Learn FX Courses

FX is the largest financial trading market in the world where $7.2 trillion is traded every day. Traders invest in the market popularly known as Forex for speculation purposes. Traders are attracted to forex due to the following explanations:

Leverage - leverage means that traders can make more money in forex by investing little of their own capital. This is because traders can borrow funds to trade with from their forex broker using leverage.

Liquidity - The fact that forex is the largest financial trading market in the world means that there are very many traders trading the market at any given time of day or night during the market week. The fact that there are many traders trading on this market make the market a very liquid market meaning one can open & close trade within a few seconds.

Low Transaction Cost - Because in forex there are many traders trading at any one given time means that trade costs are lower due to this big volume of trades taking place in the trading market. The only transaction cost paid by the trader is the spreads; no other cost is paid by the traders. The spread is also only when a trader opens a trade: therefore if a trader does not trade then they don't pay any cost.

This guide presents the various forex education courses that technical traders or traders that want to learn analysis can learn from. After traders have learned the basics of forex it is then time to learn more about technical analysis topics that they can use to trade with.

The forex analysis lessons can guide beginners on how to study the various analysis concepts.

Basics of Technical Analysis

Candle Charts

For technical traders the basic analysis tool that they use is the chart. There are 3 types of charts: line charts, bar charts and candle charts. The type of chart most often used by traders is the candle chart. This is because the candle chart has a visually appealing format which clearly represents the movement of prices, by displaying different colors for different movements; that blue color when prices close higher than where they opened or red colour that represents when prices close lower than where they open. In addition these candles show the distance between the open & close price and this forms the body of the candlestick. This body of the candlestick is looks similar to the wax part of a real candlestick. The highest point of the price will be plotted with what as known as a shadow, the shadow is a thin poking line that is drawn above the candle & it looks very similar to the wick of a real candlestick. There is also another shadow drawn below the candlesticks & this represents the lowest point of the price.

The information plotted by the candlesticks is known as OHCL - which represents Opening price, High, Low and Closing price.

Japanese candlesticks were developed and created in Japan by a traditional and famous rice trader that used to trade futures, his name was Homma Munehisa, he later moved to trading the Tokyo exchange market that was in 18^th Century and he made a fortune trading the Tokyo exchange market using these candlesticks: He is said to have made over a 100 consecutive winning trade transactions.

In addition to showing the graphical representations of price traders also use candlestick patterns to gauge & determine the momentum of the price movement. Traders also study these candle patterns so as to learn how to interpret and signals from the various candle patterns. Traders wanting to about the various candlesticks patterns can learn from our forex section under the analysis topics, the various candle patterns used to trade Forex are:

1.Long & short Candles

2.Spinning Tops and Doji Candles

3.Hammer Candle-stick Setup & Hanging Man Candlestick Pattern Candles

4.Inverted Hammer Candlestick Setup & Shooting Star Candlestick Setup Candles

5.Piercing Line Candle Setup & Dark Cloud Cover Candlestick Setup Candles

6.Morning Star Candlestick Sticks, Evening Star Candles & Engulfing Candlesticks Patterns

Support and Resistance Levels

Some traders also refer to these levels as support and resistance lines. The concepts of support and resistance levels refers to price zones where it's difficult for the price break through & move beyond these levels.

At these levels traders are likely to perceive the price of the forex currency pair as being cheap or as being expensive.

Support

Support prohibits the price of an asset from getting pushed downwards. Support areas are therefore regarded as the floor because these price points prevent and prohibit the market from moving prices downward past a certain point.

Resistance

Resistance stops the price of an asset from getting pushed upwards. Resistance levels are hence regarded as the ceiling because these price points prevent and prohibit the market from moving prices up-ward.

Therefore, these levels might be used by the trader to determine where to open trades at the points where there is a high risk reward ratio. For example a trader may open a buy trade at a support zone and place a stop loss a couple of pips below that point. The trader buys at this point/level because they perceive the price to be cheap. A trader may open a sell trade position at a resistance zone and place a stop loss a few pips above the resistance zone. The trader sells at this point because they perceive that at that point the price is very expensive and hence there will be less people willing to buy that currency because the price is very expensive and hence the price is likely to start moving down soon rather than continue to move upward.

FX Trend-Lines

TrendLines are used to determine the general direction of the market.

Sometimes support and resistances are formed diagonally on a similar way like a stair-case. This forms a trend, a trend is a sustained movement in one direction either upward or downwards.

A trend-line depicts these points of support & resistance for price.

Trend-line is an aspect of trading analysis that uses line studies to try & predict where price will move next.

A trend-line is a straight diagonal line that connects two or more price points & then extends into the future to act as line of support or resistance.

TrendLines are based upon the idea that the markets move in trends. Trendlines are used to show 3 things.

The overall direction of price movement up or down.
The strength of prevailing market price movement and
Where future support & resistance of the current price movement are likely to be located at.

If a trend line forms in a certain direction then the price mostly move in that particular direction for a period of time until a time when the trend-line breaks-out.

Upwards trend line - If the price of a currency is moving up then a line is formed that is also moving up. This line is called an upwards trend-line.

Down-wards trend line - If the price of a currency is heading down then a line is formed that also moves downward. This line is called a downwards trend-line.

MAs Moving Averages Indicator

Moving averages are also used in forex to determine the general direction of the market. MAs is a price trend following indicators that's used to show the direction of the price.

Most common method of determine direction of the trend is by using 2 moving averages to form the MA cross over system. The MA cross over system is covered in our forex strategies section. The MA(Moving Average) crossover trading system is made up of 2 moving averages one with a lower period & the other with a higher period, e.g. a trader might use the 5 period Moving Average and the 7 period MA, when price of a currency is moving up the 2 MAs will also be heading up and when the prices are heading down the 2 MAs will also be moving down. Traders can also identify when a market trend changes its direction because the 2 MAs will crossover each other once there is a change in the direction of the price movement. This cross-over signal is used by the traders to determine when to open a new trade after the crossover signal has been generated and the two MA start and begin to move in the same direction. This cross over signal is also used to determine when to close a trade & take profit after there a crossover in the opposite market direction.

Bollinger Bands Indicator

Bollinger Bands is a very popular forex indicator, it is also a trend following indicator & it's used to show the general and overall trend of the market. The Bollinger band is made up of 3 lines, these are:

·Middle band - this is a moving average of 20 periods

·Upper Band - shows upper limit of price

·Lower Band - illustrates and shows lower limit of the price

Middle band will show the general direction of the price trend whether up or down.

The upper band is where a trader will open a sell trade if the price trend is down or close their buy trade and tp order at this level if the market is trending upwards.

The lower band is where a trader will open a buy trade if the market trend is up or close their sell trade & take-profit at this technical level if the market is trending downward.

FX Fib Retracement Levels

Fib retracements are popularly used by traders to determine the levels where the price retracements are likely to reach and get to. Traders use these retracement levels to determine where to open trade positions after a price pullback.

Fibonacci retracement levels are covered & discussed on the learn forex lessons section of this web site under the analysis topics. Trader can learn how to use the Fib retracements, which levels are commonly used to open trade positions & how to plot these retracement levels using Fib retracement indicator.

All these analysis techniques are also covered on the strategies section of this learn forex tutorial website & trader can learn more about these concepts and get examples of these concepts are used in trading from this forex strategies section that has numerous screenshots illustrations of these technical tools and how they are drawn on forex charts along with explanation of they are used to generate forex signals.

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