Currency trading introduction

Dear visitors,welcome to my humble site. My name is Alex Green, among friends also known as THE ANIMAL, you will find out Im the trader who actually made over 6k profit within my first year of trading. That time it was 2001 and trading was still done over telephone lines, we had almost no computer software to automate.

With that being said, let us have a look at what Forex really is.

Before we start, I warn you online forex trading IS NOT EASY AT ALL !


So what actually is currency trading ?

It is very simple.. you buy one currency and at the same time you sell the other curency. For example you speculate on rising Dollars so you must sell EUROs or British Pounds at the same moment you buy Dollars. You buy currency with the aim in mind, that buying currency will go up versus the currency that is being sold. You profit on the difference. or .. ehm you lose lots of money but that is completely different story.

What are the benefits of online trading currencies ?

  • market is open 24/5 from Monday to Friday
  • you dont need any special permissions to enter the market, you just have to be over 18 in Europe
  • high leverage that allows you open large trades with small margin
  • relatively low entry capital required .. approx. $1000 and up

What are the disadvantages of currency trading ?

  •  high fluctuation, very instable market
  •  it is way too hard to predict market moves in case you trade shortterm
  • there is a lot of buzz about currency market and many beginners are flowing in, having now clue about the market
  • this market is being operated by professionals, which means many times your loss is their profit

Here you can find the news about capital markets that you should probably read.

If you are brand new to the game of online trading, you should perhaps firstly read the educational currency trading sites.

What is needed when you want to succeed in the game of online investing ?

  • you have to be psychically fit and still –> believe it or not, almost all savvy investors are more calm and introvert persons rather than extrovert :)
  • you need the right forex trading platform that will fit your needs
  • you need trading tools (charts Metatrader 4, robots)

 Rule No. 1: never lose money; rule No. 2: don’t forget rule No. 1

How a forex trader should read candlestick charts

These days, most online forex trading platforms generally offer three main types of chart giving the user three ways of viewing market price data.

These are:

  • Bar Charts
  • Line Charts
  • Candlestick Charts

In my opinion, the most useful of these is the candlestick chart…
Candlestick price charts were invented by Japanese traders in the 1700’s to enable the trader to see the market’s opening price, closing price as well as the highest price and lowest price over a specific period of time. Each candle represents these four pieces of information over a specific time period. An example of a trading chart price candlestick is given below.

forex candlestick

Up and down candles used in forex trading

As I said, on a candlestick price chart, each individual candlestick represents a specific period of time. For example, on a 1 hour candlestick price chart each individual candlestick represents a 1 hour period of time when the market was open. Candles will not be drawn by the trading platform when the market is closed.

The main advantage of candlestick prices charts over line price charts is that the market’s high and lows are not available on line charts and the main advantage of candlestick price charts over bar charts is that on a bar chart the body (that is the opening and closing prices) are not so distinguished and not so obvious to the human eye although all the same price information is there.

The main advantage of candlestick charts and bar charts is that having the price extremes (i.e. the market’s highs and lows) on a price chart allows traders to draw clear trend (support and resistance) lines. Without this information trend lines can only ever represent approximations.

Three scenarios forex candlesticks

Three most frequent scenarios of candlestic sizes

Some of the other ways that the price information displayed in a candlestick chart can be used is the analysis of long term candlesticks (usually daily and weekly candles) themselves. For example, a small body, the candlestick’s body is the part made up by the open and close prices shows that the market is pretty indecisive particularly when candles wicks (that is, the thin lines connecting the body to the highs and lows) are of a similar size.

Another revealing pattern on daily and weekly candlesticks is that of a single long wick and a close near the high or low. A long low wick shows that the price has moved far for the low and closed near the high signalling a strong uptrend. Likewise when a daily or better still weekly candlestick shows that the price has moved down a great deal and closed fairly near to the low it is a very strong indication of a solid down trend.

I strongly suggest in case you want to become forex trader that you visit website and put a serious effort into learning to read candlestick price charts and, more importantly, giving some serious independent thought to what a particular daily or weekly candle might actually be telling them. For example, what might a candle that opens above the previous candle’s high (a gapping candle) tell us? What might a candle be telling us when both the high and low are no higher or lower than the previous day’s opening and closing prices (an inside day)?

I could simply tell the reader what I believe these things signify but the problem is that in trading there is simply no substitute for learning how to trade and using one’s own independent thought process to make sense of what they see. And in my opinion, an uncluttered candlestick chart is the easiest way to see the market clearest.