Introduction to Forex Charting

This part of the course is going to give you a brief overview of the three primary types of charts that you will run across in your Forex trading journey. The chart type that I use, and that my members use, is candlestick charts, I feel forex candlestick charts do the best job at showing the price dynamics in a market, since their design helps you to visualize the “force”, or lack thereof, that a particular price movement exhibited. So, let’s go over the three main types of charts that you will likely see as you trade the markets:
• Line charts

Line charts are good at giving you a quick view of overall market trend as well as support and resistance levels. They are not really practical to trade off of because you can’t see the individual price bars, but if you want to see the trend of the market in a clear manner, you should check out the line charts of your favorite markets from time to time.
Line charts are made by connecting a line from the high price of one period to the high price of the next, low to low, open to open, or close to close. By far, line charts that show a connection from one closing price to the next are the most useful and the most widely used; this is because the closing price of a market is deemed the most important, since it determines who won the battle between the bulls and the bears for that time period. Let’s look at an example of a daily line chart of the EURUSD:


• Bar charts
A bar chart shows us a price bar for each period of time. So if you are looking at a daily chart you will see a price bar for each day, a 4 hour chart will show you one price bar for each 4 hour period of time…etc. An individual price bar gives us four pieces of information that we can use to help us make our trading decisions: The open, high, low, and close, you will sometimes see bar charts called OHLC charts (open, high, low, close charts), here’s an example of one price bar:
Here’s an example of the same EURUSD chart we used for the line chart example but as a bar chart:


• Candlestick charts
Candlestick charts show the same information as a bar chart but in a graphical format that is more fun to look at. Candlestick charts indicate the high and low of the given time period just as bar charts do, with a vertical line. The top vertical line is called the upper shadow while the bottom vertical line is called the lower shadow; you might also see the upper and lower shadows referred to as “wicks”. The main difference lies in how candlestick charts display the opening and closing price. The large block in the middle of the candlestick indicates the range between the opening and closing price. Traditionally this block is called the “real body”.
Generally if the real body is filled in, or darker in color the currency closed lower than it opened, and if the real body is left unfilled, or usually a lighter color, the currency closed higher than it opened. For example, if the real body is white or another light color, the top of the real body likely indicates the close price and the bottom of the real body indicates the open price. If the real body is black or another dark color, the top of the real body likely indicates the open price and the bottom indicates the close price (I used the word “likely” since you can make the real body whatever color you want). This will all become clear with an illustration:
Now, here’s the same EURUSD daily chart that I showed you in line and bar form, as a candlestick chart. Note that I have made the candles black and white, you can pick whatever colors you want, just make sure they are friendly to your eye but also that they convey bullish and bearishness to you. Bullish candles are the white ones (close higher than open) and bearish candles are the black ones (close lower than open):

 

Candlestick charts are the most popular of all three major chart forms, and as such, they are the type you will see most often as you trade, and they are also the type I recommend you use when you learn and trade with price action strategies. I use candlestick charts in my Forex trading course, and I recommended all my members use them when posting up charts in the members’ forum, because their visual pleasantness and simplicity make it easier for everyone to learn from."learntotradethemarket"

How To Set Up MetaTrader Forex Charting Platform

MetaTrader Forex Trading Tutorial: Setting up MetaTrader 4 for price action trading charts.


                  

This lesson is going to provide you with a tutorial of the basics of using the MetaTrader trading platform. MetaTrader 4 (MT4) is the most popular Forex trading platform and forex charting software in the world. I personally trade on this platform and I recommend my readers & members use it too.
As anyone who has followed me for a while knows, I trade and recommend New York close 5-day per week charts. The reason is that closing prices are the most important in the markets, and the New York close marks the end of the current Forex trading day and then the new day starts in Asia. As the New York session is the most traded session behind London, it’s important to see who won the battle between the bulls and bears at the New York close and as the current Forex trading day ends. You can download the correct 5-day New York close charts for free via this link: New York Close Forex Charts Download.
This tutorial is going to show you how to setup the MT4 platform for optimal price action trading, thus we won’t be discussing any of the automated “robot trading” / expert advisor functions of the platform as they are not a part of the price action trading strategies that I trade and teach.
After you read today’s lesson let me know if it helped you, if you learned anything new about the MetaTrader platfom, or if you would like me to add any explanations to this tutorial next week… you can contact me here.
Navigating the MetaTrader platform: The main windows
Below is a screen shot of approximately what your MetaTrader platform will look like when you first open it up. Your charts will probably be black and green however, with a bunch of indicators all over them. We will discuss how to get your charts setup with a white background for clean price action forex trading in the next section.
For now, let’s cover the main functions of each window you see in the image below:
1) The first window at the very top is the “Toolbars” window, here you’ll find many different icons that allow you to do many different things, we will cover most of these icons later on, for now just be aware of the toolbar window and that it is full of different tools and shortcuts for you to use.
2) The next window is the “Chart” window, this is obviously where you will see the current chart(s) you have open.
3) Next, see the “Market Watch” window on the upper left hand side of the screen. The market watch window lists all the markets available from your broker and gives you their real-time bid and ask prices. Note: to unlock all markets offered by your broker, simply right click within the market watch window and then select the “show all” option.
There’s a “tick chart” tab at the bottom of the market watch window, click on it and you’ll see the current price activity of the pair you have selected in the market watch window, tick by tick,…I don’t really use this but thought I’d just tell you what it’s for real quick.
To see which currency pairs I prefer to trade as well as an example of how you might want to populate your market watch window, check out my article on the best forex pairs to trade.
- Below we can see the main windows of the MetaTrader platform:

                
4) Below the market watch window is the “Navigator” window. In this window you can see your account(s), as well as a variety of indicators, expert advisors and scripts…both of which you can and should ignore. To learn why I don’t use many indicators or trade with expert advisors, check out this article on forex indicators, and this one on forex robots.
5) Finally, the terminal window appears at the bottom of the screen and within it you’ll find these six tabs: Trade, Account History, News, Alerts, Mailbox, and Journal. You can go through each tab to get familiar with what it does. The “trade” tab is the most important as this is where your pending and open trades can be viewed. The “account history” tab contains all your account activity since you opened it, primarily deposits, withdrawals, and closed trades. You can also generate detailed reports of your trading history here.
Setting up your charts for clean price action trading:
Next, we need to get our charts setup for optimal price action trading. You can customize your price charts in MetaTrader to reflect your own personal style and color preferences. I personally prefer a white background and black foreground for the cleanest and simplest approach. Here’s how to setup a clean white chart for optimal price action trading:
1) How to open a chart
There are three main ways to open a chart window on the platform. You can click on the “file” menu at the very top left of your screen and then click “new chart”, or you can right click in the market watch window on the specific currency pair you want the chart for and then select “chart window”. There’s also a “new chart” icon in the toolbar, see the image below:

            
2) How to set chart properties
Once you’ve got your desired chart open, you want to get it setup for clean price action trading. To do that, you just need to right click on the chart, and then select “properties” which is located at the bottom of the menu that appears, you’ll then see this box appear:
             
Now, as you can see in the “color scheme” window there is actually already a “black on white” theme that you can use. My personal settings look a little different though, you can see them here:
Note I have taken off the “grid” and “volume” functions.
             
The “common” tab located to the right of the “colors” tab in the window above, allows you to select or deselect certain features, such as volume, grid, period separators, and others. You can also change the chart to bar, candlestick or line chart in the common tab. It’s pretty self explanatory so play around with it a bit to get more familiar with the options.
3) How to save your chart setup as a template
Once you’ve adjusted your color scheme and other chart properties to how you want them, you have the option of saving your chart setup as a template, then you can easily apply the same properties to other charts. To save a template you can click on the “Template” icon in the toolbar and then select “save template”, or you can right click on the chart itself and then select “Template” and then “save template”. You can also click on the “Charts” menu at the very top of your platform and then select “Template”. See here:

             

I’ve also labeled a few other functions on the toolbar in the image above. We can see in the “chart type” box you can select bar, candlestick or line chart; we use forex candlestick charts in the members’ area. You can also see the function to zoom in and out of the current chart selected, as well as the time frame icon which goes from 1 minute chart up to monthly chart. I personally never look at a time frame under the 1 hour, and my trading course and community is focused on teaching time frames from the 1 hour and above, with the primary focus being on the daily chart time frame.
A cool tip about templates:
To quickly open a new chart with the current open chart’s template properties, simply select the market you want to see in the market watch window and then left click and slide it (drag it) over to the chart window containing the desired template. That new market will automatically open in the existing chart window with same template properties:
            
How to add moving averages and other analysis tools to you charts
I do implement the 8 and 21 daily chart exponential moving averages for trend analysis and to see dynamic support and resistance levels, note that I don’t use them in the traditional “indicator cross-over” sense. So let’s discuss how to put these EMAs on your charts.
The easiest way to do it is just to click the “Indicators” icon in the toolbar, then select “trend” then “moving average”:
           
You’ll then see this box appear:

You can also add indicators by going to “Insert” at the very top of the platform and then clicking on “indicators” then “trend” then “moving averages”, then the box above will appear.
You want the period set to either 8 or 21, depending on which EMA you are putting in at the time, then the “MA method” should be Exponential and “Apply to” close. You can pick whatever colors make you feel happy, just make sure the colors of the 8 and 21 contrast nicely so you can easily tell them apart, I use red for the 8 day EMA and blue for the 21 day EMA.
You can then save that particular chart setup with the EMAs as template. You can have a number of templates saved as you can see, then you can quickly go from one template to the next. I have one clean template setup (see above) with no EMAs and then one with the 8 and 21 day EMA. You can learn more about how I use the EMAs in my forex trading course. I do not use any moving averages on the 4 hour chart.
The other main analysis tools that I use are the horizontal line tool and the Fibonacci tool. They are pretty self explanatory, but with the Fibonacci tool I usually only have the 50% and 61.8% level as those are the only ones I look at. Simple right click on the Fibonacci tool after applying it to your charts and then you can change its properties.
              
How to setup my 4 primary time frames in one market profile
To quickly see the 1 hour, 4 hour, daily, and weekly time frame in one window, you can do this:
Open 4 new charts of the same currency pair and then use the time frame icon to set them to 1 hour, 4 hour, daily, and weekly. Now, go to the “Windows” menu at the top of the toolbar and select either “Tile horizontally” or “Tile Vertically”, they are both going to make your chart windows the same when you have 4 charts.
Now, once you get the 4 time frames setup, you can go to the “File” menu or click on the “Profiles” icon and save your current window arrangement as a profile.
Cool tip: If you want to you can save each market as its own profile and then quickly scroll from one profile to the next by clicking “ctrl + F5” at the same time, to see the previous profile press “ctrl + F6”. See here:

             
Quickly analyze multiple markets
You can have as many different chart windows open as you want in MetaTrader, and you’ll see at the bottom of the platform are tabs that allow you to quickly open a chart to analyze or edit it. You can open up a chart from the tabs at the bottom and then quickly change its time frame or template via the time frame and template icons in the toolbar that we’ve already discussed above. These tabs make it easy to get a quick view of many different markets and this is the primary method I use to scroll between markets on MT4.

         

In closing
Now you know the basics of the MetaTrader 4 trading platform and how to get it setup for clean price action trading. If you want more instruction on how I trade with price action on the MetaTrader platform, check out my price action trading course and members’ community. Remember you can download the free MT4 Forex Charting Platform Here."learntotradethemarket"

Price Action Trading Analysis

What is Price Action Analysis?

 

 

My definition of Price Action Analysis: Price action analysis is the analysis of the price movement of a market over time. By learning to read the price action of a market, we can determine a market’s directional bias as well as trade from reoccurring price action patterns or price action setups that reflect changes or continuations in market sentiment.

In simpler terms: Price action analysis is the use of the natural or “raw” price movement of a market to analyze and trade it. This means, you are making all of your trading decisions based purely on the price bars on a “naked” or indicator-free price chart.
All economic variables create price movement which can be easily seen on a market’s price chart. Whether an economic variable is filtered down through a human trader or a computer trader, the movement that it creates in the market will be easily visible on a price chart. Therefore, instead of trying to analyze a million economic variables each day (this is impossible obviously), you can simply learn to trade from price action analysis because this style of trading allows you to easily analyze and make use of all market variables by simply reading and trading off of the price action created by said market variables.

• How do you apply price action analysis to the Forex market?
First, I want to say that price action analysis can be used to trade any financial market, since it simply makes use of the “core” price data of the market. However, my personal favorite market to trade is the Forex market, mainly due to its deep liquidity which makes it easy to enter and exit the market, and also because the Forex market tends to have better trending conditions as well as more volatility which makes for better directional trading and allows price action trading to really shine.
My own personal approach to trading and teaching price action trading is that you can trade effectively from a few time-tested price action setups. There really is no need to try and trade from 25 different price patterns, the Forex market moves in a relatively predictable fashion most of the time, so all we need is a handful of effective price action entry setups to give us a good chance at finding and entering high-probability trades.
The first thing you need to do to apply price action to the Forex market, is to strip your charts of all indicators and get a “clean” price chart with only the price bars in a color you like. I choose simple black and white or blue and red for my colors, but you can pick whichever colors you like (Part 7 will cover an introduction to charting). Here’s an example of my daily chart setup on the EURUSD:

Now, let’s look at an example of a clean and simple price chart next to a price chart covered with some of the most popular indicators that many traders use. I want you to look at these two charts and think about which one seems easier and more logical to trade off of:

Common Forex trading mistakes and traps

 There are common mistakes and ‘traps’ that give nearly all traders trouble at some point in their trading careers. So, let’s cover the most common mistakes that traders make which keep them from making money in the markets:
• Analysis-paralysis

There is a virtually unlimited amount of Forex news variables that can distract a trader, as well as tons and tons of trading systems and trading software. You’ll need to sift through all of these variables and forge a trading strategy that is simple yet effective, warning; this can be a very a difficult task for beginner traders.
The reason why, is that most traders seem to think that ‘more is better’, when in reality ‘more’ is actually worse, as it relates to Forex trading. There really is no need to sit in front of your computer for hours on end analyzing Forex news reports or numerous indicators. My trading philosophy is that all variables that affect a market’s price movement are reflected via the price action on a price chart. So, spending your time and money on trading software, systems, or analyzing news variables is simply a waste. Furthermore, many traders get analysis-paralysis, this occurs when a trader tries to analyze so many market variables that they exhaust themselves to the point of making silly emotional trading mistakes.
• Over-trading
 
Most traders do not make money in the markets over the long-run for one simple reason: they trade way too much. One curious fact of trading is that most traders do very well on demo accounts, but then when they start trading real money they do horribly. The reason for this is that in demo trading there is virtually no emotion involved since your real money is not on the line. So, this goes to show that emotion is the #1 destroyer of trading success. Traders who over-trade are operating purely on emotion.
Trading when your pre-defined trading edge is not actually present is over-trading. Trading if you have no trading plan or have not mastered a trading edge yet is over-trading. Essentially, you need to know EXACTLY what you’re looking for in the market and then ONLY trade when your edge is present. Trading too much causes you to rack up transaction costs (spreads or commissions), and it also causes you to lose money a lot faster since you are purely gambling in the market. You need to take a calm and calculated approached to the market, not a drunken-gamblers approach…which seems to be the favored approach of many traders.
• Not applying risk reward and money management correctly

Risk management is critical to achieving success in the markets. Risk management involves controlling your risk per trade to a level that is tolerable for you. Most traders ignore the fact that they COULD lose on ANY TRADE. If you know and accept that you could lose on any trade…why would you EVER risk more than you were comfortable with losing??? Yet traders make this mistake time and time again…the mistake of risking too much money per trade. It only takes one over-leveraged trade that goes against you to set off a chain of emotional trading errors that wipes out your trading account a lot faster than you think. Check out this cool article on Forex money management for more.
• No trading plan and no routine or discipline

Not having a Forex trading plan is perhaps the most prevalent trading mistake the Forex traders make. Many traders seem to think that they will create a trading plan “later on” or after they start making money or that they simply don’t need one or can just keep it “in their heads”. All of these rationalizations are simply keeping traders from achieving the success they so badly desire. If you don’t have a Forex trading plan that details all of your actions in the market as well as your overall trading approach and strategy, you will be far more likely to operate emotionally and from a gambling mindset. Beginner traders especially need a Forex trading plan to solidify their trading strategy and to create a guide that they use to trade the market from, and you can’t keep it in your head…you need to physically write out your trading plan and read it every day you trade.
• Trading real money too soon or gambling it

 

The urge to jump into the market and start trading real money is often too much for most traders to withstand. However, the truth is that until you have mastered an effective Forex trading strategy like price action trading, you really should not be trading real money. By “mastering” the strategy, I mean you should be consistently successful with it on a demo account for a period of 3 to 6 months or more, prior to going live. However, you don’t want to use demo account trading as a crutch…trading a real account is different due to the real emotions involved, so just be sure you switch to real-money trading after you have achieved success on demo…don’t be afraid of trading real money, because eventually you will need to make the switch to real money trading.
Also, be sure you are not just gambling your money away. Doing the things we discussed above; over-trading, over-leveraging, not having a trading plan, etc, these are all things that gambling traders do. Traders who don’t gamble in the markets are calm and calculating…they have a trading plan, a trading journal, and they know exactly what their trading edge is and when to trade it.

Professional Forex Trading

 

                              What is Professional Forex Trading? – Making the Money

• What is a professional Forex trader?

A professional Forex trader is someone who uses price movement in the Foreign exchange currency market to make profit. The aim of any Forex trader is to win as many trades as possible and also to maximize those winning trades. A professional Forex chart technician uses price charts to analyze and trade the market. By trading with an EDGE in the market, professional traders can put the odds in their favor to successfully trade price movement from point A to point B.
Caution: Forex trading is not a ‘get-rich-quick’ scheme and it is more difficult to make money in Forex than what most popular Forex system-selling websites would have you believe. To trade profitably we must not only have winning trades, but we must also cut our losing trades short so that our winners out-pace our losers. You see, losing is an enviable part of trading the Forex markets, and you must learn to lose properly by taking small losses relative to your winners. This means you must A L W A Y S trade with a stop loss on E V E R Y trade you take and make sure the dollar amount you have at risk is an amount you are 100% comfortable with losing.
Professional Forex price-chart traders have a winning edge which is developed via Technical Analysis (more on this in Part 4). There are also Fundamental Analysis traders and traders who use a combination of both analysis techniques; we will discuss all of these later.
A professional Forex trader understands that reading a price chart is both art and skill, and as such, they do not try to mechanize or automate the process of trading as each moment in the market is unique, so it takes a flexible and dynamic trading strategy to trade the markets with a high-probability edge.
• How do pro traders trade the Forex markets?
There are many different trading strategies and systems that pro traders use to trade the markets with, but generally speaking, professional traders do not use overly-complicated trading methods and rely mainly on the raw price data of the market to make their analysis and predictions. To be comprehensive, I wanted to give you guys a brief overview of all the primary different styles and ways people trade the Forex market:
Automated / Robot Trading: Software-based trading systems, also known as forex trading robots, are created by converting a set of trading rules into code that a computer can make use of. The computer will then run this code via trading software that scans the markets for trades that meet the requirements of the trading rules contained in the code. The trades are then executed automatically via the trader’s broker.
Discretionary Trading: Discretionary Forex trading depends on a trader’s ‘gut’ trading feel or discretionary trading skill to analyze and trade the markets. Discretionary trading allows for a more flexible approach than automated trading but it does take a certain amount of time to develop your discretionary trading skill. Most professional Forex traders are discretionary traders because they understand the market is a dynamic and constantly flowing entity that is best traded by the human mind.
Technical Trading: Technical trading, or technical analysis, involved analysis of a market’s price chart for making one’s trading decisions. Technical analysis traders use price patterns or ‘technical signals’ to trade the market with an edge. The common belief amongst technical analysis traders is that all economic variables are represented by and factored into the price movement on a price chart.
Fundamental Trading: Fundamental trading, or news trading, is a trading technique wherein traders rely heavily on market news to make their trading analysis and predictions. Fundamental news does ‘drive’ price movement, but often times the market will react differently than what a particular news release would imply due to the fact that market participants often buy on expectations of future events and sell once the reality of said future event occurs. This is another main reason many pro traders rely more heavily on technical analysis than fundamental analysis, although many do use a combination of the two.
Day Trading: Traders who day-trade the Forex market are in and out of the market within one day. This means they typically buy and sell currencies over a very short period of time and they may enter and exit numerous trades in one day.
Scalping: Scalping is similar to day-trading but it relies on more frequent and shorter-term trades than even day-trading does. It is a trading style that refers to jumping in and out of the market many times a day to ‘scalp’ a few pips here and a few pips there, generally with little regard for placing logical stop-losses. Scalping is generally not recommended by experienced / pro traders because it is essentially just gambling.
Swing Trading / Position Trading: This style of trading involves taking a short to mid-term view on the market and traders who swing trade will be in a trade anywhere from a few hours to several days or weeks. Swing or position traders are generally looking to trade with the near-term daily chart momentum and typically enter anywhere from 2 to 10 trades per month, on average.
Range Trading: Range trading involves trading a market that is consolidating between obvious support and resistance levels. By watching for trading signals near the support and resistance boundaries of the trading range, traders have a high-probability entry scenario with obvious risk and reward placement.
Trend Trading: Trend traders are traders who wait for the market to trend and then take advantage of this high-probability movement by looking for entries within the trend. An uptrend is considered to be in place when a market is making higher highs and higher lows, and a downtrend is in place when a market is making lower highs and lower lows. By looking for entries within a trending market, traders have the best chance at making a large profit on their risk. Traders who continually try to trade against the trend by trying to pick the top and bottom of the market, generally lose money quite quickly. Professional Fx traders are largely trend-traders.
Counter-trend Trading: Trends do indeed end, and if you are a savvy and skilled trader you can successful trade a counter-trend move, but this should not be tried until trend-trading has been mastered as counter-trend trading is inherently more risky than trend-trading and there can be many false tops or bottoms in a trend before the real one emerges.
Carry Trading: Carry trading, or simply ‘the carry trade’ as it is called, is the strategy of simply buying a high interest-rate currency against a low interest-rate currency and holding the position for what is usually a long period of time. Forex brokers will pay traders the interest rate difference, or ‘swap’, between the two currencies for each day the position is held. The trick here is that higher-yielding currencies are susceptible to large sell-offs if the market loses risk appetite since these currencies are generally considered riskier than safe-haven currencies like the U.S. dollar or Japanese yen, so it’s a good idea to trail your stop loss up to lock in profit as the carry trade moves in your favor.
• Professional Forex traders vs. amateur Forex traders
Professional Forex trading might seem like something of an elusive or difficult goal for those of you struggling to trade profitably or just beginning to trade. But, there are a few key differences between pro traders and amateur traders that you should be aware of to help you improve your trading or get started on the right track if you are a newbie:

• The important role of Banks in Forex trading
Banks play a very important role in FOREX trading. In fact, most of the market plays against larger banks, hedge funds and big-money players. Commercial banks (such as Deutsche Bank and Barclays) provide liquidity to the Forex market due to the trading volume they handle every day. Some of this trading represents foreign currency conversions on behalf of customers’ needs while some is carried out by the banks’ proprietary trading desk for speculative purpose. The bottom line is that we retail Forex traders are small-change compared to the bigger players like commercial banks, hedge funds, and other big players. We can profit from the moves these big players cause in the market by finding our own edge in the market and trading it with discipline. "learntotradethemarket"

Long or Short ? Order Types And Calculating Profits & Losses

Going long, Going short, Order types, and Calculating Profit & Loss
• Buying and selling


The basic idea of trading the markets is to buy low and sell high or sell high and buy low. I know that probably sounds a little weird to you because you are probably thinking “how can I sell something that I don’t own?” Well, in the Forex market when you sell a currency pair you are actually buying the quote currency (the second currency in the pair) and selling the base currency (the first currency in the pair).
In the case of a non-Forex example though, selling short seems a little confusing, like if you were to sell a stock or commodity. The basic idea here is that your broker lends you the stock or commodity to sell and then you must buy it back later to close the transaction. Essentially, since there is no physical delivery it is possible to sell a security with your broker since you will ‘give’ it back to them at a later date, hopefully at a lower price.
• Long vs. Short
Another great thing about the Forex market is that you have more of a potential to profit in both rising and falling markets due to the fact that there is no market bias like the bullish bias of stocks. Anyone who has traded for a while knows that the fastest money is made in falling markets, so if you learn to trade both bull and bear markets you will have plenty of opportunities to profit.
LONG – When we go long it means we are buying the market and so we want the market to rise so that we can then sell back our position at a higher price than we bought for. This means we are buying the first currency in the pair and selling the second. So, if we buy the EURUSD and the euro strengthens relative to the U.S. dollar, we will be in a profitable trade.
SHORT – When we go short it means we are selling the market and so we want the market to fall so that we can then buy back our position at a lower price than we sold it for. This means we are selling the first currency in the pair and buying the second. So, if we sell the GBPUSD and the British pound weakens relative to the U.S. dollar, we will be in a profitable trade.
(potential arrow image)
• Order types
Now it’s time to cover order types. When you execute a trade in the Forex market it is called an ‘order’, there are different order types and they can vary between brokers. All brokers provide some basic order types, there are other ‘special’ order types that are not offered by all brokers though, and we will cover them all below:
Market order – A market order is an order that is placed ‘at the market’ and it’s executed instantly at the best available price.

Forex Trading Terminology

Forex Trading Terminology 

The Forex market comes with its very own set of terms and jargon. So, before you go any deeper into learning how to trade the Fx market, it’s important you understand some of the basic Forex terminology that you will encounter on your trading journey…
• Basic Forex terms:
Cross rate - The currency exchange rate between two currencies, both of which are not the official currencies of the country in which the exchange rate quote is given in. This phrase is also sometimes used to refer to currency quotes which do not involve the U.S. dollar, regardless of which country the quote is provided in.
For example, if an exchange rate between the British pound and the Japanese yen was quoted in an American newspaper, this would be considered a cross rate in this context, because neither the pound or the yen is the standard currency of the U.S. However, if the exchange rate between the pound and the U.S. dollar were quoted in that same newspaper, it would not be considered a cross rate because the quote involves the U.S. official currency.
Exchange Rate - The value of one currency expressed in terms of another. For example, if EUR/USD is 1.3200, 1 Euro is worth US$1.3200.
Pip – The smallest increment of price movement a currency can make. Also called point or points. For example, 1 pip for the EUR/USD = 0.0001 and 1 pip for the USD/JPY = 0.01.
Leverage - Leverage is the ability to gear your account into a position greater than your total account margin. For instance, if a trader has $1,000 of margin in his account and he opens a $100,000 position, he leverages his account by 100 times, or 100:1. If he opens a $200,000 position with $1,000 of margin in his account, his leverage is 200 times, or 200:1. Increasing your leverage magnifies both gains and losses.
To calculate the leverage used, divide the total value of your open positions by the total margin balance in your account. For example, if you have $10,000 of margin in your account and you open one standard lot of USD/JPY (100,000 units of the base currency) for $100,000, your leverage ratio is 10:1 ($100,000 / $10,000). If you open one standard lot of EUR/USD for $150,000 (100,000 x EURUSD 1.5000) your leverage ratio is 15:1 ($150,000 / $10,000).
Margin - The deposit required to open or maintain a position. Margin can be either “free” or “used”. Used margin is that amount which is being used to maintain an open position, whereas free margin is the amount available to open new positions. With a $1,000 margin balance in your account and a 1% margin requirement to open a position, you can buy or sell a position worth up to a notional $100,000. This allows a trader to leverage his account by up to 100 times or a leverage ratio of 100:1.
If a trader’s account falls below the minimum amount required to maintain an open position, he will receive a “margin call” requiring him to either add more money into his or her account or to close the open position. Most brokers will automatically close a trade when the margin balance falls below the amount required to keep it open. The amount required to maintain an open position is dependent on the broker and could be 50% of the original margin required to open the trade.
Spread - The difference between the sell quote and the buy quote or the bid and offer price. For example, if EUR/USD quotes read 1.3200/03, the spread is the difference between 1.3200 and 1.3203, or 3 pips. In order to break even on a trade, a position must move in the direction of the trade by an amount equal to the spread.
• The major Forex pairs and their nicknames:

• Understanding Forex currency pair quotes:
You will need to understand how to properly read a currency pair quote before you start trading them. So, let’s get started with this:
The exchange rate of two currencies is quoted in a pair, such as the EURUSD or the USDJPY. The reason for this is because in any foreign exchange transaction you are simultaneously buying one currency and selling another. If you were to buy the EURUSD and the euro strengthened against the dollar, you would then be in a profitable trade. Here’s an example of a Forex quote for the euro vs. the U.S. dollar:

The first currency in the pair that is located to the left of the slash mark is called the base currency, and the second currency of the pair that’s located to the right of the slash market is called the counter or quote currency.
If you buy the EUR/USD (or any other currency pair), the exchange rate tells you how much you need to pay in terms of the quote currency to buy one unit of the base currency. In other words, in the example above, you have to pay 1.32105 U.S. dollars to buy 1 euro.
If you sell the EUR/USD (or any other currency pair), the exchange rate tells you how much of the quote currency you receive for selling one unit of the base currency. In other words, in the example above, you will receive 1.32105 U.S. dollars if you sell 1 euro.
An easy way to think about it is like this: the BASE currency is the BASIS for the trade. So, if you buy the EURUSD you are buying euro’s (base currency) and selling dollars (quote currency), if you sell the EURUSD you are selling euro’s (base currency) and buying dollars (quote currency). So, whether you buy or sell a currency pair, it is always based upon the first currency in the pair; the base currency.
The basic point of Forex trading is to buy a currency pair if you think its base currency will appreciate (increase in value) relative to the quote currency. If you think the base currency will depreciate (lose value) relative to the quote currency you would sell the pair.
• Bid and Ask price
Bid Price – The bid is the price at which the market (or your broker) will buy a specific currency pair from you. Thus, at the bid price, a trader can sell the base currency to their broker.

Ask Price – The ask price is the price at which the market (or your broker) will sell a specific currency pair to you. Thus, at the ask price you can buy the base currency from your broker.

Bid/Ask Spread – The spread of a currency pair varies between brokers and it is the difference between the bid and ask the price."learntotradethemarket"

Forex Trading Strategies

Economic data releases are essential for a foreign exchange trader. These important economic indicators create volatility, and plenty of speculation is always surrounding them, and The United States' gross domestic product (GDP) is one such report. Not only do forex (FX) traders continue to monitor this important piece of economic data, they use it to either establish a new position or support a current one.

What Goes into the GDP Report
Gross domestic product is simply the total market value of all goods and services produced in a particular country. In the case of the United States, this total can be broken down into four main categories: consumption, investment, government expenditures (or spending) and net exports.

• Consumption: Final consumption expenditures by households. These can include things like food, rent, fuel and other personal spending.
• Investment: Business spending on new plants and equipment, as well as household investment in property.
• Government spending and investment: The total of all government spending, including public employee salaries and defense or social program benefits.
• Net Exports: Total final exports, minus total imports. A higher net export number is more productive for the economy.

The sum of these numbers is the United States' total gross domestic product, which can be compared to another year's performance in order to derive a percentage of GDP growth or contraction in a particular period.

Making the Comparison
Gross domestic product figures can be released on a monthly or quarterly basis. For the United States, the Bureau of Economic Analysis (BEA), a branch of the U.S. Commerce Department, releases final quarterly domestic figures – along with additional advanced or preliminary figures toward the end of each month. This report can also be released in either real or nominal conditions, the former being adjusted for the effects of inflation. The BEA also releases its GDP price index that has been used in competition with both consumer price index (CPI) and the personal consumption expenditures deflator as a gauge of consumer inflation.

Trading the Foreign Exchange Markets
Like any other piece of important economic data, the gross domestic product report holds a lot of weight for currency traders. It serves as evidence of growth in a productive economy, while signaling contraction in a withering one. As a result, currency traders will tend to seek higher rates of GDP or growth in a belief that interest rates will follow the same direction. If an economy is experiencing a good rate of growth, the benefits will trickle down to the consumer – increasing the likelihood of spending and expansion. In turn, higher spending leads to rising prices, which central banks attempt to tame through interest rate hikes.

Although there are three versions – advanced, preliminary and final – it's the relation between the three that is important, not just the individual releases. Currency professionals will emphasize the advanced reading when trading. But, they won't dismiss any differences when it comes to comparing the advanced with both the preliminary and final readings.

For example, a final reading of 1.5% growth compared to an earlier advanced release of 3.5% is worse off when compared to a similar 1.5% print in both advanced and final readings. A positive growth figure is always good for the economy, but not when a final GDP figure dips below the advanced reading.

What Investors Can Expect
There are three basic reactions to price action that a trader or investor can expect:

1. A lower-than-expected GDP reading will likely result in a selloff of the domestic currency relative to other currencies. In the case of the U.S., a lower GDP figure would signal an economic contraction and hurt the chances of a rise in U.S. interest rates – lowering the value or attractiveness of U.S. dollar based assets. Additionally, the further below an actual GDP reading is from the estimate, the sharper the decline in the dollar.

2. An expected reading requires a bit more comparison by the FX investor. Here, the analyst or trader will want to compare the current reading to the previous quarter's reading – maybe even the previous year's reading. This way, a better evaluation of the situation can be gathered. Given this factor, you can expect that the resulting price action will tend to be mixed as the market sorts out the details.

3. A higher-than-expected reading will tend to strengthen the underlying currency versus other currencies. Therefore, a higher U.S. GDP figure will benefit the greenback, lending to some appreciation in the U.S. dollar against counter currencies; the higher an actual GDP reading is, the sharper the incline of the dollar's appreciation.

Putting It All Together
So, let's take a quick look at a recent example:

Figure 1 – EUR/USD reacts to the U.S. GDP release on March 28, 2011 Source: FX Trek Intellicharts

In Figure 1, the EUR/USD currency pair fell from the 1.4200 big figure over the past couple of sessions (far right handside of the chart) to establish support just below 1.4050 in the 60-minute time frame. Observe how the euro appreciated by about 50 pips, immediately following the March 28, 2011, release at 8:30 a.m. At that time, it was revealed that the world's largest economy grew by less than what was expected. Instead of rising by an estimated 1.9%, the U.S. grew by an advance figure of only 1.8%. This was also less than the 3.1% from the previous quarter – a visual slowdown in growth. As a result, traders sided with selling a weaker U.S. dollar, helping the euro to retrace its losses and climb even higher through the 1.4200 resistance barrier.

A currency trader looking to take advantage of this opportunity could easily place a buy entry near the support level – adding a relatively narrow stop order of 30-40 pips for risk management sake.

The Bottom Line
The U.S. gross domestic product report is (and always will be) an important release to consider when it comes to trading the foreign exchange markets. And, it's the traders that understand how to interpret the data and apply its relevance to a particular trade that come out on top. 'investopedeia'

Forex Tutorial: Foreign Exchange Risk and Benefits

In this section, we'll take a look at some of the benefits and risks associated with the forex market. We'll also discuss how it differs from the equity market in order to get a greater understanding of how the forex market works.

The Good and the Bad We already have mentioned that factors such as the size, volatility and global structure of the foreign exchange market have all contributed to its rapid success. Given the highly liquid nature of this market, investors are able to place extremely large trades without affecting any given exchange rate. These large positions are made available to forex traders because of the low margin requirements used by the majority of the industry's brokers. For example, it is possible for a trader to control a position of US$100,000 by putting down as little as US$1,000 up front and borrowing the remainder from his or her forex broker. This amount of leverage acts as a double-edged sword because investors can realize large gains when rates make a small favorable change, but they also run the risk of a massive loss when the rates move against them. Despite the foreign exchange risks, the amount of leverage available in the forex market is what makes it attractive for many speculators.

The currency market is also the only market that is truly open 24 hours a day with decent liquidity throughout the day. For traders who may have a day job or just a busy schedule, it is an optimal market to trade in. As you can see from the chart below, the major trading hubs are spread throughout many different time zones, eliminating the need to wait for an opening or closing bell. As the U.S. trading closes, other markets in the East are opening, making it possible to trade at any time during the day.

Time Zone	Time (ET)
Tokyo Open	7:00 pm
Tokyo Close	4:00 am
London Open	3:00 am
London Close	12:00 pm
New York Open	8:00 am
New York Close	5:00 pm

While the forex market may offer more excitement to the investor, the risks are also higher in comparison to trading equities. The ultra-high leverage of the forex market means that huge gains can quickly turn to damaging losses and can wipe out the majority of your account in a matter of minutes. This is important for all new traders to understand, because in the forex market - due to the large amount of money involved and the number of players - traders will react quickly to information released into the market, leading to sharp moves in the price of the currency pair.

how to trade Forex

 Beginners / How to Trade Forex?

Learn how to trade Forex

Forex market in itself is the same as any other: commodity market, stock market, or the one that is near your house. All of them have similar features; the difference is only in the goods offered and the methods of making a deal.
Since Forex is a currency market, it’s obvious that the product it offers is foreign exchange currency. Your job as a trader is to buy currency at a cheaper rate and sell it at the more expensive. The difference is your profit. You can also do it in reverse. Knowing that the price for the currency will go down, you sell it at the expensive rate and buy it back later at a cheaper price. The difference in price makes your forex profit

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Forex: You can do it!

Beginners may find it difficult to understand how to trade forex and how to make money in Forex trading. In fact, the Forex trading is no big deal and everyone can do it. All you have to do at first is to open an account at RoboForex broker website, download and install the program where you can trade – trade terminal. You can work just as on demo-account, where you can practice and sharpen your skills as a trader, so on the real account, where you can make real money.

To understand how millions of traders earn money with FOREX trading, all you need is to give one minute of your time.

Forex newbies sometimes find it difficult to understand how exactly one can gain on the differences in exchange rates. To explain this, let us consider an example - how to forex trade. Once you open a forex trade account with a RoboForex, of say $100, you need to define the upper and lower limit on the chart of the currency pair, say EUR / USD, and decide what you do: buy or sell. Assume that on October 3 you predict that the quotes will rise, and thus you buy EUR 7500 at the price of 1.318, making a deal of 7500*1.318 = USD 9885. This is possible due to the level that allows you to make transactions worth 100 times more than you have at your account. On October 27 the rate rises up to 1.42. You decide to sell EUR 7500, making a deal worth of 7500 * 1.42 = USD 10,650. Your earnings amounted to 10650 - 9885 = USD 765

 

The visual information is always easier to understand and to remember, therefore, we suggest that you take at a look at the video course, that we offer for free and learn some skills necessary to trade forex successfully.	MetaTrader4 is the most popular program for traders around the world to make their deals. All you have to do is to download and install it on your computer so that you can also start working on Forex.	The more accurate the analysis of the market is, the more profitable deals you can make. We offer you daily forex analysis from the best market experts. Keeping your eye on the news and forecasts, will make you gain hand in forex trading much faster.

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How much money do you need to trade?

To start trading on the forex market one doesn’t need a big amount of money, as it may seem at a first glance. Thanks to the level that Roboforex offers, you can enter into transactions amounting to tens or hundreds of times greater than the sum in your account. For example, with the deposit of $ 50 and 1:100 level, you can make a deal amounting to $ 5,000.

What is Forex Trading?

What is Forex trading?
FOREX (FX) stands for “foreign exchange” (FOReign EXchange). The essence of the Forex financial market is the trading buying and selling of currencies at market prices.
Forex is actually a group of banks participating in trades, which buys and sells over three billion dollars of currency daily. The currency trading market operates on business days.
Forex is often mistaken for an exchange, which is not true as it does not have a specific address, like the London Stock Exchange or the New York Stock Exchange. Forex Trades are conducted 24 hours a day, so you can always buy or sell currencies. Forex Trades are carried out over the telephone and through special software, the forex trading terminals. This is great advantage for those who plan to earn money on Forex – all you need is a computer accompanied with appropriate software and an Internet connection, so you can work from the convenience of your own home!