This guide uses Forex spot trading as the basis for the underlying techniques and examples; many of which can also be applied to trading ETF’s and stocks.
This guide was made specifically for newcomers to the field of trading and will endow its reader with a foundation to develop a strategy and begin a career within this volatile and versatile field.
Our goal is to introduce the reader to the intricate workings and functions of the financial market that is foreign exchange. This insight into how Forex actually works will clear the preconceived delusions of any foul taught rooky trader, consequently, giving way to a foundation of confidence in trading. Along with this spectacular benefit, the opening sections provide useful jargon, trading times and the required equipment applicable to the trading of currencies.
Price Action/Technical Analysis is essential to any trader with the courage to speculate in today’s kaleidoscopic market of contradiction and promise. Also, technical analysis is vital to all forms of traders. Whether you fancy the discretionary path or the automated highway, technical analysis is an essential ‘baby step’ towards knowing how to trade Forex. This being said, chapter three of this handbook is dedicated to the most essential aspects of Price Action, including: Candle Sticks, Price Patterns, Moving Averages and Gap Theory.
Following Price Action is a chapter on Fundamentals, the Fundamentals of Forex. This section has proven to be more than helpful in providing a better understanding of the ‘bigger’ picture and more importantly the longer term trends in currency trading. This chapter covers correlations between commodities and currencies as well as the concept of capital movement and ‘risk on risk off’ investing.
This chapter seeks to enlighten our members on the concept of the market’s fractal nature. The Forex market follows the laws of Fractal Geometry; we explain what this means and the advantages to your trading if you master the concept. Fractal Geometry is a section of great benefit to any reader as its pages are rich in mass psychological workings of Forex coupled with the ‘mathematics behind the madness’. A comprehension of the fractal nature of markets, in conjunction with Elliot Wave Theory and the psychological realisations it brings, allow for an advanced understanding of the ‘bigger’ picture.
Systems Development contains information and tools assisting our members to be on the right side of the line separating the professionals from the amateurs. The chapter, Systems Development, is dedicated to providing methods used to collect statistical data from your trading styles in order to optimize strategies for any market condition. This is done in such a way as to make these methods flexible for the purpose of allowing our members to develop systems according to their own personalities.
This chapter builds on from the previous chapter of Systems Development. Once sufficient statistical data has been collected we calculate Performance Metrics. Performance Metrics are essential ratios, such as the Sharpe Ratio, that characterize a trading system. The calculation as well as the function of each ratio is explained. In addition, this knowledge can be used to further optimize a system by optimizing the Performance Metrics of our members’ trading systems.
The final section of this Handbook is one of paramount importance and practicality. Risk Management or Money Management is at the heart of successful trading. This chapter will enable our members to safely take on more risk using their expertise in risk management. This is the final step in creating and optimizing a holistic trading system to be perfected using demo accounts and ultimately used in live Forex Markets.