Welcome to Lesson 1

Hope you’re ready to have your mind blown…¬†ūüĎĆ

In the next few moments, we’re going to introduce you to the unique and life changing strategies we’ve used to invest, trade and build wealth.

Image above: The morning ritual at Infinite Prosperity HQ, checking trades from the London session overnight.

Before moving on, we trust you enjoyed the introduction to IP lesson. This is where you learned about the 4 objectives to achieve Financial Independence.

If you skipped that, go back and read it now¬†or else some of the content in this lesson won’t make sense.

Get ready

In this Lesson, we’ll go even deeper, this time highlighting some of the specific tools, tricks, and strategies that you can begin today to take your financial empowerment to the next level.

I am certain that these lessons could potentially contain¬†some of the most powerful¬†content you’ve ever read.

Despite your current level of experience, by the end of Lesson 10, you will have the precise information and action plan necessary to start saving, investing, trading and building wealth.

These lessons will change your life… and we back this claim with our Life Changer Guarantee.

If you have prior trading and investing experience, please excuse the simplicity of Lesson 1, as we must ensure our beginners have the basic foundations laid before tackling the more advanced principles later on.

On the contrary, if you currently know nothing about trading or investing, don’t worry!

You’re in good hands.

Image above: In good hands. Amy, Lewis, Irek, Benny, Robyn, Scott and 30+ Infinite Prosperity students on the 2016 IP Yacht cruise, the day after the Infinite Prosperity Ball.

In fact, if you’ve never invested, traded or started a business – you have some advantages. This is because you probably haven’t developed an array of bad habits that you’ll need to ‚Äúunlearn‚ÄĚ.

The lessons ahead are specifically ordered so that your learning is optimized. We have now taken thousands of students through these lessons. Please suppress your urge to skip through to the strategies, as this may leave you without the underlying foundations of successful trading firmly implanted in your mind.

Get this:¬†Investing, trading and growing wealth is 80% psychology and just 20% strategy…

Therefore, even the best strategies in the hands of an underdeveloped neophyte, will only deliver mediocre results at best. We have extensive amounts of data to prove this. In fact, we built the entire IP course around this truth.

So let’s talk business…

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The Best Business Model on Earth

So far, you know the 2 primary financial outcomes. You also know the 4 specific objectives to achieve them.

Another quick reminder:

  • Objective 1: Increase your liquid assets (A)
  • Objective 2: Reduce and control your monthly expenses (E)
  • Objective 3: Learn to invest at 5-10% per year (0.05)
  • Objective 4: Increase your passive and semi passive income (PI)

Let’s play with this in practical terms…

The majority of people who wish to build wealth and achieve financial independence eventually come to realize that they’ll need to start a business of some kind.

So what kind of business should you start?

And in starting a business… how does it specifically affect the 4 objectives of Financial Independence?

Very few new business owners ask this question.

Let’s take a look at some popular business models…

1. Open a shop:

You might wish to open a shop that sells widgets. Great idea!

  • Firstly, understand the success rate is low. Most people in business don’t succeed. If that scares you, don’t open a shop.
  • Secondly, you’ll need product to sell. That means you’ll either have to sacrifice your savings and liquidity (A) or get a business loan, which will increase your expenses (E)
  • Thirdly, you’ll need a shop. That means your expenses (E) just went sky high.

Already, you can see that you’re fighting against the odds and doing the opposite of moving toward financial independence.

Can you succeed with a shop? Absolutely! But with this model, your degree of financial independence will get (much) worse before it gets better… if it gets better at all.

2. Become a tradesman/contractor:

After high school, I personally completed an electrical apprenticeship. Many of my tradesmen, colleagues and fellow apprentices had dreams of some day opening their own electrical business. Great idea, right?

  • Firstly, understand the success rate is low. Most people in business don’t succeed. If that scares you, don’t start a contracting business.
  • Secondly, you’ll need a fully equipped vehicle with tools. That means you’ll either have to sacrifice your savings and liquidity (A) or get a business loan, which will increase your expenses (E)
  • Thirdly, you’ll need to go to work every day. This is pure active income. Even if your revenue hits a million dollars, 70% will probably be exhausted by costs and the left over will be eaten by taxes. Maybe you’ll see $150-$200k per year if you have a good accountant, but it’s not passive or semi passive (PI). Your time and space is completely governed by your need for income.

Already, you can see that you’re fighting against the odds and doing the opposite of moving toward financial independence.

Can you succeed as a tradesman? Absolutely! But with this model, your degree of financial independence will get (much) worse before it gets better… if it gets better at all.

3. eBay, eCommerce or online sales

My first “real” business was on eBay! In fact, I lived primarily off eBay and eCommerce income from 2006 through 2009 by selling consumer electronics, software and clothing that I imported from China via a website called DHGate.

Today, the online sales industry is very, very popular! And it’s a good business model, right?

  • Firstly, understand the success rate is low. Most people in online business don’t succeed. If that scares you, don’t start an online business.
  • Secondly, you’ll need products to sell. That means you’ll either have to sacrifice your savings and liquidity (A) or get a business loan, which will increase your expenses (E)
  • I imported tens of thousands of dollars worth of stock. I was very blessed to have a successful business wherein 60-70% of all my stock sold at a profit!
  • Truth be told, I probably would not succeed in that business today. The eBay market has become oversaturated as everyone tries to “get in on it”. Also, to this day I still have thousands of dollars worth of (unsellable) stock in brown boxes at my parents house. Pure liquidity (A) gone to waste.
  • By the way, more income requires more sales, which requires more packaging, more shipping, more customers, more emails, more vendors, more products and more time. It’s not passive nor semi-passive (PI), and unless you’re drop shipping or build a team of staff – it’s certainly not mobile either.

Already, you can see that you’re fighting against the odds and doing the opposite of moving toward financial independence.

Can you succeed in online business? Absolutely! But with this model, your degree of financial independence will get (much) worse before it gets better… if it gets better at all.

The truth, revealed

Most new business owners don’t actually know what they’re doing. They get caught up in the day-to-day runnings and end up enslaving themselves in their own businesses. Indeed, most of them end up working in their business rather than working on their business.

As Michael E. Gerber stated in the business classic “The E Myth”, most new business owners think they’re entrepreneurs, when in truth they’re technicians. There is a big difference between being a master plumber, and creating a successful plumbing empire… and because so few new business owners understand this reality, they make predictable mistakes:

  • Most new business owners sacrifice their life savings (A) to get started.
  • Most new business owners push their expenses (E) through the roof, just to get off the ground.
  • Most new business owners have no plan and no idea about how they’ll even arrive at passive income (PI)… Alas, many never get there at all.
  • Most new business owners don’t have a strategy of investing a portion of their profits (0.05).
  • Most new business owners fail in spectacular fashion…

But perhaps the most mind boggling truth is this…

Even if they succeeded with their original business plan, the vast majority of new business owners were never even aware of the 4 financial objectives that promised their freedom and liberation. In other words, most new business owners are destined to fail from the beginning. 

At Infinite Prosperity, we teach a business model like no other:

4. Online trading

Trading the financial markets is truly one of the best business models on earth.

Let’s take a look at the objectives:

  • Firstly, understand the success rate is low. Most people in trading don’t succeed. If that scares you, don’t be a trader.
  • Secondly, you can start (properly) trading with as little as $1,000-$2,000. That means you don’t need to sacrifice your life savings (A) or get loans that increase (E). In fact, your capital savings that sit inside your trading account are completely liquid. In other words, at any time, you can withdraw capital from inside your trading business. This is a purely liquid business. Few other businesses offer pure liquidity like this.
  • Thirdly, expenses (E) are minimal.¬† To¬†start a successful trading business, your expenses are:
    • A few hundred dollars on education (Infinite Prosperity course)
    • A few thousand dollars on a laptop or desktop computer (which you probably already have)
    • An internet connection¬†(which you probably already have)
    • Your starting capital actually¬†isn’t even an “expense”. It’s just your savings (A) stored in a different account.
  • No staff
  • No buildings
  • No rent
  • No storefronts
  • No products
  • Every dollar you make in trading is purely mobile. You can make the same amount in your parents basement as you can on a white-sand beach in the Maldives (keep in mind the notable risk factors such as sun glare, cocktail dehydration and abrasive sands ruining your equipment, which we’ll discuss later).
  • Every dollar you make in trading is semi-passive. This business is scalable independently of time input. In other words, it requires the same amount of time and energy to make $1,000 as it does to make $100,000. The primary difference being your account size (A), which, as an Infinite Prosperity student, you’ll learn how to grow each month from inside and outside your trading business.
  • Pure passive trading income (PI) can be achieved via delegation. Many Infinite Prosperity students now professionally manage capital. This means on top of your self-made semi-passive income, you can have someone else make a portion of your income for you.

Trading the financial markets is, indeed, an extremely powerful business model… and one that I strongly urge my friends and family to look into.

Trading the online currency market is a major part of our course here at Infinite Prosperity.

Image above: A traditional work space and uniform for an online trader.

But every rose has it’s thorns… and the currency market certainly has it’s own unique set of challenges, hurdles and traps.

As a business owner of any kind, you must understand that you’re fighting against the odds. In trading, business, relationships, health, longevity and life fulfilment – most people never attain a high level of success. If you’re not cut out to push against mediocrity and aim for exceptional results, why bother starting a business at all? Just get a regular job and enjoy yourself, it will be less stressful.

If you are going to start a business, at least with this business, you can rest assured knowing each and every step you take from day 1 is moving you closer to financial independence – not further away from it.

See for yourself:

  • A:¬†In these first two lessons, you already learned a savings ritual to increase your liquid assets (A). This never stops! Not only does more savings give you more financial security and freedom, but in this business, more savings leads to more profits, too. You’ll never need to sacrifice your liquidity in a trading business.
  • E:¬†Currency trading is a business that allows you to use what you’ve already got to generate money without the need for expensive stores, staff and stock. There is simply no need to take on the risk of huge business loans in a trading model like ours.
  • (0.05): As a currency trader employing grounded principles for long term wealth creation, you will also build a passive investment portfolio alongside your speculative dealings. This will allow you to buy the market and create an ever growing wealth portfolio that can be willed onto your family at the time of your death. In fact, a trading business acts as the 5th dimension of diversification in your investment tier. We’ll explain this later in the course.
  • (PI): Every dollar you make in trading is mobile and semi-passive. The shift to pure passive can be arranged in a few short steps (and at a price) as priorities in your life move and twist.

Image above: Head day trader at Infinite Prosperity, Irek Piekarski (left), compares trades and analysis with Lewis (right).

Ultimately, your business should exist to serve you, not the other way around. As I always say to my students, don’t attach to any one particular business or industry (even trading). Rather, give yourself permission to draw on any and all tools or strategies to create a life of your own specific design… trading is but another arrow you may wish to add to your financial quiver.

So can you succeed as an online trader? Absolutely, and with this model your degree of financial independence gets stronger every day, starting from day one.

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Order of Operation

At the time of this writing, online trading has become an extremely hyped-up industry, marketed primarily to those who lack the financial awareness to see wisdom amongst folly. Each week, new financial products are flooding the market – boasting ever higher degrees of leverage, easier transactions, smartphone platforms, credit card deposits, alerts, signals, gimmicks, and of course – the elusive promise of quick, easy, guaranteed wealth.

The objective of this course is to cut through the fluff, present the wisdom, and deliver it in such a way that is still inspiring, promising and uplifting to students.

With that in mind, here is the order of operations we recommend when becoming a trader.

  1. Save (Taught in Strategy 1)
  2. Invest (Taught in Strategy 1)
  3. Trade (Taught in Strategy 2 and 3)

The specific definitions, allocations, and instructions for each of the 3 steps will unfold gradually throughout the Lessons ahead, and will finally become crystal clear upon the completion of the 3 strategies we present.

wealth-pyramid

Saving and passively investing are relatively simple concepts in comparison to the art and science of trading…

For that reason, the majority of the content in this course is focussed on the trading component. We built it this way deliberately, so by the end of the course – you’ll know exactly how to do all 3 at a very proficient level. As mentioned earlier, we elect to trade the currency market, also known as the foreign exchange market.

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7 Reasons Everyone Should Learn to Trade

As I’ve mentioned before, I initially learned to trade in my teens.

I truly believe this gave me an incredible advantage in life.

Image above: A clear desk, a clear mind. Trading has a transformative effect on an individuals mental faculties, strategic planning, foresight and problem solving.

In fact, even if you don’t become a full-time trader, I encourage you to at least learn how to trade.

Why? Well… developing the analytical mindset, emotional control and objective framework of thinking can yield major benefits that spill over into other areas of your life. I’ve personally used these principles now to empower my relationships, businesses, leadership and teaching, health and wellbeing, family life and even in my relatively objective pursuit into spiritual awareness and development.

By learning how to trade, you learn how to think rather than merely what to think.

7 reasons everyone should learn how to trade:

1. Trading forces you to think in terms of what others are thinking.

In Lesson 4, you’ll learn about reading the oscillations of the collective market mind. In business and relational settings, the finely rehearsed ability to tune into what others are thinking will give you a powerful advantage.


2. Trading forces you into objectivity.

  • If you‚Äôre too naive and become easily infatuated, you‚Äôll lose in trading.
  • If you‚Äôre too sceptical and become easily resentful, you‚Äôll lose in trading.
  • As a trader, the necessity for objectivity will help you master nearly every area of your life.

3. Trading demands self introspection and review.

In Lesson 9, you’ll learn a process called ASR (Advanced Self Review). Mass population tend to focus on casting blame and taking credit. They oscillate between pride and shame, so deep truths are hidden by their polarised perceptions of themselves. Masterful individuals are able to objectively pull apart each and every component of their lives and make calm, methodical changes that increase the probability of their long-term success. Trading will force you to master this skill.

4. Trading highlights your unique strengths and weaknesses. 

Do you suffer from FOMO (Fear Of Missing Out?). If so, trading will bring this to the surface. What about the fear of being wrong? That will surface very quickly. Are you a fast, emotionless decision maker? Great! Trading highlights both your strengths and weaknesses, giving you an insight into your own psychology that you may not have even known about. Your mentors at Infinite Prosperity are also extremely successful life coaches, and can use your trading “quirks” to guide you toward mastery in many disciplines (inside and outside of trading).

5. Trading forces you to grow comfortable with short term failure. 

In trading, our profitability model is governed by the random distribution of wins and losses. It gives you a direct shortcut to emotionally stimulating “highs” and “lows” like no other activity on earth. This hugely accelerates the process by which you climatize to the inevitable oscillations of life, and strengthens your ability to “go with the flow”.

6. Trading makes you a master of risk management and probability.

By applying my experience of risk management and probability, I have now been able to develop multiple 7 figure businesses that contribute to the lives of thousands of people around the world. Trading the markets was my training ground for this skill.

7. Trading acts like a turbocharger for financial wealth.

If you already have a great income from your job, career or business – there are few other models on earth that can potentially magnify that income like trading can.

While trading the markets certainly is not everyone’s ultimate destiny, I have come to recommend learning the art of trading to nearly all of my friends and family members now.

Image above: Calm. Poised. Methodical. Behind the scenes of the laptop lifestyle.

In my personal life, and in the lives of thousands of our students, I have seen how learning how to trade can transform the mind game of an individual faster than any other activity.

So are you ready to see what it’s all about?

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What is Foreign Exchange?

Let’s talk online foreign exchange trading…

Another word for foreign exchange is forex.

If you’ve ever bought something online or travelled to another country, you probably converted some of your local currency into another currency. Indeed, if you’re reading this, you’ve probably already participated in the forex market!

  • Most people have traded their currency for goods and services.
  • Most people have traded their currency for other currencies online or in airports.
  • Most people are already a forex “traders” (of sorts)

The only difference between this kind of forex “trading” and professional online forex trading, is that in the latter, we seek to “trade” systematically and methodically with the intention of making money.

Let me explain with an example…

Assume you live in Australia and your primary currency is the Australian Dollar (AUD).

Say you find a beautiful watch in the USA that you desperately need in your life, so you buy it for $4,000 US Dollars (USD).

At checkout, you discover the current exchange rate for AUD/USD is 1.1020. This means every 1 Australian Dollar is equivalent to 1.1020 US Dollars.

Therefore, the $4,000 USD watch effectively costs $3,630 AUD.

Tag Heuer

  • AUD/USD exchange rate = 1.1020
  • 1 AUD = 1.1020 USD
  • $3,630 AUD = $4,000 USD
  • Calculation: $4,000 √∑ 1.1020

After completing the transaction, you’ve essentially participated in the forex market!

You exchanged your Australian Dollars into US Dollars to make a purchase. In trading terms, you’ve sold Australian Dollars and bought US Dollars.

Two months later, you see that the US Dollar has rallied up, and the AUD/USD exchange rate is now 0.9960 (which means every 1 Australian dollar is now only 99.6 US cents). If you did the same calculation again, you’d find that if you had purchased the watch now, it would cost you $4,020 Aussie Dollars.

  • AUD/USD exchange rate = 0.9960
  • 1 AUD = 0.9960 USD
  • $4,020 AUD = $4,000 USD
  • Calculation: $4,000 √∑ 0.9960

In review, you bought a watch for $3,630 AUD, and 2 months later it costs $4,020 AUD from the same seller, due to the change in exchange rate.

It is these very fluctuations in exchange rates that allow online traders to make money in the foreign exchange market.

The foreign exchange market is often referred to as the forex, FX, or currency market. It is the largest financial market in the world. At the time of this writing, the New York Stock Exchange turns over about 170 billion US Dollars a day in trading volume. The currency market, on the other hand, turns over a staggering 5 trillion US Dollars every day!

Here’s what 5 trillion dollars looks like

One hundred dollars
$100 USD
Ten thousand dollars
$10,000 USD
One million dollars
$1,000,000 USD
One hundred million dollars
$100,000,000 USD
One trillion dollars
$1,000,000,000,000 USD (1 Trillion) 
Note the crates here are stacked 2 high.
Remember, the forex market turns over (approximately) $5 trillion per day.

 

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What Is Traded?

Money. A forex trader is one who trades money.

Currency trading is quite literally the act of buying money, waiting on a shift in exchange rates, then selling it back to the market – ideally for a profit.

In the long run, the value of a currency is lead by numerous factors, such as central bank actions, interest rates and economic strength.

However, the smaller and shorter-term fluctuations are often lead by market speculators.

As history would show, speculators as an aggregate are often an emotionally charged group. When hundreds of thousands of them get together in a highly emotional game of fear, greed and uncertainty – their combined behavior takes on a kind of “herd mentality”. This creates repeatable patterns that occur over and over again. To the professional speculator who is able to remove himself from the emotional oscillations of fear and greed, he may apply strategic, methodical, risk managed actions to profit from this inevitable market rhythm.

The professional trader may find a profitable edge without knowing with certainty what the market will do next. The truth is that certainties in trading are few and far between.

Your edge in trading does not come from “making predictions”, as much as it comes from mastering 4 key skills:

  1. Understanding basic human behavioral tendencies
  2. Understanding basic mathematical probabilities
  3. Understanding basic pattern recognition
  4. Understanding how to transcend your own emotional reactions through strategic foresight and master planning

You will learn all 4 skills in the Lessons to follow.

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Currencies

As a forex trader, the first thing you’ll need to learn about is your product: currency.

Currencies are always abbreviated by three letter symbols. The first two letters identify the country, and the third letter represents the type of currency.

Take the Canadian Dollar for example (CAD) – the CA stands for Canada, and the D stands for Dollar.

Major Currencies

  • USD United States (Dollar)
  • EUR Euro-Zone (Euro)
  • GBP Great Britain (Pound)
  • JPY Japan (Yen)
  • CHF Switzerland (Franc)
  • CAD Canada (Dollar)
  • AUD Australia (Dollar)
  • NZD New Zealand (Dollar)

As a currency trader, you may be presented with the opportunity to trade more obscure “exotic” currencies such as the Turkish Lira, South African Rand, Mexican Peso etc. We encourage you to stick to the “Major 8” listed above,¬†as these currencies have the highest trading volume in the FX market. High volume means transaction costs are generally lower, and more people are trading those currencies, which is important when you need to exit a trade.

Paired up in every possible combination, the “Major 8” deliver 28 tradable pairs. With so many to choose from, there is simply no need to risk your capital taking a position on high cost, low volume exotics.

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Currency Pairs

An individual currency does not have an absolute value.

Currencies are always quoted in pairs and therefore are only given a value in comparison to another currency at any given time. An example of a pair would be the Australian Dollar and the US Dollar (AUD/USD). If you were to buy the AUD/USD you would be buying Australian Dollars whilst simultaneously selling US Dollars, this means you profit from how much the Australian Dollar increases in comparison to the US Dollar.

To make it easier to swallow, keep in mind that your broker will take care of this “simultaneous buying and selling” activity.

It is wise to simply focus on the pair as a single trading instrument, like a stock.

As I mentioned in the previous section, you will ultimately be focussing on 28 possible pairs in total. More on this in Lesson 5.

When pairs are quoted, the currency on the left is the base currency. The currency on the right is the quote currency.

aud-usd-quote-pairs

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Forex vs. Stocks

So why trade the foreign exchange market?

Why not stocks, commodities, options or even property?

Image above: The 24 hour-a-day forex market means more flexibility when travelling into different time zones.

Well, each financial market has benefits and drawbacks, traits and quirks. It would be foolish to suggest Market A is universally “better” than Market B. A more reasonable comparison is to say that certain markets have certain advantages in certain roles of your wealth portfolio.

The trading and investing philosophy that you’ll learn in this course is based on 3 distinct tiers, as mentioned earlier.

  1. Foundations: Cash savings and cash equivalents
  2. Investments: Passive investing using index funds and 5 dimensions of diversification. Stocks, bonds, commodities and REIT’s (Real-estate investment trusts)
  3. Speculations: Forex trading

Each tier serves a very specific purpose in your overall wealth portfolio, and by gradually optimizing the ratios between each tier based on performance, you will automatically move toward a portfolio allocation that is tailored to you.

In my own journey, coming from a stock trading background, the transition into currency trading created more technical consistency. In active stock trading, a single announcement, mistake or lawsuit could spike the market in either direction. Throw in daily gapping, lower volume and market manipulation, and you too may also find that shifting to Forex as a technical trader could be a wise move.

That said, having all your eggs in one basket is not intelligent investing.

Pure forex trading (like pure stock trading) can be highly stressful. Therefore, a balance of speculative forex trading, combined with passive (unleveraged) income producing investments, supported by a secure cash foundation is a powerful combination. A portfolio some refer to as the holy trinity.

Here are some generic advantages and characteristics of Forex:

24-hour market
The forex market operates 24 hours a day, 5 days a week. It doesn’t open and close each day like the stock market, which means price can fluctuate smoothly all week. Stocks, on the other hand, are subject to “gapping” when the market opens each morning. This can bring on a headache if the market gaps in the opposite direction to your trade.

No one can control price
The forex market is so big that no single entity can control the price. Certain stocks, on the other hand, are small enough that the price can be easily manipulated by groups (or even individuals). If you’ve seen movies like “The Wolf of Wall Street”, you may be aware of pump-and-dump regimes. The potential exception to this rule is if you open an account with a forex broker who operates a B-Book. We will explain the difference between A-Book and B-Book in Lesson 5, and guide you in the right direction.

Low costs
Forex has some of the lowest transaction costs in the financial market. The commission structure in FX changed in early 2015, which made it even cheaper for swing traders like us to do business. A typical $1,000 swing trade on EURUSD costs around 10 cents per round trip, as opposed to $15+ in stocks. Transaction costs (known as spreads) are dynamic, meaning they change throughout the trading day depending on volume. Later in the course, we will show you exactly what time of day is best to trade, depending on your strategy.

High leverage
Currencies usually only fluctuate by a cent or so each day, so to make any substantial amount of money, you need to place thousands of dollars on each trade. Brokers recognize that not everyone starts with huge trading accounts, so they allow you to leverage your positions. The intelligent trader uses leverage in a unique way, which will be explained later in this Lesson.

High liquidity
To purchase any investment or enter any trade, remember there has to be someone else willing to sell the opportunity to you at the same time. One of the advantages with OTC (over-the-counter) forex trading is that there is always someone willing to buy or sell to you. In the stock market, you can get stuck in a trade that is turning sour, with nobody willing to take it off your hands.

Make money when the market is falling
Unlike the traditional investment model of ‚Äúbuy low, sell high‚ÄĚ the forex market offers traders the option to “short” a currency pair and make money on the fall.

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Pips

The unit for measuring the price of a currency is called a “pip”, which stands for “Percentage In Point”.

Some traders often refer to pips as ‚Äúpoints‚ÄĚ. When reading a price quote, the single¬†pip is the 4th decimal place.

  • If AUD/USD rises from 1.0520 to 1.0525, that indicates a 5 pip rise.
  • If AUD/USD rises from 1.0520 to 1.0540, that indicates a 20 pip rise.

The exception to this rule is any currency pair that includes the Japanese Yen. A yen pair is only ever displayed with 2 decimal places.

If GBP/JPY rises from 125.20 to 125.40, that is a 20 pip rise.

pips

You must develop a strong understanding of pips, and how to measure them, as this is the foundation of risk management.

“100 pips per day”

During your time as a Forex student, you will inevitably come across a social media page, advertisement, video, article, company or individual who claims to have a system that allows them to generate “x pips per day”.

Firstly, a consistent daily return is highly improbable given the nature of random distribution in probability based business models such as trading. I am yet to meet a single trader who came close to making a net profit every day or even every week. Of the few traders I know who are yet to face a losing month, their track record is under 2 years Рand even they realize that a losing month Рeven consecutive losing months  Рare inevitable in the long run. Crowing about (daily) profits is usually a marketing ploy targetted at those with ultra-low time and space horizons (the masses).

Secondly, I am yet to meet a professional trader who refers to their profits in pips. While measuring pips is indeed an essential component of the risk management process, announcing profits and losses in pips is often the trademark of a rookie. Serious investors and traders refer to profits and losses as a percentage of their total account size. If you make a $200 profit on a $10,000 account size, you have returned 2% on the trade. The formula is as follows:

  • Profit / Total Account Size * 100
  • $200 / $10,000 * 100 = 2%

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Lots, Leverage & Profit

Forex is traded in specific amounts called “lots”.

  • A standard lot is 100,000 units of base currency.
  • A mini lot is 10,000 units of base currency.
  • A micro lot is 1,000 units of base currency.

Example 1

Assume you buy 2 mini lots of AUD/USD at 1.0500 and sell them when the price reaches 1.0600. A 100 pip price movement like this can reasonably occur over a period of one day. The ‚Äúmargin‚ÄĚ is the amount of money you must “put up” to place the trade.

Mini Lots: 2
Notional value of trade: $20,000
Leverage: 1:1
Margin required: $20,000
Buy Price: 1.0500
Sell Price: 1.0600
Profit (Pips): 100
Profit (Dollars): $200*

*The profit in dollars is calculated by multiplying the price gain by the total value of the position (0.0100 x 20,000)

In summary, you made $200 profit by trading 2 AUD/USD mini lots. The issue is that those mini lots cost you $20,000. You put up $20,000 of your capital to make a $200 profit. But what if you don’t have a $20,000 account? And even if you did, would you really want to put up your entire account on just one trade? What if your strategy calls you to take 2-3 trades at a time? You‚Äôd need a $60,000 account, and even then you’d still be using the entirety of your available funds to place those trades. This is not intelligent trading.

Example 2 (with leverage)

Brokers recognize that not everyone starts with large trading accounts, so they allow you to leverage your positions. A common leverage ratio is 100 to 1. The effect this has on your trade is significant. Instead of using $20,000 margin, you only need to put up $200.

Mini Lots: 2
Notional value of trade: $20,000
Leverage: 100:1
Margin required: $200 (Notional value / leverage ratio)
Buy Price: 1.0500
Sell Price: 1.0600
Profit (Pips): 100
Profit (Dollars): $200*

In summary, you still made $200 profit by trading the 2 AUD/USD mini lots, but this time you only put up $200 to place the trade. This makes an enormous difference to your trading regime, as it enables you to take multiple trades at a time while keeping your risk minimized and keeping the majority of your account balance disengaged from the market.

When trading on leverage, think of your broker as a bank who “loans” you the $20,000 to place the trade. In this¬†example, all they ask for in return is a $200 good faith deposit. Upon closing the trade, the deposit is returned to you, plus or minus profit/loss you make on the trade.

Having your $200 margin leveraged up to $20,000 sounds great, right?

Well it is, until you abuse it.

High degrees of leverage, means high potential profit, which leads to high amounts of greed, which manifests low eventual success rates. The abuse of leverage is the number one reason that amateur traders blow their accounts.

The 90/90/90 Rule

The 90/90/90 rule states that 90% of new retail traders lose 90% of their money in the first 90 days.

Leverage magnifies your upside to the same degree that it magnifies your downside. It does not increase your edge. It merely takes you to wherever you’re going, much faster.

  • For the master speculator, who effectively manages his greed, leverage is a powerful tool.
  • For the emotional punter, who tries to get rich quick, leverage is but a fatal attraction.

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How To Make Money When The Market Goes Down

Most people are familiar with the concept of buying an¬†investment, waiting on a price increase, and selling it later on for a profit. However, many people are not aware of the phenomenon known as “short selling”.

When a trader “shorts” a currency pair, she is wagering that it will fall in value.

Short selling in a real life situation would go something like this:

Enzo is visiting his friend Natalie before heading to a party. He notices that she has a full box of Corona Beer in her fridge. He takes the box¬†and tells her it will be replaced first thing in the morning. A seasoned party-goer, Enzo predicts that by 9PM, his friends will have finished all of their beer.¬†A clever entrepreneur, he shows up to the party and sells the box of beer for $80 to 4 thirsty friends. Enzo pockets the $80 from the sale, but to “cover the deal”, he still needs to pay back Natalie for the beers he ‚Äúborrowed‚ÄĚ from her. When the liquor store opens the next morning, he buys a fresh carton of Corona for $50 and delivers it to Natalie‚Äôs house.

In review, Natalie received her beers back, Enzo’s friends got to drink more, and Enzo pocketed $30 profit from the transaction. Enzo has essentially ‚Äúshorted‚ÄĚ a carton of Coronas.

He sold high, bought low.

In a trading situation, Enzo is the trader, Natalie is the broker, and Enzo‚Äôs friends are other market participants. Currency pairs don‚Äôt always go up, so the ability to “short sell” is a powerful arrow in every trader’s quiver. The terms ‚Äúlong‚ÄĚ and ‚Äúshort‚ÄĚ are given to each individual trade depending on the direction it is being traded.

  • Long trades are those that you want to rise.
  • Short trades are those that you want to fall.

“Long” and “short” have nothing to do with the period of time a trade is open.

In practice, placing a short trade is just as easy as placing a long trade. We simply press SELL instead of BUY. The broker automatically knows you want to enter a trade “short” and will fill your order accordingly. Specific instructions will be covered in later lessons.

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Three Ways To Trade The Market

So far, you understand that you can profit from buying a currency pair and selling it later at a higher price.

You can also short sell a currency pair and profit from buying it back later at a lower price. But the obvious question that remains is, how do you know when to buy and sell?

There are three primary methods in retail trading.

1. Fundamental Analysis

Fundamental analysis in forex is the study of the relative economic strength in countries. To use this kind of analysis effectively, traders must keep an eye on political and economic events, as well as announcements, presentations, and speeches by politicians and economists. Releases such as interest rates, employment data, trade balance, GDP, manufacturing PMI and retail sales have an impact on currencies, so it is vital for fundamental traders to monitor these announcements. Serious fundamental day traders may display numerous TV’s in their office, with news feeds from Bloomberg, CNBC and other finance channels. This kind of analysis can take years to master,¬†and requires hours of research each day.

2. Technical Analysis

Technical analysis in forex is the study of price patterns. In the short term, the value of a currency pair is governed by supply and demand. If the collective market has a view that the Australian Dollar will rise against the US Dollar, the demand for the Australian Dollar will send AUD/USD higher. In technical analysis, your objective is to find significant points in time and price where the market is most likely to buy (or sell).

Buying and selling activity (and therefore price) is correlated to the oscillations of fear and greed, optimism and pessimism in the collective market mind. The intelligent technical trader see’s a story of human emotion in his charts.

A lifeless price chart to the laymen is a living, feeling entity to the master speculator.

Human emotion drives order flow. Order flow drives price. Price creates patterns. These patterns tend to repeat themselves over and over again. Crowd psychology has been reflected in the price of stocks, indices, commodities, futures and currencies since the beginning of the free market.

In trading and in life, he who joins the crowd has no choice but to move with the rhythm of the crowd. He who transcends the crowd can master it from above.

3. Hybrid Analysis

Hybrid analysis in forex is a combination of both technical and fundamental analysis. By looking at the macro-economic environment (the big picture view), hybrid traders may apply another level of confluence over their technical analysis. In our Pro Trader program, we introduce students to hybrid analysis.

Our advice

  1. If you’re new to Forex, start with technical analysis.
  2. After you’ve developed consistency, gradually add layer by layer of global macro analysis to your trading plan.

Our education naturally reflects this in the order of our teaching.

The best technical trading strategies are simple to identify and execute. They have strict entry and exit criteria as well as water-tight risk management. When executed consistently, a sound technical trading strategy will give a trader a slight edge over time. Successful trading is a game of probability, not certainty, so it is important to realize that all trading strategies will have losses. Losing trades are simply a cost of doing business.

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Price Charts

As a forex trader, it is important to understand how to read a currency chart.

There are 2 main types of charts: Bar charts and Candlestick charts.

Both of these charts produce the same information, displayed in a slightly different way. Choosing between bars or candles is simply a matter of personal preference.

Bar Chart

Candlestick Chart

Which style do you like best?

The two charts above represent the price action over the same 9 week period of the USD/CHF displayed in bar and candlestick charts respectively. These are both daily charts, meaning each individual bar/candle represents one 24 hour trading day.

In Lesson 5, we’ll show you how to open your own¬†brokerage account and explain how to use the trading platform to load price charts and read them in (much) more detail.

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Risk Management

Life contains risk. Going to work contains risk. Investing contains risk. Trading contains risk.

Risk is an inevitable part of life. To run from it in fear is foolish. To identify, control and master it is wise.

The biggest risks in trading are as follows:

  1. Not knowing the risk.
  2. Not knowing the reward.
  3. Not knowing the probability of reward-to-risk.
  4. Not knowing oneself.

In other words, the greatest risk in trading is not knowing what you’re doing and why you’re doing it.

Monetary risk

On a trade-to-trade basis, monetary risk must be identified, capped, compared with reward and mentally resolved.

Your worst-case-scenario on each position is known well before your trade ever reaches the live market. The master speculator does not become swayed by “surprises”. Every scenario is considered and resolved ahead of time.

Stop loss orders

One tool we use to contain monetary risk on each trade is the stop loss order. A stop loss order is your safety net. It is an order that tells your broker to automatically close down a trade if the market reaches a certain level. Each and every trade you place will have a capped maximum loss of 1% of your trading account.

This means on a $5,000 trading account, the maximum loss you will face on any given trade is $50.

A fixed percentage worst-case-scenario like this¬†means that if your account balance reduces, the amount you risk reduces. Even if you were to face the worst-case-scenario 10 times in a row, you’d still have over 90% of your account intact.¬†The entirety of Lesson 3 is dedicated to Risk Management.

The bulletproof plan

There are many more risk factors in trading that must be addressed before you set off in the market. We will cover these very early on in the course.

Starting in Lesson 3, we’ll show you how to plan for:

  • Trade Risk
  • Gambling Risk
  • Drawdown Risk
  • Volatility Risk
  • Correlation Risk
  • Capitalisation Risk
  • Margin Call Risk
  • News Risk
  • Execution Risk
  • Technology Risk
  • Psychological Risk
  • Diversification Risk
  • Inflation Risk
  • Currency Risk
  • Ratio of Reward/Risk
  • Slippage Risk
  • Broker Risk

By the end of the course, you’ll be a risk management machine!

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Don't Risk A Cent In The Learning Stage

During your learning stage, it is wise not to risk a¬†cent of your money in the market. Most forex brokers offer demo accounts which allow you to learn how to place trades and follow a strategy before you use real money. A demo account will look and feel like a real trading account, but it will be funded with “paper money”. This gives you the perfect opportunity to practice strategy execution, and get a feel for how the market behaves in a risk-free environment.

As an education provider, Infinite Prosperity remains broker impartial. Our company does not profit from your trading activity, so we carry no agenda to push you into live trading before you’re 100% ready. Our remuneration structure is purely education-based. The better we provide education, the more likely you will refer friends and family to our teachings.

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Strategies

In this business, without a crystal clear step by step strategy – you’re probably gambling!

The Infinite Prosperity course was hand-crafted to assist you with 3 types of financial strategies.

  1. Saving (Taught in Strategy 1)
  2. Investing (Taught in Strategy 1)
  3. Trading (Taught in Strategy 2 and 3)

Allow us to briefly explain…

1. Saving

Setting aside a portion of every dollar you make, and deliberately paying yourself first, is step one in building a vast financial fortune. So many people¬†think they’ll start saving when:

  • Their debts are paid off
  • They get the promotion
  • Their boyfriend get’s a job
  • The kids leave home
  • The mortgage is paid off
  • Insert more excuses here…

It rarely ever happens. In Strategy 1, you will learn how to implement an automated, accelerated savings plan that will form the base of your wealth portfolio.

Cash is king – and for investors and traders alike, building your portfolio on a firm cash foundation is essential.

  • Financial masters earn their way toward greater degrees of leverage
  • Financial fools try to leverage their way into overnight wealth

Our advice is, start small, and start today.¬†Every day you’re not saving, investing and trading is a day you’re being left behind. Save cash, and avoid the excessive use of loans, margin, derivatives and leverage early on. Remember, cash savings will help your financial and emotional stability during volatile market conditions. When you build your own confidence up by making great returns on a small account, you can then gradually scale up in size accordingly. “Betting the farm” when you don’t have experience is not smart.

2. Investing

Cash is a great tool to build stability and¬†calm your¬†emotional oscillations, but it’s a leaking bucket. Saving for the sake of saving is not wise in the long run. Over the last 100 years, the US Dollar has experienced an average rate of inflation of approximately 3% per year.

This means¬†every dollar that sits in your bank¬†loses 3% of it’s value each year. To break even with inflation, you must generate at least a 3% return after tax! If you’re not investing, you’re going backwards.

Warren Buffet’s mentor, Benjamin Graham, defined investing as:

“An operation which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”

The investing operations we teach in Infinite Prosperity are based on the passive, automated, regular purchase of low cost index funds. Buying equal amounts in regular intervals is a process called “dollar cost averaging”, or “time diversification”.¬†Ben Graham refers to this kind of investing as “defensive investing”.

By the very nature of her¬†investment structure, the “defensive investor” is granted a unique mental¬†blessing… she does not need to know what’s happening in the market, nor does she greatly need to care. Passive investing in this fashion should not take more than a few hours per year to implement.

3. Trading

Forex trading is a form of speculation. The potential returns in trading are far superior to those that we can expect from passive investing. However, the difficulty level and leverage-related risks are superior to investing as well.

With this in mind, Strategy 1 will reveal to you a truly unique, self-optimsing portfolio allocation system. It optimises output for trading superstars and minimises exposure to risk for trading rookies.

Ultimately, at Infinite Prosperity…

  • If you become a decent FX trader, the¬†system has you covered.
  • If you become an FX superstar, the¬†system has you covered.
  • If you blow up in FX and quit, in the long run, the¬†system has you covered.

Within trading strategies, there are two sub categories:

  1. Day trading
  2. Swing trading

Day Trading

Day traders focus on lower time frames, usually less than one day. This kind of trading is very appealing to new forex traders, due to the amount of money that can be made in a relatively short period of time. Day traders often use the 4 hour and 1 hour chart to time their entries.

The benefit of day trading the forex market is that you’re able to trade extremely small price movements that can mature in just hours, rather than waiting weeks or years as with longer-term investments.

The drawback of day trading is that targeting such small price movements makes the relative transaction costs much higher. This means your strike rate must be greater in order to make the same after-cost profit as a longer term trader. The issue is that lower timeframes are subject to more “market noise”, and this generally goes hand-in-hand with lower strike rates.

So the necessity for a higher strike rate combined with the conflicting reality of lower strike rates unveils four foundational principles for the intelligent day trader:

  1. He must only trade the lower time frames in congruency with longer-term momentum.
  2. He must seek to find greater degrees of reward compared to risk.
  3. He must never chase ultra-small price movements (as in scalping).
  4. He must avoid high-cost/hidden fee book-making services such as FX binary options.

Swing Trading

Swing Traders focus on the movement of a currency pair over a number of days, weeks and even months. Swing Traders often use the daily chart to time their entries.

The benefits of Swing Trading are vast, and largely underrated in online trading education. Be aware that many “trading education” companies are actually subsidiaries for brokers who make the majority of their income from the trading activity of their students. This may introduce a huge conflict of interest, if the education is skewed toward encouraging the student to over-trade. At Infinite Prosperity, we make nothing from the trading activity of our clients. On the contrary, we promote low volume trading strategies to keep costs down and profits high. This is why we start by teaching Swing Trading.

The benefits of Swing Trading:

  1. Daily charts are typically more “predictable”
  2. Daily charts contain less market noise than lower timeframes
  3. Swing Traders only have to scour their watch list once a day
  4. This opens the door to the potentiality of semi-passive income. Remember the prosperity formula?
  5. Low time input means Swing Trader’s can actually create a higher hourly rate than a comparable level Day Trader
  6. Swing Trading is the “goldilocks” trading style between passive investing and active day trading

As a general rule of thumb, we suggest learning the principles of Swing Trading before joining the league of day trading. As an Infinite Prosperity member, your learning journey will naturally and effortlessly factor this in.

Again, in the Silver and Gold Membership at Infinite Prosperity, we teach:

  • Saving & Passive Investing (Strategy 1)
  • Forex Swing Trading (Strategy 2 & 3)

Forex Trends is a trend trading strategy designed to identify significant psychological turning points based on the 6 principles of technical analysis. Performance and returns are optimal during trending markets.

Forex Trends Example:


Forex Reversals covers all the bases in speculative technical trading. It can be effectively employed to catch both trend and counter-trend market phases. This makes it one of the most versatile trading systems available.

Forex Reversals Example

After you have learned these first 3 strategies, some students choose to upgrade to our Platinum Membership where we delve into the world of Forex Day Trading. Done right, day trading can become an extremely powerful tool in your wealth creation toolkit, just like it has for thousands of our students so far. By the way, if you already have trading experience and would prefer to jump right into day trading, let us know so we can arrange a special fast-track package for you based on your prior learning.

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Build Your Wealth Machine

If you’re one of the few who really took the time to thoroughly read and digest the last two lessons, you should now be familiar with our financial empowerment philosophy.

Do not underestimate the power in what you have learned.

To bring it all together now, I want to summarise by explaining how to build your very own wealth machine.

Tip: See if you notice the 4 objectives of Financial Independence in this video (and, more importantly, how you can implement them into your own life):

Again, those objectives are:

  1. Increase your liquid assets (A)
  2. Reduce and control your expenses (E)
  3. Increase your passive and semi-passive income streams (PI)
  4. Invest passively at 5-10% per year (0.05)

Our job in the Paid Infinite Prosperity Membership is to give you the tools and strategies you need to begin building your wealth machine immediately!

Enroll Now

This is just some of what you’ll get as a paid member:

  1. You’ll increase your liquid assets (A)
    • You’ll get our forced accelerated savings master ritual
    • You’ll get our guide to building a million dollar lifestyle with other peoples money
    • You’ll learn “popular” traps and traditions to avoid like the plague
  2. Reduce and control expenses (E)
    • You’ll get the Monthly Expense Optimizer which will can reduce your outgoings by 10-30% in under 2 hours
    • You’ll get our Asset Allocation Calculator and Personal Wealth Map software
    • You’ll learn how to “Budget Like a Boss” with the golden ratio
  3. Increase passive income streams (PI)
    • You’ll get Strategy 1: The complete guide to Passive Investing
    • You’ll get Strategy 2: Forex Trends
    • You’ll get Strategy 3: Forex Reversals
    • And an exclusive invite to the IP Partnership Program & Online Marketing Class where we’ll show you how to make up to $450USD per referral while building a high quality, high value social media presence at the same time.
  4. Invest passively at 5-10% per year (0.05)
    • You’ll learn it all in Strategy 1: Liquid, passive, defensive investing

You now understand the framework of achieving “Infinite Prosperity”.

It’s just a matter of plugging in the specifics. If you’re ready to learn those specifics, take action now!

Every day you’re not compounding your trading and investing accounts is a day you’re being left in the dust…

Get Access To The Full Course

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