Six years ago, I was with a friend in a local coffee shop when he suddenly fl ipped open his laptop to reveal a screen full of charts. Through the charts and jumping numbers on the screen, I asked him, “What ’s this?”
He coolly replied, “Forex trading.”
T hinking it was some hobby he recently picked up, I asked again, “Real cash?”
“Yes.” He nodded smugly. “Real cash.”
T hat began to draw me in, slowly but surely. Looking back, it wasn’ t the fact that forex was the biggest fi nancial market in the world that drew me in. What drew me in was the fact that all you needed was an Internet connection and a laptop to make money from this market anywhere in the world.
My fi rst trade was on the GBP/USD. It was on an uptrend, and the price had reached a new high. This is it, I thought, rubbing my hands gleefully. I ’m going to be a millionaire by next Friday. Seeing that the price had reached a new high, I was convinced that gravity would pull it right down.
F ascinated, I started to ask my trader friend some questions. When he shared with me the story of how George Soros broke the Bank of England on September 16, 1992, and made $1 billion in a day, I was hooked.
I ’ m the kind of guy who only needs one live example of someone who has done something to convince me that I can do it too. Excited about this new discovery called forex trading, I went off and started to do my own reading on free websites.
Soon I started my fi rst account with USD3,000.
I clicked “sell.” That poignant moment was the start of my painful lesson. After I clicked “sell,” the price continued to creep up. That’ s not supposed to happen, I thought.
As prices continued climbing, I decided to hit the sell button again, only this time with double the lot size (and double the intensity) as my fi rst trade. I reasoned that if I clicked twice the number of lots, all that needed to happen was for prices to fall a little before I could see some nice profi ts.
After the second “sell” click, I couldn ’t believe my eyes. The price went up further. My hands started to get sweaty. My head started to shine from the beads of sweat that started to trickle down from my bald head. Murphy’ s Law was in full motion. In desperation, I actually grabbed the laptop and turned it upside down to paint me a picture of falling prices. My ego was badly hurt.
“It ’s got to come down,” I muttered to myself. At that point, I clicked “sell” for a third time, with double the lot size of the second trade.
T he numbers on my laptop screen at the time weren’ t very far from the numbers my friend had shown me. The only difference was that mine had a stubborn negative sign preceding them that just wouldn ’t go away. A couple of days after my third dreaded click, the broker closed off all my positions.
I was hit with the dreaded margin call.
In a grand total of just six days, I had lost my entire account.
W henever I share my story in my forex seminars, I replicate the scenario and draw an uptrend on the whiteboard.
“ Would you click ‘buy’ or ‘ sell’ over here?” I always ask, as I circle the highest point reached by the price. At every single seminar, most people choose to sell, confi dent that high prices will fall.
I t’ s almost a consolation to know that we human beings are wired in much the same way. Needless to say, after I blew up my account, I was devastated.
Contents
CHAPTER 1 How to Play the Game
The Forex Game
Forex and the Seven Majors
Leverage
Summary
CHAPTER 2 How Money Is Made in the Game
Buy Low, Sell High
Three Points in Every Trade
Bid/Ask Spread
W hat Causes the Price of Currencies
to Fluctuate?
Fraction Theory
Reading the Charts
Market Structure
Summary
CHAPTER 3 The Six Major Players
Central Banks
Commercial and Investment Banks
Multinational Corporations Institutional Traders
Retail Forex Brokers
Retail Traders
Summary
CHAPTER 4 Why You Must Play the Game
Top 17 Reasons to Trade Forex
Summary
CHAPTER 5 Play It Your Way: Understanding
Your Profile
The Experiment
Five Categories of Forex Traders
Your Perfect Strategy
Summary
PART TWO Strategies to Win the Game
Includes details on the FXPRIMUS
100% bonus trading credit
CHAPTER 6 Strategies for Scalpers
Strategy 1: Rapid-Fire Strategy
Strategy 2: Piranha Strategy
CHAPTER 7 Strategies for Day Traders
Strategy 3: Fade the Break
Strategy 4: Trade the Break
Trading the News 138
Strategy 5: Gawk the Talk
Strategy 6: Balk the Talk
Contents ix
CHAPTER 8 Strategies for Swing Traders
Strategy 7: Trend Rider
Strategy 8: Trend Bouncer
Strategy 9: Fifth Element
Strategy 10: Power Ranger
Strategy 11: The Pendulum
CHAPTER 9 Strategies for Position Traders
Strategy 12: Swap and Fly
Strategy 13: Commodity Correlation (Part 1)
Strategy 13: Commodity Correlation (Part 2)
Strategy 14: Siamese Twins
CHAPTER 10 Strategies for Mechanical Traders
Strategy 15: Guppy Burst
Strategy 16: English Breakfast Tea
Strategy 17: Good Morning Asia
CHAPTER 11 Conclusion
Bibliography
About the Author
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