The Traders Bible

By Eduardo Vanci

How to WIN when trading Forex or the Markets. Simple yet professional guide for new or experienced traders. Learn the secrets of successful trading revealed from years of trading the markets in this trading bible. By following these pages you WILL eliminate losses and increase winnings.

 

• Language: English
• Publisher: Eduardo Vanci
• Release date: Dec 14, 2023
• ISBN: 9798223166559

Book preview

Chapter 1.

Introduction to trading.

1: What is Forex Trading?

2: The Basics of Trading

3: Developing Your Trading Plan

4: Trading Strategies

5: The Advantages and Risks

6: Fundamental Analysis

7: Technical Analysis

8: Trading Platforms and Brokers

9: Managing Your Money

10: Tips for Successful Trading

For those relatively new to trading or looking to up their game this is an introduction to the important basics. We will discuss some of these chapters in more detail later. Even if you're not a complete newbie I suggest reading all chapters in this section before progressing to the meaty stuff just as a refresher. Though this section leans more towards Forex trading, the same techniques apply to most trading.

Trading is one of the most popular and profitable ways to invest in the financial markets. For the non-initiated it is also one of the most difficult markets to make money in. Though after reading this book, you should find it a lot easier. Trading in the foreign exchange market is a great way to diversify your portfolio and make money in the long run.

The foreign exchange market (Forex) is the largest and most liquid financial market in the world, with a daily trading volume of more than $6 trillion. Forex trading is the simultaneous buying of one currency and selling another, which takes place in the foreign exchange market. Forex trading is the process of leveraging one currency against another in the hopes of making a profit from the price movements on the foreign exchange market.

But with the high potential for profit comes the risk of loss. Trading requires knowledge and skills that many people don't possess. It also requires discipline and patience. But this can be learnt and the contents you read here in this book will put you on the right path.

In this section, we will discuss the basics of trading, from the terminology used to the different types of trading strategies. We will also discuss the advantages and risks associated with trading, as well as strategies for successful trading. Finally, we will discuss the different types of trading platforms and how to manage your money when trading.

1: What is Forex Trading?

As we have said, Forex trading is the simultaneous buying of one currency and selling another. Currencies are traded in pairs, with one currency being bought and the other being sold. For example, the euro-dollar pair is EUR/USD. Buying one currency and selling another is known as a currency pair. The price of the currency pair is the exchange rate which goes up and down for periods of time.

The foreign exchange market is open 24 hours a day, five days a week, except for holidays. Forex trading takes place around the world, with the major trading centres being located in London, Tokyo, New York, and Hong Kong.

2: The Basics of Forex Trading:

Forex trading involves buying and selling currency pairs in the hopes of making a profit from price movements in the FX market. To make money from Forex trading, you need to understand the basics.

Trading is done through a broker, who will provide you with a platform that allows you to buy and sell currencies, commodities and indexes. The prices of these markets are constantly changing, and it's up to the trader to decide when and how to buy and sell in order to take advantage of these changes. You don't have to risk real money at this stage as all brokers provide free 'demo' accounts that you can fund with any amount of imaginary money. This is absolutely essential for anyone new to trading and expect to spend several months (I spent over a year) testing and experimenting various charts and technical indicators before putting any real money at risk. But what you learn today will enable you to learn much quicker, as someone else has already trodden the path of failure and success giving you a clear road ahead.

The first step in Forex trading is to identify the currency pair you want to trade. Currency pairs are composed of two currencies, with one being the base currency and the other being the quote currency. The base currency is the currency that you are buying, while the quote currency is the currency that you are selling.

The next step is to decide how much of the currency pair you want to buy or sell. This is known as the trading size or the lot size. The size of the trade will depend on the amount of money you want to invest in the currency pair. When you're ready to make a trade, you'll need to decide whether to go long or short. Going long means you're buying a currency in the hope that its value will increase, while going short means you're selling a currency in the hope that its value will decrease.

The third step is to decide how much money you want to risk on each trade. The risk is the amount of money you are willing to lose on each trade. It is important to remember that all trading is risky, and you can lose money, so it is important to only risk money that you can afford to lose.

The fourth step is to decide when to buy or sell the currency pair. This is known as the entry point. It is important to understand the different types of orders, such as stop loss and take profit orders, to help you manage your risk.

The fifth step is to monitor the performance of the currency pair. This involves keeping track of the price movements and adjusting as necessary.

Forex trading can be a great way to make money, but it's important to understand the risks involved. With the right education and proper risk management, you can become a successful Forex trader.

3: Developing Your Trading Plan

Developing a trading plan is an essential part of any trader's success.

A trading plan is a written document that outlines a trader's goals, strategies, and risk management strategies. It also provides details about the trader's trading style, such as when they plan to enter and exit positions, how they will manage their money, and what type of analysis they will use to make decisions.

Whether you're trading in the foreign exchange or any other market, having a well thought out trading plan is key to achieving consistent and profitable results. A trading plan is unique to the individual trader and their goals.

The first step in developing your trading plan is to define your investment goals and objectives. This includes deciding how much money you want to make from trading and how much risk you are willing to take. You should also determine your time horizon, i.e. how long you plan to hold your positions. Sometimes the trade may last days or weeks.

Once you have a clear understanding of your investment goals, it's time to decide on your trading strategies. This includes defining which currency pairs you will trade and when you will enter and exit trades. It is important to remember that a good trading plan is not static and should be adjusted as the market changes.

The next step is to decide on your risk management strategy. This includes defining what percentage of your capital you are willing to risk on each trade (which should be no more than 2% when starting out), setting stop-loss and take-profit levels, and determining how much leverage you are comfortable with. Risk management is essential in all trading since markets can be highly volatile and unpredictable.

Finally, you need to decide on the type of analysis you will use to make trading decisions. There are many different types of analysis, such as technical analysis, fundamental analysis, and sentiment analysis. It is important to understand the strengths and weaknesses of each type of analysis and to develop a strategy that combines them to produce consistent winning results.

Developing a trading plan is an important step in becoming a successful trader. It helps you define your goals, strategies, and risk management strategies, and it allows you to make informed decisions based on the analysis you have conducted. Having a well thought out trading plan is essential in achieving successful results.

4: Trading Strategies:

Trading strategies are essential for successful trading. Trading strategies refer to the set of rules that traders follow when entering and exiting trades, as well as the methods used to manage risk.

While there is no one-size-fits-all approach to trading, there are several different types of trading strategies that can be employed. Each type has its advantages and disadvantages.

The best strategy for a trader depends on their individual goals and risk tolerance.

Trading strategies are methods used by traders to identify profitable trading opportunities in the market.

Fundamental analysis is a type of strategy that looks at macroeconomic factors, such as interest rates, inflation, and economic growth, to identify potential trading opportunities. This is used more by the experienced and professional traders. It's very complex and takes great learning.

Technical analysis is a type of strategy that looks at price movements and patterns to identify potential trading opportunities and the one used by most traders.

Both of these strategies can be used to identify profitable trading opportunities in the market. Though we are concentrating on the technical strategies as this is the easiest to use.

There are several technical strategies used by traders the most common being: -

Trend Following Strategies.

Trend following strategies are designed to take advantage of up or down markets. These strategies involve identifying a trend by monitoring price movements and then buying or selling accordingly. Trend following strategies can be used with any time frame, from short term intra-day trading to longer term positions held for weeks or months.

Momentum Trading Strategies.

Momentum trading strategies involve buying and selling based on short term fast price movements. These strategies often involve taking a position as soon as a price starts to move in a certain direction and then closing the position once it has reached a predetermined level of profit or loss. Momentum trading is best suited for traders who are willing to take risks and are comfortable with fast paced trading. Momentum strategy is similar to 'scalping' described below.

Range Trading Strategies.

Range trading strategies involve taking advantage of market movements that occur within a certain price range. These strategies involve buying when the price dips within the range and selling when the price rises within the range. Range trading requires traders to be patient and disciplined, as prices can remain within the range for long periods of time.

Swing Trading Strategies.

Swing trading strategies involve taking advantage of price swings that occur over a period of days or weeks. These strategies involve buying when a price dips below a certain level and then selling when the price rises above that same level. Swing trading can be a good strategy for traders who are comfortable with taking calculated risks and are looking for longer term trades.

Position Trading.

Position trading is a longer-term strategy that involves taking a position in a currency pair and holding it for an extended period of time. Position traders look for long term trends on monthly charts and then enter a trade when the trend looks likely to continue.

Scalping.

Scalping is a strategy that involves taking small profits on a regular basis. Scalpers look for small price movements and then quickly enter and exit the market to capture profits. This can entail entering and closing dozens of trades a day and requires constant monitoring and action and often done from the five minute or even one minute chart. It's fast paced and best suited for a more experienced trader with the mentality suited to this fast-paced decision making.

News Trading.

News trading is a strategy that attempts to capitalise on market moving news. News traders look for economic reports and other news events that could move a particular market and then enter a trade. There is a well-known saying in the trading world 'buy the rumour, sell the news'. Basically, rumours lead up to a news event that could push that market up in