What Is Forex and How Do You Start Trading?
In this video:
00:26 – The basics of Forex trading
00:46 – Coronavirus and the need for additional income
01:11 – Forex is the best market to trade – here’s why
02:10 – Trading currencies in pairs
03:16 – You can also make money when the Currencies fall
05:16 – Allows you to work from home and create a passive income
05:50 – Clients can become full time traders
06:15 – Emails from clients, excellent trading results
07:57 – You need to start with the basics
What is Forex? How do you trade the Forex market? How do you get into it, and what are the benefits? Let’s talk about that and more right now.
Hey, traders. it’s Andrew Mitchem here, the owner of The Forex Trading Coach with video and podcast number 359.
The basics of Forex trading
I want to take a step back this week and talk about the absolute basics of Forex trading, what it is, how do you get into it, the process you need to go to, seeing if you’re the right fit, et cetera.
So if you’ve been trading for a while, I apologise that this is going to be more of a newbies video and podcast.
Coronavirus and the need for additional income
But the reason I’m making this right now is because with the coronavirus issue going on around the world, and yes, it even affected us here in New Zealand with a lockdown right now, a lot of people are coming to me saying, “Look, I need some form of new income. I’ve heard about trading. I don’t know about it. How do I start? What is it even?” So I wanted to make this video because it’s very, very topical.
Forex is the best market to trade – here’s why
So look, to me, trading the Forex market is like no other market, and it’s been my only and preferred choice of Forex market now for 16 years. I’ll explain to you what it is, and then why I trade it, and then I’ve got some emails here I’d like to read out that I’ve received just this week to show what can be achieved.
So going back to the absolute basics, in the Forex market, there are eight main currencies. There are several others, but there are eight main currencies that we look at trading, and they are the US dollar, the Canadian, the Pound, the Euro, the Yen, the Franc, the Australian dollar, and the New Zealand dollar. It doesn’t matter where you live in the world, what time zone you’re on, what your local currency is. None of that really matters when you come to trade the Forex market. I don’t trade just the New Zealand dollar because I live here. If you live in the US, you don’t need to trade just the US dollar.
Trading currencies in pairs
So what we’re doing is when we say trading a currency, we actually trade currencies in pairs. So it means that we’re trading two of those eight together. So when you buy stocks or shares, you’re buying just one of something, and you’re anticipating it’s going to go up in value in most cases. A little bit like when you buy a house, you’re buying a house. You’re expecting it or hoping it’s going to go up in value, especially if it’s an investment property. But with currencies, we trade currency pairs, so we trade, let’s say for instance, the Euro against the US dollar.
So we always trade it that way round. It’s never the US dollar against the Euro. It’s just the way that it’s written. So we’re looking at one currency to strengthen and the other to weaken. So if, for instance, we look at our charts or economically, we look at what’s happening in the Euro, and we look at the Euro to strengthen, but at the same time, the US dollar to show weakness, we’re looking at buying Euro-US dollar as a currency pair, anticipating it’s going to rise in value, so we can make money when it goes up.
You can also make money when the Currencies fall
The beauty of the Forex market and especially right now where things are crashing in most other markets is that we can make money equally as much, and equally as well, and equally as successfully when the Euro-US dollar is falling, providing that we’re selling it at that point. So what we’re looking at that time is for the Euro to be weakening in currency value and the US dollar to be strengthening, and that brings the Euro-US dollar currency pair down. Different ways you can do this, you can be what’s called a fundamental trader where you’re looking at economics, and GDPs, and employment data, and interest rates, all those type of things, or you can be like we are. You can see it behind me on my screen here, technical traders.
Yes, we’re aware of the fundamentals and we do look at them. We’re aware of them, but we don’t trade them. We don’t let them influence what our decision-making is because as a technical trader, everything I know is factored into the charts. So all I need to be is someone that’s interested in doing maths, someone who’s interested in patterns, probability, that type of thing. If that’s you, then you’ve got a good chance of looking at a chart and quickly understanding what it is it’s telling us. Of course, you need help, and guidance, and education, and a strategy on top of that. But if you’ve got any interest in patterns, and maths, and consistency, and low risk, all those type of things that we’re looking for as a good Forex trader, you’ve got a really good chance of making this work for you.
But the beauty right now with stocks and shares, and probably soon to be property prices around the world crashing and tumbling, we’ve just had an absolute fantastic time trading the Forex market because most of the currency pairs like the Australian-US and the New Zealand-US, et cetera have been falling, but we’ve been making money on those, looking to take sell trades on those currency pairs, and we can make money exactly the same way as we can if the price is moving up and we’re buying. So a big, big difference there.
Allows you to work from home and create a passive income
You can use an online platform, and right now, working from home, either you’re forced to be at home right now through lockdowns or people are working from home, but this is an absolute perfect time to be doing something like this, working from home, and educating yourself, and creating yourself a passive income. Look, I’m not saying you’re going to suddenly either quit your job or lose your job depending on the economic circumstances right now and suddenly jump into becoming a full-time Forex trader. I’m not saying that because realistically, you’re not going to do that.
Clients can become full time traders
However, I do have clients who have been with me from absolute scratch, never started trading before to six months’ time, they are now trading full-time. That’s not happening for everybody, but it can certainly happen if you’ve got that drive, determination, and the will to want to make this happen. So a lot of it does depend on you. We can only provide so much knowledge, education, et cetera, but it does depend on how much you want to do this.
Emails from clients, excellent trading results
So let me cover a few emails that have come here just this week. On Tuesday, I received an email from a guy in London. He’s called Mikalai. He said, “My trading is going well. My counter is compounding with my winners getting bigger. Trading conditions have been amazing. I’ve been trading the 15-minute charts today because isolation allows me to do that. I’m already up 2.3% for the week.” That is received on Tuesday based on Monday’s trading. The next day, on Wednesday, Mikalai wrote to me again, “Another great day trading the shorter timeframe charts. My target for the day of 2% was hit even before my wife woke up. The early bird catches the worm. It can be done.”
An email here from Diana. Diana has been with me for probably about three or four months now. She sent me an account here. it’s all on Myfxbook. You can see all the trades or the seven of them in the last two weeks she’s taken plus 9.56% in the last two weeks. The profit factor is 17.9, which by the way, if you don’t know a profit factor, that’s enormous, so that’s fantastic trading. Nearly 10% there in two weeks by Diana. This one in terms of percentages is incredible. This is from John. He wrote to me on Wednesday. He said, “I’ve been following gold and silver closely this month, and I’m up 42% on my capital already. Very, very pleased with those results.” John has given me his entry and exit levels, and how he got into the trades here. But if you’ve seen gold and silver, they’ve crashed. Now, they just started to pull back, so he’s been actually buying the pullback, so 42% there. This was written on the 25th of March, 42% in a month, so it shows what can be done.
You need to start with the basics
Look, I’m not saying you’re going to rush out there and make 42% in a month just like John from day one. Absolutely not, but you’ve got to start somewhere. You’ve got to learn the basics and learn how to become a good trader. If you have any interest at all, I’ll put a link below this video or somewhere on this page to our 5-star-rated Forex coaching course. We’ve got clients in 58 countries that we’ve helped over the last almost 11 years. In May of this year, we celebrate our 11th birthday since our first client was trained.
So if you’d like to join us, you know where to find us. Have a look at that link. Stay safe out there with the coronavirus issues and the lockdowns wherever you are in the world. Don’t forget that working and being at home can actually have some benefits, so no better time to learn what’s happening behind me here on the charts and how to do that for yourself.
So once again, this is Andrew Mitchem and The Forex Trading Coach. I’ll see you this time next week. Bye for now.