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Author Topic: How-To Trade the FOREX Market and use/earn bitcoins doing it! Check it out :) :)  (Read 1126 times)
TheLotusPod
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February 24, 2016, 12:14:28 AM
Last edit: July 10, 2017, 11:45:54 PM by TheLotusPod
 #1

This Is A Tutorial On

How to trade the FOREX market using your bitcoins and receive profits in bitcoins Smiley
Basics of Forex trading.
How to get started
Technical Analysis, Reading charts, risk/reward management, etc, etc

(This will be a live ongoing tutorial on a variety of things such as technical analysis, starting with the basics and moving to more advanced techniques and theories)
You can start here: https://1broker.com/?r=3567


Huge Update

This will be a on-going tutorial with multiple parts

If you already know how to do these things and you are just here to learn technical analysis then skip too part 2

Part 1 of this tutorial will be about how to use the website and understanding what the terminology means and getting familiar with how to execute trades and all of that basic stuff

Part 2 of this tutorial will be on Technical Analysis, learning how to read charts and identify trends and key trend reversals and how to read candles and such. So if you already know how to open positions and start trading then skip forward to the second part of this tutorial and learn more of the technical side of trading!

Part 3 of this tutorial will be a continuation of Technical Analysis and a introduction too more advanced techniques and theories as well as a multitude of other things.

Part 2 and 3 will be on-going and I will be updating every now and then with more content

If you have any questions please feel free to PM me!

I will be choosing 5 people at random on the first of next month to receive some free trade signals. In order to be eligible for this "raffle" you need to be a referral of mine on https://1broker.com/?r=3567

Signals Include Variables For The Following: Entry Price, Stop Loss, Take Profit, Suggested Leverage, etc.
Signals will be provided for multiple currency pairs

(If your interested in purchasing FOREX trading signals PM me for details - spots limited)


Ive finally decided to compose this tutorial I've been adamantly getting asked to do for awhile now and what better community to share this with and give back then the bitcointalk community! Smiley In the beginning I will try to be very basic until we get a little further along as it will be easier for everyone to grasp some of the more advanced trading techniques and theories at that point. In this tutorial I will teach you guys and gals a few different things starting out with understanding what all those buttons mean in the trade prompt and becoming familiar with all of the trading options and how to use them Tongue

The next part of the tutorial will be the part that everyone loves -- Technical Analysis and how to read charts and understand them along with proper risk management ect, ect, Smiley I plan on updating this tutorial frequently and Part 2 will be a ongoing tutorial depending on everyone's interest in the topic.

Feel free to scroll down and skip ahead to part 2 if your already familiar with trading and want to start learning how to execute profitable trades

Please if you have ANY questions feel free to PM me Smiley



What exactly is FOREX?

Forex stands for foreign exchange and to participate in the market and realize profits you will be buying one currency and simultaneously selling another, Currencies are traded threw an exchange and are traded in pairs
(more on all this later)

There are alot of advantages that trading FOREX has over stocks and commodities or indices but thats for another time, our time will be much better spent getting right into things Smiley.

To someone who is completely unfamiliar with this market or trading in general sometimes it can seem very overwhelming at times but trust me, after this tutorial you will understand everything you need to know to get started Smiley. With a good teacher things that seem complex or overwhelming are easily understood (feel free to PM me if you have any questions at all!)



Before we get started I would like to show you how to read a currency pair and give a quick outline of the Symbols and what currency they correspond to for those who don't know


These are the symbols for the Major currencies


upload pictures free



Currencies are always quoted in pairs like USD/JPY or AUD/USD, as i said earlier when ever you make a transaction you are simultaneously buying one currency while selling the other



windows screenshot


In this example the first currency in the quote (GBP) is known as the base currency. The second currency in the quote (USD) is referred to as the counter or quote currency

If you were to participate in the market quoted above (GBP/USD) and make a buy, you would be paying $1.51 USD for a single GBP (British pound) or vice-verse if you were to sell, you would be receiving $1.51 USD for one single GBP

Shortly here i will discuss what taking a "long" position means and what taking a "short" position means



Okay now that we got that down lets get started!!

https://1broker.com/?r=3567 is the only exchange (that I'm aware of) that allows you to participate in the FOREX market by using your bitcoins and also receiving your profits in bitcoins!

This part is really simply and probably doesn't need an explanation lol

Step 1: Go to https://1broker.com/?r=3567 and create an account (yes, this is my referral link and I would really appreciate anyone who found this tutorial useful to register with that link, thanks guys Smiley)

Step 2: deposit the amount of bitcoins you would like to start trading with (Any new trader should start small) The beauty of 1broker is the minimum position size they offer is very small at .01 btc Smiley (the smallest minimum I've seen offered from any broker)

So now that you have an account lets take a look at the dashboard on the left side of the screen


screenshot tool


We will be focusing on the FOREX tab for this tutorial (if you haven't figured that out yet that's not a good sign lol Wink)


----

Here you will see a list of all the currency pairs available for trading and buttons that correspond to opening a short or long position as well as the current Bid and Ask quotes (Don't worry, more on what all of this means in a minute Smiley)


imagehosting

Lets click on EUR/USD together and take a look at what this page consists of


At the top of this page you will see a variety of information including the currency pair (EUR/USD), The maximum amount of leverage available for this pair (200) and the current spread (0.0001)  (Don't worry i will teach you what all of this means, that's why we're here Smiley)


image upload no compression


Now just below that you will see the current Bid and Ask price as well as two beautiful buttons, one labeled "Long" and the other Labeled "Short"


windows screenshot

For the sake of this demonstration lets click on the button labeled "Long" together and familiarize ourselves with the most important page you'll be using on this website Smiley


image upload no resize

After clicking on "Long" you will see a window with the following options

AMOUNT: This is self explanatory, The amount you put here in bitcoin is the amount your total position is going to be worth upon entry. Minimum is .01, so while your just starting out and learning you may want to try a few smaller sized positions around the minimum of .01
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DIRECTION: When trading you have two options, either going "Long" or going "Short". When you take a "Long" position that means you expect the price to increase and you will profit from the price increasing from your entry price.

And of course vice-verse, When you take a "Short" position you are expecting the price to decrease and you will profit from the price decreasing from your entry price
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LEVERAGE!: This is very important and will be explained in much greater detail later on. Leverage can be used to maximize profit as well as risk and is generally used by more experienced traders. After spending some time with me you will understand and be able to comfortably use leveraged positions to your advantage

When using a leverage of 200 or 1:200 (which is the maximum amount offered for the currency we are looking at right now) for every 1 dollar of purchasing power (or for every 1 bitcoin in our case) you actually control $200 of the underlying currency

So if you were to purchase this particular currency pair we are viewing right now (EUR/USD) at a leverage of 1:200 then for every 1 bitcoin you purchase you will actually have a position size equivalent to 200 bitcoins!

Or subsequently, for just .01 BTC you would actually be controlling 2 Bitcoins worth of the currency in question! (that's $40,000 worth of buying power with only $200 invested!)

Now this may sound great but you can equally loose your whole position size just as fast, When using a leveraged position if the price moves against you even slightly you could end up being "margin called" which will force your position to be closed at a loss.

Here is a calculator that can be used to determine when your position will be automatically closed (margin-called) based off of how much leverage your using and how big your position size is
https://1broker.com/?c=stoploss_limit_calculator
I will explain leverage in much more detail later on so if your feeling overwhelmed about this particular part please don't fret, just continue the tutorial and you will have a much greater understanding by the end Smiley
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ORDER TYPE: In this field we will determine how your trade will be executed. 1broker offers 3 different types of orders and we will discuss all of these

The first and most simplistic order type we encounter is "Market". This means that you will be buying (or selling) the currency pair selected at the current market value, your order will be executed almost immediately.

The second order type we come across is "Limit" and will probably be the order type that you use the most. A limit order allows you to set the entry price at which your trade will be executed. This should be lower than the current price for long positions and higher for short positions.

The third and final order type that crosses our path today is called a "Stop-Entry" order.

A Stop Entry order is an order to open a position once the market hits a specified price. Contrary to Limit orders the "stop entry price" should be higher than the current price for long positions and lower for short positions.

A good example would be if you wanted to go Long on EUR/USD but only AFTER it has risen to a certain point or broke threw a certain resistance level and vice verse, if you wanted to open a Short position but only AFTER the price goes down to a certain point do you want your order to execute.
(PM me for any additional questions pertaining to order types, or anything else for that matter Smiley)

------------------------------------------------------


The next field we see on this page is "STOP LOSS"



image hosting free


Stop Loss: The Stop Loss field is where your going to enter the price at which you want your position to automatically close if it has moved to far against your entry price for your liking.
Opening a position without having a predetermined Stop Loss (as well as a "take profit" point) is a foolish mistake beginners tend to make and should be avoided.


The final field on the page we are viewing is the "Take Profit" section.

Take Profit: The "Take Profit" field is where your going to enter the price at which you want your position to automatically close if it has moved in the direction you were expecting far enough to realize the profits you were seeking Smiley.
So its essentially the same thing as the Stop Loss field but this time your setting a parameter for the scenario that you've made a profit on your position instead of trying to manage risk and minimize your losses which is what the "Stop Loss" field is for.

So to sum it up, Take Profit and Stop Loss are the fields in which your going to specify how much your willing to loose on your position and how much of a profit you want to realize before closing your position and ending the trade Smiley



Quick overview of what we've covered so far


How to get started with an account at https://1broker.com/?r=3567
Very brief and short explanation on what the FOREX market is
The symbols for various currencies and how to read a quote
What "Long" and "Short" positions are (more on Leverage during the Technical Analysis part of this tutorial)
Different kinds of order types and how to use them
What the "Take Profit" and "Stop Loss" Fields mean (Further details on how to properly use these fields while trading will be given shortly Smiley)


 If you found this tutorial useful it would be much appreciated if you sign up using my referral link (https://1broker.com/?r=3567). I would love to help and see all of you become successful FOREX traders weather its for fun or too supplement income or if you really get into and it becomes even more than that Smiley. I am always here to help out so don't shy away from PM'ing me any questions you have about anything!

here is my referral link you can sign up with https://1broker.com/?r=3567

If some of you are still unsure about a few things and would like some further help I could probably let some of you follow my trades in real time so you can get the hang of things, send me a PM and we can discuss further Smiley


I will be posting the second part of this tutorial shorty (The most fun and important part!) so stay tuned!

In the second part you will learn trading techniques and risk management and how to analyze charts and much much more, AND as a BONUS getting to trade side-by-side with me and ask me questions Smiley

https://1broker.com/?r=3567

Please if you have ANY questions feel free to PM me Smiley


Additional quick notes


Forex Market Hours in GMT



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The Forex market is available for trading 24 hours a day, five and one-half days per week.

END OF PART I

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February 24, 2016, 12:17:04 AM
Last edit: February 24, 2016, 05:52:40 PM by TheLotusPod
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__________________________________________________________________________

FOREX TUTORIAL
PART II
The Basics On
How to read and interpret charts and different candlestick patterns
How to identify Pivot Points and use them to make profitable trades
Using different forms of Technical Analysis
A lot of different vocab and explanations for very important topics in relation to the market
How to read and use multiple indicators such as Moving Averages, MACD, ADX, DMI
By the end of this tutorial you will have a much better grasp on the market and be able to execute a high ratio of extremely profitable trades. Smiley
Welcome to the second part of the tutorial! This is where you guys and gals will learn technical analysis and how to make some very exciting and profitable trades!
So without further adue, I bring too you, PART II!!

Update
I will be choosing 5 people at random on the first of next month to receive 3 free signals and the opportunity for some private lessons. In order to be eligible for this "raffle" you need to be a referral of mine on https://1broker.com/m/r.php?i=3567

Signals Include Variables For The Following: Entry Price, Stop Loss, Take Profit, Suggested Leverage, etc.
Signals will be provided for any Currency Pair of your choice

(If your interested in purchasing FOREX trading signals PM me for details - spots limited)

______________________________

-----  Reading Charts & Understanding Candlestick Patterns & Other Basics  -----


Before we start on Technical Analysis lets take a look at some charts and get a feel for what certain things mean and how to read and understand what your looking at Smiley

Netdania is a free website that provides really good charts and has the tools required for this part of the tutorial, if you don't already use a website or
have a program that provides you with the charts and tools that you need then i suggest using Netdania or finding one that you like as you will need it for this tutorial

You can use Netdanias charts by going to http://www.netdania.com/Products/live-streaming-currency-exchange-rates/real-time-forex-charts/NetStation.aspx and clicking launch netstation. Or you can google "Forex charts" and use what ever charts you prefer as long as it has the tools needed for this tutorial. The screen shots i will be using for this tutorial will be taken from Netdania so if you want to follow me step-by-step then i suggest using their charts or something similar. (Here is a direct link that will load Netstation for you if you cant find the "Launch Netstation button". http://www.netdania.com/Products/live-realtime-streaming-currency-exchange-rates-charts/chart-forex-charts/NetStationFullWindow.aspx)

After going to the website provided in the previous link, Click on "Launch Netstation" and once it loads click on EUR/USD under the "Quote List" and a chart will open for the currency pair EUR/USD. Below are screen shots of this. After it loads just keep it handy as we will be going back to this window VERY soon.



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The very first thing you need to understand and learn how to read are what is referred to as "Candles"





As you can see, within a moment of viewing a candle you are easily able to gather a multitude of information such as the currency's highs and lows and where the currency has opened and closed as well as weather it closed higher or lower then when it opened

Candlesticks are formed using the open, high, low, and close of the chosen time period. Before we discuss different candlestick patterns I would like to first explain what "Bearish" and "Bullish" candles are. Below is a picture of two candles, one of which is a Bullish (white) candle and the other a Bearish (Red) candle.

(depending on what chart your using the colors could be different but should be easy for you to decipher which is which. The charts we're using for this tutorial use Orange for Bearish Candles and Blue for Bullish Candles)





If the Body of the candle is White (or Blue) it means the candle has closed higher then when the candle originally opened, and vice-versa, if the candle is Red (or Orange) then it closed at a lower price then when it originally opened

*** New vocab! ***


The terms Bullish and Bearish are used a lot in the trading community (I'm sure you can google the roots of the word if your curious but this isn't a history lesson Tongue)

In the previous lesson you have all learned what going Long or taking a Short position means.

Bullish refers to any LONG move made in the market and a Bullish candle is a candle that is formed when the price INCREASES, whilst vice versa Bearish
refers to any SHORT move made in the market and a Bearish candle is formed when the price DECREASES

Now that everyone knows what Candlesticks are and how to read them, lets move on to Candlestick Patterns!

_________________________________


-----  Candlestick Patterns!  -----

Now lets discuss different candlestick patterns



First off lets take a quick look at the difference between long and short candles in length. Below is a picture of the two





A long candle is an indication that there is alot of buying or selling pressure happening, the longer the body the more intense this pressure is. Meaning that either the sellers (Bears) or the buyers (Bulls) were able to take control of that candle by the time it closed and the next candle opened

A short candle just means that there is very little activity going on at that moment

Okay now that you know the difference between long and short candles in length and what they mean lets take a look at some Candlestick Patterns

The first Pattern were going to look at is referred to as the "Spinning Top" (which is illustrated below)







When it comes to Spinning Tops its not very important weather the Bulls or the Bears have control of the candle. What IS important to note is that not much movement in either direction has occurred and more importantly there is alot of indecision in the market

If you start to see Spinning Tops while the market is in a downtrend then a possible reversal in direction may occur, and of course this applies in the vise-versa when the market is in a uptrend and you start to see Spinning Tops form also indicating a possible reversal

Spinning Tops often occur when a trend is dying out, making them very important for predicting reversals


Now instead of discussing each of the Candlestick Patterns individually I will simplify it for everyone and provide a chart with interpretations of them all at the end of this vocab session

I feel it is important that everyone knows the names of these candlesticks before continuing so lets have a quick vocab session!! Smiley
      
****Vocab!!!****
(The Spinning Tops we just discussed are part of this vocab list as well)


The second type of Candle I would like you to know the name of is what is referred to as a "Doji Candlestick". Doji Candlesticks have the same open and closing price and their are 4 different type of Doji Candlesticks. We will discuss what they all mean at the end of this vocab. Below is a picture of the 4 different Doji Candlesticks along with their names.







The next type of candlestick you should know the name of is what is referred too as a "Hammer and Hanging Man". Below is a picture of a Hammer and Hanging Man candlestick.  (more on what these candles tell us at the end of the vocab) For now I just want you guys to know what they look like and what their names are









Next up is what is referred too as the "Inverted Hammer and Shooting Star" pattern. Below is a picture of this pattern










 That concludes the vocabulary for now Smiley. Good job! You made it threw the boring vocab! Smiley. Now that everyone is familiar with the names of the patterns we will be discussing we can continue Smiley.

 Their are much more advanced duel and triple candlestick patterns which will be discussed later on, at the moment this is not important and for now we will stick to the basic candlestick patterns as to not get overwhelmed with too much at once Smiley

-------------------------

 Okay now lets interpret the patterns we just discussed. Below is a "Cheat-Sheet" if you will, on the various candlestick patterns that we have just discussed. I suggest you study this chart and familiarize yourself with it. Maybe even save it to your desktop as a reference until you are able to recall what the patterns indicate by memory.

(This picture was scanned from a book so bear with me, I'm aware that it isn't the best of quality lol)










As you can see, some of the various candlestick patterns we just looked at along with others are described in this "Cheat-Sheet" as Bullish or Bearish. For instance number 9 depicts the "Hammer or Hanging-Man" as being Bullish if the market is in a Downtrend and Bearish if the market is in a Uptrend. Meaning if you see a Hammer or Hanging-Man form during a Uptrend in the market then this is a indicator to Sell. And of course vice-versa if you see a Hammer or Hanging-Man form during a Downtrend then this would indicate that the market may reverse and start trending up and that you should possibly Buy
--------------------

Yay!! Now that everyone knows what candles are and how to read them we can finally start looking at some charts!! Give yourselves a pat on the back Smiley. Right now we will be focusing on how to read charts and the Technical Analysis side of things which will allow you to set up some very profitable trades. With that said, I feel as if it would be an unwise use of our time if i was to explain all of the buttons and such on the charting programs so instead we will just be talking about the tools and different functions needed to understand and proceed in this tutorial.

The proceeding screen shots will be of the charts provided by Netdania's, Netstation. Links and details for using their charts were talked about in the beginning of this part of the tutorial, here is another link though http://www.netdania.com/netstation. (Click Launch Netstation and then click on EUR/USD as I described at the very beginning of Part II) Below is a screen shot of what it should look like after loading the chart for EUR/USD








(above)
Here is a 1 hour chart for EUR/USD. The timeframe is displayed at the top in the red box. Circled in red is the Studies tab, upon clicking the Studies tab a new window will open up allowing you to select various tools for Technical Analysis and Charting to be used at your disposal, a few of which will be discussed shortly


Lets first take a look at the time-frames and what they mean. To the beginner the concept of multiple time-frames may at first seem confusing but don't worry its a very simple concept and easy to grasp Smiley

At the top you will see buttons that read "T 1 5 10 15 30 1H 2H 4H 8H D W M" representing the different time-frames ranging from one minute to one month. We are currently viewing the 1H (one hour) chart, which simply means each of the candles on the chart we are currently viewing were open for one hour exactly. At the end of the hour the most recent candle will close and immediately a new one will open for the proceeding hour. The new candle will move up and down in price for exactly an hour upon which it will close and the next candle will open and start moving.

Each time-frame has its own pros and cons and can be utilized for different types of trading techniques and styles. You will most likely end up finding and using a particular time-frame that suites your style of trading and Technical Analysis more then the others.

Lets take a look at the pros and cons of short, medium, and long term time-frames and what kind of TA (Technical Analysis) their mostly used for. Later on we will discuss more in-depth the different techniques/styles that are used on the various time-frames. (You can skip this part for now and learn what time frame you prefer and the pros and cons of them as you go along but that's up too you Tongue)

Its important too note that some people consider times frames of a hour as short term time frames and some people consider 30 minute times frames as long term. It depends on your style and what it means in relation to your style and techniques.
I just want to give everyone a basic understanding of the concept. Further discussion on this topic will take place later.

--Short-Term Time Frames--


By using a short term time-frame anywhere from 1 minute to 15 minutes you will be provided with much more trading opportunities then longer time-frames. If you are someone who wants to make multiple trades in a single day or even in a single hour and profit from the many minuet swings that occur threw-out the day or even threw out a single hour then the shorter time-frames are what you'll be using for this. While trading using the shorter-term time frames opposed to the hourly charts or longer, most traders will utilize higher leveraged positions so as to maximize their profits on the many extremely small swings in the market that occur minute by minute. Using 200X Leverage is not uncommon here. (We will discuss more on leverage in a little bit Smiley)

Now lets discuss the downside of using shorter term time-frames. Too start, when using shorter time-frames sometimes the market will move too fast for you to have ample enough time to execute accurate and worth-while Technical Analysis and strategy. Also, since your trades are much more frequent you will have higher fees coupled with the fact that the trades are much smaller in this time-frame. Lastly, because moves happen so quickly at this time-frame you have less room for error and may get margin called or stopped out by small rally's and reversals.

Timing is IMPECCABLE when it comes to using short term time-frames and strategy. Trading will be intense at this time-frame due to all of short quick moves in the market.


--Medium Time Frames--


This is my favorite time-frame too trade on. Every trader is different and there is no right or wrong time-frame to trade on. The medium time-frames that I concentrate mostly on range from 30 minutes too 2 hours. When trading on these time-frames you have plenty of time to execute and plan solid concrete Technical Analysis and strategy, and plenty of time to use the various tools provided for TA so that you are able to plan a more precise entry as well as a better idea for where to place your Stop Loss and Take Profit variables at Smiley.

The downside to this is that there is of course much less opportunities to trade opposed to a shorter time-frame. Depending on what you prefer and how you trade, a shorter time-frame may be your bread and butter Smiley. Don't worry, after trading for just a short time you'll figure out what time-frame you dominate and prefer over the others Smiley. (Also its not like you have to stick to any one time-frame anyways, chances are you'll find yourself using multiple time-frames)



--Long-term Time Frames--


This is a time-frame that a lot of people really prefer using and you'll see why in a moment. Although, it of course has its downsides as well Smiley.

Long term time-frames are considered to be the 8 hour chart all the way up to the 1 month chart. (The chart being used for this tutorial has buttons that correspond to the following "long term" time-frames: 8H, D, W, and M. Where D is Day, W is Week, and M is Month. Some charts will even go up to a year)

When using long term time-frames you can easily view and identify the direction of the trend and weather the Bulls or Bears are currently in control of the market. Long term time-frames will also grant you the chance to gain a much larger profit per trade and you will be much less likely to have your position force closed by getting margin called/hitting your Stop Loss due to unexpected Rallies or sudden Reversals.

Long term trades will inherently last much much longer and thus give you the opportunity to monitor your trade more closely, this will allow you the ability to make wiser more clear-headed decisions on when to take profit or where to place your Stop Loss.

Less emotion is involved when trading these slower time-frames opposed to the lightning fast high pressure trading that occurs in the quicker, shorter time-frames. This is a good thing as you DO-NOT want to trade using your emotions. After all, we're not gambling, we're making calculated trades and emotions can get in the way of this. Math doesn't have emotion Tongue.

 (although some would debate that markets do have "emotion", but that's some economic philosophy that we wont be getting into during this tutorial lol)

_____________________________


-----  Technical Analysis & Various Tools [of the trade] Wink-----  
(AKA - The Fun Part Tongue)

Are you ready to finally start making some trades!

Now that you know what your looking at when viewing a chart lets discuss some Technical Analysis and how to use a few of the tools provided to analyze a currency pair and set up some profitable trades! Smiley.
 
If your feeling overwhelmed its okay, that's normal, don't worry! We will start off with some basic yet extremely effective technical analysis that everyone who has made it this far will be able to quickly grasp and execute and within no time you will finally be identifying and making profitable trades Smiley. (Remember if you ever have any questions AT ALL, DO NOT hesitate to ask. You can always PM me if you need some help or clarification Smiley)

First lets take a look at what "Support" and "Resistance" levels are and how to identify them and use them to trade. Too make things simple lets take a look at Wikipedia's definition of Support and Resistance. (The following two definitions are a direct citation from Wikipedia) I have put in bold the part that I want you to know and remember

Support
*A Support level is a level where the price tends to find support as it falls.* This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has breached this level, by an amount exceeding some noise, it is likely to continue falling until meeting 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 rises.* This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has breached this level, by an amount exceeding some noise, it is likely to continue rising until meeting another Resistance level.


So now you may be asking how do we find and chart these Support and Resistance levels. To do this we are going to be using what is referred to as "Pivot Points". I will give you a brief definition of what Pivot Points are.


Pivot Points are simply the average of the High, Low, and Closing price from the previous day or hour or what ever time-frame you are calculating them for, these numbers are used to project Support an Resistance levels for future time-frames Smiley.

There are 5 main types of Pivot Points, all of which are calculated using a different formula. We will be sticking to just the Standard Pivot Point formula for this demonstration. (In part 3 of this tutorial we can discuss the other pivot points but for now lets not add too much into the mix and become overwhelmed)

 If you would like to research the other pivot point methods right now then these are the names of them so you can look them up (This is NOT needed to continue the tutorial and may just overwhelm you at this point)

Fibonacci Pivots
Camarilla Pivots
Woodies Pivots
Demarks Pivots


 Now luckily you do not have to spend the time calculating pivot points on your own as there are numerous websites that do the calculations for you and display them in a easy to read manor

Here is a website that will give you the Pivot Points for various time-frames on essentially every currency pair you will be trading Smiley.

http://www.actionforex.com/markets/pivot-points/standard-pivot-points-2010040848154/ - We will be using this website for the following part of this tutorial

Open this website up in another tab. We will be using this website shortly Smiley

Okay now its time too finally put some technical analysis into action! First off lets learn how to use these pivot points to make some trades.

Make sure you have Netdania or what ever website/program your using to view charts open and ready to go. For this demonstration we will be focusing on AUD/USD. Make sure if your not using Netdania that what ever chart you are using has a tool for drawing lines on your chart

Now, open a 30 Minute chart for AUD/USD and at the top select the tab labeled Lines > Add Lines > Click Add Free Horizontal Trendline.( Refer to the Screen Shot below if you cant find this lol)






Next, go to the website I just provided for viewing Pivot Points that have already been calculated for us and click on AUD/USD
(http://www.actionforex.com/markets/pivot-points/standard-pivot-points-2010040848154/)









After clicking on AUD/USD you will be brought to a page that looks like this









We will be focusing on the Daily Pivot Points for this part of the tutorial so just ignore the data for the Hourly, Weekly, and Monthly Pivot Points for now

PP - Stands for Pivot Point.       S - stands for Support.       R - stands for Resistance.

As you can see in the previous Screen Shot, the Pivot Point or PP is at 0.7085, so were going to draw a line at this price to represent the Pivot Point! (below is a screen shot of this)









If you right-click your Pivot Point line you just drew you can select Properties and change the color of the line. For this tutorial change the color of your line to yellow, this will help distinguish the difference between your Pivot Points and other lines you will be drawing here shortly.

Next, were going to add R1, R2, and R3 onto our chart. These will represent lines of Resistance.

(http://www.actionforex.com/markets/pivot-points/aud%10usd-pivot-points-2010040873475/)
Looking back at the website that provides us with our data for AUD/USD you will notice the following:

R1 is at 0.7132
R2 is at 0.7172
R3 is at 0.7219

Now lets add all three of these lines to our chart. After adding them to the chart, change the color to RED.

After adding these lines and making them Red your chart should look like the following Screen Shot. (I realize chances are you'll be reading this at a different date then what my charts are at currently but as long as your understanding the concept, which I'm sure everyone at this stage does, then your fine Smiley.








Now that we have our Pivot Point and Resistance lines charted lets add our Support lines

Looking back at the website were using to provide us with our data the following is what our Support is at

S1 being at 0.7045
S2 being at 0.6998
S3 being at 0.6958

Add these lines on your chart as well and make them Green in color. Afterwords your chart should resemble the following Screen Shot








Okay now that we have all of our Pivot Points in place lets talk about how were going to use them effectively Smiley


A very important strategy that Pivot Points are used for is to gauge Market Sentiment, allowing you to see and visualize weather or not traders are more inclined to buy or sell the currency pair in question.

Picture the Yellow Pivot Point line is the 50 yard line on a football field. Depending on what side the ball (or price in our case) is on will tell you weather buyers or sellers have the strength.

If the price is ABOVE or breaks ABOVE the Pivot Point this indicates Bullish sentiment in the market, where on the other hand if the price is BELOW or breaks BELOW the Pivot Point then this would indicate Bearish sentiment in the market.

-------
After reading the following explanation on how to use pivot points there will be a screen shot with an example so just read it threw even if your not understanding it and after looking at the screen shot you will definitely understand Smiley

An important thing to note is that the price will test Support and Resistance levels repeatedly and the more times that the price touches/tests a pivot level and reverses then the stronger that pivot level is. (by pivot level I mean any of the lines for Support and Resistance as well as the actual Pivot Point its-self)

One way too trade using Pivot Points is to trade the reversal. If you notice that the price is nearing a pivot level then you can open a trade in the opposite direction once it "bounces" off the level or Pivot Point in question. Then using the nearest pivot level in the direction of your trade as a target to take profit you can set your Take Profit parameters at this level or if your looking to lock in more profits then you can set your Take profit at the next pivot level. Also, you will be using the pivot levels that are in the opposite direction of your trade too set your Stop Loss at as well. (After viewing the following screen shots this will all make sense if your not understanding Smiley)

For example, if the price is nearing the first level of Resistance or "R1" then you can sell the currency pair by opening a Short position and placing your Stop Loss slightly above the second level of Resistance or "R2". If you want to be more conservative and are extremely confident that the reversal is going to occur then you can place your Stop Loss slightly above R1 opposed too R2. After opening a Short position at R1 your going to set your Take Profit target at the nearest pivot level in the direction of your trade, weathers that's the Pivot Point its-self or one of the Support/Resistance lines. OR for more profit you can set your target at one of the proceeding pivot levels.

Now, lets look back at our AUD/USD chart that we just drew our Pivot Point and Support & Resistance levels on and lets look at this scenario played out.








As you can see if we sold the currency pair/opened a Short position at R1 then all 3 of our Profit Targets would have hit! It broke threw the Pivot Point and continued to break threw the first level of Support/S1 and bounced off S2. Congrats on your profits! Smiley. Now on the other hand if you got greedy and tried to take profits at S3 then you would have missed out. Also if you would have placed your Stop Loss just above R1 opposed to R2 then you would have been stopped out. Until you get the hang of things you should place your Stop Loss one full pivot level away opposed to the pivot level your opening your position on Smiley.

This part is very important so pay attention to this. Once the price BREAKS THREW a pivot level, (weather that's a level of Support, Resistance, or the Pivot Point its-self) that level will then inherit the opposite properties from what it once had. I will give you a example.

If for instance the price breaks above R1 and bounces off of R2 then R1 now becomes a line of Support opposed to Resistance. If price was to continue to break threw R2 and is making its way too R3 then R2 now becomes a line of Support instead of Resistance

Same thing with Support lines. If price breaks below S1 by a reasonable amount and is making its way towards S2 then S1 is now a line of Resistance opposed to Support and you can expect prices to meet resistance at this level where it once had support.

This Resistance-turned-Support and Support-turned-Resistance is important to remember and if for some reason this is confusing too you don't worry its a simple concept that you will catch onto quickly, also i will provide screen shots of this scenario later so that you can have a example to reference.

Here is another screen shot of the Pivot levels we drew together on AUD/USD illustrating the technique we just discussed in regards to using our pivot points to make profitable trades.





 



By now you guys should understand the concept of Pivot Points and the Support and Resistance levels derived from it. In Part 3 of this tutorial we will be discussing much more advanced technical analysis and other ways too use Pivot Points but for now lets keep it simple Smiley.

In part 3 i will teach you guys how to trade the breakout of these pivot levels as well.

_______________________________

Indicators


Okay now that you guys have Pivot Points down, lets talk about a few different Indicators and how we can use them for technical analysis

We're going to discuss and learn some simple techniques on how to use the following indicators/tools:


 Moving Averages - Helps us Determine the current Trend and Market Sentiment, etc.

 MACD (Moving Average Convergance Divergance) - Will help us time our Entry's and Exits, etc.

 ADX (Average Directional Index) - Will help us determine the Strength of the current Trend

 DMI (Directional Movment Index) - Will help us determine the direction of the Trend as well as the trends Strength and various other things.


For now this is what were going to focus on and discuss. These tools are all you'll need for now. I don't want to overwhelm you guys and teach you too many things at once so in part 3 of this tutorial we will learn how to use some other tools/indicators such as Bollinger Bands, RSI , etc, etc.

For now this is all you'll need to make plenty of profitable trades Smiley

Moving Averages

First off lets discuss Moving Averages and how to use them to identify the current trend and sentiment in the market. This part will be VERY SIMPLE and SHORT. Smiley

There are alot of different things that Moving Averages can tell us but for now were just going to be using them to determine the current trend and market sentiment

For this part of the tutorial were going to be looking at EUR/USD so open up a chart for EUR/USD and follow along Smiley.

While on a 1H chart for EUR/USD Click on the tab at the top of the screen labeled "Studies". (If your not using Netdania's Netstation then you'll have to find it on your own but look for Moving Averages)








After clicking on "Studies" a box will open with a list of various tools and indicators. Type Moving Average in the search bar or find it on the list and click on it. After clicking on Moving Averages, in the box labeled "Parameters" under "Period" your going to type 100.









After clicking Add you will notice a blue line on your chart. This line represents the average price based off the last 100 points of data.

As you can see the line is moving in a nice uniform upwards trend, indicating that the market is currently trending up. I drew a arrow to represent this.









Moving averages can be a simple way to recognize Support and Resistance levels, keep in mind you should always use multiple indicators together when analyzing a currency.

Once you have identified a very strong trend in the market, any time the price retracts back to the Moving Average you will have a good opportunity too open a trade and hop on and ride the trend until the price breaks threw and closes on the other side of the Moving Average.

Now lets look back at EUR/USD again. I took a screen shot and drew this in order to give you guys a visual of what I'm describing. (You are too buy at the arrows i labeled as Support and then close your position and take profits at the arrow i labeled as Resistance)









As the price retracted back to the Moving Average and bounced off it you would have had multiple opportunities to open a long position/Buy EUR/USD and then as the price closed below the Moving Average this would have been an indication to close your position and take profits Smiley. This would have netted you some healthy profits, especially with adequately applied Leverage (which we will be discussing later on). Smiley!!!

That's it for now for Moving Averages! Later on I will teach you guys how to use multiple Moving Averages at once, and then using the crossover of the two as a "Trigger" too either Sell or Buy. I don't want to overwhelm anyone with too much at once and the best way to go about things is to learn one piece at a time so for now were going to move on Smiley.

Give yourselves a pat on the back! Take some of those profits you've made so far and treat yourself to something nice as a reward for making it this far! You deserve it! (For real though, you should probably take a break and give yourself some fresh-air champ Tongue)

*UPDATE*

As you can see in the following screen shot that was taken a few days later, the price finally broke threw and closed BELOW the Moving Average thus making the Moving Average a point of Resistance now opposed too Support




---------------



MACD (moving average convergence divergence)


Okay next we are going to discuss the indicator referred to as MACD (Moving Averages Convergence and Divergence). I am going to teach you guys how to read and understand MACD and use it as a "trigger" to either Sell or Buy the currency your viewing, which in our case is EUR/USD.

MACD is a very powerful indicator and is one of the most popular indicators used by traders today. Its ability to generate a good percentage of consistently accurate Buy or Sell signals coupled with its simplicity is probably one of the biggest reasons this indicator in conjunction with others is analytical gold to the adept trader.

MACD can be used too help determine the direction of a trend and weather a trend is likely to be ending or reversing, as well as the momentum and strength of the trend. This will immensely help you time the Entry's and Exits on your trades.

Lets go back to our charts and add MACD too it.

(in case you still need the link http://netdania.com/Products/live-streaming-currency-exchange-rates/real-time-forex-charts/NetStation.aspx Click Launch Netstation)

At the top of NetStation (The charting program we are using for this tutorial) click on the tab labeled "Studies" again.









After clicking the tab labeled "Studies" a box will pop up with a list of indicators like before except this time your going to type MACD in the search bar or find it on the list and click it. Your screen should look like the following screen shot. Keep all of the parameters at their default settings ( 12, 26, and 9) including the colors and click "Add"









After clicking on "Add" their should now be a separate chart attached to the bottom of the EUR/USD chart. This is your MACD Indicator Smiley. The following screen shot is a picture of EUR/USD with the MACD indicator attached to the bottom. This is what it should look like.









Okay now lets learn the basics of MACD. In part 3 we will go much more in-depth on all of the indicators mentioned in part 2 as well as others.

MACD is essentially just two "EMA's" or Exponential Moving Averages. One moving average is shorter and faster then the other longer and slower moving average

The MACD we just added to our chart (EUR/USD) is using the default EMA's of 12 periods and 26 periods. The 12 period EMA in our case is Green and is the "faster" moving average, whereas the 26 period EMA is Blue in our case and is the "slower" moving average.

For now I just want you too remember which EMA is the "faster" one (green) and which one is the "slower" one (blue).









Now I am going to teach you guys and gals how too use the MACD Crossver as a "trigger" too either Buy or Sell.

Lets discuss what signals are being given to us when the "Faster" moving average (Green) crosses or intersects with the "Slower" moving average (Blue).

As this crossover occurs, there is a very important moment in the market for us to possibly capitalize on

In the following screen shot I drew arrows at these crossovers so you guys can get a visual









Each of these points are signals telling us to either Buy or Sell and are referred too as either a Bullish Crossover or a Bearish Crossover.

Bullish Crossover- A Bullish Crossover occurs when the Faster moving average (green line) crosses ABOVE the Slower moving average (blue line). This would be a signal to Buy the currency in question which in our case is EUR/USD. (The first, third, fifth and seventh cross-overs on the previous screen shot would be an example of this)

Bearish Crossover- Yup, you guessed it. A Bearish Crossover occurs when the Faster moving average (green line) crosses BELOW the Slower moving average (blue line). This indicates a signal to Sell the currency.

Now lets look back at our EUR/USD chart with our MACD indicator attached too it and see these principles in action. Below is a screen shot demonstrating what we just learned.









This visual should help you understand the concept of MACD crossovers

On the bottom half of the previous screen shot you will see that on the MACD chart I highlighted the Bullish Crossovers in Green and drew green arrows pointing too them. I also highlighted the Bearish Crossovers in Red and drew red arrows pointing to them as well.

On the top half where the price is displayed I highlighted the areas that correspond with the MACD chart below on the bottom half.

Wow! Look at how much insight MACD crossovers can give you! As you can see these signals can be very appealing and if you listened to what these crossovers had too tell you then you would have netted a very nice profit!!! Congrats!

Okay now lets look at how MACD can be used to signal momentum and direction.

I'm sure by now you guys are wondering what those red bars on the MACD chart are for. This is referred to as a Histogram. The Histogram can be used to signal Market Momentum and Direction. These bars are calculated by analyzing the two EMAs. The size of the bars and the amount in which the bars change in size will provide us with information about momentum. When the bars are becoming bigger/longer this means that momentum is rising and the trend is becoming stronger and vice versa when the bars are decreasing in size this means that momentum is falling and the trend is starting to weaken

The Histogram shows us direction by observing weather the bars are extending upwards or downwards. When the bars are extending upwards this means that the price is moving upwards in direction with the histogram and of course the vice versa applies when the bars are extending downwards opposed to up.

That's it for the Histogram Smiley. In part 3 we will go much more in depth about all of the indicators that we have discussed in this part of the tutorial

------------
https://1broker.com/m/r.php?i=3567
(Part 2 Continued in next post)

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February 24, 2016, 12:18:48 AM
Last edit: February 24, 2016, 06:24:04 PM by TheLotusPod
 #3

(Continuation of Part 2)
https://1broker.com/m/r.php?i=3567

The last two indicators we are going to discuss in this part of the tutorial are generally used together and are known as DMI (Directional Movment Index) and ADX (Average Direction Index) and are used too tell us the Direction of the current trend and the Strength of said trend

Looking back at EUR/USD, Lets add both of the indicators too our chart starting with DMI first.

Click back on the "Studies" tab again as we did before except this time your going to type into the search bar or search the list for "DMI" and then click "Add". Make sure you keep all of the parameters at their default settings









After adding the DMI indicator to your chart it should look like the following screen shot below









On the indicator that we added to our chart our +DMI is the Red line and the -DMI is the Blue line.

The +DMI (Red Line) measures how strongly the price moves upwards and the -DMI (Blue Line) will measure how strongly the price moves downwards









First we are going too look and see which one of these DMI lines are on top or Above the other. This is referred too as the Dominant DMI. Which ever DMI is the stronger, more dominant DMI is going to be the DMI that is most likely to predict the direction of the price. Once the lines Crossover this means that the dominance has changed from Bullish to Bearish or Bearish to Bullish.

Yup you guess it, a Crossover occurs when the DMI on the bottom crosses up through the DMI on the top a.k.a the "Dominant" DMI. This should not be interpreted as a signal to Buy or Sell but rather used in combination with the other indicators we discussed to confirm your Entry's/Exits or weather you should Buy or Sell. Paying attention to one indicator solely such as the DMI is a mistake alot of beginners make and one that you should not be willing too partake in. For instance paying attention to JUST the DMI Crossover can be unreliable as it will frequently give late signals when volatility is high and false signals when volatility is low.

In conjunction with the other indicators we discussed, you should be using the DMI as a indicator of potential change in direction of the market.

The number at the very right of the DMI chart shows the "Strength" and this number ranges from 0 to 100 with 0 showing extreme weakness and 100 showing phenomenal strength.

If the DMI value is anything over 25 this means that the current directional momentum of the currency is STRONG. On the other hand DMI values that are under 25 are directionaly WEAK.

If a Crossover occurs AND the PEAKS of the dominant DMI are above 25 while the PEAKS of the bottom DMI are below 25 then this would indicate a change in the Trend and you should pay attention to these moments in the market

Below is a screen shot illustrating this concept









For now this is as far in-depth as we are going to go when it comes to the DMI indicator. There is much much more that this indicator can do for us but for now I'm just trying to give you guys the basics of these indicators so you can start making some profitable trades! Smiley

Now lets talk a little about the ADX (Average Directional Index) indicator, this part will be very brief Smiley. The ADX indicator is usually plotted on the same chart as the DMI indicator as both of the indicators work really well in conjunction with each other and really compliment one another.

Go back to the "Studies" tab and search for ADX and click "Add" to add it too your chart using the default parameters. Below is a screen shot of what the ADX chart looks like.








The ADX (Average Directional Index) indicator is another indicator that is used to determine and quantify Trend Strength. ADX has a value ranging from 0-100

Unlike like the DMI indicator. The ADX line is NON-DIRECTIONAL and will tell you trend strength weather price is trending up or down.

As I said before, ADX and DMI are generally used together. As we learned earlier when the +DMI is above the -DMI this means that price is trending Upwards and the ADX measures the strength of this up-trend. Of course if the -DMI is above the +DMI this would indicate that price is trending Downwards and the ADX will now be giving you a measurement of the strength of that Down-trend opposed to the uptrend as before

If the ADX has a value above 25 (Just like previously with the DMI) this is a indicator that the trend is strong and using trend trading techniques should pan out well when the value of ADX is above 25. Below is a screen shot with this level marked off so you have a visual.








Below is a screen shot of a table I found that illustrates the value of ADX and what it means in terms of trend strength.








Its important too note that just because the ADX line is decreasing does not mean that the trend is changing rather it just means the strength of the trend isn't as strong as it previously was.

That's it for ADX for now! In part 3 of the tutorial we are going to touch back on a lot of the indicators discussed in this part of the tutorial (part 2) and go much more in-depth on them.
_____________________


That's it for part 2 of the tutorial guys! Good job everyone!!! Congratulations!! Now imagine using all of these indicators together in symphony to orchestrate very profitable trades and execute them with confidence in knowing what your doing is a all around technically and financially sound decision!

By using all of the information you have learned so far and utilizing all of the tools we discussed in conjunction with each-other you should be able to make some very exciting and profitable trades!! I look forward to hearing all about your success and answering any questions anyone has about ANYTHING! Please don't hesitate too PM me if you have any questions!

https://1broker.com/m/r.php?i=3567


Quick overview of some of the things we've covered in Part II

How to read charts and understand what candlesticks and candlestick patterns are and how to identify them
What Pivot Points are and how to chart them and use them for "Range Trading" to make profitable trades!
Various vocab words and explanations for very important topics in relation to the market
How to read and use multiple Indicators such as Moving Averages, MACD, ADX and DMI
Different forms of Technical Analysis
etc, etc

Update
I will be choosing 5 people at random on the first of next month to receive 3 free signals and the opportunity for some private lessons. In order to be eligible for this "raffle" you need to be a referral of mine on https://1broker.com/m/r.php?i=3567

Signals Include Variables For The Following: Entry Price, Stop Loss, Take Profit, Suggested Leverage, etc.
Signals will be provided for any Currency Pair of your choice

(If your interested in purchasing FOREX trading signals PM me for details - spots limited)
 
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February 24, 2016, 12:37:22 AM
Last edit: February 24, 2016, 06:29:58 PM by TheLotusPod
 #4


ENJOY!!!

I worked hard on this and I hope this community finds it valuable! Smiley!


If anyone has any questions let me know Smiley.
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February 25, 2016, 07:08:49 PM
 #5

I will update next week with information on how to use Bollinger Bands and what they are Smiley
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February 25, 2016, 09:24:07 PM
 #6

I will update next week with information on how to use Bollinger Bands and what they are Smiley
Thanks a lot for this useful information that you shared.It helped a novice like me to understand some of the important basics of forex trade.I will soon get my feet wet with forex trading

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March 01, 2016, 05:02:33 AM
 #7

I will update next week with information on how to use Bollinger Bands and what they are Smiley
Thanks a lot for this useful information that you shared.It helped a novice like me to understand some of the important basics of forex trade.I will soon get my feet wet with forex trading

No problem I'm glad I could help! Thanks for the review Smiley. I will PM you tomorrow with some information I think you'll really enjoy since you were the first too reply Smiley


Tomorrow I will PM a few of you with a couple free trading signals including all of the variables Smiley

(Coming soon: How to use Bollinger Bands and Advanced Fractals)
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March 03, 2016, 12:03:09 AM
 #8






For everyone who has been following my trades its time to take profits!

+%178 on one position
+%78 on another position
+%35 on the final position

That's a total of %291 profit in one day! Congrats if you were one of the people who received the free signals from me and enjoy your profits!

I will be selecting another 5 people next week to receive some more free signals again! PM me for details

(I don't care much for disclosing my position sizes therefor I blacked out that part)

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March 06, 2016, 10:34:28 PM
 #9

And the markets are open again! Good luck this week everyone Smiley
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March 06, 2016, 11:02:36 PM
 #10

I have been a forex trader for 4 years, and it is interesting to realize that there are some guys still believing in technical analysis as a reliable way to carry out this business, when it is well known that TA is nothing but a series of numbers and figures related to past events.

I am totally convinced that this business is just a matter of money management and strategy, and it is enough to become a profitable trader.
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March 07, 2016, 12:25:33 AM
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I have been a forex trader for 4 years, and it is interesting to realize that there are some guys still believing in technical analysis as a reliable way to carry out this business, when it is well known that TA is nothing but a series of numbers and figures related to past events.

I am totally convinced that this business is just a matter of money management and strategy, and it is enough to become a profitable trader.

Hello Angaper! Thanks for taking the time to read my tutorial and reply, I really appreciate your input Smiley. I respectively disagree on your stance when it comes to the importance and relevance of technical analysis but I definitely do agree with your outlook on money management.

If your not utilizing proper risk management in unison with a strategy then you will surely fail weather that strategy be based on technical analysis or something else. With that being said, technical analysis is a VERY important tool that every trader should have in their tool box for it is very important to understand and I don't think it should be something that's ever overlooked or under appreciated. The value of technical analysis when used in conjunction with proper risk management is truly priceless.

The next piece that I will be adding to this tutorial will have a section on proper risk/reward management and how to identify trades that fit a defined risk/reward ratio


I hope everyone's having a good start to the trading week! I will probably post a few trading signals on this thread for everyone sometime this week Smiley!

These last couple years have been phenomenal for me and I'm really looking forward to sharing my knowledge with all of you and raking in an insane amount of pips together!

If anyone has any questions about ANYTHING feel free to PM me Smiley
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March 07, 2016, 10:36:08 AM
 #12

That's a lovely tutorial thank you for posting. I did a little bit of forex a few years back but now I am on roaming internet until I get proper internet connection so to trade now is nearly an impossibility until I get my nice internet. My husband now works for a forex company looking after Chinese clients lol but he is also anxious to get started and learn to trade as well. When we both start doing first a demo account each we will have a friendly competition then we will start trading for real at some point.  Cheesy
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July 10, 2017, 11:52:03 PM
 #13

Hello everyone I am back!!!! I will be updating a bunch of new information as well as a new winning strategy that I have developed that is truly amazing!

I hope everyone has learned a lot from this tutorial so far and by now you should all have the tools needed for us to continue on Smiley. If you are just now joining us, welcome! Stay tuned! Smiley
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