When it comes to the high school level of forex education, you should be prepared to dig deeper and break down the technical analysis that is offered in concepts like trading divergences, breakouts and the use of multiple time frames on charts.
The forex market is all about uncertainty and finding ways that tame these uncertainties is the best way to make great trades in the foreign exchange market. You may not be able to control the waves of the forex market but, you can learn to ride them.
The only way to do that is if you have the skills that are needed to make this happen. You can start staying ahead of time by applying something we call divergence trading to make sure that you are never killed by the waves.
In this level, you will have to go through the following topics;
• Trading divergences
• Market environment
• Trading breakouts and fakeouts
• Fundamental analysis
• Currency crosses
• Multiple time frame analysis
Under all these topics, you are going to have them all broken down into bite-sized chunks for easier digestion.
Go into this level of your FX education with an open mind and see what comes out of it.
1. Trading Divergences
In this part, you will learn how to compare the movement of an indicator in FX tracking with the price action. Divergences can be used as leading indicators. They can help you do your online trading when prices have bottomed out or take a sell call when the prices are close to the top.
Under this level, you will also learn the following things:
• What is a regular divergence?
• What is a hidden divergence?
• How to trade divergences
• How to avoid entering way too early when trading divergences
• 9 rules for trading divergences
At the end of these lessons, you will be presented with the summary and a cheat sheet to help you remember the most important points of the lesson and how you can use them to capitalize on the trades that you make.
2. Market Environment
Knowing what is forex environment when trading, is something that you will need to do as a trader in the FX market. When you go into the FX market, think of it like going to war. No one ever goes in unprepared.
This part of the lesson is prepared to show you what the environment is like and what you can expect. It will also show you what you can do to thrive in there.
Every environment will need you to go in with a plan that is designed to work in that specific environment. There are three classifications of environment that you may find yourself in. They are;
- Trending up
- Trending down
As you will find out when you progress into the lesson, there are so many things that you will need to discover before you can know how to determine the environment and work it to your advantage. The rest of the lesson gets into:
• What is a trending market?
• What is a range-bound market?
• Trend retracement or reversal?
• How to identify reversals
• Protect yourself from reversals
At the end of this, you will know what the environment is like when you observe it for a short while. After that, we move into trading breakouts and fakeouts.
3. Trading Breakouts and Fakeouts
Breakouts happen when the price moves out of some trading range or consolidation. It indicates that the traders must enter the market and remain in there until the volatility goes down. Traders confuse breakouts and fakeouts easily.
Sometimes, when there is a possible breakout, the price reverses momentum and if you went in too early, it could turn out to be a fakeout instead of a breakout and that will cost you money. In this lesson, you will be taught how to look for indicators that something is a breakout to avoid this confusion.
Under this lesson, you will dive into the following subtopics:
• How to trade breakouts
• How to measure volatility
• Types of breakouts
• How to trade breakouts using trend lines, channels and triangles
• How to measure the strength of a breakout
• How to detect fakeouts
• Fade the breakout
• How to trade fakeouts
From all these lessons, you will glean important information that will allow you to make the smart decision when faced with something as complicated as this.
4. Fundamental Analysis
In summary, when people talk about fundamental analysis in the FX market, they are discussing the economic conditions of the currency’s host nation. The analysis may have many details that include political conditions, economic scenarios, environmental reports, news events, weather or announcements that can affect the value of a currency.
In this lesson, you will also learn; • What interest rates matter to forex traders
• How monetary policy affects the forex market
• Hawkish and Dovish central banks
• Fundamental factors that affects currency values
• Where to find forex news and market data
• Market expectations of news and their impact on currencies
Fundamental analysis may not help people that much when estimating the direction that a currency will go because of the loopholes, but it is important. If you pair it with technical analysis, you will have a pretty good picture why brokers and other stakeholder in the FX market consider it.
Stay current and be up to date on what the data says to make profits.
5. Currency Crosses
In the past, currencies had to be converted into US dollars before they could be converted into another currency. However, the development of currency trading crosses has made it easy to bypass this tedious process. Some of the most common crosses you will see are EUR/JPY, GBP/JPY, EUR/CHF etc.
Under this lesson, you will get to learn the following things;
• What is a currency cross pair?
• Why trade currency crosses?
• Currency crosses are trend-y
• Trade interest rate differentials
• Being careful when trading obscure currency crosses
• How to trade fundamentals with currency crosses
• How to trade a synthetic currency pair and why you probably shouldn’t do it
• Trading the Euro and Yen Crosses
• How cross currency pairs affect dollar pairs
You may not have to learn calculations to know what each of these currencies is worth when compared to another because there is numerous software for that. However, understanding the underlying math is very important.
6. Multiple Time Frame Analysis
It might sound hard trading multiple time frames but it is not that hard once you get what the basic principles entail. When explained in simple words, multiple time frame analysis means you look at the same currency pair as well as the same price but in multiple time frames.
It is not easy obviously but when you understand how it works, you can pull it off effortlessly. To get the way this works, you will be taken through the following topics:
• What time frame should I trade?
• What time frame is best for trading?
• Why you should look at the multiple time frames when trading forex.
• How to use time frame analysis to find better entry and exit points.
• Trading with 3 timeframes
At this point, we come to the end of the high school level of learning how to trade forex.
Trading Breakouts and Fakeouts
- What is a Currency Cross Pair?
- Why Trade Currency Crosses?
- Currency Crosses Are Trend-y
- Trade Interest Rate Differentials
- Be Careful Trading Obscure Currency Crosses
- How to Trade Fundamentals With Currency Crosses
- How to Trade a Synthetic Currency Pair and Why You Probably Shouldn’t
- Trading the Euro and Yen Crosses
- How Cross Currency Pairs Affect Dollar Pairs
- Summary: Currency Crosses
Multiple Time Frame Analysis
- Trading Multiple Time Frames In Forex
- What Time Frame Should I Trade?
- What Time Frame Is Best for Trading?
- Why You Should Look at Multiple Time Frames When Trading Forex
- How to Use Multiple Time Frame Analysis to Find Better Entry and Exit Points
- Trading With Three Time Frames
- Summary: Multiple Time Frame Analysis