KISS FOREX

How to Trade
out of Recession
50pips/Day
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Copyright © 2012-2015 by SIOLEENO INV. CO LTD

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Published by:

SIOLEENO INV. CO LTD

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To my Man for being my Guardian Angel supporting and encouraging me
all the way.
 TABLE OF CONTENTS

Introduction
1. What is FOREX
2. Why FOREX Trading?
3. Fundamentals
4. Forex Technical Analysis for a 6yrs old
5. 50 pips a Day
6. What you Need
7. Forex Brokers
8. Pareto Principle
9. The 3 Different Trading Styles
10. The 3 Different Market Tendencies
11. Let’s Start Forex Trading
12. Always Keep in Mind
Resources
Legal Disclaimer

Introduction
 Words are not enough to express how proud I am for
being Greek and I hope my sadness for the situation my country is into, never gets a
physical form because if it was color, would have painted black the mountains of the
world.
On the other hand, I’m optimistic that with systematic efforts to exceed ourselves on all
levels, us Greeks will soon manage to get out of the Darkness and shine showing the
world that new beginnings can be founded on the pure essence of spirit wired by the
dynamics of a magnificent soul.
Publishing this Book about FOREX TRADING has been a dream of mine secretly kept
in my heart for long. So here I am, a constant student of the Markets, the psychology of
the Traders and the Magic of Mathematics, ready to share what I’ve learned and
exchange experiences and ideas with other Forex Enthusiasts.
What about You?
Are you FOREX intimidated ? OK, maybe you don’t admit it openly. But just in case it
would make you feel better, I must tell you that I had been FOREX-scared for more than
four years ! Although I was amazed by its power and all the elements that make
FOREX Market the biggest and most liquid of all, I somehow felt so “little”, so
inefficient to actually try to claim my tiny pips out of it. Till I realized that you don’t
have to be a wash-machine engineer in order to use a wash-machine and get the cleanest
laundry in the block
You may already be an experienced FOREX Trader, probably being here out of
curiosity….which is fine. But being aware of the fact that most important things are
simple, and we all tend to mess up with simple things just because we miss the
BASICS, I decided to write this Book aiming to teach the BASICS to any newbie so that
the broader vision comes naturally.
“One Thing I Know Is That I Don’t Know A Thing” ……Socrates
My motive? Global recession and the huge impact it has on my Country’s economy as
well as in the lives of millions of people allover the world.
I’m stubborn enough to believe that there shouldn’t be poverty in the era of Internet.
Many times in the past, I found myself at the verge of bankruptcy due to poor choices
and even poorer practices. But I always stood up ready for the next fight. Being a big
believer of perseverance towards the pursuance of sustainable income, I couldn’t keep
this knowledge I gained to myself.
I feel blessed for being able to grow stronger from the challenges I faced throughout the
22 years of my business ventures and for the wealth of experience I gained following the
route of continuous improvement and training.
Now it’s my turn to give back and make other people feel blessed and happy enjoying
the fruits of their efforts which will be possible thanks to the knowledge I’m sharing
with them.
You don’t have to be a genius or a rocket scientist to make a comfortable living from
FOREX TRADING alone. But the transition from your current career status to that of a
Part-Time or Full-Time Forex Trader, must happen gradually and I’m explaining the
necessary steps you have to make later on in the Book.
The thought that successful Forex Traders with amazing lifestyle were not better than me
was hammering my mind over and over again while I was studying technical analysis. I
just couldn’t accept that as an alibi for not trying.
I’m not a Financial Advisor, a Professional Trader, a Technical Analyst or an
Economist. The book you’re reading is the compilation of knowledge I gained through
studying, exploring, researching and experimenting with my LIVE Forex Accounts with
four different Forex Brokers through a series of almost seven years.
Respecting you as much as I respect myself, I only included in here tips and info I’m
absolutely certain of and I kept the Book’s price so low it won’t worth more than a
Cinema Ticket. But if you act upon the information I’m giving you, this Book is going to
be the Ticket to a New Life, the Life of your Dreams.
When I started with Forex, didn’t have the luck to be guided by someone who could
actually explain to me in plain language what FOREX and technical analysis is about.
Seeing is believing and doing is learning. We, human beings are by nature creatures of
experience. We learn by practicing. Learning process starts by imitating and the more
we practice the more we master whatever we’re practicing.
If you really want to learn FOREX TRADING, nothing and nobody can stop you from
learning. Mastering it, is also totally up to you. Very few things in life can beat the
excitement of watching pips pile up to your account….trust me! The masses of
unsuccessful FOREX Traders, are people who don’t believe in themselves, are not
determined to learn FOREX and they don’t know the BASICS or have very poor
knowledge of them. Ancient Greeks were saying “half-knowledge is worse than no-
knowledge at all”.
My fear of not getting the FOREX Education that would enable me to Trade with
Confidence, kept me away from something I knew that would offer me an unparallel
financial success and all kinds of freedom. You don’t have to go through this. This
Book is designed to give you a GOOD UNDERSTANDING of FOREX TRADING and
will enable you to START PROFITING FROM DAY #1.
I chose to use a Very Simple Language, avoiding the use of sophisticated and extremely
technical terms. Being a fan of Paretto’s Principle, I adapted Book’s structure on the
20% of the Basic Knowledge, that will give you the 80% of Countable Results making
you a successful Trader…if you put some commitment and effort to it.
This Book offers a comprehensive introduction to Forex Trading Basics to anyone who
is determined to receive the proper Education before actually Trading FOREX. The
Systems I’m presenting -and using- are NOT my own. I’m far from being a Professional
Trader, a FOREX Technical Analyst, a Mathematician or a Financial Markets Expert.
But I can assure you, that using these Systems first with a DEMO Account, and next with
a LIVE one, you’ll share my enthusiasm, because you’ll start making profits, and you’ll
know EXACTLY why. Most important, you’ll be able to REPEAT the process over and
over being confident about your Trades. No more confusion, gambling or lucky
guessing.
You’ll have discovered your FOREX ID and with these Robust Systems, you’ll decide
when and why to Enter the Market as well as EXACTLY when to Exit, using the right
Confirmation Tools….Profiting EVERY SINGLE DAY. But because the SYSTEMS
presuppose a solid knowledge of their Basic Rules, I strongly recommend you go
through the Entire Book before you test the waters.
For those of you, who would like to attend my FOREX Seminars there will be relevant
updates at http://ForexID.com and there is a FOREX ENTHUSIASTS Community
we’re building at http://FXholic.com you’re invited to. Sign-up for our Newsletter at
http://ForexID.com to learn more. Before you ask, NO I don’t manage Accounts on
behalf of clients. As soon as that changes, you’ll find the relevant announcement on my
Forex Sites.

Wishing you Success !

Sofia Stavropoulou

1. What is FOREX
 From all the things that fascinated me in my Life,
FOREX has been a subject I wish I knew much earlier about, and I hope one day it will
be included in Schools’ Curriculum. Why? Because FOREX means Foreign Exchange,
and Foreign-Exchange is the Global Market where Countries’ Currencies are traded,
which is the reason why FOREX Market is the biggest and the most Liquid Market in
the World, trading an astounding volume of almost 3 TRILLION USD per DAY…that’s
right…per DAY!
Because no Economy can roll on without a good standing of its currency, there simply is
NO Economy on Planet Earth that is not affected by FOREX on a primary or a
secondary level. Till recently, only Institutional Investors such as BANKS and Funds
had access to FOREX TRADING, but the Revolution of the INTERNET, made the
online Forex Trading Platforms accessible to any person in the world. This fact alone,
justifies the huge profit potential behind Forex, but bear in mind, that Fortunes are being
lost each day as well. That makes the need for a proper FOREX Education an essential
prerequisite. In other words, DON’T START with FOREX Trading unless you have at
least familiarized yourself with the basics.
Just like stocks are being traded in Stock Exchanges, and investors make profits from
the prices’ movements, in FOREX we have Currency-Pairs traded -actually their
Exchange Rate is the traded Value- and profits (or losses) can occur from any sort of
Rates’ Movements.
The Traded Currencies in FOREX are many, each representing the Economy of a
Country (i.e. USD-United States Dollar : United States) or a Group of Countries (i.e.
EUR-Euro : European Union), but we only need to Focus on the EIGHT most important,
also called Major Currencies which are responsible for the biggest part of the traded
Monetary Volume :
EUR = euro
GBP = Great Britain Pound
USD = United States Dollar
JPY= Japanese Yen
CHF= Swiss Franc
CAD= Canadian Dollar
AUD= Australian Dollar
NZD= New Zealand Dollar
Since FOREX Trading is a Global Market, note that a FOREX Week starts on Monday
morning in New Zealand and closes on Friday Afternoon in New York, while shifting
around the globe from the East to the West from one Time-Zone to the next, which means
that by the time Tokyo’s Market gets inactive for the day, Middle East and European
Markets of Zurich, Frankfurt, and London have woke up, and as time rolls past Europe,
New York’s Market is warming up.
Although there are Exchange Volume differences between the Markets, bringing London
at the top followed by NY and Tokyo, the opportunity for the Trader is gigantic
practically all around the clock.

2. Why FOREX Trading?

The number of people who are literally obsessed with FOREX all over the world,
constantly increases, and the reasons are many.
1. FOREX Market has extremely High Liquidity. Unlike any other asset,
which takes some time to cash out, Currencies are in tremendous demand every
minute of the day.
2. You can access the FOREX Market from the comfort of your home or
 office. All you need is an INTERNET connection and a FOREX Trading
Account with a BROKER who will provide you the Trading Platform.
3. The Trading Schedule is very flexible. Depending on your Time Zone, you
can decide to trade during hours that don’t interfere with your daily activities.
4. Offers the opportunity to trade according to your personal style. There are
people who are hyperactive and prefer intraday trading, while long-term
trading suits better to people who have a sophisticated investor’s approach to
FOREX. There is no right or wrong regarding your personal trading style.
That’s why we call it personal after all.
5. Your Orders’ Execution is IMMEDIATE.
6. FOREX substratum unlike stocks exchange, is based on the economies of
whole countries, therefore it’s practically impossible to be manipulated the way
stocks are. That factor alone, makes it a global equalizer, although there certain
exist dinosaurs in this Market as well, who can impose their temporary
influence. (more on my opinion on the subject on the Chapter about
Fundamentals )
7. There is the potential of a HUGE leverage in FOREX, although this is a
“double edged knife”, because it can work against you as well. Most
BROKERS offer a 1:100 leverage, which means you can use 1000 EURO of
your own capital to manage a “lot” of 100000EURO. With a Market’s move to
the desired direction of 100 pips (pip=percentage in point, which is the FOREX
Market’s “unit” representing the minimum incremental upward or downward
move of currency pair’s exchange rate), you earn 100000 X 100 X
0,0001=1000EURO (in our example we suppose you’re trading the EUR/USD
pair). But if the Market moves 100 pips to the opposite direction, your capital is
swept off. I’ll talk on the leverage issue extensively in later Chapters. For
now, lets say that a 1:4 Leverage is a wise way to eliminate your risk not only
while starting out, but also as your lifetime positioning. If you wish to go a bit
wilder, try not to exceed 1:10.
8. FOREX offers the possibility of “Carry Trade” where you practically invest
of the interest rate differentials between Currency Pairs.
9. CAD (Canadian Dollar) and AUD (Australian Dollar) are also called
Commodities Currencies because the economies of these two Countries are
closely related to the Commodities of Petroleum and Gold respectively.
Therefore it is safe to assume that each currency will follow the direction of the
commodity to which it is linked, and speculate on that move’s impact on
Currency Pairs’ exchange rate wherever this currency is the one of the two.
I’m sure there is a number of reasons I didn’t include on my list, but you certainly got
my point. There is no doubt that FOREX is a powerful vehicle of profitability once it is
based on solid education. I believe that FOREX offers a Recession-Proof
MoneyMaker suitable to all ages and social backgrounds. It’s ideal for students, middle
class people, working moms, people with low-paying jobs, retirees as well as
entrepreneurs of all kinds. My joy can’t be described every time my 16years old son
sets up a trade under my supervision.

3. Fundamentals

When you trade Forex, you actually trade Currencies

from various countries or groups of countries which means, just like behind stocks there
are structured Companies, behind currencies there are Economies of whole Countries.

As a very well put Ad on the Web was saying : “When you Forex Trade, Your Business
is Everybody Else’s Business”. No Market in the World can move without money. As
long as there are people, money will be the trade and commerce universal unit and it
will carry a particular idiosyncrasy per Country.

In fact, when a Country’s Economy Indices improve, its Currency becomes stronger
which in turn triggers a series of positive and negative consequences -its exports are
not as competitive – and conversely all parameters such as Unemployment Rate, Gross
Domestic Product, Consumer Confidence, Central Bank’s Interest Rates Policy, Retail
Sales, Consumer and Producer Prices etc that represent a Country’s Financial Health
Image, reflect to its currency.

Every tiny bit of information in regard to a Country’s economy, influences its

currency’s status against other currencies, therefore there is an immediate impact on the
Market’s Sentiment translating to the currencies’ exchange rate upward or downward
movement which we can factor in our Trade and gain substantial profits depending on
our evaluation’s accuracy, the magnitude of the impact and its duration.

All these Political or Technical Financial News released with a predefined frequency
from reliable sources, giving information to the investors, which concerns the major
economical pillars of a country’s economy, are called Fundamentals.

When we say that “we are trading the News” it means we’re setting up our Trades so
that our Take-Profit expectations are aligned with the Market’s Sentiment after the
News Release.

It’s not my intention to go on in depth about Fundamental Analysis but I’ll try to sum my
points up so that you can get the most of it and effectively apply it to your daily trading.

Since I already referred to “Market’s Sentiment” I would like to make a brief

presentation here of what it actually is and how you should approach this key element.

When you think “Market” think “People”. People like YOU and ME. Behind each
trading position no matter how big or small, hides a person. The power that moves the
Market lies in People’s psychology. The predominant tendency of this psychology is
what we call “Market’s Sentiment”. Just like there is the individual psychology that
drives one person’s action, there also is a “collective psychology” that drives Market’s
moves.

You might think that big institutional investors who move the bigger chunks of capital
would be more prudent and rational with their trading attitude. That’s not the case.
Human nature rules. And human nature is about the part of our brain that makes the
action-leading decisions. Neurosciences have brought to the light the fact that we
remain emotional beings with our primitive brain (prefrontal lobes) and its control
center based on amygdala, controlling 80% of our actions as opposed to our new and
sophisticated neocortex where reasonable thinking originates from.

“What about knowledge?” You could ask. Well, knowledge is a valuable instinctive
reactions filter, but doesn’t always work because our inclination to follow the mass
carried away by the stream is extremely strong.

In most cases, traders take the brainless route of crowd’s reactions and align themselves
to the psychology of the masses. There are countless examples in human history of huge
groups of investors, even whole countries getting scammed again and again falling
victims of their manipulated collective psychology.
Market is an “Unstructured Environment”. It moves like a beast blindly driven by its
two primary emotions : fear and greed. First comes reaction, then contemplation and
before the correction to the last extreme reaction is completed a new reflex is triggered.

The blinded Market crowd, reacts at intense degree either to the perspective of profit
translating its greed into mania, or to the perspective of loss which leads to panic. Both
mania and panic, are not the results of reasonable thinking.

“Never underestimate the power of human stupidity”.

R.A. Heinlein

“Much has been written about panics and manias...but one thing is certain, that at
particular times a great deal of stupid people have a great deal of stupid money... the
money of these people, the blind capital as we call it, of the country is particularly large
and craving; it seeks someone to devour it, and there is plethora, it finds someone, and
there is speculation, it is devoured and there is panic.”
Walter Bagehot - Essay on Edward Gibbon

According to the Great Greek Philosopher Aristotle, “human is - by definition - a social

being”. Our existence per se is modeled and conditioned by our social interactions. We
want to belong to a Community. The bigger the Community, the better. And most of the
times, the opinion of the majority overshadows the opinion of the individual. To many
Traders, this can be catastrophic.

“The fact that an opinion has been widely held is no evidence that it is not entirely
absurd;indeed, in view of the silliness of the majority of mankind, a widespread belief
is more likely to be foolish than sensible.”
Bertrand Russell

To observe and evaluate Market’s Sentiment is one thing. To let yourself get swept off
by it, is something totally different and can be disastrous for your account.

There are many brilliant books written about Market’s Psychology and Crowd’s
Manias. This is not our topic here. I tried to put the “Market’s Sentiment” into its
proper frame before I go to the actual ways of “trading the news” and interweaving
fundamental analysis to your trading style.

I have read in many Forex Related books, that Forex Market, can’t be manipulated just
as Stock Market can by internal Corporate Policies intrigues, scandals and information
leaks from insiders. Unfortunately, it isn’t so. Of course it takes a big decision-making
center to generate ripples on the surface of the Forex Market Waters, but I have seen
these ripples repeatedly shaking the Markets through the last few years, having focused
my attention to the effects on the Market caused by decisions of the EUROGROUP or the
ECB related to my country’s (Greece’s) financial situation and the domino effect they
had on Euro’s exchange rate with other currencies. I couldn’t help but notice the
delirious dance of millions certain Investment Lobbies in conjunction with the
Evaluation Houses and Global Funds or Financial Institutions had set -using
governments as puppets- behind the cruel front of declining economies and devastated
Nations.

Risking to sound silly, I’ll dare to express my opinion here on a phenomenon I have
experienced from inside. European Union Leaders, having secured Big China’s alliance
for the EURO, they don’t mind cashing out Market’s Sentiment every time they “play”
with one Country’s Weak Economy or with another’s. Today it’s Greece, tomorrow
Portugal or Spain, next comes Ireland and so on. Little do they care about Nations’
Unity and Prosperity. Their greedy goals are way above anything else. I really hope
this is just an extremely naïve scenario popped out of my poor mind. But so far, this is
the only logical explanation I can give to the way Greece has been treated by its
European Union Partners. The dreadful image speaks deafening loudly and says “why
do they lend money to someone they slowly kill if they’re not after his assets?” If they
really cared about strengthening and supporting their partner-country’s economy, they’d
stimulate growth and embrace its efforts to restructure hypertrophic public
administration sector in a viable manner, not under the dictatorship of a triangular
system that justifies its existence only caring about numbers while ignoring people.

Sometimes I keep wondering how many golden Forex Millionaires have woken up
wealthier on Mondays right after EuroGroup’s Weekend Sessions. Or is it just my poor
mind’s assumption that a handful of investors had already been positioned for the
Monday’s Upward or Downward Rally just before the weekend?

So, yes Forex Market can indeed be manipulated too but again, it’s crucial for the
disciplined trader to be an observer and evaluator instead of a blind follower.

“Is the public always wrong?” “The answer is decidedly no. The public is right more
times than not. In stock market parlance, the public is right during the trends and wrong
at both ends.”
Humphrey Neil

It’s at the ends, -bearish lows and bullish highs- we’ll apply our counterintuitive and
against the crowd-madness thinking to milk maximum profits out of our trades, catching
early Market’s Reversals.

Which headlines do matter? The truth is, there are too many news that actually affect the
Markets, but you must always keep confusion away from you by cutting off the noise. To
do that, just follow the following steps :

1. Make a list of the kind of News, Reports, Announcements or Releases that

are directly related to the particular PAIR or PAIRS of Currencies you’re
trading.
2. Most of these NEWS are released with a certain Frequency at specific
hours during certain Trading Sessions. For instance, you should never expect
any announcement related to the Bank of England during the Asian Session. It
will be during European (London) Session. Write down the daily or weekly
schedule of these Releases so you can get familiarized with it and becomes
second nature to you.
3. Pick your News Sources. You won’t have any difficulty with this because
there is a plethora of sources. Your Forex Broker has certainly integrated a
NEWS TICKER on their Trading Platform and you can also choose to subscribe
to the RSS FEED of major financial News Agencies such as BLOOMBERG and
others.
4. Go through the Headlines collecting on a NotePad ONLY the Important
ones. Some of the news are not always tradable, while others such as
Employment Reports, Retail Sales, Manufacturing and Service Sector Data,
Gross Domestic Product Releases and Inflation Reports are almost always
tradable. Trade only HIGH-IMPACT Reports or News Releases.
5. Do these Headlines signify a “Surprise” for the Markets? How big is it?
For most Reports there have been Forecasts released before them, to compare
their figures against. In general a 5% deviation from the Forecast signifies a
BIG SURPRISE, but there have been cases when much lower deviation caused
major Market Reactions. Watch the Pair’s Rate’s move immediately after the
Report’s Release.
6. Wait at least 5 minutes –for the Market Noise to calm down and the impact
on the pair to be clearly marked- before you enter the Trade.
7. Market’s Move and Market’s Sentiment. Moving Averages are properly
aligned during upward or downward trends, so you can have clear picture of
Market’s “sentiment” before the Release. If the Release is aligned to the
existing trend, odds are this Trend is going to last much longer. If the Release is
opposite to the existing trend, it might cause a minor reversal but be aware it
might be of a very short duration before a corrective wave brings price again to
the dominant trend’s path. So, you’d rather stay out of the Market. Sometimes
 no trade is much better than a bad trade…trust me. So ONLY TRADE News
that are in line with Market’s Sentiment.
8. Use 5MINUTE Time-Frame and enter the trade 5MINUTES AFTER the
News or Report Release. Place your STOP at the high end of the REPORT’s
Candlestick, or 20-35 pips higher if you enter short. (the opposite stands if you
enter long, where you place your stop at the lowest end of Release’s
Candlestick). Use your trade-capital in three batches so you can exit in three
phases thus minimizing losses and maximizing profits.

4. Forex Technical Analysis for a

6yrs old

Imagine FOREX Market as a vast sea. The Market moves to an upward or downward
direction which is called TREND. Imagine Trends as Tidal Waves bursting to the shore
and then retrace backwards. Many financial analysts as well as mathematicians have
expressed their theories in an effort to recognize, monitor and record Market’s patterns,
while others argue that only naive can see patterns in chaos. The one “school of
thought” insists on considering the FOREX Market “efficient”, while the other holds the
belief that this is not the case.
On the other hand, there are TWO MAIN Approaches regarding the way we can
interpret Market’s behavioral “trends” and of course the main scope always is to
foresee its direction. One is FUNDAMENTAL Analysis, a set of parameters and
factors derrived from news, reports, political correlations, rates of unemployment,
interest rates or other data regarding the economic situation of the Countries. It is also
called “News-Trading” and it is the approach chosen by a minority of Traders. The
other is TECHNICAL Analysis, mainly consisting of the Statistical Analysis of the
Historical Data and their projection in the future along with the recognition of certain
patterns that repeat themselves. In other words, TECHNICAL Analysis uses Historical
Price Action -Rate Action in FOREX- to predict Future Price Action, and appeals to the
majority of Traders who feel comfortable using charts, indicators, trends and
oscillators.
Ancient Greeks were saying “Metron Ariston” which means “Being Moderate is
Optimum” and of course it’s self explanatory that both types of Analysis are
complementary of each other. But my personal take on the matter – please forgive my
one sided view- is that monitoring the News and the released reports from certain
Influence Centers for the countries their Currencies I trade, is very time-consuming to
say the least. In addition to that, analyzing and interpreting the basic elements
presupposes a great deal of familiarity with financial and political factors, which
definitely is NOT my “cup of tea”.
So, Technical Analysis is by default, my choice about predicting Currency-Rates’
action. I love to base my decisions on hard data and price movement analysis instead of
constantly watching the global political landscape. BUT, I do admit that people who
are too much into Fundamental Analysis, can’t be wrong either, as long as their results
speak for themselves. Who can ignore Chinese stating that they have taken EURO under
custody and will do all they can to push it up against USD?
In the following Chapters, I’ll make a more detailed presentation of Technical Analysis
aspects. As promised, I will not be using complicated terms and descriptions, and will
simplify everything to an extreme point, but you must also promise, that you’ll start
enriching your knowledge about FOREX, studying books and visiting FOREX authority
sites. An excellent starting point would be visiting the FOREX related sites we
recommend on the Resources Section, and studying the books we have hand-picked
from AMAZON.
Every Industry has its “lingo” and FOREX is not the exception to the rule. The terms are
literally countless, and this is the conclusion of an outsider. I can hardly imagine what a
veteran FOREX Trader would say on the matter. But as I’ll try to do throughout the
whole Course, I’ll present here only the very few that will be absolutely necessary on
your everyday Trading. You’ll have all the time in the world to digg for the rest. But you
should promise to yourself a NON-STOP Education and Training on FOREX from now
on. Otherwise, please don’t start trading. There are more entertaining ways to kill your
hard earned money if you have to.
Terms Related to a Trader’s Actions:
GOING LONG: Actually the terms “sell” and “buy” are non-practical in FOREX,
because we trade the Exchange Rate of a PAIR of CURRENCIES, therefore when we
sell one we simultaneously buy the other. So there had to be a term to describe the
trading action of BUYING the Base-Currency which is the first one – i.e. in EUR / USD
, this is EUR – and SELLING the Counter-Currency or Quote-Currency , which is USD
in our example, expecting to earn from the rate’s UPWARD TREND.
SELLING SHORT: We go “SHORT” when we Sell the Base Currency and
simultaneously Buy the Counter Currency (or Quote Currency). Actually, by Selling
Short, we expect to profit when the Currency Pair’s Exchange Rate Falls, therefore we
are looking for the formation of a DOWNWARD TREND to set our Trade.
FLAT: This is how a FOREX Trader’s Status can be called when there is NO OPEN
POSITION.
FINANCIAL MANAGEMENT: It costed me almost 10000 EURO and a couple of
years away from the FOREX Market, going with the brainless crowd of FOREX
ignorant gamblers. I dont know which exactly was the root of my arrogant superficiality
that pushed me to risk my hard-earned capital riding the wild waves of super-leverage.
But now I know well what it takes to AVOID such failure, and I would like to pass this
lesson to you too. Financial Management is refered to your determination of being a
Disciplined FOREX Trader. Unlike any other Market, in Spot FOREX you can minimize
your Risk down to the Broker’s Spread. You need just a tiny little advantage on your
side to be wildly profitable as opposed to managing your investment portfolios in other
Markets. Unfortunately, this Simple Truth slips the attention of the vast majority of
FOREX Traders, who get “drunk” from the euphoria of winning a series of small Trades
in the region of $200 -$500 only to reach the End-Point of being “slaughtered” with
massive losses of $10000 or $17000. All they manage to do while in the Arena, is to
“FEED THE BEAST”. Don’t be one of them. You can use TWO PRINCIPLES to secure
the best Financial Management, and to keep yourself “in the Market” at ZERO exposure.
• TRADE SIZE: Statistically, it’s almost impossible to have 20 losing
Trades in a row. It’s more than impossible to have 30 losing Trades in a row.
Therefore, if you cut down your Trading Capital into 30 “chunks” of Trading-
Lots, you will run ZERO RISK of losing more than the Spread which equals the
trading cost of 30 Transactions. PRINCIPLE #1 : NEVER Risk more than 3% of
your Trading Capital Per Trade. So if you have a $10000 Account, it means you
should NEVER allocate more than $300 per Trade. (we’ll explain how you can
use the STOP-LOSS Order up to that limit)
• LEVERAGE: To many, what makes FOREX Trading the Modern “El
Dorado” is the offered LEVERAGE by the Brokers, who basically wish you
bite the bait and use it so they can multiply their profits at your expense. Why am
I saying that? Lets take an example. With a $10000 Account and a 1:100
Leverage, the Broker allows you to Trade “ON MARGIN” practically Trading a
LOT of $100000 for every $1000 of yours. This means that your Capital of
$10000 is the COLLATERAL the Brokers lend you $1 MILLION against. So in
a hypothetic senario of a Winning Trade which earned for you 100 pips, while
you Traded a LOT of $100000 with $1000 of your CAPITAL as a
COLLATERAL, here are the financial results : you earned 100pips X 100000 =
$1000 ( since 1 pip equals the minimum exchange rate movement and holds the
fourth decimal position, when trading a lot of $100000, each pip equals $10) if
Broker’s Spread is 3 pips, your NET Profit from this TRADE is : 100-3=97pips
or $970 Before you go WOW, lets see what happens in a reverse situation
where the Market moves against you, and you lose 100pips. This loss translates
to $1000 PLUS $30 (spread) and sweeps off your Capital of $1000 at once. So,
 PRINCIPLE #2 : NEVER TRADE with LEVERAGE higher than 3fold up to
5fold your Trading Capital. As you gain experience, you’ll be managing bigger
LOTS and you’ll be improving your trading skills, but you should NEVER fall
in the trap of LEVERAGE.
RISK EVALUATION: There is no way you can evaluate your risk in Stock Market, but
FOREX Market is a totally different playground. There is a wealth of historical
statistical data that help you assess the average Price-Range for the Currency Pair
you’re about to Trade. EUR/USD for instance has an average Daily Price Range of
100pips. So you can set a FIRM Stop-Loss Rule in the region of 50 pips or maximum
100pips depending on your Account’s size, and stick with it. Always evaluate the
trendlines, the Support and Resistance Levels, keep an eye on Fibonnaci retracement
levels, make sure RSI, Stochastics, PSAR, Moving Averages or Candlestick
Formations, confirm the trend and trade ONLY after all your conditions are met
ALWAYS using a fixed STOP-LOSS. If you’re not sure, stay out of the trade. Don’t be
tempted to deviate from your STANDARD STOP-LOSS range in terms of pips.
Terms Related to a Trader’s Account Status:
MARGIN: The minimum amount of money required by the Broker, in order for you to
Open a Trading Position, which stands as a Collateral, and represents the Maximum
Amount of Losses you’ll be allowed to have. While it is being called “Performance
Guarantee” you should rather think of it as “FOREX Trading Account Insurance
Premium”.
EQUITY: Because Equity represents FOREX Account Holder’s Difference between
Assets and Liabilities, Equity should ALWAYS be Above Margin. When we have Open
Trading Positions, Equity=Margin + Free (useable) Margin. When we have NO Open
Positions, Account Balance=Equity=Free Margin .
BALANCE: Amount of money in a Spot FOREX Trading Account.
FREE BALANCE: The amount of money in a Spot FOREX Trading Account deducted
by the “Margin” which represents the collateral for the Open Positions.
S/L (STOP LOSS): The Currency Exchange Rate Price at which you have placed a
Protective STOP-LOSS Order, which is triggered when the Market moves against you,
and closes your Position minimizing your loss at the predefined by you amount.
T/P (TAKE PROFIT): The Currency Exchange Rate Price at which you have placed an
“EXIT” Order. If your Position is Long, you Take your Profits by Selling at a higher
price, the Base Currency which you had initially Bought at a lower price. If your
Position is Short, you Take your Profits by Buying at a lower price, the Base Currency
which you had initially Sold at a higher price.
ORDER TYPES:
 MARKET ORDER : Is the Order to BUY or SELL at the Market’s Current
Rate’s Price.
• LIMIT ORDER: Is the Order to BUY or SELL at a specific Rate’s Price.
This Type of Order is Comprised by Two Variables: the predefined Price and
the Time during which the Order remains Active.
It Also has TWO DIFFERENT types of “Execution Request”.
1. GTC (Good Till Cancelled): This type of LIMIT ORDER, remains active till it’s
cancelled by the Trader.
2. GFD (Good For the Day): This type of LIMIT ORDER, remains active till the End
of the Trading Day, and since FOREX is a 24hour Market, the Trader either Specifies
the Time or accepts the End of the Trading Day Time set by his/her Broker
STOP ORDER : It’s also a BUY or SELL Order at a predefined Rate’s Price, usually
associated with a Market Order aiming at stopping losses when price moves against us.
OCO (One Cancels the Other) : This type of Order is the one given when we are not
sure about the Market’s Trend, or we expect a Breakout and so we want to enter the
Market early in every possible direction it takes. It cosists of TWO LIMIT or TWO
STOP Orders above and below the current price, both including price and duration
variables. So when one Order is Executed, the other One is Cancelled.
P/L (PROFIT / LOSS): The amount of money expressed in your FOREX Account’s
Currency, you are profiting or losing on a particular Open Trading Position.
SIZE ( LOT SIZE): LOT is the smallest position we can take in the FOREX
MARKET. Just like in STOCK MARKET we trade “SHARES”, in FOREX MARKET
we trade “LOTS” which are -depending on our account type- 100000 units of BASE
CURRENCY. In mini-accounts a mini-lot equals 10000 units of BASE CURRENCY.
ENTRY : This is the price-point (in terms of Currency Exchange Rate) at which we
decide to ENTER the Market going either LONG (buying the Base Currency) or SHORT
(selling the Base Currency)
EXIT : This is the price-point (in terms of Currency Exchange Rate) at which we
decide to Close Our Position and Exit the Market.
LEVERAGE : This is the Ability to Manage Funds that are Multiple Times More than
Your Own Capital. For example a TRADING LOT is consisted of 100000 units of
Base Currency , lets say EUR/USD, which means when I’m trading a Standard Lot of
EUR/USD I should actually have an amount of 100000euro in my FOREX ACCOUNT.
Instead, the FOREX BROKER allows me to Trade this LOT with an amount as small as
1:100 or even 1:200 of 100000euros. That means, I can trade a Standard Lot of
100000euros for as little as 1000euros -or less- of my own money. The POWER of
LEVERAGE is a Knife that cuts from “both edges”. As fast as I can enjoy huge profits,
I can also see my Account’s Margin been swept away in minutes. Suppose I have an
1:100 Leverage which means I’m profiting 10euros per pip. Suppose also, the Rate
moves to my direction giving me 102 pips of profit. My Broker keeps their 2pips -
spread fees- and the rest 100 are mine to keep, which means I made a Profit of
1000euros. Nice! Lets see now what happens if the Rate moves Against me for
102pips. I have a loss of 1020euros, my margin is all swept away and my FOREX
Account is shut down unless I have more funds in it.
SPREAD: The difference between the BUY and SELL prices of a Rate, set at a fixed
point by each FOREX BROKER for each particular Currency Pair.
Terms Related to the MARKET :
You will see – and use- two terms very often, while actively involved in FOREX
TRADING:
• BULLISH
• BEARISH
The need for these terms errupted from the sheer fact that we have to describe the
MARKET’s MOVES in a way that has an instant and undeniable emotional and
semantic impact.
Since BULLS tend to attack UPWARDS placing their head DOWN and getting ready for
an UPWARD MOVE which will finish the opponent, we use the term “BULLS” for the
investors who “push” a CURRENCY PAIR RATE UPWARDS.
BEARS on the other hand prepare their attack by standing on their two back feet and
getting ready to FALL DOWNWARDS upon their victim.
The MARKET’s MOVE -or main TREND- is formed depending on which of the two
“armies” of investors wins over the other. If the MARKET goes UPWARDS, BULLS
have every reason to feel satisfied for the results of their “efforts”, and when MARKET
goes DOWNWARDS, it’s BEARS’ turn to be happy.
To bring things closer to us, we will just note that a BULLISH SIGNAL will get us
ready to enter the MARKET “LONG” , if we get it confirmed by our “variables”. A
BEARISH SIGNAL will give us the “green light” to enter the MARKET “SHORT” if
our confirmation and necessary variables are aligned. (we will discuss about the
confirmation and the prerequisites at the SYSTEM, LESSON)
SPOT (CASH MARKET): According to WIKIPEDIA “The spot market or cash
market is a public financial market, in which financial instruments or commodities are
traded for immediate delivery. It contrasts with a futures market in which delivery is
due at a later date.” INVESTOPEDIA also tells us that “The spot market is also called
the “cash market” or “physical market”, because prices are settled in cash on the spot at
current market prices, as opposed to forward prices.”
LIQUID: Practically it means “Cashable”. FOREX MARKET is extremely liquid
because you can cash-out every moment the Currency you have purchased.
PAIRS: In FOREX Market -or Currency Exchange Market- we trade the Exchange
Rates of Currency Pairs.
COMMODITY CURRENCIES: There are Countries whose Economies are revolving
around certain Commodities and their Currencies are directly related to these
commodities, and that is reflected on their Rate. For example Canada is a major Oil
Producer and CAD always follows the Oil Prices moves. Similarly Australia is a
Major Gold producer and AUD is alligned with Gold’s price-moves. Such Currencies
are called Commodity-Currencies.
OVERBOUGHT PAIR: This term signifies that a specific Currency Pair has
exhausted it’s BULLISH Potential and its Rate has reached a Level which is Higher than
it should be, and a Corrective BEARISH Market move should be anticipated.
*Although an downtrend might be the next Market’s move, this is NOT always the case,
and the Trader should take under consideration a lot of factors and variables before
deciding about his/her positioning.
OVERSOLD PAIR: This term signifies that a specific Currency Pair has exhausted
it’s BEARISH Potential and its Rate has reached a Level which is Lower than it should
be, and a Corrective BULLISH Market move should be anticipated. *Although an
uptrend might be the next Market’s move, this is NOT always the case, and the Trader
should take under consideration a lot of factors and variables before deciding about
his/her positioning.
Terms Related to the Charts’ Graphs :
PIP : It’s the smallest price-movement and the term stands for “percentage in price”. In
most pairs, it represents the incremental movement of the 4th decimal digit on the
Currency Pair Exchange Rate.
TREND: Stands for Market’s Directional Move for a specific Rate.
TREND LINES : Trend Lines are lines we draw connecting the Lower Lows in an
Uptrend -therefore Forming the Support Level as well- or the Higher Highs on a
Downtrend -therefore Forming the Resistance Level-. Many Traders base their Trading
Strategy to a large degree on TrendLines. When Market’s move Crosses the Trendline,
we get a strong signal of Market’s trend Reversal.
 Drawing Trend Lines

Uptrend Trend Line

Downtrend Trendline
RANGE: This represents the ZONE within which the Currency Pair’s Exchange Rate
moves without a clear and specific directional tendency.
BREAKOUT: This happens when the Rate moves below the LOWER Levels -Support
Levels- or above the HIGER Levels- Resistance Levels.
CANDLESTICKS:
 Anatomy of a Candlestick
TRADING PATTERNS (or CANDLESTICK FORMATIONS): In Technical
Analysis, Charts and Patterns are the basic elements of a Trader’s Daily Routine. I
promised to keep this Course short and sweet, so I won’t delve into detailed
descriptions of Candlestick Formations, but in the near future, we’ll have the chance to
Review Winning Strategies Based Solely on Chart Patterns or Candlestick Formations
such as head and shoulders, double tops, double bottoms, cross doji, symmetrical and
asymmetrical triangles, pennants, breakouts, pullbacks, retracements, consolidations etc
SUPPORT and RESISTANCE: These two “CONCEPTS” are simple but essential to
the Forex Trader’s success. They refer to the two different aspects of the same
phenomenon. Most Traders tend to be positioned at certain prices -round numbers etc-
therefore they RESIST if the price tends to go ABOVE that level, or offer SUPPORT if
the price attempts to move BELOW that level. That means that SUPPORT is a price
level at which prices tend to stay ABOVE, while RESISTANCE is a price level at
which prices tend to stay BELOW.
INDICATORS : A deeper way to look at the Price’s Movements apart from the patterns
formed on the charts, is with the use of Technical Indicators. An INDICATOR is a
Graphic Representation on the Chart or an Independent Graph of its own, derived from
price and/or volume data over certain time-periods. There are hundreds of Indicators,
but the most popular ones are much fewer. So don’t get overwhelmed by their number.
Basically there are TWO Types of Indicators : Overlaid and Independent. Overlaid
ones are drawn on the same chart as the price movements, while Independent are drawn
inside their own pane in their own separate windows. Moving Averages, Bollinger
Bands, Parabolic Stop and Reversal (PSAR), MACD (Moving Average Convergence
Divergence), RSI (Relative Strength Index) are some of the most popular and helpful
Indicators.
FIBONACCI LEVELS: Named after the famous Italian Mathematician who studied
numeric sequences and discovered ratios that repeat themselves throughout all of nature,
we will FOCUS and USE the following levels between 0.000 and 1.000 : 1) 0.250
2) 0.382 3) 0.618 4) 0.750 as you see on the chart below :

TIME FRAMES : Forex Technical Analysis, being based on historical data about the
currency pairs exchange rates movements, uses multiple time frames on charts. There
are 1minute , 5 minutes, 15minutes, 30minutes, 1hour, 4hours, daily, weekly and
monthly charts. The time frames define the TIME-UNIT used on the charts per case. So,
on a 15minute chart, each candlestick lasts 15minutes, on a 4hour chart each candlestick
lasts 4 hours and so on. Many FOREX Trading Strategies use multiple Time-Frames
and the reason is that daily weekly and monthly time-frames give a long-term
perspective of the Market’s Trend, while smaller time-frames help us set more accurate
criteria for our entry or exit.
CONSOLIDATION: The term describes the phenomenon when Currency Pair’s
Exchange Rate is moving inside an area which gets narroer and narrower. If we draw
the Resistance and Support Trend Lines, they form a triangular shape with its sharp edge
towards current Rate’s Price. Breakouts use to follow Consolidations.
VOLATILITY: Describes the tendency of a pair’s rate to “FLY” high or “FALL” low
fluctuating over a given period of time. A Volatile Pair moves fast to one or another
direction, while a non Volatile Pair shows a steadier and predictable moving pattern.
TRADING CONDITIONS: Basically, the Trading Conditions are referred to
variables and prerequisites a Trader should take under consideration when Market is in
one of the THREE following phases:
• Trending (having a certain Directional Move)
• Range Bound (rate going up and down within a zone)
• Consolidating (rate moving in a triangular pattern which constantly gets
 narrower) A Breakout often follows.
FOREX Trading Days and Hours.

The “opening” of a FOREX Trade Day is set at 5:00pm New

York time , 10:00pm London time, and so is the closing. The reason why this is the time
used, is because when it is Sunday 5:00pm in New York it’s Monday morning in
Australia and New Zealand, therefore the new trading day begins.
It is also important to note that the most active hours of the day are those when the Three
Biggest FOREX Trading centers : Great Britain, United States and Japan are in control.
So basically the FOREX Trading day consists of THREE SESSIONS : The Asian
Session, The European Session and the U.S. Session.
There are countless more terms we couldn’t include on our list, and we will certainly
be more analytical about many of the terms mentioned above, as we will be referring to
the Trading Strategies and Techniques we recommend in the following Lessons.

5. 50 pips a Day
 I love EMINEM. To me he represents
what it takes to make your Dream come true. He started from scratch and built his fame
and Records-Producing empire one hit at the time….which is World’s Oldest Success
Recipe. Desire is not enough. Many talk about the Law of Attraction. I believe in the
Law of Commitment and Systematic Work without shifting your Focus from your Goal
no matter what. As Henry Ford had said “obstacles are these little frightening things we
see when we take our eyes from our Goal”.

I say this because learning to Trade Forex is way more than a set of skills. It’s a whole
new attitude. To become a successful Forex Trader to the extent you want to be one,
either trading for an hour a day or 8 hours a day, you need to have a purpose, a
principle, the right mindset and a system. We’ll delve into the technical stuff regarding
the System in the following Chapters.

Here, we’ll talk about your Purpose, your Principle and your Mindset.

It all starts with a purpose. Behind the purpose hides a strong motive. So what’s your
motive? Do you want an additional source of income? Are you looking for a way to
free up more of your time to be with your family or to enjoy life? Are you tired of
working for somebody else? Are you looking for a new career with unlimited
possibilities? Are you determined to seek financial freedom? Are you looking for high-
return investment vehicles for your capital? Do you see Forex as a good fit for your
Investments Portfolio but don’t trust others to manage your money?

Please write your motive down.

Now lets move on with your purpose. Without a purpose is like sailing to the unknown.
Not having a specific purpose means you should never embark to the Forex Venture at
all. You must have a crystal clear idea of what your outcome should be. So clear that it
will be as if you already reached that purpose yesterday.

Write your purpose down.

Before we move on to the Principle and the Mindset, I must tell you that even if your
motive is the strongest in the whole world, you should NEVER jeopardize your family’s
or personal financial security quitting your job and jumping on the Forex Train with the
expectation of overnight riches. This scenario simply DOES NOT exist. The healthy
approach is to either allocate for your Forex Trading an initial Trading Capital of at
least $10,000 or work on your education till you manage to put this amount aside only
for Forex Trading ON THE CONDITION you don’t owe this money, you don’t take it
away from basic obligations and you can afford losing it all to the last penny.

Now, regarding your purpose, it’s not enough having one and being crystal clear about
it. It must be achievable. You can always re-adjust it to your future status as you
advance as a Forex Trader and gain more confidence in yourself. The reason I set the
50pips daily as a profit target, is that although it’s not always easy, it is achievable. The
Market on average moves 300-400pips per day. Of course there have been many 500-
800pips move days during 2012 but basing our assumptions on an average environment,
managing to get our little share of 50pips is a goal worth pursuing and within our
capacity.

Don’t go crazy and start imagining about the 1000pips ride and so on. Start small. Start
with little baby-steps.

In the beginning, setting up your trades for a profit of 50pips with your stop 25-35pips
behind your entry point, is a good strategy.

What should be the Basic Principle functioning as the backbone of your actions?
Simple but rarely applied. Money comes in our hands in two different forms : seed
money and fruit money.

Seed Money is money to be invested and not spent.

Fruit money is money to be spent.

Basic prerequisite for the two forms of money is the existence of a primary source of
cash-flow. In your case, this source of cash-flow is your current job or business.

You’ll take a small amount of money from your cash-flow, -after you make sure all your
expenses are covered- and save it. A percentage of your savings (seed money) can go
to fund your FOREX Account.

Your primary goal is to reach a minimum of $10K as a starting trading Capital.

Once you start trading, your next goal is to gradually withdraw your initial seed-money
($10K) from your Forex Account and save it, while you replace it with fruit-money
produced from your Forex-Account’s earnings. Although this initial Capital produced
by your early Forex Trading earnings will be Fruit-Money, regard it as Seed-Money and
keep it there.

I would advice you to reach your Forex-Trading Account’s Capital to at least the Level
of $100K before you start withdrawing your earnings, making sure you always have
$100K Balance in it.

Depending on your Financial Goals, you can gradually take your next steps regarding
your career, but you’ll do it only after you have secured a sustainable cash-flow of
earnings (fruit-money) from your Forex-Account.

Scaling your Trading up, and leveling your Account to the region of millions, is totally
up to you, but every journey starts with a first step and to reach that point, you must start
with small incremental progress aiming at 50pips per day even if you can only grasp
20pips or less at the beginning. It’s OK, as long as you stick to your schedule.
Consistency and persistence is the key. The results will amaze you.

6. What you Need

Now you have got a “taste” of FOREX and you definitely got the picture of it. But what
does it really take for someone – a beginner- to step into it?
FIRST, you need a PC or a Mac and an Internet “High Speed” Connection.
NEXT, you need a Bank Account with an available for FOREX-TRADE amount of
money to trade with. The Amount of Money you’ll start Trading with, depends on
YOUR Personal Financial Comfort Status. It HAS to be an amount you will NOT die if
you lose it, and risking it, won’t jeopardize anything related to your Family or Business
Please, promise to yourself you will NOT use as your initial Trading Capital Money
you should use for an obligation. I will NOT tell you to start Trading with a DEMO
Account for a Year or More – although that’s the best possible way to familiarize
yourself with FOREX- but I will BEG YOU, NOT to trade with Money you should use
for other purposes.
NEXT, you need a FOREX BROKER. This is Huge. There are many FOREX Brokers
who advertise their Services and Platforms, and most of them are great, but you should
know WHAT TO LOOK FOR at the very beginning, before even considering signing up
with them and opening an Account. Your Criteria must be directly related to the safety
of your money, the efficiency of their Platform, the speed of transfering your money from
your FOREX Account to your Bank Account when you ask to, and of course the
SPREAD they’re Asking for. It is essential that they are Regulated by the
INTERNATIONALLY RECOGNIZED FOREX TRADE AUTHORITIES, and they are
Licensed to offer their Services. And you definitely must pick a NON DEALING
DESK (NDD) Forex Broker to trade with. (read more on Chapter 7 about Forex
Brokers)
NEXT, you need a Solid Money-Management Strategy. The best Strategy I’ve been
taught and feel really proud about having sticked to is to use 2-3% of my Capital per
Trade, and NEVER EVER have more than 1:3 up to 1:5 LEVERAGE. This way it’s
Mathematically Impossible to lose all my Capital and therefore stay out of Trade, and
my Only Concern is to slightly bend the odds to my favor in order to be Wildly
Profitable and steadily accumulate money over time
NEXT, you have to decide which is the Currencies Pair you’d like to start your FOREX
Trading “career” with. It wouldn’t be a bad idea to stick with one PAIR, and gradually
become an “expert” on it. I know it would be so exotic and promising -maybe you’ve
daydreamed about it already- sitting infront of a console with 6 huge PC Monitors,
watching simultaneously the Charts of their Rates Movements and collecting hundreds
of “pips” daily. Well, I’m afraid I’ll have to burst that bubble of yours. This is NOT
impossible, BUT, if you’d like to make it possible one day, you should learn the ropes
very well with one Pair first. This pair can be associated with your mother-country’s
currency – i.e. you may be Canadian, so CAD might be your focus currency for a lot of
serious reasons- or you may be located geographically close to Europe -i.e. you may be
living in the Middle East and when London starts Trading with high volumes, you love
being part of the Trade- or your FOREX trading available hours of the day are very late
at night, -your Country being in Eastern Europe or Near East- so TOKYO Trade
Rhythms is your choice and YEN can’t be out of it.
NEXT, you have to familiarize yourself with your FOREX BROKER’s Trading
Platform. It is essential to know how you can switch from one chart view to another,
how you add lines and indicators, how you place the various types of orders…to say the
least. I know it may seem silly placing this step among the BASICS, but I’m sure you’ll
be grateful to me I did. So just play a bit with the Platform, watch the VIDEO Tutorials,
open DEMO Account, do some trials and never stop testing and exploring your
Platform’s technical possibilities in the Background.
NEXT comes the SYSTEM ! You need a SYSTEM which practically will help you
Recognize and Confirm ENTRY SIGNALS, will guide you towards placing your STOP-
LOSS in a way that eliminates Risk and doesn’t Cut your Profitability Potential
everytime the Market jumps to the opposite direction, and will also help you Recognize
and Confirm your EXIT SIGNALS, so you don’t step out too early. There definitely are
hundreds of systems, or should I say thousands? Well, perhaps it would be fair enough
to say that there are as many systems as many successful traders. But, other than
reviewing a few of them, we can’t analyze, test and show you all, neither you can
absorb and use the information. Nobody can. So we have chosen to show you a
SYSTEM we’ve been taught by our FOREX BROKER, and have tested over and over
again with our OWN hard earned money through our LIVE (not DEMO) Account
And we believe, we’ll contribute a bit to the NEXT CHAPTER of your LIFE, which is
going to be a brilliant one.
LAST but not least, you need a Solid INVESTMENT Plan about your FOREX
earnings. And that will be the topic of Another E-Course For now, I think I’ve got
you covered.
7.Forex Brokers

And here comes the One Million Dollar

Question : How to decide which Broker to work with? Most of them advertise
offering excessive leverage –even as extreme as 1:400-, fixed or variable spreads and
demo accounts. But what differentiates one brokerage to another is sometimes hard to
spot, and most of the times a Retail Financial Services Company (aka a Forex Broker)
acts as the market maker for all your trades. The consequences of that are shading of
prices, widen spreads arbitrarily, or trade against the client!
Most of investors actually need to understand that in this complex Forex world the word
‘broker’ has a double meaning. Unlike your typical equities broker, which only gives
you an access to the market, Forex brokers often are in fact the market.
That means:
A broker is a party that mediates between a buyer and a seller.
A market maker is a firm that quotes both a buy and a sell price in a financial
instrument or commodity, hoping to make a profit on the bid/offer spread.
A Forex broker can be either a broker per-se (just a channel between you
and the actual market, called Non Dealing Desk) or a market maker (the one
who buys from you and sells to you, called Dealing Desk) or even both!
Ever wanted to understand the difference between a Dealing Desk (DD), No Dealing
Desk (NDD), Straight Through Processing (STP), Market Maker (MM), and Electronic
Communications Network (ECN) ? Then in this book we should answer most of your
questions and will guide you how to select the right broker when trading Forex,
Commodities or CFDs’ with leverage.
DD — Dealing Desk — Forex brokers that operate (route orders) through the Dealing
Desk and quote fixed spreads. A dealing desk broker makes money via spreads and by
trading against its clients. A Dealing Desk Forex broker is called a Market Maker – they
literally “make the market“ for traders: when traders want to sell, they buy from them ,
when traders want to buy, they sell to them, e.g. they will always take the opposite side
of the trade and in this way “create the market“. A trader doesn’t see the real market
quotes, which allows Dealing Desk brokers (Market Makers) manipulate with their
quotes where they need to in order to fill clients orders.
NDD — No Dealing Desk — NDD Forex brokers provide access to the interbank
market without passing orders through the dealing desk. With true No Dealing Desk
brokers there are no re-quotes on orders and no additional pausing during order
confirmation. This, in particular, allows trading during news times with no restrictions
on trading. An NDD broker can either charge commission for trading or choose to
increase the spread and make Forex trading commission free. No Dealing Desk brokers
are STP or ECN+STP.
STP Brokers — Straight Through Processing display its own quotes which are
correlated to the actual inter-banking quotes and send orders directly from clients to the
liquidity providers – banks or other brokers. Sometimes STP brokers have just one
liquidity provider, other times several. The more liquidity providers there are and
therefore liquidity in the system, the better the fills for the clients. The fact that traders
have access to the real-time market quotes and can execute trades immediately without
dealer intervention is what makes the platform STP.
ECN — Electronic Communications Network — ECN Forex brokers additionally
allow clients’ orders to interact with other clients’ orders. ECN Forex broker provides
a marketplace where all its participants (banks, market makers and individual traders)
trade against each other by sending competing bids and offers into the system.
Participants interact inside the system and get the best offers for their trades available at
that time. All trading orders are matched between counter parties in real time. A small
trading fee – commission – is always applied.
A Market Maker (MM) is a firm that both buys the clients lots and sells to the client.
This is also called a Dealing Desk (DD) firm. Your orders are never quoted on the
market, simply because the Broker IS the market. When you read about brokers ‘trading
against you’ this is what people actually mean, although they are partly wrong – brokers
don’t necessarily ‘trade against you’, they are simply the counterparty to your trades.
Of course they have an obvious interest for you to lose money but when people go out
and point at brokers saying they steal your money or trade against you most of the time
this only serves for marketing purposes and as a promotion for other ‘non market
making’ brokers. Market Makers also typically never re-quote orders because they
don’t need to route your orders to the inter-banking market but choose whether to accept
your orders or not. For instance when too many traders place orders on one currency
pair and in the same direction long or short, the market maker might not want to take all
this risk and can reject some orders. The same can happen when there is ‘news time’
and MM’s exposure peaks beyond certain predefined levels.
A Forex Broker who is not a Market Maker, either is a Straight Through Processing
Broker (STP) or an Electronic Communications Network Broker (ECN). These types
of brokers are typically called Non Dealing Desk brokers. Sometimes STP brokers are
discussed as if they were ECN brokers. To be a true ECN, a broker must display the
Depth of the Market (DOM) in a data window, let clients show their own order size in
the system and allow other clients to hit those orders. With ECN broker traders can see
where the liquidity is and execute trades.
ECN brokers are the purest breed among all Forex dealers. They don’t profit on
spread difference. Their only profit comes from commission. ECN brokers are
interested in their clients to be winning; otherwise there will be no commission to earn.
STP brokers make money on spreads (they charge certain number of pips per currency
pair and per trade which may vary depending upon specific market circumstances), thus
even though they do not have a physical dealing desk to monitor and counter-trade client
orders, they are still able to set their own price – the spread markup – for routing
trading orders to liquidity providers and providing their clients with advanced trading
services, lower account deposits, faster execution and anonymous trading environment
with no dealing desk.
STP brokers also have a strong interest to see their clients trading profitable, so that
clients can also increase their trade sizes, resulting in greater earnings for the broker.
Market Makers make money on spreads and by hedging against their clients. Since
Market Makers profit from their clients’ losses and vice versa, one could derive clearly
that there is an inherit conflict of interest between the MM and its clients. Furthermore,
clients’ profitability increases the MM’s exposure, which eventually could lead to the
default of the MM.
The Benefits of trading with No Dealing Desk Brokers are many. Among the main
reason why traders look for NDD brokers is transparency, better and faster fills and
anonymity.
Transparency means that a trader enters a true market instead of the market being
artificially created for him. Better fills are a result of the direct and competitive market
bids and offers. Anonymity means that there is no Dealing Desk watching who has
come to the market and is asking for an order to be filled, instead client orders are
executed automatically, immediately through the market network and totally
anonymously.
On the opposite side is a Dealing Desk broker, who is able to profile their clients. In
the worst case scenario, such a broker can split clients into groups and put less
successful ones on auto-execution and trade against them because on average they will
lose, while clients that show signs of successful trading will be put on “slowdown“
mode and can be provided with frequent re-quotes, slippage and/or slower execution
especially during fast moving markets while a broker tries to offset own risks.
The transparency of a Dealing Desk broker depends on the rules inside the company.
Apart from the obvious rule of thumb that your Forex Broker should be strictly regulated
by the Financial Authorities in the country they’re registered at and they must have
sufficient Capital to back up their operations and guarantee their long-term viability in
the Markets, these criteria are not enough for you, unless you can verify that this is a
NDD Broker. Hopefully now you can identify some of the challenges and aspects when
choosing a Forex Broker.

8. Pareto Principle

The number of FOREX Traders who keep

trading on a “Gambling Mode” is unbelievably big, and does NOT include only
beginners… FEAR acts like a narcotic that numbs the brain and makes the stomach stiff
but still, being at the verge of a financial loss can be addictive and Neuroscientists may
have supportive theories about the phenomenon.
FEAR is by definition the “reaction to the UNKNOWN”. So, the more you KNOW
Forex, the less you fear. Of course RISK is always involved with all kinds of trade.
But “BLIND BETTING” on a Currency Pair’s Rate Trend is one scenario, and taking
pre-calculated risks is a totally different one.
I know talking about KNOWLEDGE OF FOREX which is a vast ocean on its own – or
maybe a universe?- sounds unrealistic, but here comes a Mathematician’s Principle to
offer us a handy approach. Don’t recall much about Pareto – other than the fact he was
Italian Mathematician- so you’ll have to GOOGLE him up a bit (wasting time on such
type of research, would push this Book’s publishing date even more, so I didn’t do it
and I hope you appreciate my decision.)
Pareto Principle is about a very well documented phenomenon in many aspects of life
with as many applications as the projects of people who take it under consideration. It’s
also known as “The 80/20 Rule”. Now I got you hooked…..right?
As it is well observed and documented that 20% of Clients give 80% of profits or 20%
of Clients give 80% of nagging, it is also a fact that 20% of our efforts give 80% of our
results and that 20% of knowledge on a particular subject is enough to give us an 80%
“grip” of it.
That means, if you acquire 20% of key-knowledge on FOREX Trading, you’ll secure an
amazing 80% of results. But lets make some points clear about this. First of all
Knowledge is different than Info. There is good and bad, interesting and boring,
relevant and irrelevant info, but knowledge can only be of two kinds : theoretical and
actionable. To many, both are useful. To my opinion, only actionable knowledge helps
us expand our limits and increase our capacity on all levels. Regarding FOREX,
Actionable Knowledge is the cutting edge Advantage that separates Professional
Traders from Occasional Gamblers. Simply, Knowledge will make you rich. And
because info is endless, KNOWLEDGE will be your “Guide” and your “Filtering
System” through useless garbage.
So don’t get overwhelmed by the Available Knowledge, because we’re here to help you
access Only the 20% of the Basics that will place you at the top Level of the “Game”
fast enough to start making money in the next few days.
Yes, there are Certain Trading Styles. But I can’t tell you “please find yours” -as the
author of a Book on the subject was saying- BEFORE you actually KNOW what the
hell FOREX is about.

9. The 3 Different Trading Styles

Differences produce variety and variety leads to dynamics. It’s practically impossible
to talk about Trading Styles in World’s most dynamic and powerful Market, where each
Trader makes his/her own planet, but for illustrative purposes I’ll mention here the
three MAIN CATEGORIES of Trading Styles.

Intraday Trading (or DayTrading)

As its name indicates, this Style of Trading is referred to those Traders who are fast and
furious, entering and exiting the Market with speed many times a Day. The reasons
they’re fast can be many either related to their personal idiosyncrasy or to their limited
equity capital which doesn’t allow them to take big risks tolerating major market
reversals before it continuous its main trend. Intraday Traders usually use the smallest
time-frames of 1minute, 5minutes, 15minutes or 30minutes and do what is also known as
“scalping” shaving off their profits a few pips at the time.

Swing Trading

Swing Traders ride Market’s Waves following its swings upwards or downwards.
Their trades usually last 1-3 Days. They use 1hour 4hours and 1day charts a lot. This
“breed” of Traders have been described as cold-executors who don’t care about how
much money there’s left on the table. Their entries and exits are almost invisible. They
plan their entries and exits meticulously and then they hit and go no matter if they earned
or lost. It is indeed very fascinating to be a Capital Markets’ Windsurfer. All you care
is to have the wind blowing on your back as you enter the sea and exit ashore.

Position Trading (or Long Term Trading)

This Trading Style is suitable for the sophisticated investor who is willing to go for
long-term gains following the weekly, monthly and annual cycles of the market. This
Trader holds his/her position for quite a bit of time, making minor corrections and
adjustments on the way. Position Traders prefer to get the bigger picture of the Market
than getting tangled into its noise. They act more as Market-Observers rather than
Market-Participants. Their favorite time-frames are the daily, weekly and monthly ones.

10. The 3 Different Market Tendencies

OK lets take things from the beginning. Trading FOREX practically means trading the
economies of the nations whose currencies are being traded. One main characteristic of
the FOREX Market, is that it forms strong trends. Wall Street “hawks” say that “The
Trend is your Friend” and there’s a good reason to that. Trading with the trend is one of
the most profitable trading methods in any Market, especially in FOREX Market,
because of the fact that each country’s economy remains weak or strong for years, is the
perfect field where trends appear a lot and are of critical importance to your overall
success.

But what is Trend? Trend is simply the predominant direction of Market’s Movement, as
a 5 years old child would describe saying : “mom, this line goes up”…..or…..”dad, the
line falls down” watching a FOREX Chart.
We can’t talk about TRADING FOREX if we haven’t established our Trading Style. To
establish a Trading Style, we need to setup our STRATEGY which is basically
consisted of the following THREE POINTS:

1. when to ENTER the Market (ENTRY POINT)

2. when to EXIT the Market (EXIT POINT)
3. how to manage money

Identifying TRENDS, is the FIRST STEP in a sequence of STEPS, which will lead us to
Setting Up our Strategy. At the beginning, it will take a bit, but soon it will become a
sort of reflex. Actually, if we can’t see the “PATTERN” of Market’s Directional Move,
we should go for a walk or do something else instead of “gambling” our hard earned
money.
I know there are many EXPERTS who state that there are NO Patterns in the Market,
and the Market is a chaos, and the moment you think you see a pattern, you’re about to
experience a painful failure. But you know what? If we didn’t approach the sea
because of its unpredictability, we would never sail, would never travel, would never
expand commerce. Markets are chaotic like the Sea, and that happens because human-
nature lies behind them. But human-nature manifests certain behavioral patterns and
their reflections to the Markets have been noted over and over again, and a combination
of sciences like mathematics and psychology, make the backbone of what we call
TECHNICAL ANALYSIS. So when a Currency Pair TRENDS, we know that,
depending on the TREND’s PATTERN, there are certain things we should expect to
happen with high possibility of being accurate with our prediction, according to a huge
volume of collected and analyzed data.

In order to identify TRENDS, we must know which types of MARKET TENDENCIES

exist, their characteristics, and the SOLID CRITERIA we can use to confirm a certain
type of TENDENCY whether it involves a Trend or not. Once we “KNOW” the type of
the TENDENCY, our next issue is to setup our Strategy using a particular Trading
Technique and determine our Money Management that suits our “wallet” (Forex
Account).

To be more precise, lets call these types of MARKET TENDENCIES, TRADING

CONDITIONS. Each condition requires a different Trading Technique and there
isn’t a Trading Technique that fits them all. Once you digest EACH TRADING
CONDITION’s characteristics, and the Trading Technique that goes with it, you will
realize why so many FOREX TRADING BOTS and SOFTWARE are popping from
here and there, and I doubt you’d ever prefer missing the joy and excitement of actual
trading, by passing it over to a ROBOT which just checks if each TRADING
CONDITION’s Criteria are met, before it uses the appropriate Trading Technique that
goes with it.

I don’t want to be mean with anyone. There are some exceptional FOREX
AUTOMATION Programs out there.

STEPS OF ACTION :
Determine the MARKET’s TENDENCY (or TRADING
CONDITION).
Pick the Suitable Trading Strategy for this Particular Condition.
Setup the Trade and Enter the Market.

There are THREE Basic types of TRADING CONDITIONS (or TENDENCIES) :

TRENDING : when the Currency Pair moves towards a certain definite

direction (up or down)

RANGE-BOUND : when the Currency Pair moves between Support And

Resistance levels (bounces within a range) <—– when the Support and
Resistance Levels are close to each other, the Pair practically moves
horizontally and that means we should wait till a clear TREND appears.
 CONSOLIDATING: when Currency Pair is “trapped” in a narrow
tightening area <—– this TREND often is followed by STRONG
BREAKOUTS that can give massive profits to the disciplined Trader.

Markets change and a Currency Pair that moves TRENDING today may start RANGING
next week or pass to a CONSOLIDATING phase instead. Each Trading Condition
needs to be traded accordingly. Applying a TRENDING Trading Technique to a
Consolidating or Range-Bound Pair would equal absolute failure, and vice versa
applying a Consolidating Trading Technique to a Range-Bound or Trending Pair would
be a huge mistake.

Trends and Tendencies

Each Market must be observed long enough till we are familiar with its predominant
TENDENCIES. Why do we need TENDENCIES? Because our Trading Strategy will
be based on them. Luckily, FOREX MARKET tends to form long strong trends. (see
TRENDING Trading Condition above).
Finding Support or Resistance in Round Numbers, is another FOREX Market’s
Tendency, and it’s quite helpful to take it under consideration when placing our stops.

Why TREND is our Friend

When a Market is trending, it has obviously chosen a clear and specific direction.
History shows that in FOREX Market trends can last for years. If we can “jump on the
train” on the right side of the trend – long/buying in an uptrend, or short/selling in a
downtrend- we’re in for enjoying a substantial gain, on the condition we’ll “Let Our
Winners Run”. Unfortunately many traders exit “prematurely” or they hold on their
“losing positions” for too long. Both are psychologically triggered behavioral patterns
which have no place in a disciplined Trader’s agenda. We’ll discuss on how to avoid
such actions.
In contrast to this, a RANGE-BOUND Currency Pair which is moving Sideways has no
definite direction, because price tends to come back towards the “entry point”. It’s
considerably harder for Traders to hold on to their positions under such circumstances.
If you don’t want to stay out of the Market till it’s trending again, you can Trade Range-
Bound Currency Pairs, but using totally different Techniques.

How To Determine if the Market is Trending

We will refer in detail to the Criteria – because there are several of them- in the Course,
but you can have an idea of them below :

Using TWO Bollinger Bands Credits for this method go to Ms Kathy Lien -
mentioned in the Resources Section- and her excellent book “The Little Book of
Currency Trading – How to Make Big Profits in the World of Forex” (One with
20,2- meaning 2 Standard Deviations Away from the 20-Day Moving Average |
One with 20,1-meaning 1 Standard Deviation Away from the 20-Day Moving
Average) which ZONE is the Currency Pair Rate moving in? BUY ZONE, SELL
ZONE or RANGEBOUND Trading ZONE? See the Chart below:
 Using Two Bollinger Bands to Identify Market's Trend
Are the Moving Averages in PROPER ORDER ? (Proper Order for an
UP-trend : the 10-period Simple Moving Average (SMA) is located above the
20-period SMA, which is above the 50-period SMA, which is above the 200-
period SMA <—– 10>20>50>200 …….Proper Order for a DOWN-
trend: the order would be reversed : 200>50>20>10 )
 Using Average Directional Index (ADX). This Indicator indicates the
trend’s STRENGTH regardless of its direction. A reading ABOVE 35 and
rising shows that Market is Strongly Trending.

Drawing TRENDLINES : Beneath the UP-Trends or Above DOWN-

Trends. But they are extremely subjective. Unless we use TOM DEMARK’s
Method taking under consideration only the LATEST Price-Movements, reading
the charts from right to left.
Before we move on with the “meat and potatoes” of this Book, let me clarify a few
things opening a parenthesis here.

First, I remind you that I’m not any sort of Financial Guru or Trading Expert and don’t
take pride on calling myself a “trainer” either, because I’m not. I’m a FOREX Trading
enthusiast, a lifelong student of the Markets and you can consider me a friend who wants
to help you enter FOREX World and make your own discoveries thereafter. I’m here to
show you the basics to start with. There are many pieces of information I can’t include
or I lack knowledge of. But I’m giving you here what took me years and lots of lost
money to learn myself ….the hard way. I’m also sharing applicable knowledge which
has already been translated into money to my bank account again and again. Don’t miss
out visiting the Resources Section and going through the books or sites of Truly Big
Traders I admire, respect and feel deeply grateful to such as Ed Ponsi, Kathy Lien, John
Bollinger, Tom Demark and others. These are true Gurus and I feel extremely honored
to join their ranks as a Forex Book Author.

Once you familiarize yourself with FOREX Trading, you’ll realize that the more you
understand and advance, the more you expand your horizons to Commodities, Options,
Futures, (as well as other Derivatives) and you start to feel the vastness of the
TRADING UNIVERSE and the opportunities it offers to the Trader who has put
himself/herself on the path of continuous improvement.

My scope and ultimate goal for this Book, is to help you Start Forex Trading
experiencing the excitement of knowing what you’re doing and why, while profiting in
the process. I cut the theoretical stuff out of the Book as much as possible and want you
full and undivided attention for the next paragraphs where I’m presenting a few tested
and favorite techniques of mine –and of dear friends who also are into Forex Trading-
that will over the whole spectrum of the THREE TRADING CONDITIONS : 1.)
Trending 2.)Range Bound and 3.)Consolidating Market.

I “composed” my techniques taking one piece I found working perfectly well from one
System, adding another from another and putting them into REAL CONDITIONS Testing
with my own money in my LIVE ACCOUNTS.

Closing the Parenthesis, I have one last piece of advice for you. Use your DEMO
ACCOUNT to test each Technique before you apply it on your LIVE ACCOUNT
and ALWAYS KEEP A JOURNAL of your Trades, Demo or Live ones. I know that
if I tell you to DEMO TRADE for at least twelve months before you start Trading LIVE,
you won’t listen to me. I have been in your shoes and couldn’t stand out of the real
Action for more than a few weeks either. It’s a bad thing we can’t control this strong
impulse inside us and when it comes to Forex we all become impatient kids in front of
the Luna-Park’s Doors. But please do the DEMO-ACCOUNT testing and NEVER
EVER forget to update your Journal. You can always trace your mistakes and fine-tune
your Trading System by spotting your weaknesses.

End of parenthesis and now let’s go on to the TRADING TECHNIQUES you can start
using depending on MARKET’s TRADING CONDITION.

Before you roll up your sleeves, I want you to memorize by heart the following TWO
GOLDEN RULES of Risk Management. Note them in your smartphone, put them in a
memo note and stick it to your fridge or your PC Monitor, sing them in the morning
while you’re alone in your bathroom, repeat them before your prayer every night going
to bed, just make sure they’re planted deeply in your head and stay there forever.

Risking to make my Book look a bit ugly already with my red-fonts above, I’m now
going to make it even uglier adding the yellow highlighting for the TWO RULES, but
believe me, you’ll thank me for this one day

For ease of use I decided to present this part of the Book with the layout of a cookbook.
Before each Trading Technique, I’ll be giving you a quick Overview of its Basic
Elements (Ingredients), so you can browse the techniques easily and also have the
whole picture in your mind about the “cake” you want to make, before you actually get
into the execution process.

11. Let’s Start Forex Trading

How much Money should I use Per Trade?

So first, you have to look at FOREX TRADE as if it is a BUSINESS. Next, you have
to eliminate FINANCIAL RISK, by following two basic principles:
• NEVER trade more than 10% of your Capital. 2-3% is the IDEAL
VOLUME of each trade of yours. This way you’ll never get kicked off the
MARKET, and will NOT lose your Capital.
• NEVER trade with a LEVERAGE higher than 4-5 times your Capital.
High LEVERAGE such as 1:100 or even 1:200 seems very lucrative in terms of
earning potential, because each pip can earn you 10-20 euros, but don’t forget
that it can swipe away your Capital with EXACTLY the same ease, once the
MARKET moves against you. So don’t be a fool. Don’t do what the majority of
people do seeing the cheese and missing the mouse-trap. Don’t be another one
who will add water to the BROKER’s mill.
How should I prioritize things in my mind?
• First Things First : Money Management. Once you have set up your Trade
and are ready to enter the MARKET, remember to ALWAYS use 3 LOTS of
trading capital. Therefore you’ll open 3 Positions simultaneously. You’ll close
the 1st once you have earned your trading capital PLUS Forex Broker’s Spread
or Commission. This way, the rest of your Trade will run at ZERO RISK for
you. You close your 2nd position at about the 50% of your Profits Projection or
somewhere between 20 and 30pips. You’ll let the 3rd position open till it
reaches your exit point at your TAKE-PROFIT Stop or trailing it even further if
you see that the Market trends strongly to your favor. After closing your 2nd
position, you have locked in some profit, small but real. So now you can go as
much wild as you like with your 3rd position. Try to make a habit out of this
method. It protects you from losses and maximizes your earning potential.
• Intraday Trading : Go for Intraday Trading if you have limited trading
capital-therefore can’t survive big Market’s plunges against your position- ,if
you can allocate a little time on a daily basis (one or two hours) to monitor your
trades and if you are not a patient type of person but you rather love speed and
quick results combined with adrenaline rush.
• Long-Term Trading : Go for Long-Term Trading if you have a substantial
 amount of money you want to invest on FOREX Markets and can afford
Market’s weekly or monthly dips, without risking getting your capital wiped
off. Go for long-term Trading if you only want to monitor your trades once in a
while on a weekly or bi-weekly basis and if you are after big money in the long
run without the element of gambling in your style.
Which Currency Pair to Start Trading with?
Although there are MANY Currency Pairs , pick ONE to start with and add more with
time. Pick the Currency Pair which you feel more familiar with. If you live in Europe,
EUR/USD is your pair, if you live in Japan, YEN should be the one of the two
currencies you’ll be trading, if you live in US it goes without saying that USD will be
one of the two currencies, CAD if you are a Canadian, AUD if you live in Australia and
so on…

Which Session Should I Trade in ?

One of the reasons I feel lucky with FOREX, is the fact that the geographical position of
my Country, Greece, allows me to trade during any of the three Sessions, Asian,
European and American. It doesn’t matter where you live, as long as you pick a time of
the day which is convenient for you and there is significant Trading Activity. Be careful
not jumping in between the Sessions while one Market shuts down for the day and the
other one hasn’t been “warmed up” yet. This way you’ll avoid fake breakouts and
dramatic unforeseen reversals once the Market enters intense action zone. If you’re
smart about your timing, you’re good to go with a great deal of flexibility in terms of
your available time.

Do I have to have a System?

Having a SYSTEM -you can call it STRATEGY- is essential. The SYSTEM separates
hobbyists -as much as anyone putting his/her money at stake can be called as such- from
professionals. I hear the word “discipline” used A LOT about FOREX TRADING.
Well, to me things are simple. You EITHER know what you’re doing, because you
follow a SYSTEM and you stick with it, or you have NO IDEA of what you’re doing,
where you’re going and why, so it’s a reasonable consequence to jump here and there,
trying things, and acting as a GAMBLER rather than a Sophisticated Investor. Others
call it LACK OF DISCIPLINE. I call it COMPLETE IGNORANCE.

What should a Valid Trading System Look Like?

A TRADING SYSTEM has to be simple, effective and consistent. We have tried quite
a few, and we’ll be reviewing a lot in the future stimulating conversation with our
members. The main points of a SYSTEM based on Technical Analysis, should be a set
of objective prerequisites triggering ENTRY SIGNALS, reliable confirmation filters,
a set of objective variables triggering EXIT SIGNALS, and reliable confirmation
filters. We found that the SYSTEM introduced by
QUANTUM GLOBE INC. is one of the best , and it matches perfectly with
our money-management principles.

TRADING SYSTEM FOR TRENDING MARKET

System’s Name MARKET’S WAVES & FIBONACCI

RETRACEMENT TOOL
What Trading Style/s is it Intraday , Swing Trading, Long-Term (Position
Suitable for? Trading)
When to Use it? When Market is Trending OR Range Bound
How much Capital to Use? Don’t use more than 3-5% of your Trading Capital
What Leverage to Use? 1:4 is the ideal for ZERO Risk. Don’t exceed 1:10.
How Many Positions to Open? Open 3 Positions and exit partially
What Time Frame? 5min for Intraday Trading | 4hours for Long-Term
Trading
Tools to be Used? Fibonacci Retracement Tool , RSI 14 Period on
DAILY Chart
Trade Setting Condition? Active Wave at least 40pips for Intraday Trading |
Active Wave at least 150pips for Long-Term
Trading
Entry Condition? Before we enter, one candlestick must close inside
0.618 -0.382 Fibonacci Levels Zone.
Entry Confirmation? Bullish Confirmation if one whole candlestick
closes above Fibonacci 0.750 and RSI is above
50, Bearish Confirmation if one whole candlestick
closes below Fibonacci 0.250 and RSI is below 50
Where to place Stop? 50pips below long or above short entry for Intraday
| 100pips for Long-Term
Exit Confirmation? Our STOP is hit or we get REVERSE Signal.

INTRADAY TRADING : It’s fascinating, I’ll be giving you the STRATEGY, but
please avoid using it for the first few months, till you are quite familiar with the entire
trading environment. Since this SYSTEM uses the 5min Candlesticks for Intraday
Trading, it takes strong reflexes solid knowledge and a bit of experience to trade right,
and check all the necessary variables fast enough. On the other hand, there are many
times when it takes days for my Long-Term Trading to give me all the confirmations I
need to enter. In those cases, I have discovered that INTRADAY TRADING can be
VERY PROFITABLE. Just familiarize yourself with the chart and the signals you’re
looking for.
Without diving into technical details and complicated jargon, we’ll give you only the
HIGHLIGHTS of the SYSTEM and walk you through it. The System has been
developed by a team of Scientists and an Experienced Trader. Its Basis is that
MARKET moves forming Big Waves -called TRENDS- which are interrupted by
Small Waves -retracements to the opposite direction- and then again follows the Big
Wave’s Direction. Each time retracements happen, they tend to expand in accordance to
Fibonacci ratios of the Big Wave. Combining ELLIOT’s Theory about WAVES, and
Fibonacci Ratios, this System also offers infallible Entry and Exit Confirmation Filters
along with Well Tested Main Rules or Prerequisites for TWO TYPES of FOREX
Trading: Intraday and Long Term.

INTRADAY TRADING:
• We use the 5minutes candlestick chart
• First we find the Active Wave , which has to be bigger than 40pips
• Then we draw the Fibonacci Levels
• Next we check if Retracement Channel – the zone between 0.618 and
0.382- is triggered and that happens if one candlestick closes within the zone.
• If and ONLY if that happens, we focus on the Confirmation Levels. Upper
Confirmation Level : 0.750 Lower Confirmation Level 0.250
• If ONE WHOLE CANDLESTICK goes above Upper Confirmation Level
(0.750) that’s a BULLISH Signal but we’ll need one more Confirmation before
we enter, and that will be checking the RSI -14 period- on the DAILY CHART.
If RSI is ABOVE 50 we can enter LONG.
• If ONE WHOLE CANDLESTICK goes below Lower Confirmation Level
(0.250) that’s a BEARISH Signal but we’ll need one more Confirmation before
we enter, and that will be checking the RSI -14 period- on DAILY CHART. If
RSI is BELOW 50 we can enter SHORT.
• Right after ENTRY, we place our STOP LOSS ORDER. That will be
50pips BELOW ENTRY, if we entered LONG or 50pips ABOVE ENTRY, if
we entered SHORT.
 • We exit EITHER if we get a REVERSE SIGNAL (with the same rules),
OR if our 50pips STOP is hit.

LONG TERM TRADING :

• We use the 4hour candlestick chart
• First we find the Active Wave , which has to be bigger than 150pips
• Then we draw the Fibonacci Levels
• Next we check if Retracement Channel – the zone between 0.618 and
0.382- is triggered and that happens if one candlestick closes within the zone.
• If and ONLY if that happens, we focus on the Confirmation Levels. Upper
Confirmation Level : 0.750 Lower Confirmation Level 0.250
• If ONE WHOLE CANDLESTICK goes above Upper Confirmation Level
(0.750) that’s a BULLISH Signal but we’ll need one more Confirmation before
we enter, and that will be checking the RSI -14 period- on the DAILY CHART.
If RSI is ABOVE 50 we can enter LONG.
• If ONE WHOLE CANDLESTICK goes below Lower Confirmation Level
(0.250) that’s a BEARISH Signal but we’ll need one more Confirmation before
we enter, and that will be checking the RSI -14 period- on DAILY CHART. If
RSI is BELOW 50 we can enter SHORT.
• Right after ENTRY, we place our STOP LOSS ORDER. That will be
100pips BELOW ENTRY, if we entered LONG or 100pips ABOVE ENTRY, if
we entered SHORT.
• We exit EITHER if we get a REVERSE SIGNAL (with the same rules),
OR if our 100pips STOP is hit.

Step-1, Find the Active Wave

Once we have decided about going INTRADAY or LONG-TERM, the next step is to
find the ACTIVE WAVE on our chart. Below is the ACTIVE WAVE Drawing on a
4hours Chart of EUR/USD on March 12th 2011:
To Draw the ACTIVE WAVE all you have to do is CONNECT the higher Rate’s Price
with the lower one and you can do it for as many WAVES you see on your Chart.
Doesn’t matter if the WAVE’s trend is an uptrend or a downtrend. Just draw a line
connecting its edges.
Next you have to pick the WAVE which is closer to the time point you are at.
Finally you have to make sure the most recent WAVE is MORE than 40pips on 5min
candlestick Chart (INTRADAY TRADING), and MORE than 150pips on 4hours
candlestick Chart (LONG TERM TRADING). In our example, since I’m a LONG-
TERM Trading fan, 4hours candlestick Chart is my option and YES, my most recent
WAVE, is way bigger than 150pips……it’s 285pips. So this DEFINITELY is my
ACTIVE WAVE.

Step-2, Draw Fibonacci Levels

So far, we have decided if we’ll go INTRADAY or LONG-TERM, and we have
already our “Working Canvas” in front of us. A 5min Candlestick Chart for
INTRADAY-ers and a 4hours Candlestick Chart for LONG-TERM-ers. We also have
spotted the ACTIVE WAVE, which is the most recent Market’s Move which exceeds
40pips for INTRADAY, and 150pips for LONG-TERM.
The NEXT THING we have to do, is DRAW the FIBONACCI LEVELS on our ACTIVE
WAVE.
The FIBONACCI LEVELS tool usually comes with your TRADING PLATFORM
SOFTWARE. But you can easily calculate the levels yourself, as I’m doing for the one
which is missing from my Trading Platform’ s SOFTWARE.
Which are the FIBONACCI LEVELS? There are 6 of them we’ll be using.

1. 1.000 : Which is at the TOP EDGE of our ACTIVE WAVE. Has only a reference
value, just to make sure we draw the levels right. Nothing else.
2. 0.750: Which is the level at the 75% of the ACTIVE WAVE’s price movement. For
Example, on the Chart you’ll see below (EUR/USD, 4hours, March 12th 2011) the
ACTIVE WAVE’s top price is 1.4037 and the bottom price is 1.3752. A total of
285pips. The 75% of this Total, is 213pips. If we add it to the bottom price (1.3752) it
gives us the FIBONACCI LEVEL 0.750 price which is 1.3965. Because our
SOFTWARE doesnt draw this level by default, we have to add it manually (see the
thick yellow line). This LEVEL is also called the UPPER CONFIRMATION
LEVEL.
3. 0.618 : This is the level at the 61.8% of the ACTIVE WAVE’s total price movement.
It also stands as the UPPER THRESHOLD of the RETRACEMENT CHANNEL.
You’ll see images and details on next lessons.
4. 0.382 : This is the level at the 38.2% of the ACTIVE WAVE’s price movement. It
also stands as the LOWER THRESHOLD of the RETRACEMENT CHANNEL.
You’ll find images and details on next lessons.
5. 0.250 : Which is the level at the 25% of the ACTIVE WAVE’s price movement. This
level is also called the LOWER CONFIRMATION LEVEL.
6. 0.000 : This is the BOTTOM EDGE of our ACTIVE WAVE. Just like the 1.000
level, its value is just for reference purposes, for us to make sure we draw the levels
right. Nothing else.
On the Chart illustrated above, you also see a 0.500 level. Again it only serves as a
point of reference. Nothing else.

Step-3, Is Retracement Channel Triggered?

Now that we have properly drawn the FIBONACCI LEVELS, the FIRST THING we’ll
be waiting for is to see if the RETRACEMENT CHANNEL is triggered.
What is the RETRACEMENT CHANNEL? It’s the zone between 0.618 and 0.382
levels. 0.618 level is its UPPER THRESHOLD and 0.382 level is its LOWER
THRESHOLD.

Fibonacci Retracement Channel

When is the RETRACEMENT CHANNEL TRIGGERED? This happens when a

Candlestick’s closing price is inside the RETRACEMENT CHANNEL.
 Fibonacci Retracement Channel Triggered

If you don’t want to go back to the CANDLESTICK’s ANATOMY, look at the image
below to refresh your understading about a Candlestick’s CLOSING PRICE.

candlestick's closing price

Step-4, Confirmation Levels

Now that our NUMBER 1 Prerequisite is met, and One Candlestick has closed INSIDE
THE RETRACEMENT CHANNEL, we focus our attention to the CONFIRMATION
LEVELS.
The next thing we WAIT to see is if ONE WHOLE CANDLESTICK -not just a part of
it- will CLOSE Above the UPPER CONFIRMATION LEVEL which is at 0.750 or
Below the LOWER CONFIRMATION LEVEL which is at 0.250.
FOUR are the POSSIBLE SENARIOS:
1. ACTIVE WAVE is DOWNWARD and we see a WHOLE CANDLESTICK close
BELOW 0.250 (Lower Confirmation Level). This is a BEARISH SIGNAL, and
because the ACTIVE WAVE is Downward and Market’s current trend is BEARISH, we
can safely assume that ACTIVE WAVE is a BIG WAVE and Market’s Trend is indeed
Downward.

Downward Active Wave and Bearish Signal

2. ACTIVE WAVE is DOWNWARD and we see a WHOLE CANDLESTICK close
ABOVE 0.750 (Upper Confirmation Level). This is a BULLISH SIGNAL, and
because the ACTIVE WAVE is Downward but Market’s current trend is BULLISH, we
can safely assume that ACTIVE WAVE is a SMALL WAVE -a Corrective One- but
Market’s True Trend is Upward.
 Downward Wave and Bullish Signal
3. ACTIVE WAVE is UPWARD and we see a WHOLE CANDLESTICK close
BELOW 0.250 (Lower Confirmation Level). This is a BEARISH SIGNAL, and
because the ACTIVE WAVE is Upward but Market’s current trend is BEARISH, we
can safely assume that ACTIVE WAVE is a SMALL WAVE -Corrective Wave- and
Market’s True Trend is Downward.

Upward Active Wave and Bearish Signal

4. ACTIVE WAVE is UPWARD and we see a WHOLE CANDLESTICK close
ABOVE 0.750 (Upper Confirmation Level). This is a BULLISH SIGNAL, and
because the ACTIVE WAVE is Upward and Market’s current trend is BULLISH, we can
safely assume that ACTIVE WAVE is a BIG WAVE and Market’s Trend is indeed
Upward.

Upward Active Wave and Bullish Signal

Step-5, Get Final Confirmation and Run the Trade

In any SCENARIO you’ll be getting EITHER BULLISH SIGNAL, OR BEARISH.
Still you shouldn’t enter UNLESS you get the FINAL CONFIRMATION which is from
14period DAILY RSI Index.
If your SIGNAL is BULLISH and RSI is above 50 you should ENTER LONG.

Daily RSI(14) above 50 gives a Bullish Confirmation

If your SIGNAL is BEARISH and RSI is below 50 you should ENTER SHORT.
It can’t get any simpler than that.
Yes, there will be LOSING TRADES even if all criteria are met, but they’ll be
minimized.
Instead, if you ignore the rules and act intuitively, you’re doomed. I have done it.
MAJOR STUPIDITY! Take my word on it.
Once you place your ORDER going LONG or SHORT, immediately you should place
your STOP LOSS ORDER.
1. For INTRADAY Trading on the 5min Candlestick Chart, your STOP LOSS ORDER
should be placed 50pips BELOW your entry point if you go LONG, OR 50pips ABOVE
your entry point if you go SHORT.
2. For LONG-TERM Trading, on the 4hour Candlestick Chart, your STOP LOSS
ORDER should be placed 100pips BELOW your entry point if you go LONG, OR
100pips ABOVE your entry point if you go SHORT.
Running the Trade is Simple. Every time a NEW ACTIVE WAVE is formed, you Draw
the NEW FIBONACCI LEVELS and again pull your STOP 50pips or 100pips -
depending if you go Intraday or Long-Term- below your long position or above your
short one.

Step-6, Exit Signal Triggered

Don’t be over-romantic with TRADE and don’t fool yourself that there is a golden
system that wins all trades, because simply …….THERE ISN’T !
What we’ve given you here is one of the BEST Systems ever Developed and tested, that
increases your winning odds substantially compared to many others.
If you also follow our Advice on Money Management and DON’T RISK more than 3-
10% of your CAPITAL on a trade- 3% being the ABSOLUTELY SAFE level- and
DON’T TRADE WITH LEVERAGE BIGGER THAN 1:4 , you will slowly and
steadily become a RICH FOREX TRADER.
Now, when should you EXIT?
According to the SYSTEM we presented, you either LOST the TRADE, which means
you exited because your STOP LOSS has been hit, or you are winning -and with this
system we’re talking about lots of pips- so you should exit once you see a REVERSE
SIGNAL Produced. That happens after you see the RETRACEMENT CHANNEL
Triggered -watching the most recent ACTIVE WAVE and having drawn the Fibonacci
Levels- and consequently you see a WHOLE CANDLESTICK above the UPPER or
below the LOWER Confirmation Levels (depending which one is against your trade).
PART II : RANGE BOUND MARKET SYSTEMS
System’s Name
What Trading Style/s is it
Suitable for?
When to Use it?
How much Capital to Use?
What Leverage to Use?
How Many Positions to Open?
What Time Frame?
Tools to be Used?
Trade Setting Condition?
Entry Condition?
Entry Confirmation?
Where to place Stop?
Exit Confirmation?
TRADE BASED ON SUPPORT AND
RESISTANCE LEVELS
Intraday , Swing Trading
When Market is Range Bound
Don’t use more than 3-5% of your Trading Capital
1:4 is the ideal for ZERO Risk. Don’t exceed 1:10.
Open 1 Position
Depends on the Time-Frame Chart you want to
work with, your Equity and your time-availability
to monitor the Trade. Works fine with all small and
medium Time-Frames (1min, 5min, 15min, 30min,
1h, 4h)
Support and Resistance Levels
Watch carefully for at least 10 latest Candlesticks,
the Price Action
Before we enter Long, Price (Pair’s Exchange
Rate) must have bounced back from Support Level
and before we enter Short, price must have
bounced back from Resistance Level.
If you are a Conservative Trader, you’ll entry Long
or Short on the Candlestick right AFTER the
Reversal Candlestick. If you are an Aggressive
Trader, you’ll wait for the Price to be behind you
testing Resistance or Support and you enter Long or
Short respectively when you feel evidence is strong
that the Price Bounces to your Direction.
50pips below long or above short entry for Intraday
| 100pips for Long-Term
Our STOP is hit or the Price Approaches the
opposite Level in which case we exit our Long
Position a few pips below Resistance and our
 Short Position a few pips above Support.

Trading SUPPORT and RESISTANCE in a RANGE BOUND Market Condition, may

seem simplistic but in fact demands all your attention to the Price-Movement and your
Reflexes at a state of Alert.

Don’t make the mistake and get greedy entering at SUPPORT or RESISTANCE
assuming they’ll hold and you’ll catch the move early. This way, you may find yourself
experiencing un-necessary losses if price breaks SUPPORT or RESISTANCE against
your expectations. It’s better you enter with a small delay, but with strong evidence
you’ve jumped on a winning trade

Below I’m giving you another Trading System for a RANGE BOUND Trading
Condition, if you love to use more precise external tools than your own subjective
perception
This Method is called FOCUS POINT because our POINT OF FOCUS is the DOJI
Candlestick we see close to a Fibonacci Retracement Level.
Although the DOJI Candlestick on a Fibonacci Level –or pretty close to it- along with
the Reversal Candlestick constitute enough evidence for us to enter the Market to the
Direction of the newly formed trend, when Parabolic PSAR is triggered we’re
definitely good to enter and Stochastics Crossover can ease even the most Conservative
Trader’s mind
Our Stop will initially be placed either below the DOJI’s lowest end or below Reversal
Candlestick if we enter Long, or above DOJI’s highest high or reversal Candlestick if
we enter Short. While Market moves to our favor, we can trail our stop keeping it two
candlesticks close below or above from the 10 Period Moving Average respectively.
System’s Name FOCUS POINT FIBONACCI METHOD
What Trading Style/s is it Intraday , Swing Trading, Long-Term (Position
Suitable for? Trading)
When to Use it? When Market is Trending OR Range Bound
How much Capital to Use? Don’t use more than 3-5% of your Trading Capital
What Leverage to Use? 1:4 is the ideal for ZERO Risk. Don’t exceed 1:10.
How Many Positions to Open? Open 3 Positions and exit partially
What Time Frame? It’s better you use this Trading Method with time-
frames of 4h or higher because it can give you
substantial profits.
Tools to be Used? Fibonacci Retracement Tool , Parabolic PSAR
(settings of 0.02 , 0.20), Stochastics (settings of
8,3,3)
Trade Setting Condition? Draw Fibonacci Retracement Levels between the
recent Swing High and Swing Low points. Have a
DOJI Candlestick (it looks like a CROSS because
its open and close prices are the same) at a
Fibonacci Retracement Level. Have a Reversal
Candlestick. Parabolic Trigger. Stochastics
Crossover.
Entry Condition? The DOJI Candlestick is followed by a Reversal
Candlestick both holding the Fibonacci
Retracement level.
Entry Confirmation? For an Aggressive Trader, the DOJI +Reversal
Candlesticks offer adequate assurance to enter
Long above the higher end of DOJI or Short below
the lowest end of DOJI. The Conservative Trader
will wait till Parabolic PSAR is triggered. If that
happens, buy or sell entry is absolutely confirmed

Where to place Stop?
Exit Confirmation?
but the Stochastics Crossover gives you additional
confidence.
After a Long Entry you can place your Stop below
DOJI or Bullish Reversal Candlestick. After a
Short Entry you can place your Stop Above DOJI
or Bearish Reversal Candlestick. We recommend
using a Trailing Stop in conjunction with your
partial exit strategy.
You can place your Exit Two Candlesticks Close
under the 10 Period Moving Average in an uptrend
or Two Candlesticks Close above 10 Period
Moving Average in a downtrend. You can place
your Take-Profit Objectives to Fibonacci
Extensions in a Bullish Market, or Fibonacci
Expansions in a Bearish Market and you can exit
partially for each Resistance Level you reach when
trading Long or for each Support Level you reach
when trading short.

Our EXIT STRATEGY will be dictated by the projections based on Fibonacci

Extensions (on a Long Trade) or Expansions (on a Short Trade).

PART III : CONSOLIDATING MARKET SYSTEMS

Consolidation Phase actually means that the Market is in “CONTRACTION” and we
should soon expect an “EXPANSION” also known as BREAKOUT. There are many
ways to identify the Consolidation Trading Condition when Market practically moves
sideways, and volatility has dropped. We have already seen in previous chapter that
using Kathy Lien’s method of double Bollinger Bands, we can catch the Consolidation
Phase.

There are also certain patterns formed during this phase, such as triangles, pennants and
flags seen below. But how can we be sure this is going to be a true and “legitimate”
Breakout and not a “fake” one? And even if we make sure there’s a legitimate Breakout
coming, how can we determine the Direction of Market’s big Move?

First, you can avoid “fake” breakouts by checking out the timing of the Market’s
Sessions. All three sessions have higher trading volume, therefore their moves are
more valid, during their early hours, while trading volume declines at their closing
hours. Sudden breakouts occurring during those hours are possibly manipulated by
institutional traders who are rushing to fill their clients’ orders. Don’t trust breakouts
that happen during the closing hours of sessions.

As for the breakout’s Direction, the first step we have to take is to locate our
REFERENCE POINT which can be a particular candlestick. We then place TWO
ORDERS SIMULTANEOUSLY. A BUYING ORDER below its Lower End and a
SELLING ORDER above its Higher End. As soon as one of the Two Orders gets
triggered, we use the other one as our Protective Stop.

Below I’ll give you a Powerful Trading System to test and use during Market’s
Contraction Phases, suitable for Swing Trading and Position Trading Styles.

Before I give you the System’s Table and the Chart that goes with it, I would like to
clarify its components so we speak and understand the same language while I’ll be using
abbreviations.

A Bar or Candlestick -in our case a Candlestick- which is the latest in our Chart, and
meets the following TWO CRITERIA, is called a NR4/IB .
 It has the narrowest range of all 4 (including it) so is a NR4 (Narrow Range
4).
Its open or close price or both are within the price range of its previous
Candlestick so is an IB (Inside Bar) to its previous one.

We can use the NR4/IB setup alone for quick and easy profitable trades suitable to a
Swing-Trader since they last only 3 days, or we can combine it with a very powerful
tool, the HISTORIC VOLATILITY RATIO and spot Major Market’s Moves that may
last days, weeks or months giving us substantial gains.

You can see the two trading elements combined in the chart below.
System’s Name NR4/BI Setup
What Trading Style/s is it Swing Trading, Long-Term (Position Trading)
Suitable for?
When to Use it? When Market is in Contraction Phase, giving the
picture of Consolidation. Also applicable in
Trending Markets.
How much Capital to Use? Don’t use more than 3-5% of your Trading Capital
What Leverage to Use? 1:4 is the ideal for ZERO Risk. Don’t exceed 1:10.
How Many Positions to Open? Open 1 Position
What Time Frame? 1Day Chart
Tools to be Used? Locate the latest NR4/BI Candlestick
Trade Setting Condition? Last Day’s Candlestick is a NR4/BI. We enter a
BUY Order 1pip above it and a SELL Order 1pip
below it.
Entry Condition? If our BUY Order is triggered, we enter Long and
use our SELL Order as Protective Stop. If our Sell
Order is triggered, we enter Short and use our BUY
Order as Protective Stop.
Entry Confirmation? Our BUY or SELL Order is hit.
 Where to place Stop?
Exit Confirmation?
If our BUY Order is triggered, we enter Long and
use our SELL Order as Protective Stop. If our Sell
Order is triggered, we enter Short and use our BUY
Order as Protective Stop.
We exit at the Close-Price of the 3rd Day’s
Candlestick.

Now if we want to super-charge our Trading Arsenal with a Powerful Trading System
that gives us a huge advantage with early positioning in Major Market’s Moves, we can
use the NR4/BI Setup Combining it with the HVR Indicator (you can download it for
free signing up for our Newsletter at http://ForexID.com ) which gives us a very strong
entry signal before Major Market Moves when its 6/100 or 10/100 or both indicators
fall below 50%.

If we combine a NR4/BI setup with HVR below 50% signal, we are in for major profits
in most of the cases.
There are literally hundreds if not thousands of Trading Systems and Variations or
Combinations of them, and even if I wanted and could include most of them in this
book, a huge plethora of them would be left out. My scope was not to create a Trading
Systems Library here, but a Book which will introduce with simple and actionable steps
a Beginner, to the Real World of Forex Trading.

I will close the Trading Systems Section with a System I truly love because it gives
another angle to the Trading. It’s DIVERGENCE TRADING. Not all the Trading
Conditions lend themselves to DIVERGENCE TRADING, but by familiarizing yourself
with this System’s Patterns, your skilled eye will soon be able to recognize them when
present.
In the Chart above, you see how DIVERGENCE TRADING was in effect on the 4hour
time-frame of EUR/USD on July 10th 2012. I used MACD (Moving Average
Convergence Divergence) Oscillator, a powerful tool by itself. While the price was
showing a downward trend, MACD’s diagram gave a different reading. Below you’ll
see the same trading period using RSI (Relative Strength Index).

Although the Oscillator is different, we can see the same divergence between the two
trendlines.
Below you’ll see the 4 PATTERNS of DIVERGENCE TRADING illustrated so you
can easily recognize them during your Trading.
 o In REGULAR BULLISH Divergence, Price moves to LOWER
LOW Point while Oscillator moves to HIGHER LOW giving a BUY SIGNAL.
o In REGULAR BEARISH Divergence, Price moves to
HIGHER HIGH Point while Oscillator moves to LOWER HIGH giving a SELL
SIGNAL.
o In HIDDEN BULLISH Divergence, Price moves to HIGHER
LOW Point while Oscillator moves to LOWER LOW giving a BUY SIGNAL.
o In HIDDEN BEARISH Divergence, Price moves to LOWER
HIGH Point while Oscillator moves to HIGHER HIGH giving a SELL SIGNAL.

23. Always keep in Mind.

Trading Arena is a Big Character-Tester. Any System that can catapult you to the
extreme heights of success demands you’re made of steel. What do I mean by that?

Many Traders think they’re Trading Against the Market. Every time they celebrate a
winning trade they brag “I beat the Market! I’m the best!”
That couldn’t be further from reality. Just like the sailor can’t beat the sea, a trader
can’t beat the Market simply because the Market provides the Trading Environment he’s
trying to get his/her tiny bit of trading action from. Market is a tremendous anonymous
beast with as many faces as the people around the world that are part of it. This beast is
the biggest financial structure known to the world, with a daily volume of transactions
exceeding 4 TRILLION of DOLLARS. Are you sure you are trading “against” it?

Other Traders think they’re Trading Against their FX Broker. Well, if you haven’t done
your homework about picking a NON DEALING DESK Forex Broker, maybe the
opposite stands true and you don’t have a single chance to come out profitable from
this. If on the other hand, you have chosen your FX Broker wisely, it’s at least utopic to
believe you can “beat” your Broker, because your Broker makes money for every Trade
you Take, winning or not, and their revenues accrue not only from you but from all the
Clients using their Platform and Services.

Some Traders think they’ll soon break the code of Forex Trading and they’ll max out
their results to the extent of millions. So they believe they trade “against” the System
till they find the secret loophole to their “El Dorado”. That’s not just a fallacy….it’s a
dangerous delusion and if you are one of them, please do your reality-check NOW!
Today!

In Forex and in any other form of Trading, YOU ONLY TRADE AGAINST YOUR
“BAD” SELF. Or, to put it sweetly, it’s your neocortex (logical brain) trading against
your primitive prefrontal lobes (emotional brain).

“As LeDoux -a neuroscientist- points out , “You don’t need to know exactly what
something is to know that it may be dangerous.”…… The emergency route from eye or
ear to thalamus to amygdala (the control center of our emotional brain) is crucial: it
saves time in an emergency, when an instantaneous response is required.”
Emotional Intelligence – Daniel Goleman

When fear and panic drive the Markets to new directions, you must let your logical
brain do the analytical and synthetical thinking instead of joining the mad crowd.

I read somewhere that money is a shy and timid child while poverty is a shameless loud
shrew. If you chase money, it will run away from you. Poverty on the other hand chases
you all the time and you try to escape being in her vicinity. To get money come to you,
just like it happens with a timid child, you must earn its TRUST. To earn money’s trust,
you must prove your ability to manage it right focusing on the VALUE you can give to
other people’s lives rather to your own. Greed is a very bad advisor to that direction.

“Trade with an edge, manage risk, be consistent and keep it simple. The entire Turtle
training, and indeed the basis for all successful trading, can be summed up in these four
core principles.”
Way of the Turtle – Curtis M. Faith

To make more money with Forex Trading, you must become a better trader and that
equals being immune to greed which pulls you out of your plan and primary goals. To
achieve that, you must build a stronger character and must always keep in mind :

WHO YOU ARE ,

WHERE YOU ARE HEADING TO and
WHY.

“In the Market Environment you have to make the rules to the game and then have the
discipline to abide by these rules, even though the Market moves in ways that will
constantly tempt you into believing you don’t need to follow your rules this time. This
movement allows you to indulge in any illusion or distortion that suits you in any given
moment. Certainly you wouldn’t choose to feel pain (confronting your illusions about
the Market) if there is any reasonable information that would support the possibility of
your expectation being fulfilled.

In an unlimited environment, if you can’t confront the reality of a loss, then the
possibility exists for you to lose everything, in each and every trade. If you believe
trading is like gambling, it isn’t. In any gambling game you have to actively participate
to lose and do nothing to stop losing. In the Market Environment, you have to actively
participate to get into a trade and actively participate to end your losses. If you do
nothing, the potential exists to lose everything you own.”
The Disciplined Trader – Mark Douglas

Entering the world of Trading, you’ll hear about the story behind Wall Street legend
Richard Dennis, his disciples, -novice traders- the Turtles, and the trading techniques
that made them millionaires.

“The Turtles’ core axioms were the same ones practiced by the great speculators from
one hundred years earlier :

-Do not let emotions fluctuate with the up and down of your capital.
-Be consistent and even-tempered.
-Judge yourself not by the outcome, but by your process.
-Know what you are going to do when the Market does what it is going to do.
-Every now and then the impossible can and will happen.
-Know each day what your plan and your contingencies are for the next day.
-What can I win and what can I lose? What are probabilities of either happening?

However, there was precision behind the familiar-sounding euphemisms. From the first
day of training, William Eckhardt outlined five questions that were relevant to what he
called an optimal trade. The Turtles had to be able to answer these questions at all
times:

o What is it the state of the Market?

o What is the volatility of the Market?
o What is the equity being traded?
o What is the System or the Trading Orientation?
o What is the Risk Aversion of the Trader or Client?

There was no messing around in Eckhardt’s tone, as he suggested that these were the
only things that had any importance.”
The Complete Turtle Trader – Michael W. Covel

The very moment you set your foot in the Markets, start developing your own Trading
System by modeling what gives you the best results with minimum effort. And because
the Foundation of your Trading is YOURSEF, you must start by taking an inventory of
yourself.

“To have Market Success, you must develop a System that is right for you. In order to
develop such a System, you must care a careful self-inventory of your skills, your
temperament, your time, your resources, your strengths and your weaknesses.”
Trade Your Way to Financial Freedom – Van K. Tharp

I once heard the parable of the “Pool Effect” while attending a Web-Marketing
Conference, and the principle expressed in the parable, applies to all our Ventures.

If you’re swimming and playing in a pool, does it make any difference to you if the pool
is 10ft or 20ft deep? Would you have more or less fun? That’s right ! It doesn’t make
any difference.

So get to know which is the DEPTH of the POOL which suffices for you to enjoy your
life, and make a good use of the excess water adding value to other people’s lives.

In other words, know your goals and plan ahead how you’ll manage any excessive
amounts of money that will be the fruit of your success, in a way which will be
meaningful to you and will make a huge difference in other people’s lives. If you
choose to adopt this attitude, money will keep flowing to you almost effortlessly. But to
reach that point, you have to become your best possible self, fight your inner daemons
and tame your own “dragon”. Beyond that point, your responsibility towards other
people becomes significant and your role gets into a new frame.

Thank You!
Thank you for going through this book and I hope it has been a revealing and interesting
read for you. Most of all I hope it caused a stir in your thinking and will effectively
guide you through the fascinating world of Forex Trading using an amazing System that
gives you strong and reliable Signals to base your Trading Decisions upon, for big and
consistent profits. If you found it useful, please leave your REVIEW on book’s page on
AMAZON : http://www.amazon.com/dp/B008Y04WDY so that more people benefit
from it.

I apologize for my not so perfect English, Greek being my mother-language.

If you want the Book in PDF Format so you can Print it out, you can Download it from
here : http://payhip.com/b/qKiB

FXHOLIC Series of Books on AMAZON :

1. http://www.amazon.com/dp/B008Y04WDY : KISS FOREX : How to
Forex Trade out of Recession 50pips/Day (Keep It Simple Stupid Lessons)
(FXHOLIC) [Kindle Edition]
2. http://www.amazon.com/dp/B00C78K7VA : KISS FOREX : How to
Trade ICHIMOKU System's Profitable Signals | Keep It Simple Stupid Lessons
(FXHOLIC) [Kindle Edition]
3. http://www.amazon.com/dp/B00CA5P4SQ : KISS FOREX : How to
Trade Bollinger Bands for Big Profits | Keep It Simple Stupid Lessons
(FXHOLIC) [Kindle Edition]
 4. http://www.amazon.com/dp/B00CDFX8LI: KISS FOREX : How to Setup
Killer Trades with…FIBONACCI ! | Keep It Simple Stupid Lessons
(FXHOLIC) [Kindle Edition]

FXHOLIC Series of Books on Payhip :

1. http://payhip.com/b/qKiB : KISS FOREX : How to Forex Trade out of
Recession 50pips/Day (Keep It Simple Stupid Lessons) (FXHOLIC) [Printable
PDF Format]
2. http://payhip.com/b/dKTW: KISS FOREX : How to Trade ICHIMOKU
System's Profitable Signals | Keep It Simple Stupid Lessons
(FXHOLIC) [Printable PDF Format]
3. http://payhip.com/b/3hGr : KISS FOREX : How to Trade Bollinger Bands
for Big Profits | Keep It Simple Stupid Lessons (FXHOLIC) [Printable PDF
Format]
4. http://payhip.com/b/aj3C: KISS FOREX : How to Setup Killer Trades
with…FIBONACCI ! | Keep It Simple Stupid Lessons (FXHOLIC) [Printable
PDF Format]
5. http://payhip.com/b/0NbO: KISS FOREX : FXHOLIC’s Roadmap to
Consistent Profits…simplified | 4 Books Bundle [Printable PDF Format]

Out of every 100 Forex Traders, 90 lose money and soon are out of the Markets, 7
struggle for their survival in the Market’s environment and only 3 are true winners.
Apart from proper education, having a “Mentor” in FOREX Trading is an essential
element that can elevate you to this exceptional 3%. I can be your Coach and Mentor. If
you’re interested in hiring me, email me at : hi@forexid.com or hi@ssofia.com to
discuss further.

Happy pips!

Sofia Stavropoulou
RESOURCES
Books I found valuable
1. Emotional Intelligence – Daniel Goleman
2. Forex Patterns and Probabilities – Ed Ponsi
3. The Little Book of Currency Trading – Kathy Lien
4. Chart Your Way to Profits – Tim Knight
5. Getting Started in Forex Trading Strategies – Michael Duane Archer
6. Way of the Turtle – Curtis M. Faith
7. Trade Your Way to Financial Freedom - Van K. Tharp
8. The Complete Turtle Trader - Michael W. Covel

Sites I love visiting

1. BabyPips.com
2. ForexFactory.com
3. MarketStudies.com
4. ProfitSwings.com
5. FibonacciSecrets.com
6. Bloomberg.com/news/currencies/
 7. Bloomberg.com/markets/currencies/

My Forex Sites
1. Forexid.com : Forex Training Site. Here you can signup for my
Newsletter, my live Seminars -whenever Scheduled- and join our Group of Friends
in SKYPE Room at a tiny Monthly Membership Fee.
2. FXholic.com : Forex e-Magazine. Soon to be released on iPAD
NEWSSTAND. Here you can join the Community, and the big FXHOLIC Contest.

My Profile Page : about.me/ssofia

My Personal Blog : SSofia.com

Follow me on INSTAGRAM : @fxholic

Follow me on Twitter : @ssofia , @forexid, @fxholic
Special Acknowledgements
Special thanks go to Mr Jaron Veelo (GemCapital Tower, 13 Acropolis Ave & 2
Thoukididou Street, Nicosia 2006 Cyprus) for his courtesy to allow us republish part of
his article about Forex Brokers.

Credits to QUANTUM GLOBE INC. for their exceptional System, elements of which
are presented as “MARKET’S WAVES & FIBONACCI RETRACEMENT TOOL” in
the book.

Credits to Stephen A. Pierce CTA, for his excellent study on HVR + NR4/BI System
Setup, elements of which are presented as “NR4/BI Setup”
LEGAL DISCLAIMER
Trading foreign exchange and other on-exchange and over-the-counter products carries a
high level of risk and may not be suitable for all investors. The high degree of leverage
associated with such trading can result in losses, as well as gains. The past performance
of any trading strategy or methodology is not indicative of future results, which can vary
due to market volatility; it should not be interpreted as a forecast of future performance.
You should carefully consider whether such trading is suitable for you in light of your
financial condition, level of experience and appetite for risk, and seek advice from an
independent financial adviser, if you have any doubts.