There are many “guides” on the Internet that purport to show you how to trade the Forex markets. This one actually delivers. At least it will once I’ve finished writing it anyway.
This article could be incredibly long, so instead of explaining each little nuance and the terminology of trading I will link to other articles and websites occasionally. If you already understand that particular nuance or term there’s no need to follow the link; you can instead continue reading this article until.
I’m going to assume you know what trading is (in simple terms, buying and selling) and also what Forex is. If you don’t know this please read these articles first:
Wikipedia – Foreign Exchange Market
Wikihow – How to Trade Forex
If you’re in the UK I suggest you consider spread betting (more info) then choose a broker and platform. I recommend you use Metatrader. It’s not perfect but it gets the job done and can perform pretty much any task you as of it. Your broker may have a specific version of Metatrader, so it’s best to download it from your broker’s website.
Once you have logged in to Metatrader with your demo or live trading account (please open a demo account if you’re still learning) we can work on setting up your charts and deciphering what is going on.
The default look and feel to Metatrader is pretty dated and unpleasant on the eyes. I change the chart background to white or cream and change the candlestick colours to red and blue. That’s all just preference of course, it makes no difference in theory but in practice you are more likely to be willing to analyse the charts for longer if the charts are pleasing to look at. If you’re lost at this point, you need to go back to BabyPips.com and read up on the basics of trading, then come back here.
Once you have your charts open (I suggest starting with EUR/USD, GBP/USD, USD/CHF, USD/JPY) we can start to look for structure and get a feel for the market. If you’re not sure how to read structure there is more info here:
How to Read Structure
Next we will put our trading strategy to work. There is a LOT more to a trading strategy than just telling us what to look for and when to trade. More info here:
Building a Trading Strategy
In the interests of keeping this article short and relevant I will focus on the part of the strategy that tells us what to trade and how. Here we go!
We’re looking for areas where the market has seemingly got “stuck”. In essence we’re looking for rangebound price action, but not quite as you will have been taught to look for before. Other articles will tell you this is how to identify a range-bound market:
I’m going to show you how to use the principles of trading breakouts using Dow style zig zag structure. Oh yeah it’s about to get interesting.