This Forex Trading PDF is written in such a way that even complete beginners can understand it and learn from it. In other words, we have read tons of Forex books, opened and closed thousands of trades; have filtered out?

all the needed basics for beginner traders, and simplified them. So all you have to do is to take this FREE knowledge and start your online currency trading journey! TOP 3 Forex strategies that actually work? TOP 6 market movers, that create the most significant opportunities for profits?

The best times for trading Currencies online? Learn how to read charts? Tips and warnings when using leverage? Learn whats the difference between Fundamental and Technical Analysis?

Information is gold and we believe the more you have, the more you should share. As we see, the US dollar is represented in all currency pairs, thus, if a currency pair contains the US dollar, this pair is considered a major currency pair.

Pairs which do not include the US dollar are called cross currency pairs, or cross rates. One of the most interesting movements in the Forex market involving the British pound took place in the September 16, That day is known as Black Wednesday with the British Pound posting its biggest fall.

the US dollar currency pairs. The general reasons for this "sterling crisis" are said to be the participation of Great Britain in the European currency system with fixed exchange rate corridors; recently passed parliamentary elections; a reduction in the British industrial output; the Bank of England efforts to hold the parity rate for the Deutschemark, as well as a dramatic outflow of investors. At the same time, due to a profitability slant, the German currency market became more attractive than the British one.

All in all, the speculators were rushing to sell pounds for Deutschemarks and for US dollars. As a result, the pound returned to a floating exchange rate. Another intriguing currency pair is the US dollar vs. It is traded most actively during sessions in Asia. From the mid 80's the Yen ratings started rising actively versus the US Dollar. In the early 90's a prosperous economic development turned into a standstill in Japan, the unemployment increased; earnings and wages slid as well as the living standards of the Japanese population.

And from the beginning of the year , this caused bankruptcies of numerous financial organizations in Japan. As a consequence, the quotes on the Tokyo Stock Exchange collapsed, a Yen devaluation took place, thereafter, a new wave of bankruptcies among manufacturing companies began. The above started an Asian crisis in the years that led a Yen crash.

It resulted in a tumble of the Yen-US dollar pair from Yens for one US dollar to The global economic crisis touched almost all fields of human activities. Forex currency market was no exception. Though, Forex participants central banks, commercial banks, investment banks, brokers and dealers, pension funds, insurance companies and transnational companies were in a difficult position, the Forex market continues to function successfully, it is a stable and profitable as never before.

The financial crisis of has led to drastic changes in the world's currencies values. During the crisis, the Yen strengthened most of all against all other currencies. Neither the US dollar, nor the euro, but the Yen proved to be the most reliable currency instrument for traders. One of the reasons for such strengthening can be attributed to the fact that traders needed to find a sanctuary amid a monetary chaos.

Ask and Bid When traders want to place an order on the Forex market they should be aware of the currency pair as well as the price of this pair. A Forex market price of a currency pair is denoted by two symbols, Ask and Bid, which have specific digital notations.

Consequently, a trader sells the currency standing second. Bid price is the lowest price in the quotation of the currency pair, at which a trader sells the currency standing first in the abbreviation of the currency pair. Respectively, a trader buys the currency standing second. Seem complicated? This means that you can buy 1 euro for 1. The difference between the Bid price and the Ask price is called spread.

The spread is actually the commission of the broker. The Spreads in Forex trading are actually very small compared to currency spreads at banks. A pip is the smallest price movement of a traded currency. It is very important that you understand what a pip is in the Forex trading because you will be using pips in calculating your profits and losses.. For most currencies a pip is 0.

When a currency moves from a value of 1. There is an exception for quotations for Japanese Yen against other currencies. For currencies in relation to Japanese Yen a pip is 0. A lot is the minimal traded amount for each currency transaction. For regular accounts one lot equals , units of the base currency. However you can also open mini and micro accounts that allow trading in smaller lots.

Understanding the Pip Spread - The spread is closely associated with the pip and has a major importance for you as a trader. As mentioned above, It is the difference between the selling and the buying price of a currency pair. It is the difference in the bid and ask price. The ask is the price at which you buy and the bid is the price at which you sell. In this case the spread is 3 pips. The pip spread is your cost of doing business here.

In the case above it means you sustain a paper loss equal to 3 pips at the moment you enter the trade. Your contract has to appreciate by 3 pips before you break even. The lower the pip spread the easier is it for you to profit. Generally the more active and bigger the market, the lower the pip spread. Smaller and more exotic markets tend to have a higher spread. Smaller accounts will generally have higher spreads than bigger regular accounts.

From the profitability point of view it is important to find a broker offering a lower pip spread, however the low spread is not everything. More important is to choose a reputable and reliable broker. Most brokers will allow leverage. This can heighten profits and losses and should be used wisely. How to Control Losses with "Stop Loss" Stop loss is a widely used order aiming mainly at limiting the possible losses in case of negative market movements.

Stop loss is used only with open positions. When the market conditions are not favorable for a trader and the price has reached the level of the "Stop loss", the deal is closed automatically. Therefore, Stop loss helps the trader to control losses and in case of failures to keep safe at least part of his deposit. If a trader does not use Stop loss orders, the position is closed by the broker when the sum of losses is equal to the sum of the deposit.

There are 3 types of Stop loss orders: fixed Stop loss, sliding Stop loss and combined Stop loss. Fixed Stop losses are set while opening positions. They cannot be changed until the deal is closed.

Sliding stop losses, on the other hand, can be modified any time depending on the price movement. Another name for sliding Stop loss is Trailing stop, that can be modified either manually or automatically based on the traders' settings. There are many discussions on whether it is necessary to use Stop losses or not.

Some traders believe that Stop loss is essential in trading, emphasizing the ability of Stop losses to prevent the loss of the whole deposit. If the price is rapidly moving in a direction which does not correspond to the forecast, a deal that has not been closed in time can result in a significant loss.

The opponents of Stop loss believe that this order can limit not only losses, but profits as well. In this case the position is closed prematurely with a loss while it could develop into a profit later on.

As a rule, the decision on whether to use Stop loss or not depends on the individual strategy and preferences of a particular trader. Trailing stop is an order which its major function is to act as an automatic maintenance of an open position with continually shifting of the stop loss level depending on the price movement. A trader may open a bullish position and sets the gap from the current price to trailing stop in pips. When the price goes upwards, the trailing stop follows it automatically sticking to the set gap.

In case that the price goes down, then the trailing stop quote remains on the spot. In this way, a trader using a trailing stop has an opportunity to derive maximal profit at an ascending price with no regard to the set Take Profit value.

Furthermore, a trailing stop is a loss limiter. Here is an example: a trader opens a buy position at the price of 1. In case that the price starts to move upwards and exceeds the mark of 1. If the price turns down, the price does not change its position.

As to a sell position opening, trailing stop behaves quite in the opposite. The trader sets it a few pips higher. At a price descending motion the trailing stop shifts according to the set size. With the up-going price, the trailing stop does not move.

While applying a trailing stop in Forex operations a trader will have to remove stop loss orders manually in line with increases in the trade profit. Trailing stop sets a stop loss level automatically at the value the trader needs. A trailing stop is mainly used by traders who run trend trading, but can't follow the price moves continually.

Trailing stop usage is also feasible at intraday trades, when quick reaction to price change is required. Please note that trailing stops work only when the trading terminal is open. Once the terminal is switched off the stop loss is fixed at its current spot. How to Use Forex for Hedging Hedging denotes safety and security. Hedging means the protection of a client's funds from unfavorable currency rate fluctuations.

Account funds are fixed at their current price through conducting trades on Forex. Thus, hedging helps to ease exposure to currency rate changes risks, which helps to prevent the risk of currency rate fluctuations.

As a matter of fact, hedging presupposes using one instrument in order to lower the risk related to unfavorable market factors impact on the price of another one directly associated with it.

Hedging can also be considered as a type of investment allowing to minimize price movements risks in the market. The hedging cost should be valued with regard to the possible losses in the event of not hedging. Here's a hedging example: a trader, who imports in a foreign currency, opens a buy trade with the currency of his trading account in advance, and when the real time of the currency purchase arrives to his bank, he closes the position.

And a trader, who exports in a foreign currency, opens a sell trade with the currency on his trading account beforehand, and at a the real moment of this currency purchase in his bank, he closes it. Advantages of Forex Over Other Investment Assets 1. Simple to comprehend and master - In a Forex trade we deal with just a pair of currencies 2. Low Minimum Investment - The Forex market requires less capital to start trading than most other markets.

The initial investment could go very low, depending on the leverage offered by the broker. This is a great advantage since Forex traders are able to keep their risk investment to the lowest level.

Online Forex brokers offer "mini" and "micro" trading accounts with low minimum account deposit. We're not saying you should open an account with the bare minimum, but it does make Forex trading much more accessible to the average individual who doesn't have a lot of start-up trading capital. Trading starts when the markets open in Australia on Sunday evening, and ends after markets close in New York on Friday. High Liquidity - Liquidity is the ability of an asset to be converted into cash quickly and without any price discount.

In Forex this means we can move large amounts of money into and out of foreign currency with minimal price movement. Low Transaction Cost - In Forex, typically the cost of a transaction is built into the price.

It is called the spread. The spread is the difference between the buying and selling price. Leverage - Forex Brokers allow traders to trade the market using leverage. Leverage is the ability to trade more money on the market than what is actually in the trader's account. Profit Potential from Rising and Falling Prices - The Forex market has no restrictions for directional trading. This means, if you think a currency pair is going to increase in value; you can buy it, or go long.

Similarly, if you think it could decrease in value you can sell it, or go short.. No one can corner the market - The foreign exchange market is so huge and has so many participants that no single entity can control the market price for an extended period of time. Such a huge amount of a daily volume allows for an excellent price stability in most market conditions. This means you likely will never have to worry about slippage as you would when trading stocks or commodities.

The price you see quoted on your trading screen is the price you get. Market transparency and Instant execution - Market transparency is much greater in Forex than in stocks or commodities, this means it is easier to analyze the inner workings of the market and figure out what is driving it.

Instantaneous order execution is another great advantage Forex has over other markets. Retail Forex trading is generally done over the internet on all electronic platforms. The Forex market has no central exchange and was designed to be this way to facilitate large banks and allow for instant execution of transactions, this means no delays for you and extreme ease of execution.

Price movements are highly predictable in the Forex market - Due to its highly speculative nature Forex price movements tend to over shoot and then correct back to the mean. This means there are a number of repetitive patterns that are easily recognizable to the trader who is trained in price action analysis.

Forex currency pairs generally spend more time in very strong up or down trends than other markets, this is also a huge advantage because it is generally much easier to trade a strongly trending market than a chaotic and consolidating market. Now, if you were holding a futures position over night it is entirely possible that your stop got gapped around, in which case you would get filled at the next best price, which often will be extremely damaging to your trading account.

Direct participation, difficult to manipulate or influence - Forex trading operates in a decentralized online electronic market for its participants: Banks, FCMs, hedge funds, governments, retail currency conversion houses and high worth net individuals. Investors can interact directly with the market maker for pricing on a currency pair.

Access is quicker and costs are lower than in other markets. Large market liquidity makes it very difficult for any one participant to manipulate or influence it. Easier market analysis - Countries are more often stable than companies making it easier to predict their economic direction.

Primary factors affecting demand and supply for Forex investment are interest rates and economic indicators such as GDP, trade balances and foreign investment. This and other economic data released regularly determines demand and supply for currency pairs.

Technology frontiers and investing - Technology enables the retail investor the ability to make better investment decisions through ready access to economic and political news events, to technical charting software and electronic trading platforms. They also have transparent and safe access to their investment funds in segregated accounts so that the safety of their funds is guaranteed.

Limited Risk - Despite the common perception about Forex being risky, it is easy to limit and reduce the risk if a trader chooses the right strategy. In addition it should be mentioned that stops are much easier to control as well, that is why newbies have good chances to succeed even while doing their first steps as Forex investors and traders. No fees or middlemen - There are no commissions when trading on the Forex market.

The retail brokers in this market are compensated through the bid-ask spread. Businessmen can also spot currency trading which eliminates the middlemen and allows each person to trade directly with the market that is responsible for pricing on a certain currency pair. Not only does this expedite the process, it gives each trader more options and versatility. The Basic Forex Trading Strategy The basic Forex strategy that is used by many traders of all experience levels, is Trend Following.

This strategy is widely followed because of its simplicity to identify and trade and many times, strong trends can bail you out of an imperfect set of buy and sell rules. Before we delve into the basics of Trend Following, it is important to first explain why trend trading is a popular strategy used by many new and experienced traders.

Do you have the perfect Forex trading strategy? I have not found it. To me, a perfect strategy is the one that wins all of the time and has minimal trade drawdown. Therefore, learning how to trade in an imperfect world is very important. Trend following is a simple way to cover up some strategy imperfections by identifying the strongest trends in the market. When you trade in the direction of the trend, the rest of your trading approach can fall right into place. This doesn't mean that all your trades will be winners.

It does mean that you don't have to be exact in your entries and exits once you find a strong trend to trade. Now how do you know when a trend starts and when it is going to end? Since this is a beginners guide I will not elaborate on the various techniques that traders use to identify trends as this is beyond the scope of this book.

I will however touch on several techniques in later chapters but note that these will be just in an introduction level without going too much deeper. Any trader either a newbie or a pro should develop his own style of trading. There are several trading styles that you can adopt. You will choose your style based on your personality and financial capacities.

Many traders make the mistake of adopting a trading style that is unnatural for them. A trader may adopt one of the following two main trading styles: Day Trading and Intraweek trading. Let's discuss each of them; Day Trading Day trading on Forex means that one or few trades are conducted within one trading day. As a rule, the time intervals between the opening or the closing of trades may take from several minutes up to several hours. Despite some difficulties of day-trading, this type of trading is very popular among the newcomers as well as among experienced traders.

Day trading allows for the opportunity to make a profit in a short time with a small amount of funds. In order to achieve favorable results in an intraday trading it is essential that you make the right forecast as to the price movement, as there are many external factors that cause high volatility in the currency market.

So to make your day trading beneficial you have to track the market situation, collate facts and make conclusions about the price behavior of currencies, it is also important to be able to react fast so that you will find entry and exit points quickly at the opening or the closing of trades. Combining knowledge of technical analysis to be discussed in a later chapter with patience and observance a trader has good chances to earn well with a relatively low risk.

There are several strategies of day trading. The most widespread among them is Scalping - a strategy that is offering a fast opening or closing of several day positions. The trader closes trades while making just a few profit pips on each trade while the earnings come from the accumulation of a large number of successfully completed short term trades. Another popular day trading strategy is news trading. Traders, who choose news trading, monitor the market events permanently, analyze the currencies behavior in different cases.

Usually news trading requires an insight learning of market development and a proper trade experience accumulation. Day trading can be a source of a nice income through the readiness to devote most of your free time to trading.

Now here are the advantages and disadvantages of day trading. This style is suitable for traders with endurance and quick reactions. Intraweek Trading Intraweek trade has no such furious market movements as in intraday trade. It may seem that the market is motionless.

But it is just at the first sight. Probably, every trader can find additional styles, but the two that we've mentioned here are probably the most common. Forex Trading Risk Management Your first concern when trading Forex should be not to risk too much money on any given trade. Unfortunately, many traders start trading Forex without thinking about the risk that they are taking - only about the potential rewards. If you want to succeed in Forex you must take into consideration the maximum percentage of the total trading money that you should risk in any one trade.

Actually, your ability to limit your losses is equally as critical or even more critical as your success in managing winning trades.

The goal of practicing a good Forex money management is to minimize risk and increase payouts. For starters here are 3 quick tips: First, Trading Forex is fun and exciting and money can be made; but you must also keep in mind that like with any other trading there is the risk of losing.

Hence, Forex trading rule number one: do not trade with money you can't afford to lose. Second, never borrow money while trading, trade only with your own money this does not apply to leverage that is provided by your broker.

And third, set and stick to a budget. Write it on your forehead if you have to, but no matter what, when you hit that number, quit trading for the day. Good money management calls for adopting a conservative investment strategy that means that you should never risk your entire capital.

When you enter a trade no matter how great it may be , always ensure to only invest conservatively. Forex trading like any other investing is not a sure thing, there is always a risk factor involved. A conservative investment strategy helps you to conserve your money when things go wrong.

Forex trading offers a lot of choices to the trader. A good money management strategy requires diversification. The volatility that accompanies trading currencies is much distinct from say trading commodities as well as stocks. Obviously, the payouts may vary depending on the currency pair which is selected. As the saying goes, never put all your eggs in the same basket. Losses in a trade should be accepted on a positive note. The effects of a trade that goes against you are able to impact the future or successive trade decisions.

Expecting losses whilst investing can assist traders in identifying the areas which may happen to be unnoticed. Losses needs to be seen as a stepping stone instead of having it affect you.

Start off slow and scale up - this has a significant role particularly for beginner traders. Certainly do not fall for the emotions and commit your entire amounts right away on one trade. Investing in small amounts continually helps you to take a self-disciplined approach. The majority of Forex brokers allow for a small minimum trade sum.

Use this advantage and be sure to trade with patience. Do not expect to make gains with Forex trading as soon as you made your first deposit. Trade in small amounts until you have the sense of the assets that you're trading. This can gradually build your self-confidence levels and helps to automatically be aware of the indicators and be able to prepare your investing strategy and ultimately help reduce the losses.

One of the important things that specifies successful traders has to do with using a good money management strategy.

If you have traded any type of CFDs , you would have probably heard of the Forex carry trade strategy. Whilst this strategy is harder to make money with at the moment because of widespread low-interest rates, it has now been a popular method to make money for many years.

When using the carry trade strategy, you are looking to profit from the different interest rates each currency offers. As we go through in this post, you need to take some positives and negatives into account if you want to use the carry trade strategy. Free PDF Guide: Get Your Forex Carry Trade PDF Trading Guide. The basic mechanics of the Forex carry trade is that you are looking to buy a high-interest currency compared to another currency with a low interest.

The difference in this interest will be paid to you from your broker. Normally the interest payments will be made once each weekday with a triple payment on Wednesday to cover the weekend period.

The reason that carry trades have been so popular over the years is that many currencies have offered high interest rates that allow for very profitable carry trades. These profits could then be compounded with the use of leverage. In years gone by, the most popular currencies to make the carry trade have been currencies such as the Australian Dollar and New Zealand dollar because of their higher interest rates.

At the moment, the carry trade is far tougher to make money from because interest rates around the world from most major economies have been falling. You can find an up-to-date list of all the different interest rates from FXStreet here.

Something to keep in mind is that if you are in a negative carry trade, you will pay this interest and not receive it. The carry trade will only affect if you hold your trade for longer periods and during the rollover period from your broker. Scalp and day trades that are not held during this period will not face any swap charges or interest. Carry trade work the best when the central bank for a certain currency is raising interest rates.

In this scenario, you can often get the best of both worlds. As a currency has its interest rates hiked, more and more will look to buy that currency to profit from the carry trade.

This is why you will often see a currency make strong moves higher as their central bank increase their interest rates. Whilst earning interest on your trade can be an easy way to make money, there are some risks that can bring the carry trade apart. When a currency with high-interest rates starts to have its interest cut, the carry trade will be less profitable. Because the carry trade is now less profitable, more traders will move out of their positions and into other higher-yielding positions.

It is essential you keep an eye on interest rate levels and anything that could change them in the near future. As a currency continues to move interest rates higher, the strength of that currency will normally increase as more traders flock to it. This can give you a win-win situation of profiting from the interest and also from the gain in the price. The losses that you could incur from price moving against you could far outweigh the profit from the interest. Staying up to date with the latest interest rates and the currency trades that offer the highest yield is crucial to a successful carry trade.

The image below shows the interest rates from each currency and the average yield offered. Each broker will offer different amounts of yield for each currency, so if you are looking to use the carry trade, it is important you choose your broker carefully. The best pairs are those that are paying higher rates of interest. Something to keep in mind is that these will often be offered by the smaller currencies and currencies prone to wild fluctuations in their price.

The easiest way to work out if a carry trade could potentially profitable is by using a carry trade calculator. After you have selected your currency pair, entered whether you are going long or short, and the interest rate levels, you will be given an amount that you could potentially make or lose with the carry trade. I hunt pips each day in the charts with price action technical analysis and indicators. My goal is to get as many pips as possible and help you understand how to use indicators and price action together successfully in your own trading.

Skip to content. NOTE: Get your free carry trade strategy pdf guide below. Table of Contents. Pip Hunter I hunt pips each day in the charts with price action technical analysis and indicators.

Likewise if the market is in an upswing, the pivot point is the junction or value at which the market begins to turn and start a downswing. When the current prices move lower than the low of the previous 20 bars - that's a sell signal. Read right away or while drinking your morning coffee. You will not pay a single penny in commission, and spreads are super-tight. Best Forex Trading Guide for Beginners PDF We have picked Capital. Double Bottom These are also trend reversal formations.

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