Forex Trading System Secrets Copyright2012 â€“ Miroslav Brezinsky Limits of Liability / Disclaimer of Warranty: The author of this information and the accompanying materials has used his best efforts in preparing this course. The author makes no representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents of this course. He disclaims any warranties (expressed or implied), merchantability, or fitness for any particular purpose. The author shall in no event be held liable for any loss or other
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Table of Contents
An Introduction To Forex
The History of Forex
Understanding Currency Conversion
The Candlestick Chart
Understanding Market Trends
Forex Volatility And Market Expectation
Your Forex Future
Chapter One – An Introduction To Forex Of all the methods and systems for making money online, perhaps none is as popular and widespread as "Forex." Forex refers to the trading of International currencies and making a profit from the difference in the respective exchange rates. The word "Forex" is a combination and contraction of two words "foreign" and "exchange." The old saying, "Where there's smoke, there's fire" is especially applicable to Forex currency trading. Because there is a lot both. Every day millons of trades are conducted on the only truly Global unrestricted financial market. Owing to the fact that Forex profits are derived from the difference in the exchange rates between the currencies of countries, there is no "central authority" governing the Forex market. Because of this, it's very difficult to manipulate the Forex market. In comparison to the stock market, which can be, and is regularly manipulated by the most powerful investors. The amount of money exchanged every day with Forex trades are truly staggering. Anywhere between 1 trillion and 1.5 trillon U.S. dollars. An astronomical amount, to be sure. Seemingly daunting to the non-expert wanting to participate. But the good news is, you can get a piece of the '"Forex Pie" with no risk. Owing to the fact that many Online Forex brokers offer a practice account. Usually with $10,000 or so to get up to speed. This will allow you to “get your feet wet” without risking drowning!
Chapter Two – The History of Forex While even non-traders are familiar with the term “Forex” it's likely you don't know that the Forex market is an indirect result of the Vietnam war. For the lowdown we go back through the mists of time to 1971. The Place: Bretton Woods, Nova Scotia, Canada. The United States proposes to the other Major Nations of the World that they tie the value of their currencies to the (then) mighty U.S. dollar. Which was mighty because it was backed by Gold. In other words, the U.S. treasury did not(then) print more money than it's equivalent in Fort Knox. The other Nations agreed. But soon, as often happens with positive agreements, the Bretton Woods Agreement went South. The reason: the Vietnam war. Saddled with an enormous war spending debt, a man named Nixon took the U.S. off the gold standard, and the Government printing office(treasury division) went into overdrive. Printing money like there was no tommorrow. What there was - was, predictably - Massive inflation. Which caused the other signatory nations to the Bretton Woods Agreement, to
wave it, and the "mighty" U.S. dollar a big, and definite "bye bye." This was the beginning of the Forex market, as the World's other countries began establishing values for their currencies based on National economic conditions. The obvious consequence was a difference in the value of one countries currency, relative to another. Thus the phrase "exchange rate" entered our language. Followed Swiftly by "Foreign Exchange." Which, even more swiftly, was shortened to "Forex." These “early days” of Forex trading were more complicated. Due to the number of players on the European market, and the mind-numbing number of respective currencies. At that time you had the franc,the pound, the lira and countless others to contend with. However this situation was improved in 1992 with the emergence of the European Union, which established the Euro in 1999 as the currency of record across all of Europe. With the exception of Britian, still clinging to it's pound sterling.
Chapter Three – Forex Today
With this simplification of the currency conversion process, the “landscape” of the Forex market became more easily travelled. Now, the main countries trade in five currencies: U.S. dollars, Australian dollars, British pounds sterling, the Euro, and the Japanese Yen. As you would expect from looking at these currencies, the major players include the majority of the European nations, the United States and the Asian markets. Japan is particularly present here. And Australia has also joined the Forex foray.
Chapter 4: Understanding Currency Conversion Like any new business venture, you'll need to begin with a basic understanding of how it works. With Forex this means noting the values of different currencies and studying domestic market trends as well as foreign ones This will give you the basic prepartion necessary to understand and act in the area of currency conversion, which is the “bottom line” in Forex trading.
Working With Multiple Currencies 7
Now that you are “armed” with a basic understanding of currency conversion and market trends, your next task will be to get a basic idea of current rates of currency exchange. Happily, this is not difficult. And more good news – it's free. You'll find more sources than you can possibly use on the internet. Comparing this information should give you a fairly accurate “baseline” from which to operate.
Forex-Speak Like any specialized profession, Forex has a language all it's own. One of it's most unique and amusing words is the “pip.” Not, as you might imagine, referring to the seeds of an apple or lemon! In Forex trading a “pip” is the smallest fraction, or decimal, in which a currency can be traded. The U.S. dollar is often expressed to the hundredth of a cent (the fourth decimal place). Another commonplace word that has a different and unique meaning in the “Forex Language” is “yard.” As you might expect, it doesn't refer to that expense of grass behind your
house where your lawn chair resides. In “Forex-Speak” “yard” refers to the quantity of currency as opposed to it's value and is equivalent to one million units of the currency in question. So, while a “yard” of Euros and a “yard” of Yen are the same quantity, there is no equivalent value between the two.
Forex Trending Getting into the Forex Market is a lot like a sailboat trip. The night before the voyage, you check the weather forecast. Look at the barometer. Note the condition of the sea. Pour over your charts. Check the boat to make sure everything's watertight. And, above all, that you have life preservers. It's the same with Forex. Except, sadly, there are no life preservers! So you'll want to make doubly certain your preparations are the best they can be. Or it is your wallet – not your life that will feel the pain! Like your sailboat trip, you'll want to pour over charts. But of course they won't be the nautical variety. Solid information from experts is what you need. And it's easily obtained. Informed opinion in newspaper financial pages; listening to and comparing the advice of market analysts will prepare you for your “Maiden Forex Voyage.”
This “financial intelligence” will help you track marketing trends and make educated predictions about where the market may be headed. Giving you the ability to decide when to buy and when to sell.
Chapter Five – The Candlestick Chart One of the most useful “weapons” in your Forex info arsenal is something known as a “Candlestick Chart”.These charts are basically a combination of a line graph and a bar graph that show the trend of various stocks, indexes, or other interests over a specified period of time. This will easily allow you to determine if a stock is up or down, when the last major change in it's journey occurred, and how long it's likely it's present path will continue. Not only will the Candlestick Chart give you current information, but with it you will also be able to research commodities, prices and market trends for years past. This “historical data” will enable you to see “the big picture” with regard to whatever the object of your search may be. The Candlestick Chart will help to answer your questions and concerns, and help to determine if it's a good idea to postpone your action on a particular possibility until the
market takes an upswing, or whether it's better for you to act now.
Chapter Six- Understanding Market Trends Like the stock market, the Forex market is also affected by rumours, innuendo, and, of course politics. A rumour that a large company is in financial difficulty can send it's shares on a one way trip to the basement. Creating an opportunity as it's share prices plummet. Also, when countries have a downturn in their ecomonies, the resulting depression and inflation will create a devaluation of it's currency. Wars and natural disasters can, and frequently do, produce similair effects. Bottom Line : If you don't already act from the boy scout motto: “be prepared” - now is the time to get with that program! By paying attention to World events, social trends, and, yes, rumours, you'll be “prepared” for currency fluctuations and be ready to profit from them. 11
Chapter Seven : Forex Volatility and Market Expectation Given that the tendency for fluctuation is much stronger â€“ and often occurs faster - in the Forex market than on the stock market, what can you do to prepare for this eventuality? The short, and honest answer, is to understand , as precisely as possible, the reason for the flucuation. This will enable you, armed with your research of current and past trends, to make an informed action decision. There are two principal causes for the volatility of the Forex Market. The first, and most obvious, is a deliberate currency devaluation by a Government. You may recall Russia attempted this in 1998 - announcing that they intended to devalue the ruble. The obvious consequence was that hearing this news, the Russian people rushed to their banks. And in one day the ruble fell by 25%. Bad news for the Russian economy. But good news for Forex traders who had their fingers on the pulse of World events.
The second, and usually most unpredictable variable in currency exchange rates is the interaction of the currencies themselves. For example, a currency with a history of great stability may, inexplicably experience devaluation. There could be any number of reasons. But none of them matter. The end result – the downturn – is what you'll have to deal with. Again – be a boy scout - “be prepared!” This is your best, and only “antidode” to “market fluctation fever!” Yes, it will take experience. Not to mention a certain amount of “intestinal fortitude.” You must act, when it is time, in your best judgement to act. Don't second guess yourself. Just do it! Yes, sometimes you'll be unsuccessful. Sometimes you'll make a bad call. But the more action you take, the more success you'll have in the long term. Isn't that so with anything? Bottom Line : Constantly changing currency conversion rates and market volatility ensure that there will be no certainties on any given day in the Forex Market. If you're good with that (and do your homework – daily) Forex will be good for you.
Chapter Eight – Your Forex Future While it"s true that enormous returns are possible with Forex, (Ask Warren Buffet or George Soros) they are usually the result of enormous and long term investments by extremely experienced traders. (Think Warren Buffet and George Soros.) If you're not in the billionaire/millionaire class, the cold shower of reality is that your returns will be relative to your investment. And if your idea of a Forex investment is less than three digits, frankly you'd be better off buying a lottery ticket. Bottom line: There is no “free lunch.” But there is a real, honest and accessible opportunity to make money online, wherever you choose, with Forex Currency Trading. More GOOD NEWS! To aid novice traders gaining knowledge and experience, most Online Forex Brokers offer a practice account. This enables new traders to familiarize themselves with the system, trading "virtual practice money" and not their life savings.
Then, when they're ready to start trading with their own money, they'll have (at least) a basic understanding of what works and what doesn't. Allowing them to begin their trading careers with confidence borne of experience.
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Published on Nov 18, 2012
Forex Currency Trading doesn't have to be confusing and complicated. I explain everything you need to know to get started with Foreign Exch...