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The Best Book To Learn Forex Trading

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  1. THEULTIMATE FOREXTRADINGSYSTEM UnbeatableStrategytoPlace 92%WinningTrades MOSTAFAAFSHARI ThirdEdition

  2. Copyright©2016byMostafaAfshari Allrightsreserved.Nopartofthispublicationmaybe reproduced,distributed,ortransmittedinanyformor byanymeans,includingphotocopying,recording,or otherelectronicormechanicalmethods,withoutthe priorwrittenpermissionoftheauthor,exceptinthe caseofbriefquotationsembodiedincriticalreviews andcertainothernoncommercialusespermittedby copyrightlaw.Forpermissionrequests,writetothe authorattheaddressbelow. mostafaafshari@hushmail.com

  3. Contents Preface PARTI:BASICS 1 1.WhatisForex? 3 2.Profit/LossUnits(pips) 3 3.InvestmentUnits(l?s) 4 4.GenerosityofBrokers(Leverage) 4 5.ForexCharts 5 6.TrendandReversal 6 7.SupportandResistanceRevisited 11 8.ConsolidationandBreakout 13 9.LocalMaximaandMinima 16 10.WhichAreTheBestCurrencyPairstoTrade? 17 11.TheBestHourstoTrade 17 PARTII:FOREXTRADINGSTRATEGI? 21 12.ChartPatternsTradingStrategy 23 12.1TheMostProfitableForexChartPatterns 23 12.1.1MandW(Bat)Patterns 23 12.1.2Triangle(WeakeningMandStrengtheningW)Patterns 24 12.1.3Cascade(WeakeningUpwardorDownward)Patterns 25 12.1.4HeadandShouldersPattern 28 12.1.5SolidWall(orSandwich)Pattern 29 12.1.6Fractals 31 12.1.7DoubleandTripleTop/B?tomPatterns 31 13.PriceRejectionTradingStrategy 33 14.CorrelationTradingStrategy 38 14.195%ProbableCorrelationTrading 39 15.VolumePriceAnalysis(VPA)TradingStrategy 42 16.LongTerm(Daily,Weekly,Monthly)TradingStrategy 45 16.1AbandonedBaby-EMA(5)LongTermTradingStrategy 48

  4. Contents 17.SentimentTradingStrategy 51 17.1WhatIsTradersSentiment? 51 17.2HowtoUseSentimentChartsinTrading? 52 18.MultipleTimeFrameTradingStrategy 56 19.NewsTradingStrategy 58 19.1WhatIsNewsTrading 58 19.2HowtoDoNewsTrading 59 19.3ATypicalNewsTradingSession 63 19.4MyRemarksonNewsTrading 66 PARTIII:THEULTIMATEFOREXTRADINGSYSTEM 69 20.HighPerformanceTrading 70 21.MoneyandRiskManagement 73 22.TheConceptofOptimalTrading 77 23.ATypicalHighPerformanceTradingSession 77 24.PsychologyofTrading 81 25.PredictiveForexTrading 83 PARTIV:FINALADVICE 85 26.FinalAdvice 86 AnswersoftheExercises 87

  5. Preface Forextradingisabouthavingasolidtradingstrategy,having asoundplantomanageyourrisks,beingabletocontrol yourexcitementsduringatradeandhavingdiscipline.“The Ultimate Forex Trading System-Unbeatable Strategy to Place 92% Winning Trades” is an attempt to create a balancedsystemofallthesefourkeyfactors.Theresultisa high performance trading system quite adaptable to any tradinghabitandpersonallifestyle.Thisbookincludesthe followingtopics. InpartoneIhaveexplainedpreliminarybutkeyconcepts thateveryForextraderneedtoknow.Topicssuchassupport andresistance,consolidationandbreakout,thebestcurrency pairstotrade,thebesthoursfortradingandsoon. In part two you will find eight essential Forex trading strategiesthathavepassedmystrictcriteriatobeeasyto apply, highly profitable and manageable. Chart patterns tradingasaclassictradingmethodisthefirststrategythatI haveexplainedinthisbook.Onlyveryhighprobablechart patterns are discussed and real examples help you to discover their trading potential. In this chapter I have focused on training eyes and mind to predict (with high probability)howthenextbar(s)willunfold.Pricerejection(a subsidiaryofpriceaction)isthesecondtradingstrategythat Ihavediscussedinthisbook.Usingpricerejectionpinand twinbars(thatrevealsthemomentumbehindtheprice)isa

  6. classicskillthateveryprofessionaltraderhastoknowand benefitfromit.ThethirdstrategythatIhaveexplainedis correlation (negative or positive) between currency pairs. Correlationtradingisaveryaccuratestrategythatexploits thediscrepancyortimelagbetweentwonormallycorrelated currency pairs. Volume Price Analysis (VPA) is the next strategythatIhaveexploredinthispartofthebook.Under thistopicyouwillseehowverysimplerulesenableyouto interpretvolume-priceinterplayandhowitmakesareal differenceinyourtrading.Forthosewhocannotbeinvolved totrading24hoursadayandwishtoenterlongtermtrades tohaveenoughtimetoleavetheirtradingroomforafew days (or even weeks), long term trading strategy is the solution.Especially,averyhighlyprobabletradingmethod that I have called it Abandoned Baby EMA(5) is a very promising long term trading strategy. The sixth trading strategyusesrealtimesentimentcharts(buy/sellpositions) of worldwide traders to benefit from their opinion to forecast how the market will behave in the next hours. Checkingmultipletimeframesisagoodmethodtodouble confirmenteringatrade.IthasbeendiscussedinMultiple TimeFrameTradingStrategychapter.Newstradingasthe laststrategyhasbeentreatedfromastatisticalpointof view.Howestimateyourchancetoenterawinningtrade afterorduringnewsreleasesbystudyingthepricehistory andmarketreactiontothemediumorhighimpactnewsand what measures you have to take to manage this type of trading.

  7. Partthreeistheclimaxofthebookbecauseyouwilllearnto combineallyourknowledgeaboutForexbasicconceptsand varioustradingstrategiestoenteronlyhighperformance (morethan90%winningrate)trades.Manyrealtrading exampleswillguideyoutoreachthisleveloftradingskills. Moneyandriskmanagementhasbeendiscussedaroundthe very practical concept of risk/reward ratio, the only mechanismyouneedtocontrolyourtrades,minimizeyour risks,maximizeyourprofitanddotradeinaveryrelaxed andcomfortablestateofmind.AndunderPsychologyof Tradingyouwillfindthesummaryofthebestadvicesto controlyourpsychologyduringtradesandmaintainawinner mindset. MostafaAfshari August2016

  8. intuition are more helpful. However, two very simple methodscanbeusefulandyoucanusethemtoidentifya reversalwithmediocresuccess.Inthefirstmethodyoucan drawtwoExponentialMovingAveragesforexampleEMA(9) andEMA(15).WhenthefastEMA(9)crossoverorcrossunder theslowEMA(15),itisasignofareversal.Theothermethod is using of two regression lines. In an uptrend draw a regressionlinetangenttolowerlowsandoneregression linetangenttothelatesttwohigherhighs.Ifthesetwolines crosseachotherinsomepointitcanbeapotentialreversal point and if not, the trend may probably continue. In downtrend,drawalinetangenttohigherhighsandaline tangenttothelatesttwolowerlows.Iftwolinescrosseach otherthecrosspointcanbeapotentialreversalandifnot thedowntrendmorelikelywillcontinue. Figure6.4Confirmingareversalbycrossoftwo regressionlines 9

  9. Figure6.5Confirmingareversalbycrossoftwo regressionlines Figure6.6Confirmingareversalbycrossoverofafast andaslowEMA 10

  10. 12.ChartPatternsTradingStrategy 12.1TheMostProfitableForexChartPatterns Formanyreasons,Forexchartsusuallyformsomerepeated patterns.Ifyouworkwiththemandyoureyesaretrainedby lookingatthem,thesepatternsareverypowerfultoolsto guideyouduringyourtrades.Therearemanypatternsand eachofthemhasitsnamebuttobesimpleandshortI explainhereonlythemostprofitablepatternswhichalways workandyoucanrelyon. 12.1.1MandW(Bat)Patterns Thesearethemostfrequentchartpatternsandmoreor lesshaveMorWshape.Sometimes,onelegextendsor anotherleggetsshort. Figure12.1.1.1AW(bat)pattern 23

  11. Thesearenotveryaccuratesignalsbuttheyhelpyoutoget aroughestimationofacurrencymove. 12.1.2Triangle(WeakeningMandStrengtheningW)Patterns ContrarytoMandWpatterns,triangle(orweakeningMand strengtheningWpatterns)areveryaccuratesignals(0.8or moreprobable).AweakeningMisformedwhenanupward (bullish)moveiscompleted,thenaweakerdownwardmove (onethirdorhalfofthefirstmove)happensandthenavery weak bullish (usually one candle) comes after it. After completion of the third move you can say with a high confidencethatthecurrencypricewillsharplydrop.Thisis the place you should sell the currency and make a nice profit.StrengtheningWpatternhasjustthesamestorybut inareverseorder. Figure12.1.2.1Atrianglepattern 24

  12. Thepriceintrianglepatternsusuallyconvergestoatight rangeandthentendstobreakout.Ilovetrianglepatterns becausetheyareverystrongsignalsandnearlyalwaysare correct. Figure12.1.2.2Atrianglepattern 12.1.3Cascade(WeakeningUpwardorDownward)Patterns These are in fact upward or downward price moves that followacurvedpathandgetexhaustedduringthetime.For example,anupwardmovestartswiththreebullishcandles, then follows by one bearish candle, then two bullish and againonebearishandhenceforth.Itisobviousthatthe movegetsweakenandthentendstoreverse(amajoror minorreversaldependsonthesignificanceofsupportor resistancelevel,forexampleifaweakeningupwardcascade reachesamajorresistancelevelabigreversalishighly 25

  13. Twinpatternsreflectstrongpricerejectionsandarevery reliabletotrade. Exercise7.Drawchartsforafewmajorcurrencypairsindifferenttime framesonhttps://www.tradingview.com/e/andtrytofindthepinbarsin support and resistance zones or up and downtrends. In support or resistancezonesseewhenandhowthereversalstakeplace. Exercise8.On1Hand4Hhistoricalchartslookforpinbarsandfindhow thelengthofpinsisrelevanttothemomentumthepricewilltake. 14.CorrelationTradingStrategy InForexmarket,somecurrencies(thatusuallybelongtoone monetary zone or originate from economically linked countries) are (negatively or positively) correlated. This correlation provides traders very highly probable trading opportunities. In correlation trading we are seeking moments that one highly correlated currency pair (correlationcoefficientsof+0.75to+0.85or-0.75to-0.85) slightlylagging(orleading)theother.Infact,theessenceof correlationtradingisthetimelag(ordivergence)oftwo tightlyboundcurrencies.Astheselagslastonlyforashort time,1Htimeframeisthestandardofthissortoftrading.As an example, GBP/USD and AUD/USD are traditionally correlatedandifadivergenceiscaughtontime,itoffersa greattradingopportunity.SometimesAUD/USDisleading andGBP/USDislaggingandviceversa.Itisobviousthatin correlationtrading,weonlytradethelaggingcurrency. 38

  14. Correlation trading setups are among the most accurate, highlyprobabletradingopportunitiesyoumayspotonthe market. Especially, I recommend this type of trading for beginners.Becauseoftheirhighaccuracytheyarealsoideal foroptimaltrading(seechapter22).Evenyoucanusetwo currencies correlated to another one to place double correlationtrades.Forexample,useUSD/JPYandAUD/USD todoubleconfirmaEUR/USDtrade.Itisobviousthatdouble correlationsetupshappenmuchlessthansinglecorrelation setupsbutwhencome,youcantriggeranoptimaltradewith 99%confidenceandharvestsomebigbucks. Exercise9.On1HForexchartsoverlaynormallycorrelatedcurrency pairs(EUR/USD-NZD/USD,GBP/USD-AUD/USD,USD/JPY-USD/CHF,USD/ CHF-USD/CADetc.),spotthetimelagsandexamineifthetwoconditions ofcorrelationtradingaremet. 15.VolumePriceAnalysis(VPA)TradingStrategy Volumeistheconcurrenceofpriceandasimportantasitis. Asmarttraderalwayshasaneyeonthevolumeduringthe trades.VolumePriceAnalysis(VPA)issimplytheanalysisof volume-priceinterplay.Asignificantchangeinvolumeofthe currentbarincomparisontothepreviousbar(usuallyin1H and4Htimeframes)tellusthatthecombinationofbuyers and sellers has changed. This means that the market is undernewsupply-demandshiftsandwilldefinitelyreactto thischange.Thisisanearlysignalandwecantakethefull advantageofitinourtrading. 42

  15. Figure15.2Volume-priceanalysistrading Ontheabovepicture,arrow1showsashortbarbutthe volumespikesignalstheendofthedownwardmoveand dominanceofthebuyers.Asyousee,alongmovestarts immediately. Arrow 2 shows a short head pin bar. The relevantvolumespikesignalsthatsellershavetakenoverat higherhighandthenextshortmoveisconfirmed.Arrow3 anditsvolumespikeindicatesthedominanceofthebuyers at support level (lower low) and hence a long move is expected (that has already happened). Arrow 4 shows an eveningstarpinbaratresistancelevel.Thespikeinformsus thatashortmoveisontheway. Exercise10.OnhistoricalForexchartsactivatevolumeindicatorandfind somevolumespikes.Trytointerpretthepricechangesinrelationwith thevolumespikes. 44

  16. 17.SentimentTradingStrategy 17.1WhatIsTradersSentiment? One of the most influential factors in financial markets including Forex is supply-demand pressure (or buyers- sellerspressure).InForex,asasparsemarket,wearenot abletomeasurethisfactorinrealtime,butfortunately,a verycloseestimationofitisinhandthatiscalledsentiment. Sentiment,asitisunderstandablefromthewordisthefeel oropinionofthetradersaboutthemarket.Inagiventime,a partofthetraderssensethemarketasbullishandtendto openlongpositionsandtheotherpartsensethemarketas bearish and tend to open short positions. This game is repeatedallthetimeandtheoppositesentimentsofthe massesactasaconsiderablesupply-demandforce.So,the trick is to look at the sentiment charts and follow the dominantgroup. Figure17.1.1Bull/bearsentimentevolvement 51

  17. Fortunately,someofthebigbrokerspublishthesentiment oftheirtradersinrealtimeandthesetoolsarevaluable gemstoinformushowthecommunityoftradersthinks aboutthemarket.Thissentimentissimplyshowninpercent (percentoflongandshortopenpositions).Amongthebest sentimentchartsIhavetonameOanda,DukascopyBankand SaxoBank.Especially,Oandahasdoneagreatjobtogenerate avarietyofnice,informativechartsthatisquitefittoour purpose. http://fxtrade.oanda.com/analysis/open-position-ratios.shtml https://www.dukascopy.com/swiss/english/marketwatch/ sentiment http://www.saxobank.com/market-insight/saxotools/forex- open-positions 17.2HowtoUseSentimentChartsinTrading? Sentimentchartsshowlongandshortsentimentsinpercent intwocolorsrespectivelyblue(orgreen)andred.Asshown on the picture, for example in USD/JPY pair, the long sentiment(openpositions)is54%andtheshortsentiment (open positions) is 46%. We call these figures absolute sentimentastheyshowusthecumulativesentimentofthe traders(totalopenpositions)fromthecurrenttimedate backtoevenafewmonthsago.Theimportantpointhereis thatthesentimentchartsmaynotreflectthemostrecent sentiment of traders because they carry the sentiment informationofthemassfromthepastdates. 52

  18. Figure17.2.1Traderssentimentasaleadingsignal Figure17.2.2Asentimenttradingopportunity 54

  19. Figure19.3.1Anewstradeanalysis But,analyzingAUD/USDforthesamenewsrelease,wefind thatallconditionsofasuccessfulnewstradearemet.Avery tightresistancelevelandacceptablerisk/rewardratio(1:2.2) qualifyAUD/USDforthistrade. Figure19.3.2Anewstradeanalysis 65

  20. your experience, skills and your psychological control will determinehowmuchyoursuccessratewillbe.But,without doubtyoucanseethatacombinationoftradingsignalswill greatly enhance the accuracy of your trading and the winningratioofyourtrades.Also,asIwilldiscussinthe chapter about psychology of trading, being more certain about your trading decision, will help you to lessen your stressandbepsychologicallymorereadytomanageyour tradetoawinningend. In the following examples I have tried to illustrate the advantagesofhighperformancetradingusingsimultaneous combinationofafewtradingsignals.Onthepictures,figure1 referstoapatternsignal,figure2referstoacorrelation signal and figure 3 refers to a volume spike signal. Coincidenceofallthesesignalstellsusthatwecanentera veryhighlyprobabletrade. Figure20.1Highperformancetradingopportunity 71

  21. Figure20.2Highperformancetradingopportunity Figure20.3Highperformancetradingopportunity 72

  22. ThefollowingpicturesshowyouhowsetyourbestSLandTP targetsandhowcalculateyourrisk/rewardratio. Figure21.2HowtomanageyourriskinForex Figure21.3HowtomanageyourriskinForex 76

  23. What you read is a free sample of “The Ultimate Forex Trading System-Unbeatable Strategy To Place 92% Winning Trades.” You Can Download This Book Here You Can Download This Book Here: :