Ebook indd

Where to place stops 
We stop out of a trade when we no longer want to hold onto that particular position. The question 
that arises is: WHY do we want to get out of that trade?
There can be 2 reasons for stopping out of a trade. EITHER the market tells us that our intrinsic 
View or Directional Assessments itself was wrong. OR we stop out of a trade (even if we still believe 
in our basic Bullish or Bearish reading) because we think we can establish another position at a 
better level than the previous one.
The effort should be to choose a meaningful SL which is neither too close to the entry to get activated 
soon after entry (only to have the market go back in the original direction thereafter), nor so far away 
from the entry that we have no time or space left for follow up action.
The difficult part about the paragraph above is that it requires us to have a 
Trading Plan or Strategy 
and to choose our Entry much more carefully than we tend to do, in accordance with that plan.
Follow through action required we come back to the reasons for wanting to stop out. In the first 
case, when our directional reading has been proved wrong, we should look to enter into a trade in 
the opposite direction - a case of Stop-and-Reverse (SAR). It needs to be pointed out here that it 
is NOT necessary to SAR at the same instance and level all the time. If you are an intra-week (or 
longer) trader, you can enter into a reverse trade after stopping out of the original trade, allowing 
yourself time to reformulate your strategy.

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© 1st Forex Trading Academy 2004
37
How to manage your risk
Risk and Reward
Traders have no business trading if risk/reward analysis is not at the top of their concerns. If a 
trader has no idea of the potential profit return on any given trade relative to the initial risk of 
taking the trade at all, his long-term profitability is in question.
Of course, for every trader, the best case scenario would be to minimize the first and maximize the 
second. But how do you get a handle on the potential reward in any investment and the risk you 
might be taking on?
Technical analysis – what’s popularly called charting – can help traders evaluate both risk and 
reward. The technical indicators used to read the charts will give you the simplest kind of picture 
you can get of a currency’s performance.
Simply by placing your support and resistance and by looking at the past performance of a currency 
you can get a record of its closing price over time. Once all of the elements are in place for an 
analysis, you can calculate your pips difference and verify, depending on the trend of the market, 
if you will make more profit or loss and if it is after all worth the position.
For example, if the market is in a bullish situation, you need to have a higher pips difference 
between your buy-stop order and your resistance price than between your support price and your 
buy-stop order so that your reward will be maximize and your risk will be minimize. 
In each case, upside (bullish) or downside (bearish), the tools of technical analysis will tell you 
important things about risk and reward. Don’t trade without them.

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© 1st Forex Trading Academy 2004
38
Fundamental Analysis
Fundamental Analysis
Introduction 
Why Trade Forex
The future is coming quickly upon us; very soon millions will be on the Internet trading foreign 
currency. Forex trading is gaining momentum now, as the word goes out that is a SAFE market to 
trade in.
The major reasons why Forex trading is catching on to the individual trader are Safety, Liquidity, 
Trade when you wish, guaranteed stop losses, and it’s fun.
You do not have to sit in front of your computer all day long to trade the Forex, although once 
you see the power of Forex trading you might want to. Our teaching methods will show you the 
correct entry and exit points. All you have to do is glance at the charts occasionally to see if cor-
rect entry point is approaching, and if it is then get in on the trade. We will even show you how to 
leave your computer and have your trade be closed automatically at the level that you wish.
Everything you need to trade in the Forex market will be provided to you. You will be able to 
participate in the trading seminars, listen and watch experienced traders in our system live to your 
computer.
The world is getting more complex, but getting smaller at the same time. The Internet has made 
information accessible to anyone on the planet. We urge you to educate yourself in the techniques 
of 1st Forex trading academy, as it is already becoming the best way to increase your income from 
your own computer.
Don’t be the one that says, «Forex, I could have been in that.» It’s time for 1st Forex Trading Aca-
demy to teach you how to make money with money. After all, when you boil it down, that is what 
currency trading really is.
Forex fits into your trading plan than gets started. Don’t be surprised that you can use various tra-
ding vehicles in the world of Forex.