LethalForexSystemver2 PDF

Lethal Forex System
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Copyright Lethal Forex System http://www.LethalForex.com
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Lethal Forex System

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LETHAL FOREX SYSTEM

By Alex Seeni
www.LethalForex.com

The Ultimate E-Book For All Forex Traders

- You always wanted a book that can teach you how to make money,
how about we teach you how to multiply your money, guaranteed.

WARNING:

This book contains highly practical and extremely effective methods
of income generation. This material is known to be of extremely
addictive nature. For the disciplined and willing, there are no limits to
the endless benefits of this system.
Proceed at your own risk . . .

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OBLIGATORY Legal Notice

The information services and resources provided in this e-book are
based upon the current Internet and Forex environment. The
techniques presented have been extraordinarily lucrative and
rewarding.

However, the internet and the forex industry are constantly changing,
the sites and services presented in this e-book may change, cease or
expand with time.

We hope that the skills and knowledge acquired from this manual will
provide you with the ability to adapt to inevitable income generation.

However, we cannot be held responsible for changes or losses that
may entail fro the applicability of these techniques.

Screenshots in the e-book are from publicly available trading
platforms and websites. All product names, logos and artwork are
copyrights of their respective owners.

None of the owners have been sponsored or endorsed in this
publication.

Also, the owners or authors of this e-book have not been endorsed or
supplemented in anyway for such publications.

While all attempts have been made to verify information provided, the
author assumes no responsibility for errors, omissions or contrary
interpretation of the subject matter herein.

The purchaser or the reader of this publication assumes responsibility
for the use of these materials and information. The system when
deployed with a fair amount of knowledge, experience and aptitude
can generate constant income, no guarantee of income is made as
the eventual exit points and risk appetite of the trader is not within
controllable means.

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The author reserves the right to make changes and assumes no
responsibility or liability whatsoever on behalf of any purchaser or
reader of these materials.

This property remains the property of the author, Alex Seeni, his
group of advisors, and the team at Lethal Forex and
www.LethalForex.com.

Reproducing or regurgitation of any part of this material by any
extent, via any medium, including photocopying, is not allowed unless
approved and declared permissible in written consent by the author.

Copyright 2008 Alex Seeni and www.LethalForex.com

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Table of Contents

Preface 8

FOREX Market Introduction 14
A Brief History Of The FOREX Market 14
Definition of FOREX 15

Different Sectors in the Forex Market 18
Currency SPOT Market 18
Currency Forward Market 18
Currency Futures Market 18

FOREX Market Players 20
Central Banks & Governments 20
Banks 21
Hedge Funds 21
Commercial Businesses 21
Investors & Speculators 22
You & Me 22

Factors That Cause Currencies To Fluctuate 23

Major Currencies In the FX Market 24

FOREX Market Mechanism 25

Types of Trading Transactions 26

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Types of Trading Orders 27
Market Order 27
Limit (Entry) Order 28
Stop (Exit) Order 29
Stop Limit Order 29
Trailing Stop Order 29
OCO (One Cancels Other) Order 30
Limit + Trailing Stop 30
Limit + Stop Market 30
Market + Trailing Stop 30
Stop + Trailing Stop 30

FOREX Lot Sizes and Leverage 31

The Advantages of FOREX Trading over Equity (Stock) Market 32
Liquidity 32
Opportunity to Profit in Both Directions 32
Simplicity 32
Small Trading Capital with High Profit Potential 32
High Leverage of 100:1 33
24 Hour Global Market 33
Demo Account 33

Fundamental And Technical Analysis 34
Fundamental Analysis 34
Technical Analysis 35

The System 36

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The FrameWork 40
Spread Size 40
Support Levels 41
Resistance Levels 41
Pivot Points 42
Risk Policy 43

The Market Movers 45
What They Are 45
How To Stay On Top of These Movers 46

Making the Money 47
2 Simple Systems to Make Money 47

System 1: Analyze and React 47
The Plan 47
The Risks and Benefits 49
Conclusion 50

System 2: Harvest And Reap 51
The Plan 51
Conclusion 54

Conclusion 55

Forex Glossary 56

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PREFACE

I had to slam the snooze button on my alarm once again. It was
one of those mornings that I didnt feel like getting up. You know, one
of those days. Within about 5 mins, modern technology on my alarm
clock had the snooze button flashing again and there was my alarm
clock blaring in my ears.

Dreary eyed, I peeked at the time to notice that it was 05:10 am
in the morning. Geez, it must be another trade session I thought. Half
asleep, I checked the trade schedule on my Palm Scheduler quickly.
Yes, true enough, it was.

I had the UK CPI y/y news release coming out in about 20
minutes. Dang, I didnt have time I panicked as I quickly headed off to
my study room to get my computer ready for this trading session.

Knowing that the trade was 20 minutes away and that the
opportunity to make some very lucrative returns on my trading
account, the adrenaline pump was enough to make me as wide
awake as an owl. Grabbing my cuppa coffee for more visibility, I
switched on my computer and logged into my trading portal.

I quickly popped up some key news indicators prior to this
report and noticing how the overall trend for GBP was, I understood
that the pound was having a downward trend. I also took note of what
the last numbers were for this trade and how the market reacted to it.
Everyone expected the news release to be at about 2.5% deviation.
The last release was at 2.2% deviation, so it was pretty weak a
difference and the market hardly reacted.

Anyway, I am not going to sulk on past history and quickly
loaded up my trading window. I had the first preference for a short or
sell signal as 1) the market was in overall slump mode and 2) the
general UK consumer index wasnt expected to do very well.

I had my ears on the ground so I somewhat could guess what is
going on, but in any case, I had both a short and long trade window
open, with my first reaction poised for the short trade.

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As all was in order, I waited. The clock ticked, 0527 0528.
0529, it was beginning to get pretty exciting at this point in time. Just
a quick glance to see all was set right, the clock ticked, 0530.

My news feed window flashed the report number and the
deviation was -6.2%. Holy Cow! This was a huge deviation and
almost on instinct, my finger clicked on the OK button to place a
short order. I was pretty impressed at how fast my fingers worked
themselves without me even thinking of what I was doing. I guess the
years of trading on news and numbers had become somewhat
instinctive.

I watched the pound drop against the dollar. It felt like a rock in
water, almost falling about 40 pips in the first 5 seconds, stumbled
across for another 15 pips before dropping again in free-fall mode
for another 20-25 pips. My target is usually to make about 50 pips per
trade like this and anything else above that is just additional
toppings.

Knowing that the market was pretty much in slump mode, I
knew that the overall momentum would carry the cable in that
downwards direction anyway.

So, I put in a stop loss at the 50 pips price mark from my entry
price, and watched the market move. The price level was only
dropping as expected. Pleased, I know it was a job well done and
even if the worst was to happen, which is if the market is to reverse, I
know my order will be stopped out with 50 pips profit.

Job well done, mate I told myself as I switched my monitor off,
and went back to sleep. I slept for the next 2 hours and got back to
see that the market has trickled along to a nice 131 pips profit. I
closed the trade and collected the profits before getting ready for the
next Canada Core CPI m/m trade which was at 08:30 am.

Dear FOREX trader, welcome to my life. You might probably
read this opening few paragraphs and think Yeah right or how I
wish. Whatever you might think or feel, it really doesnt matter.

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This is the way my trading life is and how it has been for the
last few years.

What really matters is, I am about to share with you the very
same knowledge and system. Welcome to Lethal Forex System dear
trader. What you are going to read and understand, may well change
that to can and will, indeed change your life, literally.

Honestly, if you think, this is easy, you are damn right it is.
However, it wasnt this easy at all at the start. In fact, it was very, very
difficult. Based on key signals and automated trading systems,

I embarked on my initial trading days and lost much of my
trading capital in my very first few trading months. That fluffed really
bad. Then I discovered that most of these service providers made
more money selling these service subscriptions to wannabe traders
like myself and not by making the trades themselves.

Disappointed, I went on an expedition to learn and master
FOREX trading myself. I attended expensive FOREX courses that
cost me an arm and a leg and an overloaded head-full of technical
BS.

Pardon my language, but that was how frustrated I was. Even
though I applied all the techniques and market analysis in the world, I
couldnt guess where the market was going. Yes, guessing is the
keyword. For after sometime, I felt that was exactly what I was doing;
guessing. After this stage with this industry, I was almost 2 years old
and disappointed, oh and broke as well.

I literally had wiped all my savings and was just living on faith
beyond hope, loads of self belief wiped out.

I thought that it was the moment to throw in the towel and get
myself a job. That was the one and only thing that could at least bring
me back to a human lifestyle (I was trading almost about 15 hours in
front of my computer everyday) and some income that I could use to
live healthily again.

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As I was literally sending in my job applications and looking
back, I wanted to see what I had learnt. At this point, I realized;

1) Most guaranteed and automated systems out there dont
work.
2) The authors and so called experts make more money selling
these crap stuff than actually trading with these strategies
themselves.
3) There is no holy-grail system
4) And almost 8 out of 10 the profitable trade positions I held
reversed or stopped out due to strong market trends.

As I was just writing point 4, something snapped.

I realized that there was a very peculiar coincidence that all or
most of the profitable trade positions I had, had very bad run-ins with
a certain timing. I then began to study all the timings of these erratic
market movements or U turn-around.

Somehow, they all happened at a fix time of the day and week.
This was too much to be a coincidence and I began digging up the
reason why this was happening. I then realized that there were key
market indicators and news releases that were released exactly at
these times.

Inquisitive, I began to find out all about all such reports and
market releases. I then went back in history and found all back logs of
news releases, market expectations and forecasts, how these
releases are related with the forecasts and how they move the market
when their relation to the expectations are questioned.

Questions, questions and more questions, that was all I had at
this point.

I kept digging and finding until I found perfect sources, relation
trends between market forecasts and releases and of course, the
final pip shake-up or shake-down for the end retail trader like myself.

I talked to the professional traders and bankers to understand
how it all worked together. I just couldnt get it all to stick together.

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Why does the market move at sometimes and not at others? Why are
some reports not as important? Why does the news reporting jobs in
the US cause the JPY based pairs to appreciate in value so much?
Why, why why?

I remember that I never rested until I got all my answers.
Eventually, I put together a skeletal plan that was to be my blueprint
for success. My dear reader, I remember that I went for almost 2 days
without sleep as I got this system together.

What really got me excited was that I was getting somewhere
and if, only IF I could get it as right as I think I should, perhaps I can
have a really reliable system? Perhaps I can make money
consistently? And perhaps I will be able to recover all my lost money
or maybe make even more?

I then realized that based on a pre-defined set of numbers, the
market goes through a knee-jerk reaction. Regardless of the strength
of the currency or its value increasing or decreasing, the market does
react and during these reactions there are heavy profits to be made.
I started subscribing to bank feeds and raw release reports that can
make a mathematician feel juvenile.

After plodding, floundering and finding my way through, I
realized that it wasnt so difficult after all. I just had to know what the
numbers will be, where they are going to go and simply park my
money therein. Once done, close my position and keep my trading
capital safe.

It sure wasnt perfect when it started and never will be, with the
market being so new and changing all the time.

However, what you have in front of you right now, has given me a
new life, the lifestyle that I yearn for and got me back my lost
confidence and self-belief. I now make about 100 pips on a very bad
month and at least about 500 pips on a good month and I leave the
rest to your imagination.

The best part is, I never, ever, risk losing my trading capital. I
do not want to belittle your trading account or brag about mine by

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giving actual monetary value to what I make, and based on your
trading account and risk appetite, you surely know the numbers up
there can be real magic.

Whatever you feel, or however sceptical you might be, you
have something very very special in your hands right now. Keep it
close, for you might be losing your sleep very soon too

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FOREX Market Introduction

A Brief History of the FOREX Market

n this opening exchange, we are going to
cover the basics of what the FOREX industry
is all about. If you are an expert or already
have sound knowledge in this field, you may
choose to skip this section. However, you may
still want to read this section as we share this
with you, so as to understand our style of explanation and any basic
keywords that you may pick up which we might be using throughout
the book. So, lets start the lessons going;

The word FOREX is derived from the words FOReign and
Exchange. When compared relatively with other trading and
commodity markets which are existent, the FOREX market is
relatively new.

In 1944, the gold standard was established. Major western
industrialized countries agreed to a pegging system at Bretton
Woods, New Hampshire where the par value of major currencies was
pegged vis--vis the US dollar. The US dollar was pegged at $35 to
one troy of gold.

In 1971, former US president Nixon d pegged all major
currencies with the US dollar directly and abandoned the gold
standard.

In 1978, after the second major devaluation of the US Dollar,
fixed exchange rate mechanism was replaced with the new free
floating rate system. This free floating rate system between difference
currencies of the world was the beginning of Forex.

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Definition of FOREX

ith more economies of the world becoming
highly interrelated, foreign currency
exchange has become a part of our lives. In
FOREX terminology, you will often hear the word
INTERBANK very frequently.

Traditionally, Interbank simply mean banks
and large institutions exchanging information about
the current rate at which their clients or themselves would sell or buy
a currency.

The market has evolved on to such a large degree that current
terms of Interbank can even also apply to anybody who is prepared to
buy or sell a currency. It could be two individuals, your retail money
changer offering to exchange Euros for US Dollars, Yen for Euro, and
Pound Sterling for Euro.

The Interbank Foreign Exchange market involves trading of one
economys currency against another economies currency. The
market is not a centralized location for trading activity which is
unlike other securities/commodities or fund derivatives.

FOREX is primarily traded through banks, financial institutions,
brokers, dealers and private individuals linked by internet, phones
and other means of instant communication. The direct Interbank
market consisting of dealers with currency settlement capabilities
acting as principle.

Trading volume among the dealers is the largest in this
particular market. Unlike other financial markets of the world, the
FORX market is open 24 hours every business day.

According to a survey complied by Basel-based Bank for
International Settlements (BIS), in April 2007, the average market
turnover in the global FOREX market reached an all-time record high
of US$3.2 Trillion daily!

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The report mentioned that Britain had the biggest global share
of US$1.3 Trillion in daily turnover, or 34.1%. The US came in second
with a daily trading volume of US$664 billion, or 16.6% share. The
third, fourth and fifth ranking went to Switzerland, Japan and
Singapore accordingly. Singapores FOREX market share of 5.8% or
US$231 billion was ahead of Hong Kong and Australia with about
4.4% global share.

The report attributed the increase to the wide spread utilisation
of brokers electronic trading platform by retail investors trading
FOREX currencies. This tremendous turnover is more than all the
worlds stock markets combined on any given day.

The FOREX market is a global 24 hours market. All the
participants can gain entry into the market very conveniently without
having to wait for the markets to open.

At any given time, there is always a major financial center open
where banks, dealers, hedge funds, corporations, individual investors
and speculators are trading currencies. Traders can trade during
anytime of the day or night, and do not have to wait for any markets
to be opened before placing their trades. Unlike other markets such
as stock or futures, traders would have to wait till the markets open
and trading is usually confined to about less than 7 hours a day.

Here is the standard operating hours of the various FOREX
markets in action throughout the day. Note that some major
currencys nations trading center will be open at anytime of the day.

FOREX Market
Center
Time Open
(GMT)
Time Close
(GMT)
Sydney, Australia 21:00 05:00
Tokyo, Japan 23:00 07:00
Frankfurt, Germany 07:00 15:00
London, Great Britain 08:00 16:00
New York, United
States
12:00 20:00

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Previously, the foreign exchange market was only available to
banks, fund managers and large financial institutions. However. it is
only during the last few years that individual(retail) investors have
been able to gain access to this market.

With the ongoing penetration of Internet technologies and
growing competition, it is now possible for small investors to
participate in this market at the comfort of their home or office as long
as they have an internet connection.

Due to the size and volume of the Interbank FOREX market, it
is also impossible for anyone to manipulate the market for any given
length of time. Due to its transparency and high volatile conditions
and strong interrelation with other economies, no single entity can
manipulate the market, let alone extort it for its own internal benefits.

Like the famous Enron and ExxonMobil scandals that we have
known, there cannot be any contortion of the numbers made in favour
of anyone. This allows for 1) for the market to be pure, transparent
and in a What You See Is What You Get delivery mode and
2)Investors or Traders confidence will never be questioned or
battered with the numbers being falsely reported.

The FOREX market works in the purest form of supply and
demand for currencies as a tradable commodity. Many financial
analysts often refer to the FOREX market as the most efficient market
in the world.

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Different Sectors in the Forex Market

Under the FOREX market, there are various types of FX
contracts which deal the same basic commodity; currencies.
However, the mode of distribution and how it is sold can differ. As
such, there have been countless variations of how the FOREX
industry deals with its currencies, and here are the most popular
versions, or more commonly called as contracts;

Currency Spot Market - This is where a spot
deal takes place between two parties who
deliver a certain amount of different currencies
to each other, based on an agreed exchange
rate, within two business days of the deal date.

Currency Forward Market -This is where a forward transaction
takes place between two parties who deliver a certain amount of
different currencies to each other, based on an agreed exchange
rate, past two business days of the deal date.

Currency Futures Market - This is a special case of the forward
market whereby the deals mature past the spot value date. Other
than these few sectors, there are also the Swap and Option market.

Of all the above sectors, the Currency Spot market is the
biggest with 48% market share followed by Currency Swaps at 39%.

The Spot market with almost half of the entire Forex market
share is where many private individuals speculated in the (Long)
buying and (Short) selling of currencies with the intention to make
profits.

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It is estimated that about 70%-90% of Spot Forex transactions
is speculative. In simple term - the individual or institution that buys or
sells the currency pairs has no intention of actually taking delivery of
the currency. In reality, their sole purpose is to speculate on the
movement of that particular currency to generate profits.

In recent years, many traders have switched from currency
Futures market trading to Spot market trading. The Spot market
offers better liquidity and generally has a much lower trading cost
than currency futures. Banks and brokers in the Spot market can
quote markets 24 hours a day.

Furthermore, the Spot Forex market is not burdened by
exchange and NFA (National Futures Association) fees, which are
generally passed on to the client in the form of higher commissions.
For these reasons, virtually all professional traders and institutions
conduct most of their Forex dealing in the currency Spot market
rather in the currency future market.

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FOREX Market Players

The FOREX Market, just like the commodities and Stocks
market, needs its various entities/parties to complete full circle on its
supply and demand. As we need to understand the various parties
roles in this industry, it is important to know who they are and how
their involvement will affect and most importantly, influence your
trade.

For example, a banks involvement to hold a $2 bn stake in the
USD will heavily influence the strength of all US pairs. If you might
hear some inside news of such large institutions interests fledgling in,
you might want to have a small stake in it to ride its momentum. This
is also called a bank flow trade.

On the flipside, a broker who places your trades might not
actually influence your stakes in the various currencies. However, he
might influence your actual placements with their spreads and spread
deviations on the various currencies, especially during news release
timings. The various factors like spread size, fill guarantee, leverage,
roll and hold pricings, might influence the placement of your trades.

To understand this further, let us look at the various parties
involved;

Central Banks And Governments;
These entities decide and implement monetary
policies. Governments and Central Banks can
play a major role in the FOREX market. Central
banks provide financial stability by controlling
the majority stake in a countrys money supply.

Some Central Banks themselves are run by the Governments.
Others, however, are privately owned or have stakes of private
investors and corporations. In other structural conglomerates, the
Central Bank itself will review, suggest and endorse all policies. The
Bank Of England(BOE) is one such example. However, over time,
due to liberalization of economies, some private banks might hold

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more stake in equity rather than the state or government owned
banks.

Often, the most powerful and market moving news releases are
released by the Governments. Key census data such as employment,
consumer price index, consumer confidence, inflation report, gross
consumer cost of living, interest rate revisions are some of the many
every day subjects that are analyzed by these reports and will greatly
influence the economy for which these reports are revolving around.

Banks- A major portion of the FOREX market turnover is from
banks. Banks with massive political affluence and large fund/portfolio
size can literally trade billions and billions of currencies each working
day. This could be in the form of hedging or for speculative purposes.

Hedge Funds- By now, you know that the FOREX market has
high liquidity which is a major attraction for traders.

What this means that there is always abundance of supply and
demand at any given time. For example, if you have traded stocks,
you know that if a certain listing has nationwide hysteria or severe
questions raised about its value, there will be a certain blackhole
where no transactions might take place. If you are an owner of such
stock, even though the value might be plummeting, you will be faced
with a desperate situation of having no buyers.

This kind of situations will rarely happen in the FOREX industry.
Hedge funds of late, which have heavily increased their stakes, have
begun to allocate big portions of their portfolios to speculate on the
FOREX market. Another advantage is a higher degree of leverage
available to them when compared to, say the stock market.

Commercial Businesses- The reason why the FOREX market
is in existence is primarily due to global trade. With the highly
interrelated global market place, goods are import or export to many
countries. Payment for these goods and services may be made and
received in different currencies. Billion and billions of dollars are
exchanges every day for trade facilitation.

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Investors and Speculators- In reality, there isnt much
difference between the two. Both are in the market hoping to make a
profit by exploiting the movement of a currency pair. Each has their
reason to believe why a currency will move up or down and in turn
long or short a currency accordingly. The speculators naturally hold
the currencies for very short intra-month or intra-week and some
even intra-day trades, whereas the investors mainly park a bigger
portion of their funds onto a certain currency for long term returns.

You and Me- When we have our holiday aboard, we would
naturally need to buy that country's currency and upon return, revert
back to our own nations currency. When we are using our credit
cards to make overseas purchases, our credit card company has to
convert our purchases into out home currency in order to bill us. Not
knowingly, we are already trading currencies.

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Factors that causes Currencies to Fluctuate

he cumulative buy and sell of a
currency causes it to move its value
(price level) either up or down. There
are numerous factors that cause the
fluctuation of exchange rate.

Central bank monetary policy and balance of payment.

A countrys political, social and fundamental economic
environment such as economic growth rate, inflation and
interest rate.

The inflow and outflow of capital between nations - be it
physical or portfolio flow.

Central bank abilities to back up it own currency during
speculative attack will provide faith to calm its currency price.

Speculative activities by professional currency manger
with billions of funds can also sometimes move the market.

Movement of the currencies is ultimately dictated by demand
and supply. However, predicting demand and supply is not as simply
one would think.

T

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Major Currencies in the Forex Market

he US Dollar, Japanese Yen and the Euro
dollar combined are the three major
economic powerhouses.

The US dollar is the most dominant currency in
the world of todays Interbank FOREX market.
The four next most traded currencies are the Euro dollar, Japanese
Yen, British Pound and Swiss Franc.

Though the FOREX market comprises of almost all the
currencies on earth, these four currencies traded against the US
Dollar make up the majority on the FOREX market and are known as
major currencies or the majors.

Currencies are traded in pairs and each currency has its own
symbol. For the Euro dollar- it is EUR, Japanese Yen - it is JPY, for
the Pounds Sterling - it is GBP, and for the Swiss Franc - it is CHF.
Hence, 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 and so forth.

You will always see the USD quoted first with few exceptions
such as Pounds Sterling, Euro Dollar, Australia Dollar (AUD) and
New Zealand Dollar (NZD. The first currency quoted is called the
base currency.

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FOREX Market Mechanism

ow that you know that the FOREX market is
the largest traded market in the world, you
would need to understand how the markets
are traded and what you would need to
understand before you can buy and sell these
pairs.

In other words, how are these currency pairs quoted on the
FOREX market? You will see two numbers on all FOREX quotes.
The first number is called the bid and the second is known as the
offer price.

Take for instance EURUSD. You will see 1.4394/1.4395 as the
numbers quoted against this pair. The first quote of 1.4394 is the bid
price, the price where traders are prepared to buy Euro against the
USD Dollar. The second number 1.4395 is the offer or ask price and
it is the price traders are prepared to sell the Euro against the US
Dollar. You will notice that there is a difference between the bid and
the offer price. This difference is known as the spread. Based on the
previous EUR/USD quote, you know that 1 Euro is equal 1.4394 US
dollar.

The way profit is measured of a currency is by pips or point.
PIP is the acronym for price interest point. If the EUR/USD moves
from 1.4394 to 1.4444 that is 50 pips. A pip or 0.001 is the last
decimal place of a currency quotation with the exception of the
Japanese Yen and Yen cross rates. A price movement for the
USD/JPY from 111.10 to 111.60 will be 50 pips.

N

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Types of Trading Transactions

n Spot market trading, there are two main
types of trading transactions.

A long (Buy) position is one which a FOREX
trader buys a currency pair at one price and
aims to sell it later at a higher price. For
example, Long EURUSD will basically mean that the trader is
anticipating that the Euro will rise against the US dollar.

A short (Sell) position is one in which the trader sells a currency
in anticipation that it will depreciate. For example Short EURUSD
will basically mean that the trader is anticipating that the Euro will fall
in value against the US dollar. In this scenario, the investor will
benefits from a declining Euro.
I

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Types of Trading Orders

o trade the Forex market, traders must
understand the different types of trading
orders. The following are some of major
types of orders that can be found on most
Broker trading platforms if one would to trade
FOREX.

Market Order - A market order is an instant order to buy or sell
a currency pair at the current market price and is used to enter or exit
the market quickly. Under normal market conditions without any
major news release, market orders are executed instantly.

When a market order is placed, what the trader means is simply
to buy or sell the currency pair at whatever price it is traded now.
Under extreme volatile market conditions, especially during major
news release, it is possible for a trader to get re-quoted. This means
that when prices are moving very rapidly, the price requested may
have already changed by the time the order is received by the broker.

If this occurs, the broker will immediately provide the trader with
a new quote price. The trader can then choose whether to execute
the re-quoted price. However, it is important to note that under no
circumstances will a market order be filled unless the trader agreed to
it.

This might prove disadvantageous to the trader, especially
during news releases which is a very important in our trading systems
as you will discover later.

When there is a re-quote and a new price is given, the trader
will need time to think about the offer and choose to accept it. By this
time, a good 5-15 seconds might have passed and a good portion of
the price movement might have already been lost, if not lost
altogether.

T

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Therefore, some brokers offer an option to get filled at whatever
price that can be filled at. This is also not good, as some spread sizes
or market movements can kill your trade.

For example, if a news release that you want to trade on moves
the market by about 50 pips at the immediate moment and perhaps
another 10 pips on the slow increase, if you get a very bad fill by your
broker, you might get filled at the top of the spike, right after the 50
pip movement. In that case, you may only see a 10 pip profit overall.
Worse still, if the market retraces, you might be in for a loss.

Somewhere right between
these 2 situations is getting a
market order, with a
predefined market range. On
the figure on the left for
example, you can see the
market range is set to 5 pips.
This means that when you
place an order, you do not
want to be filled if the price
has moved more than 5 pips in either direction.

This will ensure you get filled in the shortest time possible
without exposing yourself during volatile trade conditions.

Limit (Entry) Order - A limit order is a pending order placed to
buy or sell a currency pair at a specific price to enter the market. The
order essentially contains two variables; price and time. The trader
specifies a price at which he is willing to buy or sell a certain currency
pair and also specifies the time that the orders should remain active.

A limit order can be entered either as GTC (Good till cancelled)
or GFD (Good for the day). A GTC (Good till cancelled) order will
remain active in the market until the trader decides to cancel it. The
broker will not cancel the order at any time. It is the responsibility of
the trader to remember that he or she possesses the order. A GFD
(Good for the day) order will remains active in the market until the
end of the trading day.

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As the currency Spot market is an ongoing market, the end of
day will normally be 00.00 GMT on the broker trading platform.

Stop (Exit) Order - A stop exit order is a pending limit order
placed to buy or sell a currency pair at a certain price in order to exit
the market. The order contains the same two variables, price and
time. The difference between a limit order and a stop exit order is that
stop order is used to exit the market whilst limit order sole purpose is
for entering the market. In FOREX trading, Stop orders are used for
various reasons.

To exit the market once a trade loss has occurred. Use to exit
the market when the trader profit target is reach.

Stop Limit Order - Works like a Stop Market order with one
major exception. Once the order is activated (by the currency trading
at or through the stop price), it does not become a market order.
Instead, it becomes a limit order with a specified limit price.

The advantage of this order is that you set a specified price at
which your order can be filled. The disadvantage is that your order
may not be filled. In this case, your exposure to loss will continue until
the position is closed.

Some trading strategies encourage a reasonable gap between
your submitted stop and limit prices when using the stop limit order
type. This is done as a precaution to increase the probability of
execution of your limit price, and decrease the potential bypassing of
your submitted limit price.

Trailing Stop Order - Ride a currency's price trend, profit from
its movement, and limit your downside risk without constantly
monitoring prices. Trailing stops move your stop price with the price
of the currency and are server-sided, protecting you in the event you
lose Internet connection.

When using the trailing stop, it is important to know the answer
to the question: How do you represent a pip per currency pair? A pip

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is the last digit to the right of the decimal point in the current currency
dealing rate.

OCO (One Cancels the Other) Order - An OCO order is a
mixture of two limit and/or stop orders. Two orders with price and time
variables are placed above and below the current price. When one of
the orders is executed the other is automatically cancelled.

Limit + Trailing Stop - Initially places a limit order on one side
(either a buy or sell) and upon execution, places an opposite trailing
stop on the other side (either a buy or sell). Note: Upon execution of
any part of the initial limit order, an equal trailing stop is placed with
your pre-set offset.

Limit + Stop Market
Initially places a limit order on one side (either a buy or sell) and upon
execution, places an opposite stop market order for the other side
(either a buy or sell).

Market + Trailing Stop
Initially places a market order (either a buy or sell) and upon
execution, places an opposite trailing stop (either a buy or sell). Note:
Upon execution of any part of the initial market order, an equal trailing
stop is placed with your pre-set offset. You must know how to
represent the number of pips of your trail offset per currency pair.

Stop + Trailing Stop
Initially places a Stop Market order (either a buy or sell) and upon
execution, places an opposite Trailing Stop order (either a buy or
sell).

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Forex Lot Sizes and Leverage

ne of the major advantages in FOREX
currency is the high degree of leverage
provided by most brokerage companies.

In the Forex market, depending on which
brokerage firm a trader use, $1,000 could
control $100,000 in currency. Such controlling
leverage of 100 to 1 is quite typical of most
trading accounts. Using $1,000 to control $100,000 is also known as
margin.

In the last few years, lots of brokerage firms have begun to offer
e-mini accounts which may be funded with as little as a few hundred
dollars. Such account minimum lot size will be $100, which in return
control $10,000 in currency value.

With such leverage or margin, a 1% relative change in a
currency will equate to about 100% return on investment if the trade
is in the traders favor. There have been many discussions on the
topic of margin or leverage and some argue that high leverage is
dangerous. Leverage is a double-edge sword. This is a point for the
individual concerned to mange their own risk.

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The Advantages of Forex Trading over
Equity (Stock) Market

Liquidity The FOREX market is the largest
and the most liquid market in the world. With a
daily trading volume larger than all the various
stock markets combined, this will ensure price
stability. With such liquidity, FOREX Traders
can open or close a position without much
difficulty and most importantly, will receive a
fair and transparent market price.

Opportunity to Profit in Both Directions There is no such
thing as bull or bear market in FOREX. In FOREX, it is of no
concern whether the economy is booming or it is in recession. For
stock trading, profits are usually made when the economy is
booming. But we all know that the economic cycle is cyclical all
things that go up must come down. This is not the case in the FOREX
market. Regardless of how major economies are performing,
currency exchange rates are always fluctuating, and this in turn will
provide trading opportunity for traders to gain profit.

Simplicity There are not many major currency pairs traded
on the Forex market. Therefore, traders may have a better feel of
price movement patterns and behaviour. Whereas in the stock
market, there is literally thousands of stocks to monitor and it is not
easy to follow so many of them.

Small Trading Capital with High Profit Potential
Nowadays, the minimum amount needed to open a trading account is
less than $300. Due to heavy competition, some brokers may even
accept much lesser opening capital amounts. In FOREX market, this
small trading amount could potentially earn hundreds of dollars per
week.

In stock market, this may not be possible. Of course both
markets have potential to lose as well. That is besides the point as
the risks in such volatile markets are always omnipresent. The point

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we are trying to make is that in the Forex market, traders can make
good money with much lesser trading capital.

High Leverage of 100:1 - 100:1 leverage is commonly
available from online Forex brokers. This is substantially exceeds the
common 2:1 margin offered by equity brokers, and 15:1 in the futures
market. Some brokers even offer higher leverage of 100:1.

However, it is important to remember that while this type of
leverage allows investors to maximize their profit potential, the
potential for loss is equally as high. Leverage is a double-edged
sword and necessitates the use of proper money management.
Without proper risk management, this high degree of leverage cans
also lead to big losses.

24 Hour Global Market - FOREX is a 24-hour global market
that opens from Monday to Friday. The Forex market starts each
trading day from Sydney, Tokyo, London, and finally to New York.
Regardless of whether it is in the day or night, there are always
market participants actively trading the Forex market.

Forex traders can respond very quickly to any currency
fluctuations or breaking news immediately unlike the stock and future
market. The ECN's (Electronic Communication Networks) in stock
and future market are relatively new products derived as an after
hours extension to the regular trading hours.

Many of these ECN's have ill liquidity and there is no guarantee
that a trade will be executed, or at a fair price. Usually, stock or future
market traders would have to wait until the real market opens the next
morning in order to execute a trade at fair value.

Demo Account FOREX Trading has a unique feature called
Demo Account or a simulation account. This Demo Account allows
the trader to trade using real-time price on the brokers trading
platform with the exact interface and function as a real account. With
this simulated account, FOREX traders could gain real market
experience in trading without risking any capital.

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Fundamental and Technical Analysis

Fundamental and Technical analysis are the
two most common types of approaches to
trade the Forex market.

Fundamental Analysis

Fundamental analysis focuses on the theoretical models of
exchange rate determination such as purchasing power parity (PPP)
and the theory of elasticity.

Fundamental analysis also concentrates on other major
economic factors such as Gross National Product (GNP) that
measures the economic performance of a nation economy. Other
economic indicators include Gross Domestic Product (GDP), which
refer to the sum of all goods and services produced in a country.
Consumption spending, Investment and government spending are all
very influential due to their sheer size of monetary affluence and have
great impact on a nations economic performance.

Inflation Indicators such as Producer price index (PPI),
Consumer price index (CPI) are closely watched by traders to
measure inflationary activity. For the Federal Reserve, the method of
choice to flight inflation is to raise interest rates. And higher interest
rates tend to support the local currency, in this case, the US dollar.

For the fundamentalists, this approach to examine all the
factors will determine the real value of a currency. This is normally
referred to as the intrinsic value. A fundamentalist believes that if the
intrinsic value is below the current market price, there is a good
opportunity to long or buy the currency. And if a currency current
market price is higher than its intrinsic value, there is higher
probability that the currency will falls, hence, opportunity to short or
sell.

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Technical Analysis

Technical analysis is the study of market action, mainly through
the use of charts and indicators to forecast the future movement of a
currency. There are a few principles that a technical analyst applies.
The price is a compressive reflection of all market forces.

To a technical analyst, regardless of what the fundamentalist
are saying, the price you is the price you get. Price moves in trend
up (bullish), down (bearish) and flat (sideway) until the trend is broken
and a reversal takes place. The time duration of the trend may be
long intermediate or short. The historical trend will repeat itself.

The tools of the technical analyst are indicators, chart pattern
and system. Moving average, Bollinger band and Stochastic
Oscillator are some of the indicators. Trend line, support and
resistance are some examples of chart pattern.

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The System

Now that you have understood the basics and the fundamentals
about how the entire FOREX market works, let us get to the nitty
gritty of how you can actually start making money with very simple,
yet effective methods that will guarantee you income on each and
every trade opportunity. Now, if that is not attractive enough for you,
let us break down the benefits that you will get by following this
system;

1) 100% Capital Preservation

As we are not speculating and are not entering into
trades with the hope of it moving, you will not be
losing any of your capital amount invested. At every
trade opportunity you have, you either will make profit
or keep your original account.

2) Profits, every time.

As mentioned in point 1, every opportunity that we
get in on, is a proven opportunity with mechanical
calculations(not emotional) and will always reap you
results. When you enter the trade, you either make
money or you dont. You will never, ever lose money.

3) Mechanical, highly rational decision making

As you might already know, 90% of FX traders lose
money. This is because most decisions are based on
emotions or gut instincts.

When the price roars in our favour, we hold on for
more. When the price goes against us, we hope that it
will turn around. When the market just straddles
sideways, we expect a miracle to cause a strong
movement.

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None of these ever will produce consistent
profits on an ongoing effort.

Our system is highly mechanical and purely based
on numbers. The numbers govern your actions and
there are no emotional decisions. Yes, there will
always be what if situations. Then again, we ensure
that your money is always safe and only grows.

4) Short, effective trades

We trade purely on news releases of market
indicators. Within an hour of each news release, we
are done. At most times, we are done way before that,
depending on your expectations.

In our system, we expect to make 50-100 pips every
trade we get in into, depending on the numbers
released. As soon as we observe any signs of
retracing or conflicting numbers, we will close our open
positions. No time for wishful thinking here.

5) Action, Action and Action

You probably hate hearing this, but we have to tell
you anyway. All the best systems in the world will not
work if you do not take action and stick to the rules. I
will be lying if I told you that this system can make
money for you while you sleep.

To the contrary, it can be quite stressful during
times of these new releases which you must capitalize
on. Then again, by strictly following the guidelines
given, you should be able to very easily make the best
use of this system.

So, how does this work?

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Very simple. Every week and almost 5 days in a week, there
are countless key market indicator releases. Each of these indicators,
have the ability to move the market.

These news releases themselves dont move the market, but
the confidence of investors, traders, banks and institutions all take
very strong interests to these indicators. If the indicators are released
more favourably than what the market consensus is, the currency that
the news release is for will become much stronger in the short time
span that the news is released. Likewise, if the news release is much
weaker than the market consensus, the currency will radically
weaken.

For example, let us take one of the stronger and powerful news
indicator, which can shake the market by the scruff of its neck; the
Federal Reserves interest rate release or more commonly called The
FOMC Meeting Minutes.

If everyone believes that the interest will stay as it is and the
Federal Reserves pop the news that they are going to cut interest
rates by 0.5%, this will be an obvious shocker for the market. This will
cause the value of the USD to weaken drastically. This happens
because the value of returns of putting your money in USD is no
longer as what it used to be before and will cause movement of these
deposits to move to other currencies, say the GBP or JPY for
example. Therefore, all currency pairs with the USD pair, such as
GBP/USD, EUR/USD, NZD/USD, AUD/USD to strengthen in value
while an opposite pair, USD/JPY will drop in value.

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Impact of FOMC Release 130 Pips in 45 Mins

Likewise, if the decision was to hike the interest rates, that will
cause the market to be bullish about the USD and this will cause a
spike in the currency value. The example you see in the figure above;
is once such instance where a single news release is so strong, that it
can move this particular pair, by 130 pips within 45 mins.

In actual dollar value, if you had invested 3,000 Euros against
the dollar when this news release was made, you would have made
3,900 euros after 45 mins! Oh, and did I mention that your original
3,000 Euro capital amount is untouched, meaning you now have
6,900 Euros in your account. Not bad for 45 mins of work ey?

So, what we are going to teach you in this system is to
capitalize these spikes whichever way they might go, to their fullest
potential and obtaining the best returns for you.

Before we teach you the actual steps to do so, here are some
factors you might want to be aware of;

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The FrameWork

Spread Size

This is the most important factor that could make or break your
trades. The Spread size is basically the difference between your ask
and bid, or simply buy and sell price. What happens is, even though
most brokers would brag that they have the least spread size with
every trade that you make, often as low as 1-2 pips, they would
exorbitantly raise the spread sizes during news releases.

You see, at the time of news releases, there will be a huge
spike of transaction orders within that very short period of time. These
spread sizes is actually the commission that the broker makes.
Therefore, in order to milk the cow at its best period, the spread size
will increase many folds during these news releases. Some brokers
increase their spread size to anything between 20-50 pips!

Therefore, what happens is that when you are in a trade and
the market moves 50 pips, that is actually your money for the taking.
However, if your brokers spread size is 50 pips during the news
release, you will just break even and you have just made 50 pips for
your broker, thank you very much!

It is therefore very important to know of the spread levels during
these news releases. You may ask your brokers sales representative
to find out more or you may choose to simply observe the gap
between the prices widening during these news releases.

.
Spread Size Difference between the ask and sell price, 10 pips in this example.

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Support Levels

For every currency pair, there are 2 kinds of trend lines. These
lines pretty much determine the intraday natural supply and demand
nature of the market behaviour. They are called the Support Level
lines and the Resistance Level lines.

When the market is bearish and the price is going down, the
support line gives support and usually allows the market to bounce
off using that level. You may understand this better by looking at the
figure above and notice how the movement keeps bouncing off the
light pink line.

Resistance Levels

When the market is bullish and the price goes up, there is a
reverse support level called the resistance levels which will normally
impede the price to penetrate beyond that price level. This is again
better explained by the figure above, which has the single point of
contact with the highest point in price movement and that
psychologically causes trades to close out, hence the price level
reversing.

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Of course as you have earlier read, certain market news
indicator releases are not inhibited by these lines. They will break all
such resistance and support levels. These lines will only work outside
of these news indicators announcements and only serve as
guidelines for market movements.

Your understanding of these guidelines and market movements
are very important when there are meek market indicators released.

If a news release is weak that it only moves 10-30 pips, you will need
to watch these guidelines as they will restrict their movement.

If you have a powerful news indicator which can move 30-50
pips, you might face such resistance between the 2
nd
and 3
rd
level of
resistance/support levels.

If you have a shattering news indicator, anything that can move
more than 70 pips in the first 5 minutes, you should least bother
about these resistance/support lines! Just enjoy the movement and
smile all the way to the bank

Pivot Points

A pivot point is a turning point that usually encompasses the
median price of the average low and average highs of the trades for
the day/week, depending on the daily/weekly pivot point that you
might be referring to.

Most price level action, upwards or downwards, will usually
revolve around the pivot point. If they break into the next higher or
lower resistance/support level, usually the price level action will then
start revolving around that line. After a certain period of time, that will
become the new average pivot point and all other lines will adjust
accordingly.

On the figure above once again, this is clearly shown by the
thick pink line in the middle. Notice how close the price levels keep
fluctuating around that price level!

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Risk Policy (Money Management)

Honestly, I am wondering why I am even covering this here.
Even if I am covering it, it should be the first ever topic that I should
be sharing with you. This topic is that important! With the benefit of
doubt that you might be a beginner with Forex, I will share this with
you. Even if you might be an intermediate trader, there is no harm
adhering yourself to these policies, as it will serve you well in the long
run.

Here is what I need you to do.

1) Write down how much you would like to grow your
account each month/year.

I want to grow my account by ___ % each month/year.

2) Now divide that by the number of days in a month/year

I will grow my account by ___ % every day.
(uh-uh, you are not going back to change the figure for
qn.1!)

3) Now, regardless of your trading capital amount, you
should figure out how much your lot size should be, if
you were to increase your account by the % amount
you have answered in Qn.2

4) For e.g. if you want to increase your account by 2%
each day, based on the currency you are trading, you
should risk only that percentage of your overall trading
capital.

If I am trading GBP/USD, for 2 lots, 200,000, and GBP/USD
pair is trading at $2 USD (for examples sake), I will be risking
$400,000 USD of my tradeable equity. I would at least recommend
that you have at least $2,000,000 of tradeable equity at least before
you consider risking that amount. That would be about 20% of your
overall tradeable capital, which is very high risk already. I would
highly recommend that you only trade about 5% at any time. This will
allow you to make consistent gains over time.

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Any trades that you risk more than 15% of your capital amount
are considered high risk. Do not risk such proportions at any time,
unless you are absolutely sure of the outcome of the trade. In any
case, you just dont want to be sorry when it is too late.

5) Every trade that you enter, will be the same lot size or
percentage size of the seed capital, not your
compound capital.

6) Repeat this for the whole month, until you have
reached your aim of growing your account by that
much % each month.

7) Once done, only after the first quantum of returns, will
you use your compound capital and recalculate step 3
onwards.

At this point, you may or may not understand what I am trying
to tell you here. The point is, if you stick to this plan exactly the same
way that I have outlined here, you will always be in profit.

Even if you may lose certain trades due to whatever reason,
long term or overall, you will always be in profit and never stand to
lose your capital amount.

The Market Movers

As you might have already understood by now, we are only
focusing on prime news reports that are closely watched by many key
stakeholders in the industry, such as financial institutions,
governments, banks, hedge funds and traders.

There are countless such reports that come out each day. Most
are simply overlooked, important enough for that respective industry
but not the economy as a whole or are just not FOREX related, e.g
commodities, though that can be questioned to a certain extent.

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What They Are

You would only need to focus on key market movers and the
rest can be just forgotten. The good thing is that you wont have to
waste your time watching every report but you also have to be very
disciplined and ensure that the trade timings are never missed. At the
certain timing, no matter which part of the world you might be at, you
need to be present to make the trade. That is the solitary discipline
needed, but it sure is worth it.

Some of the key releases that you should never lose track of,
exact at the time of this print, are; (in no order of priority)

BOC Governor Speaks CAD Currency
RBA Meeting Minutes AUD Currency
Core CPI m/m CAD & USD Currency
MPC Meeting Minutes GBP Currency
FOMC Meeting Minutes USD Currency
Retail Sales m/m GBP Currency
Unemployment Claims USD Currency
NFP Release USD Currency
Employment Change CAD Currency

And many others.

To ensure that your computers timing is in synch with the
actual world clock timing, you might want to download the Atomic
Clock Synch available at http://www.download.com/Atomic-Clock-
Sync/3000-2350_4-10061823.html?part=dl-
AtomicClo&subj=dl&tag=button

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How To Stay On Top of These Movers

So, what are the various indicators that you have to watch? For
a constant always updated list, bookmark this link;

The Forex Factory - http://www.forexfactory.com

The Forex Factory Calendar Note the high impact signals

The High Impact indicators, depicted by the red icons, are the
most watched news releases in the industry. Those in orange are not
to die for, but can sometimes turn out to be home-runs once in a
while.

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Making The Money

2 Simple Systems to Make Money

Alright folks, here is where the rubber hits the road. After all
these pages of arduous fundamental lessons and understanding of
how the market naturally moves, what its characteristics are and how
they all fit together, here is the final bit where we actually share with
you how the money can be made.

System 1: Analyze and React

This is a bare-bone winner takes all trade tactic. It is lucrative,
highly addictive, and if you are a hot blooded adrenaline junkie trader
like some of us are, you will love the number crunching moments just
before the trade and during the first few seconds of the news release.

The Plan

1) Watch your news release timings and pick up your
currency pair.
For e.g. against the calendar, if you pick out the NFP
trade release, it will heavily move the USD cross pairs
(GBP/USD, EUR/USD, USD/JPY pairs and so on)

2) Subscribe to a broadcast feed or news release feed that
will provide you live streaming numbers.

Trade the News
http://www.tradethenews.com/forex-news.asp
and
Economic News
http://www.economicnews.ca

are such examples. There are many other options of such
services online which you can pay and subscribe to.
Some of the top-notch premium services ensure that you

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get the news at the same time as most banks and
government financial institutions do!

3) Based on past consensus and market movement data,
you can gauge the general market sentiments about this
news releases and what is expected of them. Under the
Forex Factory calendar itself, you can see on an
overview, what the forecasts are expected to be.

4) If the subscription feed release is stronger than what the
forecast was, it will obviously strengthen the currency that
the news is about and you can then trade accordingly on
the pair.

For example, if you are watching FOMC minutes and the
Federal Reserve chooses to cut interest rates by point,
this is obviously very bad for the US dollar. Therefore,
what will happen is all pairs against USD will strengthen
as the USD weakens. This means that pairs like
GBP/USD, EUR/USD will rise in value so you should
have placed a long or buy order on them.

On the flipside, if another currency is paired against the USD,
say USD/JPY for example, that currency will weaken. As USD is the
not the base currency in the pair, the value of the pair will go down as
the value of USD goes down. In this instance, you will have placed a
short order against this particular pair.

At times, most numbers for the better means good news and
should cause a direct relation against the currency pair, However,
some news brings negative margin releases and the smaller the
number, means the better the news.

For example, you can take the US Jobless Claims report. This
is an indicator which releases the unemployment rate in the US.
Obviously, the higher the unemployment, the poorer the economy is
doing. If the number comes out larger than the forecast, this means
more people are jobless, thus reflecting the poor state of the
economy and the result will be a weakening of the USD.

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Therefore, as long as you watch the respective trades properly,
analyze their market impacts and how the nature of their numbers
effect the market confidence, you should be able to get the hang of
this system very quickly.

1 such trade made using the system. Notice that it went almost 100 pips In one
direction before reversing the other way. A Trailing stop exit would have ensured
that you would have exited at that point, bagging at least 80 odd pips in this
trade.

The Risks and Benefits

You dont want to hear this, but it is our duty to tell you in any
case so that you understand that with the added benefits and nice fat
profits that you can take, this system does have its shortcomings.

Firstly, this is a very stressful way of trading. You see, seconds
after the news release is out, the market will start moving. Often,
almost immediately, Which means that if you are slow and cannot
decide quickly enough, you are going to get in too late which is not
going to get you much profits.

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If you decide wrongly and make the opposite option, you will be
finished within the first few minutes and could be staring at a big fat
red loss margin rather than profit.
Also, the subscription feed to the streaming data services can
be rather expensive. During my early trading days, I had to set aside
about 4% of my monthly profit just to keep my news feed system
constantly throw me the numbers as they are released. If you can
afford it, you should. Otherwise, if it hurts where it matters, you might
want to do this manually. If you choose to do it manually, you must be
really really good at numbers with split second decision making and
lightning fast finger clicking ability.

The benefits on the other hand are that you only enter a trade
when you know it is good. At times, the news releases are exactly
what the market expected or would have deteriorated in their relativity
or impact to the market they are indicative of, and though they might
have massive deviations, the price levels might not move as the
industry no longer pays them much attention.

Also, whatever trade you enter, you will always be in profit with
no drawdown. In a few minutes or an hour at the most, you should
have cashed in on your innings and gladly close your position out.

Conclusion on System 1

I know I am not making this any easier for you and the truth is
that it isnt. Unless you have the abilities as described above or not
confident of meeting the standard, do not try this! If you are unsure or
would like to try this yourself and improve over time, you may choose
to open a demo account with the many brokers out there and try this
for yourself with actual news releases. If you can cash in on at least
50% of the trades over 6 months, you should be pruned and ready to
trade with live capital, albeit with small lots.

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System 2: Harvest and Reap

This is where it gets really exciting. If you have been having
apprehensions, feeling sceptical about trading and not sure about
where to start, I can totally relate with you. When I had first started,
there were many systems out there which proved to be guaranteed
and failsafe.

Some of them even guaranteed up to 50% growth in the first
month itself. Honestly, after some time, I just realized that there were
no such systems and if everything could be automated and
guaranteed as these systems can claim to be, banks and top financial
institutions need not hire top bankers to multiply their funds.

Do you actually know that more than 90% of traders lose
money? Oh, havent we already mentioned that before?

Anyway, what I wanted to state here is that there is no system
that will guarantee such high returns all the time. The system you are
going to discover very shortly is a system that will not guarantee any
such high returns.

However, it is simple, highly mechanized and it follows a plan!
Most importantly, you will never ever lose money. With certain trades,
you might lose money due to the spread size or poor news indicators
that dont move the market at all. However, if the news would
naturally move about 20-40 pips at the least, you should be profitable
and can gladly hold on for much higher profits. Ok, it might not make
sense at this time, but read this system very closely and you will see
the bigger picture of it at the end of how the system works.

The Plan

1) Watch your news release timings and pick up your
currency pair.

For e.g. against the calendar, if you pick out the NFP
trade release, it will heavily move the USD cross
pairs(GBP/USD, EUR/USD, USD/JPY pairs and so on)

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2) Get your trade windows ready and just watch for a stable
price point. When I say stable, it means a price level that
doesnt fluctuate too much. As you watch each trade go by,
notice how the price level gets really fidgety just before news
release timings. This is a tactic by banks ad brokers to give
fake spreads and close out orders. Well, not too much of that
for now.

3) Now, read this step properly before you execute it. You
need to place 2 trades in the exact opposite trend for the
same currency pair. This can sometimes also be called a
hedging position. You need to check with your broker if they
can allow you to do that. Some brokers will disallow such a
trading position. A buy when a sell position is open will close
the sell position out and vice versa if your broker does not
support such bi-directional pairs to be open on the same
currency pair.

4) Now, you would notice that there will be 2 positions open
of the same pair. You will notice that as the price level
moves, one position open will be gaining profits and the
other will be gaining losses. Do not worry about this. This is
called hedging. You should be at the same financial standing
as you were when you opened these positions. You might be
a few pips negative as you might have to absorb the spread
difference in your trades. Not to worry, we can easily
overcome these losses if the news indicator can move the
market substantially.

5) Now, open 2 TTO(Threshold Trigger Order) or OCO(One
Cancels Other) orders on each of these positions.

Ok, this might get complicating. If you understand the bigger
picture, you should understand what we are trying to achieve
here.

You might have other means to achieve the same objective
or perhaps your broker calls these order types differently.
So, this is what we are trying to do.

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We are locking in 2 positions to take advantage of the price
level movements. You see, the market moving indicator that
will be released in the next news release can move the price
level in either direction. The price level can shoot up or
down, hopefully more than 30-50 pips, which we want to
take advantage of. Now, as you dont know which way the
price level will go, we have both positions open.

However, we need to get out on one position which moves
negatively and cash in on the other which is going our way.
We therefore need to open a stop loss on these positions
which will close out when the market moves in the wrong
direction, with regards to each of these positions. I would
suggest a stop loss of about 10-20 pips, depending on your
risk appetite. I would suggest about 10-15 pips for weak
news releases and about 15-25 pips for stronger news
releases.

Now, on one front, you have covered the loss possibilities.
On the other end, you need to cash in when the market is
moving in the right direction. You see, the position that has
gone wrong, or in other words, the position which has its
direction set in the opposite direction of the market
movement, will have closed by now.

Your other position, which has its direction in line with the
market movements, will be in profit and should be in green
shortly. You can either have a take profit already pre-
programmed to cash in on the innings. Otherwise, you can
manually watch the movements exit when you deem fit.

6) So, back to the plan, you can either have take profits
programmed or stop losses programmed to take maximum
profits out of these trades. If you would have the guts to
stomach the risk and the roller coaster the trades might
bring, I would recommend you to have a trailing stop loss of
about 7 pips or about 5%. Dont be greedy, there will always
be more trading opportunities.

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Otherwise, you can still watch the trades manually and close
the position our when you feel the time is right.

Conclusion on System 2

This system might seem really difficult for the beginner but
really easy for the intermediate or expert trader. The beauty of this
system is that is very simple, easy to setup and highly effective. We
speak to professional traders and when we tell them about this
system, they usually laugh it off. Of course it has its risks and
disadvantages, we are not denying that. However, if watched
carefully and the numbers are worked out well before committing
each trade, you should be having the last laugh.

The negative traits of this system are; you have to set your
trades up fast. We would suggest you set them up about 45 seconds
before the news release. Some brokers allow you to have dynamic
trade boxes already setup. When the time is right, you may just have
to click on a button to submit the order through. If you do it too slow,
you might not have setup your orders in time before the big move
happens. If you do it too fast or early, the price level might have
moved such that your stop loss is triggered and your positions might
get closed out even before the big move takes place. Timing is
everything in this system, so watch your clock and good luck!

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Conclusion

We hope you have enjoyed reading this ebook on the basic
introduction of the FOREX market and 2 very simple but powerful
systems that can change the way you make money, overnight literally

Just before we wish you good luck, some words of caution to
you. Remember caution is the best way forward in trading. Don't risk
money you can't afford to lose and control your emotions.

A really good trade is that goes according to your plan, Even if
you bag handsome profits with a trade which had no plan or system
tied to it, you should accept that you are just gambling then. Simply
throwing a dart in the dark by guessing where the market would go
and then cashing out when you feel like it is simply just that;
gambling. You might be making money now, but not always.

When the market goes against you, then you really wish you
knew what you were doing. At that time, it might just seem that the
whole market is against you and you probably know what happens
next; you might lose whatever you had made and more. As the
saying goes Trade your plan, plan your trade.

With retrospective modelling, of course it might not look the
best or things could have done better. However, the most important
question is this; Will your money be safe and you always be in
control? If not, think again. You need to make money, consistently. I
hope you are not here to make a quick buck and run. Makes sense?
Think again.

So, that is all for now dear FOREX trader. We wish you the best
in your endeavours with your trading and may only the best workout
for you.

Also, you may choose to visit our website and blog that may
equip you with greater details and knowledge as time goes by. Plus
as our customer, we are always there behind you to see you through.

Take Care & God Bless
The Team @ Lethal Forex - www.LethalForex.com

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Forex Glossary

These following glossary lists of terms are commonly used in the FOREX market
which may or may not have been mentioned in this ebook.

Appreciation - An increase in the price of a currency in response to market
demand.

Arbitrage - Profiting from small prices differences by taking an equal and
opposite position for an instrument that is traded on more than one market.

Bear Market - A market distinguished by general declining prices of a currency
or market.

Big Figure - Dealer expression of referring to the first few digits of an exchange
rate. For example, a USD/Yen rate might be 107.30/107.35, the big figure is 107.

Bretton Woods - An agreement that established fixed foreign exchange rates for
major currencies and pegged the price of gold at US $35 per ounce. In1971,
former US President Nixon overturned the Bretton Woods agreement and a
floating exchange rate for the major currencies was established.

Broker An agent acting as an intermediary between banks, linking together
buyers and sellers to sell currencies or instrument for a fee or commission.

Bull Market - A market distinguished by general rising prices of an individual
currency or market.

Buy On Margin - The process of buying a currency pair where a client pays cash
for part of the overall value of the position. The word margin refers to the portion
the investor puts up rather than the portion that is borrowed.

Cable - Referring to the Sterling/US Dollar exchange rate.

Carry (Interest-Rate Carry) - The income or cost associated with keeping a
foreign exchange position overnight. This is derived when the currency pairs in
the position have different interest rates for the same period of time.

Central Bank - A government or quasi-governmental organization that manages
a country's monetary policy. For example, the US central bank is the Federal
Reserve.
Chartist - A person who uses charts and graphs to interprets historical data to
find trends and predict future price movements. Aka as Technical Trader.

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Clearing - The process of settling a trade.

Closing A Trade - The process of selling or buying a trade in the forex market
resulting in the liquidation (squaring up) of the position.

Commission - A transaction fee charged by a broker.
Confirmation - A written document exchanged by counterparts to a transaction
that states important details such as the date, the size of the transaction, the
price, the commission, and the amount of money involved.
Contract - The standard unit of trading. In Forex the standard lot is $100,000.

Cover - To close out a short position by buying currency pair which has been
sold.

Cross Rate - The exchange rate between any two currencies that are
considered non-standard in the country where the currency pair is quoted. For
example, in the US, a GBP/JPY quote would be considered a cross rate,
whereas in UK or Japan it would be one of the primary currency pairs traded.

Currency Note and coin issued by the central bank or government, serve as a
legal tender for trade.

Day Order- A buy or sell order that will expire automatically at the end of the
trading day on which it is entered.

Day Trading- Refers to a style or type of trading where trade positions are
opened and closed within the same trading session or same day.

Dealer - One who commits capital and takes one side of a position, hoping to
earn a spread (profit) by closing out the position in a subsequent trade with
another party.

Deficit - A negative balance of trade or payments.

Delivery - A Forex trade where both sides make and take actual delivery of the
currencies traded.

Depreciation - A decline in the value of a currency.

Derivative - A security that value changes in relation to the price movements of a
related or underlying security. The underlying security can include stock, bond,
currencies. Future contract, forward contract and option are examples of
derivative. Derivative can be traded and are usually used to hedge portfolio risk.

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Devaluation- The deliberate downward act of a currencys price by a
government.

Discretionary Account - An account in which the customer permits a trading
institution to act on the customer's behalf in buying and selling currency pairs.
The institution has discretion as to the choice of currency pairs, prices, and
timing-subject to any limitations specified in the agreement.

Economic Indicator- A government issued statistic that indicates current
economic growth and stability. Common indicators include employment rates,
Gross Domestic Product (GDP), inflation, retail sales, etc.

European Central Bank (ECB) - The Central Bank of the European Monetary
Union.

Execution - The Process of completing an order or deal.

EURO - the currency of the European Monetary Union (EMU) used by twelve
countries in EU.

Federal Reserve (Fed) - The Central Bank of the United States.

Federal Open Market Committee (FOMC) It is responsible for formulation of
monetary policy. The FOMC meets eight times per year to set key interest rates,
such as the discount rate, and to decide whether to increase or decrease the
money supply.

Fill - The process of completing a customer's order to buy or sell a currency pair.

Fill Price - The price at which a buy or sell order was executed.

Fundamental analysis - Analysis of economic and political information with the
objective of determining future movements in a financial market.

Hedge - A strategy to reduce the risk of adverse price movement and volatility of
the market on ones portfolio.

Inflation - An economic condition whereby prices for consumer goods rise over
time that decrease purchasing power.
Initial Margin The initial deposit that a customer needs to make prior to enter
into a position.
Interbank rates - The Foreign Exchange rates at which large international banks
quote other large international banks.

Leading Indicators Statistics such as unemployment rates, CPI, Federal
Funds rate, retail sales & etc that are used to predict future economic activity.

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LIBO Means London Interbank Offer Rate. The rate which is used by major
international bank to lend to one another.

Liquidity - The ability of a market to accept large transaction with minimal price
changes.

Liquidation - The closing of an existing position through the execution of an
offsetting transaction.

Liquid Asset Those assets that can be easily converted to cash.

Margin - The amount of money needed to maintain an open position.

Margin call - A request from a broker or dealer for additional funds or other
collateral to guarantee performance on a position that has moved against the
customer.

Market Close - Refers to the time where a market closes for trading. In forex
market, there is no official market close.

Market Maker - A dealer who regularly quotes both bid and asks prices and is
ready to make a two-sided market for any financial instrument. A market maker in
Forex may take a opposite position against the customer.

Momentum - The tendency of a currency pair to continue in price movement in a
single direction.

Offer The price at which a seller is willing to sell.

Open Position A long or short position that is subject to market fluctuations
and has not been closed out.

Over the Counter (OTC ) - To describe any transaction that is not conducted
over an exchange.
Overnight Position A trade that remains open at the end of a trading day.
Overbrought A term used to describe a market where price has risen at a
pace that is too fast and is due for retracement.
Oversold A term used to describe a market where price has decelerate at an
abnormal fast rate and is due for upward price reversal.

Pips aka points. The smallest amount and exchange rate can move, i.e.
0.0001.

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Political Risk - Exposure to changes in governmental policy which will have an
adverse effect on an investor's position. Political risk is prevalent in third world
countries.

Position - The amount of a given currency owned by a trader.

Price Transparency - Describes bid and ask quotes to which every market
participant has equal access.

Quote The offer price of a security.

Realized/Unrealized profit Unrealized profit is a gain from the increase of an
asset that has not been cashed in. Realized profit is made from cashing in the
unrealized profit.

Resistance - A term used in technical analysis indicating a specific price level
that has trouble breaking out.

Revaluation - An increase in the exchange rate for a currency as a result of
central bank intervention. Opposite of Devaluation.

Risk Management - The employment of financial analysis and use of trading
techniques to reduce and/or control exposure to financial risk.

Roll-Over - The process of extending the settlement value date on an open
position forward to the next valid value date.

Scalping - A trading strategy that a day trader used to make small profits on
small price movements. Traders who used this strategy to trade are also known
as scalpers.

Settlement - The actual delivery of currencies made on the maturity date of a
trade.

Short Position - An investment position that benefits from a decline in market
price.

Slippage This occurs when market orders (including stop losses) are not
getting filled at (or even very close to) ones expected price. This happens often
when the market price moves too fast for the broker to execute the order close to
the expected price.

Spread The difference between a bid and offer price.

Support Levels - A term used in technical analysis that indicates a specific price
level that is holding and acting as a support.

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Swap - A transaction which moves the maturity date of an open position to a
future date.

Technical Analysis A technique used to try and predict price movement by
analyzing historical price movement and volume level.

Transaction Date - The date a trade occurs.

Turnover - The total money value of all executed transactions in a given time
period.

Two-Way Price - When both a bid and offer rate is quoted in a Forex
transaction.

Uptick - a price quote that is higher than the preceding quote for the same
currency.

Value Date aka maturity date. The date where payment is exchanged between
two parties. For spot currency transactions, the value date is normally two
business days after the trade has occurred.

Variation Margin A call by the broker to increase margin requirement during a
period of extreme market volatility.

Whipsaw term used to describe a highly volatile market where a sharp price
movement is quickly followed by a sharp reversal.

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