PROFIT MAX ACADEMY

TABLE OF CONTENT

1: What is Forex trading and How Does it Work

2: What are the Major Currency Pairs
3: When is the Best Time to Trade Forex
4: Common Forex Trading Terminologies
5: What is a Forex Lot Size
6: The Different Types of Forex Orders
7: How to Read a Forex Chart
8: The Different Types of Forex Charts
9: The Different Types of Forex Analysis
10: The Different Types of Forex Trading Strategies
11: The Different Types of Forex Brokers
12: How to Choose a Forex Broker
1: WHAT IS FOREX TRADING AND HOW DOES IT WORK
Lesson1
What is the FOREX market?
Forex stands for foreign exchange. F-O-R goes with foreign and E-X is exchange so when you
hear the term Forex, you're basically referring to foreign exchange.
 Forex trading is simply the trading of one currency for another.
This is something that I would say 99% of us have dabbled in Forex. May not be electronically
where you're going long or short but physically when.
Let's say, I'm in Singapore and I'm going to Malaysia for a holiday, if I want to go to
Malaysia for a holiday, I need to spend Malaysian ringgit.
In order to get Malaysian ringgit, I need to sell my Singapore dollars for Malaysian ringgit.
This is one form of Forex trading.
You're selling your own domestic currency for foreign currency so you can spend their currency
in the foreign country that you're visiting.

PLAYERS IN FOREX MARKET

Who trades FOREX and why?
Forex is largely traded by:
 Central Banks
 Banks
 Corporations
 Retail traders

Let me explain…
Central Banks
Central banks are usually meant to intervene in the FX markets.
In 2012, you have the Swiss franc pegged against the Euro because the Swiss franc was
appreciating too much against the Euro, and the central bank intervened and pegged the Euro at
1.2
This is an example of the Central Bank intervening in the FX markets.
Banks
Banks like Deutsche Bank, Goldman Sachs, HSBC where they trade Forex, but as a form of
market making to provide liquidity to corporations.
As well as to hedge their book in case they have any currency risk, then these banks will also
trade the Forex market.

Corporations
Banks and corporations have a close working relationship.
Let's say I'm Toyota, I manufacture cars.
But the thing is that my car spare parts are not found in Japan.
I may have to go to countries like India to source for these spare parts.
If I'm the car maker, in order to buy the raw materials to manufacture my car, I need to get them
in a foreign country.
So, what I'll do is that I will sell my own country currency, Japanese yen for the Indian rupee.
So, I got an Indian rupee and I can go to India and buy the relevant materials that I need.
This is another form of Forex trading for corporations where they typically sell their own
domestic currency in exchange for a foreign currency to buy relevant raw materials that they
need.

This is how corporations dabble in the FX markets, and also to hedge whatever positions that
they have that could be exposed to currency risk.
Retail Traders
Retail traders are like me and you who speculate in the Forex market to earn a profit.
I believe this is the reason why you're watching this video right now, to learn how to trade the
Forex market.

Let me share with you how it all works this ecosystem…

You can see that the central banks are the largest, followed by major banks like Deutsche, Goldman,
JP Morgan, and whatsoever.
All these major banks have relations with investment funds and commercial companies like
Toyota and Cadbury, and also hedge funds who want to trade in the FX market.
On top of it, they also have connections to market makers and ECN brokers.
From then on, this is where your own broker has a connection to you, the retail trader, through
their own trading platform.
This is how the ecosystem work.
Banks would communicate with your own retail brokers, commercial companies or investment
funds.
It does not mean that they will dabble in all three categories for the banks.
Some of them may just choose to focus on investment funds, some just focus on commercials
company or maybe some can have dealings with all three different categories.
But you as the retail trader, you only have access with the connection with the market maker who
then might pass on your order to the bank connection directly.
May or may not depend on how your broker established their trading system.
With that said…
This is the hierarchy of the FOREX market:

You can see the major banks are at the top.

They put in the largest orders and they typically communicate with one another using the EBS
system.
Further down the food chain is where you have your retail market makers, the brokers, the ECNs.
They put hedge funds and commercial companies at the same level.
But to me, I will say this group of traders (hedge funds) are typically one level above retail
trading.
Last but not least is retail traders who trade the FX market.
This is why retail traders like you and me don't move the market. Markets are usually moved by
the big players which I shared with you at the top of the food chain.

What are the advantages of FOREX trading?

The advantages of trading in FOREX are:
• High liquidity
• Low barrier to entry
• Better risk management
• Trade anytime you want
• Low transaction costs

2: WHAT ARE THE MAJOR CURRENCY PAIRS

Lesson 2
What are the different currency pairs?
Currency pairs can be divided into three categories…
Major Pairs
The major currency pairs are the most traded currencies in the world, so there are about seven
major currency pairs: 1. EUR/USD (Euro Dollar)
2. GBP/USD (Pound Dollar)
3. USD/CHF (Dollar Swissy)
4. USD/JPY (Dollar Yen)
5. AUD/USD (Aussie Dollar)
6. NZD/USD (Kiwi Dollar)
7. USD/CAD (Dollar Loonie)

Among the seven major currency pairs, the bulk of the transaction
is usually within these top four, so these are usually the most liquid
currency pairs there is out there.
Here’s what I mean:
Cross Currency Pairs
A cross currency pair basically means that it is a non-USD pair.
Here are the following:
1. Euro Crosses: EUR/CHF, EUR/GBP, EUR/AUD
2. Yen Crosses: EUR/JPY, GBP/JPY, AUD/JPY
3. Pound Crosses: GBP/AUD, GBP/NZD, GBP/CAD Exotic Pairs
Exotic currency pairs basically refer to currency pairs in developing countries most of the time.
Here are the following exotic currency pairs:
1. USD/ZAR
2. USD/MXN
3. USD/THB
4. USD/SGD
5. USD/HKD
6. USD/SEK
These are not major currency pairs even though there’s a USD because you can see that the
dollar is pegged into countries which are classified as developing nations.
One thing to note is that these exotic currency pairs tend to have wider spreads because they are
not actively traded like the major currency pairs.
So, don't be surprised if you see the spread on these pairs, like a few hundred pips.
3: WHEN IS THE BEST TIME TO TRADE FOREX

LESSON 3
What are the different Forex trading sessions out there?
Mainly, you have three different types of trading session:
• Asian Session
• London Session
• New York Session
This pretty much is run around the clock. Asian to London, London to New York, and New York
back to the Asian session.

When does the trading session change schedule?

Since we have something called the Daylight Savings, Trading sessions’ schedule changes
depending on the month of the year:
• Summer Period (April to October)
• Winter Period (October to April)
Summer Period (April to October)
The Asian session starts from 6 PM to 3 AM Eastern Daylight Time (EDT).
The London session starts from 3 AM to 12 AM Eastern Daylight Time (EDT).
The New York session starts from, 8 AM to 5 PM Eastern Daylight Time (EDT). Winter
Period (October to April)
The Asian session starts from 6 PM to 3 AM Eastern Standard Time (EST).
The London session starts from 3 AM to 12 AM Eastern Standard Time (EST).
The New York session starts from, 8 AM to 5 PM Eastern Standard Time (EST).
Everything's all pushed back by an hour during this winter period, so please bear this in mind.
Now…
If all this may seem confusing, don't worry, there's a very simple solution to this.
Just Google Forex market hours, and there are different types of Forex session that you can look
at, and just apply to your relevant time zone.

What is the best time to trade Forex?

This question is mainly directed for day traders.
If you're like a swing trader or position trader, or you trade the longer timeframe, it doesn't really
matter when is the best time to trade the Forex market.
Because it's irrelevant to you.
But if you're a short-term trader (day trading), then it matters to know which is the best time to
trade Forex.
London Session
For traders who want to trade the volatility, then the London session is the best.
Because you have the greatest number of transaction and volatility during the market hour.
London and New York Overlap Session
To be even more precise, the London and New York overlap is the best time to trade.
Which means…
The London and New York session is open at the same time, this is the best time to be trading!
Here’s what I mean:
Source: Oanda
As you can see, the historical hourly trade activity increases during the London session up until it
overlaps with the New York session.
This means that if you're a day trader, and you're trading breakouts and trends, London session is
the time that you must trade because this is where volatility is the most active!
If you want to trade breakouts during the Asian session, there's really not much meat to eat if you
want to trade the trend.

What is the best day to trade Forex?

Just like the best time to trade Forex within certain hours, there are certain best days to trade
Forex as well!
Generally, it's Tuesday, Wednesday, and Thursday.

This day chart has been provided by Baby pips.

In EUR/USD, you can see that the range of this pair during Sunday is 69 pips.
Monday 109.
Tuesday 142.
Wednesday 136.
Thursday 145.
Friday 144.
You can see that across all the different currency pairs.
You tend to experience increased volatility during Tuesday, Wednesday, and Thursday. Some
of the reason could be because that on Monday, traders are still hanging over from the
weekend, so they are not too active.
This is why volatility is quite tame.
Similarly, for Friday, people want to pack up for the weekend, so they don't really want activity
trade that much.

4: COMMON FOREX TRADING TERMINOLOGIES

LESSON4
What are the common trading terminologies?
This is for those of you who are brand new to Forex trading.
If you don't understand what's the meaning of long/short, pip, bid, ask, spread, and all of this all
alien language to you, then don't worry…
This video will clear all your doubt, frustration, and confusion.
So, here’s what I’ll cover:
• Long/Short
• Leverage & Margin
• Pip
• Bid & Ask • Spread
Here we go… Long/Short
To simply put it, long and short refers to your trade direction.
If a trader says something like, "Hey Rayner, I'm long EUR/USD!" This
means that the trader would make a profit if the price goes up.
It means the trader is bullish.
He wants the market to go up so he can make a profit.
And if someone says, "Hey Rayner, I'm short the GBP/USD!"
This means that he wants the market to go down because he will make a profit if the price trades
lower.
So, this is the meaning of long and short.
Long means you're bullish.
Short means you're bearish.
You’ll make money if the market goes down for short.
And you'll make money if the market goes up if you're long.

Leverage & Margin

Leverage basically means how much larger can you trade relative to your account size. I've
seen people mentioning leverage like how much more you can borrow.
But I wouldn't really use the word ‘borrow’ down here.
Because when you are trading Forex, your broker is not really lending you any money.
It's just a term that refers to how much larger you can trade relative to your account size.
I'll just give you an example…
Let's say you fund your account $10,000.00, and your broker offers you a leverage of 1:50.
What this means, is that your broker will allow you to trade up to $500,000.00 worth of
currencies, because he gives you a 1:50 leverage.
This is what it means…
Your broker isn't really going to physically or electronically lend you another $490,000.00 in
your account.
It just means that you can trade up to $500,000.
This is what I mean by a 1:50 leverage.
If it's a broker that offers 1:100
You can trade up to $1,000,000.
Just take the leverage factor, and multiplied by the amount of cash in your trading account.
That's your leverage.
what is margin?
Essentially, margin and leverage they are two sides of the same coin.
You can apply this formula, just take 100, divide by your leverage factor.
So earlier we spoke about a factor of 1:50, so your margin this over here is 2%.
What this means is that your broker requires you to put at least 2% margin in your account to be
able to trade the 1:50 size that you want.
To put it simply, if you were to trade $500,000.00 worth of currencies, your broker requires you
to put 2% of this amount in your account, which is equivalent to $10,000.00!
This is why I say they're pretty much two sides of the same coin...
Leverage, and margin.
And one thing to bear in mind is that leverage is a double-edged sword.
You can potentially make more money, with a higher leverage.
But at the same time, you can potentially lose more in a faster period of time, because all you
need is just a small percentage move against you.
And you will lose a lot depending on how much leverage you're using.
When you are actually trading, I don't really consider leverage and margin when I'm trading.
Because when I'm trading, I always have my stop loss in place and from there on I can calculate
the appropriate position size for my trade.
And even though I'm trading with high leverage, I won't use a huge chunk of my capital because
the risk has been taken into consideration.

Pip
Pip basically refers to the point in percentage.
It's the smallest price movement in the Forex market.
Now I would say there's a smaller price movement because there's something called the pipette,
but it's not a very useful thing to talk about.
For most currency pairs, the pip is the fourth decimal place.
For the Yen pairs (JPY), it's the second decimal place. This is something you have to know.
Let’s talk about EUR/USD.
Let's say EUR/USD is trading at 1.0012, and let's say it moves up to 1.0015.
So how many pips did this, did the market move for EUR/USD?
Just take 15, minus 12, and you realize that you move up by three pips.
For the Yen pairs, like USDJPY.
Let's say it's trading at 120.01, and it moves to 120.05.
How many pips did this market move?
It moved up to four pips.
Because for the Yen remember, I say that you have to look at the second decimal place.

Bid & Ask

What is a bid and ask?
The bid is basically the price that you can sell it.
The ask price is the price that can buy at.
One thing to know is that when you are trading Forex, there isn't exactly one price in the market.
It's always two prices; the bid and ask.
Let’s say you're getting EUR/USD.
Let's say…
The ask is at 1.0015
The bid is at 1.0014
If you want to sell EUR/USD right now, you will sell it at the Bid price.
If you want to buy EUR/USD right now, you'll buy it the Ask price.
Depending on your trade direction, you are being offered different prices when you're trading.
One thing to note is that the bid is always lower than the ask. Spread
Since you already understand what is the bid and ask… The
spread is simply the difference between the bid and ask!
Another example:
If the Dollar Canadian is trading at 1.1125, this is the ask, and the bid is 1.1122
What is the spread?
It’s three pips on USD/CAD.
Now you may be wondering…
"Hey, Rayner, why do I have to pay 0.1125 to buy and when I sell I can only sell at 0.1122? Why
do I have to lose these three pips?"
Well simply put, your broker the market maker, needs to make a living as well!
This is the form of transaction cost that is being passed on to you.
They have to make a living, they can't just provide a free service!
Now that you understand this.
5: WHAT IS A FOREX LOT SIZE
LESSON5
What is a Forex lot size?
But when you are dealing with Forex…
There is a little bit of terminology that you might want to familiarize yourself with:
• Standard Lot (100,000 Units)
• Mini Lot (10,000 Units)
• Micro Lot (1,000 Units)
• Nano Lot (Below 1,000 Units) For example...
In a standard lot, it represents 100,000 units of currency.
Let's say you want to buy 100,000 units (one lot) of AUD/USD.
The Aussie against the US dollar is currently at $1.20
What happens is that you will receive 100,000 units of Australian Dollars!
In return, you will fork out (pay) $120,000 US Dollars.
Just to put things in perspective:
• 100,000 Units = 1.00 Lot
• 10,000 Units = 0.10 Lot
• 1,000 Units = 0.01 Lot
• Below 1,000 Units = 0.001 Lot
With that said, I have come to the end of this video and I'll see you in the next.

6: THE DIFFERENT TYPES OF FOREX ORDERS

LESSON6

What are the four types of orders?

Here are the following:
• Market Order
• Limit Order
• Stop Order
• Stop-Loss Order
I'm going to explain to you what are these four different types of orders and the pros and cons to
it.
Market Order
A market order is that you want to enter the market at the current price.
For example, you are looking at a chart and the market is moving without you and you tell
yourself…
"Man, I got to be in this move. I got to enter the market right now!"
If you want to enter the market right now, you will use a market order.
You know for sure you'll be in a trade because you're basically entering the market right now.
However, the market might retrace and could give you a better price.
So, the downside to this is that you will pay a premium. Here
are the Pros and Cons:
Pros: You know for sure you’ll be in the trade. Cons:
You pay a premium.

Limit Order
You only enter the market if the price comes to your desired level.
Let’s say, the market is trading higher.
You don't want to go long at the current price.
You think it's too overbought, it's too high.
So instead, you want to buy at a lower price!
What you can do is you can put in a limit order at a lower or desired price.
If the market does come back lower and hit your lower price level, you will be filled on your
trade.
This is what I mean by entering only if the market comes to your desired level, so you are trading
with pullbacks.
The pros are that you will be entering your trade at a cheaper price and this would naturally
improve your risk to reward.
The downside to this is that you might miss the move because the market doesn't necessarily have
to come to the level that you are waiting for and you might miss the move!
The second thing is that you are trading against the current momentum.
What this means is that if the market is trading higher, you place a limit order, it comes back
down.
You're basically entering the current momentum that is against you.
Of course, there are ways to circumvent this…
You could wait for a reversal candlestick pattern before the market does a higher close and then
you enter the trade.
Here are the Pros and Cons:
Pros: Enter at a “cheaper” price.
Cons: Might miss the move and trading against current momentum.

Stop Order
This simply means that you only enter the trade if the market moves in your favor.
For example, the market could be in a range.
You want to trade the breakout of the range.
What you can do is that you can put a buy stop order at the breakout price (above current price).
So that if the market trades and hit this level, only then will you be filled on the trade to go long.
Here are the Pros and Cons:
Pros: Enter trades with momentum.
Cons: It might be a false breakout.

Stop Loss Order

This type of order is slightly different from the earlier orders.
Because the earlier three orders are orders to get you into a trade, an entry. Whereas
a stop-loss order is to get you out of the trade.
It's an exit.
Let's say, you buy at support in anticipation the market will to continue trading higher and you
have a stop loss order below support.
But what happens is that the market collapses lower.
If it hits your stop-loss level, you will be out of the trade for a loss.
This kind of limits your downside.
Imagine if the market collapses all the way lower and you don't have a stop loss.
Your initial loss could have been bigger.
So, a stop loss order is simply a defensive mechanism to protect your capital if the market goes
against you.
Cutting your losses means that you live to fight another day.
You don't blow up your entire trading account, and like I've said, it's a defensive measure.
The bad side is that the market could reverse back in your intended direction.
But I would rather get stopped out of my trade and get a small end bite than get a big crocodile
bite.
Here are the Pros and Cons:
Pros: Cut your losses by not blowing your entire account.
Cons: The market could reverse back in your direction. Recap
• A market order is where you enter the trade right now.
• A limit order is where you want to enter at a cheaper price.
• A Stop order is where you want to enter at a higher price (breakouts).
• A Stop-Loss order gets you out of your losing trade and protects your capital.

7: HOW TO READ A FOREX CHART

LESSON7
Here is a chart from the charting platform from TradingView, It's one of the more popular
charting platforms:

But It's not the only one, you have stuff like MT4, MT5, NinjaTrader, and many more…
So, I will explain to you how to read a Forex chart. How
to read a Forex Chart
If you want to read a Forex chart...
One thing you'll note is that the price on the right side of the chart.
This basically tells you what is the current price of this market:

How to interpret Bid and Ask in Forex

If you studied the earlier lesson, you'll know the market always has two prices. Number one is
the bid (Left Side) and number two is the ask (Right Side):

So, as you can see, the bid is at 1.3127

And the ask is 1.3129 Remember?
The bid is the price that you want to sell it.
The ask is the price that you want to buy it.
Let's say you want to buy NZD/USD.
The asking price is 0.7322 and the bid is 0.7321

Let's say you long at New Zealand dollar is 0.7322, and you sell it at 0.7330 You
make eight pips, right?
If you've entered the trade and made 8 pips, and you are trading with one standard lot.
This will be about $80 profit.
Because one standard lot with one pip movement is $10.

8: THE DIFFERENT TYPES OF FOREX CHARTS

LESSON8
The Different Types of Forex Charts
There are many different types of chart out there...
There is no point in me sharing with you and discussing all the different types of charts.
Because most probably you will not use 99% of them.
So, I'm just going to share with you the three most popular ones.
And you can then decide which is the one that suits you best. Different
types of Forex chart
Here are the three most popular type of Forex chart:
• Line Chart
• Bar Chart
• Candlestick Chart
Line Chart
The first one is what we call a line chart. It
simply looks like a line on your chart:

One thing to bear in mind is that the line chart uses the closing price only.

Bar Chart
The bar chart takes into consideration the open, high, low, and close only:

Candlestick Chart
The candlestick chart takes into consideration the open, high, low, and close, but it colors the
body compared to the bar chart:
How to interpret different types of Forex chart
As I've mentioned, there are different types of chart that you can use.
Point and Figure, Kagi, Line chart, Renko, Baseline, Area, Hollow Candles, etc.
But I'm just going to share with you the three that I just mentioned:
Line Chart
Chart
Simply put, the bottom of the bar is the low, the lowest price of the bar.
And the top of the bar is the high, the highest price of the bar.
The left thing that you see sticking out is basically the open. The
right thing that you see sticking out is the close.
Here’s what I mean:
So, this is how you see the open, high, low, and close.
One thing to bear in mind is that a bullish candle and a bearish candle, the open and the close are
in opposite direction.
It basically confused me at the start when I was new to trading, but trust me…
It will make sense to you eventually.
Candlestick Chart
Compared to a bar chart, the candle chart basically shows you the color of the body, showing you
the momentum of the move.
The bar chart does show as well but it's not as obvious to the naked eye.
When you look at candle chart, the picture is more easily summarized.
The candlestick chart looks like this...
They have the open, high, low, and close:
Don't worry if you don't really know how to read a candlestick chart.
Because I have a free candlestick training course that you can check out here. Recap
• Line chart takes into consideration only in the closing price.
• Bar chart has the open, high, low, close.
• Candlestick has the open, high, low, close but the body is colored.

9: THE DIFFERENT TYPES OF FOREX ANALYSIS

LESSON9
Different types of Forex analysis
Forex analysis generally falls into one of these three categories:
• Fundamental Analysis
• Technical Analysis
• Sentiment Analysis

Fundamental Analysis
With this kind of analysis, you typically look at things like...
GDP, the Gross Domestic Product of a country or how fast or slow a country is growing.
The interest rates.
Non-farm payroll, like how many jobs are created.
These are one of a few of the key fundamental piece of news that Forex traders look into.
Of course, there's a lot more out there.
So, if you want to check out fundamental analysis.
You can go down to www.forexfactory.com
At the calendar, you will see the different piece of fundamental news that will be coming out for
the week:

If you're going to look at the differences, you can look at the previous change, what's the actual
number that came out, and the forecast.

So, this is a very useful website to kind of follow through what are the different pieces of
fundamental news that are coming out in the markets for all the different countries.
Euro, New Zealand, Canadian, and US Dollar, etc.
Technical Analysis
Technical analysis is vastly different from fundamental analysis.
Fundamental considers data information that is related to macroeconomics.
Whereas technical analysis…
You are dealing with indicators, support/resistance, candlestick patterns, Fibonacci ratios, RSI,
Stochastic, ict , btmm, smc and any more.
It's all basically the stuff that you see traders plot on their charts.
Those are usually what we call technical analysis tools!
To share with you an example.
This chart is a candlestick chart with the 200-period moving average as a black line with support
and resistance levels:

This all classify under technical analysis and it's really a lot that you can play around with.
The thing is…
You do not need to know everything from A to Z.
You don't have to know everything like fundamentals, technical, or sentiment.
But rather to pick that few tools that resonate the most with you, and be proficient in it!

Sentiment Analysis
Sentiment analysis is in a category of its own.
Because it quantifies and gauges what the market sentiment is.
For example, there's one called the Commitment of Traders report:
You can go to barchart.com as they provide free COT reports.
Now...
How do you use it?
The general idea is that there are three groups of traders in the market.
The large speculator, like banks and other institutions.
Small speculator like retail traders like me and you.
Then the commercial speculators, people who go to the markets to hedge whatever reasons that
they want to hedge for.
For example…
Cadbury needs cocoa to make chocolate.
So, they may go to the futures market and locking at a fixed rate of cocoa as their raw material.
Or maybe cars like Ford Motors that wants to buy supplies in India or China and they want to
hedge their currency.
This is all classified under commercial speculator.
The general idea of using the COT report is that you want to look at the white timeframe like
with the last five years.
You're going to look for the extremes of the COT report.
The general idea is that the COT report tends to help you anticipate market turning points. For
example:

The red line, which is the commercial speculator.

The green line is the large speculator.
And the blue line is a small speculator (you can usually ignore it).
Is where I pay attention to when price moves to the extreme.
When it's going to reach extreme selling levels, it's telling you that a lot of the commercial
companies are selling this particular instrument like EUR/USD.
You can actually see how the EUR/USD bottomed out last May 2017.
You can also see that it isn't foolproof.
But there will be times where the commercial speculator is able to so-called help you better time
your entry.
Again…
Using the COT report is to look for extreme buy and selling levels made by the commercials
because that could actually highlight you of potential reversals in the market.
Another one that you can use is what I call the long/short ratio:
This is a tool that you can use on Forex Factory.
Over here, you can see traders coming to this website and stating their positions whether they are
long or short.
What you want to do is to look for extremes.
For example…
What I tend to find is that when there is an extreme group of traders who are long.
The market tends to reverse towards the downside.
When the extreme number of traders were short, the market tends to reverse towards the upside.
We can use this as a sentiment tool to trick against the so-called “the herd.”
But you don't want to trade this in isolation, but use it as a sentiment tool that you can use as part
of your trading plan!
I believe there are other sites or other brokerage sites that let you see what their clients are doing
what, what are their positions.
Again, you want to take note of extreme positions like maybe 80% is long, 20% in short.
That is something that could give you an idea behind the sentiment of the particular currency that
you are trading.

11: THE DIFFERENT TYPES OF FOREX BROKERS

LESSON11
What are the different types of Forex brokers
In this lesson, you'll learn what are the different types of Forex brokers.
They generally fall into one of two types of category:
• Dealing Desk Broker
• Non-Dealing Desk Broker

Let me explain what this all mean…

Dealing Desk Broker

A dealing desk broker is basically a market maker.

And yes, they take the opposite side of your trade…
There will be many of you who will have alarms ringing and ask “Oh what? they take the
opposite side of my trade? So, that means if I lose they'll gain!” Yes, if
they take the opposite side of your trade, and they don't hedge it.
Your loss is their gain, and their gain is your loss.
Although it sounds pretty gloomy, there are upsides to trading with market maker:
• Fixed Spread
• Likely to trade Nano lots.
First, is their spread tends to be fixed, it doesn't really fluctuate too much because after all,
they're trading against you!
Second, you are likely to be able to trade in Nano lots.
If you recall in the earlier lessons...
You have studied mini, micro lot, and even nano lots.
This means that you can trade really small size.
With a nano lot, it is possible to trade with a $500 account and still adopt proper risk
management.
So, this is the beauty of trading with the market marker.
Although they take the opposite side of your trade, it's not an illegal thing.
This is just the way they run their business, and there are a couple of advantages to trading with a
market maker and otherwise known as the dealing desk.
Non-Dealing Desk Broker

Non-Dealing Desks fall into two categories:

• Straight through Processing (STP)
• Electronic Communication Networks (ECN) For Straight through
processing:
Let's say, this is you, the trader in the image (right).
The broker will link my order to a liquidity provider like banks, hedge funds, and other brokers.
Basically, the broker will take my order, and route it to a liquidity provider.
How your broker will earn in this instance, is that they will mark up the spread.
So, let's say it's trading at a bid price of 100.070, and ask is 100.100 (Provider A).
What your broker will do is that they’re not going to give me a better spread as being offered on
the liquidity providers.
What he will show on my screen is 100.090 Bid and 100.110 Ask.
You can see that the spread is higher than the original price.
What the broker will do is to mark up the spread.
In real life, they won't usually mark up too much, I'm just trying to give you an illustration.
You tend to have variable spreads when there is major news releases.
Because you know traders are taking away liquidity in the market.
Another thing about Straight through processing is that you're unlikely to trade in Nano lots. So,
it's unlikely that you can trade with Nano lots if you're going through Straight through
processing broker.
Another one is what we call it Electronic communication network.
So, the difference between this and STP is that an Electronic communication network gives you
direct interaction with the liquidity providers and other ECN participants.
Let's say this is you (left), and this is your broker (center).
The broker gives me the ability to trade within the other liquidity providers.
Instead of marking up the spread of my order, they typically charge a commission on your trades.
So, the ECN approach is where you can have a direct interaction with the other liquidity
providers.
What type of Forex broker should I choose?
Should you go to the STP, ECN or market maker?
Well, here's my take on it…
For the market maker, otherwise known as dealing desk.
I would suggest new traders go for it.
Why new traders?
Because, for new traders, you want to be able to adopt proper risk management.
You want to be able to trade in Nano lots.
And only a market maker would offer you this privilege because they're simply not making a
market for you.
As for Non-Dealing Desks, I would suggest this for day traders where you're trying to fight for
every pip in the market.
Going for Non-Dealing Desk broker will give you better spreads.
So, going for a Non-Dealing Desk broker will charge you a commission every trade.
But you will be offered with the tightest spread possible.
Okay. So, with that said, let's do a quick recap...
Recap
• Dealing Desk Brokers are typically trading with market makers, they typically offer you a
fixed spread and allow you to trade in nano lots.
• Non-Dealing Desk Brokers consists of STP and ECN. It gives you tight spreads, but you have
to trade a larger minimum size.

12: HOW TO CHOOSE A FOREX BROKER

LESSON12
How to select a Forex broker
The last thing that I want to talk about is how to select a Forex broker.
Because this is one of the most common questions that I get from traders.
So, the first thing to look for is…
Regulation
Execution
Customer Service
Ease of withdrawal

End of phase one of introduction to forex trading

Prepared by :aliensking
Founder :profit max academy
We are found in Instagram , youtube channel , twitter and ticktok as
Instagram :@aliensking
Youtube :profit max acedmy
twitter :aliensking
ticktok :profit max academy
Contact me in whatsaap and normal by

Phone number :+255749969930