Professional Market Analysis and A Place to Learn Losing Less!

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Forex Trading Lessons for the Beginners:

Most often I have been asked “How can I be a professional Forex trader from a beginner/newbie?

Most of the times I referred them to few Forex communities/blogs/forums but I noticed there is no one who guide step by step and avoid less important topics. Sometimes they create complexity to the new comers as they loose their primary focus to unnecessary topics.

I have been requested by many followers and friends to create a knowledge base/guide for the new comers who want to be a professional Forex trader. Here is a mature guide for the beginners who want to be a Forex trader from zero level. Please follow Step by Step and contact me if you have any question that relevant to Forex trading lessons.

Step 1:

Things you should know!

[lvca_tabs style=”style7″ mobile_width=”600″][lvca_tab tab_title=”What is Forex?”]Forex is Foreign Currency Exchange, also known as FX and Currency Trading. If you ever visited another country you probably bought the currency of the country you are visiting from the Airport or Banks so that you can be okay if you need any financial transaction in a foreign land.

Just imagine in this era of globalization almost everybody, every multinational companies, governments, agencies are doing financial deals and transactions with each other in every single second. And they are converting their native currencies with foreign currencies!

These exchange volumes are huge in amount; in fact Forex Exchange Market is the largest liquid market in the world! Per day transactions volume is More than 7 Trillion US dollar!

 

All the other capital markets combine in the world against Forex Market looks like a baby Hamster beside a giant Mammoth!

So, If you want to ride a Mammoth you must have proper education, months of training, nice armor and techniques. By the time you will learn never force it or go against it, because you will loose.

Same in Forex trading, you must have proper education, months of practice, perfect money management and a rock solid trading strategy! And you will never go against this mighty market.[/lvca_tab][lvca_tab tab_title=”What is Pip?”]

Pip = ‘Price Interest Point’. In words, a pip is the smallest measure of changes in a certain currency pair in the forex market. Most often the price differential between 1 to 5th digits of a currency pair. And usually $0.0001 is one pip in Major currency pairs except Yen (JPY).

In the calculation of Pips you should count only digit not the dot!

Example 1:

The rate of EURUSD was 1.0820 yesterday and today price is down and current rate is 1.0620! It means in forex calculation EURUSD price fall by 200 Pips as follows 1 0820 – 1 0620 = 200 Pips (ignore the dots). 100 Pips means $0.01 (one cent) in major pairs.

Example 2:

Few hours earlier USDJPY price was 113.12 but present price is 113.77. Let’s do the calculation 113 77- 113 12 = 65 Pips. So the price of USDJPY is up by 65 pips.

You really don’t have to calculate pips manually into your trading software, Most of the trading softwares have a default tool/function for that.[/lvca_tab][lvca_tab tab_title=”What is Spread?”]

What is Spread and Why Spread is very important?

In currency market spread is the difference between Buy (bid) and Sell (ask) price.

You will see bank/broker takes more when they Sell a currency to you and gives less when they buy from you.

An Example:
Dollar vs Indian Rupee rate
(a) Buy/Bid rate: $1= ₹67.50 (You have to buy in this rate)
(b) Sell/Ask rate: $1= ₹67.00 (You have to sell in this rate)

Bank/Broker is making profit from Spread which is ₹0.50 from each US dollar.

Obviously, the currencies people exchange most have the lowest spread as they are very competitive. But if the currency exchange volume is too low the Spread could be alarming level which is not worth trading.

Such as:
EURUSD, GBPUSD, USDJPY are the most common trading currency and they have spread between 0.02- 2 Pips. You will get $98 to$99.8 dollar if you make $100 profit!

But if you want to trade USDHKD (USD vs Hong Kong Dollar) you will see the spread is more than 25-30 Pips which is very costly. It means Bank/Broker will charge you 15 to 30 times more. You will get only $70 to $75 Dollar If you make $100 dollar profit from a trade! I know it is scary and not fair.

I really don’t encourage trading a currency pair if it has more than 10 Pips spread unless it has hundreds of pips profit target. Between 1-5 Pips spread are suitable.[/lvca_tab][lvca_tab tab_title=”What is Swap?”]What is Swap?

A swap is an agreement between two parties to exchange a series of assets, liabilities, payments or future cash flows. This exchange takes place at a predetermined time, according to the contract. There are five types of Swap learn more here. And learn more how general swap works here.

What is Swap in Forex Market?

Forex swap is an agreement between two foreign parties to exchange currency and the agreement consists of swapping the principal and interest payments on a loan made in one currency for principal and interest of the payments of a loan of equal value in another currency. Please learn more about currency swap here.

Why Swap is even more important than Spread?

Different Forex brokers have different swap rates for the same currency pair! Some Forex broker have swap differential more than -$5 a day in major pairs for per standard lot!

Just imagine you are a swing trader and you need to hold your trade for 3 to 4 months! It will charge you more than $330-$440 from your profit! Which is equal to 33-44 pips! Some cross pair swap could be more than -$10 a day! It would cost you more than-$1300 if you need to hold it for 6 months! Which is equal around 150 pips! It is horrible!

So, you must need to check the swap rates for the currencies of your broker before opening an account with them in the first place. Generally Forex Brokers those offer most eye catching advertisement, highest leverage and bonus has highest swap rates!

Compare the Swap rates in retails Forex broker and find reasonable Swap rate brokers here.[/lvca_tab][lvca_tab tab_title=”Trade Commission?”]

Trade commission is one kind of trading fees charged by Forex Brokers.

Most of the times STP/ECN brokers charge commission in per standard lot trading volume or on per million trading volume. Which is good because they have very tight spread, normally less than 1 Pips in major currency pairs!

If a broker says they charge $70 dollars trade commission in per million volume it means they charge $70 in 10 Standard lots or $7 in per Standard lot. (1 Standard lot = $100,000)

Please learn more about ‘Lot’ just few step below in this table. And you will find details about types of forex broker in ‘Step 2’.[/lvca_tab][lvca_tab tab_title=”What is Slippage?”][/lvca_tab][lvca_tab tab_title=”What is Lot/Volume?”][/lvca_tab][lvca_tab tab_title=”What is Leverage?”][/lvca_tab][lvca_tab tab_title=”Liquidity Providers”][/lvca_tab][lvca_tab tab_title=”What is Carry Trade?”][/lvca_tab][lvca_tab tab_title=”Market Players!”][/lvca_tab][lvca_tab tab_title=”Time and Sessions!”][/lvca_tab][lvca_tab tab_title=”Bull & Bear Market?”][/lvca_tab][lvca_tab tab_title=”Going North & South!”][/lvca_tab][lvca_tab tab_title=”Hawkish & Dovish!”][/lvca_tab][lvca_tab tab_title=”Currency Slang Names!”][/lvca_tab][/lvca_tabs]

Things into trading environment

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When you will trade currencies

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Charts types which you will analyse

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Step 2

Types of trader you want to be

Very New or most experienced trader. Kung-fu trader

Smart Trader follow price action in lower time frame

Professional Trader and Fund Manager and medium institution

Corporate, hedge fund

Must know about Retail Forex Brokers

In developing nations Brokers often offer IB commission to the introducer who get Commission from broker based your trading volume and they encourage traders to scalp or trade large volume so that they can get higher commission from broker. This is the most stupid things in a retails trader. They wiped out their account in a matter of days!

All about Indicators, Expert Advisors (E.A.) and Forex Robot

Stay the hell away from robot. Its all about terminator and Zombie world. You don’t belong there. You are not the lucky one like others who sell Robot. Why would he sell Robot at the first place if he makes so much money. He doesn’t need your 50 bucks.

Look at Warren Buffett, George Soros they didn’t do it all of the sudden. They earned it. They grew old so they are not Terminators for sure. So you need to earn it not make it.

Others Indicators as Pivot Point, Stochastic, On Balance Volume, True Range etc

Forex Analysis

Central Banks, MPC, Employment, CPI, GDP, Retails Sells …

Price behavior of forex market

Mostly depends on crazy retails crowed

Japanese Candlesticks

more are coming soon

Step 3

You Must Need Trading Plans or never trade

Double top, Double bottom, Head and Shoulder,  Falling wage, Raising Wase, Pinbar, Inside bar, Morning star, Evening star

The technical chart patterns that you need to ignore as a beginner. But after 6 months of trading experience you can learn them. They known as Gartley Pattern. unique way to find the market with fibo level.

Bat Patterns,  Butterfly Patterns, Shark Patterns, Carb Patterns, XABCD, more here

I made things much easier to M and W patterns.

Forex News Trading

All the news in the forex calendar don’t have the slimier impact  find complete anatomy here

Central Bank Outlook

Learn more present Central bank economic steps, interest rate and MPC outlook Dovish/Hawkish here

Co relations

Learn currency co-relations with commodity, metals and indices here

Why 95% Forex trader loose their account?

Learn how Leverage can eat your account

How to set ‘Stop Loss’ like professional traders?

Learn more here

Step 4

Money Management: Position Sizing & Others

Find details here

Trading Phycology & Emotion Control

Trading Journal

Which blog/news event site to follow?

Demo practice

Practice demo account with a broker least 3 months before starting live account.

Thank you. Your moderate level of learning is complete. You know now 50% about forex trading. Rest you have to learn by time. You will need at least 1.5 years live trading experience to call yourself a forex trader unless you take my core price action course where you can be a smart trader in less than 6 months.

All the best wishes for you. Contact me anytime you need. I reply at every Saturday to all submitted questions.

-Shaon Bhuiya