every Trader that watches this video
will have a complete understanding of
Forex let's get it so first off what is
Forex Forex is the largest and most
liquid Market in the world and it trades
on average about 6.6 trillion dollars
per day now what that means for us as
Traders is that we're never going to
have a problem getting our order filled
Forex is a global Marketplace for
exchanging National currencies and the
way we use this as Traders is that in
Forex we're trading based on something
called a currency pair which we'll talk
about in a second and this currency pair
is nothing more than the exchange rate
between two different countries and this
exchange rate fluctuates Up and Down
based on the different strengths and
weaknesses of an economy for a specific
currency along with many other factors
and as Traders we use information that
we gather from technical analysis and
fundamental analysis along with news
events in order to predict these
fluctuations in prices and trade
accordingly now as I just said Forex is
traded in something called a currency
pairs the very next thing we're going to
do is take a look at what is a currency
pair a currency pair is exactly what it
sounds like it is two separate
currencies in a pair and we use this
currency pair to determine the exchange
rate of two separate currencies to make
this more clear you can see on the
screen we have the Aussie dollar and
what I'll do is I'll also put a
screenshot of every three letter
abbreviation that equals a specific
currency on the screen somewhere right
now and these three letter symbols again
represent a specific currency so in this
case we have the AUD which would be the
Australian dollar versus the USD which
would be the United States dollar in a
currency pair the first currency in this
pair is what is known as the base
currency and the base currency is always
equal to one the second currency in a
currency pair is what is known as the
quote currency the quote currency is the
quote you actually see on the screen so
the way to look at this is it takes one
Australian dollar and if I have one
Australian dollar I have roughly 0
0.6504 cents of United States dollar
currency so that means it takes a
roughly 65 cents USD to equal one
Australian dollar so in this case I want
to ask you which currency is stronger at
this moment well if we only need 65
cents USD in order to equal one
Australian dollar then the USD is
stronger than the Australian dollar at
this moment let's do this one more time
with another example on the screen you
can see that we have the euro versus the
dollar so if we have Euro versus dollar
which one of these is going to be the
base currency that's gonna be the Euros
that means the euro is going to be equal
to one then we have the dollar which is
what it's called the quote currency
since the dollar is the quote currency
that means it takes
1.0713 USD to equal one Euro so let's go
ahead and put that down we have
1.0713 I know my handwriting is awesome
and so now we know that the euro is
stronger than the dollar at the moment
because it takes us 1.07 or a dollar and
seven cents to equal one Euro at this
moment and for a last example I want you
to do this one completely which one of
these in the cad Yin is going to be the
base currency now which one's the quote
currency and which one is represented by
this number
so hopefully you said that the Canada
was the base currency hopefully you said
the yin was the quote currency and
hopefully you said the
102.63 was how many Yen it would take to
equal one Canadian dollar now let's move
on to Brokers so what is a Forex broker
a Forex broker is just a financial
services company that acts as a
middleman between us as Traders and the
Forex Market itself it's how we actually
Place trades now in terms of Forex
Brokers there's plenty of options out
there the only things that I'm going to
say here is that you want to make sure
you find a regulated broker that's
regulated in a country you've heard of
so not a broker that's registered and
regulated in the Cayman Islands that's
something you would not want because
there you're running the risk of that
broker shutting down going bankrupt and
you losing all of your money so you
don't want to find a broker that's
either not regulated or not regulated in
a country that you have heard of but as
long as you have a broker that's
registered and regulated in a country
you've heard from you're probably in the
clear the other thing you want to look
out for is you want to find a broker
that has competitive spreads spreads are
how Brokers make money some Brokers are
going to have higher spreads than others
so you want to make sure to find a
broker that has competitive spreads and
outside of that this broker is going to
need to cater to your own personal needs
so it may be different for everyone for
me my personal broker is olanda they're
not sponsoring this video I don't have
any kind of affiliate link with them
whatsoever I've just used them forever
and it's who I use right now feel free
to check them out at owanda.com now your
broker may have a trading platform that
comes with it but they're normally not
that good so the next thing you're going
to need after a broker is an actual
trading platform you've probably heard
of mt4 and mt5 my favorite though is
tradingview.com so this is my trading
platform that I use on a daily basis
it's an online trading platform meaning
you don't have to download anything to
access it and it's got everything anyone
would ever need it's got every indicator
you can think of it's got all different
types of tools that can help you make
trading as smooth as possible which is
very very necessary in my opinion if you
want a full tutorial on this platform
I'll put it in the top right corner of
the screen along with in the description
I've made like a 20 minute tutorial that
goes through every part of trading View
and teaches you exactly how to use this
trading platform if you're interested in
that check out that video but one of my
favorite parts of trading view is that I
can connect my broker to this trading
platform and I'll have to switch back
and forth between my broker and my
trading platform in order to place
actual trades so right now what I want
to do is show you how to connect your
broker to trading view if this is
something you decide to do also feel
free to check out tradingview by going
to
www.tradingview.com so in order to
connect your broker to trading view all
you need to do is come down here to
trading panel you can make this as large
as you want to I hit see all Brokers and
at this point just look through the list
of Brokers that are available in your
area and make the decision on whether or
not you would like to connect your
broker with Trading you now if your
broker is not on this list that simply
means that they cannot connect with
trading View at this time and you have
to find a different trading platform or
do as I used to do and go back and forth
between your trading platform and your
actual brokerage account in order to
place trades so now that you know a
little bit about Brokers trading
platforms and how to connect a trading
platform to trading view let's move on
now and talk about what is a pip so a
pip is how the Forex Market moves it
stands for percentage in points and
what's really important for you to
understand is what a pip is a pip is the
fourth place after the decimal so right
here we're looking at the euro dollar
this is the important part what you
really need to understand is that a
single pip is the fourth place after the
decimal if we go one two three four
which one of these numbers is a pip the
fourth one so the nine here is one pip
what that means is that if we go from
1.0709 on the euro dollar to
1.0708 we have now went down the price
of the Euro against the dollar has went
down one pip
so that's how you calculate and find a
pip and how much prices move is based on
these bits so let's go ahead and do
another example here what if we go to
1.0809 at this point how many Pips has
price went up
well we've went up 100 Pips so the nine
is the ones the zero here would be the
tens the seven would be the hundreds
that's how we calculate everything let's
do two more examples really quickly it's
just easy math so you should be able to
get a hang of this pretty quickly what
if we go to 1.07
one zero how much did we go up we went
up one pip because we went from 09 to 1
0. one more example here what if we go
to
1.0701 how many Pips did price move
lower we moved lower by eight Pips
because we went from zero nine to zero
one meaning we went down eight Pips in
this example now this four decimal point
to the PIP is true for every currency
pair except Yen crosses except pairs
that have JPY in them so what we're
going to do now that you understand a
regular currency pair in terms of Pips
where the PIP is and how to determine
how much a currency pairs went up and
down using Pips let's now take a look at
a JPY pair and where the PIP is on those
pairs so as I said on a regular currency
pair everything but Yen pairs the PIP is
gonna be the fourth place after the
decimal which means we can't have that
on a Yin pair because on Yin pairs we
only have two places after the decimal
so for Yin pairs the PIP is the second
place after the decimal so one two that
would mean the six right here is the PIP
counter for the dollar Yen so if the
dollar Yen goes from
139.96 to 139
0.97 how much did the dollar Yen go up
it went up by one bit
let's do a couple more examples what if
we go to 139
.86 how much did we go down we went down
by 10 Pips so now that you know what a
bip is and how we can determine how much
prices of a currency pair have went up
and down by using fips what is a pip
worth how to calculate the value of a
bit is what we're going to take a look
at right now while in a trade in the
Forex Market as the market moves up and
down we're obviously making and losing
money depending on what position we have
on now with the market moving in Pips we
need to know another side to this
equation to understand what the value of
each pip as price moves is going to be
worth how much is it going to take out
and add to our account as prices go up
and down the way we determine that is
through the position size that we are
using so each pip can be worth a
completely different amount depending on
your position size luckily there are
position size calculators that do all
this work for us but I'm going to show
you a chart that gives you a general
rule for position sizing and how much
each pip will be worth based on the
position size that you have let's take a
look at that right now so here that is
and what we can see here is a nano lot
is about 100 units of currency and a
hundred units of currency means that
generally you'll be making and losing
about one cent per pip as we go up you
can see that these numbers go up so as
we go to a micro lot which is 1 000
units of currency being your position
size you'll be making and losing about
10 cents per pip as we go up to a mini
lot which is ten thousand units of
currency you're gonna be making and
losing about one dollar per pip and as
we go up to a standard lot we're gonna
be making and losing ten dollars for
every single pip price moves up or down
so again that is a generalization and a
general rule of how much each pip is
going to be worth it's a little bit
different for every currency pair but
this is a good generalization and again
fortunate for us we do not need to know
this at all because there's something
called position size calculators which
I'm going to show you right now just in
case that wasn't completely clear as
price moves up and down after we've
placed an order it's doing so obviously
in Pips and as price goes up a certain
amount of Pips we're gonna make a
certain amount of money if we bought at
a certain price as price goes down we're
going to lose a certain amount of money
and each pip can be worth different
amounts depending yet again on our
position size so hopefully that clears
any doubts up about that situation our
position size is going to be what
determines the value of a pip as price
moves up and down while we're inside of
a trade now let's take a look at a
position size calculator I like to
personally use this position size
calculator is on myfxbook.com you can
literally just type in position size
calculator for Forex on Google it'll be
one of the first like five that pop up
or you can just go to the link you can
see right under the video and this makes
determining the value of a pip extreme
really easy without you having to do any
math at all all you have to do is put in
the currency pair you're trading put in
your account currency then you're going
to put in your account size let's say
you have ten thousand dollar account the
next thing you can do is type in what
percent of your account you want to risk
let's go with a two percent risk and
then we're gonna need your stop loss
let's say that the amount you're willing
to lose on that trade is about 20 Pips
now all you have to do is hit calculate
and this will show you the exact amount
of units that you need in order to place
this specific trade so a position as
calculator is going to be the way to go
instead of trying to determine the value
of a pip by using a bunch of math
instead of that let's just use the
position size calculator because if it's
here why would we not use it to save
some time now as I said in order to use
this correctly you're going to need to
know what your stop loss is in Pips and
for that reason what I want to do right
now is go through what a stop loss is
how you can set a stop loss correctly
and talk a little bit about risk
management along with leverage so a stop
loss is going to be a main contributor
to our risk management plan a stop loss
is going to be a price that we go okay I
was wrong about this trade and I want to
go ahead and get out cut my losses and
move on to the next one so let's say
here on the pound dollar that I'm
expecting a bounce out of price because
of the fact that we're at a previous
level of structure that's been tested
multiple times and I see this little
doji happening so I'm like cool I want
to buy this right now well a good place
for a stop in my opinion and for my own
personal trading would be below this
Zone because if price in fact breaks
below this Zone then my analysis is no
longer true this area is not holding up
price if price goes below it hopefully
that makes sense so this might be an
area that I put my stop loss and the
exact price of this would be
1.2406 now for risk management plans
something we have to determine is how
much of my account am I willing to lose
on this specific trade trade so if I
have roughly 43 Pips down to my stop
loss how much does each pip need to be
worth for me to risk one to two percent
of my account on this trade let me make
that more clear so let's say I have a
10K account
and I want to risk two percent meaning I
want to risk 200 okay well in that case
how much does each pip need to be worth
in order for 43 Pips to equal my 200
loss now we could do some simple math
and figure that up or we could take the
easy route and just go back over to our
position size calculator we're on the
pound dollar that's what we're gonna do
by the way so we're on the pound dollar
let's go over here to position size
calculator we'll type in pound dollar
we'll go ahead and click that we set our
account currency as ten thousand dollars
and our risk we're trying to take on
this trade is two percent just so you
know an average across retail Traders is
somewhere between one percent and two
percent of their total account value is
what a lot of retail professional
Traders are going to be risking so we're
gonna go with two percent in this case
and our stop loss in Pips was
42.8 Pips we're gonna call it 43 Pips so
we'll do 43 and then we'll click
calculate and what you'll notice is this
does all the work for you it gives you
the exact position size that you need
which is 46 512 units or 0.47 Lots in
order for this to be true on your trade
in order for your stop loss on your
trade to equal 200 that's the position
size you're going to need to use it's 46
512 units for this pound dollar trade so
that's a little bit about risk
management how we can utilize stop
losses along with our position size
calculator in order to make risk
management extremely easy in terms of
actually placing the stop loss in your
brokerage account it's going to depend a
little bit on your brokerage or your
trading platform in trading view I just
right click the chart click create new
order if I wanted to buy the pound
dollar at market right now all I would
need to do is hit stop loss you can see
the number for my stop loss as in the
exact price right here it's
1.2406 so I would go for the price of
the stop loss
1.2406 you'd also go up here to your
percent risk and do whatever you would
like let's say it's two percent here in
this case so that would be the actual
process of placing the stop loss order
as you're buying or after you buy a
specific trade here on trading view as I
said it'll be slightly different
depending on the platform and broker
that you use now let's move on so I can
teach you about leverage leverage it's
probably one of the most complicated
subjects for ninety percent of people
that attempt to start Forex Trading but
I'm going to make this very simple I
promise leverages the use of borrowed
funds from your broker in order for you
to be able to have a larger positions it
gives you a ability to have a larger
position size and what did we just say
about Pips every pip the market moves
while you're in a trade is going to be
worth a certain amount that number the
amount each pip is worth goes up
depending on your position size the
bigger the position size the more each
pip is worth so with that being the case
obviously leverage can help you grow an
account faster because each pip can be
worth more but it can also cause you to
have much larger losses than you
initially could with your own account
balance so that is why it's so important
to understand risk management stop
losses and only risk a very small
portion of your account per trade before
even talking about leverage that's the
whole reason we just did that entire
section first so let's dive deep into
leverage right now let's say that you
have a ten thousand dollar account and
you have no leverage at all in this case
what is your maximum position size your
maximum position size that you can have
in a trade or in the Market at all is
just your 10 000 units so this would be
your maximum position size with zero
leverage and what I want you to do is to
start thinking of Leverage not as some
complicated thing you have to try to
figure out but as your maximum position
size your leveraged account let's go
with a ten to one leverage to keep math
very simple but it's going to be the
same for any leverage you use the
numbers are just going to change based
on what leverage amount you have we're
going to go with a 10 to 1 leverage so
on a ten thousand dollar account with
ten to one leverage now instead of your
maximum position size you can have it
any one time in the market being 10 000
it's now a hundred thousand units now
the wrong way to use leverage would be
to go out and just place a trade with a
hundred thousand units because that
means that each pip is gonna be worth 10
bucks you only have 100 bips before you
blow your entire account that would not
be the right way to use leverage but
what leverage can help us do is what if
we wanted to be in three different
trades all at a two percent or less risk
but we couldn't do that more than likely
with just 10 000 units of Maximum
position size we can do that now by
utilizing leverage which in my opinion
and the way I trade this is going to be
the correct way to use Leverage is to
use it in order to be in more trades at
once not necessarily in order to just
place a trade with the largest position
size possible so again replace the word
leverage with your maximum position size
Leverage is not your broker telling you
hey you can borrow a hundred thousand
dollars and you can lose a hundred
thousand dollars we'll only take 10
grand from you you can lose a full 100
that's fine that's on us that is a very
common misconception that's not true at
all your Leverage is just the maximum
position size you can hold it once when
your account drops and you lose ten
thousand dollars you're gonna get a
margin call they're gonna take the
position off themselves and you're gonna
have your account being completely blown
you can't lose a hundred thousand
dollars because you have 10 to 1
leverage on a 10K account that's not how
it works again Leverage is your maximum
position size your maximum buying power
this is the amount of units you can hold
in your account at any one given dime so
with that being the case to make this a
little more clear let's go through a
couple of hypothetical trades and you
tell me whether or not you could place
that trade with a ten thousand dollar
account using ten to one leverage we'll
use the same pound dollar trade as our
first example so on this trade remember
the 43 Pips is our stop loss but let's
say you wanted to risk five hundred
dollars this time you said hey I'm going
to risk a little more than normal I'm
gonna go with a 500 risk that's five
percent of the account and what we have
to do now is figure out what position
size do we need for this stop loss to
equal 500 remember we have a 10 K
account with 10 to one leverage meaning
we have a 100k buying power we can open
a maximum position of a hundred thousand
units let's go over to the position size
calculator hit the pound dollar yet
again and we're looking at an account
size of ten thousand dollars
we're looking at a risk of 500 by the
way you can swap this from percent to
regular money just like that we're gonna
be looking at a 500 risk and remember
our stop loss was 43 Pips so if I hit
calculate I'm going to ask you a very
serious question after learning what you
have about leverage we're risking 500 on
a ten thousand dollar account be honest
do you think you should be able to place
that trade
so many of you probably just said yes
you're thinking oh it's just 500 risk on
a ten thousand dollar account why
wouldn't I be able to place that trade
remember
Leverage is our maximum buying power and
with the leverage we have currently that
we've discussed throughout this video
10K account
ten to one leverage what's our Max
buying power 100 K units now I want you
to look at the units and look how much
we would need to place this trade in
order to place this trade we would need
a hundred and sixteen thousand units our
Max buying power with Leverage is only a
hundred thousand units so even though
all we're trying to do is risk five
hundred dollars on a ten thousand dollar
account which I know seems like it
should be capable you should be able to
do that you can't do that because your
broker is only giving you ten to one
leverage you have a Max buying power of
100K units and that's the reason you
can't place this specific trade so
hopefully that clears up a little bit
about leverage let's take a look at one
more example
let's just change this trade up and say
we wanted to risk three hundred dollars
calculate now we don't have to go
through much you should know by now that
you have a 10K account you have 10 to 1
leverage you have a hundred thousand
units of buying power in this case could
you place this trade
yes because all you need is 69 000 units
in order to place this trade so remember
Leverage is not the amount you can use
and just because all you want to risk is
five hundred dollars on a ten thousand
dollar account doesn't mean you're going
to be able to because what you have to
think about and look at is your max
buying power otherwise known as leverage
so if you only have 100K of Max buying
power then the largest position you can
open is going to be a hundred thousand
unit position and again this works
across everything if you had a 10K
account
and let's say you had 50 to one leverage
your max buying power now is 500
000 units again it's just simple math
combining your leverage with your
account or multiplying it in order to
figure out your leverage and or Max
buying power learning what you just did
about the basics of Forex is a great
start but in order to be a successful
Trader and ever start making real money
from Trading there's three important
skills you must master in the middle of
this triangle is everyone making money
from their trading all of them have
mastered a strategy or strategies that
make money over time they've all
mastered their risk management and
they've all mastered their mindset we
call this trading psychology and right
now I'm looking for 500 new or
struggling traders to mentor and teach
each of these very important skills to
and help guide all 500 of these traders
to trading success so throughout this
process as you'll not only get access to
all the strategies techniques tips and
tricks that I've learned about trading
throughout my decade of trading
experience but it's also a full Mentor
program where you'll have access to me
to answer any of the questions that you
may have you'll also be getting some of
my own personal trading setups each and
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made it to the end let me know in the
comments section I wish you the best of
luck on all your future trades and I'll
catch you in the next video see you soon