What is Forex – 2 Minute Explanation

in this two minute tuesday episode i’m going back to the basics and i’m going to teach you what forex is and how you can make money from it [Music] welcome back to the channel everyone my name’s artie and this is the moving average a show where we discuss everything day trading to keep you profitable on a consistent basis, I’m really going to try to do it under two minutes, so let’s go into my great little papers, you’ve probably heard the term thrown around what does forex stand for it stands for foreign currency to exchange your currency for a foreign currency if you live in the United States and you have ever traveled to Mexico for vacation, this is going to be your first introduction to foreign currency every international airport has a currency exchange kiosk where you exchange currency for that country’s currency, for example when you travel to Mexico now if you give them one dollar they will give you 20 pesos that is the current exchange rate so if you exchange a hundred dollars you will get 2000 pesos just for that to put into perspective when I a kid was like 13 when we would travel to mexico the exchange rate was 1 to 10.

Basically you can have a lot of fun in mexico with a dollar tacos tacos now we can get into the deeper stuff let’s look at euro american dollar it is the most traded currency pair and at the moment for one euro you will need 1.13 , now you may be asking yourself what does this mean and how should I make money from it when trading currency pairs . a standard lot is a unit of measure of the amount you buy, for example if euro is usd 1.13 and you want to trade one standard lot that is one hundred thousand units in.

to place that trade you need one hundred and thirteen thousand dollars the current price multiplied by the number of units that you can see here in the third and fourth decimal points of this price if it were to go from this price to this price which would ‘ be a difference of 10 pips which is basically a difference of 1,100 of the price, so with your original purchase of 113,000 you would have an additional 100 , which is the act of trading against one buy price and sell at a higher price you make the difference of a hundred dollars that’s your profit now don’t get confused because it can easily go the opposite way and you can only lose so much money that is why a clear understanding of technical analysis basic financial fundamental analysis as well as months and months of studying and practicing will help you make money instead of losing money if you want to learn the basics of technical analysis i have a fantastic beginner playlist you can find here and if you this enjoyed video and you got some value from it, make sure you like comment and subscribe makes me feel good about myself , thanks a lot for watching and see you in the next video