About Us

Who is Vantage
Vantage Values
Vantage Awards
Forex Trading For Beginners: The Ultimate Guide
About Us
3

WHO IS VANTAGE?

Empowering you to better trade on the right

market opportunities

For more than 10 years, we’ve purpose-built

our platform and services to help you trade
effortlessly and better on the right market
opportunities. Our Vantage ecosystem is
not only a place for you to trade in financial
assets, but a place for you to learn, explore
and connect with other like-minded investors.

We are an award-winning, multi-asset

broker headquartered in Sydney, with over 10
years of market experience, operating in 172
countries. With more than 1,000 employees
in over 30 global offices, we are there to
support you in your trading experience.

At Vantage, we hold ourselves to the highest

regulatory and security standards so you can
trade through us with absolute peace of mind.

Our simple and intuitive trading platform

allows you to trade over 300 different CFDs on
instruments no matter where you are. Our ultra-
fast execution, stable performance, and round-
the-clock dedicated customer service support,
ensures that with Vantage, you have the edge
to trade better on market opportunities.

Trade with an edge. trade smarter @

vantage.
Forex Trading For Beginners: The Ultimate Guide
About Us
4

What’s important to you, is

VANTAGE VALUES

important to us.
We believe that your peace of mind is of
paramount importance to us. That is why
we take a no-nonsense approach towards
compliance and security, to safeguard your
interests and keep your funds segregated.
Year after year, we are persistently trusted by
our customers.

We believe speed is everything in the market.

We spare no expense in building a powerful
and nimble trade platform, creating highly
efficient processes, so you can enjoy a
smooth and efficient trading experience.

We believe technology needs to work

for people, not the other way around.
Our trading tools are simply intuitive and
designed to take the complexity out of
trading, so you can be free to focus on what
matters most.

We believe trading should be borderless. That

is why our open and dynamic platform allows
you to seamlessly connect with our experts, our
agents, and your fellow investors, so we can
drive meaningful investment outcomes together.

We believe in a human-centric approach. We

listen, taking time to understand your specific
needs and serve you wholeheartedly. We are
by your side to provide you with resources
and support so you can seize every winning
opportunity.

Because when you succeed, we all do.

Forex Trading For Beginners: The Ultimate Guide
About Us
5
VANTAGE AWARDS
 01 Forex Market Overview
What is Forex?
Forex Currency Pairs
Basics of Forex
Forex Need to Know

02 Forex Market Analysis

CONTENTS

Fundamental Analysis
Technical Analysis – Price Action Trading
Technical Analysis – Indicator Trading

03 Forex Trading Psychology

Psychology and Forex Trading
01
Forex Market
Overview
What is Forex?
Forex Currency Pairs
Basics of Forex
Forex Need to Know
Forex Market Overview

What is Forex?
Forex Trading For Beginners: The Ultimate Guide
What is Forex?
9
OVERVIEW

What is Forex?

The forex or FX market, which is short for the foreign

exchange market, is the place in which individuals,
companies and governments all trade different
currencies with one another. Put simply, the forex market
is the marketplace where money is bought and sold.

Open 24 hours a day and 5 days a week, unlike stock

or bond markets, the forex market doesn’t close at the
end of each day. Instead, trading just shifts to different
financial centres around the world. The day starts
with the Sydney session and moves to Tokyo, London,
Frankfurt and finally New York before it is time for
Sydney to do it all over again!
Forex Trading For Beginners: The Ultimate Guide
What is Forex?
10
OVERVIEW

When compared to various stock, commodities and

bond markets worldwide, the forex market is by FAR
the biggest financial market in the world. The NYSE
sees an average of $22.4 billion per day in volume
traded, while the London Stock Exchange sees an
average day turn over $7.2 billion in volume traded.

They sound like big numbers, don’t they? Well the forex
market does an absolutely massive $5.3 TRILLION,
monstering them all in comparison!

The most appealing thing about trading forex is just

how accessible it is to trade for regular people like
you! Known as ‘retail traders’, these are the people
trading the forex market from their own homes with
nothing more than a computer, a connection to the
internet and their own personal trading account with
a forex broker such as Vantage.
Forex Trading For Beginners: The Ultimate Guide
What is Forex?
11
WHY TRADE FOREX?

If you were to ask someone on the street what their

opinion of forex trading was, you’d most likely get the
following responses:

“Why on Earth would you want to throw your money

away like that?”

“Your broker will steal your money.”

“You’re much safer investing in blue chip stocks for the

long term.”

For one reason or another, forex is unfortunately seen

by many as a risky, get rich quick scam. But is that a
fair assessment? Well the answer is actually both yes
and no.

Like most things in life, people fear what they don’t

actually understand and if you don’t educate yourself
and dive in head first with your life savings trading forex
with an unregulated broker, what the heck do you
expect? Of course you’re likely to lose your money…

On the other hand, if you put in the time to properly

educate yourself as a forex trader, understand the
leverage available to you, your broker’s financial
regulation and most importantly how to manage your
risk, then Forex could well be the perfect market for
you to trade!

So what are some of the advantages that

forex trading has over trading stocks and
other markets?
Forex Trading For Beginners: The Ultimate Guide
What is Forex?
12
WHY TRADE FOREX?

1. Forex Trading is Easy

Unlike other forms of investing, forex trading is easy

to get started. When you compare what you need to
get started trading forex with what you need to get
started in stocks, options or futures trading, they all
pale in comparison.

All you need to trade forex is a computer, an internet

connection and a mind that wants to learn! Open
an account with a forex broker such as Vantage with
as little as $100 and take advantage of the copious
amounts of free forex education that is on the
Vantage website!

2. Forex Trading is Cheap

As you just read, forex trading doesn’t require you to

deposit tens of thousands of dollars into your account
just to get started. You can open an account and
begin trading forex with as little as a $100 deposit.

Another huge advantage that forex trading has over

stocks, options and futures is costs to enter and exit
a trade. With other financial instruments and markets,
you can pay huge fees to simply enter and exit a one
size fits all trade. Forex on the other hand allows you to
trade just 0.01 of a standard lot, paying just the spread.
Forex Trading For Beginners: The Ultimate Guide
What is Forex?
13
WHY TRADE FOREX?

3. The Ability to Trade Forex Anywhere, Anytime

Unlike your 9 to 5 day job, forex trading doesn’t restrict

you to your desk or worksite. If you don’t want to be
inside, then don’t be inside! Forex gives you the ability
to trade anywhere, anytime. Trade wherever and
whenever you want, it’s up to you.

Access your MetaTrader 4 account on a computer,

laptop, web browser, tablet or mobile phone. All you
need is an internet connection. Always be connected
to the market and never let a trading opportunity go
by wishing you could have profited from it!

4. World’s Biggest Market

Here’s a question for you. How many stock charts have you
looked at and seen gaps scattered throughout the chart?

Remember that gaps mean that you can’t get in or

out of a trade at those prices because there is simply
no one looking to buy or sell there. This adds a whole
other element of risk to stock traders that forex traders
don’t have to worry about.
Forex Trading For Beginners: The Ultimate Guide
What is Forex?
14

As we outlined in our what is forex section, the forex

FOREX TRADING SESSIONS

market is open 24 hours a day and 5 days a week. As

one part of the world wakes up, the centre of trading
focuses around that section of the globe and slowly
shifts between financial centres as the day unfolds
throughout the world.

The major forex trading sessions are outlined in the

following table:

Forex Session Open (GMT) Close (GMT)

Sydney Session 9.00 PM 5.00 AM

Tokyo (Asian) Session 11.00 PM 7.00 AM

Frankfurt (European) 7.00 AM 3.00 PM

London Session 8.00 AM 4.00 PM

New York Session 1.00 PM 9.00 PM

As a basic rule, you are better off trading the

respective currency pair during its corresponding
session. For example, AUD/USD is more likely to move
during the relatively quiet Sydney session because
of market moving news releases. On the other hand,
EUR/GBP probably isn’t going to experience the same
types of moves during Asia as both Europe and the UK
is asleep.

Now, as you can see some of the forex trading

sessions actually overlap one another. During these
session cross over times, it is seen as one of the
optimal times to be trading forex as you have highly
liquid market conditions where good quality moves
often come. But why are they seen as good quality
moves? Shouldn’t a move be a move? Well the simple
answer here is no, not all moves are good for trading.
Forex Trading For Beginners: The Ultimate Guide
What is Forex?
15
FOREX TRADING SESSIONS

Now, as you can see some of the forex trading sessions

actually overlap one another. During these session
cross over times, it is seen as one of the optimal times
to be trading forex as you have highly liquid market
conditions where good quality moves often come. But
why are they seen as good quality moves? Shouldn’t
a move be a move? Well the simple answer here is no,
not all moves are good for trading.

For example, a move during the illiquid end to the

New York trading session might be prone to a fake
out rather than a sustained, more predictable move.
You could be much better off taking a break out trade
during the London session open when the market
is at its most liquid and moves are better. On your
forex sessions diagram, take note of important times
such as session open and closes when major market
participants might look to open or close major orders.
Forex Market Overview

Forex Currency
Pairs
Forex Trading For Beginners: The Ultimate Guide
Forex Currency Pairs
17
OVERVIEW

Forex currency pairs

Now we know a little more about what the Forex
market is, let’s take a look at the currencies that are
traded and how they are traded. We have talked
about how massive the forex market is as a whole, so
let’s now dig down a little deeper into the individual
currencies that make up this huge market.
Below is a list of the most popular, actively traded
currencies in the forex market as well as their
abbreviations that traders use:

US Dollar (USD)
Euro (EUR)
Japanese Yen (JPY)
Pound Sterling (GBP)
Australian Dollar (AUD)
Swiss Franc (CHF)
Canadian Dollar (CAD)

But in the Forex market, you cannot simply buy or sell

these single currencies alone. In Forex, currencies are
actually quoted and traded in pairs, hence the name
currency pairs. It makes sense when you think about
trading currencies with real world applications and
not simply as a paper share in a company or a futures
contract. When you want to buy a specific currency,
what are you going to pay for it with? Of course,
another currency. This is where the idea of forex
currency pairs comes from.
Forex Trading For Beginners: The Ultimate Guide
Forex Currency Pairs
18

Here we have listed the most commonly traded forex

OVERVIEW

currency pairs:

Euro / US Dollar (EUR/USD)

US Dollar / Japanese Yen (USD/JPY)
Pound Sterling / US Dollar (GBP/USD)
US Dollar / Swiss Franc (USD/CHF)
Australian Dollar / US Dollar (AUD/USD)
US Dollar / Canadian Dollar (USD/CAD)

Now let’s look at an example of a Forex trade. Say

that your analysis is telling you to buy EUR/USD. This
essentially means that you are buying the Euro and
selling the US Dollar. Because each currency pair is
actually a relationship between the two different
currencies quoted, you have a few different scenarios
that could put your trade in a profitable position.

Put simply, you will profit if the Euro rises and the US Dollar
falls. But the currency pair relationship also means that
you will profit if both currencies are rising but the Euro rises
more and likewise if both currencies are falling but the
USD is falling faster.

Be sure to log into your Vantage MT4 live account and try
both buying and selling different forex currency pairs to
get your head around the relationships.
 Forex Trading For Beginners: The Ultimate Guide
Forex Currency Pairs
19
CURRENCY PAIRS WRITTEN?
HOW ARE FOREX

Here we can see the different parts that make up a

forex currency pair.

The first currency listed in the pair is known as the

base currency and the second currency listed in the
pair is what’s known as the quote currency.

Have you ever noticed that a currency pair is always

written in a set order? For example, EUR/USD is always
written with the EUR as the base currency and not
the other way around. This is due to standards that
have been universally set, whereby each currency
has a ranking relative to one another. If one currency
is ranked higher than another, when quoted as a
currency pair it will receive base currency status.

The universally accepted ranking order is as follows:

1. EUR
2. GBP
3. AUD
4. NZD
5. USD
6. CAD
7. CHF
8. JPY

The rankings were established according to the

relative values of the currencies at the time, but new
currencies such as the Euro were subjectively inserted.
 Forex Trading For Beginners: The Ultimate Guide
Forex Currency Pairs
20
CURRENCY PAIRS WRITTEN?
HOW ARE FOREX

When a forex currency pair is displayed as a quote like

the example above, the price shows how much of the
quote currency (in this case, the USD) is required to buy
1 unit of the base currency (in this case, the EUR). For
example, EUR/USD at 1.2000 means that 1 Euro can buy
1.2000 US Dollars.

In a forex currency quote, the first number is what is called

the bid price, or the price at which you are able to buy
the currency pair. The second number is called the ask
price, and is the price at which you can sell the currency
pair. The difference between the bid and ask price is
what is known as the spread and is the price that you
must pay to enter your trade.

On the Vantage MT4 terminal, take a look at the quote

board and check the base and quote currencies and the
tight spreads that Vantage can offer its traders.
 Forex Trading For Beginners: The Ultimate Guide
Forex Currency Pairs
21

Sometimes when talking to other forex traders you

NICKNAMES: CABLE AND FIBER?
FOREX CURRENCY PAIR

might hear a reference to a nickname that you don’t

understand.

“I’m looking to long 10 lots in Cable, what are you

thinking?”

“Hmm, have you taken a look at Fiber? Support looks

like it might be breaking across the board.”

Wait, what? I thought we were talking forex trading

over here? Although It may seem strange at first, these
are actually nicknames for different forex currency
pairs!

Let’s take a look at the two forex currency pair

nicknames that get used the most, Cable and Fiber.

GBP/USD – Cable: Back in the mid-19th century,

before the invention of satellites and fiber optics,
the exchange rate between the British Pound
Sterling (GBP) and the US Dollar (USD) was actually
transmitted across the Atlantic Ocean via submarine
cable. The first such cable between the London and
NY exchanges was laid in 1858 and the rest as they
say, is history!

Traders love to talk about the good old days and this
piece of forex trading history has stuck with traders
generations onward.
 Forex Trading For Beginners: The Ultimate Guide
Forex Currency Pairs
22
NICKNAMES: CABLE AND FIBER?
FOREX CURRENCY PAIR

EUR/USD – Fiber: But what about the brand spanking

new Euro that was first introduced in only 1999? EUR/USD
of course doesn’t quite have the same romantic history
to draw upon that Cable does. So what do traders do?
Well, being the funny bunch that they are, they’ve gone
and simply ‘upgraded’ the old Cable to a state of the art
Fibre Optic line. Hence the nickname Fibre!

The nickname Fiber is simply a play on words on the first

nicknamed Cable. Isn’t it funny how nicknames like this
just stick!

Of course there are many more forex currency pair

nicknames going around which we’ve listed for you here:

AUD/USD – Aussie
NZD/USD – Kiwi
USD/CHF – Swissy
USD/CAD – Loonie
GBP/JPY – Guppy
EUR/JPY – Yuppy
EUR/GBP – Chunnel

Go through the Market Watch on your Vantage MT4

live account and find the currency pairs with nicknames
yourself. You now never have to feel left out of a
conversation with other forex traders again!
Forex Trading For Beginners: The Ultimate Guide
Forex Currency Pairs
23

You may have heard traders discussing the ‘majors’

TYPES OF FOREX CURRENCY PAIRS

or maybe even saw someone talk about shorting an

‘exotic’ forex currency pair. No they weren’t talking
about a soldier trading from an exotic beach while
sunbathing naked (zing!) on the sand, they were
actually talking about the different types of forex
currency pairs that are available!

The Majors are typically the most traded currencies,

paired with the USD, although some traders may
refer to any forex currency pair featuring the USD as
one of the majors. The majors are the most actively
traded forex pairs which means they most liquid. This
increased liquidity means that forex brokers such as
Vantage can offer tighter spreads between the bid
and ask price on the majors. Here are the average
RAW ECN spreads to look out for:

EUR/USD – 0.1 pips.

USD/JPY – 0.5 pips.
GBP/USD – 0.6 pips.
AUD/USD – 0.4 pips.

The Minors are normally referring to any of the

remaining, non USD forex currency pairs. These slightly
less popular pairs often experience more wild swings
in both directions due to less liquidity in the market.
This also means that their spreads are often wider
than those of the majors. Here are the average RAW
ECN spreads to look out for:

EUR/JPY – 2.1 pips.

EUR/GBP – 3.5 pips.
GBP/CHF – 3.3 pips.
AUD/NZD – 1.4 pips.
Forex Trading For Beginners: The Ultimate Guide
Forex Currency Pairs
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What about The Currency Crosses? Once again, the

TYPES OF FOREX CURRENCY PAIRS

forex currency crosses are just another example of the

minors where USD is no longer required to complete the
trade. Historically you see, anyone who needed to trade
one currency for another would first have to convert
their original sum into USD. The currency crosses were
first developed to bypass the step of first having to go
to USD. While that sounds normal today, at the time
this was ground breaking in its business functionality.
Examples of a currency cross with RAW ECN spreads
would be:

GBP/JPY – 3.1 pips.

EUR/AUD – 2.7 pips.

And finally, sometimes you may also see some of the

minors referred to as The Exotics. This just simply means
that the currency pair is something that is rarely traded or
spoken about in mainstream financial circles. An example
of some of the forex currency pairs that could be
considered as exotics with RAW ECN spreads are here:

EUR/TRY
CAD/SGD

The characteristics of both majors and minors are

different and the personalities of the currency pairs that
you are trading have to be taken into account when
you are determining the pairs on which to employ your
trading strategy on.

Maybe the wider spreads on GBP/CHF might prohibit

you from effectively scalping the pair? But at the same
time, maybe the big moves might be much more effective
for you as a swing trader? These are all things to consider
when building your trading plan and deciding on which
forex currency pairs to trade.

Test the 45 forex currency pairs that Vantage offers on a

free MT4 demo account and test your trading strategy on
different pairs.
Forex Market Overview

Basics of Forex
Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
26
OVERVIEW

Basics of Forex
In this chapter, we will discuss the basics of Forex
trading – everything you need to know to get started
trading.

First we will cover buying and selling in “Going Long

and Short”, then we’ll move on to ‘Lot Size & Leverage’.
Next, we’ll cover what a pip is and how to calculate its
worth in “What is a Forex pip? How much is a Forex pip
worth?”.

Finally, we’ll discuss the various order types and swap

trading in “Different Types Of Forex Orders” and “What
is Forex Swap? Can I Make Money Collecting Forex
Swap?”.

Be sure to follow the lessons up with your own trading

on your free forex demo account.
Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
27
GOING LONG OR GOING SHORT

Put simply, forex markets go both up and down. Every

regular guy you chat to on the street is going to be able
to tell you that. So why do so many investors only buy
and hold assets like shares in a company or commodities
such as gold? What I find even more questionable, is
why do these ‘buy only’ investors sell their assets when
they know the market is going to go down, but don’t do
anything else to profit from the move? They predicted it
was coming, but they do nothing!

Wouldn’t it be great if instead of just selling your

assets when you predict a fall in the market, you could
profit from your prediction too? Forex trading isn’t
like investing in stocks where you just buy and hold.
Trading forex gives you the opportunity to profit in ALL
market conditions. Whether the market is going up
or going down won’t bother you as you’ll see trading
opportunities in both directions.
Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
28

As we described on the forex currency pairs lesson, when

GOING LONG OR GOING SHORT

trading forex, you cannot simply buy or sell a single

currency. In forex, currencies are written in pairs meaning
that you must buy one currency pair by selling another
(and vice versa).

If you want to buy a forex currency pair, then you are

going long (or taking a long position). This means
that you want the base currency to rise in value when
compared to the quote currency so you can sell it at
a higher price. This is straight forward, but what if you
wanted to profit in a falling market?

On the other hand, if you want to sell a forex currency

pair, then you are going short (or taking a short position).
In this scenario, you want the base currency to fall when
compared to the quote currency so you can buy it back
at a lower price.

Try taking both long and short positions yourself on a

Vantage MT4 live account.
Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
29
LOT SIZE AND LEVERAGE

When you’re trading forex online, it’s not like you can load
your car up with cash, drive to a designated meeting
place and trade your Dollars for Yen. You are of course
doing business via online contracts. Contracts that have
standard sizes called lots in place to make online forex
trading standardised around the world.

The following is a list of common lot sizes and the

corresponding number of currency units that you are in
fact buying or selling.

• 1 STANDARD lot represents 100,000 units of currency.

• 1 MINI lot represents 10,000 units of currency.
• 1 MICRO lot represents 1000 units of currency.

Both the Standard STP and RAW ECN forex trading

accounts at Vantage are by default set to be trading
using standard lots. At first glance, this may seem like it is
only suitable for big traders but don’t worry because the
Vantage MT4 platform allows you to trade down to 0.01
of a standard lot, effectively giving you the opportunity to
trade Micro lots if you please. By playing with fractions of
a standard lot, traders of all levels are able to trade on a
standard account.

The next question then becomes; do I need $100,000 in

my forex trading account just to trade 1 single standard
lot?! Don’t stress, the answer is no. This is where forex
traders utilize what is known as leverage.
Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
30
LOT SIZE AND LEVERAGE

When you trade forex using leverage, you actually are

able to control more money than the balance of your
own trading account. The term comes about because
with the broker’s help, you are ‘leveraging’ the money
that you have. Using leverage allows you to increase
your profits because you are able to trade bigger size
than a non-leveraged investment would allow.

At Vantage, a standard account has leverage of

100:1. This means that for every $1,000 in your trading
account, you are actually able to control $100,000 of
currency. Think of leverage as your broker lending you
the $100,000 so you can trade standard lot sizes. Your
$1,000 account is what’s known as margin, and can be
seen as a good faith deposit while you are using their
money to trade standard lot sizes.

For example, let’s say your Standard STP trading

account at Vantage has a balance of $5,000 and the
leverage you are using is 100:1. If you wanted to go long
1 standard lot of EUR/USD then Vantage would set
aside $1,000 as margin and would allow you to take the
position.

This is an extreme example and also highlights the

risks that leveraged forex trading exposes you to. If the
‘Margin Level’ in your MT4 Terminal drops to 50%, then
your position will be automatically closed and you will
have experienced what is called a margin call.
 Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
31

Manually Calculating Pip Value

WHAT IS A FOREX PIP?
HOW MUCH IS A FOREX PIP WORTH?

In this article, Base currency refers to the first currency in

a pair ie EUR in EURUSD and quote currency refers to the
second ie USD.

TO CALULATE:

If account is denominated in USD and USD is the

quote currency (EURUSD):
Pip Value = 0.0001 x Units

Example: You have a 5000 USD account and go long 25

000 EURUSD (.25 lots):

Pip Value = 0.0001 x Units

Pip Value = 0.0001 x 25 000
Pip Value = $2.50

If account is denominated in another currency (ie AUD)

and USD is the quote currency (EURUSD)
Pip Value = 0.0001 x Units / AUDUSD

Example – You have a $5000 AUD account and you go

long $25 000 EURUSD:

Pip Value = 0.0001 x Units / AUDUSD

Pip Value = 0.0001 x 25 000 / .7150
Pip Value = $2.50 / .7150
= $3.50

Note at current market rates, pip value is substantially

larger if account is denominated in AUD – this is very
important to know when calculating stop losses.
 Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
32

If account is denominated in USD and USD is the

IS A FOREX PIP WORTH?
WHAT IS A FOREX PIP? HOW MUCH

base currency (USDCHF):

Pip value = 0.0001 x units/quote

Example – You have a $5000 USD account and go

long $25 000 USDCHF:
Pip value = 0.0001 x units / quote
Pip Value = 0.0001 x 25 000 / USDCHF
Pip Value = $2.50 / .9915
Pip Value = $2.52

If account is denominated in another currency (ie

AUD) and USD is the base currency (USDCHF):
Pip Value = 0.0001 x units / quote / AUDUSD

Example – You have a $5000 AUD account and go

long $25 000 USDCHF:
Pip value = 0.0001 x units / quote / AUDUSD
Pip Value = 0.0001 x 25 000 / USDCHF / AUDUSD
Pip Value = $2.50 / .9915 / AUDUSD
Pip Value = $2.52 / .7150
Pip Value = $3.52

If account is denominated in USD and you are

trading a cross with no USD component such as
EURGBP:
Pip Value = 0.0001 x Units x Quote currency rate (GBPUSD).

Example: You have a 5000 USD account and go long

25 000 EURGBP (.25 lots):

Pip Value = 0.0001 x Units x GBPUSD

Pip Value = 0.0001 x 25 000 x GBPUSD
Pip Value = $2.50 x 1.4350
Pip Value = $3.59

If we used the above example but with an AUD

account, we could either divide the final USD pip
value by the AUDUSD rate, or use GBPAUD instead of
GBPUSD as the quote currency rate.

Note that for a pair like EURCHF, the quote currency is

not available as CHFUSD, therefore you would use 1/
(USDCHF) for the quote currency rate. Also, with some
pairs a multiplier other than 0.0001 must be used (if JPY
is the quote currency for example, the multiplier is 0.01).
Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
33

The term forex order simply means how you will enter or
DIFFERENT TYPES OF FOREX ORDERS

exit a trade. When you’re trading forex, you have many

more options at your fingertips to take advantage of
trading opportunities, both now and in the future, than
just simply buying and selling at the current market price
and we go through your options here.

A market order can be both a buy or sell order that will

enter you into a trade at the current market price. That is
the price you see right now on your MT4 chart. If you enter
a market order then you will be instantly entered at the
best available price.

Market orders are best used when you see a trading

opportunity that needs you to act quickly. Click buy/sell
at market and you’re in the trade instantly. For example,
the bid price for AUD/USD is currently at 0.7228 and the
ask price is at 0.7230. If you wanted to go long AUD/
USD at market, then you would be entered at the ask
price of 0.7230. You would click buy and your Vantage
MT4 platform would instantly execute a buy order at that
exact price.
Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
34
DIFFERENT TYPES OF FOREX ORDERS

A stop order can be both a buy stop, or a sell stop and

is used when you would like to buy above the market
or sell below the market. This is best used for trading
breakouts or trend continuation strategies when you
want the market to just keep going.

For example, AUD/USD is currently trading at 0.7230

and is trending upward. You believe that price
will continue to go up, and actually break-out of
resistance at 0.7300. Instead of sitting in front of your
computer and hitting buy at market, possibly missing
your perfect entry price, set a buy stop order at
0.7300. You don’t have to be in front of your computer
when price hits your stop order.

If on the other hand, you think that price will reverse

when it hits a certain price, you can use what is called
a limit order. Limit orders can be either a buy limit,
or a sell limit, depending on which way the market is
headed before your expected reversal. A buy limit is
used to by below the market and a sell limit is used to
sell above the market.

For example, AUD/USD is currently trading at 0.7230

and your analysis tells you that resistance at 0.7300
will likely hold so you want to short if price reaches this
level. You can either sit in front of your trading station
and wait for price to hit 0.7300 and sell at market, or
you can use a sell limit order.
Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
35
WHAT IS FOREX SWAP?

What is swap in Forex?

Swap is an interest fee that is either paid or charged
to you at the end of each trading day. When trading
on margin, you receive interest on your long positions,
while paying interest on short positions. The net interest
difference is known as the carry and traders seeking to
profit from this are known as carry traders.

Positive carry results when you receive more in interest

than you are required to pay, and is added directly to
your account. If the carry is negative, it is subtracted from
your account. If you open and close a trade within the
same day, the trade has no interest implications.
Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
36
CAN I MAKE MONEY COLLECTING FOREX SWAP?

Can I make money from swap in Forex

trading?
If you’re interested in placing a carry trade, the
first step is finding a high yielding and low yielding
forex currency pair. Some examples of low yielding
(or funding currencies) are the Japanese Yen (JPY),
the Swiss Franc (CHF) and the Euro (EUR). As far as
high yielding currencies go, the Dollar (AUD) and
New Zealand Dollar (NZD) are popular, though more
advanced carry traders might look to the South
African Rand (ZAR) or other exotic currencies.

Let’s use the Euro and Dollar: rates in the Eurozone

are currently below 0, whilst interest rates in are
relatively higher, currently 2%. This means that there is
an opportunity to earn carry buying AUD with EUR ie
going short EURAUD. Great, simple right?

Sadly it’s not that easy – there is no point earning a

pip a day in swap if the pair is moving against you 100
pips / week. That is, if we wanted to perform a carry
trade on EURAUD, we would wait until the pair was
trending down, sell into any strength and hold for the
length of the down trend.

Think of swap as an added bonus or incentive for

holding a trade long term (or in the case of negative
swap, a deterrent).

Are you looking to profit from the carry trade long term?
Open a Vantage live account today.
Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
37

When you’re trading Oil on the MT4 platform, if you

HOW OIL ROLLOVER WORKS

hold a position over the monthly expiration date of

the futures contract that price is based on, you will
encounter a rollover. If you do not wish for your position
to be rolled over, then you should close your position
beforehand.

This is because Oil is a futures contract which has a

set expiration date. If you want to continue to hold
your position over the expiration date, the old position
must be closed as the contract expires, and a new one
opened on the new futures contract.

Do I Incur Any Losses During the OIL Rollover Process?

Following the rollover in Oil, your account may show

a materialised loss due to the process employed. Be
aware that there are in fact ZERO costs or charges
incurred by clients involved in the rollover process.
Where you see a debit, you will also see an equal
credit added to your account.

New Oil Price Old Oil Price = Debit for Long Positions /
Credit for Short Positions
Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
38
HOW OIL ROLLOVER WORKS

Oil Rollover Example

For a 10 barrel CL-OIL trade, at a price of $98.50 and

a difference between monthly contracts of +50 Pips
($0.50), the calculations are as follows:

Long Position: (10 x -0.50) + (-0.04 x 10) + ((10 x 98.50 x

-0.002 x 1)/360) = -$5.41
Short Position: (10 x +0.50) + (-0.04 x 10) + ((10 x 98.50 x
-0.002 x 1)/360) = +$4.59

All Oil rollover adjustments are calculated in the

currency that the instrument is denominated in. If your
account is denominated in another currency, your
account will be converted at the current market rate.

Trade Oil on MT4 with the leading, regulated broker,

Vantage.
 Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
39
HOW TO AVOID A MARGIN CALL AND
FORCED CLOSURE

Forex traders have the ability to leverage a small amount

of capital and open positions hundreds of times larger
than their account balance, unlocking the door to
incredible profits. Leverage however, is a double-edged
sword: with great profit potential, comes the potential for
large losses. If you open too large a position, or too many
smaller positions, and the coin-toss goes against you,
you could face a margin call and forced closure, leaving
you with a small fraction of your original balance. So how
can you avoid a margin call and forced closure?
 Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
40

Position Sizing
HOW TO AVOID A MARGIN CALL AND
FORCED CLOSURE

Safe, calculated position sizing goes hand in hand

with successful forex trading. Before entering a trade,
you should know where you are going to place your
stop loss and how much you are risking on the position
– how far your stop loss is from your entry and how
much you are risking per trade determines the size of
your position. It should never be the other way around:
the size of your position should not determine your
stop loss, or risk per trade.

Some education outlets and gurus will tell you that it is

OK to risk as much as 5% per trade. Most professional
traders on the other hand, will tell you this is far too
much risk for a single position. Imagine you are trying
to keep your drawdown below 20%: if you are risking
5% per trade and lose 4 trades in a row, you have
already met your drawdown tolerance. The more an
account draws-down, the harder it is it to build back
up. Large drawdowns are also very tough on the mind
and you could begin to revenge-trade or open even
larger positions in order to try and make back your
losses – this is not trading – it is gambling in every
sense of the word.

In general, you should never risk more than 2% of your

account balance on any one trade. If you are just
starting out, 1% might be more appropriate. Once you
have learned the ropes and you are confident with
yourself and your strategy, then you could consider
increasing your position size a little. Either way though,
5% is probably too much for the majority of strategies.
Even the best professional traders can have losing
streaks well in excess 4 trades.

If you want to trade larger positions, you should fund

your account appropriately. This is the only safe way
of trading with size.
 Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
41

Number of positions and correlation

HOW TO AVOID A MARGIN CALL AND
FORCED CLOSURE

The number of positions you have open determines

your risk at any one time. Just because you are only
risking 2% per trade, don’t think you can go crazy and
open 10 simultaneous positions – this is a sure-fire way
to receive a margin call.

Even if you only have two positions open, but you

are trading highly correlated markets, you are still
essentially risking 4% on a single trade. An example of
this would be risking 2% on a long AUDUSD position,
whilst simultaneously risking 2% on a long NZDUSD
position – if the USD surges, you will be stopped out of
both positions simultaneously, and lose 4%.

On the flipside, don’t take opposite trades in highly

correlated markets and assume your risk is zero. If
we take the above example, except you go long
AUDUSD and short NZDUSD; yes the USD components
theoretically cancel each other out, but you still have
long AUD and short NZD exposure. Also, correlated
markets don’t always move in lockstep and in times of
high volatility, the market can move violently in both
directions in just a few minutes and take out both of
your stops.

In general, you should never have more than two or

three positions open at the same time, and you should
try to avoid trading highly-correlated markets, or at
least be aware of the risks.

The upside

If you trade with an appropriate amount of leverage,

restrict your risk-per-trade to no more than 2%, size
your positions appropriately and never open more
than a couple of positions at any one time, it is
nearly impossible to receive a margin call. Proper risk
management is the difference between successful
trading and gambling. Perfect risk management and
you will be well on the path to becoming a profitable
and successful forex trader.
 Forex Trading For Beginners: The Ultimate Guide
Basics of Forex
42

Margin call and forced closure

HOW TO AVOID A MARGIN CALL AND
FORCED CLOSURE

If the equity in your account falls below 100% of your

margin requirements, you will receive a margin call
(in modern times this is just an email – no one will
physically call you!). The margin call is informing you
that you have insufficient equity in your account and
you should either close some of your positions, or top-
up your account with appropriate funds. You can
close, or partially close your positions from your MT4
terminal, or log into your client area and top up your
account with a credit card, or one of our other instant
funding options.

If you ignore the margin call warning and your equity

continues to fall, reaching 50%, your positions will be
automatically closed and your floating losses will be
realized. This is what’s known in trading circles as a
‘blown account’ – you will be left with a very small
portion of your original balance. Exactly how little you
are left with depends on how much leverage you were
using and how many positions you had open. If you
have lots of positions open, they won’t all be closed
simultaneously, but progressively. This means you
could be left with only a few dollars in your account.
Blown accounts must be avoided at all costs.

It’s all on you

Though we can educate you in regards to proper risk

management and notify you when your equity falls
too low, at the end of the day, managing your position
sizing and ensuring your account remains sufficiently
funded, is your responsibility. Vantage offers clients
large amounts of leverage so our clients are free to
trade in a manner that suits them and trade any
strategy. Most scalping strategies for example, require
large amounts of leverage, even when they are only
risking 1 or 2%. If you are not scalping, chances are
you don’t actually need a lot of leverage – consider
setting your leverage to 50:1 or 100:1.

Leverage is an incredibly powerful tool if used correctly,

but with great power, comes great responsibility, and
that responsibility lies squarely with you.
Forex Market Overview

Forex Need
to Know
Forex Trading For Beginners: The Ultimate Guide
Forex Need to Know
44
OVERVIEW

Forex Need to Know

In this chapter, we will discuss the final things that you
NEED to know before you dive into Forex trading.

One of the most important aspects that unprofitable

traders fail to understand is the topic of risk:reward
ratios and the win rates that different forex trading
strategies require you to maintain to be a consistently
profitable trader.

We wrap up the section with a comparison between

the different types business models that forex brokers
run. The age old battle between an ECN broker and a
Market Maker!

At the end of this section, you are just about ready to

open a live forex trading account!
Forex Trading For Beginners: The Ultimate Guide
Forex Need to Know
45

In this forex education section we will discuss risk:reward

FOREX RISK: REWARD AND WIN RATES

ratios, win rates and the relationship between the two.

Having a sound understanding of this relationship is
essential if you want to make money trading Forex.
When trading a forex currency pair, one of two things
could happen – price could either go up or down. Your
job as a trader is to be on the right side of this move.
That is predict it correctly. Alright, so we have two
possibilities, that’s essentially a 50/50 chance either
way. Here lies the problem: If you win one, lose one, win
one, lose one, etc how do you make money? Simple, all
else equal, you won’t!

To make money trading Forex you need to have some

form of edge. You either need to be able to pick the
market correctly more than half the time (this is known
as a positive win rate) or, win more than you lose on
each trade (known as a positive risk to reward ratio).
The best forex traders will do both and achieve great
success – not only do they pick markets right more
often than not (this comes with experience), but they
win more than they lose on each trade as well.

Imagine this: You place four trades, winning two and

losing two. On each trade you have a stop loss of 10
pips and a take profit level of 20 pips. What’s your
net result? +20, +20, -10, -10 = +20. You haven’t got
any better at picking forex markets since the first
paragraph, but you are now trading with a positive
risk:reward ratio. Instead of breaking even, you are now
profitable! Your breakeven level falls from 50% to 33.33%.
This is a 1:2 risk to reward ratio – your average losses are
half the size of your average wins.
Forex Trading For Beginners: The Ultimate Guide
Forex Need to Know
46

This is an example of a 1:2 trade – we are long EUR/

FOREX RISK: REWARD AND WIN RATES

USD, risking 80 pips to potentially make 160:

Note we could actually squeeze 1:3 out of this range:

If making 1:3 trades, you only have to be right 25% of

the time in order to break even.
If you want to make money trading Forex you have to have
some form of edge. Find your trading edge with Vantage.
02
Forex Market
Analysis
Fundamental Analysis
Technical Analysis – Price Action Trading
Technical Analysis – Indicator Trading
Forex Market Analysis

Fundamental
Analysis
Forex Trading For Beginners: The Ultimate Guide
Fundamental Analysis
49
OVERVIEW

As you have already read, Fundamental analysis is

studying the economic fundamentals of a currency,
country, or economy. Economic fundamentals really
is a very broad term and gives you a huge amount of
information to draw upon when conducting your analysis.

But why are economic news releases of this type so

important to the value of a country’s currency? Well, it
all comes down to simple supply and demand.

If a country’s economic outlook is healthy, then this will

mean that the investment that businesses will put into
the economy should see demand for the currency rise.

This is then exaggerated by the country’s central bank

being forced to raise interest rates to control inflation
and stop the economy from overheating too quickly.

When interest rates go up, foreign investors gain

more value by investing in assets of that country,
creating more demand for the currency and having it’s
value rise in the process.

As you can see, Fundamental analysis can be very

powerful. If you can predict the future health of a
country’s economy, then you can actually go a long way
in predicting the future health of a country’s currency!
Forex Trading For Beginners: The Ultimate Guide
Fundamental Analysis
50
OVERVIEW

Don’t worry too much if you weren’t an economics

major at school because funnily enough, the actual
numbers or news releases aren’t the most important
part of fundamental analysis to forex traders. The
most important part of any change in fundamentals is
how the market EXPECTS it to react.

It’s not uncommon for good news to send a country’s

currency falling like a stone. This may sound strange
after reading our definition of fundamental analysis
above, but because changes in an economy’s
fundamentals can take many months to flow through
the entire economy, forex markets actually price in
these moves before they actually happen.

Forex traders are always trying to stay one step

ahead of their competition so market sentiment, or
where the market thinks that the fundamentals are
going to send price, is actually much more important
than the release itself!

The main fundamentals that you as a trader should

focus on are explained from here:

• Economic data releases

• Central Bank Decisions
• News Headlines

Don’t forget to also take a look at the Forex Calendar

and the Forex News Centre on the Vantage website as
a starting point for your fundamental analysis.
 Forex Trading For Beginners: The Ultimate Guide
Fundamental Analysis
51

The biggest and most obvious part of fundamental

TRADING ECONOMIC DATA RELEASES:
NEWS TRADING

analysis is trading economic data releases, or more

simply as traders call it: News trading.

So that everyone in the market has a level playing

field when it comes to market sensitive news, each
economic data release has a set time and date
that it must be released. This means that at this
particular time EVERYONE is watching and trading
that particular forex market. All this attention leads to
volatile market conditions as everyone tries to outwit
each other in the race to best position themselves.

There are literally hundreds of economic data releases

every single day. Think about it. Every single country in
the world releasing data such as unemployment, retail
sales, GDP, trade balance. The list goes on forever. But
just because a piece of economic data is released,
doesn’t mean that it is relevant to you and your trade!

The Vantage economic calendar allows you to filter news

releases by both country and expected market impact,
making sure you’re only focusing on the news that is
most relevant to you and your particular forex trade.
 Forex Trading For Beginners: The Ultimate Guide
Fundamental Analysis
52

If you are trading EUR/USD, then the GDP of South

TRADING ECONOMIC DATA RELEASES:
NEWS TRADING

Africa contracting shouldn’t really have too much of an

effect on either the Euro or the US Dollar, should it? Of
course not.

But on the other hand, a big and unexpected drop

in the tier 1 US unemployment rate could have
catastrophic effects on not only USD forex pairs,
but across the entire forex market. This is because
the US economy is still the biggest and weakness
at the top of today’s interconnected world so easily
sends shockwaves through the entire world. Do you
remember the GFC?

Did you know:

“The US Non-Farm Payroll report is one of the most
significant pieces of economic news on the forex
calendar. NFP, as traders refer to the release, is the
monthly change in the number of employed people in
the US economy with farming excluded. It is a major
barometer for the health of the US economy and in
term the globe.”

So where can you stay up to date with the most

important economic data releases?

The Vantage Forex Economic Calendar.

• Our forex economic calendar should be the first point
of call for all traders starting their morning routine. As
outlined above, the calendar can be fully customised
and filtered to only show you the scheduled forex data
releases most important to you and your trades.

Don’t be caught out by increased volatility during

economic data releases. Mark them on the calendar
and manage your risk accordingly.
Forex Trading For Beginners: The Ultimate Guide
Fundamental Analysis
53

To achieve certain economic mandates or goals, a

TRADING CENTRAL BANK DECISIONS

country’s most potent weapon is monetary policy.

Monetary policy is determined by a country’s central bank
acting independent from government (unless you’re China
of course!).

Monetary Policy is the process of setting the interest rate

and controlling the supply of money.

There are three main goals that monetary policy helps a

central bank achieve. Those being:

1. Economic growth targets.

2. Inflation in the target band.
3. Low unemployment.

Now we have gone through what monetary policy is, let’s

go one step further. Have you ever heard monetary policy
referred to as being Hawkish or Dovish? No, economists
aren’t watching birds or performing magic tricks, they’re
actually describing the types of monetary policy that
central banks have at their disposal.
Forex Trading For Beginners: The Ultimate Guide
Fundamental Analysis
54

Hawkish monetary policy is indicative of rising interest

TRADING CENTRAL BANK DECISIONS

rates. It is sometimes referred to as tightening because

essentially the central bank is looking to tighten the
economy and slow it down in the wake of higher inflation.

Under a hawkish scenario where interest rates are

rising, the borrowing of money by both business and
consumers becomes more expensive (due to higher
interest repayments) so spending and investment
decreases as a result.

Dovish monetary policy is the opposite, and indicative

of falling interest rates. A central bank may decide to
loosen monetary policy by cutting interest rates with
the goal of stimulating a stagnating economy in mind.

Under a dovish scenario where interest rates are

falling, money is being made cheaper and more
accessible to business and consumers which
encourages them to invest or spend. This spending
then stimulates a stagnant economy.

By using the different types of monetary policy, a

central bank can somewhat control, and in the end
smooth the wild swings between the good and bad
times experienced by an economy. Both economies
and markets want stability and there is no point in
experiencing huge booms if they are followed by
equally as devastating busts in a regular business cycle.
Forex Trading For Beginners: The Ultimate Guide
Fundamental Analysis
55

After going through the highly organised data releases

TRADING EVENT RISK: TRADING HEADLINES

and central bank decisions, there is one last piece of

fundamental analysis that you need to be aware of. Event
risk is anything that will move markets, but that you can’t
see coming.

Natural disasters:

Natural disasters are one headline that nobody wants

to read, but unfortunately for all of us, they are a
fact of life. I’m sure you all remember the devastating
Japanese earthquakes that rocked the island and
triggered multiple tsunamis? This saw USD/JPY
instantly shoot up as traders exited their Japanese Yen
exposure and sought the safety of US Dollars.

Natural disasters aren’t something that the people

can plan for, but they are reported instantly on social
media wherever they happen in the world. You have
no excuses if you let yourself get caught out by a
natural disaster headline.
Forex Trading For Beginners: The Ultimate Guide
Fundamental Analysis
56
TRADING EVENT RISK: TRADING HEADLINES

Terrorist attacks:

Terrorist attacks, declarations of war and political

tensions all have an effect on forex markets. In our
recent memory we of course have the devastating
attacks in the French capital of Paris. This saw money
leave the Euro, as fears over what sort of an impact
this would happen on consumer confidence and
spending in the Eurozone, as well as a flight to US
Dollars in the risk-off market.

It is almost a sad reflection on where human society is

at right now, that a terrorist attack actually might not
move markets at all due to the frequency that they
occur and are now reported. If North Korea reporting
the successful test of a hydrogen bomb can’t move
markets, then really what will?

The question of whether being able to profit from

events that often see such widespread loss of
property and even life comes up here and isn’t
something that we can ever answer. We do however
say that these events are a fact of life in the world we
live in today and first and foremost, you must manage
your risk around them at the very least.
Forex Market Analysis

Technical
Analysis –
Price Action
Trading
Forex Trading For Beginners: The Ultimate Guide
Technical Analysis – Price Action Trading
58

Technical Analysis is the use of charts, such as those

OVERVIEW

found on the Vantage MetaTrader 4 (MT4) platform,

to study historical price movement to determine the
possible future direction of price. The idea behind
technical analysis is that everything you need to
know, has been reflected in price. That means that
if everything you need to know is in price, then
price action is the only thing you need to know or
understand to trade.

Studying price off charts is very subjective but for

the most part, trading off technical analysis is a self-
fulfilling prophecy if you will. Humans look for patterns
and past signals to try to predict the future. And
because everyone starts to look at the same patterns
and behaviour, price reacts!

Vantage allows traders to trade directly off the charts

using the most popular online forex trading terminal
in the world, MT4. Traders using the Vantage MT4
platform are gaining an edge on global forex markets
with substantial improvements in execution speed and
a transparent price feed across all asset classes.

Whenever you are ready, you can open a live account

and conduct your own Technical Analysis.
Forex Trading For Beginners: The Ultimate Guide
Technical Analysis – Price Action Trading
59

Forex traders use charts to determine market direction

TYPES OF FOREX CHARTS

and identify possible buying and selling opportunities.

There are three types of charts commonly used in
forex that you can flick between on MT4:

• Line chart;
• Bar chart;
• Candlestick chart.

Line Chart:
These charts are handy for quickly determining the
trend – only the current/close price is graphed – as
such these charts should not be used for placing stop
loss or take profit orders.

Bar Chart:
The chart is created with the use of bars where each bar
has a high (top) and a low (bottom) with a line on either
side; right side being the opening price and the left side
being the closing price for the selected time period.
Forex Trading For Beginners: The Ultimate Guide
Technical Analysis – Price Action Trading
60
TYPES OF FOREX CHARTS

Different colours can be used to identify bars that

close higher than the open (bull or up bars) or lower
than the open (bear or down bars). The example
above has green lines for up bars and red bars for
down bars. These charts show all the information you
need but most traders and analysts tend to favour the
third option – Candlestick charts.

Candlestick Chart:
This chart is created much like bar charts, with the
only difference being that candlesticks add dimension
and colour to the Bar Chart by depicting the area
of the bar between the open and close as a two
dimensional real body.

Candlesticks are comprised of a body which

represents the difference between the open and
close prices. An up candlestick occurs when the close
is higher than the open – and down candlesticks
occurs when the close is lower than the high. In the
chart example above, up candlesticks are green whilst
down candlesticks are red. If the open is equal to the
close there will not be a body, just a line – this type of
candle is referred to as a “Doji”.

The thinner lines extending beyond the body are

called ‘Wicks’ – above the body is the high and below
the body is the low for the selected time period. A
large wick (relative to the body), indicates a potential
turning point (support/resistance).
Forex Trading For Beginners: The Ultimate Guide
Technical Analysis – Price Action Trading
61
WHAT IS A CANDLE?

Select the candle chart option on your MT4 platform

when you open up your charts.
Forex Trading For Beginners: The Ultimate Guide
Technical Analysis – Price Action Trading
62

In this section we’re going to take a look at trading

CANDLE PATTERNS

off forex candles on your MT4 charts. There are many

different forex candle patterns – we’ll have a look at
some of the more common and reliable ones here.
Candle patterns often indicate a turning point or
reversal in the forex market, so we’ll break this section
up into ‘Bearish Reversal Candles’ and ‘Bullish Reversal
Candles’.

Bearish Reversal Candles

Shooting Star:

The Shooting Star is a single candle bearish reversal

pattern that occurs at the end of an uptrend. Price
initially moves higher, before eventually closing near
the open, leaving a long wick with a short body. Wick
should be at least 1.5x the length of the body. Note
in the above example, this forex candle leads to a
decline of nearly 1000 pips in less than two weeks.

Bearish Engulfing:
Forex Trading For Beginners: The Ultimate Guide
Technical Analysis – Price Action Trading
63

The Bearish Engulfing is one of the more common

CANDLE PATTERNS

bearish reversal and continuation patterns. The

candle will close lower, with a body that completely
engulfs the body of the relatively smaller previous
candle. Note this candle continues to occur frequently
throughout the down trend, signalling continuation
(we have only circled two which occur at peaks).

Hanging Man:

The Hanging Man is another relatively common

bearish reversal candle that occurs at peaks. Price will
move signifcantly lower at the start of the perioid but
will come back to finish near the open, leaving a long
wick and small body (simmilar to the Shooting Star,
but the wick is below the candle not above). If this
forex candle occurs in the lows of a down trend it is a
bullish candle known as a hammer.

Bullish Reversal Candles

Bullish Hammer:
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The Bullish Hammer is a common reversal pattern

CANDLE PATTERNS

that looks identical to the Hanging Man candle but

occurs in the bottoms of down trends. Price will move
signifcantly lower at the start of the perioid but will
come back to finish near the open, leaving a long wick
and small body. Note in this example, the following
candle actually breaches the Hammer’s low – forex
traders should always set their stop a reasonable
distance from any reversal candle.

Bullish Engulfing:

The Bullish Engulfing is identical to the Bearish

Engulfing but it is an up candle occuring at the
end of a down trend. The body of the new candle
will completely engulf the previous candles body
signalling a major shift in sentiment.

These are just a few of the more common forex

candle patterns with high success rates. Remember
some candles appear identical so you have to then
determine whether the candle is appearing at a peak
in an advance (Hanging Man) or at a trough in a
decline (Bullish Hammer)?

Don’t forget to set your stops a safe distance from the

relevant candle’s high/low – though many reversals
are immediate, there is some times noise which you
should adjust for.

Go back on your MT4 charts and see how many of

each forex candle pattern you can find and come up
with a trading strategy around them.
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In this section we will cover chart patterns, these are

CANDLE PATTERNS

patterns that are comprised of many candles and

take considerably more time to form. Once again,
there are multitudes of chart patterns to draw up on
your MT4 platform, so we will try to only cover the more
common and reliable patterns.

Head and Shoulders – Bearish Reversal Pattern

This is by far one of the most common and easy to
recognise chart patterns, it is also the most reliable.
Forex traders love these patterns for both their
reliability and the fact they offer clear entry and stop
loss levels:

These patterns have four components:

1. Left Shoulder – small rounded top. Pattern is not yet

visible

2. Head – Pair breaks above the left shoulder before

retracing 100%, or the majority of the ascent –
potential pattern visible to the keen eyed chart trader

3. Right Shoulder – pair forms a lower high to the right

of the head, usually similar magnitude to left shoulder,
but variance is not uncommon. Head and Shoulders
top is now clearly visible.

4. Neckline – Though the chart pattern is now clearly

visible, it is not a confirmed top until there is a break
below the neckline. The Neckline connects the lows of
the left and right shoulders. This is often a straight line,
though in the above example it is ascending – patterns
with ascending necklines are even more reliable than
the standard, flat neckline Head and houlders.
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Once price breaches the neckline, the trader enters

CANDLE PATTERNS

short. Stop can be placed above the right shoulder,

or above the head (depending on your risk tolerance).
Note that price often comes back to test the
underside of the neckline – this can be very handy
if you’ve missed the original break and reinforces
bearish bias. In this example, once price breaches the
neckline, there is a ecline of over 100 pips.

Deformed Head & Shoulders – the above example

was very clean, though some times, these patterns
can exhibit ‘deformities’ such as dual or multiple right
shoulders, descending neck lines or shoulders that
exceed the top. Cleaner patters tend to be more reliable,
though the key to a successful trade is always waiting til
the pattern is confirmed ie the Neckline breaks. Here are
some examples of the above deformities:
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CANDLE PATTERNS

Head and Shoulders patterns are extremely reliable

and offer the trader clear entry and exit points, but
always remember – the setup is not confirmed until
the neckline is breached.

Inverse Head and Shoulders – Bullish Reversal Pattern

As the name suggests, these patterns are identical to
a standard Head and Shoulders, but appear upside
down (on their heads) and signify a potential bottom.
Not quite as reliable as the standard H&S, but still a very
reliable pattern. These patterns are often more difficult
to spot than their bearish counterparts, but recognition
becomes easier as you gain charting experience.

Once again, the key here is waiting til the neckline is

breached.
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Double Top – Bearish Reversal Pattern

CANDLE PATTERNS

The Double Top or ‘M’, is another reliable chart pattern

favoured by many traders. Like the H&S, it offers the
trader clear entry and stop loss levels. With the Double
Top, the entry trigger is known as the Confirmation Line:

The Double Top is characterized by two tops of similar

magnitudes, originating from roughly the same point.
The Confirmation Line connects the two origin points
and tends to be flat or ascending at a slight gradient.
Just like the H&S, the trader does not enter short
until the Confirmation Line is breached and the top
is confirmed. Note the two tops often take the shape
of H&S or smaller double top patterns (this M features
the two H&S examples from earlier).

Double Bottom – Bullish Reversal Pattern

The Double Bottom or ‘W’ is the inverse of the Double
Top – it’s shape is reminiscent of the letter ‘W’ and the
pattern signals a potential bottom.

As with the other reversal patterns we’ve covered, the

trader waits until the Confirmation Line is breached
before entering a Buy position.

Go back on your MT4 charts and see how many of

each forex chart pattern you can find.
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Ascending Triangle – Bullish Continuation Pattern:

CHART PATTERNS – CONTINUATION

The Ascending Triangle is one of the most reliable

bullish continuation or accumulation patterns. It is
characterized by a series of higher lows failing at a flat
top – this means it is a ‘terminal’ pattern – eventually
price will have to stop carving higher lows, or more
often than not, the top will have to break.

Just like the reversal patterns discussed in the previous

section, the buy signal occurs when the top breaks
and the pattern is confirmed.

Descending Triangle – Bearish Continuation Pattern:

The Descending Triangle on the other hand, is a very
reliable bearish continuation pattern. The pattern is
characterized by a series of lower highs meeting a flat
bottom.

Traders will enter short when the flat bottom is taken

out. As we discussed in the Trend Trading section,
price can decline quite quickly in a bear market –
these patterns often yield impressive moves lower.
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Bull Flag – Bullish Continuation Pattern:

CHART PATTERNS – CONTINUATION

Bull Flags or Pennants are an extremely reliable bullish

continuation pattern. They are deceptive to the novice
trader as price is temporarily trending down, but at a
relatively shallow pace. Bull flags are characterized by
a series of parallel lower highs and lower lows within a
dominant uptrend:

A buy signal is triggered when the upper parallel is

breached.

Bear Flag – Bearish Continuation Pattern:

The last continuation pattern we will look at is the
Bear Flag. The opposite of the Bull Flag, characterized
by a series of parallel higher lows and higher highs
within a dominant down trend:

Traders will look to enter short once the lower parallel

breaks. Just like the Descending Triangle, these
patterns can lead to some fierce bearish continuation
– in this case, GBPUSD declines over 800 pips in less
than a month.
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CHART PATTERNS – CONTINUATION

The Take Away: Chart patterns are often high

probability, high reward trades that offer the trade
clear entry and stop loss levels. Patterns are confirmed
when the relevant line breaks – not before – wait for
the breakout.

Again, go back on your MT4 trading platform and see

how many of each forex chart pattern you can find.
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In Forex trading, support and resistance refers to levels

SUPPORT AND RESISTANCE

where price is likely to pause, bounce or even reverse.

Support is a lower price point or zone where the
currency pair is considered ‘cheap’, spurning buying
interest. Resistance is an upper price point or zone
where the pair is considered ‘expensive’ and is likely to
encounter sellers:

In the above example, the Australian Dollar is finding

buyers around 7150, but encountering strong selling
interest above 7250 – note pair spikes above 7250
resistance five times, but is unable to close above
there. It is also worth noting that when there’s an
hourly close below 7150 support, pair is then unable
to close back above the level – former support is now
acting as resistance:

This is a fairly common occurrence in Forex trading –

levels that previously encouraged buying interest will
nearly always encourage selling interest after they
break down (and vice versa).
You’ve heard the old saying “Buy Low, Sell High”?
Forex traders look to sell into resistance and buy into
support, this leads to higher probability setups, allows
the trader to set tight stops and leaves plenty of room
for rewarding trades.
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Now we’ve had a look a horizontal support and

SUPPORT AND RESISTANCE

resistance, let’s take a quick look at trend resistance

and support:

This is the trend line that supported USDJPY from

September 2012 – January 2016. Note pair finds
buying interest whenever price nears trend support.

Here we have the recent down trend in GBPUSD,

note pair is unable to close the week above trend line
resistance and eventually turns lower.

Remember: If you want high probability, rewarding setups

– Buy low, sell high – buy into support, sell into resistance.
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Fibonacci retracements are a quick and easy way

FIBONACCI

of predicting support and resistance levels in Forex.

The Fibonacci tool works on the principle that
markets tend to ‘retrace’ a portion of a move prior
to continuing the dominant trend. Traders use the
Fibonacci tool on MT4 to connect the lows and highs
of a recent trend, swing or range and the tool displays
likely support and resistance levels derived from
the Fibonacci Sequence (Golden Ratio). Fibonacci
levels appear again and again in Forex – this tool
is surprisingly reliable when it comes to predicting
support and resistance:

This is the recent down move in USDCAD. If we use the

Fibonacci tool to connect the previous peak to the
range low, we are shown three potential resistance
levels. The standard Fibonacci retracement levels
are 23.6, 38.2 & 61.8, but many traders also use the
78.6 and 50 levels. 50 is not actually derived from
the Fibonacci sequence, but the importance of the
level cannot be denied – 50% retracements are very
common place:
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Let’s take another look at USDCAD:

FIBONACCI

Despite a false break above in late February, pair is

essentially capped by the 23.6 Fib. Above the 23.6
we have the 38.2, a break above the 23.6 would
likely encounter resistance here. These levels are very
common; a trend can retrace these percentages and
still be considered healthy. Next we have the 50%
mark, note this level is important as it coincides with
former support. Above 50% and traders are beginning
to question the recent move – is this a retracement or
a reversal? Having said that; 61.8 retracements, prior
to continuation are also fairly common. The 78.6 is
considered the be all and end all – if a pair retraces
more than 78.6% of the prior move, chances are it’s
heading straight back to the origin (100%). It may have
completely reversed direction or is range bound.

A trader with a bearish bias on USDCAD would wait

for a break above the 23.6 and look for a reaction
at one of the higher fib levels, before entering short.
On the other hand, a trader with a bullish bias might
trade a break above the 23.6 with a stop below the
recent lows, or wait for a break above one of the
higher fibs.
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The previous examples were all assessing down

FIBONACCI

moves; let’s take a look at an up move:

The process is the same, but instead of dragging the

Fibonacci tool from the high to the low; we drag it
from the low to the high. A trader looks at this chart
and see’s USDCHF is trending up and decides they
want to buy. They know not to buy into resistance,
so they use the Fibonacci tool to identify probable
support levels. They notice that price seems to be
respecting the 50% level and decide they will attempt
to enter long there. They have two options:

1) Watch and wait for a correction to, reaction at the

50% level

2) Place a Buy Limit order just above the 50% level

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The first option is probably ‘safer’, as the trader is

FIBONACCI

not blindly buying into a potential support level. On

the other hand, the second option means the trader
does not have to sit and watch the market. Either
way, our trader has four options for placing their stop,
depending on their risk tolerance:

1. A tight stop just below the 50% level

2. A more reasonable stop below the 61.8

3. A considerably looser stop below the 78.6

4. A stop below 100 – if price moves below here the

trader’s bullish bias is unquestionably invalidated as
pair has set a new low

The first option is likely a little too risky, most traders

would probably opt for the balanced choice under
the 61.8. With the latter two, the trader risks holding on
to a losing position for longer than necessary and is
sacrificing reward.

Fibonacci Retracements are a great way of identifying

potential support and resistance levels. When
analysing a down move, the trader uses the tool from
the high to the low. When looking at a rally, the trader
drags from the low to the high. The standard 23.6,
38.2 and 61.8 Fib levels are great, but many Fibonacci
traders add in the 78.6 and 50 levels too. Trade breaks
of key Fibs or reactions, depending on your strategy
and bias.
Forex Market Analysis

Technical
Analysis –
Indicator Trading
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We have previously discussed Price Action or Naked

OVERVIEW

trading – not for you? In this chapter we are going

to discuss the alternative, trading while wearing your
pants… Just kidding! Of course we’re talking about
using indicators.

Indicators analyse price action for you and give clear

entry and exit signals. We will cover some of the more
popular indicators and discuss how you can apply
them to your trading.

Just be aware that no indicator is perfect. Many

traders will filter “bad” signals by only taking signals
in the direction of the trend ie only taking sell signals
in a down trend and vice versa. More on this later –
first we will discuss the most popular and widely used
indicator: The Moving Average.

Learn how to attach indicators to your MT4 platform

charts by reading the following MT4 user guide.
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Moving Averages are by far the most widely used and

MOVING AVERAGES – BASICS

easy to understand forex indicator. They display right

on top of your chart and mechanics are very easy
to understand – a moving average or MA – is quite
simply the average price over a given period.

This is one of the more common Moving Averages –

SMA100 – the Simple Moving Average of the close price
for the last 100 bars. We have placed the SMA100 over
the GBP/USD forex pair on a 4 hour chart.

The simplest form of MA analysis is checking where

price is in relation to the MA – is price above the
100SMA? Look to buy. Is price below? Look to sell.

That is, when GBP/USD is above the 100SMA, we will

look to buy lows, when it below the 100SMA, we will
look to sell highs:
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As you can see, this is quite a reliable strategy at first

MOVING AVERAGES – BASICS

glance – all the marked highs below the SMA lead to

substantial declines and all the marked lows above
the SMA lead to substantial bounces. Realistically
though, this image was created with the benefit of
hindsight – a live forex trader may well have bought
the final touch of the 100 SMA:

Even so, GBP/USD did appreciate 75 pips before

eventually breaking lower – Our hypothetical trader
could have taken profit, moved his stop loss to break-
even or, lost a small amount when pair breached the
SMA. Let’s say the trader lost on this one, but 7 wins
out of 8 trades is still extremely impressive!

You will rarely see a moving average in isolation like

this, most traders will use a combination of a ‘fast’
and ‘slow’ moving average. We go into more detail on
moving average trading in the next section.
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In the last section we introduced Moving Averages or

MOVING AVERAGES – CROSSOVERS

Mas. We used a single MA in isolation and let it guide

us into possible buying and selling opportunities. We
used the 100SMA (100 Period Simple Moving Average)
on a 4 hour GBP/USD chart – this is a relatively ‘slow’
MA. In this section, we will take our look at MA’s a little
further and look at Moving Average Crosses using
both a ‘fast’ and ‘slow’ MA:

We have kept the ‘slow’ 100SMA from the previous

section (green line) and added in a ‘fast’ MA: the
20SMA (red line). In the previous section, we looked
at price’s relation to the 100SMA and used that to
determine our buying/selling bias. Here we will go
a little further and look at the relationship between
the fast and slow MAs. Note that when the fast MA
(red) crosses above the slow MA (green) on the 2nd of
February, GBP/USD appreciates over 300 pips.
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However, when the fast MA crosses back below the slow

MOVING AVERAGES – CROSSOVERS

on the 17th of February, GBP/USD eventually declines

around 240 pips (this move is probably still active):

“But it went up first!” you say?

True, but note after the Fast MA crossed below the

slow MA, price never again breached the slow MA ie
a trader with his stop above the 100SMA survived the
noise and caught the move lower.

Note that this approach is a lot more systematic than

the subjective selling highs/buying lows strategy in
the previous section. Trading systematically takes the
guess work out of forex trading and tends to be less
taxing mentally than pure discretionary trading.

Wondering where to exit the trade? A lot of forex

traders simply take a multiple of their stop loss for their
profit target, but this might not be for you.

In the next section we will discuss another type of

indicator; the Oscillator. Oscillators can be very handy
when determining whether or not an instrument is
oversold/overbought and hence, when to exit.
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In the last section we looked at Moving Average

RSI – BASICS

crosses and using Moving Averages to determine the

trend. In this section we will move on to a new type
of indicator – the Oscillator. Unlike the MA, Oscillators
tend to appear below your MT4 chart in a separate
window. We’re going to take a look at one of the most
common oscillators, the Relative Strength Index or RSI:

RSI looks at an instrument’s ability to close higher/

lower over a given period. When RSI is above 70, a
forex currency pair is considered ‘overbought’ and
when it’s below 30, it’s considered ‘oversold’. It’s
important to note that just because a security is
overbought/oversold, does not mean it’s going to
reverse – Indicators can read overbought/oversold for
extended periods of time. A sell signal does not occur
until RSI crosses back from overbought/oversold into
the 70-30 range:
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Let’s look at the first buy signal – when RSI crosses back
RSI – BASICS

above 30 on the 20th of Jan. Note that the forex pair

actually sets a new low (and issues a second signal)
before moving higher. The first signal occurs at 1.4182, the
new low is over 100 pips lower at 1.4079 – chances are
most traders would have been stopped out on this signal.

The second buy signal is better, but there is still

significant whip saw before the trader eventually nets
380 pips. This sell signal tells the trader to exit their long
and go short – the forex trader then proceeds to make
another 422 pips before the next buy/exit signal!

So let’s have a look, our hypothetical RSI trader’s first

trade was a loss of 100 pips, before making 380 and 422
pips on his second and third trades. That’s 2 wins out of 3
trades, with a net profit of 702 pips!
But what now? RSI is telling the forex trader to buy even
though the currency pair has just broken below the late
February lows. The trader could well lose 110 pips on this
signal. That would bring their win rate down to a more
realistic 50% and net profit to 590 Pips.

What if our trader had ignored buy signals? GBP/USD is

in a major down trend after all. Well, we would have had
1 trade, 1 win and net profit of 422 pips. Over such a small
sample size it is hard to compare the two, but long term
testing shows better performance when trading RSI with
the trend.
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In the previous forex education section, we introduced

RSI – TRADING DIVERGENCE

the Relative Strength Index (RSI) and buying and selling

when the indicator crosses back from oversold and
overbought. In this section we will move past the basics
and introduce a more advanced concept: Divergence.

Divergence occurs when a forex currency pair makes

a new high or low and the indicator (in this case RSI)
does not confirm:

This is a 4 hour chart of USD/CHF which shows both

bullish and bearish RSI divergence. Bullish divergence
occurs when price move to new lows, while RSI carves a
higher low.

Conversely, bearish divergence occurs when price

moves to new highs, but RSI stops short of the previous
peak. We’ve highlighted bullish (buy) signals in green
and bearish (sell) signals in red:
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The buy signal (green), yields over 200 pips before a basic
RSI – TRADING DIVERGENCE

overbought cross tells the forex trader to exit. Note that

there is a slight pause between this exit signal and the
bearish divergence signal. This move is yet to play out, but
the forex pair has already declined 90 pips. Let’s take a
closer look:

Note that before the bullish divergence signal, RSI

issues 3 basic buy signals as it crosses back above 30
(red crosses). The first two are pretty shocking; USD/
CHF declines over 250 pips before eventually turning
higher. The third signal is comparably better – the pair
only declines around 115 pips before the bullish reversal.
Conversely, the bullish divergence signal coincides
perfectly with the actual bottom.

There is only one basic sell signal before the bearish

divergence – USD/CHF appreciates another 50 pips
before the top – this is not as bad as the false buy signals,
but there’s always room for improvement. This time, the
divergence signal does not coincide with the top perfectly
– but the difference is negligible – approximately 5 pips.

A forex trader taking basic RSI signals on their MT4

platform would have had at least 1 losing trade with this
example (possibly 3 depending on their stop loss). On the
other hand, a divergence forex trader would have netted
two winners and not lost a single trade.

The take away: A forex trader who waits for divergence,

will likely avoid some losing trades and enter the market
at a better price than your basic RSI trader. This allows
for tighter stops and easier targets and should yield an
improved win rate. RSI often precedes moves in price.
Meaning that RSI will often begin to trend up/down
before price does – this can give the divergence forex
trader a profitable head start over your average price
action forex trader.
03
Forex Trading
Psychology
Psychology and Forex Trading
Forex Trading Psychology

Psychology and
Forex Trading
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You’ve been trading a demo account for a while now.

OVERVIEW

You’ve read about technical analysis, fundamental

analysis and you think your pretty on top of it. Your
demo trading was extremely profitable – you made
$25 000 profit on your demo account in just one
month. You decide you’re going to begin trading with
real money…

You open a real account and deposit $10 000 – a

significant portion of your savings. Your first trade
loses: -5%. Your next trade loses: -5%. You’re now down
$1000 in two days. You think to yourself:

“That took me a week to earn that money, now it’s

gone in two days!”

What’s different here? You had two losses in a row

on your demo account, you came back. You weren’t
scared – it was like a game, it was fun – it even
seemed easy.

Trading Forex with real money isn’t a game. The

psychological difference between actually losing
$1000 and losing some numbers on a demo account
cannot be quantified. To be successful, you need to
overcome this. You were extremely profitable on the
demo account and if you stick to your guns and trade
the same strategy – you will come back. In fact, if
you’re trading with a positive risk to reward ratio –
you’ll be back at breakeven on your next trade … and
in profit on the one after that.

Trading psychology is often paradoxical; fear of

losing can cause you to lose, ‘knowing’ you’re on
a good trade is often even more damaging. To be
successful, you must detach from these feelings. To be
a successful trader; you need to be ‘cold as ice’.

From Chapter 3, we encourage you to take the next

step in your forex trading (if you’re ready of course),
and open a live account with Vantage.
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ACCEPTING LOSSES AND LEARNING TO
TRADE FOREX SYSTEMATICALLY

Even the best forex traders in the world have losing

trades – losing is a part of trading – but how do you
react when you lose? How do you feel? If you’re angry
or sad; chances are you were risking too much, or
taking a trade you knew you shouldn’t – or both.

Whether looking at a successful breakout trader, trend

follower or scalper; there is always a common theme:
they all have a trading system and they stick to it.
These traders don’t get emotional when they take a
loss; they were trading according to their rules and
the trade didn’t work out. They lost a pre-determined
amount they were comfortable with and accept it as
an unavoidable part of trading. They move on to the
next trade, knowing their system is profitable over the
long term.
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An inexperienced forex trader might open a long

ACCEPTING LOSSES AND LEARNING TO
TRADE FOREX SYSTEMATICALLY

position in an uptrend thinking the market is continuing

to move up. They didn’t put a stop loss on the trade,
as they were confident about the overall direction and
worried about getting needlessly stopped out. They
think “I’ll exit if it moves against me” … Bearish news
breaks and the market quickly move 100 pips against
them. They are now looking at a 100 pip loss when it
could have been limited to a fraction of that.

Now what? The market snaps back 50 pips. The

inexperienced trader is relieved “maybe it’s going back
up?!”. BAM! classic 50% retrace before continuation: the
market falls another 100 pips. This is too much for our
trader; he finally cuts the trade at the lows, losing 150
pips. Over the next few sessions the pair recovers to
his original entry and beyond, in line with the trend. Did
they do the right thing, cutting at -150? Maybe – it well
could have continued to fall.

The fact is, our trader should have never been in this
position in the first place and was forced to make a less
than optimal decision. If they’d had a clear exit strategy
in place, there would have been no question about
what to do. Their stop loss would have been hit or they
would have exited manually, (yet systematically) for a
much smaller loss.

Whether your entries are discretionary or systematic,

you should always have a clear exit plan for each and
every trade. Don’t be left saying “What do I do?”

Plan your exit and react accordingly.

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MANAGING GREED IN FOREX TRADING

If you want to be a successful forex trader, greed is

probably the biggest obstacle you’ll have to overcome.
If you try to get rich on every trade, you’ll more than
likely end up blowing your account – slow and steady
wins the race. It’s the great paradox that all traders
face – if you want to get rich quickly, you have to do it
slowly.

Imagine you’re risking your entire balance on a trade.

Sure you might win the first two, or three trades and
triple your balance a few times, but eventually you’ll
lose one (and lose everything!). Now what if you were
still aiming to make double your risk when you trade,
but only risking 1% per trade? Say you place 10 trades in
a week and get half of them right – 5 winners/5 losers:

1. -1%
2. +2%
3. -1%
4. -1%
5. +2%
6. -1%
7. +2%
8. +2%
9. -1%
10. +2 %

Total = +5%
Forex Trading For Beginners: The Ultimate Guide
Psychology and Forex Trading
94
MANAGING GREED IN FOREX TRADING

Okay, so with your modest $5000 balance that might not

be life changing ($250 a week)… but what happens when
you compound that return over a year?

5000 x 1.0552 = $63 214

That’s a return of over 1260% without ever risking more

than 1%. Now work out the return for the following year!

You can get rich relatively quickly through trading

Forex, but it doesn’t happen overnight. It happens over
hundreds, if not thousands, of systematic, high probability
and low risk trades. In order to ‘get rich quick’, you have to
be patient – If you truly want to satisfy your greed, keep it
in check.

Are you ready to take the next step in your forex trading?
It’s time to open a live account with Vantage!