Forex Trading Notes

Trading Sessions and Currency Pairs

  • Identify the start and end times of trading sessions to align with your schedule.
  • Trade currency pairs that are active during your chosen session.
    • Example: If trading during the London session, consider EUR/USD or GBP pairs.
  • Resource: A Discord resource provides a chart matching sessions with suitable currencies.

Trading GBP/JPY

  • Consider trading GBP/JPY, which is active across multiple sessions.
  • It moves during the London session (British pound) and the Tokyo session (Japanese yen).
  • The pair is also influenced by the New York session due to the US economy.
  • A free course is available focusing on trading this pair.

TradingView Chart Setup

  • Clean up the watchlist and select the primary trading pair.
  • Volume bars at the bottom of the chart can be hidden.
  • The "indicator pop up" will be used later.

Understanding TradingView

  • Y-axis: Represents prices.
  • X-axis: Represents the date and time.
  • Side toolbar: Contains tools for marking up charts.

Favorite Trading Tools

  • Second row:
    • Trend Line Tool
    • Vertical Line Tool
  • Third row:
    • Fibonacci Retracement Tool (fifth option)
  • Fifth row:
    • Long Position
    • Short Position
    • Price Range
  • Next row:
    • Rectangle Tool
    • Another unspecified tool.
  • These tools will appear on the toolbar for easy access.

Candlestick Basics

  • Green candles: Indicate buying (price increased).
  • Red candles: Indicate selling (price decreased).
  • Green Candle:
    • Green means buy, indicating the price closed higher than it opened.
    • The filled part of the candle is the "body".
    • Lines extending from the body are called "wicks".
    • The bottom of the body represents the opening price, while the top represents the closing price.
    • Wicks shows the high and low prices reached during that period.
  • Red Candle:
    • The opposite of green candles.
    • The opening price is at the top of the body because the price went down.
    • The closing price is lower than the opening price.
    • Wicks show the highest and lowest prices during the period.

Time Frames

  • Candle timeframe indicates how long it takes for a candle to form.
  • Daily (D): Each candle represents one day.
  • Favorite timeframes for quick access:
    • Daily
    • 4 Hour
    • 1 Hour
    • 15 Minute
    • 5 Minute
  • Lower timeframes provide more detail, acting like a "microscope".
  • Rewinding time (requires the Essential plan) allows testing strategies.

Time frame Examples:

  • Daily Chart: Each candle represents one day of trading activity.
  • 1-Hour Chart: Each candle represents one hour of trading activity; zooming in shows 24 candles for a single day’s candle on the daily chart.
  • 15-Minute Chart: Each candle represents fifteen minutes of trading activity, providing even more granular detail.
  • 5-Minute Chart: Provides the most detailed view, with each candle representing five minutes.

Importance of Multiple Time Frames

  • Trading requires understanding both micro (detailed) and macro (big picture) perspectives.
  • Failing to consider the larger trend can lead to losses.
  • Example: A 15-minute chart might show an upward trend, but a 4-hour chart could indicate a downtrend.
  • Higher timeframes (e.g., 4-hour) carry more weight than lower timeframes (e.g., 15-minute).

Types of Markets

  • Uptrend: Characterized by higher lows and higher highs; enter on supports.
  • Downtrend: Characterized by lower highs and lower lows; enter on resistances.
  • Consolidating: Market stays within the same high and low range; buy low and sell high.

Uptrend

  • Want to be buying because the market is trending upwards.
  • Characterized by higher lows and higher highs.
  • The next high that is created is higher than the previous high and the next low created is higher than the previous low.
  • Enter in on supports: When the price breaks past a ceiling (resistance) and comes back to it.

Downtrend

  • Want to be selling because the market is trending downwards.
  • Characterized by lower highs and lower lows.
  • The next high is lower than the previous high and the next low is lower than the previous low.
  • Enter in on resistance: Buyers aren't able to push the market any higher and the sellers are in control.

Consolidated Markets

  • Market is staying at the same high and the same low.
  • Follow the advice about buying low and selling high.

Predicting the Market

  • Two types of analysis:
    • Fundamental Analysis
    • Technical Analysis

Fundamental Analysis

  • Understanding the economy and listening to the news.
  • Use ForexFactory.com to get economic news related to different currencies.
  • Impact levels (folder colors):
    • Yellow: Low impact.
    • Orange: Medium impact.
    • Red: High impact. (storm/hurricane)

Technical Analysis

  • Analyzing charts to identify patterns and predict future movements.
  • Past repeats itself.

Risk Management and Reward

  • Measure risk using the Price Range tool.
  • Determine stop loss and take profit levels.
  • Ensure a favorable risk-reward ratio.
  • Risk-reward should be like this: (1:3). The reward should be three times the risk.

Pips

  • Pips are a multiplier to understand how much you can potentially lose or gain.
  • Every 10 pips equals one "X" (times the investment).

Using MetaTrader 4

  • MetaTrader 4 on your Phone (MT4) is the app to trade on.
  • Create a demo account to practice.
    • Leverage: 1 to 100.
    • Use the lowest money amount.

MetaTrader 4 Account Setup

  • Switch from simple to advanced view in the "Quotes" section.
  • Add the GBP/JPY pair; if it’s not listed, add it via the plus sign.

Placing a Trade

  • Click "Trade" then click the plus sign.
  • Choose British Pound/Japanese Yen from the list.

Trade Execution Types

  • Market Execution (Instant Execution): Executes trades immediately at the current market price.
  • Pending Orders: Executes trades when the price reaches a specified level.
    • Buy Limit: An order to buy when the price drops to a certain level, anticipating a price reversal.
    • Sell Limit: An order to sell when the price rises to a certain level, anticipating a price reversal.
    • Buy Stop: An order to buy when the price rises to a certain level, expecting the price to continue upwards.
    • Sell Stop: An order to sell when the price drops to a certain level, expecting the price to continue downwards.

Understanding Lot Size

  • Lot size determines the amount of currency you are trading.
  • 0. 01: One dollar per 10 pips.
  • 0. 1: Ten dollars per 10 pips.
  • 1. 00 (Standard): One hundred dollars per 10 pips.

Setting Stop Loss and Take Profit

  • Stop Loss is the risk amount and take profit is the reward.
  • Use the values from TradingView to set these levels in MetaTrader.

Live Account Bonus

  • Create an account with Forex.com.
  • During registration, Forex.com will ask for:
    • Email address
    • Social Security number
    • Financial details
  • The minimum initial deposit is 100 dollars.
  • Download MetaTrader to your phone and sign in using your Forex.com credentials.

Final Thoughts

  • Develop a trading plan, choose a pair, understand market patterns, and manage risk.
  • 70% of success is psychology. Maintain an appropriate mindset and focus.
  • Join the Discord community to learn from others and potentially profit while learning.