Basics of Candlesticks & Patterns

Now you probably see chart with candlesticks. Are you ready to learn how these candlesticks signs or mark to you market pricing? Let us join candlesticks learning here....

Bullish / Bearish candlesticks: Suppose you want to trade in 1 Hour time frame. Notice when 59 minutes and then 00 to a new candle is starting. Now watch if the market price  upping then you see candlesticks is growing up.So after 1 hour later your watching candle will be ended. Now questions where is the open and close price 1 hour time frame? Yeah if  the candlesticks are bullish then 1st is the open price and last is the close price. (Look at the attach chart) If the candlesticks are bearish then vice versa. Have you ever eaten an ice cream ? Has it any stick ? Yeah right candle has a stick like that and it  is called shadow. So open & close price is varying from time to time frame. Mostly uses daily open and close price. Remember it... Most important>>>>>

Watch please please candlesticks carefully. You will be learning Forex market sentiment dramatically if you stick with candlesticks on your chart.

Do candlesticks mark us market movement? Yes of course. At the first stage  Japan trading Forex with candlestick chart. They didn't use bar or graph chart. They are trying to understand for price movement now or near or future price movement with these  sticks while eastern countries just use bar charting in the meta trader.

Today this market you have found many types of candlesticks with formation or figure. So many candlestick patterns now used for trading or market analysis better. It is mostly used.

In the above my chart I just recognize some of them. You have to learn more candlesticks patterns and about their behaviors.

I will be attaching a couple of famous books for only candlesticks (Reference book ) learning. Be happy. Enjoy learning....

*1st book link https://www.dropbox.com/s/4eadfkk62pezhkg/Profitable%20Candlestick%20Trading.pdf

*2nd book link https: //www.dropbox.com/s/nva6ftv5ub1vspt/Japanese Candlestick Charting Techniques [1991 330p  S. Nison] [Trading ebook].pdf

Type of Forex Trading Orders

Trading currency business you only buy or sell currency. So you just buy or sell if you determine these and of course instant execute trades. But there are some trading order you have to  learn. These are called pending orders.
1. Buy & Sell stop : If the market is gone certain pricing level you wish enter buy or sell currency then these types are right for you. So at a certain price level you believe that the market will move up or down and you have to  execute buy or sell stop order. If you are not in front of a computer no problem meta trader executes trade even if you are not live...
2. Buy & Sell limit : These orders are opposite of buy and sell stop order. Suppose you notice that the price is upping and you believe that after a while market will be turned down at a certain price level and again it up. Now your marking down  price level where  you have buy limit order. And your analysis that the market now down but will be up and  again it will be down now your marking up price level where you have sell limit order.
3. OCO ( once cancels other) : 2 orders at a same time (above & below current market price)  but execute one which touch or reach firstly and at the same time other order cancel.
4. Trailing stop order: Suppose you enter a buy or sell then if the market go in your favour, you  wish to lock up some profit / pips / points then trailing stop order you have to be  set off. Generally it is set by pips or points. O.. Oh.. Sound like good yeah meta 4 just lock your profit and if locking profit price is  trying  to break then meta 4 close your trade and lock / save your profit.

How to use Trading Platform Meta Trade 4

Before learning Forex deeply let us familiar your trading platform or software that called Meta Trade 4  or 5 .The Meta 4 platform is generally used most of the traders in this market and Meta 5 has been just some upgrading. But before choice Meta 5 you have to know that many Forex Indicators or EA's (Expert Advisor useful for automated trading)  are based on the Meta 4 version. However Meta 5 also has those. And finally it is your choice. Here I am going to show to you Meta 4 trading platform and its uses......
Candlesticks / bar / graph chart : You earlier know market price up or down but how does it measure you buy points but points by which symbol? Yah this is by candle sticks ( 1st uses in  Japan) or Bar (Eastern countries use ago or now ) and Graph chart (this may be you learn school books). So if the price rise up the graph or candle stick or bar grows up and right hand scale you see the points how much price for a certain time or place..
Time Frame : From 1 Minute to Monthly  time frame you can use for trading and analysis mean if you choice 1 hour time frame all candle sticks or bar or graph will be finished that period so for trading day you have only 24 candlesticks on your meta 4. You will be learning more details after some periods.
Expert Advisor: This section is for automated trading with coded some scripts. One need not stay on the monitor you can do your work while EA enter trades and close the trade on your favor. But you must have to know this deeply or you will be suffer of your capital or burn of your account deposit. I will be writing about  EA one of  the other lesson deeply.. Ok.
Data window : Here you will find different pairs with different pricing up and downing and you can drag any pair in your meta 4 for trading if you wish.
Tools: Here some line tools that are helping for drawing the trade line .
Templates: This section is suitable for your saving templates that you may be settled with different indicators or drawing. Once you have  save them you have not drawn or settled any in future trading, just open a click and see your saving templates for start trading.

Others way of trading Forex

You have already learned that Forex market lives 24 hours but Forex can also trade in the different way ... Sound like horrible yeah not it is. Let be learn some way..

* Spot market : Currency is traded instance or on the spot using current market price. This type of trading generally we do.

* Future : Trading currency  upcoming date at a specified price. It is created by CME ( Chicago Mercantile Exchange ).

*Options: It is traded through an Exchange. When you buy or sell as options mean you want to trading a certain price on an expiration date. For example International Securities  Exchange, Chicago Board Option Exchange.

Who is the biggest in the Forex market

In the Forex market big players are the Super Banks, Large Commercial companies, Gov. Central Banks, and individual participants.

1. Super Banks : As you know fx market is decentralized so these banks act biggest play transaction in favor of their clients with huge capital. They are also known as Interbank such as UBS, Barclays, Citigroup etc.

2. Large Companies: These companies take part in the Forex market in order doing  business. They also play a role but they are typically smaller than super banks.

3. Gov. & Central Banks: They play  in the market with currency supply and control  inflation such as ECB (European Central Bank), BoE (Bank of England), Fed R ( Federal Reserve).

4. Individual : Like you and me or others who just enter the market to jump some making cash no matter they are joint or single or huge or small capital.....

Which currency trading most and Forex session and transaction where most

According of IMF ( international monetary fund ) the USD traded mostly in the Forex market then GBP and JPY and EURO

USD traded about                   62%
GBP & JPY                            4%
EURO                                   2%
Rest currency                       28%
* (source IMF 2012)

So USD is the king in the  Forex trading market.

Trading Sessions:

The Asia Session (NZ, Australia, Japan ) open = 10 to 11AM GMT
The London Session ( GB and EU ) open = 7 to 8 AM GMT
The New York Session ( US, Canada ) open = 8 AM GMT
*note : during DST (day saving time ) it open 1 Hour ago.

The Forex market is acting as Over-the-Counter ( OTC) or interbank mean market entry electronically open 24 hours.

  Per day transaction of Forex market: 

New York stock  exchange about 22.4 billion $
Tokyo stock exchange about 18.9 billion $
London stock  exchange about 7.2 billion $

Major, Minor & Cross Currency

In the Forex market major currencies are USD,EURO,GBP,CHF,AUD,JPY,NZD,CAD and they have high liquidity so they are major and rest of currencies are   minor currency.

You know about base & quote currency and also know they traded as pair. Suppose you traded Euro / Usd and Aud/Usd most but if you want to trade Euro/Aud? Is this possible.. Yes this is called cross currency trading but beware if you want to trade cross currency this have highly transaction cost mean highly spread your broker demand to you.

Some nick name of currency:

USD = Buck
EURO = Fiber
GBP = Great Britain Pound = Cable

CHF = Swiss Frank = Swissy 

AUD = Australian Dollar = Aussie

NAZ = Newzeland Dollar = kiwi

CAD = Canadian Dollar = Loonie

Leverage and Margin

You already know about lot size in the  Forex trading. In the Forex market you or anyone trading currency with a small deposit of money. But with a small portion of money or capital how you buy or sell 1 Standard lot (100,000 units or $100,000)?

Suppose your broker act as a bank they just allowed you a trade 1 Standard lot by deposit of a specific amount of money. The rest money lends you for trading it is called leverage. And the initial deposit for trading 1 Standard lot this money is called Margin or initial Margin. It is vary from broker to  broker. Suppose you see a broker website information at 100:1 (1% Margin required) deposit mean you have to deposit $1000 and if you want leverage then trade 1 standard lot your broker will lend you $90,000 for you ( $1000*leverage100  = $100,000 )

Profit / Loss calculating currency business

An Exchange declared that how much money you get against another. Suppose EURO/USD exchange rate is at the  moment 1.3242 /1.3245 after one day later the price up and shows 1.3272/1.3275 so if you brought Euro ago  that rate then you got profit 1.3272-1.3242=30 and if your lot size is  one mini lot (worth 1 $/per point/pips ) then your profit 30*1$ = 30$ - broker spread 3$ = total 27 $...when you buy or sell your broker deduct his  spread from your account deposit after you close a trade.

Now question what is lot  and pip...........

 

Have you ever seen a price quote if so then you might see that there are 4 or 5 digits after decimal like this 1.3245 to 1.32458 but for Japan Yen you also see 2 or 3 digits after decimal like this 184.25 or 184.254. So last digit is called pip or pipettes or point. When you found 4 digits after decimal then last  digit is pip and if 5 digits then last is pipettes. In the above example you profit 30 pips ( 1.3272-1.3242=30). You may also call pip as point. So clear 1 pip is 0.0001 points and  in case of JPY then it is 0.01

In Forex market you trade a specific amount this is called lot.

1 Standard lot = 100,000 units 

1 Mini lot = 10000 units

1 Micro lot = 1000 units

Now let us assume pip value 1 standard lot:

If USD is the base currency

Suppose USD/Jpy quoted as 117.80 then ( 0.01/117.80) * 100,000 = 8.48$ per pip

If USD is not the base currency

Suppose GBP/USD exchange rate is 1.5240 then ( 0.0001/ 1.5240) *100, 00 = 6.56 * 1.5240 = 9.99 $ around $10 worth.

So therefore 1 Standard lot  per pip value is $10

1 mini lot  per pip value is $1

Currency trading but how?

In the Forex market currencies are traded in pairs. For example EURO/USD, GBP/JPY, AUD/USD etc. The 1st part of currency is called Base currency and 2nd after the slash (/) is called the Quote currency. When you buy or sell your base currency at the same time you sell or buy the quote currency (virtually).

Euro / Usd pair for an example:

1.3345 / 1.3348 

Look at last two digits you notice price difference is 3 (48-45=3) but it is truly 0.0003 differences. For a moment this price may display in your trading platform/software called Meta Trader 4 or 5.
The 1st part currency is a bid price mean your broker is willing to buy it and the 2nd is asking price mean your broker is willing sell quote currency that rate. You also see that bid and ask price is changing because the Forex market is floating market so demand and supply change market price every time.
* The different bid & ask price is called spread. Above example broker spread is 3.

Forex advantages & market structure

The main advantage of Forex trading it is running 24 hours so no matter you are a different time zones and you can use demo trading (money is virtual) for practicing your Forex trading business  and it is free. The Forex market is so huge, that mean high liquidity (even a sec you can buy or sell), no commissions, no middlemen, a lot of resources, do business small amount of money, huge leverage, no hidden cost etc..

Market structure

Buyer >>>>> Centralized market <<<<< Seller

Major Banks

^

Electronic Brokering Services

^

Medium Banks

^

Retailer/ECN/Hedge funds/Commercial companies

^

Traders

Traders involve Fx market just internet communication system over a backbone of those above

Forex History

The ancient societies people produce agriculture and they buy or sell their products among them. Money system starts thinking then. People were settled gold to standard for business among them. A piece of gold was the value of buy or sell values. But there was a problem that a piece of gold may be small or large or cannot measure exactly. Then the idea of Coin solved the issue. Metal coin has signed and mark of value. The business was going then ok
However business grew coins became more important banks started to issue a large amount of coins and different countries tried it so business transaction between them there was a problem with the fix which amount or rate the agree to convert value to exchange their product's value?
After the Napoleon war a number of the nations agreed to fix an exchange value against gold.
After the World war 2 in 1944 at US 44 nations agreed to exchange their currency against the USD. The International Monetary Fund (IMF) established. The value of the USD is fixed against gold.
In 1971 exchanged rates was allowed deviate up to 4.5% their fixed values. EU participates grew and most of the nation participates exchange their currency with a  fix rate  from 1971 to 1976.After 1976 currency market was floating, the exchange rate was floating, international organization were set up the control over currency conversion. Currency was used to buy another currency modern fx market starting.
The rapid grow of telecommunication and computer Forex market changed its operating system. Earlier the market was the for banks, hedge fund, large financial institutes but now market is for everyone any time any where no matter. So today's market is supply and demand.

What is Forex mean...

Forex or FX mean Foreign Exchange.It is Currency exchange.The world and it nations have different currency and if they business among them then currency exchange is done.So they exchange their currency and off course a certain rate.It is the world largest financial business.Suppose you are at America for visit only and at the airport you have to just convert your local currency to US dollar then you find that 1$=amount of your local currency.You are happy to convert it and enjoy a nice visit US after then you have to go back home again you can convert your cash USD ( your hand left after paying during visit) to your local currency.