Peters - Forex for ambitious beginners: a guide to successful currency trading

Forex

ForAmbitious Beginners

smashwords edition

Forex For AmbitiousBeginners

2012 OdysseaPublishing

ISBN #978-90-810821-5-0

Copyright 2012Jelle Peters. All rights reserved. Except as permitted under theUnited States Copyright Act of 1976, no part of this publicationmay be reproduced, stored in a retrieval system or transmitted inany form by any means, electronic, mechanical, photocopying,recording, scanning or otherwise, without the prior writtenpermission of the publisher.

SmashwordsEdition, License Notes. This ebook is licensed for your personalenjoyment only. This ebook may not be re-sold or given away toother people. If you would like to share this book with anotherperson, please purchase an additional copy for each recipient. Ifyoure reading this book and did not purchase it, or it was notpurchased for your use only, then please return to Smashwords.comand purchase your own copy. Thank you for respecting the hard workof this author.

www.forexforambitiousbeginners.com

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Limit ofLiability/Disclaimer of Warranty: While the publisher andauthor have used their best efforts in preparing this book, theymake no representations or warranties with respect to the accuracyor completeness of the contents of this book and specificallydisclaim any implied warranties of merchantability or fitness for aparticular purpose. No warranty may be created or extended by salesrepresentatives or written sales materials. The advice andstrategies contained herein may not be suitable for your situation.You should consult with a professional where appropriate. Neitherthe publisher nor author shall be liable for any loss of profit orany other commercial damages, including but not limited to special,incidental, consequential, or other damages.

First Edition,July 2012

Table OfContents

Introduction

Part I Howdoes the forex market work

Part IITrading on the forex yourself

Part IIIUnderstanding and Predicting Price Movements

Part IV ForexTrading Strategies

Part V How tobecome a successful forex trader

Part VI ForexQuiz

The currencymarket (a.k.a foreign exchange, forex, FX) has been the fastestgrowing financial market of the past two decades and certainly alsoone of the most exciting ones. Since 2000 the daily transactionvalue at the forex has grown from $1,7 trillion to $3,98 trillion.That's 3,980 billion dollar, per day. By comparison, the averagedaily volume at the New York Stock Exchange, the most importantstock exchange in the world was $153 billion in 2008; in otherwords, 1/26 part the forex.

Several factorscontribute to the growing popularity of currency trading.

1. Theinternet. It's really no coincidence that currency trading hasgrown exponentially in the past decade. Thanks to the huge growthin the number of broadband connections, many individual consumersare now able to use the kind of online trading platforms that hadpreviously only been available to professional traders working outof dealing rooms.

2. An increasedwillingness to take risks. This new generation of traders is morecomfortable taking risks in exchange for a chance at bigger gains,and faster turn around on their investments.

3. Low start-upcosts. The forex trading game is open even to people with only acouple of hundred bucks to trade with. Try opening an equityaccount at your bank with just $100!

4. Lowoperation costs. Trading currency is cheaper, much cheaper, thantrading stocks. Forex brokers don't charge commission, only spread,making it a particularly interesting proposition for smalltraders.

5. Instantgratification. 'Now' is the new magic word in trading as well as ineverything else. The forex is open 24 hours a day, five days aweek, and is therefore much better equipped to cater to the needsof the 'I want it now' generation than stock markets, which areonly open for a couple of hours a day. People don't want to bedependant anymore on opening hours, or wait for investingopportunities that present themselves only once or twice amonth.

Now, chancesare that you've already heard some great stories about how easy itis to make money trading on the forex. Maybe you heard a storyabout a beginning trader just like you, who started out with just acouple of hundred bucks and with this or that simple strategy andmade tens of thousands of dollars in profit in only a fewmonths.

Yeah, that'snot gonna happen.

I don't want toburst your bubble or anything, but it's better to start out withyour feet firmly planted on the road to riches and not have yourhead filled with fantasies. The latter will only bring youunnecessary disappointment. Sure, for every trading strategy thereis one happy idiot who made a bundle using it. This kind of luckcan be seen at work in the lottery as well. As you have bought thisbook I take it you're not interested in the ins & outs of alottery (a losing proposition by the way) but want to learn abouthow to make money consistently trading currencies. And 'consistent'is one word 'luck' will never be friends with.

You shouldtherefore realize the following truth: trading the forex is not a'get rich quick scheme'. When you first start out trading thecurrency market, you will make errors. You will take on too muchrisk, forget to set your stop/loss, practice bad money management,lack an exit strategy, etc. Every beginner makes mistakes, it'sonly natural; the question is how many mistakes, how much will theycost you, and what are you going to learn from them.

This book won'tmake you rich, but it can quickly teach you a lot about how theforex works, what the most important trading strategies are, howyou can protect your trading capital and how to avoid many, many,mistakes. In short, this book will send you off to a flying startas a forex trader.

After readingForex for Ambitious Beginners you'll have an advantage over95% of those other beginning FX traders -- those unprepared and illequipped people who got in over their heads and were never heardfrom again.

Socongratulations with this excellent head start and all the bestwishes for the rest of your forex trading career!

JellePeters

P.S. Pleasevisit www.forexforambitiousbeginners.com if you have any questions about the book or the quiz.

To betterunderstand how the currency market works, it's important to know alittle bit about its history. For instance, what is the GoldStandard and does it still play a role in today's fast andfluid financial world? How long has the forex existed in itscurrent form? And who or what makes sure that everything at theforex happens according to regulations? What kind of regulationswould that be by the way? And while we're playing 20 questions, whyis the US Dollar so omnipresent on the forex? (the USD is presentin all five of the most important currency pairs)

Extra: The value of agiven currency compared to another currency is acquired by tradingit against that other currency in a 'currency pair'. The five mostimportant currency pairs are the EUR/USD | GBP/USD | USD/JPY |USD/CHF | USD/CAD. More about this in chapter 3 'How currency ratesare determined'.

Another oftenheard question -- Why is a currency market even needed in the firstplace? Why not simply choose a fixed ratio between currencies?Wouldn't that be easier not to mention cheaper and much morestable than a (completely) free floating currency market?