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Detroit Forex Seminar

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Forexearlywarning conducted a live forex seminar in Detroit on August 31, 2013. Topics we covered included forex basics, parallel and inverse analysis, how to locate forex trends and set up forex trend indicators, support and resistance, multiple time frame analysis, trade entry management, money management and profit taking, and the steps/process of becoming a forex trader.

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Detroit Forex Seminar

  1. 1. Forex Early Warning The low Cost Leader in Forex Trade Alerts Copyright © 2013 MT2 Enterprises, LLC. All right reserved.
  2. 2. Agenda Resources 3 Rules Forex Basics Parallel and inverse Trends Support and Resistance Multiple Timeframe Analysis ENTRY Management Profit Taking Money Management Process of becoming a Forex Trader
  3. 3. Reference Materials All online at Forexearlywarning.com
  4. 4. Reference Materials 35 Lessons
  5. 5. In Order To Trade The Spot Forex You need to know the direction of the Trend. You need to have a valid entry point
  6. 6. 3 Simple Rules There are some very Simple things a forex trader can try to understand that will increase their trading accuracy from the more common 90% failure rate to as high as 90% positive trading accuracy in the matter of a few weeks. Reference: Lesson 18
  7. 7. Currency Transaction Basics Exchanging currency at the Border
  8. 8. Currency Kiosk Trade 10,000 USD for CAD at exchange rate of 1.05 Don’t spend the money. If exchange rate moves down to 1.04. Exchange CAD back for USD now have 10,100 Same as Selling the USD/CAD Online
  9. 9. Currency Kiosk Trade 10,000 USD for CAD at exchange rate of 1.05 Don’t spend the money. If exchange rate moves up to 1.06. Exchange CAD back for USD now have 9,900 Same as Selling the USD/CAD Online
  10. 10. Currency Pairs If you Buy a currency pair online you want it to go up If you Sell a currency pair online you want it to go down
  11. 11. Cash Transaction SAME AS Online Transaction Cash is Unleveraged 1:1 Online 50:1 Leverage+
  12. 12. Anatomy of the Transaction Exchange rate shows how many USD needed to Buy or Sell 1 EUR
  13. 13. Anatomy of the Transaction PIP “Price Interest Point”= .0001 Yen based = .01 PIP Value is based on 3 Factors 1) The currency pair 2) Size of the trade 3) The exchange rate
  14. 14. Anatomy of the Transaction Calculating PIP Value 1)EUR/USD 2)10,000 3)1.4600 1) 10,000 x .0001 = 1 USD per PIP 2) 100 pip movement would = 1x100= $100 USD profit or Loss Conversion to USD Not required since USD is in pair
  15. 15. Anatomy of the Transaction Calculating PIP Value 1)GBP/NZD 2)20,000 3)1.9945 1) 20,000 x .0001 = 2 NZD per PIP 2) 2/1.9945 = 1.00 GBP per PIP 3) 100 PIP movement = 100 x1.00 = $100 GBP profit/loss Conversion to USD $100 x current GBP/USD rate=Profit/loss in USD 1.5567 x 100 = $157.65 USD profit/loss
  16. 16. Anatomy of the Transaction Calculating PIP Value 1)EUR/GBP 2)20,000 3).8580 1) 20,000 x .0001 = 2 GBP per PIP 2) 2/.8580 = 2.33 EUR per PIP 3) 100 PIP movement = 100 x2.33 = 233 EUR profit/loss Conversion to USD 233 x current EUR/USD rate=Profit/Loss in USD 233x1.3364=$311.38 USD
  17. 17. Anatomy of the Transaction Calculating PIP Value 1)GBP/JPY 2)350,000 3)152.60 1) 350,000 x .01 = 3500 JPY per PIP 2) 3500/152.60= 22.94 GBP per PIP 3) 100 PIP movement = 100 x22.94 = 2,240 GBP profit/loss Conversion to USD 2,240 x current GBP/USD rate=Profit in USD 2,240x1.5567=$3,487.01
  18. 18. How Do Currency Pairs Move? Currency Pairs ONLY move up or down based on?? Individual currency strength & weakness
  19. 19. Basics CAD Weak USD Strong Buy the USD/CAD
  20. 20. Basics CAD Strong USD Weak Sell the USD/CAD
  21. 21. Strength and Weakness The individual currency pushing is STRONG The Individual currency being pushed is WEAK
  22. 22. Time to Learn Parallel and Inverse – 2 Weeks Support and Resistance – 3 months (If full time) MTFA – 1 year
  23. 23. Parallel and Inverse USED 2 WAYS At Analysis & At Entry
  24. 24. 8 Individual Currencies USD US Dollar CHF Swiss Franc EUR Euro GBP British Pound JPY Japanese Yen CAD Canadian Dollar AUD Australian Dollar NZD New Zealand Dollar
  25. 25. • GBP is Weak • CHF is strong • Sell the GBP/CHF
  26. 26. Parallel An Inverse Analysis Reference: Lesson 8 Forex Article Parallel and inverse analysis is the study of how individual currencies influence the movements of currency pairs.
  27. 27. Individual Currency = The Country Currency Pair = the Transaction Individual Currency IS NOT a Pair
  28. 28. 8 Individual Currencies USD US Dollar CHF Swiss Franc EUR Euro GBP British Pound JPY Japanese Yen CAD Canadian Dollar AUD Australian Dollar NZD New Zealand Dollar
  29. 29. 28 Pairs USD US Dollar CHF Swiss Franc EUR Euro GBP British Pound JPY Japanese Yen CAD Canadian Dollar AUD Australian Dollar NZD New Zealand USD US Dollar CHF Swiss Franc EUR Euro GBP British Pound JPY Japanese Yen CAD Canadian Dollar AUD Australian Dollar NZD New Zealand
  30. 30. Currency Pairs Should Be Grouped As Individual Currencies EUR/USD GBP/USD AUD/USD NZD/USD USD/CAD USD/CHF USD/JPY EUR/USD EUR/JPY EUR/CHF EUR/GBP EUR/CAD EUR/NZD EUR/AUD EUR/JPY GBP/JPY AUD/JPY NZD/JPY CHF/JPY USD/JPY CAD/JPY For Analysis USD JPYEUR GBP/USD GBP/JPY GBP/CHF EUR/GBP GBP/CAD GBP/NZD GBP/AUD GBP
  31. 31. The Market Is The Indicator Pairs move only by Individual Currency Strength and Weakness Parallel and Inverse analysis is the only way to measure Strength and Weakness
  32. 32. Technical Indicators Do Not Measure Individual Currency Strength and Weakness Why are they on charting platforms?
  33. 33. Technical Indicators
  34. 34. Strength and Weakness Examples The individual currency pushing is STRONG The Individual currency being pushed is WEAK
  35. 35. Strong USD Strong EUR
  36. 36. Not Strong or Weak Strong Vs Strong
  37. 37. Weak VS Weak
  38. 38. Slingshot
  39. 39. Slingshots Your best and safest trade Fastest movement in a direction
  40. 40. Groups of Individual Currencies EUR/USD GBP/USD AUD/USD NZD/USD USD/CAD USD/CHF USD/JPY EUR/USD EUR/JPY EUR/CHF EUR/GBP EUR/CAD EUR/NZD EUR/AUD EUR/JPY GBP/JPY AUD/JPY NZD/JPY CHF/JPY USD/JPY CAD/JPY For Analysis USD JPYEUR GBP/USD GBP/JPY GBP/CHF EUR/GBP GBP/CAD GBP/NZD GBP/AUD GBP
  41. 41. / / / EUR Weak on All Pairs / / / /
  42. 42. Strong on All Pairs
  43. 43. Slingshot
  44. 44. On the Charts EUR/JPY GBP/JPY AUD/JPY NZD/JPY CHF/JPY USD/JPY CAD/JPY
  45. 45. Drivers Changing Strength and Weakness DRIVES the Market. Change in DRIVERS is a change in which individual currency is strong and which is weak
  46. 46. When Do The Drivers Switch?? During the Intraday consolidations Usually after the Main session Sometime News events
  47. 47. When Do drivers Lesson 14 - Best Times To Trade The Forex Market
  48. 48. When do drivers change?
  49. 49. Separate The Pairs NOT EUR/USD EUR USD Always think of them Separate!!
  50. 50. Parallel and inverse If you can identify what parallel and/or inverse group is DRIVING the market, you can successfully trade almost everyday there is movement.
  51. 51. Trend Definition: Trend on a currency pair is a long series of movements and market dynamics on both sides of the pair that favors movement in one direction.
  52. 52. Trends
  53. 53. Trends
  54. 54. Trends / / / /
  55. 55. EUR/JPY Oscillation
  56. 56. Choppy /
  57. 57. Choppy Mine Mine Mine!!
  58. 58. Free Trend Indicators F.A.S. – Fresh Cross. Angle. Separation. Fresh trends = Lower Risk and Higher Risk Reward Ratio Over extended trend = Higher Risk and Lower Risk Reward Ratio
  59. 59. Trend Cycles and Fresh Crosses
  60. 60. Free Trend Indicators Strong Uptrend Strong Downtrend
  61. 61. Trends
  62. 62. Trends
  63. 63. Trends
  64. 64. No Trend
  65. 65. No Trend
  66. 66. Price Chart Without Trend Indicators You can see direction with just price
  67. 67. Price Chart With Trend Indicators
  68. 68. Price Chart With Trend Indicators Trend indicator point to a direction
  69. 69. Noisy price chart
  70. 70. Same Chart – No Noise
  71. 71. Noise VS Clear Direction Noise Direction
  72. 72. Support and Resistance Lesson 10 - Forex Support and Resistance and Price Alarms Article 2 - Effective Use of Price Alarms The forex market is a support and resistance market. All trends start and end at support and resistance. All reversals and retracements start at support and resistance.
  73. 73. Support and Resistance Support A support level is a price level where the price tends to find support as it is going down. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely to continue dropping until it finds another support level. Resistance A resistance level is the opposite of a support level. It is where the price tends to find resistance as it is going up. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely that it will continue rising until it finds another resistance level. Source: wikipedia
  74. 74. Support and Resistance Entry Points Targets Stop levels
  75. 75. Support and Resistance
  76. 76. Support and Resistance
  77. 77. Short term Support and Resistance M5, M15, H1 Timeframes (Intraday S&R)
  78. 78. Long Term Support and Resistance H4, D1, W1, MN Timeframes
  79. 79. Support and Resistance The Difference between Long Term and Short term S&R is you profit potential or “Room to Move”. How much room to move between Long and Short term?? My personal rule is it must be AT LEAST 100 pips! FEW is around 100-125 MINIMUM
  80. 80. Support and Resistance What if you do not have 100 pips?? Road Block! DO NOT consider the trade! Move on and find another trade OR Wait till that level is cleared.
  81. 81. Support and Resistance Wait until the level is cleared. Temporary Road Block
  82. 82. Support and Resistance Visual Examples of Support and Resistance http://www.flickr.com/photos/forexearlywarning/
  83. 83. Support and Resistance Entry = Short term Support & Resistance Profit Target = Long term Support & Resistance Stop Loss = Short term S&R for Beginners = Longer term S&R for Experienced Veterans(Bigger Stops) http://www.forexearlywarning.com/forex-lessons/forex-profit-taking
  84. 84. Support and Resistance S&R Numbers are REPETATIVE on ranging and oscillating pairs
  85. 85. Support and Resistance Trend Indicators converging: an indication of a currency pair stalling at support or resistance
  86. 86. Price alarms Used to monitor Short term S&R for possible entry
  87. 87. Your Job Yes , work is involved Know the condition of the market by examining charts systematically to assist in planning and entries
  88. 88. MTFA- Multiple Time Frame Analysis Lesson 11 - Multiple Time Frame Analysis of The Spot Forex Article 4 - Multiple Time Frame Analysis Multiple time frame analysis (MTFA) is the inspection of very basic forex trend indicators and forex charts, starting with the largest trends and time frames, and working backwards down through successively smaller time frames to see how the smaller time frames and trends feed the larger time frames.
  89. 89. MTFA- Multiple Time Frame Analysis Lesson 11 - Multiple Time Frame Analysis of The Spot Forex Article 4 - Multiple Time Frame Analysis When the smaller time frames are in agreement with the larger trends you can enter a spot forex trade in the direction of the trend with very good safety. If no trend exists on a particular currency pair the smaller time frames and trends will, at some point, build an uptrend or downtrend.
  90. 90. MTFA- Multiple Time Frame Analysis Simply put: You are looking for the BEST and SAFEST direction to trade a currency pair
  91. 91. MTFA Timeframes W1- Weekly Long term Trend D1 – Daily Intermediate term Trend H4 – 4 hourly Short Term Trend Main Direction Timeframes
  92. 92. MTFA – What to observe Is it Trending or Oscillating? Is it Choppy Ranging? How FRESH or OLD are the Trends?
  93. 93. MTFA – What to observe Is it Trending or Oscillating? This is your Direction Is it Choppy Ranging? This means don’t trade it! How FRESH or OLD are the Trends? This is your assessment of RISK
  94. 94. MTFA – What to observe Is it Trending or Oscillating? The higher time frames trends and the direction of the major trend always overrule the lower time frames. What is the Largest time frame with Trend??
  95. 95. MTFA – What to observe “When the smaller time frames are in agreement with the larger trends you can enter a spot forex trade in the direction of the trend with very good safety.” New trends in the smaller time frames enable us to enter the trends in the larger time frames if a currency pair is trending.
  96. 96. MTFA – What to observe Parallel and Inverse Are all or most of the pairs in a group of 7 going the same way or doing the same thing???? Important!!
  97. 97. MTFA- Smaller Timeframes If you have a Large trend like W1 you could wait for a fresh trend on D1 or H4 back in the direction of the W1. Direction. Direction. Direction. W1 D1 H4 H1 M30 M15 What is a smaller time frame? Depends on the trend or oscillation you are trading. If you are trading the H4 trend, You could wait for a fresh H1 trend to get in H4 trend
  98. 98. MTFA for Parallel & Inverse http://finance.groups.yahoo.com/group/4xtrendtraders/ FEW Analysis Heatmap
  99. 99. MTFA for Parallel & Inverse http://finance.groups.yahoo.com/group/4xtrendtraders/ FEW Analysis Heatmap
  100. 100. MTFA for Parallel & Inverse http://finance.groups.yahoo.com/group/4xtrendtraders/ FEW Analysis Heatmap
  101. 101. MTFA for Parallel & Inverse http://finance.groups.yahoo.com/group/4xtrendtraders/ FEW Analysis Heatmap JPY Weak AUD Weak CAD Mixed
  102. 102. What Do I Do Now? I have analyzed currency pairs using MTFA. I found a currency pair in a strong uptrend. Parallel & Inverse verifies the Direction. The difference between short term and long term resistance is 300 pips. I have a price alarm set at short term resistance.
  103. 103. How Do I Enter Trades? You enter trades with the Forex Heatmap® In the MAIN trading session
  104. 104. The Forex Heatmap® Visual map of Parallel and Inverse at entry
  105. 105. The Forex Heatmap® Main Goal at the beginning is to Learn to: Master it!
  106. 106. When Do I Enter Trades?
  107. 107. How Do I Enter Trades? The Forex Heatmap® Monitors 28 Pairs in Real Time Measures Movement of Currency Strength and Weakness Lesson 15 - The Forex Heatmap
  108. 108. What the Heatmap Does NOT Do Does NOT know the direction of or if a Trend exists Does NOT know strength or quality of the Trend Does NOT know if the movement has just started Does NOT know if the pair moved hundreds of pips already, Does NOT plan a trade for you. Does NOT know where support or resistance is. Does NOT know if news drivers are coming out.
  109. 109. What the Heatmap Does Do Tells you which individual currencies are strong or weak or mixed. Point you to additional trading opportunities in the same P&I group of pairs that you may have not considered during the planning process.
  110. 110. Anatomy of the Heatmap Arranged by 8 individual Currencies USD CHF EUR JPY GBP AUD CAD NZD All pairs are represented twice
  111. 111. Strong on All Pairs
  112. 112. Anatomy of the Heatmap Separated into 2 Sessions
  113. 113. Anatomy of the Heatmap Current time in GMT NEXT reset to zero (countdown timer) Refreshes every 30 seconds
  114. 114. Anatomy of the Heatmap Change in price shown in percentage Visual Bar showing price change direction
  115. 115. % Change and Bar Graph Move Together
  116. 116. Highest % UP and Down Biggest mover UP (over.25) Gets green Arrow Biggest mover DOWN(over.25) Gets red Arrow
  117. 117. Anatomy of the Heatmap % change is based on the currency pair price movement 0.25% move up EUR/USD current rate = 1.3330 1.3330 x 0.25% = 33 pips of movement 33 pip move on EUR/USD 33 / 1.3330 = 0.25%
  118. 118. Anatomy of the Heatmap 1.00% move on GBP/CAD GBP/CAD current rate = 1.6263 1.6263 x 1.00%(.01) = 162 pips of movement 162 pip move on GBP/CAD 162 / 1.6263 = 1.00%
  119. 119. Anatomy of the Heatmap Price Rising = Green Bar Price Rising = % Rising Price Drop = Red Bar Price Drop = % Drop
  120. 120. Parallel and Inverse The only thing that DRIVES price and price movement
  121. 121. EUR Strong CAD Weak /
  122. 122. CAD STRONG EUR WEAK /
  123. 123. / EUR and CAD are BOTH Strong or BOTH Weak
  124. 124. JPY Strong on All Pairs
  125. 125. JPY Strong on All Pairs
  126. 126. Slingshots
  127. 127. Slingshot GBP/AUD
  128. 128. Mixed Signals Simply don’t trade!! The Forex Heatmap is a GO or NO Go indicator.
  129. 129. Heatmap Supplemental Trades Point you to additional trading opportunities in the same P&I group of pairs that you may have not considered during the planning process. Points you towards that you may not have anticipated based on the trend analysis and trade planning process. (Warning!)
  130. 130. Heatmap Supplemental Trades Don’t Fall into the trap of only trading Heatmap Signals!!! Use it for what it was designed for.
  131. 131. Heatmap Scenarios The GBP/JPY is consolidating and starts a fresh movement, but only the GBP is strong, do you take the trade?? Generally speaking yes because it’s a fresh move starting after a consolidation, check the charts for next resistance point.
  132. 132. Heatmap Scenarios Some news comes out and a price alarm hits, you see a strong EUR and the EUR/JPY has a fresh moving average cross trend on the H4 chart, do you take the trade?? Yes, if there is no nearby resistance.
  133. 133. Heatmap Scenarios The EUR/CHF is consolidating but in a strong downtrend, the D1 and W1 timeframes are separated with no support, a fresh down cycle starts through support, the EUR is weak and the CHF is neutral. Do you enter the trade?? Yes, the trend is strong and the pair was consolidating so likely no slingshot is required.
  134. 134. Heatmap Scenarios You check the heatmap in the main session and the EUR/CAD is a slingshot with EUR strong and CAD weak. You check the H4 and it is separated with no resistance. Do you take the trade?? Yes, most definitely.
  135. 135. Heatmap Scenarios The AUD/JPY starts to move in the Asian session and moves 225 pips overnight, do you buy it in the main session if the heatmap signals are good?? No, definitely not, too deep into the move, it has been moving for 12 hours, you missed it.
  136. 136. Heatmap Scenarios If the Heatmap gives you an unexpected or supplemental trade in the main session that is a slingshot look straight at H4 chart, if the trend is good and there is no support or resistance, would you trade it?? Yes. This is a real timesaver because you look at one timeframe to assist with your trade decision.
  137. 137. Heatmap Scenarios You have a fresh or developing intermediate uptrend (D1) on the USD/JPY with some very minor resistance nearby. In the main session the USD is strong but the JPY is neutral, do you take the trade. Yes, you have a fresh trend on a larger time frame.
  138. 138. Money Management Very important IF you need it. Do NOT need it if - The forex trading system you are using does not work and consistently give you positive pips with demo trades Do NOT need it if - The forex system you are using works at making pips but you are not applying the system correctly or as designed and using it your own way then you will not consistently see positive pips Loss Management – Keeping you from losing your money slower.
  139. 139. Money Management Very important IF you need it. NEED IT - If the forex system you are using works and you are using the system correctly you will consistently see positive pips. Need profit management. Profit Management - manage the profits and the occasional small losses or break even stop outs
  140. 140. Good Money Management •Having a system that works •Paper Trading (Demo) - Not as exciting as losing real money •Adjusting your risk to fit market conditions •Gaining Knowledge - Not Gambling - DTH
  141. 141. Knowledge Reduces EGO
  142. 142. If You Do Not Know? Do NOT Trade with real money!!
  143. 143. Manage an Entry 1. Placement of your initial stop order 2. Moving your stop order up to breakeven 3. Closing out or scaling our profitable lots as the trade proceeds into profitability. Lesson 29 Part 1 - Profit Taking Techniques Lesson 29 Part 2 - Profit Taking Techniques Lesson 7 - Forex Trading Tips
  144. 144. Manage an Entry 1. Placement of your initial stop order. 20-40 Pips OR Lows or Highs on smaller timeframes Initial Guidelines
  145. 145. Manage an Entry 1. Placement of your initial stop order. 20-40 Pips OR Lows or Highs on smaller timeframes Initial Guidelines
  146. 146. Manage an Entry 2. Moving your stop order up to breakeven •Time •Time of Day •Price Alarms •Set pip amount
  147. 147. Manage an Entry 3. Closing out or scaling our profitable lots as the trade proceeds into profitability. Profit Management
  148. 148. Profit Management Rule of Thumb
  149. 149. Profit Management Rule of Thumb Close out half of your profitable lots. Letting the rest of your lots ride to see there the trend takes the pair.
  150. 150. Money Management Money Management Ratio Minimum of +2:1 ( can reach +20:1) Calculated in planning process Scalpers are -3:1
  151. 151. Consolidation Cycles Learn to recognize the most common types of consolidation and retracement cycles that occur Helps with stop placement Helps to hold on to trends longer
  152. 152. Consolidation Cycles If a currency pair is consolidating or resting (moving sideways) for a good period of time, then movement starts, it tends to keep moving. Hold on to trends longer
  153. 153. Profit Taking Based on Time of Day If you choose to close out a portion of your lots after a strong move you can do so at the end of the USD session in a time window of 11:00 - 12:00 noon EST plus or minus 30 minutes.
  154. 154. Profit Taking Based on TRENDS If you buy the EUR/JPY, for example, and all of JPY pairs are trending upward on the D1 time frame, then it is best to hold onto your EUR/JPY trade. Why would you exit?? Incorporating the trend into your thinking as to how to exit a profitable trade and using the D1 time frame for these decisions to hold. If you drop down to the H4 time frame you are looking to swing trade only for 2-4 days. Plus
  155. 155. Profit Taking Based S&R If you spot the next major resistance and the pair you bought is approaching this price or stalling near this price, it would be wise to scale out additional lots or possibly all of your lots. Plus
  156. 156. Profit Taking P&I If P & I is strong in whole group, Hold Longer. If P & I is changing, Take profit. Plus
  157. 157. Profit Taking P&I Use the Heatmap?? Tells you to get in trade but can also tell you when to exit. Also, After a couple days if the Heatmap has slingshot the opposite direction. Take Profit
  158. 158. Help Avoid Stop Outs Veteran Traders only! After you use the “rule of thumb” to take profits, Put your stop on remaining lots equal to the amount of profit taken. Ref:Lesson 29 Part 2 - Profit Taking Techniques Deeper stops “Guaranteed no-loss method of running deeper stops”
  159. 159. Other Profit Taking Techniques Price alarms and Partial Limit orders
  160. 160. Trend Trader Ultimate goal as a trend trader is to trade the larger time frames like D1 and W1 and just ride the major trends of the market, when those trends present themselves. if the market is not trending you must shift your profit taking to shorter term moves You cannot control the market only your own analysis and behavior towards the current market condition and what is presented to you today.
  161. 161. Trend Trader
  162. 162. Trend Trader You can tell yourself you want to be a trend trader or you can actually do it with micro lots and prove that you are.
  163. 163. In Order To Trade The Spot Forex You need to know the direction of the Trend. You need to have a valid entry point

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