WHAT IS FOREX?

Thou I'll personally add other things to it that are not listed here but highly necessary
Here come the big question, majority of us have been asking WHAT IS FOREX?
To start from the basics;
Forex is the short form of Foreign Exchange. So what is foreign exchange? Many of you have
participated in the foreign exchange unknowingly. For example, if you have bought components
from Wal-Mart, or you have travelled outside your country before, you have participated in Forex
that way. Because during the process, you given out your country’s currency in exchange for
another currency. You have exchanged your own currency with another foreign country.
The online aspect is the FOREX we are learning, and this one happens between banks, central
banks of countries, hedge funds majorly. We will elaborate about this later. Forex is one of the
largest markets in the world with a Total day liquidity of $5.3 trillion. It is larger than New York
Stock Exchange market and crypto market combined together.
This is a graph of the average daily trading volume for the Forex market, New York
Stock Exchange, Tokyo Stock Exchange, and London Stock Exchange. So you can see
how big it is!!! Though some institutions say the average trading volume of NYSE (New York

Stock Exchange) can go up to 169 billion dollars some times. But that's still dwarfed by Forex.
That's very huge so if you place your 5,000 dollars, can you see that the market for that day
does not even know you. Even if you trade with 10 million dollars, you cannot move the market
by even a single inch. Now remove your 10 million dollars from 5 trillion, nobody knows that you
even exist. And that's what make Forex so lucrative, and why me and you can cut our own
share from the global cake.
Remember I told you that, we are learning the online side of FOREX, (the offline/physical aspect
is just normal life trades between entities of two different countries), and so we are on the online
side of it that made me and you to be here right now. And the platform of convergence for
majority of Forex traders is the METATRADER 4 APP (MT4), that I told you guys to download,
i hope everyone downloaded it. If not do it right now.
There are other trading software’s that people use, and institutions, but the most widely
accepted by governing bodies, is MT4. That’s where you place the orders, sell, buy currency,
etc. About how to use it, don't worry we will soon get there, and we will be succinctly taught how
to effectively use the MT4 APP. The online aspect of trading, the trading platform is what unites
us all to a central location. Basically, the system allows you to buy and sell, just by pressing
buttons, Instead of going to another country to exchange currency. Right on MT4, you can do
the exchange, the only difference is that, there will be no physical goods you receive in return.

WHO ARE THOSE THAT PARTICIPATE IN FOREX?

1. Investment Banks
2. Central banks of countries.
3. Hedge funds
4. Financial institutions
5. Retail Traders (this is where I and you fall)
And the first 4 above control more than 75 % of the activities in Forex.

WHAT IS TRADED ON FOREX?

You know we have established the fact that we trade currency on Forex but even more than just
currency, Forex is broader than ever, now you can trade:
Spot OIL, Futures, Gold, GoldE, Silver, OIL, Shares EU, Crypto, Commodities, Shares US,
Shares UK, Bonds, Energy, Crypto’s, and Currency pairs as well (AUDCAD, AUDCHF, and
AUDJPY). Some are currency pairs of different countries, and others are commodities, Oil,
Precious metals, some Crypto’s, and Bonds etc.
Now, these entities are the ones that trade all those stuff that I outlined above, like currency
pairs, gold, oil, futures etc...The 5 entities are the ones doing the buying and selling of them all,
we are the ones with the smallest power and that brings us to our next question

WHAT IS A FOREX BROKER?

 Forex Brokers are Firms that gives you access to the FOREX MARKET.
 They provide Traders access to the Financial Market.
 They provide a trader with a trading account.
 They give traders what we call leverage. They also provide support functions to the
traders.
But before you go ahead and just pick one broker and register, hold your horses, wait patiently
till I will teach you how to register with a broker, because, there are some settings you need to
make to your account, if you make mistake, you're on your own, your details and documents
you will upload, is another thing, so take your time and wait for it. You know I said we are the
ones with the smallest power.
There are various Brokers in the Forex Market. We have, HOTFOREX, EXNESS, OCTAFX,
FXTM, FXCM, FBS, LITEFOREX, ALPHAFOREX, ATLAS FX, AND BLUESTONE etc.
They make their money through spreads. We will talk more about all these later on during the
lessons.
Don't forget this is the curriculum we are following:
1. STAGE ONE
  Introduction
 What Is Forex
 What Is Traded On Forex
 Who Is a Forex Broker?
 Trading Times & Trading Sessions
 FxHours Interface
 Terminologies Used In Forex
 Forms of Trading
 Currency Pairs
 MT4 Interface Part 1
 Opening an account with Broker

FOREX, WHAT IT BASICALLY MEANS, WHAT IT’S ALL ABOUT, THE KIND OF
ORGANIZATIONS AND PEOPLE THAT PARTICIPATE IN FOREX.
Also, we talked about what is traded on the Forex market, and we came to a conclusion that the
Forex market is not like the conventional markets we have in ShopRite, or city mall or Wal-Mart
stores. Remember what defines a market is the kind of commodity that is being sold there, and
we were informed that in the Forex market what we basically do is buying and selling of
currencies, and we also noted that, the Forex market has become so wide that, even
commodities like Oil, Gold, Silver, are being transacted on it, as well as the crypto currencies.
Then, we discussed the brokers as well; we were told that brokers are the ones that link us with
the Forex market, because they offer us “leverage”.

THE BROKERS
Well, Forex brokers are incredibly important. Broadly speaking, a broker is the registered
Institutions that give us (traders) access to financial markets to trade financial instruments.
These Financial instruments am talking about here include currencies, stocks, precious metals
and CFDs. With this in mind, a Forex gives you access to trade currency pairs.

BUYERS AND SELLERS

These are the banks that provide the currencies for traders to buy or sell. Because of their size,
they do not deal with individual traders. Therefore, a broker becomes necessary so that they
can bridge the gap between big banks selling currencies and individual traders (like me and
you) looking to profit from that activity. To help u better understand the Forex brokers, let make
a useful comparison. Brokers are middlemen when people look to buy properties they typically
use an estate agent right? Therefore, the estate agents in this case are acting as middlemen. In
Forex, those estate agencies we are talking about are brokers they connect sellers and buyers
to the market.
A Forex broker performs the exact same function of an estate agency – except the market they
specialize in is currencies. So if you want to trade particular currency pairs you need to find a
broker that provides access to your desired instruments.

CRUCIAL THINGS TO CONSIDER WHEN CHOOSING A GOOD BROKER

The retail Forex market is so competitive that just thinking about having to sift through all the
available brokers can give you a major headache. Choosing which Forex broker to trade with
can be a very overwhelming task especially if you don’t know what you should be looking for.

SECURITY
The first and foremost characteristic that a good broker must have is a high level of security.
After all, you’re not going to hand over thousands of dollars to a person who simply claims he’s
legit, right?
Fortunately, checking the credibility of a Forex broker isn’t very hard. There are regulatory
agencies all over the world that separate the trustworthy from the fraudulent. Before even
THINKING of putting your money in a broker, make sure that the broker is a member of the
regulatory bodies.

TRANSACTION COST
No matter what kind of currency trader you are, like it or not, you will always be subject to
transaction costs every single time you enter a trade, you will have to pay for either the spread
or a commission so it is only natural to look for the most affordable and cheapest rates.
Sometimes you may need to sacrifice low transaction for a more reliable broker. Make sure you
know if you need tight spreads for your type of trading, and then review your available options.
It’s all about finding the correct balance between security and low transaction costs.

DEPOSIT AND WITHDRAWAL

Good FX brokers will allow you to deposit funds and withdraw your earnings hassle-free.
Brokers really have no reason to make it hard for you to withdraw your profits because the only
reason they hold your funds is to facilitate trading. Your broker only holds your money to make
trading easier so there is no reason for you to have a hard time getting the profits you have
earned. Your broker should make sure that the withdrawal process is speedy and smooth. If not,
better run away from such broker

TRADING PLATFORM
In online Forex trading, most trading activity happens through the brokers’ trading platform. This
means that the trading platform of your broker must be user-friendly and stable. When looking
for a broker, always check what its trading platform has to offer. Does it offer free news feed?
How about easy-to-use technical and charting tools? Does it present you with all the information
you will need to trade properly?

EXECUTION
It is mandatory that your broker fills you at the best possible price for your orders. Under normal
market conditions (e.g. normal liquidity, no important news releases or surprise events), there
really is no reason for your broker to not fill you at, or very close to, the market price you see
when you click the “buy” or “sell” button.
For example, assuming you have a stable internet connection, if you click “buy” EUR/USD for
1.3000, you should get filled at that price or within micro-pips of it.
Don't worry you will get to know what micro pips are when we get to that.
 CUSTOMER SERVICE
Brokers aren’t perfect, and therefore you must pick a broker that you could easily contact when
problems arise. The competence of brokers when dealing with account or technical support
issues is just as important as their performance on executing trades. Brokers may be kind and
helpful during the account opening process, but have terrible “after sales” support.
The speed at which your orders get filled is very important especially if you’re a scalper (You will
understand when you get to stage 3 and 4). A few pips difference in price can make that much
harder on you to win that trade.

TRADING TIMES AND TRADING SESSION

The Forex market never sleeps except on the weekends and bank holidays. The round the
clock trading is one of the very attractive features for the retail traders as you can trade at your
leisure, in your free time. However, it is important to know the timings of different local trading
sessions as the local sessions may be unique as far as the volatility and volumes of certain
currency pairs are concerned. It is also important to know the timings when two or more local
sessions overlap.
The FX market is made up of four important trading sessions, each named after a major
financial centre in a particular geography of the globe.
These four sessions are:
 Sydney
 Tokyo
 London
 New York
The open and close timings in GMT of these sessions are shown below in these tables for the
winter and summer season.

When it’s 8AM of Australia, their market session will start, and when it’s 5pm their market
session will close. So it is for other countries too. Now someone will ask me, but Hilary, you
said Forex is 24 hours trade, yes it’s true, and now this is what happens.
On the Forex market, you can trade any currency any time, but don’t forget I told you guys, that
banks, hedge funds, financial institutions are the ones that trade the majority part of all Forex
market transactions. Now don’t forget, these are companies with employees, certainly, it’s the
employees of these companies that will sit in front of the mainframe computers and push the
buy or sell buttons for their company - now let me ask you, will those employees not go home?
Certainly the company must close and resume the other day. Though, they will always have
night workers, but majority of the people will have to go back home. Not only that other
companies, buys and sell currencies during working hours, because that's when they might
need to buy goods from other companies from other countries. And all these trades affect the
GDP of the country, and when the economy of a country is affected, automatically the currency
will feel the impact too and working hour of any country usually falls in between 8am - 5pm now
also the retail traders like you and me,
This explanation actually concerns the retail traders more no matter the country you are, as a
human being, your most active time will always be the day isn’t it? Definitely, you will want to
execute trades, when you are active and not when you are asleep, so that’s why for a particular
currency, let’s say South African Rand; as a South African, you will want to trade your currency
during the day, and sleep in the night. Definitely, many more people like you will want to act the
same way, banks inclusive, and other companies. So volatility of a particular currency will be at
its peak when the citizens of that country are in daylight, during working hours. We will talk more
about volatility
Now in normal circumstances you don’t expect Indians to trade dollars more than the
Americans, am i right? A country will trade its own currency more than any other person from
somewhere else; hence, when the citizens of the country are in daylight, working hours, it has
more weight on that currency hence the daylight period of each currency’s country is what we
refer to as their trading session. 8am of that country time to 5pm

FOREX MARKET SESSIONS

Currencies trade 24 hours a day, 5 days a week. This round the clock trading process exists
due to different time zones where markets operate.
The Foreign Exchange market is divided into four main sessions:
 The European
 The North American
 Australian
 The Asian sessions
Alternatively, these sessions are called as the London, New York, Sydney, and Tokyo sessions.
As it was mentioned before, there are two time zones, winter and Summer Zones.

WINTER ZONE (OCTOBER-APRIL)

Typical GMT Forex Winter Trading Hours:
 London session from 08:00am to 17:00pm GMT
 New York session from 13:00pm to 22:00pm GMT
 Tokyo session from 23:00pm to 08:00am GMT
  Sydney session from 21:00pm to 06:00am GMT

SUMMER ZONE (APRIL-OCTOBER)

Typical GMT Forex Summer Trading Hours:
 London session from 07:00am to 16:00pm GMT
 New York session from 12:00pm to 21:00pm GMT
 Tokyo session from 23:00pm to 08:00am GMT
 Sydney session from 22:00pm to 07:00am GMT

FOREX MARKET OVERLAPS

An overlap occurs when two Forex markets are open at the same time. During an overlap, the
liquidity and the trading activity get maximized.

GMT SUMMER OVERLAPS

 New York and London sessions overlap: 12:00pm - 16:00pm GMT
 London and Tokyo sessions overlap: 07:00am - 08:00am GMT
 Sydney and Tokyo sessions overlap: 23.00pm - 07:00am GMT
Note that there are some overlapping times when one or more sessions are trading together.
These are the times which are best to trade because of high volumes generated by multiple
markets.
On the following chart below, these overlapping times are highlighted in bright green at the
bottom of each table on the below chart note and understand them well.

THREE KEY FOREX TRADING OVERLAPS

These are the three key Forex trading overlaps:
1. American-European Overlap: 12:00 to 16:00 GMT
This overlap offers the most active Forex trading hours. Especially as concerns the three major
European currencies
 Euro
 British Pound Sterling
 Swiss franc
The American-European overlap includes 70% of the total average trading range of the
European trading hours and 80% of the total average trading range of the US trading hours.
Most Active Pairs: EURUSD, EURGBP, GBPUSD, USDCHF, EURCHF, and GBPCHF
Note that during 12.00 and 14.00 three markets are open simultaneously (New York, London,
and Frankfurt).
2. Asian-European Overlap: 07:00AM to 08:00AM GMT
The Asian- European overlap begins with the opening of the three major European Markets
 London
 Frankfurt
 Zurich and lasts 1 hour
Most Active Pairs: USDJPY, EURJPY, GBPJPY, and CHFJPY
3. Australian-Asian Overlap: 00:00 to 06:00 AM GMT
This Overlap involves the intersection of many financial markets in Asia and Oceania, this
include
 Tokyo
 Singapore
 Shanghai
 Australia
 New Zealand
 Hong Kong
Most Active Pairs: AUDUSD, EURAUD, NZDUSD, AUDJPY, AUDNZD and NZDJPY

THE BEST TIMES AND DAYS TO TRADE FOREX CURRENCIES

The Best Times to Trade Forex
The London session is traditionally the most active Forex session as it involves transactions
from a great number of European countries (UK and EU countries). The second most active
session is the New York session.
The overlapping times between two Forex sessions provide wider volatility, pip range
movement, and the highest degree of liquidity. The overlap between these two sessions
(London and New York) offers the best opportunities for currency traders. Note that during
12.00 and 14.00 GMT three markets are open simultaneously (New York, London, and
Frankfurt).
.

FOREX TERMINOLOGIES
In every place, there is the unique language been talked by the people of that particular place
that differs from others if you're into military, you hear words like bravo team, sniper, classified
mission, copy etc. If you are into medicine, there are code words like patient, appendectomy,
dose myomectomy etc.
 So also in Forex, there are different code words that are used. Am sure you guys notes this
during our previous lectures, you met with different terminologies used which you never heard
right? Those are what we use in Forex. The Forex market comes with its very own set of terms
and jargon. So, before you go any deeper into learning how to trade the FX market, it is
important you understand some of the basic Forex terminologies that you will encounter on your
trading journey

BASIC FOREX TERMS

The first Forex term we are going to learn today is
 Buy and sell
Normally, if you want to make profit on a commodity, you buy the commodity at a low price and
sell it at a high price right? This way, you make the profit. For example In Kenya, one of the
most common mineral resources is GOLD.
There is no place where you can get the accurate price of a commodity than on Forex market,
if the commodity is listed on Forex, then the price you see there is the accurate.
It’s by far more accurate than the price you see on Google, Google is not a financial institution,
they only copy the data published by financial institutions. There is no reliable institution like
Forex.
Let see this MT4 interface, also you can open your mt4 app and see it too

The numbers you see there are buy price and sell price of a particular currency pair. Where
circled, is a Gold-USD pair, so I'm trying to explain buy and sell. So let's say you bought gold
(XAU)when it was at 1572 dollars per ounce, by now its 1972(based on the where i circled
above), you have gained more than 200 dollars, isn't it? But don't bother yourself about that
picture for now we will soon get to know how to interpret it when we are treating currency pairs.
You can only profit when you buy a material at a lower price and wait for it to gain more value
and sell at higher price. But when the price is coming down, it means the commodity is losing
value, there is no way you can make money from a commodity losing value. Even if you sold
gold at its current price, you will only make exactly the price it is presently,
In short, in real world, in normal market, you can only make profit when price of a thing is going
up, if you have bought it when the price was low. Just like Bitcoin.
That's the normal logic isn't it? But in Forex, when you buy, if the prices go up, you make
money, also when you sell, if the prices fall below that price you sold the commodity, you are
still going to make money.
So in normal life, you can only profit from buying a commodity low price but in Forex whether
buying or selling, you can make profit.

BULLISH AND BEARISH MARKET

Am sure you are familiar with the two animals. A BULL and A BEAR

The terms bullish and bearish are derived from these two animals following their behaviour
while fighting. The terms bullish and bearish define whether traders think that prices of an asset
will rise or fall in the future. They are also used in hindsight to describe rising or falling markets.
They are common trading terms in the written press.
Bullish: When traders are bullish about an asset, they believe that its price will rise. Bull
markets features rising prices.
Bearish: When traders are bearish about an asset, they believe that its price will fall. Bear
markets features falling prices.
Originally, these words are borrowed from stock exchange.
A bull is someone who "buys" shares, and a "bear" is someone who sells shares of a
commodity.
BULLISH market is the market that is going up. BEARISH market is the market that is going
down.
Note: you must understand this terms, it is a Forex language you will come across with
regularly.
When someone tells you that a currency pair or a commodity is Bullish it’s telling you that it’s
going up. People are buying the commodity.
Remember, let's say you're selling plantain for 3,000 Zambian kwacha, but as time goes on,
people in Lusaka, Zambia suddenly develops the love for friend plantain, what do u think
happens to the price? It begins to increase. So when people are buying it, the price also goes
up, because over time, demand will exceed supply and when that happens, there will be
scarcity, and scarcity will drive the prices of things up.
The simple thing is, when they say bullish it means up, and Bearish means going down.

LONG AND SHORT

One of the great things in Forex market is that you have more of potential to profit in both bullish
(rising up) and bearish (falling down) due to the fact that there is no market bias like a bullish
bias in stock market. And for those who traded for a while they know that the fastest money is
made in bearish market (falling market). So if u learns to trade both bull and bear markets you
will have pretty profits opportunities.
 LONG
When you go long, it means he is buying the market and so he want the market to rise so that
we can then sell back our position at a higher price than we bought for. This means we are
buying the first currency in the pair and selling the second. So, if we buy the EURUSD and the
Euro strengthens relative to the U.S. dollar, we will be in a profitable trade.
 SHORT
When you go short, it means we are selling the market and so we want the market to fall so that
we can then buy back our position at a lower price than we sold it for. This means we are selling
the first currency in the pair and buying the second. So, if we sell the GBPUSD and the British
pound weakens relative to the U.S. dollar, we will be in a profitable trade.
Simply,
TO GO SHORT – sell.
TO GO LONG – buy.

RANGING
A market is said to be Ranging, if it does not have any particular direction. It is neither moving

definite direction, neither go up ↗ (bullish) nor go down ↘ (bearish). It is just go sideways →

upwards nor downwards. As you can see in the picture below the market is not really having a

(ranging). Where was circled, it was ranging But where I pointed by green arrow, the market has
started trending from there. See an example of a ranging market.
 TRENDING
A market is said to be trending when it has a definite direction, its ether moving Upwards ↗ or
Downwards ↘, but you said bullish, you said bearish, okay, why not ranging and trending. So
when the direction of the market is up, we say it’s an uptrend. If the direction of the market is
down, we say it’s a downtrend
↓See an example of downtrend or bearish market. See an example of Uptrend or bullish
market↓

HAWKISH AND DOVISH

 Hawkish- This is the situation whereby the Governor or President of the central bank of
any country gives a statement indicating increase in the interest rate
 Dovish- This is the situation whereby the Governor or President of the central bank of
any country does not want to tamper with the interest rate or even willing to reduce the
interest rate.
Hawkish: Increase Interest rate
Dovish: same interest rate or even reduced interest rate

INTEREST RATES
Interest rate: An interest rate is the percentage of principal charged by the lender for the use of
its money. Also remember in Basic economics or mathematics, when you borrow 20 dollars and
an interest rate of 5% is placed on it, it means you will be paying additional 1 dollar every month
for the money you borrowed until you have finished paying it.
1 dollar is the 5% of 20 dollar.
Now the only person that gives statement on interest rate is the Governor of the central bank of
any country or any person he delegates to give the news.
Now this is how interest rate news report is important when given by the central banks. The
commercial banks, relates directly with the central bank of a country, so, they (commercial
banks) often borrow money from the central bank of the country. Now if the central bank lends
them very huge amount of money at high interest rate, it means the little banks, will pay
additional money, when paying up their debt to the central bank. And that's not good for them,
So the commercial banks will also increase the interest rates for you and me, when we want to
borrow money from them.
Central Bank ==> Commercial Banks ==> You and Me
Now, when you discover the interest rate is high, if you borrow 2000 dollars, and you're paying
10% interest, you will be paying additional 200 dollars. That will scare you off, so you won't want
to borrow again. There is no standard company in this world that will not borrow money from
banks, I have not seen that company that won't borrow money, if not, where does it want to get
the money.
Except if it's a local business, but if it's a standard and big corporation, you must borrow money,
at least at formative states. So high interest rate means people will not want to borrow money,
while lower interest rate means people will be willing to borrow money from banks since they
know the interest rate is low.

NOW HOW DOES AN INTEREST RATE DECISION AFFECT THE CURRENCY OF A

COUNTRY?
When there are high interest rates on a short term basis, it will scare off the people who want to
build companies, because they don't want to borrow money they will be paying high interests
on. Hence that way, it will reduce investments in the country and that's not good for the
economy on the other hand when there is lower interest rates, everyone can borrow money
freely, companies will easily borrow money, and that's good news for the country economy
Now as Forex traders this affects us in a different way we buy and sell CURRENCY.
We don't build companies high interest rates also increase the strength of a CURRENCY.
This is good for us FX traders. Low interest rate weakens a currency. This is a bad news for us
FX traders. Example, if the dollar is at 1.3000 if the interest rate is increased, Dollar will gain
more strength, maybe it becomes 1.4000 you have benefited 1000 points if you bought dollar
when it was at 1.3000
Because if you will trade fundamentals, you must be able to differentiate between a hawkish
and dovish report or you will make a wrong analysis of the market.
  A hawk bird is known to fly high and is known to be wicked, to other birds and chickens
 A dove on the other hand is known to be gentle and peaceful, but fly lower altitude in
the air than the hawk
Summarily:
Hawk flies HIGH but is a BAD bird.
Dove flies LOW but is a GOOD bird
Hawkish report means HIGH interest rate but BAD for economy and people, Dovish report
mean LOW interest rate but GOOD for economy and people.
But as currency traders, Hawkish news is positive news for us while dovish is not good news.
But the beauty of Forex is that, even if it is dovish news, you can still profit from it

LEVERAGE
Leverage is the ability to gear your account into a position greater than your total account
margin. For instance, if a trader has $1,000 of margin in his account and he opens a $100,000
position, he leverages his account by 100 times, or 100:1. If he opens a $200,000 position with
$1,000 of margin in his account, his leverage is 200 times, or 200:1. Increasing your leverage
magnifies both gains and losses.
To calculate the leverage used, divide the total value of your open positions by the total margin
balance in your account.
For example, if you have $10,000 of margin in your account and you open one standard lot of
USD/JPY (100,000 units of the base currency) for $100,000, your leverage ratio is 10:1
($100,000 / $10,000). If you open one standard lot of EUR/USD for $150,000 (100,000 x
EURUSD 1.5000) your leverage ratio is 15:1 ($150,000 / $10,000).
You may still be confused about leverage don't worry by the time you get to the analytical class,
you will understand what i mean by all these things.

PIP (PERCENTAGE IN POINTS)

The smallest increment of price movement a currency can make is called point or points.
For example, 1 pip for the EUR/USD = 0.0001 and 1 pip for the USD/JPY = 0.01.

MARGIN
The deposit required to open or maintain a position. Margin can be either free or used.
Used margin is that amount which is being used to maintain an open position, whereas free
margin is the amount available to open new positions. With a $1,000 margin balance in your
account and a 1% margin requirement to open a position, you can buy or sell a position worth
up to a notional $100,000.
This allows a trader to leverage his account by up to 100 times or a leverage ratio of 100:1. If a
trader’s account falls below the minimum amount required maintaining an open position, he will
receive a margin call requiring him to either add more money into his or her account or to close
the open position. Most brokers will automatically close a trade when the margin balance falls
below the amount required to keep it open.
The amount required to maintain an open position is dependent on the broker and could be 50%
of the original margin required to open the trade.

BID AND ASK PRICE

 Bid Price: The bid is the price at which the market (or your broker) will buy a specific
currency pair from you. Thus, at the bid price, a trader can sell the base currency to their
broker.
 Ask Price: The ask price is the price at which the market (or your broker) will sell a
specific currency pair to you. Thus, at the ask price you can buy the base currency from
your broker.

SPREAD
The difference between the sell quote and the buy quote or the difference between ask price
and the bid price is called Spread
That is:
Ask price - bid price = Spread
For example, if EUR/USD quotes read 1.3200/1.3203, in this case the spread is the difference
between 1.3200 and 1.3203, which are 3 pips.
In order to break even on a trade, a position must move in the direction of the trade by an
amount equal to the spread.
Spread is how the brokers make their money it is what they charge you for the trade

CURRENCY PAIR
In currency pair we have two terms here base currency and quote currency. The first currency in
the pair that is located to the left of the slash mark is called the base currency, and the second
currency of the pair that’s located to the right of the slash market is called the counter or quote
currency.

ORDER
When you execute a trade in the Forex market it is called an order, Orders are also called
position or security there are different order types and they can vary between brokers. All
brokers provide some basic order types, there are other ‘special’ order types that are not offered
by all brokers though, and we will cover them all in detail on coming sessions.

LOT SIZE /CONTRACT SIZE

In Forex, positions are quoted in terms of lots. The common nomenclature is Standard lot, Mini
lot, Micro lot, and Nano lot. We can see examples of each of these in the chart below and the
number of units they each represent:

VOLATILITY
Simply refers to the market's rate of change or the number of people placing trades in
proportion to the money they use to trade too. High volatility means the price changes rapidly
over a short period of time while Low market volatility means an exchange rate does not
fluctuate dramatically, but have steady price change over a period of time.

LIQUIDITY
This is the ability of the currency pair to be bought /sold without causing a significant change in
its exchange rate. High liquidity of currency pair means that the currency is easily bought or sold
and there are significant trade activities of that pair.

CURRENCY PAIRS
Currencies are always quoted in pairs (TWO), such as GBP/USD or USD/JPY. The
reason they are quoted in pairs is because in every foreign exchange transaction, you
are simultaneously buying one currency and selling another.
In Forex, no currency exists alone, it must be paired with another currency, if not, and there
can’t be foreign “exchange”. The exchange rate of two currencies is quoted in a pair, such as
the EURUSD or the USDJPY.
The reason for this is because in any foreign exchange transaction you are simultaneously
buying one currency and selling another. If you were to buy the EURUSD and the euro
strengthened against the dollar, you would then be in a profitable trade.
Here’s an example of a Forex quote for the great British pound vs. the U.S. dollar👇.
 .
The first currency (left) in the pair that is located to the left of the slash mark is called the base
currency, and the second currency (right) of the pair that’s located to the right of the slash
market is called the counter or quote currency. If you buy the EUR/USD (or any other currency
pair), the exchange rate tells you how much you need to pay in terms of the quote currency to
buy one unit of the base currency.
An easy way to think about it is like this. The BASE currency is the BASIS for the trade, so if you
buy the EURUSD you are buying euro’s (base currency) and selling dollars (quote currency), if
you sell the EURUSD you are selling euro’s (base currency) and buying dollars (quote
currency). It may be a bit of confusion for newbie but take good time read it slowly
The basic point of Forex trading is to buy a currency pair if you think its base currency will
appreciate (increase in value) relative to the quote currency. If you think the base currency will
depreciate (lose value) relative to the quote currency you would sell the pair. So, either you buy
or sell a currency pair, it is always based upon the first currency in the pair; the base currency.

TYPES OF CURRENCY'S PAIR

There are three categories of currency pairs;
 Majors
 Crosses
 Exotics.

MAJORS
The major Forex currency pairs are the major countries that are paired with the U.S. dollar (the
nicknames of the majors are in parenthesis).
 EUR/USD – Euro vs. the U.S. dollar (Fibre)
 GBP/USD – British pound vs. the U.S. dollar (Sterling, Cable)
 AUD/USD – Australia dollar vs. the U.S. dollar (Aussie)
 NZD/USD – New Zealand dollar vs. the U.S. dollar (kiwi)
 USD/JPY – U.S. dollar vs. the Japanese yen (the Yen)
 USD/CHF – U.S. dollar vs. the Swiss franc (Swissair)
 USD/CAD – U.S. dollar vs. the Canadian dollar (Loonies)
 XAU/USD – Gold vs. the U.S. dollar
 XAG/USD – Silver vs. the U.S. dollar
We are also including silver and gold in this list since they are quoted in U.S. dollars and we
trade them regularly.

CROSSES
The crosses are those pairs that are not paired vs. the U.S. dollar such as:
Currency pairs fall on that category are;
 AUD/CAD – Australian dollar vs. the Canadian dollar
 AUD/CHF – Australian dollar vs. the Swiss franc
 AUD/JPY – Australian dollar vs. the Japanese yen
 AUD/NZD – Aussie dollar vs. the New Zealand dollar
 CAD/JPY – Canadian dollar vs. the Japanese yen
 CHF/JPY – Swiss franc vs. the Japanese yen
 EUR/AUD – Euro vs. the Australian dollar
 EUR/CAD – Euro vs. the Canadian dollar
 EUR/CHF – Euro vs. the Swiss franc
 EUR/GBP – Euro vs. the British pound
 EUR/JPY – Euro vs. the Japanese yen
 EUR/NZD – Euro vs. the New Zealand dollar
 GBP/AUD – British pound vs. the Australian dollar
 GBP/CHF – British pound vs. the Swiss franc
 GBP/JPY – British pound vs. the Japanese yen
 NZD/JPY – New Zealand vs. the Japanese yen

EXOTICS
The exotics are those pairs that consist of developing and emerging economies rather than
developed and already industrialized economies like the majors. Here is a list of some of the
more commonly traded exotics:
 USD/TRY – U.S. dollar vs. the Turkish lira
 EUR/TRY – Euro vs. the Turkish lira
 USD/ZAR – U.S. dollar vs. the South African rand
 USD/MXN – U.S. dollar vs. the Mexican peso
 USD/BRL – U.S. dollar vs. the Brazilian real
Open your MT5 app, and then click where i put a black arrow this is where the currencies are
listed
So in any currency pair listed there the first one is base and second is quote currency like in the
picture above i select USDJPY, therefore USD is the Base while JPY is the Quote currency. An
important thing to note here is that the Base Currency is always stronger than the Quote
Currency, although there are some few exceptional cases where it is the other way round
whereby the quote currency is stronger than the base. As you can see on the listed of currency
above, all currency are listed in pairs that’s why we call them currency pair

Let’s deal with the middle column first, let’s use EURJPY, with the value at 123.67, now what
this figure telling you? It will take 124.67 yen (JPY) to buy 1 Euro (EUR)
Let use another example to explain further. Let use the GBPUSD pair.

There are two information’s we get from that pair.

First, the pair itself is telling you that GBP (Great brutish Pounds a.k.a sterling) is stronger than
US Dollar because GBP is put as the base currency and USD as the Quote currency.
Second, GBPUSD has a value of 1.3071, it means it will take 1.3071 USD to buy 1 pound
(GBP)
NOTE: There are occasions in which the stronger currencies are written as the second pair.
Examples include
  AUDUSD - US dollar is stronger than Australian dollars.
 EURGBP - Pound is stronger than EURO.
 USDCHF - Swiss franc is stronger than the dollar.
When you see these few exceptions don’t bother too much about why the weaker one is written
first even though it’s quite glaring that the Quote is Stronger what you need to do is look at
those numbers beside it all the numbers that starts with [Link] (i.e. Zero point something) are
exceptions . In them the Quote is stronger than the base.
However apart from those few exceptions generally in Forex the Base is always stronger than
the Quote.

Currency pair is like a pair of scale when one side goes up ↗ automatically the second one is
going down ↘. So let’s say side A is Euro and side B is dollar, hence when euro goes up ↗ it
means dollar is going down ↘ AUTOMATICALLY, and when you discover euro is going down,
that means dollar is going up automatically. Both of them can't go up simultaneously, it is not
possible. So that’s how you should be viewing currency pairs henceforth.
When we are buying or selling, we are dealing with the base currency not the quote currency
directly but this is the trick, you are indirectly also dealing with the Quote Currency.
Naturally when you buy let use GBPUSD as example
You are buying GBP When you sell you are selling USD as well like the pair of scale, when one
side goes this way, the other goes opposite way.
So when you are buying GBP automatically you are selling USD, So when you are dealing with
USDJPY. If you buy USDJPY, it means you are buying USD while you're selling JPY
automatically don't forget we are dealing with currency pairs, all your transaction is between the
two pairs only.
When dollar is gaining strength, automatically, Japanese yen is losing its strength to dollar,
when dollar is losing strength it means the yen is the one gaining strength. Now let's say interest
rate in America is decreased, it means the dollar will rise, isn't it, So you know it’s good news for
dollar, because the interest rate is dovish.
As you can see we are getting to the main Forex, that why we are taking everything slowly so
that you will grab it all.
Now let's say you're dealing with USDJPY, you know quite alright that, if USD rise it means yen
will fall. But on the chart, it will not show that yen is falling, it only shows that dollar is rising, so
you're the one that will automatically process it in your brain that stronger dollar means weaker
yen.
So you buy, but let's say there is news that Japan is decreasing their interest rate, or something
good happen to Japan, it means the yen is going to be stronger. Now on the chart, the chart will
not go up, don't forget, everything is programmed for the BASE Currency, but here the quote is
the one gaining strength, so that means, the base currency will be going down because the
quote currency is going up.
But on the chart, it's only the movement of the Base you will see, you will just process it in your
mind what's happening, but it won't reflect on the chart)
Now let's go to our MT5, AND Check GBPUSD like this GBPUSD chart will be displayed

If your phone is on portrait, tap the screen of your phone once, it will pop up this blue circle, then
select the D1 that I pointed the red arrow to

What we have done here is, we changed the time frame to be daily time frame but if you put
your phone in landscape mode, tap it at once, and select the D1 here

Now, i need u to scroll back your chart from today’s date to June 23, 2016, just keep looking at
the date down there.
What i want you to see, is that big black candle i circled in yellow which happened on June 23
2016, and that was a bad news for Britain so also it was for their currency.
Hence with that, there was a sharp drop in the GBP that was the BREXIT candle, therefore,
NEWS is one of the most important factors that strengthen or weaken a particular currency pair.
So at that time, BREXIT news in Britain, affected their currency, that why there was sudden
drop in currency.
The news meant that Britain will separate from European Union, and that means all the benefit
they used to enjoy from the European Union, they won't enjoy it anymore. So it was a bad news
for the pounds (sterling). This is fundamental analysis we will cover it in detail later on.
But that will be in the analytical stage. Pounds start losing strength and automatically for the
GBPUSD pair, that downward movement means pounds is losing strength, so USD is definitely
gaining strength, but don't forget I told you, the chart is programmed for the base currency,
hence what happens to GBP is what we are seeing but as a Forex trader you know that, for the
downward movement, it means the dollars which is the Quote Currency in this case is gaining
strength, so when you sell the weakening GBP, it means you are buying the strengthening USD.

That's why they say Forex is a two way market, whether up↗ and down↘ you are making
money. If one currency is strengthening you buy it, if it's weakening you sell it.
That's just the concept of currency pairs, when the market is going up, you buy and when it's
going down, you sell.
Now the big question is, how do we know when it is likely to go down or up?
That’s the Secret guys, if you could know when the market is likely to go up and when it is likely
to go down, and then you will be raking in dollars every day because the earlier you enter the
market, the more your profit will be making.
That's where Fundamental analysis (the news) and Technical analysis comes in.
Those are the things you will use, to know what is likely to happen to a currency,

WHAT IS A PIP
A pip (Percentage in Point) is the smallest unit of price for any currency nearly all currency
pairs consist of five significant digits and most pairs have the decimal point immediately after the
first digit,
Let say a pair EUR/USD equals 1.2538.
In this instance, a single pip equals the smallest change in the fourth decimal place for example
EURUSD moved from 1.2538 to 1.2540 we say the currency has moved 2 pips Though as you
go further, you would learn that there are smaller versions called micro-pips but let us not get
anything complicated for now.

PIPETTE/MICRO PIP
One-tenth of a pip (1/10). Some brokers quote fractional pips, or pipettes, for added precision in
quoting rates. For example, if EUR/USD moved from 1.32156 to 1.32158, it moved 2 pipettes a
pip is the basic unit with which we measure when there is increase or decrease in the value of a
currency pair.
Let remind ourselves the time we learn physics, they say, the S.I unit of temperature is Kelvin ,
that of distance is meter, the one for speed is m/s , time is seconds that doesn’t mean there
are no smaller values, but those ones are the generally agreed units by which we measure
those things.
For example, centimetre or millimetre is smaller than meter right? Yet we say meter is the unit
for distance. So also In Forex, micro pips are smaller than pips, but pips are the generally
agreed.
Open your MT4 app
For most currency pairs in Forex we start calculating the pips from the 4th digit after the
decimal. However there are few exceptions like Gold, silver, crude, Japanese yen etc. But we
would start with the general ones before we go to the exceptions so we won't get ourselves
confused. Open your mt4

Note: Ignore those numbers looking like raised to power for now, (they are the micro-pips I told
you about). Now focus on other digits. Now, let take GBPUSD as a case study here from that
pair you start calculating the PIPS from the 4th number after the decimal point which is "1".
Currency moves generally in Forex are measured and calculated in pips.
Let take another example, this time let make use of EURUSD as case study.

As pointed with an arrow, the value of EURUSD is currently at 1.1799, let say it makes 5 pips
movement, its new value will be 1.1804. So how did I get the 1.1804?
I added 5 to the 4th number after the decimal point (9) and it increased to 14. If pro traders are
talking to each other and you hear conversations like,
JOHN said to CINDY
"Hey CINDY" were you aware that EURUSD moved bullish yesterday like 50 pips? and CINDY
knew that, yesterday the EURUSD was around 1.1120, so naturally, she can calculate in her
mind, without having to open MT4, that EURUSD will be around 1.1170 by now, because, if
you add 50 to 1.1120, it is 1.1170, remember I told you to forget the small micro-pips behind it is
not important for now. And let assume the market went bearish for 70 pips for EURUSD, it mean
we deduct 70pips from the price 1.1120 so the new price will be 1.1050.
Remember if it’s bearish, it means, the value of a currency pair reduced, and if it bullish, it
increased, and also don’t forget, that I told you, that the chart is designed basically for the base
currency, it’s the trader that knows that if the base currency is losing value you Will not see on
the chart interface.
It means the quote currency is gaining value, and if the base currency is increasing in value, it
means the quote currency is losing value the chart is designed for base currency, never forget
that recall the picture of weighing scale used in describing, if one side goes up, the other must
come down, it’s a law of nature, for most currency pairs in Forex, the pip calculation starts from
the 4th decimal place. Although, there are some currency pairs that are not up to a 4 decimal
place. Some of them have specific ways of calculating them
Example, Japanese yen pairs e.g. USDJPY, EURJPY, GBPJPY, AUDJPY, NZDJPY etc.
Another popular example is Gold XAUUSD - Gold paired with USD.
How to calculate the pips for exceptions. Open MT5, and select a pair with JPY.
Let take USDJPY pair. For JPY pairs, the pip count starts from the second decimal place.
For example in this picture USDJPY at 105.66 hence, the pip counts starts from the second
decimal place which is "6" because, the number ‘6’, is the second decimal place value of the
USDJPY pair assuming USDJPY makes a move of 1pip from this current value of 105.66 the
new value would be 105.67
How did we get this?
We simply added 1 to the 2nd decimal place digit which is “6”, hence, we got the new 105.67
value.
Now let's say we add 124 pips to it.
That means the value will cross over to the other side of the point, 105.66+ 124 = 106.91
That often happens in pairs like JPY. Now let see for Gold, Gold is one of the commodities that
have the highest volatility. It can move 1000 pips on a good day. Only Gold can do that, Gold is
represented as XAUUSD by some Brokers. Now due to its high volatility, the broker had taken
some measures so as to minimize the gain and loses, because if it were to be calculated same
way as others are calculated, people will make too much profit and too much loses at same
time, and it's bad for both the trader and the brokers unlike JPY where we calculate from 2nd
decimal place, for Gold you start calculating the pips from the 1st decimal place.
Let go back to our MT5 and see for gold.
 Now, from this picture above, the value of gold is 2038.21 and we said gold calculation is done
from the first digit number. Let assume gold moves from the current price a bullish movement by
1 pip as usual, we add 1pip value to the price. The new value will be 2038.21 +0.1= 2038.31.
Because Gold and Japanese yen, you can never avoid them in Forex, they are one of the most
traded pairs in the Forex market.
Firstly I like you to go to the setting of your MT4 and ensure that your "ask price" is showing on
the chart, so it will be easy for you to visually see your ask price on the chart.
Got to:
I. Menu
II. Settings
III. Scroll up, and ensure you mark “ask price line”
Now go back to your charts, it will show the ask price in red line and the bid price in blue line.

Take EURUSD as a case study.

From the image above you will see something like EURUSD 1.1799 on left column and
1.1800 on the right column 1.1799 is the Bid price while 1.1800 is the ask price no, click on the
menu button not on the trade.
Now the first thing that comes to mind is what is “bid” and what is “ask
BID PRICE is the price that buyers are willing to buy.
ASK PRICE is the price that sellers are willing to sell.
Now in any market you go, whether Shoprite, or Wal-Mart or Kumasi market on roadside, there
must be two types of people in any market, or else market will not be able to exist. There must
be buyers and the sellers, so for there to be a market, there must be someone willing to sell a
product, and there must be a customer that wants to buy that product.
So also in currency market, before you can buy a currency, someone is willing to sell that
currency to you at a price that pays him, And at the same time for you to sell, someone must be
willing to buy that currency from you.
Its normal logic now it’s very easy to buy and sell in Forex, because your broker can buy and
sell at the same time for you, now it’s not your business who the brokers sell the currency to or
buying the currency from, those are advance knowledge in the currency market, but you don’t
need all that, what you as a Forex trader need is to be able to sell anytime and buy anytime you
want, and the brokers got you covered on that, so you don’t need to worry about it but I needed
to put up that explanation, so that you can understand the background of what I want to say
next, which is the explanation of bid and ask.
As you can see, the Bid for every currency is always lesser than the ask price, this means the
rate you sell is always lesser than the rate you will buy.
Let use this analogy to explain bid and ask price.
For example, you have a car, you want to sell it for 1000 dollars, and you gave it to car dealers
to sell for you, instead of you to waste your time looking for buyers, they just buy the car for
1000 dollars from you and they sell it at their convenience to other customer at let say 1,200
dollars. The moment you sell it to them, even if you want to buy it back from them, how much
will you pay? You will have to pay 1200 dollars to them even though it was your own car, why?
The car dealers charged you 200 dollars as their own commission. That is what you call spread
in Forex it is the commission the brokers charge you. From this case 1000 dollars is the bid
price (price you sell to dealers or the price they are “bidding” to get your car) 1200 dollars is the
ask price (the price they are ‘asking’ you to buy from them) 200 dollars is the spread (the gain of
the dealers that is when you click a buy or sell button on your MT4 in Forex, your account will
start in negative first, because, on every trade you make whether you buy or sell, the brokers
will firstly remove their owner commission before placing a trade for you. let go to MT4 and just
place a trade, you will see your trade will start in negative, that negative, means the brokers
have deducted their own fee already,
So let open MT5 and do the following.
Tap on any currency pair you like
Click new order, choose either buy or sell, then see what happens
As you can observe, that red value it shows means that the brokers are collecting their own
share of your trade, they don't want any story about their own commission that is why they are
collecting it first.

HOW THESE BID PRICE AND ASK PRICE WORK

In Forex, it is the bid price that is used to draw the charts to understand this statement let go
back to our chart. Now, open your MT5 where currency pairs are listed

Then tap any currency pair you like i will select EURUSD you can do same, this time tap open
chart It will bring you here
If your phone is on portrait, tap the screen of your phone once, it will pop up this blue circle, the
select the M5 that I pointed the red arrow to

If your phone is on landscape mode, tap it once, and select the M5 here.
Now, let observe the chart with the M5 we selected
As you can see, that blue line is where the price is currently, the "ask price" is above the
candlesticks it is the movement of that blue line that draws all those charts you see, you will
notice it is the BID PRICE that draws the lines of the charts, not the ask price. The bid price is
generally stable, but the ask price is adjusted by your broker, whether to reduce the spreads
(their commission) or increase it. The bid price can be said to show original price level of a
currency pair while ask price can be said to show you how much the brokers wants to charge
you.
M5 means 5mins timeframe. Every candle on the M5 represent price movement for the past
5mins so a new candle forms every 5mins.M1 means 1 minute, h4 means 4hours, D1 means
1day. If your trade in on blue, then you're in profit but if it is on red with a (-) sign then you're on
loss.
Now, press and hold that trade and you'll see the options that'll pop up, Select chart
It will bring you to the chart of this trade what i want you to understand is, there are three lines i
pointed arrows at

The green dotted line (i pointed green arrow), it was when those lines (blue and red) moved
above it that it started turning to profit when you buy a particular currency pair like what i did,
your orders will be filled-in at the ask price level, when you sell a particular currency pair, your
orders will be filled-in at the bid price level. As you see here a blue line must exceed that dotted
line above to be in profit, but as at the time of executing this trade, you will be in loss due to
spreads the broker charges.
It is when the red line goes below the dotted green line, that's when you start making profit. Pick
a pair, execute a both buy and sell orders on the same pair you wish to use, leave the trade still,
and observe what's happening to your trade.
When you are buying, the order gets filled-in at your ask price level, but it is until your bid price
move upwards beyond where your orders were filled-in, that’s when you start running in profit
but if unfortunately for you, the price goes down, while you bought, then the loss will continue
increasing and when you are selling, the orders get filled-in at your bid price level, but it is until
your ask price moves downwards below where your orders were filled-in, that’s when you start
making profit but if unfortunately for you, the price goes up, while you sold, then the loss will
continue increasing.

SPREAD
Spread is the difference between these two prices (Ask price and bid price). The spread is how
brokers make their money. Instead of charging a separate fee for making a trade, the cost
is built into the buy and sell price of the currency pair you want to trade.
So when a broker claims “zero commissions” or “no commission”, it is misleading because while
there is no separate commission fee, you still pay a commission. It is just built into the spread.
The spread is usually measured in pips which is the smallest unit of price movement of a
currency pair.

Now, open MT4 chart

You don’t have to bother yourself with the second value the first value is the number of pips for
the spread, for example, EURGBP in the picture above, the spread is 24, originally, but that 24
is not twenty four but it is 2 pips and 4 micro pips.
Therefore, for spreads
EURGBP 2 4
 | |
Pip Micro-pip
What you should be aware of is the pip, not the micro pip, which means for EURGBP, the
spread is 2 (two).
There are some cases where, the spread is increased greatly by the brokers, to prevent
scalpers from scalping the market, maybe during news times, or data release (scalping is the
form of Forex trading, you will learn it in the analytical class)
For example GBPNZD, they may increase the spread to 15pips
Now this is the way it will written
GBPNZD spread read 157,
GBPNZD 15 7
| |
(Pips) Micro-pip
The last number is always the micro-pip, so just in case you notice the spread has increased to
3 digits, then, the first two is the pip value, and the last digit is always the micro pips, so you
don’t need that one.
It’s good to note the amount of spread of each currency before you place your trades because,
the bigger the spreads , the longer it takes for your trade to enter profit, that’s why people prefer
to trade currencies with lower spreads play through the currency pairs on your MT4 now and be
observing the spreads.
Also, try and test run what I told you in the bid and ask price, open trades, find out where your
orders were filled when buying, compare it to where it is filled when selling, test all what I have
been teaching you in today’s lesson, so you can understand.
Now let me tell you a trick about spreads, you will be wondering why is it that the spreads of
AUDNZD or NZDUSD is wider than that of EURUSD or USDJPY (I’m just picking the pairs
randomly to explain to you).
You see, when a currency pair has high volume (traded in high quantity), many traders will be
setting their orders, it is easy for brokers to buy and sell currencies (remember I said you
shouldn’t worry yourself about who the brokers are buying the currency from or selling it to), so
because it’s easy for them to place trades, they charge less. Also, the brokers make enough
gain from the spreads they charge when trader placing orders, so they won’t mind making the
spread lower.
But when a currency pair has low volume (that is, traders don’t usually trade it in high quantity),
buying and selling becomes difficult for the brokers. They won’t easily find buyers of a currency,
neither will they easily find sellers, so transaction becomes difficult, so the brokers will charge
higher spread for the troubles they go through in order to place a trade for you, and also, the
brokers make little gain form the people setting orders on the currency pair.
So literally, they will charge the few people trading, more spreads, so that they can secure
enough profit for themselves for all the troubles they go through.
EURUSD, USDJPY, GBPUSD
Those are the most traded pairs in Forex, and if you observe, their spreads is always around 2
or 3.

FORMS OF TRADING ORDERS

There are basically 2 types of Trading Orders namely;
 Instant Market Execution
 Pending Orders
1. Stop Orders
I. Buy Stop
II. Sell Stop.
2. Limit Orders
I. Buy Limit
II. Sell Limit

INSTANT MARKET EXECUTION

Simply means that you are buying at that instantaneous Market price. Let us say a Currency
pair is presently 1.3456 and you clicked on buy. What you did was Instant Market Execution
because you bought at that current price. Remember guys when i told u to place your trade
whether you buy or sell the time i showed you why initially trade read negative red number
once you place a trade? so what you did there was instant execution order.
You bought the market instantly. We will be practicing it, one by one. But I think we are all
familiar with Instant execution by now, because we place an order at instant market price.

PENDING ORDERS
What is a pending order?
A pending order is the type of orders that, is not executed instantly, but later on it is executed by
the broker’s computer on your behalf, whether you are there or you are not there. Pending
orders, is like you program your broker, to execute orders for you whenever the price moves in
certain directions. On pending orders, other subtype falls into it. Which is Stop orders and Limit
orders, is when you are Buying or selling at a Future price.
1. Stop Orders
I. Buy Stop
II. Sell Stop
2. Limit Orders
I. Buy Limit
II. Sell Limit
Buy Stop
This is the used in the situation, whereby by your analysis of the market, you feel the market is
going to continue bullish, but you’re not sure, nevertheless, you believe that if it should reach a
particular price level, you are confident you have analysed the market correctly, so you want to
join the trade and execute buy order.
Let me show you how to find there order on your mt4.
Open mt4 app, tap any currency pair, and click new order

On market execution this is where you will find those orders you click on market execution. Now
if you want to place an instant execution order you place your order but if you want to place
other orders like buy stop, sell stop, buy/sell limit now you need to tap the market execution i
pointed above.

You see, those are our pending orders now, all these things will be taught in details in analytical
stage.
Based on this picture, as you can see the buy Stop order is indicated by the blue arrow, and the
price is indicated by the orange arrow, the price has not reached there, but when price reach
that buy stop line, it will execute a buy order . If the current market price of EURUSD is at
1.1088, and with your analysis, you believe the market will go up to 1.1400, but you don’t want
to enter market now, you can place your buy stop order at 1.1300. That means when price level
gets to 1.1300, the brokers computer will respond to the instruction you gave it, and it will fill-in a
buy order for you at that 1.1300 price. Advantages of Pending orders is that, you don’t have to
be there, for your orders to be filled in, in fact you don’t have to open your MT4 at that time.
Your brokers will make you join the trade at that price the moment you successfully place a
pending order.
Now for SELL STOP It is exactly the same principle as that of BUY STOP the only single
difference is that, for BUY STOP, you are buying, for SELL STOP you are selling remember the
name SELL STOP, BUY STOP Its same principles, just that one is for a sell order and the other
is for buy order.

LIMIT ORDERS
BUY LIMIT AND SELL LIMIT
BUY LIMIT, this is used in a situation whereby, you believe based on your analysis of the
market, by the time the price will reach a certain stage, it will turn around and move back to
where it’s coming from. When you place a BUY LIMIT order, what you’re saying is that, when
price reach this level, the market is going to reverse, so the brokers should execute a reverse
order for you. What do I mean, you know the price of let’s say EURUSD is moving down, and
you know when it’s going down its bearish right? And bearish means sell, right.
Originally, what we should do is to sell, but when you notice, the market may not sell much
again, it’s going to start going bullish, which means buy, and you are telling the broker that,
when price hits this particular price level, don’t sell, buy instead, (that’s what a limit order
means).
Buy Limit is when you feel that the market will soon change its direction totally and you took risk
of placing a counter trend order. That's how the buy Limit is used and for sell Limit, when the
market is bullish, you predict the market will soon Start selling, so you just hit the sell limit order,
at a particular price so that when the market stops buying and starts selling, you will enter profit.
But for now and even afterwards the most important is always the buy stop and sell stop orders

COMMON MISTAKES MADE BY TRADERS

Human error in the Forex market is common and often leads to familiar trading mistakes. These
trading mistakes crop up particularly with newbie traders on a regular basis being aware of
these errors can help traders become more efficient in their Forex trading. Prior to committing to
Forex trading, consider these widespread trading mistakes you must evade as this contribute to
a large proportion of unsuccessful trades
 NO TRADING PLAN
Opening up a trade without a concrete plan is like asking the market to take your money if the
market moves against you, when will you cut your losses? If the market moves in your favour,
when will you take profit? The concept of Take profits and stop loss will be taught at the
analytical class.
 OPENING MANY TRADES AT THE SAME TIME
For a beginner, and intermediate trader, don’t jump on so many trades at the same time, so that
you can have time to monitor them, or analyse them well by careful analysis of candlestick
formations It’s always good to focus on not more than 3 pairs at a time. Don’t forget the saying
“Jack of all trade, master of NONE”
 TRADING PLAN
A trading plan is an organized approach to executing a trading system that you’ve developed
based on your market analysis and outlook while factoring in risk management and personal
psychology. No matter how good your trading plan is, it won’t work if you don’t follow it.
My target for each day will be 5 % If i make 10% profit on 100 dollar account for 20 days, that
will yield 672 dollars, if you withdraw 300 of that, and invested the remaining 372, if you make
10 % profit daily again, for next 20 days (1 month) - that’s 2500 dollars, let’s say you withdraw
1500 and invest $1000, and you do the 10 % again for 1 month on the 1000 dollars - that’s
6,700 dollars. 10% or 5% is not too small. Forex works best by compounding the profit now,
5000 dollars in three months, that’s more than the salary of a senior government official in 3
months, and guess what? If you still do the same %age on the 5000 dollars, your money will be
growing in geometric progression that's how to gradually build your account in Forex when
greed is allowed, at the end of the day, you will have yourself to blame, because you could have
closed in profit.
Now look at these three magnificent buildings in Shanghai China. You will say how they build
these towering buildings the truth is, it all started with 1 pillar of stone put on another, one brick
put on another, that's how they are gradually building it, till it become what it becomes now it’s
not an overnight task, If you make 10 dollars a day, for 20 days, that's 200 dollars without stress
that's more than the salaries of 60 % of workforce in Sub-Saharan Africa, so why the greed!
Build little by little and you will soon grow rich. I will be withdrawing half of my profit every month
it all depends on what percentage of your account balance you wish to withdraw.
I will be using the weekends to study more about Forex
Don’t forget, the difference between me and you receiving this lecture, is the knowledge I have I
know what you don’t know, that’s why I’m making profits and you’re not yet making, in this
Forex, the more you know, the more profitable you will become. If I know what mark Zuckerberg
knows today, I will also be on the Forbes list of world richest, in a short while; KNOWLEDGE is
equal to money, when applied in wisdom. So don’t stop seeking knowledge those you call gurus
the difference between them and you is what they know that you do not know. Never forget that
those who are gurus today, never started as gurus they were once novice like most of you
today.

WE ARE DONE WITH THE BASIC CLASS!!!!