Forex Today

While some countries have still not accepted the currency as
their own (such as Britain, who still uses the sterling pound),
the process of currency conversion has been simplified
without the large number of various currencies that were
previously dealt with. Instead of dozens of currencies, the
main countries trade in five – U.S. dollars, Australian dollars,
British pounds sterling, the Euro, and the Japanese Yen.
Today, the Foreign Exchange Market is international and
worldwide. The market is open 24 hours a day, 5 days a
week, to accommodate all of the time zones for all of the
major players. These now include most of Europe, the
United States, and Asian markets, especially Japan. Even
Australia has joined the international trading markets, and
since such nations are halfway around the world from some
of the other top players, time zones obviously must be taken
into consideration.
Another completely separate but perhaps more important
concern with trading in Forex is understanding how trade
works in multiple currencies. How can you compare the
value of a stock across international lines if the values are
expressed in two separate, non-equivalent currencies? And
how do you measure gains and losses when conversion rate
is constantly changing?

The History Of Forex

When foreign trade began, it was not an international trade
market. It was borne out of the Bretton Woods agreement
in 1944, which set forth that foreign currencies would be
fixed against the dollar, which was valued at $35 per ounce
of gold. This precedent was first put into practice in 1967,
when a bank in Chicago refused to fund a loan to a professor
in sterling pound. Of course, his intention was to sell the
currency, which he felt was priced too high against the
dollar, then buy it back later when the value had declined,
turning a quick profit.

After 1971, when the dollar was no longer convertible to
gold and the domestic market was stronger, the Bretton
Woods agreement was abandoned, and the currency
conversion process became more variable. This allowed for
a stronger backing in the foreign markets, and the United
States and Europe began a strong trade relationship. In the
1980s, the market hours and usage was extended through
the use of computers and technology to include the Asian
time zones as well. At this time, foreign exchange equaled
about $70 billion a day. Today, about twenty years later,
the trade level has skyrocketed, with trade equaling close to
$1.5 trillion daily.
Originally, trading across international lines was more
difficult, with several different currencies involved across
Europe. Though the major players in the European market
were deeply involved in and veterans of international trade
by the time other markets joined in, there were more
currencies to keep track of – the franc, the pound, the lira,
and many more – than was reasonable. With the birth of
the European Union in 1992, the wheels were set in motion
to create a single currency that would be used across most
of Europe, and the Euro was finally established and put into
circulation in 1999.

Forex Functionality

While the functionality of Forex is the same as a domestic
stock exchange, the commodities and prices are more
volatile, and there are additional factors to take into
considerations besides the typical risks associated with a
domestic market. You will have to contend with not only the
value of your stocks and your currency, but also the foreign
currencies involved in any trades or exchanges on Forex, as
well as the inconsistencies of values of particular goods and
services across international borders. It is like driving a car
with a standard transmission as opposed to an automatic. On the domestic front, the work is mostly done for you, and
all you have to do is navigate, much like an automatic
transmission. However, shifting gears is quite similar to
having to constantly take part in the currency conversion. It
can be distracting, and it certainly complicates the act of
driving.
Because the financial situation of many countries is not as
secure as that of the United States, this can pose a
formidable problem in determining where to invest your
money and what to expect next in the international market.
Knowing what countries and currencies are involved in Forex
can assist you by allowing you to more closely monitor the
financial situation in the nations with which you will be
interacting.

An Introduction to FOREX

Forex is the nickname for the Foreign Exchange Market. In
the United States, there are several branches of the stock
market, each with their own name. For instance, some
stocks trade on the Dow Jones, others on Nasdaq. Of
course, all stock market transactions in the United States
take place on the New York Stock Exchange (NYSE). In
other countries the same is true. There may be one or more
distinct markets.
However, international trade takes place on the market
termed the Foreign Exchange Market, or Forex. Several
countries across the world in almost every time zone
participate in trade on Forex, with multiple currencies being
utilized and stocks and commodities from all participating
countries being offered for trade. Because there are so
many nations and time zones involved, Forex does not
function as a “business day” entity like most domestic stock
markets. It remains open for trade 24 hours a day, 5 days a
week.
Of course, these additional hours increase the risk factor
intensely for those of us who are human and obviously
cannot monitor our investments 24 hours a day. This means
that the value of your holdings could potentially plummet overnight, while you sleep, because other countries are still
trading while you are in a dream world. Again, it is like a
car – there are many moving pieces under the hood, and
just because you cannot see them does not mean they are
not functioning.
This is one reason for several safety options, like limit
orders, which we will discuss later. This is also why it is
strongly recommended that your first attempts to make
money on the stock market are not transactions that take
place within the Foreign Exchange Market but on a standard
nine-to-five domestic trading market. In our car analogy,
this would be comparable to having asked someone who has
never driven or even changed the oil in a car to rebuild the
engine.

The Market Outlook

By taking note of various changes in the status of different
available stock options, you will learn how to spot early
market trends, giving you a clue to the future of a particular
commodity, and this can only add to your chances for
profitability. Prediction is a big part of the game when
working in the stock market, since you can never be
completely certain in what direction the market will swing at
any given time.
However, you can make an educated guess, much the same
way a meteorologist forecasts the weather. While he or she

is not right 100% of the time, the forecast is usually quite
close to the actual outcome of the weather because the
meteorologist is a scientist who has studied weather trends
and can pick out details that assist in making that educated
guess. With a little time and seasoning, you can attain the
same level of experience and intuition within the stock
market.
Once you have become more comfortable functioning in the
same world as the stockbrokers and day traders, and you
feel confident (or at least less nervous or awkward) making
such important financial decisions, you may decide to make
your move toward the Foreign Exchange Market (more
commonly known as Forex), and the goal of this book is to
prepare you to operate within the boundaries of this more
complex entity. Next, we will discuss some of the properties
of Forex and how much more complex this stock market
entity can be than a standard domestic market.
The Foreign Exchange Market is incredibly volatile, and there
are a lot more factors to consider when placing an order on
this market than on a domestic market. The following
chapter is an introduction to the exciting and somewhat
scary world of the Foreign Exchange Market, or Forex.

Bulls And Bears

Understanding stock market trends can make your job of
earning money in the market much simpler. In contrast, if
you know little or nothing about these trends can cause
serious loss.

Bulls And Bears
As you dig deeper into the market and learn more about the
way it functions, you will begin to hear certain terms about
marketing trends that seem to be repeated over and over
again. Market trends are variable and volatile, both on a
daily basis and over extended periods of time. In the past,
for example, the United States has had devastating stock
market crashes, but due to the freedom of a capitalist
society, the American economy has always eventually
rebound.
What does it mean for the market or a particular stock to
rebound? Assuming that the value of a company or its stock
has plummeted to a level that seem unrecoverable, leaving
it practically worthless, it may feel as though that company
is in danger of bankruptcy and falling off the scope of the
free trade markets altogether. All of a sudden, however, the
founder of that company may introduce a new product over
which consumers go wild. Everyone wants one, and this

product may be in short supply upon its introduction,
causing a race to the department store shelves.
When such a move occurs, the law of supply and demand
will take over, making the company valuable once again.
The stock price for that company’s shares will recover, and
the resulting gain in value would be considered a rebound –
a return to the original status (or better) prior to the
devastating loss.
The market trends either up or down, and there are specific
references to strong changes in the market values that you
may frequently hear. If several different areas of the
market are in a steep downward slide, with values dropping
rapidly (perhaps even ten or twenty percent in a few days),
it is referred to as a bear market. You can remember this
reference as though you are in the extremely dangerous
position of being chased by a bear – if you are in possession
of several stocks or other commodities worth a goodly sum,
you have a serious chance of losing a great deal of value
that could translate to a loss of net worth should you choose
to sell, and it can be a similar, very dangerous situation.
Your best bet in these cases is to either sell before prices
drop below your original purchase price or to hold onto the
shares until the market rebounds. However, when the bear
market reaches a low point, it can be an ideal time to get
into the game, as it is rare for prices to drop below this

point. Then, if you patiently await the recovery or rebound
of the market, you can make a great deal of money from a
bear market. These options will be discussed in more depth
in later chapters.
At the same time, a bull market is a strong general upward
trend for many stocks. You might compare this to the
running of the bulls in Pamplona, Spain, every year. You are
safer if you are indoors when the running occurs, and by the
same token, if you own stock during a bull market, you are
in a prime position to increase your net worth and sell your
shares, making a great deal of money. This is another idea
will be further explored in greater detail further on in this
ebook.

The 6 Giants of Global Profits

The U.S. dollar is falling so quickly …

And so many of our favorite investments are moving up so broadly …

I've gathered the wisdom of our entire team this morning to give you a full run-down on the six giants of global profits.

I won't keep you guessing as to who the giants are. They're China, India, Japan, Brazil, Australia … and Canada.

There is nothing, I repeat nothing, that you do every day that is not connected to, or dependent upon, these six countries.

They make the clothes you wear. They answer the phones when you call customer service.

They supply the gas for your car. They build your car. They make the paste in your toothpaste. Some of them even examine your CT scans instead of your doctor.

Quietly, invisibly, they have penetrated every corner of your daily life … except perhaps one: Your portfolio.

If you do not hold significant investments related to these six global giants, you are already missing out on an opportunity that comes along (maybe) once every 100 years.

China's stock market, for example, rose 131% in 2006 — nearly ten times more than ours.


Even Brazil's market, despite a relatively slower economy, delivered double the gains of the S&P 500.

In fact, fifty-five different foreign stock markets beat the U.S. in 2006.

Now, those markets are soaring even further, still widely outperforming the Dow. China is trumping the U.S. markets. So are Brazil and every other country we've been recommending.

Safety First

Mike Larson warns us that the housing woes in the U.S. are not over. They're getting worse.

And no matter what the profit potential may be overseas, we all feel strongly that your first priority must be capital preservation. That means putting SAFETY first.

That means keeping a good chunk of your core holdings in the most conservative investments you can find.

At the same time, if you're like most investors, the idea of global investing often sounds like a crapshoot. But that's just not true. If you've got all of your money invested in U.S. stocks, you've got all your eggs in one basket. So you could be exposing yourself to more risk.

And you could be missing some of the largest, most sustainable profit opportunities in the world today.

So let's embark on a quick, 10-minute global excursion to review where we've come from and where we're going …

China: "To Get Rich is Glorious"

When Chinese Premiere Deng Xiaoping spoke these words back in 1993, Larry Edelson was among the first to let us know.

And indeed, that's when China unleashed an economic force unprecedented in modern history. That single, but pivotal, change in philosophy marked the beginning of China's relentless march to prosperity.

And along the way, we are seeing a series of largely untold economic miracles:

Chinese consumer spending has jumped from virtually zero to nearly $1 trillion.


There are now over 100 cities in China with a population over 1 million. The U.S. has only nine.


China currently boasts 1.3 billion consumers. Plus, to stimulate foreign investments, Beijing is pulling out all the stops.
China plans to boost natural gas consumption by as much as 500 percent … invest nearly $4 billion in information technology and infrastructure … expand fiber optic networks … beef up mobile communications capacity … establish digital capable HDTV transmission … and use GPS technology for traffic control.

China is building massive skyscrapers, highways, city expressways, subway lines, and an intra-city light rail.

It's expanding the Beijing airport, improving water, electric, gas, and heating facilities. All across China, the equivalent of a city the size of San Francisco is being built every two weeks. This year alone, Shanghai (with 17 million people) will complete towers with more square footage than all the available space in Manhattan combined.

Even more significant is that China just launched a rural initiative for over 800 million citizens.

It plans to spend over $11 billion a year on rural education, irrigation, and medical services.

And it's investing tens of billions to build 112,000 miles of rural roads — enough to circle the globe four times over.

Imagine, just imagine, the raw materials and natural resources like cement, asphalt, tar and steel required to feed that kind of growth. That's why consumption of just about every imaginable resource is flying off the charts!

The Relentless Rise of India:
"It's Like China 15 or 20 Years Ago."

Those are the words of a renowned emerging-markets investor that appeared in a recent issue of Time magazine. But that's just a tiny glimpse of India's almost unlimited potential:

India is currently home to more than 1 billion people and projected to surpass China as the most populous country on Earth by 2015.


India's economy is growing 8 percent a year — the second fastest rate in the world.


The Indian stock market has tripled in three years — creating a record number of billionaires. One reason: Foreign investors have poured $30 billion into India's stock market in 36 months.
Just like China, India needs massive amounts of natural resources and commodities to feed its booming economy.

And this is not just a passing trend. It's an economic appetite that could last for a long time. But where will China and India find the commodities, natural resources, and consumer products to feed their unbridled expansion?

A "Back Door" to Asia: Brazil!


Elisabeth's mother, who lives in Brazil, recently turned 90. At the reservoir on our farm, her grandchildren and even their dog joined us in celebrating.

Ever since Luiz Inácio Lula da Silva ("Lula") was elected Brazil's president five years ago, she's been saying he'd wreck the economy.

Lula has done precisely the opposite.

He's implemented the most disciplined fiscal and monetary policy the country has seen in half a century.

He has boosted Brazil's currency by 69% since he took office in January 2003. He has increased the trade surplus by 225% from $14.1 billion to $45.8 billion. And he has paid off 100% of Brazil's debts to the International Monetary Fund.

To achieve all that, however, Lula had to pay a stiff price: Spartan government spending, sky-high interest rates … and, consequently, a relatively slow economy last year.

So it's only now, in his second term, that he feels he's got a firm enough financial foundation in place to go for the real prize: Big growth.

With that goal in mind, the Bank of Brazil (the equivalent to our Fed) has already slashed its benchmark interest rate 14 times, to the lowest level in recent history.

And sure enough, the economy is responding:

Retail sales have jumped 8.5%. Capital goods production jumped 18%. And Brazil's key stock index, the Bovespa, which rose 32.9% last year, has gone on to new highs in 2007.

In just four years, Brazil's president, Luiz Inácio Lula da Silva, has transformed the Brazilian economy and forged monumental deals with China.

Brazil's trade balance has gone from an $8 billion deficit to a $46 billion surplus. Just recently, Brazil's state-owned oil company inked a deal to sell China 12 million barrels of crude oil.

How do you get all that oil out of Brazil when its infrastructure is not up to par? No problem for China.

They've offered many billions to improve Brazil's port and railway infrastructure — so they can extract natural resources more efficiently. China is also building the world's second largest dam in the Brazilian Amazon.

And energy from that dam will power mines that send raw material to … China. Brazil's natural resources are equivalent to those of the U.S. and Canada combined. But even those resources alone can't feed the needs of China, India, and all of Asia.

So these resource-gobbling giants are looking elsewhere too.

Canada: The Strongest, Most Stable
Natural Resource Nation in the World

Sean Brodrick tells us that, unlike emerging nations, Canada has all the technology and expertise it needs to exploit its vast resources.

Even more important, Canada has modern deep-water ports on both the Atlantic and Pacific coasts — giving it easy access to both European and Asian markets.

Best of all, Canada is sitting on massive deposits of gold, uranium, coal, oil and other vital resources.

And they're already cashing in. Canada recently recorded its fifth-best trade surplus in history.

The reason? China.

Chinese importers are buying all the raw materials that Canada can sell them. That, plus a boom in mining projects and fattening margins, helps explain why the TSX-Venture exchange (Canada's small-cap market) has outperformed the S&P 500 by 153% over the past five years. Meanwhile …

China has bought one of Canada's largest oil companies.


China has blanketed the country with a vast network of scouts (armed with truckloads of money) to scoop up coal mines, oil sand fields, natural gas pipelines and metals.
Remember: Canada is the most modern and technologically advanced of the world's large natural resource nations.

Exploration spending for mining in British Columbia alone hit a record high of $230 million dollars in 2006, and should keep ramping up in 2007.

A New Chinese "Gold"
Rush in Australia?

In the 1800s, Chinese miners flocked to Australia for the great gold rush. Today, it's happening again.

Only the Chinese aren't looking for gold; they're after uranium. And they're not coming with picks and shovels.

They're coming with mountains of money. Why? Because Australia happens to sit on the world's largest known deposits of uranium — with more reserves than the United States, Canada, Russia and Brazil combined. And with more than 900 new nuclear plants now being planned, the hunger for uranium is just beginning.

Australia's abundant natural resources — including iron ore, nickel, coal, uranium, and more — are in such huge demand in nearby Asia, it's no surprise then that …

Australia's economy is now in its sixteenth consecutive year of expansion.


Job growth has been the strongest in 17 years, dropping the jobless rate to the lowest level in more than three decades! Result: Consumer spending is growing and consumer confidence recently hit a 19-month high.


There's no better indicator of a country's future than its currency, and the Aussie dollar recently reached its highest level since 1996.
Japan: The Sun is Rising Again

Japan is now enjoying its longest, non-stop, sustained expansion since World War II.

Automakers are soaring. Banks are thriving. Unemployment hit a record low.

And the stock market doubled in 24 months. So what's the mega-force behind Japan's remarkable recovery? You guessed it — China.

Japan's trade with China jumped to $189 billion last year, the seventh straight annual record. This year, it should easily top $200 billion.

Look. Just when most people were giving up on Japan a few years ago, the country was cleaning up its balance sheet and starting to capitalize on China's economic boom.

At the same time, Japan is also solidifying trade and security links with Australia. It's currently the biggest buyer of that country's coal, natural gas, oil, and agricultural goods. And if the two countries hammer out a free trade agreement, both economies will get an additional boost.

Tony Sagami, who recently revisited his native Japan, puts it this way:


"Everybody I talked to — from the fish vendors at Tsukiji market to the Shiseido clerks at luxury Takashimaya department store — says their companies are making more money and they're much more optimistic about the future.

"But investors aren't quite as bullish. So valuations on Japanese stocks are still among the lowest in the world."

How to Invest Overseas

Years ago, investing in foreign stocks was cumbersome. You had to start with substantial sums. You had to open special brokerage accounts in Hong Kong, London or elsewhere. And you often had to pay very substantial commissions. Today, it's far more convenient because …

You can buy American Depository Receipts, or ADRs, a certificate issued by a U.S. institution representing a specific number of shares of a foreign stock. Favor ADRs that are liquid, trading hundreds of thousands of shares daily on major U.S. exchanges like the NYSE.


You can buy foreign stocks through a U.S. broker with a strong international desk such as Euro-Pacific Capital or Schwab. And most convenient of all …


You can buy exchange traded funds (ETFs) that invest in overseas stocks for you. There are actively traded ETFs for China (FXI) … Brazil (EWZ) … Singapore (EWS) … Japan (EWJ) … and many, many more.
Plus, as Jack Crooks explains …

Even Individual Currencies Are
Now Cheap and Easy to Trade!


Clearly, there is explosive growth happening all around the world. And one of the best parts of all this action is that currencies — the very lifeblood of these economies — are also making monumental moves on an almost daily basis.

Look, the foreign exchange market is, without a doubt, the largest market in the world — and the most liquid.

As much as $3 trillion a day trade in the currency market, more than all of the world's stock markets combined.

Moreover, about 80% of all that trading is in seven major currencies, meaning that the volume in each of the majors is massive.

That makes the currency market the most critical market to support global trade and international transactions.

But what I like most is that there's always a bull market in currencies. That gives you the power to make money regardless of what's happening in the world.

The reason is simple: Currencies are different from stocks, bonds or commodities in that they let you make money by buying and selling one currency against another.

Plus, unlike the wild days of yesteryear, you no longer have to open big accounts or take huge risks to trade in this market. Two new revolutionary vehicles — currency ETFs and the Philadelphia Exchange's World Currency Options — now make it possible for average investors to trade currencies as easily as any other ETF or option.

The greatest advantage of all? The profit potential thanks to three factors: Big moves, potentially huge leverage, and strictly limited risk!

To me, they're just one more way for you to reap massive profits from the global giants of profits. And as Martin's been telling you …

This Worldwide Growth and Expansion
Represents the Greatest Wealth-Building
Opportunity in the Last 100 Years.

I hope I’ve managed to communicate the colossal magnitude of the expansion that’s now happening. I also hope you understand that opportunities like these come along maybe once every hundred years. The time is now.

You can stand pat with a narrow-minded investment strategy that focuses on the USA. Or you can intelligently diversify with these exploding markets and watch your portfolio multiply.

But never forget: Don't overinvest. Allocate your money prudently. Stay on top of it regularly. And do your best to wait for normal corrections before adding new funds.

Making Decisions In The Beginning

Let us return to driving as a reference. When you first start
driving, you will not enter the highway and take the car at speeds of sixty and seventy miles per hour. Instead, you
will stay in residential areas or at least on the access road,
where there is less pressure to maintain such a high speed.
In the stock market, you will also want to stay away from
any expensive stocks or extremely volatile investments until
you have become extremely comfortable with the process of
trading.
There are small investment opportunities referred to as
“penny stocks”, which will help you try out your sea legs and
get a feel for how the stock market works prior to investing
large sums of money and risking a big financial loss. These
particular stocks cost literally pennies or small dollar
amounts and typically only fluctuate fractions of a cent on
any given day, making them extremely safe for those just
starting out.
Once you get the hang of it and can better judge the market
trends, you can comfortably move on to more complicated
and adventurous areas of the market. It is like removing
the training wheels from your bicycle or entering the
freeway the first time at an hour of the day when there is no
traffic to contend with.
Be aware that, just like you may fall off your bike once or
twice and end up with some scrapes and bruises, you may
lose money in an investment here and there. This is very
typical, and investing in the stock market is a lot like

gambling. In poker, you cannot expect to win every hand,
and the same is true in the world of investments. Learning
to watch the market trends, though, is similar to watching
other cars as you join traffic and determining the correct
speed and proximity to other cars for optimal safety. Such
diligent study can help you improve your statistics drastically
in a short time.

How Investment Works

Any time you are going to be putting your money into a
fund; it is a good idea to start by understanding what you
are buying into. The stock market is a complicated entity,
and doing minimal business in trading requires a fair amount
of basic knowledge, as well as the understanding and
acceptance of the high risk factor. The more you know in
advance regarding the functionality of the system, the less
likely it is that you will take a heavy hit, ending in
devastating loss.
First of all and probably most important in the trading
business, you should understand what stocks actually are.
When you buy or sell a stock on the open market, you
should keep in mind that you are dealing with real objects,
not pieces of paper; you are buying and selling real parts of
a particular company, its product, or some other various
commodity.
Owning a “share” means that you have actually bought into
the company or product involved and become a partial
owner of that commodity. Of course, you could be one of
millions of shareholders, as most companies and products
are broken into minute pieces of the whole, but you are still
considered an investor in that company or product until you
sell your shares.

Think of it as paying for a tank of gas in the car that your
parents bought for you to drive. You may have even bought
the oil filter that has been put on the car, and you may feel
that this investment makes you part owner. However, when
you look at the overall cost of the car, you have really
contributed very little to that amount. However, as long as
you continue to invest in the gas for the car and take care of
the maintenance needs, you can claim part ownership of the
car.
Because the value of a company and its products or services
can fluctuate continuously, the value of the stocks you hold
will not be the same from day to day and can sometimes
even change hourly. When the price per share drops and is
considered low, it is an ideal time to purchase. This is the
least expensive way to begin your trading venture, and
working with a stock broker will allow you to gain more
information as to what stocks are ripe for the purchase at
any given time.
In doing so, you become a stockholder, and the value of
your holdings will fluctuate from day to day. Your gamble
(and hope!) is that the value of the company or product in
which you have invested will increase or rebound from the
low price at which you made your purchase. This is the goal
of all traders and means that your stock will become more
valuable.

As the value of your securities increases, so does your net
worth. When the price of the stock in your possession
reaches a high point, it is time to sell, making a profit on
your original investment. Ideally, you will always sell your
holdings for a reasonably higher price than the purchase
amount and should never sell when the current value of the
stock is below your initial purchase price. It is important to
make sure that you do not purposely take a net loss because
there are plenty of occasions when you could be forced to
take a loss.
For example, if you purchase shares of a company at twenty
dollars each, you should never sell them for eighteen dollars
apiece. If possible, you want to hold off until they are each
worth perhaps forty dollars, in essence doubling your
money. Of course, this is just an example, and not all
stocks will ever double in value, but the illustration is
meaningful.
There are other, more complex ways to invest in the stock
market. However, much like learning to ride a bicycle, you
do not want to make your first attempt without training
wheels.

What the Stock Market is All About

In any business or moneymaking venture, preparation and
foreknowledge are the keys to success. Without this sort of
insight, the attempt to make a profitable financial decision
can only end in disaster and failure, regardless of your level
of motivation and determination or the amount of money
you plan to invest.
In the stock market, this rule applies to the nth degree, as
you are investing your own money in what could be
considered a high risk wager, and you are playing with fire if
you do not have at least a general background knowledge of
how it functions. Since having a background in any area is
helpful in guiding you down a path in that particular region,
the more solid your basis of investment knowledge is, the
more likely you are to profit from any attempt to trade on
the open market.
In many ways, trading on the stock market can be
compared to driving – you do not have to be an expert to
get behind the wheel of a car, though you are expected to
have some previous knowledge about basic traffic laws,
including moving violations, safety regulations, and other
legal vehicular infractions, which are learned through either
specific study and coursework or even through some form of
5
simple exposure (such as the years you have spent riding
with your parents and others who have driven for years).
You should be able to comprehend the basic tools used to
navigate a car (where the break pedal is located versus the
gas, and how to use the rearview mirror, for example), even
if you have never touched a steering wheel.
The same is true in entering the world of the stock market.
While you do not have to know all the terminology (you will
not be short selling or determining your own long and short
positions at first, so you do not have to understand these
references completely, though you should be aware of
them), you should certainly be versed in the basic
functionality of trading stocks, bonds, securities, and other
commodities. And just like someone who is behind the
wheel of a car and getting ready to touch the gas pedal for
the first time, you should start out with caution and work
your way in slowly. A first time driver will first set the
mirrors to his or her own liking, then put the car in gear,
look for any interfering traffic, and ease onto the gas pedal,
never flooring it and testing the engine coming out of the
gate on the first attempt. Likewise, when you select your
first investment, you should choose something stable with
little fluctuation and not invest a large sum of money on this
first venture.
When a person is learning to drive, he or she will be
accompanied by another individual who is more experienced
6
and can assist them in making better driving decisions and
offering corrections that will aid in learning to handle the car
more efficiently. In the stock market, there are
stockbrokers and other experts who can give you input and
advice to help you in building your knowledge of the
commodities in which you are interested, essentially
“steering” you toward better stock market buying and selling
decisions.
You could spend hours and hours researching the stock
market and its functionality, learning how to become
involved in the trade and who to contact to get in the game,
especially if your interest lies in the Foreign Exchange
Market, which goes far beyond the level of complication of
the domestic stock market. However, in this book, you will
find all the basic information you need to get started down
the path to trading success. All of the leg work and tough
research has been done for you, collecting the data and
knowledge into one source from which you can gain enough
insight to make you a successful trader on the open market.
All you have to do is read in order to gain knowledge and
wisdom, step by step that will bring you to a heady level of
success. In this ebook, you will find all such helpful
information, all brought together in one single source for
ease of reference.
7
How Investment Works
Any time you are going to be putting your money into a
fund; it is a good idea to start by understanding what you
are buying into. The stock market is a complicated entity,
and doing minimal business in trading requires a fair amount
of basic knowledge, as well as the understanding and
acceptance of the high risk factor. The more you know in
advance regarding the functionality of the system, the less
likely it is that you will take a heavy hit, ending in
devastating loss.
First of all and probably most important in the trading
business, you should understand what stocks actually are.
When you buy or sell a stock on the open market, you
should keep in mind that you are dealing with real objects,
not pieces of paper; you are buying and selling real parts of
a particular company, its product, or some other various
commodity.
Owning a “share” means that you have actually bought into
the company or product involved and become a partial
owner of that commodity. Of course, you could be one of
millions of shareholders, as most companies and products
are broken into minute pieces of the whole, but you are still
considered an investor in that company or product until you
sell your shares.

Introduction to the FX Market

Forex, or Foreign Exchange, is the simultaneous exchange of one country's currency for that of another. In the FX market, all currencies are traded in pairs, for example EUR/USD or USD/JPY. Traders are able to BUY or SELL currency pairs. If you BUY a currency pair, you are buying the first (base) currency in the pair and selling the second (quote or counter) currency in the pair.

A trader buys the pair if he believes the base (first) currency will appreciate relative to the quote (second) currency. SELLING the currency pair implies selling the first (base) currency and buying the second (quote or counter) currency. A trader sells the pair if he believes the base (first) currency will depreciate relative to the quote (second) currency.

On the Global Trading System, if the rate is rising, buyers are making money; if the rate is falling, sellers are making money. You can buy or sell any currency at any time, and thus can profit in any economic situation. To learn more about the basic aspects of trading currencies, including margin/leverage, spreads and rollover