The ultimate trading guide pdf download

Emmanuel Follow Follow their activities. This is also a good way to learn Forex strategies in a real-life trading environment. I believe the investors. This was a great opportunity to make money shorting betting that it would decline the euro.

This is useful because the larger trade. Leverage is shown as a ratio, for movement in currency rates can be very small, example Leverage allows you to trade with more money Stock market Forex market Maximum leverage from to Varying lot sizes Term Lot In Forex, all transactions can be conducted via standard, mini, and micro lots.

Those traders who are looking to get started in the forex market should consider opening a mini account because of the smaller contract sizes. Although these movements may seem insignificant, even the smallest point change can result in thousands of dollars being made or lost due to leverage. Again, this is one of the reasons that speculators are so attracted to the forex market; even the tiniest price movement can result in huge profit.

While the high degree of leverage used in forex trading magnifies returns and risks, a few safety precautions used by professional traders may help mitigate these risks. Do you need more than strategy and only those with high risk , US dollars to open the trade? With tolerance should consider using big leverage. If you are a relatively cautious Leverage investor or trader, use a lower level of leverage with perhaps or leverage.

In other words, the countries, varying from to Stops can be used not risking to lose if the trade goes against you. Section 01 Introduction and key concepts Example: leverage in use Going short on euro Europe has been hit by a crisis, so you expect the euro to fall against the US dollar. You open a position of 1 lot, which 1. You were right. Euro depreciates against 2. Euro depreciates against the dollar to 1. Result: The euro fell by pips 1. Your profit is x 1 - 1. Section 01 Introduction and key concepts How much should I invest?

With smaller investment you will not get enough profits as the average changes in the currency rates are small.

If you haven't heard of these terms already, you undoubtedly will as you begin to invest. The terms bull market and bear market describe upward and downward market trends, respectively, and can be used to describe either the market as a whole or specific sectors and securities.

These images will help you memorize which is which. Doji - when the opening and closing price are equal. Long-Legged Doji - after small candlesticks, they indicate a potential trend change. Normally only seen on thinly traded pairs. Your Capital may be at risk. That is, on the most fundamental level, a currency rallies because there is a demand for that currency.

Regardless of whether the demand is for hedging, speculative, or conversion purposes, true movements are based on the need for the currency. Currency values decrease when there is excess supply. Supply and demand should be the real determinants for predicting future movements. However, how to predict supply and demand is not as simple as many would think. There are many factors that contribute to the net supply and demand for a currency and the strength of the economy.

Read on to uncover the main drivers that influence the exchange rates. The number of economic announcements made each day from around the world can be intimidating, so we will focus just on the most important ones. How are they divided The drivers are divided into three major groups: Geo-political, Economic and Market Psychology. For example, if the U. If the deficit is greater than Stretch, London-based head of market expectations however, it can trigger a foreign-exchange strategy at CIBC.

After three straight years of gains, strategists All traderswill find it are forecasting the U. This world keep them flat or lower. Section 02 Key drivers of currency movements Key indicators A closer look at some indicators Stock market Even day and swing traders will find it valuable to keep up with incoming economic reports from the conditions major economies.

Stock markets have a significant impact on exchange rate movements because they are a major place for high-volume currency movements. When foreign investors There are times where sentiment in the equity move their money to a markets will be the precursor to major moves in the forex market. If the stock equity market is particular stock equity rising, investment dollars generally come in to seize the opportunity.

Alternatively, falling equity market, they convert markets could prompt domestic investors to sell their capital in a their shares of local publicly traded firms to take advantage of investment opportunities abroad.

Meanwhile, in the United States, a lackluster economy is creating a shortage of currency appreciate. In this type of environment U. When they elect to do so, it results in the outflow of capital experiencing recessions, from the United States and the inflow of capital however, foreign into the United Kingdom.

Section 02 Key drivers of currency movements Key indicators The most overrated indicator GDP is no longer a big deal GDP report has also become one of least important economic indicators on the U.

One possible explanation is that GDP is released less frequently than other data in our study it comes out quarterly versus monthly , but in general, the GDP report is more prone to ambiguity and misinterpretation. Also, a large number of the components that comprise the GDP report are known in advance of the release. Section 02 Key drivers of currency movements Most volatile news reports That traders should follow closely Volatility and profits in forex are measured in pips.

The bigger the volatility the more pips and money a trader can make from a certain trade. Keep this chart by your side and make sure to mark these reports in your calendar! Unemployment indicator, showing if U. Inflation indicator. Economic indicators are snippets of financial and economic data published regularly by governmental agencies and the private sector. These statistics help market observers monitor the economy's pulse - so it's no surprise that they're followed by almost everyone in the financial markets.

With so many people poised to react to the same information, economic indicators have tremendous potential to generate volume and move prices. It might seem like you need an advanced economics degree to parse all this data accurately - but in fact traders need only keep a few simple guidelines in mind when making trading decisions based on this data.

Mark Your Economic Calendars Watching the economic calendar not only helps you consider trades around these events, it helps explain otherwise unanticipated price actions during those periods. Consider this scenario: it's Monday morning and the USD has been falling for 3 weeks, with many traders short USD positions as a result. On Friday, however, U. If that report looks promising, traders may start unwinding their short positions before Friday, leading to a short-term rally in USD through the week.

Know exactly when each economic indicator will be released. What does This Data Mean for the Economy? You need not understand every nuance of each data release, but you should try to grasp key, large-scale relationships between reports and what they measure in the economy.

For example, you should know which indicators measure the economy's growth gross domestic product, or GDP versus those that measure inflation PPI, CPI or employment strength non-farm payrolls. That focus can change over time and from one currency to another. For example, if prices inflation are not a crucial issue for a given country, but its economic growth is problematic, traders may pay less attention to inflation data and focus on employment data or GDP reports.

Section 02 Key drivers of currency movements Economic indicators What you need to know about them Part 2 Watch for the Unexpected Often the data itself may not be as important as whether or not it falls within market expectations. At the same time, be careful of pulling the trigger too quickly when an indicator falls outside expectations. Each new economic indicator release contains revisions to previously released data. Don't Get Caught Up in Details While your macroeconomics professor may appreciate all the nuances of an economic report, traders need to filter data to focus on the numbers that can inform their trading decisions.

For example, many new traders watch the headlines of the employment report, for example, assuming that new jobs are key to economic growth. That may be true generally, but in trading terms non-farm payroll is the figure traders watch most closely and therefore has the biggest impact on markets. Similarly, PPI measures changes in producer prices generally - but traders tend to watch PPI excluding food and energy as a market driver.

Food and energy data tend to be much too volatile and subject to revisions to provide an accurate reading on producer price changes. There are Two Sides to Every Trade Just remember that no trader's knowledge can be complete all the time. You might have a great handle on economic data published in Europe - but there are times when data published in the U.

Doing your homework before trading any currency can help you make better decisions. Imagine that last month the unemployment rate was at 8. With a consensus at 9. What the heck! This is because the big players have already adjusted their positions way before the news report even came out and may now be taking profits after the run up to the news event. The market players thought the unemployment rate would rise to 9. This would also happen if the actual report released an unemployment rate of Since the market consensus was 9.

The Super Tuesday results are being seen as "an outcome for continuity over the disruption threatened by Trump and Sanders," he said. You must remember that investors hate uncertainty! For Trump the upward trend was also there due to his promise to lower taxes and increase government spending on infrastrucure.

Section 02 Key drivers of currency movements Market psychology The golden rule of economic indicators The currency rates often start moving even before the actual data comes out due to forecasts and market sentiment! Sentiment analysis is a kind of FX analysis that concentrates on indicating and consequently measuring the overall psychological and emotional state of all participants of the foreign exchange market.

This kind of Forex analysis strives to quantify what percentage of FX market participants are bullish or bearish, in other words being optimistic or pessimistic. If the forecast promised a positive growth and the actual data comes out even better than forecasted, it amplifies the rise of the currency even more.

Overlap between two The Foreign Exchange market operates 24 hours a day, making it nearly impossible sessions for a single trader to track every market Generally, whenever there is an overlap in movement and respond immediately at the market e.

In period. News Release market hours. Fundamentals drive the market. During News Release, volatility is experienced and Besides liquidity, a currency pair's trading some pairs could move over pips range is also heavily dependent on depending on the type of news.

For example geographical location and macroeconomic Non-Farm Payroll is the most volatile news factors. Knowing what time of day a currency pair However, trading news is risky if you are not has the highest or narrowest trading knowledgeable about it.

However, its risky to trade these less iregular market movements caused by speeches except you are subscribed to some aggressive intraday speculation. The timing in forex trading is is usually the most active as it involves many crucial!

The US market comes next, so the time when the London session The Forex market is open 24 hours a day, but it is intersects with the US session usually provides the not active all this time! In Forex trading money is biggest returns. Expert traders consider 10 AM to made when the market is active when traders are be the best time as this is the period when the bidding on the prices so it is crucial for you to London market is preparing to close the trades learn about the most productive hours of the day and traders are getting ready to move to US and of the week for trading the forex!

This creates big swings in currency prices thus opening great opportunities for profit. Fridays are busy as well, but only until PM and during the second half of the day the movements can be very unpredictable. While it is crucial to understand when is the best time to analyze the charts and make the bids, it is equally important to know when NOT to open positions.

A thin market also comes with higher commissions spreads for each trade due to the decreased liquidity. In simple words: if you want to sell a currency, it is harder to find potential buyers, so the broker or bank must increase the commission as it takes a risk of not finding a buyer so quickly. A good example of chaotic trading is shortly before, during and shortly after important news events.

In these times of uncertainty, the currency rates can swing wildly and unpredictably, thus messing up trading by creating execution lags, triggering stop-loss orders, etc.

Usually, the higher the liquidity, the lower the volatility, and therefore the tighter the spread Spread is like a commission that you pay for the trade. However, even major pairs can experience wider than normal spreads during volatile periods, such as interest rates announcements, GDP reports, unemployment figures, to name a few examples. Most forex brokers allow you to trade all weekend, but spreads will be significantly wider during weekends when liquidity is almost non-existent.

Unfortunately, banks do the same thing, so an average forex broker could be better, but only marginally. What happens before or during important announcements. The volatility jumps before important anouncements and the drastic movements can hit the stop-losses, resulting in a lost trade and investment.

Accumulation 2. Advancing 3. Distribution 4. This means you can look to buy breakouts or pullbacks. This means you can look to short the breakdown of Support or wait for the breakdown to occur, then sell on the pullback.

You know where to enter your trades Support and Resistance and what you should do in different market conditions the 4 stages of the market. And for a Bearish candle, the open is always above the close. When the market opens, the sellers took control and pushed price lower 2.

At the selling climax, huge buying pressure stepped in and pushed price higher 3. The buying pressure is so strong that it closed above the opening price Tradingwithrayner. Moving on… Bullish Engulfing Pattern A Bullish Engulfing Pattern is a 2-candle bullish reversal candlestick pattern that forms after a decline in price. On the first candle, the sellers are in control as they closed lower for the period 2. And lastly, a Hammer is usually a Bullish Engulfing Pattern on the lower timeframe because of the way candlesticks are formed on multiple timeframes.

Shooting Star A Shooting Star is a 1- candle bearish reversal pattern that forms after an advanced in price. The opposite of a Shooting Star is Hammer. When the market opens, the buyers took control and pushed price higher 2. At the buying climax, huge selling pressure stepped in and pushed price lower 3. The selling pressure is so strong that it closed below the opening price In short, a Shooting Star is a bearish reversal candlestick pattern that shows rejection of higher prices.

And one last one… Bearish Engulfing Pattern A Bearish Engulfing Pattern is a 2-candle bearish reversal candlestick pattern that forms after an advanced in price. On the first candle, the buyers are in control as they closed higher for the period 2. But, they are not the only ones out there.

Where did the price close relative to the range? Let me explain… 1. Well, the price closed the near highs of the range which tells you the buyers are in control. Now, look at this candlestick pattern… Tradingwithrayner. Because the price closed near the lows of the range and it shows you rejection of higher prices. Next… 2. What you want to do is compare the size of the current candle to the earlier candles.

An example… Does it make sense? Now you have what it takes to read any candlestick pattern without memorizing a single one. Introducing to you, The M. Market structure 2. Area of value 3. Should you buy, sell, or stay out? If the market is in a downtrend, you look to sell only. If the market is in a range, you can buy and sell. Because you also need to know where to enter your trade. Which one should I choose? Next… 3: Entry trigger At this point: You know what to do identify market structure and where to enter area of value.

Now the final part of the equation is to know when to enter. Personally, I like to enter when the market has shown signals of reversal — thus confirming my bias. Let me share with you a few examples of The M. Instead, it goes… Up and down, up and down, up and down, right? An example: Tradingwithrayner. But when the trend is getting weak, the retracement move no longer has small bodied candles, but larger ones.

This tells you opposing pressure is stepping in. Well, nothing works all the time. Also, the buying pressure is getting weak as the candles of the trending move get smaller. One possible entry technique is to go short when the price breaks and close below Support.

If you want to trade this setup, you could go short on the break of Support. This is powerful stuff, right? If you have made it to this point, you definitely have the price action trading spirit in you.

You can be a first-class honors graduate or a school dropout, but if you fail to follow the rules of the market, it will take your money, regardless of your status and background. But if you follow the rules of the market, then how much you can make is entirely up to you.