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. It is important to ensure that your forex broker of choice is a reputable company, who will ensure that your personal information and trading funds are fully protected and backed up.

Segregation is frequently used amongst forex brokers as a way to separate your funds from the funds of the company i. their daily costs, debts and running costs. So, no matter what happens to the forex broker, your money is safe and segregated. If you find that a forex broker is unable to do this, we would suggest you find a better broker as it is standard practice these days.

All of the brokers listed towards the end of this forex trading PDF are regulated by at least one reputable licensing body. In terms of getting set up as an online forex trader, the steps remain constant regardless of which broker you decide to join. Below we list some of the steps that you will need to take. In order to open an account, you will need to enter some personal information.

Standard details requested by the broker will be things like your name, residential address, and contact details.

Some brokers will also require your tax status and will ask you to provide more financial details such as employment status, net worth and any regular income. In this instance, you will usually need to answer some multiple-choice questions based on your experience.

This is usually a fairly simple process. Known as KYC in the industry Know Your Customer , this simply means that the forex broker is going to need you to prove who you are. Some brokers will verify this using scanned copies of documentation.

Now you need to select your payment method of choice usually from a drop-down list. Bear in mind that how long this takes to go into your trading account will largely depend on the payment method — so always check this before parting with your cash. Some brokers even support e-wallets like PayPal and Skrill. After reading our forex trading PDF you should now be feeling confident enough to begin trading. However, we do recommend that you always try out a free forex trading demo first.

This will allow you to test out your newly formed trading strategies before risking your own capital. In the next section of our forex trading PDF, we explore some of the more important technical indicators and market insights used by seasoned traders.

First invented by Richard Donchian, the donchian channels can be adapted as you like, in terms of parameters. Should you choose to view a day breakdown, for example, the indicator will be created by taking the lowest low, and the highest high of that period so in this example 30 periods.

When observing the moving average on a donchian channel you can look at averages stretching from 25 days to the last days. The direction which is permitted is determined by the direction of the short-term moving average. With this in mind, you should think about opening one of the following two positions:.

You will need to sell your pair in order to exit your trade if you open a long position and visa-versa. This is another commonly used forex indicator. The simple moving average aka SMA operates at a slower rate than the present market price known as a lagging indicator.

Furthermore, it uses a lot of historical price data. In fact, more so than most other strategies. A good indication that the latest price is higher than the older price is when the long-term moving average is below the short-term moving average. This could be considered a buy signal due to an upward trend in the market. In the opposite scenario when the long-term moving average is higher than the short-term moving average, this of course points towards a sell signal due to a downward trend.

Moving averages are usually used as evidence of an overall trend, rather than purely forex trading signals. Of course, this is a great way to make your breakout signals much more productive.

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. However, if you are given a signal to buy, this usually means that the short-term moving average is higher than that of the long-term moving average. Using breaks as trading signals, the breakout is considered a long-term strategy. The breakout itself occurs when the market goes further than these consolidation limits — whether that be lower or higher.

As such, a breakout must take place whenever a new trend occurs. By looking at breaks, you will have a good indication of whether or not a new trend has begun. In this case, you might want to use a stop-loss order to give you a better chance of avoiding a substantial loss. As glamorous as a career in forex trading might sound, there are a number of risks that you need to take into account.

In the below sections of our forex trading PDF, we explore these possible risks in more detail. The transaction risk is in relation to the exchange rate and any time zone differences. This means there is a chance that at some point between the beginning and end of a contract that the exchange rates could be subject to change.

The risk of this happening elevates with the more time that passes between entering a contract and settling the same contract. This generally leads to investors withdrawing investments, and as a result, your return will be lower. The good news is that when a currency rate is on the rise, chances are that the respective currency will be stronger. When this does happen, your returns could be higher.

This is because seasoned investors like to gain exposure to stronger currencies. The higher your leverage is, the higher your losses or benefits will be.

Of course, this means leverage can affect your trading in a positive or negative way — depending on which way it goes. The final part of our forex trading PDF is to explore which brokers are popular with both newbie and seasoned traders. Each of the forex trading platforms listed below has been pre-vetted, meaning that you can be confident they tick most boxed.

This means that each platform is regulated, offers heaps of forex pairs, has low commissions and fees, and supports several payment methods. AvaTrade is an established broker that offers thousands of financial instruments. On top of stocks, indices, commodities, and cryptocurrencies all via CFDs , you can also trade heaps of forex pairs.

There are no trading commissions to pay, and spreads are very competitive. You can either trade via the AvaTrade web-platform, or via popular third-party provider MT4. The platform is heavily regulated, with several licenses under its belt. com is an FCA, CySEC, ASIC, and NBRB-regulated online broker that offers heaps of financial instruments.

All in the form of CFDs - this covers stocks, indices and commodities. You will not pay a single penny in commission, and spreads are super-tight. Leverage facilities are also on offer - fully in-line with ESMA limits. Once again, this stands at on majors and on minors and exotics.

If you are based outside of Europe or you are deemed to be a professional client, you will get even higher limits. Getting money into Capital. Having made it this far through our forex trading PDF, you should by now have an understanding of how technical analysis works, and have a good grasp of the macroeconomic fundamentals which guide currency values.

Armed with all of the useful information included in this guide, you should be ready to get out there and start trading forex. Hopefully, making a profit and learning more along the way. If you are a trader with somewhat limited funds, you might find that swing trading suits you best. If you have a larger trading fund available to you, you might have a more profitable experience with fundamental based trading.

Either way, w e do recommend trying out a free demo account where possible before trading with your hard-earned money. As well as reading helpful guides like ours, actually learning by doing will also provide you with a better sense of how it all works and how you might like to trade yourself. What does forex mean? Forex as a term refers to 'foreign exchange'. You will make money in two different scenarios. You either buy a currency pair for less than you sell it for long order , and you sell a currency pair for less than you bought it for short order.

The spread is the difference between the bid and ask price of a forex pair. This gap in pricing must be included in your profit and loss forecasts, and it is how the broker ensures that the platform always makes money. This depends on the type of forex pair you are trading.

The pip refers to the movement of one decimal place in a pair. Right before placing a trade he may briefly scratch his head or some other part of his anatomy and decide to double his usual size because he made money in the previous trade or skip this trade because he lost money in his previous trade.

Both choices are equally wrong. If you let your latest trade determine what size to trade next time, it means giving up control of trade management. The second essential skill — self-control — is harder to quantify. Fortunately there is a clear and concrete tool for implementing and measuring self-control: keeping good quality trading records.

The 16 traders in the book — men and women, long-term and short-term traders, stocks, futures and options traders, American and foreign traders — what did they have in common? They all kept excellent records. The majority must lose in order for a small, informed, and disciplined minority to make profits. The money in your trading account is your air supply. Watch it, be economical in its use, and have a reserve.

All beginners, no matter how bright, make mistakes and take losses. Begin by writing down three numbers for every trade: your entry, target and stop. Next question: how much money do you have in your trading account? Next question: how many shares of that stock may you buy?

The maximum number of shares you may buy is determined by your risk per share and your total permitted risk. Figure Most traders get killed by fish — either a shark bite a single disastrous loss or piranha bites a series of losses, none of them lethal, but together they shred an account to the bone.

Before we close this chapter, a quick comment on account size. A tiny account makes it very hard to diversify, while large accounts tend to lull beginners into a false sense of security. It is big enough to diversify but small enough not to get carried away. Remember that an intelligent beginner trades to learn. Focus on learning and acquiring skills, become a survival expert. Trade small and keep good records.

Risk management will make you a safer trader. Had he remembered, he would have done more of the right stuff and stopped repeating the wrong moves. Successful traders keep good records, review them, and learn from them. You need to keep both numerical and visual records: a spreadsheet and marked-up charts of your trades. csv Shown below are two lines from my spreadsheet, reflecting a trade I made while working on this book.

Notice that in addition to the usual numbers, such as entry and exit dates and prices, gross and net profit or loss, this spreadsheet includes columns for rating the quality of each trade as well as of every entry and exit.

I call them buy, sell and trade grades. You have to grade your performance in order to improve it. Prices flow in channels like rivers in their valleys. Your trade grade is the percentage of the width of the valley that you captured in your trade.

You will see how to construct channels in one of the following chapters. This formula compares your profit or loss in a trade to the spread between channel lines on the day you entered that trade. Since the distance from the top to the bottom of a channel reflects a realistic maximum available for a swing trade, the Trade Grade reflects the percentage of the maximum you were able to catch.

Buy and Sell grades reflect the quality of every purchase or sale. Each of these grades is based on a single bar, measuring how your entry or exit relates to the high and the low points of the day. Your Buy and Sell Grades show where you stand in the never-ending battle against the pros who make a living buying near the lows and selling near the highs.

The spreadsheet above shows two lines documenting one trade because I purchased that stock in a single trade but sold it in two installments. This is marked by the entry commissions on both lines being boxed together. Notice also that the closing price for that day Col. This meant that the trade was profitable at closing time — another measure of its quality. I exited the first half of the trade because I thought the market was becoming toppy and wanted to take partial profits.

The stock closed for the day above my sale price, which is why I colored the closing box in Col. The next day the stock reversed and headed lower. Still, the stock continued to decline after I sold and closed below my selling price, earning me a green box in Column I hope you appreciate how much useful information about the quality of trades you can get from analyzing a single line in a spreadsheet.

Save a picture of your stock and its indicators on the day you buy it and another picture on the day you sell. Those snapshots will turn you into your own teacher. StockCharts makes it easy to maintain a visual diary, combining price charts, indicators and comments. Keeping a visual diary of your trades along with numerical records will set you apart from the pack of competitors. Note: For more thoughts on record-keeping, please see my book The New Trading for a Living. Return to the top Technical Analysis StockCharts Basics Experienced members may well skip this chapter, but please read it carefully if you are a new member of StockCharts.

Clicking on any chart in this book will take you to the same chart at www. com obviously, you need to be online to use this function. Your options in StockCharts. A trader can use StockCharts without paying a dime A. Still, membership C has its privileges, and the most important of them is that the program can memorize any selections or changes a member makes on his charts. You also get more indicators and tools. com Watching that minute video will save you multiple hours down the road.

Let me briefly point out just three of the basic features of StockCharts: Overlays, Indicators, and ChartStyles. Overlays are studies that are superimposed on price plots, such as moving averages and envelopes more on those below. Indicators help us find when bulls or bears dominate a stock. You will see what indicators I use to discover the shifts of power in the endless battles between those two groups.

I like plotting my indicators below prices, but that is simply a personal preference. Advanced Options. Notice that some of the overlays and indicators allow us to use advanced options.

Those are marked by green triangles, as shown above. You will see my selections in this book — but feel free to change them, make them your own, with your own unique settings. Arrow A in Figure 07 points to one of the most useful features of StockCharts — a menu of ChartStyles. A bar on a daily chart represents the range of prices during one day.

Its vertical line connects the high and the low points of that day, while the tick on the left shows the opening price and the tick on the right the closing price. On a candlestick chart the area between the opening and closing prices is thick. Candles are hollow if prices close above the opening price or filled if they close below the opening price. Keeping an eye on the opening and closing ticks gives me the same information as candles, and I can fit more bars than candles on a computer screen.

Even though this book uses bar charts, all of its techniques can be used with candles. To create a daily bar chart using StockCharts.

com, follow these steps: 1. Log into your account. T pe a ti ker s ol i to the Create a Chart o at the top of the page. Press the Go utto he ou are do e. You should o e looki g at a hart of AM N ith our Default hart setti gs.

Markets move at the same time in different timeframes, but sometimes they trend in opposite directions. Those who track a single timeframe miss important information. To change your chart to a differe t ar period, li k o the Period dropdo , lo ated a o e the left corner of the chart, then select the new period that you want to see e. The li k the Update utto. The key principle of using multiple timeframes is to make your strategic decision — to be a bull or a bear — on a longer-term chart, then switch to a shorter-term chart for making tactical decisions where to buy and sell.

We should look for trades only when the strategic direction is clear. Select two timeframes that relate to one another by approximately a factor of five. A weekly and a daily chart make a good pair. Other good pairs are monthly and weekly for very long-term trading or daily and hourly for shorter-term trading. The same approximate ratio applies to intraday charts, such as and 5-minute. Watching at least two timeframes is like looking at the road ahead with both eyes.

Let your competitors do that, using only one timeframe. What trading vehicles shall we chart? If you live and trade outside the US, track the key stock index or indexes for your country — for example the Toronto Stock Exchange index in Canada or All-Ordinaries in Australia. Select a handful of popular, high-volume stocks to which you can give your undivided attention. AMZN weekly Clicking on any chart in this book will take you to the same chart at www. com you need to be online to use this function.

com — a weekly chart above and a daily chart below. Both are naked, without any technical indicators. Plain charting, the original approach to technical analysis, has several pluses but even more minuses.

On the other hand, trying to analyze a naked chart tends to be very subjective. Old market books are filled with descriptions of heads-and-shoulders, rectangles, triangles, etc. The longer you squint at a chart, the more of them will seem to appear. Just think of trendlines. You can draw them across the extreme price points or across the edges of congestion zones, which will change their angles and trading messages. Their angles will also change if you change your price scale.

Horizontal price levels make sense because traders have memories. They remember at what price levels trends reversed in the past. Masses of people buy and sell at those levels. This is why false breakouts — quick excursion beyond the lines of support and resistance that fail to continue — provide valuable trading signals, called false breakouts.

Among the very few chart patterns that make logical sense are horizontal lines support and resistance and their breakouts, especially false breakouts. Take a look at the weekly chart of AMZN in Figure 8. This false upside breakout led to a vicious decline. A few months later we see a mirror image of this pattern. Recoiling from that low left behind a false downside breakout, setting up the stage for a frisky rally.

All traders watch support and resistance, but professionals and amateurs react to them differently. Amateurs love following breakouts, while the pros, who expect most breakouts to fail, like to fade them — trade against them. AMZN daily Turning to the daily chart of AMZN, we immediately notice two severe breaks, marked E-1 and E The dates of earnings reports are announced far in advance, allowing you to exit those trades.

Holding a trade through earnings turns it into a crapshoot. Depending on the report, you may win, lose or stay unchanged — but that is no longer a trade but a gamble.

On the weekly chart of AMZN, we see an upside reversal near the right edge, suggesting the strategy of going long buying. The daily chart shows a pattern of alternating rallies and declines.

Rather than buying into the rally at the right edge, we may want to wait for the next minor decline on the daily chart — a wave that goes against the tide — and buy at a discount.

Compare this to sitting down in a restaurant and picking up a menu. In trading, we need to select just a handful of indicators and learn to use them.

Markets are complex; you cannot win using a single tool. Some indicators work best during trends, others in trading ranges. Trends and ranges are easy to recognize in the middle of a chart, but the closer we get to the right edge, the foggier they become. In selecting indicators, you may begin using what I show you here but please feel perfectly free to choose others. Just remember to keep their number down to five or, at a maximum six. Before using any indicator we must understand how it is constructed and what it measures.

Each tick on your computer screen reflects a transaction between a buyer and a seller — a momentary consensus of value. Buyers bid low, sellers ask for more, but they feel pressure to act before some undecided trader steps in and snatches away that deal.

When a buyer and a seller step forward from the crowd and trade with each other, a price tick appears on your screen. Moving averages add up prices during a selected time window and average them out. If each tick is a snapshot of value, then a moving average is a composite photograph of value, a trend- following indicator.

AMZN daily, and bar EMAs I highly recommend using exponential moving averages EMAs rather than simple ones. The main message of any EMA is the direction of its slope. It rises when the crowd trading a stock grows more optimistic — bullish. It declines when that crowd grows more pessimistic — bearish.

A fast EMA which I like coloring red on my chart reflects a shorter-term consensus of value. A slow EMA colored gold reflects a longer-term consensus of value. I always use a pair of EMAs, with the time window of the slow EMA twice as long as the fast EMA. My pairs may be 13 and 26 or 11 and 22 bars, etc. The bars can be weekly, daily or intraday. To add these two EMAs to your chart, follow these steps: 1. Fi d the O erla s area lo ated elo the hart 2. Cha ge the orrespo di g Para eter setti g fro the default to 4.

Cha ge the orrespo di g Color setti g fro Auto to Gold 6. Mo i g A g agai fro the o erla dropdo 7. Cha ge the Para eter fro to 8. Press the Update utto Figure DDD daily, and bar EMAs The zone between the two EMAs is extremely important — I call it THE VALUE ZONE.

A swing trader aims to buy below value and sell above it — or sell short above and cover below value. Stocks go down twice as fast as they rise. Professional traders love shorting — betting on price declines. Here you see a bearish trend in 3D Systems, Inc. DDD , identified by the downsloping EMAs. The slow gold-colored EMA turns down, indicating a downtrend.

They provide excellent shorting opportunities for savvy traders. Bullish traders do the opposite. When a rising slow moving average identifies an uptrend, they buy pullbacks into the value zone.

Return to the top Profits from manic-depression using envelopes Warren Buffett, perhaps the greatest living investor, says that whenever you buy a stock, you become a partner with a manic-depressive fellow he calls Mr.

That fellow runs up to you every day, offering to sell you his shares or to buy you out. Most of the time you should ignore him because he is crazy, but there are two exceptions. First, when Mr. Second, when Mr. These prescriptions are logical but hard to follow because Mr. Most people want to buy when he is manic near the top and sell when he is depressed near the bottom.

We need to diagnose Mr. The tool that will help us do that is an envelope or a channel. It consists of two lines parallel to a moving average — one line above and the other below. Channels help us recognize Mr. Remember that a channel is a tool, not a complete trading system. There are several methods of building channels.

The most basic and straightforward is to draw two lines parallel to a slow EMA. For example, if you use a pair that consists of a day and a day EMA, build the channel around the day EMA. Such channels are fine if you track a very small number of stocks because you can easily find the proper percentage for every stock. Some stocks require wider channels than others. Channels on the weekly chart have to be twice as wide as the daily channels.

Because of these complexities, traders look for channels that automatically adjust their width to the volatility of any stock or index. AMZN daily, and bar EMAs, Keltner channel 26, 2. Keltner channels fit the bill. Market is manic, and we should avoid buying, no matter how tempting it feels. On the contrary, consider taking profits on long positions and look for shorting opportunities. When a stock sinks towards its lower Keltner channel, it is oversold: Mr.

Market is depressed, and we should avoid shorting. On the contrary, consider taking profits on short positions and look for buying opportunities. To add Keltner Channels to your chart, follow these steps: 1. Fi d the O erla s area elo the hart 2. Cli k o the e pt o erla dropdo o i that area a d sele t Kelt er Cha els fro the dropdown 3.

Cli k the Update utto Figure My partner in SpikeTrade. com Kerry Lovvorn likes to plot not one but three ATR channels on his charts. Stock, index and futures traders are better off using more sedate Keltner channels. Return to the top The power of bulls and bears MACD indicator Our indicators should be simple and robust.

Simple because they track only a few basic numbers: opening, high, low and closing prices, plus volume. MACD stands for Moving Average Convergence-Divergence. We can plot it as two lines or a histogram. AMZN daily, and bar EMAs, MACD Lines and MACD-Histogram 12, 26, 9. To add the MACD Indicator to your chart, 1. Fi d the I di ators area elo the hart.

Cli k o o e of the I di ator dropdo s a d sele t MACD fro the list that appears. Make sure that the Positio dropdo is set to Belo e suri g that the MACD pa el appears below the price bars. Cli k the Update utto. The original indicator, invented by Gerald Appel, was MACD Lines. The Fast line of MACD tracks a short-term consensus of value, while the Slow line tracks long-term consensus of value. In pre-computer days Appel calculated them by hand and used their crossovers as buy and sell signals.

Waiting for MACD Lines to cross leads to missing the most dynamic early part of a trend; by the time those lines intersect, half of the price move is history. When personal computers became available, a team of programmers working under Tim Slater in New Orleans developed MACD-Histogram for tracing the spread between the two MACD Lines.

It is a much more sensitive indicator of the power of bulls or bears. MACD-Histogram shows whether bulls or bears dominate the latest price bar. If that bar is higher or less deep than the previous bar, bulls are in charge. If the latest bar is deeper or less high than the previous bar, bears are in charge. Take a look at the right edge of Figure 14, and the last two bars of MACD-Histogram clearly show which group is in charge.

These are ordinary signals; the best signals of MACD-Histogram, however, are divergences. At the same time, MACD-Histogram traces a different pattern. At that point, prices are lower, but the bottom of MACD-Histogram is higher, showing that bears are weaker and the downtrend is ready for a reversal. Bears slammed the market down in area A, but had their back broken when MACD-H rallied above zero in area B.

Prices fell to a new low in area C, but the shallowness of MACD-H showed that bears were exhausted. When MACD-Histogram ticked up in area C, it completed a bullish divergence. That buy signal occurred during the first week of a new bull market. Notice that breaking of the centerline between two indicator bottoms is a must for a true divergence. MACD-Histogram has to cross above the zero line before sinking to its second bottom. If there is no crossover, there is no divergence.

Another key point: MACD-Histogram gives a buy signal when it ticks up from the second bottom. There is no need to wait until it crosses above the centerline for the second time.

The buy signal occurs when MACD-Histogram, still below zero, stops declining and traces out a bar that is less negative than its preceding bar. TRIP daily, and bar EMAs, MACD Lines and MACD-Histogram 12, 26, 9.

A bearish divergence occurs when prices rise to a new high, decline, then rise to a higher peak. MACD-Histogram gives the first sign of trouble when it breaks below its zero line during the decline from its first peak. When prices reach a higher high, MACD-Histogram rises to a much lower high. It shows that bulls are weaker, prices are rising simply out of inertia and are ready to reverse.

In it capped its wild rally with a bearish divergence which warned of a coming downturn. It gave a very timely signal to sell and sell short before a vicious decline. Remember: MACD-Histogram has to re-cross its zero line between the two tops and then tick down from its second, lower peak. No matter how tempted you may feel to sell short, sit on your hands until MACD-Histogram has given you its signal.

Patience is essential for successful trading. The buyer believes that the stock is undervalued and will go up. Rising volume reflects a greater degree of conviction among both winners and losers. I prefer to track volume using an indicator that I developed: Force Index.

The greater price change and the greater the volume, the greater the Force Index. We need to smooth Force Index with a moving average. A 2-day EMA of Force Index helps catch short-term swings, while a day EMA of Force Index helps identify intermediate-term tops and bottoms.

TRIP daily, and bar EMAs, 2-day Force Index. A 2-day EMA of Force Index helps identify trade entry points. Once you decide to sell short during a downtrend, a rise of the 2-day EMA of Force Index above zero marks a short-term overvalued condition, a shorting opportunity.

On the chart above we use the slope of the slow moving average to identify the trend. Green horizontal bars mark the areas where bar EMA rises and pink horizontal bars where it declines. To add the 2-day Force Index to your chart, 1. Cha ge the Para eter setti g fro to 4. Cli k the Update utto It pays to look for divergences between the Force Index peaks and bottoms and prices. A bullish divergence is marked on the chart above with a diagonal green arrow. They alert us to buying opportunities.

Watch out for downspikes of Force index, such as the one on the left side of the green arrow. Whenever the 2-day EMA of Force Index spikes down five times or more its usual depth and then recoils from that low, expect prices to rally in the coming days. KO daily, and bar EMAs, day Force Index. A day EMA of Force Index helps track longer-term balance of power between bulls and bears.

When it crosses above its centerline, it shows that bulls are in control and suggests trading from the long side. When it turns negative, it shows that bears are in control and suggests trading from the short side.

To add the day Force Index to your chart, 1. Cli k the Update utto Divergences between a day EMA of Force Index and prices identify important turning points, and we see two of them in Figure The top B is higher than the top A, but Force Index is lower, showing that bulls have become weaker — it is a bearish divergence.

There is a bullish divergence between the bottoms X and Y. You get paid for trading well, not for trading often. Keep scanning your stocks and trade only when the picture you see at the right edge is near perfect. Force Index spikes work quite differently on the charts of the bar Force Index.

Here they provide tremendously useful signals — but only on the weekly charts where they help catch trend reversals. This idea came from Kerry Lovvorn, my partner in SpikeTrade. com who added a 3- ATR channel to the Force Index. X weekly, and bar EMAs, day Force Index with a 3-ATR Keltner channel. When the week Force Index escapes either above or below its 3-ATR Keltner channel, it marks a stampede by either bulls or bears.

It takes an uncommonly strong burst of optimism to raise the week Force Index above its 3-ATR channel. It takes an unusually powerful wave of fear to push this indicator below its 3-ATR channel. When they start choking up and the week Force Index returns into its channel, it shows that prices are ready to reverse and retrace at least a part of their previous move.

Arrows 1, 4, and 6 on the weekly chart above show where bears ran out of steam and gave buy signals; each was good for several weeks. Arrows 2, 3, and 5 show where bulls began to choke up and gave signals to sell and sell short. There are no perfect signals in market analysis, which is why we must use protective stops. How to set them is described later in this book. To add Keltner Channels to your Force Index, follow these steps: 1. Scroll do to the I di ators area elo the hart a d fi d the li e ith our For e I de settings.

Fi d the O erla dropdo lo ated o the far right of that sa e li e. Change the orrespo di g Para eters o to , , 5. Adding a Keltner channel to Force Index. Return to the top Less is more other indicators The number of technical indicators available to us is huge, but all of them are based on the same few pieces of data: open, high, low and closing prices, plus volume.

Indicators in StockCharts. This screenshot from StockCharts. com shows its wealth of technical tools. The tools we reviewed in this book are marked with green arrows.

You can study them in ChartSchool, a very useful section of StockCharts. Murphy, it must be noted, is a frequent contributor to StockCharts; his comments on intermarket analysis are original and deep.

Feel free to select others if you wish but remember not to overcomplicate your analysis. Adding more and more indicators will only clutter your charts and confuse your decision-making. Less is more in trading.

We need to select a few indicators, understand them well, and then focus on the structure of trading systems and risk control. The Impulse system will keep us out of trouble by showing when not to trade.

The slope of the last two bars of MACD-Histogram shows the direction of market power. Their combination colors every bar: green if both are rising, red if both are falling, and blue if they move in the opposite directions. Wait until the Impulse system removes its prohibition. Colors and messages of the Impulse system [from The New Trading for a Living]. Shorting is prohibited, buying or standing aside is permitted. Buying is prohibited, shorting or standing aside is permitted. Nothing is prohibited.

When both indicators decline, showing that bears are in charge, they prohibit buying. When both rise, showing that bulls are in charge, they prohibit shorting. We need to check the colors of the Impulse system in two timeframes — our favorite tactical, usually daily chart and the chart one order of magnitude longer strategic, usually weekly chart.

As for the indicator parameters, we can use a bar EMA and a MACD-Histogram. You may change these parameters, just be sure to use the same numbers consistently. By the time the Impulse system turns green, the uptrend is well under way. Our goal is to identify a potential buy early, while the Impulse system is still red, and then closely monitor that stock.

As soon as the Impulse changes from red to blue, it removes its prohibition of buying and releases us to buy. Its best signals are given not by color green or red , but by the disappearance of color the Impulse stops being red or green and turns blue.

The Impulse system. To change your chart into an Impulse System chart: 1. Fi d the T pe dropdo lo ated i the Chart Attri utes area u der eath the hart. Press the Update utto Silica Holdings Inc.

SLCA serves oil producers in the Canadian tar sands as well as frackers. As it began to decline, bargain-hunters started coming in. Notice how the red bars of the Impulse system kept telling buyers to leave it alone.

Red bars prohibited buying. Another short-lived permission to buy in area 3 was cancelled in area 4. Those messages of the Impulse system helped shorts make money that was the side I was on , but week after week told buyers to stay away, stay out of trouble.

Find your trade using whatever system you like we will review several systems below , but take a look at the Impulse system in your favorite intermediate timeframe as well as in the timeframe one order of magnitude longer before placing your order.

The Impulse system will tell you whether you are allowed or not allowed to make that trade. Hold off entering a trade until the Impulse System releases you to act.

Every trading system is designed to handle a specific price pattern. When you find a chart that matches that pattern, work up a possible trade. What kind of pattern will it look for? What kind of stock? What rules will you use for entries and exits? Write down your answers to these questions. This discipline will put you miles ahead of most competitors.

Unlocks access to the leading crypto trading analysis, signals and trading tools. World class development team backed by Quant developers and VC investors. 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.

You have to grade your performance in order to improve it. This section of our forex trading PDF is all about forex charts. Successful traders keep good records, review them, and learn from them. Some of the good MT4 forex brokers for beginners also with PDFs for MT4 are: XM CMC Markets AvaTrade Best Forex Trading App for Beginners Mobile trading has become a thing now, and many brokers are offering excellent trading services on mobile devices. Anyone who can get their hands on a copy of What is Forex Trading Step-by-Step: Guide for Total Beginners download free will find it worthwhile. LAST DAYS!

Categories:

• Forex Brokers
• Binary Options online
• Binary Options
• Forex
• Forex Bitcoin