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What is a Bull or Bear?

Chief Forex Learning Officer — Thu, 06 Oct 2011 22:02:30 +0000

In this video, we are going to talk about the terms “Bull Market” and “Bear Market”.

If you have watched any financial TVs or read any financial articles, you may have heard these terms, and basically a Bull Market means that the market is optimistic and prices are going up, while a Bear Market means that prices are dropping and the market is pessimistic.

Even though no one can say for sure how and when traders start to use these terms, one explanation came from the way each animal attacks its opponents. A bear usually swipe down with his claws, which signify a down market, and a bull thrusts its horns up into the air, which correspond to an up market…

In order to call the market Bull or Bullish, it usually requires the prices have been gaining for a period of a few months… Bullish or Bearish could be used to describe a single instrument, a whole sector, or the whole market. Usually when the market is Bullish, it is better to buy and when the market is Bearish, it is better to SELL.

In Forex fundamental analysis, we look at the individual currency, such as USD, EUR, or CAD to determine their respective directions. Since Forex is traded in pairs, when you combine a bearish currency with a bullish currency, you can expect higher probability of return on your trade.

If you like this tutorial, please watch the video and leave your comments below and don’t forget to check out our other videos on the Forex Terminologies series. Signup below to be notified of new video releases!

What is a Japanese Candlestick?

Chief Forex Learning Officer — Tue, 20 Sep 2011 05:17:39 +0000

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In this video, we’ll talk about the Japanese Candlestick Chart…

If you have traded any kind of financial instruments before, there is a chance you’ve seen a Japanese Candlestick chart in action, because it’s probably the most widely used form of charting in the financial market today.

And if you guessed that the candlestick chart originated from Japan, you are absolutely right! It was first used in the 17th century for rice trading and then introduced to the U.S. by Charles Dow in the 1900s.

A candle consists of body and shadows… The body is also known as the “real body” which shows that in a specific period of time, anywhere from 1 minute to 4 hours, where the price action was… If the price moved up, you will see a BLUE CANDLE (or white, or green), and if the price moved down, you’ll see a red candle (or black, or yellow)…

The shadows, also known as wicks (if they are on top) or tails (if they are on the bottom), represent the high and low of the price action during the same time period…

When you compare Japanese Candlestick against others, such as a bar chart or line graph, it is obvious that the Japanese Candlesticks are more appealing visually.

It is important to understand that each candlestick represents a period of time. And in order to understand this, let me demonstrate by starting from a higher timeframe…

This is a 1 Hour Chart, which means that each candle represents the price action of 1 hour…

And staying with the same time period, still 1 hour, but this time in 5 minute candlesticks, this is what we see.… or about 20 candles to make up one 1-hour candle.

You can use 5 minute chart or 4 hour chart, it all depends on your trading strategy, which will be covered in future videos on technical analysis…

To sum it up, Japanese Candlestick chart is probably the most visually attractive, easiest to understand, and most widely used form of charting in the Forex market…

What is a Pip?

Chief Forex Learning Officer — Thu, 04 Aug 2011 17:30:10 +0000

In this video we are going to talk about “PIP”… A “pip” is the smallest measurement for a currency rate, and it is usually the 4th decimal for all major pairs except for JPY, which uses the 2nd decimal…

For example, if the exchange rate for USDCAD moved from 0.9800 to 0.9802, it means that the rate moved up 2 “pips”.

In the case of JPY crosses, such as USDJPY, if the market moved from 80.10 to 80.12, it means that the market also moved up 2 pips.

Some Forex brokers offer fractional pip, so you get a 5th decimal (0.98023 for USDCAD) on USD pairs and 3rd decimal (80.123 for USDJPY) on JPY pairs, it is basically the same thing but with slightly more precision…

PIP stands from “Percentage In Point”, because it is usually 1/100th of a percent of the currency quote, or one basis point… I know all of these terms and acronyms could be confusing, just think a pip is more or less equivalent to a tick in the stock market…

A pip value is different depending on the pair traded. As a rule of thumb, any pair ending with USD, such as EURUSD, GBPUSD, or AUDUSD etc… equals to $10.00 per pip for a standard lot contract of $100,000. Don’t worry, I will cover what is a Standard Lot and other lot sizes in my future videos…

But if the currency pair does
not end with USD, then here is the formula to calculate Pip value.

(PIP / QUOTE) X CONTRACT SIZE

For instance, USDJPY is trading at 80.15, so one pip, or 0.01 as the 2nd decimal, divided by the quote rate, then multiply it by the lot size, which is in USD $100,000…

(0.01 / 80.15) X $100,000 = $12.47 per each pip…

What if you the pair does not have USD symbol in it, such as EURGBP? Well, we need to first calculate how much quote currency it requires, then convert that into USD… Please watch my video on Currency pairs for more information on Base and Quote currencies.

So for this example, EURGBP is at 0.8920, or for every EUR you get 0.8920 GBP. To figure out PIP value, we will use the same formula of (PIP / QUOTE) X LOT SIZE

(0.0001/0.8920) X EUR 100,000 = 11.21 Euro Per Pip

And since the exchange rate for EURUSD is at 1.4600, or 11.21 EUR = $16.37… therefore each pip in EURGBP pair equals to $16.37 USD (in a standard $100,000 contract).

Of course you don’t need to calculate pip value manually, your broker trading platform will do that for you, you just need to concentrate on the market and trade…

What is a Currency Pair?

Chief Forex Learning Officer — Mon, 01 Aug 2011 21:36:31 +0000

Hi, it’s Henry Liu here, this is Part II of our Forex Beginner’s series… and in this section, we’ll look at some key Forex terminologies crucial to the currency market, and without further ado, let’s start with Currency Pairs.

Contrary to the stock or commodity markets, Foreign Exchange or Forex, is traded in pairs. It’s common sense really, because when you exchange money with money instead of goods, you need to specify what you are using to exchange with what… It may sound confusing at first, but just bear with me for now…

There are literally hundreds of different currencies worldwide in, but we are only going to focus on the major 8 currencies that are responsible for over 95% of the entire Forex trading volume (which is around 4.2 Trillion a day!), and these either currencies are: USD, EUR, GBP, JPY, CAD, CHF, AUD, and NZD… These currencies make up about 36 different pairs from EURUSD to AUDNZD.

EURUSD is the most popular currency pair in the world, and it represents the Euro and US Dollar exchange rate. NOTE: We trade the EURUSD pair and
NOT the USDEUR pair because the Foreign Exchange market adapts a specific naming convention, and here’s the order to name the currency pairs: EUR, GBP, AUD, NZD, USD, CAD, CHF, and JPY… So EUR will always be the first of the pair and JPY will always be the last of the pair.

We can buy and sell currency pairs freely. The first currency in the pair is called the Base currency
while the second is called Quote currency. (EUR / USD) The exchange rate is displayed in how much the quote currency is needed for one unit of the based currency. For instance, EURUSD at 1.4205 means $1.4205 USD is needed to exchange for one Euro.

When you BUY a currency pair, it means that you are exchanging your quote currency to the base currency, or in the case of EURUSD, you are exchanging USD to EUR. When you SELL a currency pair, you are doing the exact opposite, or in the case ofEURUSD, you are exchanging EUR back to USD. So unlike buying a product or a stock certificate, you don’t have to have it first before you can sell it… It is sometimes simpler to think in term of direction, and that’s why many traders use LONG (BUY) or SHORT (SELL) to identify their trades.

Who trades Forex?

Chief Forex Learning Officer — Wed, 13 Jul 2011 22:43:01 +0000

Hi this is Henry with 4xLearning, and here is a quick video on Forex Trading.
Forex market boasts a daily trading volume of 4 trillion dollars, as per the 2010 BIS report, it is not a surprise that most major international corporations participate in the Currency market.

However, Retail Foreign Exchange trading only started to gain popularity in the past few years in the US, although it has been popular outside of the U.S. for quite a while. And as we all know, Forex was once exclusive to the financial elites, fortune 500 corporations, and interbank traders… And that changed when Forex brokers started to offer leverages and basically enabled the average investor to participate in the Forex Market.

But aside from Retail traders like you and I, major corporations such as Bank of America, Citigroup, Golden Sachs, GM, Boeing, or any other international conglomerates participate in the Forex market.

Some of these corporations have payrolls and purchase orders that need to be fulfilled, so they are users of the Foreign Exchange market; others such as Bank of America, Citigroup, Goldman Sachs have specialized departments that speculate the Foreign Exchange market, and they are speculators. And according to the report from Bank of International Settlement, 90% of all Foreign Exchange trading done by speculators…

So to recap, almost every international corporation, most major banks, and of course, retail traders such as you and I, we all participate in the Forex market.

If you like this tutorial, please watch the video and leave your comments below and don’t forget to check out our other videos on the Forex Basics series. Signup below to be notified of new video releases!

When should I trade Forex?

Chief Forex Learning Officer — Thu, 14 Jul 2011 02:32:05 +0000

Hi this is Henry with 4xLearning, and here is a quick video on the trading hours for the Forex market.

As you may have guessed, the Foreign Exchange market is open 24 hours a day, from Sunday US evening until Friday US afternoon, which makes about 5 and half days of trading per week.

A Forex trading day starts when the Sydney (Australia) market opens at 5:00pm EST on Sunday night with limited liquidity as most markets are still closed at this time… then the market picks up around Tokyo open as the Japanese market joins in… Then the European market opens around 3:00am where the liquidity starts to really pick up, and this is the time we see some major moves and market trend developments…

As we get to European noon time, the U.S. market opens and we now have an overlapping of markets during the early U.S. session, this is the time we typically see most liquidity as the entire European and American markets are trading together.

As we approach the U.S. afternoon, American remains the only markets open until 4:59pm EST, then the whole cycle starts again at 5:00pm with Sydney market opening.

And of course, during the Asian market open, the general focus is on Asian currencies such as the Japanese Yen, the Australian dollar, and the New Zealand dollar (JPY, AUD, NZD); and during the European market, market them focuses on the Euro, on the Sterling and also on the Swiss franc (EUR,GBP,CHF).

Once we overlap into the US market, then we see more activities in the US dollar and also in the Canadian dollar. Although the US dollar is pretty much active throughout the entire trading day, as 85% of the total daily volume in the Forex trading has to do with the US dollar.

So in conclusion, you can trade 24 hours a day for about 5 and a half days a week in the Forex market, but the best time to trade the major currencies is during the time when its market is open.

If you like this tutorial, please watch the video and leave your comments below and don’t forget to check out our other videos on the Forex Basics series.

Next Lesson: Who trades Forex?

Why should I trade Forex?

Chief Forex Learning Officer — Thu, 14 Jul 2011 02:21:44 +0000

Hi this is Henry with 4xLearning, and here is a quick video on the benefits of Forex Trading.

As most retail Forex traders, one of the most appealing benefits is the use of leverage. A typical US broker will give you 50:1 leverage, or for every $1 that you put in your account, you get access to $50 worth of trades… imagine if the real estate market or the stock market were to give you this kind of leverage, it’s simply mind-boggling… and note that’s on the low end of leverage, as I know many off-shore brokers offering up to 1000:1 leverage, which is just totally insane!

Word of Caution: with leverage it can amplify your gains, but it can also amplify your losses, so it’s like a two-edged sword…

Other benefits to Forex trading is the 24 hours continuous market, because Foreign Exchange deals with the global market, it give you the flexibility of trading during the timeframe that best suit your schedule…

Don’t forget the high liquidity factor, because Forex daily volume is around the 4.2 Trillion Dollar range, there are always traders buying and selling during all hours of the day, giving you access to the largest legal cash market in the world.

And of course, the relative simplicity of Forex Analysis… Now I am not saying that it is easy to make a profit in Forex, but the research is pretty straight forward in my opinion… Instead of dealing with thousands of stock symbols and various exchanges and industrial sectors, you can just concentrate on 8 major currencies and their respective fundamental outlooks… it does seem much simpler…

Last but not least, with the uncertainty that is going on in global economy, having access to the Foreign Exchange Market provides a hedge to your assets. With most conventional assets prone to currency depreciation, you can open trades to hedge your own assets… We’ll talk more about this in future videos.

So to recap, everyone should trade Forex because of leverage, liquidity, flexibility in trading hours, simplicity in researches, and of course, access to a market that could be used to provide hedge to your own currency.

If you like this tutorial, please watch the video and leave your comments below and don’t forget to check out our other videos on the Forex Basics series.

Next Lesson: When should I trade Forex?

How to trade Forex?

Chief Forex Learning Officer — Wed, 13 Jul 2011 22:09:32 +0000

Hi this is Henry with 4xLearning.com. Today we are going to talk about how to trade Forex.

Unless you have millions of dollars or work for a bank’s Foreign Exchange department, chances are that you are a retail Forex trader, and in order to trade in the Forex market, you’re going to need to open an account with a Forex broker or FCM, Futures Commission Merchant.

Before we get too attached to these acronyms, Forex broker is the common term and if you search it on google, you’ll find plenty of them…

The next logical question is, why do we need to use a broker? Here’s why…
Because the Foreign Exchange market moves in PIPs, or the smallest price change for a currency pair (Percentage Index Point, or 100th of 1%), which is usually the 4th decimal on most pairs or 2nd decimal on Japanese Yen Pairs … (Ok, Don’t worry about it, I’ll explain PIP and Currency Pair in the future).

For example,

If USD/CAD’s current rate is 0.9780, or for each USD, you get $0.9780 of a Canadian dollar.

Now if the market moves to 0.9790, or 10 pips, if you exchanged $100 USD, you would have made 10 cents.

If you exchanged $1000 USD, then you would have made a whopping $1.00

If you really were adventurous and exchanged $10,000, you would have made $10

And to make a worthwhile return, you would have to exchange $100,000 to make $100 from this one trade…

Because most retail traders don’t have $100,000 to invest in order to make $100, brokers provide leverage, which is 50:1 in the U.S. and up to 500:1 outside of US, enabling retail traders to participate in the Foreign Exchange market.

So if you use a broker that gives you 50:1 leverage, or for every dollar you invest, your broker let’s you access $50 worth of trades, so you only need to put down $2000 to trade $100,000 contract, and if USDCAD moves 10 points, you would have made $100, or 5% return on your $2000… With the market moving anywhere from 30 to 200 points a day, you can see that the potential of return is extremely high…

To recap, to trade in the Forex market you’ll need to find a Forex broker, which provides leverage and access to the Forex market.

If you like this tutorial, please watch the video and leave your comments below and don’t forget to check out our other videos on the Forex Basics series.

Next Lesson: Why should you trade Forex?

What is Forex?

Chief Forex Learning Officer — Wed, 13 Jul 2011 21:16:03 +0000

Hi, this is Henry with 4xLearning.com, and this is a quick intro on Forex Trading. For those of you who have never traded Forex, you may have the impression that Forex is a very complicated business reserved for interbank or the financial elite…

But If you have done some traveling and have had to exchange your money to a different currency, then in essence you’ve done some Forex, or Foreign Exchange…

Now we’ve established that, today’s Forex trading isn’t really exclusive to the rich or financial elite any more, as a matter of fact, through the convenience of Forex brokers, Forex is as common and accessible as the stock market to many people.

I don’t want to bore you with the history of Forex, since you can find that on Wikipedia, but the appeal to Forex trading is the high risk/return factor, because you can literally double your investment or lose it all in one trade. This is because of the use of leverage, and we’ll talk more about that in the future.

To sum it up, you may have done some Forex trading when you traveled to another country, anyone can trade Forex through Forex brokers, and what makes Forex so attractive is the potential for high returns through the use of leverage.

If you like this course, please leave your comments below…

Thank you and don’t forget to check out our other videos on the Forex Basics series.
Next Lesson: How to trade Forex?