Forex Trading.
So, you’re looking to learn the basics, perhaps even get a detailed understanding of Forex Trading. Well, you’ve come to the right place!
In this guide we’ll be addressing all of the important things that you need to know before you start forex trading in order to understand how to enter the markets safely, with an effective strategy in place.
Firstly, we’re going to explain what Forex Trading actually is and how it works. We’ll then be examining basic terminology so that you can become accustomed to the words and phrases used while trading foreign exchange. Following the basic terminology, we’re also going to examine the calculations that you’ll be using in your day-to-day life as a forex trader.
Our guide aims to fully equip you with the tools to further your knowledge and understand the details of fx trading before you enter the global markets. If you’ve had some experience with trading Forex before then feel free to skip ahead to the sections that you’d be interested in. Simply click on the menu titles below to be redirected to the relevant information for you.
What Forex Trading is and How it Works Currency Markets and Currency Pairs What is a Pip? What is a Pipette? What is a Spread What is Leverage and Margin? Trade Currencies: Is Currency Trading the Same as Forex Trading? How to Trade Currencies in Forex What You Need to Start Forex Trading Forex Brokers: What They Are and How They Work Forex Trading Apps, Platforms and Websites: What You Need to Know The Forex Market: Opening Times Forex as a form of investment How to Learn Forex Trading Examples of Forex Strategies FAQs: Can you really make money trading Forex?
CURRENCIES.
Instrument Minimum Spread Typical Spread Long Position Short Position AUDUSD 0.0 0.1 -4.94 1.15 EURGBP 0 0.4 -4.94 2.57 EURJPY 0 0.5 6.58 -10.46 EURUSD 0 0.1 -8.82 5.7 GBPAUD 0 2.5 -0.18 -7.11 GBPJPY 0 1 13.59 -18.69 GBPUSD 0 0.3 -5.36 0.86 USDCAD 0 0.2 -1.31 -2.5 USDCHF 0 0.4 7.5 -11.92 USDJPY 0 0.1 14.1 -19.58.
For a full list of our currency pairs and their spreads click here.
What Forex Trading is and How it Works.
Foreign exchange, or Forex for short, is a market where you’re able to exchange one currency for another. With a daily trade volume of $6.6 trillion dollars, the forex market itself is huge! It eclipses the likes of the New York Stock Exchange (NYSE) which, by comparison, has a trading volume of only $22.4 billion per day.
The Forex Market’s sheer size attracts a wide range of different participants, including Central Banks, Investment Managers, Hedge Funds, Corporations, Brokers and Retail Traders – with 90% of those market participants being currency speculators!
So, what exactly happens in the forex market, to make it so attractive to investors across the globe? Well, imagine that you’d like to exchange one currency for another. You’re effectively selling one currency while buying another, or 'exchanging' it.
Now, the exchange rate between those two currencies is what’s important when trading forex. The exchange rate is constantly fluctuating, and it’s these fluctuations that allow market speculators to earn from trading or potentially lose their investment. These fluctuations are driven by the supply and demand of each currency!
It’s also important to note at this point that, while you are trading, millions of other traders are also entering the forex market.
So, when you 'sell' a currency, there is a buyer for that currency somewhere else. The more people that are trading, the more money there is in the market, which is what we call the 'liquidity'. As we’ve mentioned, the forex market is huge with millions of traders across the globe Because of this the liquidity in the forex market is really high!
What is Forex?
There are around 13.9 million traders across the globe that are simultaneously buying and selling currencies. As we mentioned before, this means that the liquidity of the forex market is really high.
These high levels of liquidity mean that traders can enter and exit a trade, as there will normally be a buyer for the currency that you’re selling, or a seller for the currency that you’re buying!
High liquidity levels have other implications too. If the levels of liquidity are high, then there are a lot of market participants, so trading costs, like the spreads could potentially be lower. It also means that the market is way less susceptible to market manipulation! If someone opens a huge trade in a market with low liquidity, it’ll have a huge impact on price. This doesn’t happen in forex because there is such a large volume being traded!
Now, the forex market, as it encompasses all of the currencies in the world, is actually open 24 hours a day, from Monday until Friday. The trading that is done on these currencies is what we call over the counter or OTC for short. This means that there isn’t a physical exchange like there is for stocks. It’s actually a global network where there’s a network of financial institutions and banks that oversee the market rather than a central exchange like the New York Stock Exchange.
As an individual, you’re likely to be categorized as a 'retail trader'. However, the largest portion of forex trades are actually conducted by ‘institutional traders’ like banks, funds and large corporations. They’re not necessarily going to actually buy or sell the currencies but are speculating about price movement or hedging against upcoming changes in the exchange rate.
Let’s look at an example.
A retail trader like yourself would sell the EURUSD if they believe that the price of the USD will appreciate in value against the EURO.
An American firm however, would be able to use the forex market to hedge should the EURO weaken, meaning that should the value of their income fall, they’ll still make profit on the depreciation of the USD.
Currency Markets and Currency Pairs.
Currencies in the forex market are expressed as pairs. So, lets take a look at the EURUSD and look at what exactly makes up a currency pair.
The first thing to know, is that currency pairs are expressed in terms of the 'Base Currency' and the 'Counter Currency'. The base is always expressed first and the counter second – so in our example, the EUR is the base currency and the USD is the counter.
Once you’re ready to begin (we’ll get to that a little later in the guide) and are familiar with the platform and want to open your first trade, you’ll see two prices quoted for the EURUSD; the Sell or 'Bid' price, and the Buy or 'Ask' price, as shown below. It’s important to always remind yourself that when you click buy or sell, you’re buying or selling the first currency in the pair.
Question.
As a savvy individual, you’ve also probably noticed that there is a difference between the ‘bid’ and ‘ask’ price. This difference is what we call the ‘spread’, and it is expressed in pips. In the example above, the bid price is 1.12005 and the ask is 1.12023.
So, what would the spread be?
Didn’t get it right? Don’t worry! Check out our Spreads and Margin page to learn more.
Now that we’ve given you a brief explanation of what Forex Trading and Currency Pairs are, let’s examine some common terms that you’ll experience as you learn to trade forex.
Pips & Pipettes Bid and Ask Spread Leverage Margin.
What is a Pip ?
You’ll need to become very familiar with the term ' Pip ' if you’re going to indulge in online forex trading.
As an acronym for ' price in point ' or ' percentage in point ', a pip is the fourth decimal point used in pricing. It’s equivalent to 1% of one basis point. As most currency pairs are priced to 4 decimal points, it’s the smallest price move that an exchange rate can make (0.0001) .
Now, it’s an important term to know for currency trading because the spread (we’ll get to that later) is actually quoted in pips. We’ll look at the spread a little later!
Let’s look at an example to make it a bit clearer:
You’d like to trade the EURUSD. The price of the EURUSD is 1.1060. Before you’re about the enter the trade, you see that the price changes to 1.1059. This means that there has been a fall in price by one pip, or 0.0001.
It’s important to remember that although most currencies are quoted to 4 decimal places, some currency pairs, like the Japanese Yen is actually quoted to two decimal places.
What is a Pipette ?
Now that you’re familiar with a pip , it’s also important to know that the MT4 trading platform actually shows prices beyond the standard 4 or 2 decimal places .
A pipette is a fractional pip and can be up to 5 or 3 decimal places . It’s effectively 1/10th of a pip . Check out the image below so you can get a better idea of how pips should be read.
Comfortable with what a pip and pipette is?
Comfortable with what a pip and pipette is? Great! Now we’re going to move into working out the value of pip! Each currency’s value fluctuates, so for us to be able to trade, we’ll need to be able to calculate the value of a pip for the instrument that we want to trade. It can be done in two simple steps!
STEP 1.
Divide 1 Pip (0.0001) by the current market value of your chosen pair.
STEP 2.
Multiply that figure by your lot size.
Let’s check out an example.
EURUSD ’s price is currently at 1.5510 and your lot size is a mini lot or, 10,000 . The value of the pip is: (0.0001/1.5510) X 10,000 = 0.6447.
In this example, should the market move by one pip , you’ll earn or lose 0.6447 EUR.
It’s important to note that the pip value is defined by the quote currency. In our example above that is the EUR. However, when the quote currency is the USD the value of a pip is always the same! This means that should the lot size be 100,000, one pip will be equal to $1.
Your broker will actually be calculating the value of a pip for you, but it is something that every forex trader should know!
What is the Bid and Ask price?
As we discussed before, when you’re going to be trading forex you’ll need to understand how currencies are actually priced. We know that currencies are actually traded in pairs; with the value of one currency appreciating or depreciating in value against the other.
Now, when we buy and sell a currency pair, you’re actually simultaneously buying one currency while selling the other. So, the ‘Bid’ price is actually the price where you sell a currency pair. So, it’s the price of buying the base currency against the counter currency!
What is the Spread ?
Another common term in the forex trading world is the spread. It’s a crucial concept that you’ll need to understand when working out the costs involved while online forex trading!
So, the spread effectively means the difference between two prices. It is the gap between the bid and ask price of your chosen currency price.
As you’ve already learnt, the ‘bid’ is the price at which you sell the base currency, and the ‘ask’ is the price at which you buy the base currency! Now, the spread is a cost that you incur for placing a trade and it can be affected by a variety of factors including:
The instrument you’re trading. The volatility of the market. The market volatility. The broker you’re trading with.
It’ important to note that a good broker will have a lower spread to ensure that you aren’t priced out of trading. Although these spreads tend to widen in times of high market volatility, a broker like Tickmill will always offer you the lowest spreads available so you can trade effectively.
When the spread is widened it means that there is a larger difference between the two prices, which is a good indication of market volatility. This means that theoretically, there will be a smaller spread when the market is more liquid.
What is Leverage and Margin ?
When you begin to become familiar with terms like pips and spreads, you’ll also hear the terms leverage and margin more frequently. They’re two terms that go hand in hand.
Leverage basically involves borrowing funds from your broker to enable you to control more funds when you’re trading. This is done through the use of a margin account and is partly responsible for the increase in forex trading popularity. It effectively allows retail traders to control a lot more money than they actually invest.
Lets’ look at an example in more detail.
You’ve decided to trade with a leverage of 1:100 . You’ve deposited $1,000 with your broker.
However, you’re actually able to control $100,000 for trading!
This means that when you’re trading, the profit that you made on a trade is actually amplified because you’re using more money to trade that you have effectively borrowed from you broker. At this point you should be hugely aware that trading with leverage is a double-edge sword. Although your profits may be amplified, your losses are also amplified.
Now, to be able to access this type of leverage, your broker will need some for of insurance to enable you to do so. This is where the margin comes in! Think of your margin as a deposit that you give your broker to open and maintain a trade. The broker will effectively keep a portion of your balance to cover the potential loss of your trade.
The ' margin requirement ' that you broker needs is normally expressed as a percentage of your overall trade and each trade that you open will have one. Remember that your margin requirement will vary depending on the asset that you trade and the broker that you work with.
Trade Currencies : Is Currency Trading the Same as Forex Trading?
As you’ve been learning about trading forex, you’ve probably also come across the term currency trading. But, is currency trading the same as forex trading?
In short, it’s exactly the same thing! The term simply doesn’t use the 'foreign exchange' abbreviation 'Forex' but defines it by the currency trade itself. In order to trade currencies, what you’re actually doing is trading individual currencies in pairs, which it’s the essence of forex trading. Trading currency actually infers that you’re trading the value of one currency against another. For example, if you’re trading the EURUSD, you’re actually speculating about the change in value of the EURO against the USD.
How to Trade Currencies in Forex.
It’s all about working out the value.
The value of each currency depends on the supply and demand for it, thus determining the 'exchange rate' between the two currencies. The exchange rate itself is basically the difference between the value of one currency against another. And, it’s this exchange rate that determines how much of one currency you get in exchange for another, e.g. how many Pounds you get for your Euros.
At this point, it’s important to remember that the exchange rate is continually fluctuating.
Now, investors involved in currency trading look at many different factors that could potentially affect the value of each currency, and they speculate how these factors will affect the value of those currencies. If a trader thinks that the currency’s value will increase, they’ll buy that currency. Conversely, if they think the value of a currency will decrease, they’ll sell it instead.
Now, when you’re trading forex, you’ll be trading currency pairs. So, two different currencies will be involved, and you’ll be speculating about their value in relation to each other.
For example, an investor may believe that the value of the Euro will depreciate against the value of the British Pound, because of an imminent data release. So, the investor would sell the Euro, believing its value will fall, and buy the British Pound simultaneously, believing its value will rise. If the investor is correct, then he or she will make a profit!
It sounds pretty straightforward right? Well, bear in mind that to speculate effectively you’ll need a good understanding of the market, and knowledge about how to analyse the market movement.
What You Need to Start Forex Trading.
Before you start forex trading, there are a few things you’ll need to have ready to begin.
An Internet Connection One of the first things you’ll need is a stable internet connection, as forex trading is done online. The most important factor is that your connection is stable and readily available. This is especially important for monitoring your trades and accessing your account should you need to make changes or catch an opportunity.
A Forex Broker Next, you’ll need a Broker. This is one of the most important decisions you will make when you start forex trading. So, here’s some important factors to consider.
1. Regulation.
When choosing the broker that you’re going to start forex trading with, regulation should be something that you consider first. The regulatory body of a broker determines how protected you are as an investor!
Now, when you’re choosing a broker, it may appear to be really attractive to trade with one who can offer you 1:1000 leverage so you can trade with minimal investment. However, with great leverage comes great risk. Although the reward for a profitable trade may be vast, the market could also move in the opposite direction, meaning that you could lose a significant portion, or all your initial investment.
A regulated broker however is not able to offer such high leverage to their clients and will offer you a leverage that’s far more realistic in terms of appropriate risk to reward ratio.
Moreover, a regulated broker should be offering clients Negative Balance Protection. This means that should you be trading, and the market moves against you (or gaps), then you’re protected from generating a negative balance. This ensures that you’ll never lose more than your original investment.
By working with a regulated broker, you’re also protected should the broker become insolvent. Regulated brokers are required by law to be a member of a Financial Service Compensation Scheme. These compensation schemes are contributed to by the broker and, should the broker go bankrupt, will cover your deposit up to a certain amount!
Finally, regulated brokers also protect their clients by always having 'segregated client accounts'. These special accounts hold Client funds separately from those of the broker, ensuring that your broker can’t use your funds for other purposes.
2. Trading Conditions & Account Types.
In the process of choosing a broker so you can start forex trading, you’ll need to consider the trading conditions and account types that are on offer.
Generally, the account types that are available depend on the volume that you’ll be trading. A standard lot is 100,000 base units, a mini lot is 10,000 base units and a micro lot is 1,000.
So, should you decide to start forex trading small, you’d be better suited to something like our Classic Account. Larger accounts like our Pro and VIP are available, but more appropriate for traders who are trading larger volumes. For a comparison you can check out our Accounts Overview page here. We’ll look at what you’ll need to open an account later on.
After selecting your account type, you should also be looking at the trading conditions that are on offer, like the spreads & swaps which will be directly related to your costs, and the margin and leverage which will determine how you trade!
First, let’s look at the different types of spreads available, which are called fixed and floating.
Fixed spreads are generally provided by brokers that are defined as 'market makers'. Rather than transferring your trades directly to the interbank market, they’ll match them up with other trades internally. This means that they’re ‘making the market’. Due to this, they offer fixed spreads as it’s not going to the external market.
In contrast, some brokers offer floating spreads, whereby your trades are passed on to a liquidity provider. This means that you’re getting market prices with a 'mark-up' which is generally where a broker will make their money from. These spreads tend to be lower than those you would incur with a 'fixed spread' broker.
Because of this, brokers with floating spreads have a general incentive to make sure that their clients trade sustainably, so that they can keep profiting. It’s not in their best interest for a client to come, lose their money and then leave. Sustainability is key here! Now, working work a broker that provides floating spreads also has disadvantages. At times of high market volatility spreads may widen which is done to account for the significant market movement that is occurring.
3. Trading Instruments.
It’s all about the type of trader you want to be and the flexibility that you need. So, another important factor when selecting your broker is the instruments that they offer. Some brokers will only be offering access to trade major forex pairs. Others may have a plethora of different asset classes available, from forex to crypto with metals, stocks, indices and bonds thrown in!
When you’re making this kind of decision it’s important to have your trading strategy defined and understood so that you can choose a broker which will give you everything you need.
4. Trading Support.
When you’re ready to start forex trading, identifying the support available to you is really important. You need to consider that you may not be based in the same country as your broker and will therefore need to have access to a support team able to help you, in your native language.
Looks for a broker that offers 24/5 support at the minimum so that should there be an issue, the team will be on hand to help.
5. Trading Platform.
As we’ll discuss in more detail later, for you to be able to get access to trade forex, you’ll need to use a Forex Trading platform!
We actually offer our clients the world-renowned MT4 and MT5 platform! It has a wealth of tools available to enhance your trading including the ability to use custom indicators, charts and a notification system so you don’t miss any trading opportunities.
6. Trading Account.
As we briefly discussed earlier, you’ll need a trading account to start forex trading. To open an account with your broker you’ll also need to submit some documentation so that we can verify who you are.
We’ll guide you through the process when you come to the point of opening a live account, but just as an overview, we’ll need an identification document and your proof of address to open your account.
7. Trading Funds.
You’ve probably gathered that you’ll need to make an investment in order to start trading forex! When you’ve opened your account you’ll need to make a deposit using one of the deposit methods available to our clients.
It’s important to note that a good broker will have a variety of options available to you.
Forex Brokers : What They Are and How They Work.
Every day there’s trillions of dollars traded on the Forex Market, making it the largest financial market in terms of sheer volume traded. However, this used to only be available to the likes of big banks, financial institutions, huge corporations, and hedge funds. As technology has developed though, smaller investors like individual traders can now access the market and become retail traders! This has all been made possible by the existence of Forex Brokers.
As we’ve already explored, a forex trade is effectively selling one currency while simultaneously buying another. What a forex broker does is basically connect a trader with a buyer for the currency they’re selling and vice-versa. So, what makes your trade possible is the broker matching your trade with their other traders or transferring it to the interbank market where a match can be found!
Without your forex broker being there, you’d never be able to get access to the interbank market as you need a really big capital requirement to do so. Your forex broker actually has this capital requirement and so can place the trade on your behalf.
Thanks to leverage, where you control more funds that you have actually invested, it allows you to make bigger trades. It’s the forex broker that offers you this leverage so, they use their own capital to open the trade, meaning you can participate in the forex market!
Forex Trading Apps , Platforms and Websites : What You Need to Know.
In the section we’re going to be looking into the different software available to you as a forex trader. We’ll first look at some forex trading apps available to enhance your trading, then we’ll move into exploring fx trading platforms that you’ll use to trade and some useful forex trading websites to expand your knowledge and get economic data information.
Forex Trading Apps.
When you begin to start forex trading you’ll need to have access to market news, data, quotes, charts and even have your account readily available at the times you’ll trade. Thanks to this need, a huge range of apps have been created to be used on your mobile device.
Due to the fact that the forex market is exceptionally volatile and event driven, economic calendar apps with push notifications have become standard tools for forex traders across the world. Most brokers at this time offer their clients access to mobile apps where their clients can access their account from anywhere, ensuring that they can jump on an opportunity or exit a trade as they need to.
One of these commonly used forex trading apps is NetDania. It’s hugely popular as it gives access to forex interbank rates, real-time price quotes on stocks and commodities with information on over 20,000 financial instruments! It even offers live streaming of charts and latest market news while enabling forex traders to set price of trendline alerts to stay on top of market changes.
Another popular forex trading app is Trade Interceptor. Available on iPhone and Android devices, there’s a huge range of options for traders to access technical analysis tools and technical chart indicators. You’ll get access to live prices, charts and have the capability to set alerts for price levels, news releases and economic calendar events.
FX Trading Platforms.
An FX trading platform is a software-based interface where forex traders can buy or sell currencies online. They can be online, mobile based or downloadable and provide an interface where you’re able to access the markets to trade.
In some instances, these fx trading platforms may have been developed by your broker, however, the most widely used platform available for trading forex is the MetaTrader 4, or MT4 for short. Nearly all the forex brokers in the world will give you access to this online forex trading platform and, it’s transferrable onto all of your devices. As a Windows based program, it’ll work effectively on all Android devices. However, you’re even able to download the MT4 for Mac!
We’ve actually got a selection of dedicated MT4 pages. So, for more in-depth info about the MT4, heres some useful links:
MetaTrader 4 (MT4): the Leading Forex Trading Platform MT4 Application for Mac Users MT4 Webtrader: The Guide to Web-Based Trading.
Forex Trading Websites.
As you’re probably gathered, there is a huge amount of information of forex trading available online. So, how do you find out which resources are reliable and useful for your trading career?
Well, as we’ve explained already education is of utmost important when you’re starting to trade. So, we’d recommend websites like Baby Pips, which has a whole ‘School of Pipsology’ designed to help you learn the art of forex trading.
Other forex trading websites available are those that provide you with news and updates about what is happening in the forex market. Our blog provides this kind of information as well as sites like Bloomberg and Reuters which have huge amounts of information available.
The Forex Market: Opening Times.
When you begin to start trading you’ll probably first ask yourself ‘when is the forex market open?’ Well, there are 4 separate trading sessions in the forex market: Sydney, Tokyo, London and New York. These individual sessions and mean that the forex market opens on a Monday morning and closes on Friday night!
Check out the image below to see how the FX market timing works out.
Note: Trading hours are subject to change without prior notice. Liquidity Providers may adjust trading schedule as necessary, depending on market conditions.
You’ve probably identified that there are overlaps between the sessions, for example; at 7am (GMT) both the Tokyo and London sessions are open . This is what ensures that the forex market provides traders with 24-hour access to trade for 5 days a week (the markets close over the weekend).
Forex as a form of investment.
The investors of today have access to an extensive set of financial instruments to diversify their trading portfolio. Spanning blue chip company stocks and shares to investment in forex, the opportunities are endless. However, how do you go about deciding if you want to make a forex investment or invest elsewhere?
Well, some key factors to consider are your risk tolerance and trading style. For example, traders that are looking to make long-term investments over a period of years would be more suited to stocks. While those who are more interested in shorter-term investments with higher risks involved may be more suited to forex investing.
How to Learn Forex Trading.
We’d be extremely unrealistic if we were to assume that there is one way to learn forex trading. However, most people that start on the journey of learning to trade usually use one of the following ways:
Learning online with guides, information , and research .
Learning with a mentor or through an online course.
Copying successful traders.
Learning while you trade and through the mistakes you make .
Let’s first state that we don’t recommend number 4 on a live account! Beginning to learn forex trading is a time-consuming task and, as you are risking your own funds, we’d recommend being fully prepared before starting to trade. So, with that in mind, lets look at the first three methods of learning to trade forex.
Learning online has always been a useful tool for people wishing to hone a particular skill, and with a wealth of information online, learning to trade forex is no different. When you decide to start to learn forex, you should ensure that you’re working with a broker that offers a range of educational material to their clients. This information could be in the form of eBooks, educational videos, online articles or even webinars, where you’re able to ask questions (usually at the end) to ensure that you’ve fully understood the topic.
This method of learning allows you to do it at your own pace, to extend your knowledge into areas that you’d like to develop in and access information that may not be readily available to just anyone online.
Should you be looking for a more structured method to learn forex trading, then you may be inclined to go for an online course or work with a mentor. A good broker will also offer this option because they’re in the position to be working with a variety of educators with the knowledge and experience to help further your understanding. As an example, Tickmill offers clients the opportunity to attend in-person seminars which you can check out here.
Now, as you’re probably aware, there are millions of traders across the globe that already have that knowledge and experience in forex trading. So, people looking to learn forex trading can copy already successful traders. Again, most brokers offer this to their clients and usually have a wide range of different traders available to copy from. You can use a variety of platforms to do this.
As we mentioned previously, we don’t recommend jumping right into trading on a live account. However, by using a demo account you can trade and learn with no risk to your capital! A demo account is quite simply an account with a broker that mimics live trading conditions. You’ll be able to see the prices that brokers offer, check out how fast their execution is and, test or improve your strategy on an entirely risk-free basis. We’d recommend that you test yourself before trading with a live account.
Once you’ve decided on a learning method it’s important to then learn about the currencies you’re going to trade. New traders tend to jump straight in a trade lots of different instruments without first learning about what affects prices and the market overall.
Understanding how the instruments that you trade will have a huge impact on your success as a trader. As an example, let’s imagine you identify a currency where you can see that price has fallen significantly over the last 3 months. Using your knowledge of technical analysis, you identify that it is likely to bounce back up, so you try to 'catch the bottom'. However, if you had done more research into the currency itself, you’d see that within the country employment reports have been bad for quite a few months, meaning that the currency isn’t that likely to make a significant bounce back. If you don’t have the information about the currency itself you could find that you make mistakes in trading that could be avoided with a little research!
Now finally, one of the most important things to address when learning forex trading is the managing of risk and emotions. Imagine yourself needing to make an important decision under two different conditions: