The Forex market can be an excellent way for investors to trade profitably, and millions of investors participate every day. However, before getting started, traders should learn forex trading. The first thing to do is to become familiar with how it works, the terminology used, and how one can participate...
Here is the first part of our The Ultimate Forex Guide for Beginners to get you started on your way to investing in Forex.
- Using Multiplier
- How Olymp Trade Helps Turns Risk Into Reward
- Maximizing Profit While Reducing Risk
- Gaining Trading Knowledge and Expertise in Forex Using Tools
Interact with the underlined words and green dots to get additional details and explanations.
Explanations and definitions of terms.
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 a multiplier to make trades in order to allow them access to the market and to increase their profits.
Using multipliers 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 multiplier.
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 a multiplier for small investors and Forex beginners.
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 for Forex trading for beginners.
Forex Trading Multipliers - Earlier we explored an example of how using multipliers can turn a small investment into a highly profitable trade. Unfortunately, this came with the risk of owing the multiplied amount to the broker if the trade goes badly.
To compensate for this, Olymp Trade allows traders to use 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.
Forex Trade Example With and Without the Olymp Trade Multiplier
|Investment Amount||$500 with x500 Multiplier in Leverage||Profit/Loss||$500 without Leverage||Profit/Loss|
|Buy USD/CAD at 1.3450 and Sell at 1.41225
|Total Amount of Trade is $250,000||$12,500||Total Amount of Trade is $500||$25|
|Buy USD/CAD at 1.3450 and Sell When the Trade Loss is at $500||Total Amount of Trade is $250,000||-$500||Total Amount of Trade is $500||-$500|
The upside on the trade is still the same as with a normal multiplier, 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 multiplied 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 on their phone or computer watching the action firsthand, they can feel comfortable.
Gaining Trading Knowledge and Expertise in 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 are 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 forex trading for beginners with their investment goals. 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 develop your learn Forex trading can pay huge dividends in the coming months as you build your portfolio of investments.Check Part 3
Risk warning: The contents of this article do not constitute investment advice, and you bear sole responsibility for your trading activity and/or trading results.
Essentially, a multiplier is money lent by a broker to a trader based on the trader’s available account funds and the asset being leveraged. It allows traders to make large transactions with less funds.
Stop Loss is a postponed order that limits your losses on a trade to a specified level.
Take Profit is a postponed order that fixes your income on a trade at a specified level.