Forex Cheat Sheet! pdf

Forex Cheat Sheet!

How to Tap Into a Global Torrent of Cash without Risking the Family Farm












By Marc Charles

Table of Contents
Introduction
My Exposure to the Forex Market
Forex is a legitimate multi-trillion dollar global market
“I Don’t Want to Lose Money!”
Cut the losers short and let the winners run
The Forex Majors
The $3.90 trillion break-down is as follows:
The New “Mini” FX Accounts are a Perfect Fit for Most Traders
Forex Basics — Easier Than You Think!
2. How Base Currencies Are Quoted
3. The Rollover Transaction
4. Forex Margin
How to Accelerate Your Forex Learning Curve
Strategy for Limiting Losses
The 80-20 Strategy
Don’t Listen to Losing Traders
The Price Action Strategy
The Odds Strategy
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Markets Discount Fundamentals
Why Trends Persist
The Importance of Human Nature
Closing thoughts
About the Author
Marc Charles Testimonials
Valuable Resources

Recommended Books on Trading Forex Markets
Opening a Forex Account
Disclaimer
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Introduction

It is easy to tap into a global torrent of cash known as the Forex market.

But more importantly, you don’t have to take unnecessary risks or lose the family farm doing it.

This book is a “how to guide” for making money in the Forex market.

This book is also focused on reducing or eliminating risk, and learning how to approach the market like a savvy
professional.

Ironically, the biggest losses and ridiculous risk exposure typically occurs after a long period of winning trades.

For example, Jon Corzine learned this first hand with MF Global. He was the CEO of MF Global, a large
trading firm with massive exposure to the currency markets, Forex and derivatives. The firm lost more than $650
million in various markets recently.

Granted, the losses were not isolated to the currency or FOREX markets. But you can bet a significant portion
of the portfolio was at risk in this market.

The point is MF Global had a long winning streak of profitable trades.

At some point, without a great respect for downside risk (at all times), you become invincible. Traders (and
gamblers) often believe they are invincible. No one is invincible.

Although this book is a short “cheat sheet” for making money in the Forex market, I will also spend some time

on reducing and/or eliminating risk.








My Exposure to the Forex Market

My exposure to the currency markets took place in 1994.

My good friend Thomas K. was managing a small trading room on the fourth floor of a bank building in
downtown Wausau Wisconsin.

Thomas and his staff of three traders were using the currency and foreign exchange markets to help their
clients’ hedge risk in an export market.

But Thomas quickly learned you could make a lot of money “on the side” in addition to managing a client’s
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portfolio. And so Thomas devoted time every day to their in-house portfolio. Thomas and his traders made a lot of
money.

In fact, one day when I stopped in Thomas’ office they had “cleared” more than $22,000 in net profit. This was
accomplished in about three hours of trading.

I learned quickly the Forex market offered some “over the top” opportunities for profit.

I started trading currency futures full time in 1995, in addition to running several other business ventures.

I traded currencies about 8 hours a week….sometimes more.

1998 was a turning point for me.

I met a trader who specialized in the Forex market, and traded on a large scale.

The trader taught me “loopholes” in the market which occur a couple of times a month. He only traded these
opportunities! The trader was never “hypnotized” by market action. His only objective was to limit risk and make
huge profits.

This edition is not a full-fledged training course!

In other words, I’ve condensed years of research and experience into a few simple pages.

I’m writing a new book on high frequency Forex opportunities too, it will be published soon. I run excerpts in
my blog AskMarcCharles and in other publications.

In this edition you’ll have everything you need to get started in making money in the Forex market without
risking the family farm.

I’ve made as little as $200 or as much as $1,500 in a single day with the strategies I teach in this book.

What’s more, it takes very little effort or research to put these strategies to work.

But don’t kid yourself….it will take a little research and patience on your part to consistently pull cash from the
Forex market.

The most important thing to keep in mind is Forex is the largest electronic marketplace in the world.

I realize most people make claims such as: “This market is worth “trillions”.

But this time it’s true.
Forex is a legitimate multi-trillion dollar
global market

When research the Forex market you will see for yourself the enormity of the market.

The Forex market is used by banks, governments, drug cartels, ex-patriots and international corporations.
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On top of that, farmers, sheiks, kings, and even small traders like you and I are making money in it.

The best part is you don’t need to risk the family farm, nest egg or your kid’s college money (or should I say
PARTY money) to trade Forex.

If you are already a seasoned trader or investor, this book is probably not a good fit. This book is a “cheat
sheet”, a basic primer on the Forex market.

You can get started in Forex with less than $2,500.

But there are Forex brokerages that can be opened with less than $1000.

Granted…you CAN lose money in this market.

I always make this important point very plain and clear.

Forex is speculative – which means you can LOSE money.

However, I’ll show you how professional Forex traders and hedge funds limit their losses in this market. You

can copy these strategies.




























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“I Don’t Want to Lose Money!”

A professional currency trader told me, “Managing losses is more important than making money in this (Forex)
business”. He made millions in the market. But he also managed to avoid losing tens of millions!

He added, “Making money is the easy part”.

For this trader managing losing trades became the focal point of his strategy.

There’s an old adage in the Forex markets which states:

Cut the losers short and let the winners run

This means we need to learn how and when to cut losing trades.

I know this sounds simplistic, and traders use this adage all the time.

But cutting losers short should be the foundation of any great strategy.

In addition, we need to learn HOW and when to let the “winning” trades run wild. It is easier said than done.

I’ve enclosed a strategy for limiting losses which has worked well for me over the years.

Forex – or “FX” – stands for Foreign Exchange.

Forex is the largest and most liquid financial market in the world. It is 30 times larger than all of the U.S. equity
markets combined.

The foreign exchange is the simultaneous buying of one currency and selling of another.

About 5 percent of the daily volume in this market is from companies and governments which buy or sell
products and services in a foreign country or must convert profits made in foreign currencies into their domestic
currency.
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The remaining 95 percent is produced by individual speculators and traders who participate in the market for
profit.

For most entrepreneurs, the best trading opportunities are with the most commonly traded (and therefore most
liquid) currencies, called “the Majors.”

Today, 90% of the daily Forex volume involves trading “the Majors”.

The Forex Majors

The U.S. Dollar
The Japanese Yen
The Euro
The British Pound
The Swiss Franc
The Canadian Dollar
The Australian Dollar

Forex is a true 24-hour global market.

Forex begins trading each day in Sydney and moves around the globe as the business day unfolds in each
financial center – first to Tokyo, then to London, and then on to New York.

Unlike other financial markets, investors can respond to currency fluctuations caused by economic, social, and
political events at the time they occur – day or night.

According to the Bank for International Settlements, as of October December 2012, the average daily turnover
in global foreign exchange markets is more than $3.92 trillion!

This constitutes growth of about 20% over the $3.21 trillion daily volume as of October 2011.
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The $3.90 trillion break-down is as follows:

$1.490 trillion in spot (cash) transactions
$475 billion in outright forwards
$1.765 trillion in foreign exchange swaps
$43 billion currency swaps
$207 billion in options and other products

The “FX” market is considered an Over the Counter (OTC) or “interbank” market, because transactions are
conducted between two counterparts over the telephone or via an electronic network.

And it’s important to note… FX trading is not centralized on an exchange, as it is with the stock and futures
markets.

The most significant difference between the FX market and the currency futures market is participants in the FX
market deal on a principal-to-principal basis.

In the currency futures market, participants deal, instead, through brokers in an “open outcry” exchange.

Here’s the good news…

Internet brokerages now enable individuals and small traders with easy access to this market.

The low entry costs (sometimes as low as $500) have drawn tens of thousands of small investors, traders, and
speculators into the market.

On top of that, today there are new “mini” FX accounts. These were not available when I started trading.

The New “Mini” FX Accounts are a Perfect Fit
for Most Traders

The new “mini” FX accounts are a great way for small traders, investors, and speculators to make money.

The new “mini” FX accounts can be opened with less than $1000.

The contracts are about a third of the size of a standard Forex contract.

Brokerages offering both regular and “mini” FX accounts:

HotSpotFX

Forex

FXCM

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GAIN Capital

Saxo Bank
NADEX

Global Forex

ForexClub


These brokerages can help you open an account and get started trading.

Most Forex brokerages offer step-by-step tutorials and instruction too.

The sheer number of currencies traded in the Forex market serves to ensure extreme volatility on a day-to-day
basis.

There will always be currencies which are moving up or down, offering opportunities for profit (and
commensurate risk) to traders.

Believe it or not, extreme volatility is actually a good thing!

It simply means a market has tremendous activity. If you’re on the winning side of a trade you’ll make money
much faster!

Forex offers a ton of ways to lower risk and enable traders to profit in both rising and falling markets.

Forex also makes it possible leverage positions (the most attractive aspect of currency futures), with low margin
requirements.

Best of all, Forex charges zero dealing commissions.

Forex Basics — Easier Than You Think!

1. Buying and Selling Currencies

Currencies are always priced in pairs.

All trades result in the simultaneous purchase of one currency and sale of another.

While trading on Forex, you would execute a trade only at a time when you expect the currencies you are
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buying to increase in value relative to the one you are selling.

If the currency you are buying does increase in value, you must sell the other currency in order to lock in a
profit.

An open trade (or open position), therefore, is a trade in which a trader has bought or sold a particular
currency pair and has not yet sold or bought back the equivalent amount to close the position.

How Base Currencies Are Quoted

The first currency in the pair is considered the base currency; the second is the counter or quote currency.

Most of the time, the U.S. Dollar is the base currency, and quotes are expressed in units of 1 USD per counter
currency (for example, USD/JPY or USD/CAD).

The only exceptions to this convention are with the Euro, the Pound Sterling, and the Australian Dollar, which
are quoted as dollars per foreign currency.

Forex quotes always include a bid and an ask price. The “bid” is the price at which the market maker is willing
to buy the base currency in exchange for the counter currency.

The “ask” is the price at which the market maker is willing to sell the base currency in exchange for the counter
currency.

The difference between the bid and the ask prices is referred to as the “spread.”

The cost of establishing a position is determined by the spread, and prices are always quoted using five
numbers (for example, 134.85), the final digit of which is referred to as a point or a “pip.”

For example, if USD/CAD is quoted with a bid of 134.85 and ask of 134.90, the five-pip spread is the cost of
trading this position.

From the start, therefore, the trader must recover the five-pip cost from his profits, necessitating a favorable
move in his position in order to simply break even.

The Rollover Transaction

In the spot Forex market, trades must be settled within two business days.

For example, if a trader sells a certain number of currency units on Wednesday, he must deliver an equivalent
number of units on Friday.

Some currency-trading systems may allow for a “rollover,” with which open positions can be swapped forward
to the next settlement date (giving an extension of two additional business days).

The interest rate for such a swap is predetermined – and, in fact, these swaps are actually financial instruments
that can be traded on the currency market.
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In any spot-rollover transaction, the difference between the interest rates of the base and counter currencies is
reflected as an overnight loan.

If the trader holds a long position in the currency with the higher interest rate, he would gain on the spot
rollover.

The amount of such a gain would fluctuate day to day according to the precise interest-rate differential between
the base and the counter currencies.

Rollover rates are quoted in dollars and are shown in the interest column of the Forex trading system.

Rollovers do not affect traders who never hold a position overnight, since the rollover is exclusively a day-to-
day phenomenon.


Forex Margin

Trading in the currency markets requires a trader to think in a slightly different way about margin.

Margin on the Forex is not a down payment on a future purchase of equity. It’s a deposit to the trader’s
account which will cover any currency-trading losses in the future.

A typical currency-trading system will allow for a very high degree of leverage in its margin requirements, up to
100:1.

The system will automatically calculate the funds necessary for current positions and will check for margin

availability before executing any trade.



















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How to Accelerate Your Forex Learning
Curve

The Forex learning curve can be overwhelming, it was for me.

This is especially true if you’ve never traded currency futures, options, or the equity markets.

Therefore, in order to accelerate your understanding of the market, you’ll need to read as much about it as you
can, paper trade and watch tutorials.

Google and YouTube are excellent resources too. You’ll find hundreds of “how to” videos for beginners to
expert.

I’ve listed several books which helped me and I’m confident they will help you too.

There are dozens of Forex trading seminars available too.

But when it comes to Forex trading seminars – let the buyer beware.

The best Forex trading seminars should be conducted by someone who is a successful trader and a skillful
teacher.

Not everyone can teach!

Most people like to talk about how smart they are and how much money they claim to have made.

Online trading forums will give you a great sense of legitimate and bogus trading seminars.

Strategy for Limiting Losses

One of the greatest aspects of the Forex market is the ability to place “stop loss orders”.

A “stop loss order” is an order to buy or sell when the price of a Forex contract drops or rises to a designated
level.

For example, let’s say you buy the Japanese Yen and sell the US Dollar at a certain price point.

But the market moves against you….in this example the Yen falls in value in relation to the US Dollar.

You can place a “stop loss order” BEFORE you enter this trade to protect yourself and limit downside losses.

When the “stop loss order” is triggered (automatically and electronically) you would be removed from the
trade, and your position would be liquidated.

I always trade using “stop loss orders”….even when seasoned traders tell me I don’t need them!

If you trade the Forex markets you’ll need to familiarize yourself with the various methods of risk management,
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like stop loss orders.

Stop loss orders are an excellent risk management tool.

I would like to show you some simple Forex trading strategies. If you can the time to contemplate these and
apply them, your trading should benefit.

The 80-20 Strategy

The 80-20 Strategy is a simple way to leverage profits in the Forex market.

This strategy is applied on the daily range and signal for the first trading day of the week only.

When you research the patterns of financial markets you will notice the price on the market closes at the top or
bottom 10% to 20% of its daily range 80% of the time.

In other words, most of the time (80%) a market will close within 20% of its daily average, and the key is the
daily range or average.

So, notice the closing price of currency pairing on the first trading day of the week. It should be within 10-20%
of its daily range.

You can use this information the following week, on the first day of trading, to place a trade on the following
day.

You can paper trade this strategy without risking a dime. If you do this several times on paper, there’s a
possibility you could do this in real time.

Don’t Listen to Losing Traders

Don’t let others discourage you from trading the Forex.
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Most of the people who discourage you have lost a lot of money. They want discourage others so it makes
them look “wise” and “seasoned”.

There are plenty of good indicators and strategies to make money. But logic is better most strategies and
indicators.

Software trading programs which utilize pure logic and probability always interest me.

But don’t let losing traders discourage you form learning and trading the Forex market.

Years ago one of the best ways to trade Forex was on a site called babypips.com. You could learn how to
trade and then go out on your own. It’s still a pretty good site.

When you’re starting out you have to be aware you are trading against some of the biggest players, banks,
traders and corporations in the world. That’s not a bad thing! It’s just a wakeup call. You will be trading against
people who have been doing this a long time.

So we need to get up to speed, and learn everything we can, quickly!

Okay, back to the strategies…

The Price Action Strategy

Price action trading is one of the easiest ways to trade the Forex market.

What the heck is price action?

Price action is simply the “footprint” of money.

Financial markets exchange money between participants.

This exchange of money leaves a trail or a footprint.

This footprint is the market’s price movement or price action. You can see this price action on a price chart.

If you study price charts you will notice patterns or “clues” from price action as it makes its trail across the
charts.

You can learn to spot things which happen over and over and over, and then you can harness the inherent
power of this knowledge and trade!

When you trade like this you are referred to as a “price action trader”.

Price movement in markets tends to be somewhat repetitive.

This is a VERY big deal!

If you can identify repetitive behavior you can forecast the future with probability in your corner.
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Can someone predict the future or future price movement?

No.

But, certain cycles, patterns and price action history often repeat themselves.

Price action trading involves trading price action strategies from key levels in the market.

Here are three ways to leverage price action and make money:

Master one price action at a time

Most traders jump from one strategy to the next without mastering anything. The most successful Forex traders
and the ones making the most money tend to focus on one thing.

Be patient. Focus on longer time frames

By focusing on longer time frames you can benefit from the natural price movement and filter out the “noise”. In
other words, jumping in and out of a market in morning trading is not a longer time frame. You don’t have to trade
within week or month time frame, but there’s nothing wrong with doing it. It’s simply focusing on longer time frames
to collect more information and get a better picture of what’s happening.

Watch and learn from successful price action traders

One way to become a specialist in Forex price action trading by learning from a successful trader and applying
their strategies profitably.

You can do this online, in forums, by joining Twitter feeds, and subscribing to different trading and advisory
services.

Price action is important

No matter what strategy you use knowing how to read price action will make it more profitable, even if you
don’t rely solely on price action movement. Price action movement, averages and cycles will show you the “ebb
and flow” of a currency, which enables you to place wise trades.

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The Odds Strategy

Odds and probability are wonderful principles.

I wish I had paid more attention in school. But then, I wasn’t thinking about probability except when it came to
asking girls out!

But when you have a clear, unemotional understanding of odds and probability, you can make incredibly
powerful decisions and TRADES.

Forex charting enables you to execute trading signals when the odds are in your favor. This is an amazing thing.

You can pile up profits over time and enjoy Forex trading success when you understand the Odds Strategy.

So what is the best way to put odds on your side and catch the big Forex trends?

The answer is price charts.

We can use Forex charts, and we’ll see reality as it is. You will be trading the truth, rather than listening to the
opinions of others or letting your emotions get involved.

The following is a quick review of essence of Forex technical analysis, and applying the Odds Strategy.

Markets Discount Fundamentals

Fundamentals are facts about supply and demand, situations, and the environment, etc.

For example, if the unemployment numbers escalate in the US this is a fundamental fact. The market has
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already discounted it.

Another example, if Japan missed an interest payment on its government bonds, this is a fundamental. The
market has already discounted it.

All fundamentals show up quickly in the price action. By studying Forex price charts you can study the effect of
fundamentals. This will give you the nice overall picture.

Why Trends Persist

You can see trends or cycles by looking at a Forex historical price chart.

You will see Forex trends lasting for weeks, months or years.

Forex technical analysis assumes a trend once in motion is more likely to continue than reverse.

In other words, when a trend is in motion the ODDS or probability it stays in motion is very high. This is
powerful information.

The objective of a Forex trader should be to spot these trends and trade off of them with strong probability on
his or her side.

History Repeats

Human nature never changes.

It’s hard to believe but it’s true.

Forex chartists believe what has happened in the past will happen again.

Human nature causes reoccurring chart formations. These formations can be seen on a Forex price chart and
then traded for profit.

As human nature never changes Price patterns reflect shifts in human psychology, we can therefore look for
certain specific reliable patterns to repeat themselves, again and again.

The Importance of Human Nature

In any market humans determine the price of anything.

Everyone has access to the same facts. But we all see them differently!

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It is our perception and the perception if millions of other traders which determines price.

For example, some of the largest price moves in history have taken place with little or no change in the
fundamentals.

It’s a fact markets are most bullish at market tops and most bearish at market bottoms. This is human
psychology at work.

Human Nature is Constant

Human psychology is constant. This means patterns which have occurred in the past will occur again

If we can learn to spot these patterns, we can act on them profit from Forex trends.

Closing thoughts

You can tap into a global torrent of cash in the Forex market. But there is no reason to take unnecessary risks
or lose the family farm.

I’ve shown you everything you need to start making money in the Forex market, in a short period of time.

You also learned about stop loss orders, specific trading strategies and where to go for more help, instruction
and advice.

Forex is a great business opportunity for entrepreneurs of every size.

Please write to me with your thoughts, feedback, complaints or insight.

Marc Charles

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About the Author
Marc Charles is an entrepreneur, writer and startup advisor. He has launched, bought, sold, reviewed and
advised hundreds of businesses and money making opportunities. Marc is also a popular conference speaker and
author. Marc provides timely updates on legitimate business, money making ideas and strategies on his blog –
AskMarcCharles. You can find his commentary across the web. Marc has written more than a dozen books.
Marc is married and has three kids. He lives in Owls Head Maine and Clermont Florida.

Contact:
Marc Charles
C/O Kindle Publishing Group
PO Box 972
Camden Maine 04843
Amazon.com Author Page:
/>

Marc’s Blog />Email: imaxxman at gmail.com










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Marc Charles Testimonials

Marc is the real deal. He has helped our business on several levels. But perhaps the most powerful advice we
received from him was in the area of building a house mortgage free, and debt free living.

Dr. Charles Drew

I made more than $15,000 because of Marc’s recommendations and counsel. Marc’s the real deal…an
entrepreneurial genius and teacher.

S. Chelsea


We build a small home in Northern Arizona. But we did not discover Marc’s writing until our project was half
completed! We regrouped, and started on a new path, and it has made all the difference. We are now mortgage
free.

Diane Chambers


Marc is one of the most innovative and business savvy entrepreneurs I have ever met. He has an uncanny way
of tapping into what drives consumers, and more importantly, makes them convert. He knows what they want and
need, and how to speak to them in a way that gets results. These are some of the priceless attributes that has made
him so successful in the industry and why he’s been dubbed, “The King of Business Opportunities”. I would work
with Marc on any project, in any niche … because I know it will pay off.
Wendy M.


Marc has an uncanny ability for spotting profitable trends and creating simple profitable businesses around
them. There are a ton of people selling push-button “sit by the pool” type programs which claim to make a million
dollars instantly. This is NOT what Marc Charles does. He’s a simple guy, making a ton of money in simple ways.
If you have a chance to meet Marc in person you will be a richer person, GUARANTEED!

Roger F.



Marc has provided priceless insight to our business ventures for more than twelve years. He cuts through the
BS and instinctively gravitates to the money making formula. We would never look at a business opportunity
without consulting with him first.
Robert B

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I’ve been in business for more than four decades. I’ve made and lost money. But I’ve never met an
entrepreneur with more insight and care and concern for people than Marc Charles. He trained our staff on a new
way to sell advertising, and his tactics tripled our sales in one year. His counsel is a must for anyone who does
business on the Internet too.
P. Sterling


My company has been working with Marc for more than ten years. My experience is super positive. His
professional advice, business savvy and start-up expertise has always been very helpful …and to the point. Marc’s
direct marketing insight is invaluable to us.
Marina S.

I started a profitable web-based business because of the ideas and instruction I received from Marc’s weekly
email and blog.
Frank S.

I was exposed to Marc’s business savvy at EarlyToRise.com and I heard him speak at an Info Marketing Boot
camp. I was so impressed I approached him after his talk. I was pleasantly surprised how open he was. Marc has
continued to be a great sounding board for our business ventures. I value his opinion and consider him a mentor
and a friend!

Mike B.

I know Marc well, and I can attest to his business savvy and ability to make money. In my experience, (more
than 45 years of business ownership and deal making) I’ve been exposed to a lot of entrepreneurs. Marc stands
out from all of them. He’s incredibly shrewd and resourceful. But he’s also passionate about helping others make
money.
P. King




Marc helped our business in several ways. It was interesting to watch him work with our managers and
employees. He’s actually the nicest guy we’ve ever met. I know “nice” means nothing in the business world. But
Marc motivates people with his love and kindness. He is passionate and very knowledgeable about business,
reducing costs and the Internet.
L. Masterson

Marc consulted our trading department in 2008. We invited him back more than a dozen times since then. His
trading expertise and savvy is phenomenal. But he’s also an incredible teacher and instructor. Your business will
improve with Marc’s counsel.
Dr. David Stein

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Valuable Resources

$50,000 Forex Practice Account (FREE)
Forex.com

Forex Training and Education

FXClub.com

Straight Forex Newsletter

StraightForex.com

Forex Software

ForexSB.com
eSignal.com
LeverageFX.com

ForexPros.com

Recommended Books on Trading Forex
Markets

Trading Global Currency Markets, by Cornelius Luca
An Introduction to Foreign Exchange and Money Markets, by Reuters Financial
Currency Markets: How to Access and Trade the World’s Biggest Market, by Phillip Gotthelf

Opening a Forex Account
Global Forex Trading
FXCM
Saxo Bank
Crown Forex
FX Solutions, LLC
Forex.com
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XPRESSTRADE


Disclaimer

Any advice or information in this book is general advice only. Please take into account your personal
circumstances when trading the Forex markets. You should never trade or invest based solely on this information.

By reading this material or using the information in this book you agree this is general education material. You
shall not hold any person or entity responsible for loss or damages resulting from the content or general advice
provided in this book.

Forex and currency trading have large potential rewards, but also large potential risk.

You must be aware of the risks and be willing to accept them in order to invest in the futures, options and
Forex markets. Do not trade with money you can't afford to lose. This book is neither a solicitation nor an offer to
buy or sell futures, Forex, or other financial products.

No representation is being made which any account will or is likely to achieve profits or losses similar to those
discussed in any material on this book.

The past performance of any trading system or methodology is not necessarily indicative of future results.

Please remember past performance of any trading system or methodology is not necessarily indicative of future
results.



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