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ACFX eBook Guide A Newbie Guide to Forex

Table of Contents
Risk Disclaimer..................................................................................................................................................................................................3 Introduction ........................................................................................................................................................................................................4 1. Shop around before choosing your broker ....................................................................................................................5 2. Match your risk with your account size ...........................................................................................................................7 3. Dont get married with your losses ....................................................................................................................................8 4. Treat your losses as a price of learning how to trade ................................................................................................9 5. Always use hard stops and honor them when touched ......................................................................................... 10 6. Have a Trading Plan ............................................................................................................................................................... 12 7. Perfection through repetition ........................................................................................................................................... 13 8. Dont get emotional ................................................................................................................................................................ 14 Conclusion ........................................................................................................................................................................................................ 15 About AtlasCapital ........................................................................................................................................................................................ 16 Whats Next? .................................................................................................................................................................................................... 17

www.ACFX.com AtlasCapital Financial Services

ACFX eBook Guide A Newbie Guide to Forex

Risk Disclaimer
Users of ACFX.COM website and BLOG and any affiliated website note the content of the above analysis or any other information within the website do not at any time provide financial advice. The information is based on historical analysis and for educational purposes only. We recommend readers not to make any investment decision of any sort on the basis of the information above unless prior professional consultation is sought. Trading may not be suitable for all users of this website. Trading CFDs and Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Investors should ensure they fully understand the risks associated with leveraged CFD and FX trading before deciding to trade. Investors should carefully evaluate whether their financial situation is appropriate for such transactions.

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ACFX eBook Guide A Newbie Guide to Forex

Introduction
For many, the financial markets are a complete mystery and trying to understand how they function is made even more confusing by the plethora of different opinions and in the majority of cases made by so called misinformed experts that one will find in the financial media and internet. This e-book has been written for those who are interested in participating in the financial markets but do not know how to go about it. We are not going to sugar coat it for you. Trading is not easy and even experienced trader has bad days. Beginners through a combination of lack of discipline, inexperience and insufficient knowledge of the product they are trading get beaten up by the markets to the point where they are spent financially and psychologically. The newbie will blame the market, for their woes and become a statistic of another failed trader. With patience and by applying lots of discipline and through practice, trading can be a rewarding and enjoyable experience. This e-book will not tell you how to make millions but we hope will help you stay in the game long enough to make trading a success for you.

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ACFX eBook Guide A Newbie Guide to Forex

Shop around before choosing your broker


As a retail investor, the choice of which Forex Broker to use has never been better. As with financial markets, over supply can cause a decline in prices, the sheer volume of Forex Brokers offering their service has driven down the spreads available. The spread is a cost to the retail investor as it is the difference between the cost of purchase and cost of sale of a given product or currency pair.
All the information you need is at your finger tips

Fortunately, ACFX offers our clients some of the most competitive fixed spreads on the market and our clients take advantage of this by being able to profit much easier and quicker when compared to investors who use Forex Brokers who offer much wider spreads. ACFX offers tight and competitive fixed spreads. There are three account types designed to suit every kind of investor or trader. In order to make it simple and easy, ACFX provides 5 decimal places fixed spreads on the Classic and VIP accounts. In order to cater for professional and institutional investors, ACFX also provides an STP account with variable 5 decimal places spread. The table below illustrates the spreads on each account type:

For Classic & VIP Accounts


Classic EURUSD GBPUSD USDJPY USDCHF AUDUSD USDCAD 2.2 2.5 2.2 2.2 2.7 2.7 VIP 1.5 1.8 1.5 1.5 2 2

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ACFX eBook Guide A Newbie Guide to Forex

For STP Accounts


Product
Spot Forex Crude and Brent Gold Silver

Spreads
Variable from 0.7 pip Variable from 5 cents Variable from 60 cents Variable from 3 cents

The competitive pricing has not only forced down the spreads but has also forced down the level of overnight financing. Intraday traders who do not hold positions overnight need not worry about overnight financing. However, for those traders who hold positions overnight, the cost of financing has to be considered. What exactly is overnight financing? To put it simply, it is a minor interest payment charged to your account when for instance you decide not to close a position opened today. So why are you charged for holding a position overnight? It is to do with something called Currency Swaps and the time value of money. The borrowing of money has a cost which is called interest. You also probably know the rates of interest for each currency can vary. For instance the cost at the moment for borrowing Euros is more expensive then borrowing US$. So how does all this I hear you say affect me? To put it simply the cost of holding position in certain currencies could benefit you while holding others could mean you incur a cost. For this reason, Forex Brokers can charge you for holding positions overnight. So what is the mechanics of all this? How does it work? For example, you are an intraday trader who is holding a position where you have sold USD and bought JPY. Your position is going well and you decide to hold it overnight. You hold account in Euros and for this reason your Forex Broker has to borrow the JPY from somewhere. The swap is the difference the interest you receive for holding JPY and being short USD. Sometimes the swap is in your favor and sometimes it is not.

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ACFX eBook Guide A Newbie Guide to Forex

Match your risk with your account size


Many newbies to trading approach the business as a quick get rich scheme believing that a relatively small account size can be grown rapidly and with ease. Furthermore, leverage is a double edge sword which invariable destroys undercapitalized accounts. So how much do you need to start with as a newbie trader? This is actually a tricky question but the generally accepted answer is enough funding allocated to your account which will allow you to obtain your goals.
Before you right click, consider the risk you are taking

These goals should be both financial and educational. These being not only enough funds for you to survive losses that you will suffer which are referred to as drawdowns but also enough funds for you to stay in the game during the steep learning curve. Back to the question, the account size should reflect the risk you take on when you take a trade. The accepted level of risk is between 1 to 2% per trade. This may sound very low to many new to trading but if you marry the low levels of risk with a risk to reward ratio of at least 1 to 2, a disciplined trader can quickly grow an account. With a small account size of say euro 1,000.00 your stop level and leverage used may simple mean it is difficult to trade due to the level of risk. For example A 50 pip stop on a EUR 1,000.00 account where 1 lot is traded you will risk you around EUR 385.00 or 39% of your account. The same position taken on a EUR 20,000.00 account risk will drop to less than 2%. This does not mean you need to wait until you have EUR 20,000 to trade as ACFX offers our clients the ability to trade micro lots. Traders who fail to be sufficiently capitalized risk ruin by trading with excessive risk. ACFX understands this and is proud to announce our new micro lot campaign specifically launched for both newbies and small account size traders. We will explain the campaign at the end of the educational section of this webinar.

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ACFX eBook Guide A Newbie Guide to Forex

Dont get married to your losses


Isnt easy to look at a chart and say, I would have bought here and sold there. It is a little harder when one is asked, what you would do next without knowing what is to the left of the right edge of your monitor. So why is it that when you are in a position and the market is pointing in your direction for a large home run trade, you close the trade at first base for a tiny profit? Also why is it when you buy the euro because you know for sure that the market will go higher that the market crashes against you and the trade turns into a buy and hope position?

You are not tied to your trade

It is probably fairly obvious that cutting profits early and running your losses will have a bad effect on your account but unfortunately ones ego gets in the way of too many newbies who think they know more than the market does. In the previous chapter we talked about the level of risk one should take on when trading and the risk to reward ratio. Applying a 1 to 2% risk profile with at least a 1 to 2 risk to reward ratio will ensure that bad psychology does not take over your trading. Trading is not about being right all the time but managing your risk in a way that you lose small and win larger.

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ACFX eBook Guide A Newbie Guide to Forex

Treat your losses as a price of learning how to trade


However hard you have worked to perfect your strategy or worked on your discipline and trade management, every trader is going to lose occasionally on individual trades. For many newbie and experienced traders who have suffered a loss, bad psychology tells them to double up with a with an aim to recoup their losses or alternatively are left so fatigued by their last trading experience that they either reduce their size or stop clicking the mouse when the next good trade comes along. It is important that traders work hard on their strategy and know it inside out. By knowing your strategy intimately you are able with clarity and impartiality to assess if a loss is to be expected as part of the process or if the strategy you have chosen to trade needs further work. Every trade needs to be taken on its own merits but at the same time be considered as part of the bigger picture. This bigger picture is the strategy and its expected forward looking performance.

They say we learn from our mistakes. Thats why Im deliberately making as many as possible. Soon I will be a genius.

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ACFX eBook Guide A Newbie Guide to Forex

Always use hard stops and honor them when touched


The use of stops is not only essential if a trader wants to maintain their financial well being but when incorporated within an all encompassing trading strategy will give a trader an edge over traders who use little or no money management strategies.
If the reason you entered a trade is no longer valid then cut it

All professional traders must consider four factors before placing a position. 1. Through a logical and detailed market analysis gauge a market bias where a trader will wish to participate. 2. Identify a point of entry where a position will be placed. 3. Have an exit strategy where profits will be taken and ideally when markets trend strongly in your favor. 4. Identify a price level where when breached or touched the trader must close a losing position. Losses do and will occur. A traders analysis will never be 100% correct all the time. Therefore the ability to cut losses at appropriate levels is essential if any strategy is to have an edge. However, more often than not, the very act of taking a position will put you in a loss before the market turns in your direction. A trader needs to allow for this noise around the entry. Stops placed too close to the entry or at price level that is likely to be breached will most likely take a trader out of the position before it has time to turn profitable. As a guide a trader should risk no more than 2% of their account on any one trade. This percentage must of course have some relevance to the product they are trading and volatility at the time you place the order. If for instance you are a swing trader, your strategy may be that you are a buyer of weakness during periods of strong uptrends. The rule of thumb when swing trading is that you place your stop beneath the previous support level. Therefore a 2% stop strategy needs to allow for this as part of a traders overall strategy. Alternatively, during times of market news, increased volatility may mean that a 2% stop is impractical. A trader has to take a decision of decreasing their lot size or decide not to trade during these periods.
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ACFX eBook Guide A Newbie Guide to Forex

Placing stops does not only relate to protecting a traders capital base but can be used as part of an exit strategy which allows a trader to protect their profits. Planning ones exit prior to trading is always easier than trying to decide if you should hold on for more profits or close now. We have emphasized that placing stops is an important part of trading. Therefore understanding the mechanics of how they are actually placed on the platform is a must. The MetaTrader4 platform is simple to use and stop placement is relatively easy. The ACFX Dealing Department is available to walk through this with clients if they so require.

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ACFX eBook Guide A Newbie Guide to Forex

Have a trading plan


Trading should be treated as a business and as such should be approached in a serious and disciplined manner. Therefore to achieve your trading business goals, you need to have a well thought out and clear trading business plan. Your trading business plan should be short as a long trading plan although very precise and detailed may become unusable when applied to the real market.

Plan your next move

A trading plan can be based on technical and fundamental analysis or a combination of both. Although some traders are successful when trading with gut feelings, it is still important to try to quantify how one comes to that decision. In my view, the best trading plans should lend themselves to mechanical back testing with a goal to turn them into a simple step by step strategy or a well tested and robust grey or black box. Trading does require discipline but that this does not mean that you do not test out new ideas or lose your creative edge. ACFX encourages traders to try out their new ideas on the demo platform where positions can be taken with no risk.

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ACFX eBook Guide A Newbie Guide to Forex

Perfection through repetition


Trading has been described by many as a financial art form and as such lends itself to those with a natural ability to excel. Maybe this is true and some persons are by their personality, intellect or conditioning through their upbringing has a natural ability to be successful in trading. Natural ability may play a factor but was much more important is the discipline to study charts for hours on end and through study, research and hard work find strategies that work for you and again through self discipline and dedication perfect the strategy. The research and hard work in itself will stir ones creative juices and expand your mind and problem solving ability. Furthermore, you can test to destruction your creative ideas on a demo account until you have perfected the set up or trade it as a live micro lot with minimal exposure but with a good emotional edge to the entry.

Even Messi practices

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ACFX eBook Guide A Newbie Guide to Forex

Dont get emotional


We have mentioned bad psychology earlier in this e-book. Bad psychology and your emotions are the two main reasons why you may fail as a trader. If you are trading funds that you cannot afford to lose be it life savings or money you have borrowed, you are instantly at a disadvantage as every tick or pip that goes against you will make you worry and second guess your trading decision.

Making money is a serious business

Furthermore, although trading on a demo account and trading with real funds should mechanically be no different, however actually making the transition emotionally can be a huge barrier for a newbie trader. This again is down to the emotions. The very action of clicking the button on a live account and watching your balance rise and fall can play havoc with your emotions. Only by mastering your emotions do you stand a chance of sticking to your trading plan.

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ACFX eBook Guide A Newbie Guide to Forex

In conclusion
So you have read the e-book but you are probably not ready to take the market by the scruff of the neck just yet. However, what you have read should have given you a different view of how to tackle the exciting space that is trading. The e-book has covered areas such as being a disciplined and professional, what approach you need to have to be profitable and the best ways to reduce risk. Furthermore, we have discussed the benefits of low spreads, sufficient account capitalization, good practice in risk management and the use of stops and trade management. What is probably one of the key points to take away from this is that trading is a personal challenge. You too can be successful but this will only be from your own efforts. One should not rely on punts and tip sheets from other commentators. This e-book is a toe in the water for a newbie trader. ACFX is happy to announce that it will launch a comprehensive education offering to all our clients. We want our clients to be successful and will therefore offer them the tools to do this such as MetaTrader 4 platform and a too the point education Knowledge Base. Furthermore, our inexperienced clients can practice their technique and strategies by registering for a demo account and down loading our free to use MetaTrader 4 software. Our clients can also take advantage of our generous cash bonuses and opt to trade with micro lots as trading with real funds will give you an edge simulated trading cannot give you.

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ACFX eBook Guide A Newbie Guide to Forex

About Atlas Capital


AtlasCapital was incorporated in October 2007 and is headquartered in the centre of Limassol, Cyprus. The Company is a member of AtlasGroup, one of the most renowned business conglomerates in southeast Europe. AtlasGroup has twenty years of experience in investments and commercial banking, as well as real estate investments. Based in Cyprus and regulated by the Cyprus Securities and Exchange Commission we are fully compliant with the EU - MiFID Directive (Markets in Financial Instruments Directive). In AtlasCapital we aspire to fulfill our commitment to excellence offering our clients an array of services and innovative investment opportunities. We are pioneers in the field of GHG emissions trading in southeast Europe. AtlasCapital is the only investment firm in Greece and Cyprus that has full membership on BlueNext, the Paris-based Environmental Exchange that currently serves as the biggest platform for trading spot EUAs worldwide. In addition, AtlasCapital provides traditional services like global custodianship to investment banks, brokers-dealers, institutional investors, mutual funds, corporate entities and private investors. In January 2010, Atlas Capital FX (ACFX) - a trade name of Atlas Capital Financial services (ACFS) was formed in order to provide retail investors access to the currency, commodities, energies and equities markets.

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ACFX eBook Guide A Newbie Guide to Forex

Now you want to trade. What do you do next?


Opening an account has never been easier. Just follow the simple steps listed below. 1. Go to ACFX.com and click on Start Trading, Register for live account or simply just click on the below tab.

2. 3. 4. 5.

Fill in the Live Registration form. Carefully read the terms and conditions and click on the tabs agreeing your acceptance. Finally press the Submit Details tab. You will be contacted promptly by one of our dedicated Sales Managers.

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