Ready to start trading? Here are the five main steps to opening a trade.

Select a trading symbol

Step 1:
Select a trading symbol

Before you begin trading, decide which symbol you want to trade. Do you want to trade the AUD/USD currency pair? How about USD/JPY or GBP/USD? Consider the volatility of the symbol and whether it fits your preferred level of risk. Some symbols are more volatile than others, so make sure you have done your research before making a selection.


Step 2:
Select the direction

Smart traders always trade with direction. This means you need to decide which way you believe the market will move. Buying (going ‘long’) a currency means you hope its value will increase, and selling (‘shorting’) a currency means you believe its value will decrease. There are many methods you can use to analyse the market, such as fundamental analysis, technical tools, market reports or bank commentary.

Select the direction

Select entry & exit levels

Step 3:
Select entry & exit levels

The next step is selecting your entry and exit points. Doing so in advance helps reduce the possibility of exiting a trade too late and incurring a loss, or entering a trade too early and being on the wrong side of the market when lagging indicators hit. Use technical and fundamental analysis to help you decide whether to wait for the market to reach different levels.


Step 4:
Select the Right Trade Size

Trade size is a key component to managing your portfolio risk. Risk averse individuals may prefer to open smaller trade sizes, while experienced traders can opt to hold larger positions. Trade size varies based on trading experience, personal risk preferences, the inherent riskiness of certain instruments, and your account size.

Select the Right Trade Size

Execute & monitor your trade

Step 5:
Execute & monitor your trade

Once you have followed steps 1 through 4, it’s time to open your trade. Once the trade is executed it is important to actively monitor the position as it moves towards either your take profit or stop loss. Like most things in life, timing is everything. Stay in the trade as long as possible but don’t be afraid to stop out when you have reached your exit goals as defined by your trading strategy.

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