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  • Forex or foreign exchange market is the largest financial market in the worldlarger

  • even than the stock market, with a daily volume of over $5 trillion. Imagine if you

  • could get a tiny slice of that market, that would equal millions if not billions of dollars.

  • Forex market is as old as money itself, maybe not in the form we know it today but it did.

  • Under almost every video we upload, there are at least a few comments about people claiming

  • that they have made a fortune trading in the foreign exchange market, usually, they are

  • directly recognized as spams, but sometimes they do get published.

  • Here in this video, we will find out if you really can make money trading in the forex

  • market? But to figure that out, we have to understand

  • a few key concepts first? What is the forex market, and how exactly

  • does it works? What the three main ways traders use to make

  • money? And finally, why most people end up getting scammed?

  • Hey proactive thinkers, if you want to support this channel and help us make more videos

  • and want your name at the end of the next video, make sure to check out our Patreon

  • page. In fact, I will be posting weekly updates about the market or sometimes I will pick

  • up a company and analyze it and figure out if its a good investment or not. So if you

  • are interested in all of that, then make sure you check out our Patreon page.

  •  And now let's get into it!

  • 2. Forex For dummies

  • When we talk about globalization, we mention things such as tourism, international fights,

  • shipping, but we often ignore the role of financial institutions in making that happen.

  • In fact, without Forex, international trade is impossible.

  • Since the existence of money, every country had its own currency, even when gold was the

  • currency of the world. Not all gold coins were equal; some were made out of quality

  • gold. Others were mixed with other kinds of metal. Hence, merchants always had the problem

  • of measuring the value of different currencies.

  • Fast forward to today, even when we created paper currencies and completely demolished

  • the gold standard, that problem didn't suddenly vanish. In fact, it became even more complicated

  • since each country created its own currency. Currently, there are 180 currencies all around

  • the world.

  • Let's say you live in the United States, and since its summer, you decide to visit your

  • northern neighbor - Canada. You can't simply use your US dollars there,

  • you have to buy Canadian dollars, and only with them, you can pay for goods and services

  • in Canada. If let's say hypothetically one US dollar is equal to 1 Canadian dollar, using

  • hundred dollars, you will buy 100 Canadian dollars. But if you look at the real world,

  • 1 US dollar is equal to 1.36 Canadian dollars which means using 100 USD dollars, you can

  • buy 136 Canadian dollars.

  • Apple can't simply hire Chinese workers and pay them in dollars to manufacture your iPhone.

  • They can only pay them in Chinese yuan, that's why they have to buy yuans first.

  • And if they need to buy LCD screens for their latest flagship from Samsung, they have to

  • purchase south Korean won to pay for these screens.

  • And guess where all of these currency transactions take place. Exactly, the foreign exchange

  • market or Forex in short.

  • 3 . Can you really make money by trading money?

  • The year 1996 saw the first generation of forex online trading platforms. The Internet

  • made forex trading so accessible that it became mainstream, exactly like the Internet made

  • it easy to invest in the stock market.

  • There are essentially three ways to profit in the forex market. The most popular is probably

  • "the spot market", it's just a fancy word for a transaction with immediate delivery

  • such when you buy gold, for example, you don't wait to receive it some time in the future

  • like future contracts but rather own it immediately, but in this case, we are talking about currencies.

  • Currencies fluctuate all the time, and if you end up guessing right when a certain currency

  • rises in value as you do with stocks, you make a profit.

  • At the end of the day, the currency is like any other commodity that's driven by demand

  • and supply. Let's say for the sake of example, one US dollar equals to 2 Chinese Yuan, if

  • demand for Chinese Yuan rises or in other words, if more people decide to buy the Chinese

  • Yuan because, I don't know, they have set up factories in China, now they have to pay

  • their employees. The value of the Chinese Yuan will increase, so 1 US dollar will no

  • longer be equal to 2 Yuan but rather to 1.5 yuan.

  • Of course it's an extreme oversimplification, but that's how it works in short.

  • The number of factors that can influence the demand for a certain currency are so many

  • that we can't cover all even if this video is going to be an hour long, so lets take

  • a look at a few important ones.

  • The economic performance or the political situation can influence the demand for a certain

  • currency or the perception about the future of the economy.

  • In June 2014, a single British pound equaled to 1.7 US dollars but then rumours spread

  • that UK might leave the EU. That scared off a lot of investors, so they pulled out their

  • investments, and the demand for British pound slowly began to fall. Today with one British

  • pound, you can buy 1.25 US dollars.

  • Or take an example of China. For the last 20 years, the Chinese economy was growing

  • at an unbelievable rate; more and more business shifted their manufacturing to China. As a

  • result of that, the Chinese yuan kept rising in value against other currencies such as

  • the US dollar.

  • Traders in the forex analyze the market and speculate about the future of a particular

  • currency. If they expect it to rise, they buy a lot of it, hold it till the price rises

  • and then sell it, exactly as you trade stocks. But what makes this market much more lucrative

  • is that brokers often provide to their clients unbelievable leverage. Leverage ratios 1:100

  • are very common in the forex market. That means that, if you trade using your thousand

  • dollars, you can hold a position worth a hundred thousand dollars. If you end up making a small

  • percentage in profit, it will be huge.

  • On the other side, there are futures and forward contracts. They aren't really common among

  • the traders. They are more often used by multi-national corporations.

  • Let's say company A that's based in the USA wants to sell t-shirts in the United States.

  • Say the t-shirt costs 10 Mexican pesos to produce in Mexico and company A wants to sell

  • it for 15 dollars. And lets say hypothetically one US dollar equals to 1 Mexican peso.

  • In this case, company A should make 5 dollars in profit for each t-shirt sold. But what

  • if by the time the Mexican firm manufactures all the t-shirts and delivers them to company

  • A, the Mexican peso rises in value where lets say 1 Peso equals to 2 US dollars. So a single

  • t-shirt would cost now 20 dollars and company A will make a loss if it sells them at 15

  • dollars each.

  • To prevent such things from happening or any other risk of price fluctuations, companies

  • often buy futures contracts to fix the rate at which the transaction will be completed.

  • And if you want to buy cool t-shirts where you don't have to deal with any kind of price

  • fluctuations, you can visit our store. Finally, we have launched our merch—T-shirts, hoodies,

  • phone cases with beautiful designs that you will definitely love. So make sure you check

  • out our store. And did I tell you that you will be supporting our channel to make more

  • similar videos? The link will be in the description.

  • 4. The problem with forex trading - Forex - the market for losers

  • Unlike the stock market, where you can analyse a certain company. Figure out if it's undervalued

  • or overvalued and make a rational decision that at least in the long run will payback.

  • Forex is different, its more like speculation. There are simply too many factors that influence

  • a certain currency from tourism to geopolitical risks, which makes the market even more volatile.

  • In fact, the major players are the banks that trade among each other in huge volumes that

  • could easily crush you no matter how big is your capital.

  • So its common for amateurs to easily lose

  • their position when they aren't well educated about the market. They can get emotional and

  • make a wrong move.

  • In some countries, the forex market is entirely unregulated, which makes it even riskier.

  • A lot of brokers aren't trustworthy and can mislead their customers by betting against

  • them, for example.

  • Remember the unbelievable leverage you can get in the forex market we talked about earlier.

  • Well, there is a downside to it. Many brokerage firms went bankrupt due to lousy leverage

  • decisions. So if your position loses value to a point where you no longer meet minimum

  • margin requirements, your broker will liquidate assets to help assure that you don't lose

  • more money than you put into the account. Beginner traders who are new to the game often

  • make this mistake and quickly lose their capital.

  • It's not to say that anyone who trades in Forex loses, but risks are extremely high.

  • If you guys have enjoyed this video, make sure to give it a thumbs up. And if you want

  • to see more similar videos, then hit that subscribe button and the bell besides it and

  • don't forget to checkout our Patreon page to support us to make more similar videos.

  • Thanks for watching and until next time.

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初心者のための外国為替取引 - あなたは本当にお金を稼ぐことができますか? (Forex Trading For Beginners - Can You Really Make Money?)

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    Summer に公開 2021 年 01 月 14 日
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