Forex+Foundation+Trading+Course+(1+slide+per+page).pdf

Forex trading

1. The Complete FOREX
Foundation Course
The Complete FOREX
Foundation Course

2. Your Instructor: Mohsen Hassan
MTG
–
Montreal Trading Group
Current Position:
CEO of MTG (Montreal Trading Group)
Previous Experience:
•Discretionary Trader
•Semi-Automated Trader
•Brokerage Firm
•Quant (Back-Testing and Developing Strategies)
•Programmer (Developing Trading Software)

3. What we will learn
Currencies:
•History of money
•Forex market
•Quotation system
Forex Trading:
•Lots/Pips
•Leverage and Shorting
•Brokers/Orders
•Platforms and Charting software's
•Technical Analysis:
Charts/Candlesticks/Trends/Patterns/Indicators
•Fundamental Analysis
Risk Management/Money Management:
•Protecting your account
•Calculating position size
•Entries and Exits
MTG
–
Montreal Trading Group
Live Trading:
•Live Trades
•Trade Analysis
•Recording & Analyzing Historical trades
Trading Psychology

4. What’s expected of you
MTG
–
Montreal Trading Group
•Try to understand all concepts
•Ask yourself why? And then try to answer that question
•DO THE WORK
•Ask questions
•Practice Practice Practice

5. The History of Money
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–
Montreal Trading Group
Barter
6000 BC
700 BC
Gold
Paper
Bills
618-907
1879
Gold
Standard
Bretton
Woods
1944
1971
End Of
Gold
Standard

6. Barter
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–
Montreal Trading Group

7. Barter
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Montreal Trading Group

8. Need for a common unit of exchange
This unit needs to:
•Be used as a medium of exchange
•Store value
•Be a unit of value
MTG
–
Montreal Trading Group

9. Need for a common unit of exchange
Unit has to be:
•Scarce
•Hard to Harvest
•Durable
MTG
–
Montreal Trading Group

10. Problems with Gold
•Can be Debased.
•Fluctuates based on supply. (example: California Gold Rush –1849)
•Hard to transport.
•Issues with having multiple denominations.
•Limited supply.
MTG
–
Montreal Trading Group

11. Paper Money
•First used by the Chinese (619-907)
•Europeans started adopting the practice only in 17
th
century
•Paper money was just an I.O.U.
•I.O.Us are exchanged at local banks
MTG
–
Montreal Trading Group

12. Paper Money
•I.O.Usevolvedtoberedeemedbyanyonewhoheldthem
•PeoplethenstartedusingtheI.O.Usandneverreallyexchangingthemfor
gold
•MoredenominationsofI.O.Usstartedbeingcreated.
MTG
–
Montreal Trading Group
•SincenoonereallyredeemedtheirI.O.Us,
banksstartedprintedmoreofthemthenthey
actuallyhadingoldreserve(fractional
reservebanking)

13. Problem: Fractional Reserve
Definition:“Fractionalreservebankingisabankingsysteminwhichonlya
fractionofbankdepositsarebacked…andareavailableforwithdrawal.
Thisisdonetoexpandtheeconomybyfreeingupcapitalthatcanbe
loanedouttootherparties.”–Investopedia
MTG
–
Montreal Trading Group
Thiscausedmanybankruns,butwitha
CentralBanksbackingit’sbranchesin
caseonofthemneededextracapital,that
issuewasmostlyresolved.

14. Central Banks
•Firstone:BanksofEngland–1694
•CentralBankNotesvaluedbetterthenother
banknotes
•Regulationfornonewbankstoprintbank
notesandclosedbankstoremovetheirnotes
fromcirculation
•Thisleavesthecentralbank’snotesasthe
onlyonesinthecountry
MTG
–
Montreal Trading Group

15. Gold Standard
•TheGoldstandardisasystemthatbacksit’scurrencywithgold.
•TheUSadoptedthesystemandoneounceofgoldcouldbetradedfor
$20.67
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–
Montreal Trading Group
•Thislimitsgovernmentsandbanksto
excessivelyissuepapercurrency(and
causehugeinflation),sincethecurrency
hastobebackedbygold.

16. Backed Dollar Bill
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Montreal Trading Group

17. Change in the Gold Standard
•Afterworldwar1(1914)andthegreatdepression(1929).
•In1930stheUKandtheUSstoppedredeemingCash(doneunderRoosevelt)for
GoldCoins
•Mainreason:NotEnoughgoldtobacktheamountofcurrencytheywanted
(wantingtoincreasethemoneysupply)
MTG
–
Montreal Trading Group
•Whattookplace?FIATcurrency:“atermto
describecurrencythatisusedbecauseofa
government'sorder”–Investopedia
•Atthispointthedollarwas“floating”

18. 1933 Executive Order
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–
Montreal Trading Group

19. FIAT Dollar Bill
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Montreal Trading Group

20. Bretton Woods
•Cause:fearofcountriesdevaluatingtheircurrencies(toboostexports)
•In1944,44CountriesmeetinBrettonWoods,NewHampshire
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–
Montreal Trading Group
•Decision:AllcurrencieslinkedtotheUS
DollarandthedollarlinkedtoGold

21. Bretton Woods
•CreationofIMF(InternationalMonetaryFund).TheIMFwilllendmoneyto
countriesinneed.
•CreationoftheWorldBank(Tohelpunderdevelopedcountriestogrow).
MTG
–
Montreal Trading Group

22. End of The Gold Standard
August 15
th
1971
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–
Montreal Trading Group

23. How to make money
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–
Montreal Trading Group

24. Currency Pairs
•CurrencyPair:quotingonecurrencyagainstanother.
•BaseCurrency:thefirstcurrencylisted
•QuoteCurrency:thesecondcurrencylisted
MTG
–
Montreal Trading Group
•EachcurrencyisidentifiedbyitsISO
Currencycode
•ISOstandsforInternationalOrganization
forStandardization.Thecodeisthreeletter
alphabeticcode.

25. Currency Pairs
•Example: Currency Pair USD/CAD = 1.35
•Base Currency: USD
•Quote Currency: CAD
MTG
–
Montreal Trading Group
•ThisistheQuotefortheUSDagainst
CADdollar.Thequotationof1.35means
thatoneUSdollarcanbechangedfor
1.35Canadiandollars.

26. Major Currencies
•USD (US dollar)
•EUR (euro)
•JPY (Japanese yen)
•GBP (British pound)
•AUD (Australian dollar)
•CAD (Canadian dollar)
•CHF (Swiss franc)
MTG
–
Montreal Trading Group

27. Major Currency pairs
•GBP/USD (the cable)
•USD/CAD (Loonie)
•AUD/USD (Aussie)
•USD/CHF (Swissy)
•USD/JPY
•EUR/USD
•NZD/USD
MTG
–
Montreal Trading Group

28. Cross Pairs
Pairs that do not include USD.
Example: CAD/JPY
MTG
–
Montreal Trading Group

29. Market Structure
•TransactionsaredoneOTC(overthecounter).Thereisnocentral
exchangetotradeon.
•BecauseitisOTC,executionpriceswillvary.
MTG
–
Montreal Trading Group

30. Interbank market
The interbank market is where banks exchange currencies with one another.
They can do this by transacting directly through EBS (Electronic Broking
Services) or Thompson Reuterswho are the two electronic brokering
platforms at this level.
This is only available to very large banks.
MTG
–
Montreal Trading Group

31. The players
FX Dealers
Other Large Participants
forexbrokersand retail ECNs
MTG
–
Montreal Trading Group

32. Price Terminology
Spot Price: The current price of a currency pair
Order Book: All the buy orders and sell orders that are open
Bid Price: The price you can sell at right now
Ask Price: The price you can buy at right now
Spread: Difference between the bid and ask
MTG
–
Montreal Trading Group

33. Pips
Point= min change
Pip= 0.0001
Pipette= 0.00001
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Montreal Trading Group

34. Lots
Standard lot = 100,000 units (of base currency)
Mini lot = 10,000 units
Micro lot = 1,000 units
MTG
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Montreal Trading Group

35. Pip Value Calculation
Example: USD/CAD = 1.35251
Contract value for one Lot: 100,000 USD * 1.35251 = 135,251$ CAD
Pip value is the profit/loss for 1 Pip movement.
•If price goes up to 1.35261
•Then Contract value = 100,000 USD * 1.35261 = 135,261$ CAD
•Pip value = 135,261 -135,251 = $10 CAD
•In base currency this is equal to 10/1.35251 = 7.39
*Pip value is always in quote currency
*Value of pip is based on how many lots are taken
MTG
–
Montreal Trading Group

36. Leverage
Funds loaned to you by your broker
Brokers can loan to you up to 1000 times your money
MTG
–
Montreal Trading Group

37. Leverage
Leverage Margin Req % 1 Lot Req $
1:1 100% $100,000
2:1 50% $50,000
10:1 10% $10,000
50:1 2% $2,000
100:1 1% $1,000
200:1 0.5% $500
400:1 0.25% $250
800:1 0.125% $125
1000:1 0.1% $100
MTG
–
Montreal Trading Group

38. Short Selling
Short Selling: “the sale of an asset that the seller does not own. The seller
effects such a sale by borrowing the asset.”-Wikipedia
MTG
–
Montreal Trading Group

39. MTG
–
Montreal Trading Group

40. Brokers and Orders
A brokeris an entity that facilitates the execution of your order.
Order: instructions to buy/sell a quantity of a product.
MTG
–
Montreal Trading Group

41. What do you want in a broker
•A broker that is Regulated
•Transparency
•Alignment of interests
•Low Fees
•Leverage
•Good Platform
•Support
MTG
–
Montreal Trading Group

42. A book vs B book
The A book is the order book that has the major liquidity providers. When a
broker is using this book, he is sending your orders to be executed with one
of those liquidity providers. This is the order book used by ECN brokers.
The B book is the broker’s in-house order book. When a broker is using this
order book, he is taking the other side of your trade (can be hedged or
unhedged). This is the order book used by market maker brokers.
MTG
–
Montreal Trading Group

43. ECN brokers and Commissions
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–
Montreal Trading Group

44. Recommended Broker
MTG
–
Montreal Trading Group

45. Trading Platforms
MetaTrader4:
•Most used platform
•Programming language most widely used
•Kind of old.. (15 years old)
MTG
–
Montreal Trading Group

46. Ways of Analysis
MTG
–
Montreal Trading Group
Technical
Analysis
•The Study of
Charts (price and
volume).
Fundamental
Analysis
•The study of the
underlying forces
that affects a
financial product.
Types
of
Analysis

47. What is Technical Analysis?
TechnicalAnalysisisthetrading
disciplinethatusespriceandvolume
toidentifytradingopportunities.
MTG
–
Montreal Trading Group

48. How is Technical Analysis Used?
TechnicalAnalysisisusedwithinastrategy
tosystematizetheentryandexitprocess
andtoincreaseourtradingprofitsby
givingushighprobabilityentriesandexits.
MTG
–
Montreal Trading Group

49. Candles
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Montreal Trading Group

50. Trendlines
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Montreal Trading Group

51. Trendlines
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Montreal Trading Group

52. Channels, Supports & Resistances
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Montreal Trading Group
Support/Resistance :
•Trends
•Round Numbers
Support/Resistance Property:
•Role Reversal

53. Chart Patterns
ChartPatternsareusedbecausetheyarebelievedtohave
predictivevalueonfuturepricemovement.Somepatternscan
helptradersinchoosingentryandexitpoints.
MTG
–
Montreal Trading Group

54. Double/Multiple Tops and Bottoms
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Montreal Trading Group

55. Double/Multiple Tops and Bottoms
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–
Montreal Trading Group

56. Double/Multiple Tops and Bottoms
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–
Montreal Trading Group

57. Ascending Triangles
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–
Montreal Trading Group

58. Symmetrical Triangles
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–
Montreal Trading Group

59. Wedges
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Montreal Trading Group

60. Wedges
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–
Montreal Trading Group

61. Technical Indicators
“Technicalindicatorsareafundamentalpartoftechnicalanalysis
andaretypicallyplottedasachartpatterntotrytopredict
themarkettrend.Indicatorsgenerallyoverlayonpricechartdata
toindicatewherethepriceisgoing,orwhetherthepriceisinan
"overbought"conditionoran"oversold"condition.”-Wikipedia
MTG
–
Montreal Trading Group

62. Relative Strength Index (RSI)
MTG
–
Montreal Trading Group

63. Fibonacci Retracement
LeonardoFibonacciisan
Italianmathematician.
“TheFibonacciSequenceis
theseriesofnumbers:0,1,
1,2,3,5,8,13,21,34,...
Thenextnumberisfoundby
addingupthetwonumbers
beforeit.”–mathisfun.com
MTG
–
Montreal Trading Group

64. Risk Management
What’s Risk? An action or an activity that has a potential to go wrong.
Risk Management Techniques:
1.Risk Acceptance
2.Risk Avoidance
3.Risk Limitation
➢Stop Losses
4. Risk Transference
MTG
–
Montreal Trading Group

65. Money Management
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–
Montreal Trading Group
% Of Account Lost % Gain Required to BE
-20% +25%
-30% +43%
-40% +67%
-50% +100%
-60% +150%

66. Position Sizing
Maximum Loss per trade: ~2%
Steps:
1.Calculate Dollar Max Loss for the Position
2.Decide on Entry Price
3.Decide on Stop Loss Price
4.Calculate Position Size
Function:
Pos Size = ((Max Loss $) / (Entry Price –Stop Loss Price)) / 100,000 * Entry Price
MTG
–
Montreal Trading Group

67. Batting Average & Win/Loss Ratio
Batting Average: The percentage of trades that are profitable.
Win/Loss Ratio: the ratio of the average profitable trades over the
average un-profitable trades.
MTG
–
Montreal Trading Group

68. Thank You -Follow Us
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–
Montreal Trading Group
@MontrealTradingGroup
@MontrealTradingGroup
@Montreal Trading Group
@MTG_Traders
www.MontrealTradingGroup.com

69. Thank You -Follow Me
MTG
–
Montreal Trading Group
@Mohsen_Hassan
@Mohsen Hassan