In Forex mode, you need to not only predict the direction of the price (Buy or Sell) but also forecast how far the price will go in this direction. Your profit depends on this distance. Theoretically, your profit potential is unlimited.
Let’s imagine that you expect USD/CAD to rise to 1.3600 if it manages to rise above 1.3520.
You can open an Up trade from 1.3520 by clicking Enable Orders and choosing this price point. To make the trade automatically close at 1.3600, click on Auto-closing and enter this level as Take Profit.
Like with FT, you need to choose an amount to invest in this trade. In Forex mode, however, you can boost your trade amount using a multiplier. With the x50 multiplier, you’ll trade as if with $50 instead of the $1 you actually invested, for example. In practice, this means that each point that the price moves in your favor will bring you 50 times bigger profit than without the multiplier, and you’ll reach your profit target faster. Notice that using a multiplier increases both potential profit and loss in case the price moves against you.
For USD/CAD, if you invest $10 in a trade and the price rises from 1.3520 to 1.3600, you’ll get about $6 with the x100 multiplier and about $30 using the x500 multiplier (the commission for the trade is not taken into account).
How to open a Forex trade
To get to Forex mode, click on the asset’s name at the top of the chart. Tap on the Forex tab and pick a trading asset.
1. Pick a trading asset and make your forecast on its price. To do that, you can use the chart analysis tools and trading strategies that we’ll explain later in this course.
2. In the trading panel, choose the amount of the trade. Remember the tips about trade amount and money management from the previous lesson.
3. Choose a leverage to increase the amount of your trade.
4. Click Buy or Sell, depending on your forecast.
To close a trade at the current market price, click the Close button. You can also use Auto-closing and set Take Profit and Stop Loss in advance. Take Profit will automatically close your trade once it reaches your profit target. You can set this target in either currency or percentage points. Stop Loss automatically closes your trade and limits your loss if the price goes in the opposite direction. Again, you can set this level as either the number of currency units or percentage points.
You will see the running profit or loss for your trade in the Trades tab on the platform. Even if you enabled Auto-closing, you can close the trade anytime before the price reaches your Take Profit or Stop loss levels.
Here are the general recommendations for Forex trading:
1. This trading mode will suit you if you have a forecast about how the price could potentially move. For example, if you not only expect EUR/USD to rise but think that it will reach a particular level, you can earn on this entire move by entering a Forex trade and setting Take Profit at the level where the price may rise to.
2. Various chart patterns, such as Head and Shoulders, Double Top, etc., are especially useful for Forex mode because they provide guidance about profit targets.
3. You can use Forex mode to trade on economic news. For example, if there is a data release about inflation in the United States, the price of USD will go either up or down, allowing you to trade on this volatility.
4. Remember that using a multiplier increases both potential profit and loss.
5. To grow your account balance, you should ensure that your potential profit (Take Profit) exceeds your potential loss (Stop Loss) in every trade. For example, if you set Take Profit at $15, Stop Loss can be three times smaller, at $5.
Next
In the next lesson, we’ll compare FTT and Forex, and give you more tips on which trading mode to choose.