Day Trader-Forex Trading

By Murry Naga

 

Do you want to start making money trading, but not sure where to start?

Have you tried to learn but found it all too difficult and confusing? Do you want to learn using simplified teaching methods in an easy step-by-step format?Do you want to know more about futures forex and day Trader? If so, this is the book for you!

In the book Vol.1: Day Trader-Forex Trading, You will find

Why should you opt for day Trader-Forex Trading?
Proven strategies that will help you minimize risk and acquire handsome profits
Tips on choosing the right broker
Day Trader tools and platforms that you should know about
Effective techniques for risk management
Ways in which you can read market sentiments
And more.

In the book Vol.2 -  You will find

Understanding of the forex market
Importance of demo trading for new forex trader
Understanding of currency pair
Explanation of major currency pairs
A detailed explanation of currency quotes
Thorough learning about the concepts like pips, spreads, leverage and lot sizes
Description of various order types in forex trading
In-depth analysis of the forces that drive the forex market
Importance of fundamental analysis
Importance of technical analysis
Various parts of technical analysis
Various trading styles that can be adopted
Trading strategies that can help
Importance of risk management in forex
Introduction of the MT4 trading platform
Step by step understanding of placing orders, modifying and executing trades
In-depth focus on concepts that can help in preventing your loss in the forex market

In the book Vol.3 - Futures Trading, You will learn

Futures and Micro Futures
: Future, Micro Futures Vs Stock
Futures and Micro Futures Contracts
Choosing a Broker
The Types of Trade Orders to Use for Index Trading
Trade Psychology and Account Management
Technical Charting Patterns and Indicators
Practice to Gain Confidence Prior
Checklist and Trading Log
Mistakes to Avoid
Develop a Trading Plan

If you are looking for a fun and exciting way to trade in Day Trader-Forex trading, and Futures download this book today and get started!

• Language: English
• Publisher: Murry Naga
• Release date: Apr 6, 2022
• ISBN: 9781393455592

Murry Naga

MurryNaga writes on different genres. He's a full-time trader and a financial counsellor. He has a history of trading experience and has made a living by using his understanding of the financial system. He decided to start compiling his trading knowledge into a series of books in order to educate others using his techniques and assist them to achieve a degree of financial freedom where they can enjoy their lives without relying in their job. MurryNaga's books cover all the aspects of Forex Trading and Crypto trading, and he has even more knowledge to share with readers in the future. If you have been dreaming of achieving true financial freedom, then MurryNaga is here to help you turn those dreams into reality! His books are written in a clear and concise manner, making them easy to understand and apply.

Book preview

3 in 1

The Complete Guide of how to Maximize Profits by Investing in Forex, Stock Market, Options and Futures. Easy Strategies, Techniques and Trading Psychology.

[Murry Naga]

Text Copyright 2020 © [Murry Naga]

All rights reserved. No part of this guide may be reproduced in any form without permission in writing from the publisher except in the case of brief quotations embodied in critical articles or reviews.

Legal & Disclaimer

The information contained in this book and its contents is not designed to replace or take the place of any form of medical or professional advice; and is not meant to replace the need for independent medical, financial, legal or other professional advice or services, as may be required. The content and information in this book has been provided for educational and entertainment purposes only.

The content and information contained in this book has been compiled from sources deemed reliable, and it is accurate to the best of the Author’s knowledge, information and belief. However, the Author cannot guarantee its accuracy and validity and cannot be held liable for any errors and/or omissions. Further, changes are periodically made to this book as and when needed. Where appropriate and/or necessary, you must consult a professional (including but not limited to your doctor, attorney, financial advisor or such other professional advisor) before using any of the suggested remedies, techniques, or information in this book.

Upon using the contents and information contained in this book, you agree to hold harmless the Author from and against any damages, costs, and expenses, including any legal fees potentially resulting from the application of any of the information provided by this book. This disclaimer applies to any loss, damages or injury caused by the use and application, whether directly or indirectly, of any advice or information presented, whether for breach of contract, tort, negligence, personal injury, criminal intent, or under any other cause of action.

You agree to accept all risks of using the information presented inside this book.

You agree that by continuing to read this book, where appropriate and/or necessary, you shall consult a professional (including but not limited to your doctor, attorney, or financial advisor or such other advisor as needed) before using any of the suggested remedies, techniques, or information in this book.

Table of Contents

Futures Trading for Beginners ......................... 16

INTRODUCTION ................................... 17

Chapter 1: Futures and Micro Futures .................. 20

Brief History of Futures .............................. 20

The Futures Contract ................................ 20

Different Types Of Futures Contracts & Codes ............ 23

How to trade futures ................................ 24

Different Types of Securities .......................... 26

What and Where to Trade ............................. 30

Principles of futures trading ........................... 31

The S&P 500 Index Futures ........................... 33

Chapter 2: Day Trading: Future, Micro Futures vs Stock ... 34

Advantages of Micro Futures over Stocks ................ 34

Day Trading Experience .............................. 34

Logical and calm approach to trading. ................... 35

Be a Modern Trader ................................. 37

High Leverage ...................................... 39

A Giant Advantage .................................. 41

A New Frontier for Small Investors ..................... 41

Chapter 3: Futures and Micro Futures Contracts .......... 43

Contract Specification Sheet ........................... 43

Month Contracts Traded in Micro Futures ................ 43

Which Contracts Should You Trade ..................... 44

Regular Trading Hours & Globex ....................... 44

Typical Daily Range of an Index ....................... 45

Chapter 4: Choosing a Broker .......................... 46

Modern Online Discount Broker ....................... 46

Trading Business Advantages .......................... 48

Chapter 5: The Types of Trade Orders to Use for Index Trading ...... 50

How to We Make A Profit On The Futures Market ......... 50

The most effective method to Make Money Trading Futures . 51

Exchanging Knowledge For Success the Futures Market .... 55

Instructions to effectively exchange ..................... 57

Market Orders and the Bid and Ask ..................... 57

Limit Orders and When to Use Them .................... 58

The Day Order versus the GTC – Good Till Canceled Order . 59

Stop Orders: The Types and Uses ....................... 61

Going Long and Going Short .......................... 62

Trailing Stops ...................................... 63

OCO One Cancels the Other Orders ..................... 64

The Math of Low Commissions ........................ 65

Chapter 6: Trade Psychology and Account Management ... 66

Trading Psychology: The Disposition Effect & Mental Balance66

View trading as a long-term venture ..................... 66

Start viewing losses as part of the game .................. 68

Keep trading as a part-time activity ..................... 69

Cultivate a habit of discipline .......................... 71

View trading as a game and not a way of making money .... 72

Chapter 7: Technical Charting Patterns and Indicators .... 74

The Goal of Using Charting for Better Trading ............ 74

Candlesticks Defined ................................ 75

MACD ........................................... 76

Price Changes in Dollars NASDAQ 100 ................. 77

Chapter 8: Practice to Gain Confidence Prior ............. 78

Practice Trading .................................... 78

Major Goal of Practice ............................... 79

Diminishing Returns and the Order-Creep Phenomenon ..... 80

Chapter 9: Checklist and Trading Log ................... 83

Building a Trading Plan .............................. 83

Chapter 10: Mistakes to Avoid ......................... 86

Chapter 11: Develop a Trading Plan .................... 89

Win Rate Versus Reward-Risk Ratio Computations ........ 89

Suggestions for Improvements ......................... 90

Forming Your Trading Plan ........................... 91

Balance ........................................... 92

How In Trying Too Hard - You Can Defeat Yourself ....... 93

CONCLUSION ...................................... 95

Day Trading for Beginners ............................ 97

Introduction ......................................... 98

Chapter 1: What Is Day Trading? ...................... 99

Day Trading vs. Swing Trading ........................ 99

Buying Long, Selling Short .......................... 101

High-Frequency Trading (HFT) ....................... 102

Trade The Best, Leave The Rest ....................... 104

Chapter 2: Risk And Account Management ............. 105

Risk Management .................................. 105

Plan Your Trades Smartly ............................ 105

Practice The One-Percent Rule ........................ 106

Set Your Own Take-Profit And Stop-Loss Points ........... 106

Always Calculate Your Expected Return ................. 107

Hedge And Diversify ............................... 108

Trading Psychology ................................ 108

Not Being Confident With The Method .................. 108

Trading When You Are Unfocused Or Sick ............... 109

Not Preparing For The Trading Day .................... 109

Letting Past Failures Affect The Newer Trades ............ 109

Chapter 3: How To Find Stocks For Trades? ............ 111

Find The Stocks In-Play ............................. 111

Float And Market Cap .............................. 112

Pre-Market Gappers ................................ 113

Real-Time Intraday Scans ............................ 113

You Can Set Alerts ................................ 114

You Can Build A Watchlist .......................... 114

Planning The Trade Based On Scanners ................. 115

Chapter 4: Assets 101: Stocks, Bonds, Currencies, And Commodities ...... 116

Basics Of Stocks For Day Trading ..................... 117

Volume ......................................... 117

Volatility ........................................ 118

Understanding Bonds ............................... 119

Credit Risk ...................................... 119

Interest Rate Risk .................................. 120

Currency Trading .................................. 120

Trading Commodities ............................... 121

Chapter 5: Assets 102: ETFs, Cryptocurrency, Options, And Derivatives ...... 123

Trading ETFs ..................................... 123

Components Of ETFs ............................... 124

Benefits Of Day Trading With ETFs .................... 124

Finding Opportunities With Cryptocurrency ............. 125

Volatility ........................................ 125

Accept the Losses ................................. 126

Set Stop-Losses ................................... 126

Exploring Options .................................. 127

Why Should You Trade Options? ...................... 127

Disadvantages Of Options ........................... 128

Understanding Derivatives ........................... 129

Chapter 6: Tools And Platforms ....................... 130

Choosing A Brokerage .............................. 130

Understand What You Need .......................... 130

Check The Broker’s Fees ............................ 130

Do Some Background Check ......................... 131

Do Some More Investigation ......................... 131

Obtain A Trial .................................... 132

Discussing Brokers For Day Traders ................... 132

Lower Commissions ................................ 133

Commissions For Each Share ......................... 133

Better Short Lists .................................. 133

Direct Access To The Market ......................... 133

Being Aware Of Brokerage Scams ..................... 134

Separate Fact From Fiction ........................... 135

Make Sure You Communicate With The Broker ........... 136

Do A Thorough Research ............................ 136

Chapter 7: Introduction to Candlesticks ................ 137

Price Action And Mass Psychology .................... 138

Bullish Candlesticks ................................ 139

Bullish Hammer ................................... 139

Bullish Belt-Hold .................................. 140

Bullish Engulfing .................................. 141

Bearish Candlesticks ................................ 142

Bearish Hanging Man ............................... 142

Bearish Belt Hold .................................. 143

Bearish Engulfing ................................. 143

Indecision Candlesticks ............................. 144

Spinning Top ..................................... 145

The Doji Pattern ................................... 145

Chapter 8: Picture This – Technical Analysis ............ 147

Comparing Research Techniques Used In Day Trading ..... 147

Fundamental Research vs. Technical Research ............. 147

Assumptions In Technical Analysis .................... 149

Market Cyclicality ................................. 149

Trends In Price, Volatility, And Volume ................. 151

Characteristics And Analytical Approach ............... 151

Types Of Charts ................................... 152

Candlesticks ..................................... 152

Open-High Low-Close .............................. 153

Line ........................................... 153

Area ........................................... 153

Avoiding Technical Analysis Pitfalls ................... 154

No Opportunity In Obvious Analysis .................... 154

Analyzing The Data Too Much ........................ 154

There Might Be An Upward Bias ...................... 155

Chapter 9: All About Market Indicators ................ 157

Moving Averages .................................. 158

MACD .......................................... 159

RSI ............................................. 160

Bollinger Bands ................................... 161

CCI ............................................. 162

Fibonacci ......................................... 163

Stochastics ....................................... 163

ADX ............................................ 164

ATR ............................................ 164

Chapter 10: Day Trading Strategies .................... 166

Trade Management And Position Sizing ................ 166

Psyching Out The Markets ........................... 167

Identifying Anomalies And Traps ..................... 168

Measuring Money Flows ............................ 169

Red-To-Green Trading .............................. 169

Opening Range Breakouts ........................... 170

Scalping ......................................... 171

Reversal ......................................... 172

Chapter 11: Step-By-Step Guide For A Successful Trade .. 174

Step 1 – Build A Watchlist ........................... 174

Begin Your Watchlist Post-Market ..................... 174

Don’t Include Too Many Stocks ....................... 175

Keep Your Trade Triggers Planned Out .................. 175

The Stocks Should Fit Your Style ...................... 175

Don’t Forget Liquidity And Volume .................... 176

Step 2 – Create A Trading Plan ....................... 176

Assess How Many Risk You Can Tolerate ................ 176

Maintain A Trading Journal .......................... 176

Figure Out What Strategy To Use ...................... 177

Assess The Market Environment ....................... 177

Be Strict With Risk Management ...................... 177

Clearly Define Entry And Exit Points For Your Trades ....... 178

Figure Out Your Trading Style ........................ 178

Don’t Overlook The Fundamentals ..................... 178

Have A Fixed Reward/Risk Ratio ...................... 178

Specify The Maximum Risk You Are Going To Take Per Trade 179

Don’t Overlook Your Maximum Drawdown .............. 179

Implement Pending Orders Where It Is Needed ............ 179

Step 3 – Execute Your Trade ......................... 180

Conclusion ......................................... 182

Forex for Beginners ................................. 183

Introduction ........................................ 184

Chapter 1: The Enigma Called Forex Trading ........... 187

The Advertising Maze Can Be Treacherous to Navigate .... 188

Chapter 2: The Intimidating Stuff First ................. 191

The Forex Market Is HUGE .......................... 191

Forex Is Different .................................. 191

High Leverage and Higher Risk ....................... 192

It’s A Mesmerizing and Terrifying Terrain At the Same Time193

Chapter 3: Understanding Forex Trading ............... 195

What Is Forex? .................................... 195

What Is the Role of Forex Trading? .................... 199

Major Players ..................................... 199

Advantages ....................................... 200

Chapter 4: Major Currencies and Currency Pairs ........ 203

Major Currencies .................................. 208

The US Dollar (USD) ............................... 209

Japanese Yen (JPY) ................................ 210

Euro (EUR) ...................................... 210

British Pound (GBP) ............................... 211

Chinese Renminbi (CNH) ............................ 211

Canadian Dollar (CAD) ............................. 212

Australian Dollar (AUD) ............................ 212

Swiss Franc (CHF) ................................. 213

Major Currency Pairs ............................... 213

Minor Currency Pairs ............................... 214

Exotic Currency Pairs ............................... 215

Major Forex Markets ............................... 216

Chapter 5: Currency Quote ........................... 218

Base Currency and Counter Currency .................. 218

Volume/ Lot Size .................................. 219

Stop Loss ......................................... 220

Take Profit ....................................... 222

Order Type ....................................... 223

Limit Order/ Pending Order .......................... 224

Pips ............................................. 225

Bid Price, Ask Price and the Spread .................... 230

Chapter 6: The Curious Case of Leverage ............... 234

Chapter 7: Choosing a Broker ......................... 238

Trustworthiness and Reliability ....................... 238

Affordability ...................................... 239

Seamless Deposit and Withdrawals .................... 239

Trading Platform ................................... 240

Speed of Execution ................................. 240

Support .......................................... 240

Chapter 8: Getting Acquainted With Demo Accounts ..... 241

Chapter 9: Forces the Drive the Foreign Exchange Market . 244

Factors Influencing Demand .......................... 246

The Things That Lead to High Supply .................. 247

Chapter 10: Factors Determining the Currency Pricing in the Forex Market ...... 249

Chapter 11: Analytical Approaches .................... 251

Fundamental Analysis ............................... 251

Technical Analysis ................................. 253

Charts ........................................... 256

Indicators ........................................ 258

Finding the Best Fit ................................. 261

Chapter 12: The Mechanics of Trading ................. 263

Chapter 13: Forex Trading Styles ...................... 266

Chapter 14: Analysis Based Trading Strategies .......... 270

Chapter 15: Risk Management ........................ 273

Effective Ways to Manage Your Risk .................. 275

Chapter 16: Understanding MT4 Trading Platform ....... 277

Setting Market Execution Orders ...................... 279

Way to Modify a Trade .............................. 280

Way to Close a Trade ............................... 280

Conclusion ......................................... 281

INTRODUCTION

Today, most traders prefer to trade in futures due to their associated advantages. Trading in futures is quite flexible and diverse. The good news is that a trader can employ almost any methodology to trade. Some traders shy away from this form of trading due to their limited knowledge about futures. Also, others are discouraged from trading in futures because they think that it is difficult. Well, to some extent, this is true. Comparing trading in futures to trading in stocks, the former is very risky.

There are different forms of futures contracts including currencies, energies, interest rates, metals, food sector futures, and agricultural futures. The best futures contracts you will find in the market are briefly discussed in the following lines.

S&P 500 E-mini

Most traders will fancy the idea of trading in the S&P 500 E-mini because of its high liquidity aspect. It also appeals to most investors because of its low day trading margins. You can conveniently trade in S&P 500 E-mini around the clock not to mention that you will also benefit from its technical analysis aspect. Essentially, the S&P 500 E-mini is a friendly contract since you can easily predict its price patterns.

10 Year T-Notes

10 Year T-Notes is also ranked as one of the best contracts to trade-in. Considering its sweet maturity aspect, most traders would not hesitate to trade in this futures contract. There are low margin requirements that a trader will have to meet when trading in 10 Year T-Notes.

Crude Oil

Crude oil also stands as one of the most popular commodities in futures trading. It is an exciting market because of its high daily trading volume of about 800k. Its high volatility also makes the market highly lucrative.

Gold

This is yet another notable futures contract. It might be expensive to trade in gold; however, it is a great hedging choice more so in poor market conditions.

Capital Requirements

The amount of money required to begin trading in futures will vary. Some brokers will require a trader to have about $5,000. However, some would require only $2,000. A trader needs to choose the best broker who is flexible enough to allow them to trade with the little capital they have.

Leverage

Leverage will also vary depending on the type of futures your trade-in. The contract value will also have an impact on the amount of leverage that you will have.

Liquidity

Just like leverage, the liquidity aspects of futures will also depend on the futures you are trading. Accordingly, it is important for any trader to regularly check the respective volumes of contracts before trading on them.

Volatility

Futures are volatile. The advantage gained by using high leverage ensures that a trader makes a good profit with little price changes in the market.

Keeping the above factors into consideration, futures are a good market to trade. A trader can easily day trade with as little as $2,000. The high leverage ratio will also guarantee that huge profits can be earned.

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Futures contracts are a type of derivative in which the underlying asset of the contract is paid for in advance of its delivery. Futures deal almost exclusively in commodities though there may be futures contracts in other assets such as currency. Futures are generally traded on all major stock exchanges around the world. Therefore, futures are not just limited to one specific exchange.

Since futures deal with assets whose price fluctuates according to market conditions, keeping open positions for a longer period may expose investors to sudden market fluctuations. For instance, oil futures tend to be the riskiest of all.

Since day trading implies opening and closing positions on the same day, investors can avoid the ups and downs that come with leaving positions overnight. Also, futures are often traded after the close of markets in the United States. That implies that fluctuations in Asian markets will have a direct impact on futures traded in the United States.

So, if oil futures fall during trading in Asia, an investor in North America may wake up to an unpleasant surprise. By cashing out at the end of the day, day traders can ensure that there will be no surprises at the beginning of the next trading day.

Advanced day traders may choose to keep positions open overnight. However, derivatives are the riskiest type of investment vehicles. This is why investors need to be clear on the advantages and disadvantages that come with dabbling in these markets.

Chapter 1: Futures and Micro Futures

Brief History of Futures

In the 1840s, Chicago was becoming the mecca of the commercial exchange with railroads and telegraph lines connecting through it. In 1848 the Chicago Board of Trade was formed which gave birth to the futures contract. The very first futures contracts were created for commodities, specifically agricultural commodities.

If you have ever read about futures the typical story-line about them is that they were created to help farmers hedge against the price-fluctuations of the crops that they produced. Futures can be a great way to hedge market-specific risk and they can also be used for regular trading and speculation. Futures are a leveraged product which can help traders reap huge profits, but also carries significant risk.

The first futures contract that was ever traded was for corn. After that, it was followed by wheat, soybeans, cotton, cocoa, orange juice, sugar, pork cattle, and many others. Contracts for other products slowly began to develop. By the 1970s futures trading began to penetrate other markets.

The Futures Contract

The underlying asset for a futures contract could be stocks, commodities, currencies, bonds, and other instruments. The terms of a futures contract are standardized in quantity and the delivery date. The exchanges facilitate trading between buyers and sellers. In order to trade futures traders, they need to obviously put up cash, which is commonly referred to as margin in futures trading. A proper margin must be maintained for the life of the trade.

Margin

Traders need to have a sufficient margin in order to trade futures. This will usually depend on the kind of future that is being traded and how many contracts. In order to fully understand the margin, there are 3 different types of margin to understand.

Clearing Margin

Initial Margin

Maintenance Margin

Clearing Margin

Clearing Margin is money that is required for brokerages and institutional firms to have on hand to complete futures transactions with their clients. It is a form of capital protection for brokers to have in order to ensure client trades are executed.

Initial Margin

The initial margin is the amount that is required to execute a futures trade. This amount is typically set and facilitated by the exchanges themselves. The real exposure of the trade can be greater than the initial margin. If the loss of trade becomes greater than the initial margin, it may prompt a margin call by the broker. If a broker issues a margin call, traders are expected to post margin to bring the account back up that day. The majority of futures accounts are marked to market daily by brokers. This means that futures contracts are re-evaluated at the end of each trading day. The profit and loss are added and subtracted from the margin on a daily basis.

Maintenance Margin

The maintenance margin is the minimum amount of cash a trader must maintain in their account to keep a trade open for a futures contract. If the net value of the account falls below the maintenance margin, this will prompt the broker to issue a margin call. Once a margin call is issued the trader must post more funds to bring the account value above to the minimum.

Settlement in Futures

When a trader enters into a futures position he or she has 3 different options as to how they can settle the trade.

Straight Cash Settlement

Regular Closeout

Expiration

Physical Delivery

Straight Cash Settlement

Regular Closeout

This is the most common closeout. A trader simply closes out their futures position at the current market price. A lot of day traders use a regular closeout and typically don’t hold long term positions up until expiry for futures.

Expiration

The expiration date of a futures contract is when that futures contract stops trading and gets the final settlement price for that specific period. Most brokers typically expire a trader’s position by closing their trade out and giving them the option to re-open it for the new contract month and at the new contract price.

Physical Delivery

In today’s day, physical delivery is very uncommon. Less than 1% of futures contracts actually take physical delivery of the underlying asset. If it does happen, the amount specified in the contract is delivered by the seller of the contract to the actual exchange. It can happen with commodities, but it’s very rare.

Let’s say for example you had 1 contract on wheat futures. The standard contract size for wheat futures is 5000 bushels. When the contract expires you can take physical delivery of 5000 bushels of wheat. Even though most brokers will only do cash settlements, it is worthwhile to note that there is a very small percentage that takes physical delivery. I don’t know about you, but I prefer cash over wheat any day.

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Different Types Of Futures Contracts & Codes

A futures contract can technically be created on anything. All you need is two different counterparties to create the transaction. They don’t necessarily have to happen through the facilitation of exchange. It is best to trade futures that are facilitated and standardized by an official exchange. Since futures are a standardized contract they have specific symbol structure and abbreviations. Futures contracts can be traded on the following markets.

Agricultural

Currencies

Equity Index

Financial

Meats/Dairy

Metals

Softs

F= January

G= February

H = March

J= April

K=May

M=June

N=July

Q= August

U=September

V= October

Z= December

Let’s take the following example. Let’s say you wanted to view the current price of Natural Gas futures for this current month (January) and the year (2016).

The symbol code for this would