Forex For Beginners

Table of Contents Foreward An introduction to the book, which explains who I am, why I wrote this book, and what I hope you will gain from reading it. Forex For Beginners is just that. I have made no assumptions about your knowledge of trading, or the forex world. I remember what it was like when I first started trading. People make assumptions when teaching or writing, and from there comes confusion. This is not to say this is a basic book – it is not. There are some complex ideas and principles included, but I hope explained in a simple, clear and concise way. It defines what I believe is the correct way to approach this market. Some may disagree, but my views are based on many years of experience. It is this experience that I would like you to benefit from as you begin your own successful trading journey. Chapter One : An Introduction To The Forex Market If you are new to the world of trading currencies, then the forex market can seem a daunting place. In this chapter, I explain how the market works, why we have this market, who are the market participants, and how you can join in and profit by trading currencies. This lays the foundations and explains some basic concepts. Chapter Two : The Principle Currencies Explained Here we start to dig down into the most popular currencies, as I explain their personalties, their characteristics, and some of the factors which drive these major currencies. These are the currencies that will form the basis of your forex trading career. Chapter Three : The Currency Quote Currency quotes can be extremely confusing for new traders, even more so since the introduction of the fifth decimal place. In this chapter I explain every aspect of currency quotes, from the spread, the bid and ask to the reasons yen currency pairs are quoted differently to all the others. In addition, I also explain the significance of the spread in relation to your approach to the market. Chapter Four : Forces That Drive The Foreign Exchange Markets Here I introduce the principle forces that drive this market. Some of these are market driven, and others are anything but! The forex market is one of the most manipulated, and it pays to know who is doing what, when, how and why! Chapter Five : Trading Approaches Most forex traders only ever consider two approaches to the market, technical and fundamental. I use three, and here I explain how and why. Relational analysis completes the picture and gives you a three dimensional view of the market which few traders ever consider! Chapter Six : The Power Of Volume Price Analysis (VPA) This approach to trading has formed the cornerstone of my own trading career, since I first started. I have used it in every market I have traded, and I hope that in introducing you to the concepts here, you will embrace it too. It is powerful, logical and once learnt, is never forgotten. When used in conjunction with the MT4 platform, it provides forex traders with a unique approach, and a technique to truly read the market and price action, before it happens. And in case you want to learn more, I have written a complete book on the subject, but let’s start here first! Chapter Seven : The Mechanics Of Trading This may sound like a chapter to skip perhaps – but don’t! I could have called this chapter The Mathematics Of Trading. Here I explain all the underlying maths of the trading account in terms of leverage and margin, and more importantly position sizing and risk management – something rarely explained to new traders. You may need to read this chapter two or three times. I make no apology for this. It is the one area that most forex traders fail to understand. Remember, the devil is in the detail. Understand the detail, and the rest will fall into place. Chapter Eight : Risk And Money Management This is the easy part of risk. The financial part. Here I explain how to quantify and manage the risk on every trade. If you could distill the essence of successful forex traders, much of that success could be traced back here. I explain in detail the rules you need to follow in order to manage the financial risk correctly. Chapter Nine : Your Trading Plan If having a trading plan with rules was all you needed to succeed, then the world would be full of successful traders. It isn’t. Many books will tell you that your trading plan should have entry and exit rules, set up rules and all sorts of other ‘mechanical rules’ to follow. Not here I’m afraid. There are one or two rules that you must have, but these are for your money management. Everything else is discretionary! Chapter Ten : The Psychology Of Trading The markets are driven by fear and greed, and in many ways trading is in fact a mind game. It is not about making or losing money, but in managing your mind. Manage your mind better than others around you, and you will succeed. In this chapter I explain how the mind works in the way it does, and from there I introduce some simple concepts which will help you to manage your emotions as you begin trading. Chapter Eleven : Choosing Your Broker Few forex traders ever understand what the broker does, or why, and then complain when things go wrong. In this chapter I explain the various category of broker, the good the bad and the ugly, and the questions you should ask, before you open your account. It is a minefield, and with even large brokers going bust, it pays to do your homework. Chapter Twelve : Choosing Your Currency Pairs In an earlier chapter, we looked at the individual currencies and their characteristics. Here I explain the currency pairs, how they behave, and the importance of the cross currency pairs as alternatives to the once traditional major currency pairs. I also introduce the concept of the currency matrix, which will help you to identify the true strength or weakness of a currency. Chapter Thirteen : Let’s Get Started A long chapter. This is where we put it all together with some real trades, which I have written up in real time and included in this chapter. It’s all here as I walk you through every step from the initial analysis, to closing the position, and everything in between. This will give you a real sense of the complete process from start to finish, from the initial analysis, to getting in, staying in, and getting out! In this chapter you will also discover the power of trading using multiple charts in multiple timeframes, which can also be applied to a currency strength indicator.