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Share ideas, debate tactics, and swap war stories with forex traders from some time and found these movies, videos and documentaries related to trading. Billion Dollar Day is a British documentary that follows a number of currency brokers and traders. It gives some great insights into Forex trading. The. The best Trading documentaries · Traders: Millions By The Minute: a 2-part BBC documentary on forex traders. · Floored · Million Dollar Traders. FOREX FACTORY OPTIMIZED TREND TRADING TO WIN The app lot of Hash Algorithm date as This flag before the than one. Media5 recommends the intelligence an IP the status bar on your office. Passwords in Jansen Citrix.

Ultimately, that false confidence leads toward the collapse of England's oldest banking institution. The film depicts the consequences of adding a complete lack of trade management to a losing position. Any trader who has blown out an account can attest to the fact that desperate money never wins. This perpetual reminder resonates throughout the film as it places the viewer in the cockpit of a speeding race car heading over a cliff.

Traders can identify with all the telltale signs of an impending blowout. A well-managed stop trumps a poorly managed win. This movie covers the rags-to-riches journey of a sports handicapper in the realm of sports betting. Traders can relate to the euphoria that accompanies overleveraged wins and the numbing disbelief in the wake of massive losses thereafter.

This cautionary tale depicts the slippery nature of how win streaks can manifest into much larger losing streaks, as complacency creates blind spots in the trader's psyche. This documentary captures all the highs and lows of being a trader moving from the trenches of the trading pits to the electronic trading screens. The repercussions for the old-school floor traders left behind by the electronic trading revolution are clearly portrayed.

Their ardent stubbornness illustrates their downfall. Adapt or be eliminated is the universal theme in this film, very much like the markets. Candid interviews with both successful and struggling traders provide rare insights into the impact of this profession on lifestyle, family and overall psyche.

Traders will be inspired by many facets of this film, which truly captures the essence of trading for a living. Practice Management. Career Advice. Podcast Episodes. Your Money. Personal Finance. Your Practice. Popular Courses. Table of Contents Expand. Table of Contents. Trading Strategies Day Trading. Key Takeaways It is a good idea to stay informed about the world of finance in order to make sensible trading decisions and understand the economic landscape that can influence your investments.

While many of us are familiar with big-budget movies depicting the high finance lifestyle like "Wall Street" or "The Big Short", there are better films for understanding what it is actually like to live the life of a trader. Here, we list 5 movies dealing with certain aspects of finance or markets that every trader should watch at some point.

Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. I loved it then and I love it now. The film is exciting and gives some realistic insights into trading pits and the futures exchange Leeson worked at SIMEX. You can purchase the film here or watch it on YouTube below The documentary is over 2 episodes and is one of the most recent BBC documentaries on the subject of trading.

You may be able to watch the trading documentary through the BBC or by searching online. The YouTube video I had below is no longer available Billion Dollar Day is a British documentary that follows a number of currency brokers and traders. It gives some great insights into Forex trading.

The documentary was produced in but is still a favourite for many traders. You can watch Billion Dollar Day below This is a more recent documentary that is produced by the BBC. The series is in 3 parts and is about a group of novices who try to profit from the stock market. Lex Van Dam was the brains behind the idea and used his own capital to fund the traders. The series portrays many of the struggles that new traders face and offers some great insights into stock trading.

Wall Street Warriors is an American documentary that follows the life's of a number of professionals that are involved in financial markets. Independent traders, brokers, fund managers and floor traders are some of those who are interviewed and shadowed during the episodes. The series was very successful and there are currently 3 full seasons.

You can watch Wall Street Warriors below Trading Academy is a game-show created by City Index a London based derivatives broker. The series is very controversial and was made to promote the broker but I enjoyed it and think it is an entertaining watch. You can watch City Index: Trading Academy below

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However, the fact that it is easy to access does not mean that it is also easy to invest and make money out of it. This is the lever that many operators have used to obtain many customers, misleading them into believing that Forex trading was a no-brainer.

Forex trading is very difficult, complicated, and requires years of training and experience. The answer is simple: because with Forex you can make a lot of money, even having just a few at the beginning. There is a good news for you. In the Forex market we trade the most famous good: money , or to put it in a more technical term, currencies.

Unlike the other markets, where the absolute values of singular assets, companies or index are shown, in the Forex market the representation of the currency value is made in a combined form. In Forex the value of a currency will never be expressed in absolute terms, but always in relation to another.

The value 1. In the specific case we are saying that we need 1. We are saying the same thing. A very important agreement states that the ratio between the currencies must be represented the same way all over the world, and for any intermediary. Usually, the first two letters identifies the country, while the third corresponds to the first letter of the currency.

An exception of course is EUR! When a market is closed in one part of the world, another one is open in another part for example, if the U. For this reason, the Forex market is open 24 hours a day, 5 days a week , unlike other markets, again like the NYSE for example, that open in the morning and close in the afternoon local time. Dollars for 1 Euro, that means more dollars compared to the previous example. Dollars, so less dollars than the two previous examples. Our friend Marco from Italy recently completed his studies and decided to have a good working holiday in the US, to have a great experience and learn a new language while working.

So, Marco left his home, and once arrived in America he changed its 20, Euros in U. Marco spent 6 months in America, traveling, having fun, knowing a lot of people and learning English. On his return to Italy, he had 24, U. Marco was very surprised and pleased with what he sees, because the clerk handed him 21, euro. How is that possible? Marco left with 20, euro and came back with 21, euro, after living in America for 6 months without working, therefore using his own financial resources.

Marco unknowingly has exploited the Forex market, he has done in 6 months what investors, speculators and traders, very often do daily. We have said that Marco started with 20, euro, changing them once arrived in the United States. Therefore, the operation he has done was to use the 20, euro to buy Dollars.

You have seen previously that the exchange rate value between Euro and Dollar was expressed with a 5 digit number, one before, and four after the comma, for example 1. But how do we express the value changes of a currency exchange in Forex? Do we use the usual mathematical terms such as tenths, hundredths and thousandths?

The answer is no, in Forex, unlike other markets where the unit of measurement is the tick, we use PIPS. The pip is the minimum price deviation of an exchange rate. So, as you understand, the pip is nothing more than the fourth decimal number after the comma.

The first thing to pay attention is not to confuse 1 pip with 0. Some brokers offer prices that are up to 5 decimal figures after the comma much more accurate , but the pip always remains the fourth digit. Some currency pairs , among which the most famous are those with the Yen as the denominator quote currency , have only 2 decimal figures after the comma.

Therefore, the forex pip is no longer the fourth, but the second decimal place, and the pipette becomes the third. Pips are used by traders, or by any operator that make a transaction on the Forex market, to calculate the profits and losses of their operation. Once he has decided how much a pip is worth for that operation, the trader has just to see how many pips has been able to accumulate, or otherwise to lose.

This is one among the several elements that has driven hundreds of thousands of people to experiment Forex market, that is its ease of use. This is one of the main reasons why this market is loved by many Trader, whether independent or not. Very often we hear people and media talking about volatility in negative terms only, describing it as a strong component of risk.

But the truth is that if an instrument is not volatile at all, it would make no sense to use it for trading or investing. If the price of any goods, being it is stocks or exchange rate, does not move, it becomes very difficult to find investment and profit opportunities, both in the long term, and especially in the medium and short term.

The fact that in Forex the movements in terms of pips are frequent and widespread means that in this market the traders will have many occasions to try to take profit. The Bid price is always lower than the Ask price. You go to your broker and you ask him what is the price at which you can make this purchase. In other terms, he ASKs you 1.

The difference between your purchase price 1. Most of the Forex brokers instead do not charge commission like that, but they simply widen the spread of the market, perceiving this way their self-interest. At this point we have created two types of spreads. It means that the broker, for the fact of providing this trading service, asks you in exchange a small amount on the transaction you are about to carry out.

So you will see directly a price for the sale of 1. So, for you the bid and ask spread will be of 4 pips. What does it mean? Before you decide which particular currency exchange to use for the transaction, before you even decide whether to want to buy or sell, first of all you need two things. Now, all you need is a capital to start with, but above all you need is a broker check out our list of the best forex broker for beginners.

A broker is an intermediary that execute the transaction orders on behalf of his client. They are called intermediaries because their job is to intercede between the market, on one hand, and investors and traders on the other. The tasks performed by the broker are:. Usually the dealing desk option is given to the less consistent deposit, and the no-dealing desk to the more important. The thresholds that define when a deposit is more or less consistent depends on the business plan of the broker.

Obviously these different options have different conditions, in terms of commissions, spreads, orders execution times, and so on. These intermediaries are usually the smaller, or is the setting that is attributed to smaller accounts in the event that the broker possess multiple solutions. Usually brokers, when they receive orders from their customers, they go directly to the market through specific entities that represent the Forex circuit discussed below , where they find a counterpart, and so the order is then executed.

But it may happen that, if a counterparty is not found, or the situation is considered convenient, the broker acts himself as the counterparty for the operation of his client, without going through the market.

Therefore, when then the client will close the transaction, the broker will lose his own money if the operation of the client had been successful, or in the other case he will cash directly into his account the money lost by the customer. In fact, this type of broker make profits in two ways:. In order to fulfill your request, the broker first of all will seek among its customers a sales order that coincides with your purchase order, or in the other case he will pass the order to his liquidity supplier, ie a large entity capable of quickly buying or selling large financial positions in block.

Doing the latter, it minimizes the risk, as he gains from the spread without having the opposite side of the trading operation. At that point, if you earn, he lose, vice versa if you lose, he earns. For this intermediation activities, these brokers may charge a small fee, or simply put a little surcharge by increasing the spread as already seen.

For example:. But those are not the quotes you will receive. Usually the broker will add a little fixed surcharge, which will be his gain. If he would add 1 pip, the quotation for you would be 1. Participants may be banks, individual traders, investment funds, as well as other brokers. In essence, the participants are trading against each other by offering their best bid and ask prices. The ECN broker is the only broker that can provide such a market book , precisely because it gives direct access to it.

Now that we know how pips and spread work, and how we can buy or sell via brokers, we miss to understand how quantities work in Forex market. For this topic we will go primarily to deepen the concept of forex leverage. The standard quantity , or the unit of measurement of quantities, with which you trade in Forex is the forex Standard Lot.

When you want to buy or sell a particular pair, what you do is to go long or short of a chosen number of lots, on that particular pair. But how much is one lot in forex? A lot generally corresponds to , units one hundred thousand of the base currency on the left, at the numerator. So, considering the most important base currency in the world, i.

The answer is obviously NO. Soon I will explain the concept of leverage and margin. Meanwhile, consider the fact that with the evolution and expansion of Forex, in addition to lots, other smaller figures have appeared:. So, how much is a pip worth when I will open a transaction with one of these quantities? The calculation is very simple. If a pip corresponds to 0. Obviously, I am not obliged to use a single lot, or just a micro lot at a time.

I can simply use the quantities I want. With 3 lots my pip will be worth 30 usd, with 5 mini lots my pip will be worth 5 usd, with 8 micro lots my pip will be worth 0. However, if we want to be more precise, since the value of a pip in Forex refers to a rappot between two currencies, it goes without saying that if this rapport changes, the pip value also can vary:. In the case of non-dollar base currency in the numerator , we should add another step obtain always the dollar value.

As you can see, the pip value always ends up being around 10 usd. In addition, you can easily find on the internet some automated pip value calculator. We have seen all the quantities that are used to make Forex trading.

The question at this point should be:. The reason behind this statement is very simple. The lever is a tool that allows you, using a series of basic physics principles, to get great results doing a little effort. Forex is one of the many markets where you can use leverage. Speaking about the world of trading and investing, quite simply, the financial leverage is the ability to operate in the markets and move large amounts of capital despite having much less consistent funds.

In other words, the broker acts as guarantor in respect of the market for your operations. We will see shortly which are the calculations, but above all what are the guarantees that the broker will ask to allow you to operate with leverage. According to this example, the leverage with which the professional traders and managers usually operate is 2 to 1. It would be like saying that when they make a transaction in the market, they do it with twice the money they have.

This, in practical terms, means that they can achieve, for each transaction, a gain or loss equal to the double of what they could achieve if they would have access only to the capital in their account. Obviously, for those who know how to do their job well, leverage is a very effective and very powerful tool. We must, however, make a clear distinction, always using the latest example.

The fact that the broker has guaranteed the market for , usd does not mean that he will keep the operation open on his behalf until it loses up to , usd. Absolutely not. This is important to understand, because leverage can be a great ally, but also a potential enemy. The important thing is to know what it is and how to use it. Most Forex brokers today offer leverage up to , some even more higher, even or Some brokers offer leverage up to one thousand to one.

This way you can use a lot even having only usd on the account. But remember, the pip, with a lot, is worth 10 usd. If you were to open a position with one lot with only usd on your account and you can do it, because the leverage allows it , if the price would go against your operation for only 10 pips consider that in the foreign exchange markets in a few minutes there may be oscillations of hundreds of pips , you would have completely burned out your account.

Therefore, pay attention to leverage. In fact the broker, to allow you to operate with leverage, obviously will ask you some guarantees. In the next lesson I will show you how these guarantees work in a market like Forex. In Forex you operate with margin. For instance, in a normal purchase where there is the underlying asset delivery, such as in the stock market, when you purchase some shares this is what happens:. Suppose you have 10, usd on the account and you buy 1, shares of the XYZ inc.

On a practical level, of the 10, usd stored on your account, 5, usd would end up in the market for the purchase of the XYZ inc. The 1, XYZ inc. At this point, the value of your investment, that has been delivered within your securities portfolio, will fluctuate depending on the increasing or decreasing of the market value of the XYZ inc.

If the market value of the XYZ inc. This is what happens when you work in a market that involves the delivery of the underlying. In a market in which this delivery is not provided, just as in Forex, you will work with margin. The amount of margin required for each transaction is inversely related to the leverage allowed by the broker. The higher the leverage, the smaller the margin requirement the capital locked into the account as a guarantee. Therefore, if you have a 1, usd account you can open maximum a position of 1 lot.

The equivalent in the market of 1 lot is , usd and 1, usd is the hundredth part that, it is said, will be blocked as margin. Following this logic, we can also say that you can open at the same time a maximum of 10 positions of a minilot 0.

A minilot corresponds to an equivalent value on the market of 10, usd. If for each position will be frozen on the account the hundredth part, usd per position will be blocked as margin, which for 10 positions will always do our maximum of 1, usd. Following this reasoning, it goes without saying that you can open at the same time up to positions of a microlot 0. The margining is often expressed as a percentage value relative to the total amount of the position. Using the percentage margin required by your broker, you can calculate the value of the maximum leverage with which you can manage your trading account.

We often hear about it, but to be precise, we must say that in Forex the Margin Call does not exist. In other markets the Margin Call is the request to the client by the Broker of a payment of additional funds in order to cover the minimum margin requirement for the maintenance of losing positions. In Forex the brokers calculate at any moment what are your margin requirements, and if by chance, even for a few seconds, your losing operations should go beyond that level, the broker would close them automatically.

Knowing leverage and margin is useful for you to understand the correct lot size that the open positions should have. For this reason, there are a number of logical and mathematical reasoning that I suggest you to do now with me, because it will help you get well acquainted with the weights to give to your positions.

That is, a leverage of A leverage of times the capital held on the account, for the single transaction. And here is the other most popular types of levers offered by most brokers:. As mentioned in previous lessons, Forex is the market where you trade with currencies.

In Forex, the financial instruments used to invest are:. As we have already seen, OTC indicates that it has not a specific trading venue. The liquidity, the correctness and the security of the transactions are guaranteed by each party engaged in the trade, including all major international banking groups. As there is no headquarter, there are no official prices of the market , but the trading exchanges are communicated by all the major players in the international telematic networks such as Reuters and Bloomberg, that spread them instantly and globally.

The spot market is by far the most liquid, flexible and accessible among all the markets we are going to analyze, where brokers give to their users most of the services for free. Let us briefly analyze some of the reasons that led Forex Spot to be the most liquid market in the world and the most widely used by banks, large investment funds, small traders, in addition to being the market in which Social Trading is developed.

For this reason, the analysis are much easier and profitable. Small gap may arise, however, over the weekend, that is the only moment in which Forex is closed. Being the most liquid market in the world also means never having problems running a particular order. In other words, if we want to buy there will always be someone willing to sell, and vice versa. We will never find ourselves in the position of not being able to close a transaction for the absence of a counterpart.

These two characteristics alone, the 24 hours opening and the immense liquidity , give the opportunity for programmers to design automated trading systems, more or less professional, which can operate in automatic mode, 24 hours a day, relying on the fact that the market has always a price for those who want to buy, and one for those who want to sell.

As we have seen in previous lessons, the user has the ability to operate by margin , being able to exploit even very large margin, together with the freedom to operate with leverage, ranging from nano lots newly invented, for the less capacious pockets to micro and mini lots, getting also to the most professional and known standard lots.

In this market brokers usually do not take commissions, but their earnings are based mainly on the payment of the spread by the users, for each transaction open. The operations can be handled with a MT4 trading platform the most common for trading on the forex spot and the one that made possible the evolution and the rise of forex autotrading , very stable and light and that, at no cost, gives the possibility to operate on the market with real or demo money. All of these accessibility characteristics have made Forex Spot one of the favorite markets among retail investors.

The future, as the name itself said, is an future trading instrument, and is also derivate its price is based on an underlying. In the case of Forex, we talk of financial futures, which as underlying have currencies themselves. These contracts have quarterly deadlines March, June, September, December.

The value of a futures contract is Euro , Options are trading instruments that in Forex are fairly recent. They are listed on regulated markets, and the contract characteristics are standardized. They give to the purchaser, upon payment of a premium , the right, but not the obligation, to buy call or sell put a specified quantity of the underlying asset at a specified price at a specified future date.

The seller of an option instead sells the right described above. The disadvantages of this instrument, compared to the usual and famous Spot activity, are determined by the much more limited trading hours and the lack of liquidity. But there is an advantage that offsets the previous disadvantages, that is the flexibility given by the possibility to build strategies, even very complex, which give way to earn even in markets that maintain lateral price range.

Options are definitely the latest tools that are used for the operation on currencies. ETFs are, for the most part, passively managed funds , or funds that replicate the performance of an underlying. These instruments are primarily used for a rapid creation of diversified investment portfolio, being this funds also built on different underlying gathered in one fund, or, as in the case of Forex, to allow investors to hedge and reduce the risk of their operations in other markets by investing easily on Forex market.

The trading orders in Forex are those commands that are given to the broker via a telephone or, as is primarily done today, via a connected computer. The order family is divided into two major groups: market orders and pending orders. The characteristic of this order is to be unconditioned , ie when you enter this command, you confirm that you accept, without any conditions, to enter or exit the market at the price that is provided to you at that time by the broker.

A market order is in fact used when you want to perform an immediate purchase at the current market price. This order is communicated directly to the broker who, without hesitation, will endeavor to give you back an executed order. In the case of forex, that price is what is expressed on the trading platform as the bid or ask price , or what is communicated orally via telephone. This order is then used to immediately open a new buy or sell position, or to close and exit from a position previously opened.

In the case of fast market it is also said of high volatility and depending on the characteristics of the broker, you may want to enable the maximum deviation from the quoted price, very useful in those phases of order process that take too long, or during exhausting re-quotes. This function allows you to set a maximum deviation in pips from the initial quoted price, that when you have given the order, to which you are still willing to accept that the buy or sell order is executed.

Pending orders are also called conditioned orders , because they are executed by the broker provided that certain conditions in the market are met. Obviously the conditions that must be met are those set by the trader. They are various type orders, of buy or sell, set by the traders and taken over by the broker, who automatically forwards them to the market upon the occurrence of a certain condition. Until this occurs, the order stays resident on the servers of the broker.

You'll discover how to get started with Forex trading, how markets move, and important terminology. We'll also introduce you to the MetaTrader platform, your gateway to trading on the Forex market. Additionally, we will begin to outline in detail some of the vital key principles of the risks involved, including how to manage leverage and margin more effectively.

Looking for a different module? Click on one of the buttons below. Learning outcomes: Understand the purpose of the course Identify how you can get the most out of this course Recognise how the course fits in with the whole "First Steps" package so that you can take advantage of the available support.

Learning outcomes: Understand the nature of the Forex market and the terms used to describe it Identify the major reasons why people choose to trade Forex Become aware of the key risks that you must learn to manage Recognise the similarities and differences between Forex and other trading vehicles Identify YOUR aims as a Forex trader.

Learning outcomes: Understand how specific currencies are abbreviated Understand the currency pairs and the "Majors" Identify key market times that are most likely to influence currencies. Learning outcomes: Understand the difference between 'Long' and 'Short' trading in Forex markets Identify the principles of how to profit and manage risk from either approach Recognise why people may buy and sell a position. Learning outcomes: Understand price quotes and the importance of pips Define Forex 'spreads' and their impact on your trading Describe the meaning of a 'lot' and how lots influence position size.

Learning outcomes: Understand the underlying principles of what moves the value of currencies Define the key factors that influence this and how it impacts sentiment and ultimately price Identify how this may influence your trading decisions. Learning outcomes: Understand the key factors and process involved for taking a trade from entry to exit.

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Forex Trading - How to Get Rich Best Traders Documentary

FOREX ON THE STOCK EXCHANGE GUARANTEES

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One fact, however, set the stage for future change. In it was completed the first transatlantic cable, that linked Europe and the US. The pound became strong among world currencies, but there was always a good that was still recognized as the most reliable: gold.

The Gold Standard was a fully convertible gold to currency system. Each currency was convertible into gold, and central banks acted as guarantors of this convertibility by owning gold reserves. This system allowed the exchange rate to remain fairly stable over the decades. It was the First World War in to put an end to the gold standard, since countries, in order to meet the huge expenses, had to print money in large amounts, creating high inflation and making it impossible to guarantee convertibility.

After the First World War, a second attempt was made to return to the gold standard, albeit with some modifications, but the crisis put a definitive end to the attempts of monetary stability. The supremacy of the dollar in the global financial landscape was enshrined in the Second World War, in , with the Bretton Woods agreement , where was also created the International Monetary System IMS , a control of currency fluctuations and economic stability organ.

Very important has been also the creation of the International Monetary Fund IMF , which mission was to foster and support the weaker and developing economies, supporting and controlling the trade balances and global economic growth within a financial and currency system that was becoming every year more and more complex. It was indeed this complexity, along with the need to find a new, more flexible currency system and the need to devalue the dollar, to ensure that in the US President Nixon, together with the IMF and the representatives of the 10 major states, decided to abandon the convertibility of currencies to dollar, and of the latter to gold, opening the doors to the world of free floating rates.

It was called Smithsonian Agreement ,and was perhaps the most important element in the forthcoming developing of Forex as we know today. The end of the Bretton Woods agreements gave free rein to the creation of money and the raising of capitals in the financial markets. In the agreements in Jamaica finally made official the beginning of a new era for the trading of currency, which were almost completely liberalized.

In EMS was born, i. Over the years, the advent of new technologies created the perfect landscape, and in the 90s the flows of capitals increased exponentially, finally breaking the wall that only allowed access to the Forex market to large financial institutions, primarily banks. Finally, hedge funds had the merit of giving the last push to the evolution of the Forex market as we know it today. This attack indeed made the containment of exchange rate policy fail.

This eventually create the awareness and acceptance of leaving exchange rates fluctuating without any restrictions. Forex market was in fact liberalized. In the beginning large sums of money were needed in order to operate in it, but thanks to the expansion and evolution of the Internet and computers, Forex quickly opened its doors to all.

The brokerage companies flooded the market with their platforms and increasingly lowered and still do the minimum margin to operate, so much that today, every person with a PC, an internet connection and a few hundred dollars even less , can invest in this huge market. The Forex is universally recognized as the largest market in the world. Every day there are exchange of currencies for a volume of nearly 5, billion dollars five thousand billion, or five trillion.

We must however specify 5 trillion is the volume generated by Forex in its entirety, but as we will see, this market is divided into different sub-markets, and what we are interested in is the SPOT market only. The retail traders private traders or small speculators are a small part of this market and to participate they need intermediaries, who in the world of finance are represented by the Brokers.

Forex is spread over an interbank circuit, without having a specific location, and participants in this circuit are free to trade with each other without having a registered office. This inherent flexibility of Forex market, and the exponential increase in the number of participants, have ensured that the entry barriers in this market were completely demolished.

Today the Forex market is truly accessible to everyone. If once you could have problem with initial capital, even that problem no longer exists. Now you can open an account paying just a few tens of dollars of initial capital. However, the fact that it is easy to access does not mean that it is also easy to invest and make money out of it.

This is the lever that many operators have used to obtain many customers, misleading them into believing that Forex trading was a no-brainer. Forex trading is very difficult, complicated, and requires years of training and experience. The answer is simple: because with Forex you can make a lot of money, even having just a few at the beginning.

There is a good news for you. In the Forex market we trade the most famous good: money , or to put it in a more technical term, currencies. Unlike the other markets, where the absolute values of singular assets, companies or index are shown, in the Forex market the representation of the currency value is made in a combined form. In Forex the value of a currency will never be expressed in absolute terms, but always in relation to another. The value 1. In the specific case we are saying that we need 1.

We are saying the same thing. A very important agreement states that the ratio between the currencies must be represented the same way all over the world, and for any intermediary. Usually, the first two letters identifies the country, while the third corresponds to the first letter of the currency. An exception of course is EUR! When a market is closed in one part of the world, another one is open in another part for example, if the U. For this reason, the Forex market is open 24 hours a day, 5 days a week , unlike other markets, again like the NYSE for example, that open in the morning and close in the afternoon local time.

Dollars for 1 Euro, that means more dollars compared to the previous example. Dollars, so less dollars than the two previous examples. Our friend Marco from Italy recently completed his studies and decided to have a good working holiday in the US, to have a great experience and learn a new language while working. So, Marco left his home, and once arrived in America he changed its 20, Euros in U. Marco spent 6 months in America, traveling, having fun, knowing a lot of people and learning English.

On his return to Italy, he had 24, U. Marco was very surprised and pleased with what he sees, because the clerk handed him 21, euro. How is that possible? Marco left with 20, euro and came back with 21, euro, after living in America for 6 months without working, therefore using his own financial resources. Marco unknowingly has exploited the Forex market, he has done in 6 months what investors, speculators and traders, very often do daily.

We have said that Marco started with 20, euro, changing them once arrived in the United States. Therefore, the operation he has done was to use the 20, euro to buy Dollars. You have seen previously that the exchange rate value between Euro and Dollar was expressed with a 5 digit number, one before, and four after the comma, for example 1.

But how do we express the value changes of a currency exchange in Forex? Do we use the usual mathematical terms such as tenths, hundredths and thousandths? The answer is no, in Forex, unlike other markets where the unit of measurement is the tick, we use PIPS.

The pip is the minimum price deviation of an exchange rate. So, as you understand, the pip is nothing more than the fourth decimal number after the comma. The first thing to pay attention is not to confuse 1 pip with 0. Some brokers offer prices that are up to 5 decimal figures after the comma much more accurate , but the pip always remains the fourth digit. Some currency pairs , among which the most famous are those with the Yen as the denominator quote currency , have only 2 decimal figures after the comma.

Therefore, the forex pip is no longer the fourth, but the second decimal place, and the pipette becomes the third. Pips are used by traders, or by any operator that make a transaction on the Forex market, to calculate the profits and losses of their operation.

Once he has decided how much a pip is worth for that operation, the trader has just to see how many pips has been able to accumulate, or otherwise to lose. This is one among the several elements that has driven hundreds of thousands of people to experiment Forex market, that is its ease of use. This is one of the main reasons why this market is loved by many Trader, whether independent or not. Very often we hear people and media talking about volatility in negative terms only, describing it as a strong component of risk.

But the truth is that if an instrument is not volatile at all, it would make no sense to use it for trading or investing. If the price of any goods, being it is stocks or exchange rate, does not move, it becomes very difficult to find investment and profit opportunities, both in the long term, and especially in the medium and short term.

The fact that in Forex the movements in terms of pips are frequent and widespread means that in this market the traders will have many occasions to try to take profit. The Bid price is always lower than the Ask price. You go to your broker and you ask him what is the price at which you can make this purchase. In other terms, he ASKs you 1.

The difference between your purchase price 1. Most of the Forex brokers instead do not charge commission like that, but they simply widen the spread of the market, perceiving this way their self-interest. At this point we have created two types of spreads. It means that the broker, for the fact of providing this trading service, asks you in exchange a small amount on the transaction you are about to carry out.

So you will see directly a price for the sale of 1. So, for you the bid and ask spread will be of 4 pips. What does it mean? Before you decide which particular currency exchange to use for the transaction, before you even decide whether to want to buy or sell, first of all you need two things. Now, all you need is a capital to start with, but above all you need is a broker check out our list of the best forex broker for beginners. A broker is an intermediary that execute the transaction orders on behalf of his client.

They are called intermediaries because their job is to intercede between the market, on one hand, and investors and traders on the other. The tasks performed by the broker are:. Usually the dealing desk option is given to the less consistent deposit, and the no-dealing desk to the more important. The thresholds that define when a deposit is more or less consistent depends on the business plan of the broker.

Obviously these different options have different conditions, in terms of commissions, spreads, orders execution times, and so on. These intermediaries are usually the smaller, or is the setting that is attributed to smaller accounts in the event that the broker possess multiple solutions. Usually brokers, when they receive orders from their customers, they go directly to the market through specific entities that represent the Forex circuit discussed below , where they find a counterpart, and so the order is then executed.

But it may happen that, if a counterparty is not found, or the situation is considered convenient, the broker acts himself as the counterparty for the operation of his client, without going through the market. Therefore, when then the client will close the transaction, the broker will lose his own money if the operation of the client had been successful, or in the other case he will cash directly into his account the money lost by the customer.

In fact, this type of broker make profits in two ways:. In order to fulfill your request, the broker first of all will seek among its customers a sales order that coincides with your purchase order, or in the other case he will pass the order to his liquidity supplier, ie a large entity capable of quickly buying or selling large financial positions in block. Doing the latter, it minimizes the risk, as he gains from the spread without having the opposite side of the trading operation.

At that point, if you earn, he lose, vice versa if you lose, he earns. For this intermediation activities, these brokers may charge a small fee, or simply put a little surcharge by increasing the spread as already seen. For example:. But those are not the quotes you will receive. Usually the broker will add a little fixed surcharge, which will be his gain. If he would add 1 pip, the quotation for you would be 1. Participants may be banks, individual traders, investment funds, as well as other brokers.

In essence, the participants are trading against each other by offering their best bid and ask prices. The ECN broker is the only broker that can provide such a market book , precisely because it gives direct access to it. Now that we know how pips and spread work, and how we can buy or sell via brokers, we miss to understand how quantities work in Forex market. For this topic we will go primarily to deepen the concept of forex leverage.

The standard quantity , or the unit of measurement of quantities, with which you trade in Forex is the forex Standard Lot. When you want to buy or sell a particular pair, what you do is to go long or short of a chosen number of lots, on that particular pair. But how much is one lot in forex? A lot generally corresponds to , units one hundred thousand of the base currency on the left, at the numerator. So, considering the most important base currency in the world, i. The answer is obviously NO.

Soon I will explain the concept of leverage and margin. Meanwhile, consider the fact that with the evolution and expansion of Forex, in addition to lots, other smaller figures have appeared:. So, how much is a pip worth when I will open a transaction with one of these quantities?

The calculation is very simple. If a pip corresponds to 0. Obviously, I am not obliged to use a single lot, or just a micro lot at a time. I can simply use the quantities I want. With 3 lots my pip will be worth 30 usd, with 5 mini lots my pip will be worth 5 usd, with 8 micro lots my pip will be worth 0.

However, if we want to be more precise, since the value of a pip in Forex refers to a rappot between two currencies, it goes without saying that if this rapport changes, the pip value also can vary:. In the case of non-dollar base currency in the numerator , we should add another step obtain always the dollar value.

As you can see, the pip value always ends up being around 10 usd. In addition, you can easily find on the internet some automated pip value calculator. We have seen all the quantities that are used to make Forex trading. The question at this point should be:. The reason behind this statement is very simple. The lever is a tool that allows you, using a series of basic physics principles, to get great results doing a little effort.

Forex is one of the many markets where you can use leverage. Speaking about the world of trading and investing, quite simply, the financial leverage is the ability to operate in the markets and move large amounts of capital despite having much less consistent funds. In other words, the broker acts as guarantor in respect of the market for your operations. We will see shortly which are the calculations, but above all what are the guarantees that the broker will ask to allow you to operate with leverage.

According to this example, the leverage with which the professional traders and managers usually operate is 2 to 1. It would be like saying that when they make a transaction in the market, they do it with twice the money they have. This, in practical terms, means that they can achieve, for each transaction, a gain or loss equal to the double of what they could achieve if they would have access only to the capital in their account.

Obviously, for those who know how to do their job well, leverage is a very effective and very powerful tool. We must, however, make a clear distinction, always using the latest example. The fact that the broker has guaranteed the market for , usd does not mean that he will keep the operation open on his behalf until it loses up to , usd.

Absolutely not. This is important to understand, because leverage can be a great ally, but also a potential enemy. The important thing is to know what it is and how to use it. Most Forex brokers today offer leverage up to , some even more higher, even or Some brokers offer leverage up to one thousand to one. This way you can use a lot even having only usd on the account. But remember, the pip, with a lot, is worth 10 usd. If you were to open a position with one lot with only usd on your account and you can do it, because the leverage allows it , if the price would go against your operation for only 10 pips consider that in the foreign exchange markets in a few minutes there may be oscillations of hundreds of pips , you would have completely burned out your account.

Therefore, pay attention to leverage. In fact the broker, to allow you to operate with leverage, obviously will ask you some guarantees. In the next lesson I will show you how these guarantees work in a market like Forex. In Forex you operate with margin. For instance, in a normal purchase where there is the underlying asset delivery, such as in the stock market, when you purchase some shares this is what happens:. Suppose you have 10, usd on the account and you buy 1, shares of the XYZ inc.

On a practical level, of the 10, usd stored on your account, 5, usd would end up in the market for the purchase of the XYZ inc. The 1, XYZ inc. At this point, the value of your investment, that has been delivered within your securities portfolio, will fluctuate depending on the increasing or decreasing of the market value of the XYZ inc.

If the market value of the XYZ inc. This is what happens when you work in a market that involves the delivery of the underlying. In a market in which this delivery is not provided, just as in Forex, you will work with margin. The amount of margin required for each transaction is inversely related to the leverage allowed by the broker. The higher the leverage, the smaller the margin requirement the capital locked into the account as a guarantee. Therefore, if you have a 1, usd account you can open maximum a position of 1 lot.

The equivalent in the market of 1 lot is , usd and 1, usd is the hundredth part that, it is said, will be blocked as margin. Following this logic, we can also say that you can open at the same time a maximum of 10 positions of a minilot 0.

A minilot corresponds to an equivalent value on the market of 10, usd. If for each position will be frozen on the account the hundredth part, usd per position will be blocked as margin, which for 10 positions will always do our maximum of 1, usd. Following this reasoning, it goes without saying that you can open at the same time up to positions of a microlot 0. The margining is often expressed as a percentage value relative to the total amount of the position. Using the percentage margin required by your broker, you can calculate the value of the maximum leverage with which you can manage your trading account.

We often hear about it, but to be precise, we must say that in Forex the Margin Call does not exist. In other markets the Margin Call is the request to the client by the Broker of a payment of additional funds in order to cover the minimum margin requirement for the maintenance of losing positions. In Forex the brokers calculate at any moment what are your margin requirements, and if by chance, even for a few seconds, your losing operations should go beyond that level, the broker would close them automatically.

Knowing leverage and margin is useful for you to understand the correct lot size that the open positions should have. For this reason, there are a number of logical and mathematical reasoning that I suggest you to do now with me, because it will help you get well acquainted with the weights to give to your positions. That is, a leverage of A leverage of times the capital held on the account, for the single transaction. And here is the other most popular types of levers offered by most brokers:.

As mentioned in previous lessons, Forex is the market where you trade with currencies. In Forex, the financial instruments used to invest are:. As we have already seen, OTC indicates that it has not a specific trading venue. The liquidity, the correctness and the security of the transactions are guaranteed by each party engaged in the trade, including all major international banking groups. As there is no headquarter, there are no official prices of the market , but the trading exchanges are communicated by all the major players in the international telematic networks such as Reuters and Bloomberg, that spread them instantly and globally.

The spot market is by far the most liquid, flexible and accessible among all the markets we are going to analyze, where brokers give to their users most of the services for free. Let us briefly analyze some of the reasons that led Forex Spot to be the most liquid market in the world and the most widely used by banks, large investment funds, small traders, in addition to being the market in which Social Trading is developed. For this reason, the analysis are much easier and profitable.

Small gap may arise, however, over the weekend, that is the only moment in which Forex is closed. Being the most liquid market in the world also means never having problems running a particular order. In other words, if we want to buy there will always be someone willing to sell, and vice versa. We will never find ourselves in the position of not being able to close a transaction for the absence of a counterpart.

You'll discover how to get started with Forex trading, how markets move, and important terminology. We'll also introduce you to the MetaTrader platform, your gateway to trading on the Forex market. Additionally, we will begin to outline in detail some of the vital key principles of the risks involved, including how to manage leverage and margin more effectively.

Looking for a different module? Click on one of the buttons below. Learning outcomes: Understand the purpose of the course Identify how you can get the most out of this course Recognise how the course fits in with the whole "First Steps" package so that you can take advantage of the available support.

Learning outcomes: Understand the nature of the Forex market and the terms used to describe it Identify the major reasons why people choose to trade Forex Become aware of the key risks that you must learn to manage Recognise the similarities and differences between Forex and other trading vehicles Identify YOUR aims as a Forex trader. Learning outcomes: Understand how specific currencies are abbreviated Understand the currency pairs and the "Majors" Identify key market times that are most likely to influence currencies.

Learning outcomes: Understand the difference between 'Long' and 'Short' trading in Forex markets Identify the principles of how to profit and manage risk from either approach Recognise why people may buy and sell a position. Learning outcomes: Understand price quotes and the importance of pips Define Forex 'spreads' and their impact on your trading Describe the meaning of a 'lot' and how lots influence position size.

Learning outcomes: Understand the underlying principles of what moves the value of currencies Define the key factors that influence this and how it impacts sentiment and ultimately price Identify how this may influence your trading decisions. Learning outcomes: Understand the key factors and process involved for taking a trade from entry to exit.

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