After the correction finally completes, we have another three impulsive moves down with the first two of them followed by small corrections. With this direction in mind we then go to the smaller timeframe chart and wait for a pattern to form. If the pattern is broken on the upside, we do not trade it as our direction is down and we only look to sell at this moment.

As I said before, the direction or trend on the bigger timeframe shows us who is in control, which of the buyers and sellers have more power and conviction to drive the price to new levels.

If the direction is up, that means that the buyers are in control, they have won the war with the sellers, they are the majority and they will drive the price up. We go with them, with the majority because it is much easier to trade profitable this way.

Remember what I said in the beginning, the more people that do the same thing you do, the more chances of success. We do not trade against the majority. The same thing applies to the sellers as well. We only look to sell. Here we have first two impulsive moves down after which we only look to sell, the third big move goes all the way up above the start of the previous move so it is not a correction, it becomes an impulsive move as well.

We look to buy as the direction has changed. After this, we have another two impulsive moves up followed by another change in direction from up to down when that last impulsive move down goes bellow the start point of the previous. This is simple to do, just go to any chart and you will see that you can easily identify the last big move. Okay, now that we know how to identify the direction of our future potential trades let us turn our attention to the price patterns.

Price Patterns They are formations that happen all the time in your charts and they give us very important clues about what is going on between the buyers and the sellers. There are two major categories of patterns: continuation and reversal patterns. The reversal patterns signal that a trend change is about to happen while the continuation patterns suggest that the market is only pausing for a little while before the current trend resumes.

As this is a trend following day trading system, we will only use the continuation price patterns. The most popular and reliable continuation patterns are the following: flag pattern, pennant pattern, rectangle pattern, symmetrical triangle, ascending triangle, descending triangle patterns, cup with handle pattern, the price channel pattern and the wedge pattern. Next, we will discuss in detail each and every one of them so you will have a clear understanding of how to manage these patterns.

Flag and Pennant These two short-term continuation patterns are very frequent in the forex market. They mark a small consolidation period before the previous move resumes. In order for these patterns to be valid there has to be a sharp advance or decline preceding them. Let us see an example of a flag: As you can see in the picture above, the flag is a rectangle pattern that slopes against the previous move.

The flag in the chart above is actually not a typical one because it develops small highs and lows that you can connect with the two parallel lines. When this is the case, and you do not have any small highs and lows, you just need to see if you can contain the price within two parallel trend lines. You can see that price spiked down a little bit out of the pattern but it quickly rose back up again honoring the pattern. This is just a very short spike down; if price comes back quickly inside the pattern, you can disregard it easily.

Now let us find out what is happening from the buyers and seller point of view when this pattern occurs. Well, as discussed before, this flag pattern does not work unless it is preceded by a sharp move. In the example above the sharp move up clearly shows us that the buyers have taken control of this pair because they make a strong impulsive move up.

The actual flag itself means that the same buyers that drove the price sharply up are starting to take profits with their buy orders, they are closing part of their buy order.

The sellers on the other hand, when the flag pattern occurs, are not inclined to sell at that level. They can see that the buyers have won the short-term war; they know that buyers are very strong and will outnumber them at this level so they are not convinced at all to sell here. They prefer to wait for a better level, a higher level for them to sell, a higher level where the buyers will not be interested to buy anymore. As you can see, after the flag the buyers drove the price sharply up again.

Ok, let us move on to the pennant pattern. The pennant shares the same characteristics with the flag pattern except for the shape.

It is a small symmetrical triangle that begins wide and converges as the pattern matures. The slope of the patterns should be neutral. Let us see an example: We have a sharp decline followed by a pennant pattern after which the sellers push the price further down.

Like with the flag, the pennant is short in duration so it usually does not form its own highs and lows, in this case you just have to contain the price within two converging trend lines with a neutral slope. The logic behind the pattern is the same as with the flag.

The sellers start to take profits after that sharp decline, the buyers know that the sellers are strong and will push the price down so they stay out at that level. The difference in shape is given by the dynamics of the profit taking by the sellers.

If with the flag pattern, the price goes smooth and slowly against the previous move, suggesting traders are only taking small profits, in the case of the pennant, we have a more aggressive profit taking hence the shape of the pattern. Rectangle The rectangle is a common continuation pattern that signifies price is consolidating before resuming the trend.

Price goes up and down in a tight range forming highs and lows. The highs can be connected with a horizontal line; the lows can be connected with a horizontal line. Let us see an example: You can see that after a sharp move up price started to consolidate before resuming the previous move. It trades in a range, makes short up and down moves creating highs and lows that you can connect with horizontal lines.

For a rectangle pattern to be valid, it has to have at least two highs and at least two lows. The rectangle in the above chart has two lows and three highs.

It is a rectangle indeed. As this is a continuation pattern and we only trade with patterns like this that signal that the trend is about to resume we only expect for a break of the pattern in the direction of the last impulsive move on the 4h chart. If in this case, the last impulsive move had been down, we would have had to disregard this pattern because it breaks on the upside; it is not in line with the 4h chart. As I said before, this is not something you can worry about, forex is not exact science, and the patterns rarely do look like in textbooks.

As long as the price quickly retraces back inside the pattern and the respects again the first high creating a horizontal resistance line as it did in this chart, things are more than okay. The logic behind this pattern is the following. It doesn't use technical indicator of any kind. It also has very well defined entry,stop loss and exit rules that enables the trader to make the maximum out of every trade Learning and applying this forex day trading system is all you have to do to become profitable consistently.

You can read the sample and if you require further details feel free to contact me at [email protected] E-Book Information Year: 2, Pages: 33 Language: English Asin: BHJH8O2 Org File Size: , Extension: epub.

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Our Forex trading PDF, it is widely believed that forex is one of the biggest and most fluid or liquid asset markets in the world. Sometimes referred to as FX, currencies are traded 24 hours per day — 7 days per week. In simple terms, refers to the process of exchanging one currency to another — and generally speaking, this will be for tourism, commerce, trading and many other reasons.

In this forex trading PDF we are going to talk about what forex trading is and some of the commonly used terminology in the industry. Essentially, it is the action of selling or buying foreign currencies. Of course, these are all used by banks, corporations and investors for a variety of reasons like profit, making a trade, exchanging foreign currencies and tourism.

One of the major benefits with forex trading is that after opening a position, traders are able to put in place an automatic stop loss as well as at profit levels this closes the trade. The forex market is a place to buy or sell against each other a variety of national currencies, globally. Wherever two foreign currencies are being traded, you can be sure that a forex market exists regardless of the time zone.

In this section of our forex trading PDF, we are going to run through some of the most commonly used forex trading terminologies in the industry. The pip represents the smallest amount possible a currency quote can alter. For instance, 0. The differentiation between the sale price and the purchase price of a currency pair is known as the spread. The least popular least commonly used currency pairs usually have a low spread.

In some cases, this can be even less than a pip. When trading the most commonly used currency pairs the spread is often at its lowest. The total value of the currency pair needs to surpass the spread in order for the forex trade to become profitable. In order for forex brokers to increase the number of trades available to its customers, they need to provide capital in the way of leverage. Before you can trade using leverage, you must sign up to a forex broker and open a margin account.

Contingent on the broker and the size of the position, leverage is usually capped at if you are a retail client non-professional trader. Some offshore forex brokers will offer much more than this if you are seeking higher limits. It is because of the aforementioned example that you should exercise caution when using leverage. Should the worst possible scenario happen and your account falls below 0, you should contact your forex broker and ask for its policy on negative balance protection.

The good news is that all forex brokers which are regulated by ESMA the European Securities and Markets Authority will be able to provide you with this extra level of protection, ensuring that you never become in debt with your broker.

Margins are a good way for traders to build up their exposure. Put simply, in order for a trader to maintain position and place a trade, the trader needs to put forward a specific amount of money first — this is the margin. Rather than being a transaction cost, the margin can be compared to a security deposit. This will be held by the broker during an open forex trade. It is commonplace for forex brokers to give their customers access to leverage see above.

In order for you to lower your risk of exposure and offset your balance, you might consider hedging. This is a procedure which involves traders selling and buying financial instruments. When there are movements in currencies, a hedging strategy can reduce the risk of disadvantageous price shifts. The protection of this technique is often a short term solution. Traders often turn to hedge in a panic as a result of the financial media reporting volatility in currency markets.

This is usually down to huge events like geopolitical turmoil conflict in the middle east , global health crisis COVID and of course the great financial crisis of To counteract negative price movements, market players will tactically take advantage of attainable financial instruments in the market. This is hedging against risk in its truest form. Hedging will give you some flexibility when it comes to enhancing your forex trading experience, but there are still no guarantees that you will be totally protected from any losses or risks.

While it can take some time to get your head around heading in the forex markets, the overarching concept is that it presents both outcomes. That is to say, irrespective of which way the markets move, you will remain at the break-even point less some trading commissions.

More specifically, the spot trade is a spot transaction, with reference to the sale or the purchase of a currency. Essentially, spot forex is to both sell and buy foreign currencies. A good example of this is if you were to purchase a certain amount of South African rands ZAR , and exchange that for US dollars USD. If the value of the ZAR increases, you are able to exchange your USD back to ZAR, meaning you get more money back in comparison to the amount you originally paid. CFD is basically a contract which portrays the price movement of financial instruments.

So, without having to own the asset, you can still make the most of price movements, whilst also avoiding the need to sell or buy vast amounts of currency. CFDs are also accessible in bonds, commodities, cryptocurrencies, stocks, indices and of course — forex.

With a CFD you are able to trade in price movements, cutting out the need to buy them at all. This section of our forex trading PDF is all about forex charts. When it comes to a MetaTrader platform, traders can use bar charts, line charts and candlestick charts. You can usually toggle between the different charts, depending on your preferences, fairly easily.

The first record of the now-famous candlestick chart was used in Japan during the s and proved invaluable for rice traders. These days, this price chart is without a doubt one the most popular amongst traders all over the world. Much like the OHLC bar chart see below , candlestick charts provide low, high, open and close values for a predetermined time frame. Live forex traders love this chart due to its visual appearance and the range of price action patterns utilised.

This allows you to gain a better understanding of how live trading works before you take any big financial risks in the market. As the title suggests, this one is a bar chart, and each time frame a trader is looking at will be displayed as a bar.

In other words, if you are viewing a daily chart you will see that every bar equates to a full trading day. With this price chart, traders are able to establish who is controlling the market, whether it be sellers or buyers. OHLC analysis was the starting block for the creation of the ever-popular candlestick charts please further down.

It is a great tool for looking at the bigger picture when it comes to trends. The line chart arranges the close prices at the end of that time frame; so in this case, at the end of the day, the line will connect the closing price of that day. In this section of our forex trading PDF, we are going to talk about the different ways in which you can sell and buy a forex position as well as things to look out for.

When it comes to forex trading you can trade both short and long, but always make sure you have a good understanding of forex trading before embarking on trades. After all, forex trading can be a bit complex to begin with, especially when mixing long and short trades. In a nutshell, going long is usually a term used for buying. So, when traders expect the price of an asset to rise, they will go long.

When forex traders expect the price of an asset to fall, they will go short. This means benefiting from buying at a lesser value. To achieve this, you simply need to place a sell order.

The current exchange rate of a forex pair is always based on market forces. This will change on a second-by-second basis. As we noted earlier, you also need to take the spread into account, so there will always be a slight variation in pricing. For instance, if you exchange 1 USD for 17 ZAR, the sale and purchase price offered by your forex broker will be either side of that figure. The currency pairs with the most notable supply and demand attached to them will be considered the most liquid in the forex market.

The supply and demand aspect is thanks to the investment of importers, exporters, banks and traders — to name a few.

The most liquid currency pairs are therefore the ones in high demand. When you feel you are ready to take the plunge and begin live trading, you need to select a forex trading system. There is a vast amount of trading strategies for you to pick from. This is because investors, speculators, corporations and banks have been trading for decades. In this part of the forex trading PDF, we are going to explain a few of the strategies available to you.

If you want to buy and sell currency pairs from the comfort of your home or even via your mobile device , you will need to use a trading platform.

Otherwise referred to as a forex broker, there are literally hundreds of trading platforms active in the online space. This makes it extremely difficult to know which broker to sign up with.

In the below sections of our forex trading PDF, we explain some of the considerations that you need to make. You should also look out for analysis tools available to you. In some cases, this might be embedded, while some offer tools such as technical analysis and fundamental analysis. This is because it will save you a lot of leg work having to move between different sites and sources of information.

Some of the fastest and easiest trading platforms are MetaTrader 5 MT5 and MetaTrader 4 MT4. Crucially, both MT4 and MT5 are fast and receptive trading platforms, both providing live market data and access to sophisticated charts. It is essential before you begin trading seriously that you fully trust the trading platform you intend on using.

This is especially the case if you intend on using a scalping strategy, for example. However, if you like to trade, it is vital for your peace of mind and your finances that you are fully confident with the fast execution of data transfer. This is also the case with the precision of quoted prices, and the speed of order processing. All of these things are going to help you to have a successful forex trading experience.

To enable you to make the most of new opportunities, the ideal forex broker will be available to you 24 hours a day and 7 days a week, in line with the forex market opening hours. To save you from having to request that your broker takes action for you, your forex broker should enable you to manage your account and your trades separately. By doing this, you will be in a much better position to quickly react to any shifts in the market, and hopefully, make the most of potential opportunities.

This will enable you to gain better control over any open positions as and when they arise.

This is the best website to learn patterns. A bearish trend continuation occurs on the chart when the support zone breaks. If you are alerted to a sell signal, this indicates that the short-term moving average is below that of the long-term moving average, so you might want to place a sell order. They can see that the buyers have won the short-term war; they know that buyers are very strong and will outnumber them at this level so they are not convinced at all to sell here. Price makes a strong impulsive move followed by a small correction move then again a strong impulsive move upwards and again a corrective small move.

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