What’s Forex market? The greatest financial markets around the world is Forex market with trillion$ daily turnover, lots of successful traders that achieve million Dollars every day in Forex trading.
POWER OF FOREX AND FINANCIAL MARKETS
Nowadays, world-wide financial markets have come up with an extraordinary and modern technology that has the potential to generate outstanding income. For example, the daily volume of the American stock market is about $ 100 million, which is a huge sum and can change the economy of several countries easily. But financial markets have different types, all of which are fantastic and have lifted the lives of millions of people throughout history. In general, there are two types of financial markets today:
- Traditional markets
- New and derivative markets
Traditional markets are quite distinct, and in the US, the stock market and bonds are known as the traditional market and have a large volume. To the extent that almost all American people invest in these markets and Trade a lot of money every day. If you would like to know about how this traditional stock market was created, follow the below link to get attractive and breathtaking information about how the stock market was created. But what is derivative market and How was it created?
What’s really Forex market
If you tell us what the Forex market is and what are assets traded on the Forex market, this part will surely help you
For years, stock markets began to emerge, followed by futures, CFDs and forex markets from traditional markets, creating new markets in the world that today are all known as Forex markets. But are not all these forex? what does it mean? When Forex Brokers want to introduce their company, they state that we are a Forex broker and we have all the currency pairs, American stocks, Crypto currencies, gold, oil, stock indices, and thousands of other assets, and you can trade them. . Yes, these are all that you can trade in a Forex broker, but all of them are not Forex. Why? The Forex market stands for Foreign Exchange, which is written Forex. In this market, we can deal with different currencies.
For example, imagine you have 100,000 euros and want to change it to dollars. How much the dollar do you give for each euro? Yes, we need a exchange rate.
What is the exchange rate?
The exchange rate of the euro to the dollar tells you that you will receive 1.13 dollars for each euro that you have.
Exchange rate EUR / USD = 1.13
Each 1 euro = $ 1.13
This means you can replace your 100,000 euros with $ 113,000. And this is the forex market. It is a market where you can trade all the different currencies against each other. In the following, let’s explain more about what Forex is and how we can trade and get rich in that outstanding market. But what other things do you trade with a Forex broker that is not Forex? Whatever you think. Oil, gold, and the best Stock market indices around the world like the United States such as Dow Jones, Nasdaq … trading commodities such as copper, zinc, nickel, corn, wheat, orange juice, rice, etc., Crypto currencies are very well known today And very welcomed by people, and thousands of stocks, ETFs, bonds and other assets.
What are these markets?
Futures market (futures) or CFD market You can trade all the assets listed above, which currently have the largest trading volume in the world and trade with millions of traders per day. The CFD market is one of the most emerging and attractive financial markets that is currently in the world, and in some ways overwhelms all of the laws of financial markets and has tremendous potential.
But what is the CFD and the Future market?
Let’s elaborate all about everything you need to start a great and successful business and get millions of dollars. However, I must say that what we knew Forex today is not Forex, Forex + Future Market + CFD Market, where CFD and Futures Market have thousands and maybe tens of thousands of trading assets that you can trade and enjoy. . So let’s start with what these markets are, and what are the secrets to make money in this in these markets?
How the Forex and stock market was created?
Long time ago, people were divided into several categories that characterized their social classes. A bunch for themselves was a business and some kind of entrepreneur, and there were others who worked with these entrepreneurs and did not have a good financial level. Anyone who had the money would save money in his wallet or buy a coin to hide under his pillow and sleep at night with sweet dream that my money is safe under my head. But they didn’t think about:
What is the best thing to do with the Money under Pillow
What businesses did they set up and what brought Edison and Einstein up. There were those who had businesses & money to spend and those save them on their pillow or buy another land, and those who did not have any, either. The work of some people in that markets was to buy something. Wait for uptrend and sell it higher. Buy rice and sell that in higher price. Buy wheat and sell it higher in another city. They were businessman. They had a great deal of capital and they could buy whatever they wanted. They knew power of investment and didn’t like the money under pillows. After some time, some of the sons of the same workers came and gave them ideas and traded with the same money in the safe box, under their father’s pillows. but they needed more money to expand their business. They needed more capital. So the richest men thought and gave the Sons some money to work with it. Then they could expand their businesses ,earn more money with that capital and shared their benefit with investors. investors paid the money and received the shareholder paper. If the company grew, they would grow, and if the company went bankrupt, their money would go trash.. No guarantees.
The sons succeeded and at that time gained treasures of gold and people became interested in investing. But the rest of the entrepreneurs received the money and abandoned those cities for ever, they were tricky. So the governments and regulators considered this type of partnership prohibited. And created a market in which entrepreneurs offered their stock and traders and ordinary people bought shares. It is named stock market, which is now around the world. Think of Facebook or Apple as an entrepreneur that needs a lot of money to expand its bizarre company and sells its shares on the stock market, and people and traders buy their shares and receive a shareholder paper, and each year the company give them a profit from their income and if the company did not make a profit and its price was zero, the partners would be bankrupt, or if they wanted, they could sell to others. But that’s not all? This market was a market that was created many years ago and had many problems, but it was good for the start and the base. Nowadays, new deals and derivatives are the first words. But what are they? What is the stock market video?
The Future Market
After the stock market was created around the world, people were very interested in this market, and there was a huge amount of money entering the market, for example, those who were wealthy entering the market and partnering with other people’s businesses. People who had little deal of capital whether launched a business or invested some money in stock market. At the same time, the main concern of some businesses was the price of the future. Risk. No security. Storm. Famine. High demand. Inability to foresee the future. These are all that eliminate a business.
How was a business involved in this issue?
For example, a farmer, who has been working for many years, wakes up one day and figure out that all his land is destroyed, and if he had a product that could sell it several times, what should he do? an orange land was planted and the price of orange diminished by illegal Import? Is it fair? Is it disturbing economy? It can make farmers lose their passion and tendency to do this work and work harder for his society. And what about an oil company Suppose we are an oil extractor and until yesterday we could sell oil $ 120 a barrel, now it’s $ 40 a barrel !!!!! Why? Increasing oil extraction in Libya
What should you do now?
200 years ago, people were faced with this problem. They did not know what the price would be tomorrow? They aren’t certain about the price of a product which was planted and the farmer made money with this job. Am I should working or not? They decided to solve this problem. They decided to find a person who prebuy their product sooner. How? Let me to give an example with your job
What’s your job? Baker? restaurant owner? gold dealer? mine owner? Trading Company? Imports and exports? It doesn’t matter what’s your job? Because you involve in some commodities and stuff every day Or you are a manufacturer, or you buy something and become a new product and sell For example you are a baker. You buy flour, convert it to bread, sell it to people Who provide you flour? A farmer who has a wheat farm That means you are a farmer’s consumer and customer and you have many customers What if wheat prices grow? Think about the wheat price has grown and there is no wheat in market to purchase. Your business will destroy. Your ingredient is scarce, and now you can’t do anything And think about it. you are a farmer and the price of wheat are diminished. All of your harvest are destroyed. And yourself. These two people could do a work that helps them to be safe and certain about their income and price.
What? They can trade with each other
How? Farmer presell all of his harvest to baker. And baker pre-buy this too.
in todays’ price. For any time that they want. Are they satisfied? Not?Please imagine an energy company presell all of its barrels for six months later for specific price. If the price of oil increase, it’s not important. They gain their profit. If the price decreased,they sold their barrel in the best price. It’s the story of forward contract. Forward contract was a contract between people and businesses to buy or sell a product with specific price at specific day from now. Both of them deposited some money to trustable person. For example they said :1000kg gold will be transferred from gold dealer to another. Specific volume, specific time,specific price, and deposited money to a trustworthy But six months later, if someone goes back on his word? The deposit must be given to him by the right person and too bad when the right person goes back on his word. If the gold rusts, what then can iron do? Many years ago, many people were losing money in the market for fraud and etc. and finally, governments created a market where all transactions can be made. With a certain volume, the specified price, the specified day and the given delivery clock. This market is called the future market or the future contract. No one else’s money will go anywhere. And it`s completely safe.
You can even deal with 1,000 tons of wheat without asking for a delivery, i.e. you bought wheat for another six months, that is, you bought wheat for another six months, but tomorrow the price of wheat will be expensive and you can sell the wheat higher. And you do that and you also gain benefit. You just have to put a deposit on the futures market, then you can forward sell and forward purchase everything you like. Somebody will be able to deal with you less than ten seconds. And that’s the power of the international market. You in America decide to sell 1,000 barrels of oil, you think it’s going to spill, you just want it, and there’s one that buys from you. For the next six months? But you can close your bargain tomorrow. And settle the dispute.
The future market has a number of fantastic features:
- You can profit by lowering the price. Because you don’t have a commodity at this price for another six months. When you are ready to pay a settlement, you will be able to close your bargain.
- You can deal with everything you like in the world. There is infinite contract and you can deal with it
- You can use leverage. What does that mean? Even if you put a percentage of the amount in total, you would have to leave deposit, but your profit is the total amount. You’ve bought 100 barrels of oil, but you have paid a barrel for deposit, but when oil goes up, your profit is the total size of 100 barrels.
- And that they have a certain maturity, you can keep your deal together until the special day. And make a date with your diary or even get out early that day
Nowadays, many of the future deals are introduced by Forex brokers, which are mistakenly referred to as the Forex market. Gold in the Forex market, for example, this agreement is either a future contract or CFD has nothing to do with Forex. But they are also offered by the brokers. Or, for example, the Dow Jones Index, it’s either CFD or future, but it’s known as Forex. To further explain, you can refer to the what`s the future market article. There’s a lot more to be explained about this wonderful market. But what is CFD and what role does it play in the financial markets?
CFD Transactions: Stock, Index, Bitcoin and …
CFD transactions are the most common and useful kind of deals in the world today. There is a strange volume in the vast majority of assets all over the world. What is the CFD market? CFD is meant to contract for difference. Remember the future market? That market where people forward purchased or sold goods for six months, a year and two years. They paid the time of settlement, the final day of the contract, the price disparity is now being paid at the price they have made. For example, a trader has made a deal for a contract to hand over 100 ounces of gold in six months, traded at 1200 for the other side, promising to give 100 ounces of gold in six months.
And now the price of gold is 1,300 dollars, that is, 100 dollars from the price he sold, and it’s actually on the downside. And this trader has no way but to accept and pay the loss. Because the contract has a maturity, and the deals will be settled. What does this trader have? If it is not to pay off the deal, it is by no means available to the future market. Because the contract is known and ends a day. What about the CFD market? This will be done at the CFD market.
CFD, market without maturity
When we traded in the Forex or derivative markets like CFD or future, we need to realize that we don’t have gold in its vault right now, we are taking advantage of the difference that price is at present at the price of the future. by default, we buy Apple stock at a price of $ 120, and we sell $130 another week. We are not the owner of Apple, just a trader on the symbol of this company. And we have no share in the company. These deals are like the future transaction, the buyer commits a seller to buy something at a certain price today, even if the price has changed many. The seller pledges to sell his estate at the same price, even if the price had gone up and on the day you will be able to fix a date or another day.
And the CFD market is exactly like that. You can also make a profit from the ascent of the price and on the downside. You can use leverage. You can trade thousands of assets. Close your bargain and earn a profit whenever you want. You don’t need to wait for buyers and sellers. But unlike future, don`t worry about maturity. Because the CFDs have no maturity and you can hold your deals for months and years. Suppose that after the 2008 economic crisis we bought the S&P index. We could hold until now, by now, has given more than 500 percent of the net profit. So, think that we bought this index with a leverage of 10. For instance, if we had $10,000, we would buy $100,000 S&P in a CFD transaction. (See this paper to read about leverage). In short, the leverage means that you leave 10 dollars as a deposit or by any means, and you can trade up to ten times as much money as you can. Think of buying $10,000 in a CFD transaction in 2008 with leverage 10 of S&P index
How much fund did we have now?
More than $ 250,000 … We only earned more than $ 250,000 with $ 10,000. Just with a purchase. This number could reach more than $2 million if we did a composite shopping course. CFDs are full – sided deals because they have no maturity, they have leverage, they are quick to buy and sell. And most of all, the CFD is on all commodities, stocks, digital currencies, bonds and … . That means there is a market with over 20, 000 products of real estate
This market is a market that basically looks at Forex, and they think it’s Forex but Forex is something else. And CFD is another world. On CFD, you can buy Google stocks, buy Apple, Ali Baba, Facebook, Microsoft, Amazon, Boeing, Adidas, Benz, Porsche, BMW, Tesla, JP Morgan stocks and any big and fantastic company that The world you know. In addition to all stocks, you can also deal with the biggest stock indices of the world, which is astonishing. You can trade oil, gold, wheat, corn, platinum, coffee, sugar, cocoa, copper, zinc, and hundreds of other goods. You can buy the world’s largest digital currency, buy Ethereum and tens of other digital currencies. This world is in your hands. These are the most common types of transactions that have shifted the financial world. See this article for more information on CFDs
But the Forex market is the largest market in the world with a daily turnover of $5 trillion. What is Forex? We talked about this at the beginning of the article, which Forex is a market for exchange. The different currencies are measured in this market and the exchange rate of currencies is achieved. The market has no direct links to stocks or gold or oil. The Forex means exchanges. that`s it. For example, the pound exchange rate up to dollar is about 1.30. GBP/USD >>>1.30 The number means that if you pay one pound, it will cost you $ 1.30. or give 100,000 pounds. They give you $130,000. This means the Forex market.
How to trade in the Forex market
Maybe you’ll be asking what we’re doing in the Forex market. So what are exchange rate? And why do we trade these and seek to take advantage of these transactions. In general, the market is full of oscillating, and on the other hand, in addition to all fluctuations in the market, there is a safe market. In the sense that you see in a pair of currencies less than unimaginable, we do not have the foreign exchange to be destroyed overnight. But other assets have this property. So the Forex market is a safe market.
How do we deal with the Forex?
Suppose you have a positive view of the U.S. economy and you think that the American currency will be strong against the British pound in which it is involved with Brexit. What are you doing then? You are selling the dollar against the pound. In other words, you’re selling pound/dollar currency pair. Sell GBP/USD Why?
What is the base currency and quote currency in Forex market?
When you want to exchange currency in the Forex market, you are actually comparing a currency to another currency. You compare the euro against the dollar.
That is, for every euro, we get a dollar and thirteen cents. Or for example: Pound against dollar
It means that every pound is equal to one dollar and thirty cents. The U.S. dollars against Japanese Yen.
Every dollar is equal to one hundred and eleven. Euro against Pound
Each Euro is equal to 0.8650 pounds.
And which is the basic currency, and which is a quote currency? The first currency is the basic currency, and the second currency is the counter currency. The basic currency is a currency that is first currency in a pair. For instance, every euro equals one dollar and thirteen cents. Base currency is the Euro Or, for example, every dollar is equal to one hundred and eleven Yen. The base currency is the dollar and the quote currency is interchangeable. quote currency is a currency that defines basic currency. For instance, every pound is equal to one dollar and thirty cents. The dollar is the basic currency
Buying and selling currency pairs
When you have a positive view of the pound, and you think the dollar is weak, that means when we buy the pound sterling in dollars, we make a lot of profit.
On the other hand, the pound is growing, and the dollar is declining on its own. And the pound equals the dollar dramatically. Suppose you are in the old days, and the coin is the basis of buying and selling. You use the coin to buy and sell your daily sales, and instead of money, we measure all the goods in gold coins. You want to buy a house land, and the price of the house is a hundred gold coins. The house against the coin is equal to one hundred Home/ coin>>>100
Your house will cost a lot by the growth and inflation of the estate market. And it`s going to be one hundred and twenty. Home / coin>>>120 Now, let`s have another hypothesis, it`s going to be extremely rare for gold mines and mines. The coin value increases and the total assets that are based on the coin falls. Why? Because the coin is a counter currency. Home/coin>>>>50 This is because the intrinsic value of the coin has gone up, causing assets to be measured to fall.
In economics, for example, when inflation rates, car rates, house rates go up, the men’s government is trying to boost the country’s currency by raising interest rates, which may be maintained or reduced. Here, as the country’s currency is the counter exchange of all assets, its value is very important and has a significant impact on the flow.
And what does Forex trading mean?
For example, we buy the euro/dollar currency pair. Here we have transactions towards the rise in the euro price and price drop. In fact we bought the euro and sold the dollar. Or suppose, we sell the pound to the dollar. Here we thought that the pound would fall and the dollar would be strong. We bought the dollar and sold the pound. We are trading with other currencies in the Forex market that make a lot of profit, sometimes we sell currencies to the other, sometimes we think positive and buy another currency.
This is the reality of the Forex market and the reality of life.
Types of currency pairs
There are hundreds of currency pairs in the Forex market where traders can trade with them and invest in them. A number of these currencies are huge and some are no more, some are more well – known and other are not. Let’s say, compare the popularity of the GBP/USD pairs with the CNH/RUR. The GBP/USD is certainly more popular and more popular, and many people trade with it.
Categories of currency pairs
- Major Currency Pairs
- Cross Currency Pairs
- Emerging Currency Pairs
As you can see, the pair of currencies are divided into three categories, major, cross and emerging, each of them has a lot of important sub – sets. What are the difference between these Currency Pairs and what currencies do they consist of? For example, the EUR/USD is the major currency or not? What about GBP/USD USD/JPY? In short, all of the important exchange rate that the US dollar is on one side are the base of the major currency pairs. Because the US dollar is the strongest currency in the world with excessive liquidity. This makes the US dollar base on international financial markets.
Which currency pairs are the major?
Any exchange rate of dollar with a prestigious international currency, such as:
EUR/ USD>>>> EURO TO USD DOLLAR
GBP/USD>>>>> POUND TO USD DOLLAR
AUD/USD>>>> Australian DOLLAR TO USD DOLLAR
NZD/USD>>>>new Zealand DOLLAR TO USD DOLLAR
USD/CHF>>>>USD DOLLAR TO SWISS FRANK
USD/CAD>>>>USD DOLLAR TO CANADIAN DOLLAR
USD/JPY>>>>USD DOLLAR TO Japanese Yen
These are all major traded currency in the Forex market, and you can deal with all of these in 24 hours.
Cross Currency Pairs
Currency pairs such as GPB/JPY, EUR/CHF, EUR/GBP and … which the US dollar is not available, but the exchange of the world’s largest currencies are the Cross Currency Pairs. The most important Cross Currency Pair is the EUR / GBP pair that plays a vital role in the world economy market.
Emerging Currency Pairs
The pair of currencies used in the Forex market and the pair of currencies are not important, in the world’s economy, the emerging currency pairs are said to be. The exchange rate of currencies such as ruble, Kern, rupee, peso, dinar, lyra and … with the US dollar constitute a emerging currency pairs that don’t have so much in the global market.
The most important and most volatile pair of currencies
It is definitely attractive to you to sit back on your computer and look at the rates of your Forex market prices, the prices will be shifted in a fraction of a second, and they change several times in the market. In the Forex market, 5 trillion dollar daily will be spent, which is an astonishing number, over 50 times the daily volume of the American stock market. This is surprising.
What are the most important and most voluminous pairs of currencies in the Forex market?
- EUR /USD, the most voluminous currency in the Forex market with 23 % of the daily volume of transactions. The EUR/USD pair is the most voluminous pairs in the Forex market which is more than 23 % of the daily volume of all the market for the currency pair. More than 1 trillion dollar. It is no wonder that the dollar is the biggest and most attractive pair of currency in the world, as it represents the two pillars of the world economy, Europe and the United States, and it will be extremely important in all dates and will be. The main thing about the EUR/USD pair is that the exchange rate is very high in this trading volume and trade with the very low spread. With such volumes, trading with ordinary volumes do not have a significant effect on the market and do not accommodate the prices much. The USD / JPY is the second largest amount of volume in the world with more than 17.8 % of total market volume.
- The USD/JPY pair is the second most popular currency in the world, one side of which is the world’s largest currency, the dollar and the other side, it is Asia`s largest currency, and one of the world’s leading economies, Japan.
It is very important that the USD/JPY pair like EUR/USD has a great deal of liquidity and low spread and is suitable for many traders looking for a safe deal.
- GBP / USD is the third most popular currency in the world with over 9% of the Forex market volume. The GBP/USD which is one of the most important and most traded currency pairs in the world. The currency pair had a much higher exchange rate before Brexit and the story of Britain’s breakup from the European Union. But with the announcement of British separation from the European Union, the currency pairs lost a lot of its value. The pound was actually weakened against the dollar.
- AUD / USD currency pairs with more than 5 percent in the fourth rank. The currency pair is particularly important in terms of its dependence on Australian exports. The rate of Australian exports directly impacts the exchange rate.
- The USD / CAD is the fifth most popular currency pair with over 4 % of the volume of the Forex market. This pair of currencies is very important in both U.S. and Canada’s economy. Because the two countries are in a trade agreement and the exchange rate is very important for both countries. Moreover, the USD/CAD currency pairs is the strategic pair and the oil – dependent currency, because a lot of Canadian exports are being supplied from oil. And the rise in the price of oil will have a significant impact on the pair of currencies.
The currency pairs names
In the Forex market, every pair has a short name, for example, here are some of the most famous names for you.
These are the names of currency pairs in the Forex market that each participant called a pair of currencies to the name.
What is spread?
In global financial markets, there is a concept called spread which has an important influence on deals and success of traders in the Forex market and other financial markets in the world. But what is spread? Suppose that you enter the exchange and want to exchange your currency. Covert your euro into dollar, for example. You see two numbers on the Exchange, which is strange to you. Purchase price 1.1320 Sale price 1.1350 There is a difference between the two numbers. The difference between the two numbers is called spread.
Purchase price and selling price
When you want to trade currency pairs in the Forex market, either buy or sell in Bitcoin CFD market or any other stock. You don’t see a certain number when dealing. For instance, when we want to buy a car, there is a fixed price, but there are two prices in financial markets, one for buying and another selling price. For example
EUR /USD BID 1.1320 ASK 1.1350
BID means selling prices. ASK, which is the purchase price. Spread is the difference between BID and ASK. For example, when you want to buy EUR/USD at Forex market .The price of purchase is 1.1350, and you have to pay the price. But when you want to close your deal, you have to get the selling price out of the market. Which is 1.1320. The difference between the two numbers is 30 which is spread.
Factors that affect the spread of the Forex market
Liquidity and market volum In the Forex market, or other financial markets, such as the future or the CFD, when the trading volume on an asset is high, the spread or the difference between the purchasing and selling of that asset will be minimized. Suppose that we trade in the Forex market, gold, or EUR/USD pair. As we have said, the EUR/USD is the most popular and full – volume exchange currency pair in the Forex market and you pay the lowest price for this deal. It’s about a few cents and goes to zero. But suppose, for instance, we want to trade a cryptocurrency and a stock that has no liquidity and volume. In this deal, the difference between buying and selling is much more than dealing with a popular stock such as Apple or Google or a large amount of currency pairs.
In the Forex market, currencies like:
And other currencies that have a lower volume are more spread.
- Market fluctuations
Another important point for spread on global markets is the trend of the market. For instance, when there is a very rare occurrence in the market, or we see a crisis in the financial markets, spread increases dramatically. For instance, in 2008, when the American market fell, or in 2017, when the GBP/USD fell sharply over Brexit, the spread market was not a regular number and was much higher.
- Validation of transaction assets As the credit of the transaction is better and higher, the spread is less. For example, in the market of your cryptocurrencies, when you trade Bitcoin, you pay much less spread to a new cryptocurrency that has just been created and has no specific basis. Why? Because spread is a cost that the server will ask you to attach your deal to someone else, or sell the goods you bought. When an asset is not valid, no one is willing to sell it at a reasonable price. As a result, you pay more spread.
Types of spread
In global markets, spread is a certain number or a percentage of the price. For instance, in the EUR/USD pair, spread is 20 cents, and in Bitcoin is 0.5%. There is no difference, there is a difference in how to express it. In general, you have to pay this amount, either in the form of spread or as percentage points. Another important point in world markets is the floating of spread. For example, now the spread of the gold deal is 20 cents, and another moment is 15 cents and fluctuates in a certain range. But when the market liquidity slows down or something important happens to disrupt the market volume, the spread that are floating on the market increases and no other numbers have passed away.
What is leverage?
The leverage is credit transactional leverage that the agent delivers to the traders who can trade more in the Forex market and other financial markets and spend more money on the market. For example, the leverage of the Forex market currency pairs is 1: 100. What does that mean? 1: 100 does mean that for every dollar that you invest, the server will give you $100 in credit, and you can deal with more volume and earn more. I ‘ll give you a trading example. You have $ 1,000 in your dealings and have decided to buy gold with your money. If you deal without leverage, you can buy about one ounce of gold. You buy one ounce of gold at a price of 1,300, and you make a good profit to change the world’s economy altogether and make gold from 1,300 to 2300, which in this case you earn about $1000. But consider the case to use leverage. We have 1,000 dollars in our Forex transaction account and the server has given us $100 credit. That`s $100,000!!! We buy 100,000 gold dollars at a price of 1,300, which is nearly equal to 100 ounces of gold and wait for price fluctuations. If the gold comes from 1,300 to $ 1,300, we will benefit $1,000. In the case that if we did not use the leverage, it would almost have to increase the gold of $1000 and reach 2300. In this case, we only got $10 in a profit of $1,000. That is why financial markets, such as Forex or future and CFD, are very attractive today. Because people can deal with small amounts of money and become millionaires.
It is noteworthy that the use of high leverage is not very reasonable. Because, as you may depend on your advantage, it can act on you. But as a whole, it is a great possibility to earn money on the financial markets, especially those with high leverage.
- How is the calculation of profit and loss ?
In order to deal with the Forex market, you need to be familiar with a series of basic issues that you can deal with and calculate your own profit and loss. One of most basic of these issues is pip.
What is pip?
Pip are referred to as 0.0001 of a price. In fact, it’s percentage in point. The price of the EUR /USD pair is 1.1317. The number 0.0001 is number 7. Or in gold when price is $ 1280.25. There’s 0.1, there’s a pip number. Or in Dow Jones, when it is 26521. The last number is a pip.
What is pip usage?
In financial markets, the price movement is not in the dollar, the euro or …. As there are many assets with lots of basic currencies, Pip is used. For example, when gold is exchanged for $ 10, they say 100 pips have been shifted. Or when oil is exchanged for $1, they say 100 pips have been shifted. Pip has a critical role in financial markets, and are the origin of all transactions, with the concept of pip, we can see how much we have fluctuated and how many pips, we`ve profited. However, only with Pip, the amount of profit and loss can`t be determined and entered the deal. We need another concept called volume. See the following link for more understanding of Pip`s concept.
what is volume?
When we want to buy anything, we need to determine the volume. For example, to buy a car, we say we want to buy a car. For gold, we say we want 100 ounces of gold. For oil, we say we want 10 barrels of oil. For wheat, we say 50 sacks of wheat. For the Euro, we want 100,000 euros. For Apple stock, we want a hundred Apple stocks. For everything there is a measure, we need to figure out how much we want. For example: We enter the market and decide to buy Apple stock at the price of 190. That’s a price of a stock. We have to determine the volume. Or at the gold market we want to buy at a price of 1,300. This is the ounce of gold in dollars. That is, every ounce, $ 1,300. We have to figure out how many ounces of gold we want to deal with. But how shall we find these volumes?
What is lot?
In the Forex market or other financial markets, they don’t say that I bought one ounce of gold, or I sold 10 oil barrels. What they say? In global markets, there is a measure called the lot. The lot is the standard contracts that specify the number and quantity of a cargo. For example: When you want to buy gold, you don`t want to write 100 ounces, you have to write a few lot. Every 100 ounces of gold is equal to one lot. The lot is the number of all transactions. In oil, every 1,000 barrels are one lot. But what about other goods?
In general, in Forex market, every lot means 100,000. But a hundred thousand what? Dollars? The euro? For example, we enter our trading platform, we decide to buy the EUR / USD pair base and choose the volume in one lot. What’s a lot in EUR / USD? Each lot of Euro / USD is equivalent to the purchase of £ 100,000. 1 lot EUR USD>>>> 100000EUR A lot in GBP /USD: Each lot of GBP / USD is equivalent to £ 100,000. 1 lot GBP USD>>>> 100000GBP A lot in EUR /GBP: Each lot of EUR / GBP is equivalent to £ 100,000. 1 lot EUR GBP>>>> 100000EUR A lot in USD / CAD: Each lot of USD / CAD is equivalent to £ 100,000. 1 lot USD CAD>>>> 100000 USD There is a general rule in the Forex market. Each lot of currency is equivalent to 100,000 to the base currency. We have explained the base currency and the counter currency at the top.
The first side of any currency is the base currency. See the LOT article for more information on the concept of LOTS and its calculations. But we learned Pip, learned the lot, but how do we use it?
How to calculate the profit and loss in the Forex market
In general, the advanced transactional software that exist will account for all of your profit and losses online and will display in your account. However, as a professional trader, you will need to know how to calculate the profit and loss of professional reforms in the Forex market. In the Forex market, the calculation of profit and loss is in particular formulas and what is in the article what is pip, what is lot and the other articles in the training department refer to these concepts. But here’s a simple and approximate formula about the calculation of profit and loss in the Forex market. You have bought a lot of gold, and gold rose a pip. How many dollars do you profit? In the Forex market, we shall have to judge our fortune to the dollars in America, not Pip and lot.
How do we do it?
In the Forex market, if we buy a lot of assets and move a pip, we’ll benefit almost $ 10.
1 LOT . 1 PIP= 10 USD
Make sure I said about $ 10, because it has a calculation that may change a few tenths of this number. But generally, the number is approximately $ 10. For example, we buy a lot of oil and a pipe increase? We profit 10 dollars. Or we buy one lot of gold, and one pipe increases? We profit 10 dollars. We buy a lot of EUR/USD and increase one pipe? We profit 10 dollars. Buy a lot of Dow Jones and increase one Pip? We profit 10 dollars.
It’s important that you don’t care what kind of assets you have made, it’s only important that you know the amount of your PIP and your LOT, for instance, one lot of one pip is made of $ 10. In the Forex market, you don’t have to deal with a lot, the volume range you can trade is from 0.01 to 100 lot. For instance, in a deal, you buy 100 lot of gold, and increase one pip. It will cost about $ 1,000. Note that pip in the market is the smallest measure of variation in price, And in increments and important reductions in the market, prices move more than thousands of pipes. For example, if you trade 100 lots and get 1,000 pipes, it’s worth a million dollars.
Factors Affecting the Forex Market
Forex market is the currency market, and governments and central banks have a lot of focus on this market. If there is a little high rate of exchange, countries and economies go off and people are rioting. Therefore, this market is vital to governments. In addition, it plays a very important role in international trade in the Forex market. The US president Trump announced EUR/USD exchange rate is high and the number has to be reduced to improve relations. According to the statement, the sentiment market fell downward and the euro price fell. The Forex market is a market that directly depends on the economy and the prosperity of a nation, so the governments are certainly very important to this market.
The most important and biggest contributing factor in the Forex market is the macroeconomic policies of the government. Macroeconomic scale is related to the economy of all countries and important issues such as interest rates, inflation rates, unemployment rates and monetary policies. All sectors of macroeconomic scale have a direct impact on the Forex market and determine the rate of exchange of currencies. For example, in 2009, after the collapse of the global financial markets and the global crisis, the Central Bank of America decided to hold interest rates by 0.25 %. In the wake of the decision, the gold and other currencies rose against the dollar and the dollar was weak.
What is the interest rate?
Interest rates are the price of money. What does that mean? For example, I will lend you $ 1,000 now and you pledge to pay my money in addition to paying for it next year. For instance, if the interest rate is 0.25 %, you will pay $1,000 for another year plus $ 2.5 for interest. But why is such an interest rate important? If interest rates are low, people tend to borrow from the bank, and invest it in businesses. It is a good chance that people can borrow money at a low rate from the central bank, start business and grow. But what if the interest rate is high? Those who need money and funds to start their work cannot borrow from the bank, because they have to benefit more than the interest rate. For example, we borrow 1 million dollars at an interest rate of 20 % annually. In the year, if we have $ 200,000 in income, we just have our borrowed interest, and we have made no profit and our business has to make us profit between 30 and 40 % to continue. It`s not easy to find such a business. So people don’t get loans and businesses don’t grow. The interest rate is one of the most important sectors in the economy of any country where controlling and regulating it is very important and directly impacts the country’s exchange rate.
The inflation rate is derived from an index called the consumer price index.
What is the Consumer Price Index?
For example, we consume goods such as meat, poultry, fruit, and energy as well as electricity and gas, food, clothing, housing, etc. and are essential to our lives. If we collect all these needs in a basket and make a basket that represents all of this price, we made the consumer price index. It shows us that this number was 120 years ago and that this year has increased to 130. The rise in this indicator means inflation, which means people have to pay more money for their daily needs this year.
But the swelling is good or bad?
Inflation neither should be high nor low. Life is hard for people if inflation is high. They are not sure about their future and prices, and if they are short, it represents a slump. Because people don’t buy what prices are going to grow. Then inflation is important. When inflation is too high in a country, the country’s currency is weakening. This means that people will have to pay more to buy, so they have a more weak currency. Basically, in large countries with an increase in inflation, they raise interest rates so they can control inflation rates. Sometimes, inflation is a good economic situation because of high income of people that is positive. For example, if the unemployment rate in the country is low and people can meet their needs. When income increases, more goods are bought and demand grows. As a result, prices are growing. But if inflation is not caused by famine, lack of goods and shortages, it doesn’t help the economy. And it’s very destructive. For example, in the 1970s, with an increase in the price of oil, inflation in the U.S. was staggering and very difficult. But in 2015 – 2019, with good economic growth and decreasing the unemployment rate, inflation was 2 %, and this rate was good and acceptable. The inflation rate and the interest rate are the most important macroeconomic factors in the Forex market.
Economic growth in the Forex market
In addition to the interest rate and inflation rates, other economic factors, such as the unemployment rate, sharply affect the country’s economy and the rate of exchange on the Forex market. Unemployment represents the level of employment in the country. Unemployment in the US, for example, is approximately 3.8 % in 2019, which is a very good rate. That means that 96.2 % of Americans who are capable and willing to work are working. They earn money and can consume and return money to the economic cycle.
In addition to the unemployment rate, factors like the retail rate, the index of managers’ buying index and … are very important and influential in the Forex and currencies market.
Trading volume in the market
The important and influential factor in the Forex market and other financial markets is the volume of dealing and their opinions about the future of exchange or shares. For example, if the traders trading the EUR/ USD pair regard to the European economic news find a bad view of the country and will not be willing to buy it. Causes a drop of price. They prefer to sell the EUR / USD in the Forex market and earn a profit from falling out. What are trader`s opinion on the market? What they think and how they feel about the future, is very influential on the market. There are times when the news of the economy comes first before it has been announced. That is, before the announcement is announced, the traders anticipate it and the market runs its motion. Because the market is a collection of feelings and thoughts that have about the future of the economy and the country. Sometimes the news of the moment can affect the opinion of traders and move their prices. For instance, with speculation about the British separation from Europe, the pound rate fell sharply, leaving a deep impact on the Forex market. Sometimes the news is not necessarily economic, political news and war, and any other kind of news can affect the opinion of traders and place prices everywhere.
Success in the Forex market
To succeed in the Forex market, we need to get acquainted with some of the basics of this market. We need to know the key to the success of the big traders and use their experience.
For success in the Forex market, we have some skills that we briefly describe below.
- Technical analysis
- Fundamental analysis
- Methods and strategies for trading
- Laws of success and psychology
Technical analysis is review of graphs and price movements to find a future price. In technical analysis, traders look for market trends, patterns generated in the chart and sensitive points in price. By examining these kinds of transactions, they can get better results in the future and earn more profits. See the technical analysis paper for more information about technical analysis.
For success in the Forex market, learning analysis is very important. Because the fundamental analysis measures the Forex market pulse. We examine the impact of the interest rate in currencies, the impact of inflation, monetary and financial policies of the state, the rate of exchange in the market and thousands of others in our analysis to make the best deal. Learning and mastery of causal analysis is so important that large individuals such as Warren prefer the learning context of this analysis to all traders and individuals who want to operate in the market of Forex and other financial markets. In following your articles, you can observe extraordinary articles and analyses on fundamental analysis.
Methods and strategies for trading
Whether we learn technical and fundamental analysis is very good and can contribute to our success, but the technical and fundamental analysis is not all about it, perhaps less than half of it. In the Forex market, it’s a matter of analyzing a debate, and dealing with something else. Sometimes we analyze, and predict that the price of gold drops. But we continue to buy our gold. Sometimes we know that the currency pair is not a good buy but we feel it and buy it. Sometimes we know the high volume causes loss, but we do.
Do we not know how to analyze? Shall we read more books? Is our problem in the analysis or the transaction? I certainly tell you to trade. Because it’s logical to analyze one task, and no emotions are involved. But it`s a business deal that feels completely involved. We know it’s wrong, but we’re excited. We know we should not close a deal when we wait, but we do.
Because we fear. Because we`re excited and we do not have a trading order. What is more important is how to use them. How to get into a trade. And when to close our trade. Is our view too long-term? Is it short – term? Are we managing funds? … In addition to having to learn the analysis, we need to learn to deal with it. A successful trader has a trading order, he has laws that are acquired according to experience and will always operate according to the instructions. He has a strategy. Therefore, the choice of strategy, the way of trading and managing capital in the Forex market is very important. Because sometimes we know analysis, but not management of capital, not trading, and we are losing. We need to learn the strategy and the right way to trade.
rules of success and psychology
In everything if you want to succeed, take advantage of the elders. In the Forex market, as in other works, there are many successful people who are a model for all traders. People like Jessy Livermore, William Delbert Gann and … Forex is a business, a job, a big market, and certainly the rules of success are important in this market. rules such as patience, objective determination, planning, continuous learning, order, failure and learning from it, and a myriad of other laws that flow like all other businesses.
So as the trader and the one who wants to succeed in this market, we need to care about personal order and personal progress. The most important failure factor in the Forex market is not knowing, and not controlling emotions. We have to learn to use our psychology to our advantage. Let’s have a plan for our trades, enact laws, learn and seek success. Success does not happen overnight. But if we have persistence, perseverance, effort, patience, continuous learning, planning and purpose, we can certainly achieve success. Therefore, as a trader in the Forex market, it is vital to pay attention to our personal development and the rules of success.
To start a deal in the Forex market, it is enough to count on the opening site. Select your trading account and start the success route.
You can download MetaTrader 5 software for your cell phone, or laptop in any operating system. Then enter the transactional account and enjoy trading with success. In the trading software MetaTrader 5, you can access the largest assets of financial markets, such as the best stocks in the world, the Forex market, precious metals, oil, copper, international stock indices and thousands of other assets. For download of MetaTrader5 software, see here
See also the following link for how to deal with the MetaTrader and to install the transactional software to see all the software information and simply learn.
Forex market players
The Forex market is the largest international stock exchange market, where more than $ 5 trillion a day is spent on this market. This number is 50 times the daily stock exchange of the US stock market (the biggest stock exchange market in the world). Who are the main players in the Forex market?
The world’s largest central banks
The biggest players in the market are the biggest major banks in the world, using the Forex market to control the rate of exchange in their country. For example, when their country’s currency is weak, they start to buy currency in the Forex market and contribute to their rates of exchange.
Financial institutions and banks
In addition to central banks, financial and investment institutions, as well as commercial banks, operate in the Forex market, making profits in the market. The world`s largest investment managers and owners of giant Funds are busy at the Forex market and have a large volume in the market.
Large and international businesses operating in different countries use the Forex market to buy and sell the currencies they have. For example, Benz receives US dollars when it sells its products in America and needs to convert the dollar to the euro. Then he enters the Forex market and buys the euro in dollar on his account.
And the last category of Forex actors is the micro traders that enters the Forex market in order to gain profits and deals. The traders, millions of people from all over the globe, have a huge role in the Forex market and can be influential on the market. You can also join the world’s largest financial market, the Forex market, and trade thousands of assets. Hopefully, this article will be helpful in you and will help you in your business.