Forex Trading For Beginners
Copyright 2008 – All Rights Reserved
by ForexShortCuts.com
1
Table of Contents
7 Introduction to Forex Trading
10 Why Trade Forex?
16 Getting Started
1 !ro"ers #ou $eed to %&oid
'1 !asic F()*+ Strategy
', Choosing #our Strategy
'6 -nderstanding Forex S.reads
' Successful Trading Ti.s
/6 Forex Trading 0 )ules of Thu1b
,2 3ealing 4ith your 5osses
,7 Forex Trading Tools
2' Su11ary
2, !($-S Cha.ter6
2
Disclaimer & Terms of Use
-7S7 Go&ern1ent )e8uired 3isclai1er - Commodity Futures Trading Commission Futures and Options trading has
large potential rewards, but also large potential risk !ou must be aware of the risks and be willing to accept them
in order to in"est in the futures and options markets Don#t trade with money you can#t afford to lose This is
neither a solicitation nor an offer to $uy%&ell futures or options 'o representation is being made that any account
will or is likely to achie"e profits or losses similar to those discussed on this web site The past performance of any
trading system or methodology is not necessarily indicati"e of future results
CFTC )-5* ,7,1 - (!)OT(*T+C,- O. &+/U-,T*D )*.FO./,'C* .*&U-T& (,0* C*.T,+' -+/+T,T+O'& U'-+1* ,'
,CTU,- )*.FO./,'C* .*CO.D, &+/U-,T*D .*&U-T& DO 'OT .*).*&*'T ,CTU,- T.,D+'2 ,-&O, &+'C* T(*
T.,D*& (,0* 'OT $**' *3*CUT*D, T(* .*&U-T& /,! (,0* U'D*.-O.-O0*. CO/)*'&,T*D FO. T(* +/),CT, +F
,'!, OF C*.T,+' /,.1*T F,CTO.&, &UC( ,& -,C1 OF -+4U+D+T! &+/U-,T*D T.,D+'2 ).O2.,/& +' 2*'*.,- ,.*
,-&O &U$5*CT TO T(* F,CT T(,T T(*! ,.* D*&+2'*D 6+T( T(* $*'*F+T OF (+'D&+2(T 'O .*).*&*'T,T+O' +&
$*+'2 /,D* T(,T ,'! ,CCOU'T 6+-- O. +& -+1*-! TO ,C(+*0* ).OF+T O. -O&&*& &+/+-,. TO T(O&* &(O6'
'o representation is being made that any account will or is likely to achie"e profits or losses similar to those
shown +n fact, there are fre7uently sharp differences between hypothetical performance results and the actual
results subse7uently achie"ed by any particular trading program (ypothetical trading does not in"ol"e financial
risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading
,ll information on this website or any e-book obtained from this website is for educational purposes only and is not
intended to pro"ide financial ad"ise The same applies to any communications recei"ed as a subscriber to any
newsletter a"ailable from this site
,ny statements about profits or income, e8pressed or implied, does not represent a guarantee !our actual trading
may result in losses as no trading system is guaranteed !ou accept full responsibilities for your actions, trades,
profit or loss, and agree to hold Fore8&hortcutscom and any authori9ed distributors of this information harmless in
any and all ways
,ll rights reser"ed The use of this ebook constitutes acceptance of this agreement
This eboo" 1ay be freely distributed9 but you cannot 1odify9 edit or change its
contents 4hatsoe&er7 Website and ne4sletter .ublishers 1ust .ro.erly accredit
ForexShortCuts7co1 4ith a li&e hy.erlin" as the source and o4ner of the eboo"7
3
% :uic" Word !efore We Start777
Forex Trading is li"e golf777
, lot of people do it : but only a select few can play it with any kind of skill (r consistency7
,nd, like golf, it#s a tough ;game< at the best of times *"ery shot counts : and the landscape can be
"ery unforgi"ing ,nd that#s almost too simplistic an e8ample : golf may be difficult to master, but at
least it#s not a "olatile en"ironment
Forex is &olatile7 Things can happen fast #ou can lose your money 0 F%ST7
Or : if you know what you#re doing, you can make money fast as well +t#s =ust that getting to that point
can take literally years of diligent practice, training and e8perience in general
The botto1;line is that this isn<t a get;rich;8uic" strategy7 Go =oin the latest >5> cra?e if you<re
loo"ing for @insta;4ealthA7
!es, some ha"e made millions when they started out with a mere pittance in capital outlay : solely
from fore8 trading /aybe that will be your story Statistically s.ea"ing9 though9 the chances of that
aren<t too good7 +t#s a rare few who#"e de"eloped a system capable of such : and stuck to it with the
necessary discipline to compound their profits o"er and o"er again in order to make ;real< money
Why such a negative outlook?
Isn<t this "ind of a dreary 4ay to start out a beginner<s guide to
trading Forex?
!es, it is, actually $ut it#s important that + paint an accurate9 realistic .icture in your mind so that
you can approach this like a calculated, profit-minded business-person who#s focused on a"eraging
more profitable trades than losses
'ot a cash-cra9ed opportunist who#s only real concern is big houses, fancy cars, pri"ate =ets, etc 'ow :
that said : I thin" you<ll be &ery excited about what + ha"e to say about realistic results from fore8
trading on the ne8t page
4
I<&e 1ade it clear that Forex Trading is a difficult endea&or to succeed 4ith7
There are hundreds of thousands of factors at work at any gi"en moment that affect the currency
prices, and getting into a trend before it starts and getting out before it tanks isn#t =ust a skill : it<s a
science7
,nd normally, this would take you years of practice, losses and likely a lot of frustration before you
de"eloped an accurate sense of how to identify or predict market conditions confidently enough to
profit from them consistently
$ut the key word there is nor1ally
Thanks to today#s technology >and good ol# capitalism?, the tables ha"e turned !ou can realistically
make a consistent profit e"ery month from fore8 trading even if you#re a total and complete newbie
Bo4?
$y using Forex Trading Syste1s de"eloped by successful traders !ou simply follow along and trade
based on their pre-set conditions >if ;, @ $, then C<? - or let their trading management programs trade
for you This is a new de"elopment that#s only been .ossible recently due to the emergence of high-
speed internet and trading software titles that are adaptable to Ard-party programs
The good, reputable trading systems are tested, backtested and re-tested continually to ensure that
they#re producing a consistent win percentage >eaning that you can literally "no4 nothing and still
turn a .rofit if you follo4 a good syste1 letter by letter7
$ut a word of warningB
There#s a lot of hacks, scam-artists and ;marketers turned fore8 traders< out there hawking alleged
trading systems, e8pert ad"isor programs and software that can supposedly make money for you >while
you sleep, of course? ,nd ob"iously, many ha"e been suckered by the cle"er marketing and the
results are horrific9 so1eti1es financially de&astating777
That#s why you need to make sure that you only in"est in a trading system that#s been de"eloped by
someone who#s a fore8 trader F+.&T : and internet marketer second #ou can see our to. rated Forex
Trading Syste1 right here CC
5
+f you#"e printed out this ebook, then you can see our recommended Fore8 trading system by typing in
the following web addressB
htt.DEE4447forexshortcuts7co1Eto.rated7.h.
>y .ersonal suggestion is to chec" out that trading syste1 right no49 boo"1ar" it and then
consider de1o;trading it after you<re finished reading this boo"7
!ou always want to test any trading system with "irtual funds in your demo account before trading
actual capital /y suggestion is to demo-trade the system on a daily basis for at least two weeks : and
keep in mind that our top trading system offers an C-week ;either it makes you a profit or your money
back< guarantee, so the only thing at ris" is your ti1e if you test it on a demo account
Using a reputable trading system is about the only forex @shortcutA that exists +t#s the only e8ception
to an otherwise "ery difficult >yet potentially rewarding? form of in"estment
$o4 let<s co&er the basics of forex trading 0 ta"ing a loo" at 4hat forex is9 ho4 it 4or"s and 4hy
so1e earn fortunes F4hile 1ost actually lose 1oneyG777
6
+ntroduction
+f you were wonderingD forex trading is nothing 1ore than direct access trading of
different ty.es of foreign currencies +n the past, foreign e8change trading was
mostly limited to large banks and institutional traders howe"erD recent technological
ad"ancements ha"e made it so that small traders can also take ad"antage of the many
benefits of fore8 trading =ust by using the "arious online trading platforms to trade
The currencies of the world are on a floating e8change rate, and they are always
traded in pairs *uro%Dollar, Dollar%!en, etc ,bout CE percent of all daily transactions
in"ol"e trading of the ma=or currencies
Four ma=or currency pairs are usually used for in"estment purposes They areB *uro
against U& dollar, U& dollar against 5apanese yen, $ritish pound against U& dollar, and
U& dollar against &wiss franc .ight now + will show you how they look in the trading
marketB *U.%U&D, U&D%5)!, 2$)%U&D, and U&D%C(F ,s a note you should know that
no di"idends are paid on currencies
+f you think one currency will appreciate against another, you may e8change that
second currency for the first one and be able to stay in it +n case e"erything goes as
you plan it, e"entually you may be able to make the opposite deal in that you may
e8change this first currency back for that other and then collect profits from it
Transactions on the FO.*3 market are performed by dealers at ma=or banks or FO.*3
brokerage companies FO.*3 is a necessary part of the world wide market, so when
you are sleeping in the comfort of your bed, the dealers in *urope are trading
currencies with their 5apanese counterparts
Therefore, it is reasonable for you to belie"e that the FO.*3 market is acti"e FG hours
a day and dealers at ma=or institutions are working FG%H in three different shifts
7
Clients may place take-profit and stop-loss orders with brokers for o"ernight
e8ecution
)rice mo"ements on the FO.*3 market are "ery smooth and without the gaps that you
face almost e"ery morning on the stock market The daily turno"er on the FO.*3
market is somewhere around IJF trillion, so a new in"estor can enter and e8it
positions without any problems
The fact is that the FO.*3 market ne"er stops, e"en on &eptember JJ, FKKJ you could
still get your hands on two-side 7uotes on currencies The currency market is the
largest and oldest financial market in the world +t is also called the foreign e8change
market, F3 market for short +t is the biggest and most li7uid market in the world, and
it is traded mostly through the FG hour-a-day inter-bank currency market
6hen you compare them, you will see that the currency futures market is only one
per cent as big Unlike the futures and stock markets, trading currencies is not
centered on an e8change Trading mo"es from ma=or banking centers of the U& to
,ustralia and 'ew Lealand, to the Far *ast, to *urope and finally back to the U& it is
truly a full circle trading game
In the .ast9 the forex inter;ban" 1ar"et 4as not a&ailable to s1all s.eculators
because of the large 1ini1u1 transaction si?es and strict financial re8uire1ents7
$anks, ma=or currency dealers and sometimes e"en "ery large speculator were the
principal dealers Only they were able to take ad"antage of the currency market#s
fantastic li7uidity and strong trending nature of many of the world#s primary currency
e8change rates
Today, foreign e8change market brokers are able to break down the larger si9ed
inter-bank units, and offer small traders like you and me the opportunity to buy or
sell any number of these smaller units These brokers gi"e any si9e trader, including
8
indi"idual speculators or smaller companies, the option to trade at the same rates and
price mo"ements as the big players who once dominated the market
,s you can see, the foreign e8change market has come a long way $eing successful at
it can be intimidating and difficult when you are new to the game -et this be your
comprehensi"e guide to being successful in the fore8 market
Chapter Summary:
• Forex investing was normally reserved solely for banks and the very wealthy due to the large minimum
transaction requirements. Recent advancements in technology have made it possible for anyone to trade forex.
• Forex is the largest and oldest market in the world, with an average daily turnover of approximately $1. trillion
• !he Forex market is active " hours a day
##############################################################################
Need a Trading System That Actually Generates Consistent Profits
See our top!rated forex trading system " fully guaranteed or your money bac# $$
OR
Need a %eliable Trading Platform &ith Tight Spreads ' Real Support
Start Trading (ith as little as )*++ ,S- " This is .ur Top!%ated Trading Platform $$
##############################################################################
9
Why Trade F()*+?
The cash%spot FO.*3 markets possess certain uni7ue attributes that offer an
unmatched potential for profitable trading in any market condition or any stage of the
business cycle +t lea"es one to wonder why botherM The answer to that is "ery simple
+t boastsB
% ',;hour 1ar"etB , trader has the chance to take ad"antage of all of the profitable
market conditions at any time which means that there is no waiting for the #opening
bell# like the e8change
Bighest li8uidityB The FO.*3 market is the most li7uid market in the world That
means that a trader can enter or e8it the market whene"er they want during almost
any market condition minimal e8ecution barriers or risk and no daily trading limit
Bigh le&erageD , le"erage ratio of up to GKK is normal when compared to a le"erage
ratio of F >EKN margin re7uirement? in the e7uity markets Of course, this makes
trading in the cash%spot fore8 market awkward a swell because it makes the risk of
the down side loss much higher in the same way that it makes the profit potential on
the upside much prettier
5o4 transaction costB The retail transaction cost >the bid%ask spread? is actually less
than KJN >JK pips? under the normal market conditions ,t larger dealers, the spread
could be less than E pips, and may e8pand a great deal in fast mo"ing markets
%l4ays a bull 1ar"etD , trade in the FO.*3 market means selling or buying one
currency against another +n essence, a bull market or a bear market for a currency is
defined in terms of the outlook for "alue against other currencies +f the outlook is
positi"e, you get a bull market where a trader profits by buying the currency against
other currencies (owe"er, if the outlook is negati"e, we ha"e a bull market for other
currencies and a trader profits being forced to selling the currency against other
10
currencies
+n either case, there is always a bull market trading opportunity for a trader
Inter;ban" 1ar"etD The foundation of the FO.*3 market consists of a global network
of dealers that communicate and trade with their clients through electronic networks
and telephones There are no organi9ed e8changes like in futures that are there to
ser"e as a central location to facilitate transactions the way the 'ew !ork &tock
*8change ser"es the e7uity markets
The FO.*3 market actually works a lot like the way the ',&D,4 market in the United
&tates operates, and because of this, it is also referred to as an o"er the counter or
OTC market
$o one can corner the 1ar"etD The FO.*3 market is so large and has so many
participants that no single trader, e"en a central bank, can control the market price
for an e8tended period of time *"en when inter"entions are conducted by mighty
central banks are getting to be increasingly ineffectual and short-li"ed This means
that central banks are becoming less and less inclined to inter"ene to manipulate
market prices
It is -nregulatedD The FO.*3 market is seen as an unregulated market although the
operations of ma=or dealers like commercial banks in money centers are regulated
under the banking laws
The daily operations of retail FO.*3 brokerages are not regulated under any laws or
regulations that are specific to the FO.*3 market, and in fact, many of these types of
establishments in the United &tates do not e"en report to the +nternal .e"enue
&er"ice
The currency futures and options that are actually traded on e8changes like Chicago
11
/ercantile *8change >C/*? are under the regulation in the same manner that other
e8change-traded deri"ati"es are regulated
There are many different ad"antages to trading fore8 instead of futures or stocks,
such asB
17 5o4er >argin
5ust like futures and stock speculation, a fore8 trader has the ability to control a
large amount of the currency basically by putting up a small amount of margin
(owe"er, the margin re7uirements that are needed for trading futures are usually
around EN of the full "alue of the holding, or EKN of the total "alue of the stocks, the
margin re7uirements for fore8 is about JN For e8ample, margin re7uired to trade
foreign e8change is IJKKK for e"ery IJKK,KKK
6hat this means is that trading fore8, a currency trader#s money can play with E-times
as much "alue of product as a futures trader#s, or EK times more than a stock trader#s
When you are trading on 1argin9 this can be a &ery .rofitable 4ay to create an
in&est1ent strategy9 but it<s i1.ortant that you ta"e the ti1e to understand the
ris"s that are in&ol&ed as 4ell7
!ou should make sure that you fully understand how your margin account is going to
work !ou will want to be sure that you read the margin agreement between you and
your clearing firm !ou will also want to talk to your account representati"e if you
ha"e any 7uestions
The positions that you ha"e in your account could be partially or completely
li7uidated on the chance that the a"ailable margin in your account falls below a
predetermined amount
!ou may not actually get a margin call before your positions are li7uidated
12
$ecause of this, you should monitor your margin balance on a regular basis and utili9e
stop-loss orders on e"ery open position to limit downside risk
'7 $o Co11ission and $o *xchange Fees
6hen you trade in futures, you ha"e to pay e8change and brokerage fees Trading
fore8 has the ad"antage of being commission free This is far better for you Currency
trading is a worldwide inter-bank market that lets buyers to be matched with sellers
in an instant
*"en though you do not ha"e to pay a commission charge to a broker to match the
buyer up with the seller, the spread is usually larger than it is when you are trading
futures
For e8ample, if you are trading a 5apanese !en%U& Dollar pair, fore8 trade would
ha"e about a A point spread >worth IAK? Trading a 5! futures trade would most likely
ha"e a spread of J point >worth IJK? but you would also be charged the broker#s
commission on top of that This price could be as low as IJK in-and-out for self-
directed online trading, or as high as IEK for full-ser"ice trading +t is howe"er, all
inclusi"e pricing though
!ou are going to ha"e to compare both online fore8 and your specific futures
commission charge to see which commission is the greater one
/7 5i1ited )is" and Guaranteed Sto.s
6hen you are trading futures, your risk can be unlimited For e8ample, if you thought
that the prices for -i"e Cattle were going to continue their upward trend in December
FKKA, =ust before the disco"ery of /ad Cow Disease found in U& cattle
The price for it after that fell dramatically, which mo"ed the limit down se"eral days
in a row !ou would not ha"e been able to lea"e your position and this could ha"e
wiped out the entire e7uity in your account as a result ,s the price =ust kept on
13
falling, you would ha"e been obligated to find e"en more money to make up the
deficit in your account
,7 )ollo&er of Hositions
6hen futures contracts e8pire, you ha"e to plan ahead if you are going to rollo"er
your trades Fore8 positions e8pire e"ery two days and you need to rollo"er each
trade =ust so that you can stay in your position
27 ',;Bour >ar"et.lace
6ith futures, you are generally limited to trading only during the few hours that each
market is open in any one day +f a ma=or news story breaks out when the markets are
closed, you will not ha"e a way of getting out of it until the market reopens, which
could be many hours away
Fore8, on the other hand, is a FG%E market The day begins in 'ew !ork, and follows
the sun around the globe through *urope, ,sia, ,ustralia and back to the U& again
!ou can trade any time you like /onday-Friday
67 Free 1ar"et .lace
Foreign e8change is perhaps the largest market in the world with an a"erage daily
"olume of U&IJG trillion That is GO times as large as all the futures markets put
togetherP 6ith the huge number of people trading fore8 around the globe, it is "ery
hard for e"en go"ernments to control the price of their own currency
Fore8 trading is simply a great alternati"e to futures and commodities trading Unless
you are a broker, you will likely want to get some help in fore8 trading to help ensure
that your "enture is successful ,s with all trading, there are always some risks
in"ol"ed, but if you follow this comprehensi"e to successful fore8 trading, the whole
process should be much easier -etQs get startedP
14
Chapter Summary:
• Forex is appealing overall as a high#leverage, high#risk investment environment where large#scale profits are
possible in short periods of time
• Forex is live for " hours a day, $ days a week, leaving more time and flexibility to trade in comparison to futures
or stocks
• Risks can be minimi%ed with stop#loss rules and other similar exit strategies
##############################################################################
Copy a Trader &ho /a#es %oughly )0+++ 12ery -ay by Forex Trading...
This is 3is Automated Trading System $$
OR
&ant to .pen a Forex Account in the Next 4 /inutes .r 5ess
Start Trading (ith as little as )*++ ,S- " -edicated Personal Support 6ncluded $$
##############################################################################
15
Getting Started
6hen it comes to getting started in fore8 trading, there are 7uite a few things
that you ha"e to consider first The first thing that you need to do is to find and
choose the right broker to help you in making your trades
6hen you are choosing a $roker you need to know that there are many FO.*3 brokers
to choose from, =ust as in any other market (ere are some things that you need to
look for in making your choiceB
5o4 S.reads
The spread, which is calculated in pips, is the difference between the price at which
a currency can be bought and the price at which it can be sold at any specific point in
time FO.*3 brokers don#t charge a commission, so this difference is how they are
going to make money
6hen you are comparing brokers, you will find that the difference in spreads in FO.*3
is as large as the difference in commissions in the stock arena 6hat this means is
that lower spreads will sa"e you money and therefore, look for a broker that offers
low spreads
:uality of the Institution
Unlike e7uity brokers, FO.*3 brokers are usually attached to large banks or lending
institutions because of the large amounts of capital that is re7uired ,lso, FO.*3
brokers should be registered with the Futures Commission /erchant >FC/? as well as
regulated by the Commodity Futures Trading Commission >CFTC?
!ou can find this and other financial information and statistics about a FO.*3
brokerage on the companyQs website or the website of its parent company !ou will
want to make sure that your broker is backed by a reliable institution
16
*xtensi&e Tools and )esearch
FO.*3 brokers offer many different trading platforms for their clients =ust like
brokers in other markets do These different trading platforms often show real-time
charts, technical analysis tools, real-time news and data, and e"en support for the
"arious trading systems
$efore you commit to any one broker in specific, you will need to be sure to re7uest
free trials so that you can test their different trading platforms $rokers usually
pro"ide technical as well as fundamental commentaries, economic calendars, and
other research as a means of assisting you $asically, you will want to find a broker
who will gi"e you e"erything that you need to succeed
% Iariety of 5e&erage (.tions
-e"erage is a key necessity in FO.*3 trading because the price de"iations >the sources
of profit? are =ust set at mere fractions of a cent -e"erage, which is e8pressed as a
ratio between total capitals that is a"ailable to actual capital, which is the amount of
money a broker will lend you for trading
For exa1.le9 4hen you ha&e a ratio of 100D19 this 1eans that your bro"er 4ould
lend you J100 for e&ery J1 of actual ca.ital7 /any brokerage firms will offer you as
much as FEKBJ
Of course, you need to remember that lower le"erage also means lower risk of a
margin call, but it also means that you will get a lower bang for your buck >and "ice-
"ersa? $asically if you ha"e limited capital, you need to make sure that your broker
offers high le"erage
+f capital is not a problem, you can rest assured that any broker that has a wide
"ariety of le"erage options should suffice , "ariety of options lets you "ary the
amount of risk you are willing to take For e8ample, less le"erage >and therefore less
risk? may be preferable if you are dealing with highly "olatile >e8otic? currency pairs
17
%ccount Ty.es
/any brokers will offer you two or more types of accounts The smallest account is
known as a mini account and it re7uires you to trade with a minimum of maybe IAKK
This offers you a high amount of le"erage >which you need in order to make money
with so little initial capital? The standard account allows you to trade at a "ariety of
different le"erages, but it also re7uires a minimum initial capital of IF,KKK to get you
started
-astly, there are premium accounts, which often re7uire significant amounts of
capital to get you started +t also lets you use different amounts of le"erage and often
offer additional tools and ser"ices !ou will need to make sure that the broker you
choose has the right le"erage, tools, and ser"ices that are rele"ant to the amount of
capital that you are able to work with
Chapter Summary:
• &everage is an important factor if you have low initial capital to work with
• &ook for reputable firms with low spreads
Copy a Trader &ho /a#es %oughly )0+++ 12ery -ay by Forex Trading...
This is 3is Automated Trading System $$
OR
&ant to .pen a Forex Account in the Next 4 /inutes .r 5ess
Start Trading (ith as little as )*++ ,S- " -edicated Personal Support 6ncluded $$
18
!ro"ers That #ou $eed to %&oid
5ust like there are brokers that you want, there are also brokers that you will want to
stay away from For e8ample brokers who are prone to prematurely buying or selling
near preset points >commonly referred to as sniping and hunting? are trifling things
that are committed by brokers who only seek to increase profits
Ob"iously, no broker would actually admit to doing this, but there are ways to know if
a broker has committed this offense
Unfortunately, the only way that you can really determine which brokers do this and
which brokers don#t is to talk to fellow traders There is no actual list or organi9ation
that reports this kind of acti"ity The point here is that you ha"e to talk to others in
person or "isit online discussion forums to find out who is an honest broker
Strict >argin )ules
6hen you are trading with borrowed money, your broker should ha"e a say in how
much risk you are able to take 6ith this in mind, your broker can buy or sell at its
discretion, which can be a really bad thing for you
-et#s =ust say that you ha"e a margin account, and your position takes a headlong
nosedi"e before it begins to rebound to all-time highs *"en if you ha"e enough cash
to co"er it, some brokers will li7uidate your position on a margin call at that low This
action on their part can cost you dearly !ou talk to others in person or "isit online
discussion forums to find out who the honest brokers are
&igning up for a FO.*3 account is a great deal like getting an e7uity account The only
ma=or difference is that, for FO.*3 accounts, you are obligated to sign a margin
agreement
This agreement basically says that you are trading with borrowed money, and,
19
because of this the brokerage firm has the right to interfere with your trades in order
to protect its interests Once you sign up, all you ha"e to do is fund your account and
you#ll be ready to trade right away
Chapter Summary:
• 'sk other traders (on forex forums or web communities) about who to use as a broker.
• *ay close attention to anything you sign, especially regarding margin rules
##############################################################################
Copy a Trader &ho /a#es %oughly )0+++ 12ery -ay by Forex Trading...
This is 3is Automated Trading System $$
20
!asic F()*+ Strategy
Technical analysis and fundamental analysis are the two basic areas of strategy
in the FO.*3 market which is the e8act same as in the e7uity markets (owe"er,
technical analysis is by far the most common strategy that is used by indi"idual
FO.*3 traders (ere is a brief o"er"iew of both forms of analysis and how they
directly apply to fore8 tradingB
Funda1ental %nalysis
+f you think it#s hard enough to "alue one company, you should try "aluing a whole
country instead Fundamental analysis in the fore8 market is often an e8tremely
difficult one, and it#s usually used only as a means to predict long-term trends
(owe"er it is important to mention that some traders do trade short term strictly on
news releases There are a lot of different fundamental indicators of the currency
"alues released at many different times (ere are a few of them to get you startedB
• 'on-farm )ayrolls
• )urchasing /anagers +nde8 >)/+?
• Consumer )rice +nde8 >C)+?
• .etail &ales
• Durable 2oods
!ou need to know that these reports are not the only fundamental factors that you
ha"e to watch There are also 7uite a "ariety of meetings where you can get some
7uotes and commentary that can affect markets =ust as much as any report These
meetings are often brought out to discuss any interest rates, inflation, and other
issues that ha"e the ability to affect currency "alues
*"en changes in how things are worded when addressing certain issues such as the
21
Federal .eser"e chairman#s comments on interest ratesD can cause a "olatile market
Two important meetings that you ha"e to watch out for are the Federal Open /arket
Committee and (umphrey (awkins (earings
5ust by reading the reports and e8amining the commentary, it can help FO.*3
fundamental analysts to get a better understanding of any and all long-term market
trends and also to allow short-term traders to be able to profit from e8traordinary
happenings +f you do decide to follow a fundamental strategy, you will want to be
sure to keep an economic calendar handy at all times so you know when these reports
are released !our broker may also be able to pro"ide you with real-time access to
this kind of information
Technical %nalysis
5ust like their counterparts in the e7uity markets, technical analysts of the FO.*3
trading market analy9e price trends The only real difference between technical
analysis in FO.*3 and technical analysis in e7uities is the time frame that is in"ol"ed
in that FO.*3 markets are open FG hours a day
$ecause of this, some forms of technical analysis that factor in time ha"e to be
modified so that they can work with the FG hour FO.*3 market &ome of the most
common forms of technical analysis used in FO.*3 areB
• The *lliott 6a"es
• Fibonacci studies
• )arabolic &,.
• )i"ot points
, lot of technical analysts ha"e a tendency to combine technical studies to make
more accurate predictions on your behalf >The most common method for them is
combining the Fibonacci studies with *lliott 6a"es? Others prefer to create trading
syste1s in an effort to repeatedly locate similar buying and selling conditions
22
Using a profitable trading system with a demo account for a few weeks is a great way
to get an accurate ;feel< for Fore8 Trading : without risking any of your own moneyP
Chapter Summary:
• &everage is an important factor if you have low initial capital to work with
• &ook for reputable firms with low spreads
-emo!Trade This System To See For 7ourself &hy 6t8s .ur Top!%ecommendation:
Forex Autopilot System $$
23
Choosing #our Strategy
/ost successful traders will de"elop a strategy and perfect it o"er a specific period of
time &ome people will focus on one particular study or calculation, while still some
others use broad spectrum analysis as a means of determining their trades >ost
ex.erts 4ould li"ely suggest that you try using a co1bination of both funda1ental
and technical analysis9 4ith 4hich you can 1a"e long;ter1 .ro=ections and also
deter1ine entry and exit .oints7 Of course, in the end, it is the indi"idual trader
who has to decide what works best for him
6hen you are ready to get started in the FO.*3 market, you should o.en a de1o
account and .a.er trade so that you can .ractice until you can 1a"e a consistent
.rofit7 /any people who fail ha"e a tendency to =ump into the FO.*3 market and
7uickly lose a lot of money because of a lack of e8perience +t is important to take
your time and learn to trade properly before you start committing capital
!ou also need to be able to trade without emotion !ou canQt keep track of all stop-
loss points if you don#t ha"e the ability to e8ecute them on time !ou must always set
your stop-loss and take-profit points to e8ecute automatically, and don#t change them
unless you absolutely ha"e to /ake your decisions and stick to them (ther4ise you
4ill dri&e yourself Fand your bro"ersG cra?y7
!ou should also reali9e that you need to follow the trends +f you go against the
trend, you are =ust messing with your money because the FO.*3 market tends to
trend more often than anything else and you will ha"e a higher chance of success in
trading with the trend
The FO.*3 market is the largest market in the world, and e"ery day people are
becoming increasingly interested in it $ut before you begin trading, make sure your
broker meets certain criteria, and take the time to find a trading strategy that works
24
for you
Chapter Summary:
• +hoose a system and stick to it adamantly to test for profitability , don-t .ust whimsically trade.
• Following trends is safer than betting against them.
&ant to Spot Trends 91F.%1 They Form
Chec# .ut :ohn Chen8s ;Trend Forex System< $$
25
-nderstanding Forex S.reads
Fore8 is always priced in pairs between two different types of currencies 6hen
you make a trade, you ha"e to buy one currency and sell another at the same time +f
you want to e8it the trade, you must buy%sell the opposite position For e8ample,
when you think the price of the *uro is going to rise against the U& Dollar +n order for
you to enter a trade, you will ha"e to buy *uros and sell U& Dollars
+f you want to lea"e the trade, you will ha"e to sell *uros and buy back U& Dollars
!ou will be hoping that you were right in your guess and that the e8change rate for
*U%U&D has actually risen, which means that you will get more *uros back than when
you bought them, which is how you will make a profit
These days =ust about e"ery fore8 broker is claiming to ha"e the tightest spreads in
the industry !ut 1ar"eting does ha&e the ability to be decei&ing7 The topic of
spreads in the fore8 spot market is "ery complicated and often not easy to
understand (owe"er, nothing affects your trading profitability more
S.reads are the biggest factor in your trading .rofits next to s"ill7
First of all in order to understand the spread, you need to know what it is , spread is
the difference between the ask price >the price you buy at? and the bid price >the
price you sell at? that is 7uoted in the pips +f the 7uote between *U.%U&D at a gi"en
moment is JFFFF%G, then the spread e7uals F pips +f the 7uote is JFFFFE%GK, then
the spread is going to e7ual JE pips
The s.read is ho4 bro"ers 1a"e their 1oney7 6ider spreads will result in a higher
asking price and a lower bid price The conse7uence to this is that you ha"e to pay
more when you buy and get less when you sell, which makes it more difficult to
reali9e a profit
26
$rokers generally donQt earn the full spread, especially when they hedge client
positions The spread helps to compensate for the market maker for taking on risk
from the time it starts a client trade to when the broker#s net e8posure is hedged
>which could possibly be at a different price?
&preads are important because they affect the return on your trading strategy in a big
way ,s a trader, your sole interest is buying low and selling high >like futures and
commodities trading? 6ider spreads means buying higher and ha"ing to sell lower ,
half-pip lower spread doesn#t necessarily sound like much, but it can easily mean the
difference between a profitable trading strategy and one that isnQt profitable
The tighter the s.read is the better things are going to be for you7 (owe"er tight
spreads are only meaningful when they are paired up with good e8ecution 4uality of
e8ecution will decide whether you actually recei"e tight spreads , good e8ample of
this is when your screen shows a tight spread, but your trade is filled a few pips to
your disad"antage or is mysteriously re=ected
6hen this occurs repeatedly, it means that your broker is showing tight spreads but is
effecti"ely deli"ering wider spreads .e=ected trades, delayed e8ecution, slipping,
and stop-hunting are strategies that some brokers use to get rid of the promise of
tight spreads
&preads should always be considered in con=unction with depth of book Oddly
enough, when it comes to economies of scale, fore8 doesn#t e"en act like most other
markets On the inter-bank market, for e8ampleD the larger the ticket si9e, the larger
the spread is &o when you see a J-pip spread on an *C' platform, you ha"e to
wonder if that spread "alid for a IF/, IE/ or IJK/ trade, which it probably isnQt +n
many cases, the tight spread that is offered applies only to a capped trade si9es that
are "ery inade7uate for most of the common trading strategies
&pread policies change a great deal from broker to broker, and the policies are often
27
difficult to see through This certainly makes comparing brokers much more difficult
&ome brokers actually offer fi8ed spreads that are guaranteed to remain the same
regardless of market li7uidity $ut since fi8ed spreads are traditionally higher than
a"erage "ariable spreads, you are paying an insurance premium during most of the
trading day so that you can get protection from short-term "olatility
Other brokers offer traders "ariable spreads depending on market li7uidity &preads
are tighter when there is good market li7uidity but they will widen as li7uidity dries
up 6hen it comes to choosing between fi8ed and "ariable rates, the choice depends
on your indi"idual trading pattern +f you trade primarily on news announcements that
you hear, you may be better off with fi8ed spreads $ut only if 7uality of e8ecution is
good
&ome brokers ha"e different spreads for different clients based on their accounts For
e8ampleD those clients that ha"e larger accounts or those who make larger trades may
recei"e tighter spreads, while the clients that are referred by an introducing broker
might recei"e wider spreads in order to co"er the costs of the referral &ome offer the
same spreads to e"eryone
)roblems can come up when you are trying to learn about a company#s spread policy
because this information, along with information on trade e8ecution and order-book
depth is rather difficult to get $ecause of this, many traders get caught up in all of
the promises they hear, and take a broker#s words at face "alue This can be
dangerous The only real 4ay to find out is to try out &arious bro"ers or tal" to
those 4ho ha&e7
Chapter Summary:
• /preads are complicated, but they directly effect your profits. !ake the time to shop around.
28
Successful Trading Ti.s
There is no doubt that trading re7uires more than a few 7uick tips for success
!ou need e8perience, fortitude, capital and, abo&e all, a solid trading syste1
(owe"er, for the a"erage beginner and those who perhaps are losing their focus
because of significant draw-downs, keeping things simple can help to introduce much
needed focus into your trading
To that end, here are some tips that you can use for trading that can help you get a
handle on these e8citing marketsB
17 $e&er add to a .osition that is losing7
'7 %l4ays deter1ine a sto. and a .rofit ob=ecti&e before you start entering a
trade7 )lace stops that are based on market information, and not your account
balance +f a RproperR stop is too e8pensi"e, it isnQt worth it to make the trade
/7 )e1e1ber the .o4er of a .osition7 #ou should ne&er 1a"e a 1ar"et =udg1ent
4hen you ha&e a .osition7
,7 #our decision to exit a trade 1eans that you are able to .ercei&e changing
circu1stances7 !ou shouldnQt think you can pick a price, e8it at the market
27 In a !ull 1ar"et9 you ne&er 4ant to sell a dull 1ar"et9 in !ear 1ar"et9 you
should certainly ne&er buy a dull 1ar"et7
67 There are ti1es9 due to a lac" of li8uidity9 or excessi&e &olatility9 4hen you
should not trade at all7
29
77 Trading syste1s that 4or" in an u. 1ar"et 1ay not 4or" in a do4n 1ar"et7 +t is
good to know this and remember it
K7 There are at least three ty.es of 1ar"ets li"e u. trending9 range bound9 and
do4n trading9 and you should ha&e a different trading strategy for each7
7 -. 1ar"et and do4n 1ar"et .atterns are %5W%#S there9 and it is only that one
is al4ays 1ore do1inant7 +n an up market, for e8ample, it is "ery easy to take sell
signal after sell signal, only to be stopped repeatedly &elect trades that mo"e along
with the trend
107 % buy signal that fails is really =ust a sell signal7 % sell signal that fails is a buy
signal7
117 It<s al4ays easier to enter a losing trade7
1'7 3uring the blo4out stage of the 1ar"et9 u. or do4n9 the ris" 1anagers are
usually issuing 1argin call .osition li8uidation orders7 They don#t generally check
the screen for o"erbought or o"ersoldD they =ust keep issuing li7uidation orders +t is
best to make sure that you don#t stand in the way
1/7 ItLs good to be su.erstitiousM in that you shouldnLt trade if so1ething bothers
you7
1,7 !uy the ne4s that you hear9 sell the factual ne4s7
127 $e4s is only i1.ortant 4hen the 1ar"et doesn<t react in the direction of the
ne4s7
167 It hel.s for you to read today<s .a.er to1orro47 6hen you read yesterday#s
paper each day with the knowledge of what the market already did, it will remind you
30
that what happened yesterday has nothing to do with what will happen today
177 #ou should ne&er enter a ne4 trade in the direction of a ga.7 $e&er let the
1ar"et 1a"e you 1a"e a trade7
1K7 The first and last tic" are al4ays the 1ost ex.ensi&e7 Get in late and out
early7
17 When e&eryone else is in9 it<s ti1e for you to get out7
'07 $e&er trade 4hen you are sic"7
'17 #ou should only change your unit of trading under a .lan of attained goals7 !ou
should also ha"e a plan for reducing si9e when your trading is cold or market "olume
is down
''7 Confidence is a bad thing7 .emember, you really don#t know anything unless you
are a broker !ou need to e8pect the une8pected ,lways know your position and e8it
your trade immediately whene"er you feel uneasy
'/7 >easure yourself by .rofitable consecuti&e days and not by indi&idual trades7
',7 The best 4ay to brea" a strea" of consecuti&e loses is to not trade for a day7
'27 3on<t sto. trading 4hen youLre on a <4inning strea"<7 ,t the same time,
howe"er, stick to your stop-loss rules and money-management strategy, and don#t
think that luck has anything to do with it !our trading system may simply be ha"ing
an optimal time-period
'67 3on<t turn three losing trades in a ro4 into six in a ro47 6hen youQre off, turn
off the screen, do something else &ticking in when you are loosing is =ust silly
31
'77 Scal.ers reduce the nu1ber of &ariables effecting 1ar"et ris" by being in a
.osition only for a fe4 seconds7 3ay traders reduce 1ar"et ris" by being in trades
for 1inutes7
'K7 If you con&ert a scal. or day trade into a .osition trade9 technically you did
not consider the ris"s of the trade .ro.erly7
'7 #ou should not 4orry about a 1issed o..ortunity7 There is always another one
=ust around the corner
/07 If you loo" for secrets in the 1ar"et you 4ill only find things that no one cares
about7 +t is better to use the tools, which will be co"ered in the ne8t section
/17 $e&er as" for so1eone else<s o.inion9 they .robably did not do as 1uch
ho1e4or" as you did any4ays7
/'7 When the 1ar"et is going u.9 you should say it aloud7 When the 1ar"et is
going do4n9 you 4ant to say that aloud too7 The reason for this is that youQd be
ama9ed at how hard it is to say what is literally going on in front of you when your
mind is full of preconcei"ed opinions
//7 Successful day trading re8uires flexibility7 !ou ha"e to do your homework so
that you can understand the full potential for both sides of the market This will allow
you to make your trades based on what the market is doing at the time of the trade
/,7 Bere is a 8uote that 4ould be good for you to re1e1berD @When you 4a"e u.9
your instincts are 4rong7A
/27 When you 1a"e a 1ista"e of disci.line9 4hine li"e a fool to anyone that 4ill
listen7 ,ny errors that are made in discipline are mistakes you will keep on making for
32
many years 6earing ashes and sack cloth may help you to e8tend the time before
you do it again
/67 If you 4hined or got fidgety 4hile you read this list9 then you share t4o
ob&ious characteristics 4ith 1any other tradersD
%7 !ou ha"e traded long enough to recogni9e that you >not the market? make
mistakes, and you try to o"ercome them
!7 This fact is awkward, you ha"e become part of the market and you can ne"er
lea"e 'o matter where life takes you, you will always check the market and you will
also always want to continue being a part of it
J For s1all accounts FJ'29000 and underG9 li"e I said before you need to trade
4ith the trend7 /any beginners look for trades that flow in any direction
6hile fore8 trading easily permits bi-directional trading, trading in the
direction of the trend impro"es your odds o"er the long run
F #ou should ha&e at least t4o accounts7 One real account and the other a
demo account -earning doesn#t stop when trading real dollars begins 1eep the
demo account and use it to test any alternati"e trades etc For e8ample, you
can shadow your real trades with identical ones in your demo account, but you
will want to widen your stops in the demo in an effort to see if you#re being too
conser"ati"e
A #ou ha&e to sto. loo"ing for leading indicators because there aren<t any7
6hile some firms make a lot of money selling software that predicts the future,
the reality is that if those products really worked, they wouldn#t be telling you
about it
G *xa1ine the daily charts9 the four;hour charts and one;hour charts are
33
there to assist you in ti1ing your trades7 6hile you are trading at AK- and JE-
minute time increments, it takes a great deal of de8terity
E 3on<t trade the ti1e fra1e that is offered7 Trade the pattern instead
.e"ersal patterns, hesitation patterns and breakout patterns show up a lot
-earn to look for the pattern in any time frame
O If you ha&e the right a1ount of 1oney9 trading t4o lots is safer than =ust
trading one7 Trading three lots is safer than two etc Trading is a big pile of
emotions, technical analysis and money management One lot alone makes it
difficult to weigh these elements in deciding to enter or e8it
H *xtre1e trading can be the 1ost conser&ati&e trading 4hen you thin" about
it7 Trading at the e8tremes increases the odds that you ha"e chosen the right
direction
C #ou should fully chec" the !ig Fi&e the dollarEyen9 euroEdollar9 S4iss francE
dollar9 euroEyen and .oundEdollar before you decide to ta"e a .osition in
any one of the17 There might be something ob"ious that youQ"e missed
S Follo4 the -.side 3o4n )ule7 +f you can turn a chart upside down and it still
looks the same, a"oid it all together
JK3on<t "ee. count of your .rofits in your first '0 trades7 Nee. trac" of the
percentage of wins instead7 Once you know you can pick direction, profits can
be increased with multi-plot trading and by using "ariations in your stops +n
other words, now is the time to get serious about your personal money
management
34
Chapter Summary:
• 0nderstand that the market cannot be predicted by anyone , it-s too complex
• Follow your trading system instead, and focus on long#term patterns rather than instant results
The .nly 5egitimate Shortcut in Forex Trading is ,sing Someone 1lse8s Proven System
Forget the 1arket 2*rophets3 and /ignals
4nstead , Use Proven Algorithms !hat 4dentify *rofitable !rends and !rade For 5ou .
We highly recommend:
/arcus 5eary8s Forex Autopilot System $$
35
Forex Trading;; )ules of Thu1b
+n this section we will be co"ering the few important rules that should ne"er be
broken in trading +f you can apply these rules consistently, and with the right amount
of discipline, you will be well on the way to being a profitable trader The following
are rules that can significantly impro"e your chances of success if they are
understood, practiced, and implemented consistently in your trading These rules
ha"e been learned the hard way, mostly through trial-and-error, and the ine"itable
mistakes that e"eryone makes when they start a trading business
Set u. and I1.le1ent s.ecific goals and ob=ecti&es
Few things are more important to your trading success than ha"ing set specific goals
and ob=ecti"es for what you are trying to achie"e +t is ama9ing to me how often we
hit our targets, meet our ob=ecti"es, and reach our goals best when we speak aloud
and write them down
For any business to be successful it must ha"e measurable ob=ecti"es that you are
actually able to achie"able +n trading, the primary ob=ecti"e is ob"iously to make
money, but it is important to ha"e other ob=ecti"es that are not strictly cash-related
6e must always remember that reward and risk go hand-in-hand in trading and that
we canQt e8pect to achie"e high returns without planning and bracing for high risk
>draw-downs?
!our ob=ecti"es and goals ha"e to be "ery specific to you, but they must also include
the following characteristics if they are going to be usefulB
T $e measurable in accordance to completion and timeframe in"ol"ed
T $e realistic and achie"able
T $e worth the time and effort in"ol"ed
T $e positi"e
36
,s an e8ample, here are some actual ob=ecti"es >)lease bear in mind that this is only
a partial list?B
T Create F new positi"e-e8pectancy trading systems each and e"ery year
T &eek to make less errors implementing your trading systems each year
T 6ork to achie"e a return to ma8imum draw-down ratio of JEBJ
T Take F weeks "acation from trading during each year
!ou should also note that only one of them is meant to be about making money, and
that has a measurable ob=ecti"e that is "ery similar to a draw-down, and it is not
guaranteed +f you know what you are trying to gain in your trading, and when you are
trying to achie"e it, the whole of your efforts will be more focused on meeting your
ob=ecti"es
This also helps to guide you to only pay attention to things you really want to achie"e
with your time and resources that you ha"e a"ailable This will also gi"e you a way
that you can effecti"ely measure the success and progress of your trading strategy
2enerally traders who ha"e well-defined ob=ecti"es will be much more successful
than those that do not ha"e pre-defined goals
Consistency and disci.line
+n order for you to be able to reali9e the full potential of your trading systems it is
"ery important that you take e"ery trading entry, ad=ust e"ery stop, and close out
e"ery trade when your pre-defined trading system says you should
This ta"es an extre1e a1ount of confidence in your trading syste1s9 good and
reliable technology9 and the un4a&ering disci.line to stic" to your trading .lan no
1atter 4hat ha..ens7
37
The good thing about ha"e an underlying assumption about being consistent and
disciplined is that you ha"e a pre-defined plan for e"ery situation that you may face
in your trading, so that you know how you are defining what being consistent really
means !our plan needs to include at least the following items in it if it is going to be
successfulB
T ,ll of your trading rules for entering, adding to, and getting out of your positions
T 6hat you are planning to do if your trading computer, internet connection, broker,
power, telephone etc fails to be of any real use or break down
T 6hat you will do if for some reason you are unable to trade
T 6hat you will do if you lose a certain percentage of your account
T 6hat you will do if all the markets are closed and you canQt get out of your current
positions
Unless you write down the answers to all these scenarios, you cannot be properly
consistent and disciplined in your approach to trading and if you lose money you will
not know if it is because you didnQt follow your plan, your plan is incomplete, your
systems do not work, or if it is because you are simply going through a losing period
5et your .rofits run
This rule is undoubtedly the key to being a successful trader +t is in these three
simple words howe"er that are easier said than done 6hen we get a profitable trade
going it is our natural fear of losing the unreali9ed cash starts and we truly want to
close it out now and 7uit while we are ahead
/ost trading actually consists of long periods of small winners and losers, that is
7uickly followed by a few huge winners that make the difference between o"erall
38
profitability and simply breaking e"en or e"en losing thanks to the trading
costs>commissions, spread, and slippage?
+t is our ability to let the huge winners become huge This is what determines how we
will perform o"erall during the course of the year The key here is in letting a winning
streak run is to ha"e trailing stops that are generally outside the daily noise of the
market so that they are not so tight as to get stopped out during UnormalQ trading
process
This means that you need to be prepared to gi"e up a relati"ely large portion of a
winning tradeQs open profit and it is also the thing that makes this so hard to
implement +n fact, we should be adding to a winner and widening stops rather than
trying to figure out how tight our stops can be to capture the largest amount of
profit
The trade has already shown you if it intends to be a winner, and the chances are it is
a low-risk idea if you were to add to the position now rather than Ustrangle itQ with
stops that are too tight
+t is "ery important that your management rules lea"e room for large winning trades,
and that the rules are pre-defined and understood before you place the trade in the
first place This will allow you to stick to your rules when you do get the big winner
Cut your losses short
This is actually the sister rule to the one mentioned abo"e, and is usually =ust as
difficult to do >e"en if it is "ery easy to define? +n the same way that profitability
comes from a few large winning trades, capital preser"ation so comes from a"oiding
the few large losers that the market will see fit to send you each year
&etting a ma8imum loss point before you enter the trade so you know ahead of time
appro8imately how much you are risking on this position is pretty straight up
39
!ou =ust ha"e to ha"e an e8it price that tells you that your trade is a losing one you
should e8it before it gets any bigger $ecause of gaps at the open, or limit mo"es in
futures we can ne"er be JKKN sure that we can get out with our ma8imum loss, but
simply ha"ing the rules, and always sticking to them will sa"e us from the nasty trades
that =ust keep on going against our position until we ha"e lost more than many
winning trades can make back
+f you ha"e a losing position that is at your ma8imum loss point, you should =ust get
out right away !ou canQt hope that it will turn around for as it isnQt common sense
$eing that trades are either winners or losers, and this one is shouting U-oserQ at you,
the chances that it will turn around and become a large winner is decidedly small
6hy would you want to risk any more money on a trade that has already shown itself
to be a loser when you could simply close it out >accept the loss? and mo"e on This
will lea"e you in a much better place financially and mentally, than holding on to your
position and hoping it will go back your way
*"en if it did do this, the mental energy and negati"e feelings from holding the losing
position are =ust not worth it this is why you should always stick to your rules and
e8it a position if it hits your stop point
$e&er add to a losing trade
One of the few trade management rules that you should ne"er break is U'e"er add to
a losing tradeQ Trades are split into winners and losers, and if a trade is a loser, the
chances of it turning right around and becoming a winner are too small for you to
want to risk more money on +f it actually is a winner disguised as a loser, why not
wait until it shows it is a winner before you add to it
+f you do this you will notice that nearly e"ery time the trade ends up hitting your
40
stop loss and does not change direction &ometimes the trade turns around before it
hits your stop and becomes a winner and you can count yourself "ery lucky if it does
&ometimes the trade hits your stop loss and then turns around and becomes a winner
and you can count yourself unlucky 6hate"er happens, it is ne"er worth adding to a
loser, hoping that it will e"entually be a winner The odds of success are =ust too low
to risk more capital in addition to the initial risk
3onLt ta"e too 1uch ris"
One of the most de"astating mistakes that any trader can make is in risking too much
of their capital on a single trade One thing is certain in trading and that is if you lose
all your capital you are out of the game indefinitely 6hy should you risk so much
when you could be pre"ented from continuingM
There is a useful saying in poker than going all-in works e"ery time but once +t is the
same thing in trading +f you risk all of your account on e"ery trade it only takes one
loser to wipe you out, so you will be out of the game at some point as it is only a
7uestion of time
+n general, you should only risk J-AN of the a"ailable capital allocated to a system on
any indi"idual trade This is calculated using the si9e and, the difference between our
entry price and our ma8imum stop price, and the amount of capital that is allocated
to the system
6ith these things combined we are almost certain ne"er to lose all of our trading
capital +n fact, the chance of us hitting our ma8imum drawdown for the year is
e8tremely low
,ll trades that you make should be of a si9e that almost seems pointless to your
future fortune +f you are worried about the si9e of a trade then it is too big and you
should use a lower amount immediately
41
.emember that longe"ity in any trading market is the key to making money by
trading !ou should trade slowly o"er a long time with minimal risk, is always
preferable to rapidly with too much risk
(nly trade .ositi&e ex.ectancy syste1s
+f you ha"e a positi"e e8pectancy trading system, the only factors that will decide
how much money you will make per year are the number of trades the system actually
makes, how much capital you allocate to the system, and how accurately you use the
trading signals
+f you do not know whether your trading system is positi"e e8pectancy then it makes
no sense for you to be trading it in the first place *8pectancy is calculated using the
profit or loss on each tradeD di"ided by the initial risk, and then taking the a"erage of
this number of a series of trades &ystems that ha"e positi"e e8pectancy will make
money most of the time and those with negati"e e8pectancy will lose money
&uccessful traders only trade systems when the odds of success are in their fa"or so
that they know that making money is the final result of accurately implementing the
system and not =ust pure luck
#ou 4ill 4ant to 1ini1i?e all of you trading business costs
&ome trading systems can offer you only marginal profitability, and trading
implementation costs >commission, spread, and slippage? can be the difference
between making a profit and making a loss
6ith the simple a"ailability of modern electronic brokers, and fully-automated trade
processing and e8ecution, it is definitely worth the effort in looking for a "ery low
cost way to implement your trading system
Bigh co11ission9 4ide s.reads9 and large a1ounts of sli..age can be lo4ered
42
drastically and easily by carefully choosing the right bro"er7 This can be the
difference between a system being useable or not )aying too much for trade
implementation is a way to lose money that you can actually a"oid
For those =ust starting out, we recommend *asy Forex as a broker%platform due to
their relati"ely affordable spreads and fee structure
*ducate yourself
+n order for you to be able to compete at the highest le"el in the trading business and
be a successful player, you must be well-educated about what you are doing $eing
well-educated means that you ha"e thoroughly researched and tested your trading
ideas and know why your trading system worked in the past and is still working
+t means that you understand all the technology and applications that your system
needs to perform with accuracy +t means understanding your goal and ob=ecti"es and
how trading will help you achie"e them +t means understanding yourself and how
your personality will affect your results
+n order to succeed as a fore8 trader, you really need to become an e8pert in your
own trading business to understand how it the dots are all connected, when it is
broken, and how it can be impro"ed This takes commitment, hard work, dedication,
and more hard work
%&oid trading scared 1oney
'o one e"er made any money trading when they had to do it to pay their bills at the
end of the month (a"ing a re7uirement to make a certain amount of dollars per
month or you will be financially in trouble is the best way + know to completely mess
up all trading discipline, rules, ob=ecti"es, and leads faster than youQd e8pect to
disaster
Trading is about taking a reasonable amount of risk in order to achie"e a good reward
43
The markets and how and when they gi"e up their profits is nothing that you can
control !ou should ne"er trade if you need the money to pay bills Do not trade if
your business and personal e8penses are not co"ered by another income stream or
cash reser"e This is how hasty decisions are made
Chapter Summary:
• /tick to your system, let your profits run, cut your losses and make attainable goals.
• 6787R trade with funds you need to live on. 96&5 trade with money you can afford to lose.
The best (ay to start trading Forex profitably is to practice on a demo account (ith a trading system you can
trust.
:e recommend using the 1asy Forex platform along with the Forex Autopilot Trading System =FAPS> , which has
a consistent win#rate.
!o open a demo account for virtual trading, you might try using Forex7ard $$
44
3ealing 4ith your losses
One of the most important rules of Fore8 trading is to keep your losses as small
as possible 6ith small Fore8 trading losses, you can outlast those times when the
market mo"es against you, and be well positioned for when the trend turns around
The one .ro&en 1ethod to "ee.ing your losses s1all is to set your 1axi1u1 loss
before you e&en o.en a Forex trading .osition7
The ma8imum loss is the greatest amount of capital that you are comfortable losing
on any one trade 6ith your ma8imum loss set as a small percentage of your Fore8
trading effort, a string of losses wonQt stop you from trading for any particular amount
of time Unlike the SEN of Fore8 traders out there who lose money because they
ha"enQt implemented wise money management rules to their Fore8 trading system,
you will be ok with this money management rule
To use as an e8ample- +f + had a Fore8 trading float of IFKKK, and + began trading with
IFKK a trade, it would be reasonable for me to e8perience three losses in a row This
would reduce my Fore8 trading capital to ICKK +t would then be decided that theyQre
going to bet IGKK on the ne8t trade because they think they ha"e a higher chance of
winning after ha"ing lost three times already
+f that trader did bet IFKK dollars on the ne8t trade because they thought they were
going to win, their capital could be reduced to IEKK dollars The chances of making
money now are practically nil because + would need to make JEKN on the ne8t trade
=ust to break e"en +f the ma8imum loss had been determined, and stuck to, they
would not be in this position
+n this case, the reason for failure was because the trader risked too much money,
and didnQt apply good money management to the play
45
.emember, the goal here is to keep our losses as small as possible while also making
sure that we open a large enough position to capitali9e on profits and minimi9e
losses 6ith your money management rules in place, in your Fore8 trading system, you
will always be able to do this
Chapter Summary:
• 7ffective money management is far more valuable than a one#off 2good day3 of trading. &earn to trade so that
you-re not risking your entire egg#basket with each move.
46
Forex Trading Tools
6hen it comes to getting started with fore8 trading, the tools that you should get will
certainly make learning and e8ecuting your trading efforts a great deal easier 5ust
like you would calculator before you bought a house, there are special tools that you
can use when trading fore8 as well
$elow you will find a list and descriptions of some of the popular tools that are used
to help you make your trading e8perience easier They are listed in terms of what
they do as well -etQs look at these right nowP
%uto1atic *xecution tool
The ,d"an9 ,utoG3 platform helps to take your Trade &tation strategy signals and also
automates their e8ecution to 2ain CapitalQs trading platform ,d"an9 ,utoG3 is
designed so that it can be powerful, fle8ible and accurate so as to meet the needs of
"arious comple8 institutional trading departments
+t is also designed to be simple and efficient for an indi"idual trader ,d"an9 ,utoG3
also helps to support the e8ecution of a "ariety of different strategies working on any
number of time frames to all of the Fore8 crosses that are made a"ailable for trading
%nalytics tools
*lliott 6a"e This is considered by most e8perienced traders to be the
purest form for getting technical analysis because *lliott
47
6a"e analysis measures in"estor psychology The 6a"e
re"eals that mass psychological swings during a natural
se7uence, which creates specific and measurable patterns
1$ ,d"isory -td
This actually offers you daily technical analysis and trading
recommendations that are based on sophisticated trading
system strategies and was de"eloped by 1eith $lack +t boasts
a successful A year track record of performance
>Technical .esearch
-imited?
T.- is a &pecialist Foreign *8change Forecasting &er"ice that
can help you with forecasting and trading analysis in the
global foreign e8change markets Technical .esearch -imited
is rated the 'o J F3 ,d"isory &er"ice by customers in AS
different countries around the world
This program is "ery powerful, and offers you real-time
analysis for market professionals who are looking forB
J ,n edge with decision making support
F Top performing market models
A To spend less II on real-time data and e8change feeds
G &tandard, and simple graphical trading support
E 0isual representation of risk to the traders managing
it
48
>+nternational
Financing .e"iew?
+F. Fore8 6atch gi"es you real-time technical analysis of the
F3 spot and options markets +t gi"es you analysts in -ondon,
'ew !ork, $oston, &an Francisco, &ingapore and &ydney Few
can actually match the depth and "ariety that this program
offers +F. speciali9es in sifting through the "ast array of
information that clutters up current market participants, and
boiling it down into its bare essentials
2lobal /arket
.esearch
2lobal /arket .esearch pro"ides price forecasting and is a
pro"en performance-based Trade &trategies for the F3
market trader !ou should check out the daily newsletter, F3
Technicals and intraday updates and analysis, through the
6eb or directly to your e-mail
This is a resource for a well-connected market professional
that has been trading and writing about markets for nearly FK
years !ou can capitali9e off of his e8perience and his
analysis, especially technical analysis, to get a real trader#s
take on current market action
GC,&T gi"es you key market information and analysis to
market participants worldwide, including central banks +t
also has an on-line ser"ice that gi"es you fundamental,
political, strategic and technical analysis FG hours a day
49
Fore8T./ is the only fore8 charting ser"ice that pairs JC
world and regional currencies and tracks them e"ery day
This means Fore8T./ lets you to trade any one of the JC
currencies against any of the other JH +t uses its uni7ue
trademarked &igma $ands and (urst Cycle ,nalysis to
correctly identifyB
• O"erbought%sold fore8 markets
• 6here trading risk is at its lowest point in time
• 6hich currency pairs are ready to trade
There is also an ,-*.T& 'ewsletter that you can get free of
charge
The /arket 0u &how is the number one program for traders
and acti"e in"estors to use today +t lets you interact on your
pc in real time as your host /arket 0u and the famous 0u
Team bring you li"e market action from the 2lobal Fore8
/arkets +t lets you watch professional traders and share
ideas !ou can alsoB
• 2et .eal Time Detailed Charts from the 0u Team
• 2et -+0* Trade &etups, *ntries, &tops and )rofit
Targets
• 2et Free ,ccess for F3 ,ccount (olders
2et ,fter (ours *ducation and &eminars
Tutorials
The Fore8 *dge is an instructional CD that tries to gi"e Fore8
traders the uni7ue tools that may =ust gi"e them an ad"antage
50
to the rest of the field +t will show you how to identify uni7ue
formations and how to structure your own indicators and
generate your own signals
(ere are a few more tools that you should check around forB
• .ate (istory Tool
• Con"erter
• *uroCon"erter
• Con"ersion -ist
• .isk )robability Calculator
• +n"estment .isks >0a.?
• Fore8 )i"ot )oint Calculator
• )ip U&D "alue Calculator
51
Su11ary
,s you can see, the buying and selling of currencies is necessary as it supports
trade between countries in today#s global marketplace and, as the ma=or world
currencies often work against one another, will continue to be There is so 1uch
1oney to be 1ade fro1 currency transactions7
The ma=or players in the market today are buying and selling in single deals and they
are often running into many millions of dollars The smaller players >as usual?, like the
brokerage houses and indi"idual brokers, are often trading in single deals that consist
of as little as one hundred thousand dollars
'owadays, you can =oin this market and, pro"iding you take the time to learn
e"erything that there is to know of the currency markets and ha"e a little bit of
capital to in"est, you can ha"e a great time and earn a "ery reasonable income from
your trading efforts when you do it online
,s you ha"e learned here you will not be able to trade on your own and will need to
use a broker, but many brokers will allow you to open an account online and start
trading with anywhere between IFEK and IJ,KKK /any of them will let you try a free
demo =ust to let you get the hang of it
FO.*3 trading is not for e"erybody but its ma=or ad"antage is that it is a highly li7uid
market that does not in"ol"e the commission payments and paperwork which many
people find a problem like with other forms of trading +t is, howe"er, a technical
market and you should not try it unless you are absolutely ready to ta"e the ti1e
to learn the basic .rinci.les that 1a"e u. this currency 1ar"et and beco1e
co1.etent in the use of so1e of the tools at your dis.osal7
+t is not necessary to become an e8pert in these markets to profit from them 6ith a
little time and effort you can 7uite easily gain enough of an understanding of the
52
currency markets to start making money online and off and, e"entually you will be
surprised at =ust how 7uickly you can become 7uite an e8pert
The other factor here is using a trading system that actually works : without that,
you#re better off going to 0egas
#ou can see a full lineu. of every .ro1inent trading syste1 right here9 re&ie4ed
4ith no holds barred and based on actual user feedbac" CC
This guide has gi"en you all of the knowledge you need to make money if you really
want to ,ll you ha"e to do is follow the ad"ice mentioned here and do your research
'e8t thing you know, you will be earning steady income from the fore8 trading market
in no time at allP
53
!($-S Cha.ter6
>anaging #our >oney 0 101
/anaging 7our /oney
:hen you start Forex trading, it is important to learn the basics of money management. 4f you .ust decide
how much money you can afford to lose on a single trade, and start trading without any system, then you
are not trading you are gambling. Forex trading is not about gambling and trying to (in the ?ac#pot@ it
is about ma#ing consistent profitable trades.
Unless you manage your money properly while trading the Forex, then you just as well play the casinos in
as !egas instead"""
/ome gamblers do make money in casinos, but many more people lose their money. !he only people who
consistently make a profit from gambling are the casino owners. 7ven when gamblers do win, the casino
owners often bribe them with free hotel rooms, free food and drink etc. to carry on gambling, and in the end
they lose all their money to the casino. &hen you trade the Forex@ you need to thin# li#e the smart
casino o(ner@ not li#e a gambler...
--------------- ARTCILE CONTINUES BELOW ---------------
"What if Earning $2,000 a DAY from Forex Trading
Was As Simple as Rnning Soft!are That"s Designed to
Emulate a Forex#$illionaire%"
'nd what if it was actually legit#
6t8s not a pipe dream. &iterally hundreds of traders are turning consistent, substantial
profits each month .ust by running one program;
Forex Autopilot System =FAPS>
F'*/ is our top#rated trading system on Forex/hortcuts.com. 'nd there8s no reason
(hy you can8t start seeing massi2e results by riding the tailcoats of others- tried < true
trading systems...
Visit FAPS or see Our Full, Unbiased Review
------------------------------
4n any enterprise, it is always easier to lose money than to make it, and trading the Forex is no different.
For example, suppose you lose $= percent of your bankroll on a trade. 6ow you have only $= percent left
to trade your way back to where you started. 'nd what happens if you lose the other $= percent on your
next trade>
54
?amblers often talk about winning streaks and losing streaks. :hen they think they are on to a winning
streak they keep on staking all of their winnings on the next roll of the dice or spin of the roulette wheel ,
and what happens> 5ou@ve guessed it, they lose all their money, and end up broke. 4n Forex trading you
can never rely on winning streaks, but losing streaks are a very real and ever present danger.
Suppose you ha2e a trading system that returns a profit A+ percent of the time. 5ou would expect A
out of 1= trades to make a profit, and B out of 1= trades to make a loss. Cowever this ratio is only true if
you average out the results of hundreds or even thousands of trades. /o if you make 1== trades, you will
probably make close to A= profitable trades and B= losing trades. Dut what if you start trading, and your first
1= trades are all losing trades>
The ans(er is you must only trade (ith a small percentage of your trading ban#roll. For example,
suppose you have a starting capital of $1=,===. /ee what will happen if you make 1= consecutive losing
trades (trading with 1= percent of your bank on the left, and $ percent of your bank on the right);
*+ Percent 4 Percent
Dank !rade Dank !rade
$1=,=== $1,=== $1=,=== $$==
$E,=== $E== $E,$== $"A$
$F,1== $F1= $E,=$ $"$1
$A,E= $AE $F,$A" $"E
$G,$G1 $G$G $F,1"$ $"=A
$$,E=$ $$E1 $A,ABF $BFA
$$,B1" $$B1 $A,B$1 $BGF
$",AFB $"AF $G,EFB $B"E
$",B=$ $"B= $G,GB" $BB
$B,FA" $BFA $G,B= $B1$
4f you started with $1=,=== in your bank, and trade with 1= percent of your bank each time, then you would
have $B,FA" # $BFA H $B,"FA left in your bank after 1= losing trades. Dut you would have $G,B= # $B1$ H
$$,EFA left in your bank if you traded with .ust $ percent each time. (9f course if you had traded with
$1,=== each time, you would be cleaned out after 1= losing trades.)
4f your system returns $= percent profitable trades, and $= percent losing trades, then you would expect to
get 1= consecutive losing trades once in every 1=" trades. ('nd they might be your very first 1= tradesI) 4f
your system returns A= percent profitable trades, and B= percent losing trades, then you would expect to
get 1= consecutive losing trades once in every 1GE,B$= trades.
!his is not very likely to happen in your first 1= trades, but it is still more likely than your chances of winning
your state or national lottery. This also demonstrates the importance of de2eloping a system that
returns a high percentage of profitable trades.
55
Dy risking no more than $ percent of your bank at any one time, you should be able to ride out even long
losing streaks. !he other advantage is, as the overall amount in your bank increases you can trade with
larger margins, and hence make larger profits.
Note: :hen you trade with an odd amount, e.g. $ percent of $G,B= H $B1$, always round down. /o you
would buy 1 mini lot at $1== (with a 1 percent margin) and leave the other $== in your account, .ust in
case the trade moved against you.
---------------------------------------------------------------
Start Trading in &st F'(E $')*TES With As +ittle As
$,00 *SD---
!o trade forex, you need to open a trading account and use a platform that-s easy to use,
easy to trade, totally secure and preferable web#based.
5ou also need the necessary tools, resources and support to ensure maximum
profitability for your trades. 9ur top#pick for trading platforms is, without question;
1asy ForexB
Forget complicated software or burdensome application processes. Just fill out this
Cuic# form and you-re off to the racesI
Visit Easy Forex or see Our Full, Unbiased Review
---------------------------------------------------------------
56