FX Course PDF

2 Day
Introduction to
Forex
1
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2
Table of Contents
Introduction to the Forex Market..........................................................04
Introduction to Technical Analysis……………….....................................08
Price Expressions…………….........................................................................13
Price Expressions - Candlesticks.............................................................18
Price Expressions - Time Frames………………………………….................22
Support and Resistance.............................................................................28
Trend Lines………………………………………………………………......................52
Market Pulses / Cycles................................................................................66
Moving Averages..........................................................................................90
Indicators - RSI and Stochastic...............................................................104
Price Action - Candlesticks.......................................................................132
Price Action - Candlesticks - Bullish......................................................142
Price Action - Candlesticks - Bearish....................................................155
Price Action - Candlesticks - Indecision..............................................168
Price Action - Candlesticks - Support..................................................172
Price Action - Candlesticks - Resistance.............................................182
Trade Sizing...................................................................................................190
Reward to Risk..............................................................................................210
Trading and the News................................................................................234
Core Strategy - Intraday…………………………………………...………………243
End of Day Strategy.....................................................................................253
Trading Notes…………………………………………………………...………………265
3
Introduction to the
Forex Market
4
Forex
Forex is a global decentralised – largest and most liquid

market market in the world
– $5.3trillion Daily Trading
• no single exchange to settle trades
Volume
• market participants settle amongst
– 24 hours – 5 days a week
each other
– Influencing factors - monetary
policy and fiscal policy
5
Forex Trading Time Zones
GMT
6am 9am 12pm 3pm 6pm 9pm 12am 3am 6am
London 7:00am 5:30pm
New York 7:30am 5:30pm
Auckland 7:30am
Tokyo 5:30pm 7:30am
The London session accounts for 35% of daily volume transactions.

Where sessions overlap, it can cause volatility - greater movement.
Avoid trading 15 minutes either side of 10pm
– spread will increase.
6
Most Traded Currency Pairs
Pair Name Vernacular
EURUSD European Monetary Unit Euro
USDJPY Japanese Yen Yen
GBPUSD Great British Pound Cable
USDCHF Swiss Franc Swissy
AUDUSD Australian Dollars Aussie
USDCAD Canadian Dollars Cad
NZDUSD New Zealand Dollar Kiwi
7
Introduction to
Technical Analysis
8
Technical Analysis
Technical analysis relies on price movements displayed on
charts to predict future price movements.
9
Technical Analysis
We do this by
analysing price bars,
known as ‘price
action’ on charts.
10
Technical Analysis - Terms
Up trend
– The market makes a series of higher highs and higher lows
Down trend
– The market makes a series of lower lows and lower highs
Sideways or Range
– The market makes the same or similar lows and the same or
similar highs
No Trend - Noise
– The market makes mixed highs and lows – looks messy
(Lionel Messi)
11
Price Expressions
12
Price Expressions -
Different Asset Classes
The highlighted digit in each asset class is the digit that you speculate on.
Currency Pairs - pips 1.4515

Currency Pairs JPY - pips 115.25
Stocks & Shares - points 352.00
Commodities - points 1250.00
Indices FTSE - points 6758.00
13
Price Expressions - Buy - Long
Price moves up and we buy.
14
Price Expressions - Sell - Short
Price moves down and we sell.
15
Price Expressions - Spread
BID ASK
EURUSD 1.3784 / 1.3785
1 pip spread
GBPJPY 172.50 / 172.53

3 pip spread
The difference between the Bid and the Ask is called the spread.
We only trade pairs that have a
spread of less than 8 pips/points.
16
Price Expressions -
Candlesticks
17
Price Expressions - OHLC - Candlesticks
Some traders prefer candlesticks and others prefer OHLC bars.
18
Price Expressions - Candlesticks
High High
Candlesticks show Open Close

the movement of
the price action
over a period of
time.
Close Open
Low Low
19
Price Expressions - Candlesticks
GREEN / BUYER BAR RED / SELLER BAR
High High
Price
Close
Open
Open Close
Low Low Price
Buyer bar if the Close is above the Seller bar if the Close is below the
Open. Open.
20
Price Expressions -
Time Frames
21
Price Expressions - Forex Charts
PRICE AXIS
TIME AXIS
We read a chart in terms of both time and price
– this shows us how long it takes the market to reach a price level
22
Price Expressions - Time Frames
The time frame defines when the candlestick opens and closes.
For instance, on a 1 Hour chart a new bar opens each hour and
closes once the following hour begins.
Closes 1
hour later at
9am
1 Hr Chart
Opens at
8am
23
Price Expressions - Time Frames
We use three time frames to trade the markets.
Depending on the strategy, we use either multiple time frames
or just one time frame.
Daily 4 Hr 1 Hr
24
Price Expressions - Daily Chart
The Daily bar opens at the start of
the trading day and closes at
the end of the same day – 24
Daily Chart hours.
Provides insight into the big

picture and long term trends.
Note: For asset classes that are traded around the clock,
from Sunday night through until Friday night,
the daily chart opens and closes at 10pm.
25
Price Expressions - 4 Hr Chart
The 4 Hr chart provides insight

into short to medium term
trends.
4 Hr Chart Helps to identify whether the
Daily chart is in the push or pull
stage of its trend.
26
Price Expressions - 1 Hr Chart
The 1 Hr chart is an intra-day

time frame and is used as our
entry chart.
1 Hr Chart
27
Support and
Resistance
28
Support and Resistance
It’s essential to identify and highlight
Support, Resistance and Trend Lines
– Three or more touches for confirmation
– Longer the time period, the stronger the level
– Higher the time frame, the stronger the level
– The more bounces than breaks, the stronger the level
– Often occurs at whole numbers – 1.4500 – 123.00 – 1.000
29
Support and Resistance
It is rare that a level of support will be exact,

we are looking for the ‘best fit’.
Identify where the price is supported in

general, but don’t cover your chart in lines.
30
Support
Support = FLOOR
A support level is a price zone that the market
deems to be ‘too cheap’.
Support holds up the price action above it.
31
Support
What happens when something becomes
too cheap, or a ‘bargain’?
People begin to buy.
32
Support
What happens to the price when
people begin buying?
It begins to go up.
33
Support
Excessive buying
and demand
drives the price
Price getting up.
cheaper and
cheaper...
Too cheap.
Buyers enter the
market.
A level of support has formed.
34
Support
It’s all about practice and training your eye to

spot the levels.
Go through the following examples and identify

the most obvious level of support for each one.
35
Support - Practice 1
36
37
38
39
Resistance
Resistance holds down the price action below it.
A resistance level is a price zone that the market

deems to be ‘too expensive’.
Resistance = CEILING
40
Resistance
What happens when something becomes

too expensive?
People stop buying and begin selling.
41
Resistance
What happens to the price/value when

people begin selling?
It begins to go down.
42
Resistance
A level of resistance has formed.
Too expensive. Sellers
enter the market.
Price getting
more expensive...
Excessive selling and lack of

demand drives the price
down.
43
Resistance

spot the levels.

the most obvious level of resistance for each one.
44
Resistance - Practice 1
45
46
47
48
Support Becomes Resistance
RESISTANCE
SUPPORT
49
Support Becomes Resistance
- Break and Re-Test
RESISTANCE
SUPPORT
BREAK AND RE-TEST RESISTANCE
50
Support and Resistance - Range
51
Trend Lines
and Cycles
52
Trend Lines - and Cycles
A trend line helps us to determine a trend.
There are two directions of trend lines – up and
down.
A trend line is not enough to determine a

‘trend’. We also use Moving Averages to
determine trends.
53
Trend Lines
UP DOWN
Bullish Bearish
54
Up Trend Cycles
The market is making a HH
series of higher highs HH
and higher lows
HH
HL
HH
HL
HH
HL
HL
55
Up Trend Lines - and Cycles
56
Up Trend Lines - and Cycles
• Up trends - lines are drawn below the price action.
• There must be a minimum of three touches for a trend
line to form.
Notice that the lows are

getting higher. 57
Down Trend Cycles
The market is making a
series of lower highs and
lower lows
LH
LH
LL
LH
LL
LH
LL
LL
LL
58
Down Trend Lines - and Cycles
59
Down Trend Lines - and Cycles
Notice that the highs are
getting lower.
• Down trends - lines are drawn

above the price action.
• There must be a minimum of three
touches for a trend line to form.
60
Trend Lines

spot the levels.

the most obvious trend line for each one.
61
Trend Lines - Practice 1
62
Notice that the lows are

getting higher. 63
64
Notice that the highs are
getting lower.
65
Market Pulses /
Cycles
66
Market Pulses / Cycles
• Financial markets are made up of buyers and sellers.
• Buyers are pushing the price up, while sellers are
pushing the price down.
• The result is that the market moves in pulses.
• In this section we are going to look at the market
pulses and identify how we can use them effectively
to trade profitably.
67
Market Pulses / Cycles
Complete Market Pulse
Key turning
point
DOWN
UP DOWN
Complete Market
Pulse
BUY (LONG) TRADES SELL (SHORT) TRADES
68
Market Pulses - Buying
In an uptrend, the push of the buyers is stronger than
the pull of the sellers.
Every market pulse has two

stages - a push and a pull.
69
Push 1 = With the trend
Pull 2 = Against the trend
= Critical turning points
70
Trend based trading requires you
to execute your strategy during
the correct stage of the market
pulse.
71
Trend based trading requires
toyou to execute
execute yourduring
your strategy trend
trading strategy
the correct stage ofat
thethe correct
market
moment inpulse.the market pulse.
72
Too late in the push stage
to BUY
73
to BUY
Wrong stage
of the pulse
74
Market Pulses - Selling
In a downtrend, the push of the sellers is stronger than
the pull of the buyers.
Every market pulse has two

stages - a push and a pull.
75
Push 1 = With the trend
Pull 2 = Against the trend
= Critical turning points
76
toyou to execute
execute yourduring
your strategy trend
trading strategy
thethe correct
market
77
toyou to execute
execute yourduring
your strategy trend
trading strategy
thethe correct
market
78

to SELL
79
Wrong stage
of the pulse

to SELL
80
Market Pulses - Trading
The trader who enters the correct stage of the pulse, but too late,
has the ability to identify the stages of the market pulse but lacks
the confidence to enter early enough.
The late trader, wants more ‘proof’ that the market is

really moving before he enters the trade. The market
turns against him almost immediately after he enters. 81
The trader who enters the wrong stage of the market, is in worse
shape then the late trader. This trader has no concept of how the
market pulses.
Entering the wrong stage of the market pulse usually

means that the trader is trading without a proven
strategy. 82
The professional trader enters the market right on time. He can
identify the stages of the market pulse and has the confidence to
anticipate the move and enter the market successfully.
83
Market Pulses - Uptrend - Example 1
Can you see the market pulse?
84
85
86
Market Pulses - Downtrend - Example 1
87
88
89
Moving Averages
90
Moving Averages
• There are many types of moving averages.

• We use the Simple Moving Average - SMA.
• Moving averages can identify whether price is moving up, down or
sideways.
• Can act as dynamic support and resistance.
• Can signal a switch in direction when SMAs change from support to
resistance and vice versa.
• Ignore SMAs in a Ranging or Noisy market.
• A moving average is an indicator, not a trading strategy.
91
Moving Averages
We use the 20 SMA, 50 SMA and the 200 SMA

to determine the trend of a market.
92
Moving Averages
The 20 SMA (blue line) averages the
close of the last 20 bars.
93
Moving Averages
The 50 SMA (red line) averages the
94
Moving Averages
The 200 SMA (green line) averages the
95
Simple Moving Averages -
Dynamic Support
20 SMA
SMA support in the correct order
‒ below price 50 SMA
200 SMA
96
Moving Averages -
Dynamic Resistance
SMA resistance in the correct order
‒ above price
200 SMA
50 SMA
20 SMA
97
Moving Averages - Practice 1
Long or Short?
98
Long or Short?
99
Long or Short?
100
Long or Short?
101
Long or Short?
102
Long or Short?
NO TREND
103
Indicators -
RSI and Stochastic
104
RSI and Stochastic
RSI and Stochastic, are known as leading indicators -
They’re not a fool proof indication of where the market
will go – they work better when combined with other
factors.
Warning: an extremely overbought indicator can signify

strong Bullish momentum, and an extremely oversold
indicator can signify strong Bearish momentum.
105
RSI
• RSI stands for Relative Strength Index
• RSI can tell us if the current direction of the market is

strong enough to continue or if it is losing strength
and likely to change direction.
• We can use the RSI for market

convergence/divergence – agreement/disagreement.
• RSI can determine if the market has been overbought

or oversold (similar to the Stochastic indicator.)
106
RSI
RSI uses 2 bands - 80 and 20 - and an
input of 6 - the blue line.
80
Upper Band
20
Lower Band
107
RSI
We use the RSI in two different ways...
80
Upper Band
20
Lower Band
108
RSI
Convergence / Divergence with Price

and……
80
Upper Band
20
Lower Band
109
RSI
Overbought / Oversold
80
Upper Band
20
Lower Band
110
RSI - Bullish Convergence - AGREEMENT
Price RSI
111
112
113
RSI - Bearish Convergence - AGREEMENT
Price RSI
114
115
Agreement
116
RSI - Overbought / Oversold
117
118
119
120
121
122
Stochastic
• Stochastic is a momentum indicator.

• Like the RSI, it can be used to determine key turning
points in the markets.
123
Stochastic - Oversold
We look for the lines to cross below
the 20% band and point up.
80%
20%
124
Stochastic - Overbought
We look for the lines to cross above
the 20% band and point down.
80%
20%
125
Stochastic
Bearish Agreement and Overbought
126
Stochastic
127
Stochastic
Rresistance combined with Overbought Stochastic
128
Stochastic
Bullish Agreement and Oversold
129
Stochastic
130
Stochastic
Support combined with Oversold Stochastic
131
Price Action -
Candlesticks
132
Price Action - Market Sentiment
• Price action is the most immediate, purest
representation of market sentiment - human
behaviour.
• Price action - candlesticks and bars - tell us who won

the fight, buyers or sellers, or if it was a stalemate.
• As price fluctuates, a Candlestick will change it’s

appearance until the close of the bar. Understanding
how to read price action gives us a clue as to the
market’s intentions.
133
Price Action - Candlesticks
Price action signals fall into three categories
– Bullish – buyers are in control
– Bearish – sellers are in control
– Indecisive – equal numbers of buyers and sellers -
no one is in control - stalemate
134
Price Action - Candlestick Terminology
WICK WICK
B B
O O
D D
Y Y
TAIL TAIL
135
Bullish Candlestick -
Market Sentiment Example
As the candle opens, Sellers are in control and push the price down.
Then Buyers come into the market and drive the price back up, closing at the same
level as the opening price. The Bulls won the fight.
Open Close
136
Bearish Candlestick -
Market Sentiment Example
As the candle opens, Buyers are in control and push the price up.
Then Sellers come into the market and drive the price back down, closing at the
same level as the opening price. The Bears won the fight.
Open Close
137
Price Action -
4 HR Candlestick Formation Example
1HR 1HR 1HR 1HR 1HR
138
Price Action -
1HR 1HR 1HR 1HR 4HR
139
Price Action -
1HR 1HR 1HR 1HR 4HR
140
Price Action -
1HR 1HR 1HR 1HR 4HR CANDLESTICK COMPLETED
141
141
Price Action -
Candlesticks -
Bullish
142
Price Action - Bullish Candlesticks
Bullish candlesticks are normally found after a Bearish move,

at or near the bottom of an downward pulse / cycle.
This does not mean that every time we see a Bullish candle
the market will reverse, other factors need to be included,
which will be discussed later in the manual.
143
• Notice how some of the candlesticks have long
tails BELOW the bodies.
• Also notice how the other candlestick’s bodies

are more or less the full range of the candlestick
and mostly green.
144
Seller
Seller
Seller Buyer
145
Seller
Buyer
Seller
Seller
146
Seller
Seller
Seller
Buyer
147
Seller
Seller
Seller It’s a seller bar, but has

Bullish implications.
Seller
148
Price Action -
Bullish Candlestick Patterns
• A two bar formation known as an Bullish Inside Bar – the
green bar on the right fits inside the range of the red bar
on the left.
149
Price Action -
Bullish Candlestick Patterns
• A two bar formation known as an Bullish Engulfing Bar –
the green bar, on the right, exceeds the range of the red
bar on the left. The exception is the green Dodi.
150
Price Action Example - Hammer
151
Price Action Example - Hammer
152
Price Action Example - Bullish Engulfing
153
Price Action Example - Bullish Engulfing
154
Price Action -
Candlesticks -
Bearish
155
Price Action - Bearish Candlesticks
Bearish candlesticks are normally found after a Bullish move,

at or near the top of an upward pulse / cycle.
This does not mean that every time we see a Bearish candle
the market will reverse, other factors need to be included,
which will be discussed later in the manual.
156
Buyer
Seller
Buyer
Buyer
157
Seller
Buyer
Buyer
Buyer
158
Seller
Buyer
Buyer
Buyer
159
It’s a buyer bar, but has

Bearish implications.
Buyer
Buyer
Buyer
Buyer
160
• Notice how some of the candlesticks have long
wicks ABOVE the bodies.
• Also notice how some of the candlestick’s

bodies are more or less the full range of the
candlestick and mostly red.
161
Price Action -
Bearish Candlestick Patterns
• A two bar formation known as an Bearish Inside Bar – the
red bar on the right fits inside the range of the bar on the
left.
162
Price Action -
Bearish Candlestick Patterns
• A two bar formation known as an Bearish Engulfing Bar –
the red bar, on the right, exceeds the range of the green
bar on the left. The red Doji is an exception.
163
Price Action Example - Shooting Star
164
Price Action Example - Shooting Star
165
Price Action Example - Bearish Engulfing
166
Price Action Example - Bearish Engulfing
167
Price Action -
Candlesticks -
Indecision
168
Price Action -
Indecision Candlestick - Doji
A Doji represents indecision in
the market and can be either a
?
buyer or a seller candlestick.
=
Buyer
Occurs when there are equal

numbers of buyers and sellers.
Can signal either a pause before
continuing or a reversal – Seller
requires a confirmation
candlestick
169
Price Action - Indecision Candlesticks
• Notice how the wicks and tails of the candlesticks are more or
less equal in length.
• Notice how the bodies are in the middle, and small in

comparison to the wicks and tails. The colour is irrelevant.
170
Price Action Example - Doji
171
Price Action -
Candlesticks -
With Support
172
Price Action and Support
Bullish candlestick price action at a Support level,

further enhances the potential of price moving
higher.
173
We identify a Hammer candlestick.
174
The Hammer sits directly on a support level.

This combination strengthens the case for an upward push in
price action.
175
Price action moves upwards.
176
Note the break of the resistance, also another

strong indication of buying pressure.
177
We identify a bullish reversal candlestick.
Let’s zoom out and see if there’s also a
support level.
178
Yes, the bullish Let’s zoom back in...
reversal candlestick
sits directly on a
support level.
179
The combination of the bullish
reversal candlestick and support
level sends price action upwards.
180
Note the break of the resistance level,
which price then tests as support.
A strong indication of buying pressure.
181
Price Action -
Candlesticks -
With Resistance
182
Price Action and Resistance
Bearish candlestick price action at a Resistance level,

further enhances the potential of price moving lower.
183
We identify a Shooting Star candlestick.
184
The Shooting Star tests a resistance level. This combination strengthens
the case for an downward push in price action.
185
Price action moves downwards.
186
We identify a Bearish Engulfing candlestick.
Let’s zoom out and see if there is any resistance.
187
Yes, the Bearish Engulfing candlestick tests a major resistance level.
This strengthens the case for a downward push in price action.
Let’s zoom back in...
188
The combination of the Bearish Engulfing

candlestick and the resistance level, sends
price action downwards.
189
Trade Sizing
190
Trade Sizing - Losses
• Losses trigger fear and uncertainty, and affect our confidence,

even if the loss had nothing to do with us.
• Don’t take losses personally.
• Focus on maintaining low risk and analyse why you lost.
This is why we trade size and use stop

losses.
191
Trade Sizing - The Ratio
Account Risk (1% of trading account)
Trade Risk (points of risk)
192
Value of Point
Trade Risk (points of risk) 1.451 5
193
• Account risk is always a

percentage of your account.

• 1% of your account is the
maximum amount to risk on
Trade Risk (points of risk) any single trade.
194
• Trade risk is the number of

pips/points that you are risking on
your trade.
• It’s difference between your entry

Trade Risk (points of risk) price and your stop loss.
195
Trade Sizing - Example
Account Balance Account Risk =

=
$10,00 $100
0
(1% of Account)
Account Risk = $100
196
Entry & Stop Loss
(buy trade) = Trade Risk =
Entry 1.7550
25
(1.7550 – 1.7525)
Stop Loss 1.7525
Account Risk = $100
Trade Risk = 25 points

197
Account Risk = $100 Value of

Point
$4
198
$4 of profit for
Value of every upward
Entry 1.7550
Point point
movement.
$4
199
Value of $4 of profit for

Point Entry 1.7550 every upward
point
$4 movement.
200
Trade Sizing
How many consecutive trades

must be lost to wipe out an
entire trading account when
risking
1% per trade?
201
Trade Sizing
Impossible...
202
Trade Sizing - Cumulative Risk
• The maximum amount of capital risk on
any individual trade is 1%.
• The cumulative risk for any set of active
trades is 3%. More than 3% exposure to the
financial markets is too much.
• No more than two trades open of any one

currency i.e. GBPJPY, AUDJPY, EURJPY - too
much exposure to JPY.
203
Account Risk = ?
Trade Risk = ?
$10,000 account balance
Entry (buy): 0.8785
Stop Loss: 0.8765
204
Account Risk = $100 ($10,000 x 1%)
Trade Risk = ?
Entry (buy): 0.8785
Stop Loss: 0.8765
205
Account Risk = $100 ($10,000 x 1%)
Trade Risk = 20 points (0.8785 - 0.8765)
Entry (buy): 0.8785
Stop Loss: 0.8765
206
Account Risk = $100 ($10,000 x 1%) Value per Point
Trade Risk = 20 points (0.8785 - 0.8765) $5
Entry (buy): 0.8785
Stop Loss: 0.8765
207
Profitable exit at
0.8837
Entry (buy): 0.8785
Stop Loss: 0.8765

208
Profitable exit at
0.8837
52 point profit at
$5 per point =
$260
Entry (buy): 0.8785
Stop Loss: 0.8765

209
Reward to Risk
210
Reward to Risk
Would you risk your house for the sake of
winning a pair of trousers?
Risk Reward
211
Reward to Risk
NO WAY!
WHY?
Risk Reward
212
Reward to Risk
It just isn’t worth the risk.
Risk Reward
213
Reward to Risk
Would you risk a pair of trousers for a house?
Reward Risk
214
Reward to Risk
Of course. It is well worth the risk for the
potential reward.
Reward Risk
215
Reward to Risk In Pips - 1:1
To determine your risk in pips, calculate the number of pips from your stop loss to your entry
point. The number of pips you are risking is what you will also project as your target.
Target at 1.6990 Stop loss at 1.6300
130 Pips Reward 50 Pips Risk
Entry point at 1.6860 Entry point at 1.6250
130 Pips Risk 50 Pips Reward
Stop loss at 1.6730 Target at 1.6200
216
216
Reward to Risk Ratio
As a rule we must have at least 1:1 or greater potential between our entry and the
previous high/low.
Target Stop loss
1% Reward 1% Risk
Entry point Entry point
1% Risk 1% Reward
Stop loss Target
217
Reward to Risk - Short Example
In some cases, you

will be able to
check your
Reward:Risk ratio
just by looking at
the trade.
218
Stop Loss
Risk
Entry
Reward
Target
219
Winner
220
Trade Reward (points of potential profit)
221
Trade Reward (points of potential reward)
Ratio
Must be equal to, or greater

than, 1:1 to warrant a trade.
222
• Reward is the number of pips / points

that you are looking to collect on your
trade.
• This is the difference between your

Trade Risk (points of risk) entry price and your target price (your
target price is the predetermined exit
of the trade for a profit).
223
• Risk is the difference between your

entry price and your stop loss
• Trade risk is the number of points that

you are risking on your trade.
• This is exactly the same figure that is

used in the trade sizing ratio.
224
Reward to Risk Example - Buy Trade
Entry & Target = Trade Reward =

Target 1.7575
50
(1.7575 – 1.7525)
Entry 1.7525
Trade Reward = 50 points
225
Entry & Stop Loss = Trade Risk =

Entry 1.7525
25
(1.7525 – 1.7500)
Stop Loss 1.7500
Trade Reward = 50 points

226
Trade Reward = 50 points Reward to

Risk
Trade Risk = 25 points 2:1
227
Reward to Risk - Buy Trade Example
EUR/USD
Entry - 1.3550
Target - 1.3590
Stop Loss - 1.3530
What is your reward in terms of points?
What is your risk in terms of points?
228
EUR/USD
Entry - 1.3550
Target - 1.3590
Stop Loss - 1.3530
What is your reward in terms of points? 40 points
What is your risk in terms of points? 20 points
229

Risk
230
Reward to Risk - Sell Trade Example
EUR/USD
Entry 1.3650
Target 1.3500
Stop Loss 1.3700
What is your reward in terms of points?
What is your risk in terms of points?
231
EUR/USD
Entry 1.3650
Target 1.3500
Stop Loss 1.3700
What is your reward in terms of points? 150 points
What is your risk in terms of points? 50 points
232

Risk
233
Trading and the
News -
Understanding the
Impact
234
Trading and the NEWS
• As technical traders, we focus on the charts.
This does not mean that we ignore the timing
and release of certain economic data.
• The news informs us of whether or not it is a

good time to be trading. Once we ascertain
this, the rest is all technical.
235
We use Forex Factory for our NEWS releases.
Keep it simple at this stage –

focus on the Calendar section only.
236
Priority News
News The
Release Effect Secondary News
Interest Interest Rate Up, Currency Up
Rates News The
Release Effect
Employment Employment Down, Currency Retail Sales Sales Up, Currency Up
Down
Durable Rising DG Orders, Stronger

Trade Larger Deficit, Weaker Currency Goods Currency in the Short Term
Balance
ISM If Actual is Greater than Forecast

GDP Higher Economic Strength, (Purchasing = Good for Currency
Currency Up Orders)
NOTE: The USD is the “central” global currency –

pay close attention when the news is related to USD.
237
Not all news releases have the
same effect on the market.
RED is high
impact.
ORANGE is medium
impact.
is low impact.
238
Big moves occur when the Forecast is
very different to the Actual. Remember,
the market has already factored in the
Forecast, resulting in a “non-shock” to
the market if the Actual is similar to the
Forecast.
GREEN means the Actual was more

positive than the Forecast.
RED means the Actual was more

negative than the Forecast.
239
Trading and the NEWS - NFP
120 PIP drop in the EUR/USD

off the back of the news...
YOU DO NOT WANT TO MESS

WITH THAT. STAY AWAY FROM
NON-FARMS.
240
Trading and the NEWS - Your Calendar
Be alert for heavy news release DAYS.
Be alert for heavy news release DAYS.
241
News effects intraday, short-term
trading. End of day positions are
effected, but not to the same extent.
Pick your calendar, be aware of what to

watch out for. The moment you find
yourself considering trading the news,
run away from your computer...
242
Core Strategy
Intraday
243
5 Questions To Ask Yourself
When Looking At a Chart
1. What is the market doing? Is it Trending, Ranging or Noisy?
2. What are the MAs doing? Are they in the correct order? Are they
pointing in the direction of the trend? Are they crossing over each
other?
3. Where are the obvious support and resistance levels? Remember

these often combine with round numbers.
4. What part of the pulse / cycle is price currently in? With the trend
or counter trend?
5. What are the price action candles doing? Are they forming a
pattern?
244
Intraday - Core Strategy - Rules - Buy
Chart time frame 1Hr - Place entry orders between 7am and 4pm. Always wait for the close of
the candle. Remember, trade only currency pairs with a spread less than 8 pips.
• Is Price ABOVE the 20 SMA, 50 SMA and 200 SMA?

• Are the SMA’s in the correct stacking order?
• Is the RSI pointing UP?
• Is price close to or bouncing off the 20 SMA?
• The Bullish entry signal, should be one of the following:
- A rejection candle (Hammer) – green reversal colour is a bonus.
- An Inside candle.
- An Engulfing candle – ideally small to medium sized.
- An Indecision candle (Doji) – needs a Bullish candle to confirm.
• 1Hr entry chart requires 4Hr and Daily agreement – are they all Bullish (BUYING)?
• Identify horizontal levels on the Daily chart.
• Are there any SMA’s that could be nearby resistance?
• Entry: 2 pips above the high of the candlestick or direct to market.
• Stop Loss: 5 pips below the low of the candlestick or behind the 20 SMA.
• Target: Minimum 1:1
245
Intraday - Core Strategy - Buy Set Up
Target
Entry
Stop
20 SMA
50 SMA
200 SMA
246
Intraday - Core Strategy - Buy Set Up
RSI (6) - must be pointing UP
80
Upper Band
20
Lower Band
247
Intraday - Core Strategy - Buy Entry
Target Order:
Previous resistance or 1:1
Trade Triggers
Buy Order:
2 pips above the high or
direct to market
Stop Loss:
5 pips below the low or
behind 20 SMA
248
Intraday - Core Strategy - Rules - Sell
Chart time frame 1Hr - Place entry orders between 7am and 4pm. Always wait for the close of
the candle. Remember, trade only currency pairs with a spread less than 8 pips.
• Is Price BELOW the 20 SMA, 50 SMA and 200 SMA?

• Are the SMA’s in the correct stacking order?
• Is the RSI pointing DOWN?
• Is price close to or bouncing off the 20 SMA?
• The Bearish entry signal, should be one of the following:
- A rejection candle (Shooting Star) – red reversal colour is a bonus.
- An Inside candle.
- An Engulfing candle – ideally small to medium sized.
- An Indecision candle (Doji) – needs a Bearish candle to confirm.
• 1Hr entry chart requires 4Hr and Daily agreement – are they all Bearish (SELLING)?
• Identify horizontal levels on the Daily chart.
• Are there any SMA’s that could be nearby support?
• Entry: 2 pips below the low of the candlestick or direct to market.
• Stop Loss: 5 pips above the high of the candlestick or behind the 20 SMA.
249
Intraday
200 SMA
- Core Strategy - Sell Set Up
50 SMA
20 SMA
Stop
Entry
Target
250
Intraday - Core Strategy - Sell Set Up
RSI (6) - must be pointing DOWN
80
Upper Band
20
Lower Band
251
Intraday - Core Strategy - Sell Entry
Stop Loss:
5 pips above the high or
behind 20 SMA
Sell Order:
direct to market
Trade Triggers
Target Order:
Previous support or 1:1
252
End of Day
Strategy
253
5 Questions To Ask Yourself
When Looking At a Chart
1. What is the market doing? Is it Trending, Ranging or Noisy?
2. What are the MAs doing? Are they in the correct order? Are they
pointing in the direction of the trend? Are they crossing over each
other?
3. Where are the obvious support and resistance levels? Remember

these often combine with round numbers.
4. What part of the pulse / cycle is price currently in? With the trend
or counter trend?
5. What are the price action candles doing? Are they forming a
pattern?
254
End of Day Strategy - Rules - Buy
Daily chart - providing the entry price is still valid, place entry orders between 9pm and
6am. Avoid placing trades 15 minutes either side of 10pm - spread too large.
• Has the 5 SMA crossed ABOVE the 10 SMA?

• Is STOCHASTIC in the lower 20% - 50% range and pointing UP?
• The Bullish entry signal, should be one of the following:
- A rejection candle (Hammer) – green reversal colour is a bonus.
- An Inside candle.
- An Engulfing candle - ideally small to medium sized.
- An Indecision candle (Doji) - needs a Bullish candle to confirm.
• Entry: 5 pips above the high of candlestick.

• Stop Loss: 100 pips below the low of the candlestick.
• If the order doesn’t activate within 24 hours – cancel and re-evaluate the market.
255
End of Day Strategy - Buy Set Up
5 SMA crosses ABOVE 10 SMA
5 SMA
10 SMA
256
Stochastic - BELOW 50% and Pointing UP
80%
50%
20%
257
Target
5 SMA
Entry
Stop 10 SMA
BULLISH candle after SMA crossover
5 SMA has crossed ABOVE the 10 SMA
258
End of Day Strategy - Buy Entry
Target Order:
Previous resistance or 1:1
Trade Triggers
Buy Order:
5 pips above the high
Stop Loss:
100 pips below the low
259
End of Day Strategy - Rules - Sell
Daily chart - providing the entry price is still valid, place entry orders between 9pm and
6am. Avoid placing trades 15 minutes either side of 10pm - spread too large.
• Has the 5 SMA crossed BELOW the 10 SMA?

• Is STOCHASTIC in the upper 80% - 50% range and pointing DOWN?
• The Bearish entry signal, should be one of the following:
- A rejection candle (Shooting Star) – red reversal colour is a bonus.
- An Inside candle.
- An Engulfing candle - ideally small to medium sized.
- An Indecision candle (Doji) - needs a Bearish candle to confirm.
• Entry: 5 pips below the low of candlestick.

• Stop Loss: 100 pips above the high of the candlestick.
• If the order doesn’t activate within 24 hours – cancel and re-evaluate the market.
260
End of Day Strategy - Sell Set Up
5 SMA crosses BELOW 10 SMA
5 SMA
10 SMA
261
Stochastic - ABOVE 50% and Pointing DOWN
80%
50%
20%
262
5 SMA has crossed BELOW the 10 EMA
Bearish candle after SMA crossover
Stop
10 SMA
Entry
Target 5 SMA
263
End of Day Strategy - Sell Entry
Stop Loss:
100 pips above the high
Sell Order:
direct to market
Trade Triggers
Target Order:
Previous support or 1:1
264
Trading
Notes
265
Account Size and Lot Size
In Forex, we trade in quantities called Lots.
Approximate
Account Size Lot Size Monetary Value per
pip
£500 and below 0.01 10p or less
£500 - £1000 0.01 – 0.05 10p – 50p or less
£1000 - £2000 0.05 – 0.1 50p - £1 or less
£2000 and above 0.1 – 0.5 £1 – £5 or less
266
Trading Platform Terminology
• Margin – The amount of money in your account that is currently being used for open
trades.
• Free Margin – The balance of your account minus the margin.
• Margin Level – Gives a quick visual of your level of margin, particularly how close you
are to reaching 100% margin level (equity / margin x 100).
• Balance – Amount in the account (regardless of running P/L).
• Equity – Account balance plus or minus P/L.
• P/L – Profit minus loss of all open positions.
• Swap Rate / Rollover – Is the finance charge payable in order to hold a position open
overnight (this is charged at 10pm UK time).
• Margin Call – Is the level at which you receive a warning stating that your account has
slipped past the required margin level percentage and there is not enough equity
remaining in the account to support your open positions.
267
267
Types of Orders
• At market - Executes trade at current market price.
• Buy limit - An order to buy (open a long position) at or below a specified

price (which is below the current market price i.e. a better price).
• Sell limit - An order to sell (open a short position) at or above a specified

price (which is above the current market price i.e. a better price).
• Buy stop - An order to buy (open a long position) at or above a specified

price (which is above the current market price i.e. a worse price).
• Sell stop - An order to sell (open a short position) at or below a specified

price (which is below the current market price i.e. a worse price).
268
268
Trading Cornerstones
1. A clear understanding of your Trading

Strategy
2. A defined Trading Routine
3. A Trade Journal - a record and evaluation of
all your trades - profitable and non-profitable
4. A positive attitude
269
Daily Trading Routine
✓G
A solid trading routine helps you become
an efficient and effective trader.
• When do you trade?
✓G
• How long do you spend trading?
• How do you mentally prepare for
✓g your trading session?
270
Live Trading Routine
1. Check the NEWS calendar.

2. Check Live Trades.
– Bank profit and or,
– Move Stop Loss.
3. Market Scan.
271
Trade Journal
A Trade Journal should include the following:
• Time, date, currency and strategy name.
• A checklist of criteria of why the setup is strong - what the set up scored.
• Long or Short - Entry, Stop, and Target price numbers.
• A visual record (screen shot) of each trade set up - and a screen shot of the
outcome.
• Psychology - thoughts/concerns/feelings at the time of placing the trade.
• Outcome - the final close price, and % profit banked, as well as
thoughts/concerns/feelings about the final result.
• A-ha! Moments - psychological breakthroughs and expansions in self-
awareness.
272
Beginner Traders vs. Experienced Traders
Beginner Traders: Experienced Traders:
Impatient and excited Patient and calm
Don’t wait for their correct signals Always wait for their correct signals
Risk too much capital Treats capital like a valuable resource
Hate to be wrong Want to know if they’re wrong as soon as possible
Slow to change Quick to change

Avoid taking losses Anticipate and manage losses
Afraid of losses Understand losses are part of the game
Avoid autopsies of their losing trades Dissect in great detail their losing trades
See their losses as mistakes or as being wrong No ego - study each loss and learn the lesson
Positive expectation Expects a positive outcome

Increases risk, hoping to make up for their losses Never increases risk. Understands that it’s best to
always start from fresh.
Sees trade setups after they occur and chases them Knows where trades will setup and waits for signal
273
Trading - Positive Attitude
• Having a positive attitude allows
you to receive constructive criticism
and respond appropriately.
• It creates a better mental
environment to learn and take on
new concepts.
• It also allows you to think clearly
and stay true to your commitment,
even during potentially difficult
times.
274
2 Day
Introduction to
Forex
275

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2 Day

Forex is a global decentralised – largest and most liquid

London 7:00am 5:30pm

New York 7:30am 5:30pm

Tokyo 5:30pm 7:30am

The London session accounts for 35% of daily volume transactions.

EURUSD European Monetary Unit Euro

USDJPY Japanese Yen Yen

GBPUSD Great British Pound Cable

USDCHF Swiss Franc Swissy

AUDUSD Australian Dollars Aussie

USDCAD Canadian Dollars Cad

NZDUSD New Zealand Dollar Kiwi

Currency Pairs - pips 1.4515

Price moves up and we buy.

GBPJPY 172.50 / 172.53

Candlesticks show Open Close

Low Low Price

Provides insight into the big

The 4 Hr chart provides insight

The 1 Hr chart is an intra-day

– Three or more touches for confirmation

– Longer the time period, the stronger the level

– Higher the time frame, the stronger the level

– The more bounces than breaks, the stronger the level

– Often occurs at whole numbers – 1.4500 – 123.00 – 1.000

It is rare that a level of support will be exact,

Identify where the price is supported in

Support holds up the price action above it.

Support holds up the price action above it.

Support holds up the price action above it.

It’s all about practice and training your eye to

Go through the following examples and identify

A resistance level is a price zone that the market

What happens when something becomes

What happens to the price/value when

Excessive selling and lack of

It’s all about practice and training your eye to

Go through the following examples and identify

A trend line is not enough to determine a

Notice that the lows are

• Down trends - lines are drawn

It’s all about practice and training your eye to

Go through the following examples and identify

Notice that the lows are

BUY (LONG) TRADES SELL (SHORT) TRADES

Every market pulse has two

Every market pulse has two

Too late in the push stage

Too late in the push stage

The late trader, wants more ‘proof’ that the market is

Entering the wrong stage of the market pulse usually

Can you see the market pulse?

Can you see the market pulse?

Can you see the market pulse?

• There are many types of moving averages.

We use the 20 SMA, 50 SMA and the 200 SMA

Warning: an extremely overbought indicator can signify