Introduction to Forex
Forex Fundamentals
Characteristics of Candlesticks
Support and Resistance / Chart Patterns
Technical Indicators
Sniper Strategies
Forex Fundamentals
A Forex Fundamentals Course is designed to equip learners with a comprehensive understanding of the foundational aspects of the foreign exchange (Forex) market.
What I will learn?
- What are pips, lots and spreads
- What is Leverage?
- Order Types
- What is a Stop Loss?
- Money & Account Management
- What Timeframes Should You Trade On?
- What is Trading View?
- How to Calculate Your Position Size?
- What is MT4 or MT5?
- What is Overleveraging?
Content/Playlist (30)
- What are pips, lots and spreads (00:08:45)
Description:
In forex trading, a “pip” stands for “percentage in point” or “price interest point.” It is a unit of measurement that expresses the smallest change in the value between two currencies. Typically, a pip is equivalent to a one-digit movement in the fourth decimal place of a currency pair. For example, if the EUR/USD moves from 1.1050 to 1.1051, it has moved by one pip. However, there is an exception with Japanese yen pairs where a pip corresponds to the second decimal place, due to the yen’s low value relative to other major currencies. For instance, if USD/JPY changes from 110.40 to 110.41, this is also a one pip movement. Pips are used by traders to measure price movements, and by calculating these, traders can manage their profit and loss calculations. What is a Lot? In forex trading, a “lot” represents a standardized unit of currency that you’re trading. The size of a lot significantly affects the risk you’re taking, and thereby the potential profit or loss from your trades. Here are the common types of lot sizes in forex trading: Standard Lot: One standard lot is typically equal to 100,000 units of the base currency. For example, if you’re trading one standard lot of EUR/USD, you’re dealing with 100,000 euros. Mini Lot: One mini lot is 10,000 units of the base currency. This lot size is less commonly traded, but still available with many brokers. Micro Lot: One micro lot is 1,000 units of the base currency. This smaller lot size allows for less capital exposure and is often used by novice traders to minimize risk. Nano Lot: Although not available with all brokers, one nano lot represents 100 units of the base currency and allows for even smaller trades. The concept of lot sizes allows traders to manage their trades more effectively and to clearly understand how much currency they are controlling with each position they take. This management directly impacts the risk and potential reward on each trade, correlating with how much a pip movement affects the overall financial outcome. What is a Spread? In forex trading, the term “spread” refers to the difference between the bid price and the ask price of a currency pair. The bid price is the price at which you can sell the base currency, while the ask price is the price at which you can buy it. The spread is how brokers make their money, since most do not charge direct commissions on trades. What is a Spread? Bid Price: The price at which the trader can sell the base currency. Ask Price: The price at which the trader can buy the base currency. Types of Spreads Fixed Spread: This spread does not change and remains constant, regardless of market conditions. Variable or Floating Spread: This spread fluctuates depending on the volatility and liquidity in the market. It can be very narrow during times of high liquidity and can widen significantly during volatile market conditions or low liquidity periods. Importance Spreads are particularly important for day traders and scalpers who enter multiple trades within a single day, seeking to profit from small price movements. The lower the spread, the less the price needs to move in the trader’s favor before they start making a profit. Conversely, a higher spread means that the price must move more significantly in the favorable direction to achieve profitability. Understanding the spread is crucial for forex traders as it directly impacts the cost of trading and their potential profitability. - Order Types (00:10:35)
Description:
Order Types: In forex trading, there are several order types that traders can use to enter and exit trades. Here are some of the most common order types: Market Order: A market order is an order to buy or sell a currency pair at the current market price. It is executed at the best available price at the time the order is placed. Limit Order: A limit order is an order to buy or sell a currency pair at a specified price or better. It is used to enter a trade at a specific price level or better. Stop Order: A stop order is an order to buy or sell a currency pair once the price reaches a specified level, known as the stop price. It is used to limit losses or protect profits. Take Profit Order: A take profit order is an order to close a position at a specified price level that is more favorable than the current market price. It is used to lock in profits. Trailing Stop Order: A trailing stop order is a type of stop order that moves with the market price. It is used to protect profits by locking in gains as the market moves in the trader’s favor. These are just a few of the order types available in forex trading. Each order type has its own unique features and is used for different trading strategies and objectives.
