Congratulations!
You’ve gotten through the Pre-School and are ready to begin your first day of
class. You did go through the Pre-School right? By now you’ve learned some
history about the Forex, how it works, what affects the prices, blah blah blah.
We
know what you’re thinking…BORING! SHOW ME HOW TO
MAKE MONEY ALREADY!
Well,
say no more my friend; because here is where your journey as a Forex trader
begins…
This is your last chance to turn back… Take the red pill, and we take you back to where you were and you will forget all about this. You can go back to living your average life in your 9-5 job and work for someone else for the rest of your life.
This is your last chance to turn back… Take the red pill, and we take you back to where you were and you will forget all about this. You can go back to living your average life in your 9-5 job and work for someone else for the rest of your life.
OR
You
can take the green pill (green for money! Yeah!) And learn how you can make
money for yourself in the most active market in the world, simply by using a
little brain power. Just remember, your education will never stop. Even after
you graduate from BabyPips.com, you must constantly pursue as much knowledge as
you can, so that you can become a true FOREX MASTER! Now pop that green
pill in, wash it down with some chocolate milk, and grab your lunchbox…School
of Pipsology is now in session!
Note:
the green pill was made with a brainwashing serum. You will now obey
everything that we tell you to do! Mwuahahaha! <--evil laugh
Two Types of Trading
There
are 2 basic types of analysis you can take when approaching the forex:
- Fundamental analysis
- Technical analysis.
There
has always been a constant debate as to which analysis is better, but to tell
you the truth, you need to know a little bit of both. So let’s break each one
down and then come back and put them together.
Fundamental Analysis
Fundamental
analysis is a way of looking at the market through economic, social and
political forces that affect supply and demand. (Yada yada yada.) In
other words, you look at whose economy is doing well, and whose economy
sucks. The idea behind this type of analysis is that if a country’s
economy is doing well, their currency will also be doing well. This is
because the better a country’s economy, the more trust other countries have in
that currency.
For
example, the U.S. dollar has been gaining strength because the U.S. economy is
gaining strength. As the economy gets better, interest rates get higher to
control inflation and as a result, the value of the dollar continues to
increase. In a nutshell, that is basically what fundamental analysis is.
Later
on in the course you will learn which specific news events drive currency
prices the most. For now, just know that the fundamental analysis of the
Forex is a way of analyzing a currency through the strength of that country’s
economy.
Technical Analysis
Technical
analysis is the study of price movement. In one word, technical analysis
= charts. The idea is that a person can look at historical price
movements, and, based on the price action, can determine at some level where
the price will go. By looking at charts, you can identify trends and
patterns which can help you find good trading opportunities.
The
most IMPORTANT thing you will ever learn in technical analysis is the
trend! Many, many, many, many, many, many people have a saying that goes,
“The trend is your friend”. The reason for this is that you are much more
likely to make money when you can find a trend and trade in the same
direction. Technical analysis can help you identify these trends in its
earliest stages and therefore provide you with very profitable trading
opportunities.
Now I
know you’re thinking to yourself, “Geez, these guys are smart. They use
crazy words like "technical" and "fundamental" analysis. I
can never learn this stuff!” Don't worry yourself too much. After you're done
with the School of Pipsology, you too will be just
as....uhmmm..."smart?" as us.
By
the way, do you feel that green pill kicking in yet? Bark like a dog!