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Forex Trading Essentials Guide

Forex is the largest financial market globally, with over $6 trillion traded daily, involving various participants like banks and retail traders. Key concepts include pips, lots, leverage, and trading strategies such as scalping and day trading, alongside risk management and trading psychology. Tools like MetaTrader and TradingView are essential for analysis and practice, starting with demo accounts before moving to live trading.

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104 views9 pages

Forex Trading Essentials Guide

Forex is the largest financial market globally, with over $6 trillion traded daily, involving various participants like banks and retail traders. Key concepts include pips, lots, leverage, and trading strategies such as scalping and day trading, alongside risk management and trading psychology. Tools like MetaTrader and TradingView are essential for analysis and practice, starting with demo accounts before moving to live trading.

Uploaded by

johnkamunya4836
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Complete Forex Trading Notes

1. Introduction to Forex

Forex (Foreign Exchange) is a global marketplace for exchanging national currencies.

It is the largest financial market in the world, with over $6 trillion traded daily.

Participants include central banks, commercial banks, corporations, hedge funds, and retail traders.

Currency pairs are traded in the format: BASE/QUOTE (e.g., EUR/USD).


Complete Forex Trading Notes

2. Basic Forex Concepts

- Pips: Smallest price change, usually 0.0001.

- Lots: Standard (100k), Mini (10k), Micro (1k).

- Leverage: Controls large positions with small capital (e.g., 1:100).

- Spread: Difference between bid and ask price.


Complete Forex Trading Notes

3. Types of Analysis

1. Technical: Uses charts and indicators like Moving Averages, RSI, MACD.

2. Fundamental: Analyzes economic data like GDP, NFP, and interest rates.

3. Sentiment: Measures market mood using news and trader positions.


Complete Forex Trading Notes

4. Trading Strategies

- Scalping: Fast trades for small profits. Use M1 or M5 charts.

- Day Trading: Intraday trades. Use M15 to H1 charts.

- Swing Trading: Hold trades for days. Use H4 or Daily charts.

- Position Trading: Long-term trades. Use Daily or Weekly charts.


Complete Forex Trading Notes

5. When to Buy or Sell

Buy when price bounces off support, RSI < 30, bullish pattern appears.

Sell when price hits resistance, RSI > 70, bearish pattern appears.

Best time to trade is during the London and New York session overlap.
Complete Forex Trading Notes

6. Risk Management

- Risk only 1-2% of capital per trade.

- Use stop-loss.

- Maintain a Risk-Reward ratio of at least 1:2.

- Avoid overtrading.
Complete Forex Trading Notes

7. Trading Psychology

- Stay calm and disciplined.

- Do not chase losses.

- Keep a trading journal.

- Stick to your strategy.


Complete Forex Trading Notes

8. Tools & Platforms

- MetaTrader 4/5: Trading platforms.

- TradingView: Chart analysis.

- Forex Factory: News and calendar.


Complete Forex Trading Notes

9. How to Practice

- Start with a demo account.

- Test strategies risk-free.

- Move to live trading with small amounts.

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