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Copyright2012 Miroslav Brezinsky Limits of Liability / Disclaimer of Warranty: The author of this information and the accompanying materials has used his best efforts in preparing this course. The author makes no representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents of this course. He disclaims any warranties (expressed or implied), merchantability, or fitness for any particular purpose. The author shall in no event be held liable for any loss or other
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Table of Contents
Chapter One Chapter Two Chapter Three Chapter Four Chapter Five Chapter Six Chapter Seven Chapter Eight
An Introduction To Forex The History of Forex Forex Today Understanding Currency Conversion The Candlestick Chart Understanding Market Trends Forex Volatility And Market Expectation Your Forex Future
wave it, and the "mighty" U.S. dollar a big, and definite "bye bye." This was the beginning of the Forex market, as the World's other countries began establishing values for their currencies based on National economic conditions. The obvious consequence was a difference in the value of one countries currency, relative to another. Thus the phrase "exchange rate" entered our language. Followed Swiftly by "Foreign Exchange." Which, even more swiftly, was shortened to "Forex." These early days of Forex trading were more complicated. Due to the number of players on the European market, and the mind-numbing number of respective currencies. At that time you had the franc,the pound, the lira and countless others to contend with. However this situation was improved in 1992 with the emergence of the European Union, which established the Euro in 1999 as the currency of record across all of Europe. With the exception of Britian, still clinging to it's pound sterling.
With this simplification of the currency conversion process, the landscape of the Forex market became more easily travelled. Now, the main countries trade in five currencies: U.S. dollars, Australian dollars, British pounds sterling, the Euro, and the Japanese Yen. As you would expect from looking at these currencies, the major players include the majority of the European nations, the United States and the Asian markets. Japan is particularly present here. And Australia has also joined the Forex foray.
Now that you are armed with a basic understanding of currency conversion and market trends, your next task will be to get a basic idea of current rates of currency exchange. Happily, this is not difficult. And more good news it's free. You'll find more sources than you can possibly use on the internet. Comparing this information should give you a fairly accurate baseline from which to operate.
Forex-Speak
Like any specialized profession, Forex has a language all it's own. One of it's most unique and amusing words is the pip. Not, as you might imagine, referring to the seeds of an apple or lemon! In Forex trading a pip is the smallest fraction, or decimal, in which a currency can be traded. The U.S. dollar is often expressed to the hundredth of a cent (the fourth decimal place). Another commonplace word that has a different and unique meaning in the Forex Language is yard. As you might expect, it doesn't refer to that expense of grass behind your
house where your lawn chair resides. In Forex-Speak yard refers to the quantity of currency as opposed to it's value and is equivalent to one million units of the currency in question. So, while a yard of Euros and a yard of Yen are the same quantity, there is no equivalent value between the two.
Forex Trending
Getting into the Forex Market is a lot like a sailboat trip. The night before the voyage, you check the weather forecast. Look at the barometer. Note the condition of the sea. Pour over your charts. Check the boat to make sure everything's watertight. And, above all, that you have life preservers. It's the same with Forex. Except, sadly, there are no life preservers! So you'll want to make doubly certain your preparations are the best they can be. Or it is your wallet not your life that will feel the pain! Like your sailboat trip, you'll want to pour over charts. But of course they won't be the nautical variety. Solid information from experts is what you need. And it's easily obtained. Informed opinion in newspaper financial pages; listening to and comparing the advice of market analysts will prepare you for your Maiden Forex Voyage.
This financial intelligence will help you track marketing trends and make educated predictions about where the market may be headed. Giving you the ability to decide when to buy and when to sell.
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market takes an upswing, or whether it's better for you to act now.
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The second, and usually most unpredictable variable in currency exchange rates is the interaction of the currencies themselves. For example, a currency with a history of great stability may, inexplicably experience devaluation. There could be any number of reasons. But none of them matter. The end result the downturn is what you'll have to deal with. Again be a boy scout - be prepared! This is your best, and only antidode to market fluctation fever! Yes, it will take experience. Not to mention a certain amount of intestinal fortitude. You must act, when it is time, in your best judgement to act. Don't second guess yourself. Just do it! Yes, sometimes you'll be unsuccessful. Sometimes you'll make a bad call. But the more action you take, the more success you'll have in the long term. Isn't that so with anything? Bottom Line : Constantly changing currency conversion rates and market volatility ensure that there will be no certainties on any given day in the Forex Market. If you're good with that (and do your homework daily) Forex will be good for you.
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Then, when they're ready to start trading with their own money, they'll have (at least) a basic understanding of what works and what doesn't. Allowing them to begin their trading careers with confidence borne of experience.
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