Hey guys beauty? Murilo here! And in today's video I'm going to explain to
you what forex is and if it's really worth trading in this market. So keep an eye out there because I'm
sure you'll like it. A lot of people have doubts about what
forex is exactly, how it works. And what does forex mean? Forex means Foreign Exchange Market, it
is nothing more than the foreign currency market, it is the largest financial market in the world, it moves
five trillion dollars there every day, now in 2018, 2017 this is more or less
the average, so it moves a lot of money and this market is one of the best markets
in my opinion for making money trading, making money trading because
you basically have the global currency market right there in the palm of your hand, on
your computer screen.
So how does the
most operational part of forex work technically? It works like this you always have a
currency pair. The most famous currency pair in the world is the
EUR/USD. So let's imagine that the EUR/USD is
quoted at 1.30. There are some other details but calm down, let's go
by parts. So 1.30. What does EUR/USD at 1.30 mean? It means that you need 1.30 dollars
to buy 1 euro. So let's imagine that in the real economy
you have this value, 1.30. In forex you have five decimal places so
it's not 1.30 it's 1.30000 so that's how the forex market works you have
more decimal places you don't have the same decimal places as you find in the real economy. When you see a currency pair, it's nothing
more than that, so you have how many currencies you need, right from the quote currency to
buy the base currency.
You don't have to worry about all these
names, it's a little complicated at first but in the end it's super simple. How many dollars do you need to buy
a euro? That's basically it. If you've ever taken an international trip,
you've already done a forex trade. Let's imagine for example that I'm in
New York and then I want to go back to Portugal where I live. I get there, I have 1,300 dollars in
my wallet and I say "I want to buy it back in euros". I give 1,300 dollars and I buy 1,000 euros,
so I'm exchanging. That's forex. The only difference is that you see this
market online, you see banks, liquidity providers, gigantic companies,
funds, the entire financial market that needs to touch currencies is using this market,
finally decentralized because the forex market does not have an exchange, it it works
24/5, you don't have a world forex exchange, you have the brokers.
It's a fully decentralized market so it
's really cool. It basically works like this, you are exchanging
one currency for another, so it is a simultaneous operation, as if you were selling
a currency to buy back the same amount in another currency, and that is why you
will always see these assets in pairs. Then you have the EUR/USD. You have the GBP/JPY which is the pound sterling
against the yen. You have other pairs, GBP/CAD, it's the pound
against the Canadian dollar. AUD versus NZD, AUD/NZD, what does that mean
? The Australian dollar against the New Zealand dollar. How many New Zealand dollars do you need
to buy an Australian dollar? So it's very interesting because you
'll see the evolution of prices according to the currency pair, so it's not according
to a single asset but rather a relationship between two currencies.
And many people end up asking me
why this market exists? The forex market is absolutely necessary
for the global economy. If you didn't have the forex market the
economy would actually stop, why? Because you have exporters, importers
, banks, funds, everyone needs this market to exchange currencies
in large quantities because you don't want to have to physically exchange a million euros
for a million dollars, right? operation is a much
easier operation, that it is an online operation, a contract operation so that you
don't have physical settlement of that, because it would make everything very difficult. So it is an extremely necessary market
for importers, for exporters, for banks, for the companies that
are ultimately responsible for all these operations, so it is a very necessary market. And traders are also very necessary
because they also bring liquidity to the market, they absorb the risk, right, from banks
and other companies that are doing head.
Brokers work in the middle of the road,
bridging the gap between traders, liquidity providers, banks, in short,
bridging the gap between everyone. What is the advantage for you as a trader
to operate forex instead of operating other markets? First, it's much easier for you to start
with little money. The forex market allows you to start
with little money, the retail brokerages provide you with leverage, they finally provide you with
a series of tools that you can start with little money without having
to take substantial risks.
When you know what you are doing,
and there are several details related to forex, the operational part of you buying
and selling these assets that you need to know, for example lots, margin, leverage, these are
things that are details that you need to know . At this point, what you need to know is:
It's much easier for you to start with little money in forex than to start in
another market. It allows you this kind of situation
, where you start with little money and manage to earn substantially and do your
analysis and work in this market even with little money, starting with a relatively
smaller capital.
Other than that you work 24/5 the
forex market as I said it doesn't stop so it 's really cool you have the asia session
you have the session right the market in europe and you the new york session so you
have finally the market works 24/5 you can trade all currencies in the world it's really cool
even those who trade forex know, it's really cool that you finally have a 24-hour market,
you don't depend on the opening hours of the trading session and I've traded for a
long time future index. I prefer to trade forex I always preferred to trade
currencies I think it's a much bigger market much bigger in volume and that gives you this
opportunity when you have the market 24/5 your analysis is much more consistent
than when you have a gap of opening goes up goes down anyway, those who work in the market
know everything I'm talking about but in general this is a great advantage to have
a 24/5 market. Other than that you have hundreds of assets to
choose from.
Unlike the future index, the
future dollar, depending on the country where you are, in forex you have as many currencies as
you want. So you don't have to get stuck, ah,
there's no opportunity in that coin, some opportunity you'll end up finding on the day. For those who do day trades, for those who do swing trades,
for those who do position trades, do you find opportunities, because there are many assets, there are many currencies,
you have the main currencies, you have the smaller currencies, exotics, the crosses,
you have many many assets that you can operate, so it's really worth it in terms
of trading to know forex because you 'll finally have more operational alternatives
even to live in your day to day trading, to live operating. So I hope that now you understand a little
more what forex is, we're still going to talk about other issues like leverage, lot,
quantity but I think to understand what the forex market is, to understand how
it works overall this video was enough, ok? See you next time, thank you.
Oh and don't forget to subscribe to the channel
if you haven't subscribed yet, thanks? A hug. Goodbye!.
