Forex Trade Education

Forex Trading Course for Beginner 

Welcome you to the Khulna Forex Bazar Trading Course where we will introduce you to the basics in trading, promote understanding and assist you in your trading career. 

The Course is Included
1)    Introduction Forex
2)    What is Forex Trading
3)    How to start Forex Trading if I’m newbie
4)    Trading Tools
5)    Types of Analysis
6)    Trend Line
7)    Forex Market Hours
8)    Money and Risk Management

For beginners of forex we advise to read, especially, first several sections of the course, including information on technical and fundamental analysis. They will help you to learn how to predict the financial market on the basis of generally accepted methods of analysis, build a simple trading strategy and begin trading on the basis of the most liked techniques.

1) Introduction Forex
The market in which currencies are traded. The Forex market is the largest, most liquid market in the world with an average traded value that exceeds $3.98 trillion per day and includes all of the  currencies in the world. There is no central marketplace for currency exchange, trade is conducted over the counter. The Forex market is open 24 hours a day, five days a week and currencies are traded worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney. The Forex is the largest market in the world in terms of the total cash value traded, and any person, firm or country may participate in this market.

2) What is forex trading
Forex is the international business of trading currencies. The aim of a forex trader is to buy a currency when the price is low and sell it when it is high.The fastest way to make money It takes less than 5 minutes to open a forex trading account, and less than 1 hour to deposit funds, so you can start building your personal wealth quickly.

EXAMPLE:
Yesterday you bought 1 EUR at 1.50 USD. Today you sold that 1 EUR for 1.51 USD.

Congratulations!
You have just made a profit of $0.01 (1.51-1.50=0.01).

Now, $0.01 is a very small amount but we can take small amounts and create bigger profits out of them. In order to make the bigger profit you should trade a bigger volume of money, like thousands or millions of dollars. Just imagine you bought 100,000 EUR for 150,000 USD (100,000 EUR x 1.50 USD) yesterday and sold it today for 151,000 USD. You would have earned 1,000 USD on that trade in just one day!

3) How to start Forex Trading if I’m newbie
As we mention above that anyone can join this Forex market. First of all, you need to open a live trading account, verify the account by uploading your documents such as National ID Card, Passport, and Driving License for identity purpose and for address proof you need to upload your own name issued Bank Statement, Water Bill, Electricity Bill or any kinds of Utility Bill.

After verify your live trading account you need to add fund in order to start trading. After complete account opening process you need to download MT4 Platform and login there using your MT4 login information which one you receive in your email account registration time.MT4 Platform is an online based software where general people can Buy and Sell currency pair, Gold, Metal, Oil, Bond, Stocks etc. A trader can use this MT4 Platform many devices such as PC, MAC, Android, IOS, Tablet also Web Platform.

4) Trading Tools: 

1. What is lot size?
2. What is pip?
3. What is the Spread?
4. What is Leverage?
5. What is Margin?
6. What is Stop Out?
7. What is Support and Resistance?

TRADING TOOLS

(1) What is lot size?
A standard trading term referring to an order of 100,000 units. Currency pairs are usually traded in units of 100,000 (standard lots), 10,000 units (mini lots) or 1,000 (micro lots) meaning buying / selling 100,000 of the base currency while selling / buying the equivalent number of units of the counter currency.

For example, if you open a Buy position of one lot for EUR/USD for the ask price of 1.4000, you are purchasing 100,000 Euro while, selling 140,000 USD. A standard contract (one Lot) in which the USD is the counter currency one pip will equal $10 ($1 for a mini lot). For all other pairs exact pip values are slightly different and range from $8 to $10

(2) What is pip?
A pip is a number value. In the Forex market, the value of currency is given in pips. One pip equals 0.0001, two pips equal 0.0002, three pips equal 0.0003 and so on. One pip is the smallest price change that an exchange rate can make. Most currencies are priced to four numbers after the point.

For example, a five pip spread for EUR/USD is 1.2530/1.2535. In the major currencies, the price of the Japanese yen does not have four numbers after the point. In USD/JPY, the price is only given to two decimal points – so a quote for USD/JPY looks like this: 114.05/114.08. This quote has a three pip spread between the buy and sell price.

(3) What is the spread?
The spread is the difference between the buy (also called bid) price and the sell (also called ask) price. Two prices are given for a currency pair. The spread represents the difference between what the market maker gives to buy from a trader, and what the market maker takes to sell to a trader. If a trader buys any currency and immediately sells it - and no change in the exchange rate has happened the trader will lose money. The reason for this is that the bid price is always lower than the ask price.

For example, the EUR/USD bid/ask currency rates at your bank may be 1.2015/1.3015. This represents a spread of 1000 pips. This spread is very high compared to the bid/ask currency rates for online Forex investors, such as 1.2015/1.2020 - a spread of 5 pips. In general, smaller spreads are better for Forex investors because a smaller movement in exchange rates lets them profit from a trade more easily.The spread is where the market maker will make their money.

(4) What is Leverage? 

The ratio of the transaction size to the actual investment used for margin. Leverage allows a client to trade without putting up the full amount. Instead a margin amount is required. For example, 50:1 leverage, also known as 2% margin requirement, means $2,000 of equity is required to purchase an order worth $100,000. 400:1 leverage means $250 is required to purchase an order worth $100,000. Leverage increases both upside and downside to risk as the account is now that much more sensitive to price movements.

(5) What is Margin?

The word ‘Margin’ simply refers to the amount of money that you need to have in your account or futures margins refer to the minimum required balances to place a trade. It is a good faith money. Margin requirements for most futures contracts range from 2% to 15% and are set by the exchanges based on volatility.

(6) What is Stop Out?

Stop Out is an order for compulsory closing trading position (s) in the case of an insufficient number of free margin. This order is generated by the trade server. Stop out is the state of account when the marginal rate falls to a specified broker-level or even lower. As a result, the broker immediately closes all open trading positions in order to avoid losing money. Stop out fear as a trader and broker of the utter bankruptcy of the account. Stop out is a critical level of losses, which operates automatically to prevent a capital loss. As a result, the availability of such insurance, the trade balance is always positive. Calculating stop out is determined depending on the number of open positions and account status. The formula for calculating this level the following: Stop out = ((balance + floating profit - floating loss) / Margin) * 100%. Stop out is described in percentages.

(7) What is Support and Resistance?

Look at the diagram above. As you can see, this zigzag pattern is making its way up (bull market). When the market moves up and then pulls back, the highest point reached before it pulled back is now resistance.

As the market continues up again, the lowest point reached before it started back is now support. In this way resistance and support are continually formed as the market oscillates over time. The reverse is true for the downtrend.

5) Types of Analysis
There are three main types of forex analysis, technical forex analysis and fundamental forex analysis and sentiment forex analysis.

Fundamental:
Forex analysis bases the valuation of an asset (in our case a currency) on important economic reports. An example could be represented by the comparison of the employment reports of two countries. In this case, we could use the information of the reports to predict a decrease in value of the currency with the worse report and therefore to create a strategy that maximizes the earnings on the employment trend.

Technical:
Forex analysis is based on historical behavior of the forex market and therefore we can say it consist of taking strategic decisions based on what happened more than on what we think it would be. Many forex traders use a combination of technical analysis as well as fundamental analysis since it grants more flexibility and integrates technical forex analysis with the connection to everyday events.

Sentiment:
Sentiment analysis is a type of forex analysis that focuses on identifying and measuring the overall psychological state of all participants in the market. Sentiment analysis attempts to quantify what percentage of market participants are bullish or bearish. Once the majority sentiment is identified, a sentiment analyst will often take up a position on the opposite side on the assumption that the crowd is wrong.

6) Trend Line

There is a famous saying in the trading world, which is “Trend is your Friend”. While by just following the trend is not a guarantee that you will make profit, it increases your winning probabilities immensely. One simple and effective way to see on what direction is the trend, or if there is no trend at all, is to use a Simple Moving Average on a high timeframe. If prices are above the Simple Moving Average line, then there is an uptrend, if they are below there is a downtrend, while if they more or less in the middle then the pair is ranging (no trend).

Here are 3 examples of pairs are in an uptrend, downtrend, and ranging.

7) Forex Market Hours

This section of the website will help clarifying the concepts of Forex Market Hours and Forex Trading Sessions. One of the main advantages of Forex markets is that they are open during all working weeks – from Sunday 10:00 P.M (GMT) to Friday 10:00 P.M (GMT). Now it is logical to ask yourself a question – What times are the best for trading within Forex Market Hours?

Generally talking, the most interesting Forex Trading times are between the opening of the London stock exchange begins its activity, around 8 A.M. (GMT), and the closing of the American market, which takes place around 10 P.M. (GMT). The most hectic time in the Forex market is when the London stock exchange overlaps with the American market between 1 P.M. (GMT) to 4 P.M. (GMT). These are the times which can be considered as the most liquid or when the most Forex traders are trading in the markets. If your interest is to do day-trading this the way you should use to make trades.

Forex Trading Sessions

There are four trading sessions in the Forex market, which take place every working day when the Forex markets are open: The Pacific trading session, the Asian trading session, the London trading session and the New York trading session.

London trading session

The London trading session starts about 8 A.M. GMT and ends at around 4 P.M. GMT. The most active Forex currencies during this time frame are GBP, EUR and USD

New York trading session

The New York trading session starts at about 1 P.M. GMT and ends at about 10 P.M. GMT. The most active Forex currencies during this time frame are EUR, GBP, AUD, JPY, and USD.

Asian trading session

Asian trading session very often is the quietest session of the Forex market. All currencies move very slow and it’s not a very good time to day-trade. The only real Forex currency in this period, which has newsworthy activity, is the JPY and the activity is slow until the main financial events happen.

Pacific trading session

Pacific trading session begins when Australian and the New Zealand markets open. This is one of the quietest sessions for Forex trading. Majority of traders’ activity is focusing on the currencies: AUD, NZD, USD.

8) Money and Risk Management

Before you start trading, you have to understand that money and risk management is the most important step to take as a trader. The number one reason for traders losing their all money is the lack of a proper money and risk management strategy.

As a general rule, you should not take risk more than 5% of the capital you invest on a single position. Some traders are comfortable to risk as much as 10%, but you should never exceed this amount. Below is a useful guide that shows the maximum volume (lot) to open on a single position, according to how much money you have invested and according to your stop-loss (examples of 10-pip and 15-pip stop loss are given. It is highly recommended to choose a green and maybe a yellow area, but to avoid red.

Gold is riskier to trade due to high volatility; however more profit (or loss) can be made in relation to the margin needed in comparison to currency pairs. Below is a recommended risk strategy of trading gold.