Forex Trading Tutorial

- Start the Trading Platform

The very first step in making your first forex trade is opening the trading platform. For this tutorial, we are going to use FXTrade, the Oanda trading platform, as the example.

- Open the Chart

Now choose a currency pair and open a chart. Select a timeframe. In this case, we are going to use a 15 minute timeframe. Each candlestick on the chart represents 15 minutes of time.


For this example I am going to use the Australian Dollar vs the Japanese Yen, AUD/JPY pair. It is showing a strong downtrend and looks like a simple trade.

- Add Indicators

Now add some indicators to the chart. For this chart, we are going to add MACD and a 200 exponential moving average. Using technical indicators is an option when forex trading. They are helpful for the decision making process.

The basic rule for using the 200 EMA is if the price is above the line, it is likely to continue higher, if price is below the line, it is likely to continue lower. The price seems to be moving below the 200 EMA line. This confirms that the price is in a stable downtrend.

I am going to use the MACD indicator to look for a confirmation that the price is ready to go down again. The MACD is not always reliable as an indicator when used alone, but when used as part of a larger trading system it can be helpful to pinpoint a possible turn in price. The price seems to be fighting the downtrend a bit, so I am looking for the MACD lines to cross and head down before I make my trade.

- Place the order

Now prepare to place the order. I have confirmed that the price is in a stable downtrend so I am preparing to "go short". The short trade is for 10,000 Australian dollars against the Japanese Yen. This is also known as going short 1 mini lot.

- Set the Stop Loss and Take Profit Levels

Now set your stop loss and take profit levels. This step is optional, but highly recommended.

Setting the stop loss will limit your losses if the market does not move in the preferred direction. Setting the take profit level will make sure that the trade exits in profit once the market makes the downward move that is expected. It can be an advantage to set these levels when you place the trade because once the trade is actually in the market, the pressure can make it difficult to make decisions.

- Order Confirmation

Submit your order and wait for the confirmation screen.

- The Waiting Period

Now the waiting period begins. This is one of the more difficult concepts in forex trading.

- Trade Completion

Finally the trade is complete. This trade has resulted in a successful take profit. The take profit level for this trade was 98.00 and the price did reach that level. This resulted in a profit of $63.60.