Beginners Forex English

"Only those who will risk going toofar
can possibly find out howfaronecan go."

Albert Einstein
Chapter 1
Advantages of the Forex Market
What is the Forex Market?
The Forex market is the trade arena which allows investors to trade foreign currencies throughout
the trading day. This market is the largest in the world and has a daily turnover of 3 trillion USD.
The market is active 24 hours a day, 5 days a week. The value of the currencies changes every
moment throughout the day according to supply and demand levels.
The Forex market is the most secure medium of investment in the world, in comparison to other
channels with a risk factor, such as: stocks, options, bonds and more.
Just as in a regular market we buy and sell vegetables and in the stock market we buy and sell
stocks. In the Forex market we buy and sell currencies, this is our product. There are more than 100
currency pairs in the world which can be traded.
Chapter 1: Advantages of the Forex Market
Currency exchange rates are uniform throughout the whole world. If the exchange rate of the
Euro in relation to the USD is 1.5220 in London, it will be 1.5220 in Congo, New York, Australia and
Hong Kong.
The Forex market is largely composed of speculators.
Speculators are people like me, or perhaps like you, who buy and sell currencies to profit from
the change in the exchange rate of a currency. Only five percent of the transactions are for real
purposes of commerce such as: industry, tourism, etc. The remaining 95 percent are for speculation
purposes.
This is the zero-sum game: the total gains are equal to the total losses.
What affects the Forex market?

The Forex market is affected solely by macroeconomic data, not by microeconomic data. What
is macroeconomic data? Raising of the interest rate in a country, the unemployment rate of a
country and political conflicts within the country. On the other hand, microeconomic data are
the balance reports of a very large company in the country, a large business deal which a large
company is about to execute and/or has executed, and more.
The microeconomic data does not interest the Forex market and does not affect it.
In other words, the Forex market is affected by large-scale and international events.
The Forex market is comprises of: currencies and commodities. Today, some brokers also allow
trading of indices, futures contracts and certain stocks.
All the strategies and technical analyses that you will learn here are relevant for currencies as well
as for commodities.
Before we learn what an exchange rate is and how we buy and sell currencies, let's understand
more clearly the advantages of the Forex market based on the characteristics which I have
presented so far:
The Forex market has 2 principle advantages:

The first advantage is: liquidity.
Have you ever bought a stock and couldn't sell it a specific moment?
Example: You have bought a particular stock. The stock had risen greatly in only a few months and
all of a sudden the CEO resigned, at that moment there was a pause in the trade which lasted a
few hours, and the next day the stock decreased by 10%.
You are stuck with the stock!
In the Forex market such a thing would never occur.
If you have Euros, Pounds, Swiss Francs or any other tradable currency, you can sell it at any point
in time.
You will never get stuck with a currency, and this is a great advantage of currency trading. As
traders, it doesn't matter what you buy, what important is that at any moment you can cash in
your goods there will always be a buyer.
There is one very important rule to remember: Until you cash in your goods, there is no knowing
whether you have gained or lost.
The second advantage is: In the Forex market there is no control

by external financial bodies.
A speculator, as great as he/she is, cannot influence the exchange rate.
Central banks intervene in the trading once every decade and are successful in effecting the value
of the currency by a total of two percent, a movement of this kind lasts for only a few hours and
then the exchange rate returns to its natural price.
This goes to say that currency trading is fair, and no body, as large as it may be, can affect the
market.
On the other hand, in the case of stock and options, a large broker has the ability to inject tens
of millions of USD and by doing so they can change the price of the stock by tens of percentage
points and unfortunately they do so from time to time. 10
What advantages do we have in a market which is influenced by

macroeconomic data and not microeconomic data?
The first advantage it is much easier to
follow and trade, due to the availability and
minimal amount of data.
For stocks, for example, there are many
factors which must be followed.
Imagine that you own 4-5 stocks in the
NYSE. Let's assume that you are serious
investors, not gamblers.
You have to know who the shareholders are in
every company you invest in, what the multiplier
is, what the balance sheets look like, the gains and losses report, internal information, such as, for
example, resignation of an executive, a large future contract, and so on and so forth. One must
know so much information that following them on a daily basis would require many hours each
day.
In the Forex market there are five to six significant data in a month. The firm through which you
trade will provide you with these data in real time, and you, with the knowledge that you will gain,
will trade accordingly.
Do you understand the significance? 5-6 pieces of significant information in a month, that's all.
You won't have to live in constant chase after changes in companies in which you invest.
The second advantage the important information reaches

everyone at the same time.
Let's assume that I am the marketing manager of a large pharmaceutical company, and I am
on a flight returning from China, and in my hands is a closed contract with the government of
China, a contract which is expected to increase the profitability of the company by 100 billion
USD a year.
Who knows about the deal? myself, the CEO, his wife and her brother. And they
don't do anything with that knowledge, right? 'laughter' You made me laugh!!!
Until it is reported in the news that a huge deal took place with China, there are people who
already know, who have made use of it, and the price of the stock already reflects the news. You
will be in the second level of decision makers.
100 billion USD a year...
Haven't you ever met someone who

told you that he/she bought a specific
stock based on insider information and
the next day it rose by 20%? Yes, yes
it happens...
In the global foreign exchange market, when the American federal reserve Governor publish a
decision to increase the interest rate, the whole world knows it in the same exact second and
can respond immediately to buy or sell the USD. There is nobody who has insider information
beforehand and who make use of it in an unfair manner.
Market research and analysis

The two main approaches for analyzing the movements in the Forex market are the fundamental
analysis approach and the technical analysis approach.
The fundamental analysis focuses on financial and economical theories, as well as political
developments, to determine the forces of supply and demand.
The technical analysis focuses on price levels and trade volumes, and from these data expectations
are formed for future levels of the market.
The main difference between technical analysts and fundamental analysts is that the fundamental
analysts concentrate on causes of movements in the market, whereas technical analysts concentrate
on the effects of movements in the market.
Exercises
Question 1:
What is the turnover of the Foreign Exchange Market?
A.
B.
C.
D.
$100,000USD per day

$500,000,000USD per week
$3,000,000USD per day
Over $3,000,000,000,000USD per day
Question 2:
Does a liquid market constitute an advantage for a trader?
A. Definitely, because this prevents the trader from being stuck with merchandise for which
there is no supply or demand
B. No, a liquid market does not provide any relative advantage
C. Sometimes, depending on the hours of trade
D. Yes, only in a time of data and notifications
Question 3:
What are the main advantages of the Foreign Exchange Market?
A.
B.
C.
D.
There are no factors which can influence the market

It is very easy to follow the market due to availability and the small quantity of data
The information reaches everyone at the same time
All of the above answers are correct
Question 4:
The Foreign Exchange Market is mainly influenced by:
A.
B.
C.
D.
Large, international events

Micro data
Macro data
Answers A and C are correct
Chapter 1: Exercises
Question 5:
What is the percentage of speculators on the Foreign Exchange Market?
A.
B.
C.
D.
10%
30%
75%
95%
Question 6:
When the Euro's rate in London is 1.2000, what is the Euro's rate in Australia?
A.
B.
C.
D.
1.3000
1.2500
1.2000
Question 7:
How much significant data is there on the Foreign Exchange Market during the course
of a month?
A.
B.
C.
D.
3
5-6
20
50
Answers:
D,A,D,D,D,C,B
"Theessenceof knowledge is, having it, to apply it:

not having it, to confess your ignorance."
Confucius
Chapter 2
Elementary concepts of the Forex
Market
Currency pairs , buying and selling rates
In foreign currency trading there are always currency pairs the base currency and the counter
currency.
The base currency it is in essence our product, it is denoted on the left side of the pair. We always
buy or sell the base currency.
The counter currency it is the means of payment and is denoted on the right side of the pair.
In a transaction involving the EUR/USD I buy or sell the Euro against the USD wherein the means
of my payment is the USD.
Chapter 2: Elementary concepts of the Forex Market
The exchange rate is the price of one unit of the base currency in terms of the counter currency.
Let's take a look at the Euro against the USD: One Euro is equal to 1.5220 USD.
Spread
Spread is the difference between the buying price and selling price and is the commission which
you pay, as currency traders.
For example: If, for instance, you want to convert USD to Euros at the bank. They will tell you that
the buying price is 1.56 and that the selling price is 1.49. In other words, in order to buy one Euro
you would have to pay a little more than one and a half USD. If in that very moment you would
want to sell your one Euro to the bank, the bank will buy one Euro at a price slightly lower than one
and a half USD, so if you sold 1000 USD to the bank you received 641 Euros. By selling the Euros
back you will get only 955 USD.
You paid 1000 USD and received 955 USD, so where are the other 45 USD?
This is the profit of the CHANGE store this is the commission they charge from their customers.
This is the only commission that you will pay; in the Forex market there are no additional
commissions.
It is implied by such that we will always lose because of the spread in the first
second after the trade.
Pips
Another important concept in the Forex market is pips pip (singular), pips (plural)
In the Forex market the exchange rate rises by pips and falls by pips. For most of the currencies,
the pips are denoted 4 places after the decimal point.
In other words, if the EUR/USD rate is 1.5220 then the number of the pip is 0.
If the exchange rate was previously 1.5220 and now it rose by one pip, the exchange rate will be
1.5221.
If the exchange rate fell by 10 pips, it would be 1.5210 and so on.
The Japanese Yen is different: For the Japanese Yen the pip is denoted at two places after the
decimal point, meaning that, if the USD/JPY is at 88.57, then the pip is equal to 7. if the exchange
rate rises by 3 pips it would be equal to 88.60 and if it decreases by 27 pips the exchange rate
would be 88.30.
Average daily fluctuation

To become acquainted with the concept, the average daily fluctuation of the EUR/USD is about
100 pips a day. On more turbulent days the fluctuation reaches 200-300 pips, on calmer days the
fluctuation reaches 50-60 pips.
And in terms of percentage?
If the exchange rate is currently 1.5220 and I want to announce tomorrow that it rose by one
percent, it would be represented by a rise of 152 pips.
So if we said that the daily fluctuation of the EUR/USD is about 100 pips a day, by what percent
does the EUR/USD fluctuate on average? About 0.7%-0.8%. and in more turbulent periods 2%
at most.
From this we can learn of a new and important advantage

that exists in the Forex market this market is stable,
and I'm referring mainly to the major currencies: Euro,
USD, Pound, Yen and Swiss Franc.
This is a stable market, with exchange rate fluctuations
of half a percent up to one and a half percent
throughout the day. There is no possibility that you will
trade a currency and lose 10%-15% in one day.
Value of pips
Let's now learn the value of every pip within the confines of a particular transaction. If the exchange
rate of the EUR/USD is 1.5220 and you want to buy 100,000 Euros, how many USD do you have to
pay? 152,200 USD, of course. A second passes and the exchange rate rises to 1.5221. By how many
pips did the exchange rate rise? By one pip. And what is the current value of the 100,000 Euros?
152,210 USD. Which is 10 USD more.
The value of one pip in a transaction of 10,000 Euros is one USD.
In other words: In a transaction of 100,000 Euros, each pip has a value of 10 USD.
And in a transaction of one million Euros 100 USD.
How are pips calculated?

We take the amount of the transaction that we have performed in terms of the base currency and
divide by 10,000 this is the value of one pip in terms of the counter currency.
For example: For a transaction of 100,000 Euros we divide by 10,000, and we get 10. This means
that the value of every pip is $10.
If we execute a transaction of 30,000 Euros, every pip worth is 3 USD.
For the Japanese Yen the calculation is slightly different. We divide the amount of the transaction
in terms of the base currency by 100 and that is the value of the pip.
For example: A transaction of 100,000 USD in the currency pair USD/JPY, we divide by 100 and the
result is 1,000 Yen. Assuming that the exchange rate is 88.00, we divide the 1,000 by 88, meaning,
11.36 USD per pip.
Example: We will take the currency pair of EUR/GBP and a transaction of 100,000 Euros, each pip
is worth 100,000 divided by 10,000 and is therefore worth 10 USD. And in what currency are we
paying in? In Pounds. Meaning that every pip is equal to 10 Pounds.
Size of the spreads

Do you know what the accepted ask/bid spread is for the EUR/USD exchange rate? 3 pips.
So in order to perform a transaction of 100,000 Euros, which is equal to 152,000 USD how much
commission must one pay?
If every pip is equal to 10 USD in a transaction of 100,000 Euros, and the spread is 3 pips, we will
pay 30 USD in commission a onetime payment which includes the purchase and the sale.
Commissions
If to compare the commissions rate paid in the stocks market we will notice that in the Forex
market the commissions rate are very low.
For example, in a 10,000 Euro trade the stock's commission is half a percent hence 50 Euro. In Forex
however you will pay only 3 USD commission for a 10,000 Euro trade, for a 100,000 Euro trade you
will pay only 30 USD commission and so on and so forth.
Trading rules
If you trade a certain product, and you think that its price will rise, you will buy it and if its price
indeed rises, you will profit when you sell it, and if you are wrong and its price goes down, you
will lose.
For example, if you trade wood, and you think the wood
price will rise, you buy 10 tons of wood when the wood
price is 100 USD per ton. And later you sell it when the
price rises to 150 USD per ton, you have profited 500
USD.
If you thought that the wood price would decrease,
you would wait until the price reached 50 USD per ton,
and then you would have bought the same 10 tons at
only 500 USD.
The rules are:

A trader who thinks the value of his product is going to
rise, buys more goods and waits for the price to rise in
order to sell.
A trader who thinks that the value of a product is going to fall, rushes to sell the goods and make
the most of his money.
Traders do not always have to lose everything or gain everything, the trade can be stopped in the
middle, and such a situation will be expanded upon further later.
Let's translate this into terms of Forex market:
If you expect the exchange rate of a currency to rise, you will buy it.
If you expect the exchange rate of a currency to drop you will sell it.
The sum which you profit or lose depends on the volume of the transaction which you perform.
The greater the transaction is, the more you can profit, but you will take on a greater risk and the
smaller the transaction is, the smaller the profit will be but you will have taken on a smaller risk.
Trading currencies is exactly like buying and selling wood, tomatoes or cucumbers. We buy the
goods when we think the price will rise, and we sell the goods when we think the price will fall.
Transaction / Position
In order to complete a transaction we need to perform a purchase and a sale. If a purchase and a
sale were not performed, then the transaction was not completed, and it doesn't matter if you are
going to gain or lose in the course of the transaction.
Remember, this is an important rule: realization of the gain or loss occurs only when
the transaction is complete.
Position is in essence a transaction.
Opening of the position - opening of a transaction for a currency pair.
Open position a position which hasn't yet been closed, in other words, the transaction has not
yet been completed.
Closed position a transaction which has been completed, the actions of purchase and sale have
been performed.
Leverage
What changes the whole picture, and turns the Forex market into a market of opportunities to
profit a lot of money in a short span of time, is leverage.
Butof course, leverage causes trading to become more risky.
So what is leverage?
Brokers allow you to perform transactions in sums of money which are much larger than the
amounts that you have in your account. Sometimes even up to 400 times more than what you
have invested.
For example: You have deposited 1000 USD, the exchange rate of the Euro against the USD is
1.5220. And you believe that the price of the Euro is about to rise by 100 pips. That is your opinion.
You can pick up the phone and call the broker or give an order via the computer, 24 hours a day
please buy me 100,000 Euros
Despite the fact that you have deposited 1000 USD and 100,000 Euros cost 152,000 USD, in this
case you have taken advantage of a leverage of 152 times the money which you have in your
account.
In a transaction of 100,000 Euros, how much is each pip worth. We learned it already, remember?
10 USD. Let's assume that the exchange rate indeed rose to 1.5320. How many pips have you
earned? 100. And how much money have you earned? 100*10 = 1000 USD.
Let's deduct the commission, and the net profit from the transaction will be 970 USD.
Nearly a 100% return in one day. How great!
But what will happen if the exchange rate falls to 1.5120?
You have lost 100 pips, you have lost all of your 1000 USD.
Should you leverage?

Later on you will learn whether it is worthwhile to leverage your transactions and by how much.
But one must always remember, for whoever wants to leverage the option is always available,
but it's risky.
When there is a leverage of 300 times you can perform a transaction of 300,000 Euros as well, and
if the price rose by 100 pips, you can even earn a 300% return in one day. But if the exchange rate
decreases by 33 pips, you have lost your whole investment.
Why do the firms allow us to leverage?

The answer is simple: It is preferable for
them that we perform a transaction
of one million Euros rather than
a transaction of 10,000 Euros,
in this way the broker earns
a commission of 300 USD
and not 3 USD.
Later on you will learn
what your interest is as
traders, and why you
shouldn't be tempted to
leverage transactions.
Exercises
Question 1:
What is the meaning of the word SPREAD?
A.
B.
C.
D.
The base exchange rate

The currency exchange rate
The secondary currency exchange rate
The difference between the selling price and the purchase price
Question 2:
What is the average daily fluctuation of the main currencies on the Foreign Exchange
Market?
A.
B.
C.
D.
10%
1%
15%
100%
Question 3:
In a EUR/USD currency pair, you purchased Euro. The deal is for 150,000. What is the value
of each pip?
A.
B.
C.
D.
1.5$
10$
15$
20$
Question 4:
What is the secondary currency (or variable currency) and where is it to be found?
A. The secondary currency is our product and it is always found on the right hand side of the
currency pair
B. The secondary currency is the method of payment and is always found on the left hand
side of the currency pair
C. The secondary currency is our product and is always found on the left hand side of the
currency pair
D. The secondary currency is the method of payment and is always found on the right hand
side of the currency pair
Question 5:
At the time of the deal opening, the account will be in a state of:
A.
B.
C.
D.
A positive balance of 10 pips

A negative balance of 10 pips
A positive balance of the spread
A negative balance of the spread
Question 6:
In a EUR/USD currency pair, the currency rate is 1.2200/1.2203. You purchased 200,000.
The currency rate reached 1.2250/1.2253 and you closed the position. How many pips did
you make?
A.
B.
C.
D.
57.
47.
50.
53.
Question 7:
In a EUR/USD currency pair, the currency rate is 1.2200/1.2203. You purchased 200,000.
The currency rate reached 1.2250/1.2253 and you closed the position. How much money
did you make?
A.
B.
C.
D.
1140$
940$
1000$
1060$
Answers:
D,B,C,D,D,B,B
"Hold knowledge as though you would be in fear of losing it."
Confucius
Chapter 3
Orders and directives in the Forex
market
Stop-loss order
The meaning of this order is just as its name implies. The order cuts off our transaction at an
exchange rate that was predetermined, or rather, it limits our loss, if there is one, to an amount
which is known and determined in advance.
For example, if we bought Euros at a particular exchange rate and we placed a stop-loss order of
100 pips below the exchange rate of purchase, we know that for this transaction we can only lose
100 pips.
Chapter 3: Orders and directives in the Forex market
The advantages are:

This order obliges us to make an orderly and timely plan for our position and to manage risks in
advance.
It prevents large losses and limits our loss to a maximal sum which is known in advance.
It prevents the intervention of emotions, Hunch which may affect our decisions. The order is put
into action in a computerized and fixed manner.
It prevents the need to constantly follow our position.
Stop-loss makes the Forex market the most secure market in the
world
Let's assume that the exchange rate is 1.5220 and you think that the rate will rise to 1.5320. If you
want to gain 1000 USD through a transaction of 100,000 Euros, but are not prepared to take a risk
of more than 200 USD, what will you do? Pick up the phone and call the broker, and request to
buy me 100,000 Euros, and place a stop-loss order at an exchange rate of 1.5200, 20 pips below
the entry rate.
In other words, if the exchange rate rises, great we have gained. If the exchange rate falls and
reaches 1.5200, the transaction will be closed at the moment the exchange rate reaches a rate
determined by the order and our loss will only be 200 USD.
Thanks to the stop-loss order we have placed we can rest easy and not lose more than what we
allowed ourselves to lose. There is no channel of investment in which you can set your risk with
absolute certainty.
Consequently, we have another important advantage in the Forex market: stop-loss order
it is possible to determine the maximum risk in a transaction. We will learn more about this
directive later.
Question: I have 1,000 USD in my account, I bought 100,000 Euros at an exchange

rate of 1.5220. The rate fell by 120 pips. What will my position be?
Its very simple, in a transaction of 100,000 Euros every pip is worth 10 USD, or rather, 120 pips is
equal to 1,200 USD. Will the bank allow me to go below my level of collateral? Never.
Remember: When you don't define a stop-loss in a transaction, the stop-loss is the sum of money
that you have in your account with the broker. If you have no remaining collateral, the transaction
will be immediately terminated. Therefore it is important to place a stop-loss order.
Trailing stop
I want to teach an interesting trading strategy. You have the ability to shift the stop-loss, and with
little risk you are able to make a lot of money. The strategy is applied through a trailing stop. For
example, you've entered a transaction of 100,000 Euros, every pip worth one USD, at 1.5220, and
you've defined stop-loss at $50, which means that the transaction will be automatically closed at
an exchange rate of 1.5170. If the exchange rate reaches the stop-loss order rate, then we've lost
50 USD. The next day we perform another transaction, and again we arrive at the stop-loss limit.
We've lost another 50 USD.
The day has finally come, and in the third transaction the exchange rate begins to rise. By the end
of the day the exchange rate rose by 100 pips. Now we can raise the stop-loss limit to the point
of entry. Now we lose no money in the transaction. We are now involved in a transaction with the
potential of infinite profit without risk.
It will either fall back down to the original entry rate for which we set the stop-loss at, or a rising
trend will develop. What is a rising trend? A rising trend is a situation in which the exchange rate
begins to rise and rise. In the global financial markets there are always trends. Trends of 700 pips,
1000 pips or even more can be noticed.
Back to our story: The next day the Euro rises by 100 more pips. When it is 200 pips above the
exchange rate of purchase, we can move the stop-loss limit higher.
It is very similar to wave surfing: as long as the

wave has not ended we don't get out. If it is a
transaction of 10,000 Euros and each pip is
worth $1, then a mediocre wave of 700 pips
will give us a profit of 700 USD, or if we get
on a bigger wave, we can profit 1,500 USD
in a week or two with a risk of 50 USD.
In many trading platforms there is a trailing
stop order, which means that there is an
automatic trailing stop, you don't have to sit in
front the computer all the time. Such an order follows every movement of every pip in the market
and the stop adjusts itself accordingly.
Take-profit order
A take profit order is intended for a scenario in which a transaction is profitable and the changes
in the exchange rate are reflecting increased profits. If a client is not interested in constantly
following the transaction but is rather interested in getting out of the market at a predetermined
profit, all the client has to do is place a take-profit at an exchange rate which is higher than the
purchase rate, or rather, determine a monetary amount at which he/she would like to exit the
transaction.
For example:
we have bought Euros at a particular exchange rate and we placed a take-profit order at 100 pips
above the exchange rate of purchase. We know that in this specific transaction we can only profit a
maximum of 100 pips.
These two orders do not entail any payment of commission: They can be placed at the beginning
of the transaction, be changed in the course of the exchange, be moved or removed, as long as
they haven't been executed. It is important to note that there are brokers who allow you to place
the order only after the transaction has been opened. On the other hand, there are brokers who
allow you to place these orders at the beginning of the transaction, it is all subject to the firm
policies.
Future order - limit

Limit order is a trade order which allows a transaction to be performed at a better price than the
current market price.
For example: Let's assume that the market price for the currency pair EUR/USD currently stands
at 1.3500. The trader expects the Euro to rise up to 1.4000 in the long term, but in the short
term the trader believes that the value of the Euro will decrease and is therefore not interested
in buying the Euro at the current price of 1.3500, but rather wants to wait for a small decrease,
until 1.3300 and then buy at a lower price.
The limit order will be executed only when the price falls to 1.3300 in condition that the exchange
rate reaches this value, of course.
Future order stop

This order functions similarly to the limit order, but in the opposite direction.
Utilization of this order is relatively rare and a portion of the brokers do not offer this option at all.
For example: Let's assume that the market price for trading of the currency pair EUR/USD stands
at 1.3500.
A purchase stop order would be set at above 1.3800.
A sale stop order would be set at below 1.3200.
A trader can set a future stop order, which allows the trader, on the one hand, to enter the
transaction in the direction of the market at the time when one of the limits is reached 1.3800
or 1.3200, and on the other hand, provides the trader the privilege of performing the transaction
when he/she is not in front of a computer screen.
10
One-Cancels-the-Other (OCO) order

An OCO order is a combination of the stop order and limit order for a future transaction.
The trading platform follows the market for the trader, and will execute stop and limit orders (but
not both) at the moment in which the market arrives at a limit order or stop order, the order will
be executed and the other order will be immediately cancelled.
The two orders are valid until they are cancelled in one of the following scenarios:
Good Till Cancel the trade order is valid until it is cancelled by the trader, who executes the
cancellation through an order on an internet trading program or through a telephone conversation
with the broker.
Good Till Date the trade order is valid until the date that is set by the trader. In other words: if by
a certain date a trade order was not executed, it automatically gets cancelled by the broker or by
the trading program.
Breakaway gap
In situations where there is a gap in the price or the areas in the graph in which there was no
trading, most brokers cannot undertake to execute orders. In the case in which a client set an
order and there was a breakaway gap, the broker will try to remove the trader from the transaction
at the best available price.
There are brokers who promise their clients realization of orders at a promised exchange rate
under any market condition.
Difference in interest rate between currencies Rollover

Before we discuss this subject it is necessary to note that most brokers perform a rollover in an
automatic manner and that there is no need for intervention
by the trader. In order to understand the meaning of
the rollover one must know that the interest rate
between countries is not identical and that they
are determined by the local government
from time to time, as part of the monetary
policy.
Rollover interest is the interest paid
or received for holding a position
overnight. Every currency has its own
interest rate and because Forex trade
is conducted in currency pairs, every
transaction contains not just two currencies but
also their interest rates. If the interest of the currency
which you have bought is higher than the interest rate of the currency you have sold, you receive
the rollover interest (positive rollover). If the interest rate of the currency you have bought is lower
than that of the currency you have sold, you will pay the rollover interest (negative rollover).
Rollover interest can add significant costs or profits to your trade.
Example: When you buy the EUR/USD pair, you buy the Euro and sell the USD in order to pay for it.
The interest in the Euro block is 1% and the interest rate in the Unites States is 1.5%. Since in this
case you bought the currency with the lower interest rate, you will pay the rollover interest 0.50%
on an annual basis.
Conversely, if you sell the EUR/USD currency pair, you will pay the interest on the Euro and you will
gain the interest on the USD, and you will receive a rollover interest of 0.5%.
The mathematical formula is:
0.5% from the difference in the interest rates between the countries, divided by 365 days, multiplied
by the transaction amount.
Delays in execution or lack of execution of transactions

Such delays occur in the following cases: When economical data is publicized, and there are
problems in your internet connection or when there is overloading of servers at the brokerage or
the bank. Information that arrives at a delay of tenths of a second can be rejected.
If you thought that the inter-bank system was perfect, think again. The inter-bank systems can
also present a re-quote message, bank systems can also experience rejection of transactions or
partial execution of an order.
Exercises
Question 1:
Which order is given in order to take a profit?
A.
B.
C.
D.
STOP LOSS
SELL STOP
SELL LIMIT
TAKE PROFIT
Question 2:
Which order is given to end a loss?
A.
B.
C.
D.
STOP LOSS
SELL STOP
BUY STOP
Question 3:
Is it possible to place STOP LOSS and TAKE PROFIT orders in one open position?
A.
B.
C.
D.
Yes
No
Sometimes
Question 4:
Is it possible to have an adverse balance which is in excess of the securities placed with the
broker?
A.
B.
C.
D.
No, never
Yes
Only in the event of a significant global occurrence
It depends on whether the market is fluid
Question 5:
You have placed instructions/directions on the trading platform and turned o the
computer. Will these specifications remain valid?
A.
B.
C.
D.
Yes
No
Only if the computer remains turned on
Answers A and B are the correct answers.
Question 6:
You commenced a transaction in a EUR/USD currency pair, in the amount of 30,000 at a
rate of 1.2200. You purchased Euros and placed a STOP LOSS order at 1.2100. In for this
transaction to be profitable, does the rate need to go up or go down?
A.
B.
C.
D.
Go up
Go down
Remain as it is
Question 7:
You commenced a transaction in a EUR/USD currency pair, in the amount of 30,000 at a
rate of 1.2200. You purchased Euros and placed a STOP LOSS order at 1.2100. In the event
that the order is caught, how much have you lost?
A.
B.
C.
D.
If the order is caught, the transaction will profit as a result

$300 USD
$30 USD
There is no possibility of placing a STOP LOSS order which is lower than the purchase
price
Answers:
D,A,A,A,A,A,B
"On the other side of fear lies freedom."
Chapter 4
A winning tactic for the beginner
trader
A winning strategy
What is our goal in trading?
Our goal, ultimately, is to invest a certain amount of money and profit as much as possible. Let's
say 20% return in one year. If you invested 100,000 USD, the return would be 20,000 USD a year
the dream of every investor.
Let's do some calculating and examine how much one would have to profit a day?
Not considering weekends and holidays, we arrive at 200 active and full trading days. In other
words, we have to make 100 USD a day.
Chapter 4: A winning tactic for the beginner trader
If you invested 100,000 USD in stocks, and theoretically stocks can fall 10-15% in a day, we've seen
it happen lately, it would mean that you are risking 10,000-15,000 USD a day in the stock market
in order to profit 100 USD a day.
Why risk so much, if you can perform a transaction of 10,000 USD in the Forex market, risk less and
gain more?
In this lesson I will teach you a winning strategy, it all depends on you, and how much motivation,
will and patience you have to execute it.
Market analysis
In the money market there are analysts, economists and forecasters. Everyone is trying to forecast
which way the market will go, and whether or not it will rise or fall. If they can do it I can forecast
as well, if the Euro will rise or fall, and we already mentioned that it is much easier to forecast the
Forex market, you too can learn how to do it and you can always seek their help.
Remember: In this market nobody has an advantage over you.
Let's go back to the transaction we were

discussing, the 10,000 Euro transaction. The
value of each pip is 1 USD. Assuming that I
was right and the Euro rose by 100 pips in a
day, I profited 100 USD in one day. I will place
a stop-loss order at 50 pips and risk 50 USD,
or I will place a stop-loss order at 100 pips and
risk a maximum of 100 USD. Why do I have to risk
10,000 to 15,000 USD in the money market in order
to make 100 USD, when in the Forex market I can
risk a maximum of 100 USD?
Now we arrive at the interesting part of the lesson. We will see how we set the level of risk in
the Forex market to commission payments alone, meaning 3 pips a transaction, and how we
will be able to have a 50% annual return.
I have a young child; five years old, Jonathan, and I will make him a Forex investment manager. I
have a portfolio with 10,000 USD in it, and every morning on the way to school I ask him: Jonathan
my dear, what is daddy going to do today? Will he buy Euros or sell USD? Whatever the child says
that is what I do. If he says buy, I buy 10,000 Euros. If he says sell I sell 10,000 USD. And so forth,
for 100 days. For every transaction I set a stop-loss order of 100 pips and a take-profit order of 100
pips. That means that if the child is right, I make 100 USD, and if he is wrong I lose 100 USD. How
many times, do you think, out of 100 transactions, did my son make 100 USD and how many times
did he lose 100 USD? The answer is 50-50. It's statistics. Ultimately, it comes out to fifty-fifty.
My son guesses, and the Euro can rise or fall, there is no other possibility. It's like flipping a coin.
What will my sons account balance be after 100 transactions? 50 profitable transactions and 50
non-profitable transactions. 10,000 USD is the original amount minus the commissions that will
be paid. Assuming that commission is 3 pips, and every pip is 1 USD, then 3 times 100, or rather,
300 USD. Meaning, my account will come to 9,700 USD.
A five years old child trades without any knowledge in the field and only loses
commission.
How do you explain it, a five years old child is better than experienced Forex traders? How does he
only risk commission? I will teach you now.
To arrive at a situation in which the maximum risk is the commission alone, one must abide by
two rules.
The integrating rule proper leverage + statistical information =

guaranteed victory
In order to achieve minimal risk, you need to divide your portfolio into many smaller portions. it
can also be said on another way: it is forbidden to risk more than 2-3 percent of the portfolio on
one transaction. What does this mean? If I open a minimal portfolio of 10,000 USD, I don't risk
more than 200 300 USD in one transaction. How do I do this? I set a stop-loss order at a distance
of 200-300 pips. And why? When you flip a coin, you can get sequences of heads or tails. It is not
one time heads one time tails. It can be: five times tails and three times heads.
When we add up the results, it comes out to 50-50.
Statistics is on your side, when there are many transactions. And as we said, out of 20 flips, the coin
can land 13 times on heads and 7 times on tails, but there is no need to worry it will balance out
later. What can we do statistics is an exact science. Therefore it is forbidden to arrive at situation in
which you have no money left for trading because then the game will end and the whole theory
which I am teaching you is discounted.
What is the chance that my son, on the way to school, will lose 20 times in a row or that I will flip
a coin 20 times and it will land on heads? The answer: one half to the 20th power, in other words,
1 in a million. The chance that you will lose 20 times in a row, even if you are a 5 years old child, is
one in a million.
And what is the chance that I will lose 30 times in a row? One in a billion.
It will never happen, you will never be able to erase your entire portfolio. Statistics is on your side.
So never forget the rule: don't risk in one deal more than 2-3 percent, so that if you lose in a
few transactions in a row, nothing happened, you have enough money to continue trading
and in the eventually the account will balance out.
Trap 1: size of leverage

Let's see why everybody falls into the trap.
Let's discuss the significance of the size of leverage:
you learned a trading strategy and you are starting
to gain, the strategy works. The day comes that you
have been trading in the market already for a couple
of months and you are making very substantial gains.
You've become experts in the Euro your life is the
Euro. And then, one day, you are sure that the Euro is
on a rising streak. You read it in articles, the graph of
the technical analysis shows a jumping point, and the G8
is convening and they say that they have to fight the strengthening of the Euro. Everybody already
knows: the Euro is moving upwards and your saying my money is doing nothing, why don't I
make a large transaction of one million Euros? There is no doubt that the Euro is going to rise.
And then, you think: No, no, we said it's forbidden to leverage. You hanged in there, you didn't
let your emotions get to you and you went by the book you opened a transaction of 10,000
Euros, well, that was obvious: the Euro rose by 100 pips. At the end of the day you feel like a loser
that you made a small transaction. You gained 100 USD, because if you had leveraged, you would
have gained 10,000 USD. And you say to yourself: My money was doing nothing and we didn't
make use of it no big deal, what's important is that I am sticking to the rules that I have set for
myself. Another day passes, and you say Today the Euro is definitely correcting itself and it is
going down, and you open another small transaction and you were right. And so forth for another
one or two times. Now, you begin to break down. And then comes the day when you are sure the
Euro will rise, and you are tempted to open a 100,000 Euro transaction. And then what happens?
The market is on your side, you profit! You earned a tenfold increase 1,000 USD in a day. It's
fun making 1,000 USD in a day, right? Now you begin to get carried away. You are able to make
1,000 USD in a day, 2,000, 3,000 USD, and then you lose 5,000 USD in one day. Without noticing
you've ended up in the big casino of the world. Ultimately, in the casino everybody loses money.
Statistics.
Question: do you think that now you can go back and trade in 10,000 Euro transactions?
Not anymore.
Trap 2: improper use of stop-loss and take-profit.

You've placed a stop-loss order for 100 pips below the entry price and a take profit order at 100
pips above the entry price. The price drops by 100 pips, it arrives at the exchange rate for which
you have set the stop-loss order, the stop-loss goes into action and the transaction is automatically
closed. And as the transaction closes the exchange rate goes back up by 200 pips. After two days
you do a similar transaction, the market falls and the transaction is automatically closed at the
stop-loss point, it drops another 10-15 pips and then rises again by 250 pips. At this point you
are telling yourself: If only I had moved the stop-loss limit a little lower, I wouldn't have gotten
out with a loss of 100 USD, I would have come out with a profit of 100 USD. After a few times
of this happening (and believe me it happen a lot), you break and say to yourself: For the next
transaction I am moving the stop-loss limit another 20 pips, a total of 120 pips.
You start a transaction with the new stop-loss limit. The price goes down by 110 pips and then
makes a u-turn and rises and you end the day with a profit of 100 USD instead of a loss of 100 USD.
You were satisfied because you moved the stop-loss limit by 20 additional pips and you made
money. Great! The next day the exact same thing happens. And the
third day comes, the price drops and you move the stop-loss
limit back to 150 pips and you make money! The fourth time
it falls more and more and you move it to 200, 250, 300,
350, even 400 pips, and now you've lost 4000 USD. And
you know that there is no chance the exchange rate will
go back to where it previously was.
You couldn't close the position at 300 $ so at 4000 $
your hand will tremble. In addition, you are certain that
there is no chance that the market will continue to move
against your position all the time.
Trap 3: deterioration
Ok, you have to arrange more money. You got a loan from some friends. You know that the currency
will correct itself, but you don't know when will it come. If you've already been there, you won't be
there when it comes? For emotional reasons you can't close the position and you continue to get
more loans and the loss continues to grow.
Guys, do you insure your homes? Do you pay a premium on your insurance? Do you have life
insurance? You got car insurance?
The stop-loss order is your insurance premium, so that you never lose more than you can allow
yourself to lose.
Do you know what a balance sheet of losing clients in the Forex market looks like? 98% of their
transactions are profitable.
Most traders gain in small amounts and lose in huge amounts.

That's how most people go down.
But whoever knows how not to lose more than 2-3 percent in a transaction and whoever knows
how to leverage, sets the risk in the Forex market to a loss of commissions only. And you know
yourself and your character, and you know no one will force you to leverage 100 fold.
Whoever knows that his character will not allow him to leverage and is not able to risk only 2-3
percent of their portfolio in a transaction,
should not get involved in the Forex market it is better for him to go gamble in Las Vegas,
he'll enjoy it more there.
How to profit
Until now we have discussed how to protect our portfolios and how we only lose commissions.
But you don't want to learn how to lose commissions or fund brokers. You want to learn how to
make money.
Now begins the interesting part of the lesson. Let's see how much money can be earned in the
Forex market in one year, by risking commissions only.
Is there an economist in the world who knows how to evaluate with certainty where the Euro will
go, in what direction gold or the NASDAQ will go? What will the interest rate be? Will there be
inflation?
What is a bachelor's degree in economics, a master, a doctorate, a Nobel Prize, an investment firm,
a portfolio manager why does this whole industry exist anyway?
Simply in order to understand that it is possible to evaluate with certainty in order to break the
balance.
By how much? You will see in a moment.
Proper capital management

In order to set the amount of risk only to the amount of commissions that we will pay, one needs
financial knowledge that will allow him to break the balance and carry out a few more profitable
transactions in contrast to losing transactions.
What do you need to learn to know when the Euro will rise?
First thing technical analysis. This is analysis of prices of a
certain currency in order to identify trends, etc. And what
is the first rule in economics? Go with the trend of the
market. It's a science, and that has to be learned, it's not
complicated. In our advanced lessons we will teach
you how to look at the graph and learn how to identify
a trend. Is it an exact science? Not always, otherwise
everybody would be profiting. But, if you conduct all
your transactions from today and onwards in unison
with the trend and not against it, eventually you will
be able to have a few more profitable transactions than
losing ones. That is the whole game.
The second thing that needs to be learned is analysis of
economic data. One can explain that when the interest rate in
a country rises, the value of the local currency rises, because the demand for deposits in this
currency increase, people buy it and then it strengthens.
Even a parsley merchant in the market, after 20 years, knows exactly what the quality of the parsley
is. He looks at the leaves and immediately knows if it's a good product or not. He has no degree in
advanced parsley studies but he lives and breathes parsley.
Experience worth more than education. Similarly for you, after a few years of trading the Euro, you
will come to understand the Euro. You will be awaken in the middle of the night, and be able to
say that the exchange of the Euro is 1.4266, that at 10 in the morning there is light trading and at
night it's latent. One must be cautious around Christmas time, and that when the interest rate is
lowered it flies upward.
So you have to, go and learn technical analysis, know the economical data, experiment,
practice and profit.
Now let's see what you can do if you acquire the minimal knowledge and experience when we
break the balance.
Now I will show you a simple business template: I open a business, the name of the business is:
Euro and Sons Ltd. I deposit 10,000 USD, and I am the Euro king of the world.
There are those who sell pizzas, those who sell tomatoes and my business it to buy and sell
Euros. I work for ten minutes a day, a make one deal on the way to school with my son, Jonathan,
remember him from before? Either I earn 100 USD or I lose 100 USD. In contrast to my son, I don't
guess. I read financial newspapers, I read analysts, I do forecasting, put in my experience, and
make a rational financial decision.
My son, out of 22 transactions in a month, loses 11 times and
earns 11 times. How many pips does he lose each month
on commissions? If we assume that the spread is 3 pips,
then 66 pips, he loses 3 times 22 transactions.
The goal of the business plan: to be better than
my son. Only once a month. Take the information
that I have and translate it into victory. Instead
of 11-11, I would be 12-10 in my favor. Is it
possible?
Guys, if you didn't understand, we start the trade
in the Forex market with a 50% chance. I want to
win against the market just once with knowledge. Is
it certain that I will be able to complete one transaction
better in my favor out of 22 transactions? No, there is no
guarantee in business, but there is no chance without risk. And if
I lose, I would only lose commission, I wouldn't get loans from my friends or from banks I would
never get in trouble in this market.
Most of the traders in the world know how to identify the trend, but their problem is money
management. I, personally, have been successful for years now working in this manner. Most of
the traders who have learned this lesson and the coming lessons have succeeded in breaking the
balance, but unfortunately haven't been successful in abiding by the instructions and rules which
I set before them.
simple matematics
Let's see what happens if I succeed in one transaction which is one more success in my favor, let's
do some simple mathematics:
We spoke about 12 profitable transactions
against 10 losing ones, right?
12 profitable transactions multiplied by 100
pips gives 1200 pips in a month.
10 losing transactions multiplied by 100 pips
gives 1000 pips in a month.
How much is 1200 minus 1000? 200 pips. We
will subtract the commission (the spread) that
I paid to execute the transactions 3 pips times
22 transactions is equal to 66 pips of commission.
The total collective gain is 200 pips, minus 66 pips of commission, we earned 134 pips in a month.
I want to claim the following, if you will: if you learn Euro, if you learn technical analysis, understand
the important data which affect the Euro, you will get used to it, and then once a month you will
succeed more than a five year old. If it wasn't possible we wouldn't have taught it to you. If it
doesn't work out for you, stop trading. It appears that you didn't understand that if the graph is
rising and you are told to buy, you need to buy. It appears you didn't understand that if the bank's
governor raises the interest rate, the currency will rise. But if you were successful and understood,
then you have 134 pips in a month, by working 10 minutes a day, that's all.
Let's translate it into money: You have 10,000 USD in your account. Let's assume that you start
with a transaction of 30,000 Euros (3 fold leverage) for this transaction each pip is worth 3 USD.
3 USD times 134 pips is 402 USD. 4.02% return in a year it comes to 48.24 percent. By risking
commission alone!
And what if you attain more experience and knowledge and have 13 profitable transactions in
contrast to 9 losing transactions and not 12-10? It's already a 96.5% return. Do you know of any
investment with such a return? Because I really don't.
What amount should you invest?

Take the minimal amount of money you are willing to earn in a month and multiply it by 20.
Why? We spoke of 5% monthly returns, so if you want to make 500 USD in a month, put in 10,000
USD to open an account. But don't lie to yourself, don't put in 10,000 USD to earn 5,000 USD in a
month, because you will surely lose. Why? Because whoever tries to have a 50% return in a month,
leverages himself too much and will never succeed.
Tools for success

We will give you comprehensive on-line courses, you will get used to it, you will learn and then
you will begin trading.
If you see over time that you can earn 134 pips a month, enlarge your portfolio and start larger
transactions, you'll enlarge your portfolio and you will operate in a way that each pip will be worth
20 USD.
You've learned here the basic elements of secure Forex trading, and the sums you can achieve on
your own when you become an experienced trader.
Do you know how great it is to earn a weekly salary without being dependent on anyone, from
anywhere in the world? Maybe you won't become a millionaire by doing this, but if they throw you
to any place in the world, with a laptop and a little money, you can earn a good living, because you
will have the skill and knowledge to evaluate in which direction the Euro will go once a month.
Now that you have learned and understood the basic functions of the market, we recommend
that you continue with our firm's advanced course. a course which teaches technical analysis and
a few more trade strategies.
"The fourmost dangerous wordsin investing are:

this time it's different."
John Templeton
Chapter 5
Beginners trader strategies
A. Trend signal Strategy
General Description
In the trend signal strategy, we look for a candlestick that indicates a return to a previous trend
following a correction.
This strategy is appropriate for timeframes of 15 minutes and higher, where the bigger the
timeframe, the higher the level of precision.
This strategy is suitable for all currency pairs, commodities, indices, stocks and futures contracts.
Position Management
A signal for entering a buy trade is triggered when an upwards trend, followed by a correction
(downtrend), has been identified, and a long bullish candlestick appears whose length includes
the three preceding bearish candlesticks.
A signal for entering a sell trade is triggered when an downwards trend, followed by a correction
Chapter 5: Beginners trader strategies
(uptrend), has been identified, and a long bearish candlestick appears whose length includes the
three preceding bullish candlesticks.
The trade should be entered at the start of the first candlestick that opens after the signal.
The stop loss should be set at a distance equal to 20% the length of the correcting candlestick, and
moved at the start of each new wave in order to lock in profits.
Example Long Trade:
In this example, we review the strategy in the AUD/USD currency pair, in a one hour timeframe, where
an uptrend and subsequent correction have been identified. The signal is received by a long, corrective
bullish candlestick, whose length includes the three preceding bearish candlesticks.
After identifying this signal, we will enter a long position at the start of the next candlestick. The
correcting candlestick is 72 pips long, with 20% of 72 being 14 pips, meaning that the stop loss will be
placed at the opening value of the new candlestick minus 24 pips. In this case, the value is 0.9689.
The stop loss will be adjusted for each uptrend wave, in order to lock in profits.
Example Short Trade:
In this example, we review the strategy in the GBP/JPY currency pair, in a one hour timeframe, where
a downtrend and subsequent correction have been identified. The signal is received by a long,
corrective bearish candlestick, whose length includes the three preceding bullish candlesticks.
After identifying this signal, we will enter a short position at the start of the next candlestick. The
correcting candlestick is 1792 pips long, with 20% of 1792 being 358 pips, meaning that the stop
loss will be set for the opening value of the new candlestick minus 358 pips. In this case, the value
is 199.81.
The stop loss will be adjusted for each downtrend wave, in order to lock in profits.
In this example, we would have earned 7163 pips over a period of 7 months.
B. Tunnel Strategy
General Description
In this strategy, we are looking for a break in a tunnel pattern.
The strategy is suitable for timeframes of 4 hours or higher.
Position Management
A tunnel is identified when several peaks and troughs have formed within a uniform trend.
A break in the tunnel is signaled when the rate exceeds the tunnel values by 30 pips.
A long position will be entered when the tunnel is in a downtrend and the tunnel is broken in an
upwards direction.
A short position will be entered when the tunnel is in a uptrend and tunnel is broken in an
downwards direction.
The stop loss will be set 20 pips from the opposite border of the tunnel, and will be adjusted for
each new wave until it is triggered.
Example Long Trade:
In this example, we review the strategy in the EUR/USD currency pair, in a 4 hour timeframe. The
downtrend is identified by the tunnel borders being the peaks and troughs of the candlesticks, as
noted.
Enter a long position when a candlestick appears which breaks 30 pips over the tunnel, as can be seen
here. The stop loss will be set 20 pips from the opposite border of the tunnel, and will be adjusted for
each new wave until it gets triggered.

In this example, we test the strategy in the GBP/USD currency pair, in a weekly timeframe. The uptrend
can be identified when the tunnel borders are the peaks and troughs of the candlesticks, as displayed.
Enter a short position when a candlestick appears which breaks 30 pips below the tunnel, as can be
seen here.
The stop loss will be set 20 pips from the opposite border of the tunnel, and will be adjusted for each
new wave until it gets triggered.
According to this example, we would have earned 131 pips over a period of 3 months.
C. Fractal Strategy
General Description
In the fractal strategy, we are looking for:
A combination of averages and fractals which indicate the possibility of a future trend.
This strategy is suited for timeframes of 15 minutes and up, where the longer the timeframe, the
higher the level of precision.
This strategy is suitable for:
All currency pairs, commodities, indices, stocks and futures contracts.
Indicators used: Alligator, Fractals.
Position Management
A signal is received when the following conditions are met: deeply non-trending market,
characterized by a crossing of the three average lines of the Alligator indicator, and after the values
of a fractal pair converge more than the pair that preceded them.
A candlestick appears which passes the fractal rate at the peak of a long trade or the trough of (for)
a short position, plus a security range of 30 pips, in order to prevent a false break.
The stop loss should be set 30 pips from the value of the opposite fractal.
The trade should be exited when a candlestick appears whose closing value is within the range
of averages.
Indicators
We will add the following indicators: the Alligator indicator, found in Insert->Indicators->Bill
Williams->Alligator, and will leave it with the default values of 13,8,5 and a shift value of 8,5,3. We
will also add the Fractals indicator, found in Insert->Indicators->Bill Williams->Fractals.
Example Long Trade:
In this example, we test the strategy in the GBP/USD currency pair, in a 4 hour timeframe.
A preliminary signal is received when the indicators moving averages cross over, and a fractal pair
appears which is more converged than the pairs that preceded it.
The buy position should be entered when the value exceeds the upper fractal by 30 pips.
An example of this can be seen here.
The stop loss should be set 30 pips from the value of the lower fractal.
The trade should be exited when a candlestick appears whose closing value is within the range of
averages.

In this example, we test the strategy in the EUR/GBP currency pair, in a 4 hour timeframe.
A preliminary signal is received when the indicators moving averages cross over, and a fractal pair
appears which is more converged than the pairs that preceded it.
The sell position should be entered when the rate passes the lower fractal by 30 pips.
An example of this can be seen here.
The stop loss should be set 30 pips from the value of the upper fractal.
The trade should be exited when a candlestick appears whose closing rate is within the range of
averages.
In this example, we would have earned 239 pips over a period of 6.5 days.
D. Fishing Strip Strategy

General Description
The fishing line strategy involves looking for turning points. These points indicate the possibility
of a change in trend direction, and enable us to act accordingly.
This strategy is suited for timeframes of 15 minutes and up, where the bigger the timeframe, the
higher the level of precision.
Indicators used: Bollinger Bands.
long Trade
A preliminary signal is received when the first candlestick closes below the fishing strip, and the
following candlestick closes within the strip.
The trade should be entered at the start of the third candlestick.
The stop loss should be set 5 pips below the lowest value reached by the first candlestick.
The trade should be exited once 100 pips have been earned, or when the other end of the line has
been reached - whichever happens first.
Short Trade
A preliminary signal is received when the first candlestick closes below the fishing strip, and
the following candlestick closes within the line. The trade should be entered at the start of the
third candlestick. The stop loss should be set 5 pips above the highest rate reached by the first
candlestick. Profits should be taken once 100 pips have been earned, or the other end of the line
has been reached - whichever happens first.
Indicators
Add the relevant indicator by selecting Insert->Indicators->Trend->Bollinger Bands. Use the default
settings of 20,0,2, and configure it with the color black.
Example Long Trade:
In this example, we review the strategy in the USD/JPY currency pair, in a 4 hour timeframe. As can be
seen, the first candlestick closed below the strip, and the second candlestick closed within the strip.
The buy position will be entered at the start of the third candlestick. The stop loss should be set 5 pips
below the lowest value reached by the first candlestick.
As can be seen, the stop loss is triggered, but immediately afterwards, a signal can be seen by the first
candlestick being closed below the strip, and the second candlestick closed within the strip, meaning
that we will enter another buy long position at the start of the third candlestick. The stop loss should be
set 5 pips below the lowest value reached by the first candlestick. The trade should be exited once 100
pips have been earned, or the other end of the strip has been reached - whichever happens first. As can
be seen, in this case the rate reaches the other end of the strip.

In this example, we test the strategy in the USD/JPY currency pair, in a 4 hour timeframe. As can be seen,
the first candlestick closed below the strip, and the second candlestick closed within the strip.
The sell position will be entered at the start of the third candlestick. The stop loss should be set 5 pips
above the highest value reached by the first candlestick. The trade should be exited once 100 pips have
been earned, or the other end of the line has been reached - whichever happens first. As can be seen, in
this case the rate reaches the other end of the strip.
In this example, we would have earned 53 pips over a period of 3.5 days.
Good luck.
Please keep in mind that using those strategies does not guarantee profits as
market conditions could vary and currency trading involves substantial risk of
loss and may not be suitable to all investors
Remember before selling:

After a series of successes take a vacation.
After a series of failures take a break and come learn!
Be patient and work based on predetermined plans.
You dont have to trade every day the market isn't going anywhere.
Don't trade against the trend identify the trend and join it.
A common mistake that should be highlighted: don't earn small and lose big.
Don't let losses grow. Use the stop-loss order in every deal
Don't be "married" to the deal. Be quick to change direction if that's what the chart shows.
Forget about losses and learn from them.
And most importantly:
Don't worry about the small losses, but get excited and enjoy the big profits.
Good luck!
Chapter 6
Glossary of concepts
A
Balance of Payments
A record of transactions with the rest of the
world over a particular time period. These
include merchandise, services and capital
flows.
Account
Record of all transactions.
Account Balance
Amount of money in an account.
Appreciation
A currency is said to appreciate when price
rises in response to market demand; an
increase in the value of an asset.
Arbitrage
Taking advantage of countervailing prices in
different markets by the purchase or sale of
an instrument and simultaneous taking of
an equal and opposite position in a related
market to profit from small price differentials.
Ask, Offer
The price, or rate, that a willing seller is
prepared to sell at.
Ausie
The Australian Dollar
B
Back Office
The departments and processes related to
the settlement of financial transactions (i.e.
written confirmation and settlement of trades,
record keeping(.
Balance of Trade
The value of a country's exports minus its
imports.
Bar Chart
A type of chart which consists of four
significant points: the high and the low prices,
which form the vertical bar, the opening price,
which is marked with a little horizontal line to
the left of the bar, and the closing price, which
is marked with a little horizontal line of the
right of the bar.
Base Currency
The currency in which an investor or issuer
maintains its book of accounts; the currency
that other currencies are quoted against. In
the forex market, the US Dollar is normally
considered the `base` currency for quotes,
meaning that quotes are expressed as a unit
of $1 USD per the other currency quoted in
the pair.
Basis Point
One hundredth of a percent.
Bear
An investor who believes that prices/the
market will decline.
Chapter 6: Glossary of concepts
Bear Market
A market distinguished by a prolonged
period of declining prices accompanied with
widespread pessimism.
Bid
The price that a buyer is prepared to purchase
at; the price offered for a currency.
Bonds
Bonds are tradable instruments (debt
securities) which are issued by a borrower to
raise capital. They pay either fixed or floating
interest, known as the coupon. As interest
rates fall, bond prices rise and vice versa.
Broker
An individual, or firm, that acts as an
intermediary, putting together buyers and
sellers usually for a fee or commission. In
contrast, a `dealer` commits capital and
takes one side of a position, hoping to earn a
spread (profit) by closing out the position in a
subsequent trade with another party.
Buba
Bundesbank, Central Bank of Germany
Bull
An investor who believes that prices/the
market will rise.
Bull Market
A market distinguished by a prolonged period
of rising prices (Opposite of bear market(.
day as well as the opening and closing price. If

the open price is higher than the close price,
the rectangle between the open and close
price is shaded. If the close price is higher
than the open price, that area of the chart is
not shaded.
Central Bank
A government or quasi-governmental
organization that manages a country`s
monetary policy a prints a nation's currency.
For example, the US central bank is the Federal
Reserve, others include the ECB, BOE, BOJ.
Chartist
An individual who uses charts and graphs and
interprets historical data to find trends and
predict future movements. Also referred to as
Technical Trader.
Clearing
The process of settling a trade
Closed Position
Exposures in Foreign Currencies that no longer
exist. The process to close a position is to sell
or buy a certain amount of currency to offset
an equal amount of the open position. This
will square' the position.
Commission
A transaction fee charged by a broker.
Confirmation
A document exchanged by counterparts to
a transaction that confirms the terms of said
transaction.
Candlestick Chart
A chart that indicates the trading range for the
Contract
The standard unit of trading.
Counter Party
The participant, either a bank or customer,
with whom the financial transaction is made.
Cross Rate
An exchange rate between two currencies.
The cross rate is said to be non-standard in the
country where the currency pair is quoted. For
example, in the US, a GBP/CHF quote would
be considered a cross rate, whereas in the UK
or Switzerland it would be one of the primary
currency pairs traded.
Currency
Any form of money issued by a government
or central bank and used as legal tender and
a basis for trade.
Currency Pair
The two currencies that make up a foreign
exchange rate. For Example, EUR/USD
Currency Risk
The risk of incurring losses resulting from an
adverse change in exchange rates.
D
Day Trading
Opening and closing the same position or
positions within the same trading session.
Dealer
An individual or firm that acts as a principal
or counterpart to a transaction. Principals
take one side of a position, hoping to earn
a spread (profit) by closing out the position
in a subsequent trade with another party. In
contrast, a broker is an individual or firm that
acts as an intermediary, putting together
buyers and sellers for a fee or commission.

Deficit
A negative balance of trade or payments.
Delivery
An actual delivery where both sides transfer
possession of the currencies traded.
Deposit
The borrowing and lending of cash. The rate
that money is borrowed/lent at is known as
the deposit rate (or depo rate). Certificates of
Deposit (CD`S) are also tradable instruments.
Depreciation
A decline in the value of a currency due to
market forces.
Derivative
A contract that changes in value in relation to
the price movements of a related or underlying
security, future or other physical instrument.
An Option is the most common derivative
instrument.
Devaluation
The deliberate downward adjustment
of a currency's price, normally by official
announcement.
E
ECB - European Central Bank
The Central Bank for the European Monetary
Union.
End Of Day (Mark-to-Market(
Traders account for their positions in two
ways: accrual or mark-to-market. An accrual
system accounts only for cash flows when

they occur, hence, it only shows a profit or loss
when realized. The mark-to-market method
values the trader`s book at the end of each
working day using the closing market rates or
revaluation rates. Any profit or loss is booked
and the trader will start the next day with a
net position.
Euro
The currency of the European Monetary Union
(EMU) which replaced the European Currency
Unit (ECU(
Execution Date
The date on which a trade occurs.
F
Fed - Federal Reserve
The Central Bank for the United States.
Fixed Exchange Rate (Representative Rate(
An official exchange rate set by monetary
authorities for one or more currencies. In
practice, even fixed exchange rates fluctuate
between definite upper and lower bands,
leading to intervention.
Flat (Square, Balanced(
To be neither long nor short is the same as to
be flat or square. One would have a flat book
if he has no positions or if all the positions
cancel each other out.
FOMC - Federal Open Market Committee
The Federal Reserve monetary committee.
Forex - Foreign Exchange
The simultaneous buying of one currency
and selling of another in an over-the-counter

market. Most major FX is quoted against the
US Dollar.
Forward
The pre-specified exchange rate for a foreign
exchange contract settling at some agreed
future date, based upon the interest rate
differential between the two currencies
involved.
Forward Points
The pips added to or subtracted from the
current exchange rate to calculate a forward
price.
FRA - Forward Rate Agreements
FRA`s are transactions that allow one to
borrow/lend at a stated interest rate over a
specific time period in the future.
Front and Back Office
The front office usually comprises of the trading
room and other main business activities.
Fundamental Analysis
Analysis of economic and political information
with the objective of determining future
movements in a financial market.
Futures Contract
An obligation to exchange a good or
instrument at a set price on a future date. The
primary difference between a Future and a
Forward is that Futures are typically traded
over an exchange (Exchange- Traded Contacts
- ETC), versus forwards, which are considered
Over The Counter (OTC) contracts. An OTC is
any contract NOT traded on an exchange.
increase in the price of consumer goods,

thereby eroding purchasing power.
G5
The five leading industrial countries, being US,
Germany, Japan, France, UK.
G7
The seven leading industrial countries, being
US, Germany, Japan, France, UK, Canada, Italy.
GDP - Gross Domestic Product
Total value of a country's output, income or
expenditure produced within the country's
physical borders.
GNP - Gross National Product
GNP - Gross National Product - Gross domestic
product plus income earned from investment
or work abroad.
Initial Margin
The initial deposit of collateral required to
enter into a position as a guarantee on future
performance.
Interbank Rates
The Foreign Exchange rates at which large
international banks quote other large
international banks.
Intervention
Action by a central bank to effect the value of
its currency by entering the market. Concerted
intervention refers to action by a number of
central banks to control exchange rates.
GTC - Good-Till-Cancelled
An order left with a Dealer to buy or sell at a
fixed price. The GTC will remain in place until
executed or cancelled.
IRS - Interest Rate Swaps

An exchange of two debt obligations that have
different payment streams. The transaction
usually exchanges two parallel loans; one
fixed the other floating.
Hedge
A position or combination of positions that
reduces the risk of your primary position.
Kiwi
The New-Zealand Dollar.
High/Low
Usually the highest traded price and the lowest
traded price for the underlying instrument for
the current trading day.
I
Inflation
An economic condition where there is an
L
Leading Indicators
Economic variables that are considered
to predict future economic activity (i.e.
Unemployment, Consumer Price Index,
Producer Price Index, Retail Sales, Personal
Income, Prime Rate, Discount Rate, and Federal
Funds Rate(.
Leverage
Also called margin. The ratio of the amount
used in a transaction to the required security
deposit.
Libor - London InterBank Offered Rate
The London Inter-Bank Offered Rate. Large
international banks use LIBOR when borrowing
from another bank.
Liquidation
The closing of an existing position through
the execution of an offsetting transaction.
Liquidity
The ability of a market to accept large
transaction with minimal to no impact on
price stability.
Long
A position to purchase more of an instrument
than is sold, hence, an appreciation in value if
market prices increase.
Long Position
A position that appreciates in value if market
prices increase. When the base currency in the
pair is bought, the position is said to be long.
Loonie
The Canadian Dollar.
Lot
A unit to measure the amount of the deal. The
value of the deal always corresponds to an
integer number
M
Margin
The required equity that an investor must
deposit to collateralize a position.
Market Maker
A dealer who regularly quotes both bid and
ask prices and is ready to make a two-sided
market for any financial instrument.
Market Order
An order to buy/sell at the best price available
when the order reaches the market.
O
OCO - One Cancels the Other
A contingent order where the execution of
one part of the order automatically cancels
the other part.
Open order
An order that will be executed when a market
moves to its designated price. Normally
associated with Good til Cancelled Orders.
Open Position
An active trade with corresponding unrealized
P&L, which has not been offset by an equal
and opposite deal.
Options
An agreement that allows the holder to have
the option to buy/sell a specific security at a
certain price within a certain time. Two types
of options call and put. A call is the right to
buy while a put is the right to sell. One can
write or buy call and put options.
Order
An order is an instruction, from a client to a
broker to trade. An order can be placed at a
specific price or at the market price. Also, it can
be good until filled or until close of business.
Overnight Position
A trade that remains open until the next
business day.
Q
Quote
An indicative market price; shows the highest
bid and/or lowest ask price available on a
security at any given time.
R
Rally
A recovery in price after a period of decline.
P
Points, Pips
The term used in currency market to represent
the smallest incremental move an exchange
rate can make. Depending on context,
normally one basis point (0.0001 in the case
of EUR/USD, GBD/USD, USD/CHF and 01 in the
case of USD/JPY/(
Range
The difference between the highest and
lowest price of a future recorded during a
given trading session.
Position
A position is a trading view expressed by
buying or selling. It can refer to the amount
of a currency either owned or owed by an
investor.
Repo - Re-purchase
This type of trade involves the sale and later
re-purchase of an instrument, at a specified
time and date. Occurs in the short-term money
market.
Premium
In the currency markets, it is the amount of
points added to the spot price to determine a
forward or futures price.
Resistance
A term used in technical analysis indicating
a specific price level at which a currency will
have the inability to cross above. Recurring
failure for the price to move above that point
produces a pattern that can usually be shaped
by a straight line.
Profit/Loss (P&L(
The actual realized gain or loss resulting from
trading activities on Closed Positions, plus the
theoretical unrealized gain or loss on Open
Positions that have been Mark-to-Market.
Rate
The price of one currency in terms of another.
Risk Management
To hedge one's risk they will employ financial
analysis and trading techniques.
Roll-Over
Process whereby the settlement of a deal is
rolled forward to another value date. The cost
of this process is based on the interest rate
differential of the two currencies.
S
Settlement
The process by which a trade is entered into
the books and records of the counterparts to a
transaction. The settlement of currency trades
may or may not involve the actual physical
exchange of one currency for another.
Short
To go `short` is to have sold an instrument
without actually owning it, and to hold a short
position with expectations that the price will
decline so it can be bought back in the future
at a profit.
Short Position
An investment position that benefits from
a decline in market price. When the base
currency in the pair is sold, the position is said
to be short.
Spot
A transaction that occurs immediately, but the
funds will usually change hands within two
days after deal is struck.
Spot Price
The current market price. Settlement of
spot transactions usually occurs within two
business days.
(ask) prices; used to measure market liquidity.

Narrower spreads usually signify high liquidity.
Stop Loss Order
An order to buy/sell at an agreed price. One
could also have a pre-arranged stop order,
whereby an open position is automatically
liquidated when a specified price is reached
or passed.
Support Levels
A technique used in technical analysis that
indicates a specific price ceiling and floor at
which a given exchange rate will automatically
correct itself. Opposite of resistance.
Swap
A currency swap is the simultaneous sale
and purchase of the same amount of a given
currency at a forward exchange rate.
T
Technical Analysis
An effort to forecast prices by analyzing market
data, i.e. historical price trends and averages,
volumes, open interest, etc.
Tick
A minimum change in price, up or down.
Tomorrow Next (Tom/Next(
Simultaneous buying and selling of a currency
for delivery the following day.
Two Way Price
Both the bid and ask rate is quoted for a Forex
transaction.
Spread
The difference between the bid and offer
is normally two business days forward. Also

known as maturity date.
US Prime Rate
The interest rate at which US banks will lend to
their prime corporate customers.
V
Value Date
The date on which counterparts to a financial
transaction agree to settle their respective
obligations, i.e., exchanging payments. For
spot currency transactions, the value date
Volatility
A statistical measure of a market or a security's
price movements over time and is calculated
by using standard deviation. Associated with
high volatility is a high degree of risk.
Volume
The number, or value, of securities traded
during a specific period.
I would like to thank you for participating in

the course, and wish you success in any future
path you may choose.

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"Only those who will risk going toofar

can possibly find out howfaronecan go."

Chapter 1: Advantages of the Forex Market

What affects the Forex market?

Chapter 1: Advantages of the Forex Market

The Forex market has 2 principle advantages:

The second advantage is: In the Forex market there is no control

Chapter 1: Advantages of the Forex Market

What advantages do we have in a market which is influenced by

Chapter 1: Advantages of the Forex Market

The second advantage the important information reaches

100 billion USD a year...

Haven't you ever met someone who

Chapter 1: Advantages of the Forex Market

Market research and analysis

Chapter 1: Advantages of the Forex Market

$100,000USD per day

There are no factors which can influence the market

Large, international events

"Theessenceof knowledge is, having it, to apply it:

Chapter 2: Elementary concepts of the Forex Market

Chapter 2: Elementary concepts of the Forex Market

Chapter 2: Elementary concepts of the Forex Market

Average daily fluctuation

From this we can learn of a new and important advantage

Chapter 2: Elementary concepts of the Forex Market

How are pips calculated?

Size of the spreads

Chapter 2: Elementary concepts of the Forex Market

Chapter 2: Elementary concepts of the Forex Market

The rules are:

Chapter 2: Elementary concepts of the Forex Market

Chapter 2: Elementary concepts of the Forex Market

Should you leverage?

Why do the firms allow us to leverage?

Chapter 2: Elementary concepts of the Forex Market

The base exchange rate

A positive balance of 10 pips

"Hold knowledge as though you would be in fear of losing it."

Chapter 3: Orders and directives in the Forex market

The advantages are:

Chapter 3: Orders and directives in the Forex market

Question: I have 1,000 USD in my account, I bought 100,000 Euros at an exchange

Chapter 3: Orders and directives in the Forex market

It is very similar to wave surfing: as long as the

Chapter 3: Orders and directives in the Forex market

Future order - limit

Future order stop

Chapter 3: Orders and directives in the Forex market

One-Cancels-the-Other (OCO) order

Chapter 3: Orders and directives in the Forex market

Difference in interest rate between currencies Rollover

Chapter 3: Orders and directives in the Forex market

Delays in execution or lack of execution of transactions

Chapter 3: Orders and directives in the Forex market

If the order is caught, the transaction will profit as a result

"On the other side of fear lies freedom."

Chapter 4: A winning tactic for the beginner trader

Let's go back to the transaction we were

Chapter 4: A winning tactic for the beginner trader

Chapter 4: A winning tactic for the beginner trader

The integrating rule proper leverage + statistical information =

Chapter 4: A winning tactic for the beginner trader

Trap 1: size of leverage