15 LESSON OF FOREX (1)

LESSON #1:What Is FOREX and How to Take Part in the World's Largest, Most Liquid Trading Market
"If you think what you do is great, you ain't seen nothing yet. I'm an FX Trader".
Those were the words I heard over three years ago, and since then, regardless of how confrontational, competitive, or in- your-face they may have seemed at the time, I'm glad I heard them. I was just introduced to what we will affectionately call, throughout this mini-course (seriously), "The World's Most Powerful Home-based Business"
Even though you, and I, have had the opportunity to take part in trading foreign currencies for profit (in the same way banks and large corporations do) since 1998, it is just now becoming the cool, hip, new "thing" to talk about at parties, business events, and other social gatherings. Even though it HAS been somewhat of a loosely guarded secret, more and more investors are turning to the all-electronic world of FOREX trading for income and profit because of its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities.
But, still, whenever something SEEMS new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be overcome, the mind has to be open and the slate has to be clear for starting out fresh with the CORRECT information. So, in this first Lesson, it is our attempt to give you some solid, but not over-detailed, information on just what the heck "FX" (FOREX) means, what it is, and why it exists. Plus, we wouldn't want you to be the one giving the blank stare, at the parties, when someone brings it up :-)
If you'd like to make $200 to $3,000 for as little as ten minutes of work -- work that involves minimal risk, but plenty of upside potential -- then this ongoing email mini- course if for you. As a friend of mine said, “Trading FOREX is like picking money up off the floor. NOT trading FOREX is like leaving it there for someone else to pick up." Others in the industry have also said, “It’s like having an ATM machine on your own computer.”
In this 20-part e-Course series, we will show you what they mean.
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Here's the all-steak, no-sizzle explanation (one we feel you'll appreciate) of what FOREX is and how traders, like us, profit from it:
The Foreign Exchange Market, also referred to the "FOREX" or "FX" market, is the spot (cash) market for currency.
But, don't mistake what we're doing as trading the futures market, where you buy a contract to purchase a particular currency at a future price in time. What we do is much less risky than trading currencies on the futures market, much more profitable, and a lot easier, than trading stocks.
So, you're probably wondering where it's at ... or ... how to access the FX market? The answer is: FX Trading is not bound to any one trading floor and is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.
Yes, if that's the first time you've heard about an all- electronic market, we know this may sound somewhat intriguing to you. And, it should be, because it certainly is.
Here's what you are actually trading when you participate in the Foreign Exchange (FOREX) market: Essentially, like the large banks who use the FX market to protect themselves from the fluctuating exchange rate of different currencies, as an investor, what we're doing is simultaneously exchanging one countries currency for another. So, in actuality, we're electronically trading a currency-pair and the price that is quoted to us is the exchange rate between the two currencies.
If you just said, "Huh?" ...no worries, we've got ya covered with an explanation. In other words, simply the quoted price is how many of the one currency is worth 1 of the other currency.
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Example:
EUR/USD last trade 1.2850 - One Euro is worth $1.2850 US dollars.
The first currency (in this example, the EURO) is referred to as the base currency and the second (/USD) as the counter or quote currency.
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Okay, okay ... let me STOP myself before I get too deep into Currency Pair education (we'll cover that with you in Lesson #3)
Yes, this is a lot to share with you about this relatively new, exciting market of unlimited profit possibilities -- a market that has so many more advantages over other investments, and even over other businesses, that it will blow your socks off. And, being the curious, ambitious guy that you are, I know you'd like to dive in. So, stay tuned for tomorrow's email where we'll tell you why FOREX Trading is the ideal business and what its benefits are over other investing vehicles.
But ..... WAIT !!! I'll at least give you something to chew on overnight.
We get a lot of questions about FOREX - from folks who've never heard of it to advanced, highly-skilled traders.
The one question that keeps popping-up from the former group of people is this: "If people, like you, are making so much money by trading the FOREX, why would you share this information with anyone?" Here's the answer...
The FOREX has a DAILY trading volume of around $1.5 trillion dollars - 30 times larger than the combined volume of all U.S. equity markets. This means that 1,498,574 skilled traders could each take 1 million dollars out of the FOREX market every day and the FOREX would still have more money left than the New York Stock exchange every day!
Wow !
Yes, wow indeed. The FOREX plays a vital role in the world economy and there will always be a tremendous need for the FOREX. International trade increases as technology and communication increases. As long as there is international trade, there will be a FOREX market. The FX market has to exist so a country like Japan can sell products in the United States and be able to receive Japanese Yen in exchange for US Dollar.
So, before tomorrow arrives, just keep this in mind: There's plenty of money for plenty of traders to use the same trading techniques / tactics and profit immensely. And, with only 5% of the daily turnover of volume coming from banks, government and large corporations who need to hedge, imagine what the other 95% is for -- bingo, for speculation and profit.
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SIDENOTE: a lot of courses will spend several pages introducing the FOREX by giving a historical perspective. In our opinion, for a trader, this is a waste of time. Yes, it could be interesting to learn about the details on Who, What, When, Where and Why but, just know that historical knowledge will not help you to become a FOREX Trader.

15 LESSON OF FOREX (2)

LESSON #2:Why FOREX trading is quickly becoming one of the investing world's hottest, most rewarding opportunities. And, why it's our chosen 'Ideal Business.'
As ambitious, hungry, time freedom-driven entrepreneurs ourselves, before we were introduced to the concept of Trading-For-a-Living, we had the pleasure of reviewing and seeing IN ACTION hundreds of home business plans, profit-making ideas, and ways to earn a decent income outside of a J-O-B.
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SIDENOTE: while we realize the majority of you reading this know J-O-B stands for "Just Over Broke" and that you'll never become wealthy working one forever; and while we understand you're already determined to live your dreams and reach a level of REAL financial independence and Freedom, we still want you to know that it's NOT just all about money -- it's about quality of life. It's about time freedom and self-reliance. It's about families. It's about being able to life a live where you can achieve your recurring daydreams.
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We feel FOREX Trading allows you to live the life you've always wanted more so than any other income vehicle. It, in our opinion, is indeed "The World's Most Powerful Home-based Business". But, more than just analyzing them, we've been a part of quite a few (i.e., Direct Sales, delivery business, Real Estate, marketing consulting, risky investments, etc.). And from meeting with, interviewing, hearing about others in business, studying industries with intensity and/or reading about all the different "gurus of the moment", we have come to find a few SIMPLE truths:
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Business Truth #1:
Quite often people who have money don't have the time to enjoy it, and those that have the time don't have the money!
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Well, here's some compelling news for you ... You don't have to sacrifice a LIFE to earn an incredibly above-average income! This isn't a pipe dream. It's purely realistic and completely optimistic to say that, yes, if you FOCUS on FOREX trading for several months, you CAN bring your life into balance.
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Business Truth #2:
Before money is earned...something, somewhere, somehow has to be SOLD. And, if it's not a repeat type (consumable) product or service, as soon as you stop whipping up the sales force your income comes to a screeching halt!
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Listen: "money" is a medium of exchange, nothing more and nothing less. There's no magic way to acquire it. The way to build wealth is to exchange a value-oriented product or service for it. But what if, rather than hiring sales reps (or being one yourself), a full-time accountant, an attorney, administrative staff, customer service / human resource personnel (in other words, "employees"), you could work by yourself and have access to multiple thousands of "customers" (no need to advertise for them either) who are ready and able to BUY from you (or SELL to you) at the drop of a hat? And, wouldn't it be incredibly cool if your business could just laugh-off such traditional hindrances as competition, collection problems, changing fads, bad publicity, political or social events, etc?
Yes, all that and, oops, we almost forgot -- it gets even better... Trade from anywhere. If you like to travel, this is a dream business. Take your laptop with you and you can trade the FOREX and make money anywhere in the world where you have an internet connection. You have total freedom of location. Can you now see why we call this "The World's Most Powerful Home_based Business?"
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Business Truth #3:
A classic dilemma: for most, you can't get a job (or start a business) without experience (expertise) and you can't get experience (expertise) without a job (or being involved in business)
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When attempting to make more profit than losses on the fluctuation of exchange rates between major currencies (i.e., Trading the FOREX), nobody is going to ask you for a diploma, a formal license or verify the amount of hours you've spent studying the Foreign exchange market and banking industry. Nope, it just ain’t gonna happen! All the training you'll need to get going smoothly is included IN and WITH our Rapid Forex Training Courses (and, of course, the rest of this email mini-course series will give you more solid info than even some books do).
Now that we've talked some about how FOREX Trading Obliterates, like a nuclear explosion, the 3 main disadvantageous business TRUTHS above .....
Let's discuss the many benefits and advantages of FOREX Trading over Stocks & Commodities Here are the highlights on why FOREX is becoming the go-to market for private and institutional traders alike: The Main Benefits of Trading the FX Spot Market: (we'll get into some of the details after this)
· Never a 'Bear' Market!
· No Separate commissions!
· Low to Zero Transaction Costs / Narrow Dealer Spreads!
· A 24-hour Market with Superior Market Liquidity!
· It has up to 200:1 Leverage for Margin Trading!
· Streaming Executable Prices!
· Price Movements Are Highly Predictable!
· FOREX Trading is Economical and Start-up Costs are Low!
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Before we get into the details on the benefits listed above, student, trader, and all- around well-educated investor, it is important to know the differences between cash FOREX (SPOT FX) and currency futures.
In currency futures, the contract size is predetermined. With FOREX (SPOT FX), you may trade any desired amount, typically up to $100,000 USD. The futures market closes at the end of the business day (similar to the stock market). If important data is released overseas while the U.S. futures markets is closed, the next day's opening might sustain large gaps with potential for large losses if the direction of the move is against your position.
The Spot FOREX market runs continuously on a 24-hour basis from 7:00 am New Zealand time Monday morning to 5:00 pm New York Time Friday evening. Dealers in every major FX trading center (Sydney, Tokyo, Hong Kong/Singapore, London, Geneva and New York/Toronto) ensure a smooth transition as liquidity migrates from one time zone to the next.
Furthermore, currency futures trade in non-USD denominated currency amounts only whereas in spot FOREX, an investor can trade either in currency denominations, or in the more conventionally quoted USD amounts. The currency futures pit, even during Regular IMM (International Money Market) hours suffers from sporadic lulls in liquidity and constant price gaps. The spot FOREX market offers constant liquidity and market depth much more consistently than Futures. With IMM futures one is limited in the currency pairs he can trade - Most currency futures are traded only versus the USD - With spot FOREX, you may trade foreign currencies vs. USD or vs. each other on a 'cross' basis as well - ex: EUR/JPY, GBP/JPY, CHF/JPY, EUR/GBP and AUD/NZD (more on what these mean in Lesson #3 tomorrow)
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More and more savvy investor and entrepreneurs are shunning traditional financial markets, like stocks, bonds & commodities and building their fortunes in the foreign exchange (FOREX) marketplace.
Here are 7 important reasons why:
1): FOREX is the largest financial market in the world.
With a daily trading volume of over $1.5 trillion, the spot FOREX market can absorb trading sizes that dwarf the capacity of any other market. In fact, when compared with the $50 billion daily market for equities or the $30 billion futures market, it becomes quickly apparent this gives you, and millions of other FOREX traders, almost infinite trading liquidity and flexibility.
2): FOREX is a TRUE 24-hour market.
The FOREX Market never sleeps. Trading positions can be entered and exited at any moment - around the globe, around the clock, six days a week. There is no waiting for an opening bell as in the case of trading stocks. It is a 24- hour, continuous electronic (ONLINE) currency exchange that never closes. This is very desirable for you if you want to trade on a part-time basis, because you can choose when you want to trade: morning, noon or night.
3): There is never a Bear Market in FOREX.
You can have access to a seamless, mutually-inclusive (two- way) exchange of currencies. Meaning, because currencies trade in "pairs" (for example, US dollar vs. yen or US dollar vs. Swiss franc), one side of every currency pair (for example, USD/JPY - JPY = YEN) is constantly moving in relation to the other. Thus, when you buy a particular currency, you are actually simultaneously selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value versus the other. Of course, it is up to you to choose the correct currency to be long or short. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means you have equal potential to profit in both a rising or falling market.
4): High Leverage - up to 200:1 Leverage.
You are permitted to trade foreign currencies on a highly leveraged basis - up to 200 times your investment with some brokers. This is primarily attributed to the higher levels of liquidity within the currency markets. Standard 100,000- unit currency lots can be traded with as little as 1% margin, or $1,000. Mini FX accounts are permitted to trade with just 0.5% margin -- in other words, just $50 allows you to control a 10,000-unit currency position. Futures traders, who are accustomed to margin requirements generally equal to 5%-8% of the contract value, will immediately recognize that the FOREX market provides much greater leverage, and for stock traders, who must post at least 50% margin, there’s no comparison. If you’re looking for an efficient use of trading capital, this is it!
5): Price Movements Are Highly Predictable.
Although currency prices in the FX market may be volatile, they generally repeat themselves in relatively predictable cycles, creating trends. The strong trends that foreign currencies develop are a significant advantage for traders who use the "technical" methods and strategies we teach at RapidForex.com.
Unlike stocks, currencies rarely spend much time in tight trading ranges and have the tendency to develop strong trends. Over 80% of volume is speculative in nature and, as a result, the market frequently overshoots and then corrects itself. As a technically-trained trader, you can easily identify new trends and breakouts, which provide for multiple opportunities to enter and exit positions.
6:) Commission-free Trading and Low Transaction Cost
When you trade FOREX, through one of our recommended brokers (this info is in our private resources section), you'll do it totally commission-free! These brokers don't charge commissions to trade or to maintain an account, and that goes for all clients trading the FOREX through them, regardless of your account balance or trading volume. Even Mini FX traders can buy and sell currencies online, commission-free.
This is worth repeating: No FX commissions!
What about trading fees? There are none of the usual fees to which futures and equity traders are accustomed -- no exchange or clearing fees, no N_F_A or S_E_C fees. Because currencies trade over-the-counter (OTC), via a global electronic network -- in FOREX, what you see is what you get, allowing you to make quick decisions on your trades without having to worry or account for fees that may affect your profit/loss or slippage.
In the equities markets, you must pay both a commission and exchange fees. The over-the-counter structure of the FX market eliminates exchange and clearing fees, which in turn lowers transaction costs.
So, if FOREX broker don't charge commissions, how do they make money? Like all traded financial products, over-the- counter currency trading involves a bid/ask spread, which represents the prices at which your counterparty is willing to trade. Because the currency market offers round-the-clock liquidity, you receive tight, competitive spreads both intra-day and night. Stock traders can be more vulnerable to liquidity risk and typically receive wider trading spreads, especially during after-hours trading.
7): Instantaneous Order Execution and Market Transparency.
Market transparency is highly desired in any trading environment. The greater the market transparency, the more efficient the market becomes. Unlike other markets where transparency is compromised (like in the Enron scandal), FOREX markets are highly transparent (i.e., analyzing countries, and having access to real-time research / news, is easier than companies).
The FX market offers the highest level of market transparency out of all the financial markets. Because of this, order execution and fill confirmation usually occur in just 1-2 seconds. Markets that do not offer executable prices and force traders to absorb slippage obviously compromise the trader's profit potential considerably.
In the forex world, order execution is all-electronic and because you'll be trading via an Internet-based platform, instantaneous execution is routine. There are no exchanges, no traditional open-outcry pits, no floor brokers, and consequently, no delays.
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So, by now, if you haven't caught our FOREX fever -- our belief and interest in this market of unlimited profit- making opportunities -- well ... we're just not too sure what else we can do with you :-)
FOREX trading truly is the "World's Most Powerful Home-based Business" and we invite you to stay-tuned for tomorrow's lesson on *Currency Pairs* - how to read them, calculate profits, recommended pairs to trade, etc.

15 LESSON OF FOREX (3)

LESSON #3: How Currencies Are Traded, Understanding FOREX Quotes, Market Structure and How to Love a *pip* -- soon to be your best friend!
Before I get into how currencies are traded, quoted and structured, let me tell you about one of the best advantages of FOREX Trading. The amount of money you need to place a trade (known as "margin") is all that can be lost!
I state it like this (in a glass-is-half-empty, negatively- presumptive kind of way) because, even though I know with proper self-taught education you're NOT going to lose as much as you win anyway, I want you to know that despite the super-high leverage associated with FOREX trading (400:1 is possible; meaning if you put up $1 the trading vendor will allow you to trade like you really have $400), it's still arguably less risky than futures (commodities) trading.
(And, forget stocks, you'll never get this type of LEVERAGE in the equities market)
Futures markets are often prone to sudden and dramatic moves, against which you can’t protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you’ll be liable for any resulting deficit in the account. But because of the FX market’s deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills. And finally, there are no margin calls -- for your protection, ALL our recommended brokers will automatically close out some or all of your open positions if your account equity falls below the level required to hold the positions. Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance. In fact, if you pick from our list of recommended brokers, we guarantee that you’ll never lose more than you have in your FOREX account!
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Currencies are traded in dollar amounts called lots -- One lot is equal to $1,000, which controls $100,000 in currency. This is the "margin" I talked about above. Control $100,000 worth of currency for only 1,000 dollars. Good stuff, right?
Okay, let's move on....
Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded. The symbol for a currency pair will always be in the form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is the symbol for one countries currency and DEF is the symbol for another countries currency.
Here are some of the common symbols used in the Forex:
USD - The US Dollar
EUR - The currency of the European Union "EURO"
GBP - The British Pound
JPY - The Japanese Yen
CHF - The Swiss Franc
AUD - The Australian Dollar
CAD - The Canadian Dollar
There are symbols for other currencies as well, but these are the most commonly traded ones.
A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.
Some of the common PAIRS are:
EUR/USD Euro / US Dollar "Euro"
USD/JPY US Dollar / Japanese Yen "Dollar Yen"
GBP/USD British Pound / US Dollar "Cable"
USD/CAD US Dollar / Canadian Dollar "Dollar Canada"
AUD/USD Australian Dollar/US Dollar "Aussie Dollar"
USD/CHF US Dollar / Swiss Franc "Swissy"
EUR/JPY Euro / Japanese Yen "Euro Yen"
The listed currency pairs above look like a fraction. The numerator (top of the fraction or "left" of the / however you want to SEE it) is called the base currency. The denominator (bottom of the fraction or "right" of the /however you want to SEE it) is called the counter currency. When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency.
If this seems confusing then you're in luck. You can always get by with just thinking of the entire pair as one item. Then you are just buying or selling that one item. Thinking like this will still enable you to place trades. You only need to be aware of the base/counter concept for Fundamental Analysis issues.
So why is it important to know about the base/counter currency now? The base/counter currency concept illustrates what is actually taking place in a Forex transaction. Some of you reading this, know that short-selling was restricted in the stock market (Short-selling is where you sell a stock/currency/option/commodity first and then try to buy it back at a lower price later). But in the FOREX you are always buying one currency (base) and selling another (counter). If you sell the pair you are simply flipping which one you buy and which one you sell. The transaction is essentially the same. This allows you to short-sell with no restrictions!
You want to be able to short-sell with no restrictions so you can make money when the market drops as well as when it rises. The problem with traditional stock market trading is that the market has to go up for you to make money. With FOREX trading you can make money in all directions.
Love Your *pips*Currencies are traded on a price interest point (pip) system. Each currency pair has its own pip value.
Since we have a listed currency PAIR (i.e., EUR/USD, EUR/AUD), we need a way to talk about its associated number or price. When you see a FOREX price quote, you'll see something listed like this:
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The first component (before the slash) refers to the bid price (what you obtain in JPY when you sell USD). In this example, the bid price is 118.46. The second component (after the slash) is used to obtain the ask price (what you have to pay in JPY if you buy USD). In this example, the ask price is 118.51. The difference between the bid and the ask price is referred to as the spread (how brokers REALLY allow you to trade commission-free). In the example above, the spread is .05 or 5 pips.
Sometimes you won't see a two-sided quote, consisting of a 'bid' and 'offer'. But, rather, you'll see something like...
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When you see a Forex currency pair price quote, like the one above, just remember that that last digit of the price is referred to as the *pip*. So if you see a quote (123.50) and then a qu.ote in one min (123.51), the price rose 1 pip. Similarly, if you see a price quote of 187.50 and then after 5 min (187.58), the price rose 8 pips. The pip is always the last decimal place of the currency price quote.
YOUR GOAL IS TO CAPTURE AS MANY PROFITABLE pips AS POSSIBLE!
Since the US dollar is the centerpiece of the FOREX market, it is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair.
In the example above, a quote of USD/JPY 123.50 means that one U.S. dollar is equal to 123.50 Japanese yen.
When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote above increases to 124.01, the dollar is stronger because it will now buy more yen than before.
The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.4366, meaning that one British pound equals 1.4366 U.S. dollars.
In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar.
In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.
Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.
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So, now that you're fully indoctrinated into how to read currency quotes, let us remind you one on thing:
YOUR GOAL IS TO CAPTURE AS MANY PROFITABLE pips AS POSSIBLE!
Oh yeaaaaah ... that was already mentioned, wasn't it? :-)
The point: never lose sight of your objective. While the above lesson could go on and on for pages, it still wouldn't make you a world-class FOREX trader.
But, the combined power of our remaining lessons, just might.

15 LESSON OF FOREX (4)

LESSON #4: Buying (going "long") and selling (going "short") in the FOREX market. How to do it and calculate your profit or loss (you won't win ALL the time, but most of the time, YES, if you've got a good trading method).
Here's TWO timeless rules of Investing as they relate to today's lesson:
RULE #1) ~ Cut your losers; let your winners ride.
Let's be frank (we never promised any rose-colored glasses here did we? Well, at least not the ones you can wear ALL the time): YOU WILL HAVE LOSING TRADES.
We do. Every FOREX trader does. The key to being a consistent, predictable, reliable trader is to, at the end of the day, add up more wins than losses. And, when you KNOW (based off your trading rules), without a doubt, that YES, indeed you are, in a losing trade, don't keep losing money (lowering your stop loss) just to *prove you are right* or your rules are wrong (however you want to look at it).
Let's face it - you can't turn a sow's ear into a silk purse. You can't change the spots of a leopard and you can't turn chicken poop into chicken salad. The best trades are usually "right" immediately (the techniques, rules, methods and strategies we teach at RapidForex.com will be your best indicator for just what a "right" trade really is).
Remember, people have been trading the markets for a hundred and sixty years. The smart traders know there's going to be another trade. Cut your loses short and compound those winning positions.
RULE #2) ~ Thou Shalt Not Trade the FOREX Without the Placing of a Stop Loss Order.
When you place a STOP order, right along with your ENTRY order, via your online trade station, you've just automatically prevented a potential loss from "running" too far.
Before initiating any trade, if you haven't already figured out at what point you would be wrong and would want to cut your loses or, at the very least, reevaluate your position from the sidelines, then you shouldn't be putting on the trade in the first place.
Show us a FOREX trader who doesn't use stop loss orders and we'll show you someone who loses a lot of money.
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To make a profit, in the FOREX, a trader (possibly YOU soon?) can enter the market as a *buy position* (known as going "long") or a *sell position* (known as going "short").
For discussion, let's assume you've been studying the EURO (which, if you remember from yesterday's lesson, is paired first with the U.S. dollar or USD. Since it is paired first, it is the base currency).
Your trading methods, rules, strategies, etc., tell you that prices will rise during a particular timeframe. So you buy the EUR/USD pair (or, technically, you will simultaneously buy euros, the base currency, and sell dollars).
You open up your handy trading station software (provided to you for free by the online broker), which resides on your desktop, and you see that the EUR/USD pair is trading at:
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REMEMBER: the quote to the left of the / (1.3242) refers to the bid or "sell" price (what you obtain in USD when you sell EUR). The quote to the right of the / (1.3245) is used to obtain the ask or "buy" price (what you have to pay in USD if you buy EUR).
So, since you believe that the market price for the EUR/USD pair will go higher, you will enter a *buy position* in the market. For simplicities sake, let's say you bought one lot at 1.3245. As long as you sell back the pair at a higher price, then you make money.
But, no worries. This seemingly elaborate process is handled, and even calculated for you, via the broker's software mentioned above. The chart software and the quote board are in agreement with all sides of the currencies.
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To illustrate a typical FX SELL trade, consider this scenario involving the USD/JPY currency pair:
REMEMBER ~ Selling ("going short") the currency pair implies selling the first, base currency, and buying the second, quote currency. You sell the currency pair if you believe the base currency (USD) will go down relative to the quote currency (JPY), or equivalently, that the quote currency (JPY) will go up relative to the base currency (USD).
NOTE: while the Profit Calculations, on the Short-sell trade scenario below, may seem somewhat complicated if you've never been in the FOREX market before, trust us when we say, "this process is nearly seemless through your broker trade station (software). We're just showing you this thought- process below so you can SEE how a PROFIT occurs even when SELLING a currency pair.
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The current bid/ask price for USD/JPY is 105.26/105.30, meaning you can buy $1 US for 105.30 Japanese YEN or sell $1 US for 105.26 YEN.
Suppose you decide that the US Dollar (USD) is overvalued against the YEN (JPY). To execute this strategy, you would sell Dollars (simultaneously buying YEN), and then wait for the exchange rate to rise.
So you make the trade: selling US $100,000 and purchasing 10,526,000 YEN. (Remember, at 1% margin, your initial margin deposit would be $1,000.)
As you expected, USD/JPY falls to 104.26/104.30, meaning you can now buy $1 US for $104.30 Japanese YEN or sell $1 US for 104.26
Since you're short dollars (and are long YEN), you must now buy dollars and sell back the YEN to realize any profit.
You buy US $100,000 at the current USD/JPY rate of 104.30, and receive 10,430,000 YEN. Since you originally bought (paid for) 10,526,000 YEN, your profit is 96,000 YEN.
To calculate your P&L in terms of US dollars, simply divide 96,000 by the current USD/JPY rate of 104.30.
Total profit = US $920.42

15 LESSON OF FOREX (5)

LESSON #5: Charting Your Way to Success: FOREX Price Charts, What They Mean and How to Use Them "What's the difference between the speculative winner and the ignorant loser in FOREX?" my silver-tongue friend asked.
When I thought about it, numerous things came to mind - such as discipline, trading rules, not being greedy etc., but what came out of my mouth was really no big surprise:
"Understanding the charts... they represent so, so much. Ya gotta know they represent the lifeblood of the market. Know them well and you'll be head-and-shoulders above the rest."
We at RapidForex.com will be the first to admit that reading charts, and interpreting patterns, are more an art form than a skill; however, knowing you'll have to be personally in- tune and subjectively-creative with the charts (basing your entry and exit decisions on YOUR OWN combined methods of technical analysis) doesn't mean you should run-for-the- hills.
Nope, don't be scared...
The beauty of FOREX charts, as opposed to charts used for, say, daytrading stocks, is that they are pretty easy to interpret and use. They're a reflection of a slower-moving, stable economy (the one of a country) compared to the future and daily drama of company reports, Wall street analysts and shareholder demands.
And, don't forget...unlike stocks, currency charts rarely spend much time in tight trading ranges and have the tendency to develop strong trends (even though the FX market may be volatile, it's more predictable). And, rather than tens of thousands of stocks to analyze, you only have a few mayor currencies to trade.
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The complimentary charting software provided by any one of our recommended brokers will be absolutely sufficient for you to put your finger (eye) on the pulse of the market for any one currency pair.
Understanding just a few basic points, below, of the technical analysis of currency chart reading can lead to increased profit potential that far exceed the hazards of other markets.
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Pricing - Price reflects the perceptions and action taken by the market participants. It is the urgency between buyers and sellers in the Over-The-Counter (OTC) or 'interbank' market that creates price movement. Thus, all fundamental factors are quickly discounted in price. Therefore, by studying the price charts, you are indirectly seeing the fundamental and market psychology all at once - after all the market is fed by two emotions - Greed and Fear - and once you understand that, then you begin to understand the psychology of the market and how it relates to the chart patterns.
Data Window - Most FX online charting stations ,when you click on a price bar or candlestick, will display a small box of data usually called a display window which will contain the following items:
H = Highest_Price
L = Lowest_Price
O = Opening_Price
C = Close_Price (or Last_Price)
The most common types of price bars, used in FOREX trading, are the Bar Chart and the Candlestick chart:
Bars Charts - Price bars are a linear representation (a line) of a period of time. This enables the viewer to see a graphic representation summarizing the activity of a specific time frame. As an example, we use one minute and five-minute time intervals for our system. Each bar has similar characteristics and tells the viewer several important pieces of information. First, the highest point of the bar represents the highest price that was achieved during that time period. The lowest point of the bar represents the lowest price during the same period. Regular bars display a small dot on the left side of the bar which represents the opening price of the period and the small dot on the right side represents the closing price of the period.
Candlesticks - Japanese Candlesticks, or simply Candlesticks as they are now known, are used to represent the same information as Price bars. The only difference is that the difference between the open and close form the body of a box which is displayed with a color inside. A red color means that the close was lower than the open, and the blue color represents that the close was higher than the open. If the box has a line going up from the box it represents the high and is called the wick. If the box has a line going down from the box, it represents the low and is called the tail. Many interpretations can be made from these "candlesticks" and many books have been written on the art of interpreting these bars (you'll find a few links in our Resources Section).
So, the main thing to keep in mind between the two types of price charts is this:
Candlestick charts are similar to bar charts in that the top tip of a vertical line represents the high and bottom tip represents the low. However, market activity between the OPEN and the CLOSE is represented differently by the use of candlestick bodies.
Because of their colored bodies, candles provide greater visual detail in their chart patterns than bar charts. Which is why we recommend you become intimately familiar with Candlestick charts or, as we like to call them, "bar charts on steroids."
Chart Intervals & Time Frames: A chart Time Scale & Period, or timeframe, basically refers to the duration of time that passes between the OPEN and the CLOSE of a bar or candlestick.
While most of our trading methods, outlined in our course packages, will have you viewing the 5-min and 1-min candle charts, it is often useful to look at larger time frames (like the 1-hour or Daily chart).
For instance, with your broker software, you will be able to view a currency pair, in a 1-hour timeframe over a 2-day period, 5-day period, 10-day period, 20-day period and 30- day period.
Most of the short-term time intervals (5-min and 1-min charts) are used for entry and exit points and the longer- term time intervals (1-hour and daily charts) are used to gauge where the CORRECT trend is (we teach this extensively in our course titled "Rapid Forex Surfing").

15 LESSON OF FOREX (6)

LESSON #6:Economic Fundamentals: Or, What influences Prices In the FOREX market
Before we tell you a little about what this form of market analysis is and why you should, at least, know about it, use it some (but not necessarily focus on it), let us give you a few excerpts from two Traders being interviewed by Jack Schwager in the now-famous book MARKET WIZARDS.
Once you're through reading these beliefs, from two legendary market wizards, you'll have a good understanding on where our ideas lie when it comes to using one (fundamental analysis) or the other (technical analysis) or both to predict future currency pair price movement.
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[From page 161 - interview with Ed Seykota]:
QUESTION: What are your thoughts about using fundamental analysis as an input in trading?
ED'S RESPONSE: Fundamentals that you read about are typically useless as the market has already discounted the price, and I call them "funny-mentals." However, if you catch on early, before others believe, then you might have valuable "surprise-a-mentals."
QUESTION: You answer is a bit facetious. Does it imply that you only use technical analysis?
ED'S RESPONSE: I am primarily a trend trader with touches of hunches based on about twenty years of experience. In order of importance to me are: (1) the long-term trend, (2) the current chart pattern, and (3) picking a good spot to buy or sell. Those are the three primary components of my trading.
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Now, let's look at Bruce Kovner, who has a less pronounced one-sided belief on this issue:
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[From page 60 - interview with Bruce Kovner]:
QUESTION: Do you always use fundamental analysis in forming your trading decisions?
BRUCE'S RESPONSE: I almost always trade on a market view; I don't trade simply on technical information. I use technical analysis a great deal and it is terrific, but I can't hold a position unless I understand why the market should move.
There is a great deal of hype attached to technical analysis by some technicians who claim that it predicts the future. Technical analysis tracks the past; it does not predict the future. You have to use your own intelligence to draw conclusions about what the past activity of some traders say about the future activity of other traders.
For me, technical analysis is like a thermometer. Fundamentalists who say they are not going to pay any attention to the charts are like a doctor who says he's not going to take a patient's temperature. But, of course, that would be sheer folly. If you are a responsible participant in the market, you always want to know where the market is-- whether it is hot and excitable, or cold and stagnant. You want to know everything you can about the market to give you an edge.
Technical analysis reflects the vote of the entire marketplace and, therefore, does pick up unusual behavior. By definition, anything that creates a new chart pattern is something unusual. It is very important for me to study the details of price action to see if I can observe something about what everybody is voting for. Studying the charts is absolutely crucial and alerts me to existing disequilibria and potential changes.
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So, by now, you've probably figured out one of the unspoken truths of trading: there is a tendency to pigeonhole traders into two distinct schools of market analysis - fundamental and technical.
For forex traders, the fundamentals are everything that makes a country tick. The release of economic & inflation indicators (i.e., consumer spending, employment cost index, government spending, producer price index, etc.), political factors, government policy or an individual event can set the market in a frenzy. These have to be considered when making the decision weather to trade or not.
Technical analysis, which we will cover more in tomorrow's lesson, simply put is a way of using historical price data (via the charts) in different ways to predict the future price of a currency pair.
Charts are needed, but the reality is...
Fundamental analysis is a very effective way to forecast economic conditions, but not necessarily exact market prices. Or, said another way: as a general rule, while you DO need to have a handle on the most influential contributors for the cause of a currencies price to move up or down, you MUST trade in agreement with the supporting technical indicators.
The reason foreign exchange traders put the most emphasis on technical analysis is because traders around the world use similar charts and tools in predicting market trends. The reason the FOREX market can be so predictable some times is that if the majority are using the same graph for determining patterns and trends, then it is highly likely that they will act in a similar manner. So several thousand traders who have all charted the same resistance line, for example, will most likely either set their trades and direction to conform to that line.
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Since we'll be teaching you, via our courses, to become sound TECHNICAL TRADERS, we'll cover it more in detail tomorrow; however, we still wanted you to know what FUNDAMENTAL analysis is and what it does.
Here's a little more background.
When fundamental data is made available to the public there is a reaction from investors and speculators. Information in the form of news and economic indicators is more vague than that of technical indicators. There is a lot of gray area in this type of analysis. The market will ultimately react to how people think the economic data compares to the current market situation.
Economic indicators usually reveal information that "Should cause a currency to go up in price" or "May cause a currency to go down". The words 'should' & 'may' in the quotes above reveal the ambiguity of the fundamental data.
Here is an example of what analyzing fundamental data is like. Let's suppose there are six economic indicators (there are a lot more). Let's call our six indicators A,B,C,D,E, & F. Now we wait for the data from our indicators to be published in a financial magazine or at an online source. We manage to get the readings for our economic data for the EURO:
Indicator A: is in a range where the Euro may go up Indicator B: is in a range where the Euro should go up Indicator C: is in a range where the Euro could go down Indicator D: is in a range where the Euro usually goes down Indicator E: is in a range where the Euro could go up Indicator F: is in a range where the Euro may go down.
By looking at the above indicators, you don't know what the Euro is going to do. Furthermore, currencies are always traded in pairs (as was explained in Lesson #3). So you would have to get the fundamental data for another currency pair and compare it with the EURO. We think you can appreciate that this is no simple task.
We do not want to discourage you away from fundamental data. The best way to learn is to learn about one piece of economic data at a time. Eventually you will build a puzzle from all of the fundamental and technical data and make more informed trading decisions.

15 LESSON OF FOREX (7)

LESSON #7: Technical Analysis: Or, How to Predict the Future by Studying the Past (even if the "past" was 15 minutes ago).
As you've probably guessed by now, the reason we touched upon TECHNICAL analysis in yesterday's lesson, but saved its DETAILED discussion for today (last, behind the discussion of FUNDAMENTAL analysis), is twofold:
#1) to ensure you know they're mutually-inclusive. The best traders don't discount one or the other but understand that having a grasp on how the fundamentals influence market sentiment gives him/her an edge over those traders who don't.
#2) to ensure you know that TECHNICAL analysis is the easiest and most precise way of trading the FOREX market.
Before we tell you more about technical analysis, understanding the philosophical assumptions on which technical analysis is based, and why it's ideally-suited for the FOREX market, would be a good start:
#1) "The numbers don't lie" - all available information and its impact on traders, and the market, are already reflected in a currency's price.
#2) Prices move in trends - the foreign exchange market is mostly composed of trends and is, therefore, a place where technical analysis can be very effective.
#3) History repeats itself - over time, certain chart patterns become consistent, predictable and very reliable. The catch is SEEING them. There's always more than meets the eye at first glance.
The Magic Bullet, the Holy Grail, the Secret Sauce:
While we're not claiming that you'll become wealthy by diving deep and hard into FOREX technical analysis, techniques, methods, etc., we WILL go on the record and say that all wealthy FOREX traders DO perform technical analysis.
Why ?
Because, like us, they have unyielding B-E-L-I-E-F in one simple TRUTH:
*** PRICES MOVE IN TRENDS ***
The traders who don't believe this obviously have no need to implement a trading methodology on technical analysis. But, over 100 years of research has shown that those who trade "with the trend", more often than not, greatly improve their changes of winning (i.e., making a profitable trade).
Many times finding the prevailing trend will help you become aware of the overall market direction and offer you better visibility--especially when shorter-term movements tend to clutter the picture. And many times following the trend will bail you out of an initially less than great entry point.
So, how does technical analysis help you to determine what the trend is and HOW to trade *with it* versus against it?
Okay good question Rapidforex and, yes, we'll answer that, but before we do, let us first make sure you understand one very IMPORTANT POINT:
Even though, through our courses, we teach you how to use and read various technical indicators to identify a long- term trend, spot predictable chart patters and use certain rules to enter and exit a high-probability trade -- and even though all this involves sound logic, parameters, proven methods, processes, formulas, data, and research, these technical indicators, by themselves, are not the Holy Grail of FOREX trading. But, they're not some passing fad or hyped-up secret black box either. Beyond the mere rules, the human element is core to the strategy. It takes discipline and emotional control to stick with trading Following through the inevitable market ups and downs. Keep in mind though, good technical traders expect ups and downs. They are planned for in advance.
Okay, so now that you know that we're not claiming technical analysis is the Magic Bullet of trading (we often get asked, "Of the indicators you teach us how to use, which ones are better?" and we reply: NONE - technical indicators should simply be components of your overall customized / personalized trading system and not systems in and of themselves. They are like tools in a tool kit, not the kit itself!) let's talk about what technical analysis helps you look for:
The objectives - As a FOREX Technical Trader, your goals are:
#1) To figure out the price action of the currency pair. Price is the main concern. If the EUR/USD is at 1.3224 and goes to 1.3220, 1.3114, 1.3010 - the market is in a down trend. Despite what every technical indicator might predict, if the trend is down, stay with the trend. Indicators showing where price will go next or what it should be doing are useless. A trader need only be concerned with what the market is doing, not what the market might do. The price tells you what the market is doing.
#2) To always remember that technical indicators are only giving you confirmations based on what the market is telling you. So listen to the market and let it dictate which method you will use and which tool you will pull out of your bag of strategies and techniques. For only by listening to the markets will you ever be able to conquer it successfully!
Indicators: Their UsesHere are just a few of the most popular indicators and their purposes as they relate to the Currency Markets.
<<<>>>
If you believe in the "trend-in-your-friend" tenet of technical analysis, moving averages are very helpful. Moving averages tell the average price in a given point of time over a defined period of time. They are called moving because they reflect the latest average, while adhering to the same time measure.
A weakness of moving averages is that they lag the market, so they do not necessarily signal a change in trends. To address this issue, using a shorter period, such as 5 or 10 day moving average, would be more reflective of the recent price action than the 40 or 200-day moving averages.
Alternatively, moving averages may be used by combining two averages of distinct time- frames. Whether using 5 and 20- day MA, or 40 and 200-day MA, buy signals are usually detected when the shorter-term average crosses above the longer-term average. Conversely, sell signals are suggested when the shorter average falls below the longer one.
There are three kind of mathematically distinct moving averages: Simple MA; Linearly Weighted MA; and Exponentially Smoothed. The latter choice is the preferred one because it assigns greater weight for the most recent data, and considers data in the entire life of the instrument.
<<<>>>
Moving Average Convergence Divergence: MACD is a more detailed method of using moving averages to find trading signals from price charts. Developed by Gerald Appel, the MACD plots the difference between a 26-day exponential moving average and a 12-day exponential moving average. A 9- day moving average is generally used as a trigger line, meaning when the MACD crosses below this trigger it is a bearish signal and when it crosses above it, it's a bullish signal.
As with other studies, traders will look to MACD studies to provide early signals or divergences between market prices and a technical indicator. If the MACD turns positive and makes higher lows while prices are still tanking, this could be a strong_buy signal. Conversely, if the MACD makes lower highs while prices are making new highs, this could be a strong bearish divergence and a sell signal.
<<<>>>
The basic interpretation of Bollinger Bands is that prices tend to stay within the upper and lower bands. The distinctive characteristic of Bollinger Bands is that the spacing between the bands varies based on the volatility of the prices. During periods of extreme currency price changes (i.e., high volatility), the bands widen to become more forgiving. During periods of low volatility, the bands narrow to contain currency prices. The bands are plotted two standard deviations above and below a simple moving average. They indicate a "sell" when above the moving average (or close to the upper band) and a "buy" when below it (or close to the lower band). The bands are used by some forex traders in conjunction with other analyses, including RSI, MACD, CCI, and Rate of Change.
<<<>>>
Fibonacci retracement levels are a sequence of numbers discovered by the noted mathematician Leonardo da Pisa during the twelfth century. These numbers describe cycles found throughout nature and when applied to technical analysis can be used to find pullbacks in the currency market.
Fibonacci retracement involves anticipating changes in trends as prices near the lines created by the Fibonacci studies. After a significant price move (either up or down), prices will often retrace a significant portion (if not all) of the original move. As prices retrace, support and resistance levels often occur at or near the Fibonacci Retracement levels.
In the currency markets, the commonly used sequence of ratios is 23.6 %, 38.2%, 50% and 61.8%. Fibonacci retracement levels can easily be displayed by connecting a trend line from a perceived high point to a perceived low point. By taking the difference between the high and low, the user can apply the % ratios to achieve the desired pullbacks.
<<<>>>
RSI stands for Relative Strength Index. The RSI measures the markets activity as to whether it is over bought or over sold. It gives a trader an indication as to which way the Market is moving. It is important to note, that this is a leading indicator and thus allows one to see what the market is ABOUT to do and then act accordingly. The higher the RSI number, the more over bought it is and conversely the lower the RSI number, the more over sold it is. It is a great leading indicator for the micro and macro reversals in the market. By using an RSI on the 1 minute chart set at a period of 18 and overlaid on the bottom of your charts tend to give the best entry signals. This can also be applied to the 5-minute chart as well. The two significant entry numbers are 25 and 75.
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Technical Traders use some of these indicators, all of them, or a combination of them (our course packages tell you HOW we use various indicators to trade successfully) to confirm that they really do have a high-probability trade signal. A consistently winning FOREX trader will use 3 or 4 indicators to provide a DEFINITIVE signal to get in a trade.
Always remember: missed money is always better than lost money !
The GOLDEN RULE is this: Technical trading should be primarily systematic with a touch of "gut check" (see Ed Seykota's interview excerpt from yesterday's lesson).
Price and time are pivotal at all times. Technical methods are not based on an analysis of fundamental supply or demand factors, political news, or a countries economic profile.
Rather, to our pleasure, Technical Trading, gives us a good handle on how to answer these critical questions:
- How and when to enter the market.
- How many lots to trade at any time.
- How much money to risk on each trade.
- How to exit the trade if it becomes unprofitable.
- How to exit the trade if it becomes profitable.

15 LESSON OF FOREX (8)

LESSON #8: "A rising tide raises all ships" ... Or ... How To Determine if the Trend is truly your friend.
As we explained yesterday, the basis behind using technical analysis is to find trends when they first develop so you can ride the trend until it ends. The foreign exchange market is a very STRONG trending market and is, therefore, a place where technical analysis can be very effective.
But, as sure as the day is blue, we still know and meet traders every week who still end up buying (being "long") while the currency pair is in a basic downtrend, or selling short when a market is in a uptrend.
The key here is this: (it's so simple, some want to overlook it or "argue" with it).
Use as many technical indicators as you want, or create a personalized trading strategy based off a combination of indicators, to RECOGNIZE THE TREND. In other words, professional FOREX traders try to identify the major trend, the intermediate trend, and the short-term trend and then construct their trades in that direction, based off how long their rules allow them to hold a position.
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"We know that prices move up and down. They always have and they always will. My theory is that behind these major movements is an irresistible force. That is all one needs to know. It is not well to be too curious about all the reasons behind price movements. You risk the danger of clouding your mind with non-essentials. Just recognize that the movement is there and take advantage of it by steering your speculative ship along with the tide. Do not argue with the condition, and most of all, do not try to combat it."
-- Jesse Livermore
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So, what is Mr. Livermore - one of the most colorful, flamboyant and respected market speculators of all time - telling us?
In our terms, he's saying: If the action of the market shows your judgment to be correct, the successful trader 'stays with the market' and endeavors to make the maximum profit on each trade, according to his/her risk-to-reward / equity management rules. If and when the market goes against him/her, the smart trader will take profits and get out. In a narrow market (see definition below), when prices are not going anywhere to speak of, but move within a narrow range, there is no sense in trying to anticipate when the next BIG movement is going to be - up or down.
What Mr. Livermore is saying is to watch the market and see what the market is telling you about upcoming trends. Never argue with the market, or ask it for reasons or explanations.
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The market often display's some very familiar patterns of price movement. Once a pattern is established, it becomes the most probable course of future price action until the market changes.
There are two types of markets which will become important for you to identify; trending and trend-less. Each market type has two specific patterns which you will also notice over time.
These market types and patterns are defined as follows:
>>> Trending - Steady elongated price movements with less than a 45-degree angel with occasional pauses, profit taking, or resting periods.
In a Trending market, you have:
- Uptrends - A pattern of higher highs and higher lows.
- Downtrends - A pattern of lower lows and lower highs.
>>> Trend-less - Erratic price movements which are often steep ( greater than 45 -degree angle ) and cannot sustain and thereefore must reverse. Although the movements can move many points in a short period of time, they often result in very little net price movement over time.
In a Trend-less market, you have:
- Choppy - An erratic pattern of higher highs and lower lows.
- Sideways - A narrow pattern of lower highs and higher lows.
While up-trend and down-trend days can offer excellent trading results, choppy markets often create stop outs, while sideways markets produce for little in either direction.
Your trading objective is to get into a trending market and ride until you make our target objective.
We cover many Trend Trading Strategies in our book, "Rapid Forex Surfing" -- you will learn how to identify and draw your own channel trendlines, support and resistance lines, triangle patterns, chart key top and bottom formations, etc. (just head on over to http://www.RapidForec.com to learn all about this amazing course).

15 LESSON OF FOREX (9)

LESSON #9:FOREX Order Types and How to Use Them
When you open your trading station software (provided to you for free by any one of our recommended brokers), you will find there are TWO main ways to ENTER a market or, said in another way, there are two ways to place an initial order to buy or sell any currency pair.
(AFTER we discuss the MARKET and ENTRY order, we'll cover how to protect your profits and limit any potential or realized losses with the STOP and LIMIT order).
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MARKET ORDER - an order to buy or sell a currency pair at the market price the instant that the order is received and processed (within seconds of hitting the "OK" button on your screen). When a market order is placed, you are simply saying "I'll buy or sell the currency pair at whatever price it is at when my order gets processed."
Example: If you are looking to place an order for JPY (YEN) when the dealing price is 104.00/05, a market order will request to buy JPY at 104.00 or will request to sell JPY at 104.05 (of course, whether you BUY it or SELL it is up to you and is chosen on the software drop down box. And, again, once you've made your selection, this order is placed with a single click and is executed almost instantly).
Within the courses we have for sale at RapidForex.com, 99% of the time, we will have you avoiding MARKET orders. The reason? They tend to compel the trader to act on impulse instead of according to a trading plan.
ENTRY ORDER - an order to buy or sell a currency pair when it reaches a certain price target. This can be any price in theory. You could set an entry order for the low price of a time period, or the high price of a time period. For instance, in one of our courses (Rapid Forex Education Manual 9.0) we teach you to always set an ENTRY order to be the same price as the *open price* of the time period. When you place an ENTRY order to BUY, for example, you are simply saying "I want to buy this currency pair at a certain price, if it never reaches that price, I don't want to purchase the pair."
Example: the current "real-time" quote for the EUR/USD is 1.3317. Your analysis shows that IF the pair hits 1.3329 (a key resistance point) that there's a high-probability the pair will turnaround (retrace down) so you decide to place an ENTRY order to sell the EUR/USD at 1.3327.
The ENTRY order above shows you how you are fully-empowered to pick a price and place an order to sell at that price. If the market hits 1.3327 ... great, you now have an OPEN position and, as long as the EUR/USD pair keeps dropping and you close out (exit) your trade at a price lower than 1.3327, you make money.
And, if you don't get in the trade, via your ENTRY order, don't worry. New trades are constantly developing and if your order entry doesn't get filled you can't lose any money. Learn not to be upset when an ENTRY order isn't filled. You are saved most of the time anyway because the currency pair did the opposite of what you thought and you would have lost money, most likely, if it did get filled. Remember, when orders are not filled, it means you never risked any money!
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After your ENTRY order is placed, you can set a STOP and/or LIMIT order if you desire. STOP and LIMIT orders are both ways to exit a trade, automatically (i.e., without closing out your position via the click of your mouse - manually), after the trade is entered.
A STOP order (something we always recommend) is used to stop losses. A LIMIT order (recommended if you can't monitor your open trade) is used to redeem profits. Where these orders are placed, in relation to your open trade, depends on the direction of the entry order.
Example STOP order: If you have an open buy position on USD/JPY, which you bought at 104.20, and you want to set a stop order in case the U.S. Dollar starts to depreciate against the YEN, to stop your loss (or limit your loss - however you want to look at it), you could set a stop order at 104.00, thus closing your position at a 20-pip loss.
Tip: a STOP order is always placed BELOW the current market value of that currency pair (if you are in a long trade).
Example LIMIT order: Assume you placed an ENTRY order to BUY EUR/USD for 1.6100. You might place the STOP order at 1.6081 (limiting your loss to 19 pips) but, at the same time, you could place a LIMIT order for somewhere around 1.6171. If the currency pair reaches that price level, the LIMIT order becomes a market order to sell, or close out, the BUY position for a 71-pip profit.
Tip: a LIMIT order is always placed ABOVE the current market value of that currency pair (if you are in a long trade).
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This is all you really need to know in terms of placing orders. It's really not that complicated and, of course, our courses will walk you through the finer points of calculating your entry and exit points and ensuring you know how to scale in and out of trades with ease and precision.
If you've ever traded ONLINE before, maybe using e-Trade or a stock brokers online software package, you will be pleasantly surprised at just how intuitive, fun, and easy it is to use the desktop-based online software that a reputable FX broker can provide you.

15 LESSON OF FOREX (10)

LESSON #10: Account Size, Lots, Margins, and the Allure of 200:1 Leverage
As you first learned in Lesson #2, no other market in the world allows the LEVERAGE that the exciting world of currency-trading does.
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Sidenote: LEVERAGE refers to margin trading. In the FOREX market, it is essentially the ratio of the amount used in a trade to the required security deposit needed, by the broker, for that trade.
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Normally, for most brokerages (at least the ones we recommend), a margin deposit of just $1,000 allows you to control a $100,000 position in the FOREX market. That's 100:1 leverage, or 1%. Or, said another way, a *regular full-sized account* -- sometimes referred to as a 100k account -- allows you to trade with lot sizes equal to $100,000. Each lot is worth $100,000 in currency. It will only_require_$1,000 to trade one lot (aka, "contract")
Think about this for a moment (it is what makes this market the hottest market to trade in right now): The FX broker has loaned you $99,000 dollars secured only_by_your $1,000. This is HUGE and, as you know by now, is what allows traders to make extraordinary incomes in this market. And, as you also are probably used to hearing - "leverage is two-edged sword" - it is what can cause you to lose a lot of money if you trade without rules or Stop-loss orders.
But, for argument's sake (and to keep the continued tone of this course on encouraging you to become a FOREX trader), let's just say you WERE the person to trade with reckless abandon -- with no common sense, no strategy, no money- management principles, etc. While we don't recommend that ... still, consider this:
Unlike Futures (Commodity Trading), the market that most people associate with HIGH leverage, you can never have a debit balance when trading FOREX!
So, despite the greater leverage associated with FX trading, it's still arguably less risky than futures trading. Futures markets are often prone to sudden and dramatic moves, against which you can't protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you'll be liable for any resulting deficit in the account. But because of the FX market's deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills.
And finally, there are no margin calls -- for your protection, the FX broker's trading platform will automatically close out some or all of your open positions if your account equity -- meaning the total floating value of the account -- falls below the level required to hold the positions. Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance.
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A Quick NOTE about Margin:
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Besides being generous with their margin requirements (LEVERAGE), FX brokers also are very flexible with you. In other words, you are able to select the degree of leverage, or "gearing" as they call it, that you feel works best for you. The default margin for most brokers is set at 1% (and, of course, most traders prefer the lowest possible margin requirement), but if you prefer to trade with less leverage, some brokers allow you to trade with a 2% margin.
For instance, if you start with a 2% margin, then it will cost you $2000 to place a one-lot trade on a 100K (full) account. Your leverage is now 50:1 versus 100:1. As discussed in Lesson #3, currency moves in price-interest- points (pips), and in a regular (100K) account, each pip is worth about $8 to $10.
Mini Lots VS. Full-sized Lotsand How to Achieve up to 200:1 Leverage:
The Mini Account (explained more below) uses a different leverage calculation than a regular (100k) account. Instead of trading full-size currency lots (100,000 units), you'll trade in lots that are just 1/10 the size (10,000 currency units), which greatly reduces your risk. Pips in a Mini Account are worth, on average, $1 instead of the $8 to $10 mentioned above. The Mini FX account offers up to 200:1 leverage -- just a $50 margin deposit allows you to trade lots worth roughly $10,000 -- but the smaller lot sizes, with correspondingly smaller pip values, means that you'll be assuming less total risk. For example, while a 20-pip loss on a 100,000 EUR/USD position would be $200, the same loss on a 10,000 EUR/USD position in a Mini account would amount to $20.
So, here's the OVERVIEW of LEVERAGE (Margin, Account Size) on each of the two accounts discussed above:
100K (Regular Full-sized Account) - Minimum required account deposit = $2,000 - Recommended required account deposit = $5,000 to $10,000 - Traded in 100,000-unit currency lots - Default Margin: set at 1% ($1,000 per lot) - Leverage = 100:1 or 50:1 (if margin is set at 2%)
MINI Account - Minimum required account deposit = $300 - Recommended required account deposit = $2,000 - Traded in 10,000-unit currency lots - Default Margin: set at 0.5% ($50 per mini-lot) - Leverage = 200:1
Because there is no downside to trading a MINI Account (i.e., you're still entitled to all the benefits that full- size FX account holders enjoy - same state-of-the art trading software, charts, resources, and tools, etc.), and it is ideal for a new FOREX trader to develop a disciplined, rational forex trading strategy without excessively focusing on profits and losses (note: with less than $5,000 starting capital, you can't be WRONG too many times when trading with a regular account). . . we've developed an extensive complimentary course on how to use a MINI account.
If you haven't already read "Forex Freedom", just follow these instructions:
START SMALL, BUILD UP CONFIDENCE !!
There is NO MAXIMUM trade volume on the Mini account. Although the standard trade size is 10,000 units – you are not limited to trading one lot! For instance, you can trade 10,000 units, 50,000 units or 150,000 units. This means as you become more seasoned and build up confidence you can slowly increase the size of your positions to maximize profits (and losses). In fact the trade size of 10,000 units allows for more flexibility in terms of customizing the size of your trade. The ability to customize the size of the trade enables better risk management.
DEVELOP YOUR TRADING SKILLS WITHOUT FOCUSING ON P&L !!
When trading 100,000 currency unit lots in a regular, full- size account, if you have a relatively small balance, you may tend to fixate on your equity fluctuations and sometimes base trading decisions on emmotional reactions to these fluctuations. Many traders, for example, resist closing-out unsuccessful trades at a loss, because they hope that the market will turn in their favor. Conversely, many tend to immediately take profits when the market moves in the desired direction, rather than maximizing their gains by allowing profits to run. With less capital at stake in a Mini FX account, however, you can develop a disciplined trading methodology -- as well as the confidence needed to be a successful currency trader -- without the anxiety and distractions that come with large P&L swings.
How to capitalize on these two advantages of the MINI account is exactly what we teach you in "Forex Freedom" -- we hope you enjoy it as much as Robert enjoyed writing it.
It is our goal to serve you with the best FOREX trading content on the planet. We have been labeled "the premier go- to website for value-packed, self-taught FOREX education & training." If you're not into forking out hundreds, or even thousands of dollars for seminars, DVD's and conference calls, we think you'll thoroughly enjoy what we have to offer.
Until tomorrow's lesson, just remember, "Life is Short, Eat Desert First."

15 LESSON OF FOREX (11)

LESSON #11: DEMO Your Way to Forex Trading Success ... or, How To Trade the FOREX for Free !
Hey, here's a tongue-in-cheek, rhetorical question for you:
WANT TO TRADE THE FOREX MARKET FOR FREE?
Who doesn't, right?
What if we told you can get your ambitious, ever-ready little hands on the same state-of-the-art software package that professional FOREX traders, throughout the world, are currently using to make real-time, LIVE currency trades?
What if we told you could experience the same dynamic market action and go through the same process of making decisions, based on breaking news, reacting to charting patterns, and tracking ones performance the same way full-time FOREX traders do?
And, what if, even if you don't put REAL MONEY into your account, you still really can't see any difference in how the market reacts to you and how you react to the market (well, okay, okay ... with imaginary money, we know ya just may be a tad more liberal with your trades, but we hope you aren't).
Okay, so here's the deal...
When we started writing this 20-part e-course, we realized these lessons could literally go on forever and, still, you won't know everything. At some point, every new FOREX trader needs to start DEMO-trading.
Once you begin to place demo trades, you will learn a lot about how Forex transactions are placed. This is an important step for you to be able to learn how to become a trader. A Demo Account allows one to become familiar with trading procedures, such as placing Market, Stop, Limit, OCO Orders without any risk. All dollar losses or gains on a Demo Account are imaginary but, as mentioned above, the EXPERIENCE is not!
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SIDENOTE: Although racking up big gains in a DEMO account does not insure profits in live trading, those who are NOT successful trading on paper (DEMO account) rarely are successful when money is on the line. So, yes, just playing around and getting familiar with a demo account can be a great learning experience; however, you will not learn how to become a trader this way. You need to have a trading strategy, like the ones we teach at www.RapidForex.com ==========================================
Here's how to get started with your own demo account.
Go to http://www.marketiva.com/?gid=7261
There you can sign up for a free mini-demo account. A mini account is just like a real demo account, except the trade sizes are smaller. In a real account the smallest trade size is $100,000, in a mini account the smallest trade size is $10,000 (this can be done with a $50 margin, the power of leverage!).
There are several other places online to sign up for a free demo account, but we recommend FXCM, because they have the best overall reputation online. FXCM has built itself to the premier Forex trading platform. We don't get paid anything to endorse them, but they are currently the best.
Once you sign up for your mini-demo account, you will need to try out one of the trial charting packages. Any of these will do because they all have the necessary indicator tools that we teach you to use in our course packages. You can then set up your demo account and start drawing trendlines, marking support & resistance levels, monitoring moving averages, etc. This is a good way to get used to how orders are placed. Once you have a real trading system, you will already know how to place orders properly.
Everyone makes mistakes placing orders. You need to experiment in a demo account to make your mistakes without losing money.
At this point you have to make a decision about how fast you would like to learn how to become a trader. The truth is Rapidforex, that the longer you wait to get in on this market, the more potential money you are missing out on. You need to decide what time frame is right for you to begin trading.
You need to decide if:
1. You want to place real trades within the next 3 months (or sooner, depending on your desire)
2. You want to build your knowledge for several months before placing real trades.
The choice is entirely yours. No-one else can make that decision for you. You need to make a plan and stick to it. It is important not to put off your success. Success requires action.
If you want to place real trades within the next 3 months, you should check out www.RapidForex.com. There are some great resources there at extremely affordable prices that can get you trading in a very short amount of time.
If you want to build your knowledge base, then continue to be on the lookout for these daily email lessons. You are already subscribed to it, all you need to do is read each article attentively as they are released.

15 LESSON OF FOREX (12)

LESSON #12: When to LOOK for Trades in the Market That Never Sleeps
As we explained yesterday, the basis behind using technical analysis is to find trends when they first develop so you can ride the trend until it ends. The foreign exchange market is a very STRONG trending market and is, therefore, a place where technical analysis can be very effective.
But, as sure as the day is blue, we still know and meet traders every week who still end up buying (being "long") while the currency pair is in a basic downtrend, or selling short when a market is in a uptrend.
The key here is this: (it's so simple, some want to overlook it or "argue" with it).
Use as many technical indicators as you want, or create a personalized trading strategy based off a combination of indicators, to RECOGNIZE THE TREND. In other words, professional FOREX traders try to identify the major trend, the intermediate trend, and the short-term trend and then construct their trades in that direction, based off how long their rules allow them to hold a position.
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"We know that prices move up and down. They always have and they always will. My theory is that behind these major movements is an irresistible force. That is all one needs to know. It is not well to be too curious about all the reasons behind price movements. You risk the danger of clouding your mind with non-essentials. Just recognize that the movement is there and take advantage of it by steering your speculative ship along with the tide. Do not argue with the condition, and most of all, do not try to combat it."
-- Jesse Livermore
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So, what is Mr. Livermore - one of the most colorful, flamboyant and respected market speculators of all time - telling us?
In our terms, he's saying: If the action of the market shows your judgment to be correct, the successful trader 'stays with the market' and endeavors to make the maximum profit on each trade, according to his/her risk-to-reward / equity management rules. If and when the market goes against him/her, the smart trader will take profits and get out. In a narrow market (see definition below), when prices are not going anywhere to speak of, but move within a narrow range, there is no sense in trying to anticipate when the next BIG movement is going to be - up or down.
What Mr. Livermore is saying is to watch the market and see what the market is telling you about upcoming trends. Never argue with the market, or ask it for reasons or explanations.
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The market often display's some very familiar patterns of price movement. Once a pattern is established, it becomes the most probable course of future price action until the market changes.
There are two types of markets which will become important for you to identify; trending and trend-less. Each market type has two specific patterns which you will also notice over time.
These market types and patterns are defined as follows:
>>> Trending - Steady elongated price movements with less than a 45-degree angel with occasional pauses, profit taking, or resting periods.
In a Trending market, you have:
- Uptrends - A pattern of higher highs and higher lows.
- Downtrends - A pattern of lower lows and lower highs.
>>> Trend-less - Erratic price movements which are often steep ( greater than 45 -degree angle ) and cannot sustain and thereefore must reverse. Although the movements can move many points in a short period of time, they often result in very little net price movement over time.
In a Trend-less market, you have:
- Choppy - An erratic pattern of higher highs and lower lows.
- Sideways - A narrow pattern of lower highs and higher lows.
While up-trend and down-trend days can offer excellent trading results, choppy markets often create stop outs, while sideways markets produce for little in either direction.
Your trading objective is to get into a trending market and ride until you make our target objective.
We cover many Trend Trading Strategies in our book, "Rapid Forex Surfing" -- you will learn how to identify and draw your own channel trendlines, support and resistance lines, triangle patterns, chart key top and bottom formations, etc. (just head on over to http://www.RapidForec.com to learn all about this amazing course)

15 LESSON OF FOREX (13)

LESSON #13:Equity Management & Margin Control
Because we're readily admitting that YOU will pre-judge this Lesson, based off its title above, as boring and quickly dismiss it as "something I've heard before" (hey, didn't we tell ya we KNOW human nature), we're going to go ahead and make a....
A VERY BLUNT IN-YOUR-FACE KINDA STATEMENT (not to offend you, just to keep you paying attention) and then TELL YOU A GRUESOME STORY. First the straightforward comment:
>>> 95% of the successful (full-time, well-paid) FOREX Traders we know feel that money-management is more important than the trading. And, it's so, so important to us that we believe if you don't grasp, and follow, the basic rules below, YOU WILL FAIL! (Hey, don't take this personally. It is what it is).
Okay, on to the story.
Bloody Tale of Vicious, Senseless Animal Slayings Guides FOREX Traders to True Wisdom.A donkey, a lion, and a fox decide to go out hunting for rabbits. After a pretty good day of hunting, they had collected a large pile of rabbits. The lion says to Mr. Donkey, "I'd like for you to divide the rabbits fairly among the three of us."
So, the donkey took the rabbits and made them into three equal piles and said, "How's that?" The lion immediately pounced on the donkey and killed him.
Then the lion threw all the rabbits on top of the donkey and made one big pile. The lion turned to Mr. Fox and said, "I'd like for you to divide the rabbits evenly between the two of us." The fox walked over to the pile of rabbits and took one little scrawny rabbit for himself and put it in his pile. He left the rest of the rabbits in the large pile and said, "That pile of rabbits if for you, Mr. Lion."
The lion said, "Mr. Fox, where did you learn to divide so evenly?"
And the fox replied, "The donkey taught me."
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The Moral of the Story ?
Well .... it seems quite clear it is this: if you can learn from your own mistakes, you are smart. However, if you can learn from others mistakes, then you are wise.
Yup, we agree with this. And, by reading the listed rules we have below to share with you, you will accelerate your profit-making potential in your own FOREX trading business.
You're about to read the combined wisdom of various traders who have "been there, done that." Traders who have experienced setbacks, challenges, and turned those temporary failures into successes. We've paraphrased these timeless rules (do's and don'ts) into our own words.
WELCOME ABOARD Rapidforex .... you're about to experience the thrill of hunting rabbits with a FOREX Lion. However, in this case, you won't get killed :-)
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Equity management and properly handling leveraged margin accounts is the most significant part of any trading system. Again, most traders just don't understand how important this aspect of running a FOREX business is. The ones who DO ... know it's the critical point that separates the winners from the losers.
It was proved that if 100 traders start trading using a system with 60% winning odds, only 5 traders will be in profit at the end of the year. In spite of the 60% winning odds 95% of traders will lose because of their poor management of account equity.
But, the good news is, you don't have to be a mathematician or understand portfolio theory to manage risk. This can be easy as following these rules.
>>> RapidForex.com RULE #1: Thou shalt not risk more money than thou can afford to lose (Also known as "if you can't afford to lose, you can't afford to win."
Let's face it - this ain't bean ball. You will lose money. ALL traders loose money. Stop right here, delete this email, forget about trading currencies, do something else with the rest of your life if losing a portion of whatever money you might trade with would take food off your table, keep your kids from going to college or change your lifestyle. Repeat: there is no system or approach available that doesn't sustain losses sometimes. The trick is containing those losses.
>>> RapidForex.com RULE #2: Thou shalt never risk more than 2% of your margin account on any SINGLE trade (if you have a Mini Account, you may bend this to 5%).
For example, if you have $300 in your account, 2% is $6, equal to a 6 pip move. 5% is $15 or a 15 pip move. With a Mini-account, realistically your risk-per-trade has to be a bit higher than those who trade a 100K (regular) account. Once you get your account equity to $1000 or more then definitely limit your risk to only 2% of your margin account on any SINGLE trade.
>>> RapidForex.com RULE #3: Thou shalt always, Always, Always Use a STOP-loss order.
When you place a STOP order, right along with your ENTRY order, via your online trade station, you've just automatically prevented a potential loss from "running" too far.
Before initiating any trade, if you haven't already figured out at what point you would be wrong and would want to cut your loses or, at the very least, reevaluate your position from the sidelines, then you shouldn't be putting on the trade in the first place.
Show us a FOREX trader who doesn't use stop loss orders and we'll show you someone who loses a lot of money.
>>> RapidForex.com RULE #4: Thou shalt predetermine your exit point BEFORE you get into a trade.
To use a football analogy, if you don't know where the End Zone is what's the point in walking up to the scrimmage line to make a play? In other words, when you place a LIMIT order (or, at least mentally place it), you're telling yourself, and the rest of the market, that you understand the game plan, the big picture, the reason for being on the trade (the football field) in the first place. It is prudent to let profits run and follow a market with stop orders in an uptrending market. But it's the wisest of traders who put such a limit on their selling (profit-taking). Because of Greed, it is always more difficult to make a decision to sell (take profits) than buy. We don't want you to be the one who says, "If only I had sold when...." Know your exit strategy / game plan and this won't be you.
>>> RapidForex.com RULE #5: Thou shalt paper-trade first.
First open a DEMO account and get to learn how to place orders with it (we cover this in detail in Lesson #11). You shouldn't invest real money until you have shown a profit in a DEMO account. Many people have losing DEMO accounts and still believe that it will be different with real money. Wrong! As mentioned in Lesson #11, the only thing different between a DEMO account and a LIVE account is, with a DEMO account, you'll tend to be less-conservative and lacksadaisical with the rules. If you lose paper-trading, what makes you think you'll win with real money?
>>> RapidForex.com RULE #6: Thou shalt take a Breather when your Core Equity is significantly down.
First of all, you should understand the following term "Core equity." Core equity = Starting balance - Amount in open positions. If you have a balance of $10,000 and you enter a trade with $1,000 then your core equity is $9,000. If you enter another $1,000 trade, your core equity will be $8,000. Assuming you lost money on each trade, your core equity certainly won't be where you started it with. If you lose a certain predetermined amount of your starting capital (e.g., 10 percent to 20 percent), take a breather, analyze what went wrong, and wait until you feel confident you have a high probability trading idea/method/system before entering the market again.
>>> RapidForex.com RULE #7: Thou shalt not let thy emotions rule.
This is probably the hardest rule to keep. Yet, we have never seen a successful trader over the long haul who didn't follow it. Most people want to be winners. Most people want to make the big score and have the accompanying bragging rights. We all tend to get greedy, traders usually more so. But trading is a business. It's hard work. You must be cool, calm and always ready for the next opportunity. You can't have emotionally high highs or emotionally low lows because you'll make too many mistakes, and mistakes mean losses. If you start winning and get "too high," the tendency is to over-trade. By that, I mean starting to make marginal trades or "seat-of-the-pants" trades just for the sake of making trades, instead of waiting patiently for the right opportunity. If you get too low (this is usually after some losses), you are liable to skip the trades you should be making, or you might try to "cherry-pick" a system or an advisor's recommendations for fear of more losses, inevitably making the wrong choices. To win this game you must remain patient and clear-headed.
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Finally, to finish this lesson up, we have TWO basic rules about winning in the FOREX as well as in life:
(1) If you don't bet (trade), you can't win.
(2) If you lose all your chips, you can't bet (trade).
Think about it. Hard once. Then softly twice if you have too.

15 LESSON OF FOREX (14)

LESSON #14: 20 pips to 200 pips: Small Trades to Big Trades and Somewhere in Between.
There are FOUR different classifications of FOREX traders in the market. Each one employing one of three different pip- trading (profit-taking) styles.
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Sidenote: remember what a "pip" is? We talked about this in Lesson #3, but for a refresher: A pip is the last number to the right in a currency quote For example: If the EUR/USD traded at 1.3335 this morning. The "5" is the pip. If it moves to 1.3435, that would be a 100-pip move.
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There are the novice traders – the rookies, the ones who don't learn from the "donkey" (see yesterday's lesson; Lesson #13).
In addition to the novice traders, there are three other levels of participation in the FOREX market: the dealers, the institutional traders, and the advanced traders.
The DEALERS are the most powerful and they make the market, setting prices and putting together deals.
The INSTITUTIONAL traders work in banks, wire firms, or government agencies. They trade huge amounts of money at a time, and the size of their trades gives them enormous power.
Next, there are the ADVANCED traders. This group is comprised of people from all across the world, sitting in smaller investment firms, offices, or even their homes. You can be a part of this group. In some cases, the ADVANCED traders are the smartest group – trade for trade – than any other group. Because they don't move a lot of money on each trade, they don't have as much power as the institutional players. Because their trades are brokered by the dealers, they'll never have absolute trading power. But, because there are so many novice traders – the advanced traders have plenty of people that they can outrun.
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Each of these different traders have different philosophies about how many pips to go after.
(1) Some traders go after large pip targets -- from 50 to 500 (or more). They are often position traders, leaving trades overnight - often for days. Usually they trade one or two lots and use stops of around 50 to 100 pips.
(2) You have other traders that focus on daytrading (getting in and out of a trade within one day, usually though within hours) to get 10 to 20 pips trading one to a few lots.
(3) You also have another breed of trader that will trade multiple lots to catch just 5 to 10 pips, usually within minutes. For instance, trading 10 lots for 10 pips is an equal profit to someone trading 1 lot for 100 pips. Both would equal $1,000 profit, depending on which currency pair was traded and assuming they were on a standard 100K account (i.e., using 100:1 margin or putting up $1,000 to trade $100,000 worth of currency). Traders who attempt to trim off profits, within minutes, are usually called "Scalpers."
There is nothing wrong with trading with any of these objectives in mind. In fact, it is good to be versatile in your trading. They each have their pros and cons but, if somebody gets consistent profits (more winners than losers) with one or the other, then that one strategy should be considered GOOD.
As you progress from ROOKIE to ADVANCED trader you will figure out your personal preference and tolerance for risk.
Most of the courses we have for sale at RapidForex.com (especially the "Forex Surfing" course) teach you to shoot for 10 to 20 pips PER TRADE. It's as simple as this: We don't try to make a ton of money on each trade (excessive GREED), we never try to get revenge (a lot of traders get creamed in the market and then want to strike back. So they double their last order and go for broke) and we're not scalpers (someone who sits and makes 20-second trades for a few pips at a time).
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Yes, You can Replace Your Full-time Income and Make Over 5-figures a Month On Just 10 to 20 pips Per Trade
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Generally, the larger the pip target you are shooting for the greater will be the chance that the market will turn around on you before it reaches your target. Conversely, the smaller the pip target you are shooting for the greater will be the chance of the market reaching your target.
All things considered equal, there is a greater chance that you'll successfully pull 10-20 pips out of the market than 50 pips, or even 30 pips. The further out you go the more likely it becomes that the market will change its mind.
In our "Forex Surfing" course we give you many ideas and trading techniques to consistently capture 10 to 20 pips per trade, per day. And, once you get good at doing that, then the sky's the limit. We teach you how to compound your gains, scale in and out of trades and a lot of other ways to trade like the Traders who shoot for 40 pips per trade, but without all the risk