CHAPTER ONE - Background

We're going to start by debunking a bunch of myths.

First off, you don't have to understand a lot about the currency markets. Most of us know there is a different in then exchange rate if we take a trip to Canada or Mexico or Japan or Dompyong. hehehe

If you were to go to Japan right now, a dollar would buy about 110 Yen. You go to a kiosk or money changer, perhaps at the airport, and purchase whatever amount you think you’ll need. That’s easy enough. But what if you’re a large bank doing business overseas. Your client has just purchased 1,000 new Toyota’s and they need to be paid for with Yen. That’s not so easy. That’s why the Forex markets exist.

Rather than try to teach you all about the Forex business in this guide, simply go to http://www.foreignexchangetrading.info and click on all the items on the left side. It’s a free site and well worth visiting. Or, if you prefer, download this excellent publication: http://www.forex-trading-made-ez.com/power_forex.pdf

Now for some facts. The market is huge. More money changes hands each day than nearly all the stock exchanges combined. That’s not that important to us as traders because we can trade with as little as $100.

There’s no commission charged, as there is at a stock exchange. That’s good. We don’t have to worry about paying extra if we get stopped out of our trade. (I’ll explain later what that means if you’re not an experienced trader.)

Instead of a commission, a small spread between prices is leveled just like when you change money at the airport. For example, my pizza trade entry price was actually 1.33562. I had to make slightly more than $10 dollars to net ten. 

The most important thing I want to impress upon you at this time is risk control.

You’re going to make money. But you’re also going to lose money. How much you lose will determine your net profit. Always keep that in mind. You must control your losses if you expect to make the kind of money we discussed earlier.

Lastly, this is a “hands-on” trading manual. I’m going to train you to make money the same way I trained many pilots to fly jetliners. That’s right. For many years, as an airline captain/instructor, trained by Boeing, I taught other airline pilots how to fly jetliners.

So what’s that got to do with trading? Just this. When it comes to flying airplanes, you want to do it in the safest way possible. And the same thing is true when trading! You want to do it in the safest way possible. Much of the material will be very specific. Much of it will be repetitious. But that’s how you learn. Don’t try to outguess the strategy. Everything you’ll learn has a purpose.

Keep an open mind and you’ll do just fine. You don’t have to be smart. You don’t have to have a degree in rocket science. You just have to follow the rules and procedures. Just like flying a jetliner!