Did you know that you can make money trading with MetaTrader 5? It is an efficient trading platform in the financial markets today. Apart from helping you to execute trades, you are able to get the full analysis of how the markets are performing. MT5 is so versatile that you can use it to trade forex, CFDs, metals, and cryptocurrencies. In this article, we explain how to make money trading with MetaTrader 5. Here is how you can use it to trade the different instruments:
How to Trade Forex
As a forex trader, your main objective is to exchange currencies in pairs with the aim of making a profit. If you are a newbie, there is a lot you have to learn before making your first trade. First, you need to know what currency pairs represent. For example, in EUR/USD, the Euro is the 'base currency' while the dollar is the 'quote currency'. It is called a base currency because its value is equivalent to a unit. Thus, the currency pair price represents the value of the quote currency that can buy a 'base currency' unit. That’s what’s known as the exchange rate. Thus if EUR/USD is quoted at 1.05229, then $1.05229 will buy EUR 1.
You can buy the currency pair if you expect the 'base currency' to go up and sell if you expect the base currency to fall in value. When you buy, it is called going long. In that case, you are putting your money on the 'base currency'. That’s because you bet the the 'base currency' will increase. Alternatively, you can go short, which means selling the 'base currency'. In that case, you just bought the 'quote currency'. In that case, you can buy back the base currency once its value increases.
How to Trade CFDs
Trading CFDs is similar to forex in that a buy position happens if you expect a future rise in the price and a sell position is when you expect the price to fall. Say, you have chosen in the S&P 500 index. Choosing to go long’ or buy means you will keep earning a profit for as long as the S&P 500 keeps rising. When the price goes south, you will definitely suffer huge losses. If you choose to go short’ or sell, you will continue to earn a profit for as long as the S&P 500 keeps falling. When the price finally rises, you are bound to incur substantial losses.
It is also important to know how to calculate profits and losses. Say one S&P 500 contract is going for USD 1 for every point. A move to go long’ on the index means you will earn USD 10 if the price goes up by 10 points. Similarly, you will get a $10 loss if there is a 10 point fall in prices. Open contracts can be closed simply by taking an opposing position.
How to Trade Metals
Trading metals works the same way as far as the buy position and sell position are concerned. Taking a buy position means you expect a rise in the price and a sell position a fall in the price. Take Gold vs the US Dollar pair. You earn profit if you decide to go long’ or buy and suffer loses if you make a contrary position. Profit on a 'go shot’ position comes when prices fall while losses come when prices rise.
In the commodities market, you need to be aware of the factors that affect prices such as supply and demand. Thus, prices are bound to change when supply increases or decreases. Increase in demand leads to increase prices and vice versa. Market volatility is defined by economic, social and instability also affects the market.
It is also possible to trade Bitcoin, Litecoin, and Ethereum pairs without necessarily having to own them. Thus, you will have to quote your choice cryptocurrency against one of the major fiat currencies. Deciding when to 'go long’ or 'go short’ is similar to what happens in foreign exchange. For instance, if you are trading BTC/USD, you are basically buying Bitcoin and selling the US Dollar. Your expectation is that the value of Bitcoin will rise so as to make a profit by selling it in the future. If you 'go short’, you are basically selling Bitcoin and buying the US Dollar.
As you can see, it is possible to make money trading with MetaTrader 5. All you need to do is choose a trading instrument to put your money in. Depending on whether you chose to 'go long’ or 'go short’, you will make money depending on the movements in the market.