Interested in live forex trading, but not sure where to start? In this 2023 guide, we offer a comprehensive overview of real-time forex trading. From trading hours to tutorials, charts, broker reviews and accounts, we cover all you need to know to get set up in the world’s largest and most liquid global market.
The Forex Market
Foreign exchange, or forex (FX), is a global marketplace that facilitates the exchange of currencies. It is open 24 hours a day, five days a week and is the only truly continuous trading market in the world. Currencies are traded worldwide, across all major financial hubs and timezones. As such, it is an active marketplace with particularly high volumes during periods in which two trading sessions overlap.
Importantly, the forex market is decentralized which means that all transactions are conducted Over-the-Counter (OTC), through global networks, as opposed to central exchanges.
Traditionally, the forex market has been dominated by banks, hedge funds and large corporations. But, as barriers to entry are diminished, and the popularity of live forex trading grows, we are seeing an influx of smaller retail investors. Spreads in forex markets also tend to be tight and upfront costs are low, which have contributed to a changing landscape.
The global forex market is estimated to be worth $2,409,000,000 ($2.409 quadrillion) in 2022, with a daily average trading volume of $6.6 trillion.
What Is Forex Live Trading?
In one form or another, the forex market has been around for centuries.
Societies have exchanged goods in order to purchase other goods since the dawn of civilization. But the modern forex market as we know it today took shape only in the late 20th century.
Following the collapse of the Bretton Woods accord in 1971, more currencies were permitted to float ‘freely’ against each other with the value of a currency determined by demand and circulation. Forex is essentially traded by anticipating whether a currency will appreciate or depreciate in value relative to another. FX is also always traded in pairs because when you buy one currency you are essentially selling another.
Live forex markets are considered relatively transparent environments. Disclosures are not mandated and with all transactions taking place OTC, it is free from manipulation by a single dominating authority.
How To Trade Forex Live
There are three main ways to trade forex live with each catering to different investors:
- Spot market – this is the most popular way to trade forex. For the most part, when people refer to forex trading, they are referencing the spot market.
Here, currency pairs are traded with rates evaluated in real time, based on supply and demand.
- Forward market – a forward contract is a private, predetermined agreement between two parties to buy a currency at a future date.
- Futures market – a futures contract is an agreement between two parties to sell a currency at a future date, often following standardized terms.
Both forwards and futures contracts are binding and normally exchanged for cash upon expiry. Typically, these markets are used by large institutions to hedge against future exchange rate fluctuations.
Motives For Forex Live Trading
There are two primary reasons to trade forex. The first is for speculation and the second is for hedging.
There are many external influences that affect the valuation of a currency. Politics, demand, tourism, trade, and economic strength all have an impact. As these influences change, the valuation of a currency changes. Importantly, accurately predicting these changes presents an opportunity for profit.
Alternatively, hedging is a strategy used by businesses, authorities, and individuals to ‘protect’ themselves against future price fluctuations. It serves much like an insurance policy. The individual will commit to buying or selling currencies at a fixed rate in the future. Any subsequent price changes will not affect the individual because they have already committed themselves to fixed levels.
How To Start Trading Forex Live
There are a few hoops to jump through before you can start trading forex live:
- Educate yourself – whilst live forex trading is not overly complicated, it does require specialist expertise.
- It is important to spend time upfront to understand the processes, terminology, and software you plan to use.
- To trade forex live, you must open a real-time account with a broker. This step is crucial, and you should take your time to research and choose the right brokerage. It may be helpful to utilize simulator accounts to test platforms risk-free. Micro lot accounts are a good option for beginners with low capital requirements and variable trading limits.
- Formulating a strategy is essential to ensure you move in the right direction and to ease some of the psychological pressures of live forex trading. Your strategy should take into account your goals, level of expertise, and risk appetite, and be underpinned by robust risk management considerations.
- Success in forex trading does not happen overnight. Be disciplined, consistent, and patient. Stay on top of your figures, keep up to date with major global news and developments, and stick to your strategy.
Live Forex Strategies
A forex trade can be a long or short position in its simplest form.
In a short trade, the trader is anticipating the price to fall.
In a long trade, the trader is betting on the price increasing.
From there, trading strategies can be further categorised into four areas:
- Scalping – profits are small but (hopefully plentiful). Positions will be held for only seconds, minutes at most with a view to taking many small wins within a short period. Scalping relies on predictable swings so typically takes place during high volume windows.
- Day trading – short-term positions held and sold within a single day. Much like forex scalp traders, live day traders rely on cumulative profits to generate incremental gains. As reviews show, successful day traders will utilise technical analysis and indicators to inform their live forex trading positions.
- Swing trading – positions held for longer than a day. They tend to be taken up following major political announcements or events. Whilst they do not require constant monitoring, swing traders need to be up to date with affairs that may have an impact on the valuation of a currency.
- Position trading – long-term trades. Positions may be held for months or years. They require analysis, expertise and patience.
Live forex trading platforms, such as MT4, are the interface through which investors place trades.
Most platforms offer real-time charts and allow traders to open positions directly from graphs. A platform essentially defines how you can interact with the markets. So, what can you expect from your live forex platform?
All FX trading platforms feature charting these days. You need live charting examples. Make sure your broker also provides real-time prices and rates. Understand that the pricing of your broker depends on its liquidity providers to some degree.
The top terminals also offer a selection of technical indicators and trading tools, such as robots, otherwise known as Expert Advisors (EAs). In addition, most platforms provide live news streams. Through this feature, you can handle the fundamental part of your analysis.
The leading forex trading platforms support several order types. As a live trader, you need to understand how limit orders and stop orders work, among others.
The best trading platforms will also support a reporting function. You may need to use this for tax purposes. Note, some online platforms provide higher quality reports than others so if this is important to you, make sure you opt for a broker that offers a reliable service.
Forex Live Charts
There are a number of charts used in live forex trading.
Charts are essential tools for traders in identifying trends, spotting opportunities, and monitoring movements. When it comes to live forex trading, key charts include line charts, bar charts, and candlestick charts. Line charts are the most basic and widely used, while bar charts help identify buyers and sellers markets and offer detailed price information. Candlestick charts, introduced by Japanese traders in the 18th century, outline market direction and are easier to read.
Forex trading signals serve as trade triggers, informing traders whether to buy or sell a certain currency pair. These signals may include information on timing, stop loss, take profit, and more. Live forex trading signals may come from expert investors or various technical indicators, and while advanced signals may require payment, they can be worth the investment.
Access to live prices and quotes is essential for real-time forex traders. The current price of a currency is its most recent selling price at an exchange. The best forex brokers, such as Forex.com, offer instant pricing updates and rapid executions to prevent slippage.
Live forex trading rooms provide a space for traders to hold talks, build relationships with other investors, and develop their investing skills and expertise.
These popular groups are suitable for all, including beginners and seasoned professionals – there is always more to learn!
Trading rooms are essentially a social environment where experienced trading professionals will share advice, ideas, training tips, and sometimes even run contests. Graphs and charts are dissected, tools and software are leveraged and new strategies are put to the test. The content of sessions will vary, one room might focus on forex day trading whilst another might be using scalping strategies. Make sure you do some research and look at reviews to find the right live forex trading room for you.
Some live forex trading rooms are free but most charge a fee to enter and participate. Session length and frequency will vary between time zones but most will permit you to join from overseas. Conversation amongst participants is encouraged and facilitated through live chat features or a live forum.
Demo accounts are not live trading accounts but if you are new to trading, they are the best place to start. Demo accounts, also known as paper trading accounts, are simulations of real-world trading environments. They are useful because they offer investors a unique opportunity to trade risk-free. It is the perfect way to test out a new FX strategy or get to grips with a new platform.
Not all forex brokers offer a demo account, but many do. Where possible, we always recommend making use of it.
The benefits of watching live forex trading videos to improve your profitability are obvious.
Most forex educators use videos to teach their lessons. A unique approach to live forex trading is to record yourself trading. This allows for analysis of your emotional reactions later on. It is important to record both the screen and yourself when making these videos. Additionally, downloading FX courses can also be helpful.
The pros of live forex trading include high trading volumes and liquidity, making for easier entries and exits. Forex can be traded live around the world, giving ample opportunities for profit generation. Leverage is also widely used in forex markets, allowing for big earnings with a small initial investment.
However, there are also pitfalls to live forex trading. Volatility can be both positive and negative, as sudden fluctuations increase risk. Expertise is also necessary, as the price of global currencies is subject to a wide range of influences. From war to economic collapse, politics, and speculation, to trade forex successfully, traders will need to ensure they are up to date with global affairs. Furthermore, an understanding of the fundamentals of economics and behaviour is valuable.
Final Thoughts on Forex Live Trading
Live forex trading can be exciting and profitable. In 2023, a growing interest in retail forex investment has inspired a whole range of platforms, tools, and resources including webinars, live news feeds, and forex trading rooms where experts share top tips and advice. Traders today are spoilt for choice.
As always, ensure you do your research, find a reputable broker and utilize demo accounts where available.
Is Live Forex Trading Suitable For Beginners?
Live forex trading should only be carried out by traders with a good level of experience or those willing to risk capital. It can be risky, so until you are confident you are equipped with a good level of understanding, make the most of demo accounts to hone your skills.
Is Live Forex Trading Profitable?
It certainly can be.
There are numerous successful live forex traders who have enjoyed long and fruitful careers. And while the risks should not be overlooked, with the right experience and expertise, there is no reason why you could not be a successful forex trader.