Insider's Guide To Forex Trading

Table of Contents:

Chapter 1: What The Stock Market Is All About...4
Chapter 2: Stock Market Trends...12
Chapter 3: An Introduction To Forex...16
Chapter 4: Understanding Currency Conversion...21
Chapter 5: Understanding Statistics...26
Chapter 6: Forex Volatility And Market Expectation...30
Chapter 7: Aspects Of The Trade...34
Chapter 8: Risk Management...38
Chapter 9: “Buzz” Words...43
Chapter 10: Expert Trading Options...48
Chapter 11: Other Trading Options...51
Chapter 12: In Review...55
Chapter 13: One Final Option...60

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
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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
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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.
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Chapter 2: Stock Market Trends
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
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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