getting started with forex tradingrich+society/week+8/f… · the market that you probably didn’t...
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GETTING STARTED WITH FOREX TRADING
The market that you probably didn’t know you are already a part of
The Forex Market
What’s one of the things you’ll do if you’re going on a trip abroad?
The Forex Market
The Forex Market
NYSE: $22.4 Billion
Forex: $5 Trillion
How much is one dollar?
Understanding Currencies
USD/PHP = 43.85
But what if we’re all Japanese?
USD/PHP = 43.85
USD/JPY = 102.14
USD/PHP = 43.85
1 BASE is equal to VALUE in COUNTER
USD/PHP = 43.85 1 USD is equal to 43.85 in PHP
EUR/AUD = 1.45 1 EUR is equal to 1.45 AUD
BASE / COUNTER = VALUE
Assume you have $1,000.
You went to BPI and saw this: Buying: P43.85 Selling: P44.35
You decided to convert your USD to PHP. So, you now have P43,850
How do you make money?
After a week, you go back to BPI: Buying: P43.20 Selling: P43.70
If you convert your PHP back to USD, how much will you get?
$1,003.43 (you earned USD 3.43)
How do you make money?
Now imagine doing all that online…
That’s simply what forex trading is!
How do you make money?
Major Currencies
¨ USD ¨ EUR ¨ JPY ¨ CHF ¨ GBP ¨ AUD ¨ NZD ¨ CAD
The Forex Market
Central Banks
Banks
Forex Brokers
Corporations
Investment Funds
Market Speculators
Money Changers
Retail Traders
How the price of currency pairs move
SeeSaw Principle
Currencies Move Like a Seesaw
USD
EUR
EUR/USD Currency Pair
¨ EUR has good news (it will go up) ¨ USD has bad news (it will go down) ¨ So EUR/USD will go up ¨ The direction follows the base currency
¨ EUR had bad news (it will go down) ¨ USD has good news (it will go up) ¨ So EUR/USD will go down
EUR/USD Currency Pair
¨ EUR has good news (it will go up) ¨ USD has good news (it will go up) ¨ So EUR/USD will be sideways
¨ EUR had bad news (it will go down) ¨ USD has no news (it will be sideways) ¨ So EUR/USD will go down
USD/PHP is currently going up
¨ USD – steady economy, out of recession ¨ PHP – investors are worried about
corruption in government
¨ Note that this is just an illustration, many factors are involved
How is it done in forex?
Fundamental Analysis
Economic Calendar
www.forexfactory.com
Economic Calendar
Economic Calendar
Price action and charts
Technical Analysis
EUR/USD Daily Chart
EUR/USD Daily Chart
EUR/USD 4-Hour Chart
EUR/USD 4-Hour Chart
EUR/USD Hourly Chart
USD/CAD Hourly Chart
USD/CAD Hourly Chart
USD/CAD Hourly Chart
USD/CAD Hourly Chart
USD/CAD Hourly Chart
USD/CAD Hourly Chart
The art of selling high and buying low
Short-selling
Buy low, sell high (LONG)
BUY
SELL
Sell high, buy low (SHORT)
BUY
SELL
Basic Trading Strategy
¨ Trade when both Fundamentals and Technicals agree
¨ USD has good news ¨ EUR has bad news ¨ EUR/USD about to break down a channel
¨ Trade: Sell EUR/USD
Avoid being scammed by online brokers
Forex Brokers
Ask for their regulations. The more, the better.
Best Way To Choose a Broker
Strictest Regulatory Bodies
Country Regulatory Body
United States
National Futures Association (NFA) Commodity Futures Trading Commission (CFTC)
United Kingdom
Financial Conduct Authority (FCA) Prudential Regulation Authority (PRA)
Australia Australian Securities and Investment Commission (ASIC)
Switzerland Swiss Federal Banking Commission (SFBC)
Germany Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
France Autorité des Marchés Financiers (AMF)
New Zealand Financial Services Provider Register (FSPR)
My Forex Brokers
¨ IronFX ¤ http://fitzvillafuerte.com/go/ironfx ¤ Richmond Zalavarria
¨ FXCM ¤ http://fitzvillafuerte.com/go/fxcm ¤ Paul Familiaran
¨ Use the links so you’ll be instantly connected to my Filipino account manager
Leverage
Leverage
¨ When you want to buy a house, but you don’t have money, you take out a loan
¨ This is called having “leverage”
¨ When you open a forex trading account, it’s always a margin account, and you have to set your leverage, i.e. 1:200 leverage
¨ This means, you can trade with $200 for every $1 in your account
Leverage
¨ Remember earlier when you had $1,000? ¨ If you had 1:200 leverage, that’s as if you
had $200,000
¨ Which means, after converting your USD to PHP and back to USD again…
¨ You would have made $686.50 (instead of just $3.43)
Opening an Account
¨ For beginners, it’s best to start with a leverage of 1:100 (or lower)
¨ You can always change your leverage later on when you have better skills
¨ When opening an account, it’s best to open only with $300 to $1,000.
¨ I recommend $500 ¨ Request for a DEMO account and practice
there first
In forex, you really make money fast But you can also lose money fast
Always remember…
Price action is “10x” faster
You can make that $100 in 15 mins But you can lose $100 in 15 seconds
Forex is Fast and Furious
Why trade currencies?
¨ It’s open 24 hours, 5 days a week ¨ 5:00 AM Monday until 5:00 AM Saturday
¨ It’s a decentralized market ¨ High liquidity, and no need to pay taxes
¨ It’s a legit way to make money online ¨ Forex brokers are regulated worldwide
Why trade currencies?
¨ It’s “easier” to do fundamental analysis ¨ There are only macro and micro economics ¨ There are only eight major currencies
¨ It’s legal to do insider trading ¨ It’s extremely difficult to manipulate prices
¨ You can make money in any direction ¨ You can short-sell without restrictions
Why trade currencies?
¨ Low barriers to entry ¨ Demo accounts for practice ¨ Live accounts for as low as $25
¨ Fast and large profits ¨ You have leverage that can multiply your
income
Keys to Success
Mindset
Skills Strategy
Losing all the money in their trading account will have minimal financial impact to their life
High risk tolerance
Knows how to control and manage their fear, greed and anger
Emotional mastery
Understands that trading is like hunting for a prey, you will spend most of your time watching and waiting
Patience
Trades without emotion and uses facts and logic to analyze the market
Strategic and analytical
Trades with proper risk-reward ratios and withdraws profits often
Money management skills
Takes actions to continuously enhance their skills and improve their strategies
Committed to learning
Further Learning
¨ Tutorials from your chosen forex broker ¨ BabyPips – www.babypips.com
¤ Complete, but long and can be overwhelming ¤ Whole course is free
¨ ForexGov – www.forexgov.com ¤ Short, simple and easy to understand ¤ Basic is free, advanced course is paid