Suppose I have 13 notes of 100 dollars in my hands, Now why am I telling you this? When I went on my last international trip, I had some dollars left. Now when this money was left, it was with me. Now I will show you an interesting thing. The money that was left with me was $1300. At that time, when I took the dollar, it was the price of 71. So according to 71, I paid ₹ 92,300.
But if I go to sell this dollar today, then I found out today that I am getting the dollar rate according to 74. What does this mean that today this value is 96200. How much did I actually profit? 3900. What is this? If we talk about the Indian market, if there is a note of 2000 in our pocket, then it remains of 2000. If it is $100, then it remains $100. But the dollar is 100. But according to Indian currency, its value over the period of time changes. Why does this change? And when it changes, like I have profited here, it is real, it is in front of you that I have notes in cash, then it has profited But can this profit be for people too?
You must have heard Forex many times. What is Forex trading? All the questions in your mind right now, you are going to get the answer to all of them in this
let’s talk, you saw that this is a real profit. Approximately 4,000 rupees. Now what happens when we talk about any currency, then the value of the currency keeps changing. Today you are seeing this dollar of 74. But in 1970, if we talk about it, then the dollar was of about 7 rupees. So from 7 rupees to 70 rupees, how did its price increase by 10 times? Now why does this price increase?
Why does the value of any currency change?
This is a big part of economics in itself. But the major factors in it are GDP, inflation, how much debt is there on a country, that remains a big factor. Apart from this, PPP, purchasing power parity. Now what is purchasing power parity? I will explain to you in a very short time because it is necessary to clear all your concepts.
When you talk about purchasing power parity, for example, I went to the US or I went to Europe with you. So if I go out of India, let’s talk about Europe, let’s talk about the US. I was hungry after going to the US. I took coffee for myself and I took a sandwich. Now let’s assume that I have to pay 20 dollars for coffee and sandwich. Now you know that I am eating for 74 rupees, so let’s assume 70, 70 into 20,
I paid 1400 rupees. But if I go to a cafe in India and get coffee and a sandwich for myself, then you know that you will get coffee for 100 rupees, you will get a sandwich for 100 rupees and our work will be done for about 200 rupees. So our work is being done for 200 rupees in India and the same work is being done in 1400 rupees in the US. So now if there is such a big difference, why is this difference, it is called PPP. Purchasing power parity, for example, You go from one place to another in India. You buy an auto or you buy a cab, you pay 200 rupees.
Let’s assume that you pay 200 rupees for 10 to 15 kilometers. Now if you go to the US, will you pay 200 rupees for 10 to 15 kilometers only? The answer is no, you will spend 4000 rupees there. Now you must be thinking that sir, will it really cost so much money here? This is called purchasing power parity, that there is a difference in this and how much is the difference according to India. There is a difference of about 20 times and I do not say this. These reports are taken out by you. The World Bank takes out International Monetary Funds, so this report has already come out for you. The point here is that this difference is different according to each country. So whatever you spend in India, if you want to maintain the same standard of living in the US, then multiply it by 20. If today your expenditure in India is of Rs 10,000 and as soon as you are living in Rs 10,000, you feel that in Rs 10,000 we are living a very poor life. So if you were in the US and you were earning Rs 2 lakhs, then you would be living a very simple life in the US. So the work that can be done in Rs 10,000 here will be done in Rs 2 lakhs. Now there are differences in currency. Now what starts from here, Forex says that Forex means foreign exchange.
What are foreign currencies?
This is the Australian dollar, Canadian dollar, Swiss franc, British pound, your euro, your USD. These are all your foreign currencies. Now the difference in these foreign currencies is like the difference here is 71 to 74. In the same way, there is a difference in these currencies every second. So people trade in this, but let me tell you one thing, when you want to trade in the currency, you need to understand that you will not see a drastic change in the currency. If you are seeing that the value of the currency is changing, today the dollar you are seeing is of 74, then itis not possible that it will reach 100 rupees tomorrow. It is not possible. In one day, you will see a change of 2% or 2% will break So this is a game of 2% maximum and it does not even reach 2%, it reaches within 1.5%.
The market changes daily. So should we trade for 1.5 to 2% change? Now if people trade, then why do they trade? This is a very big question. The question is big because if there is only this much, then also trade in the share market. In the share market, the price of shares changes a lot. 10% increases in a day, 10% breaks and you can benefit from both. You know, but why should we do forex in foreign currencies?
People do forex because they get leverage here. Now understand the concept of leverage quickly. You will get different leverage margins with different brokers. Now what does leverage mean? If you have a dollar, then your broker will allow you to trade up to 100 dollars. Profit will be above 100 dollars, loss will be above 100 dollars and there are some traders who will allow you to trade from 1 dollar to 500 dollars and in fact it is more than that, but if you have a dollar and you are trading for 500 dollars or you are trading for 2000 dollars, the profit will also be according to that, but if, because changes come very little here, even brokers know that the currency will not come from 74 to 60, so it will not be a drastic change. So this amount, people can trade from a very small amount, that’s why people do forex trading. Now, there are some important terms in forex trading, which are also very important to explain to you, so I will clear that too. When you trade, there are lot sizes here. Now, along with the lot sizes, we have to understand one more thing, we have to understand pair. Now you saw a pair, like I wrote USDINR, now this is a pair. This is USD and INR, this is a pair. Now I will explain to you what a pair is, but before that, understand the lot. We have to buy a lot of these pairs. There is a lot of trading, so there are many types of lot here.
The first is your lots.
You can buy a standard lot.
The standard lot is of 1 lakh dollars, that is, a lot of 74 lakh rupees, but do we need 74 lakh rupees in our account to trade this lot? The answer is no. When you get a leverage of 500 times, then you don’t need so much money. That’s why people are trading in the whole lot here with very little money.
The second lot you see here is the mini lot.
Now the mini lot is of about 10,000 dollars. Now you will think that 10,000 dollars is also a lot, but again you get leverage.
The third lot is your micro lot,
which is of 1000 dollars and at the very end is your Nano lot, which is of 100 dollars. Now, if someone does forex trading in the beginning, then everyone advises him not to go here because here you are
thinking that I will tell you what PIP is. So what is PIP and what difference does it make according to PIP, I am going to tell you all this now, but people think that we should buy this standard lot in the starting, but then there are a lot of chances of loss because you have not learned anything, then you will lose 100% money.
So forex is completely new for many people, so let’s understand what it is. Now here is the volume Now if you take one standard lot, then the volume is one.
- If you have taken a mini lot, then here your volume is 0.1.
- If you have taken a micro lot, then the volume is 0.01.
- if you have taken a Nano lot, then the volume is 0.001.
Now according to the volume, you will get money. You will think how will you get money? Let’s understand now. You bought this standard lot of 100,000 dollars. Now here you will see a small fraction of the price. If the price changes, then you get 10 dollars on a standard lot on one PIP.
Now let me explain PIP to you first, otherwise, you will have confusion in understanding. These are all very technical things. People do not understand on the first day, so it’s okay. It can take a little time for you too. Let’s understand. Now when you see the price written once, like I said this is a pair, USD and here we have taken the Canadian dollar. So now USD CAD, you will see something written like this, 1.3450.
Now if something is written like this, then what is the PIP? Here 1,2,3,4, you come to the fourth number after the decimal. Now let’s assume that its price has increased. How much has increased? It has become 1.3452. So the fourth digit of the last has increased to 2 PIP. in percentage, it has a full form, but it has increased by 2 pips and if it is 1.3448 then we will say that 2 pips have been reduced. Very nice, you have understood so much, very good, it can increase by 20 pips or it can increase by 50 pips. So how much is the profit and loss from these pips, now you will understand quickly. Let’s come back to it again to explain So when the PIP changes, you will see that if 1 PIP changes, only 1 PIP, if you have taken the standard lot, then you will get $ 10 from 1 PIP and if 1 PIP is less, if you have bought it, then your $ 10 will go from your account.
If that 10 PIPs increases, then you have earned $ 100, this happens in seconds. So in seconds, people earn a lot of money and lose a lot of money.
Similarly, if you have a mini lot, then $ 1 per PIP, if you have a micro lot, then 10 cents per PIP and if you have a Nano lot, then 1 cent per PIP. You will not understand on the first day, it will take time, but as much as you understand, you are doing very well. You are going very good. Let’s move forward. So in Forex trading, these were some technical things. Now it depends, when the volume comes in the market, then the chances of PIPs increasing or decreasing are more. So at that time, people have a lot of fun trading. So generally what is seen, when the markets are open, especially you have to keep three zones in mind.
When the Asian market opens, the timing is different.
When the European market opens, the London market opens, the timing is different. And when the American market opens, the timing is different. When all three markets open, there is a boom in the Forex market. Boom means volume comes because there is no Indian volume in front of them. I tell you that the Forex market is the largest market in the world. You must have heard the name of the share market. There is nothing in the share market in front of the Forex market. As much as you see in the share market, there is a trade in a month. In the Forex market, the trade per day is of 6 trillion. This is the trade per day. You must have heard the name of the commodity market. This is how the Forex market is. Now let’s talk when the Forex market is so big and look, I told you that when the volume comes, then the chances of earning increase. As I told you in the middle the market may not give so much fun without volume. But when the volume comes, there is a boom in the market. It was important for you to know this. So these are the basic things that you need to know. Now let’s talk if you are interested in Forex and you want to learn Forex. How will you learn? Don’t invest money on the first day. Learn first. The Forex market is very volatile. If it is volatile, then only 2% goes up and down, but because of leverage trading, people earn a lot of money and lose a lot of money. So what I will suggest to you is that you always start with a demo account. Let’s say you have 5,000 dollars in the demo account. Now you will say that the dollar has come to 5,000, but it has come to the demo account. Yes, you trade with this and see if you are increasing money or you are decreasing. You have learned a lot of technical analysis. Just try with demo account only. Don’t invest money in the starting. Learn in the starting and after learning, you will trade with a very small amount. If you do, it is totally your choice. So finally, if you like this video, then quickly like it. Share it so that people also get an understanding about Forex trading.
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