Forex Course Outline

FOREX COURSE OUTLINE
1. INTRODUCTION TO FOREX
2. CANDLESTICK PATTERN
3. SUPPORT AND RESISTANCE
4. ADVANCED TECHNICAL ANALYSIS
5. UNDERSTANDING MARKETING STRUCTURE
6. INDICATORS/PSYCHOLOGY IN TRADING
INTRODUCTION TO FOREX
• 1. HISTORY OF FOREX
• 2. TRADING HOURS
• 3. USING MT4
• 4. FOREX TERMS(UNDERSTANDING FOREX
TERMS)
• 5. LINE CHART, BAR CHART AND CANDLESTICK
CHART
HISTORY OF FOREX
• The Foreign Exchange market, also known as FOREX is a
global financial market in which currencies are traded.
• The origin of the forex market traces its history to the
eighteenth centuries. It was established in paris in 1867.
• FOREX is the largest financial market in the world, with a
volume of about $5.3 trillion a day. If you compare that to
the $25 billion a day volume that the New York Stock
Exchange trades, you can easily see how enormous the
Foreign Exchange is. It actually equates to more than
three times the total amount of the stocks and future
market combined.
TRADING HOURS
• REGION CITY OPEN CLOSE
• Asia Tokyo 03:00 12:00
• Hong kong 04:00 13:00
• Singapore 04:00 12:00
• EUROPA Frankfurt 09:00 17:00

• London 10:00 18:00
• AMERICA New York 16:00 24:00

• Chicago 17:00 01:00
• PACIFIC Wellington 00:00 08:00

• Sydney 01:00 09:00
USING THE MT4..........
FOREX TERMS
 Currency pair- The currency pair is the quotation of one currency against another. For example,
the euro and the US dollar make up the currency pair EUR/USD. The first currency(in our case, the
EURO) is the base currency and the second(the US dollar) is the quote currency.
There are three types of currency pairs;
1. Majors
2. Crosses
3. Exotic
Major currency pair have high liquidity,they are traded most and by a vast number of players
Examples of MAJORS include
*EUR/USD-euro/US dollar
*GBP/USD-pound/US dollar
*AUD/USD- Australian dollar/US dollar
*NZD/USD- New Zealand dollar/ US dollar
*USD/JPY-US dollar/ Japanese Yen
*USD/CHF- US dollar/franc
*USD/CAD- US dollar/ Canadian dollar
Other currency pair fall under the crosses and exotic

FOREX TERMS
• Exchange Rate-The Exchange rate is the rate at

which you exchange one currency for another. The
Exchange rate shows you how much of the quote
currency you need to buy 1 unit of the base
currency. For Example: EUR/USD=1.3115. This
means that 1 euro(the base currency) is equal to
1.3115 US dollars(the quote currency).
• Quote-This is a market price that always consists

of 2 figures, the first figure is the bid/selling price
and the ask/buying price (e.g 1.23458/1.12347)
FOREX TERMS
Spread- The spread is the difference in pips between
the ask price and the bid price. The Spread
represents the brokerage service cost and
replaces transaction fees.
• There are fixed spreads and variable spreads. The
fixed spread maintain thesame number of pips
between the ask price and bid price, and are not
affected by market changes
• Variable spreads fluctuate(i.e increase or
decrease) according to the liquidity of the market.
FOREX TERMS
• Pip-A pip is the smallest price change of a given exchange rate.
PIP is an acronym for price in points.
• Long- This refers to placing a buy trade i.e buying a currency pair.
It also denotes a bullish movement.
• Short- This is the opposite of long as it refers to the placing a sell

trade. It indicates a bearish movement.
• Time frame- the time frame denotes the time each candlestick
represent. As you can see on the candlestick pattern, each
candlestick represent the time on the chart.
FOREX TERMS
• Bullish- Means appreciating or a rise.
• Bearish- Means depreciating or a fall.
• Lot- Forex is traded in amounts called lots. One standard lot has 100,000
units of the base currency while a micro lot has 1,000 units.
• Take profit(SL)- This is an order that closes your trade as soon as it has
reached a certain level of profit
• Stop loss(TP)- It is an order to close your trade as soon as it reaches a

certain level of loss. With this strategy, you can minimize your loss and
avoid losing your capital.
FOREX TERMS
• Leverage- Leverage depends on your broker and its flexibility. At the
same time, Leverage varies. It can be 100:1, 200:1 or even 500:1. With
Leverage you can use $1,000 to trade $100,000.
• How it works?
• Just as the leverage depends on your broker, so does it also depend on
the type of account you open with the broker. You open a trading
account that has a leverage of 1:100. You want to trade a position worth
$500,000 but you only have $5,000 in your account. No worries, your
broker will lend you the remaining $495,000 and set aside $5,000 as
your good faith deposit.
• Leverage basically increases your buying power and can multiply both
your gains and losses.
• Broker- A broker can be classified as the middleman between you and
the market. In other words,it’s the platform where people buy and sell
currencies. Example of brokers; Hotforex,finmax,XM,bdswiss etc.
LINE CHART
• A simple line chart draws a line from one
closing price to the next closing price. When
strung together with a line, we can see the
general price movement of a currency pair
over a period of time.
LINE CHART
BAR CHART
• A bar chart shows closing prices, while
simultaneously showing opening prices, as
well as the highs and lows. The bottom of the
vertical bar indicates the lowest traded price
for that time period, while the top of the bar
indicates the highest price paid.
BAR CHART
CANDLESTICK CHART
• A candlestick chart(also known as the
japanese candlestick chart) is a style of
financial chart used to describe price
movements of a currency.
CANDLESTICK CHART
CANDLESTICK CHART
BASIC CANDLESTICK PATTERN
Candlestick patterns are an integral part of technical analysis,
Candlestick patterns emerge because human actions and
reactions are patterned and constantly replicate and are
captured in the formation of the candles.
So, recognising how to read candlestick charts and patterns
and applying the lessons that the patterns teach, you yield
results in your trading.
There are alot of basic candlestick patterns but we’ll take a
few. I call them basic because they are the simplest form of
candlestick patterns and sometimes we overlook them.
ADVANTAGES OF CANDLESTICK PATTERN
• Candlestick are easy to interpret, and are a good place for
a beginner to start figuring out chart analysis.
• Candlestick are easy to use. Your eyes adapt almost
immediately to the information in the bar notation.
• Candlestick and candlestick pattern have cool names such
as the shooting star, which helps you to remember what
the pattern means.
• Candlestick are good at identifying market turning points-
reversal from an uptrend to a downtrend to an uptrend.
• LONG
BODIES;
• Long bodies indicates
strong buying or selling.
The longer the body is,
the more intense the
buying or selling
pressure.
• SHORT BODIES;
• Short bodies imply very
little buying or selling
activity. In street forex
lingo, bulls mean buyers
while bears mean sellers
• LONG SHADOWS;
The long shadows are of 2 types,
1. Long upper shadow
2. Long lower shadow
The upper and lower shadows on candlestick provide important
clues about the trading session.
The upper shadow signify the session high while the lower
shadow represent the session low.
• SPINNING TOPS;
Candlesticks with a long upper shadow, long lower shadow and small real
bodies are called spinning tops. The colour of the real body is not very
important. The pattern indicates the indecision between buyers and
sellers.
If a spinning top forms during an uptrend, this usually means there aren’t
many buyers left and a possible reversal in direction could occur.
If a spinning top forms during a downtrend, this usually means there aren’t
many sellers left and a possible reversal in direction could occur.
• MARUBOZU
Marubozu means there are no shadows from the
bodies. Depending on whether the candlestick’s
body is filled or hollow, the high and low are the
same as it’s open and close.
There are two types of Marubozu;
1. The white Marubozu
2. The black Marubozu
• A white marabuzo contains a long white body with no
shadows. The open price equals the low price and the
close price equals the high price. This is a bullish
candle as it shows that buyers were in control the
whole entire session. It usually becomes the first part
of a bullish continuation or a bullish reversal pattern.
• A black marabuzo contains a long black body with no
shadows. The open equals the high and the close
equals the low. This is a bearish candle as it shows
that sellers controlled the price action the whole
entire session. It usually implies bearish continuation
or bearish reversal.
• DOJI
A doji is a name for a session in which the candlestick has an open and
close that are virtually equal and are often components in pattern. Doji
candlestick look like a cross, inverted cross or a plus sign. Alone, doji
are neutral patterns that are also featured in a number of important
patterns. The doji gives or signals a reversal pattern . In japanese “doji”
means blunder or mistake referring to rarity of having open and close
price to be exactly the same. Doji suggest indecision or a struggle for
turf positioning between buyers and sellers. Prices move above and
below the open price during the session but close at or very near the
open price.
There are four special types of doji lines. The length of the upper and
lower shadows can vary and the resulting candlestick looks like a cross,
inverted cross or a plus sign.
BASIC CANDLSTICK PATTERN
BASIC CANDLESTICK
PATTERN
If a doji forms after a
series of candlesticks
with a long hollow
body(like white
marubozu), the doji
signals that the buyers
are becoming exhausted
and weakening.
NOTE- when a doji
forms, you still need a
confirmation on the
next candlestick to
know it’s direction.
BASIC
CANDLESTICK
PATTERN
If a doji forms after a
series of candlesticks
with long filled
bodies(like black
marubozu), the doji
signals that sellers are
becoming weak.
You can see this in the chart how there was a reversal
from where the doji stands.
• REVERSAL PATTERN
HAMMER AND HANGING MAN;
The hammer and hanging man look exactly alike but have totally
different meaning depending on past price action. Both have
cute little bodies(black or white), long lower shadows and short
or absent upper shadows.
The hammer is a bullish reversal pattern that forms during a
downtrend. It is named because the market is hammering out
a bottom.
When price is falling, hammers signal that the bottom is near and
price will start to rise again.
NOTE; when you see a hammer forming in a downtrend, do not
open or place a buy order. Wait for confirmation from series
of bullish candlestick.
The hanging man is a bearish reversal pattern that can also mark
a top or strong resistance level. When price is rising, the
formation of a hanging man indicates that sellers are
beginning to outnumber buyers.
INVERTED HAMMER AND SHOOTING STAR
The inverted hammer and shooting star also look identical. The
only difference between them is whether it’s on a downtrend
or an uptrend. Both candlesticks have petite little bodies, long
upper shadows and small or absent lower shadows.
• The inverted hammer occurs when price has
been falling and suggests the possibility of a
reversal.
• The shooting star is a bearish reversal pattern

that looks identical to the inverted hammer but
occurs when price has been rising.
DOUBLE CANDLESTICK PATTERN
• DARK CLOUD COVER-
Dark cloud cover candlestick pattern indicates an incoming
bearish reversal
A two candle pattern, the first candle is a long green bullish
candle.
The next candle opens higher but reverses and declines, the
candle then closes below the center of the first candle.
• ENGULFING PATTERNS-
This is one of the strong reversal candlestick patterns. There is
both a bearish and bullish engulfing pattern. The bearish
engulfing candle happens at the end of the uptrend, and the
bullish at the end of the downtrend.
The first candle has a small real body, the reversal candle is long,
ideally with short shadows, the real body of the second candle
fully engulfs the first candle.
• Bearish engulfing pattern
• PIERCING LINE-
This is another of the two candle bullish reversal candlestick
patterns. The first candle is long and red bringing the market
lower.
The next candle opens at new lows but rallies to close at a point
which pierces through the centreline of the previous candle.
• CANDLESTICK SANDWICH-
The candlestick sandwich is also a bullish reversal pattern over
three days action. The pattern forms with two red candles
surrounding one green candle in the middle, creating a
sandwich
• THREE GREEN SOLDIERS-
This candlestick pattern creates a stairway for higher price. It is a
bullish reversal pattern formed with three candles. The three
candles are green, each consecutive candle opens within the
real body of the previous candle.
The close everyday brings the market to new highs, signalling an
uptrend is about to take place.
SUPPORT AND RESISTANCE
• The support and resistance is one of the most
widely used concept in trading.
The zigzag pattern is making its way up(bull market).

When the market moves up and then pulls back,
the highest point reached before it pulled back is
now resistance.
As the market continues up again, the lowest point
reached before it started back is now support.
FACTS OF SUPPORT AND RESISTANCE
1. Support and resistance can be found in an uptrend,
downtrend and a sideways market.
2. Support and resistance points do not hold forever, a breakout
eventually happens.
3. When a resistance is broken, it turns into a potential support,
and when a support is broken it turns into a potential
resistance
4. The more often a price tests a level of resistance or support
without breaking it, the stronger the area of resistance or
support is.
5. When a support or resistance level breaks, the strength of the
follow through move depends on how strongly the broken
support and resistance had been holding.
ADVANCED TECHNICAL ANALYSIS
TREND LINES
• The trend is a tendency of a financial market to
move in a particular direction.
• The concept of trend plays the central role in
trading as it forms the bedrock of technical
market analysis.
• There are 3 types of trend movement;
 Uptrend
 Downtrend
 Sideways trend.
CHANNEL
A forex channel consists of two parallel trend lines built
according to particular rules.
Just like trend lines, the channels follow directions. It either goes
up, down and sideways. The channel also consists of parallel
lines which can be called support and resistance.
REVERSAL PATTERN
A price pattern that signals a change in the prevailing end is known as
the reversal pattern.
This pattern signify periods where either the bulls or the bears have run
out of steam. The established trend will pause and head in a new
direction.
When price reverses after a pause, the price pattern is known as a

reversal pattern. Examples of common reversal patterns include
• Head and shoulders; signaling two smaller price movements
surrounding one larger movement.
• Double tops; representing a short term swing high, followed by a
subsequent failed attempt to break above the same resistance level.
• Double bottoms; showing a short term swing low, followed by another
failed attempt to break below the same support level.
• HEAD AND SHOULDERS
Head and shoulders patterns can appear at market tops or
bottom as a series of three pushes: an initial peak or trough,
followed by a second and larger one and then a third push
that mimics the first. An uptrend that is interrupted by a
head and shoulders top pattern may experience a trend
reversal, resulting in a downtrend.
• DOUBLE TOP
Double tops and bottoms signal areas where the market has
made two unsuccessful attempts to break through a support
and resistance level. In the case of a double top which often
look like a M, an initial push up to a resistance level is
followed by a second attempt, resulting in a trend reversal. A
double bottom, on the other hand looks like the letter W and
occurs when price tries to push through a support level, is
denied and makes a second unsuccessful attempt to breach
the support level.
• GAPS
Gaps occur when there is empty space between two trading
periods that is caused by a significant increase or decrease in
price.
There are 3 main types of gaps;
i. Breakway gaps- this forms at the start of a trend.
ii. Runaway gaps- this forms during the middle of a trend.
iii. Exhaustion gaps- this forms at the near end of a trend
CONTINUATION PATTERN
Continuation pattern is a price pattern that denotes a temporary
interruption of an existing trend.
It can also be thought to be a pause during a prevailing trend.
 When price continues on its trend, the price pattern is known
as a continuation pattern. Common continuation pattern
include;
• Pennants- constructed using two converging trendlines.
• Flags- drawn with two parallel trendlines.
• Wedges- constructed with two converging trendlines, where
both are angled either up or down.
• PENNANTS
Pennants are drawn with two trendlines that eventually
converge.
• FLAGS-
Flags are constructed using two parallel trendlines that can
slope up, down or sideways(Horizontal).
• WEDGES-
Wedges are similar to pennants in that they are drawn using two
converging trendlines; however a wedge is characterized by
the fact that both trendlines are moving in the same
direction.
• TRIANGLES-
Triangles are among the most popular chart patterns used in
technical analysis since they occur frequently compared to
other patterns. We have 3 types of triangle
• Symmetrical triangle- this occurs when two trend lines
converge toward each other and signal only that a breakout is
likely to occur.
• Ascending triangle- ascending triangles are characterized by a
flat upper trend line and a rising lower trend line and suggest
a breakout is likely to occur
• Descending triangle- these triangles have a flat lower trend
line
• CUP AND HANDLE
The cup and handle is a bullish continuation pattern where an
upward trend has paused but will continue when the pattern
is confirmed.
USING INDICATORS
We are going to study a few indicators
• MACD
• STOCHASTIC
TRADING PSYCHOLOGY
The psychology of the market gives insight into the development in financial
markets.
TYPES OF TRADERS;
• Scalpers – the scalpers hold on trades for a few seconds to a few minutes
aiming to capture very small amounts of pips as many times as they can.
• Day traders – the day traders are the most popular types of traders who
hold on their forex trades for a few hours and usually never hold trades
after the session close.
• Swing traders – the swing traders hold position from several hours to
several days and analyze charts of 1 hour to 4 hours time frame.
• Position traders – this is the longest time frame compared to the other
three groups. These traders have trades that last for several weeks to
several months.
TRADING PSYCHOLOGY
POINTS TO NOTE IN TRADING
1. Do not use more than 3% of your capital on a trade
2. Always use stop loss and take profit to minimize loss
3. Avoid payback on the market
4. Overcome greed
5. Know your numbers and have a good trading plan
6. Set rules
7. FOMO(fear of missing out)
TRADING PSYCHOLOGY
RULES ON HOW TO READ THE MARKET
1. The first rule of is that market hates uncertainty. Anything
that throws the economic future into doubt will cause panic
and negativity.
2. The second rule is that the currency market relates most
things to interest rate.
3. The reaction of the market is directly correlated to how
surprising an event is.
TRADING PSYCHOLOGY
• Trade the story- Economic outlook
• Trade the news- Economic data
• Trade the data- Technical analysis
TRADING PSYCHOLOGY
TOOLS FOR A PROFITABLE TRADING
1. Trading plan
2. Research platforms(investing.com, reuters.com,forex factory)
3. News feed(bloomberg.com)
4. News calendar
5. A trading journal

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FOREX COURSE OUTLINE

• EUROPA Frankfurt 09:00 17:00

• AMERICA New York 16:00 24:00

• PACIFIC Wellington 00:00 08:00

Other currency pair fall under the crosses and exotic

• Exchange Rate-The Exchange rate is the rate at

• Quote-This is a market price that always consists

• Short- This is the opposite of long as it refers to the placing a sell

• Bearish- Means depreciating or a fall.

• Stop loss(TP)- It is an order to close your trade as soon as it reaches a

• The shooting star is a bearish reversal pattern

The zigzag pattern is making its way up(bull market).

When price reverses after a pause, the price pattern is known as a

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