FOREX TRADERS MANUAL

Tutorial 240trade.com
INDEX
Introduction
The Essentials of Forex trading
The Dangers of Leverage
Psychology
Mentors
Trading Books
Training Courses
Financial markets
Fundamental vs Technical analysis
The Majors
Which Pair to Trade
Timeframes
Trading plan
Trade your plan
Types of Trading Days
Types of Professional Investors
What type of Professional Strategies is the Most Profitable?
Which Strategy is best for me
The Market Place and its Participants
Support & Resistance
Japanese Candlesticks

Strategies
• ANALYSIS: Pivot-Based Analysis
• ANALYSIS: Pivot-Based Analysis Pivot Trend Analysis
• ANALYSIS: Pivot-Based Analysis Pivot Width
• ANALYSIS: Range Analysis Average Daily Range
• ANALYSIS: Range Analysis Average Daily Range
• Fibonacci
• Moving Averages
• ANALYSIS: The Market Profile™ (MP)
• ANALYSIS: The Market Profile™ (MP) Structure

Risk Reward Ratios

About our Courses
Introduction
There is a whole learning process at 240Trade that we teach however we can give you the following
insights within this document

The trading world is full of concepts and bad ideas, most of these concepts are promoted by the
financial industry.

They promote these concepts in order to attract liquidity to markets and thereby make money.

Many of these concepts are designed to look attractive and easy to use. There promoted via
multimillion-dollar advertising as an easy and fast way to make money.

Trust me they won’t make you money. There is more to trading then what meets the eye.

And the facts are that huge losses are made by inexperienced traders following such quick get rich
scheme concepts.

The figures show that 94% of traders eventually lose their investment within 6 months and become
nothing more than gains and liquidity to the financial industry itself!

This industry shows spectacular gains on other people’s money, and in order to maintain the machine
they use spectacular marketing to promote a get rich quick illusion that is simply fantasy.

It’s the industry itself that is getting rich therefore the industry continues to invest significant amounts of
capital to promote trading concepts that attract new inexperienced traders to bring more and more
liquidity.

It is estimated that retail traders combined losses total 3 billion per day in the FX Markets alone.

Therefore, 240Trade have compiled a learning book series of professional trading methods.

Those methods we have compiled! Reveal strategies that are proven by the test of time. You will
benefit from these methods.

You will discover the best setups to engage the market and how to become profitable.

Be under no illusion, we are not promising a get rich quick scheme. It is not easy to achieve great
trading results.

However, if you have the will and dedication, then over time these concepts will make a profitable
trader.

For some it takes months and for others its takes years. Mastery requires consistent practice and study
at markets.

However, those who endure and learn can pass through the tunnel and find success as a profitable
Trader.

WE look forward to you joining our classes ! So lets take the journey together as we show you how to
reach success.

“People who look for easy money invariable pay for the privilege of proving conclusively that it cannot
be found on this earth.” - Jesse Livermore
The Essentials of Forex trading
With Forex you are trading two currencies against one another. For example, you may buy Euro in
Exchange for Yen and make on the difference of the exchange rate.

You must decide how much base currency you want to invest. The market allows leverage so that you
don’t have to have the entire amount of the base money in your account.

In Forex for example the Euro. Minimal movement is one pip. For standard basic 1 lot (100,000 units)
move of 1 pip is equal to 10$. These rates are fluctuating as they are not immune to the inter-market
swap rates.

The Dangers of Leverage

Many Traders lose their initial Investment in Trading. because they do not understand leverage.

Leverage is a powerful but dangerous if not used properly. Leverage is just fine when the trade is in
you favor. But when thing go wrong you can lose your entire account.

New traders should start from lower sizes – micro lots or even nano lots in order to protect your capitol
from the dangers of over leveraging.

Psychology
When you are losing money, you feel fear. You hesitate to close losing position “because it may turn
around”

When your trade is in profit, you are greedy. You hesitate to close position, because it may go higher.

This kind of emotions occurs only when you are trading you will learn over time that most of your loses
come from not following a trading plan and allowing emotions to play your decision making process.

To overcome the above you need to have your trading plan on paper. Make a Trade plan and stick
to it this will minimize the impact of emotions in your trading.

Mentors
Its is important to find a good mentor as uncovering the hidden structure of the market can take years
without guidance. Its not easy to to find good mentors as many great traders are not skilled educators.
However, if you do perceiver then you will begin to understand their concepts,

Finding a great mentor is the fastest way to learn. There are different styles of trading, so you must find
which one suite you best.
Trading Books
Traders have to build knowledge and therefore it is important to read trading books. Here are some of
the Books we recommend.

Forex101 – 240Trade
Pivot Boss – Frank Ochoa
Trading in the Zone – Mark Douglas

Training Courses
Trading is a professional business and there are strategies that have been proven by the test of time.
It up to your initiative to pick the right courses for you to shorten your journey to becoming a successful
trader.
Financial markets
The financial market is a broad term describing any marketplace in which financial Instruments are
packaged and sold, these include securities under products such as equities, Bonds, currencies and
derivatives.

• Equities are stocks and shares

• Bonds represent debt obligations – and therefore are a form of borrowing. Bonds can be
issued by private companies, Central Banks or Governments!
• Currencies are foreign exchange rates. It includes all aspects of buying, selling and
exchanging currencies at current or determined prices.
• Derivatives are an arrangement or product (such as a future, option, or warrant) whose value
derives from and is dependent on the value of an underlying asset, such as a commodity,
currency, or security.
Stocks
The stock market is a financial market that enables investors to buy and sell shares of publicly traded
companies. The primary stock market is where new issues of stocks are first offered. Any subsequent
trading of stock securities occurs in the secondary market.

(OTC) Over-the-Counter Market

The over the counter (OTC) market is an example of a secondary market. An OTC market handles the
exchanging of public stocks not listed on the major Exchanges and the companies Traded on the OTC
are smaller organizations that require less regulation by the over sight authorities such as the SEC
(Securities and Exchange Commission.

Bonds
Bonds are securities! For example, an investor loans money for a defined period of time at a pre-
established rate of interest. Bonds are issued by corporations, but may also be issued by municipalities,
states and federal governments from around the world.

Money Market
The Money Market! Trades highly liquid and short-term maturities which are short-term borrowing and
lending of securities with a maturity typically less than one year.

Derivatives
Derivatives are financial instruments/securities that derive its value from its underlying asset. The value
of a derivative contract is determined by the market price of the underlying item. These instruments
include futures, options, forward contracts, swaps and contracts-for-difference.

Forex Market
The FX Market is the most liquid market in the world, as cash is the most liquid of assets. The interbank
market is the financial system that trades currency between banks.
Fundamental vs Technical analysis
Both are as important as the other in Trading so do not ignore the other side. Fundamentals move
markets as the news is the most watched driver of sentiment. Technicals enable us to prosper from
execution however fundamentals drive the sentiment which shows itself as momentum.

The Majors
The most commonly Traded currencies are known as the majors and they are listed below:

• EUR/USD: The euro and the U.S. dollar.

• USD/JPY: The U.S. dollar and the Japanese yen.

• GBP/USD: The British pound sterling and the U.S. dollar.

• USD/CHF: The U.S. dollar and the Swiss franc

Which Pair to Trade

Select one pair. It is enough. Every pair has its own characteristic. If you jump between pairs, you won’t
notice this. Also, it is important to check situation on higher time frames. When you do that on many
trading pairs, it is hard to follow price action and you won’t be able to optimize your position.

Timeframes
There are bigger chances that you will lose money on lower time frame than on higher time frame. Its
important to look at executing trades at major key levels in order to increase your chance of success.
Lower time frames are full of noise and volatility.
Trade Plan
It is really important to have a Trade plan as the market plays with emotion and without a trade plan
you will have little chance of success or follow through.

Simply put traders who can’t follow a plan end up in trouble. There is a whole learning process at
240Trade that we teach however we can give you the following insights within this document.

The Trading plan allows you to benchmark your strategies and keeps you in check and focused.

Your Trade plan should include at least the following:

• Which currency pair you trade

• Which time frames you trade - when you enter a trade (based on what strategy / signals) When
to exit a trade (based on what strategy / signals)
• What stop losses will you use
• What is your risk per trade
• What are the execution price you have planed to engage the Market.
• Reasons why you feel that this is the best place to do business.
• Your plan should include follow up notes and your results.

The trading plan can help you master Forex.

Trade your plan

As mentioned in the above section you must have a trade plan so trade your plan and remember! In
trading you must have a written trade plan without one you will end up ignoring your pre-market
analysis and end up taking trades based on emotions and not trades based on your trading plan.
Types of Market Days
"Your ability to determine which market participants are influencing price will allow you to judge the
conviction and behavior of price movement"

There are 5 other types of market days in all and all have importance. Will cover all of these
concepts at 240trade educational courses.

Here are the types of Market days in which you can learn to predict from the market open. Those
predictions are covered within our courses.

Here are the types of Market Days:

1 -Trend day
2 -Double Distribution Day
3- Typical Day
4- Expanded Typical Day
5 Range Day
6 -Sideways day

The last Trading day on the below chart is GBP/USD and the opening range led to a double distribution
day on its last trading day.
Types of Professional Investors
Generally, in Trading we can categorize the 5 types of professional Traders as follows:

• Long Term investor

Looks to hold a position for not less than a year
• Position Trader
Holds a trade for a minimum hold of one month
• Swing Trader
Capitalizes on weekly Swings
• Day Trader
Looks to trader high frequency to capitalize on short term Scalps and holds a trade not more
then 1 day

What type of Professional Strategies is the Most Profitable?

There is no strategy which is better than any other, in most part it all depends on the Trader and how
they manage their trades against risk reward.

What is the best Strategy for me?

This question depends most on the Traders patience and discipline. Patient Traders may look longer
term as that may suite their personality. Some traders do not have patience and look at short term
gains. It depends on you.

The Market Place and its Participants

The marketplace exists to facilitate trade between buyers and sellers (traders). There are two types of
buyers and two types of sellers.

Understanding these types of buyers/sellers will give you a better understanding, behind the reason
why price reacts in at key market levels.

Professional Participants at Market seek Value

1→ Initiative/intuitive buyer - Engages with the market when price is at or above value.
2→ Initiative/intuitive seller - Engages with the market when price is at or below value.
3→ Responsive buyer –Engages with the market when price is below value.
4→ Responsive Seller – Engages with the market when price is above value.

Within the below, you can see responsive and intuitive buyer/Sellers engaging the market at areas of
perceived value:
Chart below spotlights price being above value. Note that price auctions lower after the high as price
was not accepted as it was considered overpriced (overvalued}. Price auctions lower to find willing
market participants.
Buyers/sellers will start to actively engage with the market when they consider that price is
above/below value, in the first example at the far left of the chart, you can now understand what is
behind that price reaction.

When responsive buyers perceive that price is below value, they will actively engage with the market
in order to trade the price up to achieve fair value, this reaction unbalances the market, responsive
buyers outnumber the sell orders at this price level forcing the market to move up.

When price is perceived to be above value then intuitive buyers may engage with the market at this
level causing the market to breakout the range, intuitive buyers are the ones normally responsible for
the major moves, where price breaks the ranging behavior and moves to seek the next price of
agreement, on the other hand responsive buyers/sellers are the ones that trade the edges of the
ranges.

It’s not difficult now to understand that responsive traders are more exposed to failure as they enter
early without additional confirmation.

Support & Resistance

There are many ways to define support and resistance and there are many ways that, support and
resistance can fail acting as a support or fail acting as a resistance or otherwise be accepted as a
support or accepted as a resistance by the market supply/demand.
Support is a price area in a downtrend where price has significant demand level and as consequence
it may pause and/or be rejected. Support area is an area where price is considered to be
undervalued, and an area where price may appreciate.

Resistance is a price area in an uptrend where price has a significant supply level and as consequence
it may pause and/or be rejected. Resistance area is an area where price is considered to be
overvalued, and an area where price may depreciate.

If a resistance area is broken, it will become a support area. And likewise, if a support area is broken it
will become a resistance area. In other words, resistance turns in to a support when broken, and
support turns in to a resistance when broken, however this is in no way a certainty, as price can break
down below support and return back above that support or break above resistance and return back
below that resistance. Traders refer to this event as the false break scenario, a fake out or failed break
of support/resistance, in other words, sometimes price seems to be breaking the support/resistance
area by over shooting that area by 5/10 points but soon will fail to resume the breakout and reverse
the breakout direction, respecting/rejecting that support/resistance area.

Support/resistance areas present as potential trade opportunities that include: entry, target and exit
stop loss points. Price can only, and will always do one of the following 3 things at the support or
resistance zones:

• Price accepts the support or resistance area and pause or reverse the direction of the initial
move;
• Break out from support or resistance area, continuing the direction of the initial move and will
search for the next support or resistance area;
• Fake out from Support and Resistance and pause or reverse the direction of the initial move.

You can therefore assume, that support and resistance areas are looked at by the average traders, as
areas where to execute a trade. However, the market quite often breaks/false breaks these levels as
supply and demand is greater or lesser then expected at the resistance or support level.

So how will you know or learn how to identify the support and resistance areas that represent good
trading opportunities? The answers to that question we answer within our Forex 101 e book. We
recommend that you continue to learn with us.
In the chart! Take notice of how the price reacts to Support and Resistance, always keep in your
mind that only 3 things can happen:

• Price Accepts the support/resistance area

• Price breakout from support/resistance area
• Price fake out from Support/Resistance area
Japanese Candlesticks
Japanese candlestick charts have been used for centuries to develop forecasts for investment. The
framework of a Candlestick consists of its open and Close, its Real Body and its shadow which is also
referred to as its wick.

The green candle is commonly referred to as bullish or long candlestick and the red candle is
commonly referred to as bearish or short candlestick.

A bull candle is a visual representation that the buy power was stronger than the sell power, dragging
the price higher within that given time period, in opposite a bear candle is a visual representation that
the sell power was stronger than the buy power and as consequence dragging price lower within that
given time period.

Like a tug of war sellers dragged prices lower within the bear candlestick pattern and within the bull
candlestick formation buyers pushed sellers back and pushed prices higher.

Candlestick have a huge potential, they will unlock the very deep insights of trading, and they
represent the bedrock of pricing in financial markets.
Strategies
There are many Trading strategies and it can become over whelming for new traders, therefore in this
part we will provide some insights on parts of Strategies that can assist you in building yours

We recommend that you look deeper into joining the 240trade team for a greater understanding of
proven techniques.

The following will attempt to guide you on some of the techniques out there and remember essentially
it come down to what suites you.

In this part of guide, we will investigate different trading tools and strategies. Its just a guide as the topic
is wide and is therefore just an overview and it’s your choice to make.

There are many approaches here. Some traders prefer to follow trend on longer time frames. Others
like to open positions more often.

We can break down the types of Trader as follows:

1 Investors
2 Position Traders
3 Swing Traders
4 Day Traders

Some of the Great strategies that these types of Traders utilize may include the following tools.

Pivot points
Fibonacci
Moving Averages
ADR
Market Profile
Pivot points:

They are calculated based on the prior period price action and are widely used by Traders, Here are
the calculations for computing and understanding the structure of a pivot point.

1-hour Pivot Points – calculated on high, low, close of previous hour

4-hour Pivot Points – calculated on high, low, close of previous 4 hours
Daily Pivot Points – calculated on high, low, close of previous day
Weekly Pivot Points – calculated on high, low, close of previous week
Monthly Pivot Points – calculated on high, low, close of previous month
Yearly Pivot Points – calculated on high, low, close of previous year

You can build your main trading strategy based on Pivots or you can use them as an addition to other
strategy. At 240trade we have strategies that we can assist you with and we are here to help you.

In the below chart see how price on this occasion respected its pivot points. The circle is the place I
set my target when I took the trade at the monthly pivot point S1.
ANALYSIS: Pivot-Based Analysis
Pivot-Analysis’s is universally applicable to all financial markets and is market generated based on price
and is watched by professional Traders. Floor Pivots are based on price and volume and attract
Traders at key Pivot levels. This enables predictive market analysis as predictive means that pivots are
a leading indicator and not a lagging indicator.

Leading Indicators are the best tools to apply to trading live markets as they offer accurate forecasting
as well as offering traders a solid way to anticipate price movement.

Pivots are best applied when there is confluence with other leading indicators such as channels and
Trend. Pivots offer a great way to anticipate areas of support and resistance which provides traders
with a powerful edge. Pivot points can be calculated at all time frames and reveal areas of interest
not only to Day Traders but also Position and Swing Traders Key levels.
ANALYSIS: Pivot-Based Analysis Pivot Trend Analysis
Being able to forecast and anticipate future price moment is a great advantage to Traders. The
predictive nature of pivots enables the trader to have a competitive advantage due to the predictive
nature of pivots.

1. Predict future price movement and market behavior

2. Identify value areas on charts that matter
3. Pivots offer a great support or resistance to choose and engage the market! Buy the dips to the
pivots during uptrend and sell the of rips at the pivot during a down Trend.
• Higher Value: When pivot levels trend higher each day pivots identify that the trend is bullish.
• Lower Value: When pivot levels trend lower each day pivots identify that the trend is bearish.

HIGHER VALUE: The below chart is a representation of when pivot levels trend higher each day pivots
identify that the trend is bullish. “Buy the Dips”
LOWER VALUE: The below chart is a representation of When the pivot levels trend lower each day
therefore the pivots identify that the trend is bearish. “Sell the Rips“

ANALYSIS: Pivot-Based Analysis Pivot Width

Pivot width analysis is true to Auction Market Theory in its approach to market behavior. The pivots
width or known as market depth seeks to identify areas in which bulls and bears will defend value.

Using Pivot width we can anticipate the type of trading day ahead and the types of trading day used
to describe such events are true to Auction Market theory and its concepts.

How we anticipate the type of trading day ahead is described as follows using pivot width analysis
and auction market theory.

By measuring pivot width of the value area it is possible to forecast the type of trading day ahead.
Pivot width allows accurate forecasting and is predictive of market sentiment.

Auction Market Theory bests describes the type of Trading day ahead and Pivot width analysis is its
foundation’

Anticipating Market Behavior using pivot width analysis

❖ When Pivot width is wider than its average historical market depth then the forecast implies a
Trading range day ahead (WIDE VALUE)
❖ When the market demonstrates an extremely Narrow pivot then the potential of a trend or break
out day is most likely. The chances are high during Narrow Pivots ranges for a volatile break out or
a Trend Day ( NARROW VALUE)
❖ When narrow values over laps or falls inside prior value the chances of break out are high and so
are volatility as price is squeezed inside a tight volatile range and this forecasts expansion or a rapid
breakout as market seeks new value. When market Seeks new Value this behavior is known as price
discovery phase to professionals (INSIDE VALUE)
Market Behavior:

Typically, the market either follows one of the two behaviors.

• Trading range
• Trending Day

In the below chart it represents how pivots can virtually predict the type of market behavior in
advance. There fore Pivots strategies are predictive in nature.

• INSIDE VALUE A+B > = Potential increase in volatility pre-break out

• NARROW VALUE C > = Breakout
• WIDE VALUE D > = Potential range day if this value is prevalent after expansion
Fibonacci trading tools

Fibonacci retracement and expansion are also popular tool used by traders as like pivots helps to
predict future price movement. Fibonacci helps to predict where correction might end.

Fibonacci retracement helps you to find places where correction might stop. With that knowledge you
can plan to enter a position from there in a direction of main trend.

Fibonacci expansion You can also predict where there will be the next high or low. You can do this
with Fibonacci expansion.

There are more levels, but standard are 61.8%, 100% and 161.8%.

To Draw a Fibonacci expansion then the below explains just how to do that:

A and B from main swing (low and high) and point C where correction ended (similar points as you
would be looking to draw retracement levels.

Notice that both Fibonacci and Pivot points give you a level of support and resistance.
Moving averages

Moving averages are a great tool within Trending markets however they are completely useless in
ranges. Many investors make this mistake and try to use moving averages in all market conditions. In
ranges they simply do not work. However within Trending market Moving averages can be used as a
support to by the dip in a uptrend or to sell the rip in a down trend.

Here is a chart example of price pulling back to its moving average within a trend.

Remember moving averages is a trend indicator so just use them when the market is trending. Some
averages are commonly used by traders, for example 50, 100 or 200 averages. They are very popular
and when price is moving near them then you can expect reaction.
ANALYSIS: Range Analysis Average Daily Range
The ADR is a powerful tool to measure targets and reversal points. The ADR simply measures the
average range of the pair for a selected Period. The ADR with confluence to other technical factors
picks reversals at confluence Zones.

An extended ADR is a higher probability entry if you combine it with pivot width forecasting. For
example, UCHF is trading today with in Yesterday’s daily Range and the last 2 days is well below its
average range for the past 10 days. So if you entered long on CHF to day your expectations would
have been between the higher time frame ADR and the lower time frame ADR for last 2 sessions.

ADR set ups

➢ ADR 1 Day - Measures Yesterdays Range and plots that range intra day
➢ ADR 5 to 30 Days - gives you the average range for the pair on over a longer period

ADR 5 DAY: The below chars represents average daily range base on 5-day period

Note how price digests at extended ADR and this can be used to pick reversals.
ANALYSIS: The Market Profile™ (MP)

The Market Profile™ (MP) is a proprietary Trading form of technical analysis and is powerful and can go
a long way toward making you a better trader.

For new Traders the Market Profile can seem complex and daunting to decipherer as the MP itself has
many components that make it work. Therefore we have broken its complexities into a simple way to
incorporate The Market Profile™ (MP) into your trading.

By simplifying the MP we can show you how you can process the most applicable information that
you need to identify structure and volume.

ANALYSIS: The Market Profile™ (MP) a brief History

J. Peter Steidlmayer created The Market Profile™ (MP) in the early 1980’s in a joint effort with the
Chicago Board of Trade. There goal was to display the time and price relationship as it unfolded in the
market. The result was a revolutionary way of using a visual “profile” representing time and price. This
paved the way for a whole new realm of market understanding, as it created a level of certainty and
transparency between which levels will buyers and sellers defend.
ANALYSIS: The Market Profile™ (MP) Structure
The Market Profile structure identifies market participation at specific price points, which allows us to
identify where price is overvalued, undervalued, and fair valued.

Letters are used to categorize segments of time next to price, which are technically called Time Price
Opportunities (TPO’s).
The first letter of the alphabet represents the first segment of time, which is usually the first 30 minutes of
the day.

In the above Chart the following explains its components,

The second letter will correspond to the second segment of the time, which is the next 30 minutes of
the day, and so forth.

Each new segment of time will correspond to a new letter until trading is done for the day. The profile
will continue to build out as the day progresses, providing you with a real-time account of market
activity as it unfolds.

While the structure is daunting and complicated we need only to focus on the following in trading:

The Point of Control (POC) is the price where the most trading activity occurred during the day period.
This price is significant because it represents the fairest price to both buyers and sellers.

The Value Area illustrates where 70% of the trading activity occurred during the day. The Value Area
High (VAH) and Value Area Low (VAL) tell you where buyers and sellers perceive price to be away
from fair value.
Risk/ratio reward
Risk/reward ratio at 1:2 or even 1:3 proportions. That means that trader is willing to risk for example 2$
per share and expect to earn 4$ per share (1:2) or 6$ (1:3). If the risk/reward ratio is around 1:1, they do
not enter a trade because it is not worth that risk.

About 240trade courses

240trade offers powerful training courses, that include e books and mentoring. Join us and uncover
ways to become a profitable Trader.