If you want to learn how to make money in forex then you have to follow a curriculum that will teach you how to become a successful trader. You need a set of forex lessons that will establish a foundation on which you build experience. This guide will serve as a checklist for your continuing fx trading education.
Peter Bain’s Advanced Technical Analysis Course
First and foremost, you need to have a good overall understanding of the forex market in general. It is important to know how money flows affect the currencies that we observe on a daily basis. Do some homework and get this points understood well.
What is the forex market?
Why does it exist and what is its history? You need to know how it operates and how it differs from the New York Stock Exchange. Who controls the money supplies for each nation’s currency and why? What is the difference between a fiat currency and a currency based on a gold standard?
Who are the players that are trading in the forex market?
There are many traders in the foreign exchange market and they are not all equal. Did you know that corporations also trade in the forex market? There are institutional investors with billions at their discretion. How do their actions affect the markets?
How well do you know your broker?
Did you read the fine print? Do you know what the spreads are? What is their policy on slippage? Do you know where their data feed comes from? Have you looked up their customer support number? Do they have one?
What are the major currency pairs?
Why are they in pairs in the first place? Do you know the difference between the base and the cross currencies? What is the Cable? Is it the same thing as the Sterling? What about the Loonie or the Kiwi? Did you know that each currency pair has its own personality? Which ones are volatile and which ones are less active?
Do you have a good understanding of pips, margin and leverage?
Do you know how pips are calculated? What is your level of margin? Do you understand how fast leverage can draw down your account? Do you know the different types of orders? Do you know the difference between the bid and the ask price? Do you know how to hedge? Do you know what a stop-loss is?
The above only cover the functional basics of your fx trading training. If you were unsure on any of the questions then you better make a homework assignment out of it and learn it well. At this moment you know enough to be dangerous.
The next subject that you need a strong understanding of is technical analysis. Without it you will be flying blind and you day forex trading training won’t be complete without it.
Do you fully understand trends?
Did you know that major trends are composites of minor trends on smaller time frames? Do you understand the cyclic nature of trends? What does bullish and bearish mean? Why is a beginner advised to “trade with the trend”?
What is a consolidation?
Why does consolidation occur? What is considered a breakout? What percentage of time does price action spend in consolidation? What trading opportunities are available during times of low activity?
Do you understand the trader psychology behind support and resistance?
Do you see how a line of support once surpassed can serve as resistance in the future? Did you know that certain price points serve as psychological price points such as 1.2500? How do you identify strong zones of support and resistance? Why are old lows and old highs important?
Do you know how to correctly draw trendlines?
Did you know that the peaks are used when drawing a downtrend and the valleys are used for drawing and uptrend? What is the significance when price action breaks a trendline? Did you know that even old trend lines could serve as support or resistance? What is a pullback?
How many chart patterns can you identify?
What is their import? Did you know that there are continuation patterns and reversal patterns? What does the neckline have to do with the head and shoulders pattern? What part does support and resistance play when it comes to chart patterns?
Are you familiar with Japanese candlesticks?
What are the advantages that candlesticks provide over bar charts? Which candlesticks are considered leading indicators? Where in the trend do they have to occur in order to have importance? What do a series of long wicks point out? Which candlestick reflects market indecision?
What do you know about moving averages?
What is the difference between an EMA and a SMA? What are the most commonly used moving averages (which time periods)? Did you know that a moving average could serve as support or resistance? Why are moving averages considered lagging indicators? What is a death cross? What is a golden cross?
The guide above gives you a good idea of how to learn forex. If you had trouble with some of these questions then you need a thorough currency trading course. The one I recommend is Peter Bain’s forex package. Get it, learn it and apply it. As you can see, there is quite a lot to forex trading, but it gets a lot easier once you get the basics down. Study for a while and come back and review this forex guide and you’ll agree that it gets easier the longer you are exposed to it.
