01.Introduction to Forex Trading (forex for beginners).
hi guys i'm back again with another video so the like the past few weeks i was actually reviewing my channel and then i realized that when i started out i started out of excitement so much that i forgot to first record videos on the basic on the basics of forex trading so that is basically why i decided to go on this journey and make forex simple as possible by recording and shooting basic videos to the tea so that everybody who is starting out as a beginner trader can easily understand what forex is and what does it actually mean to become a trader so without any further waste of time let's get right into it so in forex would buy low and resell high this means you buy a currency pay at a low price and you sell it at a higher price right so for example if a trader came in and bought u.s desire at 14 rand 0.55 cent this means that the value of a single dollar in rent is worth 141.55 cents so now if we are buying this currency per usd we are basically implying that the value of the oil or the dollar as a currency is going to be strong as compared to the south african rent so a trader would have made money from the rise of this exchange rate price from 14.56 cents to 16 rand point 32 cents that is how you buy low and sell high which is you buy the currency at a low price and you sell it to another trader at a highest price so that is basically how the traders make money into the forex market [Music] [Music] so if we look at it from this document right that i prepaid so i will be just basically doing an intro into what 4x really is so first point 4x is short for foreign exchange right so it's it's everything that we know for instance for an exchange market it is the most liquid market in the world with actual landfill is the first expense per day right so what does that mean it's like there's a lot of volume in the market there a lot of buyers and sellers each and every single today that are buying and selling currencies in the forex market so but what is it that we really do right or traders do so you have two currencies that have compete against each other so traders actually go into forex or trading to determine which one is going to appreciate which which one is going to depreciate which one is stronger which one is going to be weaker and then they buy or they buy the strong one and they sell the weak currency simultaneously right on that particular day so that is explained in the fourth point that traders simply buy and sell currencies in order to make profit out of that right okay so how does forex work now so this is the most important thing that so what is it that traders do so they actually speculate and predict on the direction of the currencies there too as to what they are likely to get in future so the job of a trader forex trader is to actually assume or spiritually or predict on which side is the market is going to go so remember in forex you only do two things we only buy or sell currencies we only buy or sell that's all yours is to as a trader is just to speculate or predict whether our going to buy or are we going to sell right also the currencies they come in peace which is you don't trade a pair alone it is compared against the other one for example in this case i have the the us dollar versus the south african rent so as they said that we actually straight is look at which currency is going to be up just going to appreciate on a particular day and which one is going to depreciate and then when you have the currency for let's say for example the dollar is the one that is strong than the south african rent then we are going to buy that currency pay at that exchange rate price exchange rate price that will be available to us and then if now it is the rent that is stronger then that means that all the rain appreciates in value and the u.s dollar
depreciates in value which simply means that we will be selling the dollars and we will be buying the south african range so that is what it means and also forex market guys is the 24-hour market we're only traders only trade from monday to friday but with the introduction of cryptocurrencies like bitcoin ethereum and many more so those can be traded on the weekends but the currency market can only be traded from monday to friday and everything is strictly online right you need an internet connection a smartphone and money to fund your trading account right because you actually put money into your trading account through a broker that will execute the trades on your behalf right and then now going to my last point which is my favorite point right the forex forex is a recession proof so what does that mean it means that even if things like covet for instance can heat the world in the next coming years you as a trader you are not really affected in any negative way because say for example when the looting was happening in south africa so investors like pulled out in south africa and everything so it affected the value of the rent so it is an advantage for you as a trader because you're gonna go into the market and see that okay the dollar is now appreciating against the rent so let me now buy the dollars and say and sell the rents because why would you buy the south african range if their currency is losing value right sorry about that so that is what i like when i say the market i mean forex trading is a recession proof that means you cannot lose any job you're completely your own boss as you do your own thing and it is strictly online right it does affect you like if we were to have recession lots of jobs companies closing and everything like that it also does affect you as a trader but in a positive way not in such a way that you can lose your job and everything like that you can actually bet on the fact that the dollar in this case for example is going to appreciate in value as compared to the south african rank so that is what i like the most about this whole forex thing right so moving on now to the third slide so um there are basically times in which one can start trading right because some people have jobs and everything like that they are not full-time traders because trading or forex is also something that is a prop is a carrier you can do it as a career you can do it full-time in the same way you can do youtube time in the same way as a in the same way you have a nine to five job this simply means that you can also do this trading thing as a career at your own time right so if we have four trading sessions right so what is a trading session it is a time whereby one can start trading in the forex market right so it all it's it's flexible like that meaning that you don't have to be on the charts every day or like all the entire 24 hours a day you can only do it at a certain times and everything like that unlike a normal job because in a normal job you have to like at eight to nine until a certain time that work that you knock off but now when it comes to trading everything is totally online you can trade it your own time anyway and anytime right so the importance of paying trading session is that in other words it's the mark it's the trading hours in different parts of the world the way of trading activities what transaction take place right so it also like i said it's convenient or flexible for anyone you know so that they can actually do this whole thing at their own time right and also to highlight the fact that this currency pays that we are trading they move differently in different sessions because for example if you're trading let's say for example you you are now buying or selling the pound versus the dollar you would find out the pays that have pound they move differently during the london session because the pound is used in london then during the new york session which is basically in the us you'll find that the peers that have the u.s dollar move a certain way than when it is during the london session so uh below here these are basically the times in which one can start trading the markets which is the sydney which is all cities from australia which is the australians trading session where the trading hours in the stock exchange of australia start taking place so you can trade any of your pairs that have something to do with the new zealand dollar such as your nz jpy your ncd usb the nzt versus the swiss francs you can actually trade start trading them between 1 and 10 am because you'd find that there's more volatility or liquidity so liquidity is when there's a time or when there are many many many traders that are actively trading in that particular time then the volatility is how fast the market moves so having a trading session or knowing your trading session it actually helps with things like that so you can catch those moves and everything like that so the australian or the sickness session opens from 1am until 10 a.m all south african time and then the asian session which is we're looking at now currencies that involve the the japanese yen such as your usd jpy your jbp jpy so unfortunately we do not have the the japanese yen is the base currency which is just the transaction currency or is the currency on the left it is always it is also putting as a code yeah so and then if you have like the pound the currency page that involve the pound that means you can start trading those pairs during the london session which opens from 9am till 6 p.m and then if you have a little bit of experience when it comes to trading you would remember that or hear something like the london session overlaps so this means that after right after the close of after the close of the landing session then the new accession had already begun and it's continuing at least until 10 p.m because as the market finally closed at 11 every friday and opens again on the next monday right so now that we have covered that moving on and so we have like i said that we don't do not trading currencies alone they are actually paid which is you have one currency against the other so we these are the first point these are all the pairs that are most commonly traded which is there's a lot of volume in these currencies and then they are also known as major currencies as because they are most actively traded currencies and tend to have a lot of volume making the spreads lower and narrow so we're talking about things like eurusd the pound versus the u.s dollar the u.s dollar versus the japanese yen
and then the u.s dollar versus the canadian dollar and the u.s dollar versus the switzerland frank then the australian dollar versus the u.s dollar and lastly the new zealand dollar against the usd and also something that is common around major currencies is that they involve the us dollar as usd is one of the strongest and swan has one of the most leading economies in the world and then we have like or take currencies or which is those that move slow but they have to have they tended to have big moves like swing moves and everything like that so now you have so exotic crosses like pairs that do involve the dweller but not most of them and then like they become hard to analyze and everything like that so if you are starting out it is advisable that at least you start on the major currencies because they are easy to follow analyze and everything like that so then you have your euro versus the pound your euro versus the australian dollar your pound versus the japanese yen and many more and the one of the most common traded ones among this is the u.s dollar
versus the south african reindeer so these are the currencies that we buy and sell in four weeks so now let's get now into the real real real forex um deal so you have like i said that you have a currency being compared against the other so the currency that is for example we have euro versus the dollar so the currency that is on the left it is usually regarded as a base currency right which is basically the transaction currency then the currency on your right is a code and what does the code mean it means that if you have a rate or an exchange rate price for example in this case we have 1.24 so what does that mean it simply means that the value of a single or one euro is worth in dollars 1.2400 this also means that should you want to buy a single euro then you would have to pay one dollar 24 cents to get one euro so that is how you read a code it simply means that that number simply means that the value of a single euro is worth 1.24 cents in dollars right and then you have your bid price which is it is a bid price is the price at which you can sell a currency so for example if we wanted um if so i'm gonna explain this on the next slide and then you have an ask price so an ask price is the price at which you can buy that currency pay take for example that 1.24 it means that if we were traveling to europe and then we wanted to buy euros then that means the bank would say to us okay if you want a single euro you are from the us then you have to for a single euro you have to pay 1.1
24 cents which i'm gonna explain it tomorrow in the next slide right so i have here a basic example of how a forex transaction takes place because forex is not necessarily only tied to this forex transaction happen every day because the fact that you can buy something from other currencies not within your region that is a forex trading transaction if you export something to the us that is a forex transaction right because remember it's foreign exchange right so i prepared a basic example of that right so i we have the currency pair which is the euro versus the dollar and then we have an ask price which i said it is a price at which you can buy certain currency pay and then the bid price is the price at which you can sell a currency pay that currency so just to make sure so we say the bid price the price which you can sell and then as far as the price which you can buy right okay so suppose you're traveling from the us to america and then you have to so if we're traveling now from europe if you're from europe and then you're going to america we obviously in europe using white euros now we would have to exchange our euros in order to get what dollars right so let's say in your pocket you have like 400 euros and then for each then you have these prices there the house price and the paid price this simply means that if we want to exchange now our euros and then for every euro out of that 400 that we have we will have we will get 1.24 because if you're traveling from europe now then you get to the us then you would have to exchange those 100 you know those 400 euros in order to get your dollars then for every euro that you sell that means you'll get 1.24 dollars and then if you want to know how much all that will be worth in dollars then in total you'll get 496 u.s dollars rather to use in america and remember guys that exchange rates are not fixed they often change and fluctuate within days months and everything like that so now let's say you did not use that 400 euros and then now you're going back to europe right this means that you have to now sell again your euro your dollars in order to get worth your euros so now the exchange rate exchange rate price would off have increased by 1.2500 right so this means that we would have to take that 496 and multiply that by 1.04 so that we'll get an amount of how many euros are we going to get with 496 us dollars okay then you would then sell your dollars in order to buy what euros because remember as i said in the beginning we do this simultaneously if you buy a certain currency p then you're also selling the other one if you sell then you're also buying the other one then this means that you would get 562.5 euros because now the value of a
single euro in the meantime you were in the us would offer increased or decreased but in this case it has increased then you would get 560 2.5 euros and then if you're taking the amount of euros that you had in the beginning and then the amount of euros that you are now getting back means that you would have made a profit of 162.45 euros it is not necessarily a profit because you're only traveling by this means that the value of your euros have increased over time right as the exchange rate prices fluctuate or change right so this is just a basic example of a forex transaction but now we'll get into forex which is the buying and selling of currencies that you often see on other people's screens making money and everything like that so let's get into that so like i said that when we are trading now forex trading now that means you only do two things we buy or sell that currency pay right so i made an example here that suppose we're trading now so which is you're comparing the euro and the euro versus the dollar which is that is what is called the trading now if it didn't know then you find that the exchange rate price is 1.35 0.5 right because traders
like i said that they buy and sell currencies in order to make a profit out of that but this is just a much more deeper example than the one that i've just showed you okay so we buy you euros so we buy the euros at 1.35 because we are speculating that the euro is going to be stronger than the dollar right so if we put in a buy if we say to our broker right buy me the euro the this currency pay euro usd right it simply means that we are saying the economy from the europe is going to be stronger than the economy from the us because a stronger economy means a strong currency a weak economic means a weak currency right so by then if we buy euros then you would see that in the markets by a movement to the upside that means the exchange rate price or the value in other words okay you a single euro is going to also increase right so this is what it means if we would buy this currency pay and then it also means that like i said that the euro will appreciate in value than the us dollar so that is why we're basically buying the euros because why would we buy dollars whereas we see that the us dollar i mean the euro the us is not doing well economically right so if we buy that means the euro will appreciate in value the dollar will lose value and then now moving forward so like i said that will buy and sell so here's the thing in forex you buy a currency pay at its lowest and then you sell it at its highest that means it's the same as if you're buying a cup by a mark and then for 10 range and then you sell it for 20 rent then you would have made a profit out of that and then like i said in the beginning that when where there is a trader buying that certain currency pay there will be another one that will be selling that currency pay at a certain price so in case you're wondering if we bought that usd how are we making money then that means i'll first explain what's going on here and then explain furthermore so if we are sailing down the euro usd at 1.35 remember we said that that number means that the value of a single euro is worth the 1.35 cents um us dollars so if we're selling now that means the currency on the right which is the euro is lose built the currency on the right which is the dollar will actually appreciate in value which is the dollar now is the one that is strong and then the currency on the left which is the euro is the one that is losing value so we are selling our euros and then so we are selling yes our euros and then we are buying our u.s dollars and that will also mean that the dollar is strong and the euro is going to be weak right so like i said that when they trade and sell the currency pay another one will come in and buy so if you buy a certain currency pair say for example at 1.3505 and then it increased to something like 1.4
45 or 50 or something like that then if you then your broker will exit you to that trade for you and then when the market closes now for the exchange rate price increases from 1.35 say maybe to 1.505 then you would that difference from the price at which you bought it and the price at which you sold it is the amount of money that you would have made in forex so that is how that money is made when there is a buyer at a certain time they will become another trader and that will sell that currency pair expecting it to go to the lowest price then when that price is low again that means another trader will actually come in and buy that currency pay so it's the same thing over and over and over again that is basically how the money is being made in forex that is how forex week and everything like that but there is more to that because the difference between the price at which you bought that currency pay and at the price at which you sold it because when you apply when you buy and then you sell it at the second price then that means you bought it that current price at 1.25 and then when you sell it you are basically selling it to another trader that you can literally be any way that trader can be from south africa it can be me it can be anyone right so hence you are making a profit out of that and then when that trader sell that currency and then it goes lower then that means a buyer will come at that lowest price and they buy that currency pair because they would be speculating or expecting that the exchange price or the market or the dollar will now in future be with the one that will be stronger or performing beautifully in value as compared to the us dollar so that difference like i said it's much more deeper than that because it's not yet in monetary field which is that difference is not in monetary value hence we there's also something called peeps which helps us determine how much we would have made from buying this currency pair and selling the other cars at that certain price and have a seller selling at that price and closing it at a certain price so i will basically show you that how does that happen in the charts what does it mean to buy how you will see that in the charts some people who don't know they call it graphs so in those things that you usually see i will be actually showing you in the how does this that i've explained happen then after that we will get to much more deeper things as to how much do i know how much money how i know that i have made from that particular movement if i buy it now and close it at the higher price how much money would i have made then if i sell it here and sell it to another buyer at a certain price how much money i would have made there is also a topic for that which i will get into on my next video right so if you watched and came this far thank you so much thank you for watching i hope i explained everything um straight to the point which is the goal is to make everything simple and i hope to see you on the next one please do hit the subscription button i'll see you on the next one
2022-08-09 12:49
