EDUCATIONAL WORKSHOP
Forex Education
KNOWLEDGE BASE for everyone who wants to learn
Articles to read about Forex Trading
The most popular aspects to learn deeply about Trading on Financial Markets






Individual Education





Programs are designed both for beginners who require basic knowledge and for experienced traders who need a new trading strategy or special approach to get better skills or results.


Plans available
Standart
The work of the international currency market and basic principles, currency pairs and quotes, indicators
Web platform and terminals - speed and performance, functionality and convenience of the interface, compatibility and security.
Technical and fundamental analysis The differences and conditions of these types of analysis.
3-5
Lessons
Advanced
The work of the international currency market and basic principles, currency pairs and quotes, indicators
Web platform and terminals - speed and performance, functionality and convenience of the interface, compatibility and security.
Technical and fundamental analysis The differences and conditions of these types of analysis
The basics of graphic analysis and market patterns (Levels, lines, trends, channels,candlesticks, waves)
Trend indicators and oscillators.
News analysis Features of the trading methods based on news.
Auto Trading Software providers on the currency market, expert advisors, trading system optimization.
5-7
Lessons
Trading Psychology
Aspects
Now that you've studied the basics of technical and fundamental analysis, as well as the importance of proper risk management techniques, it's about time to take a look at another crucial component of forex success: trading psychology.

Trading psychology allows you to stay focused even in the middle of a long losing streak and gives you confidence to bounce back from a large drawdown. It enables you to keep a clear head and manage your expectations when you're having a good run. This is what separates seasoned trading pros from beginners, as proper trading psychology makes you focus on the process and not the profits.
As with professional athletes that also have a sports psychology mentor that helps them keep their head in the game, traders also need guidance when it comes to having the right frame of mind, especially during ever-changing market situations. In a fast-paced trading environment, one can easily get distracted or stressed in trying to make money, but trading psychology ensures that one is focused on staying disciplined or keeping a level head.
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What's interesting about trading psychology is that it is a constant learning experience. While mastery of basic forex techniques such as market analysis or building on winning positions is possible, trading psychology takes a long time to master and even the best traders out there do need a little guidance every now and then.

It doesn't matter at what stage you are in your trading career. Even if you're a beginner just learning the ropes or an expert trader managing multiple trade positions, one's trading performance and overall well-being could benefit from trading psychology tips.
If you're a new trader trying to make sense of forex market movements and making money while you're at it, the whole experience can be exciting and overwhelming at the same time. This is why it is important to work on your trading psychology from the very start of your trading endeavor.

Perhaps one of the most important things to remember when you're starting out is to just take it easy. It can be tempting to try all technical indicators all at once or trade every single top-tier news release out there, but you might run the risk of overdoing it and feeling burned out later on. Stick with what you're comfortable with and just add what you learn along the way.

Another thing to keep in mind is to know yourself. Make sure you come up with a trading strategy that is in tune with your personality and your risk preferences. For instance, if you thrive in fast-paced movements and if you're comfortable with managing many open positions at once, then you could look into scalp trading techniques. On the other hand, if you get easily stressed with quick price movements and would rather just check your charts every now and then, swing trading might be better for you.
Risk Management
Whats your risk? Why is it important and way to manage.
Risk management separates successful traders from those who wind up blowing their entire trading account. When you manage your risk properly, you take control of how much of your capital can be lost on a trade or set of trades. Risk management allows you to limit your risk even if the worst-case scenario takes place.

In order to make consistent returns, a trader has to make sure that he will be able to bounce back from a loss in case price action does not go in his favor. Determining how much to risk per trade depends on one's risk profile, as aggressive traders tend to risk more while conservative ones opt for a smaller exposure.
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To manage risk in Forex trading means to manage money. After all, this is what gets traders to this market: the desire to make a profit.
Therefore, risk management deals with understanding the factors that affect the trading account. And, positioning in such a way to diminish the Forex risks.
However, there's no holy grail in trading. No strategy has only winning trades. Hence, learning to lose is a significant step forward in any Forex risk management plan. Yes, learn to lose, to learn how to win. Diminishing Forex risks means having a tight stop? No. Instead, it means to risk a proportion of the expected reward. And, the reward to outsize the risk.
That's the definition of an interesting concept called the risk-reward ratio. Savvy traders know that the higher the ratio, the better for the Forex risk management plan.
A proper risk-reward ratio for the Forex market looks for about three times the reward. Of course, when compared with the implied risk.
For example, if you risk fifty pips, look for one hundred and fifty in return. This way, a single winner allows for a few losers, and you'll still end at break even.
What to do when you need a wider stop loss? Because some trading strategies (e.g., Elliott Waves Theory) require bigger stop loss levels, the Forex risks increase, right?
Wrong! The secret is to adjust the traded volume to the number of pips needed for the stop loss. Therefore, a bigger stop loss results in a lower volume. And, a tighter one, at a higher volume. This way, the proportion helps to protect the trading account. Moreover, such a simple Forex risk management strategy leads to profitable trading. But even the ones that do look at the economic calendar and the news ahead. If markets move, they move for a reason.

Any Forex risk management plan starts over the weekend. Or, when the previous weekends.
Savvy traders check the economic news ahead to see what the Forex risks are. The next thing they do is to adopt the strategy. For example, let's assume a major USD event is due. One great way to diversify is to…sit on your hands and not trade any USD pair. Keep in mind that having no position is, in fact, a position. Why not focusing on a cross pair, instead of a USD pair? Or, the ECB will have its regular press conference the next Thursday. Avoiding EUR pairs means avoiding unnecessary Forex risks. However, it also means missing on opportunities. Therefore, a balance should exist between the two.

How News affects Forex volatility?
Most relevant news and volatility in different trading sessions.
Most of Forex news comes from the economic sphere. Job-related data, changes in the size of an economy, inflation, etc., offer traders clues about the economic performance of a region or country. Traders put the economic news together to find out the shape of an economy. Thus, the shape of a currency.

With its almost six trillion dollars daily turnover, the Forex market depends on Forex news to move.

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Forex trading means buying and selling currency pairs. Hence, traders compare to economies for every currency pair.
It doesn't mean Forex traders need an economic background. Merely, it means looking at the major economies around the world, like:

  • United States of America
  • Eurozone
  • Japan
  • Australia
  • Canada
  • United Kingdom
  • Switzerland, etc.
Now imagine that each economy has a currency:
  • S. Dollar (USD)
  • Euro (EUR)
  • Yen (JPY)
  • Australian Dollar (AUD)
  • Canadian Dollar (CAD)
  • British Pound (GBP)
  • Swiss Franc (CHF)
Any discussion about Forex volatility and what causes it starts with the USD. As the world's reserve currency, it influences the entire Forex dashboard like no other currency.

Because of the dollar, the currency pairs form two categories: majors and crosses. Any major pair has the USD in its componence. Hence, a major don't.
Only by splitting the pairs in such a simple manner, traders can avoid Forex volatility surrounding critical economic events. For example, one way to prevent wild swings in the trading account is to trade cross pairs during American Forex news.
After the Bretton Woods conference, the USD became the pillar of the world's financial system. Moreover, the Nixon shock in 1970's decoupled it from the gold standard.
From that moment, it was only a matter of trust in the USD that kept foreign investors buying it.

The most important and relevant
The Forex calendar news out of the United States is one of the busiest of them all. Because of the dollar's role, every market depends on the shape of the US economy.
Moreover, the Intermarket correlation means the dollar will move not only the Forex market but also other markets like bonds, stocks, options, and so on. Hence, it is all about interpreting the economic news.

For a currency, it is all about the interest rate level. Hence, the Federal Reserve interest rate announcement and press conferences move the dollar. And, the Forex market.
The Fed meets every six weeks. On a Wednesday, right after the London's close, the Fed releases the FOMC (Federal Open Market Committee) Statement.
This is a text describing the monetary policy. Trading algorithms or robots scan the document with lightspeed and react.

Trading Strategies?
Overview of different strategies and approaches..
Here we have a few methods that will help you quickly change tactics and gain pips.
We're going to provide you with an overview of strategies that have worked for many years, so that you can research the ones that are of interest to you. These are the Forex trading strategies that work, and they have been proven to work by many traders.
Quite often, traders will rely on trading strategies that haven't been tested thoroughly, setting themselves up for a failure. The truth is, you can spend hours searching all over the internet for the right strategy – and have no luck finding one.
The only solution is to try out the leading strategies for yourself and see what actually works.
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Forex trade strategies and goals

Before discussing trading setups and possible strategies, we need to first understand why one would consider trading Forex in the first place. There are two main reasons: hedging and speculation.

Hedging refers to companies protecting themselves from losses. They get their daily profits from any overseas country (that has paid revenue in a foreign currency). Then, they transfer it back to their own country, expecting fluctuation in the currency.

This practice isn't really relevant to Forex strategies.
On the other hand, speculation refers to predicting a move that a company might make in a certain situation. If done correctly, these predictions greatly improve trading results.
Speculation is what day trading is all about. With the help of decent strategies, you can progress in the Forex trading world and ultimately develop your own trading strategy. The downside is that this is a time-consuming and difficult process.

The good news is that there are pre-made strategies available for you to try.
Although it is better to play it safe, especially if you're new to the game, you need to change your tactics from time to time. This may allow you to see a profit margin you could have missed otherwise.

The Bladerunner Trade
This is suitable for all timeframes and currency pairings. It is, at this moment, one of the trending strategies in the market. The Bladerunner Trade is a price action strategy.

Daily Fibonacci Pivot Trade
This trade uses daily pivots only. However, it can be extended to a longer timeline. It combines Fibonacci retracements and extensions. Fibonacci trade can incorporate any number of pivots.

Forex Overlapping Fibonacci Trade
These strategies are a favourite among many traders. The reliability tends to be a bit lower, but used in combination with appropriate confirming signals, they become extremely accurate.

Trading the Forex Fractal
This is more of a concept rather than a strategy, but you need to know this if you want to understand what the prices are doing. This offer you a lesson in market fundamentals, which will really help you to trade more effectively.

Currency trading strategies are a game of trial and error. It may be worth trying out the strategies from list above to see if any work for you. However, we will look at two further strategies which tend to be more common than the ones previously mentioned.




Glossary
Currency Pair
It is the quotation of one currency unit against another currency unit. For example, the euro and the US dollar together make up the currency pair EUR/USD. The first currency (in our case, the euro) is the base currency, and the second (the US dollar) is the quote currency. As you see, we use short forms for currencies: euro is EUR, US dollar is USD, and Japanese yen is JPY.

Exchange Rate
It is the rate at which you exchange one currency for another. The exchange rate shows you how much of the quote currency you need if you want to buy 1 unit of the base currency.

Example: EUR/USD = 1.3354. This means that 1 euro (the base currency) is equal to 1.3354 US dollars (the quote currency).
Now take a quick peek at how the euro is doing against the Japanese yen: for 1 euro I can get 106.53 Japanese yen (i.e. EUR/JPY=106.53). Maybe I'll wait until the euro gets stronger before I exchange it and fly to Tokyo again.

The exchange rate may change in 2 days or 1 week, though. It may even stabilize for a while. Okay, but when? If you're a time freak like me, the when is important to you, too.

Quote
It is a market price that always consists of 2 figures: the first figure is the bid/selling price, and the second is the ask/buying price. (e.g. 1.23458/1.12347).

Ask Price
Also known as the offer price, the ask price is the price visible on the right-hand side of a quote. This is the price at which you can buy the base currency.
For example, if the quote on the EUR/USD currency pair is 1.1965/67, it means that you can buy 1 euro for 1.1967 US dollars.

Bid Price
It is the price at which you can sell a currency pair.
For example, if the EUR/USD is quoted at 1.4568/1.4570, the first figure is the bid price at which you can sell the currency pair.
Bid is always lower than ask. And the difference between bid and ask is the spread.

Spread
It is the difference in pips between the ask price and the bid price. The spread represents the brokerage service costs and replaces transaction fees.
There are fixed spreads and variable spreads. Fixed spreads maintain the same number of pips between the ask and bid price, and are not affected by market changes. Variable spreads fluctuate (i.e. increase or decrease) according to the liquidity of the market.

Account Currency
It is the currency you choose when you open a trading account with XM. All your profits and losses will be converted into that particular currency.

At XM you can open any kind of trading account you prefer with many base currency options: USD, EUR, GBP, JPY, CHF, AUD, HUF, PLN, or RUB.
So if you open an account in USD but you transfer funds in EUR, the funds will be automatically converted into USD at the prevailing inter-bank price.

Pip
A pip is the smallest price change of a given exchange rate.
Are you a visual type? Here's an example: if the currency pair EUR/USD moves from 1.2550 to 1.2551, that's a 1 pip movement; or a move from 1.2550 to 1.2555 is a 5 pip movement. As you see, the pip is the last decimal point.
All currency pairs have 4 decimal points – the Japanese yen is the odd one out. Pairs that include JPY only have 2 decimal points (e.g. USD/JPY=86.51).

Lot

Forex is traded in amounts called lots.One standard lot> has 100,000 units of the base currency, while a micro lot has 1,000 units.

For example, if you buy 1 standard lot of EUR/USD at 1.3125, you buy 100,000 Euros and you sell 131,250 US dollars. Similarly, when you sell 1 micro lot of EUR/USD at 1.3120, you sell 1,000 Euros and you buy 1,312. US dollars.

Pip Value
The pip value shows how much 1 pip is worth. The pip value changes in parallel with market movements. So it is good to keep an eye on the currency pair(s) you are trading and how the market changes.

Now let's reflect on what you have learnt about pips! To benefit from pips and see significant a increase/decrease in profit, you will need to trade larger amounts. Suppose your account currency is USD and you choose to trade 1 standard lot of USD/JPY. How much is 1 pip worth per $100,000 on the USD/JPY currency pair?

Margin

Margin is the minimum amount of funds, expressed as a percentage, that you will need if you want to open a position and keep your positions open.

Leverage
Strictly speaking, through leverage the forex broker lends you money so that you can trade bigger lots

Equity
It is the total amount of money in your trading account, including your profit and losses. For instance, if you deposited USD 10,000 into your account and you also made a profit of USD 3,000, your equity amounts to USD 13,000.

Used Margin
It is the amount of money kept aside by your broker so that your current trading positions can be kept open and you don't end up with a negative balance.

Free Margin
It is the amount of money in your trading account with which you can open new trading positions.

Free margin = Equity – Used Margin.
This means that if your equity is USD 13,000 and your open positions require USD 2,000 margin (used margin), you are left with USD 11, 000 (free margin) available to open new positions.

Margin Call
Margin calls are a major part of risk management: as soon as your Equity drops to a percentage of the margin used, your forex broker will notify you that you need to deposit more money if you want to maintain your position. At XM this percentage is 50%.

Position
It is a trade that you hold open during a certain period of time.

Long Position

When you enter a long position, you buy a base currency. Supposing that you choose the EUR/USD pair. You expect the EUR to strengthen as compared to the USD, so you will buy EUR and profit from its increase in value.

Short Position
When you enter a short position, you sell a base currency. If you choose the EUR/USD pair again, but this time you expect the EUR to weaken as compared to the USD, you will sell the EUR and profit from its decrease in value.