We don’t want to go any further without letting you in on some things you should know before considering trading currencies.

1. All forex traders, LOSE money on some trades.

Being flexible is key to trading successfully, so you should not totally rule out losing sometimes or else you would find it difficult to adjust to trading because loss is inevitable at some point or another.

However, it is important to know that 90% of traders lose money, mainly due to lack of preparedness, skill, discipline, not having a trading edge, and having poor money management guides.

2. Trading forex is neither for the unemployed, nor for those who can’t afford to pay their bills.

You should have at least ₦350,000 of trading capital that you can afford to lose.

Don’t expect to start an account with a few thousand Naira and expect to become a billionaire.

3. Due to the size and liquidity of the forex market, not to mention the tendency for currencies to move in strong trends, the market is largely known for speculations.

This doesn’t mean that every forex trader makes it big, actually, only a few traders are very successful.

4. A lot of traders start out with the wrong expectations, hoping to make really huge profits in no time but lacking the discipline and diligence required to master the art of trading.

If you are not disciplined at little commitments, how then can you be ready to take on one of the most taskings, but financially profitable, endeavors known?

5. Short term trading IS NOT for beginners, and it hardly results to “getting rich quick”. You can’t make huge profits without taking huge risks.
6. It’s also important to know what a trading strategy is not. If you mistake taking huge risks for suffering huge losses from inconsistent trading performances, then it’s either you most likely don’t even have a trading strategy or you think trading is gambling.

Forex Trading is NOT a Get-Rich-Quick Scheme

Forex trading requires SKILL and it takes TIME to learn.

Skilled traders record huge success in this field. Just as it is other professions, it takes a process to achieve success, it doesn’t just happen.

Forex trading isn’t as easy as some people might want you to think it is. Look at it this way, if it were that easy, wouldn’t everyone trading be millionaires?

The fact is that, just as it is in business, even skilled and experienced traders are also faced with losses once in a while.

We need you to understand that there is no easy way out in forex trading.

It takes consistent PRACTICE and EXPERIENCE to master.

You can’t cut corners. Hard work, deliberate practice, and diligence are key.

In conclusion, use a DEMO ACCOUNT to practice trading until you’re certain of a method that you know thoroughly, and can comfortably execute objectively. In conclusion, find what works for you and how.

We advise you to open a Demo account for the purpose of this phase of learning.

Click on this LINK to create a HotForex Demo or Live Trading account >>> OPEN ACCOUNT

Becoming a successful forex trader is possible; it, however, as with other works of life requires diligence, commitment, a little luck, and a whole lot of patience and astuteness.

With most forex brokers, you can open a demo account easily. The good news is it’s FREE in most cases. These “pseudo” accounts have almost the same capacity that “actual” accounts have.

If you are wondering “Is it entirely free? Why is it free?”

The answer is YES, it is entirely free. Most brokers would love for you to master the nitty-gritty of their trading platforms and enjoy trading without risk, that’s why you have free access to demo accounts for the practice. They want you to fall in love with the art of trading, so much that you’ll want to trade with real money. With the demo accounts, you will learn the intricacies of forex trading, be able to test your trading skills and processes with NO risk involved.

YOU ARE ADVISED TO DEMO TRADE UNTIL YOU DEVELOP A FIRM, PROFIT-MAKING SYSTEM BEFORE YOU VENTURE INTO PUTTING REAL MONEY ON THE LINE.

You sure don’t want to lose your money, do you?

Do NOT open a live trading account until you are CONSISTENTLY trading PROFITABLY on a demo account.

If you can’t practice until you’re profitable on a demo account, it is most likely you’ll not be profitable live when real money and emotions are involved.

It is advised that you demo trade for at least THREE to TWELVE months.

You certainly can avoid losing all your money for a year, can’t you? Well if you can’t, you better use the money for something else…maybe sow a seed.

Another piece of advice you should heed is to concentrate on ONE major currency pair.

For beginners, it gets way too complex if you have to keep tabs on more than one currency pair as a demo trader.

Concentrate on ONE of the majors because they are the most liquid and this means tighter spreads and less chance of slippage.

Another reason is, as a beginner, you need time to focus on improving your trading procedures and creating good habits.

You’ll also need to try different market environments and learn how to fine-tune your processes and approach as market behavior changes.

Finally, I’m going to need you to make a solemn promise; say after me:

“I will demo trade until I develop a firm, profit-making system before I trade with real money.”

“I am a clever and patient forex trader”

We advise you to open a Demo account for the purpose of this phase of learning.

Click on this LINK to create a HotForex Demo or Live Trading account >>> OPEN ACCOUNT

A lot is the basic number of a currency’s unit that you can buy or sell. In other words, it is the minimum available unit of currency pairs you can trade on the forex market.

There are different lot sizes available to you, however, you choose based on your position, and at the broker’s instance. The sizes of LOTS include; the Standard size which is 100,000 units of currency, the Mini which is 10,000, the Micro lot size, which is 1000 and the Nano which is 100 units of currency.

As already discussed, a PIP is a small measure of change in a currency pair. These changes are actually determinants of profits and losses; however, trading must be conducted with a substantial amount for any significant profits or losses to be recorded.

The PIP value changes in accordance with the dictates of the market at a particular time. Brokers calculate PIP value in relation to lot sizes, and they keep you updated with the PIP value of currencies traded at a particular time.

A quick example of how lot sizes affects PIP value;

For instance, if the exchange rate of the USD/JPY pair is 110.80, thus; (0.01 (a pip)/110.80(an exchange rate) X 100,000 (standard lot) = $9,03 per pip

But if the US dollar is not the base currency, its calculated quite differently;  EUR/USD at an exchange rate of 1.1930: (.0001 / 1.1930) X 100,000 = 8.38 x 1.1930 = $9.99734 rounded up will be $10 per pip.

Below is an illustration of how to count your profit and lot with Lot sizes:

What Is Leverage In Forex?

One of the pecks of trading in the Forex market, is the idea of leverage, and how does this works, of course just very few traders will have as much as $100,000 to trade currencies, this is where your broker comes in. your broker can provide the bulk of the money, depending on what you both must have agreed.

As a matter of practice, the broker requires a minimum deposit known as Margin. Once the Margin is deposited, the Broker completes the money to the required lot size and you can now trade. In other words, ‘leveraging on the broker’s money

NOTE:  The amount of leverage you use will depend on your broker and what you feel comfortable with. Also, the Broker specifies how much margin is required to be deposited for every trade.

For example, if the permitted leverage is 100:1 (or 1% of position required), and you wanted to trade a position worth $100,000, but you only have $5,000 in your account, your broker would set aside $1,000 as a deposit(which is the Margin) and let you “borrow” the rest.

As earlier stated, there are no specific rules guiding the fixing of margin, they are at the discretion of the brokers. In the example above, the broker required a one percent margin. This means that for every $100,000 traded, the broker wants $1,000 as a deposit on the position.

At the close of the trade, you get your initial deposit back, including profits realized if any.  Losses would also be deducted from your account.

How to calculate Profits and losses

For example, If we decide to trade the Japanese Yen for the US dollar JPY/USD, and the price  quoted is 1.4525 / 1.4530;

if we now buy 1 standard lot (100,000 units of US dollars by selling the Japanese Yen) at 1.4530, and after a while, the price moves to 1.4550 and you decide to close your trade. The new quote for USD/JPY  would now be 1.4550 / 1.4555. Since you initially bought to open the trade, to close the trade, you now must sell.  You must take the “BID” price of 1.4550. The price which traders are prepared to buy at.

The difference between 1.4530 and 1.4550 is .0020 or 20 pips, using our formula from above, we now have (.0001/1.4550) x 100,000 = $6.87 per pip x 20 pips = $137.40.

NOTE: When you buy a currency, you will use the offer or ASK price and When you sell, you will use the BID price.

We advise you to open a Demo account for the purpose of this phase of learning.

Click on this LINK to create a HotForex Demo or Live Trading account >>> OPEN ACCOUNT