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Trade Forex From Home is crammed full of vital and powerful information giving you exact details of how to make money trading the Forex market. The unique content will educate you without the fluff because I know you don't want to waste time. Chances are you just want to get down to the nitty gritty and start to turn a profit, am I right? Well, this ebook will guide you to the heart of what really matters, revealing the truth of how to make money trading the Forex market. Sounds good, wouldn't you agree? Order now to move forward with your Forex trading future and please let me know how you get on!
FOREX TRADE FOREX om home FOR yOu Learn how to trade Foreign Exchange – ForEx Wri en and edited by Annabel Meade Written and edited by: AnnAbEl MEAdE. Visit us at: www.tradeforexfromhome.com or www.tradeforexfromhome.co.uk RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT Your level of success in attaining the results claimed in this book depends on many factors. Since these differ for every individual your success or income cannot be guaranteed nor is the author responsible for any of your actions as a result of reading this book. This is not a ‘Get Rich Quick Scheme’ The ability to withstand losses or to adhere to a particular trading program in spite of the trading losses are material points that can also adversely affect trading results. There are numerous other factors related to the market in general or to the implementation of any specific trading program, which cannot be fully accounted for in the preparation of this book. Trading the financial markets involves risk. This book and any part of the website that makes up Trade Forex From Home and its contents are neither a solicitation nor an offer to Buy/Sell any financial market. The contents of this book are for general information purposes only (contents shall also mean web sites relating to book Money For You). Although every attempt has been made to assure accuracy, the author does not give any express or implied warranty as to its accuracy, and does not accept liability for error or omission. Examples are provided for illustrative purposes only and should not be construed as investment advice or strategy. The author does not warrant the performance, effectiveness or applicability of any of the web sites or books listed or linked in this book or any web site relating to this book. The information provided in this book is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject us to any registration requirement. This book is copyrighted by Annabel Meade. No part maybe copied or changed in any format including photocopying, electronic, mechanical or otherwise under any circumstances without the written permission of the author. All rights reserved. This book is digitally encoded and electronically watermarked for rapid identification of unauthorized distribution over the internet. By purchasing this book, subscribing to our mailing list or using the contents of the website you will be deemed to have accepted these terms in full. Cover & graphic design by: www.corriedesign.co.uk. Illustrative elements include; ©iStockphoto.com/CreativeChain Design House/Nick Monu/A-Digit/Bulent Ince. Initial book design by: www.janepadginton.com 2 COnTEnTS ChApTER 1 To iNFoRM ANd EducATE 04 ChApTER 2 WHAT iS FoREX & WHY TRAdE iT? 08 ChApTER 3 HoW To PREPARE To TRAdE 23 Mental preparation - The psychology of trading. Physical preparation - Trading journal and when to trade. Trading Terminology. Financial preparation - What is required plus money management. Your Trading Plan. Research. ChApTER 4 SuMMARY & coNcluSioN 57 Encouragement to succeed & where you go from here. ChApTER 5 MY SToRY 62 Why i started trading - pretty much the same reasons as many others. 3 CHAPTER 1 INTRODUCTION TO INfORM AND EDUCATE CHAPTER 1 – INTRODUCTION INTRODUCTION The purpose of this book is to inform and educate you about the wonderful world of trading foreign exchange from the comfort of your armchair. You are probably already aware there is much information available for free and courses that cost thousands with promises which only lead to dead ends. The plain truth is that trading is a simple business, but it’s not easy. if it was everyone would be trading successfully. The content of this book is written in plain simple english taking the mystery out of trading. When one starts to trade with little or no knowledge it is not unusual for an amateur trader to lose all their money and miss out on what could prove more profitable than winning the lottery. if you start trading with the right attitude and training then this could provide you with considerable profit for a very long time to come. That is why this book has been written - to provide you with the tools to help you succeed in this exceptionally lucrative market. 4 5 CHAPTER 1 – INTRODUCTION With the cumulative knowledge of experience and research i have amassed over the years, by reading this book you can learn what you need to know to be successful in this business. it will save you money and time on expensive courses and explain how and why trade the FoREX market. There are no guarantees in life or in this business The contents of this book contains the basic tools that you need to be a trader in a very lucrative market. The things you will need are:- 1. A sum of money 2. A new computer dedicated to trading 3. An online broker and charting software 4. The right attitude 5. Time to trade AFTER PlouGHiNG i wish i had access to this information THRouGH THE ScAMS when i began my trading career. ANd ScHEMES THAT SToPS THE MAjoRiTY FRoM SuccEEdiNG THiS iS A MuST REAd BEFoRE You do ANYTHiNG ElSE. 5 6 CHAPTER 1 – INTRODUCTION Most people are aware that some city traders are receiving million dollar bonuses at christmas. Many people feel the lure of money and the greed that comes with that. After all how hard can it be? To put this in perspective the majority of private investors or traders in this game are losing. remember! Educating yourself about trading is key to increasing your probability of success. Many successful traders have lost all their money in one or two accounts before they achieve consistent profitable results. It is wise to understand from the beginning you are entering in to a market that can make you or break you. You have already taken the first step to help ensure that you end up on the make and not the break side. Make it your business and give it the commitment that any business deserves. if you set up proper rules and strategies and above all stick to them you will have a far greater chance of success. 6 7 CHAPTER 2 whAT IS fOREx & why TRADE IT? CHAPTER 2 – WHAT Is fOREx & WHy TRADE IT? what is the forex? The foreign exchange market, often referred to as forex, is the market for the various currencies of the world. It is a market which, at its core, is rooted in global trade. Goods and services are exchanged 24 hours a day all over the world. Those transactions carried out across national borders require payments in non-domestic currencies. The forex market is the largest traded market in the world For example, a uS company purchases a product from a British company. To carry out the transaction, one of two things is going to happen. The US firm may make a payment in British Pounds which would require a conversion of dollars into Pounds. Alternatively, the payment could be made in dollars, in which case the British company would then exchange the dollars for Pounds at their end. Either way, there is going to be a transaction which converts dollars into Pounds. Transactions like this take place constantly. The market maintains a rate of exchange between the uS dollar and the British Pound ACCESSIBILITY - TRAdE dAY oR NiGHT to facilitate that activity. This occurs between WHEREVER You ARE all other world currencies. iN THE WoRld 8 9 CHAPTER 2 – WHAT Is fOREx & WHy TRADE IT? considering the amount of global trade which takes place, you can see why the forex market is the biggest in the world and dwarfs all others. literally trillions of dollars worth of forex transactions take place each and every day. why Trade the forex Market? If you are interested in trading currencies online, you will find the Forex market offers several advantages over stock and futures trading. Trading the Forex deserves serious consideration - the world’s largest market is knocking at your door! daily turnover exceeds $1.5 trillion u.S. dollars (source: Bank of international Settlements) With an expanding global economy, you may already be currency trading without realising it. Every time you purchase a foreign product, you have traded the value of your currency for the exchange traded value of the foreign product. Believe it or not, that is a simplified explanation of the basic process of Forex trading. In the Forex, banks, investment firms, large corporations and individual traders buy and sell world currencies such as the Euro, British Pound, Swiss Franc, and japanese Yen FLEXIBILITY - in exchange for the value of another currency. THE FoREX MARKET iS The Forex market has long been recognized oPEN 5 dAYS A WEEK 24 HouRS A dAY – as an uncommon investment opportunity by AlloWiNG You To major banks and financial institutions. TRAdE AT A TiME THAT SuiTS You 9 10 CHAPTER 2 – WHAT Is fOREx & WHy TRADE IT? Furthermore, the Forex market is simpler to trade than stocks and futures. in the Forex market you may buy or sell currencies. You can make profits when the market is going up if you bought the market. You also can make profits when the market is going down if you sold the market. There are no restrictions when selling (shorting) as found in the u.S. stock markets. And, there are no required contracts sizes, expiration dates, and other constraints found in the futures market. Profits can be made no matter if the market goes up or down giving you a win-win situation. Forex trading has enjoyed exponential growth and widespread popularity over the past few years since it was deregulated in 1997. it is only now that online foreign exchange trading is starting to get noticed. until recently, large international banks were the only ones in the foreign exchange market, selectively allowing access to Fortune 500 companies, large funds, high net worth individuals, etc. But now, there are online trading firms that provide individual traders like you and i with direct access to the largest, most liquid financial iT’S oNlY NoW THAT market in the world - the Forex. it is the oNliNE FoREiGN most perfect market that exists because it EXcHANGE TRAdiNG has a large number of buyers and sellers all iS STARTiNG To GET selling the same products. There is a free flow NoTicEd BY THE of information and there are few barriers to PRiVATE iNVESToR - THE TiME iS NoW! interfere with your participation. 10 11 CHAPTER 2 – WHAT Is fOREx & WHy TRADE IT? Over 85% of all Forex transactions involve 7 major currencies: uS dollar (uSd) japanese Yen (jPY) Euro (EuR) Swiss Franc (cHF) British Pound (GBP) canadian dollar (cAd) Australian dollar (Aud) Take the EUR/USD for example. The first currency (the Euro in this example) is called the base currency and the second is the counter currency (the uS dollar). in this pairing we can see how many uS dollars can be bought for one Euro (the base currency). A currency pair represents the exchange rate between the two currencies. Typically, trades of $1 million and above constitute the institutional marketplace. Trades below this $1 million threshold constitute the retail marketplace. The major dealing centres today are: london (with over 50% of the market) followed by New York Tokyo Zurich Frankfurt Hong Kong LONDON iS THE Singapore MAjoR dEAliNG Paris cENTRE FoR THE Sydney FoREX MARKET 11 12 CHAPTER 2 – WHAT Is fOREx & WHy TRADE IT? The major trading sessions in the Forex Market are: ASiAN Session (Tokyo) 7pm–4am EST uS Session (New York) 8am–5pm EST EuRoPEAN Session (london) 2am–12pm EST The uS EuRoPEAN overlap period 8am–12pm EST is the most active period and therefore the best opportunity for day traders looking for volatility. The biggest price movement frequently occurs during the European Session how is the forex Market Different? There are some significant differences between the forex market and other markets, for example the stock market. While it may be the feeling that a good trader should be able to handle any market, the fact of the matter is that some structural differences in forex can require a different trading approach. Trading potential in both rising and falling markets whichever trading transaction process you choose. in every open Forex position, an investor is A SHoRT PoSiTioN iS long in one currency and short in the other. oNE iN WHicH THE A long position is one in which the trader TRAdER SEllS THE BASE cuRRENcY. A buys the base currency in anticipation that it loNG PoSiTioN iS will appreciate. Equally a short position is one oNE iN WHicH THE in which the trader sells the base currency in TRAdER BuYS THE anticipation that it will depreciate. This means BASE cuRRENcY. that trading potential exists in a rising as well as a falling market. 12 13 CHAPTER 2 – WHAT Is fOREx & WHy TRADE IT? Forex is available to trade for more than 120 hours per week 24-hour trading is available most days. Whether it’s 6pm or 6am, somewhere in the world there are buyers and sellers actively trading foreign currencies. Traders can always respond to breaking news immediately, and P&l is not affected by after hours earning reports or analyst conference calls. No Exchanges The lack of an exchange is probably the next big thing that sticks out as being different in forex. While it is true that there is exchange- based forex trading in the form of futures, the primary trading takes place over-the-counter via the spot market. There is no NYSE or FTSE in the forex market. There is no central location for price data and no real volume information on the largest scale, forex transactions are done in what is referred to as the inter-bank market. That literally means banks trading with each other on behalf of their customers. larger speculators also operate in the inter- bank market where they can execute multi- million dollar trades with ease. individual traders, who generally trade in much smaller sizes, primarily do so through brokers and dealers. 13 14 CHAPTER 2 – WHAT Is fOREx & WHy TRADE IT? Superior liquidity With a daily trading volume that is 50 times larger than the New York Stock Exchange, there are always broker/dealers willing to buy or sell currencies in the Forex market. The liquidity of this market, especially that of the major currencies, helps traders either open or close a position more easily. Margin Trading The forex market is a 100% margin-based market. Margin trading allows the individual to trade with very little startup capital. Forex brokers offer much lower commission structures The most widely used forex transaction processes The transaction processes available in Forex trading are exactly the same as other products available to trade. The most widely used are: Spot Forex and Futures This is essentially trading a 2 day short term contract or Futures contract. if this is the area of Forex trading of most interest there are a few things to consider. Trading Spot Forex you do not take actual possession of any currency TRAdERS cAN AlMoST but have a theoretical agreement to do so AlWAYS oPEN oR in the future. This will enable you to benefit cloSE A PoSiTioN AT from price change for which your broker A cHoSEN PRicE duE To HiGH liQuidiTY. will require a deposit as security against any losses. 14 15 CHAPTER 2 – WHAT Is fOREx & WHy TRADE IT? Margin Requirements in Different Markers 60 % Margin Requirements in different Markers 50 % 40 % 30 % 20 % 10 % 0% Shares Futures Currencies The advantage with this is that you may earn interest on this deposit which is called a Margin Fund. The percentage of Margin requirements on Spot or short term Futures contracts is greatly reduced compared to trading other markets which is illustrated overleaf. With Spot Forex or Forex Futures contracts, trades are held overnight. The trader will either payout or receive interest on their position, depending on whether the interest differential is for or against the trade. This is referred to as a ‘rollover’. Spot Forex and Futures trades are carried out on a trading day basis and are technically closed out at the end of each day. Your broker will then roll forward your position to the next trading day and at which time you will payout or receive interest on your position. Some traders will hold open a position knowing the interest rate is in their favour and make more profit TRAdERS cAN PAY oR on their trade. REcEiVE iNTEREST oVER NiGHT dEPENdiNG oN THEiR PoSiTioN 15 16 CHAPTER 2 – WHAT Is fOREx & WHy TRADE IT? cFd’s (contract For difference) This is as the name suggests a contract or agreement between a broker and a client to buy or sell (go long or short) a currency at a pre-determined price multiplied by the number of cFd’s or lots in the contract. cFds enable the trader to trade a highly geared product, and typically leverage of 100:1 is available. A broker will charge a commission on the transaction which can vary between brokers. cFds enable the trader to hold a position over a period of time which maybe of more interest to those who are looking to trade less frequently. Currently in the UK profits from trading using a Spreadbetting account are tax free Spreadbetting This is a simple concept. if you think that a certain currency will rise, then you buy the currency (going long). if you are right then you will sell back the currency or close the position for a profit. If your trading strategy suggests that the currency will fall then you would sell the currency (going short). if you are right you would close the position or buy back the currency for a profit. NoTE: if you are wrong in either of the above examples then you would make a loss. In the UK, profits made from trading using iN THE uK THE PRoFiTS FRoM TRAdiNG uSiNG Spreadbetting are tax exempt and duty free. SPEAdBETTiNG ARE There is no commission to pay your broker as TAX FREE a fee. However, your broker will make money on the spread of the price between buying and selling a currency. 16 17 CHAPTER 2 – WHAT Is fOREx & WHy TRADE IT? Spreadbetting is a highly geared product giving you access to trade with many times your account size. Most brokers will allow you to open an account with very little capital which makes this product and the possibilities for trading so accessible to many. depending on how you are trading, whether Spreadbetting, trading cFds (contract For difference) or trading Futures there maybe other brokers commission
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