Forex Trading - IniForex
FREEFOREXEBOOK.ORGForex Trading
IndexIndexI - Forex AdvantagesII – 5 Myths about Forex TradingIII – How Can I Start Making Money on Forex?III.1 – Educate YourselfIII.2 – Plan How You Will TradeIII.3 – Develop Your StrategyIII.4 – Test Your Skills With Virtual MoneyIII.5 – Keep a Trading DiaryIII.6 – Improve Risk Management and DisciplineIII.7 – Be Patient and RealisticIV – Automated Forex TradingV – Best Hours to Trade ForexVI – Economic CalendarVII – The Most Useful Indicators on ForexVII.1 – RSIVII.2 – MACDVII.3 – Stochastic OscillatorVII.4 – Moving AveragesVIII – Recommended ResourcesIX – Free Reproduction and Distribution RightsX – Disclaimer23577891011121314151625253137414849502
Forex AdvantagesThe Foreign exchange market (also known as Forex, currency marketor FX market) is, by far, the largest financial market in the world. Itincludes trading between large banks, central banks, currencyspeculators, multinational corporations, governments, and otherfinancial markets and institutions.The average daily trade in the global Forex and related markets iscurrently over US 3 trillion.Lots of traders are starting to trade Forex due to the Forex marketadvantages. Here are the most important Forex marketadvantages:1 – 24 hours a day market:The Forex market is open 24 hours a day (except on weekends). So,no matter where you are based, you can trade Forex at your favoritetime.2 – High liquidity:Forex market is the biggest financial market in the world averagingover 3 trillion USD daily.3 – Leverage:The leverage on Forex can be as high as 200:1 which means that youcan trade up to 100K with just 500.4 – Easy short selling:On Forex it’s as easy to buy a currency pair as to short sell it. There’sno uptick rule like on Nasdaq.5 – Free commission fees:Commission fees are 0 on Forex. The only cost in buying a currencypair is the spread.3
6 – Free trading platforms:On Forex most brokers offer good trading platforms for free.7 – Free Demo accounts:Most Forex brokers offer free demo accounts which allow you to startpracticing with virtual money. This way you can learn Forex without riskingyour money.4
5 Myths about Forex Trading1 – If I know how to trade stocks, I know how to make moneyon Forex:If you have experience trading stocks and think you can simply applyyour knowledge on Forex and make money, you’re going to bedisappointed. The Forex market is much more complex. Firstly, theForex market is open 24 hours a day. This may not seem a big dealbut it’s a significant difference in relation to the stock market. As theForex market is open 24 hours a day, this brings more complexity toa trader. If in the stock market you have periods of higher and lowervolatility, in the Forex these differences are even higher.Many stock traders think the Forex market is easy because it is open24 hours a day. They think they can trade whenever they want andmake their quick bucks. Truth is you can make money in Forex. Butfor that, you need to have a deep knowledge about this market.The indicators that work in stocks don’t always work in Forex. TheForex market is more complex and, this way, the indicators that youuse on stocks don’t work so well here.Brokers are another huge difference between stocks and Forex. Inthe Forex market, due to the lack of regulation, a lot of Forex brokersdon’t act in their clients’ best interest. It’s a lot more difficult to find agood Forex broker than a stock broker.2 – Since the market is open 24 hours a day, you can makemoney anytime you want:Once again, this is not true. In order to make money, a trader needsvolatility. Although this market is open 24 hours a day, in themajority of the time there isn’t enough volatility to make good trades.This is a big challenge because volatility can appear at any time ofthe day and the trader can’t be watching the market all the time. Hehas to adjust his strategy in order to trade only in high volatilityperiods.5
3 – Commission trades are free on Forex market:You don’t pay a commission fee when you place an order. Although,you pay the spread, which is the difference between the bid and theask.This way, the more you trade, the harder it will be to make money inForex because you’ll have higher fees. In the Forex market, as in anyother market, a trader must avoid the overtrading at all costs.4 – You need to predict what will happen in order to makemoney in forex:In order to make money in Forex, you need to react to what ishappening. This is not the same thing as predict. A good tradersimply reacts to whatever the market is telling him. He analysescharts, reads the news and all information he has at his disposal inorder to react as fast as possible to market movements. A goodtrader is always looking to evolve and learn.5 – The more complicated my strategy, the best:This is another myth that has nothing to do with reality on Forextrading. The truth is that usually the simple strategies or systemsoutperform the complicated ones. So, there’s no need to use plentyof different indicators at the same time. Study the market, find yourfavorite system or strategy, and stick with it.6
How Can I Start Making Money on Forex?Educate Yourself:If you’re just starting on Forex, you need to read everything you canabout it. Start by reading free ebooks like this one and check sometop Forex courses on the market. Think about your education as aninvestment on yourself, not as an expense. Some people argue thatyou can learn everything about Forex for free. Well, it’s possible, butI seriously doubt anyone can become a good trader without investingin his education.This is true for everything in life, so how could it be different onForex? Can you imagine a doctor performing a surgery if he has notinvested in his education?The same happens in Forex. Forex is a business and as a business itneeds time and investment on your part. If you don’t treat it as abusiness you won’t be able to earn money on it.There’s no holy grail out there that can make you money effortlesslybut there are some courses and systems that can give you all theknowledge you need to succeed. Some good products that can giveyou good knowledge on Forex are Super Forex System, Forex Killer,Forex Hidden Systems, Supra Forex and 10 Minute Forex WealthBuilder. You can check the resources section at the end of this ebookto find more good options for you.The only good education that comes for free is the experience. This isa value resource and since all Forex brokers offer you a demoaccount for free, you can gain experience without risking any money.7
Plan How You Will Trade:You need to decide how you would like to trade. Would you like today trade? Would you like to swing trade? It all depends on yourpersonality and on the time you have to trade. There’s no such thingas the best trading style. The best trading style is simply the one thatbest suits your personality. If your personality is more suitable forday trading, you probably won’t be a bright swing trader. If youprefer less stress and/or you don’t have the time to stay in front ofyour screen all day, you will probably be better swing trading.8
Develop Your Strategy:This is the most important step to master the Forex market.You can use your technical analysis skills to define a trading strategyfrom scratch. Define it and test it deeply before you commit realmoney to it.You can also visit some websites in order to learn their own strategiesand techniques. Some good trading courses on the market are SuperForex System, 10 Minute Forex Wealth Builder, and Forex HiddenSystems. If you prefer to get a software you can look at Supra Forex,Forex Multiplier, Turbo Forex Trader or Forex Killer.If you prefer to use an automatic trading system, you can start withFap Turbo, Forex Autopilot or Forex Auto Run.These are great products which can help you start trading Forexsuccessfully.9
Test Your Skills With Virtual Money:Before you commit your hard earned money on a strategy or system,you should test it on a demo account. With this test, you will be ableto know how good your strategy is and you won’t risk a dime. Visit aForex broker and open a demo account. It’s 100% free and it willallow you to grow as a trader.10
Keep a Trading Diary:Keeping a detailed trading diary is what makes you grow as a trader.This is what allows you to learn from your experience. Good tradersusually have great trading diaries while bad traders simply don’t careabout them.On your trading diary, you should annotate all your trades as well asdescribe all the reasons that made you take the trade.You should also annotate your pace of mind when you entered thetrade and during the trade. Was there any economic release whileyou were holding a trade? If so, annotate it on your trading diary.The technical indicator that you were using gave you an exit signal,and you ignored it? Well, don’t be ashamed. Write it on your tradingdiary, and learn from your mistakes.All traders make mistakes. The difference between winners and losersis that winners tend to learn from those mistakes. Losers prefer toforget about them If you want to be a winner, you’ll need to build a great trading diaryand make it as much detailed as you can. You can even take somechart snapshots at the moment you entered and exited the trade andpost them on your trading diary so that, in the future, you can seethe reasons why you made your decision about a trade.In the future you can read your trading diary and learn about somemistakes that you made. This will allow you to correct these mistakeson your future trades.11
Improve Risk Management and Discipline:Risk Management is extremely important for a trader. If you want toachieve success, you need to adopt a disciplined mind about tradingand improve your risk management rules as much as you can. Youshouldn’t risk more than 2% of your account on a trade. This wayyou’ll be more relaxed because you know that if you lose money on atrade that’s not the end of the world. Besides this, if you have a goodsystem or strategy, you need to have the discipline to stick to yourrules.12
Be Patient and Realistic:You need to be patient and have realistic expectations about theForex market.The truth is that Forex is a difficult market, and unless you work hardon it, you won’t achieve consistent results. You need to treat Forextrading as a business and you need to be patient. In order to becomea professional trader, you’ll need some time.Don’t set unrealistic goals. If you do so, you’ll be frustrated when yourealize that you weren’t able to achieve them.When you define your goals in Forex trading, define ambitious goalsbut, at the same time, goals that you can accomplish. If you’re juststarting in the Forex market, define as a goal achieving a profit at theend of the month. It doesn’t matter if it’s a big profit or not, but ifyou can start with a profit, you’re on the right track.If you’re just starting and define goals like “I’ll make 20K by the endof the month”, you’re just dreaming. This is the kind of unrealisticexpectations that destroy most beginners in Forex. Since they defineunrealistic goals, they start taking huge risks in order to believe thatthey will achieve their goal. The worst part is when the huge risksdestroy their account, and they find out that Forex trading is not aget rich quick opportunity.Patience and realistic goals are really important for a Forex trader. Ifyou define good goals and you have the patience to work andimprove your strategy, you’re on the right track.13
Automated Forex Trading:If you use a 100% mechanical system you can literally put yourcomputer doing all the work for you. An automated Forex systemsearches for trades, and places trades on your broker. So, if you feelcomfortable with this kind of system, you just need to leave yourcomputer turned on 24 hours a day, and he’ll be trading for you.If you intend to use a 100% mechanical trading system to trade ww.metaquotes.net/). MT4 is a great platform and allowsyou to build virtually any kind of trading system.If you’re not a programmer, you can look for automated Forexsystems. These systems can be back-tested, and trade for you.Usually, you can define the maximum amount you’re comfortable torisk, and the system trades accordingly with your instructions. Whenyou have everything in place, you just need to leave your computeron, and it’ll do all the work.Some of the most reputable mechanical systems on the market areFap Turbo, Forex Autopilot, and Forex Auto Run. These are the onlyprofitable automatic systems I came across so far.14
Best Hours to Trade ForexSince the Forex market is open 24 hours a day, a trader can’t trackevery single movement on the market. It’s crucial for a trader toknow when he can expect high volatility, so that he can implementhis strategy on the most effective way. If you’re trading using dailycharts, the best period to analyze Forex is around 5pm EST becausethat’s the rollover period.If you’re trading on shorter time frames, you must know when youcan expect more volatility.The most important Sessions on Forex are:The Asian Session (7pm – 4am EST) – During this period, you cansuccessfully day trade especially if you trade the yen. USD/JPY is agood choice if you plan to trade on this session. This period is not asvolatile as the US session or the European session, but it’s possible totrade it and achieve a good performance;The European Session (2am – 12pm EST) – This is one of the bestperiods to trade Forex. Since most of the dealing desks of large banksare located in London, the majority of major Forex transactions arecompleted during this session. During this period you can implementa successfully strategy on any currency pair.The U.S. Session (8am – 5pm EST) – This is another great period toimplement your forex strategies. Volatility is good, and you canexpect good volatility on any currency pair.The European and U.S sessions are the most important ones onForex, so you can trade between 2am and 5 pm EST and get goodintraday swings almost every single day.Between 8am and 12pm EST we have the U.S. session and theEuropean session at the same time. This is the best time of the dayto trade Forex. Volatility is good in all currency pairs. Some of themost important economic releases appear during this period, and thisbrings good opportunities for Forex traders almost every single day.15
Economic CalendarA good economic calendar is essential to keep you informed about themarket. It allows you to know what economic indicators will bereleased and which expectations for those indicators are.Since some economic indicators usually bring volatility to Forex, it’simportant to stay on top of these indicators, and know what you canexpect.There are 2 outstanding indicators on the market, and both of themare 100% free.1. EconomicCalendar.htmThis calendar is extremely complete. When you visit this websiteyou’ll see a calendar like this one:16
Onee of the advantagges of thhis calenndar is thhat you can see theindiccators thhat will be releaased maany weekks from now. OtherOadvantage iss that whhen you clickcon theteconoomic releease namme, aw window opens with lots ofo details about thaat econommic indicaator.newFor example, if you click on “export“prices”,pyyou’llsee a chart thatws you thhe past inndicator releases,rthe highlights, the key facctorsshowand much moore:17
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The most immportant information is thee “releasse Detailss” which tellsyou the importance ofo this inndicator (rated froom A-F). An “A” iss anextrremely immportant indicator that brinngs big voolatility too Forex mostmof the times. An “F” is not usually an important indicatoor so it won’twbrinng much volatilityvt the matoarket.The “export prices”phaas the following “RRelease details”:19
Sincce this ecconomic release is a D, yoou know you shouldn’t exxpectmucch volatility on thee Forex marketmduee to this indicator.iFor examplee, the Noonfarm PayrollsP(which(iss the moost imporrtanteconnomic rellease for Forex traders) sttands as an A, as you can seeon thetfollowwing image:Knoowing thee importtance off an ecoonomic releaseriis extremmelyimportant soo that yoou can predict thee volatilitty you wwill face ono aspeccific day.20
2. Other great eeconomic calendaar is thhe DailyFFx econoomicar. You caan find it at http:///www.dailyfx.comm/calendar/calendaWheen you vissit dailyfxx calendar, you’ll seesthis caalendar:The best thing aboutt this caleendar is that it alllows youu to filterr thecaleendar so that it only dispplays thee indicatoors relateed with youryfavoourite cuurrency. You can also chhoose to see only imporrtanteconnomic inddicators.In orderoto filter the economicec calendarr, press thetfilter button att thetop right sidee of the calendar. You’ll seee the folloowing opttion:21
If yoou select to see, forf exampple, only economicc releasess related withUSDD with meedium andd high immportancee, you jusst need too deselectt theotheer optionss, and preess applyy filter:22
Noww, you caan only seesthe mostmimpportant inndicators related withUSDD. This allows you to stay ono top off the mosst importaant econoomicreleases, annd ignoree the onnes that usually don’t brring anytthingimportant to the Forex markett.Anoother goodd feature of this economicecalendarr is that iff you click onthe name of the econnomic eveent, it also shows you the ddefinition andrelevance on this indiccator. This way yoou can usually undderstand whatwa sppecific ecoonomic reelease meeans, andd what you can exppect on Forexin teerms of volatility.v23
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The Mosst Usefuul Indiccators on ForeexIn this chapter you’ll learn howw to use the most effective indicatorrs onForeex.I (Relattive Strrength Index):RSIThe Relative Strengthh Index (RRSI) is ann extremeely useful and poppularmommentum oscillatorr. The RSSI compaares the magnitude of reecentgainns to the magnituude of recent lossses and turnstthat informaationinto a numbeer that ranges fromm 0 to 1000.There are multiple waays that you can use the RSI.RYou can use it tospott Overbouught/Oveersold levels, to sppot diverggences thhat show youa treend is lossing steamm, or youu can use it to conffirm a treend.25
A - Overbought/OversoldRSI above 70 usually means the currency pair is overbought, so a topmight be near. RSI below 30 means the currency pair is oversold so abottom might be near.Generally, if the RSI rises above 30 it is considered a bullish signal. Ifthe RSI falls below 70, it is a bearish signal.Some traders identify the long-term trend and then use extremereadings for entry points. If the long-term trend is bullish, thenoversold readings could mark potential entry points.26
B - DivergencesBuy and sell signals can also be generated by looking for positive andnegative divergences between the RSI and the currency pair price.If the price reaches a higher high but RSI isn’t able to reach a newhigh, there’s a bearish divergence. If prices reach a new low, and RSIcan’t reach a new low, there’s a bullish divergence.Divergences that occur after an overbought or oversold readingusually provide more reliable signals.Here’s an example of a bearish divergence:On point 2, EUR/USD was at an higher level while the RSI was at alower level comparing to point 1. This is a clear bearish divergence onRSI. On this example, EUR/USD went from 0.9265 to 0.8635 whichrepresents a 630 pips downtrend.27
You can also see that around 0.8635 the RSI reached the oversoldlevel for the first time, and this represented the exact bottom forEUR/USD.Let’s take a look at another example. This time we’re looking at abullish divergence on RSI:As you can easily see, at point 2 the EUR/USD was at a new low,while RSI was at an higher value. This was a clear bullish divergencethat pointed to the upside.EUR/USD started a rally of almost 1000 pips until it reached a topwhen th
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6. The Basic Forex Trading Strategy 7. Forex Trading Risk Management . 8. What You Need to Succeed in Forex 9. Technical Analysis As a Tool for Forex Trading Success . 10. Developing a Forex Strategy and Entry and Exit Signals 11. A Few Trading Tips for Dessert . 1. Making Money in Forex Trading . The Forex market has a daily volume of over 4 .
1. Making Money in Forex Trading 2. What is Forex Trading Table of Contents 3. How to Control Losses with "Stop Loss" 4. How to Use Forex for Hedging 5. Advantages of Forex Over Other Investment Assets 6. The Basic Forex Trading Strategy 7. Forex Trading Risk Management 8. What You Need to Succeed in Forex 9.
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