Complete Guide to Forex Trading by shivprasadforex

Vocabulary flashcards based on the 'Complete Guide to Forex Trading' lecture notes, covering technical indicators, market sessions, chart patterns, and risk management.

Forex (Foreign Exchange)

A market where global currencies are traded 24 hours a day, 5 days a week, with a daily volume of approximately $7.5T$.

XAUUSD

The symbol for Gold versus the US Dollar, which can move $1000-3000$ pips per day and is affected by inflation, war news, and the DXY.

US100 (NASDAQ)

An index of the top 100 US tech companies, such as Apple and Google, which moves $500-2000$ pips per day and is highly correlated with Gold.

Sydney Session

The trade session occurring from 5:30 AM to 2:00 PM IST, characterized by low volatility where mainly AUD/NZD pairs move.

London Session

A highly volatile session from 1:30 PM to 10:30 PM IST, considered best for day traders, with peak movement between 3:30 PM and 6:30 PM IST.

New York (NY) Session

A very high volatility session from 6:30 PM to 1:00 AM IST where NFP and CPI data are typically released, resulting in maximum movement for Gold and US100.

Head & Shoulders

A reversal chart pattern consisting of a left shoulder, head, and right shoulder where a neckline break signals a sell entry.

Double Top

A reversal pattern where price stops at the same level twice, forming an 'M' shape and signaling a potential sell after a neckline break.

Double Bottom

A reversal pattern where price bounces off the same low twice, forming a 'W' shape and signaling a buy opportunity upon a neckline break.

Doji

A candlestick pattern representing market indecision where the open and close prices are very close, suggesting a wait for the next candle.

Support Level

A price level where buying pressure is strong and the price typically bounces; if broken, it often becomes a resistance level.

Resistance Level

A price level dominated by sellers where the price stops rising; if broken, it often becomes a support level.

Retest

A process where price returns to a broken resistance (now support) or broken support (now resistance) to confirm the break before continuing the trend.

Buy-side Liquidity (BSL)

A liquidity pool located above previous highs where retail buy stops are placed, often targeted by institutions before a price reversal.

Sell-side Liquidity (SSL)

A liquidity pool located below previous lows where retail sell stops are placed, often targeted by institutions to fill orders before the price reverses up.

Order Block (OB)

The last candle that occurred before a strong price move, representing a zone where institutions leave unfilled orders.

EMA 9

Exponential Moving Average with a 9-period setting, represented by an orange line, used as a short-term momentum tracker and for entry timing.

EMA 18

Exponential Moving Average with an 18-period setting, represented by a blue line, used for medium-term trend tracking and as a trailing Stop Loss.

Bullish Cross

A signal where EMA 9 crosses above EMA 18, indicating the trend is turning up and providing a buy signal.

Bearish Cross

A signal where EMA 9 crosses below EMA 18, indicating the trend is turning down and providing a sell signal.

1% Rule

A risk management principle where a trader risks only $1-2\%$ of their total account balance on a single trade.

Risk:Reward Ratio (RR)

The ratio of potential loss to potential gain in a trade, with a recommended minimum of $1:2$..

Lot Size Formula

$\text{Lot Size} = \frac{\text{Account Balance} \times \text{Risk\%}}{\text{SL in pips} \times \text{Pip Value}}$..

Pip (Price Interest Point)

The smallest price movement in a currency pair, equal to $0.0001$ for most pairs.

Leverage

A tool provided by brokers that allows traders to trade with more capital than they have deposited, such as a ratio of $1:500$.

Spread

The difference between the buy (ask) and sell (bid) price, representing the broker's fee.

BOS (Break of Structure)

A signal indicating a change in market trend when the price breaks a lower low or higher high.

CHoCH (Change of Character)

A signal that confirms a trend reversal is taking place.

FVG (Fair Value Gap)

An imbalance zone on a chart where the price moved too quickly and is likely to return to later.

NFP (Non-Farm Payrolls)

High-impact US jobs data that typically causes significant market volatility.

DXY

The US Dollar Index, which measures the overall strength of the US Dollar.