learn-Forex.........................learn-Forex

P

2010-03-15T15:05:00.000-07:00

Float Analysis

2009-06-16T05:08:00.000-07:00

Download

Click Here!

here

password

http://www.arabictrader.com/vb

Fire Your Stock Analyst! Analyzing Stocks On Your Own

2009-06-16T04:59:00.000-07:00

Download

Click Here!

here

password

http://www.arabictrader.com/vb

The Handbook of Pairs Trading

2009-05-16T15:46:00.000-07:00

Download

Click Here!

here

password

http://www.arabictrader.com/vb

The Markets Never Sleep

2009-05-16T15:41:00.001-07:00

Download

Click Here!

here

password

http://www.arabictrader.com/vb

rend Forecasting With Technical Analysis

2009-05-16T15:35:00.000-07:00

Download

Click Here!

here

password

http://www.arabictrader.com/vb

Technical Analysis - Power Tools for Active Investors

2009-04-27T15:11:00.000-07:00

downalod

Click Here!

here

password

http://www.arabictrader.com/vb

Trend Forecasting With Technical Analysis

2009-04-27T15:06:00.000-07:00

downalod

Click Here!

here

password

http://www.arabictrader.com/vb

Crash Profits - Make Money When Stocks Sink And Soar

2009-04-02T16:16:00.000-07:00

Download

Click Here!

here

password

http://www.arabictrader.com/vb

Trading Chaos

2009-04-02T16:03:00.000-07:00

Download

Click Here!

or
here

password

http://www.arabictrader.com/vb

Trading Rules that Work

2009-04-02T15:59:00.001-07:00

Download

Click Here!

here

password

http://www.arabictrader.com/vb

Trend Trading

2009-03-27T14:54:00.000-07:00

Download

Click Here!

here

password

http://www.arabictrader.com/vb

Come into my Trading Room

2009-03-27T14:38:00.000-07:00

Download

Click Here!

here

password

http://www.arabictrader.com/vb

Warrior Trading

2009-03-24T15:27:00.000-07:00

Download

Click Here!

here

password

http://www.arabictrader.com/vb

Candlestick and Pivot Point Trading Triggers

2009-03-17T18:00:00.001-07:00

Click Here!

Download

password

http://www.arabictrader.com/vb

Beat the Odds in Forex Trading

2009-03-17T17:54:00.001-07:00

Download

Click Here!

or
her

password
http://www.arabictrader.com/vb

Adventures of a currency trader

2009-03-17T17:46:00.000-07:00

download

Click Here!

here

password

http://www.arabictrader.com/vb

Winning the Day Trading Game

2009-03-13T04:52:00.000-07:00

download

Click Here!

click here

password

http://www.arabictrader.com/vb

2009-03-04T10:51:00.001-08:00

The Three Skills of Top Trading

2009-03-04T10:22:00.000-08:00

Download

Click Here!

click here

password

http://www.arabictrader.com/vb

A Short Course in Technical Trading

2009-02-23T13:01:00.000-08:00

Download

Click Here!

here

password

http://how-to-learn-forex.blogspot.com/

The second lesson

2009-02-05T09:33:00.000-08:00

Pivot Points Basics

This strategy is almost entirely based on Pivot Points, but not the traditional ones. The most common formula
for calculating pivot points is this:

R2 = P + (H - L) = P + (R1 - S1)
R1 = (P x 2) - L
P = (H + L + C) / 3
S1 = (P x 2) - H
S2 = P - (H - L) = P - (R1 - S1)

As you can see, this formula gives you back 5 different levels:

Resistance 2 (R2)
Resistance 1 (R1)
The Pivot (P)
Support 1 (S1)
Support 2 (S2)

What you do is take the “High”, “Low” and “close” prices from the previous session and what you get is a
series of 5 different levels that will give you some idea about what will be the range where price is going to
move during the coming session. The “session” can be 1 day, 1 week, 1 month, 4 hours, 8 hours….whatever
you want it to be. So lets say we are day traders and we want to know what are the pivot points for today, what
we have to do is to look at the chart from Yesterday and see what was the High, Low and Close and then
calculate the pivots using the simple formula explained below. Here’s an example looking at the chart above.

We take a chart from the past session, we want to know the pivot points for this coming day (the coming 24
hours), so what we have to do first is to look at the chart from the past 24 hours. Above, we have a 30 minutes
chart for EUR/USD. I have already marked the High(1.1996), Low(1.1839) and Close(1.1871).

We are going to take this data and calculate the pivot points for the next session. First, we calculate the Pivot:

P= (H+L+C)/3 P= (1.1996+1.1839+1.1871)/3 P= 1.1902

It’s very simple math, now that we have the pivot point value we can calculate the support and resistance
levels:

R2=1.2059
R1=1.1965
P= 1.1902
S1=1.1808
S2=1.1745

Now, above we have the chart for the session we calculated the pivot points for. As you can see, on this
particular case price only touched two levels, the pivot and support 1. I am not going to get into the whole
explanation about how price acts on the different support and resistance levels, first because it would take too
long and second because it’s not necessary. This is just an introduction to pivot points for those who have no
idea of what they are.

So, you take the previous session data, you make a few numbers and you got the 5 levels pivot points for the
next session. Now, this is not the only formula for calculating pivot points and it is not the formula we are going
to use (even we are not going to use the formula I’ve been explaining during these 2 pages, I thought it was
important for you to know it).

Thomas DeMark’s Pivot Points

As you can imagine, we are going to use Thomas DeMark’s pivot points formula, which is very different from
the traditional one. DeMark’s formula gives you only two levels, High and Low. You wont have the pivot point
and 2 support/resistance levels for the next session, you will only have the High and Low for the next session.

From now on, when I talk about Pivot points I will be referring to DeMark’s pivot points.

At first, you will find DeMark’s pivot points a little harder to calculate because the formula you have to use
depends on the price action of the previous session. Suppose it’s Sunday and we want to calculate the pivot
points for the next week, just like with the traditional formula we have to look at the chart from the previous
session. On this case, if we want to calculate the pivot points for this coming week first we need to look at the
chart from the past week and take note of the High, Low, Open and Close.

DeMark’s formula works this way:
You look at the previous week data, High, Low, Open and Close.

Scenario 1

If Close is LOWER than Open (close

High + Low + Close + Low = X

Projections for the coming week are:

HIGH for the coming week = X/2 – Low
LOW for the coming week= X/2 – High

Download the book here

http://rapidshare.com/files/201738279/FREE_FOREX_SIGNALS___strategy_by_Richard..pdf.html

The first lesson

2009-01-26T05:03:00.000-08:00

1. Common knowledge about the trading on Forex

1.1. Foreign exchange as a part of the world financial market

Forex – What is it? The international currency market Forex is a special kind of the world
financial market. Trader’s purpose on the Forex to get profit as the result of foreign currencies
purchase and sale. The exchange rates of all currencies being in the market turnover are
permanently changing under the action of the demand and supply alteration. The latter is a strong
subject to the influence of any important for the human society event in the sphere of economy,
politics and nature. Consequently current prices of foreign currencies, evaluated for instance in
US dollars, fluctuate towards its higher and lower meanings.

Using these fluctuations in accordance with a known principle “buy cheaper – sell higher” traders
obtain gains. Forex is different in compare to all other sectors of the world financial system
thanks to his heightened sensibility to a large and continuously changing number of factors,
accessibility to all individual and corporative traders, exclusively high trade turnover which
creates an ensured liquidity of traded currencies and the round – the clock business hours which
enable traders to deal after normal hours or during national holidays in their country finding
markets abroad open. Just as on any other market the trading on Forex, along with an exclusively
high potential profitability, is essentially risk - bearing one. It is possible to gain a success on it
only after a certain training including a familiarization with the structure and kinds of Forex, the
principles of currencies price formation, the factors affecting prices alterations and trading risks
levels, sources of the information necessary to account all those factors, techniques of the analysis
and prediction of the market movements as well as with the trading tools and rules.
An important role in the process of the preparation for trading Forex belongs to the demo-trading
(that is to trade using a demo-account with some virtual money), which allows to testify all the
theoretical knowledge and to obtain a required minimum of the trade experience not being
subjected to a material damage.
A short history about the origin and development of the currency exchange market. Currency
trading has a long history and can be traced back to the ancient Middle East and Middle Ages
when foreign exchange started to take shape after the international merchant bankers devised bills
of exchange, which were transferable third-party payments that allowed flexibility and growth in
foreign exchange dealings.
The modern foreign exchange market characterized by periods of high volatility (that is a
frequency and amplitude of price alteration) and relative stability formed itself in the twentieth
century. By the mid-1930s London became the leading center for foreign exchange and the
British pound served as the currency to trade and to keep as a reserve currency. Because in the
old times foreign exchange was traded on the telex machines, or cable, the pound has generally
the nickname “cable”. After the World War II, where the British economy was destroyed and the
United States was the only country unscarred by war, U.S. dollar, in accordance with the Breton
Woods Accord between the USA, Great Britain and France (1944) became the reserve currency
for all the capitalist countries and all currencies were pegged to the American dollar (through the
constitution of currency ranges maintained by central banks of relevant countries by means of
interventions or currency purchases).

In turn, the U.S. dollar was pegged to gold at $35 per ounce. Thus, the U.S. dollar became the
world's reserve currency. In accordance with the same agreement was organized the International
Monetary Fund (IMF) rendering now a significant financial support to the developing and former
socialist countries effecting economical transformation. To execute these goals the IMF uses such
instruments as Reserve trenches, which allows a member to draw on its own reserve asset quota at
the time of payment, Credit trenches drawings and stand-by arrangements. The letters are the
standard form of IMF loans unlike of those as the compensatory financing facility extends
financial help to countries with temporary problems generated by reductions in export revenues,
the buffer stock financing facility which is geared toward assisting the stocking up on primary
commodities in order to ensure price stability in a specific commodity and the extended facility
designed to assist members with financial problems in amounts or for periods exceeding the
scope of the other facilities.
At the end of the 70-s the free-floating of currencies was officially mandated that became the
most important landmark in the history of financial markets in the XX century lead to the
formation of Forex in the contemporary understanding. That is the currency may be traded by
anybody and its value is a function of the current supply and demand forces in the market, and
there are no specific intervention points that have to be observed. Foreign exchange has
experienced spectacular growth in volume ever since currencies were allowed to float freely
against each other. While the daily turnover in 1977 was U.S. $5 billion, it increased to U.S. $600
billion in 1987, reached the U.S. $1 trillion mark in September 1992, and stabilized at around
$1.5 trillion by the year 2000.
Main factors influences on this spectacular growth in volume are mentioned below. A significant
role belonged to the increased volatility of currencies rates, growing mutual influence of different
economies on bank-rates established by central banks, which affect essentially currencies
exchange rates, more intense competition on goods markets and, at the same time, amalgamation
of the corporations of different countries, technological revolution in the sphere of the currencies
trading. The latter exposed in the development of automated dealing systems and the transition to
the currency trading by means of the Internet. In addition to the dealing systems, matching
systems simultaneously connect all traders around the world, electronically duplicating the
brokers' market. Advances in technology, computer software, and telecommunications and
increased experience have increased the level of traders' sophistication, their ability to both
generate profits and properly handle the exchange risks. Therefore, trading sophistication led
toward volume increase.
Regional reserve countries. Along with the global reserve currency – U.S. dollar, there are also
other regional and international reserve countries. In 1978, the nine members of the European
Community ratified a plan for the creation of the European Monetary System managed by the
European Fund of the Monetary Cooperation. By 1999 these countries, which constituted socalled
Euro zone, have implemented the transition to the common European currency - the euro
(see Figure 1.1). The euro bills are issued in denominations of 5, 10, 20, 50, 100, 200, and 500
euros. Coins are issued in denominations of 1 and 2 euros, and 50, 20, 10, 5, 2, and 1 cent.

The euro is a regional reserve currency for the euro zone countries and the Japanese yen – for the
countries of Southeast Asia. The portfolio of reserve currencies may change depending on
specific international conditions, to include the Swiss franc.
The role of the U.S. Federal Reserve System and Central banks of other G-7 countries on
Forex. All central banks and the U.S. Federal Reserve System (FRS) as well, affect the foreign
exchange markets changing discount rates and performing the monetary operations (as
interventions and currency purchases). For the foreign exchange operations most significant are
repurchase agreements to sell the same security back at the same price at a predetermined date in
the future (usually within 15 days), and at a specific rate of interest. This arrangement amounts to
a temporary injection of reserves into the banking system. The impact on the foreign exchange
market is that the national currency should weaken.
The repurchase agreements may be either customer repos or system repos. Matched salepurchase
agreements are just the opposite of repurchase agreements. When executing a matched
sale-purchase agreement, a bank or the FRS sells a security for immediate delivery to a dealer or
a foreign central bank, with the agreement to buy back the same security at the same price at a
predetermined time in the future (generally within 7 days). This arrangement amounts to a
temporary drain of reserves. The impact on the foreign exchange market is that the national
currency should strengthen. Monetary operations include payments among central banks or to
international agencies. In addition, the FRS has entered a series of currency swap arrangements
with other central banks since 1962. For instance, to help the allied war effort against Iraq's
invasion of Kuwait in 1990-1991, payments were executed by the Bundesbank and Bank of Japan
to the Federal Reserve. Also, payments to the World Bank or the United Nations are executed
through central banks. States foreign exchange markets by the U.S. Treasury and the FRS is
geared toward restoring orderly conditions in the market or influencing the exchange rates. It is
not geared toward affecting the reserves. There are two types of foreign exchange interventions:
naked intervention and sterilized intervention.
Naked intervention, or unsterilized intervention, refers to the sole foreign exchange activity. All
that takes place is the intervention itself, in which the Federal Reserve either buys or sells U.S.
dollars against a foreign currency. In addition to the impact on the foreign exchange market, there
is also a monetary effect on the money supply. If the money supply is impacted, then consequent
adjustments must be made in interest rates, in prices, and at all levels of the economy. Therefore,
a naked foreign exchange intervention has a long-term effect.
Sterilized intervention neutralizes its impact on the money supply. As there are rather few
central banks that want the impact of their intervention in the foreign exchange markets to
affect all corners of their economy, sterilized interventions have been the tool of choice. This
holds true for the FRS as well. The sterilized intervention involves an additional step to the
original currency transaction. This step consists of a sale of government securities that offsets
the reserve addition that occurs due to the intervention. It may be easier to visualize it if you
think that the central bank will finance the sale of a currency through the sale of a number of
government securities. Because a sterilized intervention only generates an impact on the
supply and demand of a certain currency, its impact will tend to have a short-to medium-term
effect.

1.2. Risks by the foreign exchange on Forex

As it was mentioned above trading on the Forex is essentially risk-bearing. By the evaluation of
the grade of a possible risk accounted should be the following kinds of it: exchange rate risk,
interest rate risk, and credit risk, country risk.
Exchange rate risk is the effect of the continuous shift in the worldwide market supply and
demand balance on an outstanding foreign exchange position. For the period it is outstanding, the
position will be subject to all the price changes. The most popular measures to cut losses short
and ride profitable positions that losses should be kept within manageable limits are the position
limit and the loss limit. By the position limitation a maximum amount of a certain currency a
trader is allowed to carry at any single time during the regular trading hours is to be established.
The loss limit is a measure designed to avoid unsustainable losses made by traders by means of
stop-loss levels setting.
Interest rate risk refers to the profit and loss generated by fluctuations in the forward spreads,
along with forward amount mismatches and maturity gaps among transactions in the foreign
exchange book. This risk is pertinent to currency swaps; forward outright, futures, and options
(See below). To minimize interest rate risk, one sets limits on the total size of mismatches. A
common approach is to separate the mismatches, based on their maturity dates, into up to six
months and past six months. All the transactions are entered in computerized systems in order to
calculate the positions for all the dates of the delivery, gains and losses. Continuous analysis of
the interest rate environment is necessary to forecast any changes that may impact on the
outstanding gaps.
Credit risk refers to the possibility that an outstanding currency position may not be repaid as
agreed, due to a voluntary or involuntary action by a counter party. In these cases, trading occurs
on regulated exchanges, such as the clearinghouse of Chicago. The following forms of credit risk
are known:
1. Replacement risk occurs when counterparties of the failed bank find their books are subjected
to the danger not to get refunds from the bank, where appropriate accounts became unbalanced.
All training material found in this manual and provided by Trading Intl. L.L.C. are held proprietary to Trading Intl. and Any
2. Settlement risk occurs because of the time zones on different continents. Consequently,
currencies may be traded at the different price at different times during the trading day. Australian
and New Zealand dollars are credited first, then Japanese yen, followed by the European

currencies and ending with the U.S. dollar. Therefore, payment may be made to a party that will
declare insolvency (or be declared insolvent) immediately after, but prior to executing its own
payments.
Therefore, in assessing the credit risk, end users must consider not only the market value of their
currency portfolios, but also the potential exposure of these portfolios. The potential exposure
may be determined through probability analysis over the time to maturity of the outstanding
position. The computerized systems currently available are very useful in implementing credit
risk policies. Credit lines are easily monitored. In addition, the matching systems introduced in
foreign exchange since April 1993 are used by traders for credit policy implementation as well.
Traders input the total line of credit for a specific counterparty. During the trading session, the
line of credit is automatically adjusted. If the line is fully used, the system will prevent the trader
from further dealing with that counterparty. After maturity, the credit line reverts to its original
level.

1.3. Kinds of the Forex

Spot Market. Currency spot trading is the most popular foreign currency instrument around the
world, making up 37 percent of the total activity (See Figure 1.2). The features of the fast-paced
spot market are high volatility and quick profits (as well losses).

A spot deal consists of a bilateral contract whereby a party delivers a specified amount of a given
currency against receipt of a specified amount of another currency from counterparty, based on an
agreed exchange rate, within two business days of the deal date. The exception is the Canadian
dollar, in which the spot delivery is executed next business day. The two-day spot delivery for
currencies was developed long before technological breakthroughs in information processing.
This time period was necessary to check out all transactions' details among counterparties.
Although technologically feasible, the contemporary markets did not find it necessary to reduce
the time to make payments. Human errors still occur and they need to be fixed before delivery.
By the entering into a contract on the spot market a bank serving a trader tells the latter the quota
– an evaluation of the currency traded against the U.S. dollar or another currency. A quota
consists of two figures (for example, USD/JPY = 133.27/133.32 or USD/JPY = 133.27/32 which
means the same). The first of these figures (the left part) is called the bid – price (that is a price at
which the trader sells), the second (the right part) is called the ask - price (the price at which the
trader buys the currency). The difference between asks and bid is called the spread. The spread,
as any currency price alteration, is being measured in points (pips).
In terms of volume, currencies around the world are traded mostly against the U.S. dollar,
because the U.S. dollar is the currency of reference. The other major currencies are the euro,
followed by the Japanese yen, the British pound, and the Swiss franc. Other currencies with
significant spot market shares are the Canadian dollar and the Australian dollar. In addition, a
significant share of trading takes place in the currencies crosses, a non-dollar instrument whereby
foreign currencies are quoted against other foreign currencies, such as euro against Japanese yen.
The spot market is characterized by high liquidity and high volatility. Volatility is the degree to
which the price of currency tends to fluctuate within a certain period of time. For instance, in an
active global trading day (24 hours), the euro/dollar exchange rate may change its value 18,000
times "flying" 100-200 pips in a matter of seconds if the market gets wind of a significant event.
On the other hand, the exchange rate may remain quite static for extended periods of time, even
in excess of an hour, when one market is almost finished trading and waiting for the next market
to take over. For example, there is a technical trading gap between around 4:30 PM and 6 PM
EDT. In the New York market, the majority of transactions occur between 8 AM and 12 PM,
when the New York and European markets overlap. The activity drops sharply in the afternoon,
over 50 percent in fact, when New York loses the international trading support. (See Figure 1.3)
Overnight trading is limited, as very few banks have overnight desks. Most of the banks send
their overnight orders to branches or other banks that operate in the active time zones. Reasons
for the popularity of the spot-market include the rapid liquidity, thanks to the market volatility,
and short term contract execution. Therefore, the credit risk is restricted. The profit and loss can
be either realized or unrealized. The realized P&L is a certain amount of money netted when a
position is closed. The unrealized P&L consists of an uncertain amount of money that an
outstanding position would roughly generate if it were closed at the current rate. The unrealized
P&L changes continuously in tandem with the exchange rate.
Forward Market. Two tools are used on the forward Forex: forward outright deals and exchange
deals or swaps. A swap deal is a combination of a spot deal and a forward outright deal.
According to figures published by the Bank for International Settlements, the percentage share of
the forward market was 57 percent in 1998. (See Figure 1.2). Translated into U.S. dollars, out of
an estimated daily gross turnover of US$1.49 trillion, the total forward market represents US$900
billion. In the forward market there is no norm with regard to the settlement dates, which range
from 3 days to 3 years. Volume in currency swaps longer than one year tends to be light but,
technically, there is no impediment to making these deals. Any date past the spot date and within
the above range may be a forward settlement, provided that it is a valid business day for both
currencies. The forward markets are decentralized markets, with players around the world
entering into a variety of deals either on a one-on-one basis or through brokers. The forward price
consists of two significant parts: the spot exchange rate and the forward spread. The spot rate is
the main building block. The forward spread is also known as the forward points or the forward
pips. The forward spread is necessary for adjusting the spot rate for specific settlement dates
different from the spot date. It holds, then, that the maturity date is another determining factor of
the forward price.

Futures Market. Currency futures are specific types of forward outright deals. Because they are
derived from the spot price, they are derivative instruments. (See Figure 1.2). They are specific
with regard to the expiration date and the size of the trade amount. Whereas, generally, forward
outright deals—those that mature past the spot delivery date—will mature on any valid date in the
two countries whose currencies are being traded, standardized amounts of foreign currency
futures mature only on the third Wednesday of March, June, September, and December.
The following are characteristics of currency futures that make them attractive. They are open to
all market participants, individuals included. It is a central market, just as efficient as the cash
market, and whereas the cash market is a much decentralized market, futures trading takes place
under one roof. It eliminates the credit risk because the Chicago Mercantile Exchange
Clearinghouse acts as the buyer for every seller, and vice versa. In turn, the Clearinghouse
minimizes its own exposure by requiring traders who maintain a nonprofitable position to post
margins equal in size to their losses. Although the futures and spot markets trade closely together,
certain divergences between the two occur, generating arbitraging opportunities. Gaps, volume,
and open interest are significant technical analysis tools (See Chapter 4) solely available in the
futures market. Because of these benefits, currency futures trading volume has steadily attracted a
large variety of players. Because futures are forward outright contracts and the forward prices are
generally slow movers, the elimination of the forward spreads will transform the futures contracts
into spot contracts.
For traders outside the exchange, the prices are available from on-line monitors. The most
popular pages are found on Bridge, Telerate, Reuters, and Bloomberg. Telerate presents the
currency futures on composite pages, while Reuters and Bloomberg display currency futures on
individual pages that show the convergence between the futures and spot prices.
Options Market. A currency option is a contract between a buyer and a seller that gives the buyer
the right, but not the obligation, to trade a specific amount of currency at a predetermined price
and within a predetermined period of time, regardless of the market price of the currency; and
gives the seller, or writer, the obligation to deliver the currency under the predetermined terms, if
and when the buyer wants to exercise the option. More factors affect the option price relative to the prices of other foreign currency instruments. Unlike spot or forwards, both high and low
volatility may generate a profit in the options market. For some, options are a cheaper vehicle for
currency trading. For others, options mean added security and exact stop-loss order execution.
Currency options constitute the fastest-growing segment of the foreign exchange market. As of
April 1998, options represented 5 percent of the foreign exchange market. (See Figure 1.4). The
biggest options trading center is the United States, followed by the United Kingdom and Japan.
Options prices are based on, or derived from, the cash instruments. Often, however, traders have
misconceptions regarding both the difficulty and simplicity of using options. There are also
misconceptions regarding the capabilities of options. Trading an option on currency futures will
entitle the buyer to the right, but not the obligation, to take physical possession of the currency
future. Unlike the currency futures, buying currency options does not require an initiation margin.
The option premium, or price, paid by the buyer to the seller, or writer, reflects the buyer's total
risk. However, upon taking physical possession of the currency future by exercising the option, a
trader will have to deposit a margin.

The currency price is the central building block, as all the other factors are compared and
analyzed against it. It is the currency price behavior that both generate the need for options
and impacts on the profitability of options

................................

Download the book here

http://rapidshare.com/files/192468708/Trading_For_A_Living_In_The_Forex_Market.pdf.html