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IntroductionA Traders Mission and GoalIt is the mission of the trader to become a financially successful long-term trader. This can be achieved when the trader adopts and accepts The 10 Keys of Successful Trading. A trader must commit to live by three disciplines to become a successful trader.(1) A trader must believe in The 10 Keys to Successful Trading and merge them into his personality. Success is depends on creating a trading plan, and maintaining the discipline to TRADE THE PLAN!(2) A trader must be committed to continued education. Study technical analysis and the psychology of successful trading. A trader must make logical decisions, void of emotions while trading. Learn to trade in control, not out of control!(3) A trader must map out a sensible equity management plan to insure a return on investment. Trade no more than 20% of a margin account and expose no more than 5% of that account on any single trade.Levels of TradersLevel OneBeginner Trader - Studies and paper trades for a minimum of one month with pretend currency, gaining the experience required to establish a track record of profitable performance. (see MTI’s - demo trading account)Level TwoAdvanced Beginner - Trades one or two lots with real money, learning to overcome emotions and at the same time establish a track record of making money.Level ThreeCompetent Trader - Trades with control over his emotional distractions, utilizes proper equity management and achieves a financial return.Level FourProficient Trader – Trades are made utilizing confidence, education, experience and the trader achieves financial returns.Level FiveExpert Trader - Instinctively executes profitable trades without emotion.Chapter 1What is the FOREX?- FOREX = Foreign Exchange- You can trade 24 hours a day- The FOREX is larger than all other financial markets COMBINEDThe Foreign Exchange (FOREX) market is a cash (or “spot”) interbank market established in 1971 when floating exchange rates began to materialize. This market is the arena in which the currency of one country is exchanged for those of another and where settlements for international business are made.The FOREX is a group of approximately 4500 currency trading institutions, including international banks, government central banks and commercial companies. Payments for exports and imports flow through the Foreign Exchange Market, as well as payments for purchases and sales of assets. This is called the “consumer” foreign exchange market. There is also a “speculator” segment in the FOREX Companies, which have large financial exposures to overseas economies participate in the FOREX to offset the risks of international investing.Historically, the FOREX interbrain market was not available for small speculators. With a previous minimum transaction size and often-stringent financial requirements, the small trader was excluded from participation in this market. But today market maker brokers are allowed to break down the large interbank units and offer small traders the opportunity to buy or sell any number of these smaller units (lots). Commercial banks play two roles in the FOREX market:(1) They facilitate transactions between two parties, such as companies wishing to exchange currencies (consumers), and(2) They speculate by buying and selling currencies. The banks take positions in certain currencies because they believe they will be worth more (if “buying long”) or less (if “selling short”) in the future. It has been estimated that international banks generate up to 70% of their revenues from currency speculation. Other speculators include many of the worlds’ most successful traders, such as George Soros.(3) The third category of the FOREX includes various countries’ central banks, like the U.S. Federal Reserve. They participate in the FOREX to serve the financial interests of their country. When a central bank buys and sells its or a foreign currency the purpose is to stabilize their own currency’s value.The FOREX is so large and is composed of so many participants, that no one player, even the government central banks, can control the market. In comparison to the daily trading volume averages of the $300 billion in the U.S. Treasury Bond market and the approximately $100 billion exchanged in the U.S. stock markets, the FOREX is huge, and has grown in excess of $1.5 trillion daily.�
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