There are two types of currency pairs.
The Majors
The Cross pairs or Cross currencies
The Majors
These are currency pairs that include the US Dollar (USD) as one of the currencies in the pair. They are as follows;
GBP/USD {GBP traded against USD}
EUR/USD
AUD/USD
NZD/USD
USD/CHF
USD/JPY
USD/CAD
The Cross pairs (Cross currencies)
These are currency pairs that do not contain the US Dollar (USD) as a currency in the pair. These include;
GBP/JPY
GBP/CHF
EUR/GBP
EUR/JPY
EUR/CHF
EUR/AUD
AUD/JPY
Analysis of a currency pair
A currency pair consists of two currencies;
The Base Currency
The Quote Currency (Counter Currency)
The Base Currency
This is the first currency of a currency pair. It is usually located on the left hand side of a currency pair.
e.g.
GBP/USD
Base Currency
The value of the base currency is always 1 (one) in relation to either the increasing or decreasing values of the second Currency pair.
This implies that the value of the base currency is always greater or stronger than that of the quote currency.
The base currency is the basis of the buy or sell transaction.
This means that whatever action we take on a currency pair; we take that action on the base currency of that currency pair.
Example;
If we say, buy GBP/USD currency pair, we are actually saying, buy GBP since GBP is the base currency of that pair.
Since Forex trading involves the simultaneous buying of one currency and selling of another currency in a given currency pair, when we say; buy GBP/USD currency pair, it also means buy GBP then silently sell USD. Likewise, if we say, sell GBP/USD pair, we are automatically saying; sell GBP and silently buy USD. For us to be able to buy or sell the quote currency which is the second currency in the currency pair, we have to do the opposite of that action to the base currency.
Example
If we want to buy USD in GBP/USD currency pair, we will have to do this indirectly by selling the base currency which is GBP so as to indirectly buy our target currency which is the USD. This is because action must first be taken on the base currency of every currency. Therefore any action we want to take on the quote currency must be done indirectly, i.e. by doing the opposite to the base currency. Therefore if you wish to buy the quote currency, simply sell the base currency and vice versa.
The Quote Currency (Counter Currency)
This is the second currency of a currency pair. It is usually located at the right hand side of every currency pair. The value of the quote currency is ever changing (varies) in response to the current situation/event taking place in the forex market. When you hear that a currency pair appreciated or depreciated, it is the value of the quote currency that represents or reflects this appreciation or depreciation of that currency pair. Remember that the value of the base currency is always 1 (always constant
GBP/USD
Quote Currency
Example
If the value of GBP/USD moves from 1.2344 to 1.2345, it is said that value of GBP has appreciated against the USD. This also means that the value of the USD which is the quote currency in this pair has depreciated or decreased against the GBP.
It also means that initially, 1 GBP was worth 1.2344 USD but presently, 1 GBP is worth 1.2345 USD.
LOGIC
In a currency chart, the prices displayed on the right hand side of the chart represent the ever changing prices of the quote currency.
Note;
The base currency is always the owner of the currency chart and its value remains constant at 1 irrespective of what happens to the price of the quote currency.
ILLUSTRATION
BASE QUOTE REMARKS
Value = 1 Moved from The number of the Quote Increased, therefore the
1.2344 – 1.2354 Quote currency has lost value or weakened in value
and automatically the Base has gained Value.
ACTION : Buy the currency pair.
Value = 1 Moved from The number of the Quote decreased, therefore the
(Constant) 1.2344 -1.2324 Quote decreased, therefore the Quote currency has
gained value or strengthened in value and
automatically the Base currency has lost some of its
previous value.
ACTION : Sell the currency pair.
When the prices of the quote currency increases, it means that the quote currency losses value against the base currency and subsequently this implies that the base currency is gaining value or appreciating against the quote currency.
ANALYSIS OF A CURRENCY QUOTE
1 GBP = 1.2344 USD
Explanation
This implies that you have to bring or spend 1.2344 USD in order to receive or obtain
1 GBP.
Quote Currency
1 GBP = 1.2344/1.2347 (USD)
Bid Price Ask Price
Bid Price
The bid price of a currency quote is the price which your broker allows you to sell each unit of the base currency.
The bid price is also known as the selling price. This is the amount of money you will get in terms of the quote currency if you decide at any time to sell one or more units of the base currency. Since the bid price is derived from the quote currency, it implies that it constantly changes as the market price changes. The bid price also represents the real current market price.
Ask Price (Offer Price)
This is the price which your broker will allow you to buy each unit of the base currency.
The ask price is an artificial price created by your broker so that he can enjoy a small commission from every trade you place or execute. The ask price is derived by adding a small number to the bid price
Monday, 1 June 2009
Currencies and Currency Pairs
Currency Symbols
In Forex trading, currencies are traded in pairs. There are more than 25 currency pairs that are traded electronically in the Forex market; however most of the money are made from seven currency pairs, known as the Majors.
The Majors
These are as follows:
US Dollars (USD) Nickname {Green back}
Great British Pounds (GBP) Nickname {Cable}
The Euro (EUR)
Australian Dollars (AUD) Nickname {Aussie}
New Zealand Dollars (NZD) Nickname {Kiwi}
Canadian Dollars (CAD) Nickname {Loonie}
Japanese Yen (JPY)
Swiss Franc (CHF) Nickname {Swissy}
Currency Pairs
As we already know, Forex trading involves the simultaneous buying and selling (exchange) of one currency for another. This implies that for every transaction that takes place in the Forex market, there must always be 2 currency pairs involved. Thus, it will be safe to say that currencies are traded in pairs, one for the other.
In Forex trading, when you buy one currency in a currency pair, you are automatically selling the other. Likewise, when you sell one currency in a currency pair, you are automatically buying the other currency in that same pair
In Forex trading, currencies are traded in pairs. There are more than 25 currency pairs that are traded electronically in the Forex market; however most of the money are made from seven currency pairs, known as the Majors.
The Majors
These are as follows:
US Dollars (USD) Nickname {Green back}
Great British Pounds (GBP) Nickname {Cable}
The Euro (EUR)
Australian Dollars (AUD) Nickname {Aussie}
New Zealand Dollars (NZD) Nickname {Kiwi}
Canadian Dollars (CAD) Nickname {Loonie}
Japanese Yen (JPY)
Swiss Franc (CHF) Nickname {Swissy}
Currency Pairs
As we already know, Forex trading involves the simultaneous buying and selling (exchange) of one currency for another. This implies that for every transaction that takes place in the Forex market, there must always be 2 currency pairs involved. Thus, it will be safe to say that currencies are traded in pairs, one for the other.
In Forex trading, when you buy one currency in a currency pair, you are automatically selling the other. Likewise, when you sell one currency in a currency pair, you are automatically buying the other currency in that same pair
Market Trading Hours
The Forex market is a 24 hrs market. It opens 24 hours a day, from Sunday 10pm Nigerian time till Friday 11 pm Nigerian time. Between 11.01pm on Friday to 9.59pm
on Sunday, the market remains temporarily closed and no trading goes on.
The market opens daily by 10 pm, starting from the New Zealand Session. It then moves to the Australian Session, then to the Asian Session, then to the London Session and finally to the New York Session, where it stays till it closes by 11pm Nigerian Time.
The Timing
New Zealand Session opens by 10:00 pm Nigerian time and closes by 4:00 am Nigerian time.
Australian (Sydney) Session Opens by 12 midnight and closes by 10:00 am
Asian (Tokyo) Session opens by 1:00 am and closes 10:00 am
London (European) Session opens by 9:00 am and closes by 6:00 pm
New York (US) session opens by 2:00 pm and closes by 11:00 pm
Market Intersection (Open at the same time)
Market intersection simply refers to those periods of the day when more than one Forex market session is open. During periods of market intersection, more traders usually participate in the Forex market. This, results in greater market volatility and volume in terms of more money exchanging hands faster between traders. For the smart Forex trader, market intersection, provides an excellent opportunity to make more profits in less time with less effort. It also offers some of the best times to trade.
New Zealand Session intersects with Australian Session from 12 midnight - 4:00 am
New Zealand Session, Australian Session and Asian Session, all intersect with one another from 1:00 am - 4:00 am
Australian Session intersects with Asian Session from 1:00 pm - 10:00 am
Australian Session Asian Session and London Session, all intersect with one another from 9:00 am – 10:00 am
London Session intersects with New York Session from 2:00 pm - 6:00 pm
on Sunday, the market remains temporarily closed and no trading goes on.
The market opens daily by 10 pm, starting from the New Zealand Session. It then moves to the Australian Session, then to the Asian Session, then to the London Session and finally to the New York Session, where it stays till it closes by 11pm Nigerian Time.
The Timing
New Zealand Session opens by 10:00 pm Nigerian time and closes by 4:00 am Nigerian time.
Australian (Sydney) Session Opens by 12 midnight and closes by 10:00 am
Asian (Tokyo) Session opens by 1:00 am and closes 10:00 am
London (European) Session opens by 9:00 am and closes by 6:00 pm
New York (US) session opens by 2:00 pm and closes by 11:00 pm
Market Intersection (Open at the same time)
Market intersection simply refers to those periods of the day when more than one Forex market session is open. During periods of market intersection, more traders usually participate in the Forex market. This, results in greater market volatility and volume in terms of more money exchanging hands faster between traders. For the smart Forex trader, market intersection, provides an excellent opportunity to make more profits in less time with less effort. It also offers some of the best times to trade.
New Zealand Session intersects with Australian Session from 12 midnight - 4:00 am
New Zealand Session, Australian Session and Asian Session, all intersect with one another from 1:00 am - 4:00 am
Australian Session intersects with Asian Session from 1:00 pm - 10:00 am
Australian Session Asian Session and London Session, all intersect with one another from 9:00 am – 10:00 am
London Session intersects with New York Session from 2:00 pm - 6:00 pm
ADVANTAGES OF FOREX TRADE
There are many benefits and advantages to trading Forex. Here are just a few reasons
why so many people are choosing this market:
• A 24-hour market. There is no waiting for the opening bell. From Sunday evening to Friday afternoon EST, the Forex market never sleeps. This is very desirable for those who want to trade on a part-time basis, because you can choose when you want to trade morning, afternoon or night.
• Market Liquidity. Because the Forex Market is so humongous, it is also extremely liquid. This means that with a click of a mouse, under normal market conditions, you can instantaneously buy and sell at will. This is because of the availability of millions of traders participating in the same market. You are never "stuck" in a trade. You can even set your online trading platform to automatically close your position at your desired profit level (limit order), and/or close a trade if a trade is going against you (stop loss order).
• Profit from rising and falling market. The Forex market is a 2 way market. This means that you can make money irrespective of the direction that the market is moving at any point in time.
• No commissions. No clearing fees, no exchange fees, no government fees, no
brokerage fees. Brokers are compensated for its services through the bid-ask spread.
• No middlemen. Spot currency trading away with the middlemen and allows
clients to interact directly with the market responsible for the pricing on a
particular currency pair.
• No fixed lot size. In the futures markets, lot or contract sizes are determined by
the exchanges. A standard-size contract for silver futures is 5000 ounces. In spot
Forex, you determine the lot size. This allows traders to participate with accounts
as small as $300.
• Low transaction cost. The retail transaction cost (the bid/ask spread) is typically
less than 0.1 percent under normal market conditions. At larger dealers, the spread could be as low as .07 percent. This will be explained later.
• No one can corner the market. The Forex market is so huge and has so many participants that no single entity, not even a central bank, can control the market price for an extended period of time. Even interventions by mighty central banks are becoming increasingly ineffective and short-lived. Central banks are becoming less and less inclined to intervene to manipulate market prices.
.Leverage. In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make extraordinary profits and at the same time keep risk capital to a minimum. For example, Forex brokers offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on. But leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.
• Free “Demo” Accounts, News, Charts, and Analysis. Most online Forex brokers offer free 'Demo' accounts to practice trading, along with breaking Forex news and charting services. These are very valuable resources for “poor” traders who would like to hone their trading skills with 'virtual' money before opening a live trading account.
• 'Mini' Trading: You would think that getting started as a currency trader would cost a lot of money. The fact is, it doesn't. Online Forex brokers offer "mini" trading accounts with a minimum account deposit of $300. This makes Forex much more accessible to the average individual who doesn't have a lot of start-up trading capital.
why so many people are choosing this market:
• A 24-hour market. There is no waiting for the opening bell. From Sunday evening to Friday afternoon EST, the Forex market never sleeps. This is very desirable for those who want to trade on a part-time basis, because you can choose when you want to trade morning, afternoon or night.
• Market Liquidity. Because the Forex Market is so humongous, it is also extremely liquid. This means that with a click of a mouse, under normal market conditions, you can instantaneously buy and sell at will. This is because of the availability of millions of traders participating in the same market. You are never "stuck" in a trade. You can even set your online trading platform to automatically close your position at your desired profit level (limit order), and/or close a trade if a trade is going against you (stop loss order).
• Profit from rising and falling market. The Forex market is a 2 way market. This means that you can make money irrespective of the direction that the market is moving at any point in time.
• No commissions. No clearing fees, no exchange fees, no government fees, no
brokerage fees. Brokers are compensated for its services through the bid-ask spread.
• No middlemen. Spot currency trading away with the middlemen and allows
clients to interact directly with the market responsible for the pricing on a
particular currency pair.
• No fixed lot size. In the futures markets, lot or contract sizes are determined by
the exchanges. A standard-size contract for silver futures is 5000 ounces. In spot
Forex, you determine the lot size. This allows traders to participate with accounts
as small as $300.
• Low transaction cost. The retail transaction cost (the bid/ask spread) is typically
less than 0.1 percent under normal market conditions. At larger dealers, the spread could be as low as .07 percent. This will be explained later.
• No one can corner the market. The Forex market is so huge and has so many participants that no single entity, not even a central bank, can control the market price for an extended period of time. Even interventions by mighty central banks are becoming increasingly ineffective and short-lived. Central banks are becoming less and less inclined to intervene to manipulate market prices.
.Leverage. In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make extraordinary profits and at the same time keep risk capital to a minimum. For example, Forex brokers offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on. But leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.
• Free “Demo” Accounts, News, Charts, and Analysis. Most online Forex brokers offer free 'Demo' accounts to practice trading, along with breaking Forex news and charting services. These are very valuable resources for “poor” traders who would like to hone their trading skills with 'virtual' money before opening a live trading account.
• 'Mini' Trading: You would think that getting started as a currency trader would cost a lot of money. The fact is, it doesn't. Online Forex brokers offer "mini" trading accounts with a minimum account deposit of $300. This makes Forex much more accessible to the average individual who doesn't have a lot of start-up trading capital.
Forex Trading Made Simple
A very warm welcome to this adventure you are about to undertake. You are about to be gin a journey which will take you into the depths of the financial world and make you financially free at the same time. To prepare for this journey, you will need to don your thinking cap as this trip has a “steep learning curve”
By following the training and methods taught in this manual, you can utilize the time before you leave for work in the morning and the time you return home in the evening to earn you an extra $500-$1000! We’ve got to go through a lot of information in order for you to start trading successfully. I do understand that you want to rush out there and start making lots of money but this particular course takes time. Please make the effort to go through this manual at least twice so it gives time for the information to sink in.
To achieve $500-$1000 a wee k as spare income, it will take some time to learn the basics and then some more time to implement a method and various techniques to trade profitably.
$1000 per week is easily achievable with this business. Don’t believe me? There are already thousands of individuals using their time to trade currencies who are making
more money than their regular job income. Most of them are now doing this full-time, as the earning potential is truly unlimited.
You can do this from any country in the world, even whilst on holiday. Remember, all you need is a decent computer, internet connection, and a little starting capital.
You can start with as little as $300, but $2000 is the recommended amount.
You don’t need to risk a single penny whilst learning, as you will learn to trade currencies with a demo or dummy account which will imitate a real account. This will allow you to buy and sell currencies
just as if you were buying and selling in the real world. However, you won’t lose or make any real money. You will be able to see your dummy account grow by $500-$1000 per week from your initial starting capital.
The reason I’m quoting currency in $$$ and not any other world denomination is simply because you will be dealing with US Dollars more than any other currency.
With this business, you don’t need any stock, employees or anything else that goes along with a traditional business. All it requires is a little computer time and some simple chart analysis (market research).
When you buy and sell currencies, you are said to be dealing in the “Foreign Exchange” market, or “Forex”market or “FX” market for short.
As a Forex trader, you will face some tough decisions from time to time. In this manual, you will learn when and where to place trades (buy or sell currency) to achieve a minimum of $500-$1000 or more per week.
Let me assure you, as a Forex trader, you can even make $1000 in a single hour providing your timing is right. Don’t worry about the details for now as we will cover everything later.
I am confident that I can help you secure your own $500 every week. I say this because I was in your position not long ago. I know what it’s like when starting out.
During my humble beginnings I lost money, which is when I decided to invest in some personal training. After completing the course, I actually started to make money as I began to think things through. I pondered over every trade. I weighed the pros and the cons and then pulled the trigger.
Now, I really do make a consistent $500-$1000 every week.
Everything written in this manual is exactly what I do. All you need to do is study and follow what I have written. There is no doubt in my mind that you will also bank at least $500 every week (if not more).
I’m not a trading guru and I don’t make exceptional amounts of money simply because I choose to spend my time doing other things. If money can’t bring you freedom, what use is it?
Ok, I don’t want to bore you with explaining the rags to riches lifestyle and other benefits of having lots of money. I’m sure you are clever enough to know what you can do with your own income of $1000 a week.
So without further ado, let’s get started.
What is Forex?
Forex simply means Foreign Exchange.
What is Forex Trading?
Forex Trading is the simultaneous buying of one currency and selling of another.
Currencies are always traded in pairs. i.e. only two at a time.
Who is a Forex Trader?
A Forex Trader is a person who buys and sells currencies on the Forex Market.
A Forex Trader tries to make profit from small price movements on fluctuations that occur in the Forex Market every time.
Forex example,
Let’s say 1 British Pound is worth 1.8 US Dollars. This means that if you go to the currency
exchange kiosk at your local airport and you give them £1 in exchange for dollars, they will give you $1.80 (in return for your £1 – disregard any commission for now).
You saw the news on TV and now you believe that the Dollar will get stronger against the Pound and so you buy many dollars.
Let’s say you gave the kiosk £100 in exchange for $180 at the exchange rate of 1.8.
100 x 1.8 = 180
A few hours later, you see that the exchange rate has changed and now every Pound is worth 1.4 US Dollars. This means that the dollar has increased in value against the Pound. Before, each pound was worth 1.8 US Dollars but now it is only worth 1.4 US Dollars. In other words, the Pound has become weaker against the US Dollar and the US Dollar has become Stronger against the Pound.
You will see this as you go back to the kiosk and re-exchange your Dollars back to Pounds.
So if each Pound is worth 1.4 US Dollars, how many pounds do you get for $180?
$180 / 1.4 = £128.57. This means you have just made yourself a profit of £28.57. You only had £100 before but now you have £128.57.
Trading currencies at home works on the same principle except you will be doing it on a larger scale and without the hassle of visiting kiosks and their inflated rates.
The Forex Market
The Foreign Exchange Market is the largest financial market in the world. It has an average daily turn over of over $2 trillion. This is 50 times larger than the combined volume of both the London and New York stock exchange.
The Forex market is also known as the Forex Spot market or FX Spot market.
With the Forex market, all transactions made are dealt with immediately.
The Forex market is considered an 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period. The Forex market is also considered an over the counter (OTC), due to the fact that transactions are conducted instantaneously between two counterparts over the phone or via an electronic network e.g. on the internet using a trading platform such as Meta Trader 4.
In Forex Trading, there is no centralized exchange point, so this means that you do not need to leave your home or office in order to participate in the Forex market.
Until the late 1990’s, only the “big guys” could play this game. The initial requirement was that you could trade only if you had about ten to fifty million bucks to start. Forex was originally intended to be used by bankers and large institutions and not by us “little guys”. However, because of the rise of the Internet, online Forex trading firms or Brokers are now able to offer affordable trading accounts to 'retail' traders like us.
All you need to get started is a computer, a high-speed Internet connection, and the
information contained within this manual.
In the Forex market, you can buy and sell currency with a few clicks of your mouse.
That’s how easy it really is.
For every person that wants to buy currency, there must be some one who is willing to sell that same currency at that exact same price and time.
“What if there is no one to sell you that currency a t that exact same price or time”?
Since over 2 trillion dollars change hands every day in the FX market, and also considering that millions of people worldwide participate in the Forex market daily, it is extremely unlikely that there are no traders willing to sell at that price. There are so many traders in this market that money changes hands at the exact prices they want. This is what you call market liquidity. The FX market is a very liquid market.
Forex trading will only come to an end when the whole world adopts a single (one world currency).
Ninety five percent of the daily turn over in the Forex market, comes from “Speculation” or “Buy for profit”, while the remaining five percent come from Big companies and Government who do actual business, such as importation and exportation.
FOREX MARKET PARTICIPANTS
There are various entities in the FX market arena. Each trades for its own financial objective. The following are the main FX participants.
Central Banks
Within the foreign exchange market national central banks play a very important role.
Ultimately, the objective of central banks is to keep inflation low and steady by controlling money supply. One of the most important responsibilities of a central bank is the restoration of an orderly market in times of excessive currency rate volatility.
Many times, the mere speculation of central bank intervention is enough to stabilize a currency. However, in the event of aggressive intervention the actual impact on the short term supply/demand balance can lead to the desired moves in exchange rates.
Banks
The inter-bank market provides for both the greater part of commercial turnover as well as huge amounts of speculative trading on a daily basis. The type of trading that banks do can be divided into two. First, trading on behalf of the banks’ customers. Here instructions are given to the bank by the individual customer to buy or sell a specific amount of currency. The second type of trading is proprietary trading. Proprietary trading simply put is when the bank’s dealers trade the bank's capital to make the bank a profit. A very large part of interbank trading takes places on electronic broking systems.
Interbank Brokers
Until not long ago, the foreign exchange brokers were doing large amounts of business, facilitating interbank trading and matching anonymous counterparts for relatively small fees. The increased use of the Internet has forced a lot of this business to move onto more efficient electronic systems that are functioning as a closed circuit for banks only.
The traditional broker box providing the opportunity to listen in on the ongoing interbank trading is still seen in most trading rooms, but turnover is noticeably smaller than just a few years ago.
Customer Brokers
These types of brokers are the ones that handle the trades you will make in the Forex market. These brokers are a direct result of the increased use of the internet. Their numbers are growing fast and the service they provide is becoming better and better as days go by. Forex trading has become such a lucrative business for these brokers that they literally will do everything to acquire customers.
The function of these brokers is to provide foreign exchange dealing services, analysis and strategic advice to customers. The services of such customer brokers are more similar in nature to stock, futures and mutual fund brokers and typically provide a service orientated approach to their clients.
Commercial Companies
Companies engaged in international trade conduct a lot of their business in foreign currencies. These companies use the currency market as a means of protecting themselves from unfavorable moves in the market. A US company operating in England would receive payments for its goods or services in Great British Pounds (GBP). The company decides at one point to change the GBP for USD. This trade, from GBP to USD, is where the company’s transaction forms part of the daily liquidity of the forex market.
Investors and Speculators
It is estimated that the largest portion of the daily volume in the forex market derives from investors and speculators. Simply put, this group of market participants trade with one objective in mind, making a profit from rise and fall of currency prices. These types of
traders are attracted to the forex market due to the incredible leverage it provides, fantastic short and long term moves, and high liquidity. Ten years ago this group consisted mainly on big well funded traders. Since the internet has become more used and more efficient in terms of connection speed big traders and investors are not the only ones who can take advantage of currency speculation. The field has leveled and today’s small speculator has the same tools big investors and speculators had 10 years ago.
Hedge Funds
Simply put, a hedge fund is a managed investment where the fund manager is authorized to use derivatives and borrowing with the aim of providing a higher return. The fund manager is allowed to use aggressive strategies that are unavailable to mutual funds, including selling short, leverage, program trading, swaps, and arbitrage.
Hedge funds have increasingly been known for aggressive currency speculation in recent years. The main reason for this is due to the high leverage, volatility and liquidity the currency market provides.
Rich Individuals
Small Time Traders like you and I
Advantages and Benefits of Forex Trading
By following the training and methods taught in this manual, you can utilize the time before you leave for work in the morning and the time you return home in the evening to earn you an extra $500-$1000! We’ve got to go through a lot of information in order for you to start trading successfully. I do understand that you want to rush out there and start making lots of money but this particular course takes time. Please make the effort to go through this manual at least twice so it gives time for the information to sink in.
To achieve $500-$1000 a wee k as spare income, it will take some time to learn the basics and then some more time to implement a method and various techniques to trade profitably.
$1000 per week is easily achievable with this business. Don’t believe me? There are already thousands of individuals using their time to trade currencies who are making
more money than their regular job income. Most of them are now doing this full-time, as the earning potential is truly unlimited.
You can do this from any country in the world, even whilst on holiday. Remember, all you need is a decent computer, internet connection, and a little starting capital.
You can start with as little as $300, but $2000 is the recommended amount.
You don’t need to risk a single penny whilst learning, as you will learn to trade currencies with a demo or dummy account which will imitate a real account. This will allow you to buy and sell currencies
just as if you were buying and selling in the real world. However, you won’t lose or make any real money. You will be able to see your dummy account grow by $500-$1000 per week from your initial starting capital.
The reason I’m quoting currency in $$$ and not any other world denomination is simply because you will be dealing with US Dollars more than any other currency.
With this business, you don’t need any stock, employees or anything else that goes along with a traditional business. All it requires is a little computer time and some simple chart analysis (market research).
When you buy and sell currencies, you are said to be dealing in the “Foreign Exchange” market, or “Forex”market or “FX” market for short.
As a Forex trader, you will face some tough decisions from time to time. In this manual, you will learn when and where to place trades (buy or sell currency) to achieve a minimum of $500-$1000 or more per week.
Let me assure you, as a Forex trader, you can even make $1000 in a single hour providing your timing is right. Don’t worry about the details for now as we will cover everything later.
I am confident that I can help you secure your own $500 every week. I say this because I was in your position not long ago. I know what it’s like when starting out.
During my humble beginnings I lost money, which is when I decided to invest in some personal training. After completing the course, I actually started to make money as I began to think things through. I pondered over every trade. I weighed the pros and the cons and then pulled the trigger.
Now, I really do make a consistent $500-$1000 every week.
Everything written in this manual is exactly what I do. All you need to do is study and follow what I have written. There is no doubt in my mind that you will also bank at least $500 every week (if not more).
I’m not a trading guru and I don’t make exceptional amounts of money simply because I choose to spend my time doing other things. If money can’t bring you freedom, what use is it?
Ok, I don’t want to bore you with explaining the rags to riches lifestyle and other benefits of having lots of money. I’m sure you are clever enough to know what you can do with your own income of $1000 a week.
So without further ado, let’s get started.
What is Forex?
Forex simply means Foreign Exchange.
What is Forex Trading?
Forex Trading is the simultaneous buying of one currency and selling of another.
Currencies are always traded in pairs. i.e. only two at a time.
Who is a Forex Trader?
A Forex Trader is a person who buys and sells currencies on the Forex Market.
A Forex Trader tries to make profit from small price movements on fluctuations that occur in the Forex Market every time.
Forex example,
Let’s say 1 British Pound is worth 1.8 US Dollars. This means that if you go to the currency
exchange kiosk at your local airport and you give them £1 in exchange for dollars, they will give you $1.80 (in return for your £1 – disregard any commission for now).
You saw the news on TV and now you believe that the Dollar will get stronger against the Pound and so you buy many dollars.
Let’s say you gave the kiosk £100 in exchange for $180 at the exchange rate of 1.8.
100 x 1.8 = 180
A few hours later, you see that the exchange rate has changed and now every Pound is worth 1.4 US Dollars. This means that the dollar has increased in value against the Pound. Before, each pound was worth 1.8 US Dollars but now it is only worth 1.4 US Dollars. In other words, the Pound has become weaker against the US Dollar and the US Dollar has become Stronger against the Pound.
You will see this as you go back to the kiosk and re-exchange your Dollars back to Pounds.
So if each Pound is worth 1.4 US Dollars, how many pounds do you get for $180?
$180 / 1.4 = £128.57. This means you have just made yourself a profit of £28.57. You only had £100 before but now you have £128.57.
Trading currencies at home works on the same principle except you will be doing it on a larger scale and without the hassle of visiting kiosks and their inflated rates.
The Forex Market
The Foreign Exchange Market is the largest financial market in the world. It has an average daily turn over of over $2 trillion. This is 50 times larger than the combined volume of both the London and New York stock exchange.
The Forex market is also known as the Forex Spot market or FX Spot market.
With the Forex market, all transactions made are dealt with immediately.
The Forex market is considered an 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period. The Forex market is also considered an over the counter (OTC), due to the fact that transactions are conducted instantaneously between two counterparts over the phone or via an electronic network e.g. on the internet using a trading platform such as Meta Trader 4.
In Forex Trading, there is no centralized exchange point, so this means that you do not need to leave your home or office in order to participate in the Forex market.
Until the late 1990’s, only the “big guys” could play this game. The initial requirement was that you could trade only if you had about ten to fifty million bucks to start. Forex was originally intended to be used by bankers and large institutions and not by us “little guys”. However, because of the rise of the Internet, online Forex trading firms or Brokers are now able to offer affordable trading accounts to 'retail' traders like us.
All you need to get started is a computer, a high-speed Internet connection, and the
information contained within this manual.
In the Forex market, you can buy and sell currency with a few clicks of your mouse.
That’s how easy it really is.
For every person that wants to buy currency, there must be some one who is willing to sell that same currency at that exact same price and time.
“What if there is no one to sell you that currency a t that exact same price or time”?
Since over 2 trillion dollars change hands every day in the FX market, and also considering that millions of people worldwide participate in the Forex market daily, it is extremely unlikely that there are no traders willing to sell at that price. There are so many traders in this market that money changes hands at the exact prices they want. This is what you call market liquidity. The FX market is a very liquid market.
Forex trading will only come to an end when the whole world adopts a single (one world currency).
Ninety five percent of the daily turn over in the Forex market, comes from “Speculation” or “Buy for profit”, while the remaining five percent come from Big companies and Government who do actual business, such as importation and exportation.
FOREX MARKET PARTICIPANTS
There are various entities in the FX market arena. Each trades for its own financial objective. The following are the main FX participants.
Central Banks
Within the foreign exchange market national central banks play a very important role.
Ultimately, the objective of central banks is to keep inflation low and steady by controlling money supply. One of the most important responsibilities of a central bank is the restoration of an orderly market in times of excessive currency rate volatility.
Many times, the mere speculation of central bank intervention is enough to stabilize a currency. However, in the event of aggressive intervention the actual impact on the short term supply/demand balance can lead to the desired moves in exchange rates.
Banks
The inter-bank market provides for both the greater part of commercial turnover as well as huge amounts of speculative trading on a daily basis. The type of trading that banks do can be divided into two. First, trading on behalf of the banks’ customers. Here instructions are given to the bank by the individual customer to buy or sell a specific amount of currency. The second type of trading is proprietary trading. Proprietary trading simply put is when the bank’s dealers trade the bank's capital to make the bank a profit. A very large part of interbank trading takes places on electronic broking systems.
Interbank Brokers
Until not long ago, the foreign exchange brokers were doing large amounts of business, facilitating interbank trading and matching anonymous counterparts for relatively small fees. The increased use of the Internet has forced a lot of this business to move onto more efficient electronic systems that are functioning as a closed circuit for banks only.
The traditional broker box providing the opportunity to listen in on the ongoing interbank trading is still seen in most trading rooms, but turnover is noticeably smaller than just a few years ago.
Customer Brokers
These types of brokers are the ones that handle the trades you will make in the Forex market. These brokers are a direct result of the increased use of the internet. Their numbers are growing fast and the service they provide is becoming better and better as days go by. Forex trading has become such a lucrative business for these brokers that they literally will do everything to acquire customers.
The function of these brokers is to provide foreign exchange dealing services, analysis and strategic advice to customers. The services of such customer brokers are more similar in nature to stock, futures and mutual fund brokers and typically provide a service orientated approach to their clients.
Commercial Companies
Companies engaged in international trade conduct a lot of their business in foreign currencies. These companies use the currency market as a means of protecting themselves from unfavorable moves in the market. A US company operating in England would receive payments for its goods or services in Great British Pounds (GBP). The company decides at one point to change the GBP for USD. This trade, from GBP to USD, is where the company’s transaction forms part of the daily liquidity of the forex market.
Investors and Speculators
It is estimated that the largest portion of the daily volume in the forex market derives from investors and speculators. Simply put, this group of market participants trade with one objective in mind, making a profit from rise and fall of currency prices. These types of
traders are attracted to the forex market due to the incredible leverage it provides, fantastic short and long term moves, and high liquidity. Ten years ago this group consisted mainly on big well funded traders. Since the internet has become more used and more efficient in terms of connection speed big traders and investors are not the only ones who can take advantage of currency speculation. The field has leveled and today’s small speculator has the same tools big investors and speculators had 10 years ago.
Hedge Funds
Simply put, a hedge fund is a managed investment where the fund manager is authorized to use derivatives and borrowing with the aim of providing a higher return. The fund manager is allowed to use aggressive strategies that are unavailable to mutual funds, including selling short, leverage, program trading, swaps, and arbitrage.
Hedge funds have increasingly been known for aggressive currency speculation in recent years. The main reason for this is due to the high leverage, volatility and liquidity the currency market provides.
Rich Individuals
Small Time Traders like you and I
Advantages and Benefits of Forex Trading
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