The Undergraduate Junior level is divided into five chapters, which include;
- Trading plan, trading style, trading motivation, profit and loss, trading routine, and tools.
- Different types of forex traders.
- Mechanical trading system.
- Forex trading journal, a potential trading area, entry trigger, position sizing, and trade management rules.
- MetaTrader 4, how to set orders, how to use EA and indicators.
This chapter provides valuable insights into the importance of a trading plan in forex trading. The chapter covers various aspects related to developing a trading plan and highlights its significance in achieving long-term success in the foreign exchange market.
The key components of a trading plan discussed in the chapter include trading goals, trading style, market analysis, entry and exit rules, risk management, performance evaluation, trading psychology, risk capital, and time dedication. Each component is explained in detail, emphasizing its role in formulating a comprehensive and systematic approach to trading.
The chapter emphasizes that having a trading plan is essential to minimize emotional biases, maintain discipline, and make informed decisions. It explains how a trading plan helps traders set clear objectives, identify preferred trading styles, analyze the market, establish entry and exit criteria, manage risk, evaluate performance, and develop the necessary discipline to achieve consistent profitability.
Additionally, the chapter highlights the significance of risk capital and emphasizes the need to avoid risking more than one can afford to lose. It stresses the importance of dedicating sufficient time to forex trading and establishing a pre-trading routine to prepare for the trading day effectively.
Furthermore, it discusses the necessary software, hardware, and other tools required for forex trading, such as trading platforms, data feeds, and reliable internet connections. It also advises traders to choose a reputable broker and perform due diligence to ensure a secure and efficient trading experience.
Types of Forex Traders
Psychology is a big part of the trading business when it comes to the FX online market. Learning how to trade forex involves more than just having a decent amount of forex education and forex trading experience.
There are many kinds of people and in this section, you will be taught how to recognize which kind you are, or are going to be. No two people trade similarly because it is always a judgment call when it comes to trading and how we decide is based on who we are as people.
Who are you?
Before you settle on a strategy that you will be using to trade, you will need to know who you are and the biggest part of this is honesty. Most of the time, you will fail just because you are using a trading style that is vastly different from your personality.
The thing about trading styles is that they seek to find out the weaknesses and strengths of people and then leverage them to make good trading choices. Aggressive people want huge wins and do not care about blowing their account, while the relaxed people want small wins and no losses.
The point is that you will be taken through a process that will help you know which trading style can be married to your personality.
Here are some of the things you can expect on this topic:
- You will learn the most important investment you can make as a forex trader.
- You will learn how to scalp.
- The specifics of day-trading will come next.
- Swing trading will also be taught.
- Position trading will be the last topic you take.
After this, you will have a working knowledge of what it feels like to be yourself when you are trading. You will need to identify without fail, what kind of trader you are or you will fail. This is not some message meant to scare you but something that encourages you to be honest with yourself about who you are.
Mechanical Trading System
You will gain a comprehensive understanding of mechanical trading systems and how they can be effectively utilized in financial markets.
The chapter begins by introducing the concept of a mechanical trading system, which is a rule-based approach to trading that relies on predefined criteria and objective indicators. Readers will learn that mechanical trading systems are designed to remove emotions and subjectivity from trading decisions, thereby improving consistency and reducing the impact of human biases.
The chapter then delves into the components of a mechanical trading system, including entry and exit rules, risk management techniques, position sizing, and performance evaluation. It emphasizes the importance of developing a robust and well-defined strategy that aligns with individual trading goals and risk tolerance.
You will also explore various types of technical indicators and tools commonly used in mechanical trading systems, such as moving averages, oscillators, and trend lines. The chapter provides insights into the selection and optimization of these indicators to enhance trading strategies.
Furthermore, the content also emphasizes the significance of back testing and forward testing to validate the effectiveness of a mechanical trading system. It explains the process of testing historical data and using the results to fine-tune the system’s parameters for optimal performance.
By the end of the chapter, you will have a solid understanding of the benefits and principles of mechanical trading systems. You will be equipped with the knowledge to develop your own systematic trading strategies, apply objective rules to your decision-making process, and execute trades with discipline and consistency.
Forex Trading Journal
This chapter provides insights into the importance of maintaining a trading journal in forex trading and discusses various elements and strategies related to trading.
The chapter begins by emphasizing the significance of a forex trading journal as a record-keeping tool to track and analyze trades. It highlights the essential information that should be included in a well-maintained trading journal, such as trade details, entry and exit prices, trade duration, emotional state, and lessons learned.
Then, it dives into the importance of a potential trading area and entry trigger in forex trading. It explains how traders should rationalize their entry areas and determine appropriate entry points based on their trading strategies. The concept of position sizing is also discussed, highlighting different position sizing strategies traders can employ to manage risk effectively.
Furthermore, the chapter introduces trade management rules and emphasizes the need for a well-defined game plan to guide trade exits. It emphasizes the significance of tracking trading performance statistics, including net profit, win percentage, largest winning and losing trades, average holding time, and others, to identify strengths and weaknesses and make informed decisions for improvement.
The chapter concludes with guidance on how to create a forex trading journal using a spreadsheet and emphasizes the importance of reviewing and analyzing the data recorded in the journal to identify patterns, refine strategies, and continuously improve trading performance.
Overall, this chapter provides valuable insights and practical guidance on how to maintain a forex trading journal, identify potential trading areas, implement effective entry triggers, manage position sizing, and establish trade management rules. It emphasizes the importance of discipline, consistency, and continuous improvement in achieving success in forex trading.
You will get a comprehensive overview of the popular forex trading platform, MetaTrader 4 (MT4). The chapter begins by introducing MT4 as the preferred platform for forex traders, developed by MetaQuotes Software in 2005. It highlights the platform’s versatility, allowing users to trade various financial instruments and employ both manual and automated trading strategies.
The chapter explains the steps to access MT4, including downloading and installing the platform, creating an account with a broker, and connecting to the broker’s server. It further guides users on navigating the MT4 interface, accessing features like the Market Watch window, Navigator window, and Chart window. The chapter highlights the importance of practicing with a demo account to gain familiarity and confidence before trading with real money.
The next section focuses on executing orders on MT4. It covers placing trades through market execution, specifying profit-taking and stop-loss levels, executing trades through pending orders, and modifying trades as necessary. The chapter provides step-by-step instructions and explains key concepts such as lot size and take profit/stop loss levels.
Additionally, the chapter also covers the installation and use of Expert Advisors (EAs), which are automated trading programs. It advises traders to thoroughly understand the specific EA they intend to use, including its indicators and settings, and provides steps for installing an EA on the MT4 platform.
Lastly, you can explore the utilization of indicators in MT4. It details the process of accessing and applying built-in indicators to charts, customizing indicator settings, adding multiple indicators, and saving chart templates for future use.
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What is a Trading Plan? Trading Style, Trading Motivation, Profit and Lose, Trading Routine and Tools
Different Types of Forex Traders? Scalping, Day Trading, Swing Trading and Position Trading
Mechanical Trading System a Full Overview and Strategy
Forex Trading Journal, Potential Trading Area, Entry Trigger, Position Sizing and Trade Management Rules
MetaTrader 4, How to Set Orders, How to Use EA and Indicators