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Foreword
I, as the author of this book will tell you right now that we
are all on a journey, no matter how far in one is compared
to the other. In life, it is best to go through this journey
together, so this books aims to invite all my brothers and
sisters into this journey, of finding truth. This is the life of a
fisherman, one who sits patiently at the end of the river
with his hands open, to recieve the fish.
The reason you have decided to read this book is because
you are in the persuit of financial knowledge, and I tell you,
before you start, you must shift your entire paradigm. Your
whole life has been built around a lie, and dogmas, which
dont allow you to truly achieve your financial goals. The
truth is that school, music, hollywood, sports, and the
status quo has told you that you must work hard for your
money, when the truth is, you must think outside the box,
and think critically. As we go on, you will find that this
trading system is one of the most powerful systems in the
entire world, which only a secluded minority of traders are
using, contrast to the average trader, who trades with
patterns, or so called "institutional orderflow."
Before we begin the process of learning, i would like to
share with you a vision, of the fiat money which currently
circulates around our world. The ultimate truth is, that
money is but fish in a river. The fish in the river are used,
and consumed, by none other than us humans. There are 5
types of humans. The first type, are the humans at the very
back of the river. These types of people are on the verge of
drowning, and barely see any fish that is left for them.
These are the losers of society, the homeless, the drunken,
the addicts. Then there are those who are in the middle of
the river, who live normally, and who are comfortable with
the mediocre. These are the middle class of society, the
ones who have an office job, who work a 9-5, and recieve a
normal paycheck which sustains their nececities. Though
they are stable, they still are not free, and have to chase the
fish of the river. The third type of human, are those who
are at the very front of the river, they have the most access
to the fish, and live a life where chasing them is easy.
These are the prestigious. These are the Harvard
graduates, the people with Doctorates and important
degrees, these are the athletes, all the way from the NBA,
to FIFA. These are the singers and the celebrities. They
have a lot of fish, but yet, they are not free, and must
continue swimming along the narrow river, chasing after
the fish. Then, there are two which the majority dont know
about. Everyone is too busy chasing fish, that these two
remain unoticable amongst the majority of the public. The
fourh type of humans, are the Dealers. These are those
humans which control the entire river. these people own,
and feed the fish. They can make the the fish go, and move,
to wherever they wish. These are the governors in federal
positions at central banks,
these are managers of massive multi-national
organizations, such as Blackrock, and the Bank of
International Settlements. And finally, the fifth type of
person. The fisherman. Instead of chasing the fish, the
fisherman leaves the river, and heads to the lake. Once
they are there, all they have to do, is hold their hands out,
and the fish coming from the river, will naturally fall onto
their hands.
SL
TP
Now, these will come later into use, and will allow you to
visually see your analysis, on the charts. You will
understand how they should be used as you will naturally
see the analysis in the photos that will come later.
As you can already guess, you have drawing tools on the
tool bar on the left side of the screen, and you may resort
back to it whenever you may need.
wick
wick
Then, you can decide how much you want to risk per trade.
I reccomend between 1% to 3%
After that hit the Buy, or Sell
button on the bottom. Now,
whenever price gets to the level
of your entry (the level between
the green, and red area), the
trade will count you in.
Technical Analysis
Technical analysis is studying the previous action that
price had, and reading the story that a chart (most
commonly the candlestick chart) tells. This, for most
traders, and for most trading system, is not the most
important part, because it is subjective, and will have a
win-rate between 40-70%
Risk management
Risk management is all about understanding how you
manage your positions and your trading. The majority of
traders do not have a plan for when they will trade, how
many trades they are allowed to trade, how much % they
are going to trade per position, and how much they are
willing to lose. If you do not have any of these things in
mind, then it will become impossible for you to become
profitable. Imagine risking 30% of your account on a single
trade? ridiculous, and it is not sustainable for the long run,
or even for the short run.
Psychology
When I first heard about psychology, my immediate
reaction was that this was gay, and that there was no need
to worry about such problems as the masculine person I
am. The truth is however, the reason 92% of traders are
unprofitable (yes, its a real statistic), is because they are
not able to manage their emotions, when it comes to
trading.
Love your family, feel things with those close to you, have a
little bit of rage when your friend beats you in a
videogame, but NEVER show ANY emotions towards the
markets.
Fundamental Analysis
Fundamental analysis is the skill of analysing markets
from statistics and projectsions of news reports and
documents. This analysis is not looking at the historical
action of the assets price, but rather analysing reports
about an entire economy. An example would be, reading
the US consumer price index report, to make desicions on
the state of the US dollar. Depending on the strategy,
Fundamental, and Technical analysis will vary in
importance, and for us, Fundamental analysis is not the
most crucial, but still something that must be taken into
consideration, when knowing the general direction of the
markets.
File 4
Trends
“The trend is your friend.”-Brad goh or some other trading
guru
Bearish
When we refer to bearishness, we are reffering to a market
that is going DOWN. Again, think about how a bear strikes
in a fight. It swings its claws from up in the air, DOWN at
the opponent.
This is an example of
a bullish trend. How
do we Identify it?
Not only is it generally
just going up, but also,
Notice that the highs
are being broken,
meaning that price is
constantly pushing
above the areas which
created slight selling
moves. (because after the high, there is always a slight
downward move.)
Range
Range
Then there is the 3rd option, but this isn't really useful for
us to identify general trend, or at least as a beginner. This
will be more relevant in the more advanced volumes,
where liquidity will be a big topic, but for now don't worry
about this scenario, and don't count it as a general trend
indicator.
The 3rd scenario is the grab, and this would be one move,
immediately followed by the opposite move. For example,
a rally immediately followed by a drop, or a drop
immediately followed by a rally. These can be counted as
candles with extremely long wicks, as these wicks indicate
price going somewhere and immediately heading into the
other direction, all in the timespan of one candle.
Again, let's focus on the first two, and worry about this
third one later.
Now before we go onto the next chapter, In order for you
to practice, and get better, I want you to do the following
AOI
As you can see, the area of interest (AOI) is an area in
which price constantly reacts off of. These are important
areas that we want to see setups in. If we can see price
entering one of these zones, we can look to get in to catch
either a continuation, or a reversal. Notice how in this
example this area has price tap in, and then reverse, or
continue, 8 times? Marking out these areas will allow you
to know where price bounces off of.
92% of traders
Le bank
Le bank
92% of traders
Le bank
A double top!
Lets sell!
Two things you must remember going forward
Accumulation
the accumulation phase creates BUY, or SELL orders
(usually both), typically within a range/consolidation, that
intice liquidity providers, and also the 92% of tradersto
buy and sell.
Now, since it was news, that also means that not every
AMD model will have such an intense, powerful
movement, but still if we look at other examples such as
this one.
Once again, be
reminded that not
every single AMD, or
any of the previous
concepts, will be a
perfect texbook setup,
and that every single
moment in the
markets is UNIQUE, as
a FACT.
In this example, price created the
range/consolidation/accumulation, but then look how
liquidity comes into play.
XAUUSD
NZDJPY
EURGBP
The thing about the london session as you will later on see,
is that there is a time where there is an overlap between
the london banks being active, and the New York banks
being active.
New York Session 2pm - 12am UTC+1
The NY session, ofter reguarded as the distribution of the
day, is of course, you guessed it, more volatile in pairs with
the USD (United Stated Dollar), or CAD (Canadian
Dollars).
XAUUSD
NZDJPY
EURGBP
EURGBP
XAUUSD
XAUUSD
Some closing notes about the timings are that you must
chose to pick the best assets in accordance to your
timezone. Since where i live, it is UTC+1, i can trade both
London, and NY with ease, and therefore trade both
GBPUSD, and XAUUSD.
You can either simplify and use less time, or you can trade
with more noise and try to get smaller trades that give the
same amount of money, but last 5 to 30 minutes.
Thank you for reading this far, and may this have boosted
your knowledge, and confidence in the markets.