The Forex market can be a great way for investors to trade profitably and millions of investors participate daily. However, before getting into the Forex markets, traders should familiarize themselves with how it works, the terminology used, and how they can participate.
Here is the second part of our The Ultimate Forex Guide for Beginners to get you started on your way to investing in Forex.
Typically, currency pairs are traded in “lots”. A standard lot is 100,000 of the currency unit being traded. On the Olymp Trade Platform, “lots” are not used in order to simplify trading.
The size of these lots would normally price many investors out of the market since they don’t have $1,000 in capital to invest in one trade let alone $100,000. Therefore, brokers allow investors to use leverage to make trades in order to allow them access to the market and to increase their profits.
Here are some examples of using leverage versus only using margin to make a trade. The first example is based on a change of only 1 pip in the market. The second example is for a change of 5%.
Using leverage properly, an investor can see significant returns on their investments in relatively short periods of time. Of course, this comes at an increased risk to the investor and to the broker that agrees to lend the money for the leverage.
This problem has opened the door for creative brokers that have found ways to limit the risk to both the investor and themselves while still providing leverage for small investors.
How Olymp Trade Helps Turns Risk Into Reward
Now you have a good general idea of how the Forex markets work and what is involved. Therefore, it is time to take a look at how you can tackle the Forex market on your own terms to create a more financially independent future for yourself. Olymp Trade is here to help.
Here are some ways that new investors can overcome the risks of investing in Forex and still trade profitably with only a small amount of capital.
- Learn how to use market analysis tools, read charts, and spot market behaviors
- Get educated on strategies used in trading Forex
- Learn from expert traders on what they look for when trading
- Open a “Demo Account” with a broker to practice
- Set achievable goals and develop a strategy to reach them
Maximizing Profit While Reducing Risk
Olymp Trade has used creative methods to help investors get the most out of their capital while providing them tools to reduce the risk on their trades. Here are some of the best features of the Olymp Trade platform available to traders.
Forex Trading Multipliers – Earlier we explored an example of how using leverage can turn a small investment into a highly profitable trade. Unfortunately, this came with the risk of owing the leveraged amount to the broker if the trade goes badly.
To compensate for this, Olymp Trade allows traders to use leverage with multipliers as high as 500 times the invested amount on trades. However, trades will automatically close once the amount of the margin invested is lost on a trade gone bad. Below is an example of the Olymp Trade multiplier and how it works.
The upside on the trade is still the same as with normal leverage, but in order to protect investors, the position will automatically close when the invested amount lost reaches 100%. In this way, the investor never needs to worry about owing the leveraged amount to Olymp Trade if the trade doesn’t perform as expected.
Even better, using Olymp Trade’s “Stop Loss” tool, the trader can set an amount for the position to close if it goes the wrong direction. The Stop Loss tool is automatically set at 50%, but can be adjusted by the trader depending on the level of risk they choose to take.
On the profitable side, traders can also set a position to automatically close once it reaches a certain level of profitability. Using the “Take Profit” tool, traders decide at what level they are satisfied with the profitability of a trade. Once it is set, they can walk away knowing that when the position reaches that profitable point, it will be closed and the profit added to their account.
The combination of the multipliers, stop loss, and take profit tools gives traders more control over their investments. Even when they can’t be at their phone or computer watching the action firsthand they can feel comfortable.
A further benefit for Olymp Trade’s Expert members is the ability to enter risk free trades a certain amount of times per month. Olymp Trade’s Expert program has numerous advantages, but the ability to cancel a trade gone bad periodically is a huge step in reducing the risk of Forex trades.
Gaining Knowledge and Expertise in Trading Forex Using Tools
One of the key hurdles for new investors that can add to the risk is a general lack of knowledge and experience of the market itself. Fortunately, there a number of ways to get the education and experience you need to be successful in the market.
Olymp Trade provides many different tools to help their clients reach their investment goals through the Forex markets. It isn’t difficult even for beginners as long as they’re willing to take some time to become knowledgeable and gain some experience.
Some of the tools available to Olymp Trade clients include:
- Video and blog tutorials on how to read charts and analyze them correctly
- Videos and blogs from experts on creating your own charts
- Olymp Trade platform provides free, customizable analytical tools
- Online trading assistance from experts in real time on the platform
Taking only a few hours a week to build your education can pay huge dividends in the coming months as you build your portfolio.