FOREX TRADING MANUAL Beginners To Advance

FOREX TRADING MANUAL
BEGINNERS TO ADVANCE
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U.S. Government Required Disclaimer
CFTC RULE 4.41 - HYPOTHETI CAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMI TATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADI NG. ALSO, SI NCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, I F ANY, OF CERTAI N MARKET FACTORS, SUCH AS LACK OF LI QUIDI TY. SIMULATED TRADI NG PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESI GNED WI TH THE BENEFI T OF HI NDSI GHT. NO REPRESENTATI ON I S BEING MADE THAT ANY ACCOUNT WILL OR I S LIKELY TO ACHI EVE PROFI T OR LOSSES SIMILAR TO THOSE SHOWN.
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risks. You must be aw are of the risks and be w illing to accept them in order to invest in the futures and options markets. Don't trade w ith money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account w ill or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
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CONTENTS
1. INTRODUCTION TO THE FOREX MARKET
1.1. Forex Basics 1.2. The Structure Of Forex Market
2. THE LOGISTICS OF FOREX TRADING

2.1. 2.2. 2.3. 2.4. How to Make Money Trading Forex How PL Calculated Orders Type Forex Lingo
3. MAJOR CURRENCIES
3.1. 3.2. 3.3. 3.4. 3.5. 3.6. United States Dollar Euro Japanese Yen Great Britain Pound Swiss Franc Commodity Currencies
4. TECHNICAL ANALYSIS
4.1. 4.2. 4.3. 4.4. 4.5. 4.6. 4.7. Introduction Japanese Candlestick Support And Resistance Trend Lines Channels Common Chart Indicators Multiple Timeframe
5. FUNDAMENTAL ANALYSIS
5.1. 5.2. 5.3. 5.4. Introduction Monetary Policy and Fiscal Policy Balance Of Payment Economic Releases
6. MONEY MANAGEMENT
6.1. Introduction 6.2. Learn To Protect Capital First 6.3. Setting Profit Expectation
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6.4. Position Sizing
7. COMMON MISTAKES
7.1. Psychology of Trading 7.2. Common Mistakes
8. PUTTING IT ALL TOGETHER

8.1. Creating A Business Plan 8.2. Maintaining A Trading Journal
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CHAPTER 1
INTRODUCTION TO THE FOREX MARKET
"Give a man a fish and he will eat for the day. Teach a man to fish and he will eat for a lifetime." Chinese Proverb
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1.1 F OREX BASICS

What is FOREX? The (FX) Foreign Exchange market is the world largest financial market, with a volume of above $4 trillion a day. Forex trading consists of buying of one currency and simultaneous selling of other. The volume and liquidity provided by the Forex market surpasses aggregated trading volume of all worlds stock markets including $25 billion a day volume that New York Stock Exchange trades, this manifest how enormous the Foreign Exchange really is. What is traded on the Foreign Exchange market? Forex trading consists simultaneous buying of one currency and the selling of other. In Forex trading traders open an account with a FX broker or dealer which facilitates the buying and selling of Currencies, and they traded in pairs; for instance the Euro and the US dollar (EUR/USD) or the Great Britain Pound and the US Dollar (GBP/USD). Assume that buy of a currency as purchasing a share in that respective country. For instance, when we buy Great Britain Pound we are in effect purchasing a share in the Britain economy. The value of currency is an undeviating reflection of what the market believes about the present and upcoming health of the economy. Which Currencies Are Traded? Some of the most admired currencies which are of mainly developed economies are listed below with their symbols: Symbol USD EUR JPY GBP CHF CAD AUD NZD Country United States Euro members Japan Great Britain Switzerland Canada Australia New Zealand Currency Dollar Euro Yen Pound Franc Dollar Dollar Dollar Nickname Buck Fiber Yen Cable Swissy Loonie Aussie Kiwi
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When Can Currencies Be Traded? The spot FX market is truly dissimilar from all the financial markets around the globe. Different financial centre, banks, individuals and institutions exchange currencies 24 hours a day excluding slight gaps on the weekends. Time Zone Tokyo Open Tokyo Close London Open London Close New York Open New York Close New York 7:00 pm 4:00 am 3:00 am 12:00 pm 8:00 am 5:00 pm GMT 0:00 9:00 8:00 17:00 13:00 22:00
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1.2 THE STRUCTURE O F F OREX MARKET

Exchange Rates Generally, exchange rate of currencies are determined by the health of thats countrys economy in association to the other countries economies. FX Spot market does not have a physical location neither a central exchange. It is considered an Over The Counter (OTC) or Interbank market, because the trades are executed electronically, within a network of banks, constantly over a 24-hour period which is not the case in other financial markets including the New York Stock Exchange. Numerous firms enable traders like us retail trader to trade Forex market. The pre-requisites of Forex trading are trivial and only require a computer, a high-speed Internet connection, and the information contained within this eBook. The Forex market (OTC) In the OTC market orders are cleared or processed on a central exchange but are routed between different participant who they want to trade with depending on the attractiveness of quotes, trading conditions and reputation of the trading counterpart. The United States dollar is the most actively traded currency, with a share of 89% of all transactions. Whereas, Euro is the second most actively traded currency at around 37% and Japanese Yen at 20%. Why Trade Foreign Currencies? There are numerous benefits and advantages of trading Forex. Follow are just a list of few pros of trading Forex and are paramount reason why so many people are choosing this market. No commissions. There are no fees included with trades made on Forex exchange including any of the following clearing fees, exchange fees, government fees, and brokerage fees. However Brokers are remunerated for their services through bid-ask spread which we will discuss later. No middlemen. Spot Forex trading is an OTC market which eliminates the need for middlemen and allows you to trade directly with the market responsible for the pricing on a particular currency pair. No fixed lot size. Spot Forex offers very flexible contract or lots size. You can determine your own contract size and can start trading with a minimum of $250 and in some cases with even less. Low transaction costs. The transaction cost which is the bid/ask spread is trivial and is typically under 0.1 percent. Larger dealer offers even more attractive transaction cost. However the spread vary from currency pairs, brokers and market conditions. A 24-hour market. Forex market is open 24 hours with different financial centre, banks, individuals and institutions exchanging currencies 24 hours a day excluding slight gaps on the weekends. Forex enables you to choose when you want to trade, either in morning, noon or night. P age |9
No one can corner the market. Unlike stock exchange and other financial market foreign exchange market has great volume with innumerous participants and there is no single entity including the center banks of developed countries that can control the market price for a elongated period. Leverage. I A small amount could be set as margin to control larger contract value. Leverage provides trader the ability to maximize their gains, and at the same time maintain risk capital to a lowest amount. For instance, a broker that offers 400:1 leverage means that $50 margin funds would enable a traders control full standard lot that is to buy or sell $100,000 worth of currencies. High Liquidity. B Forex market is enormous and extremely liquid financial market. Your order is instantaneously executed with only a simple click of the mouse under normal market conditions. Free Demo Accounts, News, Charts, and Analysis. Most online Forex brokers offer tons of value added services including 'demo' accounts to practice trading as well as real-time market new along with breaking Forex news and charting services. Mini and Micro Trading: Online Forex brokers offer "mini" and micro lot sizes or trading accounts. Accounts can be opened instantly with a minimum deposit of $200 or even less.
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CHAPTER 2
THE LOGISTICS OF FOREX TRADING
"Continuous effort, not strength or intelligence, is the key to unlocking our potential." Liane Cordes
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2.1 HOW TO MAKE M ONEY TRADING F OREX

Forex trading consists of simultaneously buying and selling of currencies. It is very simple process to place a trade in Forex market. The logistics and mechanics of Forex trading is very similar to other market (like stock market), therefore if you have prior experience in trading then this should be very simple for you to understand. Forex trading revolves around exchange of one currency for another. So if you anticipate that the value of one currency might increase so you buy that currency and sell the other. Following is the example how you make money trading EURO Trader's Action You purchase 10,000 Euros at the EUR/USD exchange rate of 1.18 Two weeks later, you exchange your 10,000 Euros back into US dollars at the exchange rate of 1.2500. You earn a profit of $700. *EUR $10,000 x 1.18 = US $11,800 ** EUR $10,000 x 1.25 = US $12,500 Ratio of a currency value against another is a simple ratio called exchange rate. For illustration, EUR/USD exchange rate specify how many EURO can purchase one U.S. Dollar. In other words, how many EURO will be required to buy one U.S. Dollar. How to Read an FX Quote Currencies are quoted in pairs, such as EUR/UDD, GBP/USD or JPY/USD. As stated earlier every foreign exchange transaction consists of simultaneously buying of one currency and selling of another that is why they are quoted in pairs. Following is an example of a foreign exchange rate and how transaction works for the Great Britain pound versus the United States Dollar: GBP/USD = 1.7500 The first currency stated in known as the base currency (in this example it is GBP for Great British Pound) whereas the one on the right is called the counter or quote currency. (in this example it is USD for United States Dollar). The exchange rate denotes how many in terms of units of the quote currency should be paid to purchase one unit of the base currency. For this example and the rate shown you would have to pay exactly 1.7500 United Stated Dollar to buy 1 GBP. EUR +10,000 -10,000 0 USD -11,800* +12,500** +700
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Where as in case of selling the exchange rate denote how many in terms of unit of the quote currency you will get for selling out the base currency. So in this example if you sell 1 GBP you will get 1.7500 USD. As it name implies the base currency is the Basis of the transaction buy or sell. This simply means that you buy the base currency and concurrently sell the quote currency. If you anticipate that the base currencies will strength against the counter currency you will open a buy trade. In opposite manner you will place a sell trade if you believe that the base currency will weaken against the quote currency.
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2.2 HOW P/L C ALCULATED

This topic will cover trivial mathematics to help you calculate profits and losses. You will also learn what is pip and lots. What is a Pip? Pip is the most common unit and the smallest possible increment in the value of currency pair. If the value of EUR/USD changes from 1.2250 to 1.2251, this means a 1 pip appreciation in the value of EUR/USD. The last decimal place of a quotation is called pip. It also helps to indentify your profits or loss. Each currency has its own value, which makes it is mandatory to compute the value of a pip for that particular currency. In currencies pairs where the USD (United States Dollar) is the base currency (or quoted first) the calculation would be as follows. Lets assume USD/JPY current rate is at 119.80 (note USD/JPY currency pair only have two decimal places, whereas most of the other pairs have four decimal places) In the case of USD/JPY, 1 pip would represent 00.01 Therefore, USD/JPY: 119.80 .01 divided by exchange rate = pip value .01 / 119.80 = 0.0000834 This looks like a very long number but later we will discuss lot size. USD/CHF: 1.5250 .0001 divided by exchange rate = pip value .0001 / 1.5250 = 0.0000655 USD/CAD: 1.4890 .0001 divided by exchange rate = pip value .0001 / 1.4890 = 0.00006715 In the case where the US Dollar is not quoted first and we want to get the US Dollar value, we have to add one more step.
EUR/USD:
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www.ForexPatternSystem.com 1.2200
.0001 divided by exchange rate = pip value so .0001 / 1.2200 = EUR 0.00008196 but we need to get back to US dollars so we add another calculation which is EUR x Exchange rate So 0.00008196 x 1.2200 = 0.00009999 When rounded up it would be 0.0001
GBP/USD: 1.7975 .0001 divided by exchange rate = pip value So .0001 / 1.7975 = GBP 0.0000556 But we need to get back to US dollars so we add another calculation which is GBP x Exchange rate So 0.0000556 x 1.7975 = 0.0000998 When rounded up it would be 0.0001 You might be bit overwhelmed but this is put to only explain how to calculate pip value. Almost all brokers will do all this tedious calculation automatically. However it is good to know how it works. In the next section, we will discuss how these seemingly insignificant amounts can add up. What is Lot? Spot Forex transaction is in lots. Lots are the number of unit of base currency that you buy or sell. The standard lot size is 100,000; the mini lot size is 10,000 whereas micro lot size is 1,000. As previously explained the smallest increment of that currency that could be measure is known as Pip. Forex trader trade large amounts of any picky currency so that the smallest increment could produce significant profit or loss. Lets suppose we will be trading standard 100,000 lot size. We will now recalculate some of the above example to check how it influences the pip value.
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USD/JPY at an exchange rate of 119.90 (.01 / 119.80) x $100,000 = $8.34 per pip USD/CHF at an exchange rate of 1.4555 (.0001 / 1.4555) x $100,000 = $6.87 per pip In cases where the United States Dollar is not base currency (quoted first), the formula will be is slightly different. EUR/USD at an exchange rate of 1.1930 (.0001 / 1.1930) X EUR 100,000 = EUR 8.38 x 1.1930 = $9.99734 rounded up will be $10 per pip GBP/USD at an exchange rate or 1.8040 (.0001 / 1.8040) x GBP 100,000 = 5.54 x 1.8040 = 9.99416 rounded up will be $10 per pip.
How to calculate Profit And Losses? Let take an example in which we buy United Stated Dollar (USD) and Sell Swiss Francs (CHF). The rate of the pair will quoted like 1.4525 / 1.4530. As we will be buying United States dollar we will be working on the 1.4530 which in fact is the rate at which other traders are prepared to sell. Let say, you buy 1 standard of 100,000 lot size at 1.4530. After some time the price moves from 1.4530 to 1.4550 and then you decide to close the trade. Therefore the new quote for the USD/CHF will be 1.4550 / 1.455. As now you are closing the trade which means you will now sell in order to close the trade therefore you will take the second 1.4550 price. Which is the price other traders are prepared to buy at. The difference between 1.4530 and 1.4550 is .0020 or 20 pips. Using the formula from before, we have (.0001/1.4550) x $100,000 = $6.87 per pip x 20 pips = $137.40 Note, when you place a trade you are subject to spread which is the bid / offer price. You will open a buy trade based on offer price and when you place sell trade it would be based on bid price. To summarize when you buy to enter a trade you pay the spread but not when you exit the trade. Same is true with sell, when you sell to enter a trade you pay the spread but not when the sell trade is closed. What is leverage? If you are not familiar with leverage you might be wondering how small investor can contribute such large amounts of money as stated in lot sizes. Assume your broker as a bank who gives you, $100,000 to buy and sell currencies and requires only a good faith deposit (margin) of $1,000. This is how leverage works it let you control large contract sizes with small good faith deposit (margin) to amplify your profits.
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The amount of leverage provided varies from brokers to brokers. Once you have funded you account to trade the broker will let you know how much they require per contract traded. For instance every 1,000 that you put in margin allow you to trade 1 standard lot of 100,000. As previous stated the leverage which directly affects the minimum security (margin) vary from broker to broker. So a broker that require 1% margin means that for every $100,000 traded the broker will put $1,000 as a security deposit (margin) on the position. What is margin Call? If in case your account equity drops below margin requirement (usable margin) due to loss on open positions your broker will close open positions. This will help prevent your account going into negative balance. Example #1 Lets assume you open an online Forex trading with a deposit of $2,000. You place a trade of 1 standard lot size on EUR/USD, which on this instance requires a $1,000 in margin. Since you started trading with $2,000 and $1000 was kept a side as a margin requirement for the open trade. Then the remaining usable margin will be $1,000, this means any losses will be deducted from your usable margin. If your losses exceeds you usable margin which in this case is $1,000 you will automatically get a margin call and all open positions will be closed.
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2.3 ORDERS T YPE

In simple terms the order type refers how trade will be entered or exited. In this topic we will discuss what different orders types that can be placed are. Some of the broker might not allow additional order type other then the basic buy or sell.
Order Types Basic Order Types Following is a list of basic order types which includes market order, limit order and stop-loss order. Market order A market order is an order type which allows placing buy or sell trade at the present market price. For instance, if EUR/USD is presently trading at 1.2200 and you want to place a buy trade at this price then you will click the buy button on your trading platform to immediately implement a buy trade at that exact price. Limit order To place limit order you need to set price and duration if the currency price reaches your specified price with the duration then a new buy or sell trade will be placed. Stop-loss order The stop loss order is a limit order which is specified to an open trade. The purpose of stop loss order is to close a trade is the price goes against you at certain level. Stop loss order is extremely important to limit your risk. Additional Order Types GTC (Good til canceled) Once a GTC order is placed it will remain active unless you make a decision to cancel it. The broker will not have privilege to cancel it anytime. Therefore you should remember and monitor the GTC order that you have scheduled. GFD (Good for the day) A GFD order stay active until the end of the current trading day. OCO (Order cancels other) OCO order consists of two interlinked order with price and duration placed above or below the prevailing market price. If one of the orders is carried outs then the other order is canceled.
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2.4 FOREX L INGO

Major and Minor Currencies The most highly traded currencies which are G7 currencies and Swiss Francs are called major currencies. USD, EUR, JPY, GBP, CHF, CAD, NZD and AUD are list of major currencies. All Currencies excluding stated above are referred to as minor currencies. Base Currency The first currency in any currency pair is called the base currency. It denotes the value base currency measured against quote currency (second currency in the pair). For example, if GBP/USD = 1.7500. Then the first currency stated in known as the base currency (in this example it is GBP for Great British Pound) whereas the one on the right is called the counter or quote currency. (In this example it is USD for United States Dollar). The exchange rate denotes how many in terms of units of the quote currency should be paid to purchase one unit of the base currency. For this example and the rate shown you would have to pay exactly 1.7500 United Stated Dollar to buy 1 GBP. Quote Currency The second currency in any currency pair is called quote currency. It may also be suitable to call it the pip currency as any profit or loss is articulated in this currency. Pip Pip is the most common unit and the smallest possible increment in the value of currency pair. If the value of EUR/USD changes from 1.2250 to 1.2251, this means a 1 pip appreciation in the value of EUR/USD. The last decimal place of a quotation is called pip. It also helps to indentify your profits or loss. Bid Price The bid price is the price at which you open a sell trade (sell the base currency) or in other words market makers are prepared to buy at bid price. Ask Price The ask price is the price at which you open buy trade (Buy the base currency) or in other words market maker are prepared to sell at ask price. For instance, in the pair EUR/USD 1.2312/17, the ask price is 1.2317. This means you can buy one Euro for 1.2817 U.S. dollars. The ask price is also set to be the offer price. Bid/Ask Spread The difference between bid and ask price is called the spread. The broker is compensated for their services via spread. P a g e | 19
Quote Convention Exchange rates in the Forex market are expressed using the following format: Base currency / Quote currency Transaction Cost The bid and ask spread is also referred as the transaction cost. Following is the formula for calculating the transaction cost: Transaction cost = Ask Price Bid Price Bid / Ask
Cross Currency A cross currency pair is a pair in which neither base nor counter currency is USD. Such pairs portray irregular price actions since it is same as opening two USD trades. For instance, simultaneous buying of EUR/USD and selling GBP/USD is equivalent to buying EUR/GBP. Margin Whenever you open a new trade a certain percentage of account balance will be set aside, as the initial margin requirement. The margin can be considered as good faith deposit which is refunded when the trade is closed. Margin requirement vary with leverage which differ from brokers to brokers. If a broker offers a 200:1 leverage this means that the margin requirement is only 0.5 %. Therefore, only $500 will be set aside as a margin requirement in order to open $100,000 standard lot. Leverage Leverage could be defined as the ability to control large dollar amounts with a relatively small amount of capital. Leverage provided varies from broker to broker ranging from 2:1 to 500:1. Increased buying power due to leverage can increase your profits but leverage should be used carefully as the loss also magnifies using leverage. Margin Call If in case your account equity drops below margin requirement (usable margin) due to loss on open positions your broker will close open positions. This will help prevent your account going into negative balance.
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CHAPTER 3
MAJOR CURRENCIES
"Life unexamined, is not worth living." Democritus
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3.1 UNITED S TATES D OLLAR

United States is the world largest individual economy. It may not be false to say that the US dollar is the king of currencies. The price of major commodities is quoted in United States dollar. More than 60% of the world currency reserves held by central banks of different countries to back their liabilities are in USD. Over 80% of all the currency transactions that take place involve USD. Therefore traders pay utmost importance to current situation of United States Economy. The health of US economy not only has direct affect on the USD but also on the other currencies of the world. United States dollar is the most actively traded currency pairs. According to BIS (Bank of International Settlements) currency pair including USD accounts up to 67% of the daily turnover in the currency market. Central Banks and governments of different countries hold USD as their primary reserve currency, hence USD accounts up to 63% of the world reserves currency. An important fact to note is many countries, especially countries in Asia (including China) maintain large reserves of the USD which they use to peg the value of their currencies against USD. The reason for doing so is to stabilize their currency and to lower the value of their currencies artificially in order to make their export items more competitive overseas. In addition, many individuals, business and multinational corporations located overseas hold United States dollar for trade purposes and United States dollar is considered more stable than their home countrys currency. Oil, silver, gold and many other commodities are priced in USD, which makes it mandatory to have or exchange to USD first prior purchase of such products.
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3.2 EURO
Euro is the second most actively traded currency and is the official currency of 16 member nations in the European Union (EU) which consists of total 27 member states. The states which have Euro as their official currency are: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. The euro is administrated and managed by European Central Bank (ECB) based in Frankfurt and the Euro System which is composed of central banks of Euro zone. European Central Bank (ECB) works as an independent central Bank and sets monitory policy. Euro facilitated lowering trade barriers, economic cooperation and integrating the economies of the major countries in Europe. Another important factor for trader to understand is that each member state that has euro as their official currency are slickly bound to the monetary policy laid down by ECB. Therefore member states can not have extremely different interest rates and inflation. Moreover member states are required to maintain banded peg exchange rate and to allow their currency value fluctuation inside a narrow band. European Monitory Union (EMU) nations are free to set their fiscal policy.
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3.3 JAPANESE YEN

Japanese Yen (JPY) is the third most actively traded currency, after United States Dollar and Euro. Apart from this it is also widely used as a reserve currency after the USD, EUR and GBP. Japanese Yen has very low interest rate which makes it suitable for carry trades and borrowing. Japan economy is the second world largest individual economy and just behind US. It is important to understand economy of Japan to grasp a clear fundament of the Yen. From fundamental standpoint Japanese economy is different from US economy, Japan have extremely few natural resources. After World War II Japan found another way to overtake the world this was not by military force but by economic development. Japan heavily relies on imported natural resources including oil, gas and other commodities. This is an important factor to understand as Japan imports 100% of its oil from exporting countries thus an increase in the price of oil has direct impact on the value Japanese Yen. Another important thing to understand is that Japan economy relies on exports of goods such as cars and electronics, as a result a string JPY means Japanese goods and services become more expensive and less attractive for overseas consumers, which might harm Japanese exports. In order to avoid any harm to Japanese economy Bank Of Japan (BOJ) intervene the Forex market to keep aw ay the Yen from raising.
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3.4 GREAT BRITAIN P OUND

Great Britain Pound (GBP) is the third largest reserve currency and fourth most actively traded currency. UK economy is mostly service based economy with grave importance on financial services. UK earns significant revenue from oil and natural gas exports. United Kingdom is a member of the EU (European Union) buy it has not adopted Euro as its currency therefore not tied with European Monetary Policy (EMU). Bank of England (BoE) is the central bank of England. The two main functions of bank of England is monetary stability and financial stability. Pound is very active in the crosses specially EUR/GBP as EU is UKs largest trading partner.
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3.5 SWISS FRANC

Switzerland is one of the richest countries with worlds most stable economy. Switzerland is considered a safe haven for investors and has renowned banking secrecy. It has a service based economy, with low unemployment rate and budget deficit. Swiss practices including economic policies mainly conform to EU standards. As Switzerland is considered safe haven for investors, money flows into Switzerland at the time of geo-political uncertainty. It is evident from the chart shown below that Swiss Franc (CHF) strengthens against USD due to its safe haven status 10 days after the September 11th 2001 attacks. The pair USD/CHF fall 1251 pips which represent that USD depreciated in value against CHF.
An other example to manifest Swiss Franc safe haven status was at the time of US Invasion of Iraq. Again the Swiss Franc strengthen against USD and the pair USD/CHF fall 1200+ pips in the period of 2 month after the invasion.
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The second most import factor to understand regarding Swiss Franc (CHF) is its strong correlation with the Euro. As evident from the graph below USD/CHF and EUR/USD pair have negative correlation. Which means when Euro strengthens CHF also appreciate in value.
As you have notice in the chart shown above both pairs have 90% of strong negative correlation. This is due to the fact that Switzerland and European Union has strong economic ties.
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3.6 COMMODITY C URRENCIES

Canadian Dollar Canada is the ninth largest economy and one of the wealthiest nations in the world. Canada has massive manufacturing sector and net exports of natural resources (especially oil and gold). The economy of Canada relies heavily on exports which makes closely tied with the international economy especially United States. United States is the leading trading partner and exports flow from Canada to United States of more than 81%. Canada is the 14th largest producer of oil, 5th largest producer of gold and chief exporter of oil to the prime consumer of oil (United States). Shift in prices of commodities has a direct affect on the exchange rate of CAD. This means all else being equal; a rise in the price of oil will result into a stronger CAD and weaker USD. Exports of commodities are key factor to gauge Canadian economy, however in recent years Canadian service sectors has massively expanded. According to Wikipedia service sector accounts up to /3rds of the countrys economic output. In other terms it means that a slowdown in United States economy can hurt Canadian Economy and its currency even if the commodities remain high.
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Australian Dollar Australia has a prosperous economy and Australian Dollar is the sixth most actively traded currency. Australia GDP consist of more than 68% of service sector, 4.7% from agriculture and mining which account for 65% of the countrys exports. Australia is the 3rd largest exporter of gold and the value of its currency has high tendency to move with the price of commodities especially gold. Australian economy and currency is similar to Canadian Dollar and economy in many ways, however unlike Canada, Australias largest export market is Asia especially Japan and China. This gives Australian dollar exposure to Asia. The AUD/USD monthly charts shows remained strong through the current crisis, and the pair has moved 25 Years high.
AUD/USD Monthly:
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New Zealand Dollar New Zealand economy greatly depends on international trade, primarily Australia and follows market economy. Other major trade partners of New Zealand are United States, China and Japan. New Zealand population and thus domestic market is very small. It rely heavily on exports of good, therefore a slowdown in their imports economy can directly affect New Zealand Dollar. Like other commodities exporting countries New Zealand has vast agricultural natural resources like Food, wood, wool, paper and dairy products. New Zealand Dollar (NZD) value is heavily influenced by the commodity prices and health of its importing economies. New Zealand is also strongly focused on tourism. Until recent time the correlation between New Zealand Dollar and commodities prices have broken down somewhat. The following chart show NZD/USD and AUD/USD correlation:
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CHAPTER 4
TECHNICAL ANALYSIS
"The gem cannot be polished without friction, nor man perfected without trials." Confucius
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4.1 INTRODUCTION
Study of price movement by analyzing historic price action usually in the form of charts is called technical analysis. Trader usually looks at price action usually in chart form and anticipate future price of the instrument. A technical indicator is a form of chart plotted using mathematical formula which is derived from the price and/or the traded volume of the financial security. The graphs are usually above or below the instrument price and are helpful in forecasting future price movement of the instrument. Technical indicators can be classified into two broad categories that is lagging and leading indicators. Leading indicators are calculated in an effort to anticipate the future movement of price. As leading indicators try to measure price movement from recent data, these indicator are prone to errant signals and it is usually recommended to use such indicators when there is no clear trend in the market. Lagging indicator pay emphasis on where the market has been and therefore what will be the future price. Lagging indicator produce least errant signal but at a cost of delayed entry. Lagging indicators are believe to work better in trending markets.
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4.2 JAPANESE CANDLESTICK

Candlestick charts plots price against time. Each candle represents Open, High, Low and Close (OHLC) of an instrument at a particular time. If the open price is less than the close price this means the for the particular time there was appreciation in the value and the candle is usually un-shaded or green. If the close price is less than the open price this means for the particular time the value of the instrument is depreciated and the candle is usually represented by shade or red color.
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4.3 SUPPORT AND R ESISTANCE

Support Support is the price level where the price action tends to find a support for falling further. At this level there is enough demand from buyers to keep the price from declining further. Resistance Resistance is opposite of support. It the the price level of a particular instrument where there is not enough demand from the buyer to keep the price to surpass this level. There are numerous ways to determine support and resistance. One basic way for identifying support and resistance (S&R) is by analyzing the chart to see were the price hit a particular level multiple time without breaking it and retraces back. If the price touches the support or resistance multiple time without breaking it the more strong the support or resistance becomes. A very basic strategy that traders use to trade using support and resistance is they buy at support and sell just before the resistance level.
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4.4 TREND LINES

Trend lines are another most commonly used technical analysis. In its basic form, traders draw a line below the price in an uptrend (when the prices are moving upward) in order to identify support areas (valleys). Where as in downtrend (when prices are moving down) trader draw a line above the price to identify peaks (resistance areas).
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4.5 CHANNELS
Channels are created by drawing a parallel line at the same angle of the trend line. To create an ascending channel (when prices are moving upward), we have to simply draw a parallel line above the price at the same angle of the upward trend line. To create a descending channel (when prices are moving downward), we have to simply draw a parallel line below the price at the same angle of the downward trend line. The channel also shows the range at which the price fluctuate when in an uptrend or down trend. Following chart shows how channel are created in an uptrend, downtrend and sideways (when there is no clear trend and the prices are range bounded.
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4.6 COMMON C HART INDICATORS

Moving Average There are different types of moving averages. Moving averages are plotted on price chart and smooth out the price action of the security on which it is plotted by simply taking average of number of periods. Moving averages are used better representation of long terms direction and filter out market noise (slight fluctuations in price). In addition moving average can be used to identify positional support and resistance levels.
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MACD (Moving Average Convergence Divergence) MACD (Moving Average Convergence Divergence) is an indicator which is used to indicate a new trend, either upward (bullish) or downward (bearish). MACD chart usually have three sub-indicators which include the following The first is the faster moving average. The second is the slower moving average of the first one. And the third is the number of bars which is used to calculate the MA of the difference between the faster and slower MA (moving average).
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RSI (Relative Strength Index) RSI (Relative Strength Index) is an indicator which is used to identify overbought or oversold conditions of the financial instrument. RSI chart has value from 0 to 100. Normally, if the indicator line is below 20, this indicates oversold, while the value above 80 means overbought.
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www.ForexPatternSystem.com Bollinger Bands Bollinger bands are indicator which is plotted on price chart and is used to measure market volatility. When the market is not trending and volatility is declining the band contracts. When there is high volatility in the market the bands expand.
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www.ForexPatternSystem.com Parabolic SAR (Stop and Reversal) Parabolic SAR (Stop and Reversal) is very basic indicator. It simply plots dots below the price if it is trending up or above to indicate potential reversals in price movement and vice versa. It generally believed that Parabolic SAR works better in a trending market.
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4.7 MULTIPLE TIMEFRAME

Multiple timeframe analysis means incorporating more than one time frame into your trading strategy. This gives you edge and ensure you do not trade with trend against larger timeframe which might change trend of the shorter time frame. Once you found entry signal in you preferred timeframe it is recommended to make a strategic decision to go long or short based on the direct of the trend of upper timeframe. Follow chart shows how to incorporate multi timeframe analysis into your trading. 1 Hour
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5 MIN
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DAILY
After analyzing these charts we see the pair is in a down trend in 5 minute and the hourly chart however when we move to daily chart it shows not only strong but also an extended uptrend. Therefore it is generally accepted by trader not to trade against large timeframe trend.
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CHAPTER 5
FUNDAMENTAL ANALYSIS
"He is foolish to blame the sea who is shipwrecked twice." Publilius Syrus
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5.1 INTRODUCTION
Fundament analysis is a form of analysis in which general economy, and factors that affect supply and demand are analyzed to make trading decisions. In simple terms it means that we study the health of the economy and if the economy seems to be in good state then its currency value will appreciate. The chief reason for this is that other counties and investors will have more trust in that country and additional capital will flow to the economy.
A fundament analyst can focus on everything such as overall health of the economy, economic releases, IR (interest rates), earnings, and production.
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5.2 OVERVIEW OF US ECONOMY

When studying fundamental analysis it is important to have at least a brief knowledge of how an economy especially United States economy works at USD is major currency. According toInvestopeida.com economy could be defined as the following: "The large set of inter-related economic production and consumption activities which aid in determining how scarce resources are allocated. The economy encompasses everything relating to the production and consumption of goods and services in an area." United States Economy is the largest economy in the world which is often referred as free market or capitalist economy. In a free market economy businesses are controlled by private sector (non government) including production and distribution of goods as well as services. Moreover in free market economy prices are set by supply and demand. Free market or capitalist economy is opposite if planned or socialist economies in which manufacturing and distributions of goods and services are done as well as prices are set by the government. Practically United States economy is blended economy as the government does handle some of the tasks which cannot be passed to private sector such as military, road building, education and law enforcement. It is important to understand that people usually prefer capitalism and free market economies therefore any move toward capitalism will generally result into market rally whereas move away from capitalism will be sensed by market as anti business and markets generally sell off.
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5.3 MONETARY P OLICY AND FISCAL P OLICY

Fiscal Policy Fiscal policy is any policy relating to government spending and taxation. Due to different reasons the economy under goes repeated growth and contraction which can be broken down as the following. 1) 2) 3) 4) Contraction Trough Expansion Peak
(image source: Wikipedia.org) Fiscal policy is an effective tool at government disposal in regulating the business cycle. Government spending and taxation must be approved by both congress and the president.
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Monetary Policy Monetary policy is the process by which Federal Reserve in case of United States or monetary authority, central bank, or government of a country controls the following: 1) Supply of money 2) Availability of money 3) Cost of borrowing money (Interest Rate) These policies are set in order to achieve set of goals which are oriented towards stability and grown of the countrys economy. Interest rate and total supply of money have great impact on economy. Monetary policy is said to be contractionary if it reduces money supply or raises IR (Interest Rate). Whereas, expansionary policy is used to tackle unemployment, this is usually done by lowering the interest rate in inflation.
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5.4 BALANCE OF PAYMENT

In long term stream of money from international trade, speculation and investment eventually decide the value of a country currency. When there is an increase in demand for export products of a country and/or investment opportunities look attractive to foreigners then all else being equal they currency should appreciate.
Trade Flows Flow of money in and out of a country due to global trade or commerce is called trade flows. In simple terms it means that money flow from the importing country to exporters country for the goods and services being delivered. When a state imports goods this add money of the importing country to the market and generate demand for the currency of the exporting nation. This is due to the fact that goods are usually purchased in the currency of the country where they are manufactured or produced, so the country importing the goods must exchange their currency.
Capital Flows Flow of capital (money) as a result of investment into and out of countries is called capital flow. As in previous topic we discussed flow of capital as a result of international trade however capital flow results due to money flow due to investments such as stock and bond market, real estate and cross boarder acquisitions and mergers.
Current Account The formula for calculating the current account for a country is as following
When describing imports and exports you will often hear about current account surplus or a current account deficit. When a value of country exports are more than they are importing is known as current account surplus. Current account deficit is opposite of current account surplus. A country with current account deficit will generally have a weaker currency, this means that the country is importing more than it is exporting and the money flow out of the country.
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Capital Account The general formula for calculating the capital account is as following:
Ownership of foreign or domestic assets refers to things such as real estate, foreign and domestic companies investment and cross border mergers and acquisitions. Portfolio investment refers to investment in stocks and bonds. Whereas, other investments includes investment in loans and bank accounts. As we discussed in our lesson on capital flows, when a market in a country is outperforming the markets in other areas of the world, money will flow into the country from foreigners seeking to participate in those out sized returns. These capital flows are reflected in the country's capital account. This is the case whether we are talking about a country's stock market, bond market, real estate market etc. Countries with aggressive inflows or outflows of funds have straight influence on its currency. If other things are kept constant then a country with major inflows create demand for the currency resulting into the appreciation in the value of the currency. Balance of Payment In simple terms balance of payment refers to sum of all the transaction by a country with rest of the world. By using balance of payment as an indicator Forex traders can achieve immense imminent into the potential future price action of a countrys currency.
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5.5 ECONOMIC RELEASES

It is important for a trader to understand major economic releases and their impact on trading. There are numerous economic releases that are published every day to cover each economic release will be out of the scope of the book however some basic economic are briefly touched below. Gross Domestic Product GDP which is also referred as Gross domestic income (GDI) is a gauge of national income and output of any countries economy. For this reason trader and other market participants closely watch Gross Domestic Product Number (GDP). High rate of growth is a good indicator for the economy but if markets anticipate that the growth is not sustainable without excess inflation, participant might reach negatively. You can read the analysis from different sources including Bloomberg.com and dailyfx.com are best services available free of cost.
Non Farm Payrolls Non Farm Payrolls (NFP), economic release is public each month on first Friday at 8:30. NFP is released by the Bureau of Labor Statistics in United States which is meant to show the number of jobs added or vanished in the economy over the period of one month. As the name implies NFP does not include jobs concerning to farming industry. When business are hiring people this means they are optimist about the future health of the economy. This is expressed in form of NFP.
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CHAPTER 6
MONEY MANAGEMENT
"Believe it can be done. When you believe something can be done, really believe, your mind will find the ways to do it." David Schwartz
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6.1 INTRODUCTION
Money management is one of the most important aspects of trading and is also the most overlooked aspect trading. Money Management rules help us protecting out equity and also make us profitable in long run. Trading without sensible money management rules is merely playing Russian roulette.
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6.2 LEARN T O PROTECT CAPITAL FIRST

The primary goal of successful trading is the safeguarding of capital. In order to explain how difficult is to get out off losses there is an example shown below: Lets assume a trader started with $10,000 and go down by $5,000. The percentage of capital he lost is 50%. Now in order to get out of his losses and to breakeven even he need to made 100% return on $5,000. In order words he has to be twice as successful to cover his draw down.
Initial Stop Loss It is important to incorporate sensible risk management into trading. This can be achieved by setting stop loss which you can afford to lose on a trade without any substantial affect on the account equity. This greatly vary from strategy that one is trading and from traders to traders. Dr Alexander Elder stated as following in his renowned book Trading for a Living. Many studies have shown that trading strategies and traders who risk more than 2% of their overall trading capital on any one trade are rarely successful over the long term. From what I have seen most traders risk way more than this on an individual trade basis, another large contributor to the high failure rate among traders.
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6.3 SETTING PROFIT E XPECTATION

In order to build robust money management plan, the key components involved is lucrative trading strategy and setting practical profit probability. Risk to Reward Ratio Yet another way to add to your odds of profitability is to always trade with a higher risk to reward ratio. This means you are more likely to make 3 times more than what you are risking per trade. You can significantly increase your chances of ending up profitability if you have 3:1 reward/risk ratio in your trading strategy. No of Trade 1 2 3 4 5 6 7 8 9 10 Total Loss $1,000 $1,000 $ 3, 000 $1,000 $ 3, 000 $1,000 $ 3, 000 $1,000 $ 5, 000 $ 3, 000 $ 15,000 Win $ 3, 000
In the example shown above your percentage of winning trades is only 50% but still you made a profit of $10,000.
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6.4 POSITION S IZING

Position sizing is the main topic for money management and vital component for successful trading. Position sizing strategy can be classified into two broad categories martingale and anti martingale. Martingale is a strategy for position sizing which increases the trade size as the trade suffer draw down or after a losing trade. Anti-martingale strategy is opposite of martingale strategy, which increases position sizing after winning trade or when the trade moves in trader favor.
Fixed Position Sizing Many traders make the mistake of choosing an arbitrary number such as 1 standard lot per $5,000 capital or so on when they take first step toward trading. Using fixed position sizing has many disadvantages it does not take into account the dollar value and volatility characteristics of the instrument being traded. Moreover fixed lot sizing does not allow a trader to trade large contract size on trades with high chances of winning and lower the trade size on lower probability of success. For instance a financial instrument of 100 unit with $20 value fluctuates 5% a day does not present the risk/reward for a second instrument of 100 unit with $30 which fluctuate 1% a day.
% Risk Model The next level of sophistication in determining your position size is by using percentage risk method. In % risk based model contract size is determined by the risk on each trade in provisions of a percentage of your capital. As we looked in our previous topic that traders who risk more than 2% of their capital on any one trade are usually not successful overlong run. For instance if a trader has $100,000 in his trading capital and identify from his historic analysis of the strategy that 2% or $2000 of his trading capital is an appropriate amount to risk per trade. % Volatility Model Volatility based position sizing consider how much the price of a financial instrument fluctuates over a given period of time. ATR (Average True Range) is an indicator which shows the volatility of any financial instrument over a period of time. Value obtained from ATR can be used to determine your stop loss level in addition to the position size of the instrument you are trading. For instance, a trader has $100,000 in trading capital and he is look to buy EUR/USD which is at 1.3580. After pulling up a chart of EUR/USD currency pair and adding the ATR it shows the value of 0.0084. As you remember from our starting topic that 1 pip represent $10 when trading standard lot. So taking this into consideration that volatility is dollar per contract for EUR/USD equals to $10 x 84 which is $840. P a g e | 57
Therefore if the trader as risk appetite of 2% of his trading capital that he is willing to risk, then on volatility basis this equals to $2000. This means under this model the trader can put approx. 2.3 standard lot.
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CHAPTER 7
COMMON MISTAKES
"All I ask is the chance to prove that money can't make me happy." Spike Milligan
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7.1 PSYCHOLOGY OF TRADING

Psychology of trading is yet another important aspect of trading. Many intelligent people lose large capital while trading however in their non trading careers they are very success full and has accumulated large sums of money. The thing that separate winners from the losers in trading is not how accurately someone picks entry points. But the factors how they will manage the trade after they have taken the trade and how they stick to their money management plan once they are on the trade. Large majority of the traders do not understand that psychology plays a vital role in money management and they should conduit their emotions correctly while trading.
The Effect of Trading Losses We are taught by the environment of the importance of always being right. There is always a fear in us of not being wrong and the need to always be right. But this mentality does not go with trading. Most trading systems that are proved successful takes lots of small losses and then make a big gain on a few winning trades. Unfortunately most of the traders do not have mental toughness lot of losing trades and give up the trading system prematurely, and hurl a profitable trading system without giving it an adequate chance. Destroy Your Trading Account A common mistake in virtually all type of trading is holding a trade even the market continues to move against the trade. It was quoted by the renowned economist John Keynes Maynard The markets can remain irrational longer than you can remain solvent Another major factor that differentiate successful trader from the one who is unsuccessful is that a wise trader move to next trade when the market does not act according to his anticipation.
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7.2 COMMON M ISTAKES

NEVER RISK MORE THAN 2% PER TRADE
One of the cardinal rules which is also the most desecrated rules in trading is that traders lose substantial amount of their account equity in one single trade by taking too much risk. You will find hundred of stories of traders who lose years of profits on a single trade that goes terribly wrong. This is the chief cause why the 2% stop-loss rule should not be violated. The table below demonstrates that large losses are extremely difficult to overcome Amount of Equity Loss 25% 50% 75% 90% Amount of Return Necessary to Re-store to Original 33% 100% 400% 1000%
Lets assume you begin trading with $10,000 and loss 50% of your capital which in dollar terms is $5000. So in order to breakeven and overcome the losses you now need 100% gain of on your remaining equity. The best way to avoid this is to have proper risk management and to avoid large losses. For this reason the 2% rule hold utmost importance in trading. If you limit 2% loss per trade this means that you can sustain 10 consecutive losing streaks in a row with a total draw down of 20% of you account equity.
LOGIC WINS, IMPULSE KILLS

Trader blew up their account more by trading impulsively than by any other mistake. If you ask a beginner trader the reason for taking a long position on a currency pair, you might hear the answer, Because it has gone down enough so now its bound to go positive. This is an example of impulsive trading and wishful thinking; the trade decision is not based on a logical reason. More money has been lost by trading impulsively than by any other means. Ask a novice why he went long on a currency pair and you will frequently hear the answer, Cause its gone down enough - so its bound to bounce. We always roll our eyes at that type of response because it is not based on reason - its nothing more than wishful thinking. Trading impulsively is merely playing the game of Russian roulette. Logical trading is extra precise than impulsive trading. Trading impulsively is simply gambling. It can be a huge rush when the trader is on a winning streak, but just one bad loss can make the trader give all of the profits and trading capital back to the market. Logical trader will know where to take profit and stop loss if trade goes against him, whereas impulsive traders are only one trade away from bankruptcy.
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ADDING TO A LOSER
Most of the time trader increase their position size and keep on adding to them if trade goes against them. This is a martingale technique in which traders desperately hope that a reversal will occur and their losses will convert to profit. However doing so increases the exposure while the trade goes in loss. In such scenarios a smart trader will typically close the position and head toward next trade.
NEVER LET A WINNER TURN INTO A LOSER

It is not uncommon to see a trade go up by 30 pips in couple of minute and then it completely reverses to hit your stop loss at 40 pips in a short while. Traders should learn to protect their profits. There are two easy ways to protect your capital and banking pips. You can add trailing stop to your orders. The second method is to use multiple lots and exit positions on different levels including a trailing stop. There is nothing worse than watching your trade be up 30 points one minute, only to see it completely reverse a short while later and take out your stop 40 points lower.
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CHAPTER 8
PUTTING IT ALL TOGETHER
"The secret to creativity is knowing how to hide your sources." Albert Einstein
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8.1 CREATING A B USINESS P LAN

Many business fail due to their lack of planning and failure to create a business plan to follow. Creating a business plan give the trader a sense of direction that they are trying to reach. It set goals, and plan to execute. Most successful traders will agree that trading is not different than business and in order to be successful in trading you should have clear and written business plan. Following are some of the things which should be included into your business plan for trading. What are your reasons for which you want to become a trader? What do you hope to achieve from trading? Be specific here. If the possibility of making a lot of money has drawn you towards trading then list out how much money you want to make from trading and what you plan to do with that money if you make it. What are the things that are going to separate you from the large majority of traders who fail? What are your biggest weaknesses? How do you plan to address your weaknesses and leverage your strengths? How much time can you devote towards actively following the market? Do you plan to day trade, swing trade, position trade or a combination of the three? Does your choice here reflect the time you have to devote to the markets? What market or markets do you plan to trade and why? At what times throughout the day are you going to spend actually trading, researching trades, and then learning about the market? What are your criteria for entering a trade? What are your criteria for exiting a trade? What is your money management strategy? How will you know if one of the pieces of your strategy stops working? After identifying that one of the pieces of your strategy has stopped working what will you do to address it? What trading software and equipment you will use to trade and how much is it? What Broker/Brokers will you use? Do you plan to add money to your account and if so where is that money going to come from? If you are profitable do you plan to reinvest profits or withdraw some or all of them? If you plan to trade full time how you will support yourself if you arent profitable right away. How much money do you plan to start to trade with? Does the math work out when considering taxes, all costs, living expenses and your initial trading balance? Those who take time to think about and write down the business plan under these heading generally have a higher chance of success.
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8.2 MAINTAINING A TRADING JOURNAL

There is an old saying learn from your mistakes, for traders it mean to maintain a trading journal. Successful trader looks at each experience or loss as a chance to learn and grow. Trader openness to leaning from their trades differential profitable and unprofitable trader. A trader should be willing to put effort to prepare a document for recoding his trades and from time to time review each trade. Trading journals could be used to document trades. You can simply write down details of your trades in a notebook or a word document. However using spread sheet software like (excel) provides you more flexibility and handy analysis options.
Below are 10 things that in my opinion it is important to document about each trade. :
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
What were the market conditions for that day or trade? Why you take the trade, entry date, time and price. Reason for exiting the trade with date, time and price at which you close the trade. Was the trade short terms or long term? Comment on market condition from the time you entered till you close the position. Money management rules that used for the trade. If possible attach a chart with your analysis. Address you weakness for the particular trade or day. Address your strength for that day or trade. You can also add additional comments which you though might be help full.
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FOREX TRADING MANUAL Beginners To Advance

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FOREX TRADING MANUAL

2. THE LOGISTICS OF FOREX TRADING

8. PUTTING IT ALL TOGETHER

1.1 F OREX BASICS

1.2 THE STRUCTURE O F F OREX MARKET

2.1 HOW TO MAKE M ONEY TRADING F OREX

2.2 HOW P/L C ALCULATED

2.3 ORDERS T YPE

2.4 FOREX L INGO

3.1 UNITED S TATES D OLLAR

3.3 JAPANESE YEN

3.4 GREAT BRITAIN P OUND

3.5 SWISS FRANC

3.6 COMMODITY C URRENCIES

4.2 JAPANESE CANDLESTICK

4.3 SUPPORT AND R ESISTANCE

4.4 TREND LINES

4.6 COMMON C HART INDICATORS

4.7 MULTIPLE TIMEFRAME

5.2 OVERVIEW OF US ECONOMY

5.3 MONETARY P OLICY AND FISCAL P OLICY

5.4 BALANCE OF PAYMENT

5.5 ECONOMIC RELEASES

6.2 LEARN T O PROTECT CAPITAL FIRST

6.3 SETTING PROFIT E XPECTATION

6.4 POSITION S IZING

7.1 PSYCHOLOGY OF TRADING

7.2 COMMON M ISTAKES

LOGIC WINS, IMPULSE KILLS

NEVER LET A WINNER TURN INTO A LOSER

8.1 CREATING A B USINESS P LAN

8.2 MAINTAINING A TRADING JOURNAL

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