Foreign exchange, often called Forex or FX, is the global marketplace for buying and selling currencies. It involves trading one currency for another, such as exchanging US dollars for euros. The Forex market is the largest financial market in the world, with a daily trading volume exceeding $6 trillion. When we trade the foreign exchange market we are often swapping CFD's (contracts for difference).

Forex trading takes place over the counter (OTC), meaning there's no central exchange like a stock market. Instead, trading is conducted electronically via computer networks among traders around the world. This market operates 24 hours a day, five days a week, allowing continuous trading as financial centers in different time zones open and close.

People trade Forex for various reasons:

1. Profit: Traders aim to make money by buying a currency at a low price and selling it at a higher price, or by selling a currency at a high price and buying it back at a lower price.

2. Hedging: Businesses and investors use Forex to protect against the risk of currency fluctuations. For instance, an American company expecting payments in euros might trade Forex to lock in a favorable exchange rate.

3. Speculation: Many traders speculate on currency movements based on economic indicators, geopolitical events, and market trends.

Forex trading offers opportunities due to its high liquidity, the ability to trade with leverage, and its accessibility to individual traders. However, it also carries risks, and successful trading requires knowledge, skill, and careful risk management.

MetaTrader 4 (MT4) & Meta Trader 5 (MT5)

MetaTrader is a widely-used and trusted trading platform designed for Forex, futures, and CFD (Contract for Difference) trading. Developed by MetaQuotes Software, MT4/5 provides traders with a user-friendly interface and a range of powerful features. Here at ForexFortune we use MetaTrader4 to take all of our trades. These are typically market orders or stop orders.

TradingView

TradingView is an online platform and social network for traders and investors. It’s known for its powerful charting tools, extensive market data, and community features. While we use MT4 to place all of our trades we use TradingView to analyse, test and view price and price action before placing our trades. Our proprietary ForexFortune indicator was also created for tradingview and is the source of many of our trades. 

Placing Trades

Using these applications is not difficult, in fact placing our trades takes no longer than 10 minutes each day. However when starting this process can be daunting. If you have never traded before make sure to check out the Placing a Trade tab above for an in depth description of how to use our signals.

A brokerage is a company that helps people buy and sell financial assets, like stocks, bonds, and currencies. Think of it as a middleman between buyers and sellers in the financial markets. Brokerages:

1. Facilitates Trades: When you want to buy or sell a financial asset, the brokerage executes the trade for you. For example, if you want to buy a stock, the brokerage will find someone who is selling that stock and complete the transaction on your behalf.

2. Provides Accounts: To trade financial assets, you need a brokerage account. The brokerage sets up and manages this account, where you can deposit money and keep track of your investments.

3. Offers Market Access: Brokerages give you access to various financial markets, such as stock markets, Forex (currency) markets, and commodities markets. This means you can trade a wide range of assets all in one place.

4. Supplies Tools and Information: Many brokerages offer tools, research, and information to help you make informed trading decisions. This might include charts, news, analysis, and educational resources.

5. Charges Fees: Brokerages make money by charging fees or commissions for their services. This might be a fee per trade, a monthly account fee, or a spread (the difference between buying and selling prices).

So while we use MT4 to execute our trades we also need a brokerage account that allows CFD trading. We then request a CFD account, with our brokerage, that is MT4 compatible (most brokerages offer this) and log in to our brokerage account inside of the MT4 platform so that we can trade. 

Risk Management in CFD Trading

Risk management is crucial when trading Contracts for Difference (CFDs) because it helps protect your capital and minimize losses. CFDs are leveraged products, meaning you can control a large position with a relatively small amount of money. While this leverage can amplify your gains, it can also magnify your losses, making effective risk management essential.

What is a Stop Loss?

A stop loss is a pre-set order you place with your broker to sell a CFD position if it reaches a certain price. The purpose of a stop loss is to limit your losses on a trade by automatically closing the position before it loses too much value.

How to Use a Stop Loss

Set a Stop Loss Level: Determine the maximum amount you’re willing to lose on a trade. This is your stop loss level. For example, if you buy a CFD at $100 and set a stop loss at $95, your position will be automatically sold if the price drops to $95, limiting your loss to $5 per share.

Risk Management Rule: Risk 1-4% of Your Total Account

When trading CFDs, it’s essential to only risk a small percentage of your total account on any single trade. The recommended range is 1-4% of your account. This means if you have $10,000 in your trading account, you should only risk $100 to $400 on a single trade. By limiting your risk to 1-4% per trade, you protect your account from significant losses, allowing you to stay in the game even when you encounter a few losing trades. Losses in CFD trading are inevitable and unavoidable so this disciplined approach helps ensure long-term success. 

How to Be Profitable in CFD Trading

Being profitable in CFD (Contracts for Difference) trading requires a combination of discipline in risk management, consistency in your trading approach, and a solid, winning strategy. It is not easy and typically over 90% of non-professional traders are not profitable. But luckily we are here to teach you. By joining us you will learn:

1. Discipline in Risk Management

a. Set a Stop Loss: Always use a stop loss to limit your potential losses on each trade. A stop loss is a predefined price level at which your trade will automatically close if the market moves against you. This helps protect your capital and prevents small losses from turning into significant ones.

b. Risk a Small Percentage of Your Account: Only risk 1-4% of your total trading account on any single trade. This ensures that even a series of losing trades won’t deplete your account, allowing you to stay in the market and recover.

c. Use Proper Position Sizing: Calculate the appropriate position size for each trade based on your stop loss level and the amount of money you’re willing to risk. This keeps your risk consistent and manageable.

2. Consistency in Your Trading Approach

a. Stick to our Signals: If you want to follow our signals. Follow only our signals. We have calculated our periods of losses and gains to stay consistent. However if you follow other signals services or your own trades you might find your losses at particular points are higher than expected.

b. Avoid Overtrading: Don’t trade just for the sake of trading. Be patient and wait for high-probability setups that align with your strategy. We are consistent with how often we trade. Follow it. If you miss a trade, come back tomorrow. Opportunities arise every day! 

3. A Winning Strategy

a. Technical Analysis: Both of our trading strategies are based strictly on technical analysis. We analyse the GBP/JPY and XAU/USD charts via trading view and provide comprehensive signals each day.

b. Backtest Your Strategy: Our strategies are backtested showing that we consistently overcome losses. Having backtested data allows us to trade through periods of losses without worrying. We know that over time we consistently make money

c. Adapt to Market Conditions: Markets are constantly changing, so it’s essential to adapt your strategy to different market conditions. What works in a trending market might not be effective in a ranging market. You will watch us avoid periods of the year, news events and holidays that impact our strategy.

Putting It All Together

Here at ForexFortune we show you each of these elements each and every day. While it sounds complicated, by trading with us you will learn the practical application of everything shown above. And guess what? It's as easy as spending 10 minutes each day entering and watching our trades!