Cornerstones For FOREXSuccess P2

EBOOK
Finding Your
Cornerstones for
Foreign Currency
Exchange Trading
Success
2019
1 1-407-740-0900 • MarketTraders.com
TA BLE OF CON T EN T S
Overview: Why is the Foundation Important? 1
Forex Basics: Understanding the Forex Market 2
Japanese Candlesticks: The Sign Language of the Market 5
Trends & Analysis of Trends: Finding Direction in the Market 10
Recap 18
BONUS Trading Formula: 5 Steps for Successfully Trading the Market 19
1-407-740-0900 • MarketTraders.com
OV ERV IE W
Why is the Foundation Important?

Benefits to Forex trader (how does it
Like any good building, sculpture, or impact trader success?)
program, the foundation sets the tone
for future success. If the foundation Every trading strategy ever created is
is poor, anything built upon it will designed with three things in mind to
crumble. This is also true for trading. help traders:
Traders without knowledge or proper
understanding of the foundational 1. Direction – Where the market is
elements of trading end up lost in the moving
market or with strategies that, while 2. Entry – Where to “get in”
successful in theory, may not have 3. Exit – Where to “get out”
enough knowledge to apply them to
the live market; either could lead to These three secrets can take a trader
losing money. A strong foundation is the from knowing absolutely nothing about
means to build success. the market to placing trades:
1. Forex Basics: Understanding How the

the Forex Market Works
2. Japanese Candlesticks: The Sign
Language of the Market
3. Trends & Analysis of Trends: Finding
Direction in the Market
F OR E X B A SIC S: UNDER S TA NDING HOW T HE
F OR E X M A R K E T WOR K S
Understanding the Forex market and

how it works provides insight to how In this section the
market moves and how you can enter and
exit the market. ßß A quick overview of the Forex market
including the best times to trade
ßß Spotting market movements faster
and more accurately
ßß Getting in and out of the market while
limiting risk
Quick Overview: What is the foreign currency exchange (Forex) market?
The Forex market is comprised of 4,500 banks worldwide. It’s open 24 hours a day, five and
a half days per week. Trading sessions start on Sundays at 5 p.m. Eastern Time and end on
Friday at 5 p.m. ET. This doesn’t mean everyone’s trades close out on Friday; positions can roll
from one week into the next. However, a lot of traders do choose to close out their positions
and look to re-enter the market Sunday evening.
Three most popular sessions to trade:
ćć London session 2 a.m. ET - 11 a.m. ET
ćć U.S. session 8 a.m. ET - 5 p.m. ET
ćć Asian session 5 p.m. ET - 6 a.m. ET
The most volume occurs during the London session, which also includes banking hours for
most of Europe as well. Traders who are most active, such as scalpers and day traders, tend to
trade this session so they can capture their profits quickly and be done trading for the day.
The Asian session usually has the lowest volatility and volume, but plays a large role in the
market and is a great chance to see when news is affecting those markets. This session time
includes most of East Asia (China, Japan, etc) along with Australia and New Zealand. It’s also a
good time to look at what’s setting up for the London session and for traders to analyze the
market while movement is lower.
Charting Tools: Spotting market movements faster and more accurately
Charting platforms and technology were designed to make your life easier. Charting tools allow
you to place trades directly to your broker and provide tools to speed up your analysis, as well
as simple enough to learn and utilize on a daily basis.
Our preferred platform at MTI is SmartTrader. There are different levels of access, but even
basic users can have a demo account, with access to its proprietary SmartTools that make
analysis faster and easier, with just a click of a button. SmartTrader users also get a built-in
demo account, so you can take your time to find the right broker for you.
Types of orders: Getting in and out of the market
One of the things that traders really need to understand is how to get in and out of the market.
Not only how, but the different ways it can happen to improve success and limit your risk. You
instruct your broker to make a trade by placing an order. There are always going to be three
orders whenever using a trading strategy: one order for entry and two orders for exit.
Entry order types
Here are some of the ways to enter the market:
ćć Market order – This is an instruction to enter the market right now, buying or selling, at the
current market price.
ćć Pending order – This is an instruction to enter the market in the future, when the price of a
currency pair reaches a predetermined price of the trader’s choosing.
Exit order types
Here are some of the ways to exit the market:
ćć Limit order – Similar to a pending limit order for entry, traders use a limit order for taking
profit. They believe and understand that when the market hits a certain target price, it will
start to retrace and then look to re-enter the market after capturing some profit.
ćć Stop-loss order – Similar to a pending order for entry, traders use a stop-loss order for
protecting their capital. Where they set the stop loss, that’s where the trader is saying, “If
the market moves against me this much, close the trade.”
See a live market demonstration showing you the Forex trading

opportunities currently available.
SHOW ME A LIVE DEMO
J A PA NE SE C A NDLE S T ICK S: T HE SIGN L A NGUAGE
OF T HE M A R K E T
A candlestick depicts the battle between the

bulls (buyers) and the bears (sellers), In this section
measuring price over a given period
of time. With your knowledge ßß What can candlesticks tell us? of
candlesticks, you’ll have the upper hand ßß Spotting common candlestick
determining optimal entry and exit points. formations to make smarter decisions
What can a candlestick tell us?
Candlesticks come in a variety of shapes and sizes and can show “decision” or “indecision”
in the market based on their shape. The common aspects of Japanese candlesticks are their
“bodies,” the measuring from the opening price to the closing price during that time period;
and their “wicks,” or “shadows,” measuring from the high price to the low price during that time
period.
Here we have two candlesticks. These are considered full-bodied -- like a fine wine -- because
the body is much larger than the wicks. That means the bulls (buyers), wanting the market
to go up, or the bears (sellers), wanting the market to go down, were in control for that time
period.
TYPES OF CANDLESTICKS
Open
BEARISH BULLISH
Long ﬁlled candlesticks Long hollow candlesticks
indicate that the Bears indicate that the Bulls
controlled trading for Close

controlled trading for
Close
most of the time. most of the time. Note: Most default charting programs
will have the bullish (or upward) candles
be green or hollow, while the bearish (or
Open
downward) candles will be red or navy.
OF T HE M A R K E T
Spotting candlestick formations
When Japanese candlesticks are grouped together, they can produce candlestick formations.
These formations can tell the trader that the market is going to change direction. There are five
major bullish formations that we pay attention to, although less impactful formations also exist
in the market.
Bullish Formations:
Opening price
of the bearish
candle BULLISH
Buy at the
opening of the
SHOOTING STAR
next candle.
When you see this: Buy in the direction of the trend
at the opening of the next candle or when it meets
the criteria of the Bullish Shooting Star.
Protective Stop Loss Order 10 pips below the low
Opening price Buy at the

of the bearish opening of the
candle next candle. BULLISH
Close of
MORNING STAR
the Bullish
candle When you see this: BUY in the direction of the trend
must be
beyond a at the opening of the next candle or when it meets
60% u-turn.
the criteria of the Bullish Morning Star.
Buy at the opening

BULLISH
of the next candle. ENGULFING CANDLE
After the Bullish Engulfing Candle appears in the
direction of the trend, BUY at the opening of
the next candle with a protective stop loss order
Protective Stop Loss Order 10 pips below the low approximately 10 pips beyond the lows of the wicks.
OF T HE M A R K E T
Bullish Formations:
Buy at the opening

of the next candle.
BULLISH
60%
Close of the
bullish candle
PIERCING LINE
must be When you see this: BUY in the direction of the trend
beyond a 60%
u-turn of the at the opening of the next candle or when it meets
bearish
candle. the criteria of the Bullish Piercing Line.
Long Wicks Buy at the

Small opening of the BULLISH
Bodies next candle.
TWEEZER BOTTOM
Wick min. 60%
When you see this: BUY in the direction of the trend
the criteria of the Tweezer Bottom.

SHOW ME A LIVE DEMO
OF T HE M A R K E T
Spotting candlestick formations
When Japanese candlesticks are grouped together, they can produce candlestick formations.
These formations can tell the trader that the market is going to change direction. There are five
major bearish formations that we pay attention to, although less impactful formations also
exist in the market.
Bearish Formations:
Protective Stop Loss Order 15 pips above the high
BEARISH
SHOOTING STAR
When you see this: SELL in the direction of the trend
Opening Sell at the
price
of the
opening
of the
the criteria of the Bearish Shooting Star.
bullish next
candle candle.
Close of the BEARISH

EVENING STAR
bearish
candle must
be beyond a
60% u-turn. When you see this: SELL in the direction of the trend
Opening
price of the Sell at the opening the criteria of the Bearish Evening Star.
bullish candle of the next candle.

BEARISH
ENGULFING CANDLE
When you see this: After the Engulfing Bearish
Candle appears in the direction of the trend, SELL at
the opening of the next candle with a protective stop
Sell at the
opening of the
loss order approximately 15 pips beyond the HIGHS
next candle. of the wicks.
OF T HE M A R K E T
Bearish Formations:

Close of the
bearish BEARISH
candle must be
beyond a 60% DARK CLOUD COVER
u-turn of the
bullish candle. When you see this: SELL in the direction of the
60% trend at the opening of the next candle or when it
Opening
Sell at the opening
meets the criteria of the Bearish Dark Cloud Cover
price of the
bullish candle of the next candle.

BEARISH
Long
Wicks
Wick min. 60%
TWEEZER TOP
Small
Bodies
When you see this: After you have two candles that
have met the criteria of a Tweezer Top, SELL at the
opening of the next candle with a protective stop
Sell at the opening loss order approximately 15 pips beyond the highs
of the next candle.
of the wicks.

SHOW ME A LIVE DEMO
T R ENDS & A N A LYSI S OF T R ENDS
The market moves in waves, building

higher highs with higher lows (buyers), In this section or
or reaching lower lows with lower highs
(sellers). These waves reveal where the ßß Identifying trends and patterns in the
market is moving and for how long. market using fractals and ABCDs If
When the market waves in one direction, ßß Using trendlines to determine trend it
is considered a trend. Movements within direction and market entry the
trends can help you find higher-quality
entry and exit points.
T R END A N A LYSI S
Fractals
The first two concepts for a trader to understand when learning how to analyze a trend are
Fractal Highs and Fractal Lows, and ABCD Swings.
A Fractal High is when there are two candles to the left and two candles to the right that are
lower than the center wick high. This shows the market reached a point of exhaustion and then
moved in the opposite direction. A Fractal low is when you have two candles to the left and two
candles to the right that are higher than the center wick low. These fractals are used to identify
the trends within the market. Each fractal can be identified with an A, B, C, or D for a trend.
F R AC TA L H I G H
F R AC TA L LO W
Combining Fractals with ABCD’s
Now that we can identify fractals in the market, how do we find the ABCD’s in an ABCD Swing?
Here’s what to do:
If the market is making higher highs and higher lows, find the lowest low on your chart and
place your A. Then find the next Fractal High and place your B. Find the next Fractal Low and
place your C and then the next Fractal High for your D.
A to B creates what is called an AB Boundary, this means the market will retrace or move in the
opposite direction inside of this area. A short-term move, it won’t mean trend is truly changing
direction. “If the market does not break the A, the market will continue to go your way.” The “C”
is going to be the lowest low inside the AB Boundary, this can be changed as the market waves.
Once the C has been established, look to predict where the D will be so you find the end of this
ABCD Swing.
F R AC TA L H I G H W I T H A B C D ’ S
F R AC TA L LO W W I T H A B C D ’ S
Once you have your initial ABCD’s laid out, you can continue charting forward -- in your next
set, C becomes the new A and D becomes the new B as you chart the new C and D points. Keep
doing this until you reach the live market or the trend reverses.
U P A B C D : R E PL AC E C W I T H A A N D D W I T H B
D O W N A B C D : R E PL AC E C W I T H A A N D D W I T H B
Types of Trendlines
Trendlines also help you:
ćć Locate buy and sell zones

ćć Determine whether the market is going up or down
ćć Identify trades with a higher winning percentage
Uptrend Lines
Uptrend lines are trend lines that, you guessed it, follow an upward trend in the waves.
There are primarily 3 uptrend lines formed in an uptrend:
1. An Inner trendline
2. An Outer trendline
3. A Long-term trendline
Draw uptrend lines across the lows of support, connecting A’s and C’s after a new high has
been made.
UP TRENDLINE CHART
U P T R E N D L I N E D R AW I N G
Downtrend Lines
Downtrend lines are trend lines that, you guessed it, follow a downward trend in the waves.
There are primarily 3 downtrend lines formed in a downtrend:
1. An Inner trendline
2. An Outer trendline
3. A Long-term trendline
Draw downtrend lines across the highs of resistance, connecting A’s and C’s after a new low
has been made.
DOWN TRENDLINE CHART

D O W N T R E N D L I N E D R AW I N G
T R END LINE S
Counter Trendlines
So if we use trendlines to find the trend direction and to see how the trend continues, how can
we use them for market entry? One way we do this is by drawing Counter Trendlines.
Counter Trendlines are drawn the same way as normal trendlines, but against the trend.
When the market is moving in an uptrend, you can draw counter trendlines across the tops of
the retracement. In a downtrend, you can draw counter trendlines across the bottoms of the
retracement.
However, there are some rules as to what makes a proper counter trendline and what
constitutes a counter trendline break. In order for a counter trend to be established, you must
have at least three candles going in the opposite direction of the trend.
Multiple Points of Confluence
Remember: A strong foundation is the means to build success. Your knowledge of how the
Forex market works, the sign language of the market and trend analysis could create the
winning combo for your next trade!
Note: A counter trendline is broken if 75% of a candle CLOSES beyond

the counter trendline. That is your entry point at the opening of the next
candle (or if you see a Candlestick Formation).
Counter Trendlines Examples:
COUN T ER T R ENDLINE S UP T R END
COUN T ER T R ENDLINE S DOW N T R END
R EC A P
ćć A good trading foundation will provide you the skill set to determine market direction,
where to get into the market, and where to get out.
ćć 3 cornerstones for trading success: (1) knowing how the market works, (2) Japanese
candlesticks and (3) trendlines.
ćć Charting tools allow you to place trades directly to your broker and provide tools to speed
up your analysis. Create your SmartTrader account today FREE.
ćć Candlesticks help measure price over a given period of time; while their formations tell
traders when the market is changing direction.
ćć As the markets move in waves, traders can identify market direction by using charting
methods such as fractals, ABCD and trend lines.
BONUS T R A DING F OR MUL A : FI V E S T EP S F OR
SUCCE S SFULLY T R A DING T HE M A R K E T
1. Educate yourself: Learn how the market works, how it moves, and why. The foundation
you’re building here will help propel you to higher heights and help you understand where
you need to grow, while we provide you the path to that growth.
2. Choose the right broker for you: Know the difference between a good broker and a great
broker. Understanding regulations and what you desire as a trader or investor will help
you determine the broker that is best for you. Technology has changed the market -- and
getting connected with a quality broker makes the trader’s life much easier.
3. Plan your trade and trade your plan: A strong trading plan will move you from disaster to
master. If you do not plan your trade, how will you know if what you’re doing is successful?
The successful trader plans their trade before entering the market, while the unsuccessful
trader enters the market and then tries to figure it out.
4. Monitor your trade and exit for profit: If a trade does not meet your criteria, pass on
the trade. Understanding your strategy and tracking your results will help you understand
when it’s time to let your profits run and when to cut your losses.
5. Spatial and emotional intelligence: Learning to read a chart and find a trade is only one
piece of the trading puzzle. Trading is 10% technical and 90% emotional. Understanding
your emotional intelligence will help you conquer your pitfalls as you learn to trade.
SHOW ME A LIVE DEMO
www.MarketTraders.com
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results.
The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your
investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and
therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and
seek advice from an independent financial advisor if you have any doubts.
Any statements regarding income, whether expressed or implied, do NOT represent a guarantee. No representation is being made that any account will
or is likely to achieve profits or losses similar to what may be shown. Any opinions, news, research, analysis, prices, or other information contained in this
documentation is provided as general market commentary, from the perspective of the individual analyst as noted on the documentation, for educational
purposes only, and does not constitute investment advice or a solicitation to buy or sell any Forex contract or securities of any type. Analysts opinions may
vary. MTI will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from use of or
reliance on such information.

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EBOOK

Overview: Why is the Foundation Important? 1

Forex Basics: Understanding the Forex Market 2

Japanese Candlesticks: The Sign Language of the Market 5

Trends & Analysis of Trends: Finding Direction in the Market 10

BONUS Trading Formula: 5 Steps for Successfully Trading the Market 19

Why is the Foundation Important?

1. Forex Basics: Understanding How the

Understanding the Forex market and

Quick Overview: What is the foreign currency exchange (Forex) market?

Three most popular sessions to trade:

ćć London session 2 a.m. ET - 11 a.m. ET

ćć U.S. session 8 a.m. ET - 5 p.m. ET

ćć Asian session 5 p.m. ET - 6 a.m. ET

Charting Tools: Spotting market movements faster and more accurately

Types of orders: Getting in and out of the market

Entry order types

Here are some of the ways to enter the market:

Exit order types

Here are some of the ways to exit the market:

See a live market demonstration showing you the Forex trading

SHOW ME A LIVE DEMO

A candlestick depicts the battle between the

What can a candlestick tell us?

indicate that the Bears indicate that the Bulls

controlled trading for Close

Spotting candlestick formations

Opening price Buy at the

Buy at the opening

Buy at the opening

Long Wicks Buy at the

See a live market demonstration showing you the Forex trading

SHOW ME A LIVE DEMO

Spotting candlestick formations

Protective Stop Loss Order 15 pips above the high

Protective Stop Loss Order 15 pips above the high

Close of the BEARISH

Protective Stop Loss Order 15 pips above the high

Protective Stop Loss Order 15 pips above the high

Protective Stop Loss Order 15 pips above the high

See a live market demonstration showing you the Forex trading

SHOW ME A LIVE DEMO

The market moves in waves, building

Combining Fractals with ABCD’s

Here’s what to do:

Trendlines also help you:

ćć Locate buy and sell zones

There are primarily 3 uptrend lines formed in an uptrend:

There are primarily 3 downtrend lines formed in a downtrend:

DOWN TRENDLINE CHART

Multiple Points of Confluence

Note: A counter trendline is broken if 75% of a candle CLOSES beyond

Counter Trendlines Examples:

COUN T ER T R ENDLINE S UP T R END

COUN T ER T R ENDLINE S DOW N T R END

SHOW ME A LIVE DEMO

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