How forex works (currency pairs, liquidity, volatility)

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About Course

Module Code

36121003 -KM-02- How Forex works (currency pairs, liquidity, volatility)

Curriculum Code

36121003

Qualification Title

How Forex works (currency pairs, liquidity, volatility)

Notice to the learner

This Learner Guide provides a comprehensive overview of the module. It is designed to improve the skills and knowledge of learners, and thus enabling them to effectively and efficiently complete specific tasks.

Entry Requirements

Physical requirements for the knowledge Module

Physical requirements the learner

  • The provider must have lesson plans and structured learning material or provide learners with access to structured learning material that addresses all the topics in all the knowledge modules as well as the applied knowledge in the practical skills.
  • QCTO/BANKSETA requirements

Human Resource requirements:

  • Lecturer/Learner ratio of 1:40 (Maximum)
  • Qualification of the lecturer:
  • Assessor and moderators: accredited with QCTO/Bankseta

Legal Requirements

  • Legal (product) trading licences software?
  • OHS Compliance certificate

 

Module Purpose

The purpose of Module 36121003 – KM-02: How Forex Works (Currency Pairs, Liquidity, Volatility) is to equip learners with a practical understanding of core forex market dynamics, enabling them to decode price movements, manage risk, and execute informed trades

 

Topic elements to be covered include

The learning will enable learners to demonstrate an understanding of:

  • KM-02-KT01: The Architecture of Currency Pairs: Base, Quote, and Economic Reflection
  • KM-02-KT02: The Lifeline of Trading: How Market Liquidity Ensures Efficiency and Tight Costs
  • KM-02-KT03: From Pips to Profit: Calculating Costs, Value, and Risk with Lots and Spreads

Venue, Date and Time:

Consult your facilitator should there be any changes to the venue, date and/or time.

Refer to your timetable

Assessment

The only way to establish whether you are competent and have accomplished the learning outcomes is through continuous assessments. This assessment process involves interpreting evidence about your ability to perform certain tasks. You will be required to perform certain procedures and tasks during the training programmer and will be assessed on them to certify your competence.

This module includes assessments in the form of self-evaluations/activities and exercises. The exercises, activities and self-assessments will be done in pairs, groups or on your own. These exercises/activities or self-assessments (Learner workbook) must be handed to the facilitator. It will be added to your portfolio of evidence, which will be proof signed by your facilitator that you have successfully performed these tasks.

Listen carefully to the instructions of the facilitator and do the given activities in the time given to you.

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Course Content

SECTION 1: KM-02-KT01: The Architecture of Currency Pairs: Base, Quote, and Economic Reflection
The structure of currency pairs, including base and quote currencies, how forex quotes are read, and how exchange rate movements reflect the relative strength of two economies. Topics Elements to be covered include • KT 0101 – Fundamental Components of a Currency Pair • KT 0102 – Mechanics of a Forex Quote • KT 0103 – Economic Reflection and Interpretation of Price Movement • KT 0104 – Real-World Application and Analysis

  • KT 0101 – Fundamental Components of a Currency Pair
  • KT 0102 – Mechanics of a Forex Quote
  • KT 0103 – Economic Reflection and Interpretation of Price Movement
  • KT 0104 – Real-World Application and Analysis

SECTION 2 KM-02-KT02: The Lifeline of Trading: How Market Liquidity Ensures Efficiency and Tight Costs
Liquidity in the forex market, recognizing how high trading volumes facilitate tight spreads, efficient execution, and minimal slippage, especially in major currency pairs. Topic elements to be covered include: • KT 0201 – The Foundation of Liquidity: Volume and Participation • KT 0202 – The Cost of Trading: How Liquidity Creates Tight Spreads • KT 0203 – Efficient Trade Execution: Getting Filled at Desired Prices • KT 0204 – Minimizing Slippage: The Impact of Liquidity on Order Accuracy

SECTION 3- KM-02-KT03: From Pips to Profit: Calculating Costs, Value, and Risk with Lots and Spreads
The practical impact of pips, spreads, and lot sizes, enabling learners to calculate pip values, assess transaction costs, and understand how these mechanics influence profitability and risk exposure Topic elements to be covered include • KT 0301 – The Pip: Defining the Unit of Price Movement • KT 0302 – Lot Sizes: Scaling the Trade and the Risk • KT 0303 – Calculating Pip Value: Translating Pips into Cash • KT 0304 – The Spread as a Transaction Cost: The Hidden Hurdle to Profitability • KT 0305 - KT 0305 – Synthesizing Knowledge: Calculating Risk Exposure and Potential Profit

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