Forex trading at Plus500
With the Plus500 trading platform you can trade in forex. For those who do not know forex, I have written a general explanation about forex. This explanation however, is mainly practical and is specifically about Forex trading at the broker Plus500. For this tutorial, it is useful if you already have opened a free Plus500 account. You can open a free account here and start practicing immediately with a demo account.
When you open the Plus500 WebTrader or the Plus500 software on your PC, Smartphone, or tablet, and log on to your (demo) account, you’ll see a button named: “all instruments”, click on this button. Below the heading “Most popular” and the sub-items “all popular”, “Risers & Fallers” and “My favorites”, you’ll see: “Forex”.
The Plus500 Forex menu has sub-items as well: “Majors I”, “Majors II”, “Virtual” and “Minors”. The “Majors” forex pairs are the better-known and more frequently traded currency pairs. Think about, for example, EUR / USD, GBP / USD and USD / JPY. Further on in this tutorial we will explain how to trade these well-known currency pairs. In the submenu “Majors II”, you will find variants of the majors with often the GBP, AUD, NZD and CAD.
After that, another interesting item appears in the Plus500 menu: “Virtual”. Here you can trade in bitcoin and in the less famous virtual currency litecoin. These currency pairs are traded against the dollar and are very volatile, therefore they offer great opportunities however!
The last submenu “Minority”, includes more exotic currency pairs, which are less frequently traded. USD / ZAR and EUR / SEK are examples of exotic currency pairs.
Suppose, for example, that you think that the euro will appreciate against the dollar. In that case you can go to “Majors I” and trade EUR / USD CFDs on the Plus500 trading platform. If you click on the “Majors I” button, all kinds of different popular currency pairs appear. The first one will automatically be EUR / USD, as this is the world’s most traded currency pair.
Whether you use the WebTrader, Smartphone or tablet app of Plus500, there are always three buttons next to the Forex pairs. From left to right: “short”, “buy” and “details”. If you click the details button, a window will open with information about the currency pair. I will explain more about this later on in the tutorial. If you want more explicit information about trading at Plus500 I recommend having a look at our education sector or our articles page.
The “short” button should be used when you think the value of the financial instrument is going to decline. In this case, if you think the Euro is going to decrease with respect to the dollar; (or the dollar to increase with respect to the Euro). When you have a short position, you earn more money if the current price of the instrument, in this case the EUR / USD, is lower in comparison to the opening price. The “buy” function works the other way around; you expect the value of the tradable instrument to increase, in this case you expect the Euro to appreciate against the dollar. To summarize: buy if you think the price will go up; short if you think the price will go down.
In this tutorial we will use the buy option in our example. If you click on buy, a new window will appear. The type of the trade in this case is “buy”. In the new window you will also see the current price, followed by the amount that you want to trade, with + and – buttons to adjust to your preference. “Required effects” indicates how much money you should have in your Plus500 account in order to be able to invest the desired amount in the EUR / USD forex position. The “Close at Profit” and “close at loss” options should speak for themselves; they allow you set a price at which Plus500 automatically closes your position. If the price reaches the desired price, the position will be closed. This is a great option to control losses and predetermine possible profits.
“Trailing Stop” is a feature for advanced CFD and forex traders to close a position automatically at a certain price when a particular price trend persists for a longer period. The best way to learn more about this option, and all other trading possibilities in general, is to open a demo account and just start practicing.
The + and – buttons behind “amount” can be used to adjust the traded amount upwards or downwards. Be aware that the amount showed here is the levered amount. It is not what you require to have in your Plus500 account.
In this example, we start carefully and buy EUR / USD for an amount of € 1,000, which requires (with a leverage of 1:200) an account balance of € 5. Just press the + and – buttons until the amount reaches € 1000. If all settings are according to your wish, press the button “Buy” to open your position. The window will be closed automatically and your position will be opened.
At the moment of opening your position, you will almost always see a small loss on your position. This is because you pay a so-called spread. In case of our position this would be around -€0.15. The spread is the different between the bid and ask price, or the “buy” and “sell” price. This is how brokers like Plus500 earn their money. This is different from traditional brokers that charge something like €7,50 to open a position, regardless of the size of the position. So don’t worry when you open your position and you immediately see a small loss, this is normal.
If after buying your first official forex currency pair you keep following the price in real time for a moment, you will notice that as the price of the EUR/USD moves up or down, so does your profit. Novice traders might not know this yet but experienced CFD traders, investors and day traders know that the EUR / USD rate is not as volatile compared to prices of other tradable instruments. This basically means that both the risk and expected return are lower for the EUR/USD than for other instruments. This makes it a good instrument to start trading with. You won’t lose or win large amounts in short periods if you trade the EUR/USD.
On the page Plus500 trading tutorial you will find an excellent trading tutorial in which you learn step by step how all functions of Plus500 work. Just follow the steps and you will be making your first profits in no time.
Watch this video to see how to trade CFDs at Plus500.
Continue reading: Plus500 lesson 2: Virtual currency trading at Plus500