Foreign Exchange
FOREX IS ONE OF THE LARGEST FINANCIAL MARKET IN THE WORLD
And it will benefit everyone, if you learn how to trade it
I promise it will be smooth and simple to understand...
It will be worth the time for everyone that’s going to be open minded to everything that is going to be taught during the Training
Did you know?
The foreign exchange (Forex) market is the largest financial market in the world, daily grossing about 5 trillion dollars.
That's great news for you and I! If you can learn how to trade the market, you could very well be on your way to making steady income and a fortune for yourself and your entire family in your own comfort.
I'm offering to teach you these rudiments of forex...
*AN INTRODUCTION TO FOREX MARKET*
Of all the financial markets, the forex market is perhaps the least understood yet it impacts every life daily in many ways.
Whatever we buy or sell, no matter how small or incidental has been influenced by the forex market.
The most relatable example is traveling overseas.
Before the trip, you might want to change some of your own currency to that of your destination.
A Nigerian/Ghanaian traveling to Great Britain would have to exchange the Naira/Cedis for Pounds.
This is the basic principle of the foreign exchange market.
The small electronic boards seen at international airports and banks are visual reminders of how currency exchange rates affect us all.
Traveling overseas, importing goods or purchasing imported products are affected by foreign exchange rates between countries around the world.
WHAT IS FOREX
Forex is a short form for FOREIGN EXCHANGE
It represents the market in which a countrys currency is quoted against that of another.
It therefore provides the basis for governments, companies and private individuals to agree a RATE of exchange between one currency and another.
Without these rates, there would be no agreed standard by which rates for transactions would be set.
As a result, all rates are quoted in pairs with one country quoted against another.
For example:
EURUSD which means that *Euro is Quoted against the United States Dollars*
The Forex market is one of the largest markets in the world with a Total Daily Liquidity of $5.1 Trillion Dollars.
The New York Stock Exchange market is the Second Largest Market and has a Daily Trading Volume of $169 Billion Dollars while the Cryptomarket, for those who know about Bitcoins, has a Total Market cap of $219 Billion Dollars averagely.
You can verify these values yourself.
So you understand how large the forex market is!
*WHY DO WE HAVE A FOREX MARKET?*
The primary purpose of the *forex market* is to provide an easy and straightforward way for businesses, banks, and governments of countries, to engage in international trade, converting from one currency to another easily and quickly.
*HOW ARE PRICES DERIVED IN FOREX?*
The prices quoted on our screens every day come from major retail banks *who effectively set the central exchange rates* through their interbank trades.
These banks, therefore, act as the central exchange for the forex market and regulate the prices.
The interbank liquidity pool is dominated by the following major banks who control around 80% of the forex market:
⬇️
🎯Deutsche Bank - 20 % forex market share
🎯UBS - 12% forex market share
🎯Citigroup - 11% forex market share
🎯Barclay’s Capital - 7% forex market share
🎯RBS - 7% forex market share
🎯Goldman Sachs - 5% forex market share
🎯HSBC - 5% forex market share
🎯Bank of America - 4% forex market share
🎯JP Morgan Chase - 4% forex market share
🎯Merrill Lynch - 4% forex market share
*WHO IS A FOREX BROKER?*
Forex Brokers You are firms that give individuals access to trade the forex market by providing trading accounts.
In other words, they act as intermediaries between traders and the market.
They give traders what is called Leverage (we would see that soon) and provide other support functions to the traders.
There are various Brokers in the Forex Market.
Examples are:
🎯*Hotforex*
🎯*Fxtm*
🎯*Fxcm*
🎯*Fbs*
🎯*LiteForex* e.t.c.
Details on the functions of Forex Brokers will be discussed later.
Let's Move on!!!
*TRADING TIMES AND TRADING SESSIONS*
Gradually, we are progressing into the major parts of this training.
If you were distracted before, you should pay attention now because your proper understanding of the Forex market would be determined by your knowledge of the trading cycles.
The first market that opens is the New Zealand market followed shortly by Sydney.
These are joined two hours later by the first major Asian centre, Tokyo, and with Hong Kong.
The markets trade together until 7am GMT when the European forex market opens.
London follows an hour later and this increases the volatility of the market.
The Asian markets close, leaving the UK and European markets to trade together until the open of the New York Market at 1pm GMT.
*Trading Sessions & Times⬇️*
*SYDNEY SESSION* opens *9PM GMT*
*TOKYO SESSION* opens *11 PM GMT*
*LONDON SESSION* opens *7AM GMT*
*FRANKFURT SESSION* opens *8AM GMT*
*NEW YORK SESSION* opens *1PM GMT*
Note these Times and Sessions in an exercise book as you will be needing them for your Trading.
PS: These Times are listed in *GMT* - Greenwich Mean Time. Nigerian Time (WAT) is an hour ahead of GMT.
So 8AM GMT is 9AM WAT.
The Sessions are named after the major cities in which most of the transactions are done and most Sessions last for 9 hours.
Known their Opening Times, add 9 hours \to get their appropriate Closing Times.
The Forex market is a 24-hour market (though it doesnt open on weekends). Hence, it is most times regarded as the market that never sleeps.
Regardless of your country or time zone, you can trade this large, highly liquid market.
*NOTE: It is advantageous to trade the market when two or more sessions are simultaneously running i.e when two or more sessions are open.*
This is because the market is more volatile when two or more sessions are open; and higher volatility implies more money in circulation.
This is a very important point ignored by many traders.
Trading a quiet market is not advisable because there won't be much fluctuation; and these movements equate to money for the trader.
You will get to understand this better soon.
For example, by *12 AM GMT*, Sydney Session and Tokyo Session would be running simultaneously.
Trading at this time will generate more profit because the market would be MORE VOLATILE, unlike trading at *9PM GMT* when the market would be QUIET.
Another example is trading by *8AM GMT* when London, Frankfurt and Tokyo(briefly) sessions would be simultaneously open so volatility would be higher.
We will be learning more important things gradually.
Let's just follow the training closely
The beauty about trading the Forex market is that the profit of one trader doesn't hinder the profit of another.
You will understand this soon.
You might have successful traders as friends but they’d rather lend you money or buy you meager gifts than teach you how to trade the market.
This is partly due to the fact that teaching Forex requires in-depth knowledge and requires dedication of both parties.
It could also be selfishness.
(Keeping your sources of income a secret has some advantages though)
*TERMINOLOGIES USED IN FOREX*
Like every field, getting accustomed to the terminologies is one of the first and major steps in learning.
It will make interpreting the news possible, as well as making communication with fellow traders and analysts easy.
Note these terms in your exercise book or Notepad.
To go *LONG* means to BUY.
When a trader goes LONG on a currency pair, that trader placed a BUY trade on the pair.
To go *SHORT* means to SELL.
When a trader goes SHORT on a currency pair, that trader placed a SELL trade on the pair.
Soon you will get to see that all we do in Forex is Buying and Selling.
The next terms we would see are
*BULLISH MARKET* - A market that is heading upwards.
*BEARISH MARKET* - A market that is heading downwards.
For emphasis, when a trader says a currency pair or a commodity is Bullish,
it means that it’s going up; while one that is Bearish is going down.
*BULLS* - Buyers are referred to as Bulls.
*BEARS* - Sellers are referred to as Bears.
*RANGING* -
A market is said to be Ranging if it does not have any particular direction i.e it is neither moving upwards not downwards.
*TRENDING* -
A Trending market has a direction i.e it is either moving upwards or downwards.
A market can be said to be trending upwards or trending downwards.
*HAWKISH* - Hawks vote for tighter monetary policy i.e higher interest rates with the aim of keeping inflation in check.
This term is mostly used when referring to the Central Bank Governor or the respective post in a country.
When they are Hawkish, they tend to be liberal on interest rate and are willing to increase it.
This is good news for investors.
*DOVISH* -
Doves vote for lesser monetary policy, keeping interest rates low with the aim of boosting economic growth.
This is the opposite of Hawkish.
Financial persons who are Dovish are very restrictive.
They do not want to tamper with the interest rate but rather reduce it. This is bad news for investors.
*NFP (NON-FARM PAYROLL)*-
A very important News Event in the US.
We would talk on that tomorrow
Also, most of the currency pairs have specific names by which they are sometimes called e.g
The dollar is sometimes called Greenback
The Pounds is sometimes called The Cable
The New Zealand dollars is sometimes called The Kiwi
The Australian dollars, The Aussie
The Canadian Dollars, The Loonie
Oil, The Black Gold e.t.c.
