SPECIAL BONUS

THE FX PROFIT MACHINE SYSTEM

PUBLISEDH BY RICHARD STEVENSON

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CHAPTER I' (HAT IS FOREX MAR)ET*

The foreign exchange market is the generic term for the worldwide institutions that exist to exchange or trade currencies. Foreign exchange is often referred to as forex or FX. The foreign exchange market is an over-the-counter (OTC market! which means that there is no central exchange and clearinghouse where orders are matched. FX dealers and market makers around the world are linked to each other around the clock via tele"hone! com"uter! and fax! creating one cohesive market. Over the "ast few #ears! currencies have $ecome one of the most "o"ular "roducts to trade. %o other market can claim a &' "ercent surge in volume over a three-#ear time frame. (ccording to the Triennial Central )ank *urve# of the foreign exchange market conducted $# the )ank for +nternational *ettlements and "u$lished in *e"tem$er ,--.! dail# trading volume hit a record of /0.1 trillion! u" from /0., trillion (or /0.. trillion at constant exchange rates in ,--0. This is estimated to $e a""roximatel# ,- times larger than the dail# trading volume of the %ew 2ork Forex 3xchange and the %asda4 com$ined. (lthough there are man# reasons that can $e used to ex"lain this surge in activit#! one of the most interesting is that the timing of the surge in volume coincides fairl# well with the emergence of online currenc# trading for the individual investor. Traditionall# FX has not $een the most "o"ular market to trade $ecause access to the foreign exchange market was "rimaril# restricted to hedge funds! Commodit# Trading (dvisors who manage large amounts of ca"ital! ma5or cor"orations! and institutional investors due to regulation! ca"ital re4uirements! and technolog#. One of the "rimar# reasons wh# the foreign exchange market has traditionall# $een the market of choice for these large "la#ers is $ecause the risk that a trader takes is full# customi6a$le. That is! one trader could use a hundred times leverage while another ma# choose to not $e leveraged at all. 7owever! in recent #ears man# firms have o"ened u" the foreign exchange market to retail traders! "roviding leveraged trading as well as free instantaneous execution "latforms! charts! and real-time news. (s a result! foreign

exchange trading has surged in "o"ularit#! increasing its attractiveness as an alternative asset class to trade. 8an# e4uit# and futures traders have $egun to add currencies into the mix of "roducts that the# trade or have even switched to trading currencies exclusivel#. The reason wh# this trend is emerging is $ecause these traders are $eginning to reali6e that there are man# attractive attri$utes to trading FX over e4uities or futures. FX Market Key Attribute 9 Foreign exchange is the largest market in the world and has growing li4uidit#. 9 There is ,.-hour around-the-clock trading. 9 Traders can "rofit in $oth $ull and $ear markets. 9 *hort selling is "ermitted and there are no trading cur$s. 9 +nstant executa$le trading "latform minimi6es sli""age and errors. 9 3ven though higher leverage increases risk! man# traders see trading the FX market as getting more $ang for the $uck. The volume and li4uidit# "resent in the FX market! one of the most li4uid markets in the world! have allowed traders to access a ,.-hour market with low transaction costs! high leverage! and the a$ilit# to "rofit in $ull and $ear markets! minimi6ed error rates! limited sli""age! and no trading cur$s. Traders can im"lement in the FX market the same strategies that the# use in anal#6ing the e4uit# markets. For fundamental traders! countries can $e anal#6ed like forex. For technical traders! the FX market is "erfect for technical anal#sis! since it is alread# the most commonl# used anal#sis tool $# "rofessional traders. +t is therefore im"ortant to take a closer look at the individual attri$utes of the FX market to reall# understand wh# this is such an attractive market to trade.

One of the "rimar# reasons wh# the FX market is "o"ular is $ecause for active traders it is the ideal market to trade. +ts ,.-hour nature offers traders instant access to the markets at all hours of the da# for immediate res"onse to glo$al develo"ments. This characteristic also gives traders the added flexi$ilit# of determining their trading da#. (ctive da# traders no longer have to wait for the e4uities market to o"en at 1:;- a.m. %ew 2ork time to $egin trading. +n addition! most "eo"le who want to trade also have a full-time 5o$ during the da#. The a$ilit# to trade after hours makes the FX market a much more convenient < market for all traders. =ifferent times of the da# will offer different trading o""ortunities as the glo$al financial centers around the world are all activel# involved in foreign exchange. >ith the FX market! trading after hours with a large online FX $roker "rovides the same li4uidit# and s"read as at an# other time of da#. (s a guideline! at &:-- ".m. *unda#! %ew 2ork time! trading $egins as the markets o"en in *#dne#! (ustralia. Then the Tok#o markets o"en at ':-- ".m. %ew 2ork time. %ext! *inga"ore and 7ong ?ong o"en at 1:-- ".m. 3*T! followed $# the 3uro"ean markets in Frankfurt (,:-- a.m. and then @ondon (;:-- a.m. . )# .:-- a.m. the 3uro"ean markets are in full swing! and (sia has concluded its trading da#. The A.*. markets o"en first in %ew 2ork around <:-- a.m. 8onda# as 3uro"e winds down. )# &:-- ".m.! *#dne# is set to reo"en once again. The most active trading hours are when the markets overla"B for exam"le! (sia and 3uro"e trading overla"s $etween ,:-- a.m. and a""roximatel# .:-- a.m.! 3uro"e and the Anited *tates overla" $etween <:-- a.m. and a""roximatel# 00:-- a.m.! while the Anited *tates and (sia overla" $etween &:-- ".m. and 1:-- ".m.. =uring %ew 2ork and @ondon hours all of the currenc# "airs trade activel#! whereas during the (sian hours the trading activit# for "airs such as the C)DEFD2 and (A=EFD2 tend to "eak. The existence of much lower transaction costs also makes the FX market "articularl# attractive. +n the e4uities market! traders must "a# a s"read (i.e.! the difference $etween the $u# and sell "rice andEor a commission. >ith online e4uit# $rokers! commissions can run u"wards of /,- "er trade. >ith "ositions of /0--!---! average round-tri" commissions could $e as high as /0,-. The over-the-counter structure of the FX market eliminates

exchange and clearing fees! which in turn lowers transaction costs. Costs are further reduced $# the efficiencies created $# a "urel# electronic market"lace that allows clients to deal directl# with the market maker! eliminating $oth ticket costs and middlemen. )ecause the currenc# market offers around-the-clock li4uidit#! traders receive tight com"etitive s"reads $oth intrada# and at night. 34uities traders are more vulnera$le to li4uidit# risk and t#"icall# receive wider dealing s"reads! es"eciall# during after-hours trading. @ow transaction costs make online FX trading the $est market to trade for short-term traders. For an active e4uit# trader who t#"icall# "laces ;- trades a da#! at a /,commission "er trade #ou would have to "a# u" to /G-- in dail# transaction costs. This is a significant amount of mone# that would definitel# take a large cut out of "rofits or dee"en losses. The reason wh# costs are so high is $ecause there are several "eo"le involved in an e4uit# transaction. 8ore s"ecificall#! for each trade there is a $roker! the exchange! and the s"ecialist. (ll of these "arties need to $e "aid! and their "a#ment comes in the form of commission and clearing fees. +n the FX market! $ecause it is decentrali6ed with no exchange or clearinghouse (ever#thing is taken care of $# the market maker ! these fees are not a""lica$le. 3ven though man# "eo"le reali6e that higher leverage comes with risks! traders are humans and few of them find it eas# to turn awa# the o""ortunit# to trade on someone elseHs mone#. The FX market caters "erfectl# to these traders $# offering the highest leverage availa$le for an# market. 8ost online currenc# firms offer 0-- times leverage on regular-si6ed accounts and u" to ,-- times leverage on the miniature accounts. Com"are that to the , times leverage 1 offered to the average e4uit# investor and the 0- times ca"ital that is t#"icall# offered to the "rofessional trader! and #ou can see wh# man# traders have turned to the foreign exchange market. The margin de"osit for leverage in the FX market is not seen as a down "a#ment on a "urchase of e4uit#! as man# "erceive margins to $e in the forex markets. Iather! the margin is a "erformance $ond! or good faith de"osit! to ensure against trading losses. This is ver# useful to short-term da# traders who need the enhancement in ca"ital to generate 4uick returns. @everage is actuall# customi6a$le! which means that the more risk-averse investor who feels comforta$le using

onl# 0- or ,- times leverage or no leverage at all can elect to do so. 7owever! leverage is reall# a dou$le-edged sword. >ithout "ro"er risk management a high degree of leverage can lead to large losses as well. Drofit in )oth )ull and )ear 8arkets +n the FX market! "rofit "otentials exist in $oth $ull and $ear markets. *ince currenc# trading alwa#s involves $u#ing one currenc# and selling another! there is no structural $ias to the market. Therefore! if #ou are long one currenc#! #ou are also short another. (s a result! "rofit "otentials exist e4uall# in $oth u"wardtrending and downward-trending markets. This is different from the e4uities market! where most traders go long instead of short forexs! so the general e4uit# investment communit# tends to suffer in a $ear market. Derfect 8arket for Technical (nal#sis For technical anal#sts! currencies rarel# s"end much time in tight trading ranges and have the tendenc# to develo" strong trends. Over <"ercent of volume is s"eculative in nature! and as a result the market fre4uentl# overshoots and then corrects itself. Technical anal#sis works well for the FX market and a technicall# trained trader can easil# identif# new trends and $reakouts! which "rovide multi"le o""ortunities to enter and exit "ositions. Charts and indicators are used $# all "rofessional FX traders! and candlestick charts are availa$le in most charting "ackages. +n addition! the most commonl# used indicatorsJsuch as Fi$onacci retracements! stochastics! moving average convergenceEdivergence (8(C= ! moving averages! (I*+ ! and su""ortEresistance levelsJhave "roven valid in man# instances.

CHAPTER +' BASIC FOREX TERM

+n this section! #ou will learn some $asic terminolog# of the forex market. Dlease s"end a few minutes to understand these termsB the# will $e hel"ful when #ou trade.

E,!h$&ge R$te' The value of oneHs currenc# in com"arison to another. For exam"le if #ou see! 3AIEA*= 0.,0--! 0 3uro is worth /0.,0 C#rre&!- P$ir' Two currencies that make u" an exchange rate. )ase Currenc# K The first currenc# in the "air. This also descri$es the currenc# #our account is traded in C"#&ter C#rre&!-' The second currenc# in the "air. This is also descri$ed as the counter currenc#. +*O Currenc# Codes K )elow are listed currenc# codes! there are man# more! $ut these are the main ones: A*= L A* =ollar 3AI L 3uro FD2 L Fa"anese 2en C)D L )ritish Dound C7F L *wiss Franc C(= L Canadian =ollar (A= L (ustralian =ollar %M= L %ew Mealand =ollar

Currenc# Dair Terminolog#- This is $asicall# the slang terms for trading certain currenc# "airs. 3AIEA*= K 3uro A*=EFD2 K =ollar 2en C)DEA*= K Ca$le or *terling A*=EC7F K *wiss# A*=EC(= K =ollar Canada

(A=EA*= K (ussie =ollar %M=EA*= K ?iwi FCM . F#t#res C"%%issi"& Mer!h$&t' (n individual or organi6ation licensed $# the A.*. Commodities Futures Trading Commission (CFTC to deal in the futures "roducts and to acce"t mone# from clients to trade them. F"re, ECN Br"ker' 3C% sim"l# means 3lectronic Communications %etwork. )asicall#! the 3C% of the Forex acts similar to the stock market 3C%! where market makers! $anks! and traders can have a real- time trading "latform to make their trades. The# can "ut and $ids and offers either in or out of the s"read! making it "ossi$le for traders to make trades $ased on these "rices. C"#&ter/$rt-' One of the "artici"ants in a transaction Pi/' The smallest increment a currenc# can make which is also known as "oints. 0 "i" L -.---0 for 3AIEA*=. A*=EFD2 L -.-0 Pi/ 0$l#e' This is the value of the "i". Di" value can $e fixed or can $e varia$le de"ending on the currenc# "air and the $ase currenc# of #our account. For exam"le! the "i" value for 3AIEA*= is alwa#s going to $e /0- for standard lots and /0 for mini lots. 7ere is how to calculate the "i" value of the currenc# #ou are trading: =ivide 0 "i" $# the exchange rate and then multi"l# it $# the lot si6e to get the $ase currenc# "i" value. To convert the "i" value over to #our currenc# value! sim"l# multi"l# the "i" value $# #our exchange rate. L"t' This is the standard lot si6e "er transaction. Asuall# a t#"ical lot si6e is 0--!--- units of the $ase currenc#! or 0-!--- if itHs what called a mini lot. Currenc# is even traded in what is known as a micro lot. There are man# dealers that will let #ou trade an# unit si6e! all the wa# down to 0 unit. S/re$d' This is the difference $etween the sell 4uote and the $u# 4uote. For exam"le if #ou see 3AIEA*= - 0.,.--E-;! this means the difference in the s"read is ; "i"s. For a trader

to $reak even! their "osition must move in the direction of the trade e4ual to the amount of the s"read. M$rgi&' The de"osit that is re4uired to o"en or maintain a "osition. ( 0N margin re4uirement makes it "ossi$le for #ou to control a /0--!--- "osition with a /0!--- margin account. St$&d$rd A!!"#&t' Trading with standard lot si6es! usuall# 0--!--- units of $ase currenc#. Mi&i A!!"#&t' Trading with mini lot si6es! which are generall# 0-!--- units of $ase currenc#. Mi!r" A!!"#&t' Trading with micro lot si6es! which are usuall# 0!--- units of $ase currenc#. Lever$ge' Asing $orrowed funds to gear #our account. )# increasing #our leverage! #ou can either gain or lose more funds. =ivide total o"en "ositions $# #our account e4uit# to get the leverage ratio. For exam"le! if a trader has /,!--- in his account and o"ens u" a /,--!--- "osition with /,!--- in his account ! he is leveraging $# ,-- times or ,--:0. M$rket Order' (n order to $u# or sell at the current market "rice. St"/1L"ss Order' (n order to restrict losses at a s"ecified level. Li%it E&tr- Order' (n order to "urchase $elow the market or to sell a$ove the market at a s"ecified level. 2our $elief is the "rice will reverse direction from that "articular "oint. St"/1E&tr- Order' (n order to "urchase a$ove the market or to sell $elow the market at a s"ecified "rice! #our $elief is the "rice will continue in the same direction it is currentl#. OCO Order 1 O&e C$&!els Other' (n order where if one is executed! the other order will $e canceled. 2TC Order1 2""d Till C$&!eled' (n order that sta#s in the market until it is either filled or canceled.

F#&d$%e&t$l A&$l-sis Tr$di&g' This st#le of trading involves anal#sis of macroeconomic factors of an econom#! under"inning the value of a currenc# and "lacing trades that su""ort the traderHs outlook of the econom#. Te!h&i!$l A&$l-sis Tr$di&g' This st#le of trading involves anal#sis of "rice charts for certain technical "atterns of $ehavior. R$&ge Tr$di&g' This st#le of trading goal is to "rofit from $u#ing technical levels of su""ort and then selling technical levels of resistance. The u""er level of resistance and lower level of su""ort is what defines the range. S!$l/i&g: This st#le of trading involves fre4uent trading to gain small gains over a short "eriod of time. The trades can last from a few seconds to a few minutes. This is the "referred method for man# online da# traders. S3i&g Tr$di&g' ( st#le of trading that involves seeking "rofit from short to medium terms in swings of the trends ha""ening. Trades can last from a few hours to man# da#s. P"siti"& Tr$di&g' ( st#le of trading that involves taking a long term "osition that is reflective of a long term outlook. The trades can last from a few weeks to man# months. A#t"%$ted Tr$di&g' ( st#le of trading that involves neither involvement nor human decision making! it uses a "re-"rogrammed strateg# that is $ased on technical or fundamental anal#sis to automaticall# execute trades via an automatic trading "latform. Tre&d Tr$di&g' ( st#le of trading that tries to gain "rofit from riding short! medium! and long term trends in "rice. Ne3s Tr$di&g' ( st#le of trading where a trader attem"ts to "rofit from fundamental news announcements on a countr#Hs econom# that will affect the value of a currenc#! usuall# tr#ing to gain short term "rofit immediatel# after the announcement is released. >hile #ou ma# not $elieve #ou need to memori6e all of these terms! itHs ver# im"ortant to understand most of them. For exam"le! in man# of the s#stem #ou are going to hear words such as trend! swing! and scal"ing. +f #ou have no idea what swing and scal"ing means! how

in the world are #ou going to $e a$le to execute the trade "ro"erl#O Take #our time and learn to full# understand exactl# how Forex o"erates.

CHAPTER 4' HO( TO BECOME A SUCCESSFUL TRA ER IN FOREX MAR)ET

)eing in trading industr# for a long time and +Hve seen gu#s come and go! most chasing 4uick "rofits. There are three t#"es of traders + see on a dail# $asis: 9 Dure *"eculators 9 Technical Traders (m#self 9 %ewsEFundamental Traders The s"eculators ma# $eat the technical and news traders certain months! $ut eventuall#! like an# gam$ler the# are usuall# left hitting a $ig loss that will $ankru"t them. +f #ou want to $e a s"eculator! + urge #ou to re-think #our strateg# $efore #ou get too involved in the forex market. *uccessful forex traders are the $est at what the# do and stud# the market on a dail# and evening $asis. Cenerall#! the successful forex traders are those who love num$ers! com"etition! and have a hard work ethic. The# en5o# the com"etition of $eating the market and the masses on a dail# $asis. +n addition! an# successful forex traders know he or she must have the most recent data! real-time charts! and news to hel" them make the $est trade ever# second of the da#. Forex traders often have multi"le com"uter screens and man# com"uters that hel" them to make their trades efficientl# and accuratel#. The hardest "art in $eing a successful forex trader is learning how to deal with the fact that #ou are risking #our own mone# with the chance to win more mone#. >hile it ma# sound sim"le to hit the $u# and sell $utton on "a"er! itHs actuall# 4uite difficult for an#one that

is not currentl# a "rofessional forex trader. There will $e moments that ever# trader feels scared! worried! or ex"erience a great amount of anxiet#. The successful traders will $e those who are a$le to "ut all their emotions to the side and make the "ro"er trade for the "ro"er reason. The $est wa# to determine if #ou are going to $e a successful forex trader is $# first anal#6ing #ourself: (re #ou the t#"e of "erson that can make the right decisions under a lot of "ressureO (re #ou the t#"e of "erson who is generall# cock# and overconfident and en5o#s risking more in life then the# should $eO )efore #ou sit down to even make #our first "ractice trade #ou need to reall# do some selfanal#6ing and "ossi$l# self-im"rovement $efore #ou make #our first real trade. *uccessful Forex Traders generall# "osses the following characteristics: 5. eter%i&ed +. A&$l-ti!$l 4. M$the%$ti!$ll- I&!li&ed 6. Sel71C"&tr"l 8. N"t tre%e&d"#s risk t$kers 9&"t i& the %$rket t" g$%:le; <. P$tie&!e =. L"ve t" le$r&

+f that doesnHt sound like #ou! then #ou ma# $e in the wrong ho$$# or "rofession. The ste" that a lot of "eo"le donHt take the time to "re"are for or reali6e is what ha""ens after #ou make the initial trade.

2ou can have all the resources! tools! knowledge and ex"erience at #our dis"osal! $ut if #ou cannot get a gri" on #our emotions! most likel# #ou wonHt do ver# well in the forex market. (ctive "artici"ation on a dail# $asis can wear and tear on #our nerves! es"eciall# in the forex market where there is considera$l# more risk. 2ou must learn to manage #our own "s#chological reactions to risks! winning! loosing and continuous tem"tations. Controlling #our emotions in an illogical manner isnHt something #ou learn over night. 3motions are natural reactions to other stimulus in our lives. >hen #ouHve lost thousands of dollars #ou have invested! the last thing #ou want to do is remain calm! unworried! and run home to tell #our s"ouse the not so luck# news. 2our first inclination might $e to get it $ack as 4uickl# as "ossi$le! which leads "eo"le into unwarranted! rash decisions that could "ossi$l# turn out to $e even worse. Cet a gri". )e "atient. >eigh the "ossi$le outcome risks with #our next availa$le choices. =onHt make a $ad or unluck# decision create a domino effect of other misguided choices. +f the tem"tation to do something 4uickl# is still floating among #our $rain cells! get awa# from the forex market. Take a $reak until #ou feel more relaxed and level headed! even if it takes several da#s. =o not make another move until #our emotions are in check. %earl# <-N of "eo"le who attem"t this industr# fail and 4uit. The# either canHt handle the stress! trade with their life savings! or the# make several $ad decisions out of ignorance or $lind emotion. The first ste" is to recogni6e the limitations and tolerance while taking the risk and then acce"ting the "ossi$le results of the risk. This is easier to do if #ou are trading with a stash of mone# #ou have set aside s"ecificall# for this "ur"ose. 7owever! if #ou are trading with #our life savings! $ill mone# or #our retirement mone#! the outcome of losing it would $e much worse than losing mone# #ou donHt need to live on. This greatl# increases #our emotional stresses! there$#! greatl# increasing #our chances of making the wrong decisions and losing it an#wa#.

8an# "eo"le think of forex trading as no more than gam$ling awa# mone#. ThatHs $ecause most "eo"le have no real understanding of choices. The# think of la$or as the onl# means of making mone# and winning mone# $# chance! strateg#! or even $# decision-making

skills is nothing more than a risk! and therefore! not worth it. Of course! fear is alwa#s the first reaction to something we donHt understand. One thing #ou must understand is that there are methods and strategies to solving "ro$lems and finding successful solutions. 7istor# is filled with incidents where leaders and common citi6ens alike have $een faced with decision-making that involved some t#"e of risks. %ot all risks are negativeB actuall# #ou make certain decisions in ho"es of risking a "ositive outcome! knowing there ma# $e a sacrifice in the long run. The catal#st of forex trading is the extraordinar# "ossi$ilit# of o$taining lots of mone# ver# 4uickl# without having to la$or #our life awa#. +t re"resents man# (merican dreams and ins"ires our "assions for taking unusual risks. Anlike gam$ling which onl# re4uires dum$ luck! forex trading involves technical knowledge of the investment markets! emotional control! strategic maneuvers! a$ilit# to make historical "redictions! and a$ove all ex"erience. >hen dealing with risk! the ke# isnHt having the guts to take a huge lea"! $ut rather assessing the risk and managing it through a "lanned strateg#. %ever enter into a trade that will "rovide a "oor risk-to-reward ratio. >eigh #our costs as o""osed to what #ou ex"ect to earn in the "rocess. +n other words! risking two "oints to gain half a "oint isnHt worth it. Da# attention to whatHs ha""ening in the market. >hen the market a""ears to $e extremel# strong! it ma# seem to $e a good idea to 5um" on for the long ride or else miss out! $ut what #ou might actuall# ex"erience is a shar" "lummet. 7istoricall# this has $een the case for man# different investments. +f ever#one is taking a long "osition! then the# are ver# confident and ex"ect the market to soar even higher. To make this ha""en! more $u#ers need to enter the market. The realit# is! if ever#one is on the long side! then that doesnHt leave man# "eo"le left to $u#. Confidence "rovides #ou with "ower to make effective decisions. +t also gives #ou the a$ilit# to learn from #our mistakes and the faith to kee" going. From the $eginning! most "eo"le are losers in the forex market. The ones that transform that loosing streak into su$stantial winnings have confidence in their a$ilities even when the#Hre down. (nd if

an#thing is for certain in the forex market! itHs the fact that the market re"resents a roller coaster ride that will carr# #ou u" and down without a momentHs notice. Iemem$er that consistenc# is another ke# ingredient to #our over all success as a da# trader. Fust as #ou ma# $e ex"eriencing a few minor losses here and there! #ou ma# ex"erience consistent small wins. This is not a discouraging thing. *o what if #ou notice a few winners cashing in on the $ig $ucksO Their winnings might have $een from "ure luck and less likel# to ha""en again. 2our small stead# wins are from a well-develo"ed strateg# and will likel# ha""en over and over again. ThatHs the difference $etween a one-time success and a lifetime successful career. >hat #ou are doing is demonstrating the a$ilit# to accumulate e4uit#. +t would $e a grave mistake to change #our decisions $ased on the wind and frolic $ehind other winners racing to the cash register. The# ma# $e having luck now! $ut even luck runs out at some "oint. +gnore this tem"tation as $est as #ou can and go with #our instincts and what #ou know. =onHt allow #our emotions to override #our instincts. ?now when to take a cut on #our losses and leave the game. +t doesnHt make #ou a 4uitter. >hat it does is "reserve #our ca"ital for another trading da#. Cood "oker "la#ers know when the stakes are too high to "la# against. The# fold $efore it gets worse! taking their losses or their wins without tem"ting fate an# further and moving on. Dart of having "atience in the forex trading world is $eing a$le to stand $ack and take time to o$serve the market with o$5ectivit#. The other "art of "atience is having the disci"line to execute #our "lans. This involves all the emotional elements of acce"ting and recogni6ing risk! managing trades with confidence! and exercising "atience through anal#sis! o$5ectivit#! and making #our moves through stead# execution. +t isnHt eas# to "reserve e4uit# and accumulate it over a sustained "eriod of time! es"eciall# if we think we could do so much $etter! faster. (s "eo"le we alwa#s want things %O>P Cood things reall# do come to those who are "atient. +n closing out this cha"ter! + want to remind #ou that while forex can $e a lot of fun! it can also $e ver# stressful. There are going to $e da#s when #ou should honestl# 5ust turn off

#our com"uter and go find something else to do. There are going to $e da#s when #ou are going to wonder wh# #ou exchange currenc# in the first "lace. 3n5o# and savor #our winning da#s! take #our losing da#s with stride! and #ou will do 5ust fine. %ow itHs time for #ou to learn how to "ut #ourself in the $est "osition to consistentl# win $# learning m# favorite time tested s#stems. )e sure to take notes and full# examine ever# chart to learn how + make m# trades on a dail# $asis.

CHAPTER 6' (HAT O YOU NEE TO TRA E FOREX ONLINE*

The following ste"s are the $asic guides that hel" #ou start #our online trading.
1. First of all! we need to o"en an online account. 2ou can choose an# $roker that

su""orts 8etatrader. "latform such as (l"ari! +nter$ankFX! FX==! Forex8eta etc. Feel free to use #our existing $rokerage account or choose one $# #ourself. 7owever we strongl# encourage the Forex8eta )rokerage.

htt":EEwww.forexmeta.comE Ieal-Time 3xecuta$le Quotes 9 ,. 7our Customer *u""ort 9 Com"etitive *"reads 9 ($ilit# To O"en (n# (ccount T#"e 9 3xtremel# Ielia$le Dlatform 9 (utomated Trading Ca"a$ilit# 9 Free Dlatform 9 Fast (nd 3as# 3xecution 9 (dvanced Charting with %umerous +ndicators and @ine *tudies

9 Ca"a$ilit# To Trade From 2our Charts 9 (uto-strateg# Feature *o 2ou Can Drogram 2our Own *trategies
2. 2ou need "rofessional charting software. + recommend #ou the 8etatrader.! which

is a ver# "owerful and "o"ular charting software among the "rofessional forex traders. 2ou can download it from Forex8eta we$site htt":EEwww.forexmeta.comE metatrader.html ;. (fter clicking on the download $utton! #ou will $e asked for o"en a demo account with them. Fust s"end , minutes to fill in the form and the# will email #ou the download link. Then #ou can download the software and install it on #our com"uter.

.. 2ou will need some u" to date financial news sources to hel" #our trading. The reason $ehind is there are some times #ou have to know what are ha""ening with the countr#Hs currenc#. + suggest #ou the following site for forex news
htt":EEwww.forexnews.comE htt":EEwww.dail#fx.comE htt":EEwww.$loom$erg.com htt":EEfinance.#ahoo.com

&. ( good com"uter with high s"eed internet connection and large monitors. 2ou can go for dual monitors so that #ou can watch different charts on different screens at the same time G. ( good attitude! "atience and eager to learn. Forex market is not a casino and do not 5um" into it with a gam$le mind. Ase #our knowledge and technical s#stem to trade.

CHAPTER 8' THE FOREX PROFIT MACHINE SYSTEM

)efore + am going into details of set u" this s#stem! we need to understand some $asic conce"t a$out the core indicators used. Overs"ld o ( condition in which the "rice of an underl#ing asset has fallen shar"l#! and to a level $elow which it true value resides. o This condition is usuall# a result of market overreaction or "anic selling. ( situation in technical anal#sis where the "rice of an asset has fallen to such a degree - usuall# on high volume - that an oscillator has reached a lower $ound. o This is generall# inter"reted as a sign that the "rice of the asset is $ecoming undervalued and ma# re"resent a $u#ing o""ortunit# for investors o (ssets that have ex"erienced shar" declines over a $rief "eriod of time are often deemed to $e oversold. o =etermining the degree to which an asset is oversold is ver# su$5ective and could easil# differ $etween investors. o Oversold is the o""osite of over$ought.

Over:"#ght o ( situation in which the demand for a certain asset is un5ustifia$l# "ushes the "rice of an underl#ing asset to levels that do not su""ort the fundamentals. o +n technical anal#sis! this term descri$es a situation in which the "rice of a securit# has risen to such a degree - usuall# on high volume - that an oscillator has reached its u""er $ound. o This is generall# inter"reted as a sign that the "rice of the asset is $ecoming overvalued and ma# ex"erience a "ull$ack o (n asset that has ex"erienced shar" u"ward movements over a ver# short "eriod of time is often deemed to $e over$ought o =etermining the degree in which an asset is over$ought is ver# su$5ective and can differ $etween investors. o (n over$ought securit# is the o""osite of one that is oversold. (illi$%s>s ?R
o

(illi$%s ?R is a momentum indicator measuring over$ought and oversold levels

o *imilar to a stochastic oscillator. com"ares a stockRs close to the high-low range over a certain "eriod of time o +t is used to determine market entr# and exit "oints o The >illiams NI "roduces values from - to -0-o a reading over <- usuall# indicates a stock is oversold o ( reading $elow ,- suggests a stock is over$ought.

Rel$tive Stre&gth I&de, o I*+ ( technical momentum indicator that com"ares the magnitude of recent gains to recent losses in an attem"t to determine over$ought and oversold conditions of an asset o (n asset is deemed to $e over$ought once the I*+ a""roaches the '- level! meaning that it ma# $e getting overvalued and is a good candidate for a "ull$ack. o @ikewise! if the I*+ a""roaches ;-! it is an indication that the asset ma# $e getting oversold and therefore likel# to $ecome undervalued. o ( trader using I*+ should $e aware that large surges and dro"s in the "rice of an asset will affect the I*+ $# creating false $u# or sell signals o The I*+ is $est used as a valua$le com"lement to other stock-"icking tools.

M"&e- Fl"3 I&de, o 8F+ is a momentum indicator that measures the strength of mone# in and out of a securit#. o ( divergence $etween the 8F+ and "rice trend can $e inter"reted as a "ossi$le trend reversal. o +t is similar to the Ielative *trength +ndex (I*+ .

o The difference is that the 8F+ also accounts for volume! whereas the I*+ onl# incor"orates "rices. o +t is im"ortant #ou take into account other indicators that will su""ort #our entr# and exit "oints o %ote that s"ik# to"s often indicate that mone# flow is a$out to to" out. o Ca"s in "rice action ma# "resent another "ro$lem #ou should $e aware of: we determine the mone# flow $# calculating the mid"oint of "rice action! $ut! if large ga"s occur! then the mid"oint is missing and the mone# flow num$ers are skewed. o 8one# flow can $e excellent for identif#ing over$ought and oversold "ositions o +ts de"endenc# on accumulationEdistri$ution ma# distort its num$ers if the mid"oint is missing. o Iemem$er alwa#s to use the signals of other indicators to verif# #our entr# and exit "oints.

St"!h$sti! Os!ill$t"r o *tochastic Oscillator ( technical momentum indicator that com"ares a securit#Rs closing "rice to its "rice range over a given time "eriod. o The oscillatorRs sensitivit# to market movements can $e reduced $# ad5usting the time "eriod or $# taking a moving average of the result.

o The theor# $ehind this indicator is that in an u"ward-trending market! "rices tend to close near their high! and during a downward-trending market! "rices tend to close near their low. o *tochastic is a favorite indicator of some technicians $ecause of the accurac# of its findings. +t is easil# "erceived $oth $# seasoned veterans and new technicians! and it tends to hel" all investors make good entr# and exit decisions on their holdings. o The main difference $etween fast and slow stochastic is summed u" in one word: sensitivit#. o The fast stochastic is more sensitive than the slow stochastic to changes in the "rice of the underl#ing securit# and will likel# result in man# transaction signals! $ut to understand this difference #ou should first understand what the stochastic momentum indicator is all a$out. o The stochastic momentum oscillator is used to com"are where a securit#Rs "rice closed relative to its "rice range over a given "eriod of time. o The slow stochastic is one of the most "o"ular indicators used $# da# traders $ecause it reduces the chance of entering a "osition $ased on a false signal. o +n general! slow stochastic measures the relative "osition of the latest closing "rice to the high and low over the "ast 0. "eriods. o >hen using this indicator! the main assum"tion is that the "rice of an asset will trade near the to" of the range in an u"trend and near the $ottom in a downtrend. o This indicator is ver# effective when used $# da# traders

E&vel"/e o 3nvelo"e a trading $and com"osed of two moving averages o one of which is shifting u"wards and the other shifting downwards o These trading $ands are used $# technical anal#sts to define a stockRs u""er and lower $oundaries o *ignals to sell occur when the stock "rice reaches the u""er $and! and $u# signals are generated when the "rice reaches the lower $and. o The reasoning $ehind the sell and $u# signals is that stock "rices tend to $ounce off the $ands. o 3ven though $u#ers and sellers will tem"oraril# "ressure a stockRs "rice to its extremes! it should re-sta$ili6e to more realistic levels found within the envelo"e.

To use the Forex FX 8achine *#stem! #ou have to install 8eta Trader . first. The following ste" will guide #ou through the installation ste"s

5. "3&l"$d Met$t$der 6. 2ou can download 8etatrader . from the we$site + mentioned in "revious "art of this manual or #ou can download it at htt":EEwww.forexmeta.comEmetatrader.html

Follow the instruction on the screen to com"lete the set u"

Once you are done, click on the check box to launch Meta Trader 4.

+. Set #/ $ de%" $!!"#&t 2ou will $e asked for o"ening an account when running 8eta Trader for the first time.

Fill u" all the necessar# information to o"en a new account and Click %ext to continue
Now, you can set up the Forex FX ro!it Machine "yste#

Choose #our trading server and click next

Click finish $utton to com"lete #our account registration "rocess. %ow! #ou can start to install and use The FX Drofit 8achine s#stem

To install it! 5ust follow the following "rocedure 0. 2ou need to close the 8eta Trader if #ou are running it
2. Co to the "lace where #ou save the file 7,/r"7it%$!hi&e.e,e! dou$le click on it to

run the installer. Dlease note that the FX Drofit 8achine installer onl# works on >indows ,---E XD E Sista ;. The installer wi6ard will start and #ou have to follow the screen instruction to com"lete the setu" "rocess. The setu" "rocess includes the following ste"s
Ste/ 5

2ou 5ust have to click %ext to continue to next ste" Ste/ +

Choose + agreeT. and click %ext to continue Ste/ 4

Choose the root folder of #our 8eta Trader and click %ext Ste/ 6

Ste/ 8

Congratulations. 2ouHve com"leted Iunning the s#stem To running the Forex Drofit 8achine! 5ust start #our 8eta Trader and load the tem"late

Sh"rt E&tr- R#les 0. Ied dot 3ntr#U*ignal a""ears for selling signal ,. The "rice encounter with resistance (an# level of $and ;. The level of the *tochastic is at the over$ought level and the stochastic cross. .. NI confirm the over$ought level &. I*+ and 8F+ confirm the over$ought level

L"&g E&tr- R#les 0. The $lue dot of 3ntr#U*ignal a""ears as a sign of $u#ing ,. The "rice is likel# at su""ort level of an# $and ;. The level of the *tochastic is at the oversold level and waiting for the cross .. The NI confirm oversold level &. The I*+ and 8F+ confirm the oversold level

E,it

The 3ntr#U*ignal shows a reversal signal E,$%/le 5. LON2 EUR@US 9 4A %i&#te ti%e7r$%e; +n this exam"le! +Hll show #ou how to enter a )A2 "osition. The 3ntr#U*ignal shows a )@A3 dot. +t signals a )A2 "osition. >e also notice that! the "rice encounters the su""ort level! so it might $ounce $ack. The stochastic is at the over$ought level and it crosses. The NI! 8F+ and I*+ confirm oversold level! so we enter our @O%C "osition at 0.,&;- with ;- "i"s $elow the entr# "oint. >hen the 3ntr#U*ignal shows a reversal signal! we exit out )A2 trade at 0.,G<& with 0&& "i"s "rofit.

SHORT EUR@US 94A %i&#tes ti%e7r$%e; +n this exam"le! +Hll show #ou how to enter a *3@@ "osition. The 3ntr#U*ignal shows a I3= dot. +t signals a *3@@ "osition. >e also notice that! the "rice encounters the resistance level! so it might $ounce $ack. The stochastic is at the oversold level and it crosses. The NI! 8F+ and I*+ confirm oversold level! so we enter our *7OIT "osition at 0.,1;- with ;- "i"s a$ove the entr# "oint. >hen the 3ntr#U*ignal shows a reversal signal! we exit out *7OIT trade at 0.,'-- with ,;- "i"s "rofit.

o )efore #ou can master an# s#stem or method #ou must have some kind of master# of self. o +f #ou donHt have control of #our emotions! then #ou will have no control over #our trading. o 2ou will come to reali6e that trading is a $usiness 5ust like an# other. +t ma# $e fun and more interesting than most $usinesses $ut it is still a $usiness. o 2ou would never consider $etting #our $usiness on one throw of the dice! #et man# traders lose control and trade like mad men. o Take #our time K the markets will $e there next #ear and the #ear after. Cet used to the method first $# "a"er trading (using imaginar# 8one# first. 2ou will find a list of $rokers who will give #ou a free (ccount to "ractice with in the next section. o Onl# once #ou have "a"er traded for some time and is showing a Drofit should #ou even consider using real mone#. o +f #ou find #ourself wanting to 5um" in at the dee" end $efore #ou have full# tried and tested the method then #ou need to ask #ourself if #ou are reall# in control of #ourself. o Trading can give #ou whatever #ou want! $ut 5ust like ever#thing else in life there is a "rice to $e "aid. That "rice is #our a$ilit# to think like ( machine and $e unaffected $# the inevita$le u"s and downs. There it is! + ho"e #ou en5o# this "u$lication and start making handsome "rofit K #ou have alread# walked halfwa# through the road to find success in ForexP )efore + end this s"ecial re"ort! thereHs something + would like to share with #ou which + think it will $enefit #ou tremendousl#. O& M$- 8th +AABC A M$gi! I& A#t"%$ted F"re, Tr$di&g (ill A//e$r

e$r Fell"3 Tr$ders >hat #ouRre a$out to learn in next few da#s 3ill DFINALLYD give -"# 3h$t -"# &eed to succeed in #our trading $usiness no matter how good or $ad #our trading skills or how much mone# #ou have to get started. 8ost "eo"le reading this have forked out on an ex"ensive home stud# course! s"ent a fortune on the "rivate coaching seminars or $een ro"ed into tons of useless trading $ooks at some "oint. The "ro$lem is most "eo"le have gotten M3IO results with the a$ove... The F"re, M$gi! M$!hi&e is sh$r/C !ris/C &" BSC i&tellige&t tr$di&g r":"t th$t 3ill :e $ TRUE :re$th "7 7resh $ir $&d /r"%ises t" le$ve -"# :l"3& $3$-.

+f #our looking for another 1--V "age manual that talks non-sto" Wtheor#W then click off this "age right now. (h$t :#ilt1i& the F"re, M$gi! M$!hi&e $re s"/histi!$ted tr$di&g te!h&iE#esC cutting edge technolog#! one of the $est algorithms in machine learning that will have 2OA growing #our trading "rofit faster than #ou ever dreamed "ossi$le. 2ouRll have all the details ver# soon! $ut let me tell #ou some little things a$out m#self. 8# name is Iichard *tevenson and + am a graduate from the famous CalTech Aniversit# with a Dh= degree in com"uter science. 8# research interests are com"utational finance! machine learning and automated s#stems. On the other side! +Hm a full-$looded trader who has $een "racticall# in the trading world for more than seven #ears *even #ears ago! + started to have m# interest in forex when + first read some ama6ing $ooks a$out "eo"le making a fortune $# trading forex. + sta#ed u" learning! working and drinking coffee #&til 8'AA i& the %"r&i&g month after month filled with the ho"e of making trading forex. There were da#s when +Rd come home late from m# 5o$! start working on m# com"uter! and work the entire night 3ith"#t g"i&g t" slee/ - and then go $ack to work the next da#. +Hve s"ent untold hours researching the historical data of each currenc# "air! diving through hundred thousands of charts! a""l#ing do6en of statistical and mathematical theories in a "ursuit to develo" a 7""l/r""7 trading s#stem.

Fi&$ll-C IFve !r$!ked the !"de t" $ %i&d :l"3i&g %$gi!C $#t"%$ted tr$di&g %$!hi&e
+t was actuall# not EASY t" 7i&d "#t and it had taken me a long time (over ; #ears to figure out how to make it ha""en. )ut once + finall# figured out the secret s#stem and turned it

into a com"letel# automated trading ro$ot! + reali6ed that I !"#ld 7i&$ll- %$ke $ h$&ds"%e i&!"%e e$sil- $&d hel/ "ther /e"/le !"/- %- s#!!ess. 7ere is 5ust one of trading account.

For the first time ever! +Hve decided to reveal m# revolutionar# trading ro$ot availa$le to a limited num$er "eo"le of the general "u$lic. )ecause #ouRre on m# S+D access list! +Rll send #ou a s"ecial link on launch da# - that will allow #ou to order one hour $efore ever#one else. (nd thatRs not all. 2ou onl# get a launch discount of /;-- OFF the full "rice if #ou order from that s"ecial S+D access link. 2ouRll also get some of secret trading tools that are not

availa$le an#where else in the world. +Rve s"ent thousands u"on thousands of dollars to $uild them and +Rll give it awa# to #ou for almost 6ero cost. =onHt miss out this s"ecial chance to sk#rocket #our forex "rofit through roof. Foin our Cut-in-line S+D list to receive earl# notification and receive instant discount when The Forex 8agic 8achine is released.
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