Forex Trading for beginners - EXPLAINED - Step by step

hi folks now last week i was scowling through the youtube videos pretty much i guess like you were doing today before you found this video today basically seeing what was out there for beginners possibly thinking about starting off in the forex markets now for those that follow me know that i've done multiple videos over the years some of them have been quite well received over a million views i think the top one is coming up for 2 million views 100 and 230 000 followers i think it is but it dawned on me what was certainly missing out there was a concise like crash course in forex trading but the challenge for me was to get this out in a reasonably short video with not wanting to bore people but equally not wanting to leave out some crucial parts about the forex markets that's why i decided to put this video together i really hope it works and now of course you're not going to learn how to become a consistently profitable forex trader in just a 20 minute video here on youtube but what i want to do is to show you what the forex market is all about if it makes sense if it sounds like something that you want to develop further then there are plenty of places where you can do just that including with us here as well now i'm also interested to hear your views as well so make sure you leave a comment after this video if you enjoyed the video please give me a thumbs up if you don't give me a thumbs down at the end now don't forget to subscribe the channel if you don't already do so and all the youtubers say don't forget to heal that bell notification just in case you don't want to miss the next video when it's been released don't forget to follow us on instagram and twitter and of course follow us on facebook if you follow us on facebook you can tune in live every 2pm london time for a live event where we discuss market opportunities for the week ahead now as a special bonus i will be coming on live every monday at 3 p.m london time here on the youtube channel discussing trading opportunities looking at some education as well your chance to interact with me on a live basis so you get your questions answered in real time another brilliant reason why you should be subscribing to the channel right without further ado let's get into forex for beginners hi guys right today is my biggest youtube challenge today i'm going to show you over the next 25 minutes everything that i know about the forex market so that you can make an informed decision whether it's something you want to delve deeper into that joking aside there is so much to know when it comes to trading come to trading in general or indeed the forex market so what this is intended to do is to basically skim over some of these topics i'm going to skim over the most important topics if you want more information of course you can subscribe to the channel and get all the other information in there that i put out on the channel i've covered a lot of these topics in much more detail on the channel here and also of course in our trading room as well do you wish to come over there but basically this is just like a quick summary of everything you need to know and here are the topics that i want to cover with you today so the what the why and the where why are we trading the forex market what are forex payers often people ask me what is a forex pair lots and leverage we're going to demystify the forex price quote sometimes bit confusing for some people technical analysis versus fundamental analysis we're going to look at brokers and the different trading platforms you can use in particular i want to show you the mt4 the mt5 trading platform that's the platform that most beginner traders use these days then we'll look at the forex price chart what the forex price actually looks like on a chart how to read them and so forth look at the different order types different strategies that you can use strategies basically set of rules they will allow you to enter and exit trades we look at the risk management the psychology tips and challenges psychology one of the most biggest and most important topics of the whole of the trading game we're going to talk about copy trading and signal following is it really worthwhile will you make money by following signals and copying other people's trading then we'll wrap it all up at the end so then you can make that decision whether you want to continue of course with any of the topics here that you want to delve deep into as i say check out the youtube video i suggest you watch this video now in its entirety then watch it again and pause if you want to take notes because i say we are going to run through it it's going to be at super fast speed so what is the forex market well you may have heard this before fox market is the largest financial market in the world today that's a turnover of almost six and a half trillion dollars you see what's happened basically in the last 30 years or so the growth has been pretty pretty explosive and it's growing each and every year as well certainly dwarfing any other markets the next nearest market that is indeed the stock market which doesn't even come close so what is the forex market well in a nutshell forex trading is basically the buying of one currency and the selling of another currency now if you think a particular economy is going to do well in the future or in the next hour or whatever it is and you might think that currency will do well as well then you buy that currency but when you're buying a currency you're exchanging it for another currency so you may be picking a currency that isn't looking so positive in terms of its economy and it's and its outlook so basically the forex market is buying one currency and they're selling another unlike if you're buying stocks you're just basically buying the stock or commodity you're just basically buying one entity forex has two transactions going on at any one time now the chances are you've already traded the forex market without even knowing it now imagine you want to go on holiday which i'm sure if you do you want to change up your currency you change up your currency if you're going overseas to the currency in which you are traveling to i live here in the uk if i want to go to the big apple in the usa i've got to change my pounds for the u.s dollar in order to facilitate my whole day my spending so here i am in the uk but i want to take 1 000 pounds with me on holiday so i go to the bureau of change you see them there at the airport all the prices on the board flicking away they're changing they're changing instantly throughout the trading day they're trading changing five times five days a week 24 hours a day these prices are flickering and changing the moment i'm changing up and i see the exchange rate on the board it's 1.3 so my thousand dollars buys one my thousand pounds i should say buys one thousand three hundred dollars thirteen hundred dollars now let's assume that the holiday doesn't take place let's assume tell you that the pilots go on strike well let's assume there's a global pandemic and all the flights have been cancelled i'm sitting here with all these dollars in the uk i've got nothing to do with them can't spend them here in the uk i've got to change them back into pounds so i can carry on spending my money and now the exchange rate has changed let's assume the exchange rate has changed from 1.3 to 1.2 change rate exchange rates are changing as i say all the time on the money markets so now my thirteen hundred dollars that i'm owning i've got to buy pounds back and i buy them back at the prevailing exchange rate 1.2 so if i divide 1 300 by 1.2 i get 1083 pounds so basically i have made an 83 pound profit for doing absolutely nothing purely because the exchange rate has shifted from 1.3 to 1.2 that's the basics behind an fx transaction a foreign exchange transaction slight difference when we're coming to trading it but that is the basic premise behind forex so why the forex market first up ease of access folks market is basically decentralized it means there's no central marketplace basically it's a communication network with all the banks and brokers all putting in their price fees and us as retail traders have easy access to this market via brokers as long as you've got an internet connection you can use this with a laptop or a smartphone you can trade from the beach often people say trading from the beach i think if you're sitting on the beach you shouldn't be trading the forex market there's plenty of other things you should be doing but you get the ideas you've got an internet connection accessing the forex market these days is indeed very very easy and liquidity i mentioned to you a moment ago about the liquidity it's a vastly uh growing markets 6.5 trillion dollars a day that basically means it's very easy to enter and exit the market obviously the more easy it is the cheaper it becomes as well so the liquidity liquidity really does assist the retail trader cost of entry uh basically is affected by increased liquidity more liquidity cheaper it is transaction costs as i said very low commissions now a lot of the brokers are fighting for your business they want to take your business and they offer very very low commissions it's a very competitive market and the spread between certain currency pairs more about this in a minute uh sometimes can be very very close the difference between the buying price and the selling price very tight that basically means that the cost of doing business in the forex market is considerably less than other trading entities and leverage remember i showed you uh there that example of going on holiday with your thousand buck pounds and you change them in to dollars and you make 83 pounds but clearly you're not going to be giving up your day job with 83 pounds profit but with the forex market many brokers will offer you high leverage basically lending you money to trade the markets that basically if you have an idea where you think a currency market is going currency pair is going you can use broker leverage to make those gains bigger leverage is a double edged sword more about that later leverage can offer huge returns but also can kill you as well unless you know how to use it correctly and use it wisely training hours forex market is open 24 hours a day uh five and a half days a week just because it's open 24 hours late five and a half days a week it doesn't mean you should be trading 24 hours a day leads to fatigue leads to problems leads to certain nasty habits as well sometimes but it certainly suits those on shift work people that have day jobs people that aren't able to spend a few hours a day in front of the screen so basically it's accessible unlike a normal stock market that will open at 8am and close at four votes markets open all day long five and a half days very easy for you to do this alongside your day job as well okay so the forex currency payers that traded in the forex market now there are typically eight major currencies that we trade in the forex market now of course you can trade all the other currencies as well the hong kong dollars and the singapore dollars and and norwegian or whatever but the major currencies that are quoted in the forex market these days are these major eight australian dollar pound yen euro you see them here on the board so when you cross match all these different currency pairs you have a total of 28 different currency pairs that you can trade so you can trade the pound against the aussie pound against the end so basically 28 different so there's plenty of opportunity for you to get into a strong currency against a weak currency plenty of opportunities if nothing's going on in the euro against the pound no problem there might be something going on against the new zealand against the swiss plenty of opportunities a little bit more about the forex pairs now basically they split between majors and miners now the majors are currently pairs that basically trade against the us dollar now the u.s dollar is the most actively traded currency on the planet i think the last time i checked it basically accounts for about 88 of all foreign exchange transactions have the dollar on one side so these other seven currencies against the us dollar are known as the majors now the benefit of trading the majors because they're most actively traded is that the volume and liquidity is much greater so sometimes volume and liquidity might dry up in the less actively traded currency pairs against the majors they have the most volume and the most liquidity because they are the most actively traded and that basically means you get tighter spreads the difference between the buying price and the selling price that is a cost in trading if you're buying a stock for five dollars and then the bid price is four dollars well cost of entry on that is one dollar so the more actively traded currency pair the majors the tighter the spread the less cost it is to trade so the cost of trading the majors is less conversely if you're trading the miners miners all they didn't uh all the other currency pairs um cost to business is generally more expensive these are less actively traded although there are some major opportunities in these as well the volume in liquidity is less okay the spreads can be wider if you're trading perhaps maybe the new zealand dollar against the swiss franc something like that sometimes the spreads will widen in that because it's not so actively traded so it's fair to say the cost of trading of the miners everything that doesn't have the us dollar on one side is generally more expensive now i want to talk to you about the forex price quote so here is a typical price quote here you've got the gpp versus the usd this is the great british pound versus the us dollar 132.50 now the first currency in the quote is known as the base currency the second currency in the quote is known as the quote currency don't worry too much about that at this juncture but the first currency is the base second is the quote now if you're buying the pound us dollar it means you're buying the pound and you're selling the us dollar so whatever you're doing to the currency pair you're doing basically to the first currencies if you're buying the pound dollar means you're buying that currency and you're exchanging it for that currency there and the quote currency tells us how much of this currency the us dollar is needed to buy one of the base currency i know this sounds a bit confusing it will become a lot clearer when you actually look at the prices on a chart so for example in this example the buyer has to pay 1.3250 to buy one pound if you're selling a particular currency pair you're selling the first currency in this case you'll be selling the pound and you'll be buying the us dollar so remember whatever you're doing to the currency pair you're doing predominantly to the first currency so you're selling the pound buying the us dollar and the credit currency tells us how much of this currency you will receive for every unit of the base currency that is sold in this case the seller will receive 1.3250 for every pound that he exchanges so what you really need to know this is all a bit confusing but what you really need to know is how much is all this worth how do you calculate what the value is of this so basically let's have a look at what a pip value is worth bearing in mind this quote base currency let's assume here the bid and ask that's the difference between the buying price and the selling price here you see 145 25 to 144 145 26 the asking price as always is going to be higher than the bid price let's exchange now uh 100 000 at the ask price it would give you 145 260 this is for one standard contract in folks we talk in terms of contracts one standard contract is one hundred thousand i'll talk more about that in a second the bid currency here is at one a bid price is one forty five twenty five so a hundred thousand at one forty five twenty five would equate to one hundred forty five thousand two hundred and fifty so you can see here the difference between this is basically ten dollars that's all you really need to know don't worry too much about all that other all that stuff i mentioned all you need to know is one standard contract difference between 25 and 26 is one one pip equate to ten dollars how you work the calculation now is you simply divide hundred thousand by point zero zero zero one gives you the ten dollars that basically shows you what a pip is worth so all you need to really know is this that when you're trading in forex we trade in terms of lots now standalone as i mentioned a moment ago is 100 000 units but it doesn't mean you need to trade 100 000 units you can trade smaller lot sizes than the standard one lot you could trade a mini lot for example a mini lot would be 10 times smaller than a standard lot which case you'd be trading 0.1 of a standard lot and indeed you can go even smaller than that you can trade a micro lot and a micro lot will only be a thousand units which would basically be 0.01 of a standard lot so what you need to know here if you look at the currency quote you'll see here a pattern developing the pip size i.e how much you'll make or lose as the price moves one pip from 25 to 26 on the last screen you'll see it reflects as 10 of the quote currency so if you're trading the dollar against the cad each pip on a standard lot would be worth 10 canadian dollars if you're trading one mini lot each pip would be worth one canadian dollars you can see cost of entry pretty low and indeed if you're trading your mic a lot you can trade for low as ten cents on bookers offer that ability as well so just because one standard lot is a hundred thousand it doesn't mean you need to be trading that here again you've got the say for example the euro against the swiss the size of the pip is 10 of the quote currency 10 swiss francs or one swiss franc or indeed 10 teams and of course the euro gets the dollar well we know that the dollar is the quote currency here each pip on a uh one standard contract would represent 10 and 10 cents and of course if you're trading and you're using british pounds or you're using another currency the euro for example then you need to obviously convert this into your own particular currency so you know in your own mind what the size of the transaction will be but i think what's important to note here is that you don't need vast amounts of money in your trading account in order to access the forex market you can literally go down to 10 cents or send teams per pip depending of course on the broker great way to learn so now let's talk about leverage i showed you a moment ago when you go on a holiday with a thousand dollars you change them into us dollars you made 83 quid or enough to give up the day job but the forex market you can use leverage banks brokers will lend you money basically to invest in the currency markets and that's basically what leverage is all about so for example if you've got a thousand dollar trading account account size a thousand dollars and you're trading one standard lot which represents one hundred thousand well one hundred thousand divided by a thousand means you'll be trading with hundred to one leverage quite high leverage certainly when you're starting off and that'll equate to 10 a pip shows you you don't need much to get wrong before you blow up your trading account you get a trade transaction 100 pips against you at 10 a pip you've blown your trading account so be careful of this leverage if you're trading for example a mini lot which represents 10 000 units 0.01 you've still got a thousand dollar trading account that's only 10 to 1 leverage 10 to 1 leverage much more manageable basically it's a dollar a pip you basically got a thousand pips to lose before you blow up your trading account certainly wouldn't suggest you stay in a position for a thousand pips against you but you get the idea so you can see here that the leverage high leverage can actually be a killer if you get it wrong it could be great if you get it right but law of large numbers suggests that you won't get it right all of the time and then go down even lower you can go down to micro lots a micro lot 0.01 of a lot that's basically a thousand units a thousand units on a thousand dollar account that would basically be a one-to-one leverage that'd be like going on holiday to the viewer to change and exchanging them up from the flashing board there as well so this is basically what leverages look at the size of the account to the size of the units that you're trading and that would basically work um work out the leverage now some brokers out there they are offering excessive leverage i've seen some brokers out there offering 500 to one leverage a thousand to one leverage i think you know what's gonna happen there if you trading with a thousand to one leverage chances are when you get it wrong you are going to blow up the trading accounts so leverage is a short fast way excessive leverage i should say is a short fast way uh to the poor house if you indeed embark on that okay let's talk about now technical analysis versus fundamental analysis this is basically how we analyze the markets in order to uh make an informed decision on whether the price is going up or indeed down it's basically two ways we analyze the market as i say technical or fundamental this is technical analysis technical analysis basically is a method of looking back at a chart at price behavior on a chart see what's happened in the past to help us predict what may happen in the future so we're looking at historical data so the chart is a visual representation of what price has done in the past by looking at a chart okay price is a result of mass perception of current value so imagine you've got lots of buyers lots of sellers all around the world all trading in the forex market what you see on the price chart at that moment in time is the mass sum of all that participation are the buyers in control or are the sellers in control and you can see that very clearly on a chart now there are a number of ways that you can look at price on a chart and traders these days use what are known as technical indicators to help them to aid them in predicting the future price movements now these technical indicators come in all shapes forms and sizes there's literally hundreds of them technical indicators will be created each and every day far more out there than i can spend time talking to you with today i will be talking about some of the more important ones in subsequent videos so make sure you do subscribe to the channel and then you can catch up and learn more about these really important indicators that traders are using these days but basically they fall into three main categories really you've got the trend following indicators that's like that the moving average you've got the macd that's the moving average convergence divergence you've got the adx you've got the atr then you've got the oscillators the oscillators basically prices oscillate between oversold and overboard gives us clues where prices are getting too expensive or indeed too cheap you've got the momentum you've got the stochastics and the relative strength index and so forth you've also got the commodity channel index then you've got the miscellaneous miscellaneous i've characterized those as like the support and resistance uh pivot points and and fibonacci that's basically some of some of the technical indicators that we use as traders now another way that we analyze the markets is using fundamental analysis so fundamental analysis is basically the macro view a macro big picture view of a state of a particular country's economy is the economy in recession is it in a period of growth normally if a country is in recession normally the currency is under pressure the central bank has to cut interest rates to uh to support growth and if countries booming then interest rates move and normally the currency should follow as well now in order to determine the economic stage of a particular country's economy we look at economic releases that are released throughout the calendar week now we always look for these and there's a schedule out we normally look at that the week in advance to see what is coming out the main important one of course is the non-farm payroll that's the us unemployment data incidentally these come out at 8 30 eastern standard time which is 9 30 a.m in the us for these economic releases in the states you've got the ghost domestic product gdp consumer price index ppi which is basically inflation really and then you've got the durable goods trade balance retail sales retail prices again we spend more time delving into these in more detail on subsequent videos you can go and check them out if you wish but the fundamental analysis is basically the macro view of a state of a particular economy to give us a clue where the country's currency may go so you've got the technical analysis which is look at charts and you've got the fundamental analysis which is looking at this economic news in a particular country okay so now let's look at brokers mt4 and mt5 now there are multiple brokers out there that you can choose to use for your trading first thing to be said is if you're trading the forex market you do need to have an account with a broker so you deposit money into the brokerage account and that will allow you to trade you'll basically decide on the leverage that you're allowed to use and so forth but you need a broker in order to access the forex market we do have some suggested brokers that you can uh that you can use but that is for another time interested to note you need to know whether the broker is regulated or not regulated now depending of course on where you are in the world i suggest you go for a regulated broker some places in the world there aren't any regulated brokers you need to find a non-regulated broker but there are some good non-regulated brokers out there as well but you certainly need to know that also we need to consider is the commission charges that they're going to charge that's basically the cost of doing business if you're trading one standard contract it might be five dollars per contract or whatever it is chances are if you're starting off you're going to be trading smaller size commission it's important not too important depending of course on how big the trading account is but certainly you need to look at that also the spreads as well make sure the spreads are nice and tight difference between the buying price and the selling price make sure the accounts are segregated make sure that your money is safe and it's not going to get wiped out by some rogue trader as well so always check out to make sure your broker's uh holding your money in segregated accounts check out fast deposits and withdrawals what i like to do with a broker when i was certainly starting off was deposit a small amount of money and then withdraw it see how quick it takes for them to give me their money back i want to make sure that i get my money back when i want my money back so fast deposits and withdrawals is very important and check out their overall customer support how long does it take for them to get back to you this day and age obviously 24 7 customer support it's quite good to find a burger that's there for you when you need them all brokerages offer demo accounts and indeed live accounts a demo account basically means that you are trading with pretend money you're pretending you're trading with their make-believe money you can't do any damage it's a great way to try out your strategies uh get familiar with the trading platform and so forth there's two scores of thought a lot of people say you should only trade with a real money because it makes it feel real my attitude is if you're not if you're starting off in trading start off with a demo account if you can't make money on a demo you're certainly not going to make money on a live account making money on a debit doesn't mean you'll definitely make money on the live account but certainly the other way around certainly works you're not making money on demo you won't make it on the live account so check that out as well great way to play with that so now let's jump on to an mt4 chart and i'll show you basically what an mt4 chart looks like most broker platforms allow you to download mt4 it's free as well more recently mt5 has been introduced as well it's just a newer version of the mt4 with more bells and whistles i'm actually that familiar with it myself i'm still on mt4 myself but here is an example of an mt4 chart okay so here's an example of an mt4 uh chart so as i say most of the brokers now will allow you to download this for free you can have a demo on live you can see here i've got a demo account any trades i put through uh won't be costing me or making me any real money it's just for uh presentation purposes or practice purposes you see lots of different profiles you can have as well here just by clicking down there i can click on the swiss franc not much going on there market overview i can have the british pound again up there with a just uh one single chart all these different indicators i can stick in by going to insert at the top here clicking the indicators i can put in oscillators and all the different oscillators are in there as well might want a macd in there as well another macd goes in there so you put all these indicators in that you're at at your will you can take them off as well very intuitive um you can also select to have different time periods at the moment this is the pound against the dollar on the four-hour chart i can move that to the daily chart looks slightly different but it's the same price just over a longer time period i can have the 15 minute chart again everything's updating instantly i've got the one minute chart as well for those of you that want to get down to the one minute chart i can check to see price displayed in a different way so at the moment here you've got the candlestick charts i can look to have that and say the bar chart um line chart more about that in a moment i can make the screens bigger and of course make them smaller um what else we've got here basically you can hear them have here you can insert your other programs as well that you may have sort of some algos you may have to help you look for um trading opportunities uh lots going on here you can put on trend lines as well if you wanted to put trend lines on and and so forth so a hell of a lot going on on an mt4 a lot going on i have done a video on mt4 as well there is plenty of videos out there on youtube on mt4 as well but certainly you'll need a training platform such as this if you indeed um you want to get started in um in fact it doesn't cost you anything as well you can literally settlement account you don't need to put any money into the brokerage just to see if indeed this is for you as well so this is basically what an mp4 chart will look like and the other thing with the mt4 chart of course is that you can trade on here as well you can click to have one click trading on and off with that little arrow at the top there and for example now this is the pound against the dollar 30 minute chart i can set my contract size here to whatever i wanted to do if i wanted to have 0.15 of a lot if i click on buy that is basically sent a buy market will order to the uh to the to the exchange i've now bought the pound against the us dollar and my profit and loss will be going up and you can see that by going to uh your trading terminal up the top here and you see all the different trades that we've got going on here at the moment and the money is flowing in and out as the markets are moving that trade we just put on was the pound against the dollar at the moment it's just um um up now 45 pence because the market hasn't really moved here you'll see the commission's in there as well not quite sure i put that trade on um shame it's on your demo account up 600 pounds at the moment there you go it's a demo account um so that's basically that there are other ways to enter the trades as well lots going on in mt4 for a separate video but to explore that is for you to explore okay so now let's look at the different chart types uh that we use when we're looking to analyze the markets there's basically three that we look at i'm going to cover them now i touched on them a moment ago when we on the mt4 platform but i just want to delve a little bit deeper into them uh but not too much i know we're whizzing through today's um itinerary pretty quickly so if it's going too fast you can always pause and watch it back on catch up first of all we've got the bar chart bar chart basically shows us four bits of information shows us where the price is opened with the horizontal line to the left high and low of that particular time period bit five minute time period or daily time period and the horizontal line to the right shows you where it closed in that particular time period so for example if this was a daily candle that would be the close of that particular currency pair um on the daily close um and then of course the next day would open up a new bar chart and off it would go again highs and lows as well and when you bunch all these together on a chart it can give you a good clear picture of where prices may go so it shows you the price at the start prices at the end um and where the highs and lows were second one i want to talk about is the line chart now the line chart is good for a quick overview of where price has been in the past gives you an overall picture of where the trend is quite good for plotting support and resistance the line chart basically looks at the closing price it takes away the high and the low so it just looks at the closing price so very good for support and resistance you might have a resistance line coming in there you may have a support line coming in there as well good for an overall view not that practical for entering trades but very good for plotting support and resistance then you've got the candlestick chart mostly the common most common form of chart analysis that we use is looking at the candlestick lots going on there so let me just explain now exactly what is going on on a candle so here you can see an example of a couple of candles i've got a red candle and a blue candle basically the red candle indicates that the price closed lower than where it opened so i'll tell you exactly what's going on here prices are opening here we trade up momentarily hit a high down here then the sellers come in control take the price down and we close down here it's a red candle we know it's a red candle because it closed lower than where it opened here our blue candle basically we open down here trees to low down there then the buyers come in control take price all the way up to this high up here and we close up here this is a bullish candle it's a bullish candle it is a blue can now you can change the color settings on those but these are the standard industry industry standard colors that we use red for bearish candles uh candles are where price is going down and blue for candles where price is going up now when you bunch all these together when you look at these in conjunction with other candles they can give telling signs of where prices may go in the future so it's technical analysis analysts we're often looking at exactly this the candlestick charts and the couple of patterns that i like to look at basically are these we've got the bullish engulfers here when you see this normally at the bottom of a downtrend it normally indicates that the prices may be wanting to reverse up and indeed you're seeing prices putting down like this and you see this type of pattern is a good indication uh that price is about to reverse back on itself so these are great candles that we use for that this is the bullish engulf of course the bearish engager as well we use these with trend and with counter trend as well this is showing us that the markets are possibly continuing on down on a downtrend so for example if we're seeing a downtrend okay and we see this little blue candle coming here and then it's dwarfed by this red candle this bearish candle bearish and golfer that indicates that the trade wants to continue on back down that is a bearish engulfing pattern as well and then you've got the pin bars as well um bullish pin bars and bearish pin bars we talk about these all the time in our uh in our trading room so do come and join us if you want to learn more about them indeed i've got some strategies out there on the youtube channel which basically incorporate these as well so those basically are the different chart types that we use um in particular i pay attention to the candlestick chart okay now let's look at the different order types that you can use when entering the market basically there are two you can use a market order or a limit order now a market order is basically an order that's sent to the market the moment you hit your buy or your cell button on your mouse so it basically executes instantly whereas a limit order basically executes in time now you have a buy stop order a buy stop order would basically use in a breakout for example um normally above where the market is trading so if the markets are trading down here for example markets trading down here and you think it might go up you might have a buy stop order above the market if the market hits your buy stop off you go and you're in the trade and of course conversely if you're trading a sell stop order prices may be trading here and trading down you might have a sales job order below where the current price is if the market comes back down and hits your sales top order you would enter a trade here in anticipation of a trend continuation that would known that would be known as a sell stop order and of course if you're trading a a buy limit order if prices are trading around here for example and you think the market's coming down to your support zone you may have a buy limit order below where the current market price is so the market comes down hits your buy limit order your order is then executed in anticipation that the market moves back up and you can exit for a profit and of course a sell limit order would be the same but of course in reverse so markets are trading up okay you may have a sell limit order above where the market price is gets to your sell limit order and you will basically enter a sell trade a short trade it hits your limit so sell a limit order placed above where the current market price is in anticipation that the market will be you know reversing back on themselves so you'd normally use a buy limit order sell limit order as well if you want to exit a position that you may be in already and lastly i want to mention this big red stop order stop loss order you see them at fairgrounds you see them at machinery you hit that stop button if you don't want any more damage done basically the same in trading if you're in an open trade you should always have a stop loss associated with it so if you start to lose money the maximum loss is pre-determined on that trade so you can't lose any more money sometimes you do get slippage but more about that another time but make sure you've got a stop loss in there to protect your trading account traders that don't use top losses could often blow up trading accounts very very quickly we talk about stops all the time and i encourage you to get used to using them strategies what is a trading strategy i think it's fair to say most traders that come into the markets for the first time they lose because they don't have a trading strategy they're shooting from their hip they're basically putting the trigger just with no real rhyme or reason a trading strategy is a must if you're going to be in this game for any period of time what is a trading strategy it's basically just a trading set of rules when you're going to enter when you're going to exit the time frames that you're using are you using an anchor chart are you using the higher time frame analysis you've got to have a set of trading rules written down and each time you trade that strategy you've got a check box and you're ticking off the rules to make sure they comply with your strategy the strategy's got to be back tested very important that you've back tested your strategy as well so you've got the confidence in trading it when it goes through that draw down period remember all strategies doesn't matter who where you get it all strategies will have drawdown periods periods when it starts to lose money you've got to make sure that you back tested the strategy on previous data so you know what the characteristics are of that strategy most importantly you've got to have a strategy got to be back tested in that strategy we'll also have the risk parameters as well what you're prepared to risk on each trade that you are taking as well so traders that without strategies are traders that generally lose money shooting from the hip is not the way to go when you're trading the markets trading on a hunch risk management position sizing is crucial for trading success and this is very very true indeed most people when they come into trading for the first time they don't consider risk they just look at the profits that they can make but as traders we should always be conscious of the risk and always be aware of the risk and always be in control of the risk just because you've got a long trade a buy trade and you've got to stop below if you need to have the stock lower down it doesn't mean you're taking on more risk if your position sizing correctly just means you reduce the size of the trade to accommodate a bigger stop so position sizing is crucial to long-term success in trading i suggest when you're trading you should not risk no more than a quarter or half percent of your account on any one trade using the same percentage risk on each trade remember einstein he said a lot of things in this time didn't he compound interest it's the eighth wonder of the world those that understand it they earn it those that don't they pay if you've got a credit card you know all about paying interest on a compound basis on your credit card but basically uh controlling risk is crucial now i want to show you on an mt4 price chart exactly what i mean by position sizing um on a forex trade okay so here's an example this is the australian dollar against the japanese yen what i've done here i've put on our risk management tool which will basically do all the work for you but it's simply here to illustrate how you should be controlling risk on each account using position sizing what i've done here i've set my default to a half percent this is quite a large account it's only a demo account by the way as you know um so this is a half percent i'm going to be risking on this account okay i turn on the risk management tool a half percent of this account is about 500 okay it's a thousand hundred thousand dollar trading account of course it is a a demo account what i do now um i look at my stop loss which is the red line here i move that down there i move my uh profit target up there what this does for me it works at my risk reward basically means i'm risking one dollar to make 1.57 okay it's going to basically still risk the half percent it's moving slightly because of the spread um but it's only risking half percent of the account but what it's done here is it's worked out the lot size for me you see here it says 19 it's going to trade 0.19 of a lot now of course if i needed to have my stop further down yeah because markets may pull back even further it's now changed my lot size to 0.10 so i'm trading a lesser lot size because my stop is further away so just because you need a further away stop for the trade it doesn't affect the risk on that particular trade still going to be risking just the 500 or half percent of this demo account and i say it works out the risk reward for you now clearly as you move the the red line down the stop loss order down that's where you're going to get out of the losing trade the risk reward ratio will change as well typically i like to have risk reward ratios of at least at least one to one um so maybe up something like that but i'll have my stops maybe a little bit lower down with a profit target trend continuation but this shows you how the lot size should determine the risk um which shouldn't change because of the determined half percent that you've stipulated from the get-go so changing the lot size to accommodate wider stops is the way you should be trading the other thing about this tool by the way is also you can have a pending order as well i can switch that in as well so if i want to have my pending order i can move my yellow line down there as well so the market pulls back down hits my entry order i can place that place the pending order that goes into the market and now that is being worked by the mt4 platform it's actually gone to the broker so my order is there waiting for a pullback it is a demo account so i'm going to leave it running right all right we're getting to the end now gosh we're getting through a lot of content hopefully you are keeping up as i say you can always uh watch it back and pause the video as we go this is like a whole trading course in 25 minutes psychology tips and challenges psychology is indeed the biggest challenge when it comes to trading most traders fail ultimately because they're not in control of their emotions and the psychology gets the better of them first thing you need to do is come in with realistic expectations you're not going to give up your day job with a hundred dollar or a 500 trading account should you start trading with a 500 account absolutely if you can learn a skill then of course that skill is scalable up and if you can prove you can trade successfully there's plenty of places that will throw money at you if you're uh if you don't have access uh to funds but have the realistic expectations don't think you're gonna knock the ball out of the park each and every trade you are gonna have losing trades along the way start off with low leverage you don't need massive leverage if you can't make money on low leverage then you're certainly not going to work or make money in the long run with high leverage it certainly is the case you know using high leverage i think is the short fast way to the poor house for most traders no one trade should make you or break you i see people out there checking their phones looking at their screens all the time looking at their trades talking about it asking me questions about it because they're overly concerned about one trade have you seen my video out there one of the best videos i think i've ever done here on the youtube channel it's called the law of large numbers one trade is irrelevant in the big scheme of things and you should be thinking about that why are you bothered about one particular trade it might win you might lose the law of large numbers which is the most important thing here's a little challenge if you do the 25 trade challenge i've just given you a brief outline there of how the forex market works and how you can maybe start off trading get yourself a strategy write it down do some back testing then do a 25 trade challenge make sure that you log the results keep a journal keep a journal of that strategy do it for 25 times without fail if you can't do that for 25 times chances are your psychology your your mental makeup is not there for a trader at this moment something you may be needing to work on surprises the amount of people that can't follow their own strategy let alone someone else's for 25 times on the bounce as i say back test everything back test back test and then i'll put it there again back test to get your psychology on track make sure you've got the confidence in the strategy that you're employing in the markets then when you have your losing periods it's nothing to worry about you've seen it all before in the past and it worked out all right in the end so make sure you back test everything that you do to use trade signals or not to use trade signals i've seen lots of people certainly coming in to us sometimes expecting to follow a signal to give up your day job look put it like this no trade signal provider on the planet cares more about your money than you care about your money so why would you entrust your hard earned money with someone else trade signals certainly have a purpose in terms of learning a particular strategy learning how someone is taking trades you might make a bit of pocket change i guarantee you you follow a signal service and you're hitting some losing runs losing trades you are going to have a lack of confidence in that signal provider you're going to jump out of him or her onto another one you'll be in that proverbial cycle of doing before you know it trades following trade signals following someone else doesn't have the longevity that trade signal provider might be gone in a month's time then what are you going to do spend time i think focusing on learning how to trade for yourself you can use forex signals or trading signals or under the signals to complement that but certainly not to rely on it and i certainly wouldn't be giving up my day job by following someone else's often say to people will come to me if there were such a signal provider there would be no national debt of venezuela central banks wouldn't have deficits they would simply be there following a signal service and paying for their government debt and so forth so be very careful of that let's summarize all this up basically folks market is the largest financial market on the planet today the liquidity the ease of access makes it very accessible for us as retail traders you can start with as low as you wish or as big as you wish you can start off small and build it up over time get the education um uh you know the education sorted out now basics are really easy i say we've got lots of education content on the basics you can get that basically from us you can get it on my youtube channel you come over to the trading room and join us in there as well we talk about this all the time so the basics are easy obviously the mentality is much more the hurdle that you need to master as a trader have the right expectations follow me on the youtube channel and of course you can join our trading community as well here um come and say hello i think there's a trial as well you can tell me we've got a vibrant community there's only about four or 500 people in there any one time looking at trading opportunities discussing markets uh sharing their ideas and so forth i know what it's like sitting here on my own in my home office trading the markets for say 14 years really before i uh joined this um this education arena and i know it's a lonely old business uh trading in the community really does help uh you along your way it's gonna be like having that private little mentor on your shoulder throughout the trading day remember this i'm sure you've seen this triangle before um i've had to have one on my team draw it up for me today so um but it's basically um something that's pretty common out there people think it's all about strategy people spend most of their time focusing on that the strategy hopping between strategy after strategies seen that video you'll never make money trading the forex market 1.8 million views you know it's the cycle of doing people are getting strategies chucking it out trading it moving around tweaking it and all that strategy is not the be all and end or strategy i reckon is worth about 10 okay risk management this manager is important this manager very important i mentioned a moment ago this management is it's crucial that you have the right risk management if you're considering um making a career out of training and we'll talk about that in more detail of course if you join me in all that business management isn't as important i would say maybe about 20 isn't as important as your trader mindset the psychology most traders fail because i haven't got this sorted out it's worth about 70 of the whole pie as far as i'm concerned that's i think where we come in and help you right i don't know how long that took i've got to look at the video now see how long it was i tried to go for about 25 minutes i've mostly overshot it if you like the video give me a thumbs up if you didn't give me a thumbs down don't forget to leave a comment let me know what you think i do try and get back to them um in due course also have a team helping me out there as well don't forget to follow us on facebook um if you follow us on facebook we do stream live every monday afternoon 2 p.m london time but also now you can follow me live um 3 p.m london time and that's the uk time 3 p.m um basically i give a little overview of what i think you should be looking at for the week ahead also put a bit of education tips in there as well we do that live so you can interact with me on a one two one basis i look forward to engaging with you there your chance to basically speak to me live as well of course you can come and join us in the training community if indeed you wish to thanks again until the next video happy trading and good luck

Channel: ForexSignals TV

Views: 455,020

Keywords: forex, forexsignals, trading, room, forex trading for beginners, how to trade forex, learn to trade, forex for beginners, forex trading tutorial, forex course, how to trade forex for beginners, forex trading course, forex explained, forex step by step, forex for dummies, forex guide, forex trading easy, forex easy explanation, forex trading, forex trader, how to start forex trading in 2020, trading forex, forex markets

Id: hQs6AYpYxWE

Length: 50min 21sec (3021 seconds)

Published: Thu Sep 10 2020