Hello this is Carol from for ex-beau dot com. And welcome back to the course and for extruding it is the Torah. 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 4 X market and these are the bulls and the bears. So the bulls stand for forex traders who invest in the growth of a currency pair. He will give an example of the British pound dollar in an upward trend. And in this case the Bulls would be active and they would be buying this currency pair. And then in order to close that letter and profit from the growth in price and in a minute we’ll discuss the mechanics behind that bears or people who invest in the decline of a currency pair. And this is an example of the euro dollar in a downward trend. Here the bears would profit from selling this currency pair. The terms bulls and bears have historical background and they were first introduced a long time ago in 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 paws to drag somebody down and that’s similar to how currency pairs move downwards. There is a bit of a difference between the Forex market and the stock market and that is because the stock market the way it’s 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 company is going to underperform is going to fail and you want to short sell that stock. I will talk about short selling in one of the future tutorials. But generally that’s a pessimistic kind of approach whereas bulls are happy creatures that are aggressive that look forward to something growing and becoming more valuable like a stock for example. But on the forex market that is very different. Pools are still the same. They’re looking for something to grow. Bears are not pessimistic bears just invest in the decline of a currency but there is no actual company behind this currency it’s not a stock. So by investing in the decline of the euro dollar are you just saying that the euro will drop but the U.S. dollar will grow soon in a way you’re actually investing into the growth of the U.S. dollar. So that’s something to remember that bears are not bad. Anybody can bear a bear. And moreover most traders will sometimes be a bull and sometimes be a bear. So you can buy in one case and sell in another case depending on what your analysis tells you. And we’ll talk more about that in the Forex analysis section of this course. All right. Moving on today we will talk about bulls and buying on the forex market. Let’s look at a British pound dollar example. And here we can see an upward trend. Let’s assume that a bull trader bought at that point in time marked by the cross and the transaction was conducted at a quarter price of one point forty four 0 0 for the British banjo’s dollar currency . As we recall from one of the previous tutorials. This means that at that point in time every single British pound was worth one point one American dollar and 44 American cents. Then let’s assume that the trainer waited for some time and closed his transaction had the price marked by the second cross and the quoted price at the time was 1.5 9 5 0. So this bull 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 it. So let’s assume that the bullish trader had 1000 U.S. dollars to invest which he put into the British pound. And he quoted price of one point forty four 0 0. Now 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 them measure them weigh them up and we can always replace them base currency with apples to simplify things. So no our example says that the trader had $1000 which he invested in two apples at the price of $1 . Forty four cents per apple. This means that he bought six hundred ninety four apples. Next he waited a certain number of days until the price for apples grew to 1.5 9 5 0 0 dollars per apple . And at this point in time he still has 694 apples. What he did with these apples next is he’s sold them at the new price and in return he got one thousand one hundred and seven dollars. So as you can see he started with $1000 and now he has 1000 $107. So if we break the final amount up we can see that $1000 is the starting amount on his account and one hundred and seven dollars is the profit that he made. Now moving back to the British pound we can see that nothing changes if we replace Apple’s back with the British pound trading invested a thousand dollars into the British pound. He goes 694 pounds. Then he sold them at a higher price got 1107 dollars back. And that is his profit $107. So he got his 1000 back and he’s got $170 extra on top of that. So in Forex the first reaction is called buying the second transaction is called closing. So even though he actually sells the British pound for dollars because this is part the second part of a buying transaction or this whole one and transaction it is in Forex we call it closing rather than selling so that we don’t confuse things. So you’re open to the action by buying and then you close that transaction. So these are the mechanics behind a bullish transaction on the Fox market in the next tutorial we will talk about short selling on the 4 x market and the mechanics behind that. And further down the track and this course in one of the tutorials we 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.