Contents


 What is Forex?






1
 What are currency pairs?




1
 Lot Sizes/Risk Management




2
 Placing a trade






3
 MT4 Desktop platform 3

MT4 Mobile platform 4

 Types of Traders






5
 Price Action






8
 Trending Market






9
 Key Levels (Support &Resistance)



13
 Trendlines







16

Identifying targets form the break and retest


18
 Candlestick Analysis





19
 Fibonacci Retracement





36
 Structure & Pattern Analysis




49
 Breakouts







53
 Top Down Analysis





64
 My Personal Lessons





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What is Forex?

Forex, a term that is often used among traders to describe the foreign exchange
market. It is a market unique for its ability to exchange one currency, in exchange for
another. The foreign exchange is the largest financial market we have to date, with
over 5 Trillion USD traded in volume through the Forex market every day from 10PM
Sunday GMT to 10PM Friday GMT.


What are currency pairs?

There are over 100 currency pairs available to trade however brokers generally
provide the most actively traded currency pairs, including commodities, stocks &
indices.
However, we are only focusing on the 7 major currency pairs which are as follows;
GBP/USD (United Kingdom /United States) EUR/USD (Eurozone / United States)
USD/JPY (United States/Japan) USD/CHF (United States / Switzerland)
USD/CAD (United States /Canada) AUD/USD (Australia /United States)
NZD/USD (New Zealand /United States)

Forexample, you may want to sell GBP for USD. You would do this by clicking “sell”
on the pair GBP/USD. One reason for doing this may be because a pattern has
formed on a technical chart giving us a good indication that the GBP is weakening
and the USD is the developing strength. (In further chapters we will go into why one
currency may come weaker or stronger against another). Another reason may be
that certain news events,positive,or negative, may take effect on either the GBP or
the USD.








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What is a spread?
When you are set up with your broker and have attached it to your trading platform
there will be a spread assigned to each currency pair available to you. Let’s use the
GBP/USD sell trade example for this as well. You’re going to short (sell) the
GBP/USD, you spread is 10. The market price for this pair right now sits at 1.40000
(market price). The spread of 10 will sit at 1.40010 (the ask price). A 10-point
difference from the market price. As you are going in for a sell order, you will need
the market to drop at least 1 pip or 10 ‘Pipettes’ in order for your trade to break even.
10 pipettes = 1 pip.
If your trade has a 20- pip target, you’re looking for the market to fall 200 pipettes.
With your entry being 1.40000, your 20 pips take profit target will be at 1.39800.

Lot Sizes /Risk Management
A lot size is term used among traders as measurement of money used within a
trading account. You will assign a lot size to each individual trade you take, and this
must be in accordance to the size of your trading account to ensure your capital is
protected. Using too big of a lot size can damage your trading account, ruin your
trading plan and also damage your trading psychology, resulting in fatigue, greed
and stress. It is highly recommended that you use a lot size of 0.01 per $100 in your
trading account and risk only 1-2% of your total equity per trade at any given time.


For this example, we will be using
2% risk.Stop Loss area marked in
‘Grey’ on these Long/Buy positions. If
your trading account is $1,000, your
lot size shouldBe 0.10 with a 20 pip
stop on the trade taken, in the
example the maximum you are
risking is $20.00. Shouldyou choose
to increase your stop loss to 40 pips,
to maintain the 2% risk you would
half your lot size to0.05 meaning you
would still only be risking $20.00 with
a larger stop loss of 40 pips.












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Vice Versa, if you’re decreasing your stop to 10 pips (not recommended) you could
double your lot size to 0.20 lots, whilst still maintaining a 2% risk.

Placing a trade
Firstly, before placing a trade, we need to know our entry point, most importantly
your exit point. Very simple aspect to the method of trading yet disastrous if you
were to get it wrong. So, here I am going to provide an example of how to place a
buy and sell trading on both the Desktop MT4 platform and the MT4 Mobile platform.

Placing a trade on the MT4 Desktop platform:



Firstly, choose the pair you’re going to trade from
the
Column on the left of the chart also known as
‘market
Watch’. For this example, we will use AUD/USD.




Open the chart for AUD/USD and right click on the
chat. With your mouse hover over the drop-
downmenu’Trading’. Here you will see an option
saying, ‘New Order’. A simpler way to access the
pop up is the key ’F9’. Once you have this second
window open, firstly, ensure this is the correct pair
you’re attempting to trade by double checking the
‘Symbol’.







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Secondly decide on your lot size,
You do this by editing the
‘Volume’ drop down option to
Your preferred lot size (refer to
Risk management section).

Now, depending on whether
You’re buying or selling this
Currency you will need to know
Where, both your Stop Loss (Max
Risk), and your Take profit
(Target) is going to be. Once you have worked out your targets, simply input them
Into the section named ‘stop loss’ / ‘take profit’.

Then, once that is all done, tap either ‘Sell by market’ or ‘Buy by market’ at the
bottom of the window.



Placing a trade on the MT4 Mobile platform:

Same idea but a slightly different so worth explaining.



Once you have opened the application, at the bottom left
of the screen you will see two arrows overlapping each
other, this is known as the ‘quotes’ section. Here we can
find a list of all the pairs available to you, tap any pair and
click Advanced view mode to check the spread of each
pair as the spread often changes depending on
marketvolatility.













In this example we will
be looking to sell
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GBP/USD. Give it a tap and click, ‘New order’. You will then be taken to the ‘Market
Execution’ page much like the one we saw on the desktop version. There are other
options such as Buy Limit, Sell Limit, Buy Order and Sell Order, however, we do not
need to focus on these as our trading style focuses on market execution entries and
not pending orders entries.

Here on the right is the option to increase or decrease the lot size you’re using for
this trade, go back to the lot Size section to read what I have advised about this part
of trading.


On the left we can see the Market price and
Ask price. You will see to the left there is a
red bar and on the right, a green. The red is
where you will type your Stop Loss, and the
green is where you will set your Take Profit.
This isn’t too clear in the beginning stages,
but it will become secondnature to you.
Then once you have your Lot size, Stop
Loss and Take Profit in place, click either
‘SELL buy market’ or ‘BUY by market’ to
execute your order.





Types of Traders

There are hundreds of successful ways to trade. The most successful traders
however will put hours, days, weeks, months and in most case’s years developing
their strategy, approach to trading and ultimately their chosen craft to the absolute,
and will continue to do so for years to come.



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It just shows that within life there is no real target apart from becoming the best at
what you do and in our case, this is trading the foreign exchange market.
Here I will briefly go over some of the most renowned ways people trade, people
may choose one over another for many reasons.
For example; The day trader may not like the risk that is taken within scalping, yet
the scalper may not have the patience to day trade.
We all reach a point in Forex where we decipher what best suits us and will carry on
learning why that may be as you become more successful.

Position Trader

Possibly one of the strictest ways to approach and trade the market yet likely one of
the most successful, with regards to the time and freedom you have away from the
charts this approach gives the trader more flexibility with their time.
Position traders firstly aim at holding their trades for weeks, if not months.
They will look at huge time frames (Monthly and Weekly) when doing their technical
analysis but these traders will focus a lot on the Fundamental side of things and
keep an ear out for potentially huge moves on one currency pair.
These traders will use a small Lot Size but chase anywhere from 100 pips to
1000pips and sometimes more, using a 100-200 pip stop loss may be considered
risky to other traders but to a position trader this will sit as a standard as it allows
significant breathing room for their trade to eventually head in their direction.


Day Trader
Day Trading is generally considered a highly successful and profitable way to trade,
understandably as the select few who master this style of trading are the most
strategic and disciplined traders allowing them to catch a lot of the big price
movements on the Foreign Exchange.
They begin the day nice and early and know exactly what they are after, they are not
after the amount if pips or profit that can potentially be made with a trade, but for a
pattern to be formed and respected.



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They will act upon their strict money management plan/ strategy they have
implemented and as soon as they see that the confirmations have been met, they
enter. The discipline these traders have is admirable.

Intraday Trader
Intraday meaning ‘within the day’. Much like day traders, do not hold trades over
night and quite simply only trade within the day but here’s the difference. Where Day
Traders may focus on dominating a singular currency pair along their trading
journey, intraday traders will look to make several trades within a singular trading
day.
They will look for recognisable patterns across a whole bunch of pairs to find the
entry they’ve been searching for.

Swing Trader
Swing Traders, again another approach to the market which some new traders may
be apprehensive about using. These trades are held for several days often,
overnight. Which to the intraday trader and the Scalper is a big no.?
They will dedicate several solid hours each night or morning to ensure they’re up to
date with their technical analysis and the trades that they have going.
Swing Traders tend to have multiple opportunities presented to them over the trading
week so they will set a limit on all; how many traders they’re going to take, how big
the lot size will be, how far their stops will be and alsotheir weekly targets. From this
they can calculate exactly how much they’re going to risk and how many pips they
will be attempting to catch. This is known as a trading plan.

Scalper
Scalper are often referred to as ‘savages’ not because they enter with extreme lot
sizes, but mainly because Scalpers enter extremely volatile markets holding
significant risk. Remember, scalpers have spent 10,000 hours perfecting their craft.
They get in and out of the market within seconds and at times minutes.
But to the scalper 15-20 minutes is quite enough, 1 hour at most. They go into the
market when there is extreme volatility and fast paced movements, hence why they
spend so little time with the sharks. Another key thing to note about scalpers is they
are after a small amount of pip, 5, 10, 20 pips at a top. A real tight stop loss,
trail-stop as soon as they’re a few pips in profit, also have no second thoughts
jumping out early as this way of trading is all about ‘securing-the-bag’.

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Price Action

Price action is used by all professional traders as it is not a lagging indicator. An
example of a lagging indicator would be a SMA (Smooth Moving Average), as the
traditional setting is 20periods on the moving average, that means its gathering
information from the previous 20 candlesticks to then be processed into a moving
average which is what we see on the chart. It’s an extremely useful tool to help
identify trend changes and trends in the market, however its downside is that the
information is delayed. The reason we choose to trade price action as opposed to
using indicators is that the technical data provided is raw and live so it can be
interpreted there and then by the trader instead of depending on several lagging
indicators. Price action is the foundation to any successful technical analyst and any
indicator chosen to be used, should be deemed as an accessory to confirm your
trade and not be used to predict movement.

In this section, we will be covering the most important candlestick formations, what
they look like, what do they indicate to use and how we can use them to our
advantage! We’ll also include information regarding;

 Trending Market (Highs and Lows)
 Key Levels (Supports & Resistance)
 Trendlines
 Candlestick Analysis
 Top Down Analysis
 Pattern Analysis (Wedges /Breakouts, etc.)











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Trending Market
A Trending Market allows traders to identify which direction the market price will
likely continue in. Trending Markets help traders capture profits by yielding high
returns on low risk trades (Swing Traders). There are four major factors that cause
both long-term trends and short-term price fluctuations within the FX Market. Price
can be influenced by one of the four major factors, such as;


 Governments

International Transactions
 Speculation and Expectation
 Supply and Demand


On the right is an example of a trending
market developing. It is clear to us that
this pair EUR/AUD is in an uptrend as
price is developing higher highs and
higher lows. Vice versa, if the market was
Developing a downtrend, we would see
lower lows and lower highs.







Using this information available to us, we can anticipate that the pairEUR/AUD will
continue its uptrend and will create a newhigher high








HL
9

HH
HL
HL
H
L
H
LH

L
High (H) – Yellow
Higher Low (HL)
Higher High (HH)
Low (L) – Blue
Lower Low (LL)
Lower High (LH)
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HL
0.04677 (3.24%)
467.7
HH




















As anticipated, in a bullish trend (uptrend) we expected a new higher high to form
(first green box) after the previous higher low (circled above).

The pip count from the circled higher low to the green new higher high would have
achieved 467.7 pips. With a lot size of just 0.10 on a USD base currency account,
the return on this single trade would have been approximately $467 USD.





H
HL
HH
HH
HL
HL
HL
LH
High (H) – Yellow
Higher Low (HL)
Higher High (HH)
Low (L) – Blue
Lower Low (LL)
Lower High (LH)
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Above is an example of a trending market developing. It is clear to us that this pair
EUR/AUD is in a downtrend as price is developing lower highs and lower lows.
Vice versa, if the, market was developing an uptrend, we would see higher highs
and higher lows. Using this information available to us, we can anticipate that the
pair EUR/AUD will continue its downtrend and will create a new lower high.






H
LH
L
LL
High (H) – Blue
Higher Low (HL)
Higher High (HH)
Low (L) – Orange
Lower Low (LL)
Lower High (LH)
LH
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`












As anticipated, in a bearish trend (downtrend) we expected a new lower low to form
(first green box) after the previous lower high (circled above).







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H
LH
LH
LL
L
New LL
New LH
High (H) – Blue
Higher Low (HL)
Higher High (HH)
Low (L) - Orange
Lower Low (LL)
Lower High (LH)
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Key Levels / Support & Resistance

The concept of support and resistance forms the foundation for basic forex technical
analysis.
Forex traders look to long (buy) at or near key levels of potential support.
Forex traders look to short (sell) at or near key levels of potential resistance.
Forex traders usually ask the question how low is low and how high is high. One way
we can identify these key levels is using areas where price is attracted to.
Support and resistance is understandably referred to as the “floor” (support)/ “ceiling”
(resistance).
Support and resistance can be identified in many ways, often traders will use
multiple factors to identify these key levels and potential reversal zones / targets.
Support and resistance are not just some random areas in which price turns around
within the market. There are potential sellers waiting at resistance zones with
pending orders (sell order) and other traders waiting on the sidelines for price to
reach these levels.
Likewise, there are potential buyers waiting at support zones with pending orders
(buy order) and other traders waiting on the sidelines for price to reach these levels.
As a trader I focus purely on price action, including candlesticks, channels, trend
lines and top down analysis.














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Examples Key Resistance (ceiling) Levels
















Above is an example of the pair GBP/USD. As you can see, price has tested the
blue horizontal line 4 times in total, meaning this price level holds significant
resistance.
You can expect a rejection of this level should the price reach it again.
After the second red box, it is clear to traders that price level is forming a resistance,
we can identify this by the big upper wicks left behind, followed by bearish engulfing
candles. These will indicate price will move with bearish momentum at these
resistance zones.
(We will cover wicks and candlestick types, such as the bearish engulfing candle
mentioned above later on)
If we were to short this pair from the resistance identified, our stop loss would be just
above the previous high allowing our trade breathing room. We would aim for a
target no less than 3/1, or most recent low.



1.37589Resistance (Red)
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Examples Key Support (floor) Levels














Above is an example of the pair CHF/JPY. As you can see, price has tested the blue
horizontal line 4 times in total, meaning this price level holds significant Support.
You can expect a rejection of this level should the price reach it again.
After the second green box, it is clear to traders that this price level is forming a
support, we can identify this by the big lower wicks left behind (3rd green box),
followed by bullish engulfing candles. These will indicate price will move with bullish
momentum at these support zones.
If we were too long this pair from the support identified, our stop loss would be just
below the previous low allowing our trade breathing room. We would aim for a target
no less than 3/1, or most recent high.








Support (Green)
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Trendlines

Trendlines, a go to technique for nearly every single trader, Position, Day Trader,
Scalper, Crypto trader or Stock Trader.
Trendlines are used quite simply to define a trend. They are areas in which price
seems to respect intently until the trendline is broken. Below is a screenshot of a
trend being ‘respected’ and a trend finally being broken. Also a screenshot of a
trendline being broken, and re tested. By retested, we mean that the market breaks
key levels of support and resistance or a breakout from a trendline or pattern, (that
we will cover later).
(See example below)

























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Retest
Retest
Retest
Retest
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After understanding support/resistance and breakout/retests, we can recognize price
formation, such as in the example below.
1. Initially we’ve identified resistance (shown as point number 1)
2. As the price unfolds the trend line begins (point number 2)
3. Points 3 & 4 confirm this supporting trendline
4. Red box represents the price ‘breaking’ the supporting trend line
5. The blue box represents price ‘retesting’ previous supporting trend line (entry
point)




















1
2
3
4
Now Support
Resistance
GBPUSD, M5 1.34028 1.34041
1.33986 1.33995
27NOV2017 27NOV08:30 27NOV09:50 27NOV10:30 27NOV11:10 27NOV11:50 27NOV12:30 27NOV13:10 27NOV13:50 27NOV14:30 27NOV15:10 27NOV15:50 27NOV16:30 27NOV17:10 27NOV17:50 27NOV18:30
1.33840
1.33795
1.33750
1.33705
1.33660
1.33615
1.33570
1.33525
1.33480
1.33435
1.33390
1.33345
1.33300
1.33255
1.33210
1.33165
1.33120
1.3307
5
27 pips
ppppi
pPIPS
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Identifying targets from the break and retest


As we know “old resistance becomes new support” Likewise “old support becomes
new resistance “. As price help resistance at point 1, targets for the break and the
retest entry were at the level of point 1 (new support) shown by the dotted line.
















Above is another example of a break and retest developed from a symmetrical
triangle. Stop loss is placed within the triangle above the high, prior to entry. Our
target would be the next clear support zone as shown in the first example.




Stop loss
goes here
Enter short here
Breakout candle
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We would place our targets no less than 3/1. E/g, our risk could be £100 and our
reward would be £300.
It is important to remember that just because a trendline has been broken it doesn’t
mean the price is inevitably going to follow in that direction. It may be what traders
refer to a ‘false breakout’. It may be that the price has broken the trend to find a prior
key level (Support or resistance, or a previous Fibonacci level).



Candlestick Analysis

Basic Sentiment Candlesticks

1. Doji

2. Marubozu

Reversal Candlesticks

3. Harami

4. Engulfing

5. Hammer / Hanging Man







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What is a candlestick

Candlesticks are composed of the body and an upper and a lower shadow also
known as a wick. The area between the open and the close is called the realbody.
The wick illustrates thehighest and lowest traded prices of an asset during the time
frame you have selected on your chart.
For example, if you are viewing a currency pair on a 1-hour time frame, each
individual candle represents 1 hour. Within that hour, price fluctuates forming the
highs, the lows and the real body. This will create a candlestick pattern that each
trader reads to assist their price action analysis.




















High price
High price

Open price

Low price
Low price

Lower shadow wick
Body

Close price

Close price
Body
Open price

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Upper Shadow Wick
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Doji

Doji candlesticks are candles with little to no “Real Body’, meaning they Open and
Close at the same price. The way we can analyse the direction of the candles
following the ‘Doji’ is by looking at the wicks/ shadows.

 Neutral- A Doji with the shadows equal length of each other but still, very little
movement within that candle.
 Long Legged- Again a Doji with the Shadows equal length of each other but
reasonable movement up & down within that candle. Opening and Closing at
the same Price.
 Gravestone- A Doji candle with a long Upper Shadow and no Lower Shadow.
 Dragonfly- A Doji candle with a long Lower Shadow and no Upper Shadow.














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Types of doji formations




























Examples within the market

Types
Neutral
Long – Legged
Gravestone
Dragonfly
Doji
Bullish
runHLHL
Small pull back, Neutral Doji formed,
(Bullish, anticipate a continuation of the upward
momentum)

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Not that we would have entered a Long directly off of one ‘Long Legged Doji’ but
there are a few things we could analyse to expect a further push to the upside.
As you can see, the Doji formed after a small pullback of the bullish run. This would
act as a supporting trend. Also, where this Doji candle closed just above the opening
this can be regarded as ‘Continuation Doji’, especially within Bullish Territory, this is
no reversal Doji. Stop Losses on this position would be 10 pips + below the Doji.












Marubozu

Marubozu Candles are candlesticks that have no Shadows, Upper or Lower. They
fluctuate within the timeframe of that candle but it will stay in the direction of it
opening.



Bullish run
Small pull back, Neutral Doji formed,
(Bullish, anticipate a continuation of the upward momentum)
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Continuation of the existing bullish trend or a reversal of the current bearish trend.
Likewise, Bearish Marubozu Candle indicates that the current bearish trend will
either continue or the current uptrend may reverse.
As mentioned above, Marubozu can result in continuation of the trend or reversal of
it. Looking above, we can identify that we are in a bearish trend and a bearish
Marubozu candle has formed. Using this information, we can expect further decline
on the AUD/CAD pair.


As expected, the trend continued to the downside 140 pips from the close of the
Bearish Marubozu.



Bearish Marubozu – Current bearish trend will
continue
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Bullish Marubozu

As mentioned above, Marubozu can result in continuation of the trend or reversal of
it. Looking below, we can identify that we are in a bullish trend and a bullish
Marubozu candle has formed. Using this information, we can expect a further push
to the upside (new highs to be made) on the AUD/CAD pair.



0.01409(1.06%)-140.9
Bearish Marubozu – Current bearish trend
will continue
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Bullish Marubozu – current Bullish trend will continue
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As expected, the Bullish trend continued to the upside catching 52 pips from the
close of the Bullish Marubozu.

0.00525 (0.41%),
52.5 35 bars, 1d 11h
Bullish Marubozu – Current Bullish trend
will continue
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Reversal Candlesticks

You will find ‘Reversal Candlesticks’ at the end of a bullish or bearish trend OR at
Key Levels of Support or Resistance. The Long-Legged Doji and the Gravestone
Doji are both examples of Reversal Candlesticks. The higher the time frame you
analyse the more reliable these patterns are.

Harami

Harami is a candlestick pattern formed by 2 candles. Whether Bearish or Bullish the
second candle opens and closes within the body of the first candle.

A Bullish Harami pattern is formed by one bearish candle and the second candle is
bullish, opens and closes inside the previous bearish candle. As shown below:

















Bullish Haram Formation
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A Bearish Harami pattern is formed by one bullish candle and the second candle is
bearish, opens and closes inside the previous bullish candle. As shown below:





























Bearish Harami Formation
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Engulfing

Engulfing patterns are again candlesticks formed by 2 candles. It is essentially the
opposite to the Harami candlestick, where the second of the 2 candles completely
‘engulfs’ the first candle.

A Bullish Engulfing candle formation is a sign that buyers are gaining control and
are pushing the market further upward. As shown below:






















Bullish Engulfing Candle
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Bearish Engulfing candle formation is a sign that sellers are gaining control and are
pushing the market further down. As shown below:











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Hammer / Hanging Man

How can we identify the candlestick?

1. Both the Hammer and the Hanging Man
Candlestick patterns look identical.
Both Hammer / Hanging man have a:

2. Candle body near the top of the candlestick; and
a long lower shadow (generally double the length
of the candle body).
3. (Color of the candle body does not matter.)

The Hammer pattern is found after a market decline and is a bullish signal. However,
the Hanging Man appears (ill-omen) at the end of a bull run is a bearish signal.

















Body near
top
Long lower
wick
Hammer / Hanging Man
Hanging Man (highlighted below)
appears (ill-omen) at the end of a bull run.
(Bearish signal)
Long lower shadow
(the wick is generally double the
length of the candle body).

Candle body near the top of
the candlestick
USDCAD
1.2781
1
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Using the Fibonacci retracement tool, it helps us as traders to identify entry and exit
points within the market. We utilise this tool by drawing from the high to the low of a
market in a downtrend vice versa in an uptrend (low to high).

Note 38.2% is our key entry level and -27% is our key exit level.


























1.29435
1.29006
1.286
1111
1111
1144
1111
1110
3
1.2862
6
1.2781
1
Hanging Man (highlighted below)
appears (ill-omen) at the end of a
bull run. (Bearish signal)
Using the Fibonacci retracement
tool, drawn from the high to low.
(helping us identify entryand
exit).
100.00 %( 1.29438)
61.80 %( 1.28794)
50.00 %( 1.28595)
38.20 %( 1.28396)
0.00 %( 1.27752)
-27.20 %(1.27294)
USDCAD
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As you can see, target 1 for take profit at 0.00% was achieved for a partial take profit
(50% of trade closed) and stop loss moved to break-even for a risk free trade,
meaning we don’t make anything if it reverses on us however we won’t lose either.
We have secured 50% of the trade and now we let the other half run.


























1.28478
1.28066
1.27750
1.2745
6
1.2744
9
1.29006
1.29435
1.2781
1
1.28603
1.28626
100.00 %( 1.29438)
38.20 %( 1.28396)
50.00 %( 1.28595)
61.80 %( 1.28794)
0.00 %( 1.27752)
-27.20 %( 1.27294)
USDCAD
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Implementing Fibonacci with other analysis

Using the Fibonacci retracement tool with our candlestick analysis helps us identify
and confirm a good entry point for our short positions (sell) on USDCAD.

Our stop loss is placed above the last swing high or between 38.2% & 50% on the
fib levels. Due to a large volume of pending orders set by large institutions and retail
traders set around these special levels, we anticipate long wicks and strong reversal
candles. So you have to be quick and precise with our entry.

Our take profit target is -27.20% as it is our fibonacci extension. Alternatively, you
could set your take profit at the 0.00% fibonacci level to take a modest 2/1 risk
reward. To maximise return, at 0.00% close partial positions and bring the stop loss
to entry point for a risk free trade.



















1.29435
1.2781
1
1.2862
6
1.286
03
1.29006
100.00 %( 1.29438)HH
61.80 %( 1.28794)
50.00 %( 1.28595)LH
38.20 %( 1.28396)LL
0.00 %( 1.27752) LL
USDCAD
-27.20 %( 1.27294)
Placing our stop loss just above
the previous high (between
50.00% & 38.2%)
Our target is -27.20% going for a
Risk: 1 : Reward :4
Last High
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Fibonacci Retracement

The Fibonacci number sequence may seem like a random set of numbers when first
looked upon. A Fibonacci Sequence is found by adding up the two numbers before
it, starting with 0 and 1. For example, the sequence goes, 0,1,1,2,3,5,8,13,21,34.
(1+1=2. 2+1=3. 3+2=5…).
Fibonacci numbers are found in our everyday lives however; they often go
unnoticed. Regardless of their value.

For example












Fibonacci can also be found within forex on any trading time frame. Although I
recommend
Using the 1/2/ 4H Time Frames with this tool. If using the tool on higher Time
Frames, it may take much longer to fulfil aimed targets
Fibonacci tools are one of the most actively traded tools by technical analysts.
In this section, we will cover one of the most important aspects regarding the fib
retracement tool and how some analysts utilise this tool. The fib retracement tool is
used to help identify good entry and exit opportunities. There are two ways to identify
targets using the fib retracement tool.

1. Trading the extensions 1.618% (used for breakouts)


a
b
a
a+b\a = a/b = ∅ = 1.61803
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2. Trading the negative extensions -27.20% -61.80% (used for pull backs)

But before we get into that, we need to set up our fib retracement tool.
First we need to open our trading view chart.


























To access the fib retracement tool,
Click on the arrow to the right of this box
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1. Draw from high to low then double click on any of the percentages to
edit the tool
2. Now make sure you have the same setting as mine




Click this tool
here
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How to use the Fib Retracement tool?
1. Identify which way the market is moving (uptrend or downtrend)

In a Downtrend

2. Click and drag the fib retracement tool from the most recent swing low up to
the last most recent swing high
3. Enter on the pullback at 38.2% (numbered 3 below) with a modest target of-
27% giving us an average risk of 1 with a reward of 3


For example, …



















After understanding the concept of the fib retracement tool, it’s time we draw it on a
live chart…

61.80 %(
0.87173)
38.20 %(
0.87096)
61.80% 20
Pips 20 Pips
SL
0.10 Lots
=$20.00
50.00 %( 40
Pips 40 Pips
SL
0.05 Lots
=$20.00
-27.20 %( 0.87228)
-27.20 %( 0.87036)10
10 Pips SL
0.20 Lots
= $20.00
0.00 %( 0.87210)
38.20 %( 0.87187)
50.00 %( 0.87180)
Uptrend, Draw from High to Low


2
3
2
3
Downtrend, Draw from Low to High
Typical 123 Formation for Fib Retracement
100.00 %(
0.87150)
100.00% EURGBP
0.00 %(
0.97057)
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EUR/GBP -1 Hour Time frame - Example
1. Identify the trend (Uptrend= higher highs, higher lows, - Downtrend = Lower
Lows, lower highs)
2. Find the most recent swing low / swing high depending on the trend
3. Using the Fib Retracement tool, draw from the recent high / lows (depending
on trend direction as shown above)
4. Stop loss to be set between 50%&61.8% with Take Profit set at -27%
5. A Wait for pullback for entry at 38.2%
6. Once trade hits 0.00% move your stop loss to breakeven (risk free trade)























1.EUR/GBP – 1 Hour Time Frame = DOWNTREND







EURGBP
0.87900
0.87850
0.87800
0.87750
0.87700
0.87650
0.87600
0.87550
0.87500
0.87450
0.87400
0.87350
0.87300
0.87250
0.87200
0.87174
0.87150
0.87100
0.87050
0.87000
0.86950
0.86900
0.86850
0.86800
0.86750

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As we can see on this chart, lower highs with lower lows have been created,
meaning EUR/GBP is in a downtrend.








` ̀












EURGBP
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2. Identifying the most recent swing high / swing low




















The highs and lows are easy to spot due to the large wicks left behind, followed by
big bearish / bullish candles.








EURGBP
23.60 %( 0.87169)
27.20 %( 0.86634)
100.00 %( 0.87974)
61.80 %( 0.87572)
50.00 %( 0.87447)
38.20 %( 0.87323)
0.00 %( 0.86921)
Swing High
Using the Fib tool, draw from
swing low to swing high
` ̀












Swing Low
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3) Using the Fib Retracement tool, draw from the recent high / lows
(depending on trend direction)























Downtrend identified meaning the fib is drawn from the most recent low, up to the
most recent swing high.




EURGBP
23.60 %( 0.87169)
27.20 %( 0.86634)
100.00 %( 0.87974)
61.80 %( 0.87572)
50.00 %( 0.87447)
38.20 %( 0.87323)
0.00 %( 0.86921)
Swing High
Using the Fib tool,
draw from swing low
to swing high
` ̀













Swing Low
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4. Stop loss to be set between 50% &61.8% with Take Profit set at -
27%





















As price is below our entry point, we anticipate a pull back to 38.2% before a short to
our target of -27%. This generally results in a 3/1 + trade (risk 1 % of equity for a
3%+ return) which is regarded to be a lot better than average.



23.60 %(0.87169)
100.00 %( 0.87974)
50.00 %(
0.87447)HL
0.00 %(
0.86921)HH

EURGBPL
27.20 %( 0.86634)


Stop loss set between 50%
& 61.8%
Take Profit set at – 27%
` ̀











Pending order at 38.2% fib
level (as price is below
entry) Low price
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5. Pullback to 38.2% occurred, trade triggered

















As anticipated, EUR/GBP has retraced to our entry zone which is 38.2%.
Our next target for a risk free trade is 0.00%, meaning we bring our stop loss to
breakeven (entry point) so if the market does reverse, we won’t lose any money nor
will we make anything either. Alternatively, you can exit your trade at 0.00% and not
ride the trade to -27%,although this means the reward is reduced by 1/3.








23.60 %( 0.87169)
`










100.00 %( 0.87974)
50.00 %( 0.87447)
0.00 %( 0.86921)
27.20 %( 0.86634)
61.80 %( 0.87572)
38.20 %( 0.87323)
Break Even
Take Profit
EURGB
P
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6. Exiting the trade



















As anticipated price has fallen to 0.00%, we now have two options.
(Most traders choose option 1)
1. Move stop loss to breakeven at 0.00% fib (risk free trade) and leave trade to
continue to target. (-27% has less probability of being achieved, however the
reward makes up for this, stop loss at breakeven therefore no risk)
2. Once trade is in profit and has crossed and closed past 23.6% fib level, move
stop loss to breakeven. Take profit at 0.00% (close trade entirely). Probability
of hitting target is higher as it’s a closer target but less of a reward.





23.60 %( 0.87169)
100.00 %( 0.87974)
50.00 %( 0.87447)
0.00 %( 0.86921)
EURGBP
-27.20 %( 0.86634)
61.80 %( 0.87572)
38.20 %( 0.87323)
`










Stop Loss has been moved to breakeven
Break even or close trade at 0.00%
Take Profit
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7. Target achieved


















As you can see, this was a risk free trade that achieved its target reasonably quickly
(the power of Fibonacci). Initially we risked 3% on this trade (18 pip / 69 pip target).
When the target was achieved of 69 pips, our return was 11.1%.







23.60 %( 0.87169)
100.00 %( 0.87974)
50.00 %( 0.87447)
0.00 %( 0.86921)
EURGBP
27.20 %( 0.86634)
61.80 %( 0.87572)
38.20 %( 0.87323)
`










Stop Loss has been moved
to breakeven
Break even or
close at 0.00%
Take Profit
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Typical 123 Formation for Fib Retracement



























EURGB
P
23.60 %( 0.87169)
27.20 %( 0.86634)
100.00 %( 0.87974)
61.80 %( 0.87572)
50.00%(0.87447)
38.20%(0.87323)
0.00%(0.86921)
` ̀










1
2
Downtrend, Draw from Low to High
100.00 %(0.87974)
EURGB
P
61.80 %( 0.87572)
50.00 %( 0.87447)
38.20 %( 0.87323)
23.60 %( 0.87169)
27.20 %( 0.86634)
1
2
3
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Structure & Pattern Analysis (Wedges / Breakouts, etc.)

All of the below patterns develop by price action unfolding in certain ways. They are
used for technical and strategic analysis for higher probability in technical pattern
trading. It should be known that just because a pattern may indicate a decent
probability of price moving in a certain direction at times it may not, numerous things
may result in this; no fundamental analysis, market movers and stop hunts etc.

Wedges
Wedges, patterns traded by all traders, these patterns form on all timeframes so
they’re great to learn regardless of your style of trading. We have two kinds of
wedges, ‘Rising Wedge’ and ‘Falling Wedge’. Firstly, let’s detail the Rising Wedge.

A rising wedge forms when price consolidates between upward trending support and
resistance zones. So, in a rising wedge you would like to find a series of higher highs
and higher lows which get tighter toward the end of the pattern awaiting a breakout.

Consider the prior movements of the Rising Wedge, this will provide more probability
or indication as of where the market will likely follow the wedge. For example, if a
rising wedge forms after and *upward* trend, it is likely a reversal of that trend. On
the other hand, if the rising wedge forms after a *downward* trend, it could also
indicate continuation of that downward trend & vice versus.











Initial uptrend
Breakout
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Triangles

Triangles or Wedges, are possibly one of the easiest yet powerful patterns to find
and analyse in the Forex market, or any market. Used by all types of traders these
patterns are widely traded and become a core practice for those looking to master
the art of technical analysis.
























Falling Market
Rising Market
Symmetrical Triangle
b d
a
c
e
a
c
e
b
d
b
d
a
c
e
Falling Triangle
a
c
e
b
d
Rising Triangle
a
c
e
b
d
a
c
b
d
e
b
d
a
c
e

a
c
e
b
d
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Inverted Widening Triangle
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Looking at the image on the previous page you can see there are plenty of triangles
to find and trade, you may also recognise from previous figures within the document
I also use these patterns often, especially trading break and retests.

The way we analyse these patterns to find entries and targets becomes simple after
finding several of these patterns yourself. Another great thing to point out about
Triangles and Wedges within the market is that they can be used on any Time-
Frame you’re trading.











USD/CAD *before* example of near ‘symmetrical triangle’. A clear descending
trendline of resistance and an ascending trending of support has been plotted on the
1H chart. Anticipating a break and a retest to the upside.











161.80 %( 1.28753)
50.00 %( 1.28273)
%(0.87572)
38.20
1.28223)

1.28223)38.20.8732
3) 0.00 %( 1.28223)
-27.00 %( 1.27943)
-61.80 %( 1.27794)

1.28800
100.00 %(1.28488)
1.1.28488)Retest
78.60 %( 1.28396)

1.28748
1.28700
%(
0.8744
7)
1.28600
%(
0.8732
3)
1.28500
%(
0.86921
)
1.28396
1.28331
1.28282
1.28200
1.28100
1.28000
Bullis
h
Engul
fing
Candl
e
1.27900
1.27800
1.28331
1.28200
1.28800
1.28748
1.28700
1.28600
1.28500
1.28396
1.28282
1.28100
1.28000
1.27900
1.27800
100.00 %( 1.28488)
78.60 %( 1.28396)
161.80 %( 1.28753)
50.00 %( 1.28273)
38.20 %( 1.28223)
0.00 %( 1.28223)
-27.00 %( 1.27943)
-61.80 %( 1.27794)
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As you can see this pattern unfolded successfully and reached the target of 1.28748.
(161.8 Fib)













When we zoom out to the Daily Time Frame we find an even larger Wedge giving
further evidence to the proof and power behind Fibonacci and ‘Fractal’ Trading. Why
show this? That small smudge of green near where the current market price is, is
where the 1H wedge shown earlier is.
As shown below as the market unfolds the price reaches the next level of resistance
at the top of the Daily Descending Resistance Trendline.



















1.40000

1.38000

1.36000
1.34000

1.32000
1.30000

1.28955
1.28202

1.26000

1.24000

1.22000
1.20000

1.18000
+
9
USDCAD
Target: 0.02613(2.04%) 261.3, Amount: 27.64
Open P&K: 0.02582, Qty: 00.75
Risk/Reward Ratio: 7.06
Stop: 0.00370 (0.29%) 37.0, Amount: 7.5
1.32000

1.30977

1.30000
1.29000

1.28748
1.28364
1.27994

1.27000

1.26000

1.25000

1.24000
1.23000
USDCA
D
A +261 pip
gain from
the initial
entry point
from the
break and
retest of the
1H Wedge.
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Breakout targets A-Z (1.618%)

Trading breakouts can be extremely easy once you have the hang of it.
At first, the idea might seem too simple to be true, but it is the truth!


We like to keep It Simple Stupid (KISS).
Entries are easy to find for a lot of traders, however exiting the trade is what most
traders find to be the hardest part especially when your profit is increasing
extensively due to the large volume of orders in a short period of time.

This can be traded with almost any pair, however, it’s good to keep in mind that
some pairs are a lot choppier and price likes to swing back and forth on their way to
target.
Traders tend to trade the major currency pairs due to large volume, meaning once a
breakout has occurred buyers / sellers will flood the market depending on direction
and push it toward the target (1.618%) as it is common knowledge that price will aim
for that extension first.

In this section we will break down a chart from A-Z, explaining how to utilise this level
which is overlooked almost all the time by retail traders! We will teach you how
to identify exit points in breakout trading and how to enter / exit a trade on a
breakout!










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As we have covered breakout retest / patterns above, we won’t go into too much
detail, However I will mention the main patterns that I follow.

























Falling Wedges
In an uptrend
In a downtrend
Rising Wedges
In an uptrend
In a downtrend
(Bearish)
(Bullish)
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This system has proven to be very profitable if risk management and the rules are
followed. For this example, we will show you the step by step trades taken to bag
£1,800 within 2 hours on GBP/USD.

1. Identifying the trend






















We can clearly see that the pair GBP/USD is in an uptrend. We have highs, followed
by higher lows and higher highs, confirming we are in an uptrend.


ꚚBearish Pound/U.S. Dollar, 60, FXCM-O1.40966 H1.40977 L1.40906 C1.40955
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2. Has a wedge formed?

Looking back at figure 1 on (page 55) we will only be looking
for a falling wedge in an uptrend (top left) as we can see
wicks are forming creating a slight downslope on the top side.
This is indicating that a breakout is due.











Zooming in we begin to draw our Trendlines. As we are looking for a breakout to the
upside, we aren’t too fussed about drawing a supporting trendline, the key trendline
should be on the buy side (the top)










As anticipated, a support line held, followed by a bullish candle with a long wick,
indicating that sellers are exiting. Followed by bullish engulfing.

In an Uptrend
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3. Breakout occurred, awaiting retest of trendline


















A breakout has occurred, we are now anticipating the trendline to be retested
(touched) again before the momentum picks up on the pair and the buyers get in at a
better price.
We are waiting to hunt the perfect entry price, like a trained
marine waiting to pull the trigger.





In the meantime, we can add in our targets using our fibonacci extension tool which
we have learned how to implement accordingly.

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4. Our exit strategy

It is imperative that we use this tool correctly to achieve the right target. If not this
could result in falling short and the trade reversing on us.
Once you have your fibonacci tool selected you will then need to identify the
previous high and low before the breakout. We are using 1.618% for breakouts so
targets should not be -27.20%inthis example.




















Once we have the break. Draw from the last low to the previous high, It’s as
simple as that! We now have our take profit which is 1.618% as seen above.
Exact method applies for shorting (selling) just flip the method!



Last low before break
Previous high before break
Draw from the low to the high
with a 1.618% take profit target
161.00 %( 1.42261)
100.00 %( 1.41953)
61.00 %( 1.41762)
50.00 %( 1.41703)
38.20 %( 1.41644)
23.60 %( 1.41571)
0.00 %( 1.41454)
27.20 %( 1.41310)
GBPUSD
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5. Placing Stop Loss


I like to place the stop loss a couple of pips below the 38.2% in an uptrend, in a
downtrend you would place the stop above the 38.2%
The risk to reward usually works out to be Risk 1 Reward 2, the reward is lower but
we justify this by the frequency of these trades happening / the high win rate.






















As you can see, take profit and stop loss set. We will now wait to see how this trade
plays out…

161.00 %( 1.42261)
100.00 %( 1.41953)
61.00 %( 1.41762)
50.00 %( 1.41703)
38.20 %( 1.41644)
23.60 %( 1.41571)
0.00 %(
1.41454)
27.20 %( 1.41310)
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6. Retest Occurred, Entry Made






















As you can see, Price has respected the trendline (old resistance becomes new
support) Order has been filled.
We have entered on the retests of this trendline and expect a rapid flood of bulls
entering this trade near this price.
Furthermore, our Fibonacci is drawn and our targets are identified, stops set and
now we expect 1.618%to be achieved as a result of the bullish momentum.


161.00 %(
1.42261)
100.00 %( 1.41953)
61.00 %( 1.41762)
50.00 %( 1.41703)
38.20 %( 1.41644)
23.60 %( 1.41571)
0.00 %( 1.41454)
27.20 %( 1.41310)
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7. Target Achieved!



















As simple as that! Target achieved.
To recap….
1. Identify trend
2. Identify the pattern (wedge triangle)
3. Wait for breakout
4. Draw fibs. (Downtrend high to low) (Uptrend low to high)
5. Set stop loss below 38.2% in an uptrend vice versa, take profit at 1.618%
6. Enter on retest
It’s as simple as that!


161.00 %( 1.42261)

100.00 %( 1.41953)
61.00 %( 1.41762)
50.00 %( 1.41703)
38.20 %( 1.41644)
23.60 %( 1.41571)
0.00 %( 1.41454)
27.20 %( 1.41310)
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Flags

A pattern of consolidation of which may either ascend or descend, the difference
between flags and the other patterns is the price will touch two parallel trends
creating the flag. I’ll break this down further in the ‘Bearish’ and ‘Bullish’ Flags. The
difference is vice versa so to save space and your reading time I’ll explain one
‘Bearish Flag pattern’.
Bearish flags are slightly ascending, this encourages the flag to unfold as we expect,
followed with a break (& potential retest) of the supporting trendline, to the downside
resulting in continuation of the initial descent.
Exactly the opposite with Bullish Flags. 1, slightly descending 2, multiple touches of
parallel trend lines 3, break to the upside following with continuation of initial upward
trend.















Each red line showing the amount price has moved is equally important, you can see
before the flag developed the market had a descent toward that temporary
consolidation, we measure that initial descent to predict how far the market will
potentially fall after the flag is broken.

CLOSE OUTSIDE OF FLAG
TOUCHES OF PARALLEL RESISTENCE TREND
TOUCHES OF PARELLEL SUPPORT TREND
USDJPY.H4 112.632 112.667 112.533 112.542
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Double Tops & Double Bottoms
There are a number of different ways to trade DT’s and DB’s, some with higher
probability than others, so back test them to see which ways you find most profitable
for you.










The
entry would be a result of the bearish engulfing candle and a close ‘BELOW’ the red
line (double top resistance zone). The target will be a support zone indicated with a
black horizontal line.
Another way to trade this would be to await a break of this green support zone,
perhaps a retest and to enter short. Try to get as many confirmations as possible
indicating it is going down; trend retests, bearish candlesticks, Fibonacci targets etc.












NEW DOUBLE BOTTOM?
DOUBLE TOP
-
1.55210


-
1.54840


-
1.54460


-
1.54090

-
1.53918

-
1.53710


-
1.53330
-


-
1.52960


-
1.52580

Upper
shadow
wick
DOUBLE TOP
If price breaks both support zones, short to next fib
38.2
50.0
Neutral
Doji
formed,
(Bullish,
anticipate
a
continuat
ion of the
upward
momentu
m)
78.6
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Top Down Analysis

Definitely something I recommend every single person looking to trade forex should
take the time to learn. Top Down Analysis, it is exactly how it should, analysing from
top to bottom (timeframe). There are a lot of ways to do Top Down Analysis but here
is the most common. Use the line chart when plotting Support & Resistance lines.
The idea of top down analysis is to get an idea of the ‘sentiment’ or ‘attitude’ of the
currency pair being analysed. It can also be used to find certain targets where a
currency pair could potentially reach.


Monthly, Weekly, Daily, 4 Hour and 1 Hour charts, in that order.


Technical analysts work with candle sticks so it is important to know that when they
say for example “4 Hour chart”, they mean they are looking at a candlestick chart
where each individual candle displayed represents 4 Hours’ time.

Top down analysis comes in 4 Main blocks 5 or 6 at a maximum. At the end of each
analysis (each time frame) within top down, traders may find it useful to take notes of
what each chart is showing.












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1. Starting off with The Monthly Chart we will see how this month’s candle is
turning out in regards to last months. At times we will see how this time of
year has played out last year and perhaps the year before. Looking at the
monthly chart is all about finding a ‘general direction’, at times a trend. We
recommend switching to the monthly line chart to markup significant key
levels of Support & Resistance as shown below.

















Let’s continue onto the next stage of Top Down Analysis.






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1.71078
1.70000
1.68000
1.66000
1.62000
1.60000
1.58000
1.57106
1.56000
1.54000
1.52000
1.50000
1.48089
1.46084
1.44000
1.41984
GBPUSD 1.39765
1.39032
1.37589
1.36000
1.34000
1.32728
1.32000
1.30000
1.28236
1.28000
1.25667
1.24000
1.22401
JUL
2011
JUL
2012
JUL
2013
JUL
2014
JUL
2015
JUL
2016
JUL
2017
JUL
2018
JUL
2019
JUL
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2. The next time frame offered by most platforms is The Weekly Chart, a clearer
view of how the month is acting and where the market may be going by the
end of the current week. How? The weekly chart presents more detail to act
upon, here traders will search for Key Levels, Support and Resistance, plot
down trend lines and channels if they are to present themselves. On the
weekly our main focus is structure & patterns.

























1.54000
1.42000
1.52000
1.36000
1.48000
1.32000
1.60000
1.30000
1.22000
1.68000
1.44000
1.34000
1.26000
1.24000
1.20000
GBPUSD
Oct 2015 Apr Jul Oct 2016 Apr Jul Oct 2017 Apr Jul Oct 2018 Apr Jul Oct 2019
1.38000
1.27886
1.46000
1.39614
1.56000
1.36587
1.68351
1.50253
1.19131
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3. On The Daily Chart things become more intreresting but not necessarily
more ‘complex’. Check the notes taken from structure found on the Monthly
and Weekly charts and refer to this when looking at The Daily. Traders will
focus on plotting some more (if possible) Key Levels, Support & Resistance
etc, and also heavily regarding candlestick formations.Whether it be a
singular reversal candlestick or a series of them consolidation and creating a
sideways market or some kind of wedge. This is where weekly chart notes
come into play.

 Have I found a Reversal Candle at a Key Level of Resistance?
 Or have I seen prices struggle to break beyond a Key Support Zone?

These are the questions you should be asking yourself when on the 3rd stage of Top
Down Analysis, The Daily Chart.


















15 Feb 19 Mar 19 Apr 16 May 14 Jun 18 Jul 16 Aug
GBPUSD



1.46000

1.45600
1.45000

1.44500

1.44000
1.43600

1.43000
1.42600

1.42000

1.41500
1.41000
1.40600

1.39915

1.30600
1.39000

1.38500
1.38000
1.37500
1.37000

1.36687

1.36000
-61.809 %( 1.44650)2014
-27.00 %( 1.43411) JUL
0.00 %( 1.42450)2015
38.20 %(
1.41090)JUL
50.00 %(
1.40669)Inve
rted
Widenin
g
Triangle
61.80 %(
1.40249)JUL
78.68 %(
1.39651)2017
100.00 %(
1.38889)a
161.80 %( 1.36688)c
Fib drawn from Low to High.
Potential Break and retest of strong Key Level & 61.8%
Bearish engulfing candle forming.
Broken trend line.
?
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4. Step four, The 4 Hour Chart. When analysing the 4 Hour chart, frequently
refer to the notes taken from the previous step (daily notes). Here Top Down
Traders break down candlestick formations into further depth. Watch to see
how the 4 hour candles have been forming within the daily candles. Also, look
to find true Reversal Candles, Stop Hunts, Large Wick Doji Candles and also
significant Candlesticks resting on or breaking Key Levels.
























Bearish engulfing
Centre of channel
-27.00 %( 1.43407)
0.00 %( 1.42447)
1.43600
1.43400
1.43200
1.43000
1.42800
1.42600
1.42400
1.42200
1.42000
1.41800
1.41600
1.41400
1.41309
1.41200
1.41000
1.40800
1.40600
1.40400
1.40200
1.39953
48.20
1.39800
1.39600
1.39400
1.39200
1.39000
1.38800
1.38600
Mar 6 12 13:00 19 13:00 26 14:00 Apr 4 9 2013-04-12 08:00:00 16 14:00 23 26 May
Small break and
retest.
Strong bearish momentum or
bullish reversal confirmation
38.20 %( 1.41088)
50.00 %( 1.40668)
61.80 %( 1.40248)
78.60 %( 1.39650)
100.00 %( 1.38889)
GBPUSD
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My Personal Lessons

These are lessons I have learned from trading for eleven years in the forex and
commodities markets. These lessons won’t be found on any YouTube video, Internet
Blogs, or books. These are lessons taught by being hands-on with the markets. I
want to help prevent my traders from making the same mistakes.

1. As a beginner, avoid finding the best entries.
I know this may sound contradicting to what we try to do at Market Makers FX, but
please, hear what I have to say. As an inexperienced trader, finding perfect entries
will result in plenty of unrealized pips. The markets won’t move in a perfect
theoretical motion. It will not bounce off every support line or hold every resistance
level. It also wouldn’t follow through with every breakout.

Finding perfect entries will result in two scenarios: your entry wasn’t filled, or your
stop loss will be too narrow-both costing you unrealized profits and losses.

2. Psychology is the 1# factor!
It does not matter what strategy you use; you will never be profitable without good
psychology in trading. Have you ever wondered why it is so easy to grow a demo
account but not a real account? There, you have your answer. Get rid of the mental
blockage with your trading and stick to your analysis.

3. The overall markets move by fundamentals.
If you have not already, trade by a forex calendar. There are weeks with NFP,
FOMC, Conferences, etc. This will determine whether the week will be choppy,
trendy, difficult, etc. If you have traded big news before, you would know of the
sudden dips/spikes. Before such movements, there will be plenty of uncertainties.
These uncertainties will result in a choppy and challenging market.

4. Who is the enemy?
This is the way the market works. When we make a buy entry and profit, there will
be a body making a sell entry and making losses. This may be another retail trader
or financial institution, but most of the time, it’s a financial institution. I can get
deeper into Big Bank trading some other time, but the main point is, look for
movements made by financial institutions and follow. That is what trading is all
about.
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