forex fortunes guide

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Table Of Contents

Foreword

Chapter 1:

Introduction

Chapter 2:

The Mindset And Trading

Chapter 3:

How To Trade On The Forex

Chapter 4:

Have Realistic Expectations

Chapter 5:

Understand The Power Of Patience

Chapter 6:

Be Organized In Your Approach To The Markets

Chapter 7:

Why Emotional Management is Critical to

Trading Success

Chapter 8:

Over Complicating Forex Trading Can Easily

Induce Emotional Trading

Chapter 9:

How Price Action Trading will Cure Emotional

Trading Problems

Wrapping Up:

The Winning Traits Of A Forex Trader

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Foreword

The aim of this book is to give readers a brief overview on Forex

markets from the means through which traders can develop the

proper mindset when trading, how to trade on the Forex market, why

emotional management is critical to successfully trading on the Forex

market, to discussing some of the favorable qualities a good Forex

trader should posses. These aspects of Forex trading will be discussed

in depth in the other chapters that follow but for now, we tackle the

basics pertaining to Forex trading as a money making entity.

Get all the info you need here.

Forex Fortunes Guide

Create The Mindset Your Need Trade Like A Pro

5 -

Chapter 1:

Introduction

Synopsis

Forex, abbreviated as FX, is a word that describes the simultaneous

selling or buying of currencies; it is an OTC (Over the Counter)

Market transaction which operates 24 hours a day, 5days a week.

Forex Markets are the largest financial markets possessing a trading

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volume of about $3 trillion per day. Forex trading operations take

place in all the major financial trading centers all over the world;

thus, these trading operations tend to overlap into the different time

zones globally.

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The Basics

Forex means the process of exchanging one currency for another

based on the market’s exchange rate with these currencies being sold

and purchased in pairs. For instance, for you to purchase Japanese

Yen you have to sell US dollars and as a result Forex currencies have

to be quoted in pairs for example GBP/USD, EUR/USD, or EUR/JPY.

Some currencies have more demand than others meaning that that

those with more demand trade more frequently and are referred to as

major currencies.

Some of the major currencies include the Swiss Franc, Japanese Yen,

British Pound, Australian Dollar, and US Dollar, whereas the less

frequently traded currencies are called minor currencies, these are

the currencies used in small developing countries, others refer to

them as exotic currencies. Currencies commonly used as investment

vehicles are confined into four pairs of currencies denoted by

USD/CHF, GBP/USD, USD/JPY, and EUR/USD.

Where Forex Trading Takes Place

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In the past, Forex trading was exclusively conducted by hedge funds,

central banks, multinational currency companies, and major banks

however; this has changed in recent times due the latest surge in

internet development and market innovations allowing even the small

time trader the opportunity to participate in the Forex market. Some

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Forex broker companies offer a variety of accounts to their clients

enabling retail traders the chance to trade in relatively smaller lots.

Even though Forex markets have undergone some remarkable

improvement, it still remains largely unregulated; and Forex trading

rules have not yet been clearly defined especially when trades go

beyond international borders.

Furthermore, traders with a sizeable amount of risk capital as is the

case with hedge funds and banks which have the ability to influence

the Forex market due to their huge financial leverage; therefore, those

with little or no experience in Forex trade will be venturing into risky

unchartered territories.

In as much as Forex trading carries very high risks, traders who go

through the trouble of educating themselves on the whole process

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could quite easily make a huge fortune in just a few weeks, with those

doing the contrary getting disastrous results amounting to huge

losses.

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Chapter 2:

The Mindset and Trading

Synopsis

Forex trading can be highly lucrative especially if you are equipped

with the necessary trading knowledge and skills. Apart from

possessing trading skills, it is essential to have the right mindset for

you to be successful in Forex trading.

This is the crucial aspect where most traders fail. No matter how good

you are in utilizing various trading strategies but without the right

mindset, you might not be able to achieve the desired results.

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Some would think that trading success happens in an instant and that

they can easily make money out of it overnight. Although there is

some truth in this belief and it is not next to impossible, only those

who continuously develop effective trading habits coupled with the

right trading mindset can actually prosper. Here are the best tips that

you can use to ensure success in Forex trading.

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Steps

Step 1: Set Realistic Expectations

The initial step is to set realistic expectations. Of course, all people

would want to earn profit. In this kind of business where currency

trading is highly volatile, you win some and you lose some. Chances

are, if you use the right strategies and forecast, you can definitely earn

a huge sum. But on the other hand, you can also lose your money.

Basically the point here is to hope for the best outcome and anticipate

the worst case scenario. There are still many factors and other market

forces that can directly and indirectly affect currency trading. Make

sure that you do not stake your whole life on the line just to be in the

Forex trading business. It is strongly suggested that you trade using

the disposable risk capital, the spare money that you can use for any

trading ventures.

Step 2: Trade Wisely- Quality over Quantity

It is a common misconception of some traders that they have to trade

everyday just to optimize their earnings. The truth of the matter is

that, you can further elevate your earnings if only you will learn how

to be more patient in trading. If you really want to achieve long term

success and get to explore the markets, you need to learn how to trade

using daily charts.

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Along with learning how to properly use these daily charts to your

advantage, you start to develop your trading mindset where you have

to patiently wait for the right timing. Once you have calculated risks

and you think you have the trading edge then that is the perfect time

to make the decision.

Step 3: Be Organized in Your Approach

Learning the market forces that affect the movements in any trading

system takes a while. Without any organized approach, you might end

up losing your money. Before anything else, you need to come up with

your own trading plan and trading journal.

This allows you to trade with discipline and to be more organized

when it comes to your trading activities and trading options.

Monitoring your daily trading journal enables you to assess your

performance and monitor your earnings as well.

Last but not the least, use the price data and other relevant

information before you trade. Be decisive in your trading decisions

and always go for calculated risks.

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Chapter 3:

How To Trade On The Forex

Synopsis

Since Forex is by far the most popular trading world of currency, it

also connotes that one should be able to understand the factors

involved in the trading process to truly garner profit from it. If you

were one of the people who want to fit in and moreover, standout in

this market, then some of the tips below would help you get a headstart.

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Understanding the Jargons of the Market

Jargons are basically the terms used in a certain company. To be able

to understand the whole process, then one should take the time to

integrate what the terms mean. The basic of these are the ‘base

currency’, the term for the currency one is spending or is trying to get

rid of. This works primarily by selling one currency so you can

actually buy another type of it. The ‘exchange rate’ is the term you

look at when you want to know how much you would spend to buy

base currency from your quote currency. These are just some of the terms found in Forex trading.

It is also important for you to decide on the two primary currencies

that you want to buy and sell. Thus, just like any other businesses,

you should be consistent in the quality of your task. Therefore,

staying at one exchange rate would possibly entail bigger profits.

Opening an Account

A brokerage account is an important part of the exchanging currency

business. You firstly have to consider the reliability of the broker you

choose to open an account to. It is advisable to research about the

broker’s background and how many years have he or she been in the

industry. In addition to this, you should also be able to identify the

broker’s transparency through asking some of the people that also has an account.

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Start your Trade!

This step is the most important part of this business. Once you started

your venture and has done steps 1 and 2 for preparatory, be not

complacent and still take time to analyze the market before you

proceed to the trade itself. The technical, fundamental and sentiment

analyses should be considered. Technical means reviewing and

researching on some charts regarding the trades. Fundamental is

taking a bird’s eye view of the economic fundamentals of different

countries, and thus using this to your advantage in choosing the right

currencies. Lastly, the Sentiment analysis entails the mood of the market.

Never forget that every step you take can lead to the destruction or

the progress of your trading. It is good to take risks but it is better to

always be cautious about it. Do not just engage in this trading venture

because you thought it will be easy, every step is counted and

therefore must be taken into full consideration.

For whatever it costs, also always be reminded that businesses are

risks; but if you take the risks with the proper weapons of knowledge

about how it will and can turn out, it usually pays off at the end.

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Chapter 4:

Have Realistic Expectations

Synopsis

Starting out in Forex trade is never an easy thing. With the promise of

high investment returns, a lot of people are easily enticed to venture

in currency trade without having second thoughts. After all, who

would not want to double or to triple their money? For some, this

might appear as the easiest way for financial liberation. Forex trade

can definitely make it possible for you to earn more.

When you come across Forex trading websites, almost all would

promise you converting your money into millions in just a short span

of time. Some online advertisements would even beguile you to finally

quit your job and to just focus on Forex trade.

But is it really worth it?

Can you really make it big overnight?

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Why Set Realistic Expectations

The answer is both a yes and a no. Forex trading is definitely worth 

your effort especially when you already possess the right mindset and 

you use effective trading strategies. But the promise of earning 

thousands or even millions overnight is just impossible and even 

dangerous. 

When you finally set to venture in currency trade, setting realistic 

expectations is the initial step. Success in this kind of business all 

starts with knowing what to actually expect. Since there are different 

market forces that can directly and indirectly impact currency trade, 

you can never be 100% sure. 

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Always keep in mind that any investment involves certain level of 

risks. It is basically the same thing when it comes to Forex trade. 

Without a doubt, you can earn a huge sum. But on the other side, you 

can also incur losses. Once you come out thinking that you can have 

all the economic gains by just buying and selling currencies, you are doomed to fail. 

Remember that just like in kind of investment venture, you need to be 

realistic to make your goals achievable and feasible. Your attitude and 

mindset towards Forex trading certainly affect your trading decisions.

Calculating Risks in Forex

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Why Set Realistic Expectations

The answer is both a yes and a no. Forex trading is definitely worth

your effort especially when you already possess the right mindset and

you use effective trading strategies. But the promise of earning

thousands or even millions overnight is just impossible and even

dangerous.

When you finally set to venture in currency trade, setting realistic

expectations is the initial step. Success in this kind of business all

starts with knowing what to actually expect. Since there are different

market forces that can directly and indirectly impact currency trade,

you can never be 100% sure.

Always keep in mind that any investment involves certain level of

risks. It is basically the same thing when it comes to Forex trade.

Without a doubt, you can earn a huge sum. But on the other side, you

can also incur losses. Once you come out thinking that you can have

all the economic gains by just buying and selling currencies, you are

doomed to fail.

Remember that just like in kind of investment venture, you need to be

realistic to make your goals achievable and feasible. Your attitude and

mindset towards Forex trading certainly affect your trading decisions.

Calculating Risks in Forex

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Chapter 5:

Understand The Power Of Patience

Synopsis

A lot of people make huge losses in Forex markets just because they

make simple mistakes like overtrading or not being patient enough to

allow their trade setups to play out and instead they enter and exit the

Forex market compulsively. The problem may lie not so much with

your trading strategy but with your inability to exercise patience by

waiting for the best low risk opportunity with the highest probability

of success. The tips discussed below will help any trader step up their

trades from mediocre trading to consistent and profitable trades.

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Educate Yourself on the Forex Market

It is important that new traders educate themselves on all matters

pertaining to the Forex Market resisting the impulse to rush into

trades before understanding the ins and outs of the trade. Learning

through mistakes on the Forex market could leave you counting your

losses, but lucky for you this can be avoided by taking the time to

study the market. After clearly establishing your trading edge, you can

now exercise patience by waiting for the right moment to execute

your trade; patience is worthless unless the trader knows what they

are waiting for.

Create a Trading Plan and Stick to It

The best traders in the market always plan ahead and are prepared at

all times having compiled an elaborate trading plan after which they

always act according to their plans.

Creating a plan does not necessarily mean that they trade all the time;

novice traders usually accumulate losses because they think that they

should be on the market trading all the time. Preparation is an

important aspect to any successful trade but at times it’s better to sit

tight and wait for the trade to play out; just because the Forex market

is open 24/7 does not mean that you should be trading all the time.

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Wait for Your Trade Setup to Play Out

Good traders never anticipate how their trades will play out, those

who do lose a lot of money in this manner. Exercise patience when

your trade plays out and bear in mind that a good trader can be

compared to a lion, an amazing predator due to his great stalking

skills, and a patient one at that, always waiting for the perfect

opportunity to go for the kill and what’s more when he goes for it he

rarely misses.

Jesse Livermore once said that big money is made by sitting and

waiting, and never by thinking, he adds that it’s important to wait for

all the factors to tilt in your favor prior to making the trade.

Trust Your Instincts

Accurate gut feelings are indisputable with one of the greatest Forex

traders, George Soros revealing that he depended heavily on his

instincts when he traded.

Soros said that he relied on his animal instincts and that when he

suffered from back pain he used the onset of the pain as a sign that

something was wrong with his portfolio. This will prompt him to

check whether something was amiss when he might have done the

contrary, if he had ignored his instincts he might have incurred huge losses.

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Know When to Call it Quits

If during a trade you realize that things are not going well for you it

will save you a great deal of money to retrench rather than adding on

to your losses by waiting for your fortunes to change. To stay in the

trading game, you have to be strong enough to bear the profits and the losses and take George Soros as an example. It didn’t matter tohim whether he lost or won, if the trade didn’t go well, he was still confident that he had the capacity to win other trades such that he

could confidently walk out without any hard feelings.

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Chapter 6:

Be Organized in Your Approach to the Markets

Synopsis

The phrase “playing the market” may make it seem like you would

enjoy greater success by trusting your gut instincts, going with the

flow, and being a slave to trends. However, the truth is actually the

opposite. You have better chances of earning from Forex trading if

you adapt a more disciplined and organized method when trading.

Avoid letting your emotions and all the hype get the better of you with the following tips.

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Planning is still the key to success

If you remember your Management 101 lessons, then you should

know that Planning is the first step to success. Forex trading is no

exception. You need to come up with plans for your short-term and

long-term goals. These plans also have to be detailed. If possible,

include step-by-step guidelines for how you want your strategy to work out.

Focus on a few high-potential currency pairs.

Don’t spread your resources thin. It’s hard to put your plan and strategies to good use when you have a lot on your plate. Rather, it’s

better to take your time choosing a small number of currency pairs

that you can fully focus on and nurture until the very end.

The more time you spend studying how your pair works in the

market, the more chances you have of predicting its future trends.

Consequently, you’ll have a lesser need to rely on instincts alone

when making a decision. Instinct is not a bad thing at all, but instincts

powered by knowledge are even more trustworthy.

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Use a timetable.

A timetable can be a more powerful tool than an ordinary calendar if

you know how to make good use of it. To start with, take note of all

the important events that are relevant to your trading plan and

strategies. These include but are not limited to the following:

 Public holidays in both countries where your currency pairs

originate

 Global and economic summits affecting your currency pairs

 Economic releases

 Scheduled key announcements from major market players

All the events above are sure to affect your currency pair in terms of

demand, supply, and liquidity – just to name a few. Every time you

add an event to your timetable, remember to review your plan and

strategies and adjust them accordingly if it proves necessary.

Expand your network.

When it comes to any kind of trading, it’s who you know, what you

know, and when you know that matter. Being able to predict market

trends is a great skill, but it’s not one you can always rely on.

However, what you can be sure to depend on at all times is your

network. It’s fairly easy to determine which individuals will make

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good sources for insider’s information. The challenges lie in making

those individuals a willing part of your network.

Check technical analyses.

Technical opinions must always be taken into account even if you

strongly feel the opposite of what these experts have to say. At the end

of the day, you need to remind yourself that technical analyses are

based on verifiable facts and figures. They have to mean something.

Last but not the least, remember that your ultimate goal is to

minimize your loss first and increase your profit next. Don’t gamble

everything on a whim.

Be man enough to admit when you’re on the losing side and just start

again. At least you still have something to start with unlike other

traders, who have lost everything because of their inability to keep their emotions in check.

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Chapter 7:

Why Emotional Management is Critical to Trading Success

Synopsis

Trading in the foreign exchange market is not all about strategies.

Oftentimes, it can involve a lot of emotions especially when the

experience is not at all pleasant. After all, even when the system of

trading is reliable, human factor still remains as the major player. The

trader can be very effective in maximizing the potentials of the

trading system.

It is also possible that the trader might lack certain qualities that

prevent him in making the right approaches. It becomes even more

disadvantageous when the trader lacks patience in dealing with losing

trades. Thus, it is essential to control strong emotional urges ensure

that the process of trading is managed properly.

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Proper Emotion Management can Lead to BetterCalls

There are instances wherein a trader dismisses the signs that his waysare inefficient, thinking that it is the system that is at fault. When thishappens, the trader will continue with the trade, hoping that thesystem will eventually turn out for the better. On the part of thetrader, this kind of reaction can be translated to as being optimistic.

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However, unless the trader is already an expert in the Forex market

and he has the right resources that will validate his moves, this

reaction is actually an act of stubbornness more than anything else.

The trader is given two paths- to recognize what is happening or to

maintain blind optimism. When the trader recognizes that the pattern

is not going to favor his end anytime soon, the best decision would be

to cut losses short. Acknowledging the technicalities of how the

market works will prevent the trader from experiencing any more marginal losses.

It is quite observed from novice traders that they are too hopeful

when they enter the Forex market. Although optimism can be a good

thing, failure to identify negative signs while they are happening will

undeniably slow down the trader’s progress in this volatile industry.

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Patience Yields Better Results

On the other side of the spectrum, it is also important to keep

emotions in check when good things are happening during the trade.

However, a normal reaction from a trader who is new to the system

and has immediately acquired profit would be to withdraw them at

the first sign. After all, liquidating the profits will translate to

guaranteed earnings.

A good lesson that amateur traders can get from experts in the system

would be to let their profits run. It is true that seeing the first sign of

profits will make a novice trader excited to cash out on his earnings,

but if he really wants to succeed in the system, he should learn how to

play along with it.

With familiarity, guidance and patience, the trader can still expand

his profits while letting it run its course. The trader can study past

trends so it will be easier for him to recognize the signs that the

market is about to reverse. Once this occurs, he can liquidate his

profits which he allowed to mature to its best potential.

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Chapter 8:

Over Complicating Forex Trading Can Easily Induce

Emotional Trading

Synopsis

These Forex trading tips are for those currently experiencing losing

streaks, it is not unnatural for a trader to lose money once in awhile,

but when you realize that you are making fewer profits and losing

more, you may have some deep underlying issues you need to fix

before you can get back on track. After reading this book, traders will

learn how make the trading process as simple as possible, providing

them with the insight on how to make more profits in the markets.

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Mastering Your Mind

The primary reason as to why a lot of Forex traders are losing money

is that they are unable to consciously master their emotions and it

does not take long before they are deeply caught up in emotionaltrading mostly because the latter is easier and is more exciting thancontrolled trading. In essence, Forex markets offer traders a pair ofoptions, the first one being to recklessly gamble your hard earnedmoney away in the adrenaline packed rollercoaster trades or theability to master your emotions through discipline, slowly making

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consistent money over a period of time.

A disciplined trader has the proper trading attitude which allows

them to grow their investment without necessarily having to resort to

risky games such as emotional trading.

Implementing the Tools for Proper Money Management

It is important that you first understand how to manage your money

on the Forex trade and then later on you can proceed to implement

the latter in you trading mannerisms. A lot of traders become very

emotional when trading because they either trade too frequently or

risk too much of their money.

Risking huge sums of money in any given trade subconsciously makes

the trader to inherently place more meaning or value on every trade;

since they have plenty to lose which naturally causes them to worry

more thereby becoming more emotional about the Forex trade.

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This kind of emotional trading works to fuel itself because emotional

trading results in more emotional trading. If it so happens that a

trader loses a significant sum of money, they put themselves in a

vulnerable position of carrying on with the cycle because they tend tofeel a great deal of anger and frustration over the lost money. Thisonly fuels their desire to risk more money so as to try to make up forthe money they had lost earlier.

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Traders often mismanage their Forex trading accounts by trading a

little too frequently and as a result they tend to lose way too much in a

relatively short period of time. Over trading could be an emotional

outlet for the trader and for them it is a form of gambling, to prevent

yourself from overtrading it is important that you have a

comprehensive trade risk management plan which should specifics on

the means through which you can preempt overtrading.

Mastering Your Trading Strategies

It is important that any successful trader masters their Forex trading

strategies, considering the fact that a lot of traders are unsure of what

it is they are searching for in the market, so as to avoid inducing emotional trading.

31 -

Chapter 9:

How Price Action Trading Will Cure Emotional

Trading Problems

Synopsis

Kingdoms have fallen and battles have been lost the moment men let

their emotions get the better of them. Since the world’s greatest

warriors and kings have fallen prey to their own emotions, how can

mere traders avoid the same death trap?

The answer is simple: it’s all about having the right mindset.

Consequently, price action trading is a good foundation to use for

developing the right mindset. This system consists of several fundamental principles.

32 -

Focus On Managing Your Emotions Instead Of

Ignoring Them

Emotions are not your enemy. This is extremely important to

understand. Ignoring them will not help you at all. If anything, they

will simply make you more prone to bad trading decisions. What’s

more critical is being the master of your emotions with the right

mindset rather than the other way around.

Avoid Overanalyzing Forex Trading

Some traders are so opposed to the involvement of emotions in their

trading strategies that they go to the extremes and over analyze their

next steps. Again, doing this will only backfire on you. When you

overanalyze and even over-complicate your trading strategies and

market trends, you will simply end up confusing yourself.

Remember that every complicated equation can be broken down to

various simpler equations. In fact, it’s one of the golden rules when

writing algebraic equations: the simpler, the better! It’s the same with

Forex trading. If a system proves too complicated for you, then forget

about it! If it works for another trader, good for them! But don’t let

that sway you into knocking your head against the wall. There are

many other systems you can try – and some of them will surely prove

much more suitable to your personality and preferences.

Stay Objective

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If you succeed in emotional management, then you will be able to use

your emotions to help you stay objective. With emotional

management, you’ll know which emotions to believe in more. If you

are presented with a very high-risk investment that you do not

understand but your friend recommends, what should you do? Greed

will tempt you to bet on it, but your instinct for danger will warn youagainst doing something foolhardy.

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With successful emotional management, you will be able to take the

more objective middle ground instead and that’s to carefully research

your options before making any decision.

Constant Training And Practice Leads To Permanent

Habits And Mindsets

Consistency and constancy are essential in making price action

trading a permanent part of your mindset. It’s not enough to know

how price action trading works. It’s not even enough to be aware that

emotions can have a positive and negative impact on your life. You

should also make a conscious effort to apply your knowledge to your

trading decisions. It’s all right to forget these principles once in a

while, but don’t let that hinder you from trying again.

Having the right mindset will not make your strategies fail-proof, but

it can significantly reduce your risks of incurring heavy trading losses.

With the right mindset, you become more aware of the pros and cons

of your decision and that’s more than what you can say about other traders.

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Wrapping Up

The Winning Traits of a Forex Trader

In the world of Forex trading, the most successful traits a trader may

have has nothing to do about who gets to play the good or bad guy.

Rather, it’s all about the traits that increase your tendencies to make

wise – or unwise – moves.

Cut Your Losses Early

Traders hear this very sage advice all this time, but most ignore it – to

their everlasting regret. Hope is a powerful motivator. And it’s always

good to be optimistic. However, you have to be careful about choosing

what to be hopeful for. Cutting your losses early does not mean you’re

quitting. It simply means it’s time to move on and try another

currency pair. It really is that simple.

Don’t Fix What’s Not Broken

It is a cliché, but that doesn’t stop it from being true. In fact, ignoring

clichéd advice is quintessential example of how people insist on

leaving the path to success in order to take a wrong turn. Why put a

stop to an account that’s doing well? Although there’s a chance for

trading pairs that are doing so good to plummet and suffer a huge

drop in their rates, these things rarely happen without any noticeable

35 -

signs. In most cases, you will have enough clues to warn you and fall

back to Trait #1: cutting your losses early.

Know The Right Time To Trade

Some people just like being the exceptions to the rule for the sake of

it. However, that kind of attitude is dangerous for a Forex trader to

adopt. More often than not, it will lead to heavy trading losses,

enough to break the bank for good.

Timing is everything in Forex trading. You may like to think it as a

subjective factor, but studies show that timing is actually objective.

Numerous experts have proven with their case studies that the best

time to trade in the Forex market is between 1900h – 1100h in UK

time, which in Eastern Time will be around 1400h to 0600h.

Know The Best Times To Use Trading Breakouts Versus

Range Trading

Rather than letting mere instinct to be your guide, there’s a surer way

of determining which of these two essential trading strategies is best

to use.

 Range trading is best to use during active hours as your

strategies are given sufficient time to work.

36 -

 Trading breakouts are best to use during volatile hours as they

can take advantage of the extreme changes that currency pairs

will undergo.

Make Use Of An Effective Leverage

How much leverage you allow yourself to use will always have a

considerable impact on your trading strategies and its eventual

outcomes. There are many different formulas you can use to compute

how much leverage you can afford to use, but at the end of the day the

factors listed below will prove most important.

 Keep it conservative.

 Always apply a stop-loss point to your strategy.

 Risk tolerance levels do not have to be proportionate with

leverage.

There are always exceptions to the rule, and those are simply an

inevitable part of the game. Even if things do not go your way, the

above traits will serve to minimize your losses and increase your winnings.