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Forex Paid Course

Forex Trading Paid Course

Lecture # 1

  1. My Introduction
  2. Look About Yourself
  3. Stock, Equities & Future Market Introduction (Old Time Trading).
  4. Forex Market Introduction ( Modern & Current Time Trading)
  5. Difference between Forex Market with others Market
  6. How does Forex Market Work?
  7. The Cause of Increasing & Decreasing Rate of Currencies & Commodities in Forex Market?
  8. Currency Exchange Methodology in Forex Market.
  9. Important Tricks for Success Trading.
  10. You Need Following Sources for Deposit; Withdrawal & Making Trade in International Forex Market.

Lecture # 2

  1. How to download Forex Trading Platform
  2. Make New Demo Account for Practice
  3. How to use Forex Platform in your Laptop
  4. Forex Platform download from Play store for Android Mobile.
  5. How to use Forex Platform in your Android Mobile.

Course Outline

Lecture # 3

  1. Buy & Sell Concept
  2. Major Currency Pairs in Forex Market.
  3. Percentage of Major pairs in the world
  4. Difference between Pairs
  5. Bid & Ask Concept
  6. Spread (Broker Commission)
  7. Pips & Spread Introduction / Calculations
  8. Spread Introduction

Course Outline

Lecture # 4

  1. Leverage
  2. Free Margin
  3. Balance
  4. Equity
  5. Minimum or Maximum Volume you can use in per trade.
  6. Pips Calculation tricks
  7. High and Normal Movement of Market in Per day
  8. Secure Trade tricks

Course Outline

Lecture # 5

  1. Chart Introduction & types.
  2. Candlesticks Introduction
  3. Difference between Line, Bars & Candlesticks
  4. Candlesticks Basic Symbols & their Activities
  5. Difference between Buy & Sell Candlesticks.
  6. Total Types of Candlesticks.
  7. Candlesticks Pattern
  8. Single Candle Pattern and Bullish & Bearish Comparison
  9. Double Candle Pattern and Bullish & Bearish Comparison
  10. Three Candle Pattern and Bullish & Bearish Comparison

Course Outline

Lecture # 6

  1. How to make Buy & Sell Trade
  2. Stop Loss (SL) and Take profit (TP)
  3. Trade modification
  4. What is Pending Order?
  5. Buy Limit Pending Orders
  6. Buy Stop Pending Orders
  7. Sell Limit Pending Orders
  8. Sell Stop Pending Orders
  9. Pending Order Modifications

Course Outline

Lecture # 7

  1. Introduction of Indicators
  2. How to use Indicators and set their parameters
  3. What are Important Indicators in Forex trading?
  4. Practical live test of important Indicators to in your Real Chart

MOTIVATION LECTURE

Real Account Complete Procedure and Payment system

  1. How to Open Forex Real Account
  2. How to verify your account
  3. How to Deposit money from your debit card to in your broker account
  4. How to withdraw amount from your broker account to in your bank
  5. How to link your bank Account to in your Online Payment Processor

Course Outline

Lecture # 8

  1. Support & Resistance

ADVANCE LEVEL OF TRAINING (Course Outling)

Lecture # 9-16

  1. Forex Data
  2. News
  3. Analysis
  4. Technical Analysis
  5. Technical News
  6. Fundamental Analysis
  7. Fundamental News
  8. The Big Source where you can get DATA, NEWS, Analysis etc.
  9. Resistance and Support Levels
  10. Scalping
  11. Strategies
  12. ABCD Pattern
  13. Harmonic Pattern
  14. Head and Shoulders pattern
  15. Trends
  16. Live Webinars

SUPPORTING TOOLS DURING COURSE

  1. Whatsapp Group Communication (During Course or trading)
  2. Personal Communication with admin
  3. Zoom software communication (During Course we will share our laptop screen with you for better learning)
  4. Personal Phone call communication
  5. Live webinars (world wide)
  6. Dollars facilities in Skrill as per requirement

Complete Course Fee (Structures)

No.

COURSE NAME

FEE for
Abroad Students
in $/€/£

FEE for
(Pakistani) Students
in PKR

Videos
Lecture

Live
Webinar

Whatsapp
services

Course
Duration

2.

FOREX TRADING (PAID COURSE)

200 $/€/£

15,000/=

Basic to Advance
(1-16)

YES

YES

30 DAYS

Investors looking to enter the world of foreign exchange can find themselves frustrated and quickly spiraling downward, losing capital fast and optimism even faster. Investing in forex—whether in futures, options, or spot contracts—offers great opportunity, but it is a vastly different atmosphere than the equities market.

Even the most successful stock traders can fail miserably in forex by treating the markets similarly. Equity markets involve the transfer of ownership, while the currency market is run by pure speculation. But there are solutions to help investors get over the learning curve: trading courses.

 

KEY TAKEAWAYS

As an individual trader, it’s never been easier to get access to forex markets from several online and mobile providers.

With easy access, beginners may find it in their best interest to read up on how the forex market works and to hone their skills and knowledge with a forex-specific trading course.

Courses are offered both online and in-person.

Keep a look out for the course provider’s reputation, feedback from past students, and if the course has professional accreditation or certification.

 

Types of Forex Trading Courses

When it comes to forex trading courses, there are two main categories:

 

Online courses

Individual training

 

Online courses can be compared to distance learning in a college-level class. An instructor provides PowerPoint presentations, eBooks, trading simulations and so on. A student will move through the beginner, intermediate and advanced levels that most online courses offer. For a trader with limited foreign exchange knowledge, a course like this can be invaluable. These courses can range from $50 to well into the hundreds of dollars.

 

[Note: Investopedia’s Forex Trading for Beginners Course offers an in-depth introduction to forex trading developed by John Jagerson, a CFA and CMT charter holder and founder of Learning Markets. With over five hours of on-demand video, exercises, and interactive content, you’ll learn how the forex market works, how to analyze currency pairs, how to build strategies, and much more. The self-paced online course includes lifetime access and a money-back guarantee.]

 

Individual training is much more specific, and it is advised that a trader have basic forex training before taking up this option. An assigned mentor, typically a successful trader, will go through strategies and risk management with the student but will spend the bulk of the time teaching through placing actual trades. Individual training runs between $1,000 and $10,000.

Qualities of Good Forex Trading Classes

No matter which type of training a trader selects, there are several criteria to consider before signing up.

 

The Reputation of the Course

A simple Google search shows roughly two million results for “forex trading courses.” To narrow the search, focus on the courses that have solid reputations. There are many scams promising giant returns and instant profits (more on this later). Don’t believe the hype. A solid training program won’t promise anything but useful information and proven strategies.

The reputation of a course is best gauged by talking with other traders and participating in online forums. The more information you can gather from people who have taken these courses, the more confident you can be that you will make the right choice.

 

 

http://www.forexlancer.com/

Forexlancer Free Course

INSTRUCTIONS

Forex Trading Free Course

Free Course Outline

Lecture # 1 - 8

  1. Introduction
  2. Currency Exchange Methodology
  3. Buy and Sell Reason
  4. Buy, Sell Candle Introduction
  5. How does Forex Market Work?
  6. How to link Local Bank,  Best Broker with Forex Market
  7. About Forex Software MT4
  8. How to Install MT4 platform from playstore
  9. How to make demo account for trading
  10. Complete Practical trading with advance level
  11. Resistance and Support level Introduction
  12. How to create real account in Broker
  13. How to create real account in skrill

Make Real account in Broker complete learning video

No. 1 Broker

No. 2 Broker

FREE ‘Beginners’ Forex Trading Introduction Course

 

Welcome To Nial Fullers Free ‘Beginners’ Forex Trading University.

Forex Trading 101 – ‘Beginners Forex Trading Introduction Course’

This Free Beginners Forex Trading Introduction Course was created to help novice traders understand all the basics of the Forex market and Forex trading in a non-boring format. This beginners course will also cover the basics of price action trading, forex charting, technical analysis, traders psychology and many other important subjects. Upon completion of this beginners forex course you will be ready to start studying my Professional Forex Trading Course.

INTRODUCTION TO FOREX TRADING – CHAPTERS & SYLLABUS

Part 1: Introduction To Forex Trading

Part 2: Forex Trading Terminology

Part 3: Long or Short ? Order Types And Calculating Profits & Losses

Part 4: What is Professional Forex Trading?

Part 5: What is Fundamental Analysis?

Part 6: What is Price Action Trading Analysis?

Part 7: Introduction to Forex Charting

Part 8: What Is A Forex Trading Strategy?

Part 9: Common Forex trading mistakes and traps

Part 10: What is Technical Analysis

Part 11: How to Make a Forex Trading Plan

Part 12: The Psychology of Forex Trading

Part 13: Professional Price Action Forex Trading Strategies

Part 1: What Is Forex Trading ? – A Definition & Introduction

 

An Introduction to FOREX Trading:

Hey traders,

This free Forex mini-course is designed to teach you the basics of the Forex market and Forex trading in a non-boring way. I know you can find this information elsewhere on the web, but let’s face it; most of it is scattered and pretty dry to read. I will try to make this tutorial as fun as possible so that you can learn about Forex trading and have a good time doing it.

Upon completion of this course you will have a solid understanding of the Forex market and Forex trading, and you will then be ready to progress to learning real-world Forex trading strategies.

What is the Forex market?

• What is Forex? – The basics…

Basically, the Forex market is where banks, businesses, governments, investors and traders come to exchange and speculate on currencies. The Forex market is also referred to as the ‘Fx market’, ‘Currency market’, ‘Foreign exchange currency market’ or ‘Foreign currency market’, and it is the largest and most liquid market in the world with an average daily turnover of $3.98 trillion.

The Fx market is open 24 hours a day, 5 days a week with the most important world trading centers being located in London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris, and Sydney.

It should be noted that there is no central marketplace for the Forex market; trading is instead said to be conducted ‘over the counter’; it’s not like stocks where there is a central marketplace with all orders processed like the NYSE. Forex is a product quoted by all the major banks, and not all banks will have the exact same price. Now, the broker platforms take all theses feeds from the different banks and the quotes we see from our broker are an approximate average of them. It’s the broker who is effectively transacting the trade and taking the other side of it…they ‘make the market’ for you. When you buy a currency pair…your broker is selling it to you, not ‘another trader’.

• A brief history of the Forex market

Ok, I admit, this part is going to be a little bit boring, but it’s important to have some basic background knowledge of the history of the Forex market so that you know a little bit about why it exists and how it got here. So here is the history of the Forex market in a nutshell:

In 1876, something called the gold exchange standard was implemented. Basically it said that all paper currency had to be backed by solid gold; the idea here was to stabilize world currencies by pegging them to the price of gold. It was a good idea in theory, but in reality it created boom-bust patterns which ultimately led to the demise of the gold standard.

The gold standard was dropped around the beginning of World War 2 as major European countries did not have enough gold to support all the currency they were printing to pay for large military projects. Although the gold standard was ultimately dropped, the precious metal never lost its spot as the ultimate form of monetary value.

The world then decided to have fixed exchange rates that resulted in the U.S. dollar being the primary reserve currency and that it would be the only currency backed by gold, this is known as the ‘Bretton Woods System’ and it happened in 1944 (I know you super excited to know that). In 1971 the U.S. declared that it would no longer exchange gold for U.S. dollars that were held in foreign reserves, this marked the end of the Bretton Woods System.

It was this break down of the Bretton Woods System that ultimately led to the mostly global acceptance of floating foreign exchange rates in 1976. This was effectively the “birth” of the current foreign currency exchange market, although it did not become widely electronically traded until about the mid 1990s.

(OK! Now let’s move on to some more entertaining topics!)…

What is Forex Trading?

Forex trading as it relates to retail traders (like you and I) is the speculation on the price of one currency against another. For example, if you think the euro is going to rise against the U.S. dollar, you can buy the EURUSD currency pair low and then (hopefully) sell it at a higher price to make a profit. Of course, if you buy the euro against the dollar (EURUSD), and the U.S. dollar strengthens, you will then be in a losing position. So, it’s important to be aware of the risk involved in trading Forex, and not only the reward.

• Why is the Forex market so popular?

Being a Forex trader offers the most amazing potential lifestyle of any profession in the world. It’s not easy to get there, but if you are determined and disciplined, you can make it happen. Here’s a quick list of skills you will need to reach your goals in the Forex market:

Ability – to take a loss without becoming emotional

Confidence – to believe in yourself and your trading strategy, and to have no fear

Dedication – to becoming the best Forex trader you can be

Discipline – to remain calm and unemotional in a realm of constant temptation (the market)

Flexibility – to trade changing market conditions successfully

Focus – to stay concentrated on your trading plan and to not stray off course

Logic – to look at the market from an objective and straight forward perspective

Organization – to forge and reinforce positive trading habits

Patience – to wait for only the highest-probability trading strategies according to your plan

Realism – to not think you are going to get rich quick and understand the reality of the market and trading

Savvy – to take advantage of your trading edge when it arises and be aware of what is happening in the market at all times

Self-control – to not over-trade and over-leverage your trading account

As traders, we can take advantage of the high leverage and volatility of the Forex market by learning and mastering and effective Forex trading strategy, building an effective trading plan around that strategy, and following it with ice-cold discipline. Money management is key here; leverage is a double-edged sword and can make you a lot of money fast or lose you a lot of money fast. The key to money management in Forex trading is to always know the exact dollar amount you have at risk before entering a trade and be TOTALLY OK with losing that amount of money, because any one trade could be a loser. More on money management later in the course.

• Who trades Forex and why?

Banks – The interbank market allows for both the majority of commercial Forex transactions and large amounts of speculative trading each day. Some large banks will trade billions of dollars, daily. Sometimes this trading is done on behalf of customers, however much is done by proprietary traders who are trading for the bank’s own account.

Companies – Companies need to use the foreign exchange market to pay for goods and services from foreign countries and also to sell goods or services in foreign countries. An important part of the daily Forex market activity comes from companies looking to exchange currency in order to transact in other countries.

Governments / Central banks – A country’s central bank can play an important role in the foreign exchange markets. They can cause an increase or decrease in the value of their nation’s currency by trying to control money supply, inflation, and (or) interest rates. They can use their substantial foreign exchange reserves to try and stabilize the market.

Hedge funds – Somewhere around 70 to 90% of all foreign exchange transactions are speculative in nature. This means, the person or institutions that bought or sold the currency has no plan of actually taking delivery of the currency; instead, the transaction was executed with sole intention of speculating on the price movement of that particular currency. Retail speculators (you and I) are small cheese compared to the big hedge funds that control and speculate with billions of dollars of equity each day in the currency markets.

Individuals – If you have ever traveled to a different country and exchanged your money into a different currency at the airport or bank, you have already participated in the foreign currency exchange market.

Investors – Investment firms who manage large portfolios for their clients use the Fx market to facilitate transactions in foreign securities. For example, an investment manager controlling an international equity portfolio needs to use the Forex market to purchase and sell several currency pairs in order to pay for foreign securities they want to purchase.

Retail Forex traders – Finally, we come to retail Forex traders (you and I). The retail Forex trading industry is growing everyday with the advent of Forex trading platforms and their ease of accessibility on the internet. Retail Forex traders access the market indirectly either through a broker or a bank. There are two main types of retail Forex brokers that provide us with the ability to speculate on the currency market: brokers and dealers. Brokers work as an agent for the trader by trying to find the best price in the market and executing on behalf of the customer. For this, they charge a commission on top of the price obtained in the market. Dealers are also called market makers because they ‘make the market’ for the trader and act as the counter-party to their transactions, they quote a price they are willing to deal at and are compensated through the spread, which is the difference between the buy and sell price (more on this later).

Advantages of Trading the Forex Market:

• Forex is the largest market in the world, with daily volumes exceeding $3 trillion per day. This means dense liquidity which makes it easy to get in and out of positions.

• Trade whenever you want: There is no opening bell in the Forex market. You can enter or exit a trade whenever you want from Sunday around 5pm EST to Friday around 4pm EST.

• Ease of access: You can fund your trading account with as little as $250 at many retail brokers and begin trading the same day in some cases. Straight through order execution allows you to trade at the click of a mouse.

• Fewer currency pairs to focus on, instead of getting lost trying to analyze thousands of stocks

• Freedom to trade anywhere in the world with the only requirements being a laptop and internet connection.

• Commission-free trading with many retail market-makers and overall lower transaction costs than stocks and commodities.

• Volatility allows traders to profit in any market condition and provides for high-probability weekly trading opportunities. Also, there is no structural market bias like the long bias of the stock market, so traders have equal opportunity to profit in rising or falling markets.

While the forex market is clearly a great market to trade, I would note to all beginners that trading carries both the potential for reward and risk. Many people come into the markets thinking only about the reward and ignoring the risks involved, this is the fastest way to lose all of your trading account money. If you want to get started trading the Fx market on the right track, it’s critical that you are aware of and accept the fact that you could lose on any given trade you take.

Part 2: Forex Trading Terminology

 

Forex Trading Terminology

The Forex market comes with its very own set of terms and jargon. So, before you go any deeper into learning how to trade the Fx market, it’s important you understand some of the basic Forex terminology that you will encounter on your trading journey…

• Basic Forex terms:

Cross rate – The currency exchange rate between two currencies, both of which are not the official currencies of the country in which the exchange rate quote is given in. This phrase is also sometimes used to refer to currency quotes which do not involve the U.S. dollar, regardless of which country the quote is provided in.

For example, if an exchange rate between the British pound and the Japanese yen was quoted in an American newspaper, this would be considered a cross rate in this context, because neither the pound or the yen is the standard currency of the U.S. However, if the exchange rate between the pound and the U.S. dollar were quoted in that same newspaper, it would not be considered a cross rate because the quote involves the U.S. official currency.

Exchange Rate – The value of one currency expressed in terms of another. For example, if EUR/USD is 1.3200, 1 Euro is worth US$1.3200.

Pip – The smallest increment of price movement a currency can make. Also called point or points. For example, 1 pip for the EUR/USD = 0.0001 and 1 pip for the USD/JPY = 0.01.

Leverage – Leverage is the ability to gear your account into a position greater than your total account margin. For instance, if a trader has $1,000 of margin in his account and he opens a $100,000 position, he leverages his account by 100 times, or 100:1. If he opens a $200,000 position with $1,000 of margin in his account, his leverage is 200 times, or 200:1. Increasing your leverage magnifies both gains and losses.

To calculate the leverage used, divide the total value of your open positions by the total margin balance in your account. For example, if you have $10,000 of margin in your account and you open one standard lot of USD/JPY (100,000 units of the base currency) for $100,000, your leverage ratio is 10:1 ($100,000 / $10,000). If you open one standard lot of EUR/USD for $150,000 (100,000 x EURUSD 1.5000) your leverage ratio is 15:1 ($150,000 / $10,000).

Margin – The deposit required to open or maintain a position. Margin can be either “free” or “used”. Used margin is that amount which is being used to maintain an open position, whereas free margin is the amount available to open new positions. With a $1,000 margin balance in your account and a 1% margin requirement to open a position, you can buy or sell a position worth up to a notional $100,000. This allows a trader to leverage his account by up to 100 times or a leverage ratio of 100:1.

If a trader’s account falls below the minimum amount required to maintain an open position, he will receive a “margin call” requiring him to either add more money into his or her account or to close the open position. Most brokers will automatically close a trade when the margin balance falls below the amount required to keep it open. The amount required to maintain an open position is dependent on the broker and could be 50% of the original margin required to open the trade.

Spread – The difference between the sell quote and the buy quote or the bid and offer price. For example, if EUR/USD quotes read 1.3200/03, the spread is the difference between 1.3200 and 1.3203, or 3 pips. In order to break even on a trade, a position must move in the direction of the trade by an amount equal to the spread.

• The major Forex pairs and their nicknames:

• Understanding Forex currency pair quotes:

You will need to understand how to properly read a currency pair quote before you start trading them. So, let’s get started with this:

The exchange rate of two currencies is quoted in a pair, such as the EURUSD or the USDJPY. The reason for this is because in any foreign exchange transaction you are simultaneously buying one currency and selling another. If you were to buy the EURUSD and the euro strengthened against the dollar, you would then be in a profitable trade. Here’s an example of a Forex quote for the euro vs. the U.S. dollar:

The first currency in the pair that is located to the left of the slash mark is called the base currency, and the second currency of the pair that’s located to the right of the slash market is called the counter or quote currency.

If you buy the EUR/USD (or any other currency pair), the exchange rate tells you how much you need to pay in terms of the quote currency to buy one unit of the base currency. In other words, in the example above, you have to pay 1.32105 U.S. dollars to buy 1 euro.

If you sell the EUR/USD (or any other currency pair), the exchange rate tells you how much of the quote currency you receive for selling one unit of the base currency. In other words, in the example above, you will receive 1.32105 U.S. dollars if you sell 1 euro.

An easy way to think about it is like this: the BASE currency is the BASIS for the trade. So, if you buy the EURUSD you are buying euro’s (base currency) and selling dollars (quote currency), if you sell the EURUSD you are selling euro’s (base currency) and buying dollars (quote currency). So, whether you buy or sell a currency pair, it is always based upon the first currency in the pair; the base currency.

The basic point of Forex trading is to buy a currency pair if you think its base currency will appreciate (increase in value) relative to the quote currency. If you think the base currency will depreciate (lose value) relative to the quote currency you would sell the pair.

• Bid and Ask price

Bid Price – The bid is the price at which the market (or your broker) will buy a specific currency pair from you. Thus, at the bid price, a trader can sell the base currency to their broker.

Ask Price – The ask price is the price at which the market (or your broker) will sell a specific currency pair to you. Thus, at the ask price you can buy the base currency from your broker.

Bid/Ask Spread – The spread of a currency pair varies between brokers and it is the difference between the bid and ask the price.

Part 3: Long or Short ? Order Types And Calculating Profits & Losses

 

Going long, Going short, Order types, and Calculating Profit & Loss

• Buying and selling

buy-sellfcThe basic idea of trading the markets is to buy low and sell high or sell high and buy low. I know that probably sounds a little weird to you because you are probably thinking “how can I sell something that I don’t own?” Well, in the Forex market when you sell a currency pair you are actually buying the quote currency (the second currency in the pair) and selling the base currency (the first currency in the pair).

In the case of a non-Forex example though, selling short seems a little confusing, like if you were to sell a stock or commodity. The basic idea here is that your broker lends you the stock or commodity to sell and then you must buy it back later to close the transaction. Essentially, since there is no physical delivery it is possible to sell a security with your broker since you will ‘give’ it back to them at a later date, hopefully at a lower price.

• Long vs. Short

Another great thing about the Forex market is that you have more of a potential to profit in both rising and falling markets due to the fact that there is no market bias like the bullish bias of stocks. Anyone who has traded for a while knows that the fastest money is made in falling markets, so if you learn to trade both bull and bear markets you will have plenty of opportunities to profit.

LONG – When we go long it means we are buying the market and so we want the market to rise so that we can then sell back our position at a higher price than we bought for. This means we are buying the first currency in the pair and selling the second. So, if we buy the EURUSD and the euro strengthens relative to the U.S. dollar, we will be in a profitable trade.

SHORT – When we go short it means we are selling the market and so we want the market to fall so that we can then buy back our position at a lower price than we sold it for. This means we are selling the first currency in the pair and buying the second. So, if we sell the GBPUSD and the British pound weakens relative to the U.S. dollar, we will be in a profitable trade.
(potential arrow image)

• Order types

Now it’s time to cover order types. When you execute a trade in the Forex market it is called an ‘order’, there are different order types and they can vary between brokers. All brokers provide some basic order types, there are other ‘special’ order types that are not offered by all brokers though, and we will cover them all below:

Market order – A market order is an order that is placed ‘at the market’ and it’s executed instantly at the best available price.

Limit Entry order – A limit entry order is placed to either buy below the current market price or sell above the current market price. This is a bit tricky to understand at first so let me explain:

If the EURUSD is currently trading at 1.3200 and you want to go sell the market if it reaches 1.3250, you can place a limit sell order and then when / if the market touches 1.3250 it will fill you short. Thus, the limit sell order is placed ABOVE current market price. If you want to buy the EURUSD at 1.3050 and the market is trading at 1.3100, you would place your limit buy order at 1.3050 and then if the market hits that level it will fill you long. Thus the limit buy order is placed BELOW current market price.

Stop Entry order – A stop-entry order is placed to buy above the current market price or sell below it. For example, if you want to trade long but you want to enter on a breakout of a resistance area, you would place your buy stop just above the resistance and you would get filled as price moves up into your stop entry order. The opposite holds true for a sell-stop entry if you want to sell the market.

Stop Loss order – A stop-loss order is an order that is connected to a trade for the purpose of preventing further losses if the price moves beyond a level that you specify. The stop-loss is perhaps the most important order in Forex trading since it gives you the ability to control your risk and limit losses. This order remains in effect until the position is liquidated or you modify or cancel the stop-loss order.

Trailing Stop – The trailing stop-loss order is an order that is connected to a trade like the standard stop-loss, but a trailing stop-loss moves or ‘trails’ the current market price as your trade moves in your favor. You can typically set your trailing stop-loss to trail at a certain distance from current market price, it will not start moving until or unless the price moves greater than the distance you specify. For example, if you set a 50 pip trailing stop on the EURUSD, the stop will not move up until your position is in your favor by 51 pips, and then the stop will only move again if the market moves 51 pips above where your trailing stop is, so this way you can lock in profit as the market moves in your favor while still giving the trade room to grow and breath. Trailing stops are best used in strong trending markets.

Good till Cancelled order (GTC) – A good till cancelled order is exactly what it says…good until you cancel it. If you place a GTC order it will not expire until you manually cancel it. Be careful with these because you don’t want to set a GTC and then forget about it only to have the market fill you a month later in a potentially unfavorable position.

Good for the Day order (GFD) – A good for day order remains active in the market until the end of the trading day, in Forex the trading day ends at 5:00pm EST or New York time. The exact time a GFD expires might vary from broker to broker, so always check with your broker.

One Cancels the Other order (OCO) – A one cancels the other order is essentially two sets of orders; it can consist of two entry orders, two stop loss orders, or two entry and two stop-loss orders. Essentially, when one order is executed the other is cancelled. So, if you want to buy OR sell the EURUSD because you are anticipating a breakout from consolidation but you don’t know which way the market will break, you can place a buy entry and stop-loss above the consolidation and a sell entry with stop-loss below the consolidation. If the buy entry gets filled for example, the sell entry and its connected stop loss will both be cancelled instantly. A very handy order to use when you are not sure which direction the market will move but are anticipating a large move.

One Triggers the Other order (OTO) – This order is the opposite of an OCO order, because instead of cancelling an order upon filling one, it will trigger another order upon filling one.

• Lot size / Contract size

In Forex, positions are quoted in terms of ‘lots’. The common nomenclature is ‘standard lot’, ‘mini lot’, ‘micro lot’, and ‘nano lot’; we can see examples of each of these in the chart below and the number of units they each represent:

lotsizefc

• How to calculate pip value

You probably already know that currencies are measured in pips, and one pip is the smallest increment of price movement that a currency can move. To make money from these small increments of price movement, you need to trade larger amounts of a particular currency in order to see any significant gain (or loss). This is where leverage comes into play; if you don’t understand leverage totally please go read Part 1 of the course where we discuss it.

So we need to know now how lot size affects the value of one pip. Let’s work through a couple examples:

We will assume we are using standard lots, which control 100,000 units per lot. Let’s see how this affects pip value.

1) EUR/JPY at an exchange rate of 100.50 (.01 / 100.50) x 100,000 = $9.95 per pip

2) USD/CHF at an exchange rate of 0.9190 (.0001 / .9190) x 100,000 = $10.88 per pip

In currency pairs where the U.S. dollar is the quote currency, one standard lot will always equal $10 per pip, one mini-lot will equal $1 per pip, one micro-lost will equal .10 cents per pip, and a nano-lot is one penny per pip.

• How to calculate profit and loss

Calculating financial dataNow, let’s move on to calculating profit and loss:

Let’s use a pair without the U.S. dollar as the quote currency since these are the trickier ones:

1) The rate for the USD/CHF is currently quoted at 0.9191 / 0.9195. Let’s say we are looking to sell the USD/CHF, this means we will be working with the ‘bid’ price of 0.9191, or the rate at which the market is prepared to buy from you.

2) You then sell 1 standard lot (100,000 units) at 0.9191

3) A couple of days later the price moves to 0.9091 / 0.9095 and you decide to take your profit of 96 pips, but what dollar amount is that??

4) The new quote price for the USD/CHF is 0.9091 / 0.9095. Since you are now closing the trade you are working with the ‘ask’ price since you are going to buy the currency pair to offset the sell order you previously initiated. So, since the ‘ask’ price is now 0.9095, this is the price the market is willing to sell the currency pair to you, or the price that you can buy it back at (since you initially sold it).

5) The difference between the price you sold at (0.9191) and the price you want to buy back at (0.9095) is 0.0096, or 96 pips.

6) Using the formula from above, we now have (.0001 / 0.9095) x 100,000 = $10.99 per pip x 96 pips = $1055.04

For currency pairs where the U.S. dollar is the quote currency, calculating profit or loss is pretty simple really. You simply take the number of pips you gained or lost and multiple that by the dollar per pip you are trading, here’s an example:

Let’s say you trade the EURUSD and you buy it at 1.3200 but the price moves down and hits your stop at 1.3100….you just lost 100 pips.

If you are trading 1 standard lot you would have lost $1,000 because 1 standard lot of pairs with the U.S. dollars as the quote currency = $10 per pip, and $10 per pip x 100 pips = $1,000

If you had traded 1 mini-lot you would have lost $100 since 1 mini-lot of USD quote pairs is equal to $1 per pip and $1 x 100 pips = $100

You can also use our Forex Trade Position Size Calculator.

Always remember: when you enter or exit a trade you have to deal with the spread of the bid/ask price. Thus, when you buy a currency you will use the ask price and when you sell a currency you use the bid price.

Part 4: What is Professional Forex Trading?

 

What is Professional Forex Trading? – Making the Money

• What is a professional Forex trader?

A professional Forex trader is someone who uses price movement in the Foreign exchange currency market to make profit. The aim of any Forex trader is to win as many trades as possible and also to maximize those winning trades. A professional Forex chart technician uses price charts to analyze and trade the market. By trading with an EDGE in the market, professional traders can put the odds in their favor to successfully trade price movement from point A to point B.

Caution: Forex trading is not a ‘get-rich-quick’ scheme and it is more difficult to make money in Forex than what most popular Forex system-selling websites would have you believe. To trade profitably we must not only have winning trades, but we must also cut our losing trades short so that our winners out-pace our losers. You see, losing is an enviable part of trading the Forex markets, and you must learn to lose properly by taking small losses relative to your winners. This means you must A L W A Y S trade with a stop loss on E V E R Y trade you take and make sure the dollar amount you have at risk is an amount you are 100% comfortable with losing.

Professional Forex price-chart traders have a winning edge which is developed via Technical Analysis (more on this in Part 4). There are also Fundamental Analysis traders and traders who use a combination of both analysis techniques; we will discuss all of these later.

professional Forex trader understands that reading a price chart is both art and skill, and as such, they do not try to mechanize or automate the process of trading as each moment in the market is unique, so it takes a flexible and dynamic trading strategy to trade the markets with a high-probability edge.

• How do pro traders trade the Forex markets?

There are many different trading strategies and systems that pro traders use to trade the markets with, but generally speaking, professional traders do not use overly-complicated trading methods and rely mainly on the raw price data of the market to make their analysis and predictions. To be comprehensive, I wanted to give you guys a brief overview of all the primary different styles and ways people trade the Forex market:

Automated / Robot Trading: Software-based trading systems, also known as forex trading robots, are created by converting a set of trading rules into code that a computer can make use of. The computer will then run this code via trading software that scans the markets for trades that meet the requirements of the trading rules contained in the code. The trades are then executed automatically via the trader’s broker.

Discretionary Trading: Discretionary Forex trading depends on a trader’s ‘gut’ trading feel or discretionary trading skill to analyze and trade the markets. Discretionary trading allows for a more flexible approach than automated trading but it does take a certain amount of time to develop your discretionary trading skill. Most professional Forex traders are discretionary traders because they understand the market is a dynamic and constantly flowing entity that is best traded by the human mind.

Technical Trading: Technical trading, or technical analysis, involved analysis of a market’s price chart for making one’s trading decisions. Technical analysis traders use price patterns or ‘technical signals’ to trade the market with an edge. The common belief amongst technical analysis traders is that all economic variables are represented by and factored into the price movement on a price chart.

Fundamental Trading: Fundamental trading, or news trading, is a trading technique wherein traders rely heavily on market news to make their trading analysis and predictions. Fundamental news does ‘drive’ price movement, but often times the market will react differently than what a particular news release would imply due to the fact that market participants often buy on expectations of future events and sell once the reality of said future event occurs. This is another main reason many pro traders rely more heavily on technical analysis than fundamental analysis, although many do use a combination of the two.

Day Trading: Traders who day-trade the Forex market are in and out of the market within one day. This means they typically buy and sell currencies over a very short period of time and they may enter and exit numerous trades in one day.

Scalping: Scalping is similar to day-trading but it relies on more frequent and shorter-term trades than even day-trading does. It is a trading style that refers to jumping in and out of the market many times a day to ‘scalp’ a few pips here and a few pips there, generally with little regard for placing logical stop-losses. Scalping is generally not recommended by experienced / pro traders because it is essentially just gambling.

Swing Trading / Position Trading: This style of trading involves taking a short to mid-term view on the market and traders who swing trade will be in a trade anywhere from a few hours to several days or weeks. Swing or position traders are generally looking to trade with the near-term daily chart momentum and typically enter anywhere from 2 to 10 trades per month, on average.

Range Trading: Range trading involves trading a market that is consolidating between obvious support and resistance levels. By watching for trading signals near the support and resistance boundaries of the trading range, traders have a high-probability entry scenario with obvious risk and reward placement.

Trend Trading: Trend traders are traders who wait for the market to trend and then take advantage of this high-probability movement by looking for entries within the trend. An uptrend is considered to be in place when a market is making higher highs and higher lows, and a downtrend is in place when a market is making lower highs and lower lows. By looking for entries within a trending market, traders have the best chance at making a large profit on their risk. Traders who continually try to trade against the trend by trying to pick the top and bottom of the market, generally lose money quite quickly. Professional Fx traders are largely trend-traders.

Counter-trend Trading: Trends do indeed end, and if you are a savvy and skilled trader you can successful trade a counter-trend move, but this should not be tried until trend-trading has been mastered as counter-trend trading is inherently more risky than trend-trading and there can be many false tops or bottoms in a trend before the real one emerges.

Carry Trading: Carry trading, or simply ‘the carry trade’ as it is called, is the strategy of simply buying a high interest-rate currency against a low interest-rate currency and holding the position for what is usually a long period of time. Forex brokers will pay traders the interest rate difference, or ‘swap’, between the two currencies for each day the position is held. The trick here is that higher-yielding currencies are susceptible to large sell-offs if the market loses risk appetite since these currencies are generally considered riskier than safe-haven currencies like the U.S. dollar or Japanese yen, so it’s a good idea to trail your stop loss up to lock in profit as the carry trade moves in your favor.

• Professional Forex traders vs. amateur Forex traders

Professional Forex trading might seem like something of an elusive or difficult goal for those of you struggling to trade profitably or just beginning to trade. But, there are a few key differences between pro traders and amateur traders that you should be aware of to help you improve your trading or get started on the right track if you are a newbie:

• The important role of Banks in Forex trading

Banks play a very important role in FOREX trading. In fact, most of the market plays against larger banks, hedge funds and big-money players. Commercial banks (such as Deutsche Bank and Barclays) provide liquidity to the Forex market due to the trading volume they handle every day. Some of this trading represents foreign currency conversions on behalf of customers’ needs while some is carried out by the banks’ proprietary trading desk for speculative purpose. The bottom line is that we retail Forex traders are small-change compared to the bigger players like commercial banks, hedge funds, and other big players. We can profit from the moves these big players cause in the market by finding our own edge in the market and trading it with discipline.

Part 5: What is Fundamental Analysis?

 

What is Fundamental Analysis?

• Fundamental Analysis

Fundamental analysis is the study of how global economic news and other news events affect financial markets. Fundamental analysis encompasses any news event, social force, economic announcement, Federal policy change, company earnings and news, and perhaps the most important piece of Fundamental data applicable to the Forex market, which is a country’s interest rates and interest rate policy.

The idea behind fundamental analysis is that if a country’s current or future economic picture is strong, their currency should strengthen. A strong economy attracts foreign investment and businesses, and this means foreigners must purchase a country’s currency to invest or start a business there. So, essentially, it all boils down to supply and demand; a country with a strong and growing economy will experience stronger demand for their currency, which will work to lessen supply and drive up the value of the currency.

For example, if the Australian economy is gaining strength, the Australian dollar will increase in value relative to other currencies. One main reason a country’s currency becomes more valuable as its economy grows and strengthens is because a country will typically raise interest rates to control growth and inflation. Higher interest rates are attractive to foreign investors and as a result they will need to buy Aussie dollars in order to invest in Australia, this of course will drive up the demand and price of the currency and lessen the supply of it.

• Major economic events in Forex

Now, let’s quickly go over some of the most important economic events that drive Forex price movement. This is just to familiarize you with some more of the jargon that you will likely come across on your Forex journey, you don’t need to worry too much about these economic events besides being aware of the times they are released each month, which can be found each day in my Forex trade setups commentary.

Gross Domestic Product (GDP)

The GDP report is one of the most important of all economic indicators. It is the biggest measure of the overall state of the economy. The GDP number is released at 8:30 am EST on the last day of each quarter and it reflects the previous quarter’s activity. The GDP is the aggregate (total) monetary value of all the goods and services produced by the entire economy during the quarter being measured; this does not include international activity however. The growth rate of GDP is the important number to look for.

Trade Balance

Trade balance is a measure of the difference between imports and exports of tangible goods and services. The level of a country’s trade balance and changes in exports vs. imports is widely followed and an important indicator of a country’s overall economic strength. It’s better to have more exports than imports, as exports help grow a country’s economy and reflect the overall health of its manufacturing sector.

Consumer Price Index (CPI)

The CPI report is the most widely used measure of inflation. This report is released at 8:30 am EST around the 15th of each month and it reflects the previous month’s data. CPI measures the change in the cost of a bundle of consumer goods and services from month to month.

The Producer Price Index (PPI)

Along with the CPI, the PPI is one of the two most important measures of inflation. This report is released at 8:30 am EST during the second full week of each month and it reflects the previous month’s data. The producer price index measures the price of goods at the wholesale level. So to contrast with CPI, the PPI measures how much producers are receiving for the goods while CPI measures the cost paid by consumers for goods.

Employment Indicators

The most important employment announcement occurs on the first Friday of every month at 8:30 am EST. This announcement includes the unemployment rate; which is the percentage of the work force that is unemployed, the number of new jobs created, the average hours worked per week, and average hourly earnings. This report often results in significant market movement. You will often hear traders and analysts talking about “NFP”, this means Non-Farm Employment report, and it is perhaps the one report each month that has the greatest power to move the markets.

Durable Goods Orders

The durable goods orders report gives a measurement of how much people are spending on longer-term purchases, these are defined as products that are expected to last more than three years. The report is released at 8:30 am EST around the 26th of each month and is believed to provide some insight into the future of the manufacturing industry.

Retail Sales Index

The Retail Sales Index measures goods sold within the retail industry, from large chains to smaller local stores, it takes a sampling of a set of retail stores across the country. The Retail Sales Index is released at 8:30 am EST around the 12th of the month; it reflects data from the previous month. This report is often revised fairly significantly after the final numbers come out.

Housing Data

Housing data includes the number of new homes that a country began building that month as well as existing home sales. Residential construction activity is a major cause of economic stimulus for a country and so it’s widely followed by Forex participants. Existing home sales are a good measure of economic strength of a country as well; low existing home sales and low new home starts are typically a sign of a sluggish or weak economy.

Interest Rates

Interest rates are the main driver in Forex markets; all of the above mentioned economic indicators are closely watched by the Federal Open Market Committee in order to gauge the overall health of the economy. The Fed can use the tools at its disposable to lower, raise, or leave interest rates unchanged, depending on the evidence it has gathered on the health of the economy. So while interest rates are the main driver of Forex price action, all of the above economic indicators are also very important.

• Technical Analysis VS. Fundamental Analysis

Technical analysis and Fundamental analysis are the two main schools of thought in trading and investing in financial markets. Technical analysts look at the price movement of a market and use this information to make predictions about its future price direction. Fundamental analysts look at economic news, also known as fundamentals. Now, since nearly any global news event can have an impact on world financial markets, technically any news event can be economic news. This is an important point that I want to make which many fundamental analysts seem to ignore…

One of the main reasons why I and all of my members prefer to trade primarily with technical analysis is because there are literally millions of different variables in the world that can affect financial markets at any one time. Now, Forex is more affected by macro events like a country’s interest rate policy or GDP numbers, but other major news events like wars or natural disasters can also cause the Forex market to move. Thus, since I and many others believe that all of these world events are factored into price and readily visible by analyzing it, there is simply no reason to try and follow all the economic news events that occur each day, in order to trade the markets.

One of the main arguments that I have read that fundamental analysts have against technical analysts is that past price data cannot predict or help predict future price movement, and instead you must use future or impending news (fundamentals) to predict the price movement of a market. So, I thought it would be a good idea to give my response to these two arguments against technical analysis:

1) If fundamental analysts want to try and tell me that past price data is not important, then I would like them to explain to me why horizontal levels of support and resistance are clearly significant. I would also like to ask them how myself and many other price action traders can successfully trade the markets by learning to trade off of a handful of simple yet powerfully predictive price action signals:

Looking at the daily spot Gold chart above, we can clearly see that support and resistance levels are important to watch. Any Fundamental analyst, who wants to say that charts don’t matter, is simply wrong, and you will come to this conclusion on your own when you spend more time studying some price charts.

2) The next argument that Fundamental analysts use is that you can more accurately predict a market’s price movement by analyze impending forex news events. Well, anyone who has traded for any length of time knows that markets often and usually react opposite to what an impending news event implies. Are there times when the market moves in the direction implied by a news event? Yes, absolutely, but is it something you can build a trading strategy and trading plan around? No.

The reason is that markets operate on expectations of the future. This is actually an accepted fact of trading and investing, so it’s a little strange to me that some people still ignore technical analysis or don’t primarily focus on it when analyzing and trading the markets. Let me explain: if Non-farm payrolls is coming out (the most important economic report each month, released in the U.S.) and the market is expecting 100,000 more jobs added last month, the market will likely already have moved in anticipation of this number. So, if the actual number is 100,000 even, the market will probably move lower, instead of higher…since there were not MORE added jobs than expected. So, while 100,000 new jobs might be a good number, the fact that the actual report did not exceed expectations is bad for traders and investors (can you see how this junk gets confusing now? I almost confused myself writing this…).

AND NOW FOR MY FINAL POINT: Since all of the preceding expectations of a news release have already been carried out and are visible on the price chart, why not just analyze and learn to trade off the price action on the price chart?? What a novel idea! You see, even after the news is released we can still use technical analysis to trade the price movement, so really technical analysis is the clearest, most practical, and most useful way to analyze and trade the markets. Am I saying there is no room for Fundamental analysis in a Forex trader’s tool box? Absolutely not. But, what I am saying is that it should be viewed and used as a compliment to technical analysis and it should be used sparingly, when in doubt consult the charts and read the price action, only use Fundamentals to support your Technical view or out of pure curiosity, never rely solely on Fundamentals to predict or trade the markets.

Part 6: What is Price Action Trading Analysis?

 

What is Price Action Analysis?

bulls-and-bears1My definition of Price Action Analysis: Price action analysis is the act of studying, reading and interpreting the price movement of a market over time, which involves the use of raw price charts to trade the market (no indicators). By learning to read the price action of a market, we can determine a market’s directional bias as well as trade from reoccurring price action patterns or price action setups that reflect changes or continuations in market sentiment.

In simpler terms: Price action analysis is the use of the natural or “raw” price movement of a market to analyze and trade it. This means, you are making all of your trading decisions based purely on the price bars on a “naked” or indicator-free price chart.

All economic variables create price movement which can be easily seen on a market’s price chart. Whether an economic variable is filtered down through a human trader or a computer trader, the movement that it creates in the market will be easily visible on a price chart. Therefore, instead of trying to analyze a million economic variables each day (this is impossible obviously), you can simply learn to trade from price action analysis because this style of trading allows you to easily analyze and make use of all market variables by simply reading and trading off of the price action created by said market variables.

• How do you apply price action analysis to the Forex market?

First, I want to say that price action analysis can be used to trade any financial market, since it simply makes use of the “core” price data of the market. However, my personal favorite market to trade is the Forex market, mainly due to its deep liquidity which makes it easy to enter and exit the market, and also because the Forex market tends to have better trending conditions as well as more volatility which makes for better directional trading and allows price action trading to really shine.

My own personal approach to trading and teaching price action trading is that you can trade effectively from a few time-tested price action setups. There really is no need to try and trade from 25 different price patterns, the Forex market moves in a relatively predictable fashion most of the time, so all we need is a handful of effective price action entry setups to give us a good chance at finding and entering high-probability trades.

The first thing you need to do to apply price action to the Forex market, is to strip your charts of all indicators and get a “clean” price chart with only the price bars in a color you like. I choose simple black and white or blue and red for my colors, but you can pick whichever colors you like (Part 7 will cover an introduction to charting). Here’s an example of my daily chart setup on the EURUSD:

paanalysiscl

Now, let’s look at an example of a clean and simple price chart next to a price chart covered with some of the most popular indicators that many traders use. I want you to look at these two charts and think about which one seems easier and more logical to trade off of:

paanalysismes

paanalysiscl1

From looking at the two charts above, you will probably agree that it seems a little silly to hide the natural price action of a market with messy and confusing indicators. All indicators are derived from price movement anyways, so if we have a solid method to trade based only on price movement (price action analysis), it only makes sense that we would use that instead of trying to analyze messy secondary data.

• What is a price action trading signal?

Next, let’s discuss how we can use price action analysis to find entries into the Forex market from a raw price chart. As a result of years of trading the markets I have boiled down all I have learned into my own unique method of trading with price action. This method consists of a handful of very specific price action entry triggers that can provide you with a high-probability entry into the market. Essentially, what we are looking for is reoccurring price patterns that tell us something about what the market might do in the near-future.

For purposes of brevity and out of respect for my paid members, I won’t give away all of my trading strategies and entry triggers here, but you can learn more about the trading strategies that I teach in my trading course. In the chart below, we are going to look at a particularly good price action signal for trading with trends; the inside bar strategy.

In the example chart below, we can see one price action trading signal that I like to use in trending markets; the inside bar setup:

paanalysisibs

• How to use price action analysis to determine a market’s trend

You will probably come across many different indicators designed to tell you what the trend of a market is. However, the most time-tested and trusted way for determining a market’s trend is simply to look at the daily charts and analyze the market’s price action. To identify a downtrend, we look for patterns of lower highs and lower lows, sometimes annotated by “LH and LL”. To identify an uptrend, we look for patterns of higher highs and higher lows, sometimes annotated by “HH and HL”.

In the example chart below, we can see examples of a downtrend, an uptrend and an uptrend changing to a downtrend:

paanalysistnd

• Where and when should you trade a price action signal?

In my trading course I focus heavily on teaching my members how to trade with “confluence”. When I say “trading with confluence” I am basically referring to looking for areas or levels in the market that are clearly significant. Confluence means when things come together or intersect. Thus, when we are looking to “trade with confluence” we are trying to put together an obvious price action signal with a significant level in the market. There are different factors of confluence that we can watch for, but in the chart below I am showing you price action setups that formed at key support and resistance levels in the market; support and resistance are each a factor of confluence. Note, I have shown you two more price action setups in the chart below; the pin bar strategy and the fakey trading signal.

In the example chart below, we are looking how to trade price action setups from confluent levels in the market:

paanalysiscon

In closing…

This lesson gave you a basic overview of what price action analysis is and how to use it in the markets. From here, you should proceed to the next part of this beginner’s course and continue learning about Forex and price action trading. As always, if you have any questions about trading just email me here, and if you want to learn more about how to trade with price action then checkout my price action trading course for more info.

Part 7: Introduction to Forex Charting

 

Introduction to Forex Charting

This part of the course is going to give you a brief overview of the three primary types of charts that you will run across in your Forex trading journey. The chart type that I use, and that my members use, is candlestick charts, I feel forex candlestick charts do the best job at showing the price dynamics in a market, since their design helps you to visualize the “force”, or lack thereof, that a particular price movement exhibited. So, let’s go over the three main types of charts that you will likely see as you trade the markets:

• Line charts

Line charts are good at giving you a quick view of overall market trend as well as support and resistance levels. They are not really practical to trade off of because you can’t see the individual price bars, but if you want to see the trend of the market in a clear manner, you should check out the line charts of your favorite markets from time to time.

Line charts are made by connecting a line from the high price of one period to the high price of the next, low to low, open to open, or close to close. By far, line charts that show a connection from one closing price to the next are the most useful and the most widely used; this is because the closing price of a market is deemed the most important, since it determines who won the battle between the bulls and the bears for that time period. Let’s look at an example of a daily line chart of the EURUSD:

• Bar charts

A bar chart shows us a price bar for each period of time. So if you are looking at a daily chart you will see a price bar for each day, a 4 hour chart will show you one price bar for each 4 hour period of time…etc. An individual price bar gives us four pieces of information that we can use to help us make our trading decisions: The open, high, low, and close, you will sometimes see bar charts called OHLC charts (open, high, low, close charts), here’s an example of one price bar:

Here’s an example of the same EURUSD chart we used for the line chart example but as a bar chart:

• Candlestick charts

Candlestick charts show the same information as a bar chart but in a graphical format that is more fun to look at. Candlestick charts indicate the high and low of the given time period just as bar charts do, with a vertical line. The top vertical line is called the upper shadow while the bottom vertical line is called the lower shadow; you might also see the upper and lower shadows referred to as “wicks”. The main difference lies in how candlestick charts display the opening and closing price. The large block in the middle of the candlestick indicates the range between the opening and closing price. Traditionally this block is called the “real body”.

Generally if the real body is filled in, or darker in color the currency closed lower than it opened, and if the real body is left unfilled, or usually a lighter color, the currency closed higher than it opened. For example, if the real body is white or another light color, the top of the real body likely indicates the close price and the bottom of the real body indicates the open price. If the real body is black or another dark color, the top of the real body likely indicates the open price and the bottom indicates the close price (I used the word “likely” since you can make the real body whatever color you want). This will all become clear with an illustration:

Now, here’s the same EURUSD daily chart that I showed you in line and bar form, as a candlestick chart. Note that I have made the candles black and white, you can pick whatever colors you want, just make sure they are friendly to your eye but also that they convey bullish and bearishness to you. Bullish candles are the white ones (close higher than open) and bearish candles are the black ones (close lower than open):

Candlestick charts are the most popular of all three major chart forms, and as such, they are the type you will see most often as you trade, and they are also the type I recommend you use when you learn and trade with price action strategies. I use candlestick charts in my Forex trading course, and I recommended all my members use them when posting up charts in the members’ forum, because their visual pleasantness and simplicity make it easier for everyone to learn from.  To download the same forex charts that myself and my students use visit the Forex Chart Platform Download Page Here.

Part 8: What Is A Forex Trading Strategy?

 

What Is A Forex Trading Strategy?

There are many different Forex trading strategies. However, there are some basics of reading a price chart that you need to know before you can move on to learning any one strategy in-depth. Let’s cover the basic building blocks of trading the Forex market from a technical analysis approach:

• Support and Resistance levels – How to identify and plot them

Support levels are created as a market turns higher. So, if a market is moving lower for example and it then changes direction and begins moving higher, it either has created a level of support or bounced off a previously existing level of support.

Resistance levels are created as a market turns lower. So, if a market is moving higher for example, and it then changed direction and beings moving lower, it either has created a level of resistance or bounced off a previously existing level of resistance:

Identifying and plotting support and resistance levels is by no means an exact science. Instead, it requires the use of the discerning human eye and a little bit of brain power…don’t be worried though, it’s really not that difficult to become proficient and confident in drawing support and resistance levels on your charts.

In the chart below, we can see the daily GBPUSD chart, with all the relevant support and resistance levels drawn in:

Now, one important point that I want you to know about support and resistance levels is that they are not concrete. Many traders seem to think support and resistance levels are concrete and that they should never trade a setup if there is a support or resistance level close by, this can result in them getting analysis paralysis and never entering a trade. While it is true that you need to take into consideration the key support and resistance levels in the market, you also need to look at the overall market condition. You see, in trending markets, support and resistance levels will often be broken by the trend momentum; so don’t be afraid of support and resistance levels, as they will often break. Instead, watch these levels for trading signals. You see, when a Forex trading signal like a price action setup forms at a key support or resistance level, it is a very high-probability even to take notice of.

• Trend trading

Trending markets offer us the best opportunity to profit, since the market is clearly moving in one general direction; we can use this information to our advantage by looking to enter the market in the direction of the trend.

An uptrend is marked by a series of higher highs and higher lows, and a downtrend is marked by a series of lower highs and lower lows. Note that trends do end, as we can see in the daily EURUSD chart below, the downtrend has come to an end recently after the pattern of lower highs and lower lows was broken…

I like to trade with the near-term daily trend by looking for high-probability price action strategies forming within the structure of the market trend. What I mean by this is essentially looking for price action setups forming near support as a market rotates lower in an uptrend and near resistance as a market rotates higher in a downtrend. Markets ebb and flow, and if you can learn to take advantage of trending markets, you will have a very good shot at becoming a profitable Forex trader:

• Counter-trend trading

Since trends do end, we can also take advantage of this information. However, counter-trend trading is inherently riskier and more difficult than trading with the trend, so it should only be attempted after you have fully mastered trading with the trend. Some of the things to look for in a good counter-trend signal is a price action pattern or setup forming at a very obvious and ‘key’ support or resistance level on the daily chart, see here:


• Range-bound market trading

When a market is in a trading range it means that it is consolidating between a level of support and resistance. We can use the fact that a market is bouncing between support and resistance to our advantage. As the market approaches the support or resistance boundary of the trading range, we have a high-probability entry level, since risk is clearly defined just above or below the resistance or support of the range. When trading price action in trading ranges, you can watch for obvious price action setups forming near the boundaries of the range, see here:



• Forex candlestick charts and patterns

We discussed Forex charts in Part 7, but as they are very important to the way that I trade and teach price action, I wanted to give them a little more time. I have previously written an excellent tutorial on Forex candlestick charts that you can check out here: Forex candlestick charts

It’s important to understand that candlestick patterns have certain terminology all to their self that you should become familiar with before you attempt to master a trading strategy like price action.

I have an excellent free tutorial on candlesticks that you can read here: Forex Japanese Candlestick Patterns

Here’s a cool video on trading with Forex candlesticks: Forex candlestick reversal bar trading strategy

• The myth of automated Forex trading systems

While we are talking about different ways of trading the Forex market, I want to touch on what I feel is a widely believed “myth” regarding automated robot and indicator-based trading systems…

You are probably going to come across many Forex website selling Forex software that they claim will fully mechanize the process of trading, so that all you have to do is click your mouse when the software tells you to and then rake in the profits. You need to constantly keep in mind the old saying “If it sounds too good to be true it probably is…” when you are learning to trade Forex. Like I said before, you are probably going to come across a lot of these robot websites if you have not already. You are best served by ignoring them all together.

You will probably see track records that they claim are “indisputable” evidence of the robots performance in the markets…what they don’t tell you is that this track record is simply a display of a “perfect” set of data that the software was back-tested on. The point is that trading software cannot work over the long-term because the market is constantly changing and as such, it takes the discerning discretion of the human brain to effectively trade the markets over the long-term. I am not saying that computer software has no place in trading, but it cannot be the only thing you rely on, and it certainly should not be used in attempt to fully-automate the trading process. The ability to read the raw price action of a market and grow and evolve with the ever-changing conditions of the market is how I personally trade and how I teach my students to trade.

Part 9: Common Forex trading mistakes and traps

 

Common Forex trading mistakes and traps

There are common mistakes and ‘traps’ that give nearly all traders trouble at some point in their trading careers. So, let’s cover the most common mistakes that traders make which keep them from making money in the markets:

• Analysis-paralysis

There is a virtually unlimited amount of Forex news variables that can distract a trader, as well as tons and tons of trading systems and trading software. You’ll need to sift through all of these variables and forge a trading strategy that is simple yet effective, warning; this can be a very a difficult task for beginner traders.

The reason why, is that most traders seem to think that ‘more is better’, when in reality ‘more’ is actually worse, as it relates to Forex trading. There really is no need to sit in front of your computer for hours on end analyzing Forex news reports or numerous indicators. My trading philosophy is that all variables that affect a market’s price movement are reflected via the price action on a price chart. So, spending your time and money on trading software, systems, or analyzing news variables is simply a waste. Furthermore, many traders get analysis-paralysis, this occurs when a trader tries to analyze so many market variables that they exhaust themselves to the point of making silly emotional trading mistakes.

• Over-trading

Most traders do not make money in the markets over the long-run for one simple reason: they trade way too much. One curious fact of trading is that most traders do very well on demo accounts, but then when they start trading real money they do horribly. The reason for this is that in demo trading there is virtually no emotion involved since your real money is not on the line. So, this goes to show that emotion is the #1 destroyer of trading success. Traders who over-trade are operating purely on emotion.

Trading when your pre-defined trading edge is not actually present is over-trading. Trading if you have no trading plan or have not mastered a trading edge yet is over-trading. Essentially, you need to know EXACTLY what you’re looking for in the market and then ONLY trade when your edge is present. Trading too much causes you to rack up transaction costs (spreads or commissions), and it also causes you to lose money a lot faster since you are purely gambling in the market. You need to take a calm and calculated approached to the market, not a drunken-gamblers approach…which seems to be the favored approach of many traders.

• Not applying risk reward and money management correctly

Risk management is critical to achieving success in the markets. Risk management involves controlling your risk per trade to a level that is tolerable for you. Most traders ignore the fact that they COULD lose on ANY TRADE. If you know and accept that you could lose on any trade…why would you EVER risk more than you were comfortable with losing??? Yet traders make this mistake time and time again…the mistake of risking too much money per trade. It only takes one over-leveraged trade that goes against you to set off a chain of emotional trading errors that wipes out your trading account a lot faster than you think. Check out this cool article on Forex money management for more.

• No trading plan and no routine or discipline

Not having a Forex trading plan is perhaps the most prevalent trading mistake the Forex traders make. Many traders seem to think that they will create a trading plan “later on” or after they start making money or that they simply don’t need one or can just keep it “in their heads”. All of these rationalizations are simply keeping traders from achieving the success they so badly desire. If you don’t have a Forex trading plan that details all of your actions in the market as well as your overall trading approach and strategy, you will be far more likely to operate emotionally and from a gambling mindset. Beginner traders especially need a Forex trading plan to solidify their trading strategy and to create a guide that they use to trade the market from, and you can’t keep it in your head…you need to physically write out your trading plan and read it every day you trade.

• Trading real money too soon or gambling it

The urge to jump into the market and start trading real money is often too much for most traders to withstand. However, the truth is that until you have mastered an effective Forex trading strategy like price action trading, you really should not be trading real money. By “mastering” the strategy, I mean you should be consistently successful with it on a demo account for a period of 3 to 6 months or more, prior to going live. However, you don’t want to use demo account trading as a crutch…trading a real account is different due to the real emotions involved, so just be sure you switch to real-money trading after you have achieved success on demo…don’t be afraid of trading real money, because eventually you will need to make the switch to real money trading.

Also, be sure you are not just gambling your money away. Doing the things we discussed above; over-trading, over-leveraging, not having a trading plan, etc, these are all things that gambling traders do. Traders who don’t gamble in the markets are calm and calculating…they have a trading plan, a trading journal, and they know exactly what their trading edge is and when to trade it.

Part 10: What is Technical Analysis?

 

What is Technical Analysis?

• Technical Analysis

Technical analysis is the study of the price movement on a chart of a particular Forex currency pair or other market. We can think of technical analysis or “T.A.” for short, as a sort of framework that traders use to study and make use of the price movement of a market.

The primary reason that traders use T.A. is to make predictions about future price movement based on past price movement.

Technical analysts believe that all current market variables are reflected via the price movement or price action on a price chart. So, if we believe that all market variables are reflected via price movement, it only goes to reason that we don’t really need much else to analyze and trade the markets besides price. I am a technical analyst and so are the members in my trading community, we prefer T.A. because we agree with the idea that all market variables are reflected via price action, so we see no reason to use other means to analyze or trade the market. That’s not to say that having some knowledge of fundamentals and news events is a bad thing, but we just don’t rely on them heavily (we discussed Fundamental Analysis in Part 5).

Technical analysts look for patterns on the chart that tend to repeat themselves; they do this to develop their trading edge from. The underlying logic here is that since most price movement is driven by human beings, certain patterns will repeat themselves in the market as human beings tend to be repetitive in their emotion and interaction with the market.

Technical analysis also encompasses learning to analyze the market structure; find trends, support and resistance levels and generally learn to ‘read’ the ebbs and flows of a market. There is obviously discretion involved here and I will be the first person to tell you that T.A. is more of an art than a science. That said, it is something you will get more comfortable with and better at given time and practice. T.A. forms the back-bone of my core trading method of price action, which is simply a derivative or off-shoot of ‘traditional T.A.”, except with more clarity and more concise strategies that don’t involve confusing forex indicators or things like Elliot Wave Theory that are far too messy and open to interpretation for me to believe they are worth trading or teaching.

Most traders instantly think of a price chart like the one above when someone mentions the word “technical analysis”. Price charts provide us with an amazing amount of useful data that paints a complete picture of a market’s historical and current supply and demand situation, as well as the price levels that the market participants have deemed the most important. As technical analysts we need to pay special attention to these price levels as price will tend to respect them again and again, indeed, much of my price action trading course is built around learning to identify and trade price action setups from key levels in the market. Price charts are also a reflection of all market participants’ beliefs about the market and market variables, so by focusing your analysis and trading on a market’s price chart you can streamline your trading and at the same time analyze the end result of everything that contributes to the price movement of a market.

Part 11: How to Make a Forex Trading Plan

 

How to Make a Forex Trading Plan

Having a Forex trading plan is one of the key elements to becoming a successful Forex trader. Many traders never even make a trading plan, let alone use one regularly. It’s very important that you do both; make a trading plan and use the one you make…don’t just make one and then never look at it like many traders do. Here are some important points to consider regarding Forex trading plans:

• Follow a plan, have a journal, log trades

You need to do three essential things to become and remain an organized and disciplined Forex trader. These things are the following: 1) Create a Forex trading plan, 2) Create (or use an existing) Forex trading journal3) ACTUALLY use BOTH of them.

The process of creating a Forex trading plan around an effective trading strategy like price action trading, will work to solidify your understanding of the trading strategy and will also provide you with a blueprint for what you need to do each time you interact with the market. Having this market blueprint is essential for developing the type of ice-cold discipline that it takes to succeed in the Forex currency market over the long-term.

Logging your trades in a trading journal is critical to your success because it allows you to have a visual representation of your ability (or lack thereof) to trade the markets, it also creates a track record for you that you can use which will show you how your trading edge plays out over time, this will allow you to ‘tweak’ and adjust your trading strategy as you see fit.

• Trading plans contain a routine and check list

To put it simply, you NEED to have a routine in your trading activities; otherwise you will just end up running and gunning the seat of your pants. I have a trading philosophy that revolves around trading Forex like a sniper and not a machine gunner, if you want to trade like a sniper you have to have a routine that you follow, and you have to be disciplined…a sniper in the military is an extremely disciplined individual, and you need to think of the Forex market like it’s a war, and you are a sniper trying to take only the ‘easiest prey’; your ‘prey’ in the markets consists of only the most obvious trade setups.

Your trading plan should include a checklist that you follow; this will include things that you look for in the market and what you want to see before entering a trade. If you can tick all the boxes then you enter the trade, if not then you hold off until your trading edge appears again. You can actually formulate your whole trading plan as a checklist; this will make it a smooth format that allows you to quickly decide if any potential trade setup is worth taking.

• Trading plans contain written guidelines of what a trader will do and look for as well as images of trade setups

Your trading plan should contain a written description of what you will do in the markets. This includes things like what your trading edge is, how you trade it, when you trade it, what time frames you trade (I prefer daily Forex chart trading), your strategy for risk management and profit taking, and your overall goals as a trader. You should also include images of your trading edge setups, so that you are constantly reminded of what an “ideal” setup looks like. Eventually, after you follow your written guidelines and “ideal” trade setup images long enough, you will burn them into your brain to the point of knowing exactly what you are looking for in the market, which will work to build your confidence as a trader.

• Trades planned in advance and ‘anticipated’ work best

One of the main reasons to create a Forex trading plan is because pre-planning your trades and pre-determining what you are looking for in the markets is the best way to profit over the long-run. You will never be more objective and calm then when you are NOT in the market, so if you can plan out all your trades when you are not in the markets, you will be totally uninfluenced by market variables when you are in a trade, and this will work to protect you from becoming an emotional Forex trader.

• Be patient and wait for the conditions of a plan to unfold – don’t force the issue

Patience is perhaps the most important virtue that a Forex trader can possess. When you are a patient trader it means you know what you are looking for in the markets and you wait for your trading edge to appear before you execute a trade. Trading in this manner eliminates many losing trades that are the result of trading emotionally…or without patience. A large part of trading, and perhaps the largest part, is simply waiting for an “ideal” price action setup or other trade setup to form in the market. Traders who don’t wait for an ideal setup to form, end up losing their money quickly because they negate their trading edge and are simply gambling instead. Make sure you stress the importance of patience in your trading plan, this way you will be reminded every time you read it why being a patient trader is so important to making money in the Forex market.

Part 12: The Psychology of Forex Trading

 

The Psychology of Forex Trading

psychI have been a trader long enough to know a thing or two about how most people think while trading the market. You see, most people experience similar thinking patterns and emotions as they trade the markets, and we can learn many important things from the differences in the way losing traders think and the way winning traders think.

I would be lying to you if I said that success in the Forex markets depends entirely on the system or strategy you use, because it doesn’t, it actually depends mostly on your mindset and on how you think about and react to the markets. However, most Forex websites trying to sell some indicator or robot-based trading system won’t tell you this, because they want you to believe that you can make money in the markets simply by buying their trading product. I prefer to tell people the truth, and the truth is that having an effective and non-confusing trading strategy is very important, but it’s only one piece of the pie. The bigger portion of the pie is managing your trades correctly and managing your emotions correctly, if you do not do these two things you will never make money in the markets over the long-term.

• Why most traders lose money

You have probably heard that most people who attempt Forex trading end up losing money. There’s a good reason for this, and the reason is primarily that most people think about trading in the wrong light. Most people come into the markets with unrealistic expectations, such as thinking they are going to quit their jobs after a month of trading or thinking they are going to turn $1,000 into $100,000 in a few months. These unrealistic expectations work to foster an account-destroying trading mindset in most traders because they feel too much pressure or “need” to make money in the markets. When you begin trading with this “need” or pressure to make money, you enviably end up trading emotionally, which is the fastest way to lose your money.

• What emotions should you watch for in yourself while trading?

To be a little bit more specific about “emotional” trading, let’s go over some of the most common emotional trading mistakes that traders make:

Greed – There’s an old saying that you may have heard regarding trading the markets, it goes something like this: “Bulls make money, bears make money, and pigs get slaughtered”. It basically means that if you are a greedy “pig” in the markets, you are almost certainly going to lose your money. Traders are greedy when they don’t take profits because they think a trade is going to go forever in their favor. Another thing that greedy traders do is add to a position simply because the market has moved in their favor, you can add to your trades if you do so for logical price action-based reasons, but doing so only because the market has moved in your favor a little bit, is usually an action born out of greed. Obviously, risking too much on a trade from the very start is a greedy thing to do too. The point here is that you need to be very careful of greed, because it can sneak up on you and quickly destroy your trading account.

Fear – Traders become fearful of entering the market usually when they are new to trading and have not yet mastered an effective trading strategy like price action trading (in which case they should not be trading real money yet anyways). Fear can also arise in a trader after they hit a series of losing trades or after suffering a loss larger than what they are emotionally capable of absorbing. To conquer fear of the market, you primarily have to make sure you are never risking more money than you are totally OK with losing on a trade. If you are totally OK with losing the amount of money you have at risk, there is nothing to fear. Fear can be a very limiting emotion to a trader because it can make them miss out on good trading opportunities.

Revenge – Traders experience a feeling of wanting “revenge” on the market when they suffer a losing trade that they were “sure” would work out. The key thing here is that there is no “sure” thing in trading…never. Also, if you have risked too much money on a trade (starting to see a theme here?), and you end up losing that money, there’s a good chance you are going to want to try and jump back in the market to make that money back….which usually just leads to another loss (and sometimes an even larger one) since you are just trading emotionally again.

Euphoria – While feeling euphoric is usually a good thing, it can actually do a lot of damage to a trader’s account after he or she hits a big winner or a large string of winners. Traders can become overly-confident after winning a few trades in the market, for this reason most traders experience their biggest losing period’s right after they hit a bunch of winners in the market. It is extremely tempting to jump right back in the market after a “perfect” trade setup or after you hit 5 winning trades in a row…there’s a fine line between keeping your feet grounded in reality and thinking that everything you do in the markets will turn to gold.

Many traders enter into a tailspin of emotional trading and losing money after they hit a string of winners. The reason this happens is because they feel confident and euphoric and forget about the real danger of the market and that ANY TRADE CAN LOSE. The key to remember here is that trading is a long-term game of probabilities, if you have a high-probability trading edge, you will eventually make money over the long-term assuming you follow your trading edge with discipline. But, even if your edge is 70% successful over time, you could still hit 30 losing trades in a row out of 100….so keep this fact in mind and always remember you never know WHICH trade will be a loser and WHICH will be a winner.

• How to obtain and maintain an effective trading mindset

millionaire-mindsetObtaining and maintaining an effective Forex trading mindset is the result of doing a lot of things right, and it usually takes a conscious effort on the trader’s behalf to accomplish this. It’s not necessarily difficult to achieve, but if you want to develop an effective trading mindset, you have to accept certain facts about trading and then trade the market with these facts in mind…

You need to know what your trading strategy (trading edge) is and you need to master it. You have to become a “sniper” in the market instead of a “machine gunner”, this involves knowing your trading strategy inside and out and having absolutely NO questions about what the market needs to look like before you risk your hard-earned money in it.

You need to always manage your risk properly. If you do not control your risk on EVERY single trade, you open the door for emotional trading to take hold of your mind, and I can promise you that once you start down the slippery slope of emotional Forex trading, it CAN be very hard to stop your slide, or even recognize that you are trading emotionally in the first place. You can largely eliminate the possibility of becoming an overly-emotional trader by only risking an amount of money per trade that you are 100% OK with losing. You should EXPECT TO LOSE on any given trade, that way you are always aware of the very real possibility of it actually happening.

You need to not over-trade. Most traders trade way too much. You need to know what your trading edge is with 100% certainty and then ONLY trade when it’s present. Once you start trading just because you “feel like it” or because you “sort of” see your trading edge…you kick off a roller coaster of emotional trading that can be very hard to stop. Don’t start over trading and you will likely not become an emotional Forex trader.

You need to become an organized trader. If there is something that is the “glue” that holds all of the points I’ve discussed in this part together, it is being an organized trader. By organized, I mean having a trading plan and a trading journal and actually using both of them consistently. You need to think of Forex trading like a business instead of like a trip to the casino. Be calm and calculating in all your interactions with the market and you should have no problem keeping the emotional trading demons at bay.

Part 13: Professional Price Action Forex Trading Strategies

 

pic-of-nial-fuller1Nial Fuller’s Professional Forex Trading Strategies

Hey traders,

Now that you’ve made it through my Free Beginner’s Forex Trading Course, I want to give you guys a little insight into my core trading philosophy, why I trade the way I do, what I teach, and how I can help you become a better trader. I hope that you enjoyed taking this free course as much as I enjoyed making it, and you should now have a solid foundation on the basics of what the Forex market is and how it’s traded.

Knowing the basics of Forex is great, and every trader needs to know them, but if you are serious about making consistent money in the markets, you need to learn real-world trading strategies that will provide you with a high-probability trading edge. Here’s some more information about me and my price action trading strategies:

About Nial Fuller:

I’ve been trading the markets for over 10 years now, and I have learned every lesson you can imagine along the way. Perhaps the biggest lesson I’ve learned is that ‘simple is better’, and this is the main point I try to convey to my students and it’s why I don’t use a ton of indicators or messy trading systems. My primary mission after becoming a successful trader has been to help other traders “see the light” of simple price action trading. I am very passionate about trading Forex, and I know a lot of other people are too, but unfortunately there is so much misleading information about it, that it can be really difficult to get started on the right path. My goal as a trading mentor is to lay a simple path for all traders to follow, that path is paved with the price action strategies that I have found to be very effective over the years. Be sure to check out Part 6 of the course on price action analysis for a refresher on what price action trading is all about.

How I trade with price action

• My core trading philosophy

My personal trading style is completely focused on “reading” the price movement of the market in its “natural” form, or in other words: “Price Action Trading Analysis’”. I don’t use any indicators or confusing systems; I simply trade from a naked price chart.

I have an arsenal of powerful price action patterns that I look for within the structure of the market. For example, if a market is in an uptrend, I will be looking for price to retrace to a support level within the uptrend, this is what I consider a “value” area, and I will then watch patiently for one of my price action signals to confirm a trade entry. Whilst the majority of my trades are following the trend of the market, I will occasionally take a counter-trend trade setup or a range-bound market trade.

Regardless of what direction I am trading, the main thing I am looking for is “obvious” price patterns forming at “key” levels in the market. When I see one of my trade setups has formed at a key level in the market, I consider this a green-light confirmation signal for me to enter a trade. Given that there are only a ‘few’ good signals each week, I spend a lot of time just waiting patiently for a trading opportunity. I wrote a very popular article last year on the concept of being a patient trader waiting to ambush trading opportunities, you can read that article here: “Trading Like A Sniper “.

In summary, my trading approach is largely built on finding multiple pieces of “evidence” that work together to confirm an entry into the market. Professional traders call this “trading with confluence”. In regards to my price action trading strategies, trading with confluence means looking for multiple factors on the chart that support the case for entering on a price action signal that has formed.

Overall, my trading strategy might appear quite simple, and frankly it is, but as I said before; simple is better in Forex trading. I’ll be honest with you guys, must unprofitable or beginner traders are attracted to overly-complex trading methods and this is usually what leads to their eventual failure. As a trader who has “been around the block” a few times, I know what has worked for me in the markets, and I feel it’s my job to convey that information to other traders. Thus, my main priority as a trading mentor is to teach my students how to trade with a simple forex trading strategy.

Here’s one of my recent videos explaining how I use one of my favorite price action signals; the pin bar trading strategy, to trade in-line with the trend:

• My favorite markets and time frames

If there is one lesson that you should accept right now, that will save you A LOT of time and money, it’s that trading the daily charts is the easiest thing you can do to reach your goals as a trader. Now, to be a little bit more specific…if you start off your trading career trading small time frames like the 5 minute and 15 minute charts, you’re going to experience a lot of frustration, lost time, and lost money. You see, these small time frames contain more variables for you to analyze (and over-analyze), this means more “noise” or random price movement that isn’t really impactful or meaningful. When you move up in time frame you get a natural “filter” that works to smooth out the noise and confusion of the small time frames. The daily chart gives you the best view of the market and also provides the most effective filter against the noise of the small time frames. I also trade the 4 hour time frame quite often, and occasionally the 1 hour charts, but I NEVER look at any time frame under the 1 hour.

My favorite markets to trade are the EURUSD and AUDUSD, but each day I will typically scan through all the major Forex pairs looking for price action trading opportunities. I also trade gold and silver and occasionally look at crude oil, the Dow Jones cash market, as well as some of my local Australian stock indexes.

Why I trade the way I do

As I say often, I am very simple in how I think about and trade the markets, my years spent “in the trenches” of the markets have reinforced the necessity to eliminate unnecessary variables from my trading. Most traders over-analyze the market and confuse themselves as a result, this ends up in them trading emotionally and losing money. Thus, I have no desire to sit in front of my computer screen staring at the 5 minute chart like a strung-out zombie-trader. I prefer to trade the daily charts and trade in a relaxed and stress-free manner; if there’s a trade setup that meets my pre-defined criteria, I enter the trade, if not, I walk away until the next day usually.

I really want to stress the fact that taking a slow and calculated approach to your trading is far better than trying to be a day-trader or entering 20 trades a week. If there’s one thing you guys take away from this free course it should be this: you aren’t going to make money fast by trading time frames under the 1 hour and by rushing your trades. You will make money faster by being a patient trader and taking a daily-chart outlook. Forex trading success is measured in months and years, not in days or weeks. So, if you remember nothing else from my website, remember that slow and steady wins the race.

What you will learn from me as your trading mentor.

I like to think I am a bit of a “contrarian”, in my trading and probably in my everyday life to some degree too. I’ve often found that if you do what everyone else does you’ll get what everyone else gets, and when it comes to trading, this approach simply doesn’t work. The fact is that most traders struggle to make money in the markets, they get frustrated, emotional, lose money, lose time, and generally have no concrete trading strategy or forex trading plan. So, if you want to be like most other traders who are obsessed with indicators and “magic” robot trading software, you will probably lose money rather quickly, like most other traders.

I don’t sugar-coat anything, and my reputation has been built on that fact. So, what I will tell you is that if you choose to learn from me,  you will learn honest, long-term and sustainable price action trading methods. I will teach you how to read the natural price dynamics of a price chart and how to find high-probability entry points within it. You will develop a discretionary trading sense that will allow you to trade for yourself forever; this is a skill that you can carry with you to not only Forex but to any market.

You will never need a signal service or $5,000 trading course to teach you to trade, because I will teach you the only trading strategy you’ll ever need. I firmly believe in the old saying “teach a man to fish and you feed him for life”.  I don’t care what anyone else tells you, rigid mechanical systems will always fail over the long-run…you NEED to learn to READ and make sense of the price movement of the market, and you need to learn to ebb and flow with it. In essence, the market is dynamic and constantly changing, so you need a trading strategy that gives you the ability to trade in this type of environment. A market will change over time, and as a price action trader, you have the ability to change and adapt with it.

In closing:

I would like to extend my personal thanks to each and everyone one of you who made it all the way through this Forex introduction course. I hope that you now have a solid understanding of the Forex market and Forex trading. Whatever path you decide to take in your Forex trading career, I wish you all the best, and if you remember nothing else from my website, remember that ‘simple is better’ when it comes to trading.

If you would like to continue learning about the power and simplicity of Price Action, then you should consider my Professional Price Action Forex Trading Course and Trading Community here. My Students get lifetime access to all of my advanced price action Forex Courses, video lessons, webinar tutorials, daily trade setups newsletter, live trade setups discussion forum, traders support line & free ongoing course updates. For more information visit the Forex Course page here.

http://www.forexlancer.com/

Forex Trading Complete Tutorial

Forex Trading Complete Tutorial

Forex Trading for Beginners: The Ultimate Guide

Reading time: 50 minutes

Online Forex and CFD trading for beginners can be especially tough. This is mostly due to unrealistic expectations that are common among Forex newcomers. What you need to know is that Forex trading is by no means a get-rich-quick scheme. This article is our ultimate guide to Forex trading for beginners. On this page, you will receive an introduction to the Forex market, how it works, and key terminology, along with the benefits of trading Forex.

 

We will cover how you can start trading Forex (including choosing the best broker and trading software), the fundamentals of risk management, the different ways you can analyse the Forex market, and an overview of the most popular Forex trading strategies. By the end of this guide, you will have the knowledge you need to start testing your trading skills with a free Demo account, before you move onto a live account.

 

What is Forex?

Forex, or the foreign exchange market (also called FX for short) is the marketplace where currenciesare traded. At its simplest, a foreign exchange transaction might be, for example, when you transfer your local currency to a new one for an upcoming holiday. Across the market as a whole, an estimated 5.3 billion USD is traded every day between governments, banks, corporations, and speculators.

 

Knowing how the industry is mapped out is important, because the collective combination of all participants creates the market you trade in. The relative weight of the trading party to the market is measured by how much money that party manages – from billion dollar hedge funds and investment banks, to private traders with a few thousand dollars in action.

Currencies are traded as pairs, and the movement of currency pairs measure the value of one currency against another. For instance, the EURUSD currency pair measures the value of the Euro against the US dollar. When the value of the pair increases, this means the value of the Euro has increased against the value of the US dollar. When the value of the pair decreases, this means the value of the US dollar has increased (or the value of the Euro has fallen). By trading Forex and CFDs, traders can make a profit off of these currency movements.

 

Which Forex Pairs Can You Trade?

Forex currency pairs are known as majors, minors, and exotics.

 

Major currency pairs are made up of the most frequently traded currencies, which are:

USD – The US Dollar

EUR – The Euro

JPY – The Japanese Yen

GBP – The British Pound

CHF – The Swiss Franc

CAD – The Canadian Dollar

AUD – The Australian Dollar

NZD – The New Zealand Dollar

 

A major currency pair is one that contains any one of these currencies paired against the US dollar, such as the EUR/USD, USDJPY or the GBPUSD. Forex minors pairs made up of these major currencies that don’t include the US dollar. These pairs include EURGBP, EURCHF, AUDNZD and so on.Finally, exotic currencies are any currencies that we haven’t already mentioned, such as the Hong Kong Dollar (HKD), the Norwegian Krone (NOK), the South African Rand (ZAR) and the Thai Baht (THB). Exotic pairs include one exotic currency and one major currency.

 

When learning about Forex trading, many beginners tend to focus on major currency pairs because of their daily volatility and tight spreads. But there are numerous other opportunities – from exotic FX pairs, to CFD trading opportunities on stocks, commodities, energy futures, to indices. There are even indices that track groups of indices, and you can trade them as well. How many markets you scan for opportunities is up to you, but do not limit yourself to just one instrument or one market. Market limitation can lead to overtrading, so make sure to diversify your investment.

 

How Do Forex Quotes Work?

When trading Forex, you’ll see that both ‘Bid’ and ‘Ask’ prices are quoted. The bid price is the price at which you can buy the currency, while the ask price is the price at which you can sell it. If you are purchasing a currency in a trade, this is known as a long trade, and the hope is that the currency pair will increase in value, so that you can sell it at a higher price and make a profit on the difference. If you are selling a currency in a trade, the opposite is true – the hope is that the currency pair will fall in value, so that you can buy it back at a lower price, which means you will profit on the difference.

The number quoted for these prices is based on the current exchange rate of the currencies in the pair, or how much of the second currency you would get in exchange for one unit of the first currency (for instance, if 1 EUR could be exchanged for 1.68 USD, the bid and ask price would be on either side of this number).

 

How Much Do Currency Values Change (Or, How Liquid Are Different Forex Pairs)?

If the way traders make a profit is by cashing in on the difference between the bid and ask prices of currency pairs, the next logical question is, how much can you expect any given currency to move?

This depends on how liquid the currency is, or how much of it is being bought and sold at any one time. The most liquid currency pairs are the ones with the most supply and demand in the Forex market, and this supply and demand is generated by banks, businesses, importers and exporters, and traders. Major currency pairs tend to be the most liquid, with the EUR/USD currency pair moving by 90-120 pips on an average day.

By contrast, the AUD/NZD moves by 50-60 pips a day, and the USDHKD currency pair only moves by an average of 32 pips a day (when looking at the value of currency pairs, most will be listed with five decimal points. A ‘Pip’ is 0.0001. So, if the EUR/USD moved from 1.16667 to 1.16677, that would represent a 1 pip change). The major Forex pairs tend to be the most liquid, and therefore provide the most opportunities for short-term trading. However, there are many opportunities among minor and exotic currencies as well, particularly if you have some specialised knowledge about a certain currency.

 

What is the Forex Spread?

The spread, in Forex, is the difference between the bid and ask price of a currency pair. For example, if the Bid price of the EUR/USD is 1.16668, and the sell price is 1.16669, the spread will be
0.0001, or 1 pip. In any Forex trade, the value of a currency pair will need to cross the spread before it becomes profitable. To continue with the previous example, if a trader entered a long EUR/USD trade at 1.16668, the trade wouldn’t become profitable until the value of the pair was higher than 1.16669.

In a currency pair with a wider spread, such as the EURCZK, the currency will need to make a larger movement in order for the trade to become profitable. At the time of writing, the bid price for this pair is 25.4373, while the ask price is 25.4124, so the spread is 0.0200, or 20 pips. It’s also not uncommon for this currency pair to have movements of less than 20 pips a day, meaning traders will likely need to perform a multi-day trade to make a profit.

This means that low-spread trading is often a priority for Forex traders, as their trades can become profitable quicker, meaning that they can make a high volume of smaller trades, rather than relying on larger trades to make money.

 

What are Forex CFDs?

If you’ve been researching Forex trading, you might have seen the term ‘Forex CFDs’ at some point. There are two ways to trade Forex: using CFDs or spot Forex (also known as margin). Spot Forex involves buying and selling the actual currency. For example, you might purchase a certain amount of Pound Sterling for Euros, and then, once the value of the Pound increases, you may then exchange your Euros for Pounds again, receiving more money back compared with what you originally spent on the purchase.

The term CFD stands for ‘Contract For Difference’, and it is a contract used to represent the movement in the prices of financial instruments. In terms of Forex, this means that rather than purchasing and selling large amounts of currency, you can profit on price movements without owning the asset itself. Along with Forex, CFDs are also available on shares, indices, bonds, commodities and cryptocurrencies. In every case, they allow you to trade on the price movements of these instruments without having to purchase them.

 

How Does Leverage Work in Forex Trading?

Along with being able to access a wide range of financial markets, another benefit of trading CFDs is that a trader can access a much larger portion of those markets, and increase their potential profits as a result. CFD contracts provide leveraged access to the market, meaning a trader can access a much larger portion of the market than what they would be able to purchase outright.To use Gold CFD as an example, at the time of writing, to purchase an ounce of Gold you would need to spend 1,200 USD. However, with a leverage rate of up to 1:20 (which means a trader could trade up to 20 times the value of what they deposit), a trader could trade on the full value of an ounce of gold (equivalent to 1,200 USD), for a deposit of just 60 USD. Similarly, if you wanted to purchase 3,000 USD with Euros, that would cost 2,570 EUR. With a leverage rate of 1:30, however, you could access 3,000 USD worth of the EUR/USD currency pair as a CFD with just 100 USD. The best part, however, is that the size of the potential profit a trader could make is the same as if they had invested in the asset outright. The risk here is that potential losses are magnified to the same extent as potential profits.

 

Calculate Your Potential Profits with our Free Forex Calculator

Now that you know the basics of how Forex trading works, including currency pairs, CFDs and leverage, why not see how a trade might look in action? Admiral Markets has a free Forex calculator for traders, so you can calculate your potential earnings online, for free. Calculate your potential Forex earnings now.

 

A Summary of Essential Forex Terms

Before we move on, let’s recap some of the key concepts covered so far with this list of key Forex terms:

 

Pip: A pip is the base unit in the price of currency pairs, or 0.0001 of the quoted price. So when the bid price for the EUR/USD pair goes from 1.16667 to 1.16677, that represents a pip change of one.

 

Spread: The spread is the difference between a currency pair’s bid and ask price. For the most popular currency pairs, the spread is often low – sometimes even less than a pip! For pairs that aren’t traded as frequently, the spread tends to be much higher. Before a Forex trade becomes profitable, the value of the currency pair must cross the spread.

 

Margin: Margin is the money in a trader’s account. However, because the average ‘Retail Forex trader’ lacks the margin required to trade a high enough volume to make a good profit, many Forex and CFD brokers offer their clients access to leverage.

 

Leverage: Leverage is capital provided by a Forex broker to bolster their client’s trading volume. For example, if you use a 1:10 rate of leverage and have $1,000 in your trading account, you can trade $10,000 worth of a currency pair. If the trade is successful, leverage will maximise your profits by a factor of 10. However, please note that leverage also multiplies your losses to the same degree, so it should be used with caution. If your account balance falls below $0, you may trigger a broker’s negative balance protection settings (if trading with an ESMA regulated broker), which will result in the trade being closed. Fortunately, this means that your balance cannot move below $0, so you will not be in debt to the broker.

 

What are the Benefits of Forex Trading?

Now that we’ve shared an overview of the Forex market, why might you want to trade Forex?

There are a number of reasons why people choose to start day trading. Some of these reasons might include the potential to earn extra money on the side from the comfort of their own home, the opportunity to learn a new skill in their own time, or even the dream of achieving financial freedom, and having more control over their financial future. When it comes to Forex specifically though, there are a number of benefits that make this financial instrument a very enticing one to trade. If you would like to learn more about the differences between the Forex market and the Stocks market, why not check out our comparison article on the topic? And find out which market is right for you! 

 

Forex: The World’s Largest Financial Market

 

Forex is the world’s largest financial market, with over 5.09 trillion USD traded every single day (in April 2016). To put it in other words, in a single day, more money will be traded in the Forex markets than Japan’s entire GDP! (Gross Domestic Product). Of these transactions, 254 billion USD is traded through CFDs and other derivative instruments.

Being the largest, most active financial market on the globe, it is also the world’s most liquid market, meaning it is easy for traders to enter into, as well as exit trades, and for the most liquid pairs, they can do so at a very low cost (even less than a single pip!). This also means that the Forex market is very volatile, creating many opportunities for traders to make a profit on both the positive and negative movements of currency pairs.

 

Trade Around the Clock

Forex is the one financial market that never sleeps, meaning you can trade at all hours of the day (or night). Unlike the world’s stock exchanges, which are located in physical trading rooms like the New York Stock Exchange or the London Stock Exchange, the Forex market is known as an ‘Over-the-counter market’ (or OTC). This means that the trades take place directly between the parties holding the currencies, rather than being managed via an exchange. Consequently, the Forex market has never been restricted to the business hours of any one exchange. However, since the Forex market is a global market, it means there is always a part of the world that is awake and conducting business, and during these hours their currencies tend to experience the most movement. For example, currency pairs involving the US dollar experience the most movement during US business hours (16:00 to 24:00 GMT), while the Euro, Pound, Swiss Franc and other European currencies experience the most movement during European business hours, (8:00 and 16:00 GMT). By contrast, the Australian Dollar, the New Zealand Dollar and the Japanese Yen tend to be more active between 00:00 and 08:00 GMT. As a trader, this means you can trade whenever it suits you – if you work during the day, there will be currencies available to trade before or after work. If you have children but are at home during the day, you can simply choose a different currency. In the Forex market, you can trade 24 hours a day, 5 days a week.

 

Speculate on Rising or Falling Prices

One of the most common trading and investment philosophies is to ‘buy low and sell high’ – this is particularly the case with long-term investments, such as investing in stocks or bonds, which rely on the asset increasing in value. In the Forex market, you can also sell high and buy low. This way, you can potentially make profits on both downward and upward trends.

As mentioned earlier, in a long trade (also known as a buy trade), a trader will open a trade at the bid price, and will aim to close the trade at a higher price, making a profit on the difference between the opening and closing value of the currency pair. So if the EUR/USD bid price is 1.16667, and the trade closes at the price of 1.17568, the difference is 0.00901, or 90.1 pips. (When trading a single lot, that would make a 901 USD profit).

Traders can also make short trades (also known as sell trades), where they sell a Forex CFD at the ask price and, once the price drops, buy it at a lower bid price, and profit on the difference. In this case, if the GBP/USD ask price was 1.32265, and the trade closed at the price of 1.31203, the difference would be 0.01062, or 106.2 pips (which would amount to 1,062 USD in profit).

 

Low Costs of Forex Trading

Due to Forex CFDs being leveraged, traders can access large portions of the currency market at a very low margin – sometimes as low as 1/500th of the size of the market they want to access (based on a leverage rate of 1:500). There are few additional costs as well – most Forex trading accounts have little (or no) commissions, order fees, and account management fees. If there are any trading fees, these are usually a markup the broker has added to the spread.

 

Ease of Access

One of the greatest advantages of Forex trading is that it is one of the most developed financial markets in terms of technology. While many markets are accessible via old fashioned trading platforms, there is constant competition in terms of the software available for trading the FX market. The platforms offered by Admiral Markets include MetaTrader 4 (MT4) and MetaTrader 5 (MT5) and MetaTrader WebTrader. MT4 and MT5 are both available for Windows, Mac, Android and iOS devices (for iPhone and iPad).

In addition, Admiral Markets also provides traders with an enhanced version of MetaTrader, known as MetaTrader Supreme Edition. With access to all this software, Forex can be traded from anywhere in the world – and all you need is an internet connection. With online, web-based platforms, trading apps and desktop programs, modern Forex trading platforms are accessible for all traders and all trading styles.

In fact, you can start trading in a risk-free environment now with a free demo account!

 

How Can You Start Trading Forex?

If you’re still reading, your next question is probably, “How can I become a successful Forex trader?”

This is the main focus of the rest of this article – we’ll outline not only how you can start trading, but also some of the most popular trading strategies for making a profit on the Forex market, which exercise risk management. The first step, of course, is getting set up to trade, which starts with finding the right Forex broker.

 

Questions to Ask to Find the Right Forex Broker

When it comes to choosing a Forex broker, it can often feel like an overwhelming choice, with countless options available. Here are the top criteria you should consider when making your choice:

 

1. Is the broker regulated?

It might surprise you to learn that the Forex market doesn’t have a central regulator. However, that doesn’t mean you should choose a broker without considering the question of regulation. Instead, we recommend choosing a broker that is regulated by the financial regulator in your area. This would be the FCA (Financial Conduct Authority) in the UK, CySEC (Cyprus Securities and Exchange Commission) in Cyprus, ASIC (Australian Securities and Investments Commission) in Australia or SEC (Securities and Exchange Commission) in the US. A good broker will usually be proud of their licensing and will use this as a selling point.

 

The benefit of choosing a regulated broker is that this will ensure that you, as a trader, are protected to the full extent of the law in your country. For instance, in 2018 the European Securities and Markets Authority (ESMA) introduced a range of legislation protecting retail trading clients, which all European Forex brokers must abide by. This legislation includes limits on available leverage, volatility protection, negative balance protection and more.

If you would like to learn more about the ESMA legislation, we have several special webinars on the topic that you can access via the following links:

 

ESMA, Retail, Professional, Leverage & Margin – CFD Regulation in the EU from August 2018

CFD Trading Strategies After ESMA: Day Trading Live With New Leverage

New ESMA Regulation and Scalping: How To Go Ahead with Forex & CFD

It’s also important to consider the security of your funds. With this in mind, we recommend choosing a broker that segregates their clients’ funds from their own, which ensures that the broker cannot use your deposits for any of their own financial activities. It also ensures that your funds will be available for withdrawal upon your request. Finally, check whether the broker offers a financial services compensation scheme. This defines the amounts of funds that will be compensated to you in the extreme case that your broker or its bank is going bankrupt.

 

2. What is the quality of the broker’s trading service?

The service of the broker you choose, and the platform they offer, is essential in ensuring that you achieve the best trading results. If you were trading on a system that was slow and regularly crashed, for example, you might not be able to enter or exit a trade at the price you want. Instead, it’s important to look for a broker that offers high levels of liquidity, low spreads and the ability toexecute orders at the price you want (or as close to this as possible).

Another element of the service provided is the margin requirements and level of leverage available. While there is no need to choose the highest level of available leverage when you start trading Forex, simply knowing that a broker offers the highest level of leverage approved by their regulator means that, as your experience grows, you can start to increase your leverage according to your preferences.

 

3. What is the cost of trading?

As Forex trading can be an income-generating activity, it’s important to treat your trading as a business activity – one where you consider both how to maximise your income, how to minimise your costs, and how to minimise the risks. With this in mind, make sure to consider the costs of trading with any Forex broker, before you ultimately select one.

Areas to think about include:

The size of their spreads: We’ve already discussed how the size of the spread influences your potential trading profits, as any currency pair needs to cross the spread before a trade will become profitable. With this in mind, look for a broker that offers low spreads.

Commissions: Ideally you should choose a Forex broker that doesn’t charge commissions, as commissions will cut into your potential profits.

The minimum deposit: Many Forex brokers will ask traders to make a minimum deposit when opening a live trading account, so it is best to find one with the lowest amount of requirements. Admiral Markets offers a minimum deposit of €200.

While searching for the cheapest Forex broker, it really comes down to a combination of spreads, execution quality, commission, and the minimum deposit. These should be the last points you consider when opening a long-term trading account. The best Forex broker for beginners depends on elements like the trading system, the quote feed, instrument portfolios, execution models, and the leverage offered.

 

4. What products and markets do they offer?

When choosing a Forex broker, obviously you will want to make sure they have access to a wide range of currency pairs, including majors, minors and exotics. But what about other financial instruments? If you are considering trading with a Forex and CFD broker, it’s a good idea to look into the other instruments they offer as well.

This will ensure that if you decide to trade stocks, indices, ETFs, commodities, cryptocurrencies and other instruments in the future, you won’t need to find a new broker to do so. Admiral Markets, for example, provides traders with access to over 7,500 financial instruments, allowing you to create a diversified trading and investment strategy from a single platform.

 

5. Which trading tools do they have available?

The quality of the trading tools a Forex broker offers can make a big difference to your trading experience. In most cases, the available tools will depend on the trading platform (or platforms) being used. For instance, Admiral Markets offers trading through the state of the art MetaTrader 4 & 5 Supreme Edition plugin, which include a range of custom tools and add-ons to improve your trading experience.

 

6. Does the broker’s offering suit your trading style?

It’s important to consider whether a Forex broker and their trading platform will suit your trading style. For example, you might be interested in following a Forex scalping strategy, which involves making a high volume of small profits on small currency movements. In this case, you would need to ensure that any potential broker has minimum distance between the market price and your stop-lossand take-profit.

Or, if you are new to Forex trading, you might not be comfortable using the maximum leverage the broker offers. With this in mind, check whether the broker allows nominal leverage – where you can choose the amount of leverage you use in your trading, anywhere up to the maximum limit.

 

7. Do they offer education and support?

Finally, consider whether the Forex broker offers education and support. Ongoing education is essential to a Forex trader’s development and achieving the best results. This is why Admiral Markets offers a range of free articles and tutorials, webinars and online courses, including Forex 101 and Zero to Hero. In addition to educational content and materials, it’s also important to consider the availability of support, so you can get your questions answered, and any potential issues dealt with.

In particular, you should look for a Forex broker that has a major presence in your country or, at a minimum, offers phone and email support in your language. A broker with an efficient customer enquiry and complaints procedure will ensure that if an enquiry is filed by a Forex trader and cannot be resolved within a few hours, it is immediately forwarded to the customer support desk or compliance department.

If you would like to explore this topic in more detail, why not check out our in-depth guide tochoosing the right Forex and CFD broker?

 

What to Look For in a Forex Trading Platform

Alongside choosing a broker, you will also be researching the Forex trading software and platforms they offer. The trading platform is the central element of your trading, and your main working tool. It is an essential piece of the puzzle, as the best Forex tools can have a significant impact on your trading results. So, what should you be looking for when considering your options?

When assessing a Forex trading platform, ensure it includes the following elements:

Reliability: Is the trading platform reliable enough for you to achieve the trading results you want? Being able to rely on the accuracy of prices quoted, the speed of data being transferred, and fast order execution is essential to being able to trade Forex successfully, particularly if you plan to use very short-term strategies like scalping. The information must be available in real time, and the platform must be available at all times when the Forex market is open. This ensures that you can take advantage of any opportunities that may present themselves.

Security: Will your funds and personal information be protected? A reputable Forex broker, and a good Forex trading platform will have measures in place to ensure the security of your information, along with the ability to backup all key account information. They will also segregate your funds from their own funds. If a broker cannot demonstrate the measures they will take to protect you and your account balance, it would be best to find another broker.

 

Independent account management: Any Forex trading platform should allow you to manage your trades and your account independently, without having to ask your broker to take action on your behalf. This ensures that you can take action as soon as the market moves, capitalise on opportunities as they arise, and monitor any open positions.

 

Analysis: Does the platform provide in-built analysis?, or offer the tools for you to conduct technical and fundamental analysis independently? Many Forex traders make trades based on technical indicators, and can trade far more effectively if they can access this information within the trading platform, rather than having to leave the platform to find it. This should include charts that are updated in real time, and access to up-to-date market data and news.

Automated trading functionality: One of the benefits of Forex trading is the ability to open a position and set automatic stop loss and take profit levels, at which the trade will close. More sophisticated platforms should have the functionality to carry out trading strategies on your behalf, once you have defined the parameters for these strategies. A good trading platform will allow this level of flexibility, rather than requiring a tr
ader to constantly be monitoring any trades.

 

At Admiral Markets, our platforms of choice are MetaTrader 4 and MetaTrader 5, which are the world’s most user-friendly multi-asset trading platforms. Both platforms are accessible across a range of devices including – PCs, Macs, iOS and Android devices and web browsers via the MetaTrader Webtrader platform for MT4 and MT5. These are fast and responsive platforms, providing real time trading data. Additionally, these platforms offer automated trading options and advanced charting capabilities, and are highly secure.

 

MetaTrader 5, which is the most recent version of the trading suite and has a range of additional features, which include:

Access to thousands of financial markets

An expanded Mini Terminal, offering complete control of your account with a single click

38 built-in trading indicators

The ability to download tick history for a range of instruments

Real volume trading data

Free market data, news and market education

Bonus trading widgets with MetaTrader Supreme Edition

To get started with MT4 and MT5, here are some helpful articles:

The Ultimate MetaTrader 4 ‘How To’ Guide

Everything You Need to Know about How to Open Live and Demo MetaTrader 5 Accounts

Our Guide to MT4 & MT5 Shortcuts

 

Should you buy Forex trading software?

While Forex trading for beginners or professionals will always require software, the level of competition between brokers means that most Forex trading software is available for free. Many Forex trading beginners are also tempted to purchase FX robots, also known as Expert Advisers (EAs). While some EAs can be helpful, it can be hard for them to remain profitable when the market changes. Unless you understand the code it’s written in, you’re probably not going to be able to adapt your EA to work with those changes. If you are one of the many traders who believe that an EA would outperform the market, then perhaps you should give it a try with the MetaTrader Supreme Edition plugin. And perhaps best of all, we offer EAs free of charge for traders!

 

How Can You Start Trading Forex? Open a Free Demo Account!

If you are keen to start trading, a risk-free way to learn the fundamentals and test out new skills is by opening a Forex demo account. A demo trading account gives you the opportunity to trade on Admiral Markets’ 7,500+ trading instruments, including our 40 CFDs on Forex currency pairs, in real market conditions, without spending any of your money. Simply put, you will have access to virtual funds that you can use to make trades in a demo environment, making this the perfect way to put your knowledge to the test.

 

How to Manage Your Risk When Trading Forex

Before you make your first trade, it’s important to consider how to effectively manage your risk in the Forex market. As we’ve already discussed, trading Forex CFDs gives you the opportunity to trade using leverage, meaning you can use a relatively small deposit to access a larger portion of the market (up to 500 times the value of your account balance, if you’re a Professional client). This then multiplies your potential profits to the same extent. However, it also multiplies your potential losses.To use an extreme example, imagine holding an account balance of 2,000 EUR and putting all of that on a single trade. If the trade goes badly, you will have lost your entire investment, and because the Forex market can move very quickly, losses can also happen very quickly. This is where risk management is essential – to help you minimise losses and protect any profits you do make. The key areas to consider when managing your Forex trading risk are trading psychology, and money management.

 

Master Your Trading Psychology

While it might sound strange to discuss the topics of mindset and psychology in a guide to Forex trading, the truth is that these are some of the most important factors separating successful traders from unsuccessful traders.

Developing trading discipline and the ability to manage your emotions will help you remain cool under pressure, entre trades at the right time, and to know when to exit those trades – whether you are cutting your losses, or taking your profits before the market turns.

Some key trading psychology tips to keep in mind include:

Stay calm: As exciting as trading can be, it is still stressful work. There will be a lot of setbacks on your way to the top. Emotions can force your hand to open a trade too early and/or close it too late. The main cause of stress for beginners in trading is the fact that some Forex trades will end in loss no matter what – it’s just the way the market is. Just remember that war is not won with a single battle. Rather, it is overall performance that counts.

Understand your risk tolerance: Every person has a different level of risk tolerance, and this will influence the size of the chances they take, the losses they are willing to experience, and the psychological effect of them. To manage your stress levels while trading, it’s important to consider your level of risk tolerance in advance, and choose trading strategies that support this. For instance, someone with a low risk tolerance would be more comfortable making lots of small trades over time and letting the small profits from each trade add up. By contrast, someone with a higher tolerance for risk would be more willing to make larger trades, with the opportunities for larger gains (but larger losses as well).

Set realistic trading goals: It’s important to be realistic with your trading expectations, as this will help you assess the best times to open and close trades. Many new Forex traders have very high expectations about their potential profits, and this causes them to trade very aggressively, with large sums of money and fast decisions. Again, start small to test your knowledge and skills, and as you start to reliably achieve the results you want, you can set bigger goals.

Set your limits in advance: Before embarking on any Forex trade, you should have defined the price at which you’ll open the trade, the price at which you will close it and take your profits, and the price at which you will close it, should the market turn unexpectedly, thereby cutting your losses. Then, once you have set those limits, it’s important to stick with them! Many new traders choose not to close a trade because the market is still moving in the direction they want it to, only to then lose all of their gains when the direction suddenly changes. If your trade hits your predetermined target, close it and enjoy your winnings. If the market moves in the opposite direction, close the trade or set a stop loss so it will close automatically.

Prepare for the worst: While this might sound pessimistic, in Forex trading it is better to prepare for the worst than expect the best. There have been many times in history when financial markets and individual trading instruments have experienced sudden spikes or drops in value. By considering the worst possible outcome of a trade, you can take measures to protect yourself, should this happen, such as by setting a stop loss in advance.

You can learn more about how to master your trading psychology in our article 10 Golden Rules of Trading Discipline.

Money Management in Forex

Managing your money in Forex trading comes down to the specific measures you use to increase your profits, whilst also minimising potential losses. Successful Forex trading has far more to do with effective money management than having a handful of good trades, and is one of the secrets that separates those who successfully trade FX over the long term, from those who give up after a couple of trades.

For the moment though, here are some money management fundamentals to guide your trading:

Decide how you will finance your trading in advance: Only one kind of money is good for investing, and that’s the kind that you are willing to lose, and preferably without damaging your physical and/or mental wellbeing in the process. Every profitable trader is profitable in their own way, while every loser experiences losses exactly the same way. Remember, use every available opportunity to learn. It’s a never-ending pr
ocess!

Define your investment level: One of the most common questions about trading Forex is ‘how much do I need to start trading?‘ For beginner traders, it’s a good idea to start small and work your way up. Fortunately, many Forex brokers have reasonable minimum deposit levels for opening an account. At Admiral Markets for example, the minimum deposit amount is $200. Be wary of any brokers offering bonuses for certain deposit levels, as these might be scams, where it is very difficult to withdraw your money in the future.

Calculate your risk: Make sure to calculate your risk before you trade. If the potential profits of a trade are smaller than the potential risks, the trade probably isn’t a good decision. You can assess your risk with our free Forex calculator.

Determine the profits required to cover any losses: Along with calculating your risks before any trade, it’s also worth calculating how much you would need to make to regain those funds in any future trade. It’s often harder to earn money back than it is to lose it, simply because your remaining investment pool is smaller, which means you have to make a larger profit (percentage wise) to break even. For example, if you invested 5,000 EUR and lost 1,000 EUR, you will have lost 20% of your balance, leaving you with a final balance of 4,000 EUR. To bring your balance back to 5,000 EUR, you will need to make a profit of 1,000 EUR. However, with a starting balance of 4,000 EUR (after the previous loss), there is now a 25% gain, rather than a 20% one.

Amount of account balance lost

Necessary return to restore original account balance

Percentage Difference

10%

11%

1%

20%

25%

5%

50%

100%

50%

75%

400%

325%

90%

1,000%

910%

Start with small trades: To help you manage your risk and preserve your capital, start by trading small sums of money, rather than taking big risks with a large portion of your account balance. For instance, in the previous example, if you put your entire 2,000 EUR account balance on a single trade, it would be easy to lose it all. By contrast, if you just traded 20 EUR, a loss would not significantly affect your account balance. It would provide you with the opportunity to learn from your experience and plan your next trade more effectively. With this in mind, limiting the capital you are prepared to risk to 5% of your account balance (or lower) will put you in a better position to continue trading Forex (and improving your technique) over the long term.

Risk Management Tools and Techniques

Once you have mastered your trading psychology and money management, there are a number of trading techniques you can apply to further reduce your risk:

 

Diversify your portfolio: We all know the saying, ‘don’t put all your eggs in one basket’, yet many new FX traders do this when it comes to their trading. Just as it isn’t wise to put all of your funds into a single trade, relying on a single currency pair increases your level of risk, because if the pair moves in a different direction to what you expect, you could lose everything. Instead, consider opening a number of small trades across different Forex pairs. You could even consider trading other CFD instruments as well, such as shares, indices, commodities, cryptocurrencies and more, as these will further diversify your trading portfolio.

 

Use leverage wisely: As we’ve already mentioned, Forex CFDs allow you to trade on a margin, or by using leverage. However, just because 1:30 (or 1:500) leverage is available, it doesn’t mean that you need to use it. At Admiral Markets, while there is a maximum amount of leverage available to our clients, they are still able to choose the amount of leverage they use when they are trading, which may be anything up to that amount. For instance, after assessing your risk, you might decide that the potential costs of trading with a 1:30 level of leverage are too great, and you are more comfortable with 1:5. Choosing a lower nominal leverage will help you to manage your risk effectively, especially if you are new to Forex trading.

 

Focus on the long term: The initial stages of your trading should be about preserving your capital – not trying to grow it. Minimising risk is the primary objective. One way to possibly achieve this is by utilising a long-term trading stance. What casual Forex trading beginners often fail to realise is that the most successful traders try to make a return on their investment based on long-term trends. They often hold their orders open for weeks, months and even years at a time. This way, Forex works as an investment rather than a lottery.

 

Use a stop loss: A stop loss is tool that traders use to limit their potential losses. Simply put, it is the price level at which you will close a trade that isn’t moving in your favour, thereby preventing any further losses as the market continues to move in that direction. You can also use a stop loss to conserve any profits you might have already made – the tool to achieve this is known as a ‘trailing’ stop loss, which follows the direction of the market. For instance, if you opened a long trade on the GBP/USD currency pair, and the pair increased in value, the price limit at which the trade should close (the stop loss) would climb alongside the price of the currency pair. If the value of the GBP/USD then started to fall, the trade would be closed as soon as it hit your stop loss, preserving any profits you had made beforehand.

Continue your Forex education: The markets are constantly changing, with new trading ideas and strategies being published regularly. To ensure you continue to develop your trading skills, it’s important to stay on top of your trading education by regularly reviewing market analysis and by learning new trading strategies. For more trading education, take a look at our Forex and CFD webinars, which are designed to grow your knowledge as you start and continue to trade.

 

How to Analyse the Forex Market

While some new Forex traders might experience beginner’s luck, and open a trade on the right currency pair in the right direction, this luck rarely lasts. For long-term trading success, a trader needs to be able to make informed trading decisions, and these decisions are a result of analysing the market.

Analysis is absolutely vital to trading. Charts are helpful for both short and long-term trading. You should be looking at daily, weekly, and monthly charts. Fortunately, there are a number of different approaches to Forex analysis, which means every trader can find the right approach for them. The three broad categories of Forex analysis are fundamental analysis, technical analysis and wave analysis.

 

Fundamental Analysis

This form of analysis involves look keeping track of real-world events that might influence the values of the financial instruments you want to trade. For instance, the value of the Australian Dollar might fluctuate following a Reserve Bank of Australia interest rate announcement, which will then affect the movements of all currency pairs including the AUD.

The seven economic indicators that have the greatest impact on the Forex market are:

Gross domestic product (GDP)

The number of jobs outside the agricultural sector (known as Non-Farm Payrolls, or NFP)

The rate of unemployment

The index of industrial production

Retail sales

Orders for durable goods

 

The interest rates of national banks (such as the European Central Bank or the US Federal Reserve)

There are then three possible scenarios following an economic publication or announcement:

No reaction, implying that the market had anticipated the announcement

A strong movement in accordance with the economic data that has been made public (so if the announcement shares positive news, the instrument affected by this news will increase in value)

 

A strong movement against the economic data shared

The challenge is assessing which outcome is the most likely, and then opening a trade accordingly. A good starting point for this trading approach is first being aware of upcoming events that may affect the Forex market (refer to our live Forex calendar for the latest events) and second, looking at the effect similar announcements had on different currency pairs in the past. You can learn more about fundamental analysis in our Introduction to Fundamental Analysis article.

 

Technical Analysis

While fundamental analysis focuses on what is happening in the real world, including economic, political, and business news and events, technical analysis largely focuses on what is happening in trading charts. Trading charts simply chronicle the price movements of different trading instruments over time, which allows traders to identify patterns in price movements and make trading decisions based on the assumption that these patterns will repeat in the future. For example, one trading chart format is the Japanese candlestick chart, which is formatted to emphasise high and low price points for certain time increments (these increments can be set by the trader in their trading platform).

The trader can then see:

The opening price for the period

The highest price point for the period

The lowest price point for the period

The closing price for the period

 

This information can then allow traders to make judgements regarding a currency pair’s price movement. For example, if a Japanese candlestick closes near the highest price for the period, that would imply that there is a strong interest on the part of buyers for this currency pair during that time period. A trader might then decide to open a long trade to take advantage of that interest.

 

Over time, common patterns emerge in the movement of the charts (and the formation of different candlesticks), which can then be used to predict potential future price movements and make the best trades based on these predictions. You can learn more about trading with Japanese candlesticks in these articles:

How to Read Candlestick Charts

Advanced Bullish Candlestick Cheatsheet

Advanced Bearish Candlestick Cheatsheet

 

Once a pattern emerges, this is known as a Forex indicator because it indicates that there is the potential to make a profitable trade. While there are a range of resources available online for learning about the best Forex indicators, your trading software should ideally have a range of built-in indicators that you can use for your trading, as is the case with MetaTrader 5’s indicators. You can learn more about technical analysis in our Introduction to Technical Analysis article.

 

Wave Analysis

Wave analysis, also known as Elliott Wave analysis, is a well-known method that analyses the price chart for patterns and the direction (trend) of a financial instrument. The method is based on historical movements in market prices, with the belief that history repeats itself. The reason for this is due to market sentiment, meaning that the market as a whole moves as a herd, and reacts in a similar way to similar events and announcements. In the Forex market, these reactions involve buying and selling currencies, which causes the prices of different currency pairs to fluctuate.

 

The theory follows sequences of five waves, or five up and down price movements which are then countered by a corrective 3 wave pattern in the opposite direction. The 5 impulsive waves are with the trend, whereas the 3 corrective waves are counter trend. In an ‘up’ move, there will be three up waves (movements 1, 3 and 5) and two down waves (movements 2 and 4). In a corrective down move, there will be 2 waves down (A and C) and 1 wave up (B). In a down move, the instrument will make 3 waves down which are separated by 2 waves up. The corrective up wave will have 2 waves up and 1 wave down. Following this, the instrument will make a ‘down’ move, with three down waves being separated by two up waves.

While this pattern does not take place every time prices move, traders can use this method as a guideline for whether or not to enter into or exit a trade by taking the following steps:

 

Determine how you will generate the Elliott Wave count, keeping in mind that the approach must be consistent for all ‘up’ and ‘down’ movements. Wait for a wave to begin. In many cases it is wise to wait until the end of the third or the beginning of the fourth movement in the wave, to ensure that the instrument is following the Elliott Wave price pattern.

 

Use a secondary indicator (or indicators) to confirm the trend.

Once you have taken these steps, you can enter into a trade with more confi
dence. If you would like to learn more about wave analysis, please read our Introduction to Forex Elliott Wave Analysisarticle.

 

6 Popular Forex Strategies

Now you know the what, the why, and the how of Forex trading. The next step to to create a trading strategy. For beginner traders, the ideal scenario is to follow a simple and effective strategy, which will allow you to confirm what works and what doesn’t work, without too many variables confusing things. Fortunately, banks, corporations, investors, and speculators have all been trading the markets for decades, which means there is already a wide range of Forex trading strategies to choose from. These include:

 

Forex scalpingScalping is a trading strategy that involves buying and selling currency pairs in very short increments – usually anywhere between a few seconds and a few hours. This is a very hands-on strategy that involves making a large number of small profits until those profits add up.

 

Intraday tradingForex intraday trading is a more conservative approach than scalping, with trades focusing on daily price trends. Trades may be open anywhere between one to four days, but usually focus on the major sessions for each Forex market.

 

Swing tradingSwing trading is a medium-term trading approach that focuses on larger price movements than scalping or intraday trading. This means that traders can set up a trade and check in on it within a few hours, or a few days, rather than having to constantly sit in front of their trading platform, making it a good option for people trading alongside a day job.

Forex hedging: Hedging is a risk management technique where a trader can offset potential losses by taking opposite positions in the market. In Forex, this can be done by taking two opposite positions on the same currency pair (e.g. by opening a long trade and a short trade on the GBP/USD currency pair), or by taking opposite positions on two correlated currencies.

 

The Forex martingale strategy: The martingale strategy is a trading strategy whereby, for every losing trade, you double the investment made in future trades in order to recover your losses, as soon as you make a successful trade. For instance, if you invest 1 EUR on your first trade and lose, on the next trade you would invest 2 EUR, then 4 EUR , then 8 EUR and so on. Please note that this strategy is extremely risky by nature and not suitable for beginners!

The Forex grid strategy: The grid strategy is one that uses buy stop orders and sell stop orders to profit on natural market movements. These orders are usually placed at 10 pip intervals and, by having these stop orders put in place, a trader can then automate this trading strategy.

To Conclude: Our Top Forex Trading Tips For Beginners

We have covered a lot of information in this article so, we’d like to conclude with an overview of our top Forex trading tips for beginners. If you take anything from this article, it should be these following tips:

 

1 – Do Your Research

Generally speaking, the less you know, the more at risk you are, and there is no limit to how much you can know or risk. An endless amount of information is available on the internet free of charge, like:

Educational videos on Forex exchange trading for beginners

Educational articles and tutorials

Forex trading seminars for beginners and professionals

Forex trading webinars

If you want to know how to learn Forex trading as a beginner, simply read as much as you possibly can, and always analyse what you read – don’t just take information in good faith.

 

2 – Test on a Demo Account or With Simulation Software

Every broker offers a demo account – whether you are a beginner or not, test every new strategy there first. Keep going until the results are conclusive and you are confident in what you are testing. Only then should you open a live account and use your strategy in the smallest volume trades available. Be sure to treat your demo account trades as if they were real trades. You may also useForex simulation software to simulate market conditions, and create an impression of a live trading session.

 

3 – Don’t Overcomplicate Things

Don’t overload your charts with indicators, or your strategy with handles or switches. The more complicated your trading strategy is, the harder it will be to follow, and the less likely it is to be effective. To find out how well a strategy performs on average in different markets, you need to carry out the necessary backtesting and research. Keeping it simple can be a real challenge, especially considering the multitude of supporting tools you can apply to your charts. Just remember – it’s not about the amount of tools at your disposal, but it is about being able to use a few tools in an effective way.

 

4 – Be Careful in Volatile Markets

Volatility is what keeps your trading activity moving. However, if you’re not careful it can also completely destroy it. When volatile, the market moves sideways, which makes spreads grow and your orders slip. As a beginner Forex trader, you need to accept that once you are in the market, anything can potentially happen, and it can completely negate your strategy.

For example, the crisis with the Swiss Franc in January 2015 ended business for many traders and brokers within hours of its occurrence. Admiral Markets have helped to minimise volatility risk for you by offering a package of advanced volatility trading settings to help you avoid the reefs of the financial markets.

 

5 – The Trend Is Your Friend

Whether you are a beginner trader or a pro, it is best to trade with what you see and not what you think. For example, you might think that the US dollar is overvalued and has been overvalued for too long. Naturally, you will want to short and you might be right eventually. But if the price is moving up, it does not matter what you think. In fact, it doesn’t matter what anybody thinks – the price is moving up and you should be trading with the trend.

 

6 – The Trade Is Open Until It’s Closed

A regular Forex trading beginner concentrates on opening a trade, but the exit point is equally important. If your trading strategy does not consider the mechanism of closing a deal, it’s not going to end well, and you’re much more likely to suffer heavy losses.

 

7 – Write Everything Down

A novice Forex trader must develop the mindset of a business owner. Every business requires a business plan, constant monitoring, and regular auditing. Jumping ahead without plans and processes is a sure-fire way to fail. Starting a trading journal is an absolute must.

Everyday, be sure to write the following:

Points for further research

Reasons to open or close a trade

Your achievements and mistakes

Keep your journal handy as a point of reference when analysing your activity. A journal ensures none of your actions are in vain. Analysis of good trades will boost your trading confidence and motivate you to push harder and go further. On the other hand, analysis of bad trades will help you to extract value and improve.

 

 

 

 

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