3 Steps to Online Trading with Deriv - Guide for beginners

Trade online with Deriv – 3 steps to get started

Everyone is talking about “trading”.

Trading is always closely related to people’s lives, although people may not realize it.

But what is trading on the online financial market? What are the characteristics?

With Deriv, you can start trading online through the simple 3 steps as below.

1. Practise
   Open a demo account and start trading for free. Practise with an unlimited amount of virtual funds.
2. Trade
   Open a real account, make a deposit, and start trading for real. Trade forex, indices, commodities, and more.
3. Withdraw
   Get your funds quickly and easily. Deriv supports a variety of withdrawal options.

Learn about the markets that you can trade online with Deriv, including forex, commodities, synthetic indices, stocks, stock indices, and cryptocurrencies.

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Trading principle

Trading is the process of exchanging one kind of good for another kind of goods. In daily life, people use money in exchange for buying things they need.

The same principle applies when it comes to trading in financial markets. If someone trades in the foreign exchange market, he is buying another currency with one currency. If the price of the currency he bought rises, then the trader makes a profit by selling the currency at a higher price, and vice versa. Buying an item at a certain price, and then selling it at a different price – we certainly hope that the price will rise. This is the main principle of trading.

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Why do prices in the market rise?

Assume that currency pairs on the foreign exchange market are like commodities on the ordinary market. The rise in commodity prices is due to their availability (supply) and the existence of demand for them. If there is a certain amount of supply in the market, the greater the demand for the commodity, the higher the price of the commodity.

This can be explained by a simple example of buying food. Let’s say you decide to buy some apples, but there are only 10 apples left in the market and you cannot buy apples anywhere else. If you are the only buyer in the market, the seller is likely to sell you apples at a reasonable price.

However, if the situation changes, for example, 15 people enter the market and all want to buy apples. In order to get the apples they want before others buy them, people are willing to buy these fruits at a higher price. Therefore, because the demand for Apple is already higher than the supply in the market, the seller will increase the price of Apple.

If the price exceeds the customer’s acceptable level, then they will not make a purchase. This will lead to a reduction in demand for Apple. Therefore, in order not to lose customers, the seller will have to stop raising prices or even lower prices.

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Market law

However, let us consider another situation where a large number of customers and huge demand will attract more sellers into the market. As the number of sellers increases, the supply increases, and there is price competition among sellers. Because customers tend to buy the lowest-priced goods, this will lead to a drop in prices.

When the demand in the market equals the supply, the price at this time is called the “market price”. Therefore, sellers and customers agree to buy and sell apples (commodities) at a specific price and quantity. For example, the seller and the customer agree to buy and sell 5 apples for $10.

The concept of “supply and demand” also applies to the foreign exchange market. But in this case, big banks (liquidity providers) and traders will play the roles of sellers and customers, while currency pairs are used as funds and commodities. Now, anyone can participate in trading on the financial market, because we can use the Internet for trading anytime, anywhere. This is why it is becoming more and more common to trade different financial instruments such as currency pairs, metals, stock commodity futures, CFDs and options.

As you can see, the principles of foreign exchange trading are well known and easy to understand. This means that to start your trader’s path immediately, what you need is the determination to learn foreign exchange trading knowledge with confidence.

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