TACTICAL INVESTMENTS

Earn While U Sleep Part II

By Binni Ong

Forex Trading As A Second Income

1-2% of contract size) Use of leverage to enhance profit margin (an average movement of 50 points a day can equate a 25-50% return over capital outlay with the power of leverage) ESSENTIAL TOOLS TO GET SECOND INCOME IN FOREX TRADING To get you started on Forex Trading, I have listed four things to note that are needed to generate your second income. Starting Capital Brokers that you trade with Charting Software Forex Strategy (fitting the objective of generating second income yet maintaining your day job) STARTING CAPITAL Before we discuss how much you will need to get started, let me explain position sizes first. There are three types of sizes micro, mini and standard. Depending on your objectives and risk appetite, you could open a forex trading account with most Singapore-based brokers with about USD1,000. Some brokers dont have minimum amount requirement. There are many means to additional income work more hours,

THE NEED FOR ADDITIONAL INCOME The need for second income is burning in your heart. Inflation, rising cost, shrinking value of money and simply the desire to have more money are all reasons adding to the pressure of having supplementary income. take an additional job or pray for windfall. I prefer none of the above. In my journey to creating wealth, I recommend Forex Trading for your consideration. WHY FOREX TRADING? The most important reason that I prefer Forex trading is the low trading capital required. Forex is a leveraged product with margin requirement of 1% to 2% for most Singapore-based brokers. If you wish to trade an amount of $10,000 USD, the capital requirement is $200 USD (on a 2% margin). There are other reasons why currency trading is getting more and more popular 24 hour a day trading hours anyone with little time could find a slot to trade Huge trading volume by institutional players and business needs, leading to high liquidity and wide range movement Low margin requirement (in Singapore, the margin required is about

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Contract Type Micro Mini Standard

Unit Size 1000 units 10,000 units 100,000 units

Value per pip or point (USD) $0.10 $1.00 $10

Approximate margin required (USD) $20 $200 $2000

*The above calculation is based on 50 times leverage or 2 % margin # Movement in the Forex market is measured by pips which is essentially points CHOOSING A GOOD BROKER There are many factors to consider when choosing a broker. One of the most important things to consider is whether the forex broker is regulated by local authority and if the types of regulations apply to you. In my personal opinion, as a newbie, you are recommended to talk to a few shortlisted brokers and understand issues such as deposit and withdrawal of funds, use of trading platform and cost of trading (essentially spreads). My choice is always to speak to MAS regulated brokers. CHARTING SOFTWARE Most people trade forex using charting softwares. Your brokers will always provide you with platform to watch prices and track price movement. In the case where they do not, you can download a free software Metatrader from http://www.metaquotes.com. FOREX STRATEGY Let me introduce a very simple concept called the 8-21 moving average cross over strategy. The pair I recommended for beginners is the EUR/USD which has low spread and much liquidity. THESE ARE THE CONFIGURATIONS FOR THE CHART. We insert two Simple Moving Averages to the closing price one faster while the other slower. Here are the specifications: 8 Period SMA - Red color 21 Period SMA- Dark Blue color TIMEFRAME - H4 PAIR: EUR/USD RULES TO FOLLOW Buy when the 8 SMA cross above the 21 SMA Sell when the 8 SMA cross below the 21 SMA Stop loss target is always set at the horizontal level of the 21SMA. Take profit only when the moving averages cross over again. Use this strategy only when both moving averages are sloping either up or down for best results. This simple strategy does 2 things: It allows you to keep your stop loss tight thus limiting risk. It allows you to keep riding a trend for unlimited upside until there is a clear exit signal. How does this convert into dollars and cents? It depends on your position size. ILLUSTRATIONS 8-21 MOVING AVERAGE CROSS OVER STRATEGY

YOUR INVESTMENT INSPIR ATIONS

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If you are trading 1 micro contract with margin requirement of approximately USD 20, your return in 1 month is approximately 300%. Date opened 8/11/2011 18/11/2010 23/11/2010 Date closed 18/11/2011 23/11/2010 2/12/2010 Number of pips won/loss 316 ($71) $372 1 micro contract If you trading 1 mini contract, the margin requirement is USD 200 approximately. Date opened 8/11/2011 18/11/2010 23/11/2010 Date closed 18/11/2011 23/11/2010 2/12/2010 Number of pips won/loss 316 ($71) $372 1 mini contract If you are trading 1 standard contract, the margin requirement is USD 2,000 approximately. Date opened 8/11/2011 18/11/2010 23/11/2010 Date closed 18/11/2011 23/11/2010 2/12/2010 Number of pips won/loss 316 ($71) $372 1 mini contract FINAL WORDS Trading is high risk. One should not expect a sure win method or a sure win attitude to sustain in the world of trading. Few rules to remember always have stop loss, do not overtrade, and expect losses along the way. However, do keep your mind open while you are working hard to earn money, do let your money works for you. Duration 10 days 5 days 9 days Total P/L in USD$ $3160.00 ($710.00) $3720.00 $6170.00 Duration 10 days 5 days 9 days Total P/L in USD$ $316.00 ($71.00) $372.00 $617.00 Duration 10 days 5 days 9 days Total P/L in USD$ $31.60 ($7.10) $37.20 $61.70

Binni Ong is the Chief Trainer of TerraSeeds Market Technician Pte Ltd, an education provider in Strategies for Stocks, Forex, Futures, Commodities and Options Trading. An avid investor and trader, an entrepreneur and mother of 14 months baby, she generates income from her passion investing and trading stock, options and forex. As a trainer, her students enjoy her clear yet systematic teaching style. It is not surprising to find her presenting in many investing and trading seminars and courses held by banks, institutions and brokerages. She holds a Master of Business on a scholarship program with NTU and has been awarded Successful Entrepreneur 2010 and Spirit of Entre-prise Nominee 2007. She can be contacted via binni.ong@terraseeds.com Terry Tan has been trading the currency market for about 2 years. He was mesmerized by Forex Trading when he was just 20 years old. He trades with Tflow method and especially likes Earn While U Sleep strategy. Immediately after army, he joins TerraSeeds team.

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