This tutorial we will talk about bulls and bears and buying and selling on the Forex market, perhaps by now you've already heard ab...
This tutorial we will talk about bulls and bears and buying and selling on the Forex market, perhaps by now you've already heard about the two creatures that dominate the Forex market, and these are the pools and the bears so the bull stands for Forex traders who invest in the growth of the currency pair here.
A good example of the British pound dollar in an upward trend and in this case, the pools would be active and they would be buying this currency pair and then in order to close later and profit from the growth in price and in a minute will discuss the mechanics behind that bears a people who invest in the decline of a currency pair and this is an example of the Yuri installer in a downward trend here.
The bears would profit from selling this currency pair. The terms bulls and bears have a historical background, and they were first introduced a long time ago.
The stock market. The choice of animals has quite a lot to do with the way they attack a bull would fling up its opponent into the air and that is similar to how currency pairs move upwards a bear would generally attack by using its pores to drag somebody down and that's a similar to how currency pairs move downwards.
There's a bit of a difference between the Forex market and the stock market and that is because of the stock market.
The way itself formed people associate bears with kind of negativity or pessimistic approach since the bears are selling and when you sell a stock you think that the companies going underperformance going to fail and you want to short sell that stock.
I will talk about short selling and want future trust, but generally, that's some mystic kind of approach where his pools are happy creatures that are aggressive, that look forward to something growing and becoming more valuable like a stalker for example.
But on the Forex market that is very different,` bulls are still the same.
They're looking for something to grow bears are not pessimistic bears just invest in the decline of the currency, but there is no actual company behind this currency.
It's not a stock so by investing in the decline of the Yuri installer you just saying that the euro will drop what the US dollar grocer in a way you're actually investing into the growth of the US dollar so that something to remember that bears are not bad GA anybody can bear a bear, and moreover, most traders will sometimes be a bull and sometimes big bear so you can buy in one case and selling another case, depending on what your analysis tells you and will talk more about that in the Forex analysis section of this course arrived.
Moving on today will talk about bulls and buying on the Forex market.
This lucrative British pound dollar example and here we can see an upward trend.
Let's assume that trader ports at that point in time marked by the cross and the transaction was conducted at 1/4 price of 1.44 00 for the British bond used all current spec as we recall from one of the previous tutorials.
This means that at that point in time, every single British pound was worth 1.1 American dollar and 44 American cents, then let's assume that the trainer waited for some time and closed his transaction at the price marked by the second cross and the quoted price at the time was 1.595. Zero so this pool trader knows what he's doing and he made money through this transaction on the Forex market.
Let's understand how exactly that happened.
Let's look at the mechanics behind so it's assumed that the bullish trader had US$1000 to invest, which he put into the British pound at a quoted price of 1.44 00 known as we did previously.
Let's simplify this example by replacing the British pound with apples because apples are also tangible.
We can hold them, count them, measure them, weigh them up and we can always replace the base currency with apples to simplify things.
So now our example says that the trader had $1000 which he invested in apples at the price of $1.44 per Apple. This means that he bought 694 apples.
Next, he waited some certain number of days until the price for apples grew to $1.5950 per Apple and at this point in time.
He still has 694 apples. What he did with these apples. Next is he sold them at the new price and in return, he caught 1107.
Dollars so you can see he started with $1000 and now he has $1107 so if you break this final amount up, we can see that $1000 is the starting months on his account and $107 is the prof that he may know moving back to the British pound, we can see that nothing changes.
If we replace apples back with the British pound per trade invested thousand dollars into the British pound he got 694 pounds.
Then he sold them at a higher price code $1107 back and that's is his prophet $107 so he got his 1000 back and he's got $107 extra on top of that turn Forex.
The first reaction is called buying of the second transaction is called closing.
So even though he actually sells the British pound four dollars because this is part of the second part of the buying transaction of the or this whole one integral transaction is in Forex.
We call it closing rather than selling so that we don't confuse things.
So your open flexion by buying and then you close the transaction.
So these are the mechanics behind a bullish transaction on the Forex market in the next tutorial we will talk about short selling on the Forex market, and the mechanics behind that, and further down the track.
In this course in one of the tutorials will talk about leverage and I will show you how this trader could have made much more profit using leverage, even with the same starting deposit of $1000.
Thank you for your attention today. I look forward to seeing you next time. And until then, happy trading
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