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Introduction To Forex Trading

What is Forex? Learn about the forex market for beginners

What is Forex?
Forex stands for Foreign Exchange, known by many names as FX, spot FX, foreign exchange market. In short, Forex – Forex is a global decentralized financial market for the exchange, buying, and selling of world currencies. A forex investor can trade currencies and earn profits. Profit from the difference in exchange rates between the currencies of two countries

If it is currency trading, why not go to the bank to change it quickly?
Because it will cost you money to convert.
Since you can’t profit, it even loses money in fees.
Long wait time to get the transaction -> lost opportunity cost
And Forex doesn’t just stop buying and selling currencies, but now Forex also allows trading of oil, gas, cryptocurrencies, etc. With things like oil and gas, of course, you can stay supplied. Outside, tell the seller, “Get me 1 liter of oil” or “Get me one gas can,” right?

Forex trading is the market that best fits the theory of perfect competition. When customers trade on the foreign exchange market, there will not be any producer or consumer who has the right or ability to control the market, affecting the price.

Today’s Forex market began in 1970, after three decades of government restrictions on foreign exchange transactions. Many factors caused this advance, but the US officially withdrew from the Bretton Woods monetary system, allowing the exchange rate to float.

Essential terms in Forex investing
Pip: Pip is the smallest unit of price movement of the currency pair, equivalent to 0.0001 of the quoted price. When the bid price (buy price) of the EUR/USD currency pair moves from 1.1779 to 1.17780, the value of the currency pair changes by one pip. (For more information: What is a Pip ?)

Spread: Spread is the difference between the bid and asks prices of a currency pair. Popular currency pairs often have low spreads – even less than one pip, and less commonly traded currency pairs have higher spreads. One note for traders when trading Forex to make a profit, the value of the trading currency pair must exceed the spread. (Refer to What is Spread ?)

Margin (Margin): The amount deposited into the account trader exchanges his broker. However, because Forex Traders with Retail accounts often need more margin to execute large volumes of trades and improve profits, many Forex and CFD brokers allow traders to use leverage ratios. (Refer to Margin in forex trading )

Leverage: Leverage is the capital provided by the Forex floor so that traders can make a larger volume of trades with the money they have. If you use 1:10 leverage and have $1,000 in your account, you can invest up to $10,000 in Forex. If the above trade is successful, the leverage will multiply the profit by ten times. (Refer to How to use financial leverage most effectively )

However, if it fails, the loss is multiplied by ten times. Therefore, traders must be cautious when using leverage ratios. Suppose the account balance falls below $0. In that case, the trader can activate the hostile balance protection policy offered by the exchange (in the case of trading with an ESMA-licensed and regulated stock exchange). The order will be automatically closed at that time, and the account balance cannot go below $0. Thanks to that, traders will not owe money to the stock exchange.

What are currency pairs in forex trading?
Today, many currencies are globally and currency pairs on the forex market. Some of the most popular Forex currency pairs:

US Dollar ( USD )
Euro ( EUR )
British Pound Sterling ( GBP )
Japanese Yen ( JPY )
Swiss Franc ( CHF )
When pairing currencies with the USD, we have the central currency pair ‘Forex majors’ – the Forex currency pairs with the most significant trading volume are:

EUR/USD
GBP/USD
USD/JPY
USD/CHF
When pairing two common currencies that do not contain USD, we have ‘Cross pairs’ cross currency pairs, like:

EUR/GBP
GBP/JPY
CHF/GBP
In addition, we have three other currencies that are often traded when playing Forex:

New Zealand Dollar(NZD)
Canadian Dollar(CAD)
Australian Dollar(AUD)
The ‘Forex minor’ minor currency pairs contain the above currencies against the USD:

NZD / USD
CAD / USD
AUD / USD
The remaining pairs, known as ‘exotic pairs,’ account for 10% of Forex trading.

Exotic pairs contain currencies not mentioned above, such as the Hong Kong Dollar (HKD), Norwegian Krone (NOK), South African Rand (ZAR), and Thai Baht (THB). Exotic pairs combine a primary currency and a minor, uncommon currency.

When starting, traders only focus on major currency pairs because of the daily volatility and low spreads.

However, traders should know that they also have many other trading opportunities, from exotic currency pairs to trading CFDs on stocks, commodities, energy futures, and indices.

You even have indicators that track other indicators and are fully tradable with them.

Traders can seek investment opportunities from many different markets. Make sure to limit yourself to a single trading instrument or market.

Limiting the market can lead to overtrading, which increases the risk of putting all your capital in one basket. So, you can diversify your portfolio to maximize profits.

Currencies on the market are traded in pairs – for example, the Euro and the USD. When making a trade, the trader can see two prices: BUY(Bid) and SELL(Ask).

Want to buy into Euros with USD? Open a EUR/USD trade and press the “Buy” button.

Want to buy USD with EURO? Do the same and select “Sell.”

Remember that your order always applies to the first currency in that pair.

If you are buying a currency or making a long trade in the market, you are always hoping that the currency pair’s value will increase to sell it at a higher price and profit from it. Exchange rate difference

If you are selling a currency or making a short trade in the market, the opposite – the trader expects the currency pair’s value to fall so that he can repurchase it at a lower price and profit from exchange rate differences.

Liquidity from the Forex market
If it is said that traders – investors, when playing electronic coins, can be manipulated by sharks, messing with the crypto market, then the forex trading market never has that happened. The reason is that Forex is a global trading market through the inter-central banking system of countries, so liquidity and transparency are almost inevitable.

Individuals cannot participate independently but must go through a broker called Brokers – Forex floors. You must find the most reputable forex broker globally or have a representative office in Vietnam to open an account to make transactions.

A currency’s liquidity is how much it can be bought and sold. The most liquid currency pair will be the currency pair with the most significant supply and demand in the Forex market at trading. So how are the supply and demand created? Banks, businesses, importers and exporters, and traders create it.

The major currency pairs are usually the most liquid
EUR/USD moves about 90-120 pips on average daily.AUD/NZD moves around 50-60 pips a day USD/HKD only moves about 32 pips a day (money values are usually recorded with five decimal places). comma after comma)

1 Pip = 0.0001. So if USD/HKD moves from 7.75686 to 7.75696, it means it has moved one pip). The major currency pairs have the most liquidity, giving traders the most short-term Forex trading opportunities.

What is CFD – Spot Forex in forex trading?
While learning about Forex investing, traders must have encountered the phrase ‘Forex CFD.’ Currently, in Vietnam, there are two ways to invest in Forex: CFD (Contract for Difference) or Spot Forex (margin).

Spot Forex is concerned with the buying and selling of actual money. Assume a trader directly converts USD to EUR. Then, when the value of the EUR currency increases, the trader converts the Euro to USD and makes a profit from the exchange rate difference, which means that the trader will collect more money than the previous amount.

CFDs are ‘Contracts for Difference’ used to reflect price movements of financial instruments. Instead of directly buying and selling large amounts of currencies in forex trading, traders can profit from price action without owning the asset.

In addition to Forex, CFDs are available on stocks, indices, bonds, commodities, and cryptocurrencies. In any case, traders can trade price action with these financial instruments without buying them directly.

Leverage in the Forex market
In addition to having access to many financial markets, the Forex CFD market also offers leverage that allows traders to trade more significant amounts than they own. As a result, increased trading profits can be achieved.

Trade Forex CFDs (leverage 1:20)Traditional Trading Deposit USD 500USD $10,000 Trade EUR/USD with an opening price of 1.16766, a closing price of 1.16966 and a spread of 0.00200Trader gain $200, equivalent 40% Traders earn $200, or 40% Trade EUR/USD with the opening price of 1.16766, the closing price of 1.16532 and spread 0.00234Trader losing $234, equivalent to 46.8%Trader lost $234, equivalent to 2.34%Advantages of the forex market compared to other markets

Its huge trading volume represents the world’s largest asset classes resulting in very high liquidity in trading;

Continuous operation 24/24, except two weekends. Trading hours from 20:15 GMT on Sunday until 22:00 GMT on Friday;

Using a capital leverage system to increase profit margins, you only need to spend 100$. With many brokers (brokers) using 1:1000 leverage, the amount you can trade up to 100 x 1000 = 100000 USD.

Profits are enormous if you know how to invest and manage your emotions when investing.

Extremely high liquidity can execute orders immediately. For example, with a stock, you post an order to sell, then you have to wait to see if someone matches the buy order at that price, then the broker will execute the order. As for Forex, as long as you place a buy or sell order, the order will be matched almost immediately.

You can define “take profit” and “stop-loss” points on your account. When you are in profit, you close the order to take that profit, or when you are losing, you stop the order at that time to avoid losing more.

Learn and trade for free with a DEMO account. The advantage of this account is that when you sign up, the DEMO account will give you virtual trading money, and you use that money to trade on the forex market.

The amount earned or lost will still show on the account, only you cannot withdraw it from the account because it is only a DEMO account.

You can trade anywhere if you have a smartphone or laptop with wifi connection.

Make money 24/24 because even Saturday and Sunday, the market is still open (free market), and you can still trade.

However, please consider when to trade because significant banks will not work on these two days. The market will be floating, so there will be many problems with manipulation and price manipulation.

How to earn income from Forex – the Forex market

To profit in this market, you need to understand the simple concept: You buy a currency pair at a low price and sell it at a high price, then you will profit from the difference—that rate. The broker will, of course, take a commission from each of those trades, called the spread.

Assuming you have $100 in your trading account, you want to enter a EUR/USD trade. With an exchange rate of 1.25, that is 1EUR = 1.25 USD. Simply put, the exchange rate is like the price tag of a product in the supermarket, and the difference between the price tag in the supermarket and the Forex is that in this market, the price tag is continuously updated and changed hourly.

Today, you believe EUR will appreciate against USD, and you use 100 USD to buy 100/1.25= 80EUR. In the ideal condition, your prediction is correct. Then you will get the following profit:

The exchange rate EUR / USD will rise, i.e. 1.25 1.35 (up 0.1). In this case, you will have a profit, and you will take profit at the moment when the exchange rate changes. At this point, 80EUR = 108USD -> you get 8$ profit.

You see that more than 8 USD is needed for your efforts, then as Danhgiasan.com mentioned in the advantages of the forex market, you have one more mechanism as leverage. There are many brokers for 1:1000 leverage; in this case, you take 8$ x 1000 = 8000 USD. If you correctly predict the market trend, this is the number you will get. The profit figure is immense.

However, with more significant profits, the risk in the market also increases, so you need to improve your knowledge of risk management because it is a part of this forex market.

How to know the currency rate, which currency pair to buy, and when is the right time to sell or buy it?

You need to know that the exchange rate of a currency pair depends on many factors such as supply and demand factors, the country’s economic situation (GDP, inflation, labor market situation, etc.) ). If you understand these factors, you will get 90% of the winnings in trading in the forex market.

Two types of analysis that I like to make money suggest to you
Fundamental analysis
You should follow the economic situation and market news, especially the Nonfarm newsletter, because this news dramatically influences the forex market. Follow news from official channels abroad, follow news updates. All will help you a lot in trading.

Technical analysis
Use chart charts to predict the trend of currency pairs. Similar to how to analyze charts in stocks, cryptocurrencies,

gold is bullish, and investors should continue to buy on dips today.

Hexun.

The OPEC secretariat reports that the current outlook for the oil market is harsher than last month’s and expects an increase in crude oil demand of 5.95 million barrels per day by 2021. A shortfall of one million barrels per day is scheduled for this year. Countries that still need to submit compensation plans have been told to do so as soon as possible. OPEC May oil production grew by 280,000 barrels per day to 25.52 million daily. A spokesperson for the Iranian Ministry of Foreign Affairs said that while substantial progress has been made in the 2015 nuclear agreement negotiations, some critical issues must still be resolved. IAEA Director-General Grid Ross said the talks with Iran had “no results,” Iran must clarify issues of its stock of enriched uranium more than 16 times the agreed-upon limit. The EIA data shows that despite the sanctions imposed on Iran, the United States imported 1.033 million barrels of crude oil from Iran in March. In a draft document, the G7 finance ministers stated that they support the OECD/efforts G20 to agree on the lowest global corporate tax rate; once the economy has recovered, the ministers must ensure the long-term sustainability of government finances; and the central bank’s numbers will be discussed. Begin work on the fundamentals of currency, and report conclusions later in 2021. the OECD issued an economic outlook, predicting that the global economy will grow by 5.8% in 2021, and many countries’ expectations have been raised. The international tax agreement may be concluded in October, according to Guria.

Investors are currently shorting commodities, ranging from crops to natural gas.

The CFTC and ICE data suggest that since November last week, the Bloomberg commodity index tracking hedge funds are the most significant position in various commodities. Decline Monday’s data shows that the Bank of Japan (BOJ) had not purchased ETFs in May, the first time since Kuroda’s election as BOJ governor in 2013 when he did not intervene in the market. The data highlights that the central bank is retreating from Kuroda’s “bazooka” stimulus plan, as the years of massive asset purchases have attracted criticism. Several critics say this has made the BOJ balance sheet highly vulnerable. German inflation data was released on Monday after local measures to contain the flu were relaxed. This month’s data has risen 2.4% year-over-year, the highest since October 2018. This year, inflation may increase to 4% for the first time since the euro’s creation.

Previously, the People’s Bank of China (PBOC) announced that to manage foreign exchange liquidity for financial institutions better, it has decided to increase the reserve ratio for foreign exchange deposits from 5% to 7% beginning June 15, 2021.

While the world economy grows, the gap between developing and developed countries increases, and it will take longer to recover to pre-epidemic output levels.

The global oil inventory surplus will be eliminated by the end of June. To achieve at least 2 million BPD of inventory drop by September-December, OPEC+ will have much room to increase production. Even if the current increase is completed, 6% of the global supply is idle.

As the world’s largest producer of sugar and coffee, the severe drought has worried the market about Brazil’s supply, pushing up future coffee prices.

May had the fastest year-on-year growth rate in nearly two and a half years. The pan-European stock index dropped and rose for four straight months in May. The weakness of the U.S. dollar, the offshore renminbi For more than two and a half months, oil distribution was highly variable. Bitcoin rose to nearly 37,000 USD in intraday trading, and ethereum gained almost 20% on the previous day’s decline. Stay on the facts today data and financial events on June 1 (Tuesday);

Q1 of the current Australian account

Manufacturing PMI (Caixin 09:45)

12:30 Aussie June rate

the German monthly retail sales rate in April

15:00 quarter GDP annual rate

value of May manufacturing PMI: 15:50 French

15.55: German seasonal unemployment rate

15:55 Germany manufacturing PMI

European manufacturing PMI, 17:00 local time

Markit Manufacturing PMI: 16:30, UK GMT

Starting at 17:00 In May, the annual CPI rate in the eurozone is not adjusted. reside

17:00 April Eurozone unemployment rate

approximately $23 billion monthly.”

21:45 -PMI Value on May 16, 2014

W 22:00 May PMI Manufacturing

the 17th OPEC and non-OPEC ministerial video conference was held

technicals

Gold~1 hour price

You can open the app to see the latest report.

Gold was static yesterday.

Daily-level prices continue to run above the shock range; some support below can be counted on. The bullish signal of the Yang Line has ended. In the short term, prices will rise, and the MACD’s fast and slow lines will increase. At the 1-hour level, the price has formed a short-term high, the trendline has provided some support, and the MACD’s fast and slow lines have increased. Because of this, the gold price is mostly rising. You can find the signal and place your orders when the price moves down toward the trend line. We are at 1912 pre-pressure. XAUUSD trading strategy (go long) Stop loss: around 1900, take profit: 1912-1922 1-hour Silver XAGUSD Silver follows the trend of gold and continues to vary within that range. Under the daily price level, it closed the bullish signal on the Yang small line Raising short-term price. Fast/Slow MACD ready for another golden cross. At the 1-hour level, the price is at a high and varying level. The MACD (Momentum, ADX, and Zero Line) shows continued strength. Today’s silver movement is mostly bullish and upward. We are waiting for the price to fall to the inscribed trend line to see the signal layout and orders. The early high target was 28.7. XAGUSD trading strategy (long) Entry point: 27.9, stop loss: 27.2, and profit: 28.7 to 29.2.

1-hour level crude oil

Yesterday, crude oil had to use the support below to rise.

The daily price increase follows the upward channel but has reached the upper Bollinger band and is being suppressed. With increased upward pressure and a likelihood of a callback, the MACD volume can shrink. Looking at the 1-hour chart, the price rise has encountered the previous upward trend line; the price has repeatedly risen and fallen, and the short-term price will decline. So, today’s crude oil price trend fell mainly. Buyers should be patient, waiting for the price to rebound above the upward trend line before taking a short position. The short-term target shock range is located near 66.1. OPIS trading strategy (short) Stop loss: 68.8, take profit: 66.1-65.4 the 1-hour EURUSD level The euro continued to rise due to the dollar’s rise and fall. The price increased significantly, staying near the 10-day moving average, and closed a bullish signal set by the mid-Yang line. The price continued to grow, and the MACD’s fast and slow-moving average converged on another golden cross. At the 1-hour level, the short-term price trend is in a V-shaped reversal, supported by the inscribed trend line, and the short-term price will rise. As such, the current trend of the euro is mainly up. I will look for a signal setup and orders as the price approaches the inward trendline. At the top of the target earlier

The Corona effects on bitcoin price

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Gold rises as dollar weakens ahead of U.S. Fed meeting

Gold rises as dollar weakens ahead of U.S. Fed meeting,

Gold Spikes To New records As Dollar, Bond Yields Dive

Gold inches higher as dollar loses ground ahead of Fed meeting

Gold prices edged higher on Tuesday as the dollar pulled back from multiweek highs ahead of the US Federal Reserve’s two-day monetary policy meeting.

Spot gold was up 0.2% at $1,341.38 as of 0344 GMT.

US gold futures also rose 0.2% to $1,345.20 an ounce.

“The overall sentiment in the gold markets is positive. There are expectations that the Fed will cut interest rates, which has weakened the dollar and remains a main driver for prices,” said Helen Lau, analyst, Argonaut Securities.

The dollar index against basket of major currencies was down 0.1% on Tuesday, making bullion cheaper for investors holding other currencies.

The dollar was somewhat weakened by the New York Fed’s business index showing a record decline in June to its weakest level in more than two and a half years.

At the current price rate, some fluctuations in gold prices are predicted as there are still some mixed views on the rate cut and some investors are cautious ahead of the Fed’s decision, Lau said.

The Fed’s two-day policy meeting starting later on Tuesday is the next major focus after markets have priced in more than two 25 basis-point rate cuts by year-end. That marks a sharp contrast to the Fed’s official forecast in March, which showed policymakers deemed the next move would be a hike.

The expectations of an interest cut have been steadily growing amid the raging US-China trade war, signs of the US economy losing momentum and pressure by President Trump to ease policy.

All these factors encouraged bullion’s appeal, with the precious metal gaining nearly 6% since touching its 2019 low of $1,265.85 in early May.

The US central bank is suspected to leave borrowing costs unchanged this time but probably lay the foundation for a rate cut later in 2019.

“We think that the Fed will not raise rates in June and with regards to policy wording, we could see a slightly less accommodative tone than what the market is expecting,” INTL FCStone analyst Edward Meir said in a note. “In which case the dollar could firm up somewhat further and perhaps pressure gold lower into its trading range.”

On the technical front, spot gold may break a support at $1,337 per ounce and fall to the next support at $1,324, according to Reuters technical analyst Wang Tao.

Goldman Backs down Perceives Rate Cuts In July And September

We now expect cuts in July and September, as well as an end to balance sheet runoff in July. Our base case is for moves in 25bp increments, but a 50bp cut is possible.

The need to get ahead of the bond market could be another reason to push Fed officials toward a bigger reduction in rates, economists including Jan Hatzius wrote in a note dated June 19. The firm had previously seen no change in rates for this year.

The FED & BOE Move The Markets

The U.S. and the U.K.’s central banks will hold their monthly sessions this week to decide where to set key interest rates. Investors worldwide will be watching these key events closely as they can significantly affect USD and GBP pairs*

The EUR/USD climbed after the U.S. Federal Reserve voted to leave rates unchanged at 1.25% last month, highlighting “solid” economic growth. This left room for another rate hike in December, with analysts claiming that a rate hike is highly likely this month, pricing in the odds at 100%, according to Investing.com’s Fed Rate Monitor Tool.

Only 500 Spots are Available

As expected, the Bank of England increased interest rates in November, marking the first rate hike in the last decade. Specifically, the BoE increased the benchmark interest rate from a record low of 0.25% to 0.50%, effectively reversing the last rate cut after the Brexit referendum. However, the rate hike was widely anticipated, which led to a sterling sell-off and caused the EURGBP to rally.

Only 500 Spots are Available

What do the analysts expect this month?

Release Forecast* Previous*

FED Interest Rate Decision 1.50% 1.25%

BOE Interest Rate Decision 0.50% 0.50%

*Table source: investing.com

How might the Forex Markets be affected?

A generally hawkish stance and a higher-than-expected key interest rate can be considered positive/bullish for USD and GBP pairs.*

A dovish monetary outlook and a lower-than-expected rate will have a negative/bearish effect on USD and GBP pairs.*