Forex Trading Course

History

The purpose of this e-book is to introduce the forex market to you. As

with many markets, there are many derivatives of the central market such
as futures, options and forwards. For the purpose of this book I will only
be discussing the main market sometimes referred to as the Spot or Cash
market.

The word FOREX is derived from Foreign Exchange and is the largest
financial market in the world. Unlike many markets, the FX market is
open 24 hours per day and has an estimated $1.5 Trillion in turnover
every day. This tremendous turnover is more than the combination of all
the worlds' stock markets on any given day. This tends to lead to a very
liquid market and thus a desirable market to trade.

Unlike many other securities (any financial instrument that can be traded)
the FX market does not have a fix ed exchange. It is primarily traded
through banks, brokers, dealers, financial institutions and private
individuals. Trades are executed through phone and increasingly through
the Internet. It is only in the last few years that the smaller investor has
been able to gain access to this market. Previously, the large amounts of
deposits required precluded the smaller investors. With the advent of the
Internet and growing competition it is now easily in the reach of most
investors.

You will often hear the term interbank discussed in FX terminology. This
originally, as the name implies, was simply banks and large institutions
exchanging information about the current rate at which their clients or
themselves were prepared to buy or sell a currency. Inter meaning
between and Bank meaning deposit taking institutions normally made up
of banks, large financial institutions, brokers or even the government.
The market has progressed to such a degree that the term interbank now
means anybody who is prepared to buy or sell a currency. It could be two
individuals or your local travel agent offering to exchange Euros for US
Dollars. You will, however, find that most of the brokers and banks use
centralized feeds to insure reliability of quote. The quotes for Bid (buy)
and Offer (sell) will all be from reliable sources. These quotes are
normally made up of the top 300 or so large institutions. This insures
that if they place an order on your behalf that the institutions they have
placed the order with is capable of fulfilling the order.

Now although we have spoken about orders being fulfilled, it is estimated

that anywhere from 70%-90% of the FX market is speculative. In other
words, the person or institution that bought or sold the currency has no
intention of actually taking delivery of the currency. Instead, they were
solely speculating on the movement of that particular currency.

Currency 1989 1992 1995 1998 2001

US Dollar 90 82.0 83.3 87.3 90.4
Euro 37.6
Japanese 27 23.4 24.1 20.2 22.7
Yen
Pound 15 13.6 9.4 11.0 13.2
Sterling
Swiss Franc 10 8.4 7.3 7.1 6.1

Source: Bank For International Settlements http://www.bis.org. Extract

From The Triennial Central Bank Survey of Foreign Exchange and
Derivatives Market Activity.

As you can see from the above table over 90% of all currencies are traded
against the US Dollar. The four next most traded currencies are the Euro
(EUR), Japanese Yen (JPY), Pound Sterling (GBP) and Swiss Franc(CHF). As
currencies are traded in pairs and exchanged one for the other when
traded, the rate at which they are exchanged is called the exchange rate.
These four currencies traded against the US Dollar make up the majority
of the market and are called major currencies or the majors.

Market Mechanics

So now we know that the FX market is the largest in the world and that
your broker or institution that you are trading with is collecting quotes
from a centralized feed or individual quotes comprising of interbank
rates. So how are these quotes made up. Well, as we previously
mentioned currencies are traded in pairs and are each assigned a symbol.

For the Japanese Yen it is JPY, for the Pounds Sterling it is GBP, for Euro it
is EUR and for the Swiss Frank it is CHF. So, EUR/USD would be Euro-
Dollar pair. GBP/USD would be pounds Sterling-Dollar pair and USD/CHF
would be Dollar-Swiss Franc pair and so on. You will always see the USD
quoted first with few exceptions such as Pounds Sterling, Eurodollar,
Australia Dollar and New Zealand Dollar. The first currency quoted is
called the base currency. Have a look below for some examples.

Currency Symbol Currency Pair

EUR/USD Euro / US Dollar
GBP/USD Pounds Sterling/ US Dollar
USD/JPY US Dollar / Japanese Yen
USD/CHF US Dollar / Swiss Franc
USD/CAD US Dollar / Canadian Dollar
AUD/USD Australian Dollar / US Dollar
NZD/USD New Zealand Dollar / US Dollar

When you see FX quotes you will actually see two numbers. The first
number is called the bid and the second number is called the offer
(sometimes called the ASK). If we use the EUR/USD as an example you
might see 0.9950/0.9955 the first number 0.9950 is the bid price and is
the price traders are prepared to buy Euros against the USD Dollar.

The second number 0.9955 is the offer price and is the price traders are
prepared to sell the Euro against the US Dollar. These quotes are
sometimes abbreviated to the last two digits of the currency such as
50/55. Each broker has its own convention and some will quote the full
number and others will show only the last two. You will also notice that
there is a difference between the bid and the offer price and that is called
the spread. For the four major currencies the spread is normally 5 give or
take a pip (we will explain pips later).

To carry on from the symbol conventions and using our previous EUR
quote of 0.9950 bid, that means that 1 Euro = 0.9950 US Dollars. In
another ex ample if we used the USD/CAD 1.4500 that would mean that
1 US Dollar = 1.4500 Canadian Dollars.

The most common increment of currencies is the PIP. If the EUR/USD

moves from 0.9550 to 0.9551 that is one Pip. A pip is the last decimal
place of a quotation. The Pip or POINT as it is sometimes referred to
depending on context is how we will measure our profit or loss.

As each currency has its own value it is necessary to calculate the value of
a pip for that particular currency. We also want a constant so we will
assume that we want to convert everything to US Dollars. In currencies
where the US Dollar is quoted first the calculation would be as follows.

Example JPY rate of 116.73 (notice the JPY only goes to two decimal
places, most of the other currencies have four decimal places). In the case
of the JPY 1 pip would be .01 therefore

• USD/JPY: (.01 divided by exchange rate = pip value) so

.01/116.73=0.0000856 it looks like a big number but later we will
discuss lot (contract) size.

• USD/CHF: (.0001 divided by exchange rate = pip value) so

.0001/1.4840 = 0.0000673

• USD/CAD: (.0001 divided by exchange rate = pip value) so

.0001/1.5223 = 0.0001522

In the case where the US Dollar is not quoted first and we want to get to
the US Dollar value we have to add one more step.

• EUR/USD: (0.0001 divided by exchange rate = pip value) so

.0001/0.9887 = EUR 0.0001011 but we want to get back to US
Dollars so we add another little calculation which is EUR X
Exchange rate so 0.0001011 X 0.9887 = 0.0000999 when rounded
up it would be 0.0001.

• GBP/USD: (0.0001 divided by exchange rate = pip value) so

0.0001/1.5506 = GBP 0.0000644 but we want to get back to US
 Dollars so we add another little calculation which is GBP X
Exchange rate so 0.0000644 X 1.5506 = 0.0000998 when rounded
up it would be 0.0001.

By this time you might be rolling your eyes back and thinking do I really
need to work all this out and the answer is no. Nearly all the brokers you
will deal with will work all this out for you. They may have slightly
different conventions but it is all done automatically. It is good however
for you to know how they work it out. In the next section we will be
discussing how these seemingly insignificant amounts can add up.

More on Market Mechanics

Spot Forex is traditionally traded in lots also referred to as contracts. The

standard size for a lot is $100,000. In the last few years a mini lot size
has been introduced of $10,000 and this again may change in the years
to come. As we mentioned on the previous page currencies are measured
in pips, which is the smallest increment of that currency. To take
advantage of these tiny increments it is desirable to trade large amounts
of a particular currency in order to see any significant profit or loss. We
shall cover leverage later but for the time being let's assume we will be
using $100,000 lot size. We will now recalculate some examples to see
how it effects the pip value.

• USD/JPY at an exchange rate of 116.73

(.01/116.73) X $100,000 = $8.56 per pip

• USD/CHF at an exchange rate of 1.4840

(0.0001/1.4840) X $100,000 = $6.73 per pip

In cases where the US Dollar is not quoted first the formula is slightly
different.

• EUR/USD at an exchange rate of 0.9887

(0.0001/ 0.9887) X EUR 100,000 = EUR 10.11 to get back to US
Dollars we add a further step
 • EUR 10.11 X Exchange rate which looks like EUR 10.11 X 0.9887 =
$9.9957 rounded up will be $10 per pip.

• GBP/USD at an exchange rate of 1.5506

(0.0001/1.5506) X GBP 100,000 = GBP 6.44 to get back to US
Dollars we add a further step

• GBP 6.44 X Exchange rate which looks like GBP 6.44 X 1.5506 =
$9.9858864 rounded up will be $10 per pip.

As we said earlier your broker may have a different convention for

calculating pip value relative to lot size but however they do it they will
be able to tell you what the pip value for the currency you are trading is
at that particular time. Remember that as the market moves so will the
pip value depending on what currency you trade.

So now we know how to calculate pip value lets have a look at how you
work out your profit or loss. Let's assume you want to buy US Dollars and
Sell Japanese Yen. The rate you are quoted is 116.70/116.75 because you
are buying the US you will be working on the116.75, the rate at which
traders are prepared to sell. So you buy 1 lot of $100,000 at 116.75. A
few hours later the price moves to 116.95 and you decide to close your
trade.

You ask for a new quote and are quoted 116.95/117.00 as you are now
closing your trade and you initially bought to enter the trade you now sell
in order to close the trade and you take 116.95 the price traders are
prepared to buy at. The difference between 116.75 and 116.95 is .20 or
20 pips. Using our formula from before, we now have (.01/116.95) X
$100,000 = $8.55 per pip X 20 pips =$171.

In the case of the EUR/USD you decide to sell the EUR and are quoted
0.9885/0.9890 you take 0.9885. Now don't get confused here.
Remember you are now selling and you need a buyer. The buyer is biding
0.9885 and that is what you take. A few hours later the EUR moves to
0.9805 and you ask for a quote. You are quoted 0.9805/0.9810 and you
take 0.9810. You originally sold EUR to open the trade and now to close
the trade you must buy back your position. In order to buy back your
position you take the price traders are prepared to sell at which is
0.9810. The difference between 0.9810 and 0.9885 is 0.0075 or 75 pips.
Using the formula from before, we now have (.0001/0.9810) X EUR
100,000 = EUR10.19: EUR 10.19 X Exchange rate 0.9810 =$9.99($10) so
75 X $10 = $750.

To reiterate what has gone before, when you enter or exit a trade at some
point your are subject to the spread in the bid/offer quote. As a rule of
thumb when you buy a currency you will use the offer price and when you
sell you will use the bid price. So when you buy a currency you pay the
spread as you enter the trade but not as you exit and when you sell a
currency you pay no spread when you enter but only when you exit.

Leverage

Leverage financed with credit, such as that purchased on a margin

account is very common in Forex. A margined account is a leverageable
account in which Forex can be purchased for a combination of cash or
collateral depending what your brokers will accept. The loan (leverage) in
the margined account is collateralized by your initial margin (deposit), if
the value of the trade (position) drops sufficiently, the broker will ask you
to either put in more cash, or sell a portion of your position or even close
your position. Margin rules may be regulated in some countries, but
margin requirements and interest vary among broker/dealers so always
check with the company you are dealing with to ensure you understand
their policy.

Up until this point you are probably wondering how a small investor can
trade such large amounts of money (positions). The amount of leverage
you use will depend on your broker and what you feel comfortable with.
There was a time when it was difficult to find companies prepared to
offer margined accounts but nowadays you can get leverage from as high
as 1% with some brokerages. This means you could control $100,000
with only $1,000.

Typically the broker will have a minimum account size also known as
account margin or initial margin e.g. $2,500. Once you have deposited
your money you will then be able to trade. The broker will also stipulate
how much they require per position (lot) traded. In the example above for
every $1,000 you have you can take a lot of $100,000 so if you have
$5,000 they may allow you to trade up to $500,00 of forex.

The minimum security (Margin) for each lot will very from broker to
broker. In the example above the broker required a one percent margin.
This means that for every $100,000 traded the broker wanted $1,000 as
security on the position.

Margin call is also something that you will have to be aware of. If for any
reason the broker thinks that your position is in danger e.g. you have a
position of $100,000 with a margin of one percent ($1,000) and your
losses are approaching your margin ($1,000). He will call you and either
ask you to deposit more money, or close your position to limit your risk
and his risk. If you are going to trade on a margin account it is imperative
that you talk with your broker first to find out what their polices are on
this type of accounts.

Variation Margin is also very important. Variation margin is the amount of

profit or loss your account is showing on open positions. Let's say you
have just deposited $10,000 with your broker. You take 5 lots of USD/JPY
which is $500,000. To secure this the broker needs $5,000 (1%). The
trade goes bad and your losses equal $5001, your broker may do a
margin call. The reason he may do a margin call is that even though you
still have $4,999 in your account the broker needs that as security and
allowing you to use it could endanger yourself and him. Another way to
look at it is this, if you have an account of $10,000 and you have a 1 lot
($100,000) position. That's $1,000 assuming a (1% margin) is no longer
available for you to trade. The money still belongs to you but for the time
you are margined the broker needs that as security. Another point of note
is that some brokers may require a higher margin at the weekends. This
may take the form of 1% margin during the week and if you intend to
hold the position over the weekend it may rise to 2% or higher. Also in
the ex ample we have used a 1% margin. This is by no means standard. I
have seen as high as 0.5% and many between 3%-5% margin. It all
depends on your broker.
There have been many discussions on the topic of margin and some
argue that too much margin is dangerous. This is a point for the
individual concerned. The important thing to remember as with all
trading is that you thoroughly understand your brokers policies on the
subject and you are comfortable with and understand your risk.

Rollovers

Even though the mighty US dominates many markets, most of Spot Forex
is still traded through London in Great Britain. So for our next description
we shall use London time. Most deals in Forex are done as Spot deals.
Spot deals are nearly always due for settlement two business days day
later. This is referred to as the value date or delivery date. On that date
the counterparties take delivery of the currency they have sold or bought.

In Spot FX the majority of the time the end of the business day is 21:59
(London time). Any positions still open at this time are automatically
rolled over to the nex t business day, which again finishes at 21:59. This
is necessary to avoid the actual delivery of the currency. As Spot FX is
predominantly speculative most of the time the trades never wish to
actually take delivery of the actual currency. They will instruct the
brokerage to always rollover their position. Many of the brokers
nowadays do this automatically and it will be in their polices and
procedures. The act of rolling the currency pair over is known as
tom.next which, stands for tomorrow and the next day. Just to go over
this again, your broker will automatically rollover your position unless
you instruct him that you actually want delivery of the currency. Another
point noting is that most leveraged accounts are unable to actually
deliver the currency as there is insufficient capital there to cover the
transaction.

Remember that if you are trading on margin, you have in effect got a loan
from your broker for the amount you are trading. If you had a 1 lot
position your broker has advanced you the $100,000 considering you
may have only had a fraction of that amount on deposit. The broker will
normally charge you the interest differential between the two currencies if
you rollover your position. This normally only happens if you have rolled
over the position and not if you open and close the position within the
same business day.

To calculate the broker's interest he will normally close your position at

the end of the business day and again reopen a new position almost
simultaneously. You open a 1 lot ($100,000) EUR/USD position on
Monday 15th at 11:00 at an exchange rate of 0.9950. During the day the
rate fluctuates and at 22:00 the rate is 0.9975. The broker closes your
position and reopens a new position with a different value date. The new
position was opened at 0.9976 a 1 pip difference. The 1 pip deference
reflects the difference in interest rates between the US Dollar and the
Euro.

In our example your are long Euro and short US Dollar. As the US Dollar
in the ex ample has a higher interest rate than the Euro you pay the
premium of 1 pip. Now the good news. If you had the reverse position
and you were short Euros and long US Dollars you would gain the interest
differential of 1 pip. If the first named currency has an overnight interest
rate lower than the second currency then you will pay that interest
differential if you bought that currency. If the first named currency has a
higher interest rate than the second currency then you will gain the
interest differential.

To simplify the above. If you are long (bought) a particular currency and
that currency has a higher overnight interest rate you will gain. If you are
short (sold) the currency with a higher overnight interest rate then you
will lose the difference.

I would like to emphasis here that although we are going a little in-depth
to explain how all this works, your broker will calculate all this for you.
The purpose of this book is just to give you an overview of how the forex
market works.

Accounts

Although the movement today is towards all transactions eventually

finishing in a profit and loss in US Dollars it is important to realize that
your profit or loss may not actually be in US Dollars. From my observation
the trend is more pronounced in the US as you would expect. Most US
based traders assume they will see their balance at the end of each day in
US Dollars. I have even spoken with some traders who are oblivious to the
fact the their profit might have actually been in Japanese Yen.

Let me explain a little more. You sell (go short) USD/JPY and as such are
short USD and Long (bought) JPY. You enter the trade at 116.10 and exit
116.90. You in fact made 80,000 Japanese Yen (1 lot traded) not US
Dollars. If you traded all four major currencies against the US Dollar you
would in fact have gained or lost in EUR, GPY, JPY and CHF.

This might give you a ledger balance at the end of the day or month with
four different currencies. This is common in London. They will stay in that
currency until you instruct the broker to ex change the currency you have
a profit or loss into your own base currency. This actually happened to
me. After dealing with mainly US based brokers it had never occurred to
me that my statement would be in anything other than US Dollars. This
can work for you or against you depending on the rate of exchange when
you change back into your home currency. Once I knew the convention I
simply instructed the broker to change my profit or loss into US Dollars
when I closed my position. It is worth checking how your broker
approaches this and simply ask them how they handle it. A small point
but worth noting.

It's a sad fact that for many years the forex market largely remained
unregulated. Even today there are many countries that still don't regulate
companies that trade forex. London has been regulated for many years
and the US is now getting its act together and has also started regulating
companies dealing forex.

It was only recently in the US you could with no more than an Internet site
and a few thousand dollars set up your own forex operation and give the
impression that you were larger than you are. I am all for the
entrepreneurial flair and everyone need to start somewhere, but when
dealing with people's money it is imperative that the company you choose
is solid.
Preferably you want a company that is regulated in the country that it
operates, insured or bonded and has some kind of track record. As a rule
of thumb, nearly all countries have some kind of regulatory authority who
will be able to advise you. Most of the regulatory authorities will have a
list of brokers that fall with their jurisdiction and will give you a list. They
probably wont tell whom to use but at least if the list came from them
you can have some confidence in those companies. Once you have a list
give a few of them a call, see who you feel comfortable with, ask for them
to send you their polices and procedures.

If you live near where your broker is based, go spend the day with him. I
have been to many brokerages just to check them out. It will give you a
chance to see their operation and meet their team. If you choose to
purchase the rest of this course, we suggest a firm that we have worked
with for a long time that is reputable, regulated and financially stable.

This brings up another interesting point. When you open an account with
a broker you will have to fill out some forms basically stating your
acceptance of their polices. This can range from a 1 page document to
something resembling a book. Take the time to read through these
documents and make a list of things you don't understand or want
explained. Most reputable companies will be happy to spend some time
with you on this.

Your involvement with your broker is largely up to you. As a forex trader

you will probably spend long hours staring at the screen without talking
to anyone. You may be the sort of person who likes this or you may be
the sort of person who likes to chat with the dealer in the trading room.
You will normally get a call once a week or once a month from someone
in the brokerage asking if everything is OK.

Statements

Before we move on to account statements I just want to touch on

segregation of funds. In times past there was a danger that traders who
deposited money with their broker who did not segregate their clients
money from their own companies money were at some risk.
The problem arose if the broker misused the deposited funds to either
reinvest or otherwise manipulated these deposits to enhance their own
standing. There were also instances were the broker became insolvent
and many complications ensued as to what was the clients money and
what was the broker's money. With the advent of regulation most brokers
now segregate their clients funds from the brokerage funds. Deposits are
normally held with banks or other large financial institution that are also
regulated and bonded or insured. This protects your money should
anything happen to your broker. The deposit taking institution is
normally aware that these deposits are client's funds. Depending on
regulation in the particular country you live, each client may have their
own segregated account or for smaller depositors they may be pooled.
The point is that segregation of funds is a safeguard. Ask your broker if
your funds are segregated and who actually has your money.

Just as with a bank you should be entitled to interest on the money you
have on deposit. Some brokers may stipulate that interest is only payable
on accounts over a certain amount, but the trend today is that you will
earn interest on any amount you have that is not being used to cover
your margin. Your broker is probably not the most competitive place to
earn interest but that should not be the point of having your money with
him in the first place. Interest on the funds in your account and
segregation of funds all go to show the reputability of the company you
are dealing with.

In this section, I will discuss briefly the basic account statement. I have to
keep this basic as there are as many flavors of account statements as you
can imagine. Just about every broker has their own way of presenting
this. The most important thing is to know where you stand at the end of
each day or week. Just because your broker is internet based and has all
the bells and whistles does not mean they are infallible. Many of the
actions taken before information is imputed are still done by hand and if
humans are involved there will be a mistake at some point. The
responsibility lies with you. It is your money so make sure that all the
transactions are correct.
 FX Firm
New York
Statement for: Mr. Joe Bloggs
Statement Date: 16th January 2004
Account No: 123456

Summary of All Trades From: 15/07/02-17/07/02

Ticket Time Trade Value B/ Symbol Quantity Rate Debit Credit Balance
No Date Date S
123458 09:05 15/07/02 17/07/02 B EUR/USD 100,000 0.9850 $10,000
123459 13:01 15/07/02 17/07/02 S EUR/USD 100,000 0.9870 $200.00 $10,200
123460 14:05 16/07/02 18/07/02 S USD/JPY 100,000 116.85 $10,200

Total Equity $10,200

Margin Available $9,200
Margin Requirements $1,000
Current Position Short USD/JPY

Normally, there is a ticket or docket number to help identify the trade.

You will nearly always find the time and date of the trade. The value date
if the currency were to be delivered. You should always see the direction
of the trade, buy or sell (Long or Short).

The amount and rate you bought or sold. Balance to let you know if you
made a profit or a loss. You should also see any open positions you may
have and the margin requirements for that position. A lot of the more
modern systems will show your open position as though it has been
closed just to give you an up to the minute balance.

The Main Players

Central Banks and Governments

Policies that are implemented by governments and central banks can play
a major role in the FX market. Central banks can play an important part in
controlling the country's money supply to insure financial stability.

Banks
A large part of FX turnover is from banks. Large banks can literally trade
billions of dollars daily. This can take the form of a service to their
customers or they themselves speculate on the FX market.

Hedge Funds
As we know, the FX market can be extremely liquid which is why it can be
desirable to trade. Hedge Funds have increasingly allocated portions of
their portfolios to speculate on the FX market. Another advantage Hedge
Funds can utilize is a much higher degree of leverage than would typically
be found in the equity markets.

Corporate Businesses
The FX market mainstay is that of international trade. Many companies
have to import or exports goods to different countries all around the
world. Payment for these goods and services may be made and received
in different currencies. Many billions of dollars are exchanged daily to
facilitate trade. The timing of those transactions can dramatically affect a
company's balance sheet.

Man in the Street

The man in the street also plays a part in toady's FX world. Every time he
goes on holiday overseas he normally need to purchase that country's
currency and again change it back into his own currency once he returns.
Unwittingly, he is in fact trading currencies. He may also purchase goods
and services while overseas and his credit card company has to convert
those sales back into his base currency in order to charge him.

Speculators and Investors

We shall differentiate speculator from investors here with the definition
that an investor has a much longer time horizon in which he expects his
investment to yield a profit. Regardless of the difference both speculators
and investors will approach the FX market.

What Next

Well now we have a basic understanding of how the FX market works and
who the main players are, what next? You are now going to have to
decide the best way to trade the market. The two most common
approaches are that of fundamental analysis and technical analysis.

Fundamental analysis concentrates on the forces of supply and demand

for a given security. This approach examines all the factors that
determine the price of a security and the real value of that security. This
is referred to as the intrinsic value. If the intrinsic value is below the
market price then there is an opportunity to buy and if the market is
above the intrinsic price then there is an opportunity to sell.

Technical analysis is the study of market action, mainly through the use
of charts and indicators to forecast the future price of a security. There
are three main points that a technical analyst applies:

• Market action discounts everything. Regardless of what the

fundamentals are saying, the price you see is the price you get.
• The price of a given security moves in trends.
• The historical trend of a security will tend to repeat.

Of all of the above things the most important of them is point A. The
tools of the technical analyst are indicators, patterns and systems. These
tools are applied to charts.

Moving averages, support and resistance lines, envelopes, Bollinger

bands and momentum are all examples of indicators.

There are many ways to skin a cat as the saying goes but fundamental
and technical analysis are the two most popular ways of trading FX.

Fundamental Analysis

Our trading system is designed around technical analysis, however, there

are some fundamentals every trader should be aware of.

Fundamentals Every Trader Should Know

Currency prices reflect the balance of supply and demand for currencies.
Two primary factors affecting supply and demand are interest rates and
the overall strength of the economy. Economic indicators such as GDP,
foreign investment, and the trade balance reflect the general health of an
economy and are, therefore, responsible for the underlying shifts in
supply and demand for that currency. There is a tremendous amount of
data released at regular intervals, some of which is more important than
others. Data related to interest rates and international trade is looked at
the closest.

Interest Rates
If the market has uncertainty regarding interest rates, then any bit of
news regarding interest rates can directly affect the currency markets.
Traditionally, if a country raises its interest rates, the currency of that
country will strengthen in relation to other countries, as investors shift
assets to that country to gain a higher return. Hikes in interest rates,
however, are generally bad news for stock markets. Some investors will
transfer money out of a country's stock market when interest rates are
hiked, believing that higher borrowing costs will affect balance sheets
negatively and result in devalued stock, causing the country's currency to
weaken. Which effect dominates can be tricky, but generally there is a
consensus beforehand as to what the interest rate move will do.
Indicators that have the biggest impact on interest rates are PPI, CPI, and
GDP. Generally the timing of interest rate moves are known in advance.
They take place after regularly scheduled meetings by the BOE, FED, ECB,
BOJ, and other central banks.

International Trade
The trade balance shows the net difference over a period of time between
a nation’s exports and imports. When a country imports more than it
exports, the trade balance will show a deficit, which is generally
considered unfavorable. For example, if US consumers wanted Japanese
products, major automobile dealers might sell US dollars to pay for the
import of Japanese vehicles with yen. The flow of dollars outside the US
would then lead to a depreciation in the value of the US dollar. Similarly if
trade figures show an increase in exports, dollars will flow into the United
States due to increased confidence in the economy and then the value of
the US dollar would increase. From the standpoint of a national economy,
a deficit in and of itself is not necessarily a bad thing. However, if the
deficit is greater than market expectations then it will trigger a negative
price movement.
Psychology of Trading

Trade with a Disciplined Plan

The problem with many traders is that they take shopping more seriously
than trading. The average shopper would not spend $400 without serious
research and examination of the product he is about to purchase, yet the
average trader would make a trade that could easily cost him $400 based
on little more than a feeling or hunch. Be sure that you have a plan in
place before you start to trade. The plan must include stop and limit
levels for the trade, as your analysis should encompass the expected
downside as well as the expected upside.

Cut Your Losses Early and Let Your Profits Run

This simple concept is one of the most difficult to implement and is the
cause of most traders demise. Most traders violate their predetermined
plan and take their profits before reaching their profit target because
they feel uncomfortable sitting on a profitable position. These same
people will easily sit on losing positions, allowing the market to move
against them for hundreds of points in hopes that the market will come
back. In addition, traders who have had their stops hit a few times only to
see the market go back in their favor once they are out, are quick to
remove stops from their trading on the belief that this will always be the
case. Stops are there to be hit, and to stop you from losing more then a
predetermined amount! The mistaken belief is that every trade should be
profitable. If you can get 3 out of 6 trades to be profitable then you are
doing well. How then do you make money with only half of your trades
being winners? You simply allow your profits on the winners to run and
make sure that your losses are minimal.

Do Not Marry Your Trades

The reason trading with a plan is the #1 tip is because most objective
analysis is done before the trade is executed. Once a trader is in a
position he/she tends to analyze the market differently in the hopes that
the market will move in a favorable direction rather than objectively
looking at the changing factors that may have turned against your
original analysis. This is especially true of losses. Traders with a losing
position tend to marry their position, which causes them to disregard the
fact that all signs point towards continued losses.

Do Not Bet the Farm

Do not over trade. One of the most common mistakes that traders make
is leveraging their account too high by trading much larger sizes than
their account should prudently trade. Leverage is a double-edged sword.
Just because one lot (100,000 units) of currency only requires $1000 as a
minimum margin deposit, it does not mean that a trader with $5000 in
his account should be able to trade 5 lots. One lot is $100,000 and
should be treated as a $100,000 investment and not the $1000 put up as
margin. Most traders analyze the charts correctly and place sensible
trades, yet they tend to over leverage themselves. As a consequence of
this, they are often forced to exit a position at the wrong time. A good
rule of thumb is to never use more than 10% of your account at any given
time.

Forex Basics

The advantages to trading the Forex, especially for short term or day
traders is the liquidity. This means that you can trade any amount of
currency and someone will always be ready to buy or sell that currency.

Another advantage is the flexible trading hours. The Forex market is

available for trading 24 hours a day.

• Spot Rate-Current market price or cash rate for a currency pair.

• Settlement-All currencies trade in 2 business days with the

exception of the Canadian Dollar, which settles next business day.

• Bid-Price at which you can sell a certain currency.

• Ask (offer)-Price at which you can buy a certain currency.

• All currency is traded in pairs. The base currency compared to the

counter currency. The exchange rate provides the price of the base
currency relative to the counter currency.
How much is one US Dollar (base currency) worth in Japanese Yen
(counter currency). So, if the quote for USD/JPY was 118.54/57, this
would mean a currency trader would pay 118.57 Yen for 1 USD and would
receive 118.54 Yen for each USD when selling.

When the exchange rate rises, it means the base currency is getting
stronger against the counter currency. When the exchange rate falls, the
opposite is true.

When placing a currency order, if you are expecting a downtrend, you

would simply sell the pair and if you are expecting an uptrend, you would
buy the currency pair. The opposite order will close the position, so if
you sold to open the position, expecting the currency to drop, you would
buy back the currency to close the position. If you bought to open the
position, expecting the currency to rise, you would sell the currency to
close that position.

Pips-We briefly went over Pips in the introduction, but let's look at them
in more detail. Pip stands for price interest point and it represents the
smallest fluctuation in price for a given currency pair. For most
currencies, the ex change rate is carried out to the fourth decimal place.
In this case, a pip is 1/10,000t h of the counter currency or .0001.

If the ask price in the EUR/USD is 1.1315 and it goes up 1 Pip, the
resulting rate will be 1.1316. Some exchange rates like the USD/JPY are
only carried out to two decimal points. For these currency pairs, a pip is
worth 1/100t h of the counter currency.

Currency 1 Pip Contract Size Exchange Rate

(Example)
EUR/USD 0.0001 100000 1.1292
GBP/USD 0.0001 100000 1.6319
USD/JPY 0.01 100000 117.82
USD/CHF 0.0001 100000 1.3736
AUD/USD 0.0001 100000 0.6580
USD/CAD 0.0001 100000 1.3793
When the USD is the counter currency (EUR/USD), it is easier to calculate
the value of one pip and the pip value is static.

• EUR/USD 1 Pip=100,000 EUR x .0001 USD/EUR = US $10.00

When the USD is the base currency, an extra step must be performed to
convert the pip value into dollars. This is done by dividing by the current
foreign ex change rate.

• USD/JPY 1 Pip= 100,000 USD x .01 JPY/USD= 1,000 JPY/117.82

JPY/USD=US$8.49

Again, your broker will usually calculate all this for you, but it's good to
know.

Types of Orders

Market Orders
An order to buy or sell a currency at the current market price. When
placing a market order, the currency trader specifies the currency pair he
wants to buy or sell (EUR/USD, USD/JPY, etc) and the number of lots he is
interested in buying or selling.

Limit Orders
An order to buy or sell currency at a specified price or better. Trader
specifies currency and price.

Stop Orders
Order that is activated when a specified price is reached. A stop order
becomes a regular market order when the exchange rate reaches a
specified level. Stop orders can be used to enter the market on
momentum or to limit the potential loss of a position.

Protect a Position
A trader buys 100,000 (1 lot) of EUR/USD at 1.1305 in anticipation of an
expected 80 pip rally in the Euro. In order to protect himself from an
unmanageable loss, the trader places a stop loss order at 1.1285 (20 pips
below the current price). This way, if the Euro drops instead of rises
against the dollar, the trader's loss is limited to 20 pips or $200 in this
example.

Buy on Momentum
Trader expects the USD to rally vs. the Japanese Yen, but is hesitant to
enter a buy order because the USD/JPY is getting close to short term
resistance at 118. The trader instead places a buy stop order 10 pips
above the resistance level. His stop is thus placed at 118.10. Unless the
USD/JPY goes to 118.10, the order won't be activated. By doing this, the
trader is waiting for the USD/JPY resistance level to be broken before
entering the position.

Trailing Stop Orders

Trailing stop orders can be placed below the current market value to
allow profits to run. This is a great technique to use so that a trader does
not sell too early into a rally, but at the same time protects himself from
losing profits already gained.

For example, a trader buys the USD/JPY at 118.10 and it rises to 119.
The trader does not want to sell too early, but also does not want to lose
the profit he has already gained. So, a trailing stop loss an be set at say
118.70. If the market continues to move up, the order ill not be activated
and the trader participates in the future gain. Trailing stop orders would
then move up to lock in more gains. For example, if the market moved to
119.20, the trader can now move the stop to 119, protecting more gains
and still not selling in case the position continues to climb. If the market
moves down through the stop, the trade will be activated and the trader
will keep the gain and exit the position.

OCO (Once Cancels Other)

An OCO order is the simultaneous placement of two linked orders above
and below the current market price. If either one of the orders is
executed in the specified time period, the remaining order will
automatically be canceled.

Example: Price of the EUR /USD is at 1.1340. A trader wants to buy

200,000 (2 lots) if the rate breaks the resistance at 1.1395 or wants to
sell short if the price breaks the support at 1.1300. The trader can then
enter an OCO order made up of a buy stop order at 1.1405 (10 pips
above the resistance) and a sell stop order at 1.1290 (10 pips below the
support) if the EUR/USD breaks support and gets to 1.1290, the sell stop
order will be executed and the buy stop order at 1.1405 will be canceled.
If instead, the EUR/USD breaks resistance and reaches 1.1405, the
opposite will take place.

Example of a Currency Trade

The current bid/ask for EUR/USD is 1.0120/1.0126, meaning you can buy
the 1 EURO for 1.0126. Suppose you feel that the EUR will appreciate in
value against the dollar. To execute this strategy, you would buy Euros
with dollars and then wait for the exchange rate to rise. So, you make
the trade: Purchasing 100,000 EUR (1 lot) at 1.0126 (101,260) At 1%
margin, your initial deposit would be $1,102.60 (100,000 contract size x
1.0126 exchange rate x 1% margin rate). Now, you must sell Euros for
dollars to realize any profit. Let's say you were right and the exchange
rate rises to 1.0236. You can now sell 1 Euro for 1.0236. When you sell
the 100,000 Euros at the current EUR/USD rate of 1.0236, you will receive
$102,360 USD. Since you originally sold (paid) $101,260 USD, your profit
is $1,100 USD. You can really see the power of leverage with this ex
ample, profiting $1,100 on $101,260 worth of currency by only
depositing $1,102.60.

Risk Management

Once we have determined which currency pair to trade based on our

analysis, we will use a market order when initially buying or selling that
pair. Once the position has been initiated, we will set a stop loss order
immediately. This order will be below the current market price and will
limit our loss if the currency does not move in our favor. We suggest that
the stop loss order be placed at whatever level of loss you personally feel
comfortable with. A good rule of thumb is no more than 25% of your
initial deposit.

Example: The current bid/ask for EUR/USD is 1.0120/1.0126 and we feel

the Euro is going to rise against the USD. We enter a market order to buy
EUR/USD. Unless the market is moving extremely fast, we should get
filled around 1.0126. To figure out where to place the stop loss, let's
figure your initial deposit.

• 100,000 EURO x 1.0126 x 1% margin = $1,012.60

So, if you want to limit your loss to 25% of your initial deposit or $253.15
($1,012.60 x 25%), then you need to set a stop loss at about 25 pips
below the current market value. Each pip in this example is worth $10, so
$253.15/$10= approx. 25. So, we would immediately set a stop loss at
1.0101. If we sold at 1.0101 our proceeds would be $101,010 and we
originally bought for 101,260, so our net loss would be $250 or 25% of
our initial deposit.

Trailing Stop Orders

If the market moves in our favor, we will begin setting trailing stop orders
to protect our profit. Let's use the previous example. If the market
moves to 1.0135, then we could set a trailing stop order at 1.0130,
protecting a 4 pip move from 1.0126 to 1.0130 while at the same time
not selling to early if the market continues to rise. If the market moves
back down and through our stop loss at 1.0130, then we would sell for
$101,300 after buying for $101,260 or a net profit of $40. If the market
continues to rise, we would keep adjusting our trailing stop loss upward.
So, if the market went to 1.0145, we could set another stop loss at
1.0140. Let's say it rises one more time to 1.0150 and we set a trailing
stop loss at 1.0145 and then the trend reverses and trades through our
stop, selling the currency at 1.0145. Now, we sold for $101,450 and
bought for $101,260 for a net profit of $190 per contract. This way, we
didn't get out at the very top of the move, but we didn't sell early either.
If we would have sold outright when it rose to 1.0130, then we would
have only profited $40 and left $150 on the table.

Trading Strategy

Trends
Trend is simply the overall direction prices are moving -- up, down, or
flat.

The direction of the trend is absolutely essential to trading and analyzing

the market. In the Foreign Exchange (FX) Market, it is possible to profit
from UP and Down movements, because of the buying and selling of one
currency and against the other currency e.g. Buy US Dollar Sell Japanese
Yen ex. Up Trend chart.
Drawing Trendlines
The basic trendline is one of the simplest technical tools employed by the
trader, and is also one of the most valuable in any type of technical
trading. For an up trendline to be drawn, there must be at least two low
points in the graph where the 2nd low point is higher than the first.

A price low is the lowest price reached during a counter trend move.
Trend Analysis and Timing
Markets don't move straight up and down. The direction of any market at
any time is either Bullish (Up), Bearish (Down), or Neutral (Sideways).
Within those trends, markets have countertrend (backing & filling)
movements. In a general sense "Markets move in waves", and in order to
make money, a trader must catch the wave at the right time.
Drawing Trendlines
Channels
When prices trend between two parallel trendlines they form a Channel.
When prices hit the bottom trendline this may be used as a buying area
and when prices hit the upper trendline this may be used as a selling.

Support
Price supports are price areas where traders find that it is difficult for
market prices to penetrate lower. Buying interest in the dollar is strong
enough to overcome selling interest in the dollar keeping prices at a
sustained level.
Resistance
Resistance is the opposite of support and represents a price level where
selling interest overcomes buying interest and advancing prices are
turning back.

Retracements

50% Retracement.
There are also 33% and 66% Retracements.

Applying Technical Analysis

Currency charts can be used on an intraday basis (5-minute, 15 minute),

hourly, weekly, or monthly basis. The chart you study depends on how
long you plan on holding a position. If you are trading with a few hours in
mind you may want to look at 5-minute or 15-minute charts. If you plan
on holding a position for a couple of days, you may want to look at an
hourly, 4-hour or daily chart. Weekly charts and monthly charts compress
price movements to allow for much longer-range trend analysis.
Therefore, these currency charts give the technical trader a longer-term
context in which to conduct trade.

My Strategy

Although it is very important to learn the basics of technical analysis to

know when a general trend is occurring, I base my trading strategy on
candlestick charting. I am looking for very short term trends within a
trading day and often only lasting minutes. The patterns on the following
pages should be indicators used in day or very short term trading.

Introduction

Japanese rice traders developed candlesticks

centuries ago to visually display price activity over a
defined trading period. Each candlestick represents
the trading activity for one period. The lines of a
candlestick represent the opening, high, low and
closing values for the period.

The main body (the wide part) of the candlestick

represents the range between the opening and
closing prices. If the closing price is higher than the
opening price, the main body is white. If the closing
price is lower than the opening price, the main body
is black.

The lines protruding from either end are called wicks

or shadows.

Bearish 3

A long black body followed by several small bodies

and ending in another long black body. The small
bodies are usually contained within the first black
body's range.
A bearish continuation pattern.

Bearish Harami

A very large white body followed by a small black

body that is contained within the previous bar.

A bearish pattern when preceded by an uptrend.

Bearish Harami Cross

A Doji contained within a large white body.

A top reversal signal.

Big Black Candle

An unusually long black body with a wide range.

Prices open near the high and close near the low.

A bearish pattern.
Big White Candle

A very long white body with a wide range between

high and low. Prices open near the low and close
near the high.

A bullish pattern.
Black Body

This candlestick is formed when the closing price is

lower than the opening price.

A bearish signal. More important when part of a

pattern.
Bullish 3

A long white body followed by three small bodies,

ending in another long white body. The three small
bodies are contained within the first white body.

A bullish continuation pattern.

Bullish Harami

A very large black body is followed by a small white

body and is contained within the black body.

A bullish pattern when preceded by a downtrend.

Bullish Harami Cross

A Doji contained within a large black body.

A bottom reversal pattern.

Dark Cloud Cover

A long white body followed by a black body. The

following black candlestick opens higher than the
white candlestick's high and closes at least 50% into
the white candlestick's body.

A bearish reversal signal during an uptrend.

Doji

The open and close are the same.

Dojis are usually components of many candlestick

patterns. This candlestick
assumes more importance the longer the vertical
line.
Doji Star

A Doji which gaps above or below a white or black

candlestick.

A reversal signal confirmed by the next candlestick

(e.g. a long white candlestick would confirm a
reversal up).
Engulfing Bearish Line

A small white body followed by and contained within

a large black body.

A top reversal signal.

Engulfing Bullish Line

A small black body followed by and contained within

a large white body.

A bottom reversal signal.

Evening Doji Star

A large white body followed by a Doji that gaps

above the white body. The third candlestick is a
black body that closes 50% or more into the white
body.

A top reversal signal, more bearish than the regular

evening star pattern.
Evening Star

A large white body followed by a small body that

gaps above the white body. The third candlestick is
a black body that closes 50% or more into the white
body.

A top reversal signal.

Falling Window

A gap or "window" between the low of the first

candlestick and the high of the second candlestick.

A rally to the gap is highly probable. The gap should

provide resistance.
Gravestone Doji

The open and close are at the low of the bar.

A top reversal signal. The longer the upper wick, the

more bearish the signal.
Hammer

A small body near the high with a long lower wick

with little or no upper wick.

A bullish pattern during a downtrend.

Hanging Man

A small body near the high with a long lower wick

with little or no upper wick. The lower wick should
be several times the height of the body.

A bearish pattern during an uptrend.

Inverted Black Hammer

An upside-down hammer with a black body.

A bottom reversal signal with confirmation the next

trading bar.
Inverted Hammer

An upside-down hammer with a white or black body.

A bottom reversal signal with confirmation the next

trading bar.
Long Legged Doji

A Doji pattern with long upper and lower wicks.

A top reversal signal.

Long Lower Shadow

A candlestick with a long lower wick with a length

equal to or longer than the range of the candlestick.

A bullish signal.
Long Upper Shadow

A candlestick with an upper wick that has a length

equal to or greater than the range of the candlestick.

A bearish signal.
Morning Doji Star

A large black body followed by a Doji that gaps

below the black body. The next candlestick is a
white body that closes 50% or more into the black
body.

A bottom reversal signal.

Morning Star

A large black body followed by a small body that

gaps below the black body. The following
candlestick is a white body that closes 50% or more
into the black body.

A bottom reversal signal.

 On Neck-Line

In a downtrend, a black candlestick is followed by a

small white candlestick with its close near the low of
the black candlestick.

A bearish pattern where the market should move

lower when the white candlestick's low is penetrated
by the next bar.
Piercing Line

A black candlestick followed by a white candlestick

that opens lower than the black candlestick's low,
but closes 50% or more into the black body.

A bottom reversal signal.

Rising Window

A gap or "window" between the high of the first

candlestick and the low of the second candlestick.

A sell off to the gap is highly likely. The gap should

provide support.

Separating Lines

In an uptrend, a black candlestick is followed by a

white candlestick with the same opening price.
(uptrend)
In a downtrend, a white candlestick is followed by a
black candlestick with the same opening price.

A continuation pattern. The prior trend should

resume.

(downtrend)
Shaven Bottom

A candlestick with no lower wick.

A bottom reversal signal with confirmation the next

trading bar.
Shaven Head

A candlestick with no upper wick.

A bullish pattern during a downtrend and a bearish

pattern during an uptrend.
Shooting Star

A candlestick with a small body, long upper wick,

and little or no lower wick.

A bearish pattern during an uptrend.

Spinning Top

A candlestick with a small body. The size of the

wicks is not critical.

A neutral pattern usually associated with other

formations.
Three Black Crows

Three long black candlesticks with consecutively

lower closes that close near their lows.

A top reversal signal.

Three White Soldiers

Three white candlesticks with consecutively higher

closes that close near their highs.

A bottom reversal signal.

 Tweezer Bottoms

Two or more candlesticks with matching bottoms.

The size or color of the candlestick does not matter.

Minor reversal signal.

Tweezer Tops

Two or more candlesticks with similar tops.

A reversal signal.
White Body

A candlestick formed when the closing price is

higher than the opening price.

A bullish signal.

In addition to candlestick charting, we also look at another technical

indicator called the MACD. The MACD is the most used and probably the
most reliable technical indicator around. The reason we like it is because
it gives early signals which is good for fast moving markets and short
term trading. In our lesson regarding the MACD, we will use stock charts,
however, the indicator is read the same way for any instrument.

Developed by Gerald Appel, Moving Average Convergence Divergence

(MACD) is one of the simplest and most reliable indicators available.
MACD uses moving averages, which are lagging indicators, to include
some trend-following characteristics. These lagging indicators are turned
into a momentum oscillator by subtracting the longer moving average
from the shorter moving average. The resulting plot forms a line that
oscillates above and below zero, without any upper or lower limits.

The most popular formula for the "standard" MACD is the difference
between a security's 26-day and 12-day exponential moving averages.
This is the formula that is used in many popular technical analysis
programs and quoted in most technical analysis books on the subject.
Appel and others have since tinkered with these original settings to come
up with a MACD that is better suited for faster or slower securities. Using
shorter moving averages will produce a quicker, more responsive
indicator, while using longer moving averages will produce a slower
indicator, less prone to whipsaws. For our purposes in this article, the
traditional 12/26 MACD will be used for explanations. Later in the
indicator series, we will address the use of different moving averages in
calculating MACD.

Of the two moving averages that make up MACD, the 12-day EMA is the
faster and the 26-day EMA is the slower. Closing prices are used to form
the moving averages. Usually, a 9-day EMA of MACD is plotted along side
to act as a trigger line. A bullish crossover occurs when MACD moves
above its 9-day EMA and a bearish crossover occurs when MACD moves
below its 9-day EMA. The Merrill Lynch chart below shows the 12-day
EMA (thin green line) with the 26-day EMA (thin blue line) overlaid the
price plot. MACD appears in the box below as the thick black line and its
9-day EMA is the thin blue line. The histogram represents the difference
between MACD and its 9-day EMA. The histogram is positive when MACD
is above its 9-day EMA and negative when MACD is below its 9-day EMA.
MACD measures the difference between two moving averages. A positive
MACD indicates that the 12-day EMA is trading above the 26-day EMA. A
negative MACD indicates that the 12-day EMA is trading below the 26-
day EMA. If MACD is positive and rising, then the gap between the 12-day
EMA and the 26-day EMA is widening. This indicates that the rate-of-
change of the faster moving average is higher than the rate-of-change
for the slower moving average. Positive momentum is increasing and this
would be considered bullish. If MACD is negative and declining further,
then the negative gap between the faster moving average (green) and the
slower moving average (blue) is expanding. Downward momentum is
accelerating and this would be considered bearish. MACD centerline
crossovers occur when the faster moving average crosses the slower
moving average.
This Merrill Lynch chart shows MACD as a solid black line and its 9-day
EMA as the thin blue line. Even though moving averages are lagging
indicators, notice that MACD moves faster than the moving averages. In
this example with Merrill Lynch, MACD also provided a few good trading
signals as well.

1. In March and April, MACD turned down ahead of both moving

averages and formed a negative divergence ahead of the price
peak.
2. In May and June, MACD began to strengthen and make higher lows
while both moving averages continued to make lower lows.

And finally, MACD formed a positive divergence in October while both

moving averages recorded new lows. MACD generates bullish signals
from three main sources:
 1. Positive divergence
2. Bullish moving average crossover
3. Bullish centerline crossover

A positive divergence occurs when MACD begins to advance and the

security is still in a downtrend and makes a lower reaction low. MAC D
can either form as a series of higher lows or a second low that is higher
than the previous low. Positive divergence's are probably the least
common of the three signals, but are usually the most reliable and lead
to the biggest moves.
A bullish moving average crossover occurs when MACD moves above its
9-day EMA or trigger line. Bullish moving average crossovers are
probably the most common signals and as such are the least reliable. If
not used in conjunction with other technical analysis tools, these
crossovers can lead to many false signals. Moving average crossovers are
sometimes used to confirm a positive divergence. The second low or
higher low of a positive divergence can be considered valid when it is
followed by a bullish moving average crossover.

Sometimes it is prudent to apply a price filter to the moving average

crossover in order to ensure that it will hold. An example of a price filter
would be to buy if MACD breaks above the 9-day EMA and remains above
for three days. The buy signal would then commence at the end of the
third day.
A bullish centerline crossover occurs when MACD moves above the zero
line and into positive territory. This is a clear indication that momentum
has changed from negative to positive, or from bearish to bullish. After a
positive divergence and bullish moving average crossover, the centerline
crossover can act as a confirmation signal. Of the three signals, moving
average crossover are probably the second most common signals.
Even though some traders may use only one of the above signals to form
a buy or a sell signal, using a combination can generate more robust
signals. In the Halliburton ex ample, all three bullish signals were present
and the stock still advanced another 20%. The stock formed a lower low
at the end of February, but MACD formed a higher low, thus creating a
potential positive divergence.

MACD then formed a bullish crossover by moving above its 9-day EMA.
And finally, MACD traded above zero to form a bullish centerline
crossover. At the time of the bullish centerline crossover, the stock was
trading at 32 1/4 and went above 40 immediately after that. In August,
the stock traded above 50. MACD generates bearish signals from three
main sources. These signals are mirror reflections of the bullish signals.

1. Negative divergence
2. Bearish moving average crossover
 3. Bearish centerline crossover

Negative Divergence
A negative divergence forms when the security advances or moves
sideways and MACD declines. The negative divergence in MACD can take
the form of either a lower high or a straight decline. Negative
divergence's are probably the least common of the three signals, but are
usually the most reliable and can warn of an impending peak.

The FDX chart shows a negative divergence when MACD formed a lower
high in May and the stock formed a higher high at the same time. This
was a rather blatant negative divergence and signaled that momentum
was slowing. A few days later, the stock broke the uptrend line and MACD
formed a lower low.
There are two possible means of confirming a negative divergence. First,
the indicator can form a lower low. This is traditional peak-and-trough
analysis applied to an indicator.

With the lower high and subsequent lower low, the up trend for MACD
has changed from bullish to bearish. Second, a bearish moving average
crossover, which is explained below, can act to confirm a negative
divergence. As long as MACD is trading above its 9-day EMA or trigger
line, it has not turned down and the lower high is difficult to confirm.
When MACD breaks below its 9-day EMA, it signals that the short-term
trend for the indicator is weakening, and a possible interim peak has
formed.

Bearish Moving Average Crossover

The most common signal for MACD is the moving average crossover. A
bearish moving average crossover occurs when MACD declines below its
9-day EMA. Not only are these signals the most common, but they also
produce the most false signals. As such, moving average crossovers
should be confirmed with other signals to avoid whipsaws and false
readings.
Sometimes a security can be in a strong uptrend and MACD will remain
above it's trigger line for a sustained period of time. In this case, it is
unlikely that a negative divergence will develop. A different signal is
needed to identify a potential change in momentum.

This was the case with MRK in February and March. The stock advanced in
a strong up trend and MACD remained above its 9-day EMA for 7 weeks.
When a bearish moving average crossover occurred, it signaled that
upside momentum was slowing. This slowing momentum should have
served as an alert to monitor the technical situation for further clues of
weakness. Weakness was soon confirmed when the stock broke its
uptrend line and MACD continued its decline and moved below zero.

Bearish Centerline Crossover

A bearish centerline crossover occurs when MACD moves below zero and
into negative territory. This is a clear indication that momentum has
changed from positive to negative, or from bullish to bearish. The
centerline crossover can act as an independent signal, or confirm a prior
signal such as a moving average crossover or negative divergence. Once
MACD crosses into negative territory, momentum, at least for the short
term, has turned bearish.

The significance of the centerline crossover will depend on the previous

movements of MACD as well. If MACD is positive for many weeks, begins
to trend down and then crosses into negative territory, it would be
considered bearish. However, if MACD has been negative for a few
months, breaks above zero and then back below, it may be seen as more
of a correction. In order to judge the significance of a centerline
crossover, traditional technical analysis can be applied to see if there has
been a change in trend, higher high or lower low.

The UIS chart depicts a bearish centerline crossover that preceded a 25%
drop in the stock that occurs just off the right edge of the chart.
Although there was little time to act once this signal appeared, there were
other warnings signs just prior to the dramatic drop.

1. After the drop to trendline support , a bearish moving average

crossover formed.
2. When the stock rebounded from the drop, MACD did not even
break above the trigger line, indicating weak upside momentum.
3. The peak of the reaction rally was marked by a shooting star
candlestick (blue arrow) and a gap down on increased volume (red
arrows).
4. After the gap down, the blue trendline extending up from Apr-99
was broken.

In addition to the signal mentioned above, the bearish centerline

crossover occurred after MACD had been above zero for almost two
months. Since 20-Sept, MACD had been weakening and momentum was
slowing. The break below zero acted as the final straw of a long
weakening process.

As with bullish MACD signals, bearish signals can be combined to create

more robust signals. In most cases, securities fall faster than they rise.
This was definitely the case with UIS and only two bearish MACD signals
were present. Using momentum indicators like MACD, technical analysis
can sometimes provide clues to impending weakness. While it may be
impossible to predict the length and duration of the decline, being able
to spot weakness can enable traders to take a more defensive position.

After issuing a profit warning in late Feb-00, CPQ dropped from above 40
to below 25 in a few months. Without inside information, predicting the
profit warning would be pretty much impossible. However, it would seem
that smart money began distributing the stock before the actual
warnings. Looking at the technical picture, we can spot evidence of this
distribution and a serious loss of momentum.
 1. In January, a negative divergence formed in MACD.
2. Chaikin Money Flow turned negative on January 21.
3. Also in January, a bearish moving average crossover occurred in
MACD (black arrow).
4. The trendline extending up from October was broken on 4-Feb.
5. A bearish centerline crossover occurred in MACD on 10-Feb (green
arrow).
6. On 16, 17 and 18-Feb, support at 41 1/2 was violated (red arrow).

A full 10 days passed in which MACD was below zero and continued to
decline (thin red lines). The day before the gap down, MACD was at levels
not seen since October. For those waiting for a recovery in the stock, the
continued decline of momentum suggested that selling pressure was
increasing, and not about to decrease. Hindsight is 20/20, but with
careful study of past situations, we can learn how to better read the
present and prepare for the future.
One of the primary benefits of MACD is that it incorporates aspects of
both momentum and trend in one indicator. As a trend-following
indicator, it will not be wrong for very long. The use of moving averages
ensures that the indicator will eventually follow the movements of the
underlying security. By using exponential moving averages, as opposed
to simple moving averages, some of the lag has been taken out.

As a momentum indicator, MACD has the ability to foreshadow moves in

the underlying security. MACD divergence's can be key factors in
predicting a trend change. A negative divergence signals that bullish
momentum is waning and there could be a potential change in trend from
bullish to bearish. This can serve as an alert for traders to take some
profits in long positions, or for aggressive traders to consider initiating a
short position.

MACD can be applied to daily, weekly or monthly charts. MACD

represents the convergence and divergence of two moving averages. The
standard setting for MACD is the difference between the 12 and 26-
period EMA. However, any combination of moving averages can be used.
The set of moving averages used in MACD can be tailored for each
individual security. For weekly charts, a faster set of moving averages
may be appropriate. For volatile securities, slower moving averages may
be needed to help smooth the data. No matter what the characteristics of
the underlying security, each individual can set MACD to suit his or her
own trading style, objectives and risk tolerance.

One of the beneficial aspects of MACD may also be a drawback. Moving

averages, be they simple, exponential or weighted, are lagging indicators.
Even though MACD represents the difference between two moving
averages, there can still be some lag in the indicator itself. This is more
likely to be the case with weekly charts than daily charts. One solution to
this problem is the use of the MACD-Histogram. MACD is not particularly
good for identifying overbought and oversold levels. Even though it is
possible to identify levels that historically represent overbought and
oversold levels, MACD does not have any upper or lower limits to bind its
movement. MACD can continue to overextend beyond historical
extremes.
MACD calculates the absolute difference between two moving averages
and not the percentage difference. MACD is calculated by subtracting one
moving average from the other. As a security increases in price, the
difference (both positive and negative) between the two moving averages
is destined to grow. This makes its difficult to compare MACD levels over
a long period of time.

The AMZN chart demonstrates the difficulty in comparing MACD levels

over a long period of time. Before 1999, AMZN's MACD is barely
recognizable and appears to trade close to the zero line. MACD was
indeed quite volatile at the time, but this volatility has been dwarfed since
the stock rose from below 20 to almost 100.

An alternative is to use the Price Oscillator, which find the percentage

difference between two moving averages:
 • (12 day EMA - 26 day EMA) / (12 day EMA)
• (20 - 18) / 20 = .10 or +10%

The resulting percentage difference can be compared over a longer

period of time. On the AMZN chart, we can see that the Price Oscillator
provides a better means for a long-term comparison. For the short term,
MACD and the Price Oscillator are basically the same. The shape of the
lines, the divergence's, moving average crossovers and centerline
crossovers for MACD and the Price Oscillator are virtually identical.

Since Gerald Appel developed MACD, there have been hundreds of new
indicators introduced to technical analysis. While many indicators have
come and gone, MACD is an oscillator that has stood the test of time. The
concept behind its use is straightforward and its construction simple, yet
it remains one of the most reliable indicators around. The effectiveness of
MACD will vary for different securities and markets. The lengths of the
moving averages can be adapted for a better fit to a particular security or
market. As with all indicators , MACD is not infallible and should be used
in conjunction with other technical analysis tools.

In 1986, Thomas Aspray developed the MACD-Histogram. Some of his

findings were presented in a series of articles for Technical Analysis of
Stocks and Commodities.

Aspray noted that MACD would sometimes lag important moves in a

security, specially when applied to weekly charts. He first experimented
by changing the moving averages and found that shorter moving
averages did indeed speed up the signals. However, he was looking for a
means to anticipate MACD crossovers. One of the answers he came up
with was the MACD-Histogram.
The MACD-Histogram represents the difference between MAC D and the
9-day EMA of MACD, which can also be referred to as the signal or
trigger line. The plot of this difference is presented as a histogram,
making centerline crossovers and divergence's are easily identifiable. A
centerline crossover for the MACD-Histogram is the same as a moving
average crossover for MACD. If you will recall, a moving average
crossover occurs when MACD moves above or below the signal line.

If the value of MACD is larger than the value of its 9-day EMA, then the
value on the MACD-Histogram will be positive. Conversely, if the value of
MACD is less than its 9-day EMA, then the value on the MACD-Histogram
will be negative. Further increases or decreases in the gap between MACD
and its 9-day EMA will be reflected in the MACD-Histogram. Sharp
increases in the MACD-Histogram indicate that MACD is rising faster than
its 9-day EMA and bullish momentum is strengthening. Sharp declines in
the MACD-Histogram indicate that MACD is falling faster than its 9-day
EMA and bearish momentum is increasing.
On the chart above, we can see that MACD-Histogram movements are
relatively independent of the actual MACD. Sometimes MACD is rising
while the MACD- Histogram is falling. At other times, MACD is falling
while MACD-Histogram is rising.

MACD-Histogram does not reflect the absolute value of MACD, but rather
the value of MACD relative to its 9-day EMA. Usually, but not always, a
move in MACD is preceded by a corresponding divergence in MACD-
Histogram.

1. The first point shows a sharp positive divergence in MACD-

Histogram that preceded a bullish moving average crossover.
2. On the second point, MACD continued to new highs, but MACD-
Histogram formed two equal highs. Although not a textbook
positive divergence, the equal high failed to confirm the strength
seen in MACD.
3. A positive divergence formed when MACD-Histogram formed a
higher low and MACD continued lower.
4. A negative divergence formed when MACD-Histogram formed a
lower high and MACD continued higher.

Thomas Aspray designed the MACD-Histogram as a tool to anticipate a

moving average crossover in MACD. Divergence's between MACD and the
MACD-Histogram are the main tool used to anticipate moving average
crossovers. A positive divergence in the MACD-Histogram indicates that
MACD is strengthening and could be on the verge of a bullish moving
average crossover. A negative divergence in the MACD-Histogram
indicates that MACD is weakening and can act to foreshadow a bearish
moving average crossover in MACD.

The main signal generated by the MACD-Histogram is a divergence

followed by a moving average crossover. A bullish signal is generated
when a positive divergence forms and there is a bullish centerline
crossover. A bearish signal is generated when there is a negative
divergence and a bearish centerline crossover. Keep in mind that a
centerline crossover for the MACD-Histogram represents a moving
average crossover for MACD.

Divergence's can take many forms and varying degrees. Generally

speaking, two types of divergence's have been identified: the slant
divergence and the peak-trough divergence
A peak-trough divergence occurs when at least two peaks or two troughs
develop in one direction to form the divergence. A series of two or more
rising troughs (higher lows) can form a positive divergence and a series
of two or more declining peaks (lower highs) can form a negative
divergence. Peak-trough divergence's usually cover a longer timeframe
than slant divergence's. On a daily chart, a peak-trough divergence can
cover a timeframe as short as two weeks or as long as several months.

Usually, the longer and sharper the divergence is, the better any ensuing
signal will be. Short and shallow divergence's can lead to false signals
and whipsaws. In addition, it would appear that peak-trough divergence's
are a bit more reliable than slant divergence's. Peak-trough divergence's
tend to be sharper and cover a longer time frame than slant divergence's
The main benefit of the MACD-Histogram is its ability to anticipate MACD
signals.

Divergence's usually appear in the MACD-Histogram before MACD

moving average crossovers. Armed with this knowledge, traders and
investors can better prepare for potential trend changes.
MACD-Histogram can be applied to daily, weekly or monthly charts.
(Note: This may require some tinkering with the number of periods used
to form the original MACD; shorter or faster moving averages may be
required for weekly and monthly charts.) Using weekly charts, the broad
underlying trend of a stock can be determined. Once the broad trend has
been determined, daily charts can be used to time entry and exit
strategies.

On the IBM weekly chart, the MACD-Histogram generated four signals.

Before each moving average crossover in MACD, a corresponding
divergence formed in the MACD- Histogram. To make adjustments for
the weekly chart, the moving averages have been shortened to 6 and 12.
This MACD is formed by subtracting the 6-week EMA from the 12-week
EMA. A 6-week EMA has been used as the trigger. The MACD-Histogram
is calculated by taking the difference between MACD (6/12) and the 6-
day EMA of MACD (6/12).
 1. The first signal was a bearish moving average crossover in Jan-99.
From its peak in late Nov-98, the MACD-Histogram formed a
negative divergence that preceded the bearish moving average
crossover in MACD.
2. The second signal was a bullish moving average crossover in April.
From its low in mid-February, the MACD-Histogram formed a
positive divergence that preceded the bullish moving average
crossover in MACD.
3. The third signal was a bearish moving average crossover in late
July. From its May peak, the MACD-Histogram formed a negative
divergence that preceded a bearish moving average crossover in
MACD.
4. The final signal was a bullish moving average crossover, which was
preceded by a slight positive divergence in MACD-Histogram.

The third signal was based on a peak-trough divergence. Two readily

identifiable and consecutive lower peaks formed to create the divergence.
The peaks and troughs on the previous divergence's, although
identifiable, do not stand out as much.

The MACD-Histogram is an indicator of an indicator or a derivative of a

derivative. MACD is the first derivative of the price action of a security
and the MACD-Histogram is the second derivative of the price action of a
security. As the second derivative, the MACD-Histogram is further
removed from the actual price action of the underlying security. The
further removed an indicator is from the underlying price action, the
greater the chances of false signals. Keep in mind that this is an indicator
of an indicator. MACD-Histogram should not be compared directly with
the price action of the underlying security.

Because MACD-Histogram was designed to anticipate MACD signals,

there may be a temptation to jump the gun. The MACD-Histogram should
be used in conjunction with other aspects of technical analysis. This will
help to alleviate the temptation for early entry. Another means to guard
against early entry is to combine weekly signals with daily signals. There
will of course be more daily signals than weekly signals. However, by
using only the daily signals that agree with the weekly signals, there will
be fewer daily signals to act on. By acting only on those daily signals that
are in agreement with the weekly signals, you are also assured of trading
with the longer trend and not against it.

Be careful of small and shallow divergence's. While these may sometimes

lead to good signals, they are also more apt to create false signals. One
method to avoid small divergence's is to look for larger divergence's with
two or more readily identifiable peaks or troughs. Compare the peaks and
troughs from past action to determine significance. Only peaks and
troughs that appear to be significant should warrant attention.

Using Technical Analysis in a Strategy

The first lesson is to learn how to recognize these candle patterns on a

chart and know their interpretation as well as MACD signals.

When you are looking to enter a trade to buy currency to open a position
(bullish), follow the bullish patterns or follow the bearish bottom reversal
indicators, which could be a signal that the current bearish trend is
reversing. Please note that just because a trend is ending does not mean
it will totally reverse, it may trade sideways. The best method is to the
follow a bearish bottom indicator with a bullish signal to confirm it.

When looking to sell a currency to open a position (bearish), follow the

bearish signals or bullish top reversal indicators, which could be a signal
that the current bullish trend is reversing.

It is good practice to look at past charts for each major currency pair and
start identifying some of the signals and see what trend occurred after
each signal. This is also a good idea to identify MACD signals. You will
quickly see how powerful the MACD can be in determining future trends.

Note: you do not need multiple signals to enter or exit a trade, however,
the more signals you can identify the more likely of the outcome. In
other words, if you find a good bullish candlestick pattern and the MACD
has crossed over center, that would be a great signal.
Once you have a good feel for the signals and have practiced on past
charts, you are ready to trade. When you enter a position, remember to
use the risk management techniques discussed earlier. Set a stop loss
order immediately at a maximum loss amount you feel comfortable with.
If you get a reversing signal during a particular trade and the currency
has not moved through your stop loss, you may want to set a tighter stop
loss knowing there is a good chance of a trend reversal. The same is true
if the market moves in your favor and you begin setting a trailing stop
loss. If you see a trend reversing signal on the chart, you may want to
protect more profits by setting a tighter stop order.

Order Ticket

Once you have completed your chart analysis and are ready to trade, you
must fill out an order ticket with the brokerage firm that you have an
account. Here are the main components of the trading ticket:

1. Make sure the account number is correct. Normally, the brokerage

firm will have a drop down menu on the online order ticket with
your account numbers. If you have multiple accounts, make sure
you check that it is the correct account.
2. Order Type-Again, usually a drop down menu with the choices
listed. (market, limit, stop, OCO, etc.)
3. Symbol-Make sure you have the correct currency pair that you want
to trade.
4. Lot Size: Enter how many lots you would like to trade (1
lot=100,000)
5. Good Until-You can set if you want the order to be good until
canceled or good until the close of a particular exchange (i.e.:
Hong Kong)
6. Always double check the current quote. The bid and ask should be
displayed on the order ticket.
7. Once everything is entered correctly, click submit.
8. Once you submit the order, you will usually get a confirmation
page. Double check all of the information again. If it's all correct,
click submit and the order will be placed.

Brokerage
There are not as many choices for opening an account to trade currency
as there are for stocks and until recently, many of these firms were not
regulated. Unfortunately, it was very easy for a small firm to put up a
website and look like they were larger than they really were. Due to the
risk of currency trading and the large amount of capital traded each day,
you want to make sure that your brokerage firm is financially stable. I use
only brokerage firm to trade my own account and it's the only one I
recommend to my clients: North Finance, Saxobank, and Marketiva
(trading platform)

Recommended

I do really love pivot point as I find it very useful. Let me explain.

Fact is of the $1.5-$2 trillion a day traded on the forex market, roughly
50% of that money, is directly controlled by the large global trading
banks such as Citibank, Deutsche, UBS, JP Morgan Chase. Another fact is
the traders at these banks, the “Big Dogs” trading 1000+ lots per trade,
do use pivot points. Furthermore, many central banks around the world
use automatic computer systems to buy and sell forex as part of their
monetary policy, these systems “kick in” at pivot points, making them
even more important. In forex, when price bust through a pivot point the
“Law of Intertia” often kicks in.

The conclusion, yes in many ways pivot points are a self-fulfilling

prophecy yes, but does this really matter? The average daily range of the
EUR/USD is 76 pips i.e. $760/lot per day. If you can catch 20 pips/day for
only 1 lot that = $200. 5 days a week. You do the math, and remember
that's for only 1 lot.

I trade forex and am very fortunate to say I got into it directly through
Peter Bain's course, I'm one of the lucky ones. i.e. I didn't go spending
thousands dollars elsewhere on “BlackBox” systems only to not get
results or worse still get ripped off by the providers. Many of Peter's
members from around the world have spent thousands buying other
courses that haven't worked as well for them as pivot point trading does
now.
I'm extremely happy with Forexmentor. I still have a professional trader
as my mentor for share trading. I asked him about forex last year as I had
been thinking about moving into the forex market for some time. He
suggested I might like to talk to some other traders he has coached over
the years who had been in forex for a while. He himself trades forex but
prefers a Fibonacci methods, but he did say Peter Bain has a very good
reputation and has been in the forex industry for a long time. Anyway, as
suggested I speak to a couple of forex traders, many of whom had signed
up for Peter Bain's course.

The key to success is not to trust just one indicator or one system by
itself. In the forex world there is no Holy Grail! I respectfully submit that
if you're inclined to believe $395 is "not cheap", then you're probably not
looking at the forex market with the right attitude. Perhaps I should set
up an online store “SALE - Holy Grail forex systems - $99.95”. Actually
this leads me to a point. In the world of forex, there is the 'dumb money'
and the 'smart money'. The smart money, the 'big Dogs' always off-load
their positions to the 'dumb money' i.e. right now on the EUR the 'dumb
money' is Long and the 'Smart Money' Short. Peter's course actually
introduces you to a nifty little website run by a guy in the US who collates
XXXX data each week so you can see exactly what the 'dumb money' and
'smart money' are doing. I'd post the website address, it's freely available
on the www, but again it's not a Holy Grail so probably "useless" to some.
To me it's just an excellent resource, especially for position trading forex,
i.e. positions over days, weeks & months.

Whilst Peter's course is based on pivot points there is so much more to it.
He talks about looking for a "confluence" of events before "pulling the
trigger" i.e. is the trend up or down? Is there divergence to price on
MACD? Is there a valid trendline break? Is there an outside bar or other
reversal candle pattern? and yes where is price in relation to the pivot
points?

I trade the London session. Time and time again, I see 4 or 5 'green
lights' at the open. Price often hugs the pivot points, tests it out and
changes direction. Bagging 20 pips within the first 3 hours of the London
session is not a difficult task. You just have to have lots of tools in your
box that you can use to determine where price action is headed - pivot
points are just one such tool!

If you're serious about trading, as something potentially to pursue on a

full-time basis, ask yourself - is a $395 investment really a lot of money?
I'd suggest not, but you must view it as an investment. (Note - Don't get
into forex if you're needing to make cash & quickly. If you know what
you're doing you can make lots of cash $$$ quickly, but it you don't you'll
be trading on emotion and get skinned alive by the market)

I spent over $20k+ on a Masters Degree and not a single person I've ever
met said "you paid too much". Why? Because most educated people can
see the value on having a Masters degree. I respectfully submit $395
USD/CAD (more for us Aussies!) is very cheap given, as you pointed out
the 6 months of mentoring that comes included.

Peters course offers something no other course I've seen does. The
membership to his mentoring site. This mentoring takes the form a daily
review (about 1 hour per day) of price action for the EUR/USD, 4 days a
week. Peter himself does video commentary whilst you watch charts of
the previous days price action. I believe 1-on-1 forex coaching starts at
USD $200/hr, so that's 2 hrs worth of Peter's video commentary of daily
price action for the EURO. $395 course fee for 6 months of training or 2
hours worth. Easy answer.

The daily video commentary views have accelerated my learning. I was

not trading forex 5 months ago, and now I'm having 70-80% success
rate, bagging on average 200 pips a week (each pip = $10 USD)

I intend to turn to trading forex professionally in 3 years. Like any job, it

takes a while to gain competency so don't expect stella results over night.
If you think that way then $395 on an education you'll use for the rest of
your life is not even a consideration. Honestly I can't even understand
why I'm reinforcing the point.

There is lots of free information on the web, but that's the point. There's
arguably too much, and unless you know what works for others and what
doesn't you'll probably get no where. K.I.S.S. = Keep It Simple Stupid!
There are other pivot point systems out there to. Some work well, some
don't. Find what works for people and copy it. Why start with so much
free information that you've got no idea what to learn first with it first
only to find yourself going standing still.

PKFFW - If you're still not sold, contact me your details and I'll even send
you my course materials I received from Forexmentor. Why? Well I don't
need it any more. I watch the Peter's daily reviews 4 days a week, refer to
my own notes, trade logs etc. but that's it.

The key to trading anything - Shares, CFD's, futures, forex, even Pork
Bellies! and do it successfully, is to have a tested system, and keep it
simple. Trading requires you to put your emotions to sleep for a while.
Fact - more than 90% of 'traders' give up within the first 12 months,
namely because they can't control their emotions (it's all psychology). Of
course a few of those people who quite also want to get rich quick, so
they go looking for a Holy Grail (under $395 of course!) only not to find
it.

You get out of life what you put in, work hard and you'll get the rewards
so you can play hard later.

If you haven't already, check out the Forexmentor website I recommend

you do. The key to the value from Peter's course is the ongoing 'mentor'
aspect but I'll get back to that.