Forex trading has become increasingly popular in recent years due to its high profit potential and 24/7 markets. However, getting started as a beginner can be daunting. This is where websites like BabyPips come in – providing educational resources specifically for newbie forex traders.
In this comprehensive BabyPips review, we will evaluate if it is the best forex education site for novice traders. Read on to find out!
Overview of BabyPips
BabyPips is one of the most well-known free educational resources for forex trading beginners. Launched in 2004, it offers a school section with detailed courses, an economic calendar, forums, trading tools and more. The site’s main goal is to break down forex concepts into easy-to-understand guides.
The company behind BabyPips is Pepperstone, an Australian forex and CFD brokerage firm. While its school section is free, BabyPips makes money from broker commissions if users open accounts through their partner links.
Key Features of BabyPips:
- Beginners Course – 6-step guide teaching everything about forex from scratch.
- School Sections – Additional lessons on technical/fundamental analysis, trading psychology etc.
- Economic Calendar – Scheduled events that impact forex markets.
- PipWater World – A virtual trading game to practice skills.
- Forums – Connect with other forex traders.
- Dictionary – Forex slang and jargon explained simply.
- Trading Tools – Built-in calculators, charting software and more.
Assessing the Beginners Course at BabyPips
The highlight of BabyPips is undoubtedly their free Beginners Course for new traders. Spanning across 6 sections with over 300 pages of lessons, it teaches the A-Z of forex in a structured format. We will evaluate the key sections covered:
Introduction to Forex Trading
The first section gives a broad introduction to forex trading, covering basic concepts like:
- Overview of forex markets and major currency pairs
- How to profit from exchange rate movements
- Key players in forex – brokers, banks, traders
- Advantages of forex trading
The simple explanations and examples make an effective starting point for total beginners.
Forex Market Participants and Their Roles
Next, BabyPips explains the roles of different institutions like investment banks, hedge funds, and retail traders that participate in forex markets. Key topics include:
- Central banks and their impact on currency valuations
- Commercial companies that hedge forex exposure
- Speculators betting on price movements
- Retail traders accessing forex through brokers
It provides newbies a good foundation before they start trading.
Major, Minor and Exotic Currency Pairs
Here traders get to learn about the different currency pairings that can be traded, categorized as:
- Major pairs like EUR/USD with high liquidity
- Minor pairs like NZD/USD with lower trading volume
- Exotic pairs like TRY/JPY involving emerging market currencies
The commodities and currencies that impact these pairings are also covered.
Bid and Ask Prices
This lesson dives into the specifics of how forex quotes work with bid/ask spreads. Key points include:
- Bid – price to sell base currency
- Ask – price to buy base currency
- Spread – difference between bid/ask
- How brokers make money from the spread
Useful examples are provided throughout to illustrate the concepts.
Pips, Lots and Profit Calculations
Moving on, newbies learn key details on position sizing and profit calculations:
- Pip value and how it varies by currency pair
- Standard, mini, micro and nano lots
- Formulas to calculate profits/losses per pip
- Leverage and how it amplifies profits/losses
The section finishes with examples showing how to calculate potential profits based on number of pips and lots.
How to Place Orders
This lesson focuses on the types of buy/sell orders that can be placed:
- Market order to open at current market price
- Limit order to open at a predefined rate
- Stop order to open if price reaches trigger level
- Entry orders to get into a trade
- Exit orders like stop loss and take profit
Useful tips are provided on choosing entry/exit levels when placing different order types.
A Forex Trading Plan
Having covered the basics, BabyPips now moves on to creating an actual trading plan. The key elements taught are:
- Choosing a trading style – day, swing, or position trading
- Developing a trading strategy based on technical/fundamental analysis
- Calculating position sizing and risk management rules
- Making a trading journal for review and improvement
This provides a solid framework to start practicing trading with a plan.
Trading Psychology and Tips
In the final section of the course, common trading psychology pitfalls are discussed, including:
- Overtrading out of boredom
- Revenge trading after losses
- Not having a stop loss
- Letting emotions override strategy
Tips to improve trading psychology are provided such as maintaining a trading journal and having a plan.
Additional Skills Courses
After finishing the Beginners Course, traders can continue building skills in the School section. Some of the key courses offered are:
Technical Analysis
- Chart basics – trends, reversals, support/resistance
- Chart patterns – triangles, head and shoulders etc.
- Indicators – moving averages, RSI, MACD etc.
- Trading strategies – breakouts, pullbacks, trends
Fundamental Analysis
- Macroeconomics – GDP, inflation, employment data
- Central bank policy – interest rates, monetary policy
- Geopolitics – elections, wars, financial crises
- Speeches – statements by officials that move markets
- News trading – trading around data releases and events
Trading Psychology
- Controlling emotions – fear, greed, regret
- Developing discipline – following trading rules
- Managing risk – position sizing, stop losses
- Having a trading plan – targets, strategies, journals
These additional courses allow traders to continue expanding their knowledge and skills systematically after completing the Beginners Course.
Pros
- Comprehensive 6 step guide teaching forex from zero
- Additional skill courses beyond the basics
- Active community forums to interact with traders
- Virtual trading game for practice
- Free access and no upsells
Cons
- Some outdated elements and cluttered layout
- Limited live trading guidance
- Primarily educational focus, less on signals/analysis
Additional Features of BabyPips
Beyond its school section, BabyPips also offers a range of other helpful features:
Economic Calendar
The economic calendar displays major scheduled events that impact forex markets. This allows traders to prepare for volatility around news releases. Filters can be applied to show specific events and time zones.
Forums
BabyPips has active trader forums where beginners can get guidance from more experienced traders on the platform. It helps build a community and get collective input.
Pip Dictionary
For all the new terminology in trading, BabyPips has a dictionary explaining concepts clearly. It is a helpful reference to better understand forex jargon.
Trading Tools
A suite of trading tools is provided including built-in calculators for profit/loss, pivot points, and position sizing. There are also trading journals, charting software, and correlation analysis tools available.
Pros
- Economic calendar helps traders be aware of volatility events
- Active community forums provide guidance
- Pip dictionary explains all forex terminology
- Handy suite of trading tools on the platform
Cons
- Forums have some inactive users and spam
- Trading tools could be more advanced
- Dictionary lacks visual elements
Is BabyPips Good for Beginners?
Based on our detailed review, here is an assessment of BabyPips’ suitability for new forex traders:
Comprehensive Education
The Beginners Course accompanied by the School section provides structured, in-depth education across technical and fundamental analysis, trading psychology and more. The concepts are broken down into easy guides.
Free Access
A major plus is that BabyPips offers all its guides and courses for free. Many competitor sites have paid memberships, upsells or hidden costs. This makes it more suitable for new traders on a budget.
Active Community
Through its forums, BabyPips provides beginners the opportunity to connect with experienced traders who can provide guidance and tips. However, the forums could benefit from more moderation and updated discussions.
Focus on Education
While it covers the basics of fundamental/technical analysis, BabyPips is mainly focused on education. Traders looking primarily for trading signals or expert analysis may need additional resources.
Outdated in Some Aspects
Despite regular updates, some parts of BabyPips such as its layout and trading tools feel a little outdated. Competitors have more modern, streamlined platforms.
Final Verdict
For new forex traders looking specifically for structured education from scratch, BabyPips is likely the best free resource out there. The Beginners Course combined with the School provides comprehensive guides that break down complex concepts. While its tools and community engagement could improve, BabyPips still shines for education.
Frequently Asked Questions
Does BabyPips provide recommended brokers?
Yes, BabyPips suggests partner brokers like Pepperstone and AxiTrader. However, traders are advised to evaluate multiple regulated brokers before opening an account.
Can I access BabyPips on mobile?
Yes, BabyPips is mobile-responsive and its education content and trading tools can be accessed conveniently via smartphones. Apps are available for iOS and Android.
Does BabyPips provide forex signals or expert analysis?
No, BabyPips focuses more on providing education for beginners rather than trading signals, analysis or recommendations. Traders should rely on their own analysis.
Can I open a demo account on BabyPips?
No, BabyPips does not offer demo accounts. You need to open a demo account directly with their partner brokers recommended on the site.
Does BabyPips offer a course completion certificate?
Yes, BabyPips provides certificates when you complete their Beginners or other Skill courses. This can be added to your portfolio.
Conclusion
In summary, BabyPips is one of the leading free educational resources for new traders starting out in forex. While it has room for improvement in terms of modernizing tools and community engagement, its structured Beginners Course and School set it apart. By starting here, novice traders can gain a strong base across the fundamentals, technical concepts and psychology of forex trading in a risk-free environment. This makes BabyPips an ideal first step for beginners before venturing into live markets.
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