Published by Lee Kelvin

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Note from Author

This book comes with lifetime updates and all you need is to scroll to the last page of
this guide and there will be instruction for you to get the lifetime update for this guide.

Performance Tracking For the Break the Bands Strategy Taught in This Book
In order to let you know the effectiveness of the strategy taught in this book, I have
decided to do a performance tracking for this strategy every week.

Click here for the Tracking Results

What You Will Learn In This Guide

First of all, I will like to thank you for choosing my book to start your journey in forex
trading. In this book, you will get to know the truth about forex trading as well as all the
information that you need to know in order to start trading forex.

I will suggest you to read this book from the beginning to the end and don’t try to skip
any section as I do not want you to miss out any important details in this book.

You must be wondering whether this book is suitable for you or not. In fact, this book is
suitable for new traders who have just started to learn forex as well as those traders
who have been learning forex sometime but are still unable to make consistent income
from it.

In this guide, I will show you all the stuff that you need to become a proper technical
trader and most importantly, I have added 2 working forex strategies that you can use to
make consistent income every month.

In this guide, my job is to provide you with all the information that you need in order to
become a forex trader as I believe the number one reason why you pick up this book is
because you wanted to make extra income for yourself or some of you may even want to
earn enough income to eventually replace your current day job which is completely
possible.

Therefore you will be taught the following information in this guide

- What Exactly is Forex Trading

- Can Anyone Really Make Money From Trading Forex
- How To Trade Forex Effectively
- Which time frame should you choose when trading Forex
- 4 Powerful and Reliable Forex Indicators To Use
- Important Candlestick Patterns You Must Know
- How to identify strong level of support and resistance
- 2 Working Strategies that you can use to make money
- The importance of Proper Money Management
Once you have finished reading this book, I will suggest you to practice the 2 strategies
in your demo account so that you can see how well they work before you start to trade
live with them.
What Is Forex?
Forex is the short form for the word “Foreign Exchange” and this actually means the
buying and selling of international currencies. In forex, you are actually buying a country
currency and at the same time selling another country currency.

Currencies are always traded in pairs like Euro/US dollar always known as EUR/USD
pair or US dollar/Japanese Yen always known as USD/JPY pair. Let’s take the
EUR/USD pair for example; when you are buying EURO, you are actually selling the
US dollars in exchange for the EURO dollars.

In fact, when you are exchanging money from your bank or money changer, you are in the
process of forex trading. You are selling your country currency to buy another country
currency. However the physical exchange above is only playing a small part in the
market. In fact, there is a Hugh marketplace where large volume transaction takes place
and this is what really moves the market.

The main player in the market is the banks and this is known as the interbank market. In
the interbank market, there are a group of banks that trade against one another and this
simply accounts for trillion of dollars everyday.

For the forex market, it goes on for 24 hours a day from Monday to Friday. This is
because when one market closes, another market opens and you can see the diagram
below for better illustration.

Before you begin your journey to explore the world of forex trading, here are some
reasons why you should trade forex.

1) The average daily turnover in the forex market is estimated to be around $3.98
trillion which is much higher than the volume of NYSE, NASDAQ and London
equity market combined. With the Hugh volume of transactions, it gives rise to
high liquidity which means that you can sell or buy a currency pair almost
instantaneously without the need to wait for buyer or seller.

2) The market is open 24 hours a day except for weekends and this provides a
trading opportunity for traders all around the world. For those of you who are
working and is looking to make extra income from forex trading, the 24 hours
market allows you to trade after you finish your work.

3) The forex market provides a large leverage factor that allows anyone to trade
with small capital. Imagine you only need USD 100 to trade USD 10,000 against
the Yen.

4) The forex is a recession proof skill as it allows the traders to SHORT the
currency pair. Unlike the stock market in certain countries where you are only
allow to BUY. Forex allows the trader to buy or sell depending on their analysis.
Can Anyone Really Make Money From FOREX?

This is one of the most commonly asked questions among the readers of my forex blog
and therefore I will like to address this issue at the very beginning of this book. In fact,
this is one of the questions that cross my mind when I am new to trading a few years
back.

Making money from forex trading is definitely one thing that is possible and it can be
done by anyone of any background. You do not need to study finance in order to be
successful in trading. In other words, forex trading is a fair playing ground for anyone
who is interested in it.

But first of all, I must tell you frankly that 90% of new traders never actually made it in
trading. Therefore the key for you to succeed is to know what the 10% does in order to
make them into a profitable trader. Below is what the 10% of new traders know and
possess that enable them to make it in this field.

Mindset

It is very important for you to have the right mindset at the very beginning so that you
can persevere and eventually make money from trading. Frankly speaking, most new
traders that I have talked to thought of forex as a get rich quick scheme.

They are attracted to forex trading from those advertisements either online or offline that
promises them attractive income within weeks of learning forex. But I must break the
news to you that these are marketing gimmicks that are employed to get you to sign up
for a course that is worth thousands of dollars.

The truth is forex trading requires you to put in effort and time to learn and practice in
order for you to start making money. You may have to take months in order to start
making money from trading. In fact, I have met people who learn and practice trading
for 1 to 2 years before they start to make money from it.

Regardless of how long it takes, this is a lifetime money making skill that you will have
if you take time and effort to learn and practice. Once you are able to trade profitably
for the first month, you will forever be able to make money from this skill.

Therefore you have to adjust your mindset to treat forex trading like a business where
you need to put it time and effort to make it works and stop thinking that you will make
money from it within weeks.

Working Strategy

The next factor that can make you a profitable trader is a working strategy. Without one,
you will never be able to make money from trading. Therefore as a new trader, you must
start to look for a reliable strategy to use and then practice it on a demo account.

The problem with most new traders is they tend to practice trading on a live account
with real money. Most of the time, they will lose all the money and eventually give up
on forex trading. My personal suggestion is for you to start trading with the strategy that
you have learned on a demo account until you are able to make profit with it for 3
consecutive months.
Once you are able to make 3 consecutive months of profit with your strategy, it means
that you have a working strategy on hand and you can now move to trade LIVE with your
money. If you do not have a good strategy on hand, do not worry as I will teach you 2
working strategies later on in this book.

Discipline
This is another factor to becoming a profitable trader. There is no point for you to have
a good and working strategy if you do not stick to it.
You may be wondering why anyone will not stick to a strategy that works. THE URGE
TO TRADE is the number one reason why a trader will not stick to his/her strategy.
Most traders find themselves always wanting to get into action which is entering a trade
and therefore tends to enter trades that are not 100% according to their strategy.
For any strategy, there must be a set of rules for entry and for those traders who likes to
get into action. They will tend to tell themselves that the trade looks like what the
strategy wants but it did not fulfilled 100% of the rule.
For a profitable trader, they will not enter a trade if it is not 100% according to their
trading plan and this is DISCIPLINE. There is no way anyone can help you with
discipline except yourself.
Proper Money Management Skill
The last factor to becoming a profitable trader will be proper money management. By
money management, I am referring to the amount of risk you are taking per trade and
how you should protect your capital while trading.
You should not risk too much of your capital per trade. The highest I have ever heard of
is 5% for a professional trader. Therefore I will urge you to stick to 2 to 3 % if you are
pretty new to your strategy. When you have a better record on how your strategy works,
you can then increase it to around 5%.
As for how to protect your capital this is done by partial exit of your trades or by
adjusting your stop loss to breakeven when the price has moved certain pips in your
favour. In this way, your account exposure will reduce and therefore your capital is
being preserved. I will talk more about this in the chapter on Proper Money
Management Skills.
As long as you are able to fulfil the above 4 factors, I can assured you that you will
eventually become a profitable trader like me.
How to Trade Forex

In this section, I shall be sharing with you the 2 major ways to forex trading. In the
world of trading, there are 2 main groups of traders’ mainly technical trader and
fundamental trader.

Technical Trader is one that focuses their strategy on technical analysis which is the use
of indicators, trend lines, candlestick patterns and other analytical tools. As a technical
trader, we are always looking for patterns in trading and then take our trade solely
based on this analysis.

Fundamental Trader is one that basically trades with the news. They are constantly
looking at the news as well as other financial report (e.g. Non Farm Payroll etc). They
tend to enter trades before a news release or during the time of news release.

Personally I am a technical trader and therefore in this guide, I will only able to teach
you how to analyse the chart to take a trade and I will not talk anytime about how to
trade the news. In my opinion, it is very hard to trade the news as the movement driven
by news are mainly emotional and very hard to predict.

However there are still fundamental traders who are making consistent profit as well. It
is just that fundamental trading requires more work and research in order to succeed.

To become a good technical trader, you will need to have the ability to read and
interpret indicator movements, identify key levels of support and resistance, important
candlestick patterns as well as picking the right time frame that suits you.

It sounds like you have to learn a lot of stuff but do not worry; you are going to learn
them all in this guide that you have purchased. In the next few chapters of this book, I
will be sharing with you how to select the time frames that suit your lifestyle, how to
read and interpret various indicators, how to identify important candlestick pattern as
well as how to trade effectively with 2 working strategies.
Time Frame Selection
When you open your trading platform, you will see a chart with all the candlesticks in it
and this is what we called Time Frame. In most trading platform, you can select
between ticks, 1 minute, 5 minutes, 15 minutes, 30 minutes, 1 hour, 4 hours, daily,
weekly and monthly time frame.

The selection of time frame relies on 2 factors, the amount of time you have everyday to
look at the chart.

For those of you who do not like or do not have the time to look at your chart for at least
1 hour everyday, I will suggest you to use the higher time frame like the 4 hourly chart,
daily chart and weekly chart. Traders that use these time frames are known as position
traders who hold their trades for days or even weeks.

On the 4 hour chart, it will only produce a candle every 4 hours and therefore it will
only produce 6 candles everyday. In other word, there will be only small changes on the
4 hour chart everyday. From the picture below, you can see that there are only 6 candles
produced for 1 day of trading.

For the daily chart, it will only produce 1 candle everyday and for the weekly chart, it
will only produce 1 candle every week. Therefore for those of you who hardly have
time to look at the chart, you can consider trading with the above time frames.

For those of you who can spare at least 1 to 4 hours everyday on your chart, you will
consider using the 15 minutes and hourly chart. The 15 minutes chart is my favourite as
you will see more movements as compared to the 4 hour chart and daily chart. For 15
minutes, it will produce a candle every 15 minutes which means that it will produce 96
candles everyday.

From the below picture, it is exactly the same period selected for the 4 hourly chart
above. You can see that there are more movement and action on the 15 minutes chart
which makes it easier to trade as compared to 4 hourly charts.

For the hourly chart, it will produce 24 candles everyday. Traders that trade with these
time frames are know as day trader who will usually exit their trading position within
the day.

For those of you who can look at the chart for more than 4 hours everyday, you can
consider using the 5 minutes and 1 minutes chart. However I personally am not a fan of
low time frame like the 5 and 1 minute chart as there are a lot of noises in the chart
which can hinder our analysis of indicators. Traders using these time frames are known
as Scalper who usually enter and exit their position within minutes.
Personally I am a day trader and I use the 15 minutes and hourly chart for my trading.
However you do not have to ponder too much into time frame as most of the strategies
available can fit into any time frame.

I often received emails from readers of my books and blogs asking me whether the
strategy that I am sharing with them works on a particular time frame. In fact, a strategy
that works on the hourly chart works equally well on any other time frame and therefore
you do not have to worry about it.

Your selection of time frame should basically be based on your availability to look at
your trading chart and nothing else. In the next chapter, I shall be sharing with you
several indicators that I like to use in my trading so that you can have a better
understanding on how indicators work.
Effective Forex Indicators and Their
Usages
As a technical trader, indicator forms an important part of our trading. Therefore I am
dedicating this chapter to teach you more about various forex indicators and how to use
them.

There are close to 50 different indicators available in the market and it is impossible
for anyone to learn how to use all of them. Therefore what we do here is to pick a few
indicators that are reliable and effective to use. In this guide, I shall be sharing with you
information on MACD Indicator, Moving Average, Bollinger Bands and Oscillators.

Introduction to MACD Indicator

The MACD Indicator is known as the Moving Average Convergence Divergence. This
is an indicator that is developed by Gerald Appel who is the president of Signalert
Corporation, an investment firm that helps to manage over $290 million dollar of
capital.

Personally, the MACD indicator is one of my favourite indicators as it has several

features that can be incorporated into a strategy. Therefore the MACD almost appears in
all my strategies.

The MACD indicator consists of a MACD line, Signal line and a Histogram.
The Histogram is basically showing you the difference between the MACD and Signal
line. If you have already setup a DEMO account with any broker, you can now log into
your platform and then select the MACD indicator to take a look at it.

The default setting of this indicator is as follow:

Short EMA: 12
Long EMA: 26
Signal Line: 9

As a technical trader, we do not need to know how these setting are done as all we need
is to know how to use this indicator.

How to Use the MACD Indicator

Like what I have said earlier in this guide, there are several different ways you can use
this indicator in your trading and I am going to list them all here.

1) Tell The Trend

If you take a close look at this indicator, you will find that there is a zero line
which is the horizontal line that you see when you plot the indicator. Some book
refers to this line as the water line as well.

When you see the 2 lines moving above the zero line, it is a sign that the market is
currently in an uptrend. Similarly when you see the 2 lines moving below the zero
line, it is a sign that the market is now in a downtrend.
2) Identify Entry and Exit

Besides telling the trend of the market, you can also use the MACD as a signal
indicator. As a signal indicator, it will be able to tell you when to enter a trade
and when to exit it.

When using this indicator as a signal indicator, we are basically going to look at
the crossover of the 2 lines.

Bullish Crossover: When you see the MACD line (RED) cutting above the Signal
line (BLUE), it is indicating to you that the price is going to move up and if you
are planning to go LONG (BUY), this is a good time to enter a trade.

However if you are already in a SHORT (SELL) trade, it is a sign for you to exit
your position as the price may move up soon.
Bearish Crossover: When you see the MACD line (RED) cutting below the
Signal line (BLUE), it is indicating to you that the price is going to move down
and if you are planning to go SHORT (SELL), this is a good time to enter a trade.

However if you are already in a LONG (BUY) trade, it is a sign for you to exit
your position as the price may move down soon.
3) Identify Reversal

The MACD indicator is one of the best reversal indicators as it is able to inform
you beforehand that the price is going to reverse.

When using the MACD as a reversal indicator, we are actually looking for
something known as Divergence. Divergence refers to the different in movement
of the MACD indicator and the market.

Positive Divergence: When you see the MACD making higher lows while the
price making lower lows, it is a sign of positive divergence and it actually
indicates that the market is going to reverse upward soon.

When we see a positive divergence, it is a good time for us to enter a LONG

(BUY) trade. However as a technical trader, we do not enter a trade simply based
on 1 indicator, we need to look for signal from various indicators to confirm this
trade.
Below is the picture of a positive divergence.

Negative Divergence: When you see the MACD making lower highs while the
price making higher high, it is a sign of negative divergence and it actually
indicates that the market is going to reverse downward soon.
When we see a negative divergence, it is a good time for us to enter a SHORT
(SELL) trade. However there are times when you may see the price continues in
its direction and then create another divergence again before it starts to reverse its
direction.
Therefore as a technical trader, we always have to look for other confirmation
before we enter a trade.
Introduction to Moving Averages

The moving average is one of the most commonly used indicators among traders due to
its simplicity and functionality.

It is basically a visual tool that is able to show us the average historical value of the
past m period. With the moving average, you will be able to tell the trend as well as the
strength of the trend.

Before we talked about how to use the moving averages, I shall elaborate on the 2 main
types of moving average.

Simple Moving Average (SMA): The SMA is simply the calculating of the average
value for a certain period of time. Therefore when you plot the 10 SMA on your chart,
you are actually seeing the average reading of the market for the past 10 candlesticks.

Exponential Moving Average (EMA): The EMA is a more responsive moving average
as it gives recent data more weightage in the calculation of the average value.
Below is the picture showing you these 2 moving averages so that you can have a better
idea of how they look like.

I personally like to use the EMA more than the SMA as it is more dynamic and
responsive.

How to Use the Moving Averages

1) Tell The Strength and Direction of Trend

For you to tell the direction of the trend, you simply have to look at the slope of
the EMA. If it is sloping upward, it is telling you that the market is in an uptrend.
If it is sloping downward, it is telling you that the market is in a downtrend.

As for the strength, you just have to look at the gradient of the slope. If the EMA is
sloping upward with steep gradient, it is a sign that the market is currently in a
strong uptrend. If it is sloping downward with steep gradient, it is a sign that the
market is in a strong downtrend.
2) As a Buy and Sell Signal

When using the moving average as a buy and sell signal, you will have to plot 2
EMAs, one faster and one slower. For example, you could plot a 20 EMA (Fast)
and a 50 EMA (Slow).
 When you see the faster EMA cutting below the slower EMA, this is what we call
a bearish crossover and it is a sign for you to enter a SHORT (SELL) trade.

Similarly when you see the faster EMA cutting above the slower EMA, this is
what we call the bullish crossover it is a signal for you to enter a LONG (BUY)
trade.

3) As a Strong Level of Support and Resistance

 For level of strong support and resistance, you will need to plot the 200 EMA. In
fact, the 200 EMA is voted as the best forex indicator in a forex magazine and this
alone tells you how strong this indicator is.

If you plot the 200 EMA on your chart, you can often see the price being repelled
by it making it a very strong level of support and resistance.

As a trader, you can either trade the repulsion when the price hits the 200 EMA
for the first time. This is another indicator that I must have on my entire chart.

Introduction to Bollinger Bands

This is an indicator that is developed by John Bollinger primarily designed to measure

the volatility of the market.

The default setting of this indicator is as follow

Number of Periods: 20
Number of Standard Deviations: 2

This indicator basically consists of an upper and lower band, the upper band serves as a
resistance level while the lower band serves as a support level.

How to Use the Bollinger Bands

1) Measure the Volatility of Market

In order to measure the volatility of the market, you will make use of the width of
the Bollinger bands. When the market is very quiet or in consolidation mode, you
will find that the bands are very narrow and this is often known as Squeeze the
Bands.
When you see the Bollinger Bands wide apart, it is telling you that the market is
very volatile now.
 I will talk more about how to use this Bollinger Bands to trade breakout in the
chapter of Strategies.

2) As a support and resistance

Besides telling the volatility of the market, the Bollinger Bands can be used as a
level of support and resistance.

If you take a look at the upper and lower bands, you will find that the price tends
to get repelled by them and stay within the bands.

The upper band is used as a resistance level and the lower band is used as a
support level. In fact, you will see the price being repelled by the upper and
lower bands quite often.

Introduction to Stochastic Indicator

The stochastic indicator is a tool that is developed by George C. Lane. This indicator is
also known as an oscillator that is used to compare the current market price to the high
and low of certain period.
The Stochastic indicator is made up of 2 lines, %K and %D and there are basically 2
setting for this indicator. Below are the default settings of the fast and slow stochastic.

Fast Stochastic

Number of periods for %K :5

Number of periods for %D :5

Slow Stochastic

%K periods :5
%D slowing periods :3
%D periods :3

The fast stochastic is more sensitive and therefore produces more false signal which is
something that is undesirable in trading.

Therefore I love to use the slow stochastic as compared to the fast stochastic. Below is
a picture to give you a comparison between the fast and slow stochastic.

Can you see the fast stochastic looks more messy as compared to the slow
stochastic.

Regardless of which stochastic you have chosen, the way you read them stays the same.
In the stochastic indicator, you will find a line marking the 20 level and another line
marking the 80 level.

When the price goes above the 80 mark, it is telling you that the market is currently
overbought. Being overbought does not necessary means that the price is going to
reverse. There are times when the price will continue to stay above the 80 level for a
long period of time and this means that the market is in a strong uptrend.

If the price goes below the 20 mark, it is a sign that the market is currently oversold and
if it stays below the 20 mark for a long period of time, it is telling you that the market is
in a strong downtrend.

How to Use the Stochastic Indicator

1) Entry Signal

When using the stochastic indicator for entry, you will need to keep an eye on the
2 lines. Personally, if the %K crosses below the %D and then move out of the 80
mark, I will enter a SHORT (SELL) trade.
If the %K crosses above the %D line and eventually move out of the 20 mark, I
will enter a LONG (BUY) trade.
2) Exit Signal

The way you use the stochastic for exit is the same as entry. If you already have
entered a LONG (BUY) trade, you will exit your position when you see the
stochastic moving above the 80 mark and then move down.

If you had entered a SHORT (SELL) trade, you will exit your position when you
see the stochastic moving below the 20 mark and then move above it.

3) Sign of Reversal

To use this indicator to tell reversal, you will have to look out for divergence like
how you do it for MACD indicator.

When you see the stochastic making lower high while the market making higher
high. It is a sign of negative divergence which means that the price will move
down.

When you see the stochastic making higher low and the market making lower low,
this is a sign of positive divergence which means that the price will move up.
Note from Author:

After you have read this section, you can start to play around with these indicators on
your demo account. Try to familiarize yourself with these indicators so that you can use
them in your strategy later.
Important Candlestick Patterns You Must Know

Most forex indicators are lagging in nature as they are generated using the historical
data of the market. Therefore most of them are unable to tell you or advice you on the
coming price movement.

Therefore as a technical trader, we must learn how to look at the candlestick patterns
which is one of the reliable leading indicators. In this chapter, I shall dedicate sometime
to go through with you several reliable candlestick patterns that I personally love to use.

There are over hundred different candlestick patterns and it is very tedious to learn them
all. However I focus a lot on the below few candlestick patterns as I find them more
reliable for me.

First of all, you need to know that there are 2 main types of candlestick patterns,
continuation pattern and reversal pattern. The continuation pattern is a sign that the price
will most likely (not 100%) continues in its original direction. As for the reversal
patterns, it is a sign that the price will most likely (not 100%) reverse its direction.

Below are the patterns that you must learn in order to be able to predict the market
movement.

Continuation Pattern

Whenever you see the below patterns, you should look for chance to enter a trade in the
same direction as the trend before the pattern.

- Symmetrical Triangle

The symmetrical triangle is one that looks like the one below. Whenever you see
the formation of a symmetrical triangle, it is a sign that the market is in
consolidation. All you need to do is to wait for the price to break the symmetrical
triangle in the direction of the previous trend before you enter a trade.
From the picture below, you can see that the price is making a down move before it
forms the symmetrical triangle formation.
 After the price made a breakout at the bottom of the triangle, we can enter a SHORT
(SELL) trade to ride the continuation trend. If the price made an upward breakout,
you should forfeit this trade.

- Wedge

The wedge formation is a very special formation as it can be a continuation or

reversal patterns depending on how the wedge slopes itself.

When you see the price making a strong down move and then start to form a
wedge that slopes upward, it is a continuation pattern and therefore what you
should do is to wait for the price to break downward before you enter any trade.

From the picture above, you can see that the price is moving downward before it starts
to form the wedge. Since the wedge is sloping upwards, it is a continuation pattern and
you can see that the price actually moves down after it breaks the bottom of the wedge.

I will talk about reverse wedge later in the reversal candlestick pattern below and you
must make sure that you know how to differentiate both of them.
Reversal Pattern

Whenever you see the below reversal patterns after a strong trend, it is an indication
that the price is going to reverse soon. Therefore you should really spend some time
looking for the below reversal patterns on your chart so that you can identify them when
they occurs in your trading.

Below are 3 reversal candlestick patterns that I love to use.

- Head and Shoulder

The head and shoulder pattern consists of 1 head and 2 shoulders by the side.
When you are in an uptrend and you see the top head and shoulder pattern which
is in the shape of a letter M, it is a sign that the price is going to move down.

From the next picture, you can see the formation of a top head and shoulder
pattern. You can see that the head is higher than the two shoulders. At the 2 swing
lows below the head, you can join them to form a neckline.
You will only enter a trade when the price manages to break the neckline.

When you are in a down trend, you will see a W-shaped bottom head and shoulder
pattern which is a sign that the price is going to move up.
 The way you trade the bottom head and shoulder pattern is the same.

- Double Top/Bottom

The double top is an M-shaped pattern where the price tries to break the previous
high point. Similar to the head and shoulder pattern, you will need to draw the
neckline for the double top pattern and then wait for the price to break that line
before you enter a trade. The double top is often formed at the end of an up trend
and you will be looking to go SHORT (SELL) when the price breaks the neck
line.
As for double bottom, it is a W-shaped formation and it is often seen at the end of
a down trend. Therefore you will always enter a LONG (BUY) trade whenever
you see the formation of this double bottom.

The ideal double top or bottom is one that has almost the same peak or trough.
However in trading, such ideal pattern do not occurs too often. As long as the
peaks are almost the same, it is considered a double top and this also applies to
the double bottom pattern.

In the next picture, you can see the formation of a double bottom and you can also
see how much the price moves after it reverses. Therefore the double top or
bottom is good reversal patterns that I will recommend to my readers.
- Reverse Wedge

When you are in a downtrend and you see the formation of a wedge that is slanted
downward, you are actually seeing the formation of a falling wedge. The falling
wedge is a reversal candlestick pattern and you should be waiting for a breakout
on the upside before you enter a LONG (BUY) trade.

Similar when you are in an uptrend and you see the formation of a wedge that is
slanted upward, it is also a reversal candlestick pattern and you should wait for a
breakout on the downside before you enter a SHORT (SELL) trade.

For better view of this reverse wedge, you can take a look at the picture.
Note from Author:

Do spend sometime to identify these patterns on your trading chart. It is only through
practice that you can eventually identify them correctly when they occurs.
Support and Resistance
If you take a close look at your trading
chart, you will see that the price is moving
in waves and these waves are basically the
work of support and resistance. The support
is a level that tends to push the price
upward while the resistance is a level that
tends to push the price downward.
As a technical trader, we must be very clear
where the strong levels of support and
resistance are. In this guide, I shall be
teaching you more about support and
resistance so that you can identify them in
your chart and then use them in your
trading.
Swing High and Low
Swings high and low are the most commonly seen support and resistance but you have to
understand that not all swing high and low is equally powerful. First of all, let me go
through with you what exactly are swing high and low.

Swing high is an N-shaped formation which consists of 1 high candle and 2 candles
lower than it on both sides. A swing high is basically known as resistance.

Swing low is a V-shaped formation which consists of 1 low candle and 2 candles higher
than it on both sides. A swing low is basically known as support.
You need to realize that the deeper your N and V-shaped patterns, the stronger are your
swing high and low. The 2 pictures above are strong level of support and resistance as
the swings are very deep.

However we are not interested in all swing highs and lows when drawing a trend line,
we are only looking out for those that have more weightage as this will produce trend
line that is more significant. Below is the level of weightage for each formation

Power of Trend Line

When talking about support and resistance, we must always talk about something known
as the trend line. A trend line represents a supply and demand among traders. According
to Wikipedia, A trend line is a bounding line for the price movement of a security.

A support trend line is drawn by connecting several swing lows and a resistance trend
line is drawn by connecting several swing highs.

Example of Support Trend Line:

A resistance trend line is drawn by connecting several swing highs

Example of Resistance Trend Line:

Rules for Conventional Trend Line
The Best Trend Line Is One That Connects The Most Swing Highs or Lows

Once The Support Trend Line Is Broken, It Will Turn Into Resistance Trend Line
Once The Resistance Trend Line Is Broken, It Will Turn Into Support Trend Line

Below are the steps to drawing a proper trend line

Step 1: Identify major swing high and low

Step 2: For support trend line, connect all the major swing lows

Step 3: For resistance trend line, connect all the major swing highs
Past Support turns Resistance
Most of the time, the support or resistance is able to push the price up and down
respectively. However there are also times where the price will break the support or
resistance level. When this situation occurs, you need to realise that the

PAST SUPPORT HAS NOW TURNED INTO NEW RESISTANCE

When the price breaks an old support level, that exact level will now become the new
resistance level.
Now that the support has been broken, it has turned into a new resistance. You can see
that the price came back to retest the new resistance before moving down. This is what
we call past support turning to new resistance.

PAST RESISTANCE HAS NOW TURNED INTO NEW SUPPORT

When the price breaks the old resistance level, that exact level will now become the
new support level.
Note from Author:

I hope that you find this section on support and resistance useful for you. It is very
important for you to know how to draw a proper trend line as you will need them when
trading the 2 strategies that I share with you in this book.

Therefore spend sometime practicing how to draw a proper trend line on your chart
first.
2 Reliable Forex Strategies

I bet most of you must be eager to get to this section of this book where I am going to
share with you 2 working forex strategies that I am personally using.

However there is some stuff that I must straighten out with you before we precede to the
details about these 2 forex strategies.

1) No Holy Grail

First of all, I must inform you that there is no Holy Grail strategy in this world.
The problem with most new traders is they tend to look for a strategy that wins
100% of the time. That is exactly why they tend to skip from one course to another
trying to find one strategy that wins 100% of the time. But you have to accept the
fact that there is no such strategy available in the market.

Even the best trader makes some losing trades as losing is simply part of the
game. The key to making money in forex trading is not just about how many trades
you win. It depends on the risk reward ratio of your strategy. I will talk more
about risk reward ratio in the money management chapter of this book so that you
can focus on learning strategy that produces good risk reward ratio.

So if you cannot accept the fact that you will make losing trades at time, you better
give up on forex trading now. The faster for you to accept this fact, the faster you
will start to make money trading forex.

So what exactly makes a good strategy? As long as your strategy can win 60 to
70% of the time (Win 6 to 7 out of 10 trades) and has a good risk reward ratio (at
least 1:2), I can assure you that you will definitely make money every single
month without fail.

2) Start with Demo

It is always wise to start trading with a demo account after you learned a new
strategy. This is to prevent you from losing your hard earn money which is usually
the main reason why people give up on trading.

Some of you may think that you can start making money after learning a strategy
 but you do not realise that you have not perfected the skills to execute it well.
Therefore I often advice my readers to trade with a demo account first and only
move to trade live after you are able to make 3 consecutive months of profits with
your strategy.

3) Stick to it

Once you manage to learn and execute a strategy that makes you profits for 3
consecutive months, you MUST stick to it. Trust me; you do not need to have 5 to
10 different strategies to make money consistently in forex. You just need 1 that
really works and you will be able to make money for you and your family for the
rest of your life.

I hope that I have made myself clear and we shall begin our chapter on forex strategy
now.
Strategy 1: Break the Bands Strategy

You may be thinking that this strategy is something that you have read in some books or
courses that talk about the breakout of Bollinger Bands. However I am not someone who
is out to make sales from my book writing some simple stuff that you can find
elsewhere.

Unlike most books that tells you to enter a trade when the price breaks the Bollinger
Bands in a certain direction which usually ends up with a losing trade. I am going to
share with you something additional that can help you to avoid making losing trade.

Therefore I hope that you will pay special attention to this book as it contains
information that can help you to make extra income consistently from trading.

How It Works:

The breakout strategy is one that actually trades the sudden movement of the market after
a long period of sideway movement. If you take a look at the picture below, you can see
that there is a period of time where the price is making very small movement. This is
what we call period of consolidation.

Usually after a period of consolidation, you will see the price making a sudden big
movement in a particular direction and this is what we call the breakout. The
advantages of trading the breakout strategy are good risk reward ratio and the ease of
execution.
This is one strategy that I will recommend to new traders as it is simple to use and most
importantly is able to make money. Some of you may think that a good strategy is one
that is pretty sophisticated and therefore do not like to trade with simple strategy.
However if you really see how a professional trader trades, you will be amazed at how
simple their strategy is. So spend sometime to learn this strategy and try it on your demo
account first to see if you can execute it well.

Indicators Required:

- Bollinger Bands
- Trend Line

Let us take a look at the picture

In order for us to know whether the price is in a period of consolidation, we will have
to make use of the Bollinger Bands. When you see that the Bollinger Bands start to
change from wide to narrow, it is a sign of squeezing the Bands. However you do not
enter any trade here, you will have to wait for the narrow bands to be formed for a
period of time before you can conclude that this is a consolidation.
Once you have confirmed a consolidation, you will start to draw a trend channel for the
consolidating price. A trend channel must be parallel to each other and it is drawn by
connecting several swing lows or swing highs together.

I will usually draw a trend line by connecting several swing lows. What I do next is to
duplicate that trend line and then move it to join several swing highs.

Next you will wait for the price to break one of the trend lines before deciding what
direction to trade.
Once the price breaks one of the trend lines, you will enter a trade at the start of the next
candle. In the trade above, you can see that the price breaks the trend line and then
moves back up and then moves down 50 pips which is the profit we make from the
trade.

Personally I often set 25 pips stop loss and 50 pips target profit for the breakout trade
and therefore this strategy has risk reward ratio of

25: 50

1: 2

However the problem with this strategy is it tends to produce a lot of fake out
movement which leads new traders to get into losing trades.

Therefore I am going to share with you something that I observed after years of trading
and this observation is what makes me win most of the time using this strategy. (READ
CAREFULLY)

When trading the breakout strategy, you will have to look at the previous price
movement. If the price is moving up before the period of consolidation, I will only trade
when the price breaks in the direction of the previous trend which is UP.
I will never enter a trade that breaks in the opposite direction of the previous trend and
this is what makes me profitable with this strategy.

If you take a look at the picture above, you can see that the price actually breaks below
the trend line first and for me I will forfeit this trade as it is most likely to be a fake out
trade. It is because the price is moving upward before the consolidation.
True enough, the price moves down 16 pips and then moves up sharply for 50 pips.
Strategy 2: EMA Crossover Strategy

How It Works:

The EMA crossover strategy is in fact a kind of reversal strategy that I have figured out
over the years. This is a strategy that has a pretty good risk reward ratio and therefore is
one that I will recommend you to use in your trading.

Indicators Required:

- 20, 50 and 200 EMA

The first thing we will do in this strategy is to identify the trend and this is done by using
the 200 EMA. What we are looking at is the direction and gradient of this indicator. We
will only trade when the market has been on one side of the 200 EMA for quite some
time.

Once you have verified that the price has been on one side of the 200 EMA for some
time, you will wait for the 20 and 50 EMAs to cross to the other side of the 200 EMA.
In the next picture, you can see that the market has been on the top side of the 200 EMA
for quite some time.

Next you will wait for the price to retrace back to hit the zone between the 2 faster
EMAs.
Once you see a candle moving into the zone between the 2 EMAs, you will enter a
SHORT (SELL) TRADE at the start of the next candle.

You will then place a stop loss of 25 pips and target profit of 50 pips for this trade and
it will give you a risk reward ratio of 1:2.

Note from Author:

I hope that you find these 2 strategies useful for you. Do note that these 2 strategies can
be applied to any time frame and any currency pairs. However I will suggest you to use
these 2 strategies on the 15 minutes chart and start trading with just the EURUSD pair.
Once you are able to execute these strategies profitably, you can then extend it to other
time frame and other currency pairs.

However you must spend some time to practice these 2 strategies on a demo account
before you start to trade live with it.

IMPORTANT NOTICE:
To help you better understand this Break the Bands Strategy, I have created a video
tutorial course for those of you who wants to hear me personally explain this strategy
and see how I trade it. This course comes with over 15 and constantly increasing trading
so that you can see how I trade it and what are the things I usually look for when trading
this strategy.

Click Here For The Video Tutorial

Money Management

The money management forms the most important role in your whole trading career.
With poor management, you will be wiped out all your money very soon. Therefore I
will like to dedicate this chapter to talk about money management. The whole money
management is divided into 2 main areas, Risk Reward Ratio and Trade Management.

First of all, I will like to talk about risk reward ratio as it is something that I often talk
about to new traders.

Risk reward ratio refers to the amount of risk versus reward you are taking in each
trade. For example, if you place a stop loss (RISK) of 20 pips and target profit
(REWARD) of 40 pips for each trade, you have a risk reward ratio of 1: 2.

With a risk reward ratio of 1: 2, you will be able to make profit consistently every
month even when your strategy only produced 50% winning percentage.

Let us do a calculation based on 10 trades with the above settings.

With a 50% winning percentage, it means that you are going to win 5 and lose 5 trades.

Amount of Profits = 5 x 40 = 200 pips

Amount of Losses = 5 x 20 = 100 pips.

Even with 50% winning percentage, you are still making 100 pips every month.
Therefore the key to profitable trading is the risk reward of your strategy and not the
winning percentage. Therefore stop searching for a strategy that wins 100% of the time
as it does not exist and focus more on improving the risk reward ratio of your strategy.
My personal advice to you is to stick to one strategy that has a risk reward ratio of at
least 1: 2.

Trade Management refers to how you manage your trades every time. As a professional
trader, we should always be looking for ways to protect our capital. New traders are
very concerned about their profit while professional traders are very concerned about
their capital.

You should make it a habit to shift your stop loss to breakeven when the price has
moved certain pips in your favour. This is to ensure that your capital is protected even
when the price starts to reverse later on.

Personally, I will shift my stop loss to breakeven when the price is 30 pips in my
favour. However it does not mean that you should also shift to breakeven when the price
is 30 pips in your favour. You need to practice and observe how the trades work and
then decide on when you should start to shift your stop loss to breakeven.
Conclusion
This Effective Guide to Forex Trading has come to an end and I hope that you find this
book useful for you. It took me quite some time to finish writing this book and I hope
that you will practice what I have taught you in this book as it will definitely be very
useful for your trading.

If you do not have any working strategy on hand to trade with, the 2 strategies taught in
this book are great and you should spend time practicing the 2 strategies that I have
taught you so that you can start to make money from trading forex soon.

This book comes with a FREE lifetime update and all you need to do is to click on the
link below to sign up for the free update.

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If you are interested to learn another money making strategy from me, you can
take a look this “Forex Piggyback Strategy” below.
For more forex trading tips, you can visit my blog at