As the biggest financial market globally, forex trading attracts new traders who want to profit from buying and selling currencies. FX trading requires excellent technical and management skills, which beginners can learn on trading platforms. In this article, we’ll explore the skills that every trader should master on TradingView, which can apply to other platforms.
TradingView and Its Features
With over 50 million users, TradingView is the leading charting platform globally. It allows traders to analyze multiple markets, assets, and instruments to make informed trading decisions. The platform offers hundreds of analytical tools, such as indicators, charts, shapes, customizable alerts, automated trading, to mention just a few. Although TradingView is highly developed for institutional and retail clients, beginners can get up to speed on the platform and become familiar with the tools and features, including:
- Advanced charts: TradingView offers advanced charts such as Line, Candlestick, Bar, Renko, Point & Figure, and volume charts. Candlestick charts are more common and recommended for beginners.
- Technical indicators: Indicators are mathematical calculations that use historical price and volume to predict market direction.
- Trading alerts: TradingView alert delivers notifications when the price reaches a certain level. Alerts are delivered via email, app notifications, and API integration.
Terms and Concepts
Here are some of the basic terms that every beginner forex trader should know:
- Currency pairs: Currencies are listed in pairs, so traders simultaneously buy and sell or sell and buy each currency listed in the pair. For example, in the EUR/USD pair, the EUR is the base currency, while the USD is the quote currency. When a trader opens a sell order, the broker sells EUR and buys USD for equal amounts.
- Pips: A point in percentage (pip) is the smallest unit of change in the exchange rate. Pips are the standard unit for measuring gains or losses when trading forex and help traders to calculate their lot sizes.
- Leverage: In forex trading, leverage refers to trading a bigger position than the available amount. Most brokers offer traders up to 1:100 in leverage, so they can open positions up to 100x their trading capital.
- Exchange rates: In the forex market, currencies are valued relative to one another and exchanged in units based on their value. The exchange rate is the rate at which one currency is exchanged for another and is impacted by different factors, including GDP, interest rates, demand and supply, etc.
- Lot size: A lot size is the standard unit for measuring the size of a trade. A standard lot is 100,000 units of the base currency. Lot sizes can also be in nano, mini, and micro lots.
Technical Analysis
Technical analysis considers historical price data and identifiable chart patterns to predict price action and market direction. Traders use technical analysis to find key levels and identify areas of interest such as old highs, old lows, support and resistance levels, and imbalances where price could react from. Technical analysis also involves indicators to determine entries and exits.
TradingView offers various charting tools for beginners learning technical analysis, such as trend indicators, oscillators, moving averages, trend lines, Fibonacci Retracements, patterns, and drawing tools to identify and mark important levels. Mastering technical analysis is non-negotiable as a trader, and TradingView makes learning and practicing analytical skills easier.
Fundamental Analysis
Have you wondered why interest rates change? Many factors, including economic, social, and political factors, influence exchange rates. These underlying drivers of a currency’s strength can point traders towards the market direction. Fundamental analysis looks closer at the factors responsible for exchange rate changes.
Through fundamental analysis, traders can look at news like wars and disease outbreaks, interest rate announcements, company financials, consumer price index (CPI), gross domestic product (GDP), employment rates, and retail sales, and analyze how investors react. Positive news, such as increased employment rates and added jobs, and higher interest rates, can increase the demand for a currency, thus increasing the exchange rate or market value.
TradingView offers tools like the economic calendar, real-time economic data, and live news updates for traders to keep up with fundamental data.
Navigating TradingView
The TradingView interface is designed for quick and smooth adaptation, and beginner traders can learn to navigate the platform fairly quickly.
The TradingView homepage shows the dashboard where various features, including charts, social feeds, watchlist, and technical tools, are available. Traders can select the “Chart” tab to find real-time market data for different currency pairs.
There is also a toolbar at the top to customize chart settings, from time frames to indicators, and chart types. The drawing tools are clustered under a toolbar on the left side of the window, where traders can pick and add any tool to the chart. Trades can also save their chart settings using the “Save” button and even name the layout for future use. The TradingView platform also features screeners, a community hub, notifications, and a chat assistant in the right-side panel.
Backtesting and Risk Management
TradingView offers the replay feature, which allows traders to test their strategies on historical data. The backtesting feature helps build confidence, define strategies, and create a trading plan as a beginner. TradingView also offers various risk management tools, including proprietary tools like Take Profit (TP) and Stop Loss (SL), Long and Short drawing tools, and third-party tools like the Risk Manage Position Sizer and Enhanced Risk Management Calculator.
Closing Thoughts: Beginner to Professional
Consistency is one habit that transforms beginners into pro traders. All successful traders started as beginners, but with consistent and intentional learning, they built their trading skills from basic to advanced and then to pro levels. New traders must go through the arches and transform their daily habits to master the essentials of forex trading on TradingView.