FOREX FOR BEGINNERS

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The ABC’s of Forex

Understanding CFD’s & Metals

Common Trading Mistakes to Avoid

Selecting Your Trading Strategy

Next Steps

Table of Contents

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Pips, candles, bulls,

bears, leverage,

liquidity…

What does it all mean and where do you start?

Forex Can Seem Pretty Overwhelming… at First

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This manual is designed to help you cut through the clutter, see market opportunities more clearly and prepare you to tackle the live markets more quickly and effectively.

We’ll Help YouSee More Clearly

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Let’s start with an explanation about what forex is.

It’s a financial market for trading currencies. In fact, forex is the world’s biggest market, and it’s only getting bigger…

Trading in foreign exchange markets averaged$5.3 trillion per day in April 2013, up 61% from April2007.*

The foreign exchange (“forex”) market is unique because of its geographical dispersion andcontinuous operation, running around the clock… 24 hours a day (except for weekends) trading from 22:00 GMT on Sunday (Sydney) until 22:00 GMT Friday (New York). Combine that with the high level of liquidity, low spread cost and theability to go long or short and you can see why it has become so popular with investors worldwide.

Forex is the World’s

Biggest Market

*Source: Bank for International Settlements preliminary global results from the 2013 Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives Markets Activity

Trading begins inSydney at 22:00 GMT

Tokyo opens twohours later, followed by Singapore and Hong Kong at 2:00 GMT

The Euopeanmarkets in Frankfurt open at 7:00 GMT.London is next at 8:00 GMT

After the Asian markets have closed

And finally, NewYork opens at 13:00 GMT

Up61% from

April 2007www.bank-fx.com

Trading 101

One of the first things you will notice is that Forex is always quoted in pairs which makes sense since what you’re doing is comparing the value of two currencies against each other. The first currency you see is the base currency (USD in the example shown) while the second is referred to as the counter currency (JPY in the example). This example illustrates how much one US dollar is worth in Japanese yen.

When trading Forex, you are buying or selling a currency pair on the base currency. Think of it this way, if you are bullish on USD you might buy USD/JPY which means that you’d be buying USD but also selling JPY.

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There are two prices on currency pairs at any given time. A bidprice is the rate that you can sell a currency pair to the market at. Conversely, the ask price is defined as the price at which you can buy from the market a currency pair. So the gap between the ask and the bid price is the spread. Together, the two prices make up a quote.

A Few Terms You Should Know

Simply put, an upward moving market is

referred to as a bull market whereas a downward moving market is referred to

as a bear market.

In currency terms, one that’s gaining value is called bullish vs. one that’s losing value which is bearish.

The key thing that you need to remember is to buy when currencies are bullish and sell when currencies are bearish.

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In finance, specifically in foreign exchange markets, a percentage in point or price interest point.(pip) is the smallest digit in the currency pair or the smallest price change that a currency pair canmake. For example, if the EUR/USD was to move from 1.1195(1) to 1.1196(1), that would be anincrease of 1 pip. A move from 1.1195(1) to 1.1198(4), would be an increase of 3.3 pips.

The major currencies (except the Japanese yen) generally have four digits after the decimal pointand a pip is one unit of the fourth decimal point. So taking a look at dollar currencies, this is to1/100th of a cent.

For the yen, a pip is one unit of the second decimal point, because the yen is much closer invalue to one hundredth of other major currencies.

Pips

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Trends & Retracements

In a down trend, the

move from the high

is called a rally or a

retracement. In a

down market you

want to sell the rally.

Obviously, you

would want to do

the opposite in an

uptrend.

Lower High

Lower High

Lower Low

Lower High

Lower Low

Lower Low

Lower Low

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Leverage

Leverage is defined as the

a very appealing benefit of Forex

you to exploit price fluctuations.

It is important for traders to

understand the benefits as well as

the hazards of trading with

leverage.

of a ratio of 100:1. With this

leverage it is possible to enter into

a trade for up to $100 for every

dollar in the account. This is where

margin-based trading can be a

powerful tool because it allows you

transaction size to investment ratio to exploit price fluctuations. Using

that’s used for margin. Leverage is $2,000 of margin in your account,

you could trade up to $200,000 at

for a lot of traders because it allows 100:1 leverage making it

possible to earn profits on the equivalent of a

$200,000 trade.

However, it is very important to

understand that you would also risk

losing funds based on a $200,000

trade. Furthermore, traders We’ll

illustrate this with an example suffering losses without sufficient

margin remaining in their account

run the risk of triggering a margin

closeout.

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Support is an area on the chart where buying is expected to take place and the resulting energy is sufficient to stop a downtrend. If the price of a currency falls towards a support level it is a test and the support will either be reconfirmed or breached.

Support & Resistance

Resistance conversely, is an areaonthe chart where selling is expected to take place and the resulting energy issufficient to stop an uptrend. If the pricof a currency rises towards a resistance

level it is a test and the resistance will either be reconfirmed or breached.

Traders often use support and resistance levels to predict where to

out of the markets. Support and resistance can be identified on a chart

to mark these bounds. Money can be made by entering the market on

side when the market is trading near support then selling as prices rise to

of resistance.

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CFD (Contracts for Difference) offers leveraged long/short trading on almost every financial instrument. It is a simple and inexpensive trading option to trade the change of price in multiple commodity and equity markets with leverage and immediate execution.

Contracts for Difference (CFDs)

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Over many centuries, gold hasremained valuable and fairlyliquid regardless of where youare in the world. It’s a popular commodity with traders who are looking for a hedgingoption.

Even investors who don’tactively trade in gold use itsactivity as a barometer toprovide insight into possiblemarket changes.

Why is Gold a Popular Commodity to Trade?

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Trading without a clearly defined strategy:The temptation to trade based on instinct is often hard to ignore. We all get a feeling in our gut from time to time but creating a clear and succinct risk management plan will help you mitigate your losses. Set the stage in advance so you know your entry & exit points.

Common Trading Mistakes to Avoid

Overleveraging:A popular feature that attracts a lot of private investors to the Forex and CFD markets is theability to trade on margin i.e. using leverage. The lure of small deposits trading relatively largepositions can be hard to resist. Sure, it might produce attractive returns, however there is alsothe possibility that your position to be liquidated for insufficient margin. Therefore, it is importantto be cognizant of both risk & return when selecting your position size. Many of the moresuccessful, tenured traders leverage between 10:1 & 50:1.Remember, slow and steady wins the race.

Know your entry & exitpoints.

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Common Trading Mistakes to Avoid

Trading without a stop-loss:Stop-loss orders are an integral component of an effective trading plan. Traders should employ stop-loss orders as a way of specifying the maximum loss they are willing to accept. By using stop-loss orders, traders can avoid the common scenario where they have many winning trades but a single loss large enough to eliminate any trace of profitability in the account. Also worth noting is that moving your stop-lossorder to avoid being stopped out is basically the same as trading without a stop loss. You should make it a rule to only ever move your stop loss only in the direction of a winning trade in an effort to lock in profits.

The Best time for

traders to get

aggressive is

when things are

going well.

No money management:Excessive risk does not equal excessive returns. The majority of traders that take big capital risks on single trades will eventually lose. The biggest difference between beginners and experienced traders is their approach to money management. Professional traders will typically suggest risking a fixed percentage of your capital in each trade. By never varying from this percentage you will reduce the impact of repeated negative decisions. Beginners often neglect these principles and increase their positions once they start to lose, ultimately diminishing their capital. The first reaction should be to decrease the size of the trades. For example switch from trading 5 lots at a time to trading 2 lots at a time.The best time for traders to get aggressive is when things are going well.

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Lacking market knowledge: A common mistake for beginners is to start trading without sufficient knowledge of the selected currency pairs and how currencies are influenced by global events.Learn as much as you can about how the international financial markets interact, and how they correlate with each other, e.g. stocks, government bonds, commodities or Forex. This knowledge allows you to make better informed trading decisions when economic indicators are published. It is also important to identify the market that allows you to adjust your strategy and avoid the entry into negative trades. The more informed you are, the better your chances are to trade successfully.

Common Trading Mistakes to Avoid

Letting your emotions get the best of you:The best way to remove emotionfrom trading is to plan as much of the trade as possible in advance prior to entering. Many traders focus on what happens after they enter a trade, but the movements in price are not under the trader's control. What the trader can control is planning where to enter,

and place stops and limits, and determine ahead of time what to do in the event of any situation that may arise. It is also important

to manage your stress when trading forex. Losses are part of the game so don’t let them get the best of you.

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No Risk- Reward Ratio: Traders should establish a risk- reward ratio for every trade they place. In other words, they should know how much they are willing to lose and how much they are seeking to gain. Generally, the risk- reward ratio should be 1:2, if not more. This means risk should equal no more than 1 half of the potential reward. Having a solid risk- reward ratio can prevent traders from entering positions that ultimately not worth the risk.

Establish a risk-

reward ratio for

every trade

Selecting YourTrading Strategy

• How often do you plan to trade?• What time of day will you be trading?• What’s your money management plan?• What buy/sell signals do you plan to use?• Do you plan to use any technical indicators?

Consider the following

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You’ve already made an intelligent decision by learning about the fundamentals of Forex.Now it’s time to consider taking these next simple steps:

• Open a demo account. It only takes 60 seconds and gives you the opportunity to practicewhat you’ve learned in a risk-free environment before using your real money inthe markets.https://bull-fx.com

• Check back often for more great webinars, videos and other learningresources.• Refer to our online Glossary of Forex Terms to help you develop your tradingvocabulary

Next Steps

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And Feel Free to Contact Us With Any Questions

We’re always interested to hear from you!

Website: https://bull-fx.comEmail: Info@bull-fx.com

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Are You Ready?

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Bank FX and Bank of Bullion is the Trading Names for SBP Gold and Diamonds group of companies. Commercial License Number 750525. Licensed and Regulated by Department of Economic Development (DED). Government of Dubai, UAE. Trading in speculative and leveraged products can result in losses that exceed your initial deposit. These products may not be suitable for everyone so please ensure you fully understand the risks involved and seek independent professional advice if necessary. Any views or opinions presented in this email do not necessarily represent those of the group which is providing this as a service and does not endorse or support the content in any way.

Disclaimer

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