Accessing markets from home can be easy thanks to technological advancements in trading, but knowing how to enter, monitor, and manage positions effectively is helpful in the home trading process.
Financial markets like stocks, bonds, and foreign exchange (forex)* have become easier to access thanks to advancements in both market connectivity and platform technology. With a steady internet connection and an account with a market provider, you can trade from home and on the go via web-based platforms as well as smartphone and tablet applications.
There are, however, guidelines to keep in mind with home trading so you don’t run into problems when entering, monitoring, and managing positions in a marketplace like forex.
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Entering a trade from home
Opening a position while trading from home can be as simple as just a few clicks when using market orders or as specific as setting your own price when using limit orders. Many people will use the former when trying to access the market quickly with less sensitivity to price, while the latter is often used by those less worried about immediacy and more particular with the price they wish to buy or sell at.
Market orders execute buy or sell orders at a market’s best available price when entered. Given the immediacy and lacking price specificity of this order type, home traders tend to send market orders when they are determined to acquire a position with little interest in the marginal differences in price of the current moment.
It should be noted that, while market orders can help you gain exposure to markets quickly, they are vulnerable to slippage risk – executing at a price higher or lower than the price seen prior to entry – especially in illiquid markets with large bid-offer spreads.
Market order example in EUR/USD
In the above example, you could click buy or sell followed by the “Place trade” button to execute a long or short position at the best available offer or bid, respectively, in the market at the time of order placement.
Limit orders attempt to execute buy or sell orders at a specified price or better predetermined by the trader. Those trading from home are likely to use limit orders while perusing markets and perhaps placing orders at prices a reachable distance from the current price with no urgency for order execution.
This order type adds a parameter to the order entry process – price – that can help to ensure a position is only committed if the market reaches a certain level, but limit orders are sent with no guarantee of being executed since the market must reach said level.
Limit order example in EUR/USD
In the above example, you can send a limit order by clicking buy or sell, entering a price lower or higher than the current price in the “Price level” section, and clicking “Place trade” when you are happy with the details.
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Monitoring a trade from home
Trades can be monitored from almost anywhere with internet access using web-based platforms on a computer or downloadable applications on a tablet or smartphone.
Most platforms will have some version of Positions, Orders, and History tabs allowing you to view current positions fluctuating in profit/loss, existing orders to be potentially executed in the future, and orders already executed in the recent past, respectively.
Home traders can also set up Alerts that notify via push notification to their smartphone or tablet, for example, when a specific market moves by a predetermined amount or to a predetermined level.
Price change alerts
Price change alerts allow the platform to notify you when large price changes occur by setting an increment in the “Change” section reflected in either percentage points or pips, a period during which the change must occur in the “Time period” section, and a short message you’d like displayed in the notification.
Price change alert example in EUR/USD
In the above example, the trader will be notified with the message “EUR/USD 1% move” if the EUR/USD forex pair changes by more than 1 percent in either direction during the period of 1 day.
Price level alerts
Price level alerts notify you of specific price level occurrences by setting the price interesting to you in the “Level” section followed by a short message you’d like displayed in the notification itself.
Price level alert example in EUR/USD
In the above example, the trader will be notified with the message “EUR/USD at 1.05” if the EUR/USD forex pair falls below 1.05 from its current price above 1.07.
Managing a trade from home
Home traders can manage positions using the same market or limit orders that were used on entry. However, using market orders to close trades would require watching the market more attentively and actively sending the order when you’d like to manage; and using limit orders to close trades do not ensure that the position is closed out as the market would need to reach your predetermined price level.
Those trading from home will often employ stop loss and take profit orders designed to manage positions around predetermined levels set at order entry. Though these order types do not guarantee execution at the specified price level, they will trigger market orders if the market moves a certain distance for or against your position without you having to manually enter the orders.
Stop loss orders
Stop loss orders aim to close positions when the market has travelled a certain distance against it. At order entry, you can set a level whereby a market order to close the position is triggered if the market reaches said level.
Stop loss order example in EUR/USD
In the above example, the stop loss order will attempt to close the position in the EUR/USD forex pair with a market order if the market moves 50 pips against the position.
Take profit orders
Take profit orders aim to close positions when the market has travelled a certain distance in the direction of the position. At order entry, you can set a level whereby a market order to close the position is triggered if the market reaches said level.
Take profit order example in EUR/USD
In the above example, the take profit order will attempt to close the position in the EUR/USD forex pair with a market order if the market moves 50 pips in the direction of the position.
How to trade forex from home
* Choose the forex market you’d like to trade
* Open an account to get started, or practice on a demo account
* Choose your forex trading platform
* Open, monitor, and close positions
Trading forex from home requires an account with a forex provider like IG and a strategy. Most strategies applicable to trading in other markets can be used to trade forex as well, including technical and fundamental analysis. You can also develop your forex trading strategies using resources like IG’s Trading Academy.
Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
*IG US is a forex provider that does not grant access to stock or bond trading
This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. See our Summary Conflicts Policy, available on our website.