Training & Signals Service Provider. Trading Forex. How to trade in Forex Market Beginners guide

Transcription

1 Trading Forex How to trade in Forex Market Beginners guide

2 Welcome to Forex Trading Congratulations! You have taken your first step towards becoming a forex trader. We are pleased to provide you with this forex education book for beginners that will help you learn about the forex market Will give you some great tips and strategies for trading success. Education is the key to successful trading and with almost $4 trillion traded each day globally, the forex market is huge, exciting and captivating. Forex Hulk is training and signals service providers from some of the world s most profitable traders. We supply daily Forex signals via our subscription services delivered in Realtime directly to your inbox or SMS. We have a wealth of industry experience with our forex signals being generated by our team of analysts using proven trading strategies and technical analysis. The majority of our subscribers make our fee back in their first few trades! Why not go and check some of our results out on Instagram? You can do this via the Icon at the top of the page. We have generated over pips and counting so what are you waiting for? This time next week you will wish you had started today We support all of our traders with personal service to take their trading to the next level, we offer our service on various ways. So, happy reading and we look forward to support you on your forex journey with us. Feel free to ask us any question you might have about trading in FOREX us at : Service@ForexHulk.com For live demonstration and more information on our services and subscription visit our website

3 Contents Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Forex Basics Choosing Broker Opening Account Getting Started Fundamental Analysis Technical Analysis Pulling it together

4 Chapter 1 Forex Basics What is Forex Market? FOREX the foreign exchange (currency or Forex, or FX) market is the biggest and the most liquid financial market with the daily volume of more than $5 trillion. Trading on this market involves buying and selling world currencies taking the profit from the exchange rates difference. Forex trading can yield high profits, but it is also very risky. Everyone can participate in Forex trading Forex (or FX) stands for foreign exchange which a traveler will know as the currency that you buy when visiting another country. For example, you may sell euros and buy dollars for your trip to the USA. The online forex market is, however, 90% speculative, which means that you don t take possession of the actual, physical currency. Rather, you open and close deals and make either a profit or loss which gets reflected in your online account. Forex Market Working Hours Forex Market Hours. The hours during which forex market participants are able to buy, sell, exchange and speculate on currencies. The forex market is open 24 hours a day, five days a week. Because this market operates in multiple time zones, it can be accessed at almost any time. Below picture will show you there exact opening hours (GMT) as per Major currency Mover

5 Chapter 1 Forex Basics Why Forex Market? There are many benefits and advantages of trading forex. Here are just a few reasons why so many people are choosing this market: A 24-hour market No commissions Low transaction costs Can t Control Market Leverage Convenient There is no waiting time. From the Monday morning opening in Australia to the afternoon close in New York, the forex market never sleeps No clearing fees, no exchange fees, no government fees, no brokerage fees. Most retail brokers are compensated for their services through something called the BID/ASK Spread Later in lesson will explain more about Bid/Ask And spread The retail transaction cost (the bid/ask spread) is typically less than 0.1% under normal market conditions. At larger dealers, the spread could be as low as 0.07% depending on broker you choose Market cant be controlled or manipulated due to its huge volume not even central bank can control its vast portion In forex trading, a small deposit can control a much larger total contract value. Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum Online, anywhere, anytime, on the device of your choice. You have full control to monitor the status of your trades, modify the terms of your open deals, close deals, or withdraw profits

6 Chapter 1 Forex Basics What are currency Pairs? Some Of Major Currency Pairs A currency pair is the quotation and pricing structure of the currencies traded in the forex market; the value of a currency is a rate and is determined by its comparison to another currency. The first listed currency of a currency pair is called the base currency, and the second currency is called the quote currency Example If you are trading EUR/USD, Where as EUR is your base currency and is always valued as 1 and USD is your Quote Currency which will be fluctuating as market moves, Lets say EUR/USD live price So that means 1 EUR is 2 USD

7 Training & Signals Service Provider Chapter 1 Forex Basics How does one profit from trading in forex? Lets say you are travelling from Europe to New York and you had 1000 Euros you went to an exchange office and exchanged it to Euro and kept with you incase of an emergency, While exchanging you got a Euro at the rate of USD Which in total is 1000 EUR x USD = 2000 USD Europe Euro You went on holiday spent good week in New York and decided to go back home You went to same exchange office and asked to get your 2000 dollars exchanged back to Euro Profit 1000 EUR 2000 USD But now the exchange rate had been changed while you were on vacation and the new rate is USD per Euro Which in total is 2000 USD x EUR = 3000 This resulted in you profiting 1000 Euro by end of your round trip 3000 EUR New York USD

8 Chapter 1 Forex Basics What is a term called PIP in Forex? PIP stands for Point In Percentage. More simply though, a pip is what we in the FX would consider a point for calculating profits and losses. When trading a mini lot (10k units of currency), each pip is worth roughly one unit of the currency in which your account is denominated. If your account is denominated in USD, for example, each pip (depending on the currency pair) is worth about $1. After a PIP digit is called pipette Refer to Picture below Example EUR/USD is Quoted at And Quote moves up one PIP to EUR/USD at Vice versa Quote moves down one PIP to EUR/USD at That is considered one PIP movement UP or Down Calculating pips? Pips can later be converted by the quantity bought or sold Example : 1 pip can be 0.1$ in value 1$ In value 10$ in value depending on quantity size bought or sold

9 Training & Signals Service Provider Chapter 1 Forex Basics What is Leverage? The leverage is having the ability to control a large amount of money using none or very little of your own money and borrowing the rest. Different brokers offers different leverage size 100:1, 1000:1, 2000:1 Example To control a $100,000 position, your broker will set aside $1,000 from your account. Your leverage, which is expressed in ratios, is now 100:1. What is Margine? To control a $100,000 position, your broker will set aside $1,000 from your account. Your leverage, which is expressed in ratios, is now 100:1. You re now controlling $100,000 with $1,000. The $1,000 deposit is margin you had to give in order to use leverage Margin is usually expressed in percentage in your account Different brokers have different margin requirement You re now controlling $100,000 with $1,000.

10 Www. ForexHulk.com Training & Signals Service Provider Chapter 1 Forex Basics What is Spread? The difference between ASK and BID or (Buy and Sell) is called spread. It represents brokerage service costs and replaces transactions fees. Spread is traditionally denoted in pips Spread is also known as brokers profit Refer to picture below Example If you are trading EUR/USD, Where as EUR is priced at and The slight difference Between buy and sell is 0.7 which is spread. What Drives Prices in Forex? What makes price fluctuate As with any marketplace, the main factor behind changes in exchange rates is supply and demand. In the forex market there are however many other factors that cause prices to fluctuate as well. These factors may be of an economic, political or geographical nature. In forex terms these are called Fundamental analysis You will learn more about Fundamental analysis in upcoming lesson

11 Chapter 1 Forex Basics Is Forex Market Risky? As any form of investment there is certain amount of risk involved. Same way Forex market is considered very risky. It is completely in your control over how much you wish to risk in term to gain profit, Do not invest what you cant afford to lose. But on the other hand loses can be minimized by placing stop loss at certain price. We recommend practicing demo accounts before choosing to invest in live account Demo Account for practice? You can open demo account Free on almost all of the brokers found today. These demo accounts work just as real accounts so can practice exactly like real money with live quotes/prices. Demo accounts is good to practice your skills with Zero risk till you figure out way to make some dollars for you YOU SHOULD DEMO TRADE UNTIL YOU DEVELOP A SOLID, PROFITABLE SYSTEM BEFORE YOU EVEN THINK ABOUT PUTTING REAL MONEY ON THE LINE Do not lose your money!

12 Chapter 1 Forex Basics What are Brokers? A forex broker is an intermediary between you and the "interbank." If you don't know what the interbank is, it's a term that refers to networks of banks that trade with each other. Typically a Forex broker will offer you a price from the banks that they have lines of credit and access to FX liquidity. Firms that provide currency traders with access to a trading platform that allows them to buy and sell foreign currencies. A currency trading broker, also known as a retail forex broker, or forex broker, handles a very small portion of the volume of the overall foreign exchange market How much money do I need to open an live account? Money you need to open an account differs from brokers to brokers. It ranges from 25$ to 100$ minimum deposit depending on brokers we will discuss brokers in further more details in our upcoming lessons

13 Chapter 2 Choosing a broker Brokers Choosing the right broker and maximizing the services you get can be the foundation for successfully managing your investments Consequently, it is basic common sense that all traders should take their time when choosing their most significant business partner, the one that will support their trading aspirations going forward Trusting a broker Due to the popularity of Forex Trading over the past decade, hundreds, if not thousands, of new forex brokers have flooded the market, all seeking your patronage. Our desire is to help you find out exactly which one of these brokers is the right one for you, thereby avoiding a potential nightmare from ever happening before you even get started Of course, the first and most important consideration when selecting a forex trading broker involves determining whether or not your funds will be secure in the broker s hands. There are four aspects you want to examine to make sure your money is safe: Domicile, Regulation, Reputation, and Funding Domicile If the domicile of your forex broker is in a major country with well-developed financial regulation, this legal infrastructure can often help you recover your funds if problems arise. Sending your money to an online forex broker based in less well-regulated places like the Bahamas or Panama may not be in your best interests. Trying to exert your legal rights in a foreign jurisdiction can be a daunting task

14 Chapter 2 Choosing a broker Regulation The second security signal to check is whether the broker is regulated or not. You should be aware that opening an account with a forex broker who has taken the trouble to register with a regulatory agency Nevertheless, by having a regulatory agency involved, a certain amount of recourse exists for a broker s clients if the company files for bankruptcy or if other problems develop that put the return of your trading funds at risk. To conclude, you should always choose a regulated broker Reputation The third point to check out is the broker s reputation. Be sure to check the Internet for either favorable testimonials or continuing complaints about the brokers you have chosen for consideration. Especially look for reviews and comments where traders have had difficulties in withdrawing their funds. If you see evidence of this, don t waste any more time on this broker. Trust The fourth and last point when it comes to choosing a trusted broker involves the financial security of the broker. Your money will always be more secure in the hands of a forex broker with great financial backing. The broker should be well funded, or have a trusted owner or parent company. These supporting relationships are often disclosed on the broker s official web site on tabs like About Us or Press Releases. it is always a good idea to make sure one extra time

15 Training & Signals Service Provider Chapter 2 Choosing a broker Pay attention to account minimums How much you have to invest may slim down your choices. Initial deposit requirements at online brokerages go up to $1,000 or more. This is by design, for a few reasons. One, it s simply hard for brokerage firms to make money off small accounts Prioritize low commissions on the investments you'll use most Make sure no additional fees, commission or charges like below Annual fees Inactivity fees Extra charges for modifying trades Trading platform fees Extra charges for research and data

16 Chapter 2 Choosing a broker Recommending Broker We have done our research to make it easier for you to choose a broker. Below are the two top brokers we suggest you open an account with :- PLUS500 Plus500 is a very strong brand, as Plus500 is the main sponsor of Atletico de Madrid (2016 Champions League finalist, and La Liga champions) Below are highlights of choosing plus500. The company has high quality customer support Leverage of up to 1:300 Tight spreads No commissions Fast and reliable order execution Web and Mobile trading platform, App built-in registration and documents approval you don t have to send s Just attach the required documents and get them approved in day or two You can register now by clicking on their LOGO

17 Chapter 2 Choosing a broker Recommending Broker We have done our research to make it easier for you to choose a broker. Mentioned brokers are well reputed and offer good services along with most of the products etoro etoro is a social trading and Investing company that allows its users to watch the financial trading activity of other users, copy them, and to make their own trades Below are highlights of choosing etoro. The company has high quality customer support Award winning social network along with trading platform where you can meet and discuss trades, share you idea and opinions. etoro also offers Copy trades, where you can chose top traders and see their stats and copy them automatically Tight spreads No commissions Fast and reliable order execution Web and Mobile trading platform, You can register now by clicking on their LOGO

18 This is worth repeating so it shall be repeated. Before trading a dime of your hard-earned money, open up two or three demos and practice till you ready to invest and make money Training & Signals Service Provider Chapter 3 Opening An Forex Account How to open an Forex account After finding the right broker for you, you can open a forex trading account in three simple steps: Selecting an account type Registration Activating your account when opening a forex trading account, you d also have to choose whether you wanted to open a standard account, a mini account, or a micro account. When Registering for an account make sure to put in accurate information e.g. your name, phone number, address etc., You will have to submit paperwork in order to make deposit or fully activate your account. Make sure to keep your user name and password secure like your banks accounts. Make sure to put in accurate information (For example Your name should be exactly the same as of your passport or ID Card, license etc.) as this information will be reviewed to activate your account for deposits and withdrawals in your trading account. It usually takes less then 24hrs to review your documents and activate it for trading

19 Chapter 4 Getting Started Trading Platforms A trading platform is a software through which investors and traders can open, close and manage market positions. Trading platforms are frequently offered by brokers either for free or at a discount rate in exchange for maintaining a funded account and/or making a specified number of trades per month. There are three type of main trading platforms Web Trader Custom Trading Software META Trader Web trading platform is basically website based platform where you can manage your positions. Custom trading platforms are designated platforms designed for specific brokers Meta trader is most commonly used Trading platform by almost all the brokers I hope you guys practiced your desired platform and got use to it by demo trading and have a working strategy to put your money on. It is very important to know your trading platform before you start trading on how to execute new trades or modify orders

20 Chapter 4 Getting Started What does term Long & Short means? To go short on a currency means that you sell it, hoping for a decline in the market price. A short position is usually expressed in terms of the base currency. Remember that every FX trading position requires a trader to go long in one position while simultaneously going short in another Going long is basically hoping price to incline or increase in value compare to other currency as both currencies work as pair one go up while other goes does vice versa Long Short Example Buy Sell When you are anticipating for price of certain pair to go up is when you buy or go long on that pair When you are anticipating for price of certain pair to go down is when you sell or go short on that Pair Buy or Long : Price of EUR/USD at and you are anticipating price to go up to you place a buy order for it to be profitable once if reached you will be profiting 100 pips Sell or Short : Price of EUR/USD at and you are anticipating price to go down to you place a sell order for it to be profitable once if reached you will be profiting 100 pips

21 Chapter 4 Getting Started What does term Bear & Bull market means? A bull market is a financial market of a group of securities in which prices are rising or are expected to rise. The term "bull market" is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, currencies and commodities When price are inclining of a stock or pair is called bullish When price are declining of a stock or pair is called bearish Stop Loss And Take Profit It is important to know how to set stop-loss and take-profit in Forex, but what does a stop-loss and takeprofit actually represent? These two forms are the most significant elements of trade management. A stop-loss is determined as an order that you send to your broker telling them to limit the losses on a particular open position or trade. As for the take-profit or target price, it is an order that you send to your broker notifying them to close your position or trade when certain price reaches a specified price level in profit Learn to place stop losses strategically Learn more about Stop loss strategies on our website by clicking the link mentioned above

22 Chapter 4 Getting Started How long should I hold my position open? It depend on below three type of traders Scalping Day Trader Swing trading Position Trading The main objective for forex scalpers is to grab very small amounts of pips as many times as they can throughout the busiest times of the day These types of trades are usually only held onto for a few seconds to a few minutes at the most! If you are day trader, you usually hold your position open anywhere from a few minutes to a few hours and generally not longer than a day Swing trading is a longer term trading style that requires patience to hold your trades for several days at a time Position trading is the longest term trading and can have trades that last for several months to several years Above Trades also require sufficient fund management and trading style to master one of them in your case Chose one of the above and learn strategies based on them

23 Chapter 5 Fundamental Analysis Fundamental Analysis And Economical calendar? Fundamental analysis and Economical Calendar is a way of looking at the forex market by analyzing economic, social, and political forces that may affect the supply and demand of an asset Fundamental analysis can be defined as the study of a country s economic and financial performance in order to determine the fair market value and future direction of its currency Below are few important fundamental factors Interest Rates the forex market is ruled by global interest rates. A currency's interest rate is probably the biggest factor in determining the perceived value of a currency. So knowing how a country's central bank sets its monetary policy, such as interest rate decisions, is a crucial thing Inflation The rate of inflation in a country can have a major impact on the value of the country's currency and the rates of foreign exchange it has with the currencies of other nations. However, inflation is just one factor among many that combine to influence a country's exchange rate. Inflation is more likely to have a significant negative effect, rather than a significant positive effect, on a currency's value and foreign exchange rate.

24 Chapter 5 Fundamental Analysis Inflation Contribution to mortgage rates By definition, inflation causes the Currency to lose its value relative to global currencies Rising mortgage rates increase the inflationary pressure on the Economy of that region As a currency loses value of the things dominated in its region, currency. Currency falls, this includes mortgage bonds As mortgage bond price fall, mortgage bond yields rise. These bond yields are the basis for mortgage rates Mortgage backed bonds adding to market supply, this leads the market price of the mortgage backed bonds lower

25 Chapter 5 Fundamental Analysis Gross Domestic Product (GDP) A country s Gross Domestic Product is the value of all goods and services produced within a country in a given time period. It represents the health of a country s economy, which directly affects the strength of its currency.

26 Chapter 5 Fundamental Analysis Unemployment Rate The unemployment rate is basically the percentage of the people in the work force without jobs but is able and willing to work. It is measured by getting the ratio of unemployed people who are willing and able to work versus the total number of people in the work force They don t have jobs They are looking for jobs They are available to work Without people who work, there would be no economic activity. For this reason, unemployment is an important gauge of the health of a country's economy and the pace of its economic growth. This is what makes it important factor to watch Higher than expected unemployment (or lower than expected employment) normally causes the currency to weaken, while lower than expected unemployment (or higher than expected employment) usually results in a stronger currency.

27 Economical Calendar An economic calendar is used by investors to monitor market-moving events, such as economic indicators and monetary policy decisions. Market-moving events, which are typically announced or released in a report, have a high probability of impacting the financial markets. Training & Signals Service Provider Chapter 5 Fundamental Analysis Trade balance This number represents the difference between the value of goods and services that a country exports and the value that it imports them at a surplus occurs if the value of exports is greater than the value of imports, and a deficit occurs if the value of imports is greater than the value of exports It is in a country s interest to export more than it imports and thereby generate money that it can use to further its growth. Exports Imports = Trade Balance Speeches & Press conferences You should also closely follow the opinions of influential figures who vote on a country s monetary and fiscal policies. Look out for any hints of economic improvement or worsening, changes in policy stance, or anything that can signal the future of a country's economic state and affect the value of its currency If the message is dovish (pessimistic) this tends to hurt the currency, while a hawkish (optimistic) tone generally boosts the currency s value.

28 Training & Signals Service Provider Chapter 4 Technical Analysis Technical Analysis Technical analysis is the study of historical price movements by using charts in order to predict future price movements In its purest form, technical analysis considers only the actual price behavior of the market or instrument, based on the premise that price reflects all relevant factors before an investor becomes aware of them through other channels Types of charts There are three types of charts Line Chart Bar Chart Candlestick Chart Charts are drawn by Realtime quote prices and are saved for future relevance to determine future of price movements. Hence past movements does not guarantee same action movement in market. But is handy tool to investigate prices and predict market to some extent Reading charts can be confusing sometime keep your charts clean and easy to understand

29 Chapter 6 Technical Analysis Types of charts Line Chart A line chart is made up of a series of dots connected by a line Line charts are very basic and they do not provide a trader with much information. This is why most traders do not use line charts. Line chats are easy way to see broad movement of price without highs and lows.

30 Chapter 6 Technical Analysis Types of charts Bar Chart A bar chart is made up of a series of bars. These bars show opening price, closing price, as well as the high and low for the period of the bar. The top of the bar is the highest point the price reached and the bottom shows the lowest price that bar fell. The dash on the left shows the price the bar opened and the dash on the right shows the price the bar closed. Bar charts are also known as OHCL charts (Open, High, Close, Low). Bar charts provide you with much more information about a currency than Line charts

31 Chapter 6 Technical Analysis Types of charts Candlestick Chart Candlestick charts are very similar to the bar charts. However, most traders prefer the look of candlestick charts. Candlesticks have bodies unlike bars. Where the open dash and close dash are the top and bottom of the candlesticks body. It makes it a lot easier to see where the candle opened and closed. The different colored candle bodies represent whether the candle moved up from open or down Candlestick chart are the most commonly used chart by traders and we suggest you get familiar with it too

32 Chapter 6 Technical Analysis What time frame should I keep for my chart? This depends on your trading strategy and how long you like to keep your deals open for. Each Candlestick or Bar will represent your time frame duration before next candlestick or bar starts There are following time frames available to you 1 Min 5 Mins 15 Mins 30 Mins 1 Hour 4 Hour 1 Week This time frame is used for finding exit from a Opened/Running trade and not often used to enter trade or finding opportunity This time frame is used for finding exit from a Opened/Running trade and not often used to enter trade or finding opportunity This time frame is used to find short term entry in a trade and also used for finding exit from a Opened/Running trade This time frame is used to find medium term entry in a trade and also used for finding exit from a Opened/Running trade This time frame is used to find medium term entry in a trade This time frame is used to find long term entry in a trade This time frame is used to find long term entry in a trade and is not used by many daily traders 1 Month This time frame is used to find long term entry in a trade and is not used by many daily traders Work on your strategy and use above time frames to find your entry and exits for trading

33 Chapter 6 Technical Analysis Forex Chart Indicators A technical indicators are additional addons for your chart to improve your prediction. Indicator is a mathematical calculation based on historic price, volume, or (in the case of futures contracts) open interest information that aims to forecast financial market direction. These addons should be chosen to more accurately predict the market Spend some more time on demo accounts and trying few indicators List of commonly used indicators and how to use shown in diagram INDICATOR PARAMETERS RULES Bollinger Bands (30,2,2) MACD (12,26,9) Parabolic SAR (.02,.02,.2) Cover and go long when daily closing price crosses below lower band. Cover and go short when daily closing price crosses above upper band. Cover and go long when MACD1 (fast) crosses above MACD2 (slow). Cover and go short when MACD1 crosses below MACD2. Cover and go long when daily closing price crosses above ParSAR. Cover and go short when daily closing price crosses below ParSAR. Remember there is no such thing as best indicator, You will need to learn them, Combine indicator if necessary to best predict market Practice them to use them towards your advantage Stochastic (14,3,3) RSI (9) Cover and go long when Stoch % crosses above 20. Cover and go short when Stoch % crosses below 80. Cover and go long when RSI crosses above 30. Cover and go short when RSI crosses below 70

34 Chapter 6 Technical Analysis Bollinger Bands Indicator Bollinger Bands is one of the popular technical analysis tools, where three different lines are drawn, with one below and one above the security price line. Its specific period moving average is denoted as midline to form an 'envelope'. These lines show a band or a volatility range in which a particular security price is moving up or down. Volatility is shown on the basis of standard deviation for a particular security, which is denoted by upper and lower line/band, as standard deviation is a measure of volatility Cover and go long when daily closing price crosses below lower band. Cover and go short when daily closing price crosses above upper band

35 Chapter 6 Technical Analysis MACD Indicator MACD, stands for Moving Average Convergence/Divergence and was invented by Gerald Appel. It is one of the simplest indicators, yet considered quite reliable. It is considered particularly effective in wide-swinging markets. The MACD indicator is referred to as an oscillator, because the MACD curve swings back and forth across zero. The oscillator does not have any upper or lower limits The indicator is considered to identify an oversold situation when the MACD is falling and pulls away rapidly from its moving average. In that case, the exchange rate is expected to go up in the near future. Conversely, the indicator is considered to identify an overbought situations occur when the MACD is rising and pulls away rapidly from its moving average. In that case, the currency price is expected to go down in the near future Cover and go long when MACD Tiny Line Stay up Zero area and One line is longer then the previous Cover and go short when MACD tiny lines below zero area and one line is longer then the previous line downwards

36 Chapter 6 Technical Analysis Parabolic SAR Indicator SAR stands for stop and reverse and it is a trend following indicator, designed to identify the turning point in price action. The parabolic SAR is shown on the charts as a series of small dots that are placed either above or below the price. When the price is trending to the upside, the dots are below the price action and when the price is trending to the downside, the dots are above the price action It trails the price movement until the price move has finished and begins to reverse. As the price move comes to an end, the parabolic SAR moves steadily closer to the price until the price ends up touching the dots - the SAR then begins to form on the other side of the price, indicating that the price is changing direction When dots are below candle stick you go long as in buy and when dots are above candle stick you go short as in sell Wait for first three dots to be on same direction to confirm trend

37 Chapter 6 Technical Analysis Stochastic Indicator Filter forex signals so you are taking only those in the direction of the trend. Stochastic is a simple momentum oscillator developed by George C. Lane in the late 1950's. Being a momentum oscillator, Stochastic can help determine when a currency pair is overbought or oversold Momentum shifts directions when these two Stochastic lines cross. Therefore, a trader takes a signal in the direction of the cross when the green line crosses the red line Cover and go long when Stoch % crosses above 20. Cover and go short when Stoch % crosses below 80.

38 Chapter 6 Technical Analysis RSI Indicator the Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between zero and 100. Traditionally, and according to Wilder, RSI is considered overbought when above 70 and oversold when below 30 Cover and go long when RSI crosses above 30. Cover and go short when RSI crosses below 70 Indicators are addon on tools to your chart to best predict market trends / Directions thus doesn t guarantee to be 100% accurate, Do your research by combining or checking few indicators to further improve your market reading skills before entering into a trade

39 Chapter 6 Technical Analysis Support and Resistance Support and resistance represent key junctures where the forces of supply and demand meet. In the financial markets, prices are driven by excessive supply (down) and demand (up). Supply is synonymous with bearish, bears and selling. Demand is synonymous with bullish, bulls and buying. These terms are used interchangeably throughout this and other articles. As demand increases, prices advance and as supply increases, prices decline. When supply and demand are equal, prices move sideways These should be studied in your main chart of candle stick despite the indicator tools addons Support and resistance are used to determine whether uptrend is broken when price crosses support downside. And whether downtrend is broken when price cross resistance the price falls below a support level, this is also a trade signal. It shows that sellers are still stronger than buyers, and may prompt buyers to close their trades and more traders to sell even more, Same way it shows buyers are stronger and when the resistance level is broken and more traders are likely to give up their sell side making buy even more stronger thus starting uptrend.

40 Chapter 7 Pulling it together Trends Trend is basically which direction market moving in period of time. Trend is your friend finding trend accurately is the key to success. Buy or Sell? Forex market is all about finding when to buy or sell. You need to find whether you will buy a pair or sell pair to make profit out of it. Whether to chose between buying or selling itself is 50 / 50 % odds of getting it right just by randomly choosing if to go long or short. But we can improve our odds by Fundamental analysis, Technical analysis using indicators and additional tools. Emotions in Forex Understanding the nature of the forex market, knowing how to apply fundamental and technical analyses, and being able to assess the direction of a trend are necessary skills for every trader. However, one of the most important, yet also most overlooked aspects of trading is related to emotions. Successful traders are aware of their emotions while trading and have learnt how to be disciplined and make rational rather than emotional decisions. The two factors that cause most damage are FEAR of Losing a trade while in profit and Hope of price going back to zero or profit zone while in loss It may also prevent them from taking advantage of a good trading opportunity. Plan your trade and trade plan. Do not just trade on your guts,

41 Chapter 7 Pulling it together Demo trade Forex Until you find a working strategy Its wise to repeat it over again to work on demo as long as you can till you find out a working strategy that actually makes profit. Remember forex doesn't play by the rules and might some time go against you weather you have done your home work on analyzing market. This is why it is important to built a working strategy that can profit and grow your account as a whole. Discipline in Forex Once you have defined a method or a system that works for you, Set your objectives. It is important to stick to the levels you selected for your stop loss and your take profit, always targeting a larger profit than the amount you are willing to lose. Adding to your margin and moving your stop loss further is likely to result in larger losses. Your stop loss should be placed at a level where you can accept that the market has moved against you and you are willing to take the hit. you should only risk what you can afford to lose. So be realistic with the stop loss and take profit limits you set. Be Patient Be patient, and wait for trends to form and give you good trading opportunities. because trading can be so exciting, new traders want to trade all the time. But this over-trading and not in best interest.

42 Chapter 7 Pulling it Together Risk Warning Trading on forex market involves substantial risk, Including complete possible loss of your finds and others losses and is not suitable for everyone. The High degree of leverage can work against you as well as for you, before deciding to participate in the forex marked, you should carefully consider your investment objective level of expertise and risk appetite. Most importantly, do not invest money you cannot afford to lose you should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts -: The End := Make sure to like our social media and also visit our website for new offers and subscriptions We wish all the best and successful trading Good luck Team Forex Hulk