2. 1 Peregrine Financial Group

3. 2 The Forex Market  Spot Market because trades are settled “on the spot” usually 2 days  Interbank or over the counter cash market established in 1971  The forex market is the most liquid market in the world with over $1.5 trillion a day traded  24 hour market gives traders the opportunity to trade a live market online anytime  Trades in pairs - long one currency short a second EUR/USD  The market is great for both position traders and day traders

4. 3 History of Currency Trading  The Barter System – value of goods were expressed in terms of other goods  Tokens – Teeth, Stones, Wooden Coins and Precious Metal was exchanged for goods  Paper became acceptable in exchange for goods during the Middle Ages  By WWI most Central Banks supported their currencies based on the based on the conversion ration to gold  Paper money could be exchanged for gold  Central Banks did not need full coverage of reserves in gold  The combination of more paper money without the gold to cover it lead to devastating inflation  After the 1929 stock market crash the US government dropped the Gold Standard

5. 4 Recent Currency History  Bretton Woods agreement was reached in 1945  International institutions for monetary controls where established  International Monetary Fund  The World Bank  GATT  Set the exchange rage of the US Dollar backed by the Gold Standard at $35.00 per oz of gold  1960’s budget problems and trade deficits lead to President Nixon suspending the gold convertibility of the US Dollar in August of 1971  Currencies were set to drift with the market

6. 5 Trading The Forex Market?  5% of the daily trading volume is from government or corporate trading  95% of the daily volume is from speculators  80% of Forex trade positions are held for less then 7 days  40% of Forex trade positions are held for less than 2 days  85% of the Forex trades are in the major currency pairs

7. 6 Terminology  Currency – the lawful currency of any country or any “composite currency” such as the European Composite Currency.  Forex – Foreign Exchange – trading one country’s currency for another countries currency.  Interbank Market – A complete network of international private banks and government banks to trade spot currencies.  Rates of Exchange – Usually determined by the natural forces of the market but can be moved by intervention of central banks.  Spot – Market for the immediate delivery of the currency.  Cross Rate – The exchange rate between two foreign currencies.  Leverage – The use of borrowed money based on a smaller amount on deposit – with forex trading the leverage runs from 50:1 to 200:1.  Delivery – The tender and receipt of the actual cash currency.  Currency Arbitrage – A trading strategy used to profit from a short-term temporary imbalance of 2 or more currency prices.  Currency Hedging – A transaction strategy used to protect against severe fluctuations in currency exchange rates.

8. 7 Forex Basics  Trades are a combination of two currencies or currency pairs  Each trade is long one currency and short the other  The first currency in a pair is the currency quoted  EUR in EURUSD is the currency being quoted  Profits or losses are in the second currency  EURJPY in this pair the profit or loss is in Japanese Yen and will be converted into US Dollars when it settles  A “PIP” is the smallest increment of price movement in any currency pair  In futures or equities the equivalent of a “PIP” is called a “TICK”

9. 8 Calculating Pip Value  There are 2 ways of calculating a “PIP” the first is EURUSD a movement from 1.1494 to 1.1498 is four PIPS or.0004  In the second case USDJPY a movement from 118.21 to 118.25 is four PIPS, or.04  The easy way to calculate based on one units is for example  AUDUSD is quoted with four decimals, cancel out the four zeros on the amount traded and you get one PIP.  Any currency pair ending in USD = $10.00 per PIP

10. 9 PIP Calculation Formulas  PIP Value on Currency Based Trades with USD as the second Currency  1 pip on 100,000 = $10.00  PIP Value on USD Based Trades  1 pip on 100,000 USD/CAD = 10 CAD / Spot Price  1 pip on 100,000 USD/CHF = 10 CHF / Spot Price  1 pip on 100,000 USD/JPY = 10 JPY / Spot Price  1 pip on 100,000 USD/MXN = 10 MXN / Spot Price  PIP Value on Cross Currency Trades  1 pip on 100,000 EUR/CHF = 10 CHF / USD/CHF Spot Price  1 pip on 100,000 EUR/GBP = 10 GBP/ EUR/GBP Spot Price  1 pip on 100,000 EUR/JPY = 10 JPY / EUR/JPY Spot Price  1 pip on 100,000 GBP/CHF = 10 CHF / GBP/CHF Spot Price

11. 10 Sample Long Trade  EURUSD looks good  EURUSD is bid 1.0576 and ask 1.0579 (3 PIP Spread)  BUY 1 EURUSD (100,000 units) for 1.0579 USD  Market moves higher you decide to sell  Current quote is 1.0591-96  You sell at the bid 1.0591 to close the position  Profit calculation:  (sell price – Buy price) X Size of trade = (1.591-1.0579)X100,000 = $120.00 USD  This 12 PIPS, 12 X $10/PIP +$120.00  Profit/Loss is always shown in the Secondary Currency, in this case USD  Base currency is first – secondary currency is the money

12. 11 Margin Requirements  Forex like commodity trading is always conducted on “Margin”  Margin rate on a retail account is 2% per account  Minimum account size is $5,000.00 – account can trade up to $250,000  Accounts are automatically liquidated when the margin reaches 10% of the equity in the account

13. 12 Risk Management  Forex trading requires tighter Risk Management then futures or equity trading because of the highly leveraged positions  High leverage, huge liquidity, and major volatility are of little use to a trader that does not control his risk  A forex trader using proper Risk Management strategies can profit with a less then 50% win ratio  Proper Risk Management compensates for ignorance, fear, greed and wishful thinking  Traders have to remember that the market can be wrong longer then they can be solvent

14. 13 Trading Strategies  Technical Analysis  Using technical studies and indicators to see the market  Bollinger Bands  MACD  CCI  Stochastic  Moving Averages  Oscillators  Momentum  Fibonancci  Gann Fans  Fundamental Analysis  Economic Calendars  Trade Imbalances  Currency Stabilization practices  Interest Rates  Central Bank intervention  Combination of Technical & Fundamental

15. 14 PFG’s Offers Institutional Clients  Full transparency  Pass through pricing  Institutional pricing  Best Bid & Offer  Electronic fills  Multiple liquidity providers

16. 15 Forex Margin Leverage  This chart shows the relationship between the amount or money needed to place a trade and the amount of money the trade controls  Margin leverage like this can make or loss you a great deal of money in short amount of time  Trading discipline is mandatory when trading Forex  Stop-loss must be entered for every trade 2% Margin Margin Trade

17. 16 Investors and Speculators  As in any efficient market, the speculator plays an important role by taking the risks that other participants do not want.  Investors are drawn to Forex because of:  High leverage of 50:1  24-hour trading  Currencies give the investor the ability to speculate on a location or region of the world.  Easier to trade then illiquid emerging market stocks  Take advantage of interest rates in other markets

18. 17 Who Should Trade the Forex  Trader needs to be able to understand a complex market  Traders must be disciplined  Good for part-time or full-time traders  Traders can use a trading system  Some traders are better off with a Managed Fund  Forex is not for everyone

19. 18 Advantages to Trading Forex  Limited number of instruments to follow  85% of daily transactions are traded within the 4 major currency pairs  EUR/USD  GBP/USD  USD/JPY  USD/CHF  Every trade is a long and short position  Buy Euro in exchange for selling the Yen  Sell the Dollar in exchange for buying the Swiss Franc  No Bear Markets – The Trader is always long one currency and short the other

20. 19 Forex Trading with PFG  Real-time trading pricing 24 hours a day  12 major currency pairs  Broker monitoring and trading capability  Real-time scrolling news  Links to full news stories  Online order entry, Market – Stop – Limit – GTC  Real-time position monitoring  Real-time profit and lost  Online statement generation

21. 20 Features & Benefits  Simulated Trading Account  Low minimum account requirements  Currency based or dollar based trading  Tight industry standard spreads  Broker Management capability  Trade multiple accounts from one login  Complete charting and technical analyst trading platform

22. 21 Position Traders Forex trading for technical traders  Daily chart shows the trending of the EUR/USD  Position traders want a strong trending market  All the studies confirm the price movement

23. 22 A Day Traders Market Day Traders Love it  Multiple entry and exit points daily  Short term trends within longer term trends  24 hour market – traders can trade a live market in the evening

24. 23 PFG Online Trading System Complete Forex Trading Platform  Real-time pricing on the 12 major currency pairs  News Headlines from around the world  Complete news stories at the click of your mouse  Easy to use order ticket  Complete real-time account information  Open Positions  Working Orders  Completed Positions

25. 24 Pricing Montage Real-time Tradable Prices  Simple point and click from the pricing montage to the Order Entry Window  Color coded price line showing change in price direction  Color coded up and down tick  Daily high & Low  Daily Net Change

26. 25 News Headlines Scrolling News Headlines  Real-time scrolling news headlines from around the world  Major Market Announcements as they happen  Multiple News Sources  Free to PFG Forex Traders  Full Stories a click away

27. 26 News Story Complete News Stories  One click on the headline and you have the complete story  Direct access to the news source for continuous coverage of the story  Full details on all major announcements

28. 27 Trade Entry Fast and easy to use Order Entry window  Enter Market, Limit or Stop Orders with the click of your mouse  Click on any price in the Pricing Matrix and the Order entry window fills in all of the necessary information to trade that pair  Use GTC (Good Till Cancel) Orders

29. 28 Advanced Order Entry Advanced Order Entry provides the Broker or Fund Trader with power tools  Enter one trade and have the system spread the results  Divide the trading allocation by either lots per client or a percentage of the trade

30. 29 Auto Order Process  To get out of a position all you have to do is click on the pair, the system will fill in the order ticket with the offsetting position automatically  After that just click submit and your order is entered

31. 30 Profit / Loss Profit / Loss Window a complete financial picture of your account.  Real-time calculations or each value displayed  Know exactly where you stand every second you trade  Know your real-time margin status before you trade

32. 31 Open Positions Display your Open Positions in Real-Time all the time  Review all your open positions marked to the market in real-time  Arrange your layout to your trading style  Sort any column to make your trading easier

33. 32 Working Orders Working Orders demand constant monitoring  Keep an eye on your working orders as you trade  One click cancel from your Working Order from this window  Sort Working Orders by currency pair

34. 33 Completed Orders Monitoring the trades you made today is as important as the ones you have on  All completed orders for the number of days you specify are displayed in this window  Sort trades by any category

35. 34 Real-time Client Monitoring  Each broker has the ability to monitors his/her clients trading in real-time  Open positions are displayed under the brokers account screen  Working Orders as well as Completed Orders are displayed in real-time  The Broker can trade any of his accounts positions in real-time if he has the proper paper work  Fund Managers and Risk Managers can monitor and if necessary trade for one of their trades while the trader is online

36. 35 Brokers Client Account List  Brokers list of all accounts are displayed in a drop down menu  By clicking on a client account number the broker will have the same real time information that the client has even if the client is online View any account with just a click

37. 36 View All Client Open Orders  The broker has the ability to watch all of his clients open orders in real-time from his broker account.  The Broker can sort this window by any field combining accounts, by currency pair or by P&L The broker can view all open and working orders in real-time

38. 37 Market Watch Display Multiple Charts on one Page  Total flexibility for the trader to design multiple pages to follow the Market  Each window contains control buttons to change the time frame  Each time frame can have its own set of technical studies

39. 38 Advanced Technical Studies  Layover multiple technical studies on each chart  Add additional technical study window pains to a chart  Add a Time and Sales window to follow your trades

40. 39 Broker’s Internet Client List  Access your client list from any PC in the world  At a glance you have access to your client’s information:  Phone Number  E-mail Address  Date of Last Trade  Number of Trades since the account was opened  Open any account by just clicking on the account number

41. 40 Web Access from Any Internet PC  Your clients can access their accounts in real-time from any Internet computer  Saves you all those phone calls asking what's going on or where are my positions  Just click the refresh button and all of your accounting information updates in real time

42. 41 Real-Time PFG Quotes  Access PFG Real-Time Forex quotes from any PC in the world without the need for special software  Quotes appear in real- time, the user and refresh the quotes at anytime just by clicking on the refresh button on his web browser

43. 42 Peregrine Financial Group, Inc. 190 South LaSalle Street 7 th Floor Chicago, IL 60603 (800) 231-1933 RChappetto@pfmail.com www.forexdealer.com