0 Forex Training Syllabus

Basic Level

1.    Forex Definition
2.    Explain traded
3.    How Do You Trade Forex?
4.    When Can You Trade Forex? 
5.   When not to Trade?
6.    Types of Charts.
•    Line Chart
•    Bar Chart
•    Candlestick Chart (Briefly Description on Candlestick Chart)
7.    Japanese Candlesticks
8.    Three Types of Analysis

Intermediate Level 

1.    How to use the Trading platform ?
2.    Support and Resistance Levels
3.    Leading vs. Lagging Indicators
4.    How can you draw trend line?

Advanced  Level

I.    How to Trade Chart Patterns ?

II.    Important Chart Patterns :

•    Double Top and Double Bottom
•    Head and Shoulders
•    Inverse Head and Shoulders
•    Rising and Falling Wedges
•    Bullish and Bearish Rectangles
•    Bearish and Bullish Pennants
•    Triangles
1.Symmetrical Triangle,
2.Ascending Triangles,
3. Descending Triangles.

III    Important indicators :

•    Stochastic
•    Moving average
1. Simple  Moving  average.
2. Exponential moving average.
3. Dynamic Support and Resistance
•    MACD
•    RSI
•    Pivot Points
•    Parabolic SAR

Secrets Level :
•    Top Usage Mistakes
•    Focus on the Process
•    Own Trading Plan
•    Design Your Trading System in Six Steps
•    Build Your Trading System in Six Steps
•    Be Patient. Stay Disciplined = Success

0 How do you draw trend line

Trend lines are drawn on charts to help predict the general direction of price. They also help you to see reversals. On the chart below the green line is a trend line.

Trend lines also help to determine good entry and exit points, and help you decide where to put your stops. Wow! They should be called magic lines, right? Well, not really. They are quite good but, like any form of analysis, if used alone they won’t make you pips. However, they make a great addition to your trading arsenal.
The main problem with trend lines is placing them on your chart. It can be a little intimidating to start with but it is quite easy to get the hang of it. In this section, you will learn how to place trend lines on your chart, and use them to make pips!

Placing Trend Lines:   

 

There are two main types of trend lines: bullish trend line and bearish trend lines. A bullish trend line has a positive slope and is formed by connecting two or more low points. The second swing low must be higher than the first swing low. Check out the example.

A bearish trend line is formed by connecting two or more high points. The second swing high must be lower than the first swing high.

1. Identify two swing low/high points, 
2. Draw a line joining them.

There you have it! Now your chart has trend lines! But wait one minute. Even though you can place a trend line based on two swing low/high points the trend line remain unconfirmed, until it is hit a third time

Once a trend line is placed and it has had a third bounce it becomes active. Now the price should find support or resistance at the trend line. It should have trouble breaking the line. If the price does break the line it usually means the trend is over.

Trend lines can be placed on any time frame but they’re more effective on longer time frames. Also, the longer a trend line is active the stronger it gets.

0 Leading vs. Lagging Indicators

In this lesson, we're going to streamline your use of these chart indicators. 

We want you to fully understand the strengths and weaknesses of each tool, so you'll be able to determine which ones work for you and which ones don't. 

Let's discuss some concepts first. There are two types of indicators: Leading and Lagging.

A Leading indicator gives a signal before the new trend or reversal occurs.

A Lagging indicator gives a signal after the trend has started and basically informs you "Hey buddy, pay attention, the trend has started and you're missing the boat."

Leading Indicators:

You're probably thinking, "Ooooh, I'm going to get rich with leading indicators!" since you would be able to profit from a new trend right at the start.  You're right. 

You would "catch" the entire trend every single time, IF the leading indicator was correct every single time. But it won't be.  When you use leading indicators, you will experience a lot of fakeouts. Leading indicators are notorious for giving bogus signals which could "mislead" you. 

Lagging Indicators:

he other option is to use lagging indicators, which aren't as prone to bogus signals. 

Lagging indicators only give signals after the price change is clearly forming a trend. The downside is that you'd be a little late in entering a position. 

Often the biggest gains of a trend occur in the first few bars, so by using a lagging indicator you could potentially miss out on much of the profit. 

It's kinda like wearing bell-bottoms in the 1980s and thinking you're so cool and hip with fashion....

For the purpose of this lesson, let's broadly categorize all of our technical indicators into one of two categories:

1. Leading indicators or oscillators

2. Lagging, trend-following, or momentum indicators

While the two can be supportive of each other, they're more likely to conflict with each other. We're not saying that one or the other should be used exclusively, but you must understand the potential pitfalls of each.

0 Support and Resistance Levels

Support and Resistance is one of the most widely used concepts in trading. Strangely enough, everyone seems to have their own idea on how you should measure support and resistance.

Let's take a look at the basics first. 

Look at the diagram above. As you can see, this zigzag pattern is making its way up (bull market). When the market moves up and then pulls back, the highest point reached before it pulled back is now resistance.

As the market continues up again, the lowest point reached before it started back is now support. In this way resistance and support are continually formed as the market oscillates over time. The reverse is true for the downtrend.

Notice how the shadows of the candles tested the 1.4700 support level. At those times it seemed like the market was "breaking" support. In hindsight we can see that the market was merely testing that level.

So how do we truly know if support and resistance was broken?

There is no definite answer to this question. Some argue that a support or resistance level is broken if the market can actually close past that level. However, you will find that this is not always the case.

Let's take our same example from above and see what happened when the price actually closed past the 1.4700 support level.

In this case, price had closed below the 1.4700 support level but ended up rising back up above it. If you had believed that this was a real breakout and sold this pair, you would've been seriously hurtin'! 

Looking at the chart now, you can visually see and come to the conclusion that the support was not actually broken; it is still very much intact and now even stronger. 

To help you filter out these false breakouts, you should think of support and resistance more of as "zones" rather than concrete numbers. 

One way to help you find these zones is to plot support and resistance on a line chart rather than a candlestick chart. The reason is that line charts only show you the closing price while candlesticks add the extreme highs and lows to the picture. 

Looking at the line chart, you want to plot your support and resistance lines around areas where you can see the price forming several peaks or valleys.

Other interesting tidbits about support and resistance:

• When the price passes through resistance, that resistance could potentially become support.

• The more often price tests a level of resistance or support without breaking it, the stronger the area of resistance or support is.

• When a support or resistance level breaks, the strength of the follow-through move depends on how strongly the broken support or resistance had been holding. 

With a little practice, you'll be able to spot potential support and resistance areas easily. In the next lesson, we'll teach you how to trade diagonal support and resistance lines.

0 How to use the Trading platform ?

The best online trading platform will be designed to help the investor in executing the trading most effectively by employing strategies to maximize the return. Most of the trading platforms are powered with unique analysis and strategy-testing features to test all buy and sell rules. With a click of your mouse you can access strategy performance reports with simulated results like profit versus loss, annual rate of return, etc. Based on them you can modify your trading strategies without incurring losses.

The best platform always comes with fully automated real-time online streaming data from the market to take the advantage of the liquidity of the market. The best online forex trading platform connects your monitor to the markets. This also ensures that you get the execution prices on every order type available without any slippage. The best trading platform should provide the robust backbone to handle transaction of heavy data and information traffic.

The best platform must offer more than one type of account like standard, institutional or mini. The platform should come with different operating packages like Flash, Java, or WAP. These software's provide firewall protection to maintain the security and integrity of your trading. You can perform your trading from home, office, laptop on the go or even from an internet cafe with equal ease. The best online forex trading platform will facilitate you to use the system without downloading any program, which presents perfect mobility to the traders or investors.

The best platform should offer:

-Tight spread on all major currency pairs with cutting-edge trading technology
- Quick execution with unlimited transaction amount
- No slippages and no requites
- Constant margin requirements in all volatile market condition
- Multiple real-time charts and other technical analysis based predictions with maximum visual representation
- Flexibility of placing complex orders including contingency orders
- Real time margin and position monitoring.
- Technical analysis for all demo and live accounts
- Authentic market news and economic calendar
- Performance, Security, Simplicity and Transparency
- Trading history and print out any reports
 -With advanced mobile platforms, you can operate when you are away from your computer.

1 Three Types of Analysis

The Big Three

You did go through the Basic Level, right????
By now you've learned some history about the forex, how it works, what affects the prices and More & More…….
We know what you're thinking...

BORING!  SHOW ME HOW TO MAKE MONEY  ALREADY!!!!

Well say no more friends because here is where your journey as a forex trader begins...
This is your last chance to turn back...
Take the Red pill   forget everything, and we'll take you back to where you were before.
You can go back to living your average life in your 9-5 job and work for someone else for the rest of your life...
OR...
You can take the Green pill, which is fully loaded with the dollar extract, and learn how you can make money for yourself in the most active market in the world, simply by using a little brain power.
Just remember, your education will never stop. Even after you graduate from the School of Pipsology, you must constantly pursue as much knowledge as you can, so that you can become a true FOREX MASTER! The learning never ends!
Are you ready to make that commitment?
Now pop that green pill in, wash it down with some delicious chocolate milk, and grab your lunchbox... the School of Pipsology is now in session!

Three Types of Market Analysi:

To begin, let's look at three ways on how you would analyze and develop ideas to trade the market. There are three basic types of market analysis:
1.    Technical Analysis
2.    Fundamental Analysis
3.    Sentiment Analysis
There has always been a constant debate as to which analysis is better, but to tell you the truth, you need to know all three.

It's kind of like standing on a three-legged stool - if one of the legs is weak, the stool will break under your weight and you'll fall flat on your face. The same holds true in trading. If your analysis on any of the three types of trading is weak and you ignore it, there's a good chance that it will cause you to lose out on your trade!

0 Japanese Candlesticks

What is a Japanese Candlestick?
While we briefly covered candlestick charting analysis in the previous lesson, we'll now dig in a little and discuss them more in detail. Let's do a quick review first.

What is Candlestick Trading?
Back in the day when Godzilla was still a cute little lizard, the Japanese created their own old school version of technical analysis to trade rice. That's right, rice.

A westerner by the name of Steve Nison "discovered" this secret technique called "Japanese candlesticks", learning it from a fellow Japanese broker. Steve researched, studied, lived, breathed, ate candlesticks, and began to write about it. Slowly, this secret technique grew in popularity in the 90s. To make a long story short, without Steve Nison, candlestick charts might have remained a buried secret.
Candlesticks can be used for any time frame, whether it be one day, one hour, 30-minutes - whatever you want! Candlesticks are used to describe the price action during the given time frame.

Candlesticks are formed using the open, high, low, and close of the chosen time period.
•    If the close is above the open, then a hollow candlestick (usually displayed as Green) is drawn.
•    If the close is below the open, then a filled candlestick (usually displayed as Red) is drawn.
•    The hollow or filled section of the candlestick is called the "real body" or body.
•    The thin lines poking above and below the body display the high/low range and are called shadows.
•    The top of the upper shadow is the "high".
•    The bottom of the lower shadow is the "low".

0 Candlestick Chart (Briefly Description on Candlestick Chart)

You already learnt what candlestick charts are so now it's time to learn what candles actually are, and how to use candle patterns to your advantage. Reading candlesticks can reveal to you a lot of very useful information, about the market. This information can make you a lot of pips.
First you need to learn how to read the information provided by a candle. So here is a quick glossary:

Bullish Candle - In financial markets, the term bullish refers to any long move. You already learnt that going long or taking a long position means buying, and expecting the rate to go up. A bullish candle is a long candle that forms when the price goes up.

Bearish Candle - In financial markets, the term bearish refers to any short (sell) move. Bearish candles form when the price moves down.

Body - The candle body is the space between the open and the close of the candle. If the body is white it means the candle closed higher than it opened. If it is red it means it closed lower than it opened.

example 1: You're watching a EUR/USD 1hr chart. The price opens at 1.4200 and moves up 100 pips to close at 1.4300 giving you a bullish (white) body.

example 2: You're watching a EUR/USD 1hr chart. The price opens at 1.4200 and moves down 100 pips to close at 1.4100 giving you a bearish (red) body.

The purpose of candlestick charting is strictly to serve as a visual aid, since the exact same information appears on an OHLC bar chart. The advantages of candlestick charting are:

•    Candlesticks are easy to interpret, and are a good place for beginners to start figuring out chart analysis.
•    Candlesticks are easy to use! Your eyes adapt almost immediately to the information in the bar notation. Plus, research shows that visuals help in studying, it might help with trading as well!
•    Candlesticks and candlestick patterns have cool names such as the shooting star, which helps you to remember what the pattern means.
•    Candlesticks are good at identifying marketing turning points - reversals from an uptrend to a downtrend or a downtrend to an uptrend. You will learn more about this later.

What You've Learned About Candle Basics so Far ?
•    Bullish candles form when the rate moves up. If you take a long position you want to see bullish candles.
•    Bearish candles form when the rate moves down. If you take a short position you want to see bearish candles.

0 Types of Charts

Let's take a look at the three most popular types of charts:
1.    Line chart
2.    Bar chart
3.    Candlestick chart
Now, we'll explain each of the charts, and let you know what you should know about each of them.
Line Charts:

A simple line chart draws a line from one closing price to the next closing price. When strung together with a line, we can see the general price movement of a currency pair over a period of time.
Here is an example of a line chart :

Bar Charts :


A bar chart is a little more complex. It shows the opening and closing prices, as well as the highs and lows. The bottom of the vertical bar indicates the lowest traded price for that time period, while the top of the bar indicates the highest price paid.
The vertical bar itself indicates the currency pair's trading range as a whole.
The horizontal hash on the left side of the bar is the opening price, and the right-side horizontal hash is the closing price.
Here is an example of a bar chart:

Take note, throughout our lessons, you will see the word "bar" in reference to a single piece of data on a chart.
A bar is simply one segment of time, whether it is one day, one week, or one hour. When you see the word 'bar' going forward, be sure to understand what time frame it is referencing.
Bar charts are also called "OHLC" charts, because they indicate the Open, the High, the Low, and the Close for that particular currency. Here's an example of a price bar

:

Open: The little horizontal line on the left is the opening price
High: The top of the vertical line defines the highest price of the time period
Low: The bottom of the vertical line defines the lowest price of the time period
Close: The little horizontal line on the right is the closing price









NEXT

Candlestick Chart (Briefly Description on Candlestick Chart)

0 When Not To Trade?

It's important to know when, where and who to fight, as well as knowing how to fight. But the most important thing to know is when not to fight!!
There's no point in learning all the techniques required to win a battle if you then take on the wrong opponent. It's a bit like trading GBP/USD instead of GBP/JPY. Although they move very similarly, they can be very different and they have mastered different forms of fighting back...
There are a number of scenarios where it's inadvisable to trade. These can be separated into personal/environmental reasons and market reasons.
Personal reasons not to trade:


1.    Do not trade while drunk. You need a clear head while you are trading. You would not fight an opponent while drunk. In fact, you might think you were fighting 2 opponents if you did!! Drinking can affect your state of mind in so many ways and can make you make simple mistakes while trading. Many of these mistakes would not be made if you were sober.
2.    Get rid of all distractions. You need to be able to concentrate on the charts and not get caught up with other things going on. For instance you might be waiting for a trade and then you get distracted and when you come back to your chart you have missed the trade or you buy instead of selling etc. Distractions can be costly. However, life is full of distractions so put the cat in the hall and shut the door. Put the baby in the playpen where you can see/hear her but at least you won't have to worry that she has wandered off again... Whatever your potential distractions are, deal with them before you start to trade. Even a Ninja can lose a fight if distracted...
3.    Emotional times. If something emotional has happened, and you can't be subjective, then do not trade! This could be any number of things that had a negative impact on your day. It could be that you broke up with your partner to a death in the family etc... You need to be able to assess what's happening in a very short period of time, and if you are mentally elsewhere then this can have a negative impact on your trading account...
The personal times that you shouldn't trade can really be summed up as times when you are out of synch with your normal body rhythm. These are times where your emotions or environment can negatively affect the way you trade, and can seriously hamper the likelihood of a successful trade. The good news is these tend to be things that you can control or have some degree of control over. The market reasons for not taking a trade are a bit different. These tend to be external where you have very little or no control over them. These can really kick you in the butt and leave you limping for a while. Ignore these at your Peril!!
Market Reasons not to trade:
1.    Bank Holidays. These are scheduled and there is nothing you can do about it. If there is an USA or UK Bank Holiday I don't bother trading. This is because the Banks are the biggest participants in the Forex market. If they are on holiday then the volume of transactions being carried out is greatly reduced. This can lead to either really static markets or on occasion erratic markets. Either way it does not follow the normal pattern, so I stay clear.
If however, it's a Bank Holiday in another country such as Japan or Australia then I wouldn't trade currencies that belong to those countries, e.g. jpy or aud pairs, but would still trade the gbp/usd/chf etc pairs...
2.    News. There are scheduled news releases, and economic news, that is due to be released throughout the day. These can be found, in advance, in a number of places but the most popular one seems to be the Forex Calendar, provided by Forex Factory.
There are 3 types of news; yellow, orange and red. Each has a different impact and is all explained in the calendar. There tend to be folders that generally are not a good idea for a new trader to try and trade. High impact, red folders, can really move the market, sometimes spiking in both directions, before settling done. These are high risk times where a lot of people get stopped out.
The one's I specifically avoid would be the ISM Manufacturing data, interest rate announcements and NFP related news announcements. However, it's not just the announcements themselves that can affect the market. The rumours surrounding what the potential numbers will be can cause the markets to move in anticipation. Therefore, it's not a good idea to trade, for the hour before or after the news. With NFP, it's a good idea not to trade that day at all.
Now that may seem extreme, but these can be the biggest account killers and can wipe out a new account in a few seconds.
3.    Speeches. These tend to generally be on the calendar as well. If specific people are talking then please do not trade. These people include the ECB President Jean-Claude Trichet, Fed Chairman Ben Bernanke and BOE Governor Mervyn King. It's important that when the BOJ Governor Masaaki Shirakawa speaks to pay attention. These tend to happen when people are asleep so less of a worry. But if you are trading the Japanese session then be wary!!
These people are notorious for dropping hints about economic policy changes that are likely to happen with the currency they are responsible for. These hints cause a lot of speculation in the market and therefore a lot of price movement. These can be big currency movers as they are generally responsible for setting Interest rates in those countries, and as mentioned above interest rate announcements can cause large movements.
4.    Erratic Periods. There will be times where a currency is moving differently from normal. Perhaps it's spiking and you don't know why. This is a good time to stay out of the market. If you don't understand why it's moving like this then it's generally because there is unscheduled news that has been released or leaked. This is generally bad news and the market is still unsure as to how to react to it. For instance, this was happening during the recent credit crunch and the various Banks reporting that they were having major difficulties.
5.    Weekends. It's unadvisable to hold trades over the weekend, unless your method is a long term strategy which specifically involves holding trades for longer time frames, such as weeks or months.
A lot can happen over the weekend. All it would take is for 1 Bank to go bust over the weekend for your position to go completely different from how you expected... A terrorist attack could happen over the weekend, which would also move the markets crazily. Now these might seem out of the norm but if you look these have happened recently on more than 1 occasion.
These types of events will generally lead to the market opening again will a large gap and generally with a large change in your position. A lot of times this can cause serious harm to your trading account balance.
6.    Market close/open. Good idea to avoid these or be wary around these times. At market close a number of trading positions are being closed. This will lead to volatility in the currency markets and can cause the price to move erratically. The same applies at market open. A lot of people are opening positions as they do not want to hold them over the weekend for the reasons stated above.
7.    December and Summer Holidays. Banks tend to trade the Forex markets at least once a day for balance sheet reasons and can also trade a number of times throughout the day for speculation reasons.

0 When Can You Trade Forex ?

Trading Sessions

Now that you know what forex is, why you should trade it, and who makes up the forex market, it's about time you learned when you can trade.

Yes, it is true that the forex market is open 24 hours a day, but that doesn't mean it's always active the whole day.

You can make money trading when the market moves up, and you can even make money when the market moves down.

BUT you will have a very difficult time trying to make money when the market doesn't move at all.

And believe us, there will be times when the market is as still as the victims of Medusa. This lesson will help determine when the best times of the day are to trade.
Market Hours

Before looking at the best times to trade, we must look at what a 24 hour day in the forex world looks like.

Copyright @ 2011 All rights reserved

The forex market can be broken up into four major trading sessions: the Sydney session, the Tokyo session, the London session, and the New York session. Below is a table of the open and close times for each session:

Time Zone	EST	GMT
Sydney Open Sydney Close	5:00 PM 2:00 AM	10:00 PM 7:00 AM
Tokyo Open Tokyo Close	7:00 PM 4:00 AM	12:00 AM 9:00 AM
London Open London Close	3:00 AM 12:00 PM	8:00 AM 5:00 PM
New York Open New York Close	8:00 AM 5:00 PM	12:00 PM 10:00 PM

You can see that in between each session, there is a period of time where two sessions are open at the same time. From 3:00-4:00 am EST, both the Tokyo and London markets are open, and from 8:00-12:00 am EST, both the London and New York markets are open.

Naturally, these are the busiest times during the market because there is more volume when two markets are open at the same time. This makes sense because during those times, all the market participants are wheelin' and dealin', which means that more money is transferring hands.

 

0 How Do You Trade Forex ?

In the forex market, you buy or sell currencies.
Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those found in other markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.
The object of forex trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold.

Example:

Trader's Action	EUR	USD
You purchase 10,000 euros at the EUR/USD exchange rate of 1.1800	+10,000	-11,800
Two weeks later, you exchange your 10,000 euros back into U.S. dollar at the exchange rate of 1.2500	-10,000	+12,500**
You earn a profit of $700	0	+700

Copyright @ 2011 All rights reserved

*EUR 10,000 x 1.18 = US $11,800
** EUR 10,000 x 1.25 = US $12,500

An exchange rate is simply the ratio of one currency valued against another currency. For example, the USD/CHF exchange rate indicates how many U.S. dollars can purchase one Swiss franc, or how many Swiss francs you need to buy one U.S. dollar.

How to Read a Forex Quote

 Currencies are always quoted in pairs, such as GBP/USD or USD/JPY. The reason they are quoted in pairs is because in every foreign exchange transaction, you are simultaneously buying one currency and selling another. Here is an example of a foreign exchange rate for the British pound versus the U.S. dollar:

The first listed currency to the left of the slash ("/") is known as the base currency (in this example, the British pound), while the second one on the right is called the counter or quote currency (in this example, the U.S. dollar).
When buying, the exchange rate tells you how much you have to pay in units of the quote currency to buy one unit of the base currency. In the example above, you have to pay 1.51258 U.S. dollars to buy 1 British pound.
When selling, the exchange rate tells you how many units of the quote currency you get for selling one unit of the base currency. In the example above, you will receive 1.51258 U.S. dollars when you sell 1 British pound.
The base currency is the "basis" for the buy or the sell. If you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency. In caveman talk, "buy EUR, sell USD."
You would buy the pair if you believe the base currency will appreciate (gain value) relative to the quote currency. You would sell the pair if you think the base currency will depreciate (lose value) relative to the quote currency.

Long/Short
 

First, you should determine whether you want to buy or sell.
If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader's talk, this is called "going long" or taking a "long position." Just remember: long = buy.
If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called "going short" or taking a "short position". Just remember: short = sell.