Thursday, September 01, 2011
Different internet brokers have different software (or platforms) that allow you to buy and sell currencies (24 hours a day, 5 days a week), but the most popular platform is called Metatrader 4, (often shortened to MT4), for Microsoft Windows. MT4 is easy to use, powerful, and absolutely free
As we mentioned before, when starting off, you don’t need any real money to practice, since MT4 allows you to experiment with practice money, e.g. $10,000, on a DEMO account. Yep, you get $10k fake money, not bad huh. A bit like the board-game Monopoly, except instead of buying and selling properties, you’re buying and selling money itself. Indeed, the best way to get an idea of the practical nature of Forex is to trade currencies with virtual money, in a demo account.
I highly recommend that you download a free copy from the following link and try experimenting with it; you’ll quickly get used to it.
You’ll need to download the first software, the MT4 Client Terminal. Once downloaded, double click on the icon, and install it, clicking on next, next, next… Then run the software. The first thing you’ll need to do is create a demo account. Just click on File Open an Account.
This is the box you should be seeing, and then filling out:
Don’t worry about leverage just yet; you’ll gain a better understanding of it as you start trading Forex. It’s just an indication of how much buying power you have. (Most brokers offer up to 1:200, which is more than enough).
When you open up your MT4 account, on the top-left hand side you’ll see the different currency pairings and their accompanying prices (i.e. current exchange rates). You’ll actually see two price columns, the “bid” and the “ask”. The difference between these is the “spread”. It’s just the brokers’ way of making money each time you want to make a trade. (You’ll understand more about bid & ask as you tread deeper the waters of the FX World). Towards the top you’ll see the symbols/buttons M1, M5, M15, M30, H1, H4, D1, MN. They just refer to the timeframe of the chart that you’re looking at, that we talked about earlier.
To open up a new chart, click on File New Chart. And then select the currency pair of your choice, for example, USD/JPY. This will bring up the USD/JPY chart on MT4. The default timeframe is always H1 (hourly chart). You can switch timeframes really easily by clicking on any of the timeframe symbols/buttons at the top.
Go to any chart, click on the “new order” button near the top of the screen. Whether it’s the EUR/USD, or GBP/USD, or any other currency pair, just try experimenting. See what happens. You can see your current open trades in the “trade box” at the bottom of the screen. It gives different information, such as when you bought/sold, which currency, what price, your SL, your TP, and most importantly, your profit / loss.
Becoming comfortable enough with MT4, in terms of knowing how to open a chart, switch timeframes, how to buy or sell a pair won’t take long at all. The best way to get used to Metatrader is just to go and make some demo trades. Once you’ve understood the basics of how the MT4 platform works, you’ll want to actually start testing a “system” on your Demo MT4 account.