Training Notes

Introduction to Forex

Forex is derived from Foreign Exchange.

The Forex market is by far the biggest and most popular financial market in the
world, with a daily turnover of about $7 trillion daily which is 40 times the
turnover of the biggest stock market the NYSE hence it is traded globally by a
large number of individuals and organizations.

Unlike other financial markets like the Stock Exchange, the Forex market is an
Over the counter (OTC), it has no physical location the entire market is run
electronically, through a network of banks.

The Market is open 24-hour a day 5 days a week, from Sunday 22:00 hrs GMT
to Friday 21:00 GMT. IST = GMT + 5.30 hrs.

This makes it convenient for people to trade since no matter what job or shifts
they do they can trade at a time convenient for them anytime of the day or at
night.

 The key players in the Forex market are –

 Central Banks - The main bank of the country , it helps regulate the currency
value, similar to RBI in India. It may also have supervisory powers, to
ensure that banks and other financial institutions do not behave recklessly or
fraudulently.

 Commercial Banks – The retail banks that deal with customer deposits. E.g. –
HSBC, Citibank, etc.

 Multinational Companies – International companies that have diverse

businesses in various countries. E.g. – Morgan Stanley, Goldman Sachs, etc.

 Individual Traders – Individuals who trade in the forex market. E.g. – Common
people, professional traders, etc

 Forex Trading basics

Forex trading is the simultaneous buying of one currency and the selling of
another. Currencies are always traded in pairs for example the Euro and the US
dollar (EUR/USD) or the US dollar and the Canadian dollar (USD/CAD).

E.g. - Bid Ask Spread

EUR / USD 1.4050 1.4055 5

o Bid – Is the Selling price of the currency.

o Ask – Is the Buying price of the currency.

o Spread – Is the Difference between the buying & selling price. The spread of
Gold & Silver is calculated in cents e.g. 70cents = 1 ounce.

The 1st currency is the base currency & the second is the counter or secondary
currency. The buying and selling always happens with the base currency, you
buy when you expect the price to rise, and sell when you expect the price to fall,
since it’s a 2 way market you can make profits on rise or fall in price of the
currency.

o Pip – The minimum change in price of a currency is called a pip.

o Pips formula – EUR/USD – 10,000, 1 pip = Deal size = 10,000 = 1 $

10,000 10,000

The pips are always calculated in terms of the quote currency.

 Leverage - Is the buying power of the customer, GLB Markets offers a superior
1:400 leverage which means for every $1 deposited client can trade up to $400
E.g. - client deposits $100 he can trade up to $40,000


Slippage - If a customer wants to automatically buy or stop loss of a certain

amount but the market falls below the said amount it is known as slippage.
E.g. – customer sets stop loss 1.4050, it reaches 1.4052 then 1.4051 and directly
to 1.4045 this is slippage.

 Forex Terminology

o Bear Market - A market distinguished by a prolonged period of declining prices

accompanied with widespread pessimism.

o Bull Market - A market distinguished by a prolonged period of rising prices.

o Position - It means opening a trade or the trades (deals) that are open.

o Long position – It is a "buy" position, meaning that this position will be in profit
if price goes up.

o Short position - It is a "sell" position, meaning that this position will be in profit if
price goes down.

o Scalping – It normally involves opening and closing a position quickly, usually

within minutes or even seconds. The scalper looks for hundreds of small profits
throughout

 Currency Segregation
 The instruments are always traded in pairs & currencies are segregated into 3
pairs Majors, Cross, Exotic.

 The first currency in the pair, the base currency, was the stronger currency at the
creation of the pair. The second currency, counter currency, was the weaker
currency at the creation of the pair.

1> Majors – Are currency that are traded (paired) with the USD.
E.g. – EUR/CHF/AUD/CAD/NZD/ZAR/JPY/GBP – USD.

2> Cross – Are currency that are traded (paired) between each other
(excld. USD)
E.g. – EUR-CHF, AUD-CAD, NZD-ZAR, JPY-GBP, EUR-GBP etc.

3> Exotic – Are currency that are traded locally (local currency) which do
not have value internationally. E.g. – Turkish Lira – USD/ EUR.

4> Commodities - GLB Markets also allow trading in various hard and soft
commodities.
E.g. - Gold (XAU), Silver (XAG) & Oil.

• Majors are low risk , Exotics are high risk.

• Most traded currency is EUR/USD.

 Benefits and Features of Forex trading

 No commissions –
No clearing fees, no exchange fees, no government fees, no brokerage fees.
 Two way Market -
It is a two way market so it allows you to trade in both your currency pair, so even
if your currency is falling you may still make profits.
 No middlemen -
Spot currency trading eliminates the middlemen, and allows you to trade directly
with the market.
 No fixed lot size –
In Forex, you determine your own lot size. This allows traders to participate with
accounts as small as $100.
 Leverage –
It increases the buying power of the customer, a small deposit can control a
much larger total trading value.
 Low transaction costs -
The retail transaction cost (the bid/ask spread) is typically less than 0.1 percent
under normal market conditions.
 A 24-hour market -
From Sunday to Friday GMT, the Forex market never sleeps. This is awesome
for those who want to trade on a part-time basis, because you can choose when
you want to trade--morning, noon or night.
 No Manipulation – The Forex market is so huge and has so many participants
that no single entity (not even a central bank) can control the market price for an
extended period of time hence it cannot be manipulated.
 High Liquidity –
Because the Forex Market is so enormous, it is also extremely liquid. This means
that under normal market conditions, you can instantaneously find a buyer or
seller. You will never get “stuck" in a trade.

 Analysis
 Fundamental Analysis – Is the analysis done based only on news, economic
indicators and global events

 Technical Analysis - The analysis based only on the technical market data
(quotes) with the help of various technical indicators.

 GLB Markets Features

 GLB Markets is officially known as Global Investment House Ltd, it is
established & Headquartered in Seychelles.

 Forward Pips – It is the interest that the currency you buy will get or you may
have to pay, it depends on the interest rate of the currency, the system
automatically calculates the forward pips. It is only applicable is the position is
open for more than 1 working day & it is a very negligible amount.

 Two orders can be set on every position –

1. Stop Loss – It gives an option to automatically close the position if the losses
exceed a certain amount. GLB Markets offers guaranteed stop loss which
protects from slippage. Even if there is slippage system will only charge for the
amount that was set. Not applicable under extreme market conditions

1. Take Profit - It gives an option to automatically close a position if the profits

reach the desired amount, it can be set in percentage, rate or in amount.

 Both these options can be set, deleted or altered even after a position is open,
they are open till the position is open.

 Limit Order - It gives an option to set a timeline in which if the price of the said
currency reaches a pre decided amount it will automatically be purchased. If
there is high slippage the deal may get cancelled.

 Leverage – GLB Markets offers a 1:400 leverage which means for every $ 1
deposited you can trade unto $ 400 e.g. - customer deposits $ 100 he can trade
unto $ 40
  GLB Markets Account Benefits
 Tight Spreads

 Guaranteed Stop Loss

 Commission free

 Minimum Investment

 24/7 Account Access

 Leverage 1:400

 Hedging Capability

 Maximum Margin Usage

 No Liability for a Debit Balance

 Secure Online Credit Card Payment

 Varied Tradable Currency Pairs, and commodity Gold & Silver

 Complete customization of client’s accounts.

 Account Types
Accounts Deposit Deal Leverage Spread Notes
Size (Pips)
Standard $ 100 $ 5000 1:400 5 pips,
70c gold
Premium $ 2000 $ 10000 1:400 3 pips,
60c gold

 Fund Deposits
  Modes of Payments – Payments can be made through

 Credit Card – Clients can deposit through local and international debit/credit
cards.
 Wire Transfer – Local wire transfer to bank accounts no charge, normally
charged $20 for international wire transfers may differ from bank to bank.
 Neteller – Clients can deposit through various local and international e-wallets
like Neteller.

 Fund Withdrawals
 Withdrawal – To withdraw money client has to fill up a form available on the
website, sign it then scan & send it to GLB Markets.

 Timeframe –
 Wire transfer 3 – 5 working days.
 Credit cards 8 – 10 working days (depends on clients bank).

 Compliance (Docs)

 Documents – There are 3 documents that have to be provided to meet

compliance and know your customer (KYC) regulations -

 Photo ID – e.g. - driving license, passport, any government approved ID.

 Utility bill – e.g. – electricity bill, phone bill etc (less than 6 months old)
 Copy of Credit Card – front & back copy of credit card.

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