How to Trade Forex Successfully 2021

How to Trade Forex Successfully 2021

There is no doubt that the foreign exchange marketplace is one of the most active trading scenes in the world. With low trading costs, data transparency, and strong short-term price trends – it is no wonder this particular asset class is so exhilarating to buy and sell!

If you are keen to learn how to trade forex successfully – stay right there.

This ultimate guide will discuss the ins and outs of how to trade forex like a pro – including order types, risk management, strategies, and a quick walkthrough of how to get started today!

 

AvaTrade - Regulated Platform With 0% Commission

Our Rating

  • Minimum deposit of just $250
  • 100% commission-free platform with tight spreads
  • Fee-free payments via debit/credit cards and e-wallets
  • Thousands of CFD markets including forex, shares, commodities, and cryptocurrencies
Start your journey towards reaching all your financial goals right here.

 

Table of Content

     

    Create an Account With a Forex Broker

    In a hurry? You can create an account with a forex broker in 4 easy steps by following the below walkthrough:

    • Step 1: Join a broker with access to dozens of forex markets. Most of the trading platforms we have reviewed on this page offer heaps of FX pairs and charge 0% commission.
    • Step 2: Enter your personal information and contact details – then upload ID for validation.
    • Step 3: Next, add some funds to your new account – selecting from what’s available to you.
    • Step 4: Find your desired forex market and place a trading order.

    Ultimately, signing up with a broker has never been easier. With that said, choosing the right one is crucial if you wish to trade forex successfully.

    Best Platforms to Trade Forex Successfully

    The online space is bloated with brokers making big promises of forex success. The truth is, there are no guarantees in this or any marketplace.

    With that said, signing up with the right brokerage will definitely start you off on the right foot and thus – give you the best chance possible of trading forex successfully.

    See below a few key metrics to finding the best forex brokers:

    • Does the platform hold a license? Regulation keeps this space free from fraud, crime, and unethical brokers. As such, licensing and regulation are super important for your forex trading experience.
    • Is there a mixed basket of forex markets available? The more options you have at your disposal when trading currencies, the more likely you are to experience success. You may want to stick to majors now – but then later move onto the volatility and price swings that exotic pairs offer.
    • Are the commission fees reasonable? No matter how much you like the look of a trading platform, or how impressive the range of tradable assets is – always check the fee table. Some brokers charge an excessive amount to both enter and exit the market – which takes away from your profit-making ability.

    With this in mind, we have reviewed the best platforms to trade forex successfully below. All of which offer low or zero-commission trading, multiple currency market options, and a great user experience.

    Note: If you already have a broker that you are happy with – you can skip this section and move straight on to our guide on how to trade forex successfully!

    1. AvaTrade – Best Broker to Trade Forex 2021

    AvaTrade has been serving the trading community for well over a decade now and is a well-respected provider in the space. You will not pay a cent in commission fees to trade forex at this brokerage. Furthermore, the minimum deposit is just $100. We checked out the spread and found it to be competitive across all markets - with an average of 0.9 pips on major pair EUR/USD, 1.1 pips on USD/JPY, and 1.5 pips on EUR/GBP.

    You will find heaps of major, minor, and exotic pairs at AvaTrade. In fact, this guide found over 50 FX markets to choose from. Exotics, in particular, include EUR/ZAR, EUR/RUB, GBP/SEK, EUR/TRY, USD/MXN, GBP/ILS, USD/TRY, and many more. Of course, the spread will be wider on exotic pairs, largely due to the lack of liquidity experienced by some markets. Other CFDs include stocks, ETFs, indices, bonds, commodities, and cryptocurrencies.

    If you are looking to perform your own charting analysis to predict the direction of your chosen FX pair, you will find a plethora of technical, fundamental, and economic indicators here. This will help you to trade forex successfully. We also found that this forex broker offers multiple video guides, lessons on various strategies, and a trading calculator. AvaTrade is also partnered with MT4 and MT5 if you want to link your account up and access a wider variety of trading tools.

    You may also download AvaTrade's free trading application called AvaTradeGO, enabling you to buy and sell on the move. The interface is laid out in a user-friendly way and you will find everything from charts to intuitive management tools. We also like that there are various compatible platforms to choose from. This includes AvaSocial, where you are able to 'like', 'follow', 'copy', and chat with seasoned currency traders. Simply download the app, create an account and then enter your MT4 login details.

    Six jurisdictions regulate this forex broker so you will not need to worry about the legitimacy of this platform. The broker will allocate your funds into a different bank account from its own and will adhere to data protection laws when processing your private information. There are heaps of payment methods accepted at AvaTrade. This includes e-wallets such as Skrill, WebMoney, and Neteller. You may also deposit using credit and debit cards or bank transfers at no extra cost.

    Our Rating

    • Trade forex commission-free from just $100
    • Regulated in 6 jurisdictions, including the EU, Japan, Australia, South Africa
    • Dozens of forex markets and compatible with MT4 and MT5
    • Admin fee charged after 12 months of inactivity
    75% of retail investors lose money when trading CFDs with this provider

    2. Blueberry Markets – Top-Rated Commission-Free Forex Broker With up to 1:500 Leverage

    Australia-based forex provider Blueberry Markets is 100% commission-free and prides itself on offering the average Joe Trader the chance to trade like a pro. You will trade currencies via MT4 and MT5, which provides you with instant access to over 30 technical indicators, and dozens of forex EAs. You can choose between 9 and 21 different timeframes - dependent on whether you opt for MT4 or MT5.

    In terms of what you can trade, there are over 300 CFDs. This guide found there to be 44 currency pairs at Blueberry Markets covering minor, major and exotic pairs. The latter includes USD/MXN, SGD/JPY, USD/SGD, USD/TRY, EUR/HUF, EUR/NOK, EUR/DKK, USD/SEK, EUR/PLN, and more. Other markets include stocks, indices, oil, and metals.

    This guide found the spread to be competitive at Blueberry Markets. For instance, on the FX pair EUR/USD you will pay an average of 0.3 pips, USD/JPY comes with a spread of around 0.2 pips, and EUR/GBP sits at approximately 0.7 pips. The spread on exotics is also tight with SGD/JPY at 2 pips. This forex broker will give you a free demo account pre-loaded with $50,000 in paper funds - for those who want to learn in a risk-free way.

    As this is a CFD broker you can go long or short on all supported assets and add leverage to boost your position - and hopefully gains. The maximum leverage for retail clients is 1:30 on major FX pairs and professional traders can access up to 1:500. Educational content includes FX charts of the day, market outlooks, tips, videos, and more.

    Based on your trading know-how and goals you can choose between two account types. First is the Standard with 0% commission charged to trade forex. If you qualify as a pro trader, you will probably opt for the professional ECN account with a $3.50 commission for every 100,000 units and raw spreads across all pairs. The minimum deposit on both options is just $100.

    The regulation at Blueberry Markets comes from ASIC and VFSC. As such, this is a safe and secure place to trade forex from home. Payment methods include credit and debit cards like Visa and Mastercard, SWIFT, bank transfer, and e-wallets such as POLi and Skrill. This forex platform offers fast withdrawals, and the interface is super easy to navigate.

    Our Rating

    • Super easy to navigate website
    • Regulated by ASIC
    • Low spread accross all forex pairs and 100% commission-free
    • Better for learner and intermediate traders
    Your capital is at risk of loss when trading CFDs at this platform

    3. Capital.com – Best Newbie-Friendly Platform to Trade Forex - Deposit Just $20

    Capital.com is a newbie-friendly forex platform that is able to offer you 100% commission-free trading across all instruments. This guide discovered in excess of 50 currency pairs, including major, minor, and exotics. This broker will offer leverage of up to 1:30 for retail traders, and 1:500 for professional - the latter meaning you could potentially multiply your position by 500 times. Less liquid exotic pairs here include USD/TRY, PLN/TRY, GBP/RUB, USD/ILS, CAD/MXN, EUR/ILS, EUR/RON, and plenty more.

    Again, let's look at the average spread on offer, using the same 3 popular pairs as our previous reviews - EUR/USD at 0.8 pips, USD/JPY at 1 pip, and EUR/GBP at 0.9 pips. Other tradable markets consist of shares, indices, cryptocurrencies, and commodities. You can connect your Capital.com account to MT4 to perform technical analysis or try automated forex trading. You might also want to check out the 'Investmate' app which offers market insight and heaps of educational features to help you learn how to trade forex successfully.

    Here, newbies can set themselves financial goals covering a basic introduction to currency trading all the way to becoming an expert CFD trader. You will also find more than 30 courses, packed to the rafters with useful information to help you trade forex in a savvy way. On the trading platform itself, we found lots of helpful extras. This includes FX guides, webinars, economic calendars, up-to-date currency news, various lessons, CFD training, and multiple forms of market analysis. There are 3 account types to choose from if you decide to trade forex here - 'Standard', 'Plus', and 'Premier'.

    Each demands a different minimum deposit - but also comes with extras such as cash rebates, custom analytics, and premier events. The standard account will suit most newbies and only requires a minimum deposit of $20 to trade currencies - or any asset. The FCA and CySEC regulate and license this brokerage. To get the ball rolling at Capital.com, make a deposit using a credit or debit card, bank transfer, or an e-wallet such as Trustly, Skrill, Apple Pay, iDeal, and more. If you have never traded before, don't worry -the interface is very user-friendly. Furthermore, this provider offers a free demo account to get to know the platform and currency markets without taking any risk.

    Our Rating

    • Compatible with MT4 for forex technical analysis
    • Minumum deposit to start forex trading is just $20
    • Licensed and Regulated by FCA and CySEC
    • Not much fundamental analysis
    82.61% of retail investors lose money when trading CFDs with this provider

    4. LonghornFX – Top-Rated ECN Broker With High Leverage

    As its name suggests, CFD broker LonghornFX primarily concentrates on the currency markets. As noted earlier, to trade forex successfully, you need access to tons of different markets. This is something that this popular broker is able to deliver. There are over 55 FX pairs here. This includes majors, minors, and exotics. The latter includes EUR/CZK, EUR/TRY, USD/PLN, USD/SEK, EUR/PLN, GBP/SEK, USD/ZAR, and there are heaps more.

    Now onto the spread, we found this to be competitive with EUR/USD averaging 0.6 pips, USD/JPY 0.7 pips, and EUR/GBP averaging 1 pip. Other tradable CFDs include stocks, indices, cryptocurrencies, and commodities such as metals and energies. There isn't much in terms of tools to help you trade forex successfully. However, this shouldn't affect you too much as you can download MT4 directly through the site to perform any technical analysis needed.

    As we mentioned you might also want to try an automated forex EA via this third-party trading platform to trade the currency markets passively. The minimum deposit at this trading platform is $10. You may also use the free demo account at LonghornFX that aims to match pricing and conditions to help you learn the ropes. When it comes to making a deposit at this forex platform, you will find that you can fund your account using Bitcoin. Or, you can use a bank wire transfer or debit/credit card - which is then converted to BTC.

    LT2 Rating

    • ECN broker with lots of FX pairs and competitive spreads
    • Leveraged CFDs via MT4
    • Super fast withdrawals
    • Platform favors Bitcoin deposits
    Your capital is at risk when trading CFDs with this provider

    How to Trade Forex Successfully

    For a fighting chance at learning to trade forex successfully, you will need to grasp the nuts and bolts of this liquid marketplace. This can take time. By reading guides like ours and going into the markets with a strategy in place, you are off to the best possible start with all future trading endeavors.

    Below we have included the fundamental elements of how to trade forex successfully, to get the ball rolling.

    Tradable Pairs

    As you probably noticed in our comprehensive broker reviews, we trade currencies in ‘pairs’. They are split into 3 categories and are distinguishable by their unique characteristics. This also means they tend to offer a different trading experience from one another.

    To further explain, let’s look at the key characteristics of major, minor, and exotic pairs:

    • Major Forex Pairs: Majors invariably contain the US dollar. USD is the world’s reserve currency so these pairs usually experience a high trading volume and super-tight spreads. This makes them suitable for newbies. Some of the most well-known forex markets of this type are USD/JPY, EUR/USD, GBP/USD, and USD/CHF.
    • Minor/Cross Forex Pairs: Minors are never associated with the US dollar, but always include 2 strong markets – such as euros or Swiss francs. Generally speaking. This category is less liquid than the aforementioned majors. With that said, minors such as GBP/JPY, EUR/GBP, and EUR/JPY still offer tight spreads and high liquidity.
    • Exotic Forex Pairs: Exotics take one strong currency such as USD or EUR and pair it with a developing market like the Turkish Lira, Thai baht, or Hungarian forint for example. Whilst the spread will be much wider on this category of currency pair, extreme price volatility can present some impressive trading opportunities.

    As you can see, each pair type offers different opportunities to trade forex successfully. If you are completely new to trading, you may wish to stick to the safer option of highly liquid markets – or practice on a demo account. We cover the latter shortly.

    The Spread

    The spread is a small charge you need to consider when you are figuring out how to trade forex successfully. It is the variance between the buy and sell price of the forex pair you are trading.

    See a simple example to clear things up:

    • Let’s imagine you are trading GBP/USD
    • The buy price is 1.3896
    • The sell price is 1.3898
    • This illustrates a spread of 2 pips

    As this is an indirect fee, you will begin your trade 2 pips in the red. As such, if you make 2 pips you will break-even – anything above that is a profit.

    Optional Leverage

    We mentioned in our brokerage reviews that you can increase your chances of trading forex successfully by trading leveraged CFDs. Markets backed by CFDs will track and match the current value of the underlying currency pair in question. This gives you the ability to trade based on its future rise or fall in price.

    See a simple example of how a leveraged forex trade works:

    • EUR/CHF is priced at €1.1008
    • You think the price will fall so place a $100 sell order to short the pair
    • After adding leverage of 1:20 – your trade is valued at $2,000
    • EUR/CHF falls in value by 8% – you were correct so create a buy order to cash out and close your trade
    • You would have made $8 from this forex trade without leverage
    • With leverage – your gains have ballooned to $160

    Leverage goes hand in hand with forex and the amount you get will depend on your jurisdiction. For instance, if you live in the EU, Australia, or the UK you can boost your position by as much as 1:30 on major pairs.

    This means you can trade with 30 times more than your account permits. Be mindful that leverage can also boost your losses if you are incorrect with your prediction.

    Types of Forex Orders

    Now that we have covered the basics, we can talk about orders to help you to trade forex successfully.

    Buy/Sell

    The most elementary trading orders are ‘buy’ and ‘sell’. You cannot enter the currency markets without placing one of these orders with your online broker.

    We mentioned above in our example that you believed the pair would see a price drop, so a sell order was created to short the pair. Had you thought EUR/CHF was going to rise in value, you would have instead placed a buy order – with the view of going long.

    Market/Limit

    Next, you can be a bit more specific on your entry into the forex market. This can be done by choosing between a ‘limit’ order and a ‘market’ order.

    See a simple example of when you might use either order:

    • Market: You have been quoted $0.7219 on NZD/USD. You like that price so place a market order. This instructs the trading platform to execute your order right away, at the next available price.
    • Limit: Using the above example on NZD/USD – let’s say you are want to enter the market when the pair hits $0.7252. As such, you set your limit order to $0.7252. When or if it reaches this price – the broker executes your order automatically.

    Note that your limit order will remain open until NZD/USD hits the price point specified.

    Stop-Loss/Take-Profit

    Stop-loss orders are an invaluable way to practice risk management, which in itself is just one way of how to trade forex successfully. Put simply, you don’t have to worry about closing your currency position before you hemorrhage money when things go wrong.

    On the other hand, take-profit orders enable you to lock in your gains from a trade, once the specific price has been hit. Simply pre-decide the closing point of your position with a stop-loss and take-profit order upon your entry into the market.

    Let us explain further with an example:

    • You are long on AUD/USD
    • You want to trade with a risk/reward ratio of 1:4
    • This means that for every 1% you risk, you want 4% in return
    • As such, you must place your stop-loss order 1% below the current price of AUD/USD and the take-profit 4% above
    • If you were short on the forex market in question – your stop-loss will need to be 1% above, and the take-profit 4% below your entry price

    This trade will be closed automatically when either your stop-loss or take-profit order is triggered. As such, you will never lose more than the percentage you specified and you always lock in your profit target!

    Trade Forex Successfully With a Strategy

    A forex strategy is like a trading discipline – used by traders from all walks of life.

    See below some of the most commonly used.

    Choose a Short-Term Forex Trading Style

    The most popular way to trade forex successfully is by ‘day’, ‘swing’, or ‘scalp’ trading.

    See below for an explanation of each:

    • Day Trading Forex: If you would rather close all forex positions before the day is through, then you could be suited to day trading. This entails buying a currency pair and selling it the same day. You can also open and close more than one position to make gains from price shifts – ensuring everything is closed by end of play.
    • Swing Trading Forex: If day trading isn’t doing it for you, you may wish to try swing trading. This will see you studying technical analysis and trend indicators – entering the market with the view of exiting days or weeks later with a profit.
    • Scalping Forex: Perhaps you prefer the idea of opening and closing multiple currency trades on a single trading day. The end goal is to make a profit from the short-term price fluctuations – making modest gains that merge into a decent end-of-day profit.

    Leveraged forex pairs come with overnight financing fees, otherwise referred to as swap fees. As such, you should check what the charges are at your chosen trading platform as they can vary by some distance.

    Practice How to Trade Forex Successfully for Free

    Fancy learning how to trade forex successfully whilst risking none of your own capital? It couldn’t be easier if you make sure you do so via a forex demo trading platform. Put simply, some brokers offer clients a free facility to trade with paper funds.

    At top-rated broker eToro, you will be given a virtual demo account pre-loaded with a whopping $100,000 in paper equity to practice trading forex successfully. Most free accounts of this nature are designed to be as close to real-life market conditions as possible – making them perfect for strategizing!

    Try a Hands-Off Approach to Trade Forex Successfully

    More and more traders are looking to take a laid-back approach to enter the FX markets through automated forex trading.

    Forex EAs

    When most of us think about automated forex trading, we think of forex EAs (Expert Advisors), or ‘trading robots’ as we commonly referred to them. For those unaware, this involves downloading algorithmic software – which is a 100% passive way to trade.

    Forex EAs scour markets, charts, and indicators looking for opportunities to buy and sell FX pairs for a profit – for you. This will be carried out via your chosen broker and any positions opened and closed by the robot will appear in your portfolio. Always verify the past performance of your chosen forex EA or robot before allowing it to trade with your capital.

    Trade Forex via a Copy Trader

    Another strategy is to mirror the trades of an already successful and experienced currency trader. This phenomenon is called Copy Trading.

    Here is how it works, in a nutshell:

    • Find a forex trader you like, based on criteria such as risk level, preferred market, and returns.
    • Invest in that person from your trading platform account balance.
    • Let’s say the Copy Trader allocates 3% to AUD/GBP and 2% to EUR/RON.
    • 5% of your investment is also allocated to the same trading positions.
    • Thus, if you invested $1,000 in the aforementioned Copy Trader – $30 is in the AUD/GBP trade, and $20 is allocated to the EUR/RON position

    You can invest in up to 100 seasoned investors at commission-free brokerage eToro. In fact, you could look to copy a handful of different people to grow your portfolio in a diversified manner.

    Sign up for Forex Trading Signals

    Forex signals enable you to hit the currency trading floor without having to spend hours studying technical analysis. Whilst there is never a truly risk-free way to trade, signals are like tips, so they save you from having to research and time the markets yourself. This can be an arduous task, especially for newbies!

    Here at Learn 2 Trade, we offer a variety of forex trading signals, all of which are sent to the thousands of Telegram members subscribed to our service.

    Every trading tip includes the elements in the example below:

    • Market: GBP/USD
    • Order: Buy
    • Entry Value: 1.3892
    • Stop-Loss Price: 1.3846
    • Take Profit: 1.3974
    • Recommended Risk: 1%

    Our forex trading signals are often accompanied by supported images – such as charts, and technical analysis. It is entirely your choice whether you take these suggestions over to your chosen trading platform to place the order.

    How to Trade Forex Successfully: Bottom Line

    There you have it, learning how to trade forex successfully isn’t the easiest of tasks. However, there are many ways in which you can give yourself the best start. Notably, choosing the right broker will be a great place to begin.

    You might also consider adding some tried and tested strategies to your forex trading plan. This can include automated forex trading such as signals, or copying a Copy Trader already well-versed in the largest financial market in the world. It’s also a commonly adopted system to include a stop-loss order in every position you take – to prevent your losses from getting out of control.

    The best brokers to consider when thinking about how to trade forex successfully are AvaTrade, Blueberry Markets, and Capital.com. All are fully regulated, offer heaps of forex markets, competitive spreads, and commission-free currency trading. Furthermore, each will give you a free demo account to practice with. If your preferred deposit method is Bitcoin, you may also want to check out LonghornFX.

     

    AvaTrade - Regulated Platform With 0% Commission

    Our Rating

    • Minimum deposit of just $250
    • 100% commission-free platform with tight spreads
    • Fee-free payments via debit/credit cards and e-wallets
    • Thousands of CFD markets including forex, shares, commodities, and cryptocurrencies
    Start your journey towards reaching all your financial goals right here.

     

    FAQs

    Can I get rich trading forex?

    Whilst it's possible to make money trading currencies, the best way to trade forex successfully is to learn the markets inside out. Practice technical analysis and use leverage to your advantage. You might also look to skip the research aspect and try forex trading signals - comparable to tips on what order to place

    Can I teach myself how to trade forex successfully?

    Yes you can. The best way to teach yourself how to trade forex successfully is to learn by experience. You might try a free demo trading facility to learn the ropes. It's also worth considering investing in a Copy Trader to grow your portfolio whilst you learn - or use trading signals to tip you off on market sentiment.

    How long will it take to trade forex successfully?

    The answer depends on various factors, such as what your idea of success is and how long it takes you to learn the markets. Most people estimate that it takes around 4-5 years to fully understand this marketplace. As such, more and more people cut corners with automated forex trading options.

    Which broker is the best to trade forex?

    We reviewed the top 5 brokers to trade forex successfully and AvaTrade came out on top. The broker provides access to heaps of forex pairs, does not charge any commission, and is regulated by no less than 6 jurisdictions.

    What is a forex trading strategy?

    When traders refer to a strategy - they mean they have a plan going into the currency markets. This will see you exercising discipline. You could vow to apply a risk/reward ratio of 1:3 on every position, use forex trading signals, or partake in scalping currencies for small but regular gains. It's always wise to have a strategy when trading any market.

     

    Author : Samantha Forlow

    Samantha Forlow

    Samantha is a UK-based researcher and writer that specializes in all-things finance. This covers everything from traditional equity and fund investments, to forex and CFD trading. Samantha has been writing financial-based content for several years and has a variety of publications in the online domain. Crucially, she is able to explain complex financial subjects in a newbie-friendly manner.