Олег Папков – Available about Forex trading in Russia (страница 2)
In the future, it will be clear to you that when choosing an account, you need to choose its characteristics very carefully. The account and currency pair have their own internal characteristics.
Now, of course, you need to download the trading platform from the broker’s website and install it on your computer. For example, MetaTrader 4. This is a very common and fairly simple and democratic trading platform. A brief description and basic skills of working with the platform are described in the chapter below.
When you open an account, the broker gives you the account number and password. After installing the platform and launching it, you need to connect to your chosen account in MetaTrader 4. (Enter its number and password in a special window). In our case, this is the number and password of our demo account.
Are we ready to trade? No. We still need to open the chart of the selected currency pair. In the open window of a currency pair or Forex instrument, we see a quote chart or quotes. Or, they say, the exchange rate of the currency pair. A little later, we will understand how to make deals and how to make money on it. And now a small excursion. To choose the right direction of the transaction, buy or sell, we need to analyze the movement of the exchange rate on the chart in the MetaTrader 4 platform. What should we be guided by?
You can list them. Indicators of movement. Technical and fundamental analysis of the chart. Other, similar currency pairs. To know what are the transaction, the market or pending. Know the characteristics of the transaction. What lot will the deal be opened with? You should know that the trade has two closing orders. One is for limiting losses, called a Stop Loss. And the other is for profit-taking, called Take Profit. What kind of deal to choose a stop loss. What to follow when choosing.
Transactions are also called orders in another way. There are market orders and pending orders. Market orders are executed immediately. They are executed at the current BID price-the sale price or ASK price-the purchase price, which is usually slightly higher. And sets them for you by your broker. In contrast, pending orders can be placed at any price and will be executed when the exchange rate reaches this price. Now let’s understand what we are buying or selling and what we are looking at on the trading platform.
Let’s imagine this situation: you opened an account in rubles (RUB) with a broker, put an amount in rubles (RUB) there, and for some part of rubles (RUB) you want to buy euros (EUR) for dollars (USD) on the euro-dollar (EURUSD) pair. That is, you need to change rubles (RUB) at the USDRUB exchange rate to dollars (USD) and already buy the coveted euros (EUR) with the dollars (USD) you have earned. This is the essence of the deal. All this will be done for you by the broker on your command, that is, when you click the appropriate BUY/SELL button (BUY/SELL), indicating how much (LOT) USD.
The exchange rate is indicated on Forex by the symbol XXX/YYY, where XXX is the base currency and the quoted currency. For example, EUR / USD – euro-dollar, USD/RUB-dollar-ruble. In the first case, USD is the quoted currency, in the second case, USD is the base currency.
Let’s understand how the price of the currency exchange rate of the instrument is formed.
The Forex currency. The Bid and Ask prices
Those who trade in Forex are not alarmed by the difference in prices between the best Ask buy price and the best Bid sell price. It happens the other way around. The absence of a spread, the so-called zero spread, is alarming. Because it becomes unclear who forms this zero spread. The presence of a spread, the difference between the best buy price and the sell price – is a natural process rather than an artificial one.
And yet, many call the spread the broker’s earnings. Yes. If not from the commission, then from the spread, the broker earns on us on each of our transactions. I think that the spread exists and it is constantly changing, it is not wise to blame brokers. Let’s try to disassemble this mechanism and see what’s inside :).
Let’s go to the market and go to the stalls where they sell apples. Behind the counter, sellers – in front of the counter, buyers. And if it’s a wholesale market, it’s even more interesting.
It is clear that sellers want to sell more expensive, and buyers want to buy cheaper. So much for the price difference. So much for the spread. And all are standing. Posted their prices. Nobody buys anything.
This state can be called a little differently: everyone posted their pending orders.
But now there is a buyer who urgently needs to buy some apples on the market, namely all that the seller has, but at any nearest cheap price, i.e. 75 kg at 101 rubles. No more expensive.
I bought. The market situation has changed. The seller left satisfied with 75 kilograms for 101 rubles.
The price went up and the cheap seller left.
The best selling price has changed and increased. Now it is 101 rubles per kilogram.
That is, the activity of a market buyer who wants to urgently buy a product, buy, as they say in Forex from the market, provoked an increase in prices and a change in the spread.
Now let’s assess the situation in which the seller urgently appeared ready to sell all his goods at any nearest price that the buyer will offer.
Availability of a seller from the market
We are looking at how the market situation will change after this action.
From the market seller, prices dropped
The spread increased and the best price to buy Ask decreased and became 97 rubles.
Indication of the spread in MT4.
Here is how the price index is displayed with the help of the price glass in other platforms.
The depth of market in MetaTrader 5.
And in another platform.
It is clear, according to a slightly simplified mechanism, how the movement, the change in the exchange rate of the currency instrument occurs. How Bid, Ask and Spread prices are formed.
But let’s go back to the brokers and their demo account.
Forex Broker
A good broker, Forex brokerage office (Forex) is 50% of success in trading on the market. Explains what to follow when choosing. Who are brokers and how to work with them?
For those in a hurry, you can take a look at —https://brokers.ru/brokers
Explanations on the regulators and types of broker work and account types are just below.
Work in the Forex market (Forex) is not directly possible, and it is useless and meaningless. You will have to work remotely via the Internet, and this is more convenient, through brokerage offices or brokers.
Forex brokers are firms that specialize in transactions in the foreign exchange market, sometimes stock, futures, etc., which, in theory, must have a Forex license for this activity, for example, from the Central Bank of the Russian Federation in Russia. The presence of a license, and this can be checked in the specialized sections on the website of the Central Bank of the Russian Federation, is like a “quality mark” for a brokerage office. Because in order to get a license in Russia, for example, a broker needs to fulfill a phantasmagoric number of requirements in accordance with Russian legislation. Not like over the Hill. Russian brokers licensed by the Central Bank of the Russian Federation are preferable. Finam Forex currently has such a license.
So why do we need them? But why? To work in the Forex market, first, we must have a working amount in the currency, or ruble equivalent. And this amount we will have to give to save and for our work to our chosen broker. This is, as it were, a banking structure. But its duty is to enter into a contract with us, to act on the open market, in accordance with the contract concluded with us and with our orders to open or close transactions. They do this not for free, but for a fee. Or it is income from the spread. We have already learned what this spread is. Or with a commission on each of our transactions.
As elsewhere, there are responsible brokerages whose goal is stable and leading work in the market and a stable legal income. There are also “sharashkin offices”, the so-called” kitchens”, the purpose of which is to” cut down your loot” and dissolve.
Normal brokers do not make noise, do not bother you, like gypsies sometimes. They simply exist, work, and advertise their activities in the usual way. “Kitchens”, as a rule, call on phones and brazenly impose themselves, hunting for your money.