KVB PRIME logo

TRADING FOR BEGINNERS

Learn forex trading

  • WHAT IS THE FOREX MARKET?
  • WHAT IS FOREX TRADING?
  • WHAT IS A FOREX BROKER?

Foreign exchange (also known as forex or FX) refers to the global, over-the-counter market (OTC) where traders, investors, institutions and banks buy and sell currencies.

Trading is conducted over the ‘interbank market’, an online channel through which currencies are traded 24 hours a day, five days a week. Forex is one of the largest trading markets, with a global daily turnover estimated to exceed US$5 trillion.

Understanding Currency Pairs

All transactions made on the forex market involve the simultaneous purchasing and selling of two currencies.

These are called ‘currency pairs’, and include a base currency and a quote currency. The display below shows the forex pair EUR/USD (Euro/US Dollar), one of the most common currency pairs used on the forex market.

Forex Trading Q&A

Understanding Forex Charts

CANDLESTICK CHART

CANDLESTICK CHART

A candlestick is a chart, also known as a Japanese Candlestick Chart, and is favoured by traders due to the wide range of information they portray. The chart displays the high, low, opening and closing prices.

A candlestick has three pips; open close and the wicks.The wicks show the high to low range and the 'real body' (wide section) shows investors if the closing price was higher or lower than the opening price.

If the candlestick is filled then the currency pair closed lower than it opened. If the candlestick is hollow, then the closing price is higher than the opening price.

BAR CHART

BAR CHART

A bar chart shows the opening, close, high and low of the currency prices.

The top of the bar represents the highest paid price and the bottom indicates the lowest traded price for that specific time period.

The actual bar represents the currency pair's overall trading range and the horizontal lines on the sides represent the opening (left) and the closing prices (right).

A bar chart is most commonly used to identify the contraction and expansion of price ranges.

LINE CHART

LINE CHART

A line chart is easy to understand for forex trading beginners. In a line chart, a line is drawn from one closing price to the next.

When connected, it is easy to identify a general price movement of a currency pair throughout a time period and determine currency patterns.

What are technical indicators and FX signals?

Technical indicators are mathematical calculations that use historic price action and volume to forecast future price movements, providing trade entry and exit signals. These signals suggest a potential time and price for a trader to enter a trade, in order to profit from the predicted move in price. Technical indicators are usually displayed over or below price charts to help traders identify trends and overbought or oversold situations.

Forex indicators are designed to describe short-term price trends and are useful for finding the right currency pair, price level and time to enter or exit a trade. Common technical indicators include:

Moving average

Moving average

Bollinger Bands

Bollinger Bands

Stochastic indicator

Stochastic indicator

MACD

MACD

Relative Strength Index

Relative Strength Index

Alligator Oscillator

Alligator Oscillator