DIGITALHF ACADEMY

Binary Options Trading Curriculum.

This trading program offers an 8 weeks intensive course with

available lifetime resources. It is flexible (based around
your schedule) and includes an overview of forex, but primarily
focuses on Binary Options trading.

After completing the course, you will be practically equipped to trade

as a professional, and able to generate as much daily income as you
desire.

Our Robust Curriculum Embodies the Following Topics:

BEGINNER’S CLASS

What is Forex?

Forex is an embodiment of foreign currency and exchange. The

foreign exchange (also known as Fx or Forex) market is a global
market place for exchanging national currencies against one
another, because of growing worldwide reach of trade, commerce and
finance.

Forex market tend to be the largest and most liquid asset market in
the world. It trades an average volume of over $5.1 trillion on a daily
basis.

Currencies trade against each other as exchange rate pairs. For

examples EUR/USD, USD/JPY.

Forex markets exist as spot (cash) markets as well as derivative

markets offering towards, futures, options and currency swaps.
Market participants use Forex to hedge against international
currencies and interest rate risk, to speculate on geopolitical events
and diversify portfolios among several other reasons.

One unique aspect of this international market is that there is no

central marketplace for foreign exchange. Rather, currency trading
is conducted electronically Over- The- Counter (OTC), which means
that all transactions occur via computer networks between traders

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around the world, rather than on one centralized exchange. The
market is 24 hours a day, 5 and a half days a week and currencies
are traded worldwide in the major financial centers of London, New
York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and
Sydney across almost every time zone. This means that when the
trading day in the U.S ends, the Forex market begins in Tokyo and
Hong Kong. As such, the Forex can be extremely active anytime of
the day with price quotes changing constantly.

Basic Terminologies

OTC - Over-The-Counter refers to the process of how

securities are traded for companies not listed on a
former exchange. Securities that traded Over-The
Counter are traded over a dealer network as opposed
to a centralized exchange.

FOMO - Fear of missing out.

Speculation - Speculation refers to the act of conducting a financial

transaction that has substantial risk of losing value
but also holds the expectation of a significant gain.

Hedge - A hedge is an investment to reduce the risk of

adverse price movement in an asset. Normally, a
hedge consists of taking an offsetting position in a
related security.

Shorting - Short selling is an investment or trading strategy

that speculates on the decline in a stock or other
securities price. it is an advanced strategy that
should only be undertaken by experienced traders
and investors.

Long Position - It is known as simply long. It is the buying of a stock,

commodity or currency with the expectation that it
will rise in value. Holding a long position is a bullish
view. A long position is the opposite of a short
position.

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Options - This is an agreement between two parties to facilitate
a potential transaction involving an asset at a preset
price and date.

Call Option - This can be purchased as a leveraged bet on the

appreciation of an asset.

Put Option - This is purchased to profit from price declines.

Strike Price - This is the price at which a derivative contract can

be bought or sold (exercised).

Derivative - They are financial products whose value is based

(derived) on the underlying assest, usually another
financial instrument.

ITM - (In-The-Money) is a call option if the the market price

is above the strike price. It is also a put option if the
market price is below the strike price.

OTM - (Out of The Money)

PIP - It is acronym for Percentage in Point. A PIP is the

smallest price move that an exchange rate can make
based on Forex market convention. In pratical terms,
a PIP is one-hundredth of one percent, or the fourth
decimal place (0.0001).

Call/Put - A call or put option is a binary option which the

option broker offers for use in trading. By investing in a
s call/put option. The trader makes a forecast as to
the market situation at the expiry of the contract. To
receive profit, the trader must correctly indicate
whether the asset price will rise or fall in comparison
to the price at the moment the option was
purchased.

Futures - The futures market is a market where the derivatives

of market an underlying asset (currency, stocks etc)
are traded.

Martingale - It is an extremely popular trading system based on

increasing positions after loss-making trades and

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 lessening them after having profit making trades.
The strategy is based on a well-known psychological
delusion which says that the probability of making a
profit increases after making a loss.

Option - It is a contract between two investors on the

condition of which one investor either acquires or
sells an underlying asset for a specified price over a
specified time which is agreed in advanced. The
second investor either sells or purchases the asset in
accordance with the contract. In other words, the
option can be an agreement to buy or sell a trading
investment.

Stop Loss - Stop Loss is an order which allows a trader to close

a position when their chosen instrument reaches a
certain price. Stop Loss can be set before and after
the opening of a position. A Stop Loss allows the
trader to avoid excess losses by automatically
closing a position. The obligatory condition of
setting up a Stop Loss is that the financial
instrument's price should not be lower than the
current market price when selling and not higher
when buying.

Take Profit - Take Profit is a trading command which allows profit

to be fixed to a certain amount when the price
reaches a certain level. This command helps to
reduce risks. If a trader sets up a Take Profit
command on a certain trading instrument, when the
price of the instrument reaches the specified price
level, the position will be closed automatically. A
Take Profit command can be set up at any time
during an open position.

Trend - Trend is the certain direction in which prices are

going. Trends can be downward (also known as bear
trends), upward (known as bull trends) or sideways
(empty trends or flats). As a general rule, when there
is a downward trend, it is recommended to open a

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 position with a sale and when there is an upward
trend, buy. If there is no trend, it is better not to
undertake any operations.

Volatility - Volatility is the range in which the price of a financial

instrument fluctuates and is one of the most
significant indicators to highlight the attractiveness
of a trading instrument. Volatility shows the extent
of risk involved in using and instrument since the
higher the trading indicator, the bigger the range in
which the rate changes over a specified amount of
time.

Forex Opening hours

The Forex market is the largest financial market in the world.

Trading in the Forex is not done at one central location but is
conducted between participants by Phone and Electronic
Communication Networks (ECNs) in various markets around the
world. The market is open 24 hours a day in different parts of the
world, from 5pm EST on Sunday until 4pm EST on Friday. The
ability of the forex to trade over 24 hours period is due in part to
different international time zones.

Forex trading opens daily with the Australian area, followed by

Europe and then North America. As one region's market close
another opens or has already opened and continue to trade in the
forex market.

It is noteworthy that in options trading, there is trading even on

weekends as many brokers offer Over-The-Counter (OTC) trading
services.

Who Trades Forex?

The Forex market not only has many players but many types of
players. Here we go through some of the major types of institutions
and traders in Forex market:

➢ Commerical and Investment Banks.

➢ Central Banks.
➢ Investment Managers and Hedge Funds.

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➢ Multinational corporations.
➢ Individual Investors.

There is a reason why forex is the largest market in the world; it

empowers everyone from central banks to retail investors to
potentially see profits from currency fluctuations related to the global
economy.

There are various strategies that can be used to trade and hedge
currencies, such as the carry trade which highlights how forex
players impact the global economy.

Main Trading currencies

- USD
- Euro
- Yen
- British Pound

Differences between Forex, and Binary Options trading.

Traders will always argue which type of trading is better, trading
Forex or binary options. Every person, engaged in trading either way,
knows that they both have certain advantages and disadvantages. If
you have not taken a closer look at the specifics of Forex trading and
binary options trading, then you are probably not aware of the major
differences between these two types of trading. Let us point out
several differences.

Risk Factor
Both Forex and binary options trading involve risk. However, if we
take a closer look at both types of trading, we may draw the
conclusion that binary options trading is a bit less risky due to the
fact, that you know how much you are going to earn or lose before
you place the trade. This is a huge advantage over Forex trading.
This way you have better control over your money.

Another considerable advantage of trading binary options over Forex

is that you will not be that dependent on leverage. Every Forex trader
knows that he/she must take advantage of the leverage offered by
his/her broker, in order to be able to trade with decent amounts of
the asset(s) he/she has chosen. Although leveraged trades will bring
you a larger profit, they will also multiply your losses in case your
trade goes awry. As a result, there is a greater possibility for novice

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traders to lose their money quicker, while operating in the Forex
market.

Trading binary options has another advantage, you have the

opportunity to refund a portion of your trades, if you feel that your
projections will not turn out to be accurate. However, this option is
not offered by all brokers.

Simplicity Factor
Participating in the binary options market is fairly simple, as trading
operations lack the complexity of operations in the Forex market.
You may need to set several parameters of the trade, but in most
cases, you will be able to place a trade in just 3-4 simple steps. On
the other hand, placing a trade in the Forex market involves setting
additional parameters of the trade in order to limit your losses,
manage risk levels, etc. The reason why trading binary options is
quite easy is that the trader can only choose between two types of
orders Call or Put. In the meantime, Forex traders are faced with a
more difficult choice.

Profitability Factor
In binary trading the amount of money you make will depend on your
investment, knowledge, experience and last but not least, is the
profit percentages offered by your broker.
In most cases the profit percentage your broker offers will vary
between 60%-80%. The percentage entirely depends on the type of
options you are trading, because the payout for certain types of
options can be up to 300-400%. The fixed payout percentage gives
you accurate information on how much money you will make from
the trade. This way, as a binary option trader, you can control your
money better and quickly calculate how much money you are going
to earn, and how much you feel comfortable to lose.
Binary traders are quite active in the market they often make over
10 deals per day. If you are one of the traders who deal with 60-
second binaries, then it is very likely that you will make over 40
trades on a daily basis. In the meantime, Forex traders have to be
more careful, while placing trades and, in many cases, they end up
placing just 3-4 trades in a single day.

Accessibility Factor
Binary options have quickly gained popularity among retail traders,
because they do not require huge investments and are a great way

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of generating a decent amount of passive income. On the other hand,
Forex traders need to invest larger amounts of money, especially if
the leverage offered by their broker is lower. Do not forget that
leverage is a great way to multiply your profits, but it is also the
quickest way to lose all the money you deposited. One should not be
tempted by the prospect of making large amounts of money in no
time.

Conclusion
The two ways of trading have their pros and cons, so it is up to every
trader to determine which one best suits their preferences. Each one
of these markets is meant for different types of traders. Forex is a
dominant market segment at the moment and trading in it is the full-
time occupation of millions of people worldwide, on the other hand,
binary options is a relatively new trend among traders and at the
moment there are not so many people, who make a living by trading
binaries. Why not turn binary options trading into a full-time
engagement?

Introduction to Technical indicators:

- Moving averages
- Bollinger Bands
- Awesome oscillator
- Relative strength index
- Stochastical Analysis
- Fibonacci

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 DIGITAL HF ACADEMY

INTERMEDIATE CLASS

WHAT IS BINARY OPTIONS AND BINARY OPTIONS TRADING?

Binary Options - Here, we have two key words: "Binary" and

"Options"

Binary - "Relating to, composed of, or involving two

things".

Options - "A thing that is or may not be chosen".

"An act of choosing to make a decision or a

choice between two alternatives".

Binary Options therefore gives the opportunity to choose between

two options only. It could either be a:

"Yes" or "No"

"A" or "B"

"0" or "1"

BINARY OPTIONS TRADING:

A Binary Options Trading is a contract that gives the bearer/trader

the right but not the obligation to either

"Buy" or "Sell" an amount of some underlined asset at a pre-

determined price/profit with a fixed time frame.

It is a financial instrument/product in which a

holder/bearer/trader/investor receives or earns a fixed/pre-
determined

amount of cash or asset if his/her prediction of the market direction

is correct; or loses his/her stalk if the

prediction is wrong.

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Binary Options Trading is a unique tool based on asset price
prediction. It is called the shortest new way to trade.

It is called "Binary" because there can be only two

options/predictions ("upwards" or "downwards", "buy" or "sell",
"higher" or "lower") and only two outcomes (either "win" or "lose").

WHY BINARY OPTIONS TRADING?

1. It is very easy, straight forward and simple to trade.

2. Minimal amount of cash needed to start trading.
3. Do not need to know all about the Forex market. You just have
to know enough.
4. It is a good starting point for new traders.
5. One can easily trade and build capital from the start
.
HISTORY OF BINARY OPTIONS TRADING

Binary Options Trading has been around for over fifty years, since
the early 1970s but in an unregulated/crude/difficult manner as
stated by the Chicago Board of Exchange (C.B.O.E.)

As at that time, only banks and other heavy financial

institutions/investors traded in what is known as "Over-The-
Counter" (OTC) market.

What we know now as Binary Options Trading was triggered by the

2007 crash of the Real Estate and Financial market in the United
States of America and subsequently crashing the financial global
system.

The Chicago Board of Exchange (C.B.O.E.) in 2008 introduced

Binary Options Trading to the public as an asset that can be traded.

The "Options Clearing Committee" (O.C.C) came up with regulatory

framework; The United States "Security and Exchange Committee"
(S.E.C) accepted O.C.C(s) recommendations and made Binary
Options Trading legal for trading on major exchanges as a "Stand
alone" tradable financial instrument. The "America Stock Exchange"
(AMEX) and also the C.B.O.E began the public offering of Binary
Option Trading the same year.

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In spite of the much improvement and regulations Binary Option
Trading was still cumbersome. But with the advancement in
Information

Communications Technology (I.C.T.), Binary Option Trading has

witnessed and enjoyed a great deal of advancement, publicity and
growth

especially with its mobile versions of several trading platforms on

laptops, android phones, etc.

Trading has become more interesting and flexible and promises to

witness even greater development and advancement in the nearest
future.

TYPES OF Binary Option Trading (B.O.T.)

There are basically two types of B.O.T. namely; Binary Trading and
Digital Trading.

Binary Trading

This involves the prediction/speculation of whether the price of an

asset will either get/rise higher than the strike price or go/fall lower
over a set period of time. It is therefore also known as the "high-low
option".

The trader decides one option (higher or lower) alone and also sets
the time period and the amount of investment. The percentage in
profit is also pre-determined/set by the Broker.

Digital Trading

Digital Trading is similar to the Binary Trading but also gives the
trader the added advantage of earning higher percentage in profit
while the trade is on.

For example, if the trader predicts that the price of the said asset will
be higher than the strike price and it actually moves higher, the
further away the asset price is from the strike price, the higher the
percentage of profit.

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Another advantage of the Digital Trading is that the trader may
decide to stop the trade mid-way or at any point before the last

30 seconds, especially if one is losing the market and moving against

prediction. This action is to help reduce the amount of loss.

RECOMMENDED BROKERS

There are numerous Brokers in the market, but Digital HF Academy

would like to introduce you to Brokers that are competent, have
stood the test of time and are also Nigeria friendly. By Nigeria friendly
we mean:

➢ Those who are easily accessible to persons residing in Nigeria.

➢ Those whose "support" responds adequately.
➢ Those whose method of cash deposit and withdrawal is easy for
Nigerian residents.

1. IQ Options 2. Prime XBT

3. DERIV (binary.com) 4. Spectre AI
5. Pocket Option 6. Expert option
7. Olym trade 8. Binary Option
9. Race Option 10. Option field
11. Binary cent 12. Finmax
13. Binomo 14. Ayrex
15. Binary mate 16. Iron trade

We advise that you choose brokers based on:

➢ User friendliness
➢ Usability
➢ Easy/sure payouts
➢ Efficient customer/support availability
➢ Easy deposits, bonuses and conditions
➢ Easy to understand trading platform

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BINARY OPTIONS SET UP

To start binary options trading, one must open a B.O.T. account after
identifying a choice broker.

It is also best to start with a "demo/practice" account.

Binary options trading demo account:

A demo account is a provision by a broker to help new

traders/beginners and experts alike to practice in the "real" market
without losing or gaining their money/investment. It is called a
"practice" or "rescue" account.

We shall open with "iq options".

In most cases the trader is given an unwithdrawable amount of

money (fake money) to trade. For example, in “iq options” it is
$10,000.00, note that the amount can be replenished if exhausted.

Steps to open the demo account:

1. Type on your browser:

➢ www.iqoptions.com or
➢ Download the “iq options” application".
It is better to download the app for easy accessibility.

➢ Sign up with your valid “email address” and secured

“password”.
➢ Set your “page time” to be in consonance with your
Broker’s time. To do this, go to “settings and check on time
zone”. For example on “iq options” set your time to Bueno
Aires, Stanley (UTC-3).

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2. Set-Chart-Time-Frame:

This sets the time each candlestick represents. Hence, one can
choose any time period from between 5 seconds to one month.

3. Indicators and Patterns:

There are many indicators and patterns available to assist the

Binary Options Trader. Notable among them are:

❖ Momentum
❖ Trend
❖ Bollinger bands
❖ MAC D
❖ R.S.I
❖ Fibonacci lines
❖ Moving Average
❖ Stochastic
❖ Farabolic SAR
Note: It should be stated here that the over use of the “demo
account” may not help you. Practice and then go to “real
account”.

CHARTS
This is where the actual trading takes place.
Charts are used to display data in various formats. The charts show
the actual movement of the market. To trade successfully and make
profits, the trader has to understand, analyse and properly interpret
the charts to execute trades. They help the trader to study, follow or
track price movements.

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There are different types of charts available to the trader. The most
common among them are line, bar and candlesticks charts.
1. Line Charts:
These charts connect the price of an asset at each period of time
as set on the time frame - second(s), minute(s), hour(s), day(s),
week(s) or month(s) using a single line.

2. Bar Charts:
This is also known as Open-High-Low-Close (OHLC) chart.
Here, both the lowest and highest point of the period are shown
or displayed on a vertical line/bar. The “opening price” is shown
on the horizontal tab on the left of the vertical line/bar with the
“closing price” shown on the horizontal tab on the right-hand
side of the same vertical line/bar.

The bar chart provides a more useful information on both the

“trading strength” and the “price gabs”. For example, the longer
the vertical line, the higher the price range for the fixed time

15
 period and the closer the closing tab to the highest price point,
the stronger the asset for the period.

3. Candlesticks charts:
This is the most useful and commonly used among professional
traders. They are more district in interpreting and discerning
the price movement of the asset(s). they come in two colors:
Green and Red

The “Green” represents: The “Red” represents:

Sellers/Put/Lower
Buyers/Call/Higher

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SUPPORT AND RESISTANCE
Simply S & R for short, is a very important part of trading strategies.
Support
Also known as “support level” or “buyer’s entry” is a level where
buyers enter the market repeatedly near a similar price, stopping or
preventing the price of a commodity/stock/currency pair, etc from
falling/dropping further. It could be as a “FLOOR” supporting the
price from further fall.
Whenever the price falls below this floor/level, then the support is
said to have been “Broken” or “Weakened”, but if the said level is
repeated, upheld or unbroken, then its is said to be “Strong”
However, note that “support levels” are not forever but changes and
new support level(s) achieved.

Resistance
This is also known as “resistance level” or “seller’s entry”. Here,
enters the market repeatedly near a similar price pushing it lower. It
will help to imagine the resistance as a “ceiling” resisting a rise or
increase in the price.
When the price rises above the said or established level, then the
resistance is said to have been “Broken” but if the level remains
unbroken for quite a while, then the level is said to be “strong” or
“respected”.
However, just as in the case of support levels, no resistance level is
held forever. It changes and new resistance level(s) achieved.

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Note that a previous support level may later become a resistance level
and vice versa.
Second, there may be several support and resistance levels at the
same time.
Again, a S & R line could be horizontal and/or vertical.

Horizontal S & R Line(s)

This is the commonly known and used. It represents a specific price
or price area, which has a supported or resisted price movement
beyond it.
It is good to note that whenever the price breaks through or goes
beyond the resistance, it shows that there is an increase in the price
and therefore serves as a positive sign.
On the other hand, whenever the price moves through a support
level, it is a negative which shows lower prices.
However, at 70% of such breakthroughs/breakouts are “false/fake”
because they only do so for one-three candlesticks or minutes and
then reverse in the opposite direction.
These are called “false breakouts” and should be well noted in
trading.

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Diagonal S & R Lines
These are commonly created by trendlines. They can be traced by
drawing a line from one price low to a higher price low or from one
price higher to a lower price high and then extended straight on to
right.
Unlike the horizontal S & R line where it is determined by the specific
price or close price, the Diagonal S & R line is determined by the
dynamics of the trend.
The upward diagonal line represents an uptrend time frame. If the
price keeps bouncing off the trendline, it is a positive sign of strength;
but if it breaks through and goes below the line, it is a negative and
warming sign of weakening price.
A downward diagonal S & R line on the other hand represents sign
of low price. If the trendline breaks through, then it may be a warning
signal of upward turn in price.
Always look and watch out for false breakouts as is the case over
70% of the time.

Historic and Predictive S & R Lines

S & R lines can be said to be both historic and/or predictive.
Successful traders are and must be in the habit of looking at the
price actions of S & R in the past and see the reason(s) for the present
behavior of the market. This informs the trader to adequately predict
the market movement for the near future and determine what type
of strategy to employ to achieve success.
Note: If your S & R line(s) has been tested by the market 3-4
times. Please do not continue to trust it/them. They may be broken
easily.

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Raw/Round Number(s)
These appear as white natural occurring horizontal lines on a Binary
Options Trading page. They end with one or more zero(s) eg “0”, “00”,
“000”, “0000”, “00000”.
The market tends to respect them as natural occurring S & R lines.
The more the number of zeros, the stronger they tend to be.

PRICE ACTION
Price action is all about the actions/activities/movements of the
price of an asset/currency pair etc. put in another way.
Price action is the study of all the buyers and sellers actively involved
in any given market.
One cannot separate price action from binary options trading. To be
a successful binary options trader, one must understand price action
for accurate predictions. Price action is the core of technical analysis.
It makes the numerous seemingly random price movements of the
day predictable by traders. Price action does not
stress/trouble/bother itself on what drives the market nor why the
price rises or falls. It simply focuses on the actual movement of the
price per time.

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Price action looks at the past, the now and then predicts what the
nearest future (that is, the next candlestick) will be. It shows the total
activities/movements of buyers and sellers to predict the movement
of the next candlestick.
There are essential tools to help the trader interpret price action:

Reversal Chart Patterns

Common Candlesticks Reversal Patterns & Diagrams

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TRENDS

Trends show the up/rising and/or down/falling movement of the

asset price in the market.
The price of an asset does not remain at a spot. Trend goes upwards
and downward from one level to another.
Usually, it is best and more profitable for the trader to follow the
trend. Hence, the slogan “never trade against the trend”.
The above statement is a safety nest for you as a trader.
A trend would be “up” or “down”, commonly referred to as “uptrend”
or “downtrend”.
If a market price moves upwards and makes a higher high, it from
an “uptrend”.

A trend could also make lower low movements, referred to as

“downtrend”.

Other common terms around trends are:

❖ Ascending triangle
❖ Descending triangle
❖ Symmetrical triangle
❖ Asymmetrical triangle

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Ascending triangle
This is a bullish formation that occurs during an uptrend as a
continuation pattern or as a reversal at the end of a downtrend.
Wherever an ascending triangle is formed, it represents
bullish/upward momentum. This forms when:
➢ An established uptrend exists.
➢ There are not less than two trend/reaction highs forming the
top of horizontal lines in reasonably close proximity.
➢ Also, there must be at least two reaction slows forming the low
ascending trend line.

Descending triangle
This is opposite of the ascending triangle pattern. It occurs as a
bearish pattern.

Symmetrical triangle
This represents a period of consolidation in the market before the
price of an asset is forced to either “breakout” or “breakdown”.
DO NOT TRADE HERE!

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Asymmetrical triangle
Unlike the symmetrical, the asymmetrical triangle is very reliable. It
consists of a horizontal and slopping trend lines converging at the
horizontal line, showing the price of the asset is converging in a
certain direction until it breaks out in the same direction.
It represents one part of the market gaining ground over the other
and eventually breaks out.
There are two types of the asymmetrical triangle name:
❖ Ascending asymmetrical triangle
❖ Descending asymmetrical triangle

This simply meaning the price is achieving lower highs, indicating

that sellers are gaining ground while the buyers are staying at the
same portion (that is “flat”). The seller eventually wins and breaks
the support level.
Popular currency pairs
❖ Trading EUR/USD
❖ Trading GBP/USD
❖ Trading USD/CAD
❖ Trading USD/CHF
❖ Trading USD/JPY
❖ Trading AUD/USD

Types of Binary Options Trading and Underlying Assets with

Emphasis on Call & Put Options
There are many trading technics or strategies available. Some are:
❖ Call option
❖ Put option
❖ One-touch-option
❖ No-touch-option

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 ❖ Double-touch-option
❖ Double-touch-option

Call option
Represents higher market price and buyers. It is represented by a
green button. By clicking the green button, the trader is
predicting/speculating that the asset will go higher within the fixed
trade time and that buyers will win.
If the prediction is correct (that is, goes higher/green) the trader
earns the pre-determined percentage of the capital as set by the
broker. But if not, the trader/investor loses all of the staked amount.

Put option
It is the direct opposite of the call option. It represents a fall in the
asset price within the set time of trade and that the sellers will win
the day. It is represented by a “red” button.
If the trader’s prediction of a lower price comes true, then he wins
the set percentage of profit, but if it goes in the opposite direction,
then he loses all of the stated investment.

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BINARY OPTIONS TRADING ANALYTICAL METHODS
1. Fundamental analysis
This has to do with a deliberate and critical study of the macro
economics, business and political news of major trade countries
that are major players in the forex market.

Both the long and short-term effects of major happening in

such nations or regions has great effects on the market.

Predominant among these nations are the United States of

America, China, etc.

In fundamental analysis, the underlisted are critical:

❖ Consumer Price Index
❖ General Employment Statistics/Data
❖ Gross Domestic Product (G.D.P)
❖ Retail Sales and Consumer Sentiments
❖ Reports peculiar to such a country etc.

For example, the market of a certain currency pair can be

terribly affected by bad news from such member nation. A good
example is that of the recent global pandemic of Covid-19.

2. Technical analysis
Technical analysis is very important in binary options trading.
To be a successful binary options trader, one must be at least
85%-95% accurate/proficient in analyzing the market.

Technical analysis is the study of the past price and trading

volumes of the asset(s) to help accurately predict the future
rates.

It is decision made based on what has already happened rather

than that which is to happen. It is the easiest way to make
money.

To be able to do this, the trader needs a combination of tools

known as patterns, indicators and strategies, traders/investors
mindset,
S & R lines, round/raw numbers, candlesticks psychology.

The binary options trader who majors in “short term trades”

and has about 30 seconds to technically analyse the market

26
 and place trade, needs proper understanding of these tools to
succeed.

He has to do this by using various information in the market:

past prices of assets, trading volumes and the trends to identify
the patterns and then accurately speculate likely future
performance of the market price.

Some of these tools, strategies and patterns include:

❖ Momentum
❖ Moving Average
❖ Candlesticks Psychology
❖ Bollinger Bands
❖ 60 seconds BOTS using Bollinger Bands
❖ 60 minutes BOTS focusing on Bollinger Bands and
Momentum
❖ 60 seconds BOTS using MACD
❖ 60 seconds BOTS focusing on investment size
❖ 60 minutes BOTS using EMA(s), MACD and RSI
❖ 60 minutes BOTS RSI, Stochastic Oscillator and EMA(s)
❖ 60 minutes BOTS using Stochastic Oscillator
❖ 60 minutes BOTS based on engulfing patterns
❖ Medium term BOTS based on MA(s)
❖ BOTS based on Chinkou Span Breakthrough
❖ BOTS based on Ichimoku Kinto Hyo
❖ 60 minutes BOTS based on Awesome Oscillator
❖ 60 minutes BOTS based on double Stochastic
❖ 60 minutes BOTS based on Pivot levels and candlesticks
patterns

PRICE ACTION TRADING

“What is Price Action Trading?”

Price action trading is a methodology that relies on historical prices

(open, high, low, and close) to help you make better trading
decisions.

Unlike indicators, fundamentals, or algorithms… price action tells

you what the market is doing and not what you think it should do.

27
Now, this isn’t the Holy Grail. But, if you devote time to learning price
action trading, you’ll trade with cleaner charts, and can pinpoint
your entries & exits with better precision.
Here’s what you’ll discover:

➢ The truth about Support and Resistance nobody tells you

➢ Market behavior secrets: How the market really moves.
➢ The secret to reading Candlestick Patterns — How to time your
trading entries with deadly accuracy.
➢ Candlestick patterns cheat sheet: How to understand any
candlestick pattern without memorizing a single one.
➢ The M.A.E Trading Formula (A simple Price Action Trading
system anyone can learn).
The truth about Support and Resistance nobody tells you
First, let’s define what’s Support and Resistance so we’re all on the
same page.
Support – A horizontal area on your chart where you can
expect buyers to push the price higher.

Resistance – A horizontal area on your chart where you can

expect sellers to push the price lower.

Here are a few examples…

Support and Resistance on EUR/USD Daily:

28
Support and Resistance can swop roles.
This means when Support breaks it can become Resistance. And
when Resistance breaks it can become Support.

Because when the price breaks Support, traders who are long are
losing money and in the “red’.
So, when the price rallies back to Support, this group of traders can
now get out of their losing trade at break-even and that induce selling
pressure.

And that’s not all because traders who missed the breakout will want
to short the markets which increase the selling pressure. And that’s
why when Support breaks it tends to become Resistance. Make
sense?
“But how do I draw Support and Resistance on my charts?”
That’s a good question.

1. Zoom out your charts (at least 200 bars for me)

2. Draw the most obvious levels (if you need to second guess, then
it’s not an important level)
3. Adjust your levels to get the greatest number of “touches” (it

can be body or wick) Now, if you want a full training on how to

draw Support and Resistance, then check

29
Dynamic Support and Resistance
According to Classical Technical Analysis, Support and Resistance
are horizontal areas on your chart.
This is useful when the market is in a range or weak trend.

But in strong trend markets, it won’t work well and that’s where you
need to rely on dynamic Support and Resistance.

What the heck is dynamic?

It means Support and Resistance “move along” with the price instead
of being static.

Market behavior secrets: How the market really moves

The markets are always changing (I’m sure you’d realize this by now).

It can in an uptrend, downtrend, range, low volatility, high volatility,

etc.

But, if you take a step back and look at the big picture, you’d realize
the market tends to be in 1 of 4 stages…

1. Accumulation

2. Advancing

3. Distribution

4. Declining

Stage #1: The Accumulation Stage

The Accumulation stage occurs after a decline in price, and it looks
like a range market in a downtrend. Here are the things to look for:

• Occurs after the price have fallen over the last 5 months or more
(on Daily timeframe)
• It looks like a range market with obvious Support and
Resistance areas — in a downtrend
• The 200-day Moving Average is flattening out

30
 • The price whips back and forth around the 200-day Moving
Average
Here’s an example…

And when the price breaks out of Resistance in an Accumulation

stage, that’s where it moves into the Advancing Stage.

Stage #2: The Advancing Stage

The Advancing Stage is an uptrend with a series of higher highs and
lows.

Here are the things to look for:

➢ Occurs after the price breaks out of Resistance in an

Accumulation stage
➢ You see a series of higher highs and lows

➢ The price is above the 200-day Moving Average

➢ The 200-day Moving Average is starting to point higher

31
No market goes up forever. It eventually gets “tired” and that’s where
it enters stage 3.

Stage #3: The Distribution Stage

The Distribution stage occurs after a rise in price, and it looks like a
range market in an uptrend.

Here are the things to look for:

➢ Occurs after the price have risen over the last 5 months or more
(on Daily timeframe)
➢ It looks like a range market with obvious Support and
Resistance areas — in an uptrend
➢ The 200-day Moving Average is flattening out

➢ The price whips back and forth around the 200-day Moving
Average

32
However, the tide is turned if the price breaks below Support and
that’s where we enter the final stage…

Stage #4: The Declining Stage

The Declining Stage is a downtrend with a series of lower highs and
lows.

Here are the things to look for:

➢ Occurs after the price breaks out of Support in a Distribution

stage
➢ You see a series of lower highs and lows

➢ The price is below the 200-day Moving Average

➢ The 200-day Moving Average is starting to point lower

33
“What’s the point of learning the 4 stages of the market?”
If you can recognize the current stage of the market, then you can
adopt the appropriate trading strategy to trade it.

Here’s how…

If the market is in an Advancing stage, then you want to be a buyer

(not a seller).

This means you can look to buy breakouts or pullbacks. An example:

Buying breakouts or pullback in an uptrend. If the market is in a

Distribution stage, then you know there’s a huge potential downside
if the price breaks below Support.

This means you can look to short the breakdown of Support or wait
for the breakdown to occur, then sell on the pullback.

Short breakdown or the pullback in a downtrend

Now once you understand the 4 stages of the market, then you’ll
know which Price Action Trading strategies to use in a given market
condition and you’ll never be “lost” again.

The secret to reading Candlestick Patterns How to time your

trading entries with deadly accuracy
You’ve learned the big picture of Price Action Trading.

You know where to enter your trades (Support and Resistance) and
what you should do in different market conditions (the 4 stages of
the market).

But there’s still one part of the puzzle missing, and that’s when to
enter a trade.

So, that’s where candlestick patterns come into play.

Let’s dive in…

34
What is a candlestick pattern and how does it work?
A candlestick pattern has 4 data points:

Open – The opening price

High – The highest price over a fixed time period

Low – The lowest price over a fixed time period

Close – Here’s what it means:

For a Bullish candle, the open is always below the close.

And for a Bearish candle, the open is always above the close.

Next, you’ll learn a few powerful candlestick patterns to help you

better time your entries…

➢ Hammer

➢ Shooting Star

➢ Bullish Engulfing Pattern

➢ Bearish Engulfing Pattern

I’ll explain…

35
Hammer

A Hammer is a (1- candle) bullish reversal pattern that forms after a

decline in price.

Here’s how to recognize it:

➢ Little to no upper shadow.

➢ The price closes at the top ¼ of the range.

➢ The lower shadow is about 2 or 3 times the length of the body

and this is what a Hammer means.

1. When the market opens, the sellers took control and pushed
price lower.
2. At the selling climax, huge buying pressure stepped in and
pushed price higher.
3. The buying pressure is so strong that it closed above the
opening price.

In short, a hammer is a bullish reversal candlestick pattern that

shows rejection of lower prices.

Now, just because you see a Hammer doesn’t mean the trend will
reverse immediately.

You’ll need more “confirmation” to increase the odds of the trade

working out and I’ll cover that in details later.

Moving on…

36
Bullish Engulfing Pattern

A Bullish Engulfing Pattern is a (2-candle) bullish reversal

candlestick pattern that forms after a decline in price.

Here’s how to recognize it:

➢ The first candle has a bearish close.

➢ The body of the second candle completely “covers” the body of

the first candle (without taking into consideration the shadow).
➢ The second candle closes bullish.

And this is what a Bullish Engulfing Pattern means.

1. On the first candle, the sellers are in control as they closed

lower for the period
2. On the second candle, strong buying pressure stepped in and
closed above the previous candle’s high — which tells you the
buyers have won the battle for now
In essence, a Bullish Engulfing Pattern tells you the buyers have
overwhelmed the sellers and are now in control.

And lastly, a Hammer is usually a Bullish Engulfing Pattern on the

lower timeframe because of the way candlesticks are formed on
multiple timeframes.

Here’s what I mean:

37
Shooting Star

A Shooting Star is a (1- candle) bearish reversal pattern that forms

after an advanced in price.

(The opposite of a Shooting Star is Hammer.)

Here’s how to recognize it:

➢ Little to no lower shadow

➢ The price closes at the bottom ¼ of the range
➢ The upper shadow is about 2 or 3 times the length of the body
and this is what a Shooting Star means…

1. When the market opens, the buyers took control and pushed
price higher

38
 2. At the buying climax, huge selling pressure stepped in and

pushed price lower 3. The selling pressure is so strong that it

closed below the opening price

In short, a Shooting Star is a bearish reversal candlestick pattern

that shows rejection of higher prices. And one last one…

Bearish Engulfing Pattern

A Bearish Engulfing Pattern is a (2-candle) bearish reversal

candlestick pattern that forms after an advanced in price.

Here’s how to recognize it:

• The first candle has a bullish close

• The body of the second candle completely “covers” the body of
the first candle (without taking into consideration the shadow)
• The second candle closes bearish
And this is what a Bearish Engulfing Pattern means…

1. On the first candle, the buyers are in control as they closed

higher for the period
2. On the second candle, strong selling pressure stepped in and
closed below the previous candle’s low — which tells you the
sellers have won the battle for now
In essence, a Bearish Engulfing Pattern tells you the sellers have
overwhelmed the buyers and are now in control.

39
What you’ve just learned are some of the most powerful reversal
candlestick patterns.

But, they are not the only ones out there.

In fact, there are many variations that it’s impossible to cover all in
one guide.

But the good news is, you don’t need to memorize candlestick
patterns to understand what the market is telling you. Here’s how…

Candlestick patterns cheat sheet: How to understand any

candlestick pattern without memorizing a single one
To understand any candlestick patterns, you only need to know 2
things...

1. Where did the price close relative to the range?

2 What’s the size of the pattern relative to the other
candlestick patterns? Let me explain…

1. Where did the price close relative to the range?

This question lets you know who’s in control momentarily.

Look at this candlestick pattern…

Let me ask you…

Who’s in control?

40
Well, the price closed the near highs of the range which tells you the
buyers are in control.

Now, look at this candlestick pattern…

Who’s in control?

Although it’s a bullish candle the sellers are actually the ones in
control.

Why?

Because the price closed near the lows of the range and it shows you
rejection of higher prices.

So remember, if you want to know who’s in control, ask

yourself… Where did the price close relative to the range?

2. What’s the size of the pattern relative to the other candlestick

patterns?
This question lets you know if there’s any strength (or conviction)
behind the move.

What you want to do is compare the size of the current candle to the
earlier candles.

If the current candle is much larger (like 2 times or more), it tells you
there’s strength behind the move.

41
Here’s an example…

An example…

Now you have what it takes to read any candlestick pattern without
memorizing a single one.

The M.A.E Trading Formula

(A simple Price Action Trading system anyone can learn)
You’ve learned the essentials of Price Action Trading (Support &
Resistance, Market Structure and Candlestick Patterns).

Now, let’s use this knowledge to find high probability trading setups
— consistently and profitably.

42
Introducing to you, The M.A.E Trading Formula, a proprietary
trading technique I’ve developed to help traders get results, fast.
Here’s how it works…

1. Market structure

2. Area of value

3. Entry trigger

1: Market structure
Now, I know it can be daunting to be looking at a blank chart.

Because you don’t know what to do.

Should you buy, sell, or stay out?

That’s why the first thing to do is identify the market structure as it

tells you what to do. So ask yourself:

“Is the market in an uptrend, downtrend, or range?”

(In other words, identify the current stage of the market).

Once you can identify the market structure, then you’ll know trade
along the path of least resistance. For example:

If the market is in an uptrend, you look to buy only.

If the market is in a downtrend, you look to sell only.

If the market is in a range, you can buy and sell.

2: Area of value
Now, identifying the market structure alone isn’t enough.

Because you also need to know where to enter your trade.

Now you’re wondering:

“There are so many places to enter a trade. Which one should I

choose?” Well, you want to trade from an area of value so you
can buy low and sell high.

43
For example:

➢ Support and Resistance

➢ Respected Moving Average

➢ Trendline

➢ Etc.

3: Entry trigger
You know what to do (identify market structure) and where to enter
(area of value).

Now the final part of the equation is to know when to enter.

Personally, I like to enter when the market has shown signals of

reversal - thus confirming my bias.

This can be in the form of reversal price patterns like:

➢ Hammer
➢ Shooting Star
➢ Bullish Engulfing Pattern
➢ Bearish Engulfing pattern
➢ Etc.
Let me share with you a few examples of The M.A.E Formula in
action…

Bonus: How to identify strength and weakness in the markets so

you don’t get caught on the wrong side of the move
The market doesn’t move in one straight line.

Instead, it goes up and down, up and down, up and down, right?

(Something like that) and you can classify this “up and down” pattern
into:

➢ Trending move
➢ Retracement moves

44
Trending move

A trending move is the “stronger” leg of the trend.

You’ll notice larger bodied candles that move in the direction of the
trend.

Retracement moves
A retracement move is the “weaker leg of the trend.

You’ll notice small bodied candles that move against the trend
(otherwise known as counter-trend).

“Why is this important?”

Because in a healthy trend, you’ll expect to see a trending move

followed by a retracement move.

But when the trend is getting weak, the retracement move no longer
has small bodied candles, but larger ones.

This tells you opposing pressure is stepping in.

45
Here’s what it means

Bonus: How to “predict” market turning points with deadly

accuracy
Would you like to be able to “predict” market turning points and spot
trading opportunities with low risk and huge returns?

Well, nothing works all the time.

But the technique I’m about to show you works well for me. Here’s
how…

1. Wait for the price to reach key market structure on the higher
timeframe (like Support & Resistance, Trend line, etc.)
2. Wait for the trending move to get “weak” by having smaller
bodied candles
3. Wait for the retracement move to get “strong” by having larger
bodied candles
4. Enter on the break of structure

Final words
Congratulations! If you have made it to this point, you definitely have
the price action trading spirit in you. I know I’ve provided you with a
lot to think about in this guide, but you now have the knowledge to
take the information and apply it into your trading. Here are a few
final thoughts I’d like to share with you before I finish up.

46
➢ How Much You Succeed is All Up to You
The thing about trading is that it doesn’t care about your
educational background.

You can be a first-class honors graduate or a school dropout,

but if you fail to follow the rules of the market, it will take your
money, regardless of your status and background.

But if you follow the rules of the market, then how much you
can make is entirely up to you. You can trade 0.1 lot, 1 lot, or
10 lots, and your profits and losses are just a matter of a few
more zeros behind.

➢ Rome Wasn’t Built in a Day

Trading is like learning a new skill. You need to be willing to
put in time and effort to be proficient in it. There are countless
lessons to learn from the markets and every mistake you learn
is a step closer to profitable trading.

Most degree graduates spent 3 years in school studying. What

about a trader acquiring a skill that could feed him or her for
life? Don’t think about the money just yet. Just focus on doing
the right things one step at a time.

Some take 10 years before being profitable whereas some never

figure it out and eventually give up. If you really want it bad
enough, then persevere on and always look at the big picture:
the chance to one day be a consistently profitable trader.

➢ Don’t Be Afraid to Ask for Help

There is absolutely no reason why you shouldn’t ask for help
when you need it.

Many people, including myself, are happy to help people out.

You’d be surprised.

If you never ask, you will never know, right?

47
CANDLESTICK PSYCHOLOGY

Introduction:

There are many ways to read a chart. You can use Japanese
Candlestick Patterns, Renko, Bar, Line, Heikin Ashi, Point & Figure,
and etc. You’re probably wondering: “Which one should I use?” Well,
if you ask me, the most popular approach is- Candlestick Patterns.
Why? Because it’s easy to learn and it works.
That’s why this monster guide is created to teach you everything you
need to know about candlestick patterns (and how to trade it like a
pro).

Here’s what you’ll learn:

➢ What is a candlestick pattern and how to read it correctly

➢ Bullish reversal candlestick patterns
➢ How to find high probability bullish reversal setups
➢ Bearish reversal candlestick patterns
➢ How to find high probability bearish reversal setups
➢ Indecision candlestick patterns
➢ Trend continuation candlestick patterns
➢ How to find high probability trend continuation setups
➢ Candlestick cheat sheet: How to understand any candlestick
pattern without memorizing a single one

Now, this is an extensive guide on candlestick patterns (with 3781

words).

So, take your time to digest the materials and come back to it
whenever you need a refresher. Now let’s begin!

What is a candlestick pattern?

Japanese candlestick patterns originated from a Japanese rice trader
called, Munehisa Homma during the 1700s. Almost 300 years later:
It was introduced to the western world by Steve Nison, in his book
called, Japanese Candlestick Charting Techniques.

48
Now, it’s likely the original ideas have been modified which now
results in the candlestick patterns you use today.
Anyway, that’s the brief history behind Japanese candlestick
patterns. Let’s learn how to read a candlestick chart.

How do you read a Japanese candlestick chart?

Now, every candlestick pattern has 4 data points:

Open – The opening price

High – The highest price over a fixed time period

Low – The lowest price over a fixed time period

Close – The closing price

Here’s what it means:

Remember,

For a Bullish candle, the open is always BELOW the close.

For a Bearish candle, the open is always ABOVE the close.

Bullish reversal candlestick patterns

Bullish reversal candlestick patterns signify that buyers are
momentarily in control.

However, it doesn’t mean you should go long immediately when you

spot such a pattern because it doesn’t offer you an “edge” in the
markets.

49
Instead, you want to combine candlestick patterns with other tools
so you can find a high probability trading setup (more on that later).

For now, these are 5 bullish reversal candlestick patterns you should
know:

❖ Hammer
❖ Bullish Engulfing Pattern
❖ Piercing Pattern
❖ Tweezer Bottom
❖ Morning Star
Hammer
A Hammer is a (1- candle) bullish reversal pattern that forms after a
decline in price.

Here’s how to recognize it:

➢ Little to no upper shadow

➢ The price closes at the top ¼ of the range
➢ The lower shadow is about 2 or 3 times the
length of the body And this is what a Hammer means…
1. When the market opens, the sellers took control and
pushed price lower
2. At the selling climax, huge buying pressure stepped in and
pushed price higher 3. The buying pressure is so strong that it
closed above the opening price
In short, a hammer is a bullish reversal candlestick pattern that
shows rejection of lower price

Now, just because you see a Hammer doesn’t mean the trend will
reverse immediately.

You’ll need more “confirmation” to increase the odds of the trade

working out and I’ll cover that in details later.

Moving on…

50
Bullish Engulfing Pattern
A Bullish Engulfing Pattern is a (2-candle) bullish
reversal candlestick pattern that forms after a
decline in price. Here’s how to recognize it:

➢ The first candle has a bearish close

➢ The body of the second candle completely
“covers” the body first candle (without taking
into consideration the shadow)
➢ The second candle closes bullish
And this is what a Bullish Engulfing Pattern means…

1. On the first candle, the sellers are in control as they closed

lower for the period
2. On the second candle, strong buying pressure stepped in and
closed above the previous candle’s high which tells you the
buyers have won the battle for now
In essence, a Bullish Engulfing Pattern tells you the buyers have
overwhelmed the sellers and are now in control.

And lastly, a Hammer is usually a Bullish Engulfing Pattern on the

lower timeframe because of the way candlesticks are formed on
multiple timeframes.

If you’re not sure how it works, then go watch this video below.

Piercing Pattern
A Piercing Pattern is a (2-candle) reversal candlestick pattern that
forms after a decline in price.

Unlike the Bullish Engulfing Pattern which closes above the previous
open, the Piercing Pattern closes within the body of the previous
candle.

51
Thus in terms of strength, the Piercing Pattern isn’t
as strong as the Bullish Engulfing pattern.

Here’s how to recognize it:

➢ The first candle has a bearish close

➢ The body of the second candle closes beyond
the halfway mark of the first candle
➢ The second candle closes bullish
And this is what a Piercing Pattern means…

1. On the first candle, the sellers are in control as they closed

lower for the period
2. On the second candle, buying pressure stepped in and it closed
bullishly (more than 50% of the previous body) which tells you
there are buying pressure around
Tweezer Bottom
When I mean Tweezer, I don’t mean the tool you use to
pick your nose hair (although it sure looks like it).
Instead; a Tweezer Bottom is a (2-candle) reversal
candlestick pattern that occurs after a decline in price.
Here’s how to recognize it:

➢ The first candle shows rejection of lower prices

➢ The second candle re-tests the low of the previous
candle and closes higher
And this is what a Tweezer Bottom means…

➢ On the first candle, the sellers pushed price lower and were met
with some buying pressure
➢ On the second candle, the sellers again tried to push price lower
but failed, and was finally overwhelmed by strong buying
pressure
In short, a Tweezer Bottom tells you the market has difficulty trading
lower (after two attempts) and it’s likely to head higher.

52
Morning Star
A Morning Star is a (3-candle) bullish reversal
candlestick pattern that forms after a decline
in price. Here’s how to recognize it:

➢ The first candle has a bearish close

➢ The second candle has a small range
➢ The third candle closes aggressively
higher (more than
50% of the first candle)

And this is what a Morning Star means…

➢ On the first candle shows, the sellers are in control as the price
closes lower
➢ On the second candle, there is indecision in the markets as
both the selling and buying pressure are in equilibrium (that’s
why the range of the candle is small)
➢ On the third candle, the buyers won the battle and the price
closes higher
In short, a Morning Star tells you the sellers are exhausted and the
buyers are momentarily in control.

How to find high probability bullish reversal setups

You’ve learned the different bullish reversal candlestick patterns.
Now, let’s take it a step further and learn how to identify high
probability trading setups with it.
You don’t want to trade any candlestick patterns in isolation because
it doesn’t offer an “edge” in the markets. So here’s how you do it.

1. If the market is trending higher, then wait for a pullback

towards Support
2. If the price pullback towards Support, then wait for a bullish
reversal candlestick pattern
3. If there’s a bullish reversal candlestick pattern, then make sure
the size of it is larger than the earlier candles (signaling strong
rejection) Here are a few cherry-picked examples:

53
Morning Star:

Bullish Engulfing Pattern:

Bearish reversal candlestick patterns

Bearish reversal candlestick patterns signify that sellers are

momentarily in control. Likewise, it doesn’t mean you should go
short immediately when you spot such a pattern because it doesn’t
offer you an “edge” in the markets.
Instead, you want to combine candlestick patterns with other tools
so you can find a high probability trading setup.

54
For now, these are 5 bearish reversal candlestick patterns you
should know:

➢ Shooting Star
➢ Bearish Engulfing Pattern
➢ Dark Cloud Cover
➢ Tweezer Top
➢ Evening Star
Shooting Star
A Shooting Star is a (1- candle) bearish reversal pattern
that forms after an advanced in price. Here’s how to
recognize it:

➢ Little to no lower shadow

➢ The price closes at the bottom ¼ of the range
➢ The upper shadow is about 2 or 3 times the
length of the body And this is what a Shooting Star
means…
➢ When the market opens, the buyers took control and pushed
price higher
➢ At the buying climax, huge selling pressure stepped in and
pushed price lower 3. The selling pressure is so strong that it
closed below the opening price
In short, a Shooting Star is a bearish reversal candlestick pattern
that shows rejection of higher prices.
Now, just because you see a Shooting Star doesn’t mean the trend
will reverse immediately.

You’ll need more “confirmation” to increase the odds of the trade

working out.

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Bearish Engulfing Pattern

A Bearish Engulfing Pattern is a (2-candle) bearish

reversal candlestick pattern that forms after an
advanced in price.

Here’s how to recognize it:

➢ The first candle has a bullish close

➢ The body of the second candle completely
“covers” the body first candle (without taking into consideration
the shadow)
➢ The second candle closes bearish
And this is what a Bearish Engulfing Pattern means…

On the first candle, the buyers are in control as they closed higher
for the period

On the second candle, strong selling pressure stepped in and closed

below the previous candle’s low — which tells you the sellers have
won the battle for now

In essence, a Bearish Engulfing Pattern tells you the sellers have

overwhelmed the buyers and are now in control.

Dark Cloud Cover

A Dark Cloud Cover is a (2-candle) reversal candlestick
pattern that forms after an advanced in price.

Unlike the Bearish Engulfing Pattern which closes below

the previous open, the Dark Cloud Cover closes within the
body of the previous candle.

Thus in terms of strength, the Dark Cloud Cover isn’t as

strong as the Bearish Engulfing pattern.

Here’s how to recognize it:

➢ The first candle has a bullish close

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 ➢ The body of the second candle closes beyond the halfway mark
of the first candle
➢ The second candle closes bearish
And this is what a Dark Cloud Cover means…

1. On the first candle, the buyers are in control as they closed

higher for the period
2. On the second candle, selling pressure stepped in and it closed
bearishly (more than 50% of the previous body) — which tells
you there are selling pressure around

Tweezer Top
A Tweezer Top is a (2-candle) reversal candlestick pattern that occurs
after an advanced in price. Here’s how to recognize it:

➢ The first candle shows rejection of higher prices

➢ The second candle re-tests the high of the previous
candle and closes lower
And this is what a Tweezer Top means…

1. On the first candle, the buyers pushed the price

higher and were met with some selling pressure
2. On the second candle, the buyers again tried to
push the price higher but failed, and was finally
overwhelmed by strong selling pressure
In short, a Tweezer Top tells you the market has difficulty trading
higher (after two attempts) and it’s likely to head lower.

Evening Star
An Evening Star is a (3-candle) bearish reversal candlestick pattern
that forms after an advanced in price.

Here’s how to recognize it:

➢ The first candle has a bullish close

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 ➢ The second candle has a small range
➢ The third candle closes aggressively lower
(more than
o 50% of the first candle)
And this is what an Evening Star means…

1. On the first candle, it shows the buyers are

in control as the price closes higher
2. On the second candle, there is indecision in the markets as
both the selling and buying pressure are in equilibrium (that’s
why the range of the candle is small)
3. On the third candle, the sellers won the battle and the price
closes lower
In short, an Evening Star tells you the buyers are exhausted and the
sellers are momentarily in control.

How to find high probability bearish reversal setups

You’ve just learned the different bearish reversal candlestick
patterns.

Now, let’s take it a step further and learn how to identify high
probability trading setups with it.

Here’s how you do it…

1. If the market is trending lower, then wait for a pullback towards

Resistance
2. If the price pullback towards Resistance, then wait for a bearish
reversal candlestick pattern
3. If there’s a bearish reversal candlestick pattern, then make sure
the size of it is larger than the earlier candles (signaling strong
rejection)
4. If there’s a strong price rejection, then go short on next candle’s
open

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 5. And vice versa for long setups

Here are a few cherry-picked examples:

Bearish Engulfing Pattern:

Bearish Engulfing Pattern:

Shooting Star:

Note: There will be losing trades as well and this is not the “holy grail”.

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Indecision candlestick patterns
Indecision candlestick patterns signify that both buying and selling
pressure is in equilibrium.
And these are 2 indecision candlestick patterns you should know:

➢ Spinning top
➢ Doji

Spinning top
A spinning top is an indecision
candlestick pattern that where
both buying and selling
pressure is fighting for control.

Here’s how to recognize it:

➢ The candle has long

upper and lower shadow
➢ The candle has a small
body
And here’s what a Spinning top
means…

1. When the market opens, both the buyers and sellers

aggressively tried to gain control (which results in upper
and lower shadows)
2. At the end of the session, neither have gained the upper
hand (which results in a small body)
In short, a spinning top shows significant volatility in the market but
with no clear winner.

And yes, it looks like the toy you played when you were young.

Moving on…

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Doji

A Doji represents indecision in the markets as both buying

and selling pressure are in equilibrium.

Here’s how to recognize it:

➢ The candle’s open and close are around the middle of the range
➢ The upper and lower shadows are short and about the same
length
Although Doji is an indecision candlestick pattern, there are
variations with different significance.

They are:

1. Dragonfly Doji

2. Gravestone Doji

Dragonfly Doji

Unlike a regular Doji which open and close near the middle of the
range, the Dragonfly Doji open and close near the highs of the range
with long lower shadow.

This tells you there is a rejection of lower prices as buying pressure

stepped in and pushed the market higher towards the opening price.

1. Gravestone Doji

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Unlike a regular Doji which open and close near the middle of the
range, the Gravestone Doji closes open and close near the lows of the
range with long upper shadow.

This tells you there is a rejection of higher prices as selling pressure

stepped in and pushed the market lower towards the opening price.

Continuation candlestick patterns

Continuation candlestick patterns signify the market is likely to

continue trading in the same direction.
And if you’re a trend trader, these candlestick patterns present some
of the best trading opportunities out there.

So here are 4 continuation patterns you should know:

➢ Rising Three Method

➢ Falling Three Method
➢ Bullish Harami
➢ Bearish Harami
Rising Three Method

The Rising Three Method is a bullish trend continuation pattern that

signals the market is likely to continue trending higher.

Here’s how to recognize it:

➢ The first candle is a large bullish candle

➢ The second, third and fourth candle has a smaller range and
body

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 ➢ The fifth candle is a large bodied candle that closes above the
highs of the first candle
And here’s what a Rising Three Method means…

1. On the first candle, it shows the buyers are in domination as

they closed the session strongly
2. On the second, third, and fourth candle, buyers are taking
profits which led to a slight decline. However, it’s not a strong
selloff as there are new buyers entering long at these prices
3. On the fifth candle, the buyers regain control and pushed the
price to new highs
Note: If you’re familiar with western charting, you’d realized the
Bullish Flag and Rising Three Method pretty much mean the same
thing.

Falling Three Method

The Falling Three Method is a bearish trend continuation pattern

that signals the market is likely to continue trending lower.

Here’s how to recognize it:

➢ The first candle is a large bearish candle

➢ The second, third and fourth candle has a smaller range and
body

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 ➢ The fifth candle is a large bodied candle that closes below the
lows of the first candle
And here’s what a Falling Three Method means…

1. On the first candle, it shows the sellers are in domination as

they closed the session strongly lower
2. On the second, third, and fourth candle, sellers are taking
profits which led to a slight advanced. However, it’s not a strong
rally as there are new sellers entering short at these prices
3. On the fifth candle, the sellers regain control and pushed the
price to new lows Next…

Bullish Harami

Here’s the deal:

Most trading websites or books will tell you the Bullish Harami
occurs after a decline in price.

But I can’t agree.

This is one of those things you must use common sense to filter out the
BS out there.
Think about this:

A downtrend is created using the prices of the few hundred

candlesticks.

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Do you think it will reverse because a Bullish Harami is formed?

Unlikely.
Instead, the Bullish Harami works best as a continuation pattern in
an uptrend.

It signals the buyers are “taking a break” and the price is likely to
trade higher.

Moving on…

Here’s how you recognize a Bullish Harami:

➢ The first candle is bullish and larger than the second candle
➢ The second candle has a small body and range (it can be bullish
or bearish)
And here’s what a Bullish Harami means…

1. On the first candle, it shows strong buying pressure as the

candle closes bullishly
2. On the second candle, it shows indecision as both buying and
selling pressure is similar (likely because of traders taking
profits and new traders entering long positions)
Note: You can treat the Harami as an Inside Bar. They mean the
same thing and can be traded in a similar context.

Bearish Harami

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A bearish Harami works best as a continuation pattern in a
downtrend.

It signals the sellers are “taking a break” and the price is likely to
trade lower.

Here’s how you recognize a Bearish Harami:

➢ The first candle is bearish and larger than the second candle
➢ The second candle has a small body and range (it can be bullish
or bearish)
And here’s what a Bearish Harami means…

1. On the first candle, it shows strong selling pressure as the

candle closes bearishly
2. On the second candle, it shows indecision as both buying and
selling pressure is similar (likely because of traders taking
profits and new traders entering short positions)
How to find high probability trend continuation setups
You’ve learned what continuation candlestick patterns are and how
it looks like.
Now, I’ll teach you how to identify high probability trading setups
with these patterns. Here’s how to do it.

1. If the market is in a range, then wait for it to breakout out of

Resistance
2. If the market breaks out of Resistance, then wait for it to form
a continuation candlestick pattern (like Rising Three Method or
Bullish Harami)
3. If the market forms a continuation candlestick pattern, then go
long on the break of the highs
4. And vice versa for short setups

Here are a few cherry-picked examples:

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Candlestick patterns cheat sheet: How to understand any
candlestick pattern without memorizing a single one
“There are so many candlestick patterns. How do I remember all of
them?” Well, you don’t have to.
Because if you understand the three things, I’m about to share with
you, then you read any candlestick patterns like a pro (think of it like
a candlestick pattern cheat sheet). Here’s what you must know…

1. The color of the body tells you who’s in control

2. The length of the wick represents price rejection

3. The ratio of the body to the wick tells you the “whole story”

1. The color of the body tells you who’s in control

When you see a candle closing above the open, it tells you the buyers
are in control momentarily and that’s why the market closes higher.

And when you see a candle closing below the open, it tells you the
sellers are in control momentarily and that’s why the market closes
lower.

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2. The length of the wick represents price rejection

Here’s the thing:

If you get a long upper shadow, it shows you strong rejection of

higher prices.

And if you get a long lower shadow, it shows you strong rejection of
lower prices.

But what if the shadow (or wick) is short?

Then it means weak rejection of prices.

3. The ratio of the body to the wick tells you the “whole story”
You mustn’t just pay attention to the body (or the shadow) because
it’s only one side of the story.

You must combine both to get the complete picture.

It’s like in a court case where a judge must listen to both the plaintiff
and the defendant before he gives a verdict.
Strong bullish close VS weak price rejection:

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This tells you the buyers are in control as there is minimal selling
pressure (the short upper wick).

Strong price rejection VS weak bullish close:

The sellers are in control as they have reversed most of the earlier
gains (long upper shadow). So, even though it’s a bullish close, the
overall picture is bearish momentarily.

Does it make sense? Great!

Now you have what it takes to read any candlestick pattern without
memorizing a single one. So, what’s next?

You’ve just learned that candlestick patterns give you an insight into
the markets (like who’s in control, who’s losing, where did the price
get rejected, and etc.).

However, you don’t want to trade candlestick patterns in isolation

because they don’t offer an edge in the markets.

Instead, use them as tools to “confirm” your bias so it can help you
better time your entries & exits. Now… it’s time to put these
techniques into practice

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