MELVIN JASON S.

DE VERA, MBA, CIS, CFMP, AFA®

Investment Consultant, First Metro Asset Management Inc. (FAMI)
Introducing Broker for Forex Trading, Klimex Capital Markets
Accredited Financial Analyst (AFA®) by American Academy of Financial Management
Head Coach, Certified Financial Market Professional Program (CFMP)
President, Finance Educators Association of the Philippines (Fin.Ed)
Deloitte-FINEX 2015-2016 Outstanding Finance Educator for the National Capital Region
Accredited Capital Market Investment Teacher and Practitioner
by the Capital Market Institute of the Philippines
FOREIGN EXCHANGE TRADING
Melvin Jason De Vera
Introducing Broker, Klimex Capital Markets

2
FOREX TRADING
Foreign Exchange = Forex = FX

• A typical foreign exchange transaction involves a

purchase of one country’s currency by paying with
another currency
• Largest market in the world: Around $3 trillion
forex trades per day versus stock market with
$500 billion trades
Why trade FOREX?
• Minimal investment – you can start with as low as USD 100
capital

• Minimal document requirements – 1) National ID (could be your

Passport or Drivers License, 2) Proof of residence (could be your
Utility bill or Bank Statement) 3) Bank Debit or Credit card (VISA
or Mastercard)

• Minimal time commitment and very flexible – spend 3-6 hours

a day is more than sufficient and market operates 24 hours a
day and 5 days a week.

• You can trade profitably regardless of the direction of the

market – You could LONG if uptrend and SHORT if downtrend
FOREX 24-HR MARKET FLEXIBILITY

FOREX MARKETS
AM (PH TIME) PM (PH TIME)
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

LONDON
NEW YORK NEW YORK
SYDNEY
TOKYO
FOREX CURRENCY MAJORS
• The United States Dollar (USD)
• The Euro (EURUSD)
• The Japanese Yen (USDJPY)
• The Great Britain Pound (GBPUSD)
• The Swiss Franc (USDCHF)
• The Australian Dollar (AUDUSD)
• The Canadian Dollar (USDCAD)
FOREX CURRENCY CODES
• 8 MOST COMMON CCY SYMBOLS
• EUR, USD, GBP, JPY, CHF, AUD, CAD, NZD

• OTHER CCY SYMBOLS

• SEK, DKK, NOK, SGD, ZAR

• MOST COMMON AND LIQUID PAIRS

• EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD,
NZD/USD, USD/CAD
CURRENCY EXCHANGE RATE
Currencies are quoted in pairs (usually 4 decimal
places except JPY pairs
EUR / USD = 1.14344

Term Currency Fractional Pip

Base Currency Pip

The base currency always has a value of 1 and in this pair EUR/USD, the Euro
has a value of 1 and it needs to be exchanged with 1.434 US Dollars
So if you want to buy 1 Euro, you will need to pay 1.434 US Dollars and if you
will sell 1 Euro, you will receive 1.434 US Dollars
CURRENCY EXCHANGE RATE(JPY pairs)
USD / JPY = 143.444

Term Currency Fractional Pip

Pip
Base Currency
For non-JPY pairs, 1 pip represents the 4th decimal place
of the quote. SO if the EUR/USD moved from 1.1434 to
1.1435 then the movement is 0.0001 or 1 pip up.
For JPY pairs, 1 pip represents the 2nd decimal place of
the quote. SO if the USD/JPY moved from 143.44 to
143.45 then the movement is 0.01 or 1 pip up.
CONTRACT LOT SIZES
CURRENCY PAIR 1 STANDARD LOT 1 PIP
EUR/USD EUR 100,000 0.0001
USD/CHF USD 100,000 0.0001
GBP/USD GBP 100,000 0.0001
USD/JPY USD 100,000 0.01
GBP/JPY GBP 100,000 0.01
AUD/USD AUD 100,000 0.0001

1 STANDARD LOT = 100,000 of the BASE currency

CONTRACT LOT SIZES
• Other lot sizes

LOT SIZE UNITS

Standard 100,000
Mini 10,000
Micro 1,000
Nano 100
CALCULATING FOREX PROFITS
• PROFIT or LOSS
= No. of Pips x No. of Lots x $Value per Pip per
Standard Lot

$Value per Pip per Standard Lot is about USD 10 for

most of the actively traded pairs (EUR/USD,
GBP/USD, AUD/USD)
You may see the $Value per Pip per Standard Lot for
all major currency pairs in
https://www.mtpredictor.com/Pip-Value-Table
PROFIT BY GOING LONG
• If you bought EUR/USD at 1.1434 and sold it at 1.1474 then you made
40 pips.
• Profit = 40 pips x $10 x 1 std lot = $400

$Value per pip per standard lot

EUR USD
+100,000 - 114,340
-100,000 +114,740
0 +400

• Without leverage, you would have to invest $114,340 to earn $400.

Most Forex brokers allow you to leverage 1:100 times
PROFIT BY GOING SHORT
• SELL EUR/USD at 1.1434 and buy it back when it drops to 1.1394 then
you made 40 pips.
• Profit = 40 pips x $10 x 1 std lot = $400

$Value per pip per standard lot

EUR USD
-100,000 +114,340
+100,000 +113,940
0 +400

• Without leverage, you would have to invest $114,340 to earn $400.

Most Forex brokers allow you to leverage 1:100 times
SHORT SELLING GUIDED BY STOCHASTICS
AND EMA 50 AND EMA 200

SELL

SELL
SELL

BUY BUY
The Power of Leverage
• In Forex, most brokers allow traders to leverage
up to 1:100, this means you can buy/sell USD
100,000 with just USD 1,000 margin.

LEVERAGE MARGIN REQUIRED

1:10 10%
1:20 5%
1:50 2%
1:100 1%
KINDS OF FOREX TRADERS
4 KINDS OF FOREX TRADERS
SCALPERS SWING TRADERS
- Target: 5-10 pips per trade - Target: 50-150 pips per trade
- Trade duration: seconds- - Trade duration: Less than a
minutes week
- Charts: M1 and M5 - Charts: H1 and H4

DAY TRADERS POSITION TRADERS

- Target: 20-40-pips per trade - Target: 500-1,000 pips per trade
- Trade duration: within the day - Trade duration: weeks to
- Charts: M15 and H1, H4 months
- Charts: D1 (Daily Candles), W1
TWO-WAY QUOTE
YOU DEALER QUOTE

SELLING BUYING BID The DEALER is MARKET

MAKER or the
QUOTING PARTY and
BUYING SELLING OFFER YOU are the PRICE
TAKER or the CALLING
PARTY

The SPREAD is the difference between the Bid Price and the
Offer Price
QUOTING AND CALLING PARTY
Example

You want to buy USD 5 million against PHP.

Four different banks quote you the following prices:

BDO: 47.15 – 25
BPI: 47.20 – 30
DBS: 47.10 – 15
UBS: 47.10 - 18

Where do you buy your USD?

QUOTING AND CALLING PARTY
Example

You want to buy USD 5 million against PHP.

Four different banks quote you the following prices:
BDO: 47.15 – 25
BPI: 47.20 – 30
DBS: 47.10 – 15
UBS: 47.10 - 18
Where do you buy your USD?
I. You want to buy USD, meaning you sell PHP
II.You ask for the rate. You act as price taker and sell PHP
Thus, you buy USD 5 mio at 47.15 and pay PHP 235.75mio (5mio x 47.15)
THE METATRADER 4 (MT4)
PLATFORM
PLACING AN ORDER IN MT4