Forex Trading Strategy

Discover all you need to know about Forex Pips, Lot

Sizes, and More, as well as How to Become a
Competent Trader, in order to be successful in the
Forex Market.

Henry Foster
 Copyright © 2022 Henry Foster

All rights reserved

The characters and events portrayed in this book are fictitious.

Any similarity to real persons, living or dead, is coincidental and
not intended by the author.

No part of this book may be reproduced, or stored in a retrieval

system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without
express written permission of the publisher.

ISBN: 979-8-83-896251-5

Cover design by: Henry Foster

Library of Congress Control Number: 2018675309

Imprint: Independently published

 TABLE OF CONTENTS

INTRODUCTION
WHAT IS FOREIGN EXCHANGE TRADING?
BASICS OF FOREX TRADING
FOREX TRADING STRATEGIES
HOW TO CREATE A TRADING PLAN
CANDLESTICK SHADOW AND THE REAL MEANING OF THE BODY
EASY AMBUSH TRADE WITH HIGH LOWS
HOW TO DEAL WITH THROBBING
REAL-WORLD EXAMPLES AND APPLICATIONS
CONCLUSION
 INTRODUCTION

I'd like to thank you and congratulate you on downloading "Forex: The
Simple Strategy for Successful Currency Trading."

This book provides tried-and-true procedures and tactics for better

understanding forex trading as a viable financial option. Foreign currency
trading has grown in popularity in the investing industry throughout the
world during the last decade. Through this book, I aim to familiarize you with
the mechanics and efficient tactics in forex trading that can allow you to earn
up to $200 each day.

I invite you to recommend this book to your friends and family, and please
leave a brief review on Amazon to express your ideas.

WHAT IS FOREIGN EXCHANGE

TRADING?

The foreign exchange (forex) market is a worldwide market where anybody

may buy and sell any currency from any country on the planet. With the
advent of liberal exchange rates in the 1970s, the forex market was born.
People and businesses that have engaged in the forex market since that time
have always assessed what price one currency would have against another
currency based on the rule of supply and demand. Because it is not subject to
outside regulation, the forex market has long been seen as a free market.
Everyone who wants to participate in forex trading is free to compete, and
they may always choose whether or not to enter into a transaction.

The large volume of forex trading transactions that occur on a daily basis
make the forex market one of the most liquid monetary marketplaces in the
world. According to various research reports, the daily volume of money
moved in the currency market is about five trillion US dollars — not
millions, not billions, but trillions of dollars. The biggest recorded volume of
transactions totals about six trillion US dollars in a single day, with an
average daily total of roughly three trillion US dollars. Because all currency
transactions are not completed in a single central forex exchange, the precise
amount cannot be determined.

Through communications networks and the Internet, you may trade forex
from anywhere in the globe. Unlike the stock market, which is only open
during regular business hours, the currency exchange is open 24 hours a day,
five days a week. On Mondays, forex trading begins at 00:00 GMT and
finishes at 22:00 GMT on Fridays. You can always locate a dealer that can
provide currency quotations in all time zones, no matter where you are. The
major forex exchanges are located in the following major markets: Europe's
Frankfurt and London, North America's New York, Asia's Tokyo and Hong
Kong, and Australia and New Zealand in the Pacific.

Because of the vast amount of transactions, the foreign currency market is

capable of preserving its neutrality and avoids being dominated by a few
large participants. Even if there are large participants who wish to influence
the market by willingly changing pricing, they will have to invest billions of
dollars. Unlike the stock market, which may quickly fall due to a huge
economic catastrophe, the forex market can swiftly recover after a
catastrophic occurrence due to the enormous volume of money coming in and
out of it on a daily basis.

To better understand how forex transactions are quoted, keep in mind that a
base currency is always stated as a unit equal to the quotation currency's
exchange rate. For example, the quote EUR/USD = 1.2762 indicates that the
base currency is the EUR, and one unit of EUR equals 1.2762 USD (which is
the quote currency).

Each forex trading transaction is done using distinct contracts, often known
as "lots." A common contract or lot size is 100,000 units. This means that if
you purchase one standard-sized contract, you will be able to manage a base
currency of 100,000 units.

Each contract is then segmented into "pips," which represent the smallest
price increase. Standard lots or contracts typically have a pip value of $10,
however if you are new to forex trading, you may try the mini-accounts
offered by some forex firms, where the lot size can be as little as 10,000 units
with pips as low as $1 or even less.

In comparison to the stock market, the forex trading market demands a much
lesser margin, especially if you know how to use leverage. You are not
required to acquire a currency in forex trading, so you can exchange it at a
later date.

Even if you do not possess any of the currency, you can create a forex
position to buy or sell it. A regular FX account may be opened through an
Internet broker with a minimum deposit of $2,000. With a minimal
investment, you can begin trading in the forex market with a leverage of
1:100. That implies you may start a $200,000 position with only a $2,000
investment and the balance $298,000 as a credit.

If you do not want to deposit a large sum right immediately, some forex
brokers provide a "mini-account" for a modest commitment of $250. With a
$50 margin deposit, you can manage a lot of up to $10,000 units of base
currency in a mini-account. This implies you may work with a leverage of
200:1 (10,000 divided by $50). With a $250 minimum commitment, you can
trade up to five mini-lots. In some cases, the leverage might be as high as
400:1 or even 500:1, requiring you to make a margin deposit of less than $50.

The leverage available in forex trading is approximately fifty times greater

than that available in stock trading. According to US law, you can have an
intraday leverage of 4:1 in stock trading provided you have at least a $25,000
account. Working with a high degree of leverage is not always appropriate
since it also includes a high level of risk. If you are ready to take that risk,
you will have greater freedom in implementing various forex trading
methods.

Because of the leverage, you will be able to engage in speculative trading

without having to deposit a significant amount of your own money. This style
of trading is also known as "marginal trading." For example, your forex
market research indicates that the price of EUR will eventually climb versus
USD. As a result, you decide to open one lot (or contract) to buy 10,000 units
of EUR at 1.2760 USD per EUR (or a total of $127,600) with a 1% margin,
or a leverage of 1:100. After some time has passed, you realize that your
original analysis was right, so you decide to exit your trade at 1.2847 (or a
total of $128,470) and gain 87 pips (or a total of $128,470).

Almost all currencies traded in the forex market move on a daily basis, with
an average of 100 to 150 pips. In some cases, the variation might be
substantially greater. The foreign currency market is always changing, and as
a forex trader, you can choose to hold a position for a short length of time or
for a longer period of time, which can last many years. The length of time
you maintain a position will be determined by your trading tactics or
strategies.

Technical Analysis vs. Fundamental Analysis

When you decide to start trading in the forex market, you may employ a
variety of approaches and strategies to help you analyze market patterns and
make smarter judgments. The ideas and procedures taught in this book can be
classified as either fundamental analysis or technical analysis.

Information regarding the political and economic circumstances in many

countries throughout the world is easily accessible thanks to the Internet. If
you want to be successful in forex trading, you must stay up to speed on this
sort of information since these events or situations might affect the overall
performance of the currency market.

You will comprehend why specific currency prices move in response to

events if you are well-informed. This is known as basic analysis, and it
entails scrutinizing a certain country's unexpected occurrences or events,
including any political instability, that might cause the country's currency to
change greatly.

When an economic prediction is produced confidently, the information

employed in fundamental analysis turns out to be a prophesy that fulfills
itself, since the market responds in reaction to the economic forecast even
before the actual event occurs, resulting in the expected conclusion.

The market may have an early response to a certain prognosis in which they
begin purchasing or selling based on what the forecast is, and when the
prediction occurs, the currency's price will begin to move in the opposite
direction of the actual movement. This is due to the fact that the predicted
event has already occurred, and forex traders are already closing their bets.
As a result, when the actual event occurs, the currency market may appear to
react in the opposite direction to what was expected.

Because all of the currencies are moving in the same direction, it will be
tough to filter through all of the intricacies that might influence the outcome.
Fundamental analysis might be intimidating for traders who are just starting
out in forex trading. Only major banks and other financial organizations can
afford to pay experienced analysts in order to get more accurate and diverse
information on a timely basis. This is also why a greater number of traders
are proficient in doing technical analysis.

Most technical analyses share the concept that all of the political and
economic information you need to study is already there in the trade charts at
your disposal. Even projected reactions to certain economic events may be
observed in the charts. When performing technical analysis, you look at how
currency values fluctuate in relation to other data points such as time and
volume. You can inquire, "What was the lowest price that this specific
currency obtained in the previous month, quarter, or year?" What is the most
expensive price? What is the average monthly transaction volume for this
currency?

Another assumption of technical analysis is that the currency market repeats

itself. This suggests that whatever happened in the past is very likely to
happen again in the future. Technical analysts examine historical currency
quotations and utilize them to forecast future values using mathematics and
statistical calculations. Fundamental and technical analysis are
complimentary, and learning how to perform both is essential if you want to
be a successful professional forex trader. You may observe that certain
aspects in your fundamental analysis are also present in your technical
analysis at any given time.

BASICS OF FOREX TRADING

If you've been reading about forex trading, you've undoubtedly come across
the words bid-ask and bid-offer. These are essentially price quotations for
currency pairings. When trading forex, all currencies are paired with another
currency, and the quotations you receive are also double, with one
representing the purchasing quote and the other representing the selling
quote. The spread refers to the difference between the two quotations or
prices. This chapter will teach you the fundamentals of trading in the
currency market.
Positions in the Forex Market

Many people go into forex trading to supplement their income and diversify
their existing financial portfolios. They achieve these objectives by holding
positions to purchase and sell various currencies. When the price of a
currency rises after you bought it at a lower price, you can gain money by
"closing" the position, or selling your currencies at a higher price. When you
close your position, or work order, you are technically selling the base
currency that you initially purchased and acquiring its matching currency.
Because the value of one of the currencies in the pair is compared to the
value of the other currency, this transaction includes a correlation of relative
worth. As a result, a currency's value is determined only by its relationship
with another currency from another country.

The "position" or "order" that you will open in the forex market will indicate
your net level of exposure in a given currency and currency pair. Your
position is classified as "flat" when you have little or no exposure, "long"
when you purchase more currency than you sell, and "short" when you sell
more currency than you buy. When you begin trading in forex, you are
essentially exchanging one currency for another because you anticipate that
the currency you purchased will gain in value relative to the currency that
you sold.

One of the fundamental forex fundamentals you must thoroughly

comprehend is that currencies are always exchanged in pairs. When you
trade, you are simultaneously purchasing one currency, the "base currency"
(the first currency in the pair quotation), and selling another currency, the
"quote currency" (the 2nd currency in the pair quote). You can make your
profit a "realized income" by selling back the currency that you initially
purchased at a higher price, but you can alternatively maintain your position
and choose to realize your money later. You will have an "open position" in
this situation.

When you purchase a currency pair, you are technically purchasing a

particular quantity of the base currency and selling an equal amount of the
quotation currency. This type of transaction is also known as "going long" or
"longing the market." For example, going long 100,000 units in the
USD/EUR pair involves purchasing 100,000 units of the US dollar (the base
currency) and selling the same number in Euro (the quote currency). If the
price you were quoted was 1.40 USD/EUR, you are effectively selling
140,000 Euros. You guarantee the acquisition of the USD counterpart when
you sell the comparable Euro amount.

The same concept applies to the opposite position, commonly known as

"shorting the market" or "going short." When you sell a certain base
currency, you will notice that its value is falling in comparison to the value of
the quote currency. As a result, you may decide to sell the 100,000 units of
US dollars that you initially purchased and repurchase the 140,000 units of
Euro because you anticipate that the value of the US dollar will eventually
decline and you will want to repurchase it at a lower Euro price later to
realize your profits.

To conclude, a long position is when you buy a certain currency, and a short
position is when you sell that same currency. Another important forex trading
notion to comprehend is: Forex quotations are often presented as bid and ask
pairs. Long forex positions (or when purchasing a currency) use the quote's
"ask" (offer) price. For example, if you wish to buy one standard lot of
CHF/USD at a stated rate of 1.5722 bid/1.5727 ask, you will be buying
100,000 CHF for 1.5727 US dollar. Short forex positions (or when selling a
currency) will, on the other hand, use the "bid" price in the quote. Using the
same example, this implies you'll be selling 100,000 CHF units at 1.5722 US
dollars.
The simultaneous and symmetrical purchasing and selling of currency pairs
constitutes forex trading. This implies that you will always be long (buying)
in one currency and short (selling) in another at the same time. In the above
example, trading your 100,000 CHF at 1.5722 USD implies you will be short
(selling) in Swiss Francs (or CHF) and long (purchasing) in US dollars.

When you keep your position open (running or active), its value will always
change based on how the market rates move. Your position may benefit when
prices rise or lose when prices fall, but such profits and losses will not be
final or recognized until you terminate your position.

What is Margin Trading?

You may compare margin trading by creating a loan account with a bank or
broker that allows you to buy certain currency pairs. The margin that you will
require is determined by the leverage that the bank or other financial
institutions can supply, and it is the assurance that you must make in order to
get control over a specific volume of currency units. For example, if you are
offered a leverage of 100:1, it implies that you may manage a $100,000 lot or
contract with just a $1,000 margin or deposit in your forex account. Other
forex firms provide smaller lots to assist novice investors to enter the forex
market. A modest lot size allows you to control a $10,000 lot with as little as
a $100 margin or investment.

Allow me to alert you of forex accounts that offer exceptionally high

leverage. These large leverages may allow you to manage a bigger number of
currencies in the forex market with a reduced margin or investment on your
part, but they may also be quite hazardous, especially if you start losing
money. Because your margin or investment is little, you may be tempted to
take positions or engage in transactions with extremely high risks. You may
believe that your investment is minor and that you are prepared to lose it all.
That is an excellent investing mindset, but keep in mind your primary goal in
forex trading, which is to make money in the long term.

Whether you are dealing with a low or huge margin, it is critical that you
understand how to correctly manage your forex position. You must establish
"stop-loss" and "target-profit levels" in order to properly manage the
positions you open. In the following chapter, you will learn more about these
tactics.

How to Close a Foreign Exchange Position

When you open a forex position, you may also enable a feature that allows
your account to automatically cancel the position when it meets a predefined
criteria. These conditions might include target-profit (when your position has
achieved a specific profit level) or stop-loss (when your position has reached
a certain loss level) (when your position has reached a certain level of loss).
You can also close your trade manually by entering into your online account
or calling your broker. When you opt to close your position manually, you
will be subject to the same circumstances as when you start a position at
market price. What exactly are Pips and Lots?

As previously stated, the smallest unit of currency movement is the point or

pip (derived from "Percentage In Point"). A pip signifies a 0.0001 variance
(either increase or decrease) in four-decimal currency pairs and a 0.01
variation in two-decimal currency pairs. For example, if the price of
CHF/USD rises from 1.3740 to 1.3799, that indicates the price rose by 59
pips.
Varying currency pairings have different pip values, which are based on the
correlation of changing currency rates. When EUR is the base currency (as in
EUR/USD), the calculation of a pip differs from when EUR is the quote
currency (as in USD/EUR).

The number of pips is commonly used to measure currency price changes. In

each forex deal, a price movement of one pip is comparable to a particular
number of earnings or loses in actual US dollars. Normally, the value of a pip
fluctuates according on the currency pairings being exchanged. Only
currency pairings using USD as the quotation currency will have identical pip
rates (the 2nd currency in the pair). This is because, regardless of the base
currency (EUR, CHF, or AUD), the USD quote currency will always move at
the same pace.

To calculate your profit or loss on a single transaction, you must first know
the pip rate and then multiply that rate by the entire number of pips that the
currency has moved for or against your position. If the price of the base
currency rises relative to the price of the quote currency, each pip that the
price rises over your original buy price is deemed a gain or profit. Each pip
that the price falls below the original purchase price, on the other hand, is
deemed a loss.

It is especially important to remember that if the quotation currency is USD

(such as CHF/USD), one pip is always equivalent to 0.0001 US dollar or
1/100 of a penny for each US dollar traded. This means that a pip costs USD
10 for a regular lot of USD 100,000 and USD 1 for a lesser lot of USD
10,000. For other currency pairings, pip values might range from USD
0.00006 to USD 0.00009. This indicates that a normal lot of USD 100,000
can have a pip value ranging from USD 6 to USD 9. Here are a few sample
computations to help you understand how pips are calculated:
The US Dollar serves as the base currency.

n USD/CHF. If the currency value is 1.1819, then the pip value is

0.0001 divided by 1.1819, or 0.0000846095. Because a normal
lot has 100,000 units, the total pip value is $8.46. (Computed as
0.0000846095 multiplied by 100,000).

n USD/JPY. If the currency value is 92.39, then the pip value is

0.01 divided by 92.29, or 0.0001082368. The total pip value for
a typical batch of 100,000 pieces is $10.82. (Computed as
0.0001082368 multiplied by 100,000).

The quote currency is the US dollar.

n EUR/USD. If the currency value is 1.2658, then the pip value

in Euro is 0.0001 divided by 1.2758, or 0.000078. The pip value
in US dollars may be calculated as 0.000078 multiplied by
1.2758 or 0.0001. The total pip value for a normal batch of
100,000 pieces is $10. (Computed as 0.0001 multiplied by
100,000).

n The ultimate pip value is always $10, regardless of the base

currency (CHF, AUD, or NZD).
Market orders and limit orders are the most prevalent order types. You can
enter or exit a specific trade position by submitting a "market order," which
allows you to buy or sell currencies at current market values. When issuing
market orders, you must exercise extreme caution since the forex market can
change so quickly that the market price at the time your market order is
placed and the actual time of completion of the purchase or sell transaction
may differ. This variation, often known as "slippage," can occur in a matter
of minutes or even seconds. A slippage might have an effect on your trade,
causing you to lose or gain a number of pips. Slippage is typically avoided
while trading forex online since the execution or fulfillment of your market
order can be performed instantly or in a matter of seconds depending on the
speed of your Internet connection.

A "limit order" allows you to automatically purchase or sell a certain

currency when its price reaches a certain level or limit. For example, you may
establish a limit order that would automatically purchase a currency if its
market price falls below the "limit-order price" you choose. Alternatively you
may sell a currency automatically if its market price rises beyond the limit-
order price you specify. Limit orders do not have slippage risk because your
order is technically produced by the computer. Limit orders are typically
placed by forex traders when they believe the market price of a currency will
ultimately rebound following a specific economic or political event.

FOREX TRADING STRATEGIES

The most prevalent forex trading strategies are divided into two categories:
long-term trading and short-term trading. Long-term trading involves a trader
basing his or her research on end-of-day data and charts and may opt to hold
a position for several weeks, if not months. A long-term trader essentially
watches the trends. One advantage of long-term forex trading is that you
won't have to watch the forex market numerous times during the day, and
you'll have to perform fewer trade transactions, which means lower
commission costs or charges. Furthermore, you would not need to employ
sophisticated equipment or computer software to aid in trend research
because you would not be spending a lot of time analyzing and monitoring
market patterns.

The obligation to set larger stops and the possibility of large stock
fluctuations are two of the most significant drawbacks of longer-term trading.
As a long-term trader, you must be well-capitalized in order to be better
prepared to withstand such massive stock fluctuations. Because you will only
make a few trading transactions every month, you must be patient, especially
during months or weeks when you are losing money and waiting for market
values to rise.

Short-term forex trading involves a trader basing his or her analysis on

intraday data and information and often holding a currency position for a few
of days or, at most, two weeks. Short-term traders engage in "swing trading,"
which is a type of forex trading. There are some traders who engage in an
even shorter type of forex trading known as "day trading," in which they try
to generate minor profits on price movements that occur during the day. One
of the most significant advantages of short-term trading is that you will be
able to capitalize on the various trading chances that arise every day. When
you can make even a tiny amount of money every day, you have a lower
likelihood of having any losing months. You will not have to rely on one or
two huge forex deals once a year to make a profit. The most significant
disadvantage of short-term trading is the increased transaction fees or costs
that you would incur.

Here are the most typical trading strategies for profiting from FX trading.
Read each one carefully and decide which technique best fits your investing
goals and personality type:

1. Trimming

The scalping forex strategy's primary goal is to generate modest amounts of

profit at frequent intervals from minute price changes ranging from two to ten
pips. Scalping allows you to join and exit a transaction in a matter of minutes,
if not seconds. Small earnings through scalping can ultimately build up to
larger profits since you will be able to get into a large number of transactions
each day, which can range from twenty to one hundred transactions on
average.

Many skilled traders see scalping as a high-risk forex trading method,

although the degree of risk involved in scalping varies based on both the time
of day you complete your trades and the forex market you utilize. Scalping is
more likely to be profitable during trending circumstances, and the best
trading period is when the forex market is fluctuating inside consolidation
patterns. When using the scalping method, you must ensure that you will be
able to respond and make judgments quickly so that you may exit a poor
trade as soon as possible with lowest pip loss. Because scalping allows you to
make many forex trades every day, you should take advantage of all profit
possibilities that come your way, even if they are little.
To optimize your scalping efforts, you should not aim for a profit more than
five to ten pips.
 2. Trading within one day

When you use intraday or day forex trading, you must close all positions
before the end of the day. The number of transactions you will finish with
this technique is projected to be substantially lower than with the scalping
method. Normally, you will research a trade and finish it within a short or
medium period using charts with a thirty minute to an hour timeframe.

3. Position Investing

The goal of the position trading strategy is to increase your position size in
increments as you watch market evolution to ensure that you can keep a
steady level of risk. This approach is also known as "averaging into a
position," and it involves opening a new forex position of a comparable size
and direction each time the risks of the prior position have been mitigated.

Assume you buy a 0.10 lot of the currency pair CHF/USD at 1.2650 and set
your stop-loss at 1.2600. That implies you have a $50 open risk.

Lot Price Stop- Open Potential

No. Loss Risk Profit When the currency price
1st 1.2650 1.2600 $50 0 rises, you will buy a second
mini-lot at 1.2700 with a
stop-loss at 1.2650, bringing the first position's stop-loss to a breakeven point
of 1.2650. Your overall risk remains at $50 after initiating the second
position.
Lot Price Stop- Open Potential
No. Loss Risk Profit If currency prices continue to
1st 1.2650 1.2600 $50 0 rise, you can buy a third
2nd 1.2700 1.2650 $50 0 mini-lot at 1.2750 with a
stop-loss at 1.2700 while
keeping the first and second positions' stops at 1.2700.
Lot Price Stop- Open Potential
No. Loss Risk Profit You may be thinking if you
1st 1.2650 1.2600 $50 0 should stop at the third mini-
2nd 1.2700 1.2650 $50 0 lot because all three of your
mini-lots are now profitable.
3rd 1.2750 1.2700 $50 0 If the market price continues
to climb, you may continue to buy a fourth mini-lot at 1.2800 with a stop-loss
at 1.2750, which will protect your gains for all four mini-lots.
Lot Price Stop- Open Potential
No. Loss Risk Profit You may buy your fifth lot at
1st 1.2650 1.2600 $50 0 1.2850 with a stop-loss at
2nd 1.2700 1.2650 $50 0 1.2800, and your secured
profits will be $250, which is
3rd 1.2750 1.2700 $50 0 calculated as $150 from the
4th 1.2800 1.2750 $50 0 first lot, $100 from the
second lot, $50 from the
third lot, and $50 from the fifth lot, minus the $50 risk exposure on the fifth
lot. The fourth batch will have reached the breakeven threshold.
Lot Price Stop- Open Potential
No. Loss Risk Profit You can limit your risks and
1st 1.2650 1.2600 $50 0 exposures with position
2nd 1.2700 1.2650 $50 0 trading since you can keep
them constant throughout the
3rd 1.2750 1.2700 $50 0 process, and you have the
 4th 1.2800 1.2750 $50 0 potential for large rewards.
5th 1.2850 1.2800 $50 0 You will be able to stay up
with market developments if
you use this method. If you have a longer investing schedule, this is
excellent. Even if you only trade intraday forex, you may use the notion of
position trading. Within a single day, you can add to your position in the
same manner as described above, allowing you to pocket gains at the
conclusion of the day with minimal risk. You should bear in mind that you
should test the position trading technique with modest lot sizes and restrict
your risk exposure to 1% to 2% of your entire capital investment. That
instance, if you put $1,000 in a forex account, your exposure should be
restricted to $10 to $20.

HOW TO CREATE A TRADING PLAN

Now that you understand the fundamentals of forex trading and the strategies
available to you, it is time to develop a trading strategy. Creating a trading
strategy will not offer you with a 100 percent assurance that you will become
a good forex trader, but it will help you avoid major mistakes or find a
solution if they do occur. A trading strategy will equip you with the necessary
skills to respond rapidly to any potential trading outcomes. A trading strategy
allows you to design a defined sequence of procedures that you must follow
while trading, which may help you regulate emotions and create discipline.
Here are the components of a solid trading strategy on which you must
decide:

● Market: Do you want to purchase or sell currencies (EUR/USD,

CHF/JPY)?
 ● Size of position: How much volume do you plan to purchase or
sell?

● Risks: How much of your capital investment are you willing to

lose?

● When do you expect to begin purchasing or selling? What

market hours or news releases are you interested in following?

● Stop: When are you planning to close a losing position?

● Exit: When do you intend to liquidate a profitable position?

● Strategy: What purchasing or selling strategy do you wish to

employ? What major and secondary indicators are you going to
use?

● Time frame: How much profit do you anticipate from a specific

position?

● Breakeven: What is the breakeven mark for this specific

position?

The following are the actions you must take before starting a forex position:

1. Research the prior daily actions of the specific forex position

you wish to open. Are prices still not crowded or over-extended?
 Are the present prices close to the previous day's highs and lows?
Read the news and any economic information that you may find
on the Internet. Check for any potential gaps that occurred over
the weekend or over a previous holiday.

2. Determine the price bar of the position you wish to enter so you
can forecast the price trend's future direction.

Long (Purchasing) – Option 1

The price trend is rising, with a down swing that is larger than the previous
two downswings.

Long (Purchasing) – Option 2

The secondary price trend is declining, but it is rising in the same direction as
the primary price trend.

Long (Purchasing) - Option 3

The secondary price trend is declining, but it is rising in the same direction as
the slope of the moving average price trend.

Short (Selling) - Option 1

The price trend is declining, with an upswing that is greater than the previous
two upswings.

Short (Selling) - Option 2

The secondary price trend is growing, but it is falling in the same direction as
the primary price trend.

Short (Selling) - Option 3

The secondary price trend is growing, but it is falling in the same direction as
the slope of the moving average price trend.

3. Determine your entrance fees:

² Buy entry price: Buy currencies when the market price is

higher than the signal bar's high level plus one tick.

² Sell entry price: Sell your currencies when the price is one
tick below the low level of the signal bar.
4. Plan your escape strategy. Keep in mind that your aim is to
profit.

Option 1: with 1 mini lot Strategy

Exit when your profit reaches roughly 60% of the average price range.

Option 2: with two tiny lots Strategy

If you have earned a full profit, exit one lot. Follow the trail to the second
mini-lot stop.

Option 3: with three small lots Strategy

If you have earned a full profit, exit one lot. Follow the second and third
mini-lots' stops. Keep the remaining two lots open until a reversal signal
appears or the trading session for the day concludes.

CANDLESTICK SHADOW AND THE REAL

MEANING OF THE BODY
A reader has asked a question.
—————————

It appears necessary to examine the chart from the opposite side, but does this
imply a third-party viewpoint? I believe it is a matter of reading the other
party's behavioral psychology and then reading and performing the reverse. I
believe that waiting at a certain time every day according to a set regulation
implies that the heart will not be unsettled. What I was most concerned about
was the shadow. Entities become white or black, or their length changes.
What exactly do shadows and entities mean?

I merely realized that it is simply a body or a shadow, but I have no

fundamental knowledge.

Thank you very much.

—————————

The true meaning of shadows and entities is both virtual and physical. The
shadow is a transient movement. Highs and lows are just temporary. When
the closing price is reached, the virtual becomes a reality. It is the chemical
that causes the body to experience momentary highs and lows.
Even if the time axis is different, it follows the same laws. This approach is
also used by the USDJPY, EURUSD, Chinese equities, and the US market.
A candlestick is often made up of a shadow and a body. The price difference
between the starting and closing prices is represented by the body. The
shadow is a transient movement. That is the distinction between virtual and
actual.

The number 1 in the illustration, for example, indicates that there was a
chance to move higher.
Temporarily white-painted. In other words, there was a bullish candlestick
moment. Number 2 was briefly darkened. It signifies that there was a brief
period when it was low. They are simply transitory highs and lows at the
moment. A candlestick is a virtual and actual repeat. The shadows are
fictitious, and their transient highs and lows become actual at the close price.

The time of the closing price is merely temporary. That is, when the
candlestick is freshly updated, the closing price shows in the following
candlestick and is fixed in a fraction of the time. Prices are moving to make
temporary highs and lows till then.

Price movements, in other words, are "virtual movements" that move to

generate transitory highs and lows. The closing price comes into play at this
point. This is repeated by the candlestick.

It then moves on to fresh candlesticks, reiterating that the highs and lows are
rising, falling, or remaining stationary. The candlestick moves higher and
lower in accordance with internal or external law. This is the market's nature.

Prices are frequently breaking through highs or finishing at lows.

In other words, it is always moving in order to generate new highs and lows.
This is the inside or outside rule. The next day, it becomes real by virtual
repetition, and so on.

Candlesticks follow the same logic in all markets. Even though the time axis
is different, it is the same. It replicates both virtual and actual worlds. Prices
are only increasing and decreasing. You could assume it's natural.

Traditional candlestick approaches include evaluating the form of a large

number of candlesticks in order to interpret their context.
However, it needs knowledge, experience, and wisdom, and doing it in real
time is extremely tough and hard. Of course, it's a fantastic system devised
hundreds of years ago, but knowing how to use it can be difficult.

We concentrate on the simple combination of the bearish and bullish

candlesticks. It instructs traders on how to trade based on the color of the
candlestick rather than its form.

To begin with, when it comes to the fundamentals of internal or external

rules, keep in mind that prices move only by increasing and decreasing. And
the objective viewpoint is to consider the person behind the chart. When
gazing at a candlestick, consider both your personal perspective and the
perspective of the person behind the screen.

Furthermore, it is preferable to cast a gaze between your own perspective and

that of a third party, as if you were gazing down at it. That sounds
challenging. Simply put, thinking from the other person's point of view.

Price changes reflect and reflect diverse people's psyche. It is conveyed by

candlesticks that vary daily, yet there is discipline in making orders and
waiting at certain times every day.

After that, I'll explain how to apply the inner or outside rules. Market
fluctuations are merely repeating the process of rising and falling, but it is not
difficult to benefit if you seek to renew the highs and lows. It's so simple.

If you set an ambush order that updates the high price, the following
candlestick will rise and catch up to the order. It depicts a trap placed for a
wild pig.

Most individuals use some type of technology to anticipate whether the most
recent price movement will go up or down in the future, and they try to
discover the likelihood. There isn't much of a benefit.

In other words, anticipating the following day's price is a waste of time, and
rather of focusing on it, the ambush utilizing the previously created
candlesticks would automatically enhance the winning rate.
The price is caught in an ambush and then tries to escape. It exploits the
essence of price: greater and lower.

Every day, the market merely repeats the virtual and the reality, but the
virtual highs become reality and the virtual lows become reality.

This rule is the only driver of any market. This is the fundamental market
premise and the universal norm.

You won't need any tricky indications or sophisticated instruments if you

grasp this portion tightly. Let's take them all off the chart. Trading may be
made very simple, straightforward, efficient, and timely by just placing an
ambush order with a clean candlestick.

To summarize, the price rises and falls as a result of internal or external rules.
Profit may be made by inputting Buy Stop and Sell Stop where the highs and
lows are updated. We shall provide specifics in a chart in the following
chapter.

EASY AMBUSH TRADE WITH HIGH LOWS

This is how it's done. Buy stop order at the previous day's high price at the
day's opening price. Place a Sell Stop order at the day's low price. Profit loss
is confirmed by closing the position at the day's closing price.

It is a daily chart USDJPY.

The first candlestick is a bearish candlestick, and the second is a bullish

candlestick.
Number two surpasses the previous peak of number one. If you put a buy
stop order at the first high price, the order will be filled, and if you settle at
the second closing price, you will profit.

The third candlestick is a bullish one. It begins between the second and third
highs and lows. In such case, we will make an ambush purchase at the second
highest price. The third finished with another drop, updating the second high.

If you put a buy stop on the second high, your order will be filled and you
will get payment.
If you settle at the third close, you will make a profit. The fourth candlestick
is a bullish one. It begins between the third and fourth highs and lows. At the
third high, place a buy ambush order. The fourth motion finished somewhat
higher than the previous one, then leaped up. Profit is the difference between
the closing price of No. 4 and the high price of No. 3.
The bullish candlestick is number 5. It began with four highs and lows.
Following a brief downturn, the price rose above the fourth high on many
times, but ultimately settled between the fourth high and the low. A buy
ambush order put at the fourth high was executed in the fifth move. The
difference between the high price of No. 4 and the closing price of No. 5 is a
loss if you settle at the closing price of No. 5.
The bullish candlestick is number 5. It began with four highs and lows.
Following a brief downturn, the price rose above the fourth high on many
times, but ultimately settled between the fourth high and the low. A buy
ambush order put at the fourth high was executed in the fifth move. The
difference between the high price of No. 4 and the closing price of No. 5 is a
loss if you settle at the closing price of No. 5.
The 7th began between the 6th high and low, briefly dropped, then updated
the 6th high before returning between the 6th high and low. The order was
completed if the buy stop order was placed at the high of the sixth, but if you
settle at the close of the seventh, the loss equals the difference between the
high of the sixth and the close of the seventh.
Number 8 began between numbers 7's high and low. Despite putting a buy
stop order at the 7th high, the 8th remained between the 7th high and the low
without updating the 7th high.
The order will not be processed. The 9th began between the 8th's peak and
low. A buy ambush order placed at the 8th high will not be completed. If you
place a sell stop order at the eighth low, the price will update and the order
will be completed. Profit is calculated using the closing price of $9. Purchase
orders submitted in the eighth high will be canceled.
Number ten begins between the high and low of number nine. Even though a
purchase stop order was placed at the 9th high, the order was not completed.
Set a sell stop at the 9th low. No. 10 has dropped to No. 9's low. The real sell
order is indicated by the dashed line at the 9th low. Take a profit and close
your position at the closing price of ten.
 HOW TO DEAL WITH THROBBING

A reader has asked a question.

—————————
I am always watching movies and studying. Thank you kindly. I'm
ambushing with a stop order on the high and low candlestick prices, but when
I execute it, I frequently reverse. Of course, if you don't look at the charts,
you shouldn't be concerned. It will be a bonus in the end, but I'm going to try
again to see if I can go a bit more smoothly. For example, if there is a smart
approach to book a reservation while keeping a close eye on the clock, such
as postponing the time to put a reservation order, I would appreciate any
advice.

Sorry for bothering you, but I appreciate your tolerance.

—————————
To cope with throbbing, it is vital to grasp the candlestick habit.

The candlestick highs and lows are updated at three different times. From
now on, the entire image of the candlestick will be given. It is a USDJPY
daily chart.
First and foremost, are you familiar with the candlestick known as "Harami,"
which is a candlestick with a baby in your mother's tummy, pregnant between
the high and low of the preceding candlestick on the day? The price
fluctuation from the peak to the low of a candlestick is referred to as
"Harami."

Prices are sluggish in a so-called range if the previous day's highs and lows
are not updated. It does not update the previous day's highs and lows, so even
if you make an order, it will be ignored. See the image below.
Everything included between the high and low prices of the left
candlestick is contained in the number 0. This implies that orders
placed on the previous day's highs and lows will not be fulfilled.
See the image below. The bearish candlestick is number one. Number 2 is a
bearish candlestick as well. No. 2 began within the high and low ranges of
No. 1 and gradually increased and decreased. This signifies that the second
candlestick broke through the first low shortly after it began and fell.

When candlesticks formed early in the day, the lows were repeated in terms
of price action. The highs and lows have been updated for the first time.
When the new candlestick appears, the second step is to update the highs and
lows.
And the fourth bull's closing price is greater than the third high. In other
words, since the period until the fifth candlestick emerged was short, the
fourth candlestick updated the third high price. Third, the No. 5 candlestick is
a bearish candlestick, while the No. 6 candlestick is a bullish candlestick.
The opening price of No. 6 appears between No. 5's highs and lows. And the
candlestick of day No. 6 is updating the peak and low of day No. 5.

In other words, the price movement of No. 6 has broken both the high and
low prices of No. 5. The top and bottom of No. 6 have extended shadows.
This signifies that the previous day's high and low are broken during the day.
The highs and lows were updated over time in the course of the day. For
these reasons, the highs and lows are updated at three different times: early,
middle, and late. If you maintain this spot, you merely need to change the
time of the stop order to increase your chances of profit. I'll tell you exactly
what I mean. Please have another look at this photograph.

No. 5 represents a bearish candlestick, whereas No. 6 represents a bull

candlestick. What happened to the sixth candlestick?

First, it breaks the fifth candlestick high after breaking the fifth candlestick
low. This implies that if it breaks the fifth low and you merely placed your
buy stop price at the fifth high, you will be able to benefit in following
swings.
In other words, if you hit the high or low, ambushing on the nonbreaking side
will boost your chances of winning. Consider some more instances. Please
see the image below
The bullish candlestick is No. 7, while the bearish candlestick is No. 8. The
candlestick at No. 8 began between No. 7's peak and low. The eighth move
breaks the seventh high but not the seventh low. This suggests that if you
place a sell stop around the 7th low and wait, you have a good chance of
profiting.

There is no need to examine recent market movements or wait for signals

from any indicators. Simply place an ambush order. To recapitulate, the
updating of high and low prices is separated into three stages: early, medium,
and late.

And if you break one of the highs or lows, you may ambush with the other
and benefit steadily without getting excited about a high win rate. The
candlestick chart's price is only moving according to the rule of updating
"high and low not updated." This is the market psychology idea of inside or
outside.

Based on these factors, if the candlestick has updated to either the high or
low, all that remains is to ambush where it has not yet updated. This will
bring the other high and low prices up to date. If the price does not adjust,
your purchase will not be completed and you must cancel. Then, in the
following chapter, I'll tell you in 5 minutes chart.
 REAL-WORLD EXAMPLES AND
APPLICATIONS

This is an example of a transaction with a low price break. This is a 5-minute

EURUSD chart. Even on a short time period, trading is conceivable. I hold
all of the sell positions.

The bull candlestick is number one. The bear candlestick is number two. The
second candlestick breaks the first candlestick's peak. In other words, because
we are updating the highest price, putting the buy stop order at the No. 1
highest price indicates that gains were made.
Candlesticks, on the other hand, may be traded like retrofits. Because the
second candlestick did not break the first low, the sell stop order was placed
at the first low when the second candlestick was verified.

The price fell with the third candlestick, and the sell stop order was struck at
the first candle's low price. Because the third candlestick finished below the
low of the first, it is advantageous at this point. When a profit is earned, the
main premise behind candlestick trading is to settle at the closing price. We
didn't settle and leave the position to demonstrate that you can trade
constantly in this chart.

Allow me to elaborate. The fourth candlestick begins slightly below the third,
briefly falls, then rises, and finishes between the high and low of the third
candlestick. The fifth candlestick began between the fourth high and low. The
sell halt was placed at the fourth-lowest price. The fifth candlestick fell
momentarily, resuming the fourth low. At this point, a sell stop was triggered,
resulting in a profit.
The sixth bull then appeared. The sell order was placed at the sixth low price.
The bear candlestick is number seven. The seventh candlestick began
between the high and low of the seventh. A sell stop order was placed at the
sixth lowest price.
High and low trades can be completed as soon as each position has produced
a profit. In this scenario, we traded continually to demonstrate our ability to
trade numerous positions.

Divided into several positions, the profit criterion is far lower than attempting
to profit in a single large deal.

The biggest advantage is that you may profit even if the price does not return
to the first place. You only need to create a profit by combining various
positions. Even if the first position is an unrealized loss, closing all positions
will allow you to remove the negative position from the positive position and
maintain the profit.

CONCLUSION
I hope this book has helped you better understand how forex trading works
and the tactics that may help you earn money and go closer to financial
freedom.

The next step is to get a free simulation tool from the Internet so you may
practice forex trading without risking your own money.

Finally, if you enjoyed this book, please take a moment to share your
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