In recent years, the world of online trading has grown exponentially. From a small niche, it is now a major activity for many investors. Before venturing into this field, it is important to understand the basics of what an online trading platform entails. In this post, you will learn about the basic features of MetaTrader 5 (MT5) and how to use them. If you are new to trading or would like to get started with low risk and high potential trades, read on!
If you are new to trading or would like to get started with low risk and high potential trades, here is a quick guide that will help you get started with MT5.
- You can open an account with a brokerage firm like FBS, ICAP or SimpleFX. Most of these firms provide MT5 trading for no additional cost. You can also use a MetaTrader 5 demo account to learn the ropes.
- Create an MT5 account and open a demo trade with a small amount of money to get the hang of it. You can also use real money for testing purposes.
- After setting up your trading platform and account, you will be able to trade between brokers. This is done by selecting the broker that offers you the rates you want.
- Once you are comfortable with trading and understand the market better, you can start with larger trades.
Basic Trading Functions in MT5
- Market analysis – This is where you figure out the current market condition and make trading decisions accordingly.
- Technical analysis – This is a method of looking at the market through charts and indicators. While you can use technical analysis without any market analysis, good market analysis will always underpin good technical analysis.
- Trading strategies – While Black-Scholes is a proven model for pricing of stocks, it does not work for every market condition. While you can’t just copy-paste the strategy, you can modify it to suit your conditions.
- Margin – You can post collateral to receive a loan and trade with the amount that you own minus the margin. You can increase or decrease the margin when the market is trading within your comfort zone. If the market moves against you and the price goes beyond your margin, you will be required to post collateral to maintain your position.
- Order types – You can choose from a variety of order types depending on your trading strategy and risk appetite.
- Market order – Sends the exact amount of shares to the broker as instructed.
- Limit order – Allows you to set a price above which the order will be executed and below which it will be ignored.
- Stop loss – This is a market loss order that is designed to automatically close your winning trades at a predetermined price (e.g. sell a trade at $2.50 and buy it back at $2.25).
- Take profit – This is a market gain order that is designed to automatically close your losing trades at a predetermined price (e.g. sell a trade at $2.50 and buy it back at $2.25).
Advanced trading functions in MT5
- Fibonacci retracement – This is a method to identify support and resistance levels based on Fibonacci retracement levels.
- Fractals – These are non-rigid technical patterns that are created by a combination of historical data, price movement and volume data.
- MACD – This is a moving average crossover signal that helps identify Bull and Bear markets.
- Stochastic – This is a stochastic oscillator that is used for momentum trading.
- RSI – This is a relative strength indicator that shows overbought or oversold conditions.
- Ichimoku – This is a momentum indicator that also shows the Ichimoku cloud.