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Discipline and proper way of thinking is the way success in the money market.
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5 characteristics of a good trader
CommitmentDiscipline
StewardshipContinued Education
Patience
Which brings us to habits
If you always do, what you’ve always done…
You’ll always get what you always got!
We become experts at what we practice!
What you are about to learn is a LEARNED SKILL
Some get it quicker, but all can get it IF:
You PRACTICE, PRACTICE, PRACTICE
The Basics
The Forex market on average has daily volume of $1.5 Trillion per
day making it 150 times larger than the New York Stock Exchange!
$1.9-3.7 Trillion
The market is moved by the BIG BOYS – Bankers and Big Corporations
If you want to trade with the big boys you have to learn
how they think and how they will REACT!
UBS Warburg Trading Floor
Major Corporations Use It!DaimlerChrysler Profit Got Lift From Currency Trades FRANKFURT -- DaimlerChrysler AG acknowledged Tuesday that more than half of its second-quarter operating profit was generated by favorable currency trades, indicating the German-U.S. concern made more money on foreign exchange than it did selling cars.
Last month the auto maker reported quarterly operating profit of €641 million ($712.7 million). Although that was down 62% from the second quarter of 2002, it beat some analysts' estimates. At the time, DaimlerChrysler said currency trading to soften the impact of the euro's rise against the dollar had had a "positive effect" but didn't detail the extent of its gains.
Now the company says about €350 million in operating profit was generated through foreign-exchange transactions, confirming an article set to be published Thursday in a German newsmagazine.
U.S. BUSINESS NEWS August 21, 2003
That’s 55%
TIME LINE - EST
JPY 7 PM to 4 AM
London 3 AM till NOON
USA 9 AM to 4 PM
Distribution of Currency Pairs
USD/OTH17%
USD/EUR29%
USD/JPY20%USD/GBP
11%
USD/CHF5%
USD/CAD4%
USD/AUD4%
EUR/OTH2%
EUR/CHF1%EUR/GBP
2%
EUR/JPY3%
OTHER2%
Source: Stocks & Commodities Dec 03’
PIP = Price Indicator Point
A pip is the smallest movement a currency can
move
A ‘pip’ (price indicator point) is the smallest unit of movement that a currency lot can have – the last one or two decimals
The Bid is selling the Cross and the Ask is Buying the Cross
The Difference is called the Spread and is the Brokers FEE
You are borrowing one currency and paying for it with another
At the end of your trade if you made money you pay back
your loan and have an increase in margin
If not…you pay back the loan with your margin
Prices in Dollars
• Currency SELL BUY• USD/JPY 118.78 118.83• EUR/USD 1.2450 1.2454• GBP/USD 1.5558 1.5563• USD/CHF 1.4573 1.4578• Multiple Currency Crosses
available
Who gets the difference?
These are called the 4 Majors
Will I get the price quoted on the charts?
Bid
Ask
Actual Price right now
The FOREX Broker gives us the right to trade:
• Go LONG - enter the market
buying and exit the market
selling our Lots
• Go SHORT - enter the market
selling and exit the market
buying our Lots
FOREXInterBank Currency Market
Broker
The Trading Process
Buyer Seller
Deposit Funds
Place Order Place Order
Technical Traders Learnto Read Charts• Successful technical
traders read charts• Charts are telling a story!• Charts tell traders where
the market is POTENTIALLY going!
Reading Japanese Candlesticks
Open Close
High
Low Low
High
OpenClose
Candlesticks measure price fluctuations within a certain time frame
Japanese Candlesticks are telling a story
• Engulfing Candles• Doji Stars• Independent Candles
(tweezers)• Exhaustion Candles• Opening and Closing a
candlestick CAN be a big deal
Engulfing Candles• An Engulfing Candle is one that
follows a previous candle of the opposite color. The engulfing candle is much larger than the first.
Doji Stars• The Doji Star signifies indecision or
a turning point.
DOJI
Significant at the end of a run
Exhaustion Candles• The Exhaustion candle signifies a
turning point.• Find on the 30/60 minute chart for
best results
Independent CandlesTweezer Tops or Bottoms (Twins)
Let’s look at a run and see if the candles were “talking”
Your Charting software- your tool to reading charts
As you use the tools of your charts they will become clear
Inverse Relationships
Inverse Relationships
• EURUSD• GBPUSD
• USDCHF• USDJPY• USDCAD?????• OIL affects this currency
Ok now that we know about the Market, how do we actually trade it?Be sure and familiarize
yourself with your dealing station basics
They all have a tutorial and all will give you a one
on one class if you ask
Successful Currency Trading Requires Various Skills• Ability to MECHANICALLY make a trade
on a Brokers platform• Ability to determine the proper trend
• Overall trend • Trend of the day
• Ability to forecast future “BIG BOY” targets• HSI TARGETS and /or Fibonacci levels• Past Support and Resistance
• Ability to psychologically handle risk
Successful Currency Trading Requires Various Skills• Ability to Spot Chart Harmony = HAR-
MONEY• Ability to PAPER TRADE the past so you
gain EXPERIENCE• Ability to spot predictable chart patterns
• Head and Shoulders• Wedges
• Ability to Manage your Margin• Ability to determine Margin Risk and
Trade Risk
Let’s just look at a few of these to see if these skills have value
We will learn each of these pieces and more in lessons
posted at free4xtraaining.com
Find the Trend
• The Trend is your Friend• The Trend give us the overall
direction of the market• As good as that is, we still have to
find the TREND OF TODAY!• To find the OVERALL trend we use
a 240 min or Day chart – this tells us what the big Boys are doing
This chart is a 240 chart showing the Trend is DOWN!
But had you traded this currency Down you
would have lost since the TREND OF THE DAY has been UP!
In Trading the PAST foretells the FUTURE!
Big Boy Targets• The big boys use Fibonacci levels as
their targets• Fibonacci levels are a tool built into ALL
charts• Their values are mathematical
equations that the Big Boys use on every chart.
• Although the market moves in up and down patterns, the destinations remain the same…a mathematical future target – for ProAct Traders this is called the HSI Target
Click here and here
The Past movement
foretells the future targets
This is what a HSI Target looks like
Simply find a Bottom or Top ( depending on direction ) and the
HSI TOOL calculates the future target for Profit
Click on the HSI TOOL then find the bottom and
click
Result are these targets
HSI TARGETS – Up = Resistances
and Down = Supports
Once you have the Trend and the Targets of the Big Boys• You can the “predict” the
movement of the market down at a level you can trade and capitalize on
• You will trade the TREND OF THE DAY to the Big Boys TARGETS
These techniques plus others will be taught in the future• As you learn and internalize the
lessons several things happen:• You can make money• You gain confidence• You understand HOW THE MARKET
moves• You get to the next level• Stay with us as we learn together
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors.. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Traders should confirm entries before making a decision to enter the market. We recommend that traders should always be very selective with entries while using tight stops. encourages traders to become more selective with entries to learn how to increase the profit gain per lot and decrease the size of protection in order to
protect the margin accounts.