Copyright © 2023 [Michaela Robertson, FxHoney]

All rights reserved.

No part of this book may be reproduced or transmitted in any form or

by any means, electronic or mechanical, including photocopying,
recording, or by any information storage and retrieval system,
without permission in writing from the copyright owner.

This book is intended to provide general information on trading and

investing and is not intended to be relied upon as professional advice.

The author and publisher disclaim any liability for any loss or damage
incurred from the use of the information presented in this book.

Cover design by [Michaela Robertson]

Published by [Michaela Robertson,FxHoney]

Printed in [South Africa]

First Printing: [June,2023]

For permissions, inquiries, or bulk sales, please contact:

[FxHoney]

Website:

[www.fxhoney.com]

Disclaimer: The information provided in this book is for educational

purposes only and does not constitute financial advice. The author
and publisher are not responsible for any actions taken based on the
information presented in this book. Please consult a qualified
financial professional before making any investment or trading
decisions.

Copyright 2023, FxHoney. All rights reserved

 C O N T E N T S

P A R T I

02 introduction

3-5 overview

6-7 getting set up

8-11 what are candlesticks?

12-27 candlestick pattterns

 C O N T E N T S
P A R T I I

29-46 market structure

47-51 timeframes and analyses

52-73 trading strategies

74-79 reversal patterns

80-89 money management

90-91 trading rules

92-94 pre-market analysis

95 trading sessions

96-106 trading plan

107-118 trading log

119-124 trading terminology

125-127 conclusion
 Part 1
introduction

overview

getting set up

what are candlesticks?

candlestick pattterns

F X H O N E Y
1
INTRODUCTION

In a nutshell, trading is the buying and selling of indices,

currency pairs, and commodities. Trading financial markets
allows us to invest with smaller amounts of capital, as we
are not actually purchasing a stock but rather trading out
price action.

The FxHoney trading bible was designed to provide you with

the expertise and tools necessary to create wealth through
trading, even if you're a beginner.

It is a compilation of all the trading strategies I have learned

throughout my years of trading and believe hold the keys to
success.

The trading strategies combined with the technical analyses

and market psychology you will learn in this book will help
you understand and trade the market with precision.

Remember, you are learning a new skill. Take your time to

understand what you're learning in this book and practice!

2
2
OVERVIEW
THIS BOOK IS DIVIDED INTO DIFFERENT SECTIONS

1
GETTING SET UP
In order to trade, you need a platform! From choosing a broker to
understanding the different account types and trading platforms,
I've got you covered!

2
CANDLESTICKS
Candlesticks and candlestick patterns are an essential part of
trading. It allows you to understand market psychology, and along
with the technical analyses I'll teach you in this book, you'll be able
to make the right decision at the right time.

3
MARKET STRUCTURE
In this section, I will help you identify trending markets,
consolidating markets, and choppy markets. I will also teach you
how to trade these markets professionally.

4
TIMEFRAMES AND ANALYSES
In this section, I will show you how to analyse from the biggest
timeframes to the smallest timeframes using technical analysis.

3
2
OVERVIEW
THIS BOOK IS DIVIDED INTO DIFFERENT SECTIONS

5
TRADING STRATEGIES
Along with the candlestick strategies, you will learn
reversal patterns, trendlines, moving averages, support and
resistance, and supply and demand zones.

6
MONEY MANAGEMENT
In this section, you will learn techniques and strategies to
effectively manage and protect your capital, along with risk
management, position sizing, risk-to-reward ratios, and stop
losses.

7
TRADING SESSIONS & NEWS
It is essential to know the different trading sessions for different
regions and how to read and understand the effect news will have
on the market. This is what I'll teach you in this section.

4
2
OVERVIEW

THIS BOOK IS DIVIDED INTO DIFFERENT SECTIONS

8
TRADING PLAN

Creating a trading plan allows you to draw up a roadmap for

making consistent and informed trading decisions. In this
section, I will teach you how to effectively set clear objectives,
manage risk, control your emotions, and be consistent in your
trading journey.

9
DAY-TO-DAY TRADING PLAN AND
TRADING LOG

BONUS! I've included a day-to-day trading plan to help you

become a successful trader. I have also added a trading log for
you to keep track of every step in your trading journey.

5
 GETTING SET UP

In order to trade, you do need a couple things in place.

You need to create a trading account with a broker. You can use
local or international brokers; however, I would recommend
using a local one.

A broker is like the middleman; this is where you will set up

your trading account, deposit, and withdraw your capital.
When creating a trading account, it is important to understand
the different trading account types (keep in mind that different
brokers may have different figures, but the concept stays the
same).

A bonus account:

This is an account where the broker gives you extra credit,

usually on a first-time deposit basis. These bonuses can come
in various forms, such as a percentage of the initial deposit,
extra trading credits, or promotional offers. The purpose of a
bonus account is to provide traders with additional capital to
trade with, potentially increasing their trading opportunities
and potential profits. It's important for traders to carefully
review the terms and conditions associated with bonus
accounts, as they often come with certain requirements or
restrictions, such as minimum trading volumes or withdrawal
limitations.

6
 GETTING SET UP

A standard account:

A standard account is one of the more risky account types.

This type of account usually charges a markup (spread) on
the instrument you're trading. Standard accounts usually
have a leverage of 1:1000. Although it is riskier, it does come
with higher rewards. I recommend going for a standard
account when you're coming in with a large amount of
capital.

Once you have created your trading account, you need to

download a trading platform where all the trading will
happen. Depending on your broker, it will either be
MetaTrader 4 or MetaTrader 5. Usually, your broker has one
that you can download directly from their site. All that's left
is to link your trading account to your trading platform and
deposit your capital!

A Micro account:

A micro account allows you to trade using smaller trading

sizes so that you're risking less of your capital, in turn
allowing more room to play around with lot sizes. It usually
uses a 1:500 leverage, meaning that for every $1 or R1, you'll
be able to trade up to $500 or R500 in the financial market.

7
 Now that you're all set up, let’s get right into it!

INTRODUCTION TO
CANDLESTICKS

Candlesticks are a visual representation of the

behaviours of buyers and sellers in the market. It allows
you to see the high, low, open, and closing prices in each
trading session. This shows us price movement.

Candlesticks can be used in conjunction with other

technical analyses to provide more confluence, which I
will teach you further on in the book.

It is important to understand human behaviour in

relation to money. Candlesticks allow us to understand
how buyers and sellers interact with each other.

It is also crucial to understand that the market movers

are banks, hedge funds, and news.

Candlesticks will help you understand what these

market movers are doing and give you an indication of
when the best time would be to enter, exit, or simply
stay away from the market.

8
 WHAT IS A CANDLESTICK?
A candlestick body consists of high, low, open, and close
price points for a specific period of time in the market. Let's
assume the picture below is in a 15-minute time frame. That
tells us that each candlestick represents 15 minutes in the
market.

HIGHEST PRICE

OPEN
HIGHEST PRICE
CLOSE

CLOSE
OPEN
LOWEST PRICE LOWEST PRICE

1 2

Candlestick 1
The close is below the open. Meaning that for this
session, the market opened at a higher price and
closed at a lower price. This indicates the sellers drove
the price down during this trading session; therefore,
it is a bearish candle. Bearish candles are usually filled
in.
Candlestick 2
The open is below the close. Meaning that for this
session, the market opened at a lower price and closed
at a higher price. This indicates that buyers drove the
price higher in this trading session; therefore, it is a
bullish candle. Bullish candles are usually just an
outline.
9
 CANDLESTICKS HAVE
DIFFERENT BODY SIZES

UPPER
CANDLE WICK
UPPER
CANDLE WICK

LOWER
CANDLE WICK
LOWER
CANDLE WICK

SHORT BODY LONG BODY

Short-body candles indicate minimal buying or selling

pressure during the specific trading session. Long-body
candles indicate strong buying or selling pressure in the
market for that specific trading session.

For example, if there is a long-body bearish candlestick (the

market opened at a higher price and closed at a lower price),
that means sellers were stronger in this specific trading
session and drove the market to lower prices.

10
 CANDLE WICKS

LONG
UPPER
CANDLE WICK

LONG
LOWER
CANDLE WICK
1 2

Candle wicks provide us with very key information about a

specific trading session.

Candlestick 1
A long upper candlewick with a short lower candlewick
indicates that buyers managed to drive the price up
drastically, but somehow sellers managed to drive the price
right back down, and the market closed below the open.

Candlestick 2
Long lower Candle wick with a short higher candle wick
indicates that sellers managed to drive price down
drastically but somehow buyers managed to drive price right
back up and market closed above the open.

11
 CANDLESTICK PATTERNS

Now that we know how to read the behaviours of buyers and

sellers from candlesticks, let's look at some candlestick
patterns.

Candlestick patterns are one of the most powerful trading

strategies you could use.

Being able to identify these patterns and the psychology

behind them will allow you to make informed decisions on
what your next move should be.

Remember that using multiple trading strategies together

just increases the accuracy of your entries.

BULLISH CANDLESTICK
PATTERNS

Bullish candlestick patterns usually occur at the bottom of a

downtrend, indicating a reversal of price movement.

This can be used as a signal that the market will be moving

towards the upside.

12
 BULLISH ENGLUFING BAR

The bullish engulfing bar consists of two candlesticks. The

first candlestick is a short bearish candlestick, and the
second one is a long-body bullish candle that englufs the
first one.

See diagram below:

CLOSE

SHORT BODY LONG BODY

OPEN

This pattern tells us that buyers are now in control of the

market, and the market direction will now be moving
towards the upside.

If this bullish candlestick pattern appears in an already-

uptrend, this can be seen as a continuation pattern.

Therefore signalling that the market will continue in an

uptrend.

If it is spotted at the bottom of a downtrend, it signals a

reversal. Therefore, it indicates that the market will change
direction and start moving towards the upside.

13
 BULLISH ENGLUFING BAR

UPTREND

LONG BODY
BULLISH
ENGULFING
CANDLE
DOWNTREND

SHORT BODY
BEARISH
CANDLE

The diagram above is a perfect example of a bullish engulfing

bar pattern at the bottom of a downtrend, which clearly
indicates a change in market direction. This shows us that
buying power exceeds selling power.

Remember to use different trading strategies and technical

analyses to provide confluence before entering the market.

14
 DRAGONFLY DOJI
CANDLESTICK

OPEN AND
CLOSE

LONG LOWER
WICK

The dragonfly doji candle is a candle where the open and

close prices are the same or around the same price, with a
long lower wick. This tells us that even though sellers tried to
push the market down in this session, buyers managed to
buy the price back up close to the open. Although a dragonfly
doji is rarely seen, this could indicate a change in market
direction towards the upside.

See diagram below:

UPTREND

DOWNTREND

DRAGONFLY
DOJI CANDLE

15
 MORNING STAR

BULLISH
BEARISH CANDLE
CANDLE

SMALL BODY BULLISH

OR BEARISH CANDLE

A morning start candlestick pattern consists of 3 candles

A bearish candlestick:
Indicating that sellers are in control of the market for that
specific trading session.

A small body candlestick:

The second candlestick can be bullish or bearish, with a
small body indicating sellers are still more dominant but
aren't able to push prices lower.
A bullish candlestick:
This candlestick gapped higher and closed above the
midpoint of the previous candle. Indicating that buyers are
now in control and can indicate a trend reversal pattern.

16
 MORNING STAR

LONG BODY
BULLISH CANDLE

SMALL BODY
LONG BODY
BEARISH
BEARISH
CANDLE
CANDLE

In the example above, this pattern occurred at the bottom of

a downtrend, therefore signalling a reversal in market
direction.

The first long body bearish candle indicates that sellers were
in control for that trading session and managed to drive the
price much lower than the open.

The second small bearish candle (Doji candle) indicates that

although sellers were still in control but unable to push
prices lower, buyers managed to push prices back up and
close near the open. This indicated an increase in buying
power. Remember that in this candlestick pattern, the
second small body candlestick can be bullish or bearish.

The third long-body bullish candlestick confirms the increase

in buying power; this means that the market is likely to
reverse and move towards the upside.

17
 TWEEZERS BOTTOM

BULLISH
CANDLE
BEARISH
CANDLE

The tweezers bottom consists of two candlesticks:

The first one is a large bearish candlestick.

The second is a large bullish candlestick.

This indicates that sellers had a good session and managed

to drive the price down; however, in the next trading session,
buyers came in and pushed the market back up and closed
around the same price as the bearish one opened.

When this candlestick pattern forms at the bottom of a

downtrend, it signals a reversal in market direction.

Don't try too hard to remember the names of the patterns;

just understand the psychology behind them. Once you
understand the psychology behind these candlesticks, it's
easy to recognise what will happen in the market next and
trade it out with precision.

18
 TWEEZERS BOTTOM

UPTREND

DOWNTREND

TWEEZERS
BOTTOM

In the example above, we can see that a tweezers bottom

occurred at the bottom of an obvious downtrend.

We can see that sellers came in and managed to drive prices

lower in the first session of this pattern.
However, in the second session, buyers drove the price back
up and closed above the open of the bearish candle in the
first session.

This could be seen as a buying signal, as it indicates that

buyers will now be pushing the market towards the upside.

As we can see in the example above, the market has now

changed from a bearish trend to a bullish trend.

19
 BEARISH CANDLESTICK
PATTERNS

Bearish candlestick patterns usually occur at the top of an

uptrend, indicating a reversal of price movement.

This can be used as a signal that the market will be moving

towards the downside.

Most of these patterns are just the opposite of the bullish

patterns we just learned about.

BEARISH ENGULFING BAR

A bearish engulfing bar is the opposite of a bullish engulfing

bar and consists of two candlesticks. The first candlestick is a
short bullish candlestick, and the second one is a long
bearish candle that englufs the first one.

See diagram below:

OPEN

SHORT BODY LONG BODY

CLOSE

20
 BEARISH ENGULFING BAR
This pattern tells us that sellers are now in control of the
market, and the market direction will now be moving
towards the downside.

If this bearish candlestick pattern appears in an already

downtrend, this can be seen as a continuation pattern.
Therefore signalling that the market will continue in a
downtrend.

If it is spotted at the top of an uptrend, it signals a reversal.

Therefore, it indicates that the market will change direction
and start moving towards the downside.

BEARISH
ENGULFING BAR

UPTREND

DOWNTREND

The diagram above is a perfect example of a bearish

engulfing bar pattern at the top of an uptrend, which clearly
indicates a change in market direction. Remember that for
this pattern, the second candle needs to fully engulf the first.
This shows us that selling power exceeds buying power.

21
 THE DOJI CANDLESTICK

This candlestick has almost no body and equally long upper

and lower shadows, telling us that there is indecision in the
market and no one is in control of the market. It is neither
bearish nor bullish. However, if it is formed at the top of an
uptrend or the bottom of a downtrend, it can signal that the
market is likely to reverse. However, make sure you have
other indicators to provide confluence before entering the
market.

See example below:

HIGHEST
PRICE

OPEN & CLOSE

LOWEST PRICE

Use doji candlesticks in conjunction with other technical

indicators and patterns to make informed trading decisions.

Traders often wait for confirmation from subsequent price

action before taking any significant actions based solely on
the appearance of a doji candlestick.

22
 THE DOJI CANDLESTICK

See examples below:

UPTREND DOJI AT THE

TOP OF AN
UPTREND

DOWNTREND

In the example above, we can see that at the top of an

uptrend, it indicates a reversal in market direction.

DOWNTREND

UPTREND

DOJI AT THE
BOTTOM OF A
DOWNTREND

In the example above, we can see that at the bottom of a

downtrend, it indicates a reversal in market direction.

23
 THE GRAVESTONE DOJI
CANDLESTICK

LONG UPPER
WICK
OPEN AND
CLOSE

The gravestone doji is the bearish version of the dragon

fly doji.

The gravestone doji candle is a candle where the open

and close prices are the same or around the same price,
with a long upper wick. This tells us that even though
buyers tried to push the market upwards in this
session, sellers managed to sell the price back down
close to the open.
See the diagram below:

GRAVESTONE
DOJI

DOWNTREND

24
 THE EVENING STAR

BEARISH
BULLISH CANDLE
CANDLE

SMALL BODY BULLISH

OR BEARISH CANDLE

A evening star pattern is the opposite of the morning star

pattern.

This bearish candlestick pattern consists of 3 candles.

A bullish candlestick:
Indicating that buyers are in control of the market for that
trading session

A small body candlestick:

The second candlestick can be any candlestick and can be
bullish or bearish with a small body

A bearish candlestick:
A long body bearish candle. Indicating that sellers are now in
control and can indicate a trend reversal pattern.

25
 THE EVENING STAR

EVENING STAR
PATTERN

UPTREND

DOWNTREND

In the example above, this pattern occurred at the top of an

uptrend, therefore signalling a reversal in market direction.

The first long-body bullish candle indicates that buyers were

in control for that trading session and managed to drive the
price much higher than the open.

The second small bearish candle indicates that buyers were

trying to push the price higher but were unable to; sellers
managed to push the price back down and close below the
open. This indicated an increase in selling power. Remember
that in this candlestick pattern, the second small body
candlestick can be bullish or bearish.

The third long bearish candlestick confirms the increase in

selling power; this means that sellers took over the market,
and it is likely to reverse and move towards the downside.

26
 THE TWEEZERS TOP

BEARISH
CANDLE
BULLISH
CANDLE

The tweezers top is the opposite of the tweezers bottom and

consists of two candlesticks:

The first one is a large bullish candlestick.

The second is a large bearish candlestick.

This indicates that buyers had a good session and managed

to drive the price up; however, in the next trading session,
sellers came in and pushed the market back down and
closed around the same price as the bullish one. When this
candlestick pattern forms at the top of an uptrend, it signals
a reversal in market direction.
See the example below:

UPTREND

DOWNTREND

TWEEZERS TOP

27
 Part 2
market structure

timeframes and analyses

trading strategies

reversal patterns

money management

trading rules

pre-market analysis

trading sessions

trading plan

trading log

trading terminology

conclusion

F X H O N E Y
 MARKET EXECUTION

There are two ways of taking a trade:

1.Taking a trade at the current market price.

2.Pending order:

Buy Stop Buy Limit Sell stop Sell limit

BUY order placed BUY order placed SELL order placed SELL order placed
above market below market below market above market
price. price. price. price.

MARKET STRUCTURE
Market structure consists of trends and patterns that
determine the direction of the market.
Once you can read market structure, it will be easy to
know what price action strategies to use.

There are three different types of markets: choppy,

ranging, and trending. Once you understand these
different types of market structures, you will be able to
know who is in control of the market, understand crowd
behaviour, which markets to stay away from, and when
to enter.

29
 MARKET STRUCTURE
Trending Market:

A trending market occurs when prices move consistently in

one direction, either up (a bullish trend) or down (a bearish
trend), with relatively little retracement.

In a bullish trend, higher highs and higher lows are formed,

indicating upward momentum. Conversely, in a bearish
trend, lower lows and lower highs are established,
suggesting downward momentum.

Trending markets can provide traders with opportunities to

enter trades in the direction of the trend, as prices have a
higher likelihood of continuing in the same direction.

Example of an uptrend with HH (higher highs) and HL (higher

lows):

HH

HH HL

HH

HL

HL
HL

30
 MARKET STRUCTURE

Trending Market:

Example of an downtrend with LH (Lower Highs) and LL

(Lower Lows):

LH

LH

LL LH

LL

LL
LL

Trending markets are easy to identify; don’t try to

complicate your analysis; use your brain and see what the
market is doing. If it is making a series of higher highs and
higher lows, it is simply an uptrend market; conversely, if it is
making a series of lower highs and lower lows, it is obviously
a downtrend market.

To determine whether a market is trending or not, you have

to use bigger time frames, such as the 4H, the daily, or the
weekly time frame. Never try to use smaller time frames to
determine the market structure.

31
 HOW TO TRADE A TRENDING
MARKET

If you can identify a trending market, it will be easy for you to

trade it; if it is a bullish market, you will look for a buying
opportunity because you have to trade with the trend; and if
the market is bearish, you have to look for a selling
opportunity.

Trending markets are characterised by two important moves:

the first is called the impulsive move, and the second is
called the retracement move.

RETRACEMENT
MOVE

IMPULSE
RETRACEMENT MOVE
MOVE

IMPULSE
MOVE

IMPULSE
MOVE

So how do you know when to enter?

32
The market above is displaying a pattern of higher highs and
higher lows, indicating a bullish trend. Upon observing this
market, one would naturally consider buying. However, it is
crucial to recognise that the market consists of two distinct
moves: an impulsive move and a subsequent pullback or
retracement move, also known as a corrective move.
Seasoned traders possess an understanding of how trending
markets operate. They strategically enter the market at the
beginning of an impulsive move and exit their positions at
the end of it. This explains why the market experiences an
impulsive move in the direction of the trend, followed by a
retracement before initiating another impulsive move.
Understanding the movement of trending markets allows
you to identify the best place to buy. Traders who buy during
the beginning of a retracement move in an uptrend market
often fall victim to professional traders and may not
understand why the market triggers their stop-loss orders
before moving in the anticipated direction.

See example of a bearish trend below:

IMPULSE
MOVE

IMPULSE
MOVE
IMPULSE
MOVE

RETRACEMENT
MOVE
IMPULSE
MOVE

RETRACEMENT
MOVE
RETRACEMENT
MOVE

33
 The illustration above depicts a market in a downtrend;
therefore, the natural instinct would be to sell at the
beginning of an impulsive move. Attempting to sell during a
retracement move can lead to being trapped by professional
traders and resulting in a losing trade.

Understanding how to recognise downtrends and uptrends,

as well as differentiating between impulsive moves and
retracement moves, is crucial. However, the key question
remains: How can one identify the beginning of an impulsive
move to enter the market alongside professional traders
while avoiding being caught in the retracement move?

To anticipate the start of an impulsive move within a

trending market, it is essential to develop proficiency in
drawing support and resistance levels. But what exactly are
support and resistance levels, and how can they be plotted
on our charts?

Support and resistance levels represent significant areas

where buyers and sellers achieve a state of balance, resulting
in notable turning points within the market. These levels
form when the price reverses its direction, and they tend to
influence price movement until they are breached. In
trending markets, swing points give rise to support and
resistance levels. In an uptrend, the preceding swing point
functions as a support level, while in a downtrend, the
former swing point acts as a resistance level.

34
 Support Level: A support level refers to a price level at
which the demand for an asset is sufficiently strong to
prevent further decline. It acts as a "floor," or a level where
buying pressure is expected to surpass selling pressure,
potentially causing the price to halt or rebound. Traders
often perceive support levels as potential entry points for
buying or as areas to set stop-loss orders for risk
management. A break below a support level may indicate a
bearish signal and the possibility of a downward movement.

Resistance Level: A resistance level is a price level at which

the supply of an asset is strong enough to prevent it from
rising further. It functions as an upper limit or a price
threshold where selling pressure is expected to outweigh
buying pressure, potentially leading to a pause or reversal in
price. Traders often perceive resistance levels as potential
entry points for selling or as areas to establish stop-loss
orders. If the price surpasses a resistance level, it may
indicate a bullish signal and the possibility of an upward
movement.

Support and resistance levels are typically identified using a

range of technical analysis tools, including chart patterns,
trendlines, moving averages, pivot points, and Fibonacci
retracements. Traders seek out regions on a price chart
where historical price reversals or consolidations have
occurred, giving rise to recognisable patterns or levels. It is
important to note that support and resistance levels are not
precise price points but rather zones or areas where
significant buying or selling pressure is anticipated.

35
 However, it is worth noting that support and resistance
levels are not infallible, as the market can breach them on
occasion due to various factors, such as significant news
events or shifts in market sentiment. Therefore, it is crucial
to supplement the use of support and resistance levels
with other technical indicators and employ risk
management strategies to make well-informed trading
decisions. It is also important to recognise that when
support is broken, it tends to transform into resistance,
and when resistance is broken, it tends to become
support. Please refer to the example below for further
clarity:
RESISTANCE

RESISTANCE

RESISTANCE
SUPPORT
SUPPORT
RESISTANCE

SUPPORT

The illustration above shows how the previous swing point

acts as a support level after the breakout. When the market
makes the retracement move, it respects the previous swing
point (support level), which will represent the beginning of
another impulsive move. As you can see, when the market
tests the previous swing point (support level), it goes up
again. By drawing a support level in an uptrending market,
we can predict when the next impulsive move will take place.
Let’s see another example of a downtrend in the market.

36
 RESISTANCE

SUPPORT
RESISTANCE

SUPPORT

RESISTANCE

SUPPORT RESISTANCE

SUPPORT

SUPPORT

The illustration above demonstrates how the market pays

attention to resistance levels. When the price approaches a
previous swing point (resistance level), the market
experiences a significant move. If you understand how price
action behaves in a trending market, you can make highly
accurate predictions about when the next significant move
will begin. Another method to identify the start of a
significant move is by drawing trend lines. This is an
important skill to learn if you want to recognise crucial linear
support and resistance levels. Let me explain what trend
lines mean first.
Often, when the market is active and creating new swing
highs and lows, the price tends to show respect for a straight
line, known as a trend line. In bullish markets, a linear
support level is likely to form, while bearish markets tend to
establish a linear resistance level.

37
 TRENDLINES

Trendlines are helpful tools that traders use to understand how

prices are moving and find potential support and resistance
levels. They can assist in making trading decisions by showing
the overall trend.

There are two main types of trendlines:

Upward Trendline: This type of trendline is drawn by connecting

higher lows on a price chart. It indicates an upward or bullish
trend, meaning buyers are in control and the price is generally
going up over time. When the price gets close to the upward
trendline, it can act as a support level where traders expect the
price to bounce back up or continue rising.

Downward Trendline: This trendline is drawn by connecting

lower highs on a price chart. It shows a downward or bearish
trend, indicating that sellers are dominant and the price is
generally going down. The downward trendline can act as a
resistance level where traders anticipate a potential reversal or
the continuation of the downward trend when the price
approaches it.

38
 TRENDLINES

Trendlines can also help identify trend reversals or

breakouts. If a trendline is decisively broken, it may
suggest a potential change in the current trend, and
traders may adjust their trading strategies accordingly.

Remember, trendlines are subjective tools, and different

traders may draw them differently based on how they
interpret price action. It's also important to use trendlines
alongside other technical analysis tools and indicators to
confirm signals and make well-informed trading
decisions.

HOW TO DRAW TRENDLINES

To create a reliable trendline, you should locate at least two

significant swing points and connect them together. It's
important that these levels are clearly evident, and you
should avoid forcing a trendline where it doesn't fit
naturally. When drawing trendlines, it's recommended to use
higher time frames, like the 4-hour and daily charts, to
identify obvious trends. Our current focus is on drawing
trendlines in trending markets, specifically to pinpoint the
start of impulsive moves. In the following section, I will
provide a detailed explanation of how to trade trendlines in
conjunction with our price action trading setups. Below is an
example illustrating how to draw trendlines in a downtrend
market.

39
 D
O
W
N
W
A
R
D
T
R
E
N
D
LI
N
E

As depicted, the market shows a clear regard for the

trendline. Whenever the price approaches the trendline, the
market reverses its direction and continues along the same
path. In this manner, trendlines assist us in foreseeing the
subsequent impulsive move aligned with the market's
direction.

Lets look at another example of an uptrend market.

E
LIN
ND
TRE
ND
UP TRE

40
 By observing the market above, you can see how it adheres
to the trendline. When we accurately draw the trendline, it
becomes easier to anticipate the upcoming upward
movement. This summarises the essential aspects of
trending markets, which are clear and straightforward. Now,
I encourage you to open your charts and search for trending
markets. Locate previous swing points that represent
support and resistance levels, and attempt to identify
trendlines as well. This exercise will enhance your
understanding of how trending markets behave and how to
predict high-probability entries in the market.

Ranging Market:

A ranging market, also known as a sideways market or

consolidating market, displays a more distinct and
consistent range with well-defined support and resistance
levels. Prices in a ranging market tend to fluctuate within
this specific range without establishing a clear trend. Traders
often employ range-bound strategies, such as buying near
support and selling near resistance, until a breakout from
the range occurs.

41
 Ranging markets are relatively easy to understand and are
commonly referred to as sideways markets due to their
neutral nature, which gives the impression of horizontal
movement. When the market consistently produces higher
highs and higher lows, we consider it to be in an uptrend.
However, when this pattern of consecutive peaks ceases, we
identify it as a ranging market. In a ranging market, price
moves horizontally as buyers and sellers continually push it
back and forth between the support and resistance levels.

Refer to the example below for further clarification.

RESISTANCE LEVEL

SUPPORT LEVEL

The provided chart illustrates a ranging market where the

price demonstrates price bouncing between a horizontal
support and resistance level. It's important to note that the
distinction between trending markets and ranging markets
lies in their movement patterns.

Trending markets typically exhibit a sequence of higher

highs and higher lows in an uptrend, while a downtrend is
characterized by higher lows and lower lows.

42
 Understanding the distinction between ranging markets
and trending markets is crucial for applying the appropriate
price action strategies based on market conditions. Trading
in ranging markets differs significantly from trading in
trending markets. In a ranging market, price moves
horizontally between significant support and resistance
levels, signifying a state of equilibrium where buyers and
sellers are evenly matched and no one party has control.
This equilibrium generally persists until the range structure
is broken, leading to the formation of a trending condition.

The most favourable buying and selling opportunities often

arise at key support and resistance levels within ranging
markets.

What's important is to develop the skill to analyse your

charts and determine whether the market is trending or
ranging. In the upcoming chapters, I will provide
comprehensive details on trading tactics and strategies
tailored for both trending and ranging markets. It is
essential to differentiate between these market types to
effectively utilise these price action strategies.

The first approach to trading ranging markets involves

patiently waiting for the price to approach a support or
resistance level. At key support levels, you can consider
buying, and at key resistance levels, you can consider
selling. Refer to the example below for visual reference.

43
 RESISTANCE LEVEL

SUPPORT LEVEL

In the current market scenario, you can observe a horizontal

movement, indicating a ranging market. In such situations,
the most favourable buying opportunities arise at the support
level, while the best selling opportunities occur at the
resistance level.

The second approach to trading ranging markets involves

patiently awaiting a breakout from either the support or
resistance levels. During a ranging market, it remains
uncertain which party will gain control. Therefore, it is crucial
to closely monitor the boundaries. However, when one of the
market participants decides to assert dominance, a breakout
will occur either above the resistance level or below the
support level. This breakout signifies the end of the ranging
period and signals the beginning of a new trend. Refer to the
example below for a visual representation.

44
 BREAKOUT

RESISTANCE LEVEL

PULLBACK

SUPPORT LEVEL

In the given market example, we can observe that the price

was trading within the boundaries of the support and
resistance levels. However, there came a point where the
price broke out of the resistance level, indicating the
potential beginning of a trend. In such situations, the
optimal entry point is typically after the breakout has
occurred. It's important to note that range boundaries can
sometimes be exceeded, creating a false impression of a
breakout.

This can be misleading and often traps traders who

entered positions based on the breakout signal.

The third approach to trading ranging markets involves

waiting for a pullback following the breakout of either the
support or resistance level. The pullback provides another
opportunity to join the emerging trend for traders who
missed the initial entry during the breakout. This approach
allows for a more favourable risk-reward ratio and can
potentially increase the likelihood of successful trades.

45
 Choppy markets:

A choppy market refers to a sideways or consolidating

market where price movements are erratic and lack a clear
trend. During such market conditions, prices tend to
fluctuate within a narrow range, making it challenging to
identify a sustained direction. Traders often encounter
false breakouts and find it difficult to execute profitable
trades.

When you encounter a choppy market, the price chart

appears noisy and lacks discernible patterns. It becomes
difficult to determine whether the market is ranging or
trending. Recognising that you are observing a choppy
market is crucial, as it can prevent emotional decision-
making and doubts about your trading strategies.

One effective way to identify a choppy market is to zoom

out on the daily chart and assess the broader picture. With
training, experience, and screen time, you will develop the
ability to distinguish between ranging markets and choppy
markets. Here is an example of a choppy chart that is not
conducive to profitable trading.

CHOPPY MARKET

46
 TIMEFRAMES AND ANALYSES

As a price action trader, your main focus is on higher time

frames such as the 1-hour (1H), 4-hour (4H), and daily charts.
Trading based on smaller time frames, like the 5-minute chart,
can be risky and result in losses due to the excessive noise
and false signals caused by the intense battle between buyers
and sellers.

Successful price action traders don't rely on a single time

frame for chart analysis. Instead, they employ a top-down
analysis approach. This means starting with larger time
frames to gain a broader perspective and then moving to
smaller time frames to make specific trading decisions.

For example, if you want to trade the 4-hour chart, you should
first examine the weekly chart and then the daily chart. By
aligning the analysis from the weekly and daily charts with the
4-hour chart, you can make more informed trading decisions.

Similarly, if you plan to trade the 1-hour chart, you should

analyse the daily chart first. This step is crucial for avoiding
low-probability trading setups and focusing on high-
probability price action signals.

47
 TIMEFRAMES AND ANALYSES

The top-down analysis allows you to identify the most

significant support and resistance levels, which act as turning
points in the market. By recognising these levels on the
weekly chart, you can anticipate the market's behaviour when
price approaches these levels on the 4-hour chart.

This information enables you to determine whether to buy,

sell, or ignore the signals generated by the market.

Market structure: Analysing the weekly chart allows you to

determine whether the market is in an upward or
downward trend, ranging, or choppy. This insight helps
you understand the behaviour of major investors and find
ways to align with them using price action strategies.

Previous candle: The most recent candle on the weekly

chart carries significance as it reveals what occurred
during that week and provides valuable information about
future market movements. By identifying these points on
the weekly chart, you can then transition to the daily or 4-
hour chart to gather additional information, such as:

Market condition: Observing the market in the 4-hour or

daily time frame helps you ascertain whether it is trending
up, trending down, ranging, or choppy.

48
TIMEFRAMES AND ANALYSES

Key levels: Identifying crucial support and

resistance levels, supply and demand areas, and
trend lines on the 4-hour or daily chart becomes
important in your analysis.

Price action signals: Keep an eye out for

candlestick patterns like pin bars, engulfing bars,
or inside bars that provide buy or sell signals in
the market.

ANALYSIS

There are two main approaches to analysing the forex

market: fundamental analysis and technical analysis.

Fundamental Analysis: Fundamental analysis involves

examining economic, political, and social factors that
can impact the value of a country's currency.

There are two main approaches to analysing the forex

market: fundamental analysis and technical analysis.

49
Fundamental Analysis: Fundamental analysis involves examining
economic, political, and social factors that can impact the value
of a currency, stock, or commodity.
Here are some important aspects of fundamental analysis:

Economic Indicators: Economic indicators such as GDP,

inflation rates, interest rates, employment data, and trade
balances provide insights into the overall economic health of
a country. Positive indicators often lead to currency
appreciation, while negative indicators can cause
depreciation.
Central Bank Policies: Monetary policies set by central banks,
including decisions on interest rates and measures like
quantitative easing, have a significant influence on currency
values. Higher interest rates generally strengthen a currency,
while lower rates can weaken it.
Geopolitical Events: Political instability, elections,
geopolitical tensions, and international conflicts can
introduce volatility into the forex market. Traders must stay
informed about such events and assess their potential impact
on currency movements.

Technical Analysis:
Technical analysis involves studying historical price data and
utilising various tools and indicators to identify patterns and
trends. Key components of technical analysis include:

Price Charts: Traders analyse price charts, such as line charts,

bar charts, and candlestick charts, to identify patterns and
trends across different timeframes. Common chart patterns
include support and resistance levels, trendlines, and
reversal patterns.

50
 ANALYSES
Technical Indicators: Traders utilise a range of
technical indicators, including moving averages,
relative strength index (RSI), stochastic oscillator, and
MACD (moving average convergence divergence), to
gain insights into market trends, momentum, and
potential entry or exit points.

Support and Resistance: Support levels refer to price

levels where buying pressure may halt further price
declines, while resistance levels indicate price levels
where selling pressure may restrict further price
increases. Identifying these levels can assist traders in
determining potential entry and exit points.

Both fundamental and technical analysis methods are

employed by forex traders to make informed trading
decisions. Some traders may rely more heavily on one type
of analysis, while others adopt a combination of both.

It's crucial for beginners to comprehend that forex trading

involves risks, and no analysis method can guarantee
success. Starting with a demo account, acquiring
knowledge and experience, and considering reputable
educational resources or seeking guidance from
experienced traders are recommended steps before
venturing into the forex market with real money.

51
PIN BAR CANDLESTICK PATERN
STRATEGY

The pin bar candlestick is a well-known Japanese candlestick

pattern utilized by price action traders to identify potential
reversal points in the market. In this section, we will delve
into the details of recognising potential pin bar signals and
the conditions necessary for high-probability setups. A pin
bar is a candlestick on a price chart characterised by a long
tail, indicating rejection and suggesting a forthcoming
market movement in the opposite direction. Pin bars
typically possess a small body and a lengthy lower wick. A
bullish pin bar is recognised by its lower wicks, while a
bearish pin bar is distinguished by its long upper wicks.
While the colour of the candlestick is not of utmost
importance, bullish candles with a white real body tend to
carry more significance than those with a black real body.
Conversely, bearish pin bars with black real bodies hold
more significance than those with white real bodies.

See example below of a bullish candlestick pattern:

BODY

LONG LOWER
WICK

52
PIN BAR CANDLESTICK PATERN
STRATEGY
See example below of a bearish candlestick pattern:

LONG UPPER
WICK

BODY

How to recognize pin bar candlestick setups?

To be frank, there is no guarantee of finding quality price

action setups in the market. Sometimes, you may come
across what appears to be a high-probability setup, and you
feel a surge of excitement as you confidently enter the trade.
However, you may end up feeling frustrated when the signal
fails for reasons unknown. Such instances occur because the
market is not solely driven by pin bar formations; it is
influenced by the law of supply and demand. Allow me to
illustrate this with an example. Suppose you identify a high-
quality pin bar candlestick near a significant support level in
an uptrend market. This is indeed a strong buying signal that
should not be overlooked. However, if the amount of money
invested by buyers in this trade is outweighed by the amount
of money at risk by sellers in the same trade, the market may
not move in the predicted direction.

53
PIN BAR CANDLESTICK PATERN
STRATEGY
If a signal fails, it does not imply that your analysis was
incorrect or that pin bars are ineffective. It simply means that
the market did not confirm your decision. In such cases, it is
important to accept the loss and move on, actively seeking
another opportunity. You might wonder why we should
search for quality pin bar setups if the market does not
always respect them. Trading is a game of probabilities
where certainty is elusive. Therefore, evaluating pin bar
setups from multiple perspectives is crucial. By focusing on
high-quality setups, you aim to tilt the probabilities in your
favour, adopting the mindset of successful traders.
To determine the viability of a pin bar trade, several criteria
should be considered:
Pin bars that form on larger time frames, such as the 4-
hour or daily charts, hold more significance. Pin bar
signals found in smaller time frames tend to generate
numerous false signals and should be disregarded.

See example below:

BULLISH PIN
BAR

54
PIN BAR CANDLESTICK PATERN
STRATEGY

A pin bar that aligns with the prevailing market direction

holds greater strength compared to one formed against the
trend. Identifying a clear trend allows you to determine
which party has control over the market. When this
candlestick pattern forms in harmony with the trend, its
effectiveness is heightened.

See the chart below:

D
EN
TR
SH
L LI
BU
PIN BARS
AGAINST THE
TREND

PIN BARS WITH

THE TREND

55
 In the chart above, we observe that bullish pin bars, which are in
line with the prevailing uptrend, prove to be effective and deserve
attention. Conversely, bearish pin bars formed against the trend
should be disregarded.

Understanding the anatomy of a pin bar is crucial. It is essential to

assess the distance between the real body and the tail to confirm
its classification as a pin bar. Pin bars with longer tails possess
greater strength.
The psychology behind the formation of pin bars lies in price
rejections. However, it is important to note that these rejections do
not necessarily signal a reversal, as pin bars can form anywhere on
the chart. To gain meaningful insights from pin bars, it is crucial to
focus on significant key levels, such as support and resistance,
supply and demand zones, and moving averages. The occurrence of
this candlestick pattern at these levels provides a clear indication
of market dynamics.
For instance, if a rejection occurs near a support level, it signifies
that the bulls hold more power and are inclined to drive the market
upward.
See chart below:

PIN BAR SIGNAL

SUPPORT
LEVEL

56
When a pin bar forms near a resistance level, it signifies that
bears are rejecting prices and preventing the bulls from
breaking that level. This indicates the sellers' willingness to
push the market downward.

Understanding the psychology underlying the formation of

this price action pattern empowers you to anticipate future
market movements and execute trades based on high-
probability pin bar signals.

For novice traders, it is highly recommended to align with

the prevailing trend. Pin bars occurring in trending markets
present favourable trading opportunities with a high risk-to-
reward ratio. Once you have mastered trading with the trend,
you can explore trading range-bound markets or even
counter-trends.

This strategy is straightforward: identify a clear uptrend or

downtrend and wait for a pin bar to form after a pullback to a
support or resistance level.

In certain cases, drawing static support and resistance levels

may be challenging due to the price's specific movement. In
such situations, you can employ the 21-moving average as a
dynamic support in an uptrend market and a dynamic
resistance in a downtrend market.

Please refer to the example below for further illustration:

57
PIN BAR CANDLESTICK PATERN
STRATEGY

PIN BAR SIGNAL

IN LINE WITH
TREND

21 MOVING
AVERAGE
(RESISTANCE)

BEARISH TREND

In the chart shown above, you can see that the market is
going down. We used the 21 moving averages to find points
where the price encountered resistance and potentially good
opportunities for pin bar trades.

Take a look at another chart below:

58
PIN BAR CANDLESTICK PATERN
STRATEGY
See another example below:

PIN BAR SIGNAL BULLISH TREND

IN LINE WITH
TREND

21 MOVING
AVERAGE
(SUPPORT)

The chart above shows the 4-hour timeframe, and it

demonstrates how the 21-moving average can be useful for
identifying important points in the market.

When the price gets close to the moving average, buyers

become active, causing the price to rise. On the chart, you
can clearly see a pin bar signal, which indicates a bullish
trend. The pin bar has a bullish shape, and the rejection from
the 21-moving average confirms the buying opportunity in
the market.

59
PIN BAR CANDLESTICK PATERN
STRATEGY
Once we have identified the trend (whether it's going up or
down) and the important levels (support or resistance), the
next step is to understand how to enter the market using the
pin bar candlestick pattern.

From my experience, there are different ways to enter a trade

with pin bars, and it depends on factors like the shape of the
candlestick, market conditions, and your money
management strategy.

Personally, I would enter the market aggressively. This

means entering the market right after the pin bar has closed
without waiting for any additional confirmation. By doing
this, you can potentially catch the beginning of a move.
Sometimes, the price continues to rise after the pin bar
closes, and if you're not already in the market, you might
miss out on the trade.
See example below:

MOVING AVERAGE USED AS

RESISTACE

SUPPORT BECAME STOP LOSS

RESISTANCE
PIN BAR
SIGNAL
WITH THE
TREND

60
The chart above demonstrates how using an aggressive entry
can help you execute your trade at the right time and not
miss out on market movements.

In this trade, we considered three important factors:

1. The trend: The market was moving downwards,

indicating a selling opportunity.
2. The level: We identified a support level that turned into
resistance.
3. The signal: A clear pin bar formed after a pullback to the
resistance level.

When all three elements align, you can enter the trade after
the pin bar has closed. Place your stop loss above the long
tail of the pin bar, and set your profit target at the next
support level in a downtrend.

Having these three elements gives you a strong foundation

for finding high-probability trade entries.

Now, let's discuss the conservative entry option. This

strategy involves entering the market after a retracement of
around 50% of the pin bar's range.

This approach can offer a risk-reward ratio of more than 5:1

in some cases. However, there are times when the market
may move quickly, and you might miss the trade if you wait
for this retracement.

61
PIN BAR CANDLESTICK PATERN
STRATEGY

TRADING PIN BARS

WITH CONFLUENCE

Trading pin bars with confluence means combining multiple

technical indicators or factors to confirm a trade signal.

It is a concept used by both beginner and advanced traders

to filter out low-quality setups and identify high probability
trades.

Confluence is important because it helps traders focus on

quality setups rather than quantity, leading to improved
trading performance.

In simple terms, confluence means that different things

come together or combine. When we're looking for a pin bar
signal, we don't just rely on the pin bar alone.

We seek other confirming factors or indicators before taking

the trade. We want multiple indicators or factors to align and
support our decision, rather than taking any pin bar signal
we see on the chart without confirmation.

62
PIN BAR CANDLESTICK PATERN
STRATEGY
Factors of confluence are important elements that traders
consider to validate their trade setups. They provide
additional confirmation and increase the probability of
success. Here are some key factors of confluence:

The trend: This is the overall direction of the market. It's

crucial to trade in line with the trend for better results. A
bearish pin bar in a downtrend is a stronger signal than in
a sideways market.

Support and resistance levels: These are specific price

levels where the market tends to react. They are watched
by many traders and can provide significant trading
opportunities.

Moving averages: These are technical indicators that act

as dynamic support or resistance levels. Traders often
use moving averages like the 8 and 21, or 100 and 200, to
identify potential reversal points and gauge the strength
of a trend.

Fibonacci retracement: This tool helps identify key levels

of potential price reversal. Traders commonly focus on
the 61% and 50% retracement levels to find important
areas in the market.

Trend lines: These lines are drawn on the chart to

visualise the direction of the market. They assist in
identifying major reversal points and can be valuable for
making trading decisions.

63
PIN BAR CANDLESTICK PATERN
STRATEGY

It's not necessary to have all these factors present for a

valid trade setup. Even if you find just one or two factors of
confluence that align with a good pin bar setup, it can still
provide a profitable trading opportunity. The more factors
that come together, the stronger the confirmation for the
trade.

64
PIN BAR CANDLESTICK PATERN
STRATEGY

When a market is range-bound, it means that prices are not

making higher highs or higher lows. Instead, they trade
horizontally between a specific support level and a
resistance level.

When you notice this change in market behaviour, you need

to adjust your trading strategy to suit this new condition. To
confirm that the market is ranging, look for at least two
instances where prices touch the support level and two
instances where prices touch the resistance level.

Once you identify the range, trading becomes simpler.

In a range-bound market, you can go long (buy) when prices
reach the support level and go short (sell) when prices
approach the resistance level. The goal is to take advantage
of the price movements within the established range.

Here is an example of a range-bound market:

RESISTANCE LEVEL
(SELL)

SUPPORT LEVEL
(BUY)

65
 As you can observe in the image above, when prices come
close to important support or resistance levels, it presents us
with a chance to either buy or sell the market. All we have to
do is be patient and wait for a clear price action pattern, like
a pin bar candlestick.
Image illustrating a pin bar setup near a support or
resistance level

PIN BAR SELL SIGNAL

RESISTANCE LEVEL
(SELL)

SUPPORT LEVEL
(BUY)

PIN BAR BUY SIGNAL

In the image above, we can see two potential trading

opportunities.

Let me explain how you can successfully trade them:

66
 In the image above, we can see two potential trading
opportunities. Let me explain how you can successfully trade
them:

The first opportunity is marked by a pin bar that was rejected

from the support level. You have two options to enter this
trade.

First, you can place a buy order after the pin bar closes.
Alternatively, you can wait for the market to touch the 50%
mark within the range of the pin bar before entering.

Your stop loss should be placed above the support level, and
your profit target should be near the resistance level. This
trade offers an attractive risk-reward ratio.

The second trading opportunity occurs near the resistance

level. You can place a sell order after the pin bar closes, and
your stop loss should be positioned below the resistance
level. Your profit target in this case would be the next support
level.
It's important to carefully consider your risk management
and ensure that your potential reward justifies the risk taken
in each trade.

67
TRADING THE ENGULFING BAR
WITH MOVING AVERAGES

Trading the engulfing bar pattern with moving averages can

be a profitable strategy, but it's important to understand
how to use moving averages correctly to avoid damaging
your trading account. Here's a simpler explanation of how
traders utilise moving averages:

Trend following: Traders use moving averages to

determine the direction of the trend. If prices are above
the 200-day simple moving average, it indicates an
uptrend, and they may consider buying. Conversely, if
prices are below the 200-day simple moving average, it
suggests a downtrend, and they may consider selling.

Overbought or oversold conditions: By observing how

prices interact with moving averages, traders can
determine if the market is overbought or oversold. For
example, in an uptrend, if prices move far away from the
moving averages, it suggests the market is overbought.

Trend reversal: Moving average crossovers can signal a

potential trend reversal. When one moving average
crosses over another, it indicates a change in the trend
direction.

68
TRADING THE ENGULFING BAR
WITH MOVING AVERAGES

However, it's important to note that moving averages have

limitations. They may not work well in range-bound or
unpredictable markets, as they can generate false signals.
It's crucial to use them under the right market conditions.

To effectively use moving averages as dynamic support and

resistance in trending markets, traders often combine them
with the engulfing bar pattern. This strategy involves using
the 21-day and 8-day simple moving averages in the daily
and 4-hour time frames.

By identifying a clear bullish or bearish market, traders can

look for buying opportunities when the price pulls back to
the moving averages and an engulfing bar pattern forms.

69
TRADING THE ENGULFING THE
ENGULFING BAR WITH
FIBONACCI RETRACEMENT

Trading the engulfing bar pattern with Fibonacci

retracement can be a profitable strategy if used correctly.
Here's a simpler explanation:

Fibonacci retracement levels: Traders use Fibonacci

retracement to identify key levels in the market. The
most important levels are the 50% and 61%
retracements. These levels often indicate major
retracements of a price move.
Predicting the next move: By understanding that major
moves in the market tend to retrace around 50% or 61%
Fibonacci levels, traders can predict the next major move
with higher accuracy. This knowledge helps in identifying
powerful price action signals.
Strategy: Start by identifying a clear uptrend or
downtrend in the market. Then, use the Fibonacci
retracement tool to determine the major corrective
levels. If you find an engulfing bar pattern that aligns
with the 50% or 61% Fibonacci levels, it serves as a
strong price action trading signal.

Trading from these Fibonacci levels gives you better entry

points, increasing the probability of success.

This approach allows you to maximise your profit potential

and become a more successful trader.
70
TRADING THE ENGULFING BAR
WITH TRENDLINES

Trading the engulfing bar pattern with trendlines can be a

useful strategy. Here's a simpler explanation:

Trendlines and market psychology: Trendlines help

traders understand the market's psychology, particularly
the interaction between buyers and sellers. They provide
insights into whether the market is optimistic or
pessimistic.

Different uses of trendlines: Trendlines can be used as

support and resistance levels when drawn horizontally or
to identify price and time when drawn vertically. There is
no right or wrong way to use trendlines.

Trading with trendlines in trending markets: In trending

markets, trendlines are drawn by connecting swing highs
or swing lows. This helps us find trading opportunities
that align with the overall trend of the market. Learning
how to draw trendlines is a valuable skill, as it works
across various financial markets.

71
TRADING THE ENGULFING BAR
WITH TRENDLINES

Trading the engulfing bar in sideways markets:

Sideways or ranging markets can be challenging to
predict. While focusing on trending markets is
recommended, the reality is that markets spend a
significant amount of time in a ranging motion.
Ignoring range-bound markets means missing out on
potential profits. Therefore, it is important to learn how
to approach and trade in such market conditions.

By understanding and utilising trendlines, traders can

enhance their analysis and improve their trading
performance in both trending and sideways markets.

72
 TRADING THE ENGULFING BAR
WITH SUPPLY AND DEMAND
ZONES IN TRENDLESS MARKETS

Trading in trendless or range-bound markets requires selectivity

and the ability to differentiate between sideways and choppy
markets. It's crucial to protect your trading account by trading
only the range-bound markets that are worth trading.

Trading the engulfing bar pattern with supply and demand zones
can be a profitable strategy. Here's a simpler explanation:

Power of supply and demand zones: Supply and demand areas

hold more significance than simple support and resistance
levels. These zones represent where banks and institutions
buy and sell in the market. Identifying these turning points can
make a significant difference in your trading success.
Factors for quality supply and demand areas: There are three
factors that define quality supply and demand areas:
Strength of the move: Pay attention to how the price quickly
leaves the zone. If the market swiftly moves away from the area, it
indicates the presence of banks and institutions.
Good risk/reward: Ensure that the level offers a favourable
risk/reward ratio for your trades.
-Bigger time frames: Daily and 4-hour supply and demand areas
are considered the most influential zones in the market.

By understanding how to identify and trade with supply and

demand zones, you can increase your trading success in range-
bound markets.

73
 REVERSAL PATTERNS

In trading, reversal patterns are special shapes on

charts that show a possible change in the direction
of the current trend.

These patterns have two parts: bear legs and bull

legs. They help traders see where the price might
start moving in the opposite direction.

By recognising these patterns, traders can make

smarter decisions about when to buy or sell. Now,
let's take a closer look at bear legs and bull legs.
G
LE
LL
U

B
B

E
A

G
R

LE
L
E
G

LL
BU

74
 REVERSAL PATTERNS

Head and Shoulders pattern: This pattern looks like

three peaks, with the middle peak higher than the
other two. It indicates a change from a positive trend
to a negative one when the price falls below a specific
line called the neckline.

HEAD
LEFT RIGHT
SHOULDER SHOULDER

NECKLINE
PRICE
REVERSING
TOWARDS
DOWNSIDE

Inverse Head and Shoulders pattern: This pattern

has three lower peaks, with the middle peak lower
than the other two. It is considered a bullish pattern
and can signal a potential trend reversal from a
downward trend to an upward trend.

PRICE
REVERSING
TOWARDS
UPSIDE

NECKLINE

LEFT RIGHT

SHOULDER SHOULDER
HEAD

75
Double Top/Bottom: A double top pattern happens when the
price tries to break a certain level twice but fails. On the
other hand, a double bottom pattern occurs when the price
reaches a support level twice but doesn't drop further. These
patterns indicate a possible change in the trend direction.

DOUBLE TOP

NECKLINE
PRICE
REVERSING
TOWARDS
DOWNSIDE

DOUBLE BOTTOM

PRICE
NECKLINE REVERSING
TOWARDS
UPSIDE

76
Triple Top/Bottom: Just like the double top/bottom pattern,
the triple top/bottom pattern involves three failed attempts
to break through a support or resistance level. This pattern is
considered a stronger signal for a trend reversal compared to
the double pattern.

TRIPLE TOP

1 2 3
D

BREAKOUT
EN

TOWARDS THE
TR

DOWNSIDE
UP

SUPPORT

TRIPLE BOTTOM

RESISTANCE

BREAKOUT
TOWARDS THE
UPSIDE

1 2 3

77
Falling/Rising Wedge: Falling wedges and rising wedges are chart
patterns that feature converging trendlines. In a falling wedge,
the trendlines slope downward, while in a rising wedge, the
trendlines slope upward. Falling wedges often indicate a possible
shift to a bullish trend, while rising wedges suggest a potential
shift to a bearish trend.

FALLING WEDGE
SU
PP
OR
T
BREAKOUT

PULLBACK

RESIS
TANC
E

RISING WEDGE

RT
SUPPO

PULLBACK

BREAKOUT
N CE
S TA
SI
RE

78
 The cup and handle pattern consists of two main parts: the
cup and the handle. Let's break down each component:

Cup: The cup part of the pattern looks like a "U" shape and
represents a temporary reversal or consolidation in the price.
On the left side of the cup, there is a gradual downtrend,
followed by a bottoming out and a gradual uptrend on the
right side. The depth of the cup is important, and a deeper
and more rounded cup is considered more reliable.

Handle: After the cup is formed, there is usually a smaller

sideways movement called the handle. The handle shows a
slight downward or sideways drift in price, creating a
consolidation pattern. It should not retrace more than one-
third of the cup's upward movement. The handle forms when
the price encounters resistance near the previous highs.

BREAKOUT

RESISTANCE

PULLBACK

79
 MONEY MANAGEMENT
STRATEGIES

Now that you have learned the trading strategies and how to
analyse the market, there is another important aspect to
consider: money management. Money management is often
overlooked, but it is what separates successful traders from
those who lose money.

Even if you have a great trading system, without a money

management plan, you won't be successful.

One key aspect of money management is position-sizing.

Position sizing refers to the number of lots (units of currency)
you risk per trade. Forex brokers typically offer mini lots,
which have a default size of approximately $1. Some brokers
even offer mini lots with a size of 10 cents, which is beneficial
for traders with smaller accounts, meaning they can even
start trading with 100 dollars.

When determining your position size, it's important to think

in terms of dollars rather than pips. For example, if you are
trading 3 mini lots of CAD/USD, it means you are trading
$30,000 worth of US dollars.

By understanding position sizing and managing your risk

appropriately, you can protect your trading account and
have the opportunity to grow it over time. Money
management is a crucial element in becoming a successful
trader.

80
MONEY MANAGEMENT RULES

Money management trading rules:

Identifying high-probability setups: You have learned

how to spot setups in the market that have a high chance
of being successful. However, not all engulfing bar
patterns are worth trading. It's important to ignore price
action signals that have low risk/reward ratios.

Risk/reward ratio: Once you have identified a high-

probability setup, there is no need for further analysis.
The key is to ensure that your trade has a potential risk-
reward ratio of at least 2:1. This means that the amount
of money you stand to win should be at least twice the
amount you are risking, or even more.

By following these money management trading rules, you

can make sure you focus on trades that offer a good balance
between risk and potential reward.

81
MONEY MANAGEMENT RULES
In sideways markets, major demand and supply zones are the
best price levels to focus on.

When you spot an engulfing bar forming in a demand area, it

can be a good trading opportunity. However, it's important
to consider the risk/reward ratio to ensure it aligns with your
money management rules.

For example, if the risk/reward ratio is 3:1, which means that

if you risk $200, you have the potential to win $600,

Calculating your risk-reward ratio before entering a trade is

crucial. It helps you determine if the potential reward
outweighs the risk, increasing your chances of long-term
success.

By assessing the risk-reward ratio, you can make more

informed trading decisions and improve your overall
profitability.

When trading, it's important to consider the potential profit

and loss.

Let's break it down:

The value per pip depends on the lot size you are trading.
For example, 1 standard lot is worth about $10 per pip, 1
mini lot is worth about $1 per pip, and 1 micro lot is equal
to 10 cents per pip.

82
 MONEY MANAGEMENT
STRATEGIES

If you have a mini trading account, it's helpful to think in

terms of the dollars you are risking instead of pips. For
instance, if you set a 50-pip stop loss and a 100-pip profit
target, it means you would risk $50 if the market hits your
stop loss and potentially win $100 if it hits your profit
target.
The size of your position depends on whether you have a
standard or mini account and how many lots you are
trading. This information is important because it
determines how much money you are risking on each
trade.
The risk-to-reward ratio is a key concept. Before entering a
trade, you need to know how much money you stand to
win if the market moves in your favour and how much you
will lose if it goes against you. It's important to avoid
trades where the potential profit is less than the amount of
money you risked.
A good risk-to-reward ratio is typically 1:2, meaning that if
you risk $100, your profit target should be at least $200.
This ratio increases your chances of long-term success.
For example, if you took 10 trades with a 1:2 risk-to-reward
ratio, risking $100 per trade, and you won 5 trades and lost
5 trades, you would lose $500 but win $1000, resulting in a
net profit of $500.

Understanding and applying proper money management,

including considering risk-to-reward ratios, is crucial for long-
term trading success.

83
The risk-to-reward ratio is a powerful concept in trading. It
means you don't have to win every trade to be successful.

By focusing on trades with a good risk-to-reward ratio,

where the potential profit is greater than the potential loss,
you can consistently make profits.

In other words, if you can make sure that the amount of

money you could win is higher than the amount you could
lose, you'll always come out on top in the long run.
It's not about winning every trade, but about making trades
that have a higher reward compared to the risk involved.

This strategy gives you a greater chance of being profitable

overall.

IMPORTANCE OF A STOP LOSS

It's important to use stop-loss orders when trading. A stop-

loss order is an order that tells your broker to exit your trade
if prices move against you and reach a certain level. It helps
protect you from experiencing large losses.

When you place a trade, you can set an initial stop-loss with
your broker. If the price reaches that level, the trade will
automatically close. This allows you to execute your trade
and then focus on other things without getting too
emotional.

You know in advance how much money you could

potentially lose if the market doesn't go in your favour.

84
Some traders rely on mental stops, where they don't place a
physical stop-loss order.

They believe that their broker will close the trade if needed,
but this isn't always the case.

Using mental stops is based on human psychology. People

don't like losing money, but it's important to accept that
losses are a part of trading.

Instead of relying on mental stops, it's better to calculate

your potential profits and losses before entering a trade.
Set your stop-loss and profit targets, and then try to forget
about the trade.

This approach helps you stay disciplined and avoid

emotional decision-making based on short-term market
movements.

85
IMPORTANCE OF A STOP LOSS

Never risk money that you can't afford to lose when it comes
to trading. Many traders ask how much money they need to
start trading. The answer depends on what you can
comfortably afford to lose.

Think of trading as a business. Just like any business, there

are profits and losses involved. If you risk losing money that
you can't afford to lose, it can create a lot of stress and fear.
This emotional pressure can negatively impact your
decision-making and lead to failure.

It's important to avoid borrowing money or risking large

amounts that could put you in a difficult financial situation.
Trading is all about managing emotions, and if you're
constantly worried about losing your entire trading account,
it will affect your ability to trade effectively. You may struggle
to stick to your trading strategy and make sound decisions.

The best approach is to start with a small amount of money.

Focus on gaining experience and gradually building your
trading account. Successful traders often start small and
grow over time. By doing so, you can learn and adapt
without putting too much financial pressure on yourself.
Remember, trading is a journey, and patience and
consistency are key to long-term success.

86
 MONEY MANAGEMENT, RISK
REWARD AND FINANCIAL
GOALS:

Money management and risk-reward management are

crucial elements of trading that can greatly affect your long-
term success. Let's take a closer look at each concept:

Money Management: Money management involves using

strategies and techniques to effectively handle your trading
capital. It includes deciding how much capital to allocate to
each trade, setting stop-loss levels, and implementing
position-sizing methods.

Here are some key principles of money management:

1. Risk per trade: Determine the maximum amount of

capital you are willing to risk on each trade. It's generally
recommended to risk only a small percentage of your
total trading capital per trade, typically around 1-2%.
2. Position sizing: Calculate the appropriate position size
for each trade based on your risk per trade. Position
sizing ensures that you don't put too much of your
capital at stake in a single trade, reducing the potential
impact of losses.
3. Diversification: Avoid putting all your capital into one
trade or asset. Instead, diversify your portfolio by
spreading your capital across different assets, markets,
or trading strategies. This helps mitigate the risk of
significant losses resulting from a single event.

87
 MONEY MANAGEMENT, RISK
REWARD AND FINANCIAL
GOALS:
Preserving your trading capital is crucial for long-term success.
It involves protecting your capital by avoiding unnecessary risks
and overtrading. Here are some key points to consider:

Capital preservation: Protecting your trading capital is

essential. Avoid taking unnecessary risks or engaging in
excessive trading, as this can deplete your capital quickly.
Preserve your capital by following your risk management
rules and making rational trading decisions based on
strategy rather than emotions.
Risk-reward management: Managing the potential risk and
reward of each trade is important. Consider the following
principles:
Risk-reward ratio: Before entering a trade, determine your
desired risk-reward ratio. This ratio compares the potential
profit to the potential loss of a trade. Aim for a favourable
risk-reward ratio where the potential reward outweighs the
potential risk. A ratio greater than 1:1 is generally preferred.
Stop-loss orders: Set appropriate stop-loss levels for each
trade to limit potential losses. A stop-loss order instructs
your broker to exit a trade if the price moves against you.
This helps protect your capital from significant losses.
Take-profit levels: Identify target levels where you plan to
exit a trade and secure profits. Determine these levels based
on your analysis and profit targets. Adjust your take-profit
levels to maintain a favourable risk-reward ratio.

88
MONEY MANAGEMENT, RISK
REWARD AND FINANCIAL
GOALS:
By focusing on capital preservation and effectively managing risk-
reward ratios, you can enhance your trading performance and
increase your chances of long-term success.

Evaluating the risk and reward of a trade is important before

entering into it. Here are some key points to consider:

Risk-reward assessment: Before taking a trade, evaluate the

potential risks and rewards involved. Analyse the probability of
the trade being successful and determine if the potential
reward justifies the risks. Avoid trades where the potential
reward is significantly lower than the associated risk.
Effective money management: Implementing proper money
management techniques is crucial. This involves determining
the amount of capital to allocate to each trade, setting stop-
loss levels, and practicing position sizing. By managing your
capital effectively, you can minimise the impact of potential
losses and protect your trading account.
Risk-reward management: Focus on maintaining a favourable
risk-reward ratio for each trade. Assess the potential risk and
reward, and aim for a ratio where the potential reward
outweighs the potential risk. This helps ensure that the
potential gains justify the potential losses.

By implementing these money management and risk-reward

management techniques, you can improve your trading
performance and reduce the impact of losses. It's important to
consistently apply these principles and remain adaptable to
changing market conditions for long-term success in trading.

89
 THINGS TO REMEMBER

• Financial Markets are driven by human psychology.

• Avoid making impulsive trades. Create a trading plan and

stick to it, following the rules.

• Fear and Greed can harm your profitability. Train your

subconscious mind to focus on following your trading plan
rather than getting caught up in wins and losses.

• Stay disciplined and trade for profit by strictly adhering to

your trading rules and plan.

• Trade based on what you see, not what you think or feel.
Use your tools and indicators to guide your actions.

• Remember that you cannot control the market, but you can
control yourself.

• Your trading mindset is crucial for success. Embrace the

stress of trading by staying focused, calm, disciplined, and
avoiding distractions. This is essential for becoming a
professional trader.

• Losses are a part of trading and should be minimised by

following the rules, avoiding impulsive or emotional trades,
and never entering a trade without a plan and a stop-loss.

• Treat trading as a business and stick to your system.

• Always set a stop-loss for every trade. Always!

90
 GOLDEN TRADING RULES

• Market movements are influenced by data and information.

• Avoid entering the market just before and just after

important economic or news events.

• Always have a clear plan for your trades, including stop-

loss, entry, and target levels.

• Create a well-defined trading plan that includes your goals,

risk tolerance, and strategies.

• Effectively manage risk by using techniques like setting

stop-loss orders and diversifying your portfolio.

• Be cautious of overtrading and focus on quality trades that

align with your strategy.

• Continuously learn and stay updated on market trends,

news, and trading strategies.

• Keep a trading journal to review and learn from your past

trades.

• Avoid trading during the first hour on Mondays.

91
 PRE MARKET ANALYSES
Evaluating financial markets and securities before they
officially open is known as pre-market analysis. This analysis
helps traders and investors make informed decisions by
anticipating potential market movements. Here are the main
components of pre-market analysis:

Market News and Events: Stay updated on relevant news

and events that can impact the market. This includes
economic indicators, earnings reports, geopolitical
developments, and central bank announcements.
Analyse how these factors may influence market
sentiment and specific securities.
Overnight Market Activity: Review the performance of
international markets, such as Asian and European
markets, that have already opened before your local
market. Significant movements in these markets can
provide insight into potential trends and market
sentiment that might carry over to your local market.
Pre-Market Stock/Asset Data: Track the pre-market price
movements of individual stocks or assets. Many financial
platforms provide pre-market quotes and volume data.
This information can indicate investor sentiment, early
buying or selling pressure, and potential gaps between
the previous closing price and the expected opening
price.
Technical Analysis: Apply technical analysis techniques
to pre-market charts and data. Evaluate key levels of
support and resistance, chart patterns, and indicators to
identify potential entry and exit points. Pre-market price
action can offer insights into how a stock or asset may
behave during regular trading hours.

92
 PRE MARKET ANALYSES

By conducting thorough pre-market analysis, traders and

investors can gain valuable insights and make better-
informed decisions when the market opens. This helps them
adapt to changing market conditions and potentially
capitalise on profitable opportunities.

Assessing futures and options activity: Analyse the trading

activity in futures contracts and options before the market
opens. Pay attention to the volume and price movements of
these derivative instruments, as they can offer indications of
investor expectations and potential market directions.

Checking company announcements: Look for any pre-market

announcements made by companies, such as earnings
releases, mergers and acquisitions, or regulatory updates.
These announcements can have a significant impact on stock
prices and overall market sentiment.

Evaluating pre-market volume and liquidity: Assess the

trading volume and liquidity during the pre-market session
for the stocks or assets you are interested in. Low volume
and limited liquidity can increase the risk of significant price
gaps or slippage when the market officially opens.

93
 PRE MARKET ANALYSES

Preparing a watch list: Based on your pre-market analysis,

create a watch list of stocks or assets that show potential
trading opportunities. Identify key levels, price targets, and
potential entry and exit points for these securities.

It's important to remember that while pre-market analysis

provides valuable insights, it does not guarantee the future
direction of the market or specific securities. Market
conditions can change rapidly after the official market open
due to new information and investor sentiment. Therefore,
it's crucial to adapt your trading strategies and decisions
based on real-time market dynamics.

94
 TRADING SESSIONS

Trading sessions are specific time periods when financial

markets are open for trading.

Different regions around the world have their own trading

sessions due to varying time zones. The major trading
sessions include:

Asian Session: This session starts when the Tokyo market

opens and involves trading in countries like Japan,
China, Australia, and Singapore. It is known for having
relatively lower volatility compared to other sessions.
European Session: This session begins when the London
market opens and covers trading in European countries
such as Germany, France, and Switzerland. It is
considered one of the most active sessions,
characterised by higher volatility.
North American Session: This session starts when the
New York market opens and includes trading in the
United States and Canada. It is known for high liquidity
and volatility, especially when it overlaps with the
European session.

Each trading session has its own specific opening and closing
times. There are also times when sessions overlap, creating
opportunities for increased trading activity.

Traders should be aware of these session timings to

effectively plan their trades and take advantage of market
movements.

95
 MY TRADING PLAN
Before developing a trading plan, you need to know what type
of trader you are according to your financial goals.

Day Trader: Day traders are traders who buy and sell assets
within the same day to make profits from short-term price
changes. They look at charts that show price movements
throughout the day and use technical analysis to find good
opportunities to trade. Day traders want to benefit from
market fluctuations and often make several trades in a
single day.

Swing Trader: Swing traders hold positions for days or

weeks to capture big price moves. They analyse technical
and fundamental factors to find trading opportunities,
using indicators, patterns, and trends to make decisions.

Position Trader: Position traders take a long-term

approach, holding positions for weeks, months, or even
years. They focus on fundamental analysis and
macroeconomic factors to identify long-term trends.
Position traders aim to capture significant price moves and
prioritise long-term trends over short-term market
fluctuations.

Scalper: Scalpers make profits from small price changes

through many quick trades. They hold positions for a few
seconds to a few minutes. Scalping needs fast decision-
making, swift execution, and a focus on liquid markets with
tight spreads.

96
 MY TRADING PLAN

Algorithmic Trader: Algorithmic traders automate trading

decisions and execute trades using computer programmes
and algorithms. They develop or use existing algorithms
that analyse market data, identify signals, and
automatically execute trades. Algorithmic trading can
involve strategies like statistical arbitrage, trend following,
and market-making.

Positional Trader: Positional traders focus on long-term

trends, holding positions for months or even years. They
analyse fundamental factors, market cycles, and economic
trends to make trading decisions. They prioritise capturing
significant price moves over an extended period and are
less concerned with short-term price fluctuations.

High-Frequency Trader: High-frequency traders use

advanced technology and algorithms to make many trades
in milliseconds or microseconds. They profit from small
price differences and temporary market inefficiencies. High-
frequency trading needs advanced infrastructure, fast
connections, and access to high-speed market data.

Event-Driven Trader: Event-driven traders concentrate on

trading during specific events or news announcements that
create substantial market volatility. They seek to profit from
price movements resulting from economic releases,
earnings reports, geopolitical events, or company-specific
news. These traders use fundamental analysis to predict
how these events will impact asset prices.

97
 MY TRADING PLAN

Developing a daily trading plan is essential for maintaining

focus, discipline, and organisation in your trading activities.

Consider incorporating the following elements into your daily

trading plan:

Market Analysis: Begin by analysing the overall market

conditions. Do a top-down analysis from bigger timeframes to
smaller timeframes. Review relevant news, economic
indicators, and market trends that can influence the securities
you trade.
Utilise both fundamental and technical analysis to identify
potential trading opportunities.

Watch List: Based on your market analysis, create a watch list of

securities that display potential trading setups. These could be
stocks, currencies, commodities, or any other assets you focus
on. Narrow down your watch list to a manageable number of
assets to avoid feeling overwhelmed.

Entry and Exit Points: Clearly define entry and exit points for the
securities on your watch list. Identify price levels, chart
patterns, or technical indicators that indicate favourable entry
points. Determine your profit targets and establish exit points if
the trade moves against you. Setting these levels in advance
helps prevent emotional decision-making during live trading.

98
 MY TRADING PLAN

Risk Management: Determine the maximum amount of capital

you are willing to risk on each trade.

Set your position size based on your predetermined risk per

trade and the specific characteristics of the trade.

Identify where you will place stop-loss orders to limit

potential losses and safeguard your capital.

Trading Strategy and Tactics: Specify the trading strategies

and tactics you will employ for each security on your watch
list. This could include breakout trading, trend following,
mean reversion, or any other strategies that align with your
trading style and the current market conditions.

Timeframes and Trading Hours: Determine the timeframes

you will use for analysis and trading. Decide whether you
will focus on intraday trading, swing trading, or longer-
term positions. Define the specific trading hours during
which you will actively monitor the market.

News and Events: Take note of important economic

releases, earnings reports, or other market-moving events
scheduled for the day. Be mindful of how these events
may impact your trades and adjust your risk management
accordingly.

99
 MY TRADING PLAN

Trading log: Maintain a trading journal to document your

trades, including entry and exit points, trade rationale,
and outcomes. Regularly review your journal to analyse
your performance, identify patterns, and learn from both
successful and unsuccessful trades.

Emotional Preparation: Acknowledge and address any

emotional challenges you may encounter while trading.
Maintain discipline and emotional balance, and avoid
impulsive decisions driven by fear or greed. Remind
yourself to adhere to your trading plan and follow your
predefined rules.

Review and Evaluation: At the end of each trading day,

review your trades and evaluate your performance
against your plan. Assess whether you adhered to your
trading rules and identify areas for improvement. Utilise
this feedback to refine your trading plan for the following
day.

Remember, a trading plan is a dynamic document that

requires adjustments as market conditions change.
Continuously assess and adapt your plan to align with
evolving market trends, news, and your own trading
experiences.

100
MY TRADING PLAN

WHY AM I TRADING?

WHAT ARE MY GOALS?

WEEKLY/MONTHLY/QUARTERLY/
ANNUALLY

101
MY TRADING PLAN

WHAT MARKETS WILL I BE

TRADING?

WHAT TIMEFRAMES AND

SETUPS WILL I TRADE?

102
MY TRADING PLAN

STOPS - HOW WILL I DEFINE MY

RISK?

ENTRY AND EXIT RULES?

103
MY TRADING PLAN

MY PRE MARKET ROUTINE

MY POST MARKET ROUTINE

104
MY TRADING PLAN

HOW WILL I FIND NEW

MARKETS TO TRADE?

DISCIPLINE AND MINDSET

NOTES

105
MY TRADING PLAN

HOW WILL I CONTINUE MY

EDUCATION?

TRADING QUOTES

106
 MY TRADING LOG

JANUARY
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

107
 MY TRADING LOG

FEBRUARY
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

108
 MY TRADING LOG

MARCH
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

109
 MY TRADING LOG

APRIL
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

110
 MY TRADING LOG

MAY
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

111
 MY TRADING LOG

JUNE
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

112
 MY TRADING LOG

JULY
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

113
 MY TRADING LOG

AUGUST
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

114
 MY TRADING LOG

SEPTEMBER
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

115
 MY TRADING LOG

OCTOBER
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

116
 MY TRADING LOG

NOVEMBER
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

117
 MY TRADING LOG

DECEMBER
STARTING CURRENCY/
LOT SIZE PROFIT
CAPITAL INDICES

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 TRADING TERMINOLOGY

Bull Market: A market condition characterized by rising prices

and optimism among traders, indicating an upward trend.

Bear Market: A market condition characterized by falling

prices and pessimism among traders, indicating a downward
trend.

Long Position: When a trader buys an asset with the

expectation that its price will rise in the future, they are said to
have taken a long position.

Short Position: When a trader sells an asset with the

expectation that its price will decline in the future, they are
said to have taken a short position. In this case, they aim to
buy it back at a lower price to profit from the price difference.

Stop Loss: A predetermined price level set by a trader to limit

potential losses on a trade. If the price reaches or surpasses
the stop-loss level, the trade is automatically closed.

Take Profit: A predetermined price level set by a trader to

secure profits on a trade. If the price reaches or surpasses the
take-profit level, the trade is automatically closed.

Margin: The amount of money or collateral required by a

broker to open and maintain a leveraged trading position. It
acts as a deposit or security against potential losses.

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 TRADING TERMINOLOGY

Volatility: A measure of the price fluctuations or variability of

an asset's value over a given period. High volatility indicates
significant price swings, while low volatility suggests stability.

Liquidity: The degree to which an asset or market can be easily

bought or sold without significantly impacting its price. High
liquidity means there is a large number of buyers and sellers,
facilitating smooth trading.

Pips: The smallest unit by which currency pair prices are

quoted. It represents the fourth decimal place in most currency
pairs. For example, if the EUR/USD exchange rate changes from
1.2500 to 1.2505, it has moved 5 pips.

Market Order: An order to buy or sell an asset at the best

available price in the market at the time the order is placed.
Market orders are executed immediately.

Limit Order: An order to buy or sell an asset at a specific price

or better. A limit order is executed only if the market reaches
the specified price.

Stop Order: An order to buy or sell an asset once the price

surpasses a specific level. It is used to limit losses or enter a
trade when the market moves in a certain direction.

Bid Price: The highest price that a buyer is willing to pay for an
asset at a given moment.

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Ask Price: The lowest price at which a seller is willing to sell an

asset at a given moment.

Spread: The difference between the bid price and the ask price
of an asset. It represents the transaction cost for trading that
asset.

Leverage: The use of borrowed funds or margin to magnify

potential returns or losses. It allows traders to control larger
positions with a smaller amount of capital.

Candlestick Chart: A popular type of price chart used in

technical analysis. It displays the open, high, low, and closing
prices for a specific time period as "candlesticks," which help
traders analyze price patterns.

Resistance Level: A price level at which an asset has historically

encountered selling pressure, causing it to reverse its upward
movement.

Support Level: A price level at which an asset has historically

encountered buying pressure, preventing it from falling further
and causing a potential rebound.

Volatility Index (VIX): A popular measure of market volatility. It

represents market participants' expectations of near-term
volatility and is often referred to as the "fear index."

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 TRADING TERMINOLOGY

Fundamental Analysis: An approach to analyzing financial

markets by evaluating economic, financial, and other
qualitative and quantitative factors that may influence an
asset's value.

Technical Analysis: An approach to analyzing financial markets

that focuses on studying historical price and volume data,
patterns, and indicators to predict future price movements.

Risk Management: The practice of identifying, assessing, and

mitigating potential risks associated with trading or
investment activities. It involves using various strategies and
tools to protect capital and minimize losses.

Breakout: A price movement in which an asset surpasses a

significant level of support or resistance, indicating a potential
trend continuation or reversal.

Day Trading: A trading style in which positions are opened and

closed within the same trading day, aiming to profit from
short-term price fluctuations.

Swing Trading: A trading style that seeks to capture medium-

term price swings or "swings" in the market. Positions are
typically held for a few days to weeks.

Scalping: A trading strategy that aims to profit from small price

movements by entering and exiting trades quickly, often within
minutes or seconds.

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Risk-Reward Ratio: A ratio that compares the potential profit of

a trade to the potential loss. It helps traders assess the
potential rewards in relation to the risks involved in a trade.

Margin Call: A notification from a broker requesting additional

funds to cover potential losses when a trader's account no
longer meets the required margin levels.

Candlestick Patterns: Specific formations on candlestick charts

that provide insights into potential price reversals or
continuations. Examples include doji, hammer, engulfing
patterns, and more.

Fibonacci Retracement: A technical analysis tool used to

identify potential levels of support and resistance based on key
Fibonacci ratios. Traders use these levels to anticipate price
reversals or pullbacks.

Moving Average (MA): A popular technical indicator that

smooths out price data over a specified period, providing a line
that traders use to identify trends and potential support or
resistance levels.

RSI (Relative Strength Index): A momentum oscillator that

measures the speed and change of price movements. It helps
traders identify overbought or oversold conditions in an asset
and potential trend reversals.

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MACD (Moving Average Convergence Divergence): A trend-

following momentum indicator that shows the relationship
between two moving averages of an asset's price. It helps
traders identify potential buy or sell signals.

Slippage: The difference between the expected price of a trade

and the actual executed price. It can occur during periods of
high market volatility or low liquidity.

Position Sizing: The process of determining the appropriate

amount of capital to allocate to a specific trade based on risk
tolerance, account size, and market conditions.

Volume: The number of shares or contracts traded in a

particular asset during a given period. It provides insight into
the level of market activity and liquidity.

Order block: An order block is a technical analysis concept

used to identify areas of significant buying or selling activity in
the market. It refers to a specific price range where
institutional traders or market participants have placed large
orders, causing a temporary imbalance in supply and demand.

Diversification: The practice of spreading investments across

different assets, markets, or sectors to reduce risk. It aims to
minimize the impact of potential losses from any single
investment.

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 CONCLUSION

Congratulations on reaching this point! It's evident that you

have the determination and hunger for success in the trading
business. I have provided you with powerful price action
strategies,valuable insights, and principles to navigate and
profit from the world of trading successfully. Remember,
your educational background doesn't determine your
success as a trader. Whether you're a doctor, lawyer, or
physician scientist, what matters is your ability to follow the
rules. Neglecting them can lead to the complete loss of your
trading account.

By understanding the fundamental concepts of trading, such

as market analysis, risk management, and developing a
trading plan, you are equipped with the necessary tools to
make informed trading decisions. Additionally, the
importance of emotional control, keeping a trading journal,
and continuous self-improvement cannot be overstated.

Trading is not a get rich quick scheme it is akin to learning a

new skill. It requires time, effort, and dedication. It may take
time to achieve consistent profitability, but with
perseverance and the application of the strategies outlined
in this handbook, you are on the right path.

If you commit yourself and put in the necessary work, you

can acquire a skill that will provide for you and your family
for a lifetime—granting you financial freedom, eliminating
the need for a day job.

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 CONCLUSION

Always remember to prioritise capital preservation,

manage risk effectively, and maintain a long-term
perspective. Markets can be unpredictable, but by staying
disciplined and adhering to your trading plan, you can
mitigate potential losses and increase the likelihood of
achieving your trading goals.

You now possess the map and the strategy, and you won't
waste years trying different indicators and strategies.
Everything you need is right here. However, it will still take
time to master these strategies. So, allocate yourself
sufficient time and dedicate as much as you can to
learning, because that's the only path to success in this
business.

As you progress, you will refine these trading strategies

according to what works for you and what doesn't. Keep
practicing and learning from your mistakes. Don't focus
solely on making money quickly; instead, strive to become
an expert in what you do. When you become an expert,
money will naturally flow to you.

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 CONCLUSION

Lastly, trading is a personal journey, and you will develop

your own trading style and preferences over time.
Embrace the process of continuous learning, adaptability,
and improvement. Be patient, resilient, and never stop
honing your skills.

With the knowledge gained from this handbook,

combined with your commitment and dedication, you are
well-equipped to embark on your trading journey. May
you find success, fulfilment, and financial prosperity in
your trading endeavors. Good luck!

Love, Kaela

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