Forex information is all over the market. What you need is not a lot of information, but a simple way to earn money. This article is written for traders who are confused by a lot of information and don’t know what to do in the end.
This article will help people who want to start trading forex to start trading smoothly. Intermediate traders will also make more money if they renew their account and start from scratch after reading this article. active Japanese with eight years of experience in forex. trader, I will explain it in an easy-to-understand way.
What you need for trading
First of all, you need to prepare what you need for forex trading. You only need two things to trade.
Smartphone
You do not need a computer to analyse charts. A smartphone is all you need. The reasons for this will be discussed later in this article. Communication speed and the newness of the model are not necessary factors for winning a trade. You can prepare an iPhone or an Android phone.
Forex account
Trade with a demo account until you become familiar with buy and sell orders and profit-taking operations. You can open a demo account for free and try trading for free.
Once you have become familiar with the operations required for trading with a demo account, open a real account. I recommend XM Global, which has more than five million customers in 190 countries and is a trusted forex broker with a Cypriot financial licence, one of the most difficult in the world to obtain. I have actually used them myself and have had no problems in eight years.
Also, you get a deposit bonus when you open an account, so you don’t lose your own money if you trade only with the bonus amount. Another big advantage is that the company uses a zero-cut system, which means that you will not lose more than the amount of your deposit.
For more information on how to open such an account with XM Global, please read this article.
How much can you earn from forex trading?
| Survey period | 2009-2012 |
| Number of people who made a profit | 1,575 |
| Number of people who made a loss | 13,224 |
| Total profit | $17.51 million |
| Total losses | $220 million |
This is the result of four years’ worth of forex and CFD trading data collected from forex traders by the French government. This data shows the number of people who made a profit, the total amount of profit, the number of people who made a loss and the total amount of loss as a percentage.
- People who made a profit: 10.6%
- People who made a loss: 89.4%.
Analysis of this data shows that approximately 10% of people have made a profit in FX trading. All you have to do is make an effort to be in this 10%, and the trading techniques to be in the 10% are explained in this article. If you are interested, please read on.
Terms to understand before trading
Preparation
Margin
The amount of collateral deposited by a trader with a forex firm as security for a trade. For a novice trader, ¥50,000 is sufficient.
Leverage
A mechanism whereby an individual trader with only a small amount of capital can make the same trades as a trader with a large amount of capital by depositing a portion of the trade amount with a forex firm as margin.
Lot
A unit of trading volume is called a lot, which varies from forex company to forex company, but in the case of XM Trading, the minimum trading unit is 0.01 lot, so it is a good idea to start trading with this number of lots. Even if you start to make money, it is advisable to keep the number of lots you enter small and split your entries into multiple entries. This is because you can only take profits in the lot units you have entered when you take profits.
Trading
Market order
This is a method of entering at the timing you intend. If you are new to trading, it is a good idea to enter with a market order.
Limit order
Unlike market orders, limit orders are automatically executed when a certain price is reached. For example, if the current price of the dollar is 130 yen and you want to place a buy order when the price reaches 135 yen in the future, you can place a limit order to buy at 135 yen and the order will be executed when the price reaches that level.
Additional margin
If the FX company asks for additional margin, you have to make an additional deposit within half a day or so, or your position will be closed compulsorily.
Loss-cut
This is a mechanism triggered to prevent the amount of losses from increasing. When the valuation loss amount (referring to a loss on an open position) reaches a defined level, the forex company will execute a mandatory loss cut in order to limit the amount of loss.
Currency pairs
Forex is a game of guessing the strength or weakness (whether the chart will go up or down) of two currencies, such as the dollar and the yen or the euro and the dollar. The more participants in the game, the more money you can earn when you win a trade. So, after eight years of making money trading forex, my two recommended currency pairs are the USD/JPY and the EUR/USD. These currency pairs are made up of reserve currencies and these currency pairs alone account for 38% of the global FX trading volume.
Interest rate gap(US10Y-JP10Y)
The difference between the yields on US and Japanese 10-year government bonds (US government bond yield – Japanese government bond yield) is important when trading FX.
The larger the number, the greater the ‘interest rate differential’. The US-Japan interest rate differential is correlated with the price movement of USD/JPY, and you can make money with a strategy of buying US dollars when the interest rate differential is large and selling US dollars when the interest rate differential is small.
https://richardkatz.substack.com/p/yen-rate-tokyo-has-no-good-short
However, there is no advantageous comparison for one-hour or four-hour trades, which are known as short-term trades.
Therefore, I recommend trading on a daily basis or longer.
You can read more about how to compare the daily US10Y/JP10Y interest rate differential and USD/JPY charts on the daily or longer term in this article.
Analysis
There are many ways to analyse charts, but you can make money with just the two analyses described in this article. Many methods of chart analysis are effective, but moving averages are an analysis method used by professional traders and are very effective for trading.
Indicator
Moving average
The average of the closing prices over a given period is called a moving average. You can set the values for any period of time to ’20’, ‘100’ and ‘200’. To explain in detail, there are two different ways of calculating moving averages, SMA and EMA, but there is not much difference between them, so you can choose whichever you prefer.
Bollinger Bands
Bollinger Bands is a statistical method. The probability of a candlestick falling within the standard deviation +- 3σ range is 99%, so you enter the market when the candlestick falls outside the Bollinger Bands range. If you take profits at the close of that time leg, you have a high probability of making money. For even greater accuracy, the set value is “3.4σ,, with a set period of 16”.
As mentioned above, we have introduced two analysis methods, but there are many more out there. However, as mentioned earlier, you cannot make money in trading by using analysis methods that nobody else is using. So, try trading using just these two methods!
Others
There are three other terms, but you will not make money using them. If you are solicited to use these methods or want to try them out, remember this blog. You will never earn money using the following three methods
Automated trading (Expert Adviser)
This is a method that uses programming to automate trades. This method uses past chart analysis and may not be applicable to future charts. If it were easy and profitable, this method would be spread all over the world. Automatic trading should not be used for trading.
Cross Order
Entering Cross Order at the same time is called double-bidding. This method is designed to ensure profits whichever way the chart moves, as the price will either move up or down. However, this method is based on the assumption that the price will come back to the entered price. The return to the entered price may be for one hour or for ten years. I do not recommend it and all my trader friends do not recommend it either, as they have to deposit margin for that period of time.
MAM(Multi Account Manager)
This is a method where you entrust the operation to a person who is known as a professional trader and receive a portion of the profits. This method is very often a scam, so be careful. If you are a trader who is really earning money, you do not need to make profits from other people’s money management, so this method is very suspicious. Never do this.
Conclusion
- Prepare your smartphone and open an account with XM.com.
- Familiarise yourself with the operation of the app with a demo account.
- After opening a real account, deposit a margin of about JPY 50,000 and receive a bonus from the forex company.
- Change the leverage to 1:1000 in the XM Global app.
- Change the moving average and Bollinger bands to the settings in this blog.
- Enter with 0.01 lots.
Just by following these rules, you will not incur large losses. For detailed chart setting procedures, please refer to this article. You will surely earn money.
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