1. Introduction To Indexes and Currencies
What is an Index?
A stock index is a method of measuring the value of a section of the
stock market. It’s basically computed from selected stocks.
Example of Indexes:
U.S :
Nasdaq, Dow Jones, S&P 500, Russel,
Britain:
FTSE100
FTSE500
France:
CAC40
China:
SSE Composite Index
Hong Kong:
Hang Seng Index
India
Bombay Stock Exchange
Japan:

2. Nikkei 225
Germany:
DAX
What does it exactly means?
Dow Jones Industrial Average: comprises 30 stocks : Alcoa,
American Express, American International Group (AIG), AT&T,
Bank of America, Boeing, Caterpillar, Chevron, Citigroup, Coca-Cola,
DuPont, Exxon, General Electric, General Motors, Hewlett-Packard,
Home Depot, Intel, IBM, Johnson & Johnson, Morgan Chase,
McDonalds, Merck, Microsoft, Pfizer, Procter & Gamble, United
Technologies, Verizon, Wal-Mart and Walt Disney.
How to calculate it?
We add all the stock values: But after calculation you find that it
equals for example: 1545.32.
But it differs from its real value on the stock market right???
To get to the value on the market you divide this number by the
official industrial averages divisor
Which is in this case 0.122834016.
After dividing 1545.32/0.122834016 = 12580.55 which is the value
appearing on the market.

3. What drives indexes?
Well as it depends on the values of the firms so if there is a decrease
of the stock value of Mcdonalds the index will face a decrease too. So
it depends on the value of the stock because some stocks have a
bigger impact on the index.
What traders use to analyse it?
They have a look at the aggregate demand in these sector, they do a
fundamental analysis on each stocks have a look on the economy,
political impact, and other factors (Sandy Hurricane).

4. FX Market:
What makes it different from other markets?
-Huge trading volume representing the largest asset class in the
world leading to high liquidity
-Geographical dispersion
-Its continuous operation: 24 hours a day except weekends, i.e.,
trading from 20:15 GMT on Sunday until 22:00 GMT Friday;
-The low margins of relative profit compared with other markets of
fixed income; and
-The use of leverage to enhance profit and loss margins and with
respect to account size
How to buy it or sell it?
There are different types of transactions in the FX market
Spot transaction: two-day delivery transaction except for the case of
trades between the Us dollar, canadian dollar, turkish liram euro and
russian ruble which settle the next business day. It represents a direct
exchange between two currencies and has the shortest time frame,
which involves cash rather than a contract.
Forward transaction. In this transaction money does not actually
changes hands until some agreed upon future date. The buyer and
seller agree for an exchange rate in the future and the transaction
occurs on that date. The date is decided by both parties

5. Swap transaction: it is the most common transaction, two parties
agree exchange currencies for a certain length then in a fixed date
they exchange it again,
Futures:
Futures are standardized forward contracts and are usually traded on a
exchange created for this purpose the average contract length it 3
months.
Option: an FX option is a derivative where the owner has the right
but not the obligation to exchange money denominated in one
currency into another currency at a pre-agreed exchange rate on a
specified date.
What drives the currency market?
-Traders have a look first at a fundamental analysis. For example,
during my internship they were based on the unemployment data in
the U.S.
-They also have a look on the economy and what people say about it.
Because some might speculate about it.
-Have a look on the supply of the money by the FED and their policy.
-Political impact
-Bad harvest ( example Tsunami for Japan).
How to begin?
Forex platform can be found for free online. Usually, I would suggest
to begin with a free demo account ( 30 days) and can begin with a 50
quids minimum cash.

6. Forex Tips:
Know yourself!
If you want to trade in a company you need to know if you and the
company match. For example if you as a customer want to trade in a
bus company you need to figure out yourself how often do you take
the bus. You need to know as many information possible about the
business and if it suits to your lifestyle and your friend’s lifestyle.
The help of an experienced trader:
www.forextradealert.info (for example)
The help of an experienced trader could be really useful to
begin with in trading.
Two ways of trading:
-Watching during few minutes or few hours the market through
a computer during the day.
- Other prefers to check their trade during regular intervals.
This is why it is important to know yourself!
Because some people can’t stand watching the market moving
up and down but others enjoy watching it and can’t think about
a different way for trading.
THE PERFECT STRATEGY DOESN’T EXIST!
In fact, for each trade there are many different strategies, which
could be at the same time good for one trade and bad for the
other one.
Example of few strategies:

7. - With clearly defined criteria and check with your list if it’s
fit.
- Identifying through graphs.
- A good strategy is the one, which avoid the guesswork.
- A good strategy should clearly define stop loss and profit
targets.
- You need to know every risk for each trade.
Stay Disciplined!
When you fix an objective for example checking the market
every 2 hours then you need to follow it.
Successful trader make as well loss but they are disciplined
and this is why they make profit overall.
The emotions can play tricks on you and do not let you what to
do.
The key is to follow your strategy and not what you mind say to
you.
A profitable trade is buying a currency or share and hoping to
sell it later at a higher currency and then buy it back cheaper at
a later stage
Forex units are the pips, its 0.0001 change that is the smallest
quoted unit.
IF you are prepared to risk 50 pips maximum, then you can set
an automatic order to close the position should the price fall by
50 pips! It is called a Stop Loss order!
When you set a profit target it is called a Profit Limit Order.
Some vocabulary:

8. When traders think that a currency will increase they are said to
be ”bullish”
If traders think negatively then they are said to be “bearish”
How to trade in Forex:
In forex you are always comparing one currency to another,
forex is in fact quoted in pairs. The first currency in a currency
pair is the “base currency”, the second currency is the “counter
currency”. For example if you are bearish of euros (think it will
decrease) you could sell EUR/USD but you are not only selling
euros but buying US dollars as well.
So if you buy a pair, up is good, if you sell it down is good.
What is leverage?
A leverage allow you to trade with 10 000 pound in the market
by setting aside only 2000 pound as a security deposit. It
means that you can take advantage of even the smallest
movements in currencies by controlling more money in the
market than you have in your account.
It can increase considerably your profits but as well increase
your loss.
Start trading with small amount is the best to do not take too
much risk
How do you know which currencies will rise
and will fall?

9. Fundamental Analysis:You need to look at supply and
demand. This is called fundamental analysis. Interest rates,
economic growth, employment, inflation, and political risk are
all factors that can affect supply and demand for currencies.
Technical Analysis: Price charts tell many stories and most
forex traders depend on them in making their trading decisions.
Chart can point out trends and important price points where
traders can enter or exit the market, if you know how to read
them.
Money management: an essential part of trading. All traders
need to know how to measure their potential risks and rewards
and use this to judge entries, exits and trade size.
The risk management:
Before entering a trade you need to know how many pips are
risked and exactly the amount, which is risked in monetary
terms.
Mostly, any professional trader risk more than 1-2% of their
trading account on any one trade.
To become a successful forex trader you must learn how to
manage risk in priority.
The winning attitude:

10. Unrealistic people just quit because people fail to make
consistent profits in forex.
The truth about trading is you will have many losing trades and
to be profitable you need strong risk management!
A winning attitude recognizes small gains over time are better.
It is easy after a string of successful trades to be tempted to
increase your trade size but it could be really dangerous and
could be out of money.
Three different strategies:
The first one is called the “News Fade”. You need to go online
and check the events. Each events has a particular impact on
the currency and from that you can take notes and write down
the impact of each events on the
Develop a safety!
You need to look in the monitor how you are doing and criticize
yourself.
You can use an excel spreadsheet and put for each column a
trading strategy.
You can note the trade time, currency, set up time, the risk ratio
how the trade progressed and how it was concluded.
Enjoy!
Trading is basically changing all the time, no one knows all
about trading and the advantage is that you can always
improve your trading.