Forex Trading Basics

This program assumes you understand certain basics about
Forex trading, but to just be sure here is a brief review.
Currencies are traded in pairs, meaning that you are really trading
one currency for another. A simple way to understand this is to
consider what you do when you go on foreign vacations. If you
are an American (for example), and you plan to travel to another
country, say Canada, then you might take say $1, 000 USD to the
bank to change it for Canadian dollars. Let’s say the exchange
rate is 1.4000, then for your $1,000 USD they would give you
$1,400 CAD (ignore bank spreads/commissions). Now let’s say
you didn’t spend the money and upon coming home you decide to
change it back to USD currency. Now let’s say the exchange rate
is 1.3700 (a change of 300 pips that could happen in a week), so
your $1,400 CAD would convert back to $1,021.89 US (again,
ignore bank spreads/commissions). Therefore you just made
$21.89, a 2.19% increase in funds (not bad).
In the Forex market you could have simply traded the “Currency
Pair” called USD/CAD, first selling USD for CAD, and then later
buying back USD with the CAD you have. Basically, you are
trading one currency for the other.
Usually currencies are traded against the US dollar (USD), so you
may be trading the US dollar against the Euro (EUR), British
Pound (GBP), Swiss Franc (CHF), Japanese Yen (JPY),
Australian Dollar (AUD), New Zealand Dollar (NZD), and of
course Canadian Dollar (CAD). There are other currency pairs,
but you normally won’t be dealing with those.

When you are trading you are attempting to capture “PIPs” (Price
Interest Points), which is one/one-hundredth of a cent (for
dollars). You will notice that the exchange has two extra decimals
at the end. From our example above, there is a one-pip
difference between 1.4000 and 1.4001.
One pip may not seem like much, but when you are trading large
volumes of currency, say $100,000, then one pip times 100,000 is
equal to $10 (less on certain currency pairs). When you are
trading currencies the broker gives you typically a 100:1 ratio
meaning that to “control” one lot of $100,000 all you need is
$1,000 on margin.
Thus, as has been explained before, when you capture 20 pips
from this amazing trading system then that means you have just
earned $200.
Now, if you don’t have at least $2,000 to open a regular Forex
trading account, or can’t afford potential 10 pip losses, then you
may want to consider a “mini” account. Most online brokers offer
mini trading accounts that you can open for as little as $300. With
a mini account you are trading lot sizes one-tenth of a regular lot
(10,000 vs. 100,000), with risk being one-tenth as well as your
rewards one-tenth. Trading a mini account means that 1 pip
equals roughly $1. If this is the only way you can afford to start
trading then open a mini account. Remember, as your account
quickly grows you can trade multiple mini lots, and trading ten
mini lots is the same as trading one regular lot. You could open a
mini account with say $300 and experience 100% to 200% gains
in your first month, quickly building your account to be able to
trade larger lot sizes.

Please remember to exercise good equity management in all your
trades, never risking more than 2% of your margin account on any
single trade, however if you have a small mini account you may
bend this rule to 5%. For example, if you have $300 in your
account, 2% is $6, equal to 6 pips loss. Realistically you need to
be prepared to suffer 10 pip losses with this system, so obviously
your risk per trade has to be a bit higher than professional traders
would normally employ. Once you get your account to $600 or
more then definitely limit your risk to only 2% of your margin
account on any single trade. Don’t be greedy and you’ll survive a
few losses to continue your gains. Please don’t trade money you
can’t afford to loose.
If you need more explanations about any of the above then simply
surf the web a little, particularly looking at online Forex brokers
websites as there you should be able to learn more about the
basics of how currency pairs work, or enroll in a good Forex
training program to make sure you understand all this. I have
also included valuable bonus you can download from the
Resources website (see Appendix A) that gives you a lot of Forex
training, and should answer your questions (I’ve had over $10,000
worth of Forex training and can say with knowledge that the
resources I’ve provided you there will teach you everything you
need to know).
A couple more things before we continue with explaining this
amazing trading system. You should have the following three
things already set up. (1) An actual trading account with real
money in it, (2) a demo trading account with fake money in it, and
(3) access to charts. I would personally recommend opening up
an account with one of my recommended brokers (listed in the
Resources Section – see Appendix A), however any of the other
major brokers may do, or whatever favorite you have.