Even though there is no crystal ball, that will tell you the future for certain you have the potential to make money by determining the overall market direction of a currency and then trading in that same direction.
So if you determine that the market direction is up, you can buy and if you determine the market direction is down you can sell in order to get started with the beginner strategy. There are a few terms that you should know ready. Let’s start a currency pair is the exchange rate between two currencies. A currency pair is referred to as one price. This price is the exchange rate between two currencies.
So if the price of the euro, US dollar is say one dollar 30, then this means that one euro is exchanged for one US dollar, 30 cents. A price chart shows how the exchange rate between two currencies develop over time. If you look at the chart on the right, you can see that the exchange rate is displayed on the right hand, side and the time is displayed on the bottom. The chart type we use is called a Japanese candlestick chart.
It is made up of shapes that look like candlesticks. Each candlestick shows the price developed over a period of time. We refer to this as a time frame. A five-minute time frame therefore means that each candlestick shows the price development over five minutes in the beginner strategy. We use the 5-minute and 30-minute time frames during the period that the candle forms you will observe that it changes shape after the period the candle is closed and a new candle starts to form or opens interpreting a candlestick is easy.
The thick part is called the body, it represents the prices at the beginning and at the end of the period, if the candle is blue, the price moved up during the period, so the opening price is at the bottom and the closing price at the top. If the candle is orange, the price moved down during the period you will find the opening price at the top and closing price at the bottom. The thin parts are called wicks and they show you the maximum and minimum price.
During the period, the candle will remain blue if the price closed above the opening price and it will remain orange. If the price closed below the opening price, you will find that we refer to pips throughout the lessons we measure how far the price moved in pips. If you think of the exchange rate between the euro and the dollar euro, US dollar, you only use two decimals such as 1.31. However, in the forex markets, this is broken down even further and we observe the price as 1.
3. 1. 0. 0. The last number, the last 0, is the pip. If the value of that currency pair moves from one point, three one: zero, zero to one point: three one: zero one: it is moved by a single pip pips are how traders generally measure their profit. If a trader buys a currency pair again, the euro, US dollar at one point three: one: zero, zero and the price moves up to one point: three, one: three: zero.
It is said to have moved up by 30 pips or the traders gained a thirty pip profit. Some trading software make use of five decimal places, in which case the fifth number is called a fractional pip or pipette. Making a trade is the act of exchanging one thing for another in the context of Forex. It means that we exchange a certain amount of one currency into a certain amount of another currency based on the current price of the currency pair, for example, if the price of the euro US dollar currency pair is at one dollar thirty, we can get one euro For every one point, three US dollars: instead of waiting for a specific price level to be reached to place your trade, you can tell the trading platform to automatically open your trade.
If that price level is hit, this is called entering the pending order. You tell the software where your entry stop loss and profit target will be, and the position size or volume you want to trade with, and the software does, the rest. A stop loss prevents you from losing all your money. If a trade goes against, you, for example, you buy in the price of the currency pair starts to go down. A stop-loss order, will automatically close your trade so that you do not lose too much money.
A profit target is the amount of money you intend to make. A profit target is a predetermined price at which you will close. Your trade for a profit position, size or volume, is how much you will buy or sell. When we refer to position size, we mean that this is the amount that you will buy or sell. It is important to know that when you wish to buy, you select the type by stop and when you want to sell you select the type sell, stop a fractal is an indicator that is displayed as a small triangle that are either plotted above or below.
A Japanese candlestick when a fractal is plotted above a Japanese candlestick. It is an up fractal and when it is plotted below a Japanese candlestick, it is a down. Fractal fractals help determine a potential price reversal. However, if price moves beyond a fractal, it indicates that price may be continuing in the same direction. Note that a freshly formed fractal can disappear again unless two full candles have formed after it.
Thus, before using a fractal in the context of the beginner strategy, you should always wait for two candles to close on the right side of the fractal, to confirm that the fractal is valid. A broken up, fractal is where the price to the right of the fractal has broken the high price of the candle, where the fractal has formed. This is shown by the line placed at the high of the candle just below the fractal.
A broken-down fractal is where the price to the right of the fractal has broken the low price of the candle where the fractal has formed. This is shown by the line placed on the low of the candle, just above the fractal note that the fractal can be broken by either the wick or the body of the candle. It does not make a difference. Broken fractals play a key role in the Forex beginner strategy. Pivot points are an indicator displayed as a set of lines on the chart that are generated automatically by your trading software.
They are used to identify your profit targets. The pivot points will be labeled as R 2 m. 4. R. 1. M. 3. Pivot. M. 2. S. 1 M. 1 s 2. You do not need to worry what these labels mean in the beginner strategy, just that they are places where the price is deemed are likely to stop.