15 LESSON OF FOREX

LESSON #1:
What Is FOREX and How to Take Part in the World's Largest, Most Liquid Trading Market

"If you think what you do is great, you ain't seen nothing yet. I'm an FX Trader".

Those were the words I heard over three years ago, and since then, regardless of how confrontational, competitive, or in- your-face they may have seemed at the time, I'm glad I heard them. I was just introduced to what we will affectionately call, throughout this mini-course (seriously), "The World's Most Powerful Home-based Business"

Even though you, and I, have had the opportunity to take part in trading foreign currencies for profit (in the same way banks and large corporations do) since 1998, it is just now becoming the cool, hip, new "thing" to talk about at parties, business events, and other social gatherings. Even though it HAS been somewhat of a loosely guarded secret, more and more investors are turning to the all-electronic world of FOREX trading for income and profit because of its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities.

But, still, whenever something SEEMS new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be overcome, the mind has to be open and the slate has to be clear for starting out fresh with the CORRECT information. So, in this first Lesson, it is our attempt to give you some solid, but not over-detailed, information on just what the heck "FX" (FOREX) means, what it is, and why it exists. Plus, we wouldn't want you to be the one giving the blank stare, at the parties, when someone brings it up :-)

If you'd like to make $200 to $3,000 for as little as ten minutes of work -- work that involves minimal risk, but plenty of upside potential -- then this ongoing email mini- course if for you. As a friend of mine said, “Trading FOREX is like picking money up off the floor. NOT trading FOREX is like leaving it there for someone else to pick up." Others in the industry have also said, “It’s like having an ATM machine on your own computer.”

In this 20-part e-Course series, we will show you what they mean.

=============

Here's the all-steak, no-sizzle explanation (one we feel you'll appreciate) of what FOREX is and how traders, like us, profit from it:

The Foreign Exchange Market, also referred to the "FOREX" or "FX" market, is the spot (cash) market for currency.

But, don't mistake what we're doing as trading the futures market, where you buy a contract to purchase a particular currency at a future price in time. What we do is much less risky than trading currencies on the futures market, much more profitable, and a lot easier, than trading stocks.

So, you're probably wondering where it's at ... or ... how to access the FX market? The answer is: FX Trading is not bound to any one trading floor and is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.

Yes, if that's the first time you've heard about an all- electronic market, we know this may sound somewhat intriguing to you. And, it should be, because it certainly is.

Here's what you are actually trading when you participate in the Foreign Exchange (FOREX) market: Essentially, like the large banks who use the FX market to protect themselves from the fluctuating exchange rate of different currencies, as an investor, what we're doing is simultaneously exchanging one countries currency for another. So, in actuality, we're electronically trading a currency-pair and the price that is quoted to us is the exchange rate between the two currencies.

If you just said, "Huh?" ...no worries, we've got ya covered with an explanation. In other words, simply the quoted price is how many of the one currency is worth 1 of the other currency.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Example:

EUR/USD last trade 1.2850 - One Euro is worth $1.2850 US dollars.

The first currency (in this example, the EURO) is referred to as the base currency and the second (/USD) as the counter or quote currency.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Okay, okay ... let me STOP myself before I get too deep into Currency Pair education (we'll cover that with you in Lesson #3)

Yes, this is a lot to share with you about this relatively new, exciting market of unlimited profit possibilities -- a market that has so many more advantages over other investments, and even over other businesses, that it will blow your socks off. And, being the curious, ambitious guy that you are, I know you'd like to dive in. So, stay tuned for tomorrow's email where we'll tell you why FOREX Trading is the ideal business and what its benefits are over other investing vehicles.

But ..... WAIT !!! I'll at least give you something to chew on overnight.

We get a lot of questions about FOREX - from folks who've never heard of it to advanced, highly-skilled traders.

The one question that keeps popping-up from the former group of people is this: "If people, like you, are making so much money by trading the FOREX, why would you share this information with anyone?" Here's the answer...

The FOREX has a DAILY trading volume of around $1.5 trillion dollars - 30 times larger than the combined volume of all U.S. equity markets. This means that 1,498,574 skilled traders could each take 1 million dollars out of the FOREX market every day and the FOREX would still have more money left than the New York Stock exchange every day!

Wow !

Yes, wow indeed. The FOREX plays a vital role in the world economy and there will always be a tremendous need for the FOREX. International trade increases as technology and communication increases. As long as there is international trade, there will be a FOREX market. The FX market has to exist so a country like Japan can sell products in the United States and be able to receive Japanese Yen in exchange for US Dollar.

So, before tomorrow arrives, just keep this in mind: There's plenty of money for plenty of traders to use the same trading techniques / tactics and profit immensely. And, with only 5% of the daily turnover of volume coming from banks, government and large corporations who need to hedge, imagine what the other 95% is for -- bingo, for speculation and profit.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

SIDENOTE: a lot of courses will spend several pages introducing the FOREX by giving a historical perspective. In our opinion, for a trader, this is a waste of time. Yes, it could be interesting to learn about the details on Who, What, When, Where and Why but, just know that historical knowledge will not help you to become a FOREX Trader.

15 LESSON OF FOREX

LESSON #2:
Why FOREX trading is quickly becoming one of the investing world's hottest, most rewarding opportunities. And, why it's our chosen 'Ideal Business.'

As ambitious, hungry, time freedom-driven entrepreneurs ourselves, before we were introduced to the concept of Trading-For-a-Living, we had the pleasure of reviewing and seeing IN ACTION hundreds of home business plans, profit-making ideas, and ways to earn a decent income outside of a J-O-B.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

SIDENOTE: while we realize the majority of you reading this know J-O-B stands for "Just Over Broke" and that you'll never become wealthy working one forever; and while we understand you're already determined to live your dreams and reach a level of REAL financial independence and Freedom, we still want you to know that it's NOT just all about money -- it's about quality of life. It's about time freedom and self-reliance. It's about families. It's about being able to life a live where you can achieve your recurring daydreams.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

We feel FOREX Trading allows you to live the life you've always wanted more so than any other income vehicle. It, in our opinion, is indeed "The World's Most Powerful Home-based Business". But, more than just analyzing them, we've been a part of quite a few (i.e., Direct Sales, delivery business, Real Estate, marketing consulting, risky investments, etc.). And from meeting with, interviewing, hearing about others in business, studying industries with intensity and/or reading about all the different "gurus of the moment", we have come to find a few SIMPLE truths:

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Business Truth #1:

Quite often people who have money don't have the time to enjoy it, and those that have the time don't have the money!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Well, here's some compelling news for you ... You don't have to sacrifice a LIFE to earn an incredibly above-average income! This isn't a pipe dream. It's purely realistic and completely optimistic to say that, yes, if you FOCUS on FOREX trading for several months, you CAN bring your life into balance.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Business Truth #2:

Before money is earned...something, somewhere, somehow has to be SOLD. And, if it's not a repeat type (consumable) product or service, as soon as you stop whipping up the sales force your income comes to a screeching halt!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Listen: "money" is a medium of exchange, nothing more and nothing less. There's no magic way to acquire it. The way to build wealth is to exchange a value-oriented product or service for it. But what if, rather than hiring sales reps (or being one yourself), a full-time accountant, an attorney, administrative staff, customer service / human resource personnel (in other words, "employees"), you could work by yourself and have access to multiple thousands of "customers" (no need to advertise for them either) who are ready and able to BUY from you (or SELL to you) at the drop of a hat? And, wouldn't it be incredibly cool if your business could just laugh-off such traditional hindrances as competition, collection problems, changing fads, bad publicity, political or social events, etc?

Yes, all that and, oops, we almost forgot -- it gets even better... Trade from anywhere. If you like to travel, this is a dream business. Take your laptop with you and you can trade the FOREX and make money anywhere in the world where you have an internet connection. You have total freedom of location. Can you now see why we call this "The World's Most Powerful Home_based Business?"

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Business Truth #3:

A classic dilemma: for most, you can't get a job (or start a business) without experience (expertise) and you can't get experience (expertise) without a job (or being involved in business)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

When attempting to make more profit than losses on the fluctuation of exchange rates between major currencies (i.e., Trading the FOREX), nobody is going to ask you for a diploma, a formal license or verify the amount of hours you've spent studying the Foreign exchange market and banking industry. Nope, it just ain’t gonna happen! All the training you'll need to get going smoothly is included IN and WITH our Rapid Forex Training Courses (and, of course, the rest of this email mini-course series will give you more solid info than even some books do).

Now that we've talked some about how FOREX Trading Obliterates, like a nuclear explosion, the 3 main disadvantageous business TRUTHS above .....

Let's discuss the many benefits and advantages of FOREX Trading over Stocks & Commodities
Here are the highlights on why FOREX is becoming the go-to market for private and institutional traders alike: The Main Benefits of Trading the FX Spot Market: (we'll get into some of the details after this)

· Never a 'Bear' Market!

· No Separate commissions!

· Low to Zero Transaction Costs / Narrow Dealer Spreads!

· A 24-hour Market with Superior Market Liquidity!

· It has up to 200:1 Leverage for Margin Trading!

· Streaming Executable Prices!

· Price Movements Are Highly Predictable!

· FOREX Trading is Economical and Start-up Costs are Low!

============================

Before we get into the details on the benefits listed above, student, trader, and all- around well-educated investor, it is important to know the differences between cash FOREX (SPOT FX) and currency futures.

In currency futures, the contract size is predetermined. With FOREX (SPOT FX), you may trade any desired amount, typically up to $100,000 USD. The futures market closes at the end of the business day (similar to the stock market). If important data is released overseas while the U.S. futures markets is closed, the next day's opening might sustain large gaps with potential for large losses if the direction of the move is against your position.

The Spot FOREX market runs continuously on a 24-hour basis from 7:00 am New Zealand time Monday morning to 5:00 pm New York Time Friday evening. Dealers in every major FX trading center (Sydney, Tokyo, Hong Kong/Singapore, London, Geneva and New York/Toronto) ensure a smooth transition as liquidity migrates from one time zone to the next.

Furthermore, currency futures trade in non-USD denominated currency amounts only whereas in spot FOREX, an investor can trade either in currency denominations, or in the more conventionally quoted USD amounts. The currency futures pit, even during Regular IMM (International Money Market) hours suffers from sporadic lulls in liquidity and constant price gaps. The spot FOREX market offers constant liquidity and market depth much more consistently than Futures. With IMM futures one is limited in the currency pairs he can trade - Most currency futures are traded only versus the USD - With spot FOREX, you may trade foreign currencies vs. USD or vs. each other on a 'cross' basis as well - ex: EUR/JPY, GBP/JPY, CHF/JPY, EUR/GBP and AUD/NZD (more on what these mean in Lesson #3 tomorrow)

============================

More and more savvy investor and entrepreneurs are shunning traditional financial markets, like stocks, bonds & commodities and building their fortunes in the foreign exchange (FOREX) marketplace.

Here are 7 important reasons why:

1): FOREX is the largest financial market in the world.

With a daily trading volume of over $1.5 trillion, the spot FOREX market can absorb trading sizes that dwarf the capacity of any other market. In fact, when compared with the $50 billion daily market for equities or the $30 billion futures market, it becomes quickly apparent this gives you, and millions of other FOREX traders, almost infinite trading liquidity and flexibility.

2): FOREX is a TRUE 24-hour market.

The FOREX Market never sleeps. Trading positions can be entered and exited at any moment - around the globe, around the clock, six days a week. There is no waiting for an opening bell as in the case of trading stocks. It is a 24- hour, continuous electronic (ONLINE) currency exchange that never closes. This is very desirable for you if you want to trade on a part-time basis, because you can choose when you want to trade: morning, noon or night.

3): There is never a Bear Market in FOREX.

You can have access to a seamless, mutually-inclusive (two- way) exchange of currencies. Meaning, because currencies trade in "pairs" (for example, US dollar vs. yen or US dollar vs. Swiss franc), one side of every currency pair (for example, USD/JPY - JPY = YEN) is constantly moving in relation to the other. Thus, when you buy a particular currency, you are actually simultaneously selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value versus the other. Of course, it is up to you to choose the correct currency to be long or short. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means you have equal potential to profit in both a rising or falling market.

4): High Leverage - up to 200:1 Leverage.

You are permitted to trade foreign currencies on a highly leveraged basis - up to 200 times your investment with some brokers. This is primarily attributed to the higher levels of liquidity within the currency markets. Standard 100,000- unit currency lots can be traded with as little as 1% margin, or $1,000. Mini FX accounts are permitted to trade with just 0.5% margin -- in other words, just $50 allows you to control a 10,000-unit currency position. Futures traders, who are accustomed to margin requirements generally equal to 5%-8% of the contract value, will immediately recognize that the FOREX market provides much greater leverage, and for stock traders, who must post at least 50% margin, there’s no comparison. If you’re looking for an efficient use of trading capital, this is it!

5): Price Movements Are Highly Predictable.

Although currency prices in the FX market may be volatile, they generally repeat themselves in relatively predictable cycles, creating trends. The strong trends that foreign currencies develop are a significant advantage for traders who use the "technical" methods and strategies we teach at RapidForex.com.

Unlike stocks, currencies rarely spend much time in tight trading ranges and have the tendency to develop strong trends. Over 80% of volume is speculative in nature and, as a result, the market frequently overshoots and then corrects itself. As a technically-trained trader, you can easily identify new trends and breakouts, which provide for multiple opportunities to enter and exit positions.

6:) Commission-free Trading and Low Transaction Cost

When you trade FOREX, through one of our recommended brokers (this info is in our private resources section), you'll do it totally commission-free! These brokers don't charge commissions to trade or to maintain an account, and that goes for all clients trading the FOREX through them, regardless of your account balance or trading volume. Even Mini FX traders can buy and sell currencies online, commission-free.

This is worth repeating: No FX commissions!

What about trading fees? There are none of the usual fees to which futures and equity traders are accustomed -- no exchange or clearing fees, no N_F_A or S_E_C fees. Because currencies trade over-the-counter (OTC), via a global electronic network -- in FOREX, what you see is what you get, allowing you to make quick decisions on your trades without having to worry or account for fees that may affect your profit/loss or slippage.

In the equities markets, you must pay both a commission and exchange fees. The over-the-counter structure of the FX market eliminates exchange and clearing fees, which in turn lowers transaction costs.

So, if FOREX broker don't charge commissions, how do they make money? Like all traded financial products, over-the- counter currency trading involves a bid/ask spread, which represents the prices at which your counterparty is willing to trade. Because the currency market offers round-the-clock liquidity, you receive tight, competitive spreads both intra-day and night. Stock traders can be more vulnerable to liquidity risk and typically receive wider trading spreads, especially during after-hours trading.

7): Instantaneous Order Execution and Market Transparency.

Market transparency is highly desired in any trading environment. The greater the market transparency, the more efficient the market becomes. Unlike other markets where transparency is compromised (like in the Enron scandal), FOREX markets are highly transparent (i.e., analyzing countries, and having access to real-time research / news, is easier than companies).

The FX market offers the highest level of market transparency out of all the financial markets. Because of this, order execution and fill confirmation usually occur in just 1-2 seconds. Markets that do not offer executable prices and force traders to absorb slippage obviously compromise the trader's profit potential considerably.

In the forex world, order execution is all-electronic and because you'll be trading via an Internet-based platform, instantaneous execution is routine. There are no exchanges, no traditional open-outcry pits, no floor brokers, and consequently, no delays.

=================================

So, by now, if you haven't caught our FOREX fever -- our belief and interest in this market of unlimited profit- making opportunities -- well ... we're just not too sure what else we can do with you :-)

FOREX trading truly is the "World's Most Powerful Home-based Business" and we invite you to stay-tuned for tomorrow's lesson on *Currency Pairs* - how to read them, calculate profits, recommended pairs to trade, etc.

15 LESSON OF FOREX

LESSON #3:
How Currencies Are Traded, Understanding FOREX Quotes, Market Structure and How to Love a *pip* -- soon to be your best friend!

Before I get into how currencies are traded, quoted and structured, let me tell you about one of the best advantages of FOREX Trading. The amount of money you need to place a trade (known as "margin") is all that can be lost!

I state it like this (in a glass-is-half-empty, negatively- presumptive kind of way) because, even though I know with proper self-taught education you're NOT going to lose as much as you win anyway, I want you to know that despite the super-high leverage associated with FOREX trading (400:1 is possible; meaning if you put up $1 the trading vendor will allow you to trade like you really have $400), it's still arguably less risky than futures (commodities) trading.

(And, forget stocks, you'll never get this type of LEVERAGE in the equities market)

Futures markets are often prone to sudden and dramatic moves, against which you can’t protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you’ll be liable for any resulting deficit in the account. But because of the FX market’s deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills. And finally, there are no margin calls -- for your protection, ALL our recommended brokers will automatically close out some or all of your open positions if your account equity falls below the level required to hold the positions. Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance. In fact, if you pick from our list of recommended brokers, we guarantee that you’ll never lose more than you have in your FOREX account!

=====================

Currencies are traded in dollar amounts called lots -- One lot is equal to $1,000, which controls $100,000 in currency. This is the "margin" I talked about above. Control $100,000 worth of currency for only 1,000 dollars. Good stuff, right?

Okay, let's move on....

Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded. The symbol for a currency pair will always be in the form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is the symbol for one countries currency and DEF is the symbol for another countries currency.

Here are some of the common symbols used in the Forex:

USD - The US Dollar

EUR - The currency of the European Union "EURO"

GBP - The British Pound

JPY - The Japanese Yen

CHF - The Swiss Franc

AUD - The Australian Dollar

CAD - The Canadian Dollar

There are symbols for other currencies as well, but these are the most commonly traded ones.

A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.

Some of the common PAIRS are:

EUR/USD Euro / US Dollar "Euro"

USD/JPY US Dollar / Japanese Yen "Dollar Yen"

GBP/USD British Pound / US Dollar "Cable"

USD/CAD US Dollar / Canadian Dollar "Dollar Canada"

AUD/USD Australian Dollar/US Dollar "Aussie Dollar"

USD/CHF US Dollar / Swiss Franc "Swissy"

EUR/JPY Euro / Japanese Yen "Euro Yen"

The listed currency pairs above look like a fraction. The numerator (top of the fraction or "left" of the / however you want to SEE it) is called the base currency. The denominator (bottom of the fraction or "right" of the /however you want to SEE it) is called the counter currency. When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency.

If this seems confusing then you're in luck. You can always get by with just thinking of the entire pair as one item. Then you are just buying or selling that one item. Thinking like this will still enable you to place trades. You only need to be aware of the base/counter concept for Fundamental Analysis issues.

So why is it important to know about the base/counter currency now? The base/counter currency concept illustrates what is actually taking place in a Forex transaction. Some of you reading this, know that short-selling was restricted in the stock market (Short-selling is where you sell a stock/currency/option/commodity first and then try to buy it back at a lower price later). But in the FOREX you are always buying one currency (base) and selling another (counter). If you sell the pair you are simply flipping which one you buy and which one you sell. The transaction is essentially the same. This allows you to short-sell with no restrictions!

You want to be able to short-sell with no restrictions so you can make money when the market drops as well as when it rises. The problem with traditional stock market trading is that the market has to go up for you to make money. With FOREX trading you can make money in all directions.

Love Your *pips*
Currencies are traded on a price interest point (pip) system. Each currency pair has its own pip value.

Since we have a listed currency PAIR (i.e., EUR/USD, EUR/AUD), we need a way to talk about its associated number or price. When you see a FOREX price quote, you'll see something listed like this:

<<>>

The first component (before the slash) refers to the bid price (what you obtain in JPY when you sell USD). In this example, the bid price is 118.46. The second component (after the slash) is used to obtain the ask price (what you have to pay in JPY if you buy USD). In this example, the ask price is 118.51. The difference between the bid and the ask price is referred to as the spread (how brokers REALLY allow you to trade commission-free). In the example above, the spread is .05 or 5 pips.

Sometimes you won't see a two-sided quote, consisting of a 'bid' and 'offer'. But, rather, you'll see something like...

<<>>

When you see a Forex currency pair price quote, like the one above, just remember that that last digit of the price is referred to as the *pip*. So if you see a quote (123.50) and then a qu.ote in one min (123.51), the price rose 1 pip. Similarly, if you see a price quote of 187.50 and then after 5 min (187.58), the price rose 8 pips. The pip is always the last decimal place of the currency price quote.

YOUR GOAL IS TO CAPTURE AS MANY PROFITABLE pips AS POSSIBLE!

Since the US dollar is the centerpiece of the FOREX market, it is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair.

In the example above, a quote of USD/JPY 123.50 means that one U.S. dollar is equal to 123.50 Japanese yen.

When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote above increases to 124.01, the dollar is stronger because it will now buy more yen than before.

The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.4366, meaning that one British pound equals 1.4366 U.S. dollars.

In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar.

In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.

Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.

====================

So, now that you're fully indoctrinated into how to read currency quotes, let us remind you one on thing:

YOUR GOAL IS TO CAPTURE AS MANY PROFITABLE pips AS POSSIBLE!

Oh yeaaaaah ... that was already mentioned, wasn't it? :-)

The point: never lose sight of your objective. While the above lesson could go on and on for pages, it still wouldn't make you a world-class FOREX trader.

But, the combined power of our remaining lessons, just might.

15 LESSON OF FOREX

LESSON #4:
Buying (going "long") and selling (going "short") in the FOREX market. How to do it and calculate your profit or loss (you won't win ALL the time, but most of the time, YES, if you've got a good trading method).

Here's TWO timeless rules of Investing as they relate to today's lesson:

RULE #1) ~ Cut your losers; let your winners ride.

Let's be frank (we never promised any rose-colored glasses here did we? Well, at least not the ones you can wear ALL the time): YOU WILL HAVE LOSING TRADES.

We do. Every FOREX trader does. The key to being a consistent, predictable, reliable trader is to, at the end of the day, add up more wins than losses. And, when you KNOW (based off your trading rules), without a doubt, that YES, indeed you are, in a losing trade, don't keep losing money (lowering your stop loss) just to *prove you are right* or your rules are wrong (however you want to look at it).

Let's face it - you can't turn a sow's ear into a silk purse. You can't change the spots of a leopard and you can't turn chicken poop into chicken salad. The best trades are usually "right" immediately (the techniques, rules, methods and strategies we teach at RapidForex.com will be your best indicator for just what a "right" trade really is).

Remember, people have been trading the markets for a hundred and sixty years. The smart traders know there's going to be another trade. Cut your loses short and compound those winning positions.

RULE #2) ~ Thou Shalt Not Trade the FOREX Without the Placing of a Stop Loss Order.

When you place a STOP order, right along with your ENTRY order, via your online trade station, you've just automatically prevented a potential loss from "running" too far.

Before initiating any trade, if you haven't already figured out at what point you would be wrong and would want to cut your loses or, at the very least, reevaluate your position from the sidelines, then you shouldn't be putting on the trade in the first place.

Show us a FOREX trader who doesn't use stop loss orders and we'll show you someone who loses a lot of money.

=================

To make a profit, in the FOREX, a trader (possibly YOU soon?) can enter the market as a *buy position* (known as going "long") or a *sell position* (known as going "short").

For discussion, let's assume you've been studying the EURO (which, if you remember from yesterday's lesson, is paired first with the U.S. dollar or USD. Since it is paired first, it is the base currency).

Your trading methods, rules, strategies, etc., tell you that prices will rise during a particular timeframe. So you buy the EUR/USD pair (or, technically, you will simultaneously buy euros, the base currency, and sell dollars).

You open up your handy trading station software (provided to you for free by the online broker), which resides on your desktop, and you see that the EUR/USD pair is trading at:

<<>>

REMEMBER: the quote to the left of the / (1.3242) refers to the bid or "sell" price (what you obtain in USD when you sell EUR). The quote to the right of the / (1.3245) is used to obtain the ask or "buy" price (what you have to pay in USD if you buy EUR).

So, since you believe that the market price for the EUR/USD pair will go higher, you will enter a *buy position* in the market. For simplicities sake, let's say you bought one lot at 1.3245. As long as you sell back the pair at a higher price, then you make money.

But, no worries. This seemingly elaborate process is handled, and even calculated for you, via the broker's software mentioned above. The chart software and the quote board are in agreement with all sides of the currencies.

=================

To illustrate a typical FX SELL trade, consider this scenario involving the USD/JPY currency pair:

REMEMBER ~ Selling ("going short") the currency pair implies selling the first, base currency, and buying the second, quote currency. You sell the currency pair if you believe the base currency (USD) will go down relative to the quote currency (JPY), or equivalently, that the quote currency (JPY) will go up relative to the base currency (USD).

NOTE: while the Profit Calculations, on the Short-sell trade scenario below, may seem somewhat complicated if you've never been in the FOREX market before, trust us when we say, "this process is nearly seemless through your broker trade station (software). We're just showing you this thought- process below so you can SEE how a PROFIT occurs even when SELLING a currency pair.

============================

The current bid/ask price for USD/JPY is 105.26/105.30, meaning you can buy $1 US for 105.30 Japanese YEN or sell $1 US for 105.26 YEN.

Suppose you decide that the US Dollar (USD) is overvalued against the YEN (JPY). To execute this strategy, you would sell Dollars (simultaneously buying YEN), and then wait for the exchange rate to rise.

So you make the trade: selling US $100,000 and purchasing 10,526,000 YEN. (Remember, at 1% margin, your initial margin deposit would be $1,000.)

As you expected, USD/JPY falls to 104.26/104.30, meaning you can now buy $1 US for $104.30 Japanese YEN or sell $1 US for 104.26

Since you're short dollars (and are long YEN), you must now buy dollars and sell back the YEN to realize any profit.

You buy US $100,000 at the current USD/JPY rate of 104.30, and receive 10,430,000 YEN. Since you originally bought (paid for) 10,526,000 YEN, your profit is 96,000 YEN.

To calculate your P&L in terms of US dollars, simply divide 96,000 by the current USD/JPY rate of 104.30.

Total profit = US $920.42

15 LESSON OF FOREX

LESSON #5:
Charting Your Way to Success: FOREX Price Charts, What They Mean and How to Use Them "What's the difference between the speculative winner and the ignorant loser in FOREX?" my silver-tongue friend asked.

When I thought about it, numerous things came to mind - such as discipline, trading rules, not being greedy etc., but what came out of my mouth was really no big surprise:

"Understanding the charts... they represent so, so much. Ya gotta know they represent the lifeblood of the market. Know them well and you'll be head-and-shoulders above the rest."

We at RapidForex.com will be the first to admit that reading charts, and interpreting patterns, are more an art form than a skill; however, knowing you'll have to be personally in- tune and subjectively-creative with the charts (basing your entry and exit decisions on YOUR OWN combined methods of technical analysis) doesn't mean you should run-for-the- hills.

Nope, don't be scared...

The beauty of FOREX charts, as opposed to charts used for, say, daytrading stocks, is that they are pretty easy to interpret and use. They're a reflection of a slower-moving, stable economy (the one of a country) compared to the future and daily drama of company reports, Wall street analysts and shareholder demands.

And, don't forget...unlike stocks, currency charts rarely spend much time in tight trading ranges and have the tendency to develop strong trends (even though the FX market may be volatile, it's more predictable). And, rather than tens of thousands of stocks to analyze, you only have a few mayor currencies to trade.

===================

The complimentary charting software provided by any one of our recommended brokers will be absolutely sufficient for you to put your finger (eye) on the pulse of the market for any one currency pair.

Understanding just a few basic points, below, of the technical analysis of currency chart reading can lead to increased profit potential that far exceed the hazards of other markets.

===============

Pricing - Price reflects the perceptions and action taken by the market participants. It is the urgency between buyers and sellers in the Over-The-Counter (OTC) or 'interbank' market that creates price movement. Thus, all fundamental factors are quickly discounted in price. Therefore, by studying the price charts, you are indirectly seeing the fundamental and market psychology all at once - after all the market is fed by two emotions - Greed and Fear - and once you understand that, then you begin to understand the psychology of the market and how it relates to the chart patterns.

Data Window - Most FX online charting stations ,when you click on a price bar or candlestick, will display a small box of data usually called a display window which will contain the following items:

H = Highest_Price

L = Lowest_Price

O = Opening_Price

C = Close_Price (or Last_Price)

The most common types of price bars, used in FOREX trading, are the Bar Chart and the Candlestick chart:

Bars Charts - Price bars are a linear representation (a line) of a period of time. This enables the viewer to see a graphic representation summarizing the activity of a specific time frame. As an example, we use one minute and five-minute time intervals for our system. Each bar has similar characteristics and tells the viewer several important pieces of information. First, the highest point of the bar represents the highest price that was achieved during that time period. The lowest point of the bar represents the lowest price during the same period. Regular bars display a small dot on the left side of the bar which represents the opening price of the period and the small dot on the right side represents the closing price of the period.

Candlesticks - Japanese Candlesticks, or simply Candlesticks as they are now known, are used to represent the same information as Price bars. The only difference is that the difference between the open and close form the body of a box which is displayed with a color inside. A red color means that the close was lower than the open, and the blue color represents that the close was higher than the open. If the box has a line going up from the box it represents the high and is called the wick. If the box has a line going down from the box, it represents the low and is called the tail. Many interpretations can be made from these "candlesticks" and many books have been written on the art of interpreting these bars (you'll find a few links in our Resources Section).

So, the main thing to keep in mind between the two types of price charts is this:

Candlestick charts are similar to bar charts in that the top tip of a vertical line represents the high and bottom tip represents the low. However, market activity between the OPEN and the CLOSE is represented differently by the use of candlestick bodies.

Because of their colored bodies, candles provide greater visual detail in their chart patterns than bar charts. Which is why we recommend you become intimately familiar with Candlestick charts or, as we like to call them, "bar charts on steroids."

Chart Intervals & Time Frames:
A chart Time Scale & Period, or timeframe, basically refers to the duration of time that passes between the OPEN and the CLOSE of a bar or candlestick.

While most of our trading methods, outlined in our course packages, will have you viewing the 5-min and 1-min candle charts, it is often useful to look at larger time frames (like the 1-hour or Daily chart).

For instance, with your broker software, you will be able to view a currency pair, in a 1-hour timeframe over a 2-day period, 5-day period, 10-day period, 20-day period and 30- day period.

Most of the short-term time intervals (5-min and 1-min charts) are used for entry and exit points and the longer- term time intervals (1-hour and daily charts) are used to gauge where the CORRECT trend is (we teach this extensively in our course titled "Rapid Forex Surfing").

15 LESSON OF FOREX

LESSON #6:
Economic Fundamentals: Or, What influences Prices In the FOREX market

Before we tell you a little about what this form of market analysis is and why you should, at least, know about it, use it some (but not necessarily focus on it), let us give you a few excerpts from two Traders being interviewed by Jack Schwager in the now-famous book MARKET WIZARDS.

Once you're through reading these beliefs, from two legendary market wizards, you'll have a good understanding on where our ideas lie when it comes to using one (fundamental analysis) or the other (technical analysis) or both to predict future currency pair price movement.

===================

[From page 161 - interview with Ed Seykota]:

QUESTION: What are your thoughts about using fundamental analysis as an input in trading?

ED'S RESPONSE: Fundamentals that you read about are typically useless as the market has already discounted the price, and I call them "funny-mentals." However, if you catch on early, before others believe, then you might have valuable "surprise-a-mentals."

QUESTION: You answer is a bit facetious. Does it imply that you only use technical analysis?

ED'S RESPONSE: I am primarily a trend trader with touches of hunches based on about twenty years of experience. In order of importance to me are: (1) the long-term trend, (2) the current chart pattern, and (3) picking a good spot to buy or sell. Those are the three primary components of my trading.

=================================================

Now, let's look at Bruce Kovner, who has a less pronounced one-sided belief on this issue:

=================================================

[From page 60 - interview with Bruce Kovner]:

QUESTION: Do you always use fundamental analysis in forming your trading decisions?

BRUCE'S RESPONSE: I almost always trade on a market view; I don't trade simply on technical information. I use technical analysis a great deal and it is terrific, but I can't hold a position unless I understand why the market should move.

There is a great deal of hype attached to technical analysis by some technicians who claim that it predicts the future. Technical analysis tracks the past; it does not predict the future. You have to use your own intelligence to draw conclusions about what the past activity of some traders say about the future activity of other traders.

For me, technical analysis is like a thermometer. Fundamentalists who say they are not going to pay any attention to the charts are like a doctor who says he's not going to take a patient's temperature. But, of course, that would be sheer folly. If you are a responsible participant in the market, you always want to know where the market is-- whether it is hot and excitable, or cold and stagnant. You want to know everything you can about the market to give you an edge.

Technical analysis reflects the vote of the entire marketplace and, therefore, does pick up unusual behavior. By definition, anything that creates a new chart pattern is something unusual. It is very important for me to study the details of price action to see if I can observe something about what everybody is voting for. Studying the charts is absolutely crucial and alerts me to existing disequilibria and potential changes.

==========================

So, by now, you've probably figured out one of the unspoken truths of trading: there is a tendency to pigeonhole traders into two distinct schools of market analysis - fundamental and technical.

For forex traders, the fundamentals are everything that makes a country tick. The release of economic & inflation indicators (i.e., consumer spending, employment cost index, government spending, producer price index, etc.), political factors, government policy or an individual event can set the market in a frenzy. These have to be considered when making the decision weather to trade or not.

Technical analysis, which we will cover more in tomorrow's lesson, simply put is a way of using historical price data (via the charts) in different ways to predict the future price of a currency pair.

Charts are needed, but the reality is...

Fundamental analysis is a very effective way to forecast economic conditions, but not necessarily exact market prices. Or, said another way: as a general rule, while you DO need to have a handle on the most influential contributors for the cause of a currencies price to move up or down, you MUST trade in agreement with the supporting technical indicators.

The reason foreign exchange traders put the most emphasis on technical analysis is because traders around the world use similar charts and tools in predicting market trends. The reason the FOREX market can be so predictable some times is that if the majority are using the same graph for determining patterns and trends, then it is highly likely that they will act in a similar manner. So several thousand traders who have all charted the same resistance line, for example, will most likely either set their trades and direction to conform to that line.

=======================

Since we'll be teaching you, via our courses, to become sound TECHNICAL TRADERS, we'll cover it more in detail tomorrow; however, we still wanted you to know what FUNDAMENTAL analysis is and what it does.

Here's a little more background.

When fundamental data is made available to the public there is a reaction from investors and speculators. Information in the form of news and economic indicators is more vague than that of technical indicators. There is a lot of gray area in this type of analysis. The market will ultimately react to how people think the economic data compares to the current market situation.

Economic indicators usually reveal information that "Should cause a currency to go up in price" or "May cause a currency to go down". The words 'should' & 'may' in the quotes above reveal the ambiguity of the fundamental data.

Here is an example of what analyzing fundamental data is like. Let's suppose there are six economic indicators (there are a lot more). Let's call our six indicators A,B,C,D,E, & F. Now we wait for the data from our indicators to be published in a financial magazine or at an online source. We manage to get the readings for our economic data for the EURO:

Indicator A: is in a range where the Euro may go up Indicator B: is in a range where the Euro should go up Indicator C: is in a range where the Euro could go down Indicator D: is in a range where the Euro usually goes down Indicator E: is in a range where the Euro could go up Indicator F: is in a range where the Euro may go down.

By looking at the above indicators, you don't know what the Euro is going to do. Furthermore, currencies are always traded in pairs (as was explained in Lesson #3). So you would have to get the fundamental data for another currency pair and compare it with the EURO. We think you can appreciate that this is no simple task.

We do not want to discourage you away from fundamental data. The best way to learn is to learn about one piece of economic data at a time. Eventually you will build a puzzle from all of the fundamental and technical data and make more informed trading decisions.