The document provides an overview of forex trading, including key information about: - The decentralized global forex market and its large daily trading volume. - Common candlestick patterns like Doji, engulfing, and hammer that can indicate trend reversals. - Important concepts like support and resistance, milestones, Bollinger Bands, and stochastic oscillator indicators. - Best practices for a forex trading system like keeping it simple, using confirmation from multiple time frames, and having clear rules for entries and exits. The document emphasizes that a robust yet simple trading system is important for consistency and analyzing what strategies are effective. Understanding common patterns and indicators can help traders identify emerging trends.

1. Let’s Start

2. • The financial markets are risky. There is a real risk of losing
money in any Stocks or Futures or Currency markets or Options
market, and the individual must decide his or her own financial
ability to trade in such markets. Mirror Forex Pvt. Ltd. ,its
directors, officers and or employees are not Responsible for any
Investment for trading.
• No guarantees nor warranties have been implied as to the
profitability of any individual who may use the techniques and
indicators learnt or used in this Forex, Stocks, Futures and
Options course. No advice has been offered as to the individual’s
financial decisions or ability to execute transactions in any
trading market with the course contents learnt in this course.
RISK DISCLAIMER

3. FOREX MARKET
• Opened to small investors in 1995
• Prior to 1995, the requirement was to
have $1 million USD in cash or assets
to trade Forex
• Margin requirements have changed for
the small investor since then
• Small investor can even open an
account with $500 USD and trade Forex

4. FOREX MARKET
 De-centralized market.
 Many locations in the world.
 For example: Sydney, Tokyo, Hong Kong,
Singapore, Frankfurt, London, and New York
 Starts: New Zealand/Sydney
 Ends: New York

5. Comparison
Volume in Forex is more then all other world Markets COMBINED
$5 Trillion
$300 Billion
$100 Billion
US Stock Market US Treasury
Bond Market
FOREX

6. • To make money
• To learn a technique of making money
• Be your own boss and choose your own hours
• Trade comfortably from home
• To have more time for what you want to do:
► spend more time with your families
► to play Golf.
WHY TRADE?

7. KEYS TO SUCCESS
• STRONG DESIRE/INTEREST
• PATIENCE
• A VALID TRADING PLAN
• CONFIDENCE IN TRADING PLAN
• EMOTIONAL DISCIPLINE
• RIGID MONEY MANAGEMENT
• ADEQUATE CAPITAL

8. Success =
SELF DISCIPLINE + KNOWLEDGE + EXPERIENCE +
SKILL
= Profits
FORMULA FOR SUCCESS

9. A TRADING SYSTEM
• Watch the markets religiously but without
trading
• Begin demo trading the most promising ideas
• Know the primary chart pattern that repeats
everyday
• Learn the techniques necessary to be a
consistent winner in the forex market
• Know why market act in a non-random
pattern that repeats everyday

10. Market Nature
• Struggle between bulls and bears
• Market moves in waves . At any given
time, market is doing one of the
following 3 things:
– Trending UP
– Trending DOWN
– Sideways movement

11. Trending UP Trending DOWN
Higher highs,
Higher Lows
Lower Highs,
Lower Lows
Sideways Movements

12. Trading as an Ideal Business
• NO Boss, NO employees
• Work from home or ANYWHERE IN THE
WORLD
• No Selling, No inventory
• Minimal investment
• Unlimited potential
• Low overhead
• Part time or Full time

13. WHY SOME TRADERS LOSE MONEY
• NO EXPERIENCE
• LACK OF KNOWLEDGE
• NO SELF DISCIPLINE
• NO TRAINING
• NO FOCUS
• NO MONEY MANAGEMENT

14. CHARACTERISTICS OF A SUCCESSFUL
TRADER
• A SENSE OF HUMOR
• EMOTIONAL CONTROL
• ABILITY TO FOCUS
• FOLLOW THE TRADING PLAN
• ALWAYS SEEKING TO IMPROVE AND
LEARN
• LITTLE OR NO EGO – STRONG SELF
CONCEPT
• ACCEPTANCE OF LOSING TRADES

15. CRITICAL MISTAKES TO AVOID
• TRADING WITHOUT A PLAN
- Relying on “Gut Feel”
- Not paying attention to news reaction
(forexfactory.com)
• IMPATIENCE
- Trading too frequently
- Overconfidence – “This is easy”
• POOR MONEY MANAGEMENT
- Not using stops – Trading too large
- Hoping the pain will end
- Trades becoming “Investments”

16. MONEY MANAGEMENT
• Don’t trade with ‘scared money’
• Don’t risk more than 5% of your capital on
any trade
• If your trading performance is struggling:
- Reduce lot size, revert to demo trading or
take a vacation
- Key: Learn to succeed before going broke
on the learning curve

17. PUT THE POWER OF PATTERN
RECOGNITION IN YOUR TRADING
• Learn how to put the probabilities of
winning in your favor by focusing on the
price
• Know the primary chart pattern that
repeats everyday
• Learn to trade without fear
• Learn the techniques necessary to be a
consistent winner in the stock market
• Understand the harmony in the forex
market and why it must move up and down

18. FOREX MARKET
• Trade possibilities in approx. 30 currency
pairs
• Focus on 6 currencies: USD, GBP, JPY, CHF,
CAD, AUD, EUR
• Best pair to trade in terms of volume and
volatility is EUR/USD
• No gaps
• Immediate execution
• Leverage 500:1

19. FOREX MARKET
• 1 standard lot = $100,000 1 pip = $10 USD
• 1 mini lot = $10,000 1 pip = $1 USD
• 1 micro lot = $1,000 1 pip= $0.10 USD
• Our objective is to capture pips

20. Bearish Market
Uptrend
Uptrend
Uptrend
Downtrend
Downtrend
Downtrend
Sideways Trend
Sideways TrendSideways Trend

21. Timing in the Forex Market
• Forbidden timing to trade : 1 am – 5 am
– No major markets open
– Minimum movement
– Financial institutions are still executing transactions but not large
enough to move the market
– Market consolidates (sideways/choppy) and moving in the range of
5-20 pips
– During this time, there is more risks, can have losing trades and
may be frustrating
• Best time to trade : 2pm – 11 pm
– During these times there are major movements in the market due to
some fundamental economic news announcements

22. Trading Types
• Short term trading (Day trading)
– Closing all positions at the end of the day
– Swing trading (3-10 days)
• Long term trading (6 months – 2 years)
• Note: Day trading margins are much less then swing
or long term trading margins

23. SWAP/Rollover
 Swap is the fee that the broker/bank/market maker
charges or pays for any open position that is not closed
before the end of the trading day.
 SWAP is based on the interest rate as determined by
the central banks of the country/region of the currency
pair.
 SWAP is determined by the lot size of the open position
per day.
 The fee will be tripled on Wednesday.

24. Break Time

25. LEVEL 2

26. Candlestick Anatomy
High
“Upper
Shadow”
Low
“Lower
Shadow”
Range
Open
Close Open
Close
 Japanese Candlestick:

27. Reversal Price Patterns
 Candle types
 Doji
 Engulfing
 Hammer
 Hanging man
 Harami
 Harami Cross
 Inverted Hammer
 Shooting Star
• Morning Star
• Evening Star
• Tweezers top
• Tweezers bottom
• High Wave Candles
• Spinning Tops

28. Doji
 Four types of Dojis:
 Common, Long-Legged, Dragon Fly and Gravestone
 Dojis open and close are at the same price level.
Common Doji

29. Engulfing Bullish Pattern
 Forms when a small red candlestick is followed by a
large green candlestick that completely eclipses or
"engulfs“ the red candlestick. The shadows or tails of
the small candlestick are short, which enables the
body of the large candlestick to cover the entire
previous candlestick.

30. Engulfing Bearish Pattern
 Consists of a small green candlestick with short shadows or
tails followed by a large red candlestick that eclipses or
"engulfs" the small green one.
Smaller body

31. Hammer
 Occurs when a security trades significantly lower
than its opening, but rallies later to close either
above or close to its opening price. This pattern
forms a hammer-shaped candlestick.
Body is red if stock
closed lower. Body
is green if it closed
higher.

32. Hanging Man
 A bearish candlestick pattern that forms at the end of an uptrend.
It is created when there is a significant sell-off, but buyers are able
to push this stock back up so that it closes at or near the opening
price. Generally the large sell-off is seen as an early indication
that the bulls (buyers) are losing control and demand for the asset
is waning.

33. Bullish Harami
 Bullish Harami Pattern is characterized by a small green real
body contained within a prior relatively long red real body.
“Harami” is an old Japanese word for “pregnant”. The long
red candlestick is “the mother” and the small candlestick is
“the baby”.

34. Bearish Harami
 Bearish Harami Pattern is a two-candlestick pattern
composed of a small red real body contained within a prior
relatively long green real body. “Harami” is an old Japanese
word for “pregnant”. The long green candlestick is “the
mother” and the small red candlestick is “the baby”.

35. Bullish Harami Cross
 Bullish Harami Cross Pattern is a Doji preceded
by a long red real body. The Bullish Harami Cross
Pattern is a major bullish reversal pattern. It is
more significant than a regular Bullish Harami
Pattern.

36. Bearish Harami Cross
 Bearish Harami Cross Pattern is a Doji preceded by a long
green real body. The Bearish Harami Cross Pattern is a major
reversal pattern and is more significant than a regular
Bearish Harami Pattern

37. Bullish Inverted Hammer
 Bullish Inverted Hammer Pattern is a candlestick
characterized by a long upper shadow and a
small real body preceded by a long red real body.

38. Bearish Inverted Hammer
 There is a long string of green candles, and then suddenly a
red candle appears. The body is very short and has a sizeable
upper wick. Prices have started at a low point, but made up
for it.

39. Shooting Star
 Shooting Star Pattern suggests that prices may be approaching
to a top. It looks like its name, a shooting star. The shooting star
is a small real body characterized by a long upper shadow, which
gaps away from the prior real body.

40. Morning Star
 This is a three-candlestick bullish formation that signals a major
bottom. It is composed of a first long red body, a second small
real body, green or red, gapping lower to form a star. These two
candlesticks define a basic star pattern. The third is a green
candlestick that closes well into the first session’s red real body.
Third candlestick shows that the market turned bullish now.

41. Evening Star
 This is a major top reversal pattern formed by three candlesticks.
The first candlestick is a long green body; the second one is a
small real body that may be green. It is characteristically marked
with a gap in higher direction thus forming a star. In fact, the
first two candlesticks form a basic star pattern. Finally we see
the red candlestick with a closing price well within first session’s
green real body.
 This pattern clearly shows that the market now
turned bearish.

42. Tweezers Top
High at the same price.
Size of body is irrelevant.
Lows can be uneven but tops
have to be the same

43. Tweezers Bottom
Low at the same price.
Size of body is irrelevant.
Highs can be uneven but
bottom have to be the same

44. High Wave Candles
 Bearish pattern

45. Spinning Top
 Small real bodies
 Bearish pattern

46. Types of Orders
Market Order
Limit Order
Stop Market
Stop Limit

47. Market Order
 When you want to buy or sell at current market price
Limit Order
 When you are expecting a market to fill your buy/sell order
at your predetermined price

48. Stop Market
 An order placed with a broker to close a position
when it reaches a certain price. A stop-loss order is
designed to limit an investor's loss
Stop Limit
 An order placed with a broker that combines the
features of stop order with those of a limit order. A
stop-limit order will be executed at a specified price
(or better) after a given stop price has been
reached. Once the stop price is reached, the stop-limit
order becomes a limit order to buy (or sell) at the limit
price or better.

49. Support
 The price level which, historically, a stock has had difficulty
falling below. It is thought of as the level at which a lot of
buyers tend to enter the stock
 The price at which a stock or market can trade,
but not exceed, for a certain period of time
Market is Nothing but support or resistance.
Resistance

50. Swap
 Interest for holding position over night.
 From 5 pm ET (2pm PST) to 5pm ET (2pm PST) the next day.
 Based on the Central Bank Interest Rates of each country or
region.
 Example:
Buy EURUSD - Negative 4.00% - 5.25% = -1.25%
Sell EURUSD - Positive 5.25% - 4.00% = 1.25%
Buy USDJPY - Positive 5.25% - 0.50% = 4.75%
Sell USDJPY - Negative 0.50% - 5.25% = -4.75%

51. Break Time

52. LEVEL 3 COURSE

53. Fixed Resistance & Support for USDJPY and EURUSD
Milestones
 Consists of three sets of umbers for major
milestones.
 Every time these two pairs come to these
milestones, the price hesitates figuring out or
hinting what to do next.
 00-15
 45-65
 75-85
 Minor milestones: 95, 50 or 55 and 35
USDJPY

54. The 3 major milestones are at the price 0-15, 45-65 and 75-85 If the trend is
up, when the price passes 0, the price trend will try to reach 15, but before it
tries to pass 15, it will stay between
0-15 for awhile.
Milestone Theory
“Works when Applied to the EUR/USD and
USD/JPY Pairs”

55. Milestone Theory
If the trend is up, when the price passes 45, the price trend will try to reach 65,
but before it tries to pass 65, it will stay between 45-65 for awhile.

56. Milestone Theory
If the trend is up, when the price passes 75, the price trend will try to reach 85,
but before it tries to pass 85, it will stay between 75-85 for awhile.

57. Bollinger Bands

58. Bollinger Bands “Bollinger Bounce”
Sel
l
Sel
l
Sel
l
Sel
l
Sel
l
Buy
Buy
Buy
Buy

59. Bollinger Bands “Bollinger Squeeze”
Candle breaks out of upper band.

60. Stochastic Oscillator
Oversold
Overbought
80
20

61. Stochastic Oscillator

62. Stochastic Oscillator
Buy
Buy
Buy
Buy
Sel
l
Sel
l
Sel
l
Sel
l
Sel
l
Sel
l

64. TIPS
• Always take a look at the time frame larger than the one you've
chosen to trade with.
It gives the bigger picture of market price movements and thus helps to
clearly define the trend. For example, when trading with 15 minute time
frame, take a look at 1 hour charts.
• Simplicity is the key when choosing a Forex system
A trading system which is overloaded with indicators and
trading rules stands little chance to become a winner.
Watching to many charts and indicators makes a mess on the
working table, while trading signals begin contradict each
other...
So, keep it simple. If doing it right, Simpler can be
smarter!

65. Why there is so much talk about having a Forex trading system?
If you want to be consistently successful in Forex, you need a Trading
System, and here is why:- Without a trading system you won't be able to
analyse what you did right and what you did wrong.
- Without a trading system your trading preferences will change all the
time: every new trade could easily have different reasons behind it.
-Without a trading system you can be late on entries due to constant
hesitation as a result of battling with your intuition or a sudden second
opinion.
- Without a trading system you'll have more doubts about the best time to
exit a trade or the best place to keep a protective stop.
-Without a trading system you cannot trade consistently and demand a
disciplined trading from yourself.
- Without a trading system you cannot fully work out your money
management and risks.
- Without a trading system you'll be prone to fear of losing and every time
you would need to regain the confidence.
TIPS