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Beginner’s Guide to MetaTrader 4 (MT4)
The most popular Forex Trading Platform in the world is MetaTrader 4 (MT4). This is a platform through which anyone can do Forex Trading or analyzing the financial market. This software was developed by MetaQuotes. This lesson will let you know about the basics of how to use the MetaTrader 4 (MT4) trading platform.
How to Install the MT4 Platform
To download the MetaTrader 4 platform, you can go straight to the article where we discuss the recommended brokers for price action traders and download a Free Demo platform. You can do that here:
A setup file (mt4setup) will be downloaded into your PC. Click on the mt4setup file to initiate the installation. You have to agree with their terms of this license agreement and then click next, as shown in the following figure:
When the installation is successfully completed, click the finish button to exit.
Now, click Next to open a demo account because without opening a demo account, you cannot operate this software.
Select New Demo Account from the drop down menu, and then click next.
After clicking Next, a new popup window will appear. Fill in the blanks. Select currency, account type, leverage, and deposit. Select the radio button “I agree to subscribe to your newsletters”, and then click Next.
Now, you will get a user ID and password. Keep your user ID and password in a safe place. Click Finish to log in.
How to change the password on the MT4 platform
To change the password on the MT4 platform, click on the “Tools” located on the toolbar. Now, a popup window will appear. You can easily change your MT4 password from here.
How to Navigate the MT4 Platform
The following is a screen shot of what your MT4 platform will look like when you first open it up. MT4 opens with four different currency pair chart windows like the EURUSD, GBPUSD, USDCHF, and USDJPY charts.
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For the time being, let’s cover the primary elements of every window you find in the picture above:
- “Toolbars” is the first window located at the very top of the MT4 platform. In this window, you will find different icons to do different things. We have discussed these icons in the later part of this article.
- The next window of the MT4 platform is the “Chart” window. Here, you will see the running chart(s) you have open.
- Below the Chart window is the “Market Watch” window located at the top left corner of the MT4 platform. This window shows every pair (symbol) of the market available according to your broker, and shows you their current bid prices and asks prices. To see every symbol offered by your broker, just right click inside of the market watch window and click to “show all”. By pressing (Ctrl + m), you can easily hide / unhide the market watch window.
- The next window is the “Navigator” window. This window will show your username, indicators, expert advisors, and scripts. To hide / unhide the navigator window, press (Ctrl + n).
- At the bottom of the MT4 platform, you will see the “Terminal window” showing a few tabs within it: Trade, Exposure, Account History, News, Alerts, Mailbox, Market, Codebase, Experts, and Journal. You can click on every tab to get acquainted with what it means. But, the most important tab is the “Trade” where you can see the running and pending trades. The Account History tab shows your account activity like deposits, withdrawals, profit, or loss. You can find your full trading history from here. You can easily hide/unhide the terminal window by pressing (Ctrl + t).
How to setup your MT4 platform for clean price action trading
For a price action trading, we need to setup our MT4 platforms chart. According to your own personal style and color choices, you can customize your MT4 platforms chart. Personally, I like a white background with a black foreground. Here’s the way to setup a clean white chart for ideal price action trading:
How to open a chart
You can open a chart by three different ways:
A. Click on the File menu at the top left of the MT4, and then click “new chart”.
B. Right click on the specific currency pair you want to open in the “Market watch” segment, and then click “chart window”.
C. Just below the File menu bar, there is an icon named “new chart”. Click on that icon, and then select the specific currency pair you want to open.
How to set the properties of a chart
Open your desired chart, then right-click the chart and select properties. Now, you will see a popup window appear.
On the properties popup window, you will find a “color scheme”. By clicking on this color scheme, you can change the color of your chart. I have clicked on “Back on White” and my chart shows black and white candlesticks on a white background, as shown in the following figure:
After that, you can take off the “grid” and “volume” by right clicking the chart and un-selecting grid and volume.
There is a “common” tab located at the right side of the “colors” tab. Using this common tab, you can change certain features like volume, grid, ask line, period separators, auto scroll, etc. You can also change the chart from candlestick to the bar chart or line chart through this common tab.
How to save your chart as a template
If you want to save the chart according to your desired color scheme and other chart properties, you can easily do it by saving the chart as a template.
To do this, click on the “Template icon” located at the top right corner of the toolbar, and then save the template. There is another way to save the template. Right click on the chart, then select template, then click on “save template”.
You can change the chart type by using the “chart type icon” located in the toolbar. You can select candlestick, bar chart, or line chart – whatever you want. But, I suggest you to use candlestick chart for better understanding the Forex market. You can use the zoom-in/zoom-out icon to make the chart zoom in or out. To change the time frame of the chart from 1 minute to monthly, use the time frame icon located in the toolbar.
If you want to open a new chart with your existing template properties, you can easily do that. Open the new chart, right click on that chart, select template, then click on your previously saved template. Now, you will see your new chart having a new currency pair that will be converted to your previously saved template.
How to set up 4 different time frames of one currency pair
You can easily set up 4 different time frame charts of a single currency pair in the same screen. To do this, open 4 new charts having the same currency pair. Now, select each chart, and then click on the time frame icon gradually from 1 minute, 5 minutes, 15 minutes, and 1 hour. Now, click on “window”, which is located at the toolbar, and then click “Tile Windows”. You will see that MT4 will automatically set 4 different time frame charts of a single currency pair in the same screen.
How to analyze multiple markets quickly
If you want to analyze as many different chart windows as you want in the MT4 platform, you can easily do it by clicking on the tabs at the bottom of the MT4 platform showing currency pairs name. You can easily edit any chart by clicking on it, and then using the toolbars icon just like we have already discussed.
How to setup more than 4 charts in the same screen
To set up more than 4 charts of the same timeframe or different timeframes in the same screen, open all those charts, then click on “Window”, then click “Tile Vertically”. Now, you will see all of your charts in the same screen, as shown in the following picture:
How to Open a Trade
You can open an entry using one of the following ways:
- Using Market Watch Window: Double click on the desired pair or right click on the desired pair, and then click “new order”. Then, set your desired volume and click on sell or buy. You may set Stop Loss and Take Profit at this time if you want.
- Using an Active Chart: Right click on the active chart, then click on “trading”, and then “new order”. You can simply open an entry by clicking Sell / Buy located at the top left corner of the active chart, but to do this, you must set your desired volume first by pressing the arrow key or through the keyboard.
- Using the Toolbar: You can easily open an entry by clicking “new order” located on the toolbar.
- Using F9: There is a shortcut key in your keyboard (F9). You can open an entry by pressing F9.
How to Modify a Trade
To modify a trade, open the terminal (Ctrl + t), then double click on the trade you want to modify. Now, you will find a popup window. Select “modify order” from the drop-down menu located beside “type”. Now, you can modify your “stop loss” or “take profit”, and then click on “modify” row located at the bottom of the popup window.
How to Close a Trade
Just like the modify option, open the terminal, and then double click on the trade you want to close. Now, a popup window will open. Select “market execution” from the drop-down menu located beside “type”, and then click on “close” located at the bottom of the popup window.
How to Monitor Your Running Trade
You can monitor your running trade either through the chart or through the “Trade” section of the terminal. You can easily view your terminal through a shortcut (Ctrl + t) or by clicking on “View” on the toolbar, and then selecting terminal.
How to check Your Trading History
To check your trading history, you have to open your terminal (Ctrl + t), and then click on “Account History”. Here, you will find each of your closed trades showing, trade entry time, type (buy/sell), size (trade volume), symbol (currency pair), entry price, stop loss, take profit, trade closing time, closing price, commission (not applicable for every trading account), swap (if you carry your trade from one day to another day, you have to pay a little as a swap charge), and finally, profit / loss.
I hope now you can easily set up your MetaTrader 4 platform for a clean and clear price action trading. If you have any questions at all, please just post them in the comments section below or send me an email. You may be interested in the related lessons and articles of this post because I have added some related MT4 indicators and expert advisors that you can use now that you know how to use this really popular trading platform.
Simple Forex Trading Strategies for Beginners
Reading time: 13 minutes
This article will look at Forex trading for beginners, and will introduce some simple Forex trading strategies. In particular, this article will guide you through three key Forex trading strategies that beginners can use, namely, the Breakout strategy, the Moving Average Crossover strategy, and the Carry Trade strategy.
The Forex market (Foreign Exchange Market or FX) is hugely liquid, with a vast number of participants. It is also a well-established market. As you might expect, the combination of popularity and time has resulted in professional FX traders devising countless trading strategies. As a day trading beginner who might simply be searching for beginner’s trading guides on how to learn to trade Forex, or even a intermediate FX trader seeking some useful trading strategy guides to improve their knowledge and skills, the sheer volume of trading techniques available can be daunting and confusing.
Some day trading strategies are very complicated, with a steep learning curve. So Forex beginners may find it better to start with a simple and easy Forex strategy.
After all, the simpler the strategy, the easier it is to understand the underlying concepts. There will be plenty of time to add complex actions after you have mastered the basics. Regardless of whether you adopt a simple or complex strategy, remember that your overarching mantra should always be to use what works. New traders are generally unable to devote large amounts of time to monitoring developments. For these newcomers to Forex, simple strategies offer an effective but low-maintenance approach.
Three Beginner Forex Trading Strategies
The first two strategies we will show you are fairly similar because they attempt to follow trends. The third strategy attempts to profit from interest rate differentials, rather than market direction.
But first things first – what is a trend?
To put it simply, a trend is the tendency for a market to continue moving in a given overall direction. A trend-following system attempts to produce buy and sell signals that align with the formation of new trends. There are many methods designed to identify when a trend starts and ends. Many of the simple Forex trading strategies that work have similar methods. Trend following can produce large profits. In fact, there are traders who have produced outstanding track records using such systems.
But there are also some drawbacks to these strategies:
- They are difficult to stick with
- Large trends can be infrequent
- The conditions that signify the potential beginning of a trend, are not frequent.
This means that the strategy tends to generate numerous losing trades. The theory is that these losses will be offset by more infrequent but larger winning trades. That is a hard pill to swallow in practice. Also, once the trend breaks down, you tend to give back a healthy amount of your profit. You may have heard the phrase, “the trend is your friend”, but you may not be so familiar with the full expression, which adds “until the end”. The end comes when the trend fails, and this can be very trying on a trader’s psychology.
One big issue with a trend-following system is that you need deep pockets to properly use it. This is because possession of a large amount of capital reduces your chances of going bust during an extended drawdown. So trend following is useful as a Forex strategy for beginners to understand, but it may not be ideal for less wealthy beginners. Now, let’s break down our strategies. The first strategy attempts to identify when a trend might be forming. It looks for price breakouts.
Depicted: GBP/USD – Admiral Markets MetaTrader 4 Supreme Edition (MT4SE) – Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.
Markets sometimes range between bands of support and resistance. This is known as consolidation. A breakout is when the market market moves beyond the boundaries of its consolidation, to new highs or lows. When a new trend occurs, a breakout must occur first. Breakouts are, therefore, seen as potential signals that a new trend has begun. But the trouble is, not all breakouts result in new trends.
In Forex, even such simple strategies must be used with risk management. By doing so, you seek to minimise your losses during the trend break-down. A new high indicates the possibility that an upward trend is beginning, and a new low indicates that a downward trend is beginning.
So how can we get a feel for the type of trend we are entering?
The length of the period can help determine the highest high or the lowest low. A breakout beyond the highest high or the lowest low for a longer period suggests a longer trend. A breakout for a short period suggests a short-term trend. In other words, you can tune a breakout strategy to react more quickly or more slowly to the formation of a trend. Reacting quicker allows you to ride a trend earlier in the curve, but may result in following more shorter-term trends.
Let’s take a look at a reasonably long-term breakout strategy:
The buy signal is when the price breaks out above the 20-day high, and the sell signal is when the price breaks out below the 20-day low. This is very simple, but there is still a major drawback. Namely, new highs may not result in a new uptrend, and new lows may not result in a new downtrend. So we are going to experience our fair share of false signals.
Using a stop-loss can help to alleviate this problem. To keep things really simple, here’s an extremely basic rule for exiting trades: We are going to take a time-based approach. You simply close your position after a certain number of days have elapsed. This time-based exit side-steps the issue of things becoming tricky when the trend begins to break down. Once you enter a trade, hold it for 80 days and then exit.
Remember, this is a long-term strategy. If you find these parameters do not yield enough frequent signals, they can be adjusted to whatever suits you best. For example, you can try using hours instead of days for a shorter strategy. Backtesting your results will give you a feel for the effectiveness of your choices. MT4SE offers backtesting, along with a large selection of other useful tools.
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Moving Average Crossover
Our second Forex strategy for beginners uses a simple moving average (SMA). SMA is a lagging indicator that uses older price data than most strategies, and moves more slowly than the current market price. The longer the period over which the SMA is averaged, the slower it moves. Often, we use a longer SMA in conjunction with a shorter SMA. For this simple Forex strategy, we are going to use a 25-day moving average as our shorter SMA, and a 200-day moving average for the longer one.
Depicted: EUR/USD – Admiral Markets MetaTrader 4 Supreme Edition (MT4-SE) – Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.
In the chart above, the 25-day moving average is the dotted red line. You can see that it follows the actual price quite closely. The 200-day moving average is the dotted green line. Notice how it smooths out the price movement? When the shorter, faster SMA crosses the longer one, it indicates a change in the trend. When the short SMA moves above the longer SMA, it means newer prices are higher than older ones.
This suggests a bullish trend, and this is our buy signal. When the short SMA moves below the longer SMA it suggests a bearish trend, and this is our sell signal. Rather than solely being used to generate trading signals, moving averages are often used as confirmations of overall trends. This means that we can combine these two strategies by using the confirmatory aspect of our SMA to make our breakout signals more effective.
With this combined strategy, we discard breakout signals that don’t match the overall trend indicated by our moving averages. Here’s an example: If we get a buy signal from our breakout, we should look to see if the short SMA is above the long SMA. If it is, we should place our trade. Otherwise, perhaps it’s better to wait.
Our final strategy is essential to know. It’s a type of trade that is widely used by professionals too, so it is not purely a beginner Forex strategy. Best of all, it is easy to implement and understand. The essence of the carry trade is to profit from the difference in yield between two currencies. To understand the principles involved, let’s first consider someone who physically converts currency.
Imagine a trader borrows a sum of Japanese Yen. Because the benchmark Japanese interest rate is extremely low (effectively zero at the time of writing), the cost of holding this debt is negligible. The trader then exchanges the yen into Canadian dollars and invests the proceeds into a government bond, which yields 0.6%. The interest received on the bond should exceed the cost of financing the Yen debt.
But there is a drawback:
Obviously a currency risk is baked into the trade. If the Yen appreciated enough against the Canadian dollar, the trader would end up losing money. The same principles apply when trading FX, but you have the convenience of it all being in one trade. If you buy a currency pair where the first-named ”base currency” has a sufficiently high interest rate, in relation to the second-named ”quote currency”, then your account will receive funds from the positive swap rate.
The amount yielded is correlated to the amount of currency commanded, so leverage is an aid if the strategy pays off. As noted earlier though, there is an inherent risk that you could end up on the wrong side of a move in the currency pair. It is therefore important to carefully select the right currencies. Inertia is your friend with this strategy, and ideally you are looking for a low volatility FX pair. It’s also important to note that leverage will end up magnifying losses if you get it wrong.
The Japanese Yen has long been popular as the funding currency, because Japanese rates have been low for so long, and the currency is perceived as stable. The strategy works well at a time of buoyant risk appetite, because people tend to seek out higher-yielding assets. The action of traders implementing the strategy can itself support the strategy, because the more people using the strategy, the greater the selling pressure on the funding currency.
But, there’s a current problem. The global low interest environment, has narrowed interest rate differentials. When risk appetite collapsed during the credit crunch, many fingers got burned as funds flowed into the safe haven of the Japanese Yen. With the Fed signalling its intention to tighten monetary policy in the future, we may yet find the carry trade coming back into favour.
If you’re interested in trading on popular currency pairs such as CADJPY and EURUSD or perhaps more exotic currency pairs such as GBPPLN and USDRON, you can do so by opening a Forex & CFD trading account with Admiral Markets!
We hope that you have found this introductory guide to Forex trading strategies for beginners useful. Bear in mind that the examples we have shared primarily aim to get you thinking about the principles involved. Don’t follow a strategy without testing it first. Feel free to put your strategies to the test with our risk-free Demo trading account, where you can trade using virtual currency, with a starting amount of $10,000.
And don’t forget to regularly check our education section for more free insights, articles and tutorials. Additionally, if you are feeling confident, and would like to test out some more advanced trading strategies, why not read our guide on the best forex trading strategies? And find out what the best trading strategy is for you.
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About Admiral Markets
Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world’s most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
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