All language subtitles for [English (auto-generated)] Forex Trading For Beginners (Full Course) [DownSub.com]

this video will be an all-inclusive

completely comprehensive beginner's

guide to forex trading if you're someone

who's just starting out in forex trading

then this will give you everything you

need to know to understand the basics of

forex and take that next step down your

path to becoming a profitable trader if

you're someone who's already trading

then chances are you probably skip these

steps right and that's a damn shame

because if you skip these steps then

it's going to be nearly impossible for

you to become a profitable trader

without the things i'm going to show you

in this lesson so whether you're

beginning your forex trading career or

someone who's already been trading let's

make sure that you have a solid

foundation with today's video on the

basics of 4x so with that being said i'm

going to let the intro and disclaimer

roll while i do hit that subscribe

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[Music]

what's up and welcome to the complete

beginner forex training course in this

course you'll learn everything you need

to know to begin your journey as a forex

trader the first question we're going to

ask is the most simple question possible

which is

what is forex

so forex is actually the largest market

in the world and what does that mean how

big do you have to be to be the largest

market in the world well on an average

trading day the forex market trades

five

trillion

with a t

dollars

that is a large amount of movement for

one trading day five trillion dollars

that's insane so that's why the forex

market is the largest market in the

world now another thing you need to

realize about the forex market and the

second thing we're gonna go over

is that in the forex market what you're

trading is called a currency pair

a currency pair is nothing more than the

exchange rate between two currency

currencies we've all had to exchange

money before if you've traveled at least

maybe you haven't but if you've traveled

outside of the country you live in

you've probably exchanged money for

another currency for instance if you

live in the united states and you take a

trip to europe then you more than likely

will exchange some of your us dollars

for european dollars and that rate the

rate of exchange is what you'll get back

for instance right now the euro dollar

exchange rate is

1.0878 so let's just write this down

the euro

against the dollar right now or the euro

dollar exchange rate

is 1.0878

so that means that if you were to go to

europe right now and you wanted to get

one euro then you would have to give

them

1.0878

to get that one euro because right now

one euro is worth 1.0878

dollars now the way we make money in the

forex market remember we're trading

based on the exchange rate between two

different currencies and the way you

actually make money is when this

exchange rate rises and falls so these

exchange rates fluctuate depending on

the strength and valuation of each of

these currencies the euro and the dollar

so if the euro rises in value

then it's going to take more dollars for

you to get one euro the same thing if

the dollar so let's say that euro goes

up in value let's just start here the

euro goes up in value then you're going

to need more than 1.0878 dollars to get

one euro and if the dollar goes down in

value it's the same thing and the

opposite is true if the opposite happens

if the euro

drops

then you're going to need less dollars

in order to get one euro and if the

dollar

rises in value then you're gonna need

less dollars to get one euro so let's do

an example of that right now what you're

actually making money on in the forex

market and what you're trading based on

is this exchanger this exchange rate

fluctuating in value going up and going

down so if this exchange rate goes from

1.0878

let's say you buy you put in a buy order

we're gonna go over all of this later on

so don't get confused yet but if you put

in a buy order at 1.0878

and this exchange rate goes to 1.0978

then you make the difference you make

the profit of essentially one cent but

we are trading based on huge amounts of

size in the forex market and with

leverage which we're going to discuss

later on right now

what you need to understand

after the question of what is forex is

what is a currency pair and that's what

we're gonna break into right now now

that you know what the forex market is

and kind of how it how it works let's

break into breaking down

a currency pair and give you a complete

understanding of what a currency pair is

let's do that right now a currency pair

if you look on the chart in front of you

it's what you see to the far red edge i

will actually make this a little bit

bigger so you can see it

as you can see on the side here we have

euro versus dollar pound versus dollar

dollar versus yen aussie versus dollar

and dollar versus swiss those are the

major currency pairs the top five major

currency pairs now with that being the

case

each of these is made up of separate

currencies right so the first thing you

need to understand is what each

three-letter

symbol represents which currency so for

each three-letter symbol we have that

represents a certain currency and i'll

post a screenshot of which currencies

are represented by which three-letter

symbol right now you'll see that on the

screen

so

with that being the case we have

one currency's value against another

currency's value which is what gives us

a better interpretation of the value of

a specific currency so in the case of

the euro dollar let's say this is a

currency pair that we can trade it's

actually the most popular currency pair

in the forex market and the euro dollar

if we write it out here

consists of two currencies right these

two currencies are called

the base currency

and the quote currency now

don't let this sound too confusing

there's nothing confusing about a

currency pair the only thing you need to

know about a currency pair is that

currently

the euro dollar

has a value of 1.0792

so the

fact that the euro dollar has a value of

1.0792

is important because you need to

understand that that is the quote pair

valuation so what that means is every

base pair as in the first pair

and this being the second pair every

first pair in a currency pair always has

a value equal to one

you are always exchanging one of that

first pair for whatever the quote pair

is the quote pair is he actually quote

the actual quote you see on the screen

is your quote pair so you're getting one

euro what this means in hindsight is

that if i have one euro i essentially

have one

dollar

seven cents point nine two

or another way to look at this is it

takes 1.0792

dollars to make one euro so therefore

the value of the euro is higher than the

value of the dollar by roughly eight

cents seven nine two cents

so let's look at one more pair and try

to go over this one more time to make

sure that you're getting it and i'll ask

you some questions while i do this to

help you to better learn because asking

questions and having you answer them is

a much better way for you to learn than

for me to just write down right so

let's do that let's go for the

dollar yen right now okay so the usd

slash jpy's the dollar yen

with the dollar yen which one of these

pairs is a base pair

is it the dollar or the yen

hopefully you said the dollar right

because the first pair the dollar is the

first pair in the equation the yen would

be the second pair

in the pair and the currency pair so

with the dollar being the first pair

that means it is the

base currency of this currency pair with

it being the base currency of this pair

what's its value always equal to

one when you're looking at the valuation

of a currency this value is always going

to be equal to one the jpy is what

it's called the quote pair

so if it's the quote pair then that

means whatever the value of the dollar

yen is and it's on the screen now it's 1

100.90 so if the yen

let's say the dollar yen itself is

110.90

so it takes one dollar

to have if you have one dollar

essentially that means you have 110.90

euro yen excuse me not euros yen so at

this point we can see that one dollar is

equal to

110.90 euros or if you have 110

110.90

yen not euros i keep doing that if you

have 110.90

yen then you essentially have one dollar

and vice versa so this is a currency

pair

and this is how you're always going to

look at it the first pair is always the

base pair with a value of one the quote

pair is what you're seeing as a quote

that's what the value of the second

currency is compared to the first

currency the quote pair is always the

value compared to the first currency the

first currency is always the

currency being compared to and it always

equals one so in this case again the

dollar would be one the yen means i need

one dollar and when i have one dollar i

essentially have

110.90 yen so that was a look at what

forex is itself and also what is a

currency pair in case you were

struggling with that or didn't know or

essentially in case you were coming into

the market as a brand new trader and

needed this lesson i hope it was

valuable for you and i'll see you guys

in the next lesson where we're going to

talk about what a pip is and how you can

actually

count pips tens of pips hundreds of pips

how do you know where a currency pair

actually sits in terms of the valuation

that's what we're going over in the next

video and i can't wait to see you guys

there talk to you soon

next up in the all-inclusive beginner

forex trading course is what is a pip we

have to understand what a pip is because

this a pip is how the forex market moves

a pip is the smallest amount of movement

we can see in a currency pair that

actually matters to us whenever we're

placing orders a pip is how we make

profit or get stopped out depending on

how our trade goes so it's very

important that we understand what this

is again a pip is the smallest number

that moves in a currency that we care

about as traders there's one number

below this called a fractional pip that

we're not even going to talk about other

than me saying don't pay attention to it

because it does not matter at all to us

as traders so what is a pip we know that

a pip is the smallest

number that moves in a currency pair but

how do we identify pip well look at the

euro dollar right now right now you can

see the euro dollar last price is

107.87 1.0787

so let's write that down we have the

euro dollar

at a price of

107.87

1.0787

and you can see on that currency as well

that there is a smaller number as a

fifth decimal a smaller number that's

two right now in red that's a fractional

pip we're not going to worry about those

at all what you need to understand is

the way you identify a pip is the fourth

place away from the decimal so the

fourth decimal point meaning if this is

the decimal point we count over

one

two

three

four

this is a pip and let me clarify that

really quickly right now we are talking

about a pip on every currency pair

except currency pairs that end in jpy

any currency pair with jpy in it is

going to be slightly different than this

and we're going to go over that next so

this is going to be what is a pip and

i'm going to put non jpy here so that no

one's confused this is a pip on every

currency pair

except yen pairs which we're going to

discuss what a pip is in a yen pair in

just a second but for every other

currency this is what you're going to

use so this is what is a pip

non-jpy for every currency pair that

doesn't have jpy in it the fourth

decimal place is what is known as one

pip so we have the euro dollar at a

value of 1.0787

what if the euro dollar goes to one

1.0786

how much have we dropped the euro

dollars went down now but by how much

well the math here is pretty easy if we

went from seven to six on our fourth

decimal which is a pip we dropped by one

pip and here's how i want you to look at

this this is the way i looked at the

beginning and it really helped me to

understand this a little more clearly

not that it's a super complicated thing

understanding this if you watch this

video a couple times will be extremely

easy but the way i look at this is let's

write out our value of the euro dollar

and space it out a little bit to give us

a little bit of room and that's what i'm

really trying to do here i want to give

myself a little bit of room so we have

one

decimal

0

7

eight

seven right

so with this being the case the way i

look at this if i if i count my numbers

one two three four decimal places a pip

i like to look at it like this

this is our ones meaning every time this

moves it's gonna be one this is our tens

every time an eight goes up or down in

this specific case that's going to be

tens and this is our one hundreds that

makes it so easy to say okay if the euro

dollar went from

1.0787 what it's at right now to 1.0797

how much did we move well let's look

down here at our chart where that's the

tens that column is the tens that

decimal point number three is the tens

so therefore this went down and actually

in this case since we went up from eight

to nine hopefully you caught that before

i did then obviously that means that the

euro dollar went up

10

pips

because it was in our third decimal

point now let's do one more number to

make sure you understand this and we'll

go through one more currency pair to

really make sure you have a good grasp

on this this is the foundation of any

trading career so let's do 1.0887

can you tell me

at this point how many pips did the euro

dollar rise well let's look at our

column or graph we have our ones the

seven it stayed the same we have our

tens which was eight it stayed the same

we have our one hundreds that was seven

and is now eight that means that the

euro dollar went up not by ten but by

one hundred pips

so that's the way you recognize

a pip a pip is the fourth decimal place

is the smallest amount of currency moves

that we care about as traders let's do a

completely different currency pair that

is not a yen pair and go over one more

and again just like in the last lesson

i'm going to ask you a lot of questions

as we go through this

i'm going to ask you a lot of questions

as we go through this and i want you to

actually answer those questions on the

other end where you're sitting or

standing depending on whether or not

you're trying to get exercise in and

now what we're going to do again is go

over a different currency pair let's go

over the aussie new zealand let's just

pick a random pair so aud

nzd

i do my ends back i'm slightly dyslexic

i literally just drew an end backwards

because i cannot

ever remember which way they go and in

my head it's always backwards so

we have the aussie new zealand right the

aussie new zealand has a current

value

of 1.0248

1.0248

tell me what would be the case okay

let's go over a scenario if the aussie

new zealand went from 1.0248

to 1.0348

how many pips did this currency pair

move

i'll give you a

second hopefully you were able to say

100 pips let's draw out our table one

more time to make this very easy one

decimal

oh

two

four

eight okay

here we have our little table that i

like to make

at this point we have our ones our one

pip which is the fourth decimal our tens

which is the third decimal we'll write

this out to one two three four decimals

we have our one hundreds

and the zero would be the one thousands

you don't really have to know that

that's kind of irrelevant unless we have

some kind of super crazy market moves

but in this case of the aussie news then

from

1.0248 to 1.0348

which currency excuse me

which

stop my phone here which one of these

numbers changed it wasn't our ones at

all was it our ones was an eight it's

still an eight it wasn't our tens it was

a four it's still a four was it our one

hundreds it was a two it is a three so

therefore this market moved

100 pips going from two to three would

mean that we moved a total of 100 pips

here on the aussie new zealand so in

order to

be absolutely sure that you understand

all this give yourself a little test

look at a currency pair and look at all

the numbers on that pair's value and

then ask yourself what would change

right down another random number but

lower above it and what would change if

price went from where it is now to that

number that you wrote down that's a

great exercise to do here in this case

and remember the way we're looking at

this is

our

pip our one pip is the fourth decimal

place away from the decimal okay so if

we have our

just as a final review here on non yin

pairs if we have

the fourth decimal place here this would

be four right one two three four after

the decimal this is one pip

this is the tens

this is the one hundreds so if we move

to 1.0258

then we have moved up

ten pips that's how you need to be

looking at it

in terms of what a pip is and how it's

valued now we've just talked about every

non-yin pair any pair that does not have

jpy will be calculated like this and

will be

evaluated like this with four decimal

places

now what about yen pairs something very

slight changes on any pair with the

letter j p y attached to it so let's do

an example of that right now if we look

at the value right now of

the dollar yen which is usd

jpy

the dollar yen currently has a value of

110.90

with this being the case and own only

pairs with jpy attached to them we go

two decimal places instead of four what

do i mean by that let's actually draw

the graph right now so that we can make

this as easy as possible we have one

one

o

point

okay if we draw our same graph

this is what it looks like now now our

one pip is the second decimal place so

what do we have to do we see our decimal

right there we go one two on the second

decimal place is one pip so this is our

ones what does that mean for the nine in

this specific case that means the nine

is going to be our tens and the zero is

going to be our one hundreds okay

so with this in place let's go ahead and

ask ourselves a very familiar question

for this video which is

if this market moved from

110.90 to one

ten

point

nine

six

how many pips did it go up

if the market moved this amount how many

pips is that that this market just rose

well if we look at the once it goes from

zero to six therefore this market would

have risen

or rose not sure which one to use there

by six pips

let me turn this on silent sorry guys

okay so now let's go over a couple of

other examples so instead of

us rising by six pips i want you to tell

me how much we are rising in this case

let's go with

one

one 12.90

if price of the dollar yen

goes from 110.90 to 112.90

then how much has that

value risen how much is the price went

up

this my friends would be 200 pips

because this column that was zero is the

hundreds column so this would be a plus

200 on the dollar yen now to make sure

that you understand yen pairs as well as

you do the other every other currency

pair i'm going to go over one more yen

pair that doesn't have the dollar in it

just a completely different pair to make

sure you're completely comprehending how

to read pips

let's go ahead and do that right now and

again in this section i'll be asking a

lot of questions and i want you to try

to answer them at home so that you get a

better grasp of this before i answer

them here even if you have to pause the

video so let's go that all rhymed wow

that's pretty good let's go into another

yen pair let's try out the pound yen so

gbsp

jpy

and the value of this currency pair

right now if i find it on the chart and

i'll show you a screenshot of it

somewhere the value of the pound yen is

130.70

as you'll notice

because this pair has jpy in it we only

move two decimals from the decimal right

so if we have

130.70

then decimal one would count as how many

pips

this is our tens remember and then

this our second decimal right this is

decimal two is going to be one pip so if

this market and this are zero on the 130

our zero is going to be 100 pips so if

this market goes to

three

seven oh what do we have how much of a

move did we have in the pound yen we had

a

300 pip move a plus 300 pip move if we

go from 130

0.70 to 130.85

how many pips did we move we moved up

15

pips

because 70 to 85 is 15. if we go to

130.72

how many pips did we move

up

to pips and if we go from 130.70

to

129 point

how much did we go down

100 pips we went down 100 pips

so i hope that now you have a really

good grasp of what a pip actually means

and how to calculate a currency's value

against another one this is a very

important foundational step to beginning

your foreign currency trading career so

it's definitely necessary to have in the

arsenal and up next we're going to talk

about what is the actual value for each

pip how to calculate order size and a

little bit about leverage so i hope to

see you there in the next video or i

will see you there in the next video and

i'll talk to you then see you soon

hey guys just wanted to record this

really quickly before we start the next

video for anyone who is trading with a

brokerage

that requires you to trade in either

standard lots

mini lots or micro lots which you're

going to learn about in just a second

then you're going to be required to

watch this next portion of the video for

instance if you trade with mt4 as your

platform for the most part mt4 will only

allow you to trade in either standard

lots

mini lots or micro lots which you're

going to learn about again in just a

second and if that's the case then you

definitely need to watch the first part

of this video but if you want to learn

the way that i personally use risk

management and calculate the value of a

pip which is what we're talking about in

this video then that's going to happen

towards the end of the video i'm going

to go over the way i actually do it my

brokerage allows me to

make trades place positions based on a

random lot size it does not matter if

it's a hundred and twenty two thousand

units if it's twenty two thousand it

doesn't matter it's completely random

and that's okay with my brokerage and

with the platform that i use for that

reason i personally

calculate the value of a pip a little

bit differently but the first part of

this video is definitely for you if

you're using mt4 or a platform

that requires you to trade based on a

certain lot size which is a lot of

brokerages out there which is why i

wanted to record this video just for you

if you're someone who is more interested

in learning exactly how i use what i use

in order to calculate the value per pip

then i'll have a time stamp on the

screen somewhere where you can go to

that portion of the video and skip this

first portion but it would probably be

beneficial to watch this first part

anyway i did want to clarify that though

in the beginning so now let's jump into

how to calculate the value of a pip this

next lesson talk soon

welcome to lesson number three on the

basics of forex in this lesson we're

going to talk about what you actually

want in terms of trading how to

calculate profits and what you don't

want in terms of trading how to

calculate your losses and what i mean by

this is what

that's a terrible w we're going to

restart this whole thing just kidding we

are going to restart with that w though

what

is the

value

of a

pip

so we know what the foreign exchange

market is we know about currency pairs

we know what a pip is but what is the

actual value of that pip to you in your

trading because

well you probably know this by now if a

market moves up in pips if you buy and

the market moves up in pips then you're

going to make money if you sell and the

market goes down in pips you're going to

lose money but how do you calculate how

much money that is this is a question i

get all the time how do i calculate my

wins and my losses in forex and today in

this video it's going to show you how to

do is determine

the value of a pip so how do we do this

well for starters the value of a pip

depends highly on the amount of currency

you're trading what that means is the

amount of units that you're trading so

in currency markets we're trading a set

of units and these units normally come

in four

major

lot sizes four major sizes so if you're

trading

units of currency then what you want to

what you want to actually look at

and i'm going to do a graph for this is

the lot size in order to come up with

the amount of value per pip the amount

of value each pip is worth it depends on

your trading lot size or the amount of

units that you're trading and those

units again are broken down into

most of the time it's actually three

major types but we're gonna do a fourth

just in case the fourth one is one

that's used very rarely but you'll

understand more about that in just a

second don't get confused nothing

confusing about this what we're gonna

have in this column is the name

of whatever lot size you're doing what

we're going to have in this column is

the size and what we're going to have in

this column is the value

per pip

so value pp value per pip in this in

this last column and this is going to be

the case for every pair that ends in usd

it's going to be very similar this is a

generalization every pair in the that

ends in usd is going to be exactly to

this scale

other currency pairs are going to vary

but not by much there's a generalization

this is a generalization but

other currency pairs are not going to

vary that much from this table the name

of the first

size that is very common is a standard

lot so we're going to label this s

l that stands for a standard lot now if

you're trading a standard lot that means

you're trading

100

000

units of currency so for trading 100 000

units of currency on any pair that ends

in usd then this is the exact value per

pip if you have one standard lot that

you're trading or if you're trading

every 100 000 units you're trading you

are trading at a value

of 10

dollars per pip

so if you're trading a standard lot on

the euro dollar that means that every

pip is dollars every pip that it moves

is ten dollars let's go through the rest

of the types of or size of units that

you can do first and then we'll break

into

more about what they mean and how you

can utilize them the second one is

called a mini lot a mini lot means that

you're controlling or holding

10 000

units of a certain currency and with

this being the case

with 10 000 units of a currency you have

a value per pip

of one dollar

so for every ten thousand units of a

currency that you hold there is a value

of one dollar per pip that's exactly

right on dollar pairs it's a

generalization that is very similar on

other pairs as well and the last lot

we're going to take a look at

is the micro lot the micro lot means

you're controlling 1 000

units of a certain currency and that

means that you are

losing or gaining 10 cents per pip so

every pip that the market moves is going

to be 10 cents up or down in your

account if you're trading a micro lot

and the last one that we're going to

take a look at that we're not going to

dive deep into it all is called a nano

lot a nano lot means that you're

controlling 100 units of currency and

every

movement of a pip is worth a penny the

value per pip is a penny which is

something that we're not even going to

worry about so

in the case of the other lots let's now

break into let's do let's get away from

this little section here and what we're

going to do is break into looking at the

difference in prices between currency

pairs and figuring out how much we

gained or lost based on that difference

in price so for instance if you bought

the euro dollar

eur

at 1.00802

and it went to 1.0902

if you were trading a standard lot and

this happened how much would you gain

on that position how much money is that

actually worth and that's what we're

going to determine and talk about up

next so let's go ahead and do that

all right so let's move into this on the

euro dollar trade here if we have the

euro dollar at

1.0802 we trade one standard lot a

hundred thousand units of this currency

and we do so at

1.0802 and this market moves to 1.0902

going up we bought we wanted the market

to go up and we take profit at 1.0902

how much money did we make see if you

can calculate how much money we made

based on this trade remember a standard

lot is 100 000 units of currency and

with that 100 000 units of currency

on any pairs ending in usd we're making

and losing exactly ten dollars the value

of a bip is exactly ten dollars so let

me share with you the equation you need

to figure this out what you need first

is the amount of pips so we're going to

look at the amount of pips which is 100

we went up 100 pips in this

particular case right so we have 100

pips

times the amount or the value per pip in

this situation based on your lot size so

if we use the standard lot of 100 000

units and we know that a standard lot on

the euro dollar is equal to 10 dollars

per pip then we would have our amount of

pips

times ten dollars per pip because we're

using a standard lot

and that we have to multiply by the

amount of standard lots in this case we

just traded one standard lot

so with this being the case

how much money did we make on this 100

pip move on the euro dollar

well the money would translate to 100

times 10 because we're using a standard

lot and with a standard lot we are

making and losing 10 dollars per pip the

value per pip is 10

we only traded one standard lot so

therefore 100 times 10 is 1

000

is what you made or what we would have

made on this 100 pip move out of the

euro dollar now let's change things up

for a second and say we wanted to trade

three standard lots in this case what

would change what number in the equation

would we need to change if this was the

case and we were trading three standard

lots instead of one

well if that was the case we would have

to change the third number in this

equation we still have a 100 pip move

right pips is right here

we still are trading standard lots so

standard lot is right here now we need

number of

lots

so what's the number of lots well we're

trading three so that would mean that

this 100 pip move if you were trading

three standard lots would equal a three

thousand dollar gain

now let's look at this in a different

way that always helped me to better

understand what's actually going on

whenever i place trades so let's move

back to placing a buy order with one

standard lot on the euro dollar if

you're doing this essentially you are

telling your broker that you are going

to

want 100 000

euros not one million euros what am i

doing 100 000 euros so if you're going

to purchase 100 000 euros

your brokerage is going to charge you

the exchange rate that the market it

currently has which is

1.0802 100 000 times 1.0802 would be

they will charge you 108

0002

so that's what you're being charged to

get 100 000 euros your broker gives you

that 100 000 euros they get 108 000 and

two dollars from you from your account

then you are holding that 100 000 euros

waiting on the market to either rise or

fall waiting on the euro dollar to

either rise or fall in this case you

bought the euros

and the market went up from 108.02 to

109.02 meaning that you still have the

same

100 000 euros that you are holding but

now instead of them having a value of

one hundred and eight thousand and two

dollars they now have a value because of

the difference in the exchange rate the

exchange rate has went up they now have

a value

of one hundred and nine thousand and two

dollars and that's where you're getting

that one thousand dollars if you're

trading a standard lot so that's the way

a pip works if you're trading a standard

lot let's go into the way a pip works if

you're trading a mini and a micro lot

just to make sure you have a solid grasp

on this

we'll keep the math easy with a 100 pip

move except now instead of trading one

standard lot

we're going to assume that you when you

do a little bit of a difficult thing

here a little more difficult as we go

let's assume you want to trade two

mini lots

so you're trading two mini lots and do

you remember what a mini is a mini is

you holding

10 000 units of currency so if you're

trading two minis you're holding 20 000

units of currency a mini

is worth one dollar per pip meaning the

value of a pip if you're trading a mini

lot is one dollar so in this case the

market goes up by 100 pips so our

equation would still be pips would be

100

times the value per mini lot

per pip when you're trading a mini lot

which is one dollar times the amount of

mini lots you're trading which is two

meaning

that your your profit on this trade if

you were trading a mini lot would be 100

times one which is 100 times two which

is the amount of mini lots you're

trading so you would have a profit of

two hundred dollars on this particular

trade now let's go through the other way

of looking at it on a mini lot as well

what you're saying is broker i want

20 000 euros

and they are going to

math is going to get a little more

difficult here hold on they're going to

charge you let's bring a calculator over

1.0802

times 20

thousand

when they do that they're gonna be

charging you twenty one thousand six

hundred and four dollars so when they're

charging you twenty one thousand six

hundred and four dollars you're holding

twenty thousand units of euro

so while you hold that twenty thousand

units of euro just as in our last

example the euro goes up a hundred pips

so you still have that same

twenty thousand

euros except now you have to multiply

that twenty

thousand

units that you're holding

times the new exchange rate of 1.0902

which means when you give them

that 20 000 units back they owe you

21 thousand eight hundred and four

dollars giving you

that two hundred dollar profit so that's

the way profit and loss works in a mini

lot no matter how many it is we have our

equation right pips times the amount per

pip the value per pip times the amount

of lots you decide to trade one more

example of this and then i'm going to

show you how i personally calculate pips

and how i use risk management in my own

trading but let's go through

this last example first on a micro lot

so let's say you want to trade one

micro lot

and you're doing that while the you buy

that one micro lot the market's at

1.0802 just as with the other examples

we go up 100 pips what's our equation

look like what we have to do

our 100 pips

times 10 cents

times the amount of micro lots we're

trading which in this case is one

what does that equal that means that you

would have made 10

on this 100 pip move trading one micro

lot so as we do

with every other

lot size let's go ahead and look at it

in a different way so you're telling

your broker i want 1

000 units of the euro and they're

telling you if you want 1 000 units of

the euro we're going to charge you 1080

and then you say okay i'm fine with that

you exchange it you hold that 1000 euros

until the price rises by 100 pips and

when it does you're saying 1

000 euros is now worth

and ninety 1990

because of that rise in price

so that's exactly how

the value of a pip works when using a

certain lot size now for my own personal

trading as i said the beginning of the

video

i actually trade based on a certain

percentage of my account value so the

the

lot size is always a random number and

that's an extremely simple thing to do

if you have the right platform so i'm

gonna show you my platform and show you

how i actually determine the value per

pip myself this was for anyone using mt4

or a brokerage that doesn't allow you to

have random lot sizes so i hope that was

helpful let's break into the way i

actually prepare have risk management

the way that i calculate value per pip

on my own personal trading right now

okay so now let's talk about how i

personally calculate the value per pip

and first let's talk about why you even

need all this information why do you

need to understand how much

every pip is worth depending on the lot

size that you're trading well the reason

is because of risk management you want

to understand

that so that you can know how much of

your account you're risking per trade

whatever your stop loss is and and also

how much you can make per trade but the

more important part of this equation is

how much you can lose so with that being

the case the reason we want to

understand the value of the pip is

because we want to understand how much

we're risking on each trade with that

being the case the way i use risk

management and calculate the value per

pip is a lot different than what i just

showed you because my brokerage as we've

discussed in the beginning and my

platform allow me to trade completely

random unit sizes so for me it's a lot

easier than having to do any of that

math i learned that at the beginning and

i know that's something a lot of you may

have to use but for those of you who

have the same brokerage as me or for

those of you who have a brokerage that

allows you to use random units to place

orders this is what i personally do i

want to share this with you as well so

all i do if i want to place a trade

let's say i wanted to buy the euro the

new zealand dollar right now which is

the currency pair we're on i would go to

create a new order

i would have a market order in and i

would set my stop stop-loss and let's do

this first let's go ahead and do say i

want to buy

the new zealand dollar right now

i want to have a stop-loss below

this red candle

so that's my stop-loss and i have a

target at a two to one risk reward so if

this is the case i now have my trade set

up so what i'll do is go to trade create

new order it's gonna be a buy order on

the new zealand dollar and i know where

my stop-loss is it's at 100 pips so 100

pips is my stop loss i know my target's

at 200 pips around a two to one risk

reward

with this being the case my units

for me

are completely irrelevant and this is

the reason i'm trading based on a

certain risk

of my account with every position that i

take out the certain risk for me is

between one and two percent so for me

the easy way that i do this is i go here

to trading view i place my order and i

put in what amount of risk i want to use

as you can see right here on the order

form it says percent risk when i put in

two percent risk you can see that it

shows me the size and units that i'm

actually purchasing and this number is

completely random again some brokerages

may only allow you to place trades based

on standard lots in that case you would

need to trade two standard lots and it

would be completely different for you

but for the way i trade for my brokerage

and my platform i'm allowed to trade

based on a certain percentage of my

account value which is what i like to do

for every trade i place therefore the

lesson we just went over is kind of

irrelevant for me at this point in my

trading considering the technology that

i use here over on the tradingview

platform in order to determine the

amount of risk i'm going to use in my

personal trading account with every

trade that i place so i wanted to give

you both of those

so that you now at least understand how

to

calculate the value of a pip based on

your order size and also you know now

that you can go over to trading view and

you can see the amount of units you need

to purchase based on the percentage risk

of your account we're going to go over a

lot more of that later on in the course

in terms of how to calculate risk per

position and things like that is going

to be later on right now i just want you

to understand how to calculate the value

of a pip and i wanted to show you how i

personally calculate the value of a pip

later on and in the next lesson we are

going over

what leverage really means so in that

video in the next video we're going to

talk a lot about leverage i really hope

you enjoyed this video and i hope that

you got value out of it hopefully now

you understand exactly how to calculate

the value of a pip and i'll talk to you

in the next video see you soon

what's up and welcome to lesson number

four in our all-inclusive beginner forex

trading course that is going to be

everything that you need in order to

start your forex trading journey this

video

you read it right folks is all about

leverage so by the end of this video

you're not only going to know what

leverage is but you're also going to

understand why a lot of traders end up

blowing accounts because of it how to

avoid that and the proper way to

actually use leverage by the end of the

video so let's go ahead and get started

with what is leverage and the way we're

going to do that is by using an example

of the housing market so let's go ahead

and get started with that right now

let's say by the way in the housing

market when you want to get a loan for a

house you actually need 20

down on that property in order to

purchase that property so let's say you

find a property

that you want to invest in

and this property is one

hundred thousand dollars

in the case of this property property

being one hundred thousand dollars how

much do you need to deposit how much of

a down payment do you need in order to

buy this house

or invest in this house you need 20

000 right

so let's say you come across the

greatest bank in the world and they come

up to you and they say hey we know you

want this property what we're going to

do is we're going to take your twenty

thousand dollars

and we're gonna give you this one

hundred thousand dollar piece of

property you can hold it as long as you

want you don't have to make any payments

on this property but when you decide to

sell it

you still owe us one hundred thousand

dollars so that means if the market

crashes and this house's property drops

like crazy you still owe us a hundred

thousand dollars whenever you decide to

sell and if the housing market goes up

vice versa you still owe us a hundred

thousand dollars so let's do this

scenario

let's say you say okay yeah great deal

that is an amazing deal so let's do it

and you buy this hundred thousand dollar

property with a twenty thousand dollar

down payment and you have no payments

and then throughout the course of twelve

months the housing market drops

fifty percent

oh no right so now your property that

was worth one hundred thousand dollars

is now only worth

fifty

thousand dollars but guess what that

bank already told you whether the market

goes up or down you owe us our hundred

thousand dollars back so in this case

you decide to sell for a loss how much

did you lose on this house

you lost

that 50 000

that sucks right so this is the power of

leverage in terms of how it can hurt you

you lost more than your initial down

payment more than your deposit maybe

more than you had if twenty thousand

dollars is all you had to invest

is this sounding familiar kind of like

leverage in the forex market and some of

the horror stories you've heard so

that's how leverage can hurt you right

and in terms of helping you we can do

this other scenario because guess what

just as bad as it can hurt you it can

help you make ridiculous returns as well

when you use it correctly so let's say

the same scenario

you pay twenty thousand dollars they say

here's this one hundred thousand dollar

property to hold

this time

instead of the market dropping by fifty

percent

we go up fifty percent over the next

twelve months so with the housing market

going up 50 you now

have this property that was worth 100

grand that is now worth

150

000 and guess what the bank says the

same thing whenever you sell at that 12

month period the bank says okay you've

sold you owe us 100k

in that case you give them

their 100k back and you end up with a

plus

50 000

profit

so in this case you made

more than your initial down payment that

is the power of leverage leverage can

allow you to make ridiculous returns and

also

unfortunately

can cause you to lose even more than you

initially invested now forex is a little

different because there's a thing called

margin call but now that you know what

leverage is let's relate it back over to

forex and by the way this bank the

twenty thousand dollars and we'll let

you hold 100k property it's the broker

so let's jump into an actual forex

scenario with this being the case let's

go ahead and delete all of this

so in 4x i'm going to draw out a little

graph here

we have about four different types of

major leverage that people or brokers

allow you to have and we have one

to ten leverage

one to twenty

one to fifty

and one to one hundred leverage

now

each of these means that you have

your account times the leverage you get

in buying power so let's say you have a

1

000 account

just to make math super simple that

means with one to ten leverage you have

10k buying power one to twenty you have

20k buying power this is

self-explanatory but i'm gonna write it

down anyway 50k buying power at one to

fifty and 100k

buying power at one to one hundred now

here is the reason most traders blow

their entire accounts using leverage

most traders say i have a thousand

dollar account but

but i have 10k in buying power

so what do i need to do obviously i need

to buy 10 000 units of the euro dollar

and hope that that goes up

that's not how you want to use leverage

that is the worst way to use leverage

and let me help you understand why we're

going to use one thousand dollars

account size as an example and we're

going to use the 50 to 1 leverage

because in the united states

that is the maximum amount of leverage

they allow you to have and personally 50

to 1 leverage is what i use so

with a one thousand dollar account

let's look at this as if you don't have

any leverage you have a thousand dollar

account we've talked about order sizes

right how many units can you purchase

with a one thousand dollar account and

no leverage at all 1000 units right

self-explanatory 1000 units what is 1000

units that is a

micro lot

one micro lot on most pairs

means that you

are

the value of a pip for your position

stay with me if you haven't studied lot

sizes and stuff we have another video on

that that you've probably just watched

hopefully this 1000 1000 unit micro lot

is worth 10

cents per

pip

okay so if you have a one thousand

dollar account that means you can trade

at maximum if you are all in on a trade

you can have 1 000 units of a currency

let's say you have 1 000 units of the

euro dollar

and you say cool i have one thousand

units these this micro lot means that

every pip the euro dollar moves is ten

cents per pip

in this case i want you to look at risk

as how many pips you can lose

how many pips could you lose at 10 cent

a pip

if you have a thousand dollar account

and no leverage

you could lose 10

000

pips

before you blow your account that's

awesome this is why not using leverage

at the beginning is a pretty good idea

if you're just now starting out you're

gonna have a lot of losses but if you

have 10 000 pips of room before you blow

your account then you would have to lose

a lot of trades to actually blow your

account here's where leverage

actually can really hurt you because

let's take this same same one thousand

dollars

and we'll actually keep all this on the

screen we have this one thousand dollars

sorry if it gets a little messy here

guys i'll color this a different color

to make it a little bit easier let's go

with

blue i like blue so we have this 1 000

account but now

separate this now you have your 1 000

account with a 50 to 1 leverage

which means you have 50

000 in buying power now here's what you

need to understand the brokerage is not

going to let you lose 50 grand before

you lose the one grand that you have

they are going to do something called

margin call this number your capital is

called margin 50 to 1 on leverage means

that you have for every one dollar of

margin

you have 50 dollars that you can put

into a position

so in this case let's say you maxed it

out and you said i have 50 000 units to

trade the guy that we were talking about

on the euro dollar right i got my 50 000

units let me just buy the euro dollar

right now so you buy euro usd same

example

and

with this euro usd trade you have spent

your full 50 000 units what is 50 000

units remember 10 000 units

is a mini lot

and a mini lot has a value per pip of

one

dollar so if we have five

mini lots how much is our value per pip

on this trade our value per pip which

we're gonna label with v p p on our euro

dollar trade

is five

dollars

you see the difference here this

was 10

cents per pip but because we're using

leverage over here we have five dollars

per pip now can this work for you

absolutely yeah you can make a lot more

money at five dollars per pip than at 10

cents per pip no one is doubting that

i'm not saying you can't do that but as

a beginner do you think it's more likely

you're gonna hit home runs or swing and

miss most the time

swing and miss you're right a lot of

times as beginners you're expected to

lose right so it's okay to lose but if

you have your entire account balance

your 1 000 in margin which gives you 50

000 in buying power on this position

how many pips do you have that you can

lose before your account goes to

absolutely zero

where it was ten thousand pips

now the math we have to do is your five

dollars per pip and your account balance

so now what we need to do is take your

account balance

of one thousand dollars

because again they're not gonna allow

you to lose more than a thousand dollars

and if you're risking five dollars per

pip that means you

divided by five dollars let's do this

let's finish the math

that means you only have

200

pips because 200 times five is a

thousand dollars that takes your account

away so instead of ten thousand pips of

risk the reason most traders blow their

accounts using leverage is because they

only have 200 pips of risk and guess

what you don't really have 200 pips of

risk because they are going to margin

call

this is the weirdest looking pin let me

change that sorry margin call you

at somewhere

around 80

to 90

so instead of 200 pips it's more like

you have about

160

pips

maybe 170 pips of risk before you get a

margin

call which is when they take all of your

trades away and you're left with a

balance of about 10 of your original

capital so you would be left with a

hundred dollar account after 160 pips of

movement out of the euro dollar if you

just had one wrong guess

so let's say you do this and you guess

wrong on the euro dollar and you're new

so you don't understand stop losses and

the euro dollar moves at 160 pips which

is doing

multiple times every day at this point

because the volatility we're seeing in

the market

you could lose your whole account

balance in one day

doing this

that's what that's the danger and the

reason that most beginners using

leverage end up

blowing their account before they have a

chance to make any money at all

that's the danger of leverage and that's

what you need to understand and there's

a correct way to use leverage as well

this would be the wrong way to use

leverage

you don't want to max out you don't want

to max out and be trading with leverage

and trading your entire account value

because that gives you a very small

margin of error again we're talking

about that 200 pips is all you have

probably closer to about 160. so if you

only have 200 pips that you can lose

that's a pretty easy amount to lose it's

easy to lose 200 pips and in a day in

the way the markets are moving right now

again the danger of leverage is that you

have way less risk

that way less pips you can lose before

you blow your entire account 200 against

the 10

000 with no leverage at all so that's

the wrong way to use leverage what's the

proper way to use leverage that's how

you blow an account using leverage how

do you use leverage to your advantage to

actually make more than your initial

deposit let's go over that right now

so here is the proper way to use

leverage one

lesson number one always use a stop loss

if you're using a leveraged account if

you're not you're putting yourself in

this

ridiculous risky situation and as

traders avoiding risk is half the battle

so always and i mean always use a stop

loss with leverage but let's talk about

the power of leverage and what it can

actually help you do same scenario we've

been discussing thousand dollar account

with fifty to one leverage

so if you have a one thousand dollar

account and fifty to one leverage what's

the correct way of using that leverage

well it's first to decide what your risk

management plan is gonna be how much are

you going to risk per trade for me and

only for me i'm not suggesting anything

to you this is for entertainment i hope

you're entertained for me

i risk between 1

and 2

of my total account balance

per trade so in this case that would be

ten to twenty dollars let's keep it

simple with ten dollars so if i want to

risk ten dollars

let's say i want to risk

two percent of this which is ten dollars

on a trade

i need to know the amount of pips i'm

going to lose

or could possibly lose in order to

create this ten dollar loss and how do

we do that well let's say that we have a

100 pip stop loss okay the euro dollar

100 pip trade the same one we've been

discussing during the entire video so

this euro usd trade

has a maximum loss of 100 pips

now in order to create this scenario

where i'm possibly losing ten dollars on

a 100 pip loss i have to figure out my

price per pip in terms of the 100 pips

stop loss and the way you do that is

with an equation the equation is the

amount of dollars

you want to risk which is ten dollars i

don't know why i put percent right there

ten dollars

and this ten dollars has to be divided

by the amount of pips we're going to

lose 10 divided by 100 pips equals

10

cents per pip

this is where it gets a little bit

easier now we know that we need a value

of 10 cents per pip on this trade why

because we have a 100 pip stop loss and

i want to risk one percent of my account

which means i need

10 cents per pip times that 100 to give

me that 10 dollar risk with 10 cents per

pip we've talked about this already that

means you need

one

micro lot

now one micro lot would cost you

1 000

because you are controlling 1 000 units

of currency with a micro lot so

if you had no margin

this would be your entire account but

with margin

the power of margin and the way to use

it correctly after you have all of this

calculated you know your stop loss is

putting you at a ten dollar risk which

is one percent of your account value

your one micro lot that would cost you a

thousand dollars no longer cost you a

thousand dollars now it's coming out of

something called margin which is your

capital so you have this full capital of

margin

that they are giving you 50 to one on

this full capital of margin means you're

getting 50

for every one dollar you invest into a

position so if i'm investing 1 000 into

a position what do i have to do i have

to divide that one thousand dollars by

my fifty to one leverage which gives me

twenty

dollars what this means is that instead

of costing me my full account of one

thousand dollars in order to place this

trade

instead of 1 000

this now only cost me

20

so instead of a thousand dollars on this

trade i've only had to put up the

deposit

of twenty dollars

so this is like the bank in the

beginning of this video the scenario we

talked about houses this is a very

similar situation you're giving your

broker twenty bucks they're saying

here's a thousand units you hold on to

that thousand units as long as you want

but when you decide to sell that

thousand units we want that thousand

dollars back no matter what if if your

investment goes up or down we want that

thousand units back so when this

investment goes up you make money but if

it goes down you still owe them a

thousand bucks but instead of losing a

thousand dollars you've only lost ten

dollars and here's that math so this is

going to be very familiar math we're

looking at euro this is the actual trade

itself this is what it looks like

euro

and dollars what you said

is i want

1 000 euros let's do the price of the

euro dollar right now price of euro

dollar right now is 1.1

you said i want

1 000

euros this is the actual trade what it

looks like in your brokerage i want 1

000 units

of euro and they said okay in order to

give you 1 000 units of euro

the exchange rate right now is 1.1042

they say okay if you want 1 000 euros

we're going to need 1

100 and 4 from you but then the bank

goes i've got you at a 50

or the broker to one leverage which

means we really only need twenty dollars

on margin for you to do this because

your twenty dollars

is equal to a thousand units so you say

cool here's my 20 hold on to it i'll

hold this thousand units until the price

fluctuates either up or down you still

have your same 1

000 units of euro

but now let's say the price drops from

the euro from

1.1042 we have a decrease in value

down to 1.0942

which would be

a drop of 100 pips which is what our

stop loss was set at so when it drops

down to 1.0942

your stop-loss gets hit and you say

here's your 1000 euros back but now the

exchange rate is lower so even though

your investment dropped in value they

still expect that same 1000 euros in

order to give them one thousand euros

you now have to hand them one thousand

and ninety four dollars

so therefore because of that

your investment dropped

ten

dollars and that's the actual math on

this specific trade now in the other

scenario let's say that the market goes

up uh 200 pips let's say you had a two

to one risk reward so let's delete this

and do the math on this as well

to make sure you fully comprehend

leverage this is going to be extremely

helpful let's say you had a 2-1 risk

reward on this trade

so

instead of going down 100 pips now we go

to 1.1

two four

two or we rose

by two hundred pips a two to one risk

reward so now

your bank said twenty dollars and will

let you hold one thousand euros at the

price of 1.1042

or 1 104

and we'll let you hold this thousand

euros as long as you want as long as

whenever you pay us back you give us

that same 1000 euro value so we say okay

cool

but this time the euro

dollar goes up by two hundred pips so

now instead of your investment being

worth one thousand one hundred and four

dollars your investment is now worth one

thousand

one hundred and twenty four dollars

meaning that instead of losing ten

dollars your investment actually went up

twenty dollars

and the power of having leverage means

that instead of spending remember in

order to get this position size

originally you would have had to spend

your entire one thousand dollar account

but instead of having to spend your

entire one thousand dollar account to

make

this twenty dollars over here you now

have made twenty dollars on an initial

twenty dollar investment because of the

power of leverage so you've made a

hundred percent gain on this specific

trade because you have leveraged the

point you only spent twenty dollars of

your actual capital in order to make

twenty dollars

on the other side of that so that is the

power of leverage and the way of using

it correctly so what does leverage

really allow us to do

in a nutshell if you use leverage

correctly it's not going to allow you to

trade with this massive size and risk

all this money and essentially gamble it

doesn't allow you to get rich in three

days it doesn't allow you to triple your

account this week leverage

allows you to be in more trades at one

time and to put an initial deposit down

of a small amount in order to purchase a

larger position

when you have a stop loss the stop loss

is so important when you have a set risk

management plan if you have that set

risk management plan you have a 1 000

account

and you're doing

risk management correctly you're only

risking 10 dollars per trade leverage

just allows you to be in

more

trades

long as you have this 10 risk it's okay

to be in a bunch of trades you can be in

20 trades and you're still only risking

200 bucks so you're not at all putting

your account in jeopardy as long as you

have this risk management in place

so that's how you combine risk

management with leverage and that's the

only way you should be using leverage i

hope this video has taught you

everything you need to know about

leverage i know it was a long one but

leverage is kind of a complicated

subject that takes a while to understand

if you had any doubts or for any reason

or confused about leverage i would

suggest going back and watching this one

more time you will be surprised at the

amount of stuff you pick up on again

hope this was helpful and i will see you

in the next video don't over leverage

and don't risk at all

all right so i really hope you enjoyed

that beginner lesson but if you are

ready for some more advanced training

then we just had a few graduates come

out of the eap training program our

flagship program here at the trading

channel i'll post some of their

testimonials on the screen and that is

incredible news for them

and that's also incredible news for you

because that means that we finally have

some spots available in the eap training

program

and while you glance through some of the

comments on the screen i want to tell

you that if you're struggling to profit

right now

then i've been where you are too

i struggled for over a year before i

found a way to be consistently

profitable i made every mistake you can

think of i moved stops i used poor risk

management i traded strategies that

didn't work i followed a signal service

that ended up with me almost blowing my

entire account but after that first year

and after nearly blowing an entire

account i found the real path to trading

success

and consistently profitable trading

became as easy as counting to six

and that is what i teach in the eap

training program i created a strategy

that only uses six simple rules to

create an edge over the market so once

you memorize these rules trading becomes

as easy as counting to six

these rules are completely objective and

easy to follow and although just having

a strategy is only one part of the

equation it is a very large part of that

equation in the eap training program we

also have lessons on risk management and

discipline to make sure that you have

everything you need to get on the right

track to becoming a consistently

profitable trader and here's a look at

some of the things that are included in

the course as you can see we have

beginner lessons that teach you

everything you need to know about

technical analysis in terms of what

you're going to learn in the course we

have a transition course which is meant

to take you from where you are to

becoming consistently profitable and

after that we have an advanced course

that is meant to take your trading to

that next level we also send out three

to five email alerts every week these

are not minus signals let me clarify

that but instead me to show you exactly

how i am looking at the market and we

also do a review video at the end of

every couple of weeks to show you how

the strategies are performing and you

can check those out right here so if

more advanced training is something that

you are looking for then we do have a

few spots available in the eap training

program this program also comes with

priority email meaning you can email me

at any point that you have questions and

i will answer you asap so if a trading

mentor is something you are looking for

then look no further go ahead and click

the link in the description for the eap

training program and it would be a

pleasure to have you aboard and to have

you join us in the eap training program

if not that's totally fine too make sure

you're subscribed here on youtube make

sure to click that like button for me if

you enjoyed this video follow us on

instagram at the trading channel and i

will see you in the next video

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you