 Welcome everyone. We're going to get started here in just under three minutes if you can hear the audio and See the welcome screen with Tick Mill. Could you type a Y in the chat box, please? Great stuff. Thanks a lot. Okay guys, welcome to today's session the first in our online education series Just going to cover some disclaimers here, which obviously very important and please take time to just briefly read those so you are you fully understand The risks involved in foreign exchange trading. So welcome to As I say to this first in our online education series We over the coming months are going to be covering everything from the basics of foreign exchange Which we're going to look at today moving on to What it means to actually be a trader how we how we look to approach the markets to to hopefully profit from Trading strategies and at the end we're actually going to move into looking at some of the trading strategies That I've employed over the years But first of all what I want to do today is just give a brief introduction of myself and the context To the capacity in which I'm presenting today I've been trading personal and external Investor capital for nearly 15 years. However, I haven't always been involved in markets after graduating back in 98 I entered the world of consulting With a specific focus on executive search after a couple of years working for a city plc I jumped ship and co-founded a boutique executive search firm that experienced some rapid growth And I eventually cashed in my stake in 2004 and post that exit I had a chunk of capital and a whole bunch of time on my hands. So I decided to explore my passion for markets and Interest that was peaked from having a front row seat to the dot-com boom and bust Seeing people make and lose fortunes overnight I started trading the e-mini S&P futures in a market that was predominantly trending north I cut some very lucky early breaks and started making some solid and then really some significant However, as is a common tale in this game my beginners luck reverse course pretty rapidly and I ended up giving back all my gains and then some It was at this point. I thought to myself either walk away from this or I commit completely and get really serious about this endeavor So what I decided to do was I sought out a mentor who Demonstrated excellence in the field of trading and I started to seriously apply myself as a student of risk It was a period during which I became considerably more self-aware My mentor really helped me focus not just on my technical game, but more importantly my mental game by 2007 I had a solidly and extensively back tested market approach and more importantly a documented business plan underpinned by a rigorous risk management strategy I then said about executing the strategy and since 2008 I've been consistently profitable on an annual basis Which is the only P&L performance metric. I'm really interested I'm not interested or affected by the outcome of individual trades. My focus is on my trading edge Demonstrating yourself over an extended series of outcomes Since 2013 I've been managing external investor capital which now represents a multi-million dollar portfolio Since 2010 I personally mentor hundreds of private traders of all experience levels From complete novices to former CME floor traders in helping them to develop trading strategies to read consistent returns from the markets I've consulted to numerous brokers and trading education brands contributing written webinar and live presentation content On a range of topics from market analysis to trading strategy development and execution I'm currently the head of trading and trader education a leading trading education firm called FX career swap I also manage and run a prop trading team for a company called little fish FX I can attest that after developing a successful non-markets And now a successful trading business that the common thread in success is persistence discipline and patience If you're trading on a hunch or a gut feel I can guarantee that you can expect to liquidate your account Like any other commercial endeavor trading requires a serious commitment and the persistence to take the hits and keep going The discipline to develop and execute the plan And the patience to incrementally increase your account equity over time If you're looking for a fast book forget it There's way more fun to be having the blackjack tables in Vegas at least you get free booze there while you're handing over your hard-earned cash Right, so that gives you a flavor of where I'm coming from And what we're going to start with today is really just covering the basics of forex So that we all have a common understanding as we proceed into Into more complex discussions over the over the coming weeks and months Maybe this is your first step into the world of forex or perhaps you or an advanced trader Wanting to brush up on some of your skills Either way this course and these sessions have been designed with you in mind This is the introductory session a comprehensive but hopefully painless coverage of some of the important basics of the foreign exchange markets By the time we've completed today's session You should be able to cut through forex jargon with ease clearly understand how currencies are priced Related to each other and appreciate market behavior Furthermore, you'll recognize who the market players are and whom you'll be trading against You'll understand the effects of trading during various times of day Learn how to calculate the value of a pip and discover various methods for executing trades And you'll be introduced to forex trade analysis So what is forex? Forex simply stands for foreign exchange in the same way that fx is taken to represent foreign exchange Forex and fx can be used interchangeably Forex is the largest financial market in the world But it's not a physical market and therefore it has no central exchange There is no big forex building in london or new york or anywhere else for that matter If you buy one currency using another whether you're in your local bank on an online exchange or even at the airport You're participating in the forex market This market covers everything from you buying your foreign currency for your holiday Abroad through to large international companies hedging their exposure to the different countries they operate in and of course everything in between So what is foreign exchange trading Trading is simply the process of buying and then selling something for the goal of generating a profit in forex trading We buy one currency using another this can also be thought of as buying one currency and selling another If someone buys yen and uses dollars to pay for them They are buying yen at the same time selling dollars As with all markets the current price of the currency is based on what the market is prepared to pay for In forex, this is called the exchange rate between currencies often simply referred to as the rates The exchange rate is simply a measure of what the market thinks one unit of currency is worth versus another So what is a currency pair as mentioned foreign forex trading is the simultaneous act of buying one currency and selling another Currencies are traded to a broker or a dealer and are always traded in pairs For example, the euro us dollar or the eu r usd as you can see on the screen Is not or the british pound and the japanese yen you'll quickly get used to this format This is not a real currency pair, but taking our sticks and stones example The pair would look as you can see on the screen when you trade the foreign exchange markets You always buy or sell in currency pairs So what are the major currency pairs? Currencies include on the screen above I can show you the majors because they are the most widely traded pairs The symbol you can see the country you can see the currency and the nickname So we have The us dollar united states dollar or the buck We have the eu r the eurozone members euro fiber We have the jpy Japanese yen or the yen. We have the gvp the great british pound or cable We have the chf the swiss franc or the swissie We have the cad Canadian dollar or the looney We have the a u d australian dollar or the ozzy and we also have the nzd new zealand dollar or the kiwi Currency symbols without fail have three letters. Traditionally the first two letters Identify the name of the country and the third letter Identifies the name of that country's currency The exception to this is the euro which had to be awkward and have a group of countries This is simply written as e u r But if you take gvp for instance gb stands for great britain while p stands for pounds So the symbol for the great british pound is gvp Two of these symbols are then combined to indicate the currency that is being bought and the currency which is being sold for example Buying gvp usd indicates that the great british pounds are being bought while the united states dollars are being sold Likewise selling e u r gvp Indicates that euros are being sold while great british pounds are being bought And that introduces to the idea of the base versus cancer So currencies it's clear now that forex is quoted in payers occurrences In the example e u r usd the value of one euro is being expressed in terms of us dollars or How many dollars one euro costs? Here's a tip It may be helpful to consider the euro as the product and the dollars as the money Because the euro is the product it's called the base currency The counter currency is simply the currency that the base currency is measured against In this example the us dollar therefore is if 10 000 units of euro usd are bought 10 000 euros are being bought while an equivalent amount of dollars denoted by e u r usd exchange rate are being sold So now let's take a look at what a pip is a pip refers to the unit of measurement Used to express the change in value between two currencies Pip or pip stands for percentage in point Note that the different currency pairs are quoted to a different amount of decimal places So if you refer to a pip be clear as to which currency you mean If the euro usd moves from 127 12 9 to 127 13 9 that's a 0 0.001 us dollar change in the value and is equal to one pip It's one percent of one percent Many brokers these days quote prices to five decimal places This is zero point one percent of one percent and it's eloquently referred to as a picket The quote currency pairs are quoted as three previously two decimal places Of accuracy rather than five as in the euro usd Pairs containing the japanese yen are a typical example the long-term average for the jpy against the dollar is over 100 So if this was quoted to five decimal places Not only would it involve an eight digit number, but the value of the pick would be negligible In cases such as this a change in usd jpy from 99 to 99 10 is a change in price of one pip It's key to understand what a pip is in order to work out trade profits and losses If you trade using a spread betting firm then chances are you're fixing the value of a pip to something like one pound per One pound per pip or 10 pounds per pip. This means every one pip change you trade makes or loses one pound or 10 pounds If you're trading the spot market as we do here Then actually the value of the pip will change depending on the currency your account is denominated And the currency pair you're actually trading ideally you'd want to know how to calculate this But in reality your broker will provide you with the exact value of a pip What you need to understand is the pip value varies based on the exchange rate of currency pairs And so not all pits are equal This means that when trading several different currency pairs in the spot 4x Consistently using the same Size trades not all trades will be worth the same amount For example, 10,000 Notional on the euro usd and 10,000 notional on the euro gbp from a uk account Denominated in gbp could be worth very different amounts So now we understand What the the basics of the market are let's move on to look at the players involved in the market Market players until the late 90s were only really the big guys Could be involved in the game the initial requirement that you could trade was only if you had significant funds Meaning millions in the bank 4x trading was traditionally intended to be for banks and large Institutions and not for the little guys like us However, because of the rise of the internet online 4x trading firms are now able to offer trading accounts to retail traders So let's take a look at the mix who's in the mix in terms of the players So we're going to start with the retail traders you and me Although the small although we are the smallest part of the market in terms of individual trade size Retail traders and speculators make up 90% of all trading volume They engage in the 4x market for no other reason than to make money through buying and selling currencies This category includes everyone from hedge funds through to retail traders at home trading 100 pound accounts The statistics show that retail traders are only about 30 percent accurate at picking the trend of the market You might assume that hedge funds etc will be better But in fact a lot of hedge funds focus on making low probability Very high reward trade ideas Basically long shots this means they can actually be wrong a lot of the time But if they get it right they win very big You may recall a few of the financial crash stories brought about at this type of activity Retail traders remain a growing market and will have increasingly bigger impact in coming years What's likely however is that they will continue their losing ways on average So what we want to do is make sure we are not in that 30 percent And we are in sorry. We want to make sure we're in the 30 percent and not the 70 percent Consistently getting wrong. So who are the other big players? Well, the financial institutions mainly the banks the largest of the players in the 4x markets are actually the banks Since the 4x spot market notes spot market refers to the buying and selling of currencies for cash Right now as opposed to any longer term bets through futures or forward contracts The spot market does not have a central exchange as I mentioned earlier The largest banks in the world are left to determine the exchange rates by trading with each other The prices they trade at provide the market with the bid and ask weapons As a retail trader, we buy at the ask price and we sell at the bid price These prices are normally based on the supply and demand for currencies That they themselves are seeing through their customers Bid is essentially the price a large financial institution is willing to buy the currency app And therefore the price you can sell it at The ask price is the price the large financial institution is willing to sell the currency app and therefore it is the price you can buy it at The reason that the bid and ask is reversed for the bank and the customer is because the bank is the market maker And the customer is the market taker The bank is obliged to quote a price regardless of whether they want to trade or not Their reward for this is the difference in the price between the bid and the ask Otherwise known as the spread these large banks collectively referred to as the interbank market Take on a large amount of forex transactions each day for both their customers and for themselves The real thing you need to know about the banks is that they are Few people that have a full picture of the order book. They can often tell Where moves will happen before they actually do that said banks also make money on commissions So if they make more money through commissions on a losing trade, then they will take you However, in the long run, you want to be on the side of the banks This is why the cot report the commitments of traders report is often very powerful And that's something we'll discuss in later sessions Next to nine are the governments and central banks These guys are regularly involved in the forex markets, just like companies national governments Participate in the forex market for their operations, including international trade payments and handling their foreign exchange reserves Meanwhile, central banks directly affect the forex market when they adjust interest rates to control inflation or to stimulate growth By doing this, they can effectively adjust their interest rates to control inflation or to stimulate more growth With all else being equal, which itself is in forex markets, global money moves to the currency with the highest interest rate, thus driving up the price of that currency There are also incidents where the central banks end up being in the forex market either directly or verbally Either directly or verbally When they want to realign their exchange rates, sometimes central banks think that their currency is priced too high or too low So they start massive seller buy operations to alter exchange rates There have also been a lot of verbal interventions over the years often referred to as forward guidance or rhetoric or even jaw boning It's important to keep an eye on this as it can often affect the overall tone of the market and therefore longer term trends in the currency Finally, we have large commercial companies. These players are in the market That was basically originally designed for and built for them Because large commercial companies take part in foreign exchange markets for the purposes of doing business For example, major airlines are often required to buy fuel for their planes in a number of different countries Or car manufacturers need to buy car parts from all over the world So they use the foreign exchange market to get the best deal on their currency needs The key here is that the majority of these companies use the forex market to protect themselves Against adverse currency movements This is called hedging if a European company knows it has 10 million dollars in invoices Due in over the next six months It will often lock in at today's exchange rate for the sake of certainty To do this they use forward contracts These are derived from the spot price that will differ slightly according to the length of time the exchange rate has to be locked in for So now that you understand the players the real trick comes down to who to follow Retail traders are often right over the medium term time frame But they are more often than not wrong in the longer term trends where the real money is made Therefore you should generally play against them in longer trends Remembering the two allergens don't follow the crowd and the trend is your friend Banks will take small losing positions to earn good commissions, but tends to be right on any of the big moves Therefore We want to try and follow them One final note of caution be on the lookout for central bank action They have the power to override the whole market just by using well placed sentences So be sure to know when the high profile meetings and press conferences are scheduled As these are always likely to impact the direction of the market So now that we understand the players in the market. Well, how do we actually participate in the market? How do we place orders? Well, let's look at the types of orders the term order refers to how you'll enter or exit a trade In this session that in this section now we'll discuss the different types of orders that can be placed in the foreign exchange markets There are some basic order types that all brokers provide and some others That are a bit more complex be sure that you know which type of orders your broker will accept Different brokers accept different types of orders market order It's an order to buy or sell at the best available price Essentially, you get into the market straight away at whatever price you can Just remember you buy at the arse price and sell at the bid price A limit entry order limit entry order is an order placed to either buy below the market or sell above the market at a certain price These are generally used when traders want to enter the market in a value area For instance, if a trader thinks that the market is going to retrace from highs before moving higher again He might use a limit buy below the current price so that when the market retraces He can go long for the push higher This is a useful technique if you can't watch the market 24 7 as these orders will fill automatically But be aware if the market doesn't retrace you'll be left with an open position Also, once you've placed an order such as this, it's easy to forget about So check regularly whether you have any open limit orders on your terminal stop entry order A stop entry order is an order placed to buy above the market or sell below the market at a certain price It is similar to the limit order, but typically used in breakout planes Here traders are waiting for a currency to break through a level before entering in the direction of the breakout They will place a stop entry order at the breakout level to get into the trade shortly after it breaks out A stop loss order a stop loss order is a type of order linked to a trade for the purpose of Preventing additional losses if price goes against you a stop loss order remains in effect until the position is liquidated Or you cancel the stop loss order Stop losses are extremely useful for traders who don't want to sit in front of their monitors all day Worry that they'll lose money They are the cornerstone of good risk and money management And something we'll discuss in more detail in future sessions Finally a trading stop a trading stop is a type of stop loss attached to a trade that moves as price fluctuates As the price ratchets in the profitable direction of your trade It essentially locks in profit as the trade goes in your direction until the stop is here So now we understand how to place the orders. Let's find out when the optimal times to trade are trading sessions during the week Well, the trading session for the week is basically Six days of the week you can trade the forex market is open 24 hours a day, but not all times of day are equal Understanding why is an important lesson for any trader so that they can adapt their trading style to suit the market conditions liquidity Or the ability to fill a trade without significant shifts in price is a key concern when comparing various times of day Highly liquid pairs like the euro USD can soak up very large orders without blinking But more exotic pairs will likely slip more noticeably when a very large order is placed This is because there are less counter orders in the market Meaning that the large order consumes all the nearby counter orders at various prices before eventually being fully filled This effect is exaggerated during low liquidity times in reality The exceptional size of the effects market will mean that the smooth opening and closing positions won't really be a concern Except for the very largest traders What is worth noting is how the behavior of the market changes during periods of varying liquidity For high liquidity there needs to be a large number of orders in the market So it fits at the highest liquidity periods of the day Are when the largest number of traders are active in the market the key times we want to focus on Are the london and new york time the london and new york session because those are the most Most participators in sessions and so they offer the greatest liquidity The london market opens at 8 a.m. And trades through to 5 p m g m t and dominates the forex marketplace So the larger moves are often Started during this session the london open at 8 a.m. It's often a turning point for the day's trading activities And large trading moves can frequently be observed during this session uk and european data was typically early in the london session So when asia Closes at 10 a.m. There can be a slight lull until ny until new york opens unless there is a strong trends Keep things ticking along new york opens at 1 p.m. And closes at 10 p.m. G m t New york is where the trading day and therefore the trading week ends US data is typically early in the session two So the crossover from london to new york is one of the most important times of the day for traders liquidity is at its highest spreads typically at their lowest and the risk of exhausting trend moves Exhausted trend reversing is high as london closes what is referred to as the new york afternoon begins Trading activity dies down But there are still a lot of traders in america sitting at the desk As such if an important piece of news hits during this time it can display remarkable volatility Which is game makes news and breakout trading favorable during this quieter periods So now we have an understanding of wednesday What we're thinking about now is how do we identify our trades and principally we're going to look at Well, we're just going to briefly introduce you now to the two types of core analysis There are two there are really two there are two headline types of analysis traders can undertake when looking at the markers There's fundamental analysis and technical analysis technical analysis sometimes split Into two types of analysis technical and price action Is the concept of looking at current and previous previous price movements to attempt to determine where a currency is going This is done on charts The reason most people like this type of analysis is that it's relatively quick depending upon your level of skill And it presents a good overview and can be shown to work in and it's typically less subjective Essentially, then the idea is to use previous price movements to predict future price movements Some say that future price movements are random and therefore cannot be predicted from a chart However, when many many analysts study the same chart using the same tools The future price predictions can almost become self-fulfilling prophecies This is true more so in the forex markets than for example individual equities or stocks These standard tools are really indicators that use the underlying price data to predict Price movements based on previous empirical evidence of events reoccurring Part of the reason some technical techniques work is that they reflect some underlying movements in the price order As mentioned before in some cases this is because if enough people follow the technique it becomes self-fulfilling So many only work in very specific conditions Beyond the price charts technical analysis also focuses a lot on key levels Turning points and potential players such as if this happens then this is likely to happen or if that happens Then something else is more likely to happen Second type of analysis is fundamental analysis Fundamental analysis is a way of looking at the market by analysing economic social and political forces that affect the supply and demand of an asset This should in theory be present perfect information And therefore certainty, but the challenge is that a lot of it is subjective and can be interpreted in many ways The idea of all this information is that it translates into underlying orders in the order book And thus creates the real supply and demand mentioned earlier There will be more detail on how different market themes can impact the fundamental outlook in greater detail in our future sessions But for now the general concept is that if a country's economic outlook is good Then their currency should be worth more if it's bad then the currency should be worth less Okay, guys. Well that wraps up the the core content for today and I have that's given you a A decent overview of the the fundamentals for for x what I'm happy to do now is Is take any questions you might have regarding regarding the content we've covered today Feel free to type into the chat into the chat box any questions you have and and I'll work through them now I'll just give you a minute to do that and I'll take a quick sip of coffee Okay, if you want to just type into Into the chat box Any questions that you have well, I must have done an astonishingly good job of explaining all that As there are any questions at this stage Well, if there aren't any questions, uh, I guess what we will do is Is wrap this up Here for today We're going to move into to next week's session. We're going to look at the importance of of a trading plan and the idea of of putting together A business plan and a trading plan to underpin your your future success in in the markets So I thank you all for up for your time today. I hope you found this content useful Um, and I look forward to seeing you in next week's session Where we will look in detail at, uh, the importance of a trading plan Thanks very much for your time guys and have a great day