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INTRODUCTION TO FOREX

Forex, or Foreign Exchange, is a global market for trading currencies, with a daily transaction volume of $4 trillion. Traders analyze market movements using fundamental, technical, and sentimental analysis, while institutions like banks significantly influence the market. Understanding key terminologies, trading sessions, and types of traders is crucial for successful trading in Forex.

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7 views4 pages

INTRODUCTION TO FOREX

Forex, or Foreign Exchange, is a global market for trading currencies, with a daily transaction volume of $4 trillion. Traders analyze market movements using fundamental, technical, and sentimental analysis, while institutions like banks significantly influence the market. Understanding key terminologies, trading sessions, and types of traders is crucial for successful trading in Forex.

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kvgqfh52hb
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INTRODUCTION TO FOREX

The term 'Forex' stands for Foreign Exchange. Forex trading in simple terms refers to the trading of
one currency for another. It is also known as FX
Forex is a global market where we exchange foreign currencies
Example u bought 2 pound for 100 dollars after someday u exchange same pond for 112$
U made a 12$ profit
Electronic trading makes it easy to buy nd sell currencies without going over the counter
This forex market does a daily transaction of $4trillion making it the biggest financial market in the
world and the big institution control the market
What is the big institution?
BANKS e.g
Bank of america
Barclays bank
Bank of england and more

But you need to understand that it takes practice upon practice to actually become a successful trader

TOPIC FOR TODAY'S CLASS


1) Fundamental Analysis
2) Technical Analysis
3) Sentimental Analysis

We are retail traders, the truth is that we can't move the market so we analyze the market and trade
along with the big boys
This big institution manipulate the market and move money by creating liquidity
We will look at how a forex chart looks like

This is how a forex chart looks like


It is represented by candlesticks
Which tells us information about the activity of the buyers and sellers at every point in time
The green represent buyers
Red represent sellers
When the buyers are dominant the market moves up
When sellers are dominant it goes down.

What is traded on forex is simply money, we have what we call the major currency
USD
GBP
EUR
NZD
CAD
AUD
CAD
CHF
YEN
You need to understand that the most traded currency is the USD It's known as the currency reserve of
the world
YEN is used in asia
We have the Japanese (JPY for short) YUAN & Chinese YUAN
Let's look at currency pairs
USD/JPY
This is the United States Dollar against the Japanese YUAN
USD is the QUOTE CURRENCY
while JPY is the COUNTER CURRENCY
If we buy USD/JPY for example we are saying that we believe that USD will do extremely well against
the JPY
If we sell the USD/JPY we are saying that the JPY will do good against the USD
You can make money, buying or selling

FOREX TERMINOLOGIES
1) LOTS: It's the standard unit size for traders, whether they're independent or institutional.

2) LEVERAGE: Leverage involves borrowing a certain amount of the money needed to invest in
something. In the case of forex, money is usually borrowed from a broker. Forex trading does offer high
leverage in the sense that for an initial margin requirement, a trader can build up and control a huge
amount of money.

3) STOPLOSS: A stop loss is an order type used in forex trading designed to limit losses from a trade. It
is also known as a 'stop order' or 'stop-market order'. The order will trigger a trade to be closed at a
loss

CURRENCY QUOTE
The quote is the price movement
Example: 1.24446 - 1.24449 pip
PIP means Point In Profit
If a price quote is at 1.5557 and it moves to 1.5559 it moves 2 pips' in profit
If it goes for u it's 2 pip in profit
If it goes against u it's 2 pip in loss
So u have to understand

TRADING SESSIONS
In forex we have mainly 3 sessions
4 sessions actually but 2 sessions over lap so we mostly focus on 3 sessions
1) The Asian Session
2) Sydney Session
3) London Session
4) New York Session

New forex day starts by 11pm at night


That's when the new candle for the trading day starts to formulate
So when the market open by 11pm it open into the Asian/Sydney session
This means that trades in Asian countries like China, Japan, Tokyo, e.t.c. are more active in the market
During this time the volatility in the market is very low and market will be very slow because there is
no much participation in the market
From 11pm to 8am the Asian session closes and the London session opens by 8am
Remember london is the financial capital of the world, so we expect alot of trading activities during the
London sessions.. Reversals mostly start during this time
The London session closes by 5pm
The New York session opens 2pm and closes by 9pm
So if you watch very well the London and New York session is the most important session in the forex
market.
When the New York session opens by 2pm remember the London session is still open, this means there
would be an over lap between the New York and London session. Therefore during this time there
would be alot of trading activities going on in the market which means we will have more volatility, so
the forex market moves more during this over lap.

Therefore the best time to trade is from 2pm to 5pm when there is alot of activities going on in the
market
So from 9pm which the New York session closes Sydney session opens, It usually overlap with the
Asian session
But you know London and New York are the financial capital of the world, the New York stock
exchange and London stock exchange are the biggest in the world so we have more trader executing
orders during this time.
TYPES OF TRADERS
1) SWING TRADERS: Are traders that hold trades for days or even weeks to capitalize on huge market
movement
2) DAY TRADERS: Opens and closes their trades in a day
3) SCALPERS: hold trade for minutes or not more than an hour

TIME FRAMES
In forex we have different time frames
5 minute
15 minutes
30 minutes
1 hour
4 hours
1 day
1 week
1 month
This time frame is important to know the type of trader you are
Scalpers use the 15 minutes and below
Day trading involves the 30minutes, 15minutes and 1 hour
Swing involves 4 hours daily weekly
With time you will understand how to use the forex time frame to analyze the market
Trading is more than just buying and selling, you need to learn how to read price action, How to do top
down analysis, Risk management and more

INTRODUCTION TO CANDLESTICK
Leverage is just like a borrowed capital given to you by ur broker to place trades higher than your
capital
If u observe when u place trades ur money no dey commot
E dey only fluctuate for ur equity
Until u close the trade in either profit or loss

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