Step 2: Make sure the course costs less than 50% of the money you have to invest. The cost of the course will not be invested directly in the market. You want to put most of the money you have to trade into your trading account.

Step 3: Make sure that the course does not have any hidden costs. You do not want to have to pay for a subscription. You should also find out if the company that sells the course has any paid subscription type services. If they have these types of services, chances are that their system will eventually require that you use them. (Free resources however, are always great!)

Step 4: Make sure you can practice trading in a demo account and still get a refund. There are courses out there that require you to place trades with real money before you get a refund. In this case, you would only need a refund if you lost all of your money!

Step 5: Make sure the information in the course teaches you how to trade independently. You need to be able to take the information you learn with you if you discover a better trading platform in the future.

You should follow the above 5 steps any time you look for an investment course. If the courses do not meet the guidelines listed above, you should move on to the next course.

There are two main types of analyzing the Forex market. The first type is technical analysis. Technical analysis is a way of using historical price data in different ways to predict the future price of a currency pair. Technical analysis relies on price charts and various technical indicators to make predictions. The main assumption of Technical Analysis is that the historical price data reveals
patterns that repeat themselves over time.

Fundamental analysis is also a popular way of analyzing the Forex market. Fundamental analysis examines different facts about the economy to predict price movements.

I am explaining technical analysis first because it is the easiest and most precise way of trading the Forex market. “The numbers don’t lie” is a phrase that applies more to technical analysis than to the fundamental approach. Technical analysis can be learned much faster than fundamental analysis and requires less expertise.

I mentioned above that technical analysis is based on technical indicators. These indicators make different mathematical calculations and display the results on a price chart. The skilled Forex trader interprets these indicators and makes trading decisions. So how do you become a skilled Forex trader, friend? Read on to find out.

The most basic technical indicator is one that you can draw with your own hand. I will simply explain this indicator, but you will not use it. This basic indicator was used early in the stock market, and is still used today. This indicator is known as a “trend line”. To draw a “trend line” you simply:

1. Print out an historical price chart for a given time interval of a currency pair.

2. Draw a line connecting two or more parts of a graph that have higher lows, or
lower highs.

Poof! Now you have a trend line. This trend line represents the basic price direction of the currency pair. When the price of the currency pair breaks through the trend line in the direction opposite of the trend, you would expect a reversal.

By reversal I mean this:

1. If the prior trend was upward and the price broke through the trend line moving down, this would indicate a new downward trend using the trend line method.

2. If the prior trend was downward and the price broke through the trend line moving up, this would indicate a new upward trend using the trend line method.

Trend lines can act as either floors or ceilings for the price data. When these lines are penetrated, the price usually moves completely to the other side of the trend line. Suppose you are monitoring the EUR/USD (a popular currency pair). You draw a trend line connecting 3 points where higher lows are reached than previously on the chart. After you draw the line, you notice that all of the price data on the chart so far falls below the trend line you have drawn. The trend line is acting like a “floor”. The floor appears to be a boundary that the price will not cross. So now you wait until the price crosses the boundary. A few periods later you notice that the trend line has been broken when the EUR/USD fell below it. So now you would expect the price to go even lower because the “trend line” method
suggests that an old floor will act as a new ceiling. So now you can expect all of the prices to be below the trend line once it has been broken.

Once the trend line is broken, the prices should stay below the trend line. This method is not very scientific. A lot of the method depends on how you draw your trend line. I have also given you a simplistic version of the trend line method.

There is a little more to it.

Because the trend line method is not very scientific (or accurate) better methods have been developed. Some changes were made to the trend line philosophy and many people called for a more precise method. There are actually many more precise methods available today. The next method was not a practical candidate to replace trend lines until the computers reached the sophistication of
the mid 1990’s.

The Simple Moving Average (SMA) is a theoretical extension of the trend line concept. The Simple Moving Average is plotted on a graph by the charting program for the Forex market data. The SMA takes the average of the close price of a given number of the last few periods. Any number of periods can be selected. You can have an SMA5 or an SMA20. An SMA5 will take an average of the previous 5 close prices on the chart and will plot it on the chart alongside the other price data. Each bar will use the previous 5 bars worth of data to calculate a point and plot it on the graph.

If the SMA is generated using a large number of periods (like an SMA50 or SMA75), you could interpret it similarly to the trend line. But if you select “faster” SMA’s (like an SMA5 or SMA20), you need to use a different strategy.

I am about to give you a strategy using the SMA. This strategy is a very basic one. It does not have a high degree of accuracy, but it is very easy to do and it is fun. It is a good technique to begin trading with. I want you to keep in mind that there are better strategies out there.

The SMA crossover method. After you have set up your free demo account, you need to open the charting software. The SMA is one of the most commonly used indicators and can be found in almost every charting package out there. When you plot the SMA, you will be able to select a line color to plot it.

Make sure to use a different color than the actual prices on the chart.

Step 1: Plot an EMA5 using blue (or any color you like)

Step 2: Plot an EMA20 using red (or any color that is different than step 1’s color)

You now have 2 SMA’s plotted on the chart. You also have two signals. Buy signal: When the SMA5 crosses the SMA20 moving up ward. Sell signal: When the SMA5 crosses the SMA20 moving down ward. The beauty of this method is that the price of the currency pair can not go up significantly without triggering the buy signal. In other words - if the currency pair begins to trend up, then the buy signal must be triggered. The opposite is also true - if the currency pair begins to trend down, then the sell signal must be triggered. The only time where this system fails is when there are false alarms.

Sometimes the currency will act like it is going to trend up and then it will trend back down. Here is a way to see how the SMA’s predict price movements. You should open up some charts and put on the SMA5 and SMA20 overlays. You can then look at the times where the price fell/rose significantly. What did the SMA look like near the beginning of the price movement? What did it look like after? By viewing
how the SMA reacted in the past you will get an intuitive feeling for how it will act in the future after an SMA crossover. The SMA crossover method will work best in longer time frames. If you attempt
to use it for tick-by-tick day trading, it will probably only produce losses. This method works better for trades that last weeks, or months.

I want to explain the meaning of the question. When I mention “trade the Forex for free”; I am referring to the actual costs of the information & software that you need to make Forex trades. It would be ludicrous to imply that you will not need investment capital (money) to make your trades.

If you want to make profits in the Forex - you will need some money to get started trading. I am going to show you in this lesson (and lesson #5) how you can get started trading with as little as $300 in a mini- account. When you stop to think about an investment opportunity, $300 is nothing when you compare it to the kind of money that can be made in the Forex.

Note: With a $300 investment, you will be able to control $60,000 worth of
currency!

I wanted to mention the question: “Can you trade the Forex for free?” to save you a tremendous amount of time and money. I am going to share something with you that is not popular in the Forex trading education world. I have already gotten some nasty comments by other Forex trading course authors by implementing this philosophy.

This nasty little secret is the lifeblood of the Forex trading education industry. I can not legally mention any company here, so I am going to tell you what this nasty little secret is. I will also give you guidelines to avoid falling into any traps. Here it is: All the information you need to trade the Forex is available in free or low cost resources.

If you search for Forex trading systems you will see an unbelievable trend. You will notice that many companies are charging thousands of dollars for trading courses. Perhaps the information is good, perhaps it is not. This is not the most profitable part of the education industry.

Most trading courses require you to subscribe to a paid service that forces you to depend on that service. These paid services can be email notifications, software leasing, & other types of services.

So what is the problem with a paid service? These services do not explain how the systems work. You are blindly paying for someone else’s recommendations. The person selling the recommendations could be using free resources to make those recommendations.

Ok, let’s suppose the paid service predicts Forex movements with the greatest accuracy. You begin to make hundreds of thousands of dollars by using the service. But something happens and the service becomes unavailable. What would you do then? You have just allowed someone to retire your trading career early and at will.

Maybe the paid service works really well at first, but then the person running the service turns it over to someone else. You could lose a lot of money before you realize that someone new is running the system into the ground (along with your prior profits!).

It is never a good idea to put your fate in someone else’s hands. If you could learn how to predict the Forex for yourself, you would be in total control. You would have knowledge that nobody can take from you.

I have been cheated by expensive courses that didn’t deliver. I spent $3,000 on an investment course that gave great information. The information they taught was useless unless I subscribed to an $80 per month software. It took me 3 months to lose the $2,000 I had in my trading account. But I also lost the $3,000 on the course, plus $240 for the software subscription.

Historical knowledge about the Forex will not help you to become a Forex trader! I will make one important point before moving forward. The Forex plays a vital role in the world economy and there will always be a tremendous need for the Forex. International trade increases as technology and communication increases. As long as there is international trade, there will be a Forex. The Forex has to exist so a country like Japan can sell products in the United States and be able to receive Japanese Yen in exchange for US Dollars.

The easiest point to begin discussing the Forex is by comparing it to the stock market. Most people have a basic concept of how the stock market operates. The stock market is where shares of a company (stock) are exchanged (i.e. bought and sold) by investors. The key principle in stock market trading is to “Buy low & sell High.” I don’t mean to sound cliché, but it is true.

In the stock market the most common way of placing an order is to buy a share of stock, and sell it later at a higher price. This is essentially what all businesses do. They buy something at one price, and attempt to sell it at a higher price. The Forex is no different. In the Forex market, currencies are always traded in pairs. Since you have to trade one currency for another, the transactions always involve a “pair” of currencies. The goal of Forex trading is to “buy” the “currency pair” at one price, and try to sell it later at a higher price. There is also another way to make money in the stock market. This “other way” is called “short-selling.” Short-selling is simply when you SELL the stock FIRST at one price, and then you try to buy-back the stock at a lower price. The goal does not change - you still want to buy low and sell high. With short-selling, you just SELL the stock FIRST. Short-selling has a much larger risk in traditional stock investing. There are many rules that limit short-selling to serious market professionals.

The Forex does not impose any limitations on short-selling. The risk on shortselling in the Forex is no different than the risk of buying in the Forex. I know you may be asking “Why isn’t there any risk or limitations on short-selling in the Forex, Brian.” My answer to you friend, is that the rules for the Forex are different. I will explain how this works in lesson #4. Until you get to lesson #4, just realize the
rules in the Forex encourage short-selling as much as regular buying. Now I have reached the part of this lesson that excites me the most. This concept will also benefit you more than any other concept you will ever learn about the Forex. I have a question for you friend: How often do you think that the
foreign exchange rates change? Think about this for a moment before reading on. Have you thought about it yet?

OK friend, how often do you think they change? They have to change sometimes, right? Did you say monthly? How about Daily? You might have guessed hourly, but you would still be wrong. I hate to tell you that you are still wrong if you guessed that they changed every minute. The true answer is: Forex prices change every second to every fraction of a second! You have just been exposed to a great concept. Read it again. I know you probably already knew this fact. Even though you already know the answer it will benefit you to think of it deliberately. The only thing you need to know for sure is that the currency exchange rates will continue to fluctuate continuously while the Forex is open. Opportunities to make money are created continuously. You do not have to worry about how much these rates change at this point. The rates change by varying amounts at various times. The important idea that you need to understand is that as the prices fluctuate every second, you have new opportunities developing to “Buy Low & Sell High”. The Forex even allows you to short-sell. You can make money in either direction.