Author: Trader

M1=Down has to cross 105.50(stop loss) area to turn positive and follow M5 trend

M5= UP will break trend if goes lower than 104.90 area(stop loss)

M15=Down will break trend if goes lower than 107.04 area(stop loss)

• M1 = one minute.
• M5 = five minute.
• M15 = fifteen minute.

In a currency pair the first currency is the currency we can buy and sell and the second currency is the currency we buy and sell it with taking the quotation usdchf this means that today it’s necessary to pay one Swiss franc 24 Sanh teams for one American dollar similarly this quote usd/jpy tells us that today in Japan they’ll give you a hundred and twelve yen for one American dollar the first currency in a currency pair is the base currency for the yen the Swiss franc and the majority of other currencies in the world the US dollar is the base currency and are there any currency pairs where the US dollar is not the base currency yes whose idea was that why make life more complicated than it needs to be I can only say two little words tradition and ambition at the time when the concept of currency pairs was being developed the British Empire was the dominant economic power the British Pound is the oldest currency in the world in fact it will soon be celebrating its thousandth birthday for most of the pounds life until the early 1970s the pound was made up of 240 pence how could we show the value of 1 dollar in terms of GBP for example if one dollar was worth sixty British pence we’d have to write it as nought point two five and not nor point six and this could cause a great deal of confusion therefore it was decided that it would be much easier to state how much a pound was worth in other currencies and not be tormented by all those pesky pennies farthings and shillings the pound is the base currency in the pair gbp/usd and though the British Pound has had a hundred pence since the 1970s and Britain no longer has a great Empire the tradition remains my friends and so this pair tells us that today one British pound will cost you one dollar and 82 cents however when the Europeans were introducing their single currency they quite consciously decided not to be bettered by the world’s oldest currency and insisted on the Euro being the base currency there was no need the metric system was laid out in Europe a very long time ago this was simply naked ambition ladies and gentlemen and the pair euro USD appeared with the Euro proudly assuming the base currency place and the quote euro USD means that today a euro will cost you one dollar twenty four cents you should commit these pairs to memory dollar Swiss franc dollar Japanese yen British Pound dollar euro dollar because usually these pairs are denoted Swiss franc Japanese yen British Pound euro as the dollar is taken as red and is not mentioned.

Now I’m gonna explain exactly what a currency pair is and what it is that makes these markets go up and down,we’ll go right back to basics when we do when we look at markets you know plenty others will look at currencies the various currency pairs see what’s moving see where the opportunities might be but I think for plenty of people who are new to this it can still be an element of confusion as to what exactly a currency pair is but what are these numbers means so I thought this week let’s just let’s just clear up any misconceptions or misunderstandings that people have about currency pairs you know if you’ve been doing this for just a few weeks you’ll know what it is you know pound US dollar is the exchange rate between the pound and the US dollar but let’s go right back to the basics what are these rates mean and when we’re looking at them you know how can they actually move around and what influences them let’s take a look first of all at what exchange rates actually are so let’s start right from the absolute basics so what is the currency what’s what’s a foreign exchange pair here we go this is pound u.s. dollar so it’s the exchange rate of a pound versus the US dollar the example I’m using here the example rate I’m using is one point three eight the easiest way of explaining this is how much of the second currency would one of the first currency by so in this example what it means is one pound will buy you at the current rate one dollar and 38 cents okay so it says it’s as straightforward as that and of course if the pound strengthens let’s say let’s say the market moves to one point four zero zero zero then it just means that one pound now buys is a little bit more it will buy us a dollar and 40 cents just to make this all make sure this will make sense one more example Euro against the British Pound so again how much does one of these bar of the second currency so in this example one euro if you’re coming over from Paris to London for the weekend will buy you nor 2.88 of apparent so obviously 88 pence in this example you could quote it the other way I mean we could we could have a look at sterling euro let’s bring up the exchange rate for that so it’s simply that exchange rate turned on its head so it’s one over that exchange rates of sterling euro one pound will buy you one euro thirteen that just over 1 euro thirteen and a half okay but there’s a market convention way of quoting this stuff so whilst you could say US dollar pound sterling euro the typical conventional way of quoting it is a pound to US dollar or euro sterling in this example but it’s all about how much of the second currency does one of the first currency by so there we go the easiest way of explaining it is how much of the second currency does the first currency by you know that that’s it that that is an exchange rate and if the markets more optimistic about the outlook for the first currency then it will go up in price but to see these moves on a chart so to look at some real markets let’s take a look at the trading platform at some of the moves that we’ve seen in our for example the Pound u.s. dollar sickly the charts here’s a simple line chart in the real world pound US dollar so this is going back to about March 2017 so you can see back then a pound would buy you arrive at one twenty four so one point two four zero zero so a parent would buy you a dollar and twenty four cents at the moment at the time of recording we’re up here to the pound has strengthened so what we’re seeing here the pound gaining ground against the dollar another way of saying it is we’ve seen dollar weakness but as its pound US dollar the chart is going up so now a pound buys you about one point three eight so a dollar thirty eight so it’s a move in excess of ten percent really the pound has strengthened by just over ten percent going from 124 to 138 in what the past ten months versus the US dollar and of course we’re looking at a longer term chart here but we’ll see plenty of changes throughout the day you know these markets do tend to be as I’m sure you’re aware pretty active markets and just another quick one to show how political events really can affect currency markets because they are so tied to the to the country’s economy and its political stability back here this is the that the vote of course the famous vote for the UK to leave the European Union the expectation was the UK population we’re going to vote stay in it ended up being something a shock when we voted the UK voted to leave and start the brexit process so you can see the night before a pound would buy you a dollar 48 so $1 48 cents the very next day because of the volatility or over the next couple of days it would only buy you one dollar thirty two cents so we saw a drop again of more than ten percent but this time it took almost a matter of hours to play out so that shows how extreme political uncertainty or political shocks can really affect a country’s currency so when it comes to what drives currency markets is a whole host of things you know clearly the economic health of that particular area for example the pound against the Japanese yen will be one factor interest rates come out to play as we’ve seen political decisions you know like the brexit decision from June 2016 had a massive impact what central banks are thinking about doing with interest rates again can cause volatility in in in currency markets but hopefully you know if you’re a little bit confused and you’ve never looked at these markets before that’s cleared up hopefully any any misunderstandings or confusion you had about how exchange rates automatically every time we upload a new video but for this week from me David Jones and trading 2 & 2 we’ll leave it there .

US Dollar

What is a dollar most people would answer that it is something that looks like and they’ll show a picture of a $1 Federal Reserve Note we recognize this as a dollar after all it says one dollar on it here is another dollar it doesn’t look like the previous dollar however the United States government declares that it’s a dollar two here is another dollar this one looks similar to the previous dollar but not exactly the same now let’s look at one more dollar this one looks similar to the last two dollars but again it’s slightly different all four dollars even though they are all made out of different materials of differing values are declared by the US government to be a dollar and forms of us money the Minneapolis Federal Reserve Bank defines money as an item or commodity that is agreed to be accepted in trade so in this slide what is being traded are paper notes and coins but what exactly does it mean that they are dollars the US Code States United States money is expressed in dollars dimes or tenths cents or hundredths and mils or thousandths according to the US Code a dollar is what money is expressed in in other words it is a unit of money however if this is true then we must then ask what exactly is the money a dollar expresses this question is not so easily answered let’s take a deeper look at the United States dollar and try to determine what kind of money the dollar represents what we find out will give us a deeper understanding of our money and the monetary policy of the United States this dollar a piece of paper and printed with different colors of ink has a number of unique characteristics first obviously it is designated as one dollar second these notes are printed by the United States Treasury and authorized by the Secretary of the Treasury third what we call a dollar is designated as legal tender for all debts public and private this means that the dollar has to be accepted by everyone for all debts public and private unless of course it was contracted beforehand but the debt would be paid in something else such as with a credit card cheque or even bitcoins fourth it is a Federal Reserve Note this means that it is issued by the Federal Reserve Banks of the United States these are the regional banks of the Federal Reserve System the central banking system of the United States the fact that the dollar is a note means that it is really a liability of the Federal Reserve Banks and an obligation of the United States this means that a dollar note is a promise to pay or an IOU issued by the Federal Reserve Bank to the holder of the note the public the US government ultimately guarantees the repayment of the loan why does the US government guarantee the note because it’s a law the US Code states the said notes shall be obligations of the United States and shall be receivable by all national and member banks and Federal Reserve banks and for all taxes customs and other public dues they shall be redeemed in lawful money on demand at the Treasury Department of the United States in the city of Washington District of Columbia or at any Federal Reserve Bank notice that the code says they shall be redeemed in lawful money on demand now this raises a number of questions first if the dollar note shall be redeemed in lawful money on demand is the note itself lawful money second if we bring the dollar to a Federal Reserve Bank or the US Treasury what kind of lawful money would receive as redemption for the dollar let’s take a look at the Federal Reserve dollar in relation to other US money to see if we can answer these questions let’s say we were to take our $1 Federal Reserve Note to a Federal Reserve Bank or to the US Treasury for redemption what would we receive we would probably receive 100 pennies or perhaps 20 nickels or ten dimes or four quarters or maybe we could get one of these Sacagawea dollars these coins might be what the US code means when it speaks of lawful money but the u.s. code is not specific on the matter however let’s consider this US money for a minute if we exchange our paper dollar from one Sacagawea dollar we could say our paper dollar is equal to one Sacagawea dollar and one Sacagawea dollar is equal to one paper dollar or Federal Reserve note that seems simple enough but things get a little more complicated this Sacagawea $1.00 coin issued by the US Mint designated as one dollar contains 88 point five percent copper six percent zinc three point five percent manganese and two percent nickel all these elements are considered base metals if we took this dollar to the United States Treasury or Federal Reserve Bank they would unfortunately not redeem it for this dollar why not it’s a dollar isn’t it let’s compare the two dollars the Sacagawea dollar is composed of base metals the American Eagle Silver Dollar on the other hand contains about one ounce of fine silver silver is considered a precious metal now consider this if piece are costs one dollar we could buy one piece of pizza with one second away a dollar if we brought the one dollar American Silver Eagle to the pizza place we could also buy one slice of pizza the pizza man would probably be more than happy to comply why because if we were to bring our coin to a coin dealer he would offer us about 20 federal reserve dollar notes in return for it we could then purchase not one but 20 pieces of pizza the $1 Silver Eagle in reality has a twenty times greater purchasing power than a one dollar Federal Reserve Note and one Sacagawea dollar now since the $1 Silver Eagle has a different purchasing power than the one dollar Federal Reserve Note and the one dollar Sacagawea dollar are they all on the same dollar let’s consider another American coin this is a United States five dollar coin how much pizza could this coin buy logically we would assume that since one dollar bought one slice five dollars should buy five slices but that would not be the smart thing to do this five dollar coin is made of 1/10 ounce of fine gold we could take this coin to a coin dealer and probably receive around 135 Federal Reserve notes for it dollar for dollar it would buy 27 times more pizza than a one dollar Sacagawea coin and a one dollar Federal Reserve Note this means that in the free market not all dollars are created equal the term dollar evidently varies from coin to coin and from coins to notes this raises a series of important questions if the term dollar is an expression of money what exactly is the correlation between a dollar and the money it expresses what exactly is the money that the dollar signifies and can we know the value of a dollar or the value of the money it represents let’s take a look at history to see if we can discover what a dollar really is there are two places in the United States Constitution where the term dollar is mentioned both have important implications for our understanding of the dollar the first is found in article 1 section 9 Clause 1 the clause states the migration or importation of such persons as any of the states now existing shall think proper to admit shall not be prohibited by the Congress prior to the Year 1808 but a tax or Duty may be imposed on such importation not exceeding ten dollars for each person this clause has reference to the slave trade prior to 1808 if a slave was imported into the United States the Constitution authorized the federal government to place a tax on the importer not to exceed ten dollars constitutional scholars see this clause as a compromise between anti and pro-slavery factions in order to get the Constitution passed however in order for this clause to make sense the meaning of the ten dollars identified as the tax had to have a known fixed value this is why if the value of a dollar was not fixed future anti-slavery factions have been Congress could attempt to manipulate monetary policy in order to change the purchasing power of the dollar so as to make it more difficult to pay the fixed tax this would decrease the profitability of the slave trade and perhaps eliminate it altogether before 1808 if this were possible it is doubtful that pro-slavery states would have agreed to the clause and the ratification of the Constitution therefore the framers of the Constitution knew exactly what a dollar was and that its value was fixed the second place where a dollars are mentioned in the US Constitution is in the seventh amendment its states in suits at common law where the value in controversy shall exceed twenty dollars the right of trial by jury shall be preserved again if the value of a dollar was not fixed Congress could manipulate the dollar so as to eliminate common law jury trials altogether obviously those groups in favor of jury trials knew this and would not have voted for ratification on this basis if the value of a dollar was not fixed but could fluctuate according to government policy neither the seventh amendment nor article 1 section 9 Clause 1 would have any relevancy to the future nor would they have ever been included in the Constitution in their present form therefore at the time of the ratification of the Constitution $10 and $20 had known fixed values independent of what Congress said the value of a dollar was interestingly since the US Mint would not be established until 1792 there was as of yet no official u.s. coins so when the US Constitution referred to dollars what exactly was the fixed value and how was it determined let’s take a look a little further back in history in 1776 shortly after the signing of the Declaration of Independence the Continental Congress began to address the issue of a metal coinage system apparently in the 1770s there were multiple international coins of differing weights and fineness of silver circulating throughout the states on September 2nd a committee of Congress recommended that the Spanish Miller become the standard of measurement for other coins the committee wrote by declaring the precise weight and fineness of the Spanish milk dollar now becoming the money unit or common measure of other coins in these states and by explaining the principles and establishing the rules by which the set common measures shall be applied to other coins in order to determine their comparative value the constitutional committee recognized that the Spanish dollar had already been accepted by the individual states as the common standard for determining the value of all other coins thus it recommended that the United States government should do so as well the spanish mil dollar was a silver coin minted in the spanish empire worth eight reallys by 1776 because of its uniformity and standard and milling Spanish dollar had become an international currency and the dominant species coin circulating in America the word dollar was thought to have evolved from the German taller which was similar in size to the Spanish dollar the Spanish dollar had a weight of approximately 387 grains of fine silver it was also known as the piece of eight because it was often divided into eight parts or bits from the 16th to 19th centuries it was thought to be the most stable and least two based coin in the world prior to the ratification of the US Constitution the United States also experimented with a paper currency as a medium of exchange this paper money known as fills of credit or Continental dollars was issued from 1775 to 1783 usually denominated in dollars and could be passed from person to person with payment due to the bearer there was usually no interest paid on them interestingly the bills are often payable in Spanish mil dollars a typical bill read the bearer is entitled to receive 55 spanish mil dollars or an equal sum in gold or silver according to a resolution of Congress this meant that Bills of credit were really a promise to pay in gold or silver with the Spanish dollar as the measurement of a dollar in order for the bill of credit to be defined it had to correspond to a real asset that had value by 1781 the Continental dollar eventually depreciated to zero value there were several reasons first neither the individual states nor the United States government accepted the paper dollars for taxes or government dues second Congress could not impose a tax to pay off the Redemption value third the states refused to supply specie to the federal government in order to redeem them fourth there were vastly too many printed fifth the British counterfeited the dollar as a means of economic warfare because of their negative experiences with a paper currency the framers of the Constitution deliberately restricted the individual states and Congress from issuing Bills of credit following the adoption of the Articles of Confederation on March 1st 1781 the United States earnestly began to seek a monetary system in his letter to Congress On January 15 1782 Robert Morris superintendent of the office of Finance commented that the various coins which have circulated in America have undergone different changes in their value so that there is hardly any which can be considered as a general standard unless it be Spanish dollars Morris here recognizes that there have been multiple coins circulating with changing values and suggests that the Spanish dollar be the standard to judge other coins On January 30th 1784 Thomas Jefferson in his plan on money echoed Morris’s view on the Spanish dollar but took it a step further the money unit of these states shall be equal in value to a Spanish mill dollar containing so much fine silver as the assay before directed shall show to be contained on an average in dollars of the several dates in circulation with us Jefferson was extremely clear the money unit of the United States should be equal to the Spanish dollar he suggested that various coins the assayed to determine an average of fine silver contained in the coins he made an important observation on the Spanish dollar later in 1784 when he stated taking it to our view all money transactions great and small I questioned if a common measure of more convenient size than the dollar could be proposed the unit or dollar is a known coin and the most familiar of all to the minds of people it has already adopted from south to north that’s identified our currency and therefore happily offers itself as a unit already introduced according to Thomas Jefferson no better money standard was available than the Spanish dollar interestingly he noted that the government did not have to mandate this the market had already adopted it on April 8th 1786 the Board of Treasury reported to Congress on the establishment of a mint and advised that the money unit or dollar will contain 375 greens and sixty-four hundredths of a grain of fine silver a dollar containing this number of grains of fine silver will be worth as much as the new Spanish dollars then in August 8th 1787 Congress made its determination on the dollar it resolved that the money unit of the United States being by the resolve of Congress of the six July’s 1785 $1 shall contain a fine silver 375 grains and 64 hundredths of a grain on the eve of the ratification of the US Constitution the Continental Congress was not confused on what money or a dollar was the dollar was a coin with a fixed weight and fineness of silver equal to the Spanish dollar of the time following the ratification of the Constitution the Secretary of the Treasury Alexander Hamilton was directed to report on the establishment of a mint in his January 28 1791 report Hamilton suggested that the unit in coins of the United States ought to correspond with 24 grains and 3/4 grains of pure gold and with 371 grains and 1/4 grain of fine silver each answering to $1.00 in the money of account while Hamilton suggested slightly reducing the amount of grains in a silver dollar he still understood that a dollar was defined as a specific medal of a specific weight and fineness he gave this important admonition in the report there is scarcely any point in the economy of national affairs of greater moment than the uniform preservation of the intrinsic value of the money unit on this the security and steady value of property essentially depend Hamilton seems to have understood that if the value of the money unit was uncertain than the security and value of all property was also uncertain on April 2nd 1792 President Washington signed the coinage act of 1792 it embodied the coinage principles espoused by the Continental Congress Jefferson Hamilton and the United States Constitution it mandated that the money of account of the United States shall be expressed in dollars or units and that the dollars are units each to be of the value of a Spanish milled dollar as the same is now current and to contain 371 grains and 4/16 parts of a grain of pure ore 416 grains of standard silver interestingly the Act also allowed the public to bring gold and silver bullion to the mint to be coined free of expense obviously Congress did not assume a monopoly on the money supply the Act also established the penalty of death for the crime of debasing the coinage inflation was severely dealt with from these observations we can draw the following conclusions first at the time of the adoption of the Constitution the framers and the Continental Congress recognized that the Spanish dollar was the money standard second governments did not authorize the Spanish dollar as money they simply recognized what the market had used for decades third the market determined the value of a dollar according to its silver content fourth the US government determined that the u.s. dollar coin would correspond to a similar weight and fineness of the Spanish silver dollar fifth the coinage act of 1792 defines the dollar as the value of a Spanish milled dollar as the same as is now current sixth this is the dollar referred to in the US Constitution seventh the dollar designated in the Constitution existed before the coinage act of 1792 and before the Constitution was ratified the general belief that a dollar correspond to a fixed amount of silver would remain until Congress enacted the legal tender acts during the Civil War up until 1862 gold silver and copper coins were the only money issued by the federal government there was no paper currency issued this was in keeping with article 1 section 8 Clause 5 of the US Constitution which states the Congress shall have power to coin money regulate the value thereof and of foreign coin however with the onset of the Civil War the Union found itself desperately short of the necessary funds needed to continue the conflict one response was to pass the first legal tender bill On February 25th 1862 Abraham Lincoln signed the bill into law this Act allowed the federal government to issue one hundred and fifty million dollars in irredeemable United States notes because of their green color they were also known as greenbacks these notes were backed only by the credit of the United States government in essence they were a fiat currency unpacked by gold or silver bullion the notes were also mandated as a legal tender for all debts public and private within the United States this meant that the notes by law had to be accepted by everyone within the country as payment for deaths the passage of this act allowed the United States government for the first time since the adoption of the Constitution to institute a paper money supply and also to designate as a dollar something that did not contain 371 grains and 4/16 parts of a grain of fine silver during the congressional debate over the bill Owen Lovejoy representative from Ohio offered an insightful perspective on the United States money he stated it is not in the power of Congress to accomplish an impossibility in making something out of nothing the piece of paper you stamp as five dollars is not five dollars and it will never be unless it is convertible into a five dollar gold and to profess it is is simply a delusion and fallacy in Lovejoy’s opinion in order for a dollar to be a dollar it had to be convertible into a precious metal he believed Congress’s attempt to call an irredeemable piece of paper a dollar was simply delusional since the Constitution assumed a dollar to be equal to the Spanish dollar and the coinage act of 1792 referred to the dollar as the same silver weight as a Spanish dollar the greenback did not meet the legal definition of a dollar a total of 450 million dollars of greenbacks are eventually printed with a total of 415 million dollars issued on July 11th 1864 greenbacks in terms of the value of gold fell to a low point of only 35 cents worth of gold in the free market a $1 US note did not equal a $1 u.s. gold coin other effects were predictable by 1865 prices had increased about 80 percent while real wages declined about 20 percent after the Civil War there were several Supreme Court challenges to the legal tender acts however in 1871 in the case of Knox versus Lee the Supreme Court ruled that a paper currency not backed by gold or silver was constitutional following the civil war gold coins continue to be issued by the federal government however silver coinage was suspended in 1873 the resumed in 1878 On January 15th 1875 Congress passed the specie payment resumption Act this act authorized the secretary of the Treasury to redeem outstanding greenbacks or u.s. notes in gold specie on demand on or after January 1st 1879 this seems to have restored confidence in US notes and by 1878 they were once again trading at par with gold a $1 US note was again equal to $1.00 in specie on May 31st 1878 the total amount of US notes was fixed at 346 million six hundred eighty-one thousand sixteen dollars this in essence permanently ended the power of the Treasury to directly create new Fiat paper money these notes are still legal tender in the United States however in 1994 legislation was passed to decrease the amount in circulation beginning in 1878 the United States government in response to political forces calling for an increase in the money supply began issuing silver certificates these certificates could be exchanged for silver coins on demand these silver dollars contain 370 1.25 grains of fine silver the constitutional definition of a dollar the federal government also issued gold certificates from 1865 to 1934 however this type of paper money was not generally intended for circulation to the public interestingly United States government issued currency was not the predominant currency circulating in the United States after the Civil War the u.s. national banking acts of 1863 and 1864 established the groundwork for a network of federally chartered gnash banks under this law banks could apply for a national charter as long as they can meet the necessary minimum capital requirement once accepted the banks are required to purchase interest-bearing US government bonds and the amount of one-third of its paid in capital the Act then allowed banks to issue banknotes up to 90 percent of the amount of government bonds if purchased though the US government printed the notes they bore the name of the issuing bank and the signatures of the bank’s officers the national bank notes were considered legal tender and could be used to pay all federal taxes except customs duties technically the notes could be redeemed at the issuing bank for silver or gold if the bank cannot redeem the notes the federal government could sell the insolvent banks bonds and pay off the bearer of the note on March 3rd 1865 the federal government imposed a tax of 10% on the notes of state banks to take effect on July 1st 1866 this tax eventually forced all non-federal currency out of circulation these notes would remain in circulation until the 1930s in 1914 after the formation of the Federal Reserve System the Federal Reserve banks began issuing Federal Reserve notes these notes were redeemable in gold on demand at the US Treasury or in gold or lawful money at any Federal Reserve Bank it was clear that these notes were interchangeable with specie in 1914 a one dollar Federal Reserve Note equalled one dollar in specie however on March 9 1933 Congress passed the emergency Banking Act of 1933 it stated the Secretary of the Treasury in his discretion may require any or all individuals partnerships associations and corporations to pay and deliver to the treasurer of the United States any are all gold coin gold bullion and gold certificates owned by such individuals partnerships associations and corporations upon receipt of such gold coin called bullion or gold certificates the secretary of the treasury shall pay therefore an equivalent amount of any other form of coin or currency coins or issued under the laws of the United States this law removed the gold obligation and authorized the Treasury to satisfy Redemption demands with other forms of coins or current legal notes of equal face value subsequently on April 5th 1933 President Roosevelt issued executive order 6102 this otter criminalized the public possession of gold coins thus ending the circulation of gold specie money by 1934 most circulating currency notes are beginning to be consolidated into Federal Reserve notes after 1934 the notes carried the inscription this note is redeemable in lawful money at the United States Treasury or at any Federal Reserve Bank cents silver coins were in circulation the notes could be redeemed in silver starting with series 1963 the words will pay to the bearer on demand no longer appear and each Federal Reserve Note simply states a particular denomination in dollars with series 1963 the promise of redemption also vanished from the face of each note On June 24th 1968 the US Treasuries stopped redeeming silver certificates in silver bullion by 1970 silver was removed from the production of coins on August 15 1971 President Nixon directed Treasury secretary Connally to suspend with certain exceptions the convertibility of the dollar into gold or other reserve assets ordering the gold window to be closed such that foreign governments could no longer exchange their dollars for gold thus on their face Federal Reserve notes became in the description of John extre a former member of the Board of Governors of the Federal Reserve System paper I owe you nothing currency as we have seen the currency we use today the Federal Reserve Note may be designated a dollar but it is not what a dollar has historically been defined as nor is it what the Constitution assumed a dollar to be essentially Federal Reserve notes are a fiat currency redeemable for nothing they are basically in the words of economist guido Holtzman legal tender paper slips the implications of this are significant a dollar that contains 370 1.25 grains of fine silver cannot be reduced in value below the market exchange value of silver for other commodities however a dollar that contains no fixed amount of any particular substance per dollar can theoretically be reduced in value infinitely therefore since the Federal Reserve Bank under the authority of the federal government can print an unlimited amount of fiat dollars ex nihilo it can if desired inflate the money supply and thus reduce the purchasing power of the dollar former Federal Reserve Chairman Ben Bernanke has stated as much light gold US dollars have value only to the extent they are strictly limited in supply but the US government has a technology called a printing press or today it’s electronic equivalent that allows it to produce as many US dollars as it wishes at essentially no cost by increasing the number of US dollars in circulation the US government can also reduce the value of a dollar in terms of goods and services which is equivalent to raising the prices in dollars of those goods and services we conclude that under a paper money system a determined government can always generate higher spending and hence positive inflation in response to government engineered inflation economist Murray Rothbard wrote this but if government manages to establish paper tickets or bank credit as money as equivalent to gold grams or ounces then the government as dominant money supplier becomes free to create money cautiously and at will as a result this inflation of the money supply destroys the value of the dollar drives up prices cripples economic calculation and hobbles and seriously damages the workings of the market economy the natural tendency of government once in charge of money is to inflate and to destroy the value of the currency let’s consider these two graphs the first is the money supply of the United States between 1918 and 2003 we can see it has risen considerably the next is the purchasing power of the dollar since 1913 according to the US Bureau of Labor Statistics the dollar has lost 95 percent of its purchasing power since 1913 Bernanke was correct concerning the power of the government to cause inflation and Rothbard was correct in the direction it would ultimately take let’s consider the Federal Reserve dollar in relation to federal government fiscal policy holzman observes the most visible consequence of the paper money inflation of the past 30 years may be the explosion of public debt in the private sector a person’s ability to borrow is limited by his present assets and by his expected revenue in the public sector a government’s ability to borrow is limited by its present resources and its revenue from future taxation however with the presence of a central bank such as the Federal Reserve Bank the situation has changed since the bank is a quasi governmental status it has certain loyalties to the federal government the federal government can now rely on the bank the primary money producer in the country for unlimited credit the problem is that the federal government can obtain credit for an excess of its current assets and expected revenue from taxation often the federal government’s debt burden can grow faster than the production of money consider the following chart in 1960 the federal debt was less than two times the money supply in 2013 it grew to almost seven times the money supply in essence the inflation of the money supply has become a hidden tax on the public and since there is nothing to constrain depreciation of the dollar the government has a virtually unlimited power to tax without voter approval interestingly the only check on unlimited money printing by the central bank would be the possibility of a hyperinflationary scenario thus far no major currency has experienced this nor does it seem imminent in the near future economist FA Hyack concludes what is so dangerous and ought to be done away with is not government’s right to issue money but the exclusive right to do so and their power to force people to use it and to accept it at a particular price but there is no reason whatever why people should not be free to make contracts including ordinary purchases and sales in any kind of money they choose or why they should be obliged to sell against any particular money there could be no more effective check against the abuse of money by the government and if people were free to refuse any money they distrusted and to prefer money in which they had confidence.

Japenese Yen

Japan they count their money’s in yen and it is kind of different comparative how how people count in Canada or u.s. because in Japan they only count in yen whereas in Canada or us they have dollar and cents so basically this is how it works one cent is 1 yen in Japanese so if you are thinking of a dollar then it’s a hundred yen because it’s 100 cent of course there’s always current exchange rate so I’m just ignoring that part right now but that’s how you count the Japanese money and for example if you wanted to buy a coffee and maybe costed $4.00 I don’t know then it would be 400 yen in Japanese currency because it’s 400 cent in American and Canadian dollar now I’m going to show you the coins and bills that are used in Japan unlike the US dollar there are many coins and there are not many bills so the first one is 1 yen coin and that’s equivalent to 1 cent and next one is 5 yen and then 10 yen 50 yen 100 yen and 500 yen coin which is weird because in in Canada there’s five dollar but there was no bill for $5.00 so the Bell there’s a thousand bill which is equivalent to a thousand cent and that’s like $10 and two thousand bill five thousand bill and ten thousand bill so two thousand bill is very rare because it was created in the year 2000 and it was just only that year it was created and now they don’t make it anymore so that’s why it’s really rare you can still use it but it’s just really you don’t see that often in Japan either okay another thing is that there are a Japanese wait to say coins and bills 1 yen is etn dama and as I taught you in last lesson Ichi means one and n means yen and that means coin so that’s that and second one is Gauri and Emma and the third one is Zhu and Emma that’s ten cent I mean sorry ten yen the next one is goes you and Emma and another one next one is Hector and Emma and I don’t think I taught you but chocolate means hundred so that’s why and 500 yen is go Hector and Emma and notice I said go hacker it’s because it’s five and hundreds it’s that’s why it’s go shocked ooh and a thousand a thousand yen is saying that’s it and notice that it’s not dama it’s because it’s not coin and it’s bill so in that case we will say such so it’s 2,000 yen is me saying that’s a and 5,000 yen is go saying SATs ooh and 10,000 yen is et Mayan SATs and each demon means 10,000 .

Let’s look at just a brief history of Chinese currency manipulation part of the growth strategy of the Communist Party has been to hold down the value of the Chinese currency and therefore subsidize Chinese exporters it might seem in traditional economics that this will lead to too much exporting and too high a set of prices for imports but there is a possible way of giving an economic rationale for this policy think of China right after it emerged from its reforms of the late 1970s and early 1980s as simply not having enough commercial or enough capitalistic interest groups by subsidizing exporters the Chinese created a new set of interest groups that would over time push the economy in the country toward more commercially oriented policies on this graph the higher we’re located say up here the greater the number of wan it is taking to purchase a United States dollar and thus the weaker is the value of the Chinese currency if we think of the Chinese reforms as starting at around 1979 what we see is an extended period of time where the value of the Chinese currency is declining here starting in 1980 up through the mid 90s and part of that was due to Chinese currency manipulation that is a deliberate attempt to create more Wan sell those wan on world markets and keep down the value of the Chinese currency since that happened what we find since the mid-1990s is very slowly the value of the Chinese currency has been rising again with a notable acceleration in that process over the last few years that’s an indication that the Communist Party is moving away from the strategy of currency manipulation and allowing the domestic currency to find its appropriate level you will note that the Chinese government sterilized this new money creation that is they did not want it to seep into the Chinese economy and create very high rates of inflation so in essence they devoted real resources to sell bonds for that new money pull the new money back out of the economy and a way to think about this is that some years the Chinese government was spending about nine to ten percent of GDP simply manipulating its exchange rate and subsidizing its exporters so by taking the Chinese currency to buy dollars over so many years the Chinese government has accumulated huge US dollar reserves and you will note the government is in large part just sitting on these reserves it’s hard for the government to sell off too many of those reserves at once because that would in essence drive down the value of the US dollar in to some extent reverse the Chinese policy of currency manipulation you can see from this picture that Chinese dollar based reserves are now over three point six trillion dollars and this process of reserve accumulation it really starts to pick up here in the mid to late 1990s when China is exporting more and more the more successful is the Chinese export machine well the more the Chinese government has to accumulate dollar reserves to keep the value of the Chinese currency from rising just to review once more that historical table on the value of the Chinese currency well the one relative to the dollar is really starting to rise at about two thousand five at which point it is rising pretty steadily and we can see that prices really do matter so if you think of the wand as starting to rise in value at around two thousand five well if you look at this graph here which is the Chinese current account surplus as a percentage of GDP at around two thousand five well that really starts falling quite dramatically the Chinese current account surplus as a percentage of Chinese GDP it’s peaking at around two thousand six when it’s about ten percent of Chinese GDP and since that time for a number of reasons as you see here again it has really been falling one is the higher value of the Chinese currency but another big big reason is simply the financial crisis in the West which hurt the Western demand for Chinese and other products that limited China’s current account surplus as a percent of GDP but even as some nations began to emerge from their financial crisis or from their recession what we find is not a return to the yelled pattern but rather a new equilibrium where China is not merely doing exporting but rather is doing exporting and importing and the Western nations have in some regards cut back on their net trade deficit with China you can look here at the u.s. current account deficit as a percentage of GDP the lower we are on this vertical axis the higher the u.s. current account deficit and what we see is that current account deficit reaches a peak at around 2006 when it is almost 6 percent of GDP at the same time that the Chinese current account surplus is diminishing the u.s. current account deficit is growing smaller too and that is rising more or less continuously over this point in time and we see that the u.s. is moving much closer toward trade balance and the u.s. current account deficit is now just a bit more than 2 percent of GDP as opposed to almost 6 percent of GDP and we can think of this process as a series of price effects and income effects through which the US Chinese trade balance is slowly moving into a new equilibrium to read more on all of this you can google the key terms of this including through news.google.com for the latest developments see also our broader video on currency manipulation in general and we have also found very useful this piece cited here China’s growth stability and use of international reserves.

The following currency pairs have very high liquidity and hence these are most suitable for swing trading in my opinion (not necessarily be in same order though!)

USD/JPY(US dollar – Japanese Yen)

GBP/USD(British Pound – US Dollar)

EUR/USD(Euro – US Dollar)

AUD/USD(Australian Dollar – US Dollar)

USD/CHF(US Dollar – Swiss Franc)

USD/CAD(US Dollar – Canadian Dollar)

Now the big question What is a swing trading.

swing trading is basically a short term trading method that you can apply to forex,stock futures and options. In swing trading what you do is you take on positions and you kind of keep it for about two days to a few weeks. This also depends on preference of a trader. Most of the traders actually trade for a period of two days to 20 days or 10 days, and that again depends on your psychological makeup as a trader. We’ll be covering up some basics of swing trading . I’ll focused on what to trade, when to trade, and how to trade it. So let’s get started. I’ll talk about trading, investing, and market analysis to help you become a better investor and trader. So learning objectives are as follows. So I’ll be taking you through some basic stuff for swing trading, then I’ll be doing a comparison between swing trading, positional trading, and the buy and hold approach, and then I’ll be moving on to trading instruments that are available when we are trying to swing trade. The next point that I’ll be covering is how swing trading fits in overall market strategy of a full time trader, then I’ll be taking up whether you should adopt a system based swing trading as a technique or you should go in for a discretionary trading approach. Then there are two distinctive swing trading approach that a trader can take. One is the top down approach and the bottom up approach. I’ll be telling you why the top down approach is the more preferred method to swing trade. And in the end I’ll be talking about trading platform tools and your broker selection. So this part is focused on the very basics of swing trading. I do understand that not everybody is proficient with trading and investing as a topic. So, which is why I am deliberately making an attempt to start with the very basics and then build onto advanced concepts. So I’ll just answer this basic question, what is swing trading? So, So most of the times the trades taken in swing trade are based on technical analysis concepts. But again, this is not limited to technical analysis only. In case you are following fundamental analysis very closely, so some of the concepts like earning projections or earnings estimate, these kind of triggers can be used for trade entries as well. But this would be more specific around earning seasons or major stock events. So, I’ll just cover up a basic difference of what is swing trading, positional trading, and buy and hold approach. Now, buy and hold is more applicable to investments, but I have seen in markets that there are traders out there who like to buy stocks and kind of hold them from a trading perspective also. So, which is why I have kept this buy and hold approach in sort of a trading topic as well. So, in swing trading as I’ve said it’s a short term method and the positional holding period ranges from two days to about a few weeks. Positional trading, again, it’s sort of a medium term method. It’s not a short term method, and the time duration for a trade typically ranges between a few weeks to a few months. And buy and hold approach, obviously I told you, it’s like a trader is taking up a position and keeping that position for a period of one year or a few years. Now, this happens as well because now mostly if you buy a stock for one year or more that itself categorizes as an investment, but there are some traders out there in the market who like to keep their investment portfolio separate and like to keep their trading portfolio separate, and in that trading portfolio they kind of want to hold positions for one or two years as well. So on this chart I’ll just show you what is swing trading. So this is about swing trading, right? So these swings that you’re seeing this on the way up, this on the way down, again this is on the way down. This one is again on the way down. So these swings that you’re seeing these are actually categorized as swing trading because you are trying to capture this swing or this one, right? Now, if you see this particular movement, this cannot be categorized as a swing because there are some sort of retracements happening on the up side and the down side, right? So basically a swing is where you can clearly mark out a pivot and price either falls or rises from there. So that is the job of a swing trader. His aim is to capture the most relevant swing that is likely to happen, right? So positional trading is sort of different because a trader is more bothered about the larger price movement here. So, in this particular case that price movement would be from July to October 2015 and in this case it would be from April 2016 to about April 2017, and in this particular case it would about April 27 to January 2018. So these are the kind of moves that a positional trader prefers because he likes to get into positions and he kind of holds on to that positions for a period of let’s say a few months, right? So the buy and hold technique is hypothetically if you’re holding a position here, even if the price falls about 50% you still kind of hold that position and you don’t kind of exit on every down turn as such, and you keep on holding that position ’til the relevant conditions prevail. So, this sort of technique actually requires a lot of patience and it’s a completely different topic, which is why I won’t go there. But swing trading and positional trading concepts are more or less the same, except for the fact that time duration of trade is much shorter in swing trading, whereas in positional trading it is much longer. So, we’ll just come to the trading instruments aspect, which trading instruments are available for swing trading. Before heading forward I would just tell you that this part is a sort of theoretical part because this will actually form the building blocks for part two, three, four, and five. I don’t think I would end at part five because this is a extremely vast subject, and I think as of now I have just planned for five parts, but I think it would easily extend up to 10 parts. So, which is why this part one is extremely crucial, because you need to get your basics right in order to understand what is going to be taught in part two, three, four, five, and so on and so forth. So the trading instruments that are available for swing trading, they kind of depend on market conditions and the trend direction and the volatility conditions. Now, these three specific aspects I’ll be taking up in detail in remaining parts, that is, part two, three, four, five. But you have to remember that swing trading is sort of a short term trading method. So, which is why instrument selection is absolutely crucial here. The three most popular instruments that we have available are stocks, futures, and options. Now, in case you’re a beginner, or you are trying to learn how to trade, I will tell you that you should stick to stocks when it comes to swing trading, because the risk management and position sizing is much easier in stocks, and this should be your most preferred instrument. In fact, my personal preference is always to stick with stocks as far as swing trading is concerned. Futures is the most popular instrument because at a very small margin you can actually build up pretty large positions. But it is actually also one of the instruments that leads to huge capital destruction. So, which is why I categorize this instrument as risk to reward is not that great in this futures instrument especially for beginners, because it’s kind of difficult to manage risk in futures. Options is actually the most rewarding instrument, but the experience level required to manage a trade in options is quite high. It is more rewarding in terms of risk to reward, and there is a limited capital that you can lose especially if you’re buying options. But again, I would still say that in case you are starting out or even you’re two, three years, sort of you have experience in the market, still try and stick to stocks before you graduate to the next level. So in terms of moving up to the next level I would say that first start with stocks, then move to futures, and then finally try your hand on options, right? Because in my opinion options are one of the most trickiest instrument to trade, whether from positional perspective or swing trading perspective. I’m an options trader as well. So I trade these instruments quite frequently, which is why out of experience I’m telling you that trading options is actually pretty difficult. It’s actually more lucrative because most of the brokers and advisors, if I may use the word, they kind of push retail traders to pick up positions in options, but I think you should be away from this instrument for a long time until you master how to trade stocks. Then you need to master how to trade futures and then you should move on to options. So that is how I prefer for a trader to graduate from one instrument to other. So I’ll just come to this aspect which is swing trading as an overall market strategy. Now, why this is important is because I often see that traders commit a lot of money in swing trading and they’re also not clear about what type of market strategy they should adopt. So, swing trading in my opinion should not form 100% of your market strategy, because in market strategy, I’ll just show you this chart first. Yeah, so this is the sort of market strategy I follow in trading. So my market strategy comprises of three independent strategies, which is one is swing trading, the second is positional trading, and third is investments, right? So these three sort of investment and trading techniques actually form my complete market strategy. So this, I would say that this depends on trader, because there will be occasions where a trader would feel that he’s just a swing trader. He does not want to invest or he does not want to trade positionally. That is fine. But in general, if you’re starting out try to classify your market strategy into three sub topics, which is positional trading, swing trading, and long term investment. Now, in positional trading you should stick to stocks and futures. In swing trading you should, you can experiment with stocks, futures, and options, and for long term investments there are a lot of options available, that is, stocks, bonds, deposits, gold, silver. The list is endless. So, if you’re starting out I would say that for positional trading, which is a completely separate topic and I will cover it up once I’ve finished with swing trading and options trading topic, for positional trading and swing trading start with stocks first. Don’t move to futures and options until and unless you sort of master how to trade stocks. And long term investments, again, I have covered some bit of this topic in detail. So you can check out the channel for how to select stocks to invest in the stock market. So I’ll just come to asset allocation when it comes to market strategy. Now this is the sort of asset allocation that I follow. So I had shown in this previous slide that my market strategy comprises of swing trading, positional trading, and investment. Now the way I divide my capital is that I allocate about 10% capital to swing trading, then I allocate about 30% capital to positional trading, and for long term investments I allocate 60% of my money, all right? So, this is the sort of income categories that I have classified based on my psychological comfort level. So, for me, the positional trading that I do is my active income because I am a full time trader. The swing trading that I do is my passive income. That is, my life does not depend on this income. It mostly depends on positional trading. And long term investments, obviously you cannot categorize them as income because they are the sort of long term returns that you take out of the market. So the modified chart that I showed you, this is the initial chart. So, based on capital allocation this would be my market strategy. That 10% of my money goes into swing trading. About 30% goes into positional trading, and 60% of my money goes into investments, right? So, this is how I sort of divide my money when it comes to my overall market strategy. Now, understanding this, especially if you’re a beginner, is important. Get into the habit of dividing your money into three or four segments which you prefer. You can also add one that’s a fixed deposit segment or IPO segment, whatever segment you want to add based again on your comfort level. But get into the habit of allocating your money in terms of the various strategies you are going to apply in market, because not all years will pass by where all these three strategies would make you money. It would be that those years are extremely rare when you will make money in positional trading, swing trading, and long term investment at the same time. So there are times when investments won’t do well, only swing trading and positional trading will do well, and then there will be time only when investments will do well, and swing trading and in positional trading you won’t make that much money. So, which is why it is extremely important to allocate capital to different sort of market strategies. So now I’ll come to swing trading, when it comes to trading systems or discretionary trading. Now, trading systems is when you sort of take a set of rules and you kind of put them into a computer program and that program actually gives you entry or exit signals. Now system trading is something, it’s a good thing, especially in India. As of now, you’re seeing a lot of brokers providing these back end APIs through which you can sort of build your own trading systems and do kind of automation stuff, you know? You just buy and sell based on whatever triggers are coming out of your trading systems. Now, this is a good thing. But for a old school trader like me I’ve always preferred discretionary trading because this where my own analysis or my own reading of market comes into picture. Now, this ultimately depends on from trader to trader whether he wants to make a swing trading system or whether he wants to practice swing trading based on sort of discretionary approach where he’ll be looking at charts, he’ll be looking at other indicators and what the broader market is doing, and then taking a call whether he wants to trade in this environment or wants to sit out, whereas a trading system does not differentiate in any market condition, unless and until you have some advanced programming out there, which can see into the insights of what is going on in the overall market. I think a human mind is only capable of doing that. I don’t think various programs or softwares out there are capable enough of sort of replacing the insight that a human mind can have with respect to trading and overall market conditions. So, in my opinion most of the trading systems actually fail to capitalize on the human element and that forms a huge part of trading. In case you’ve been in the market for one or two years you would know what I’m talking about. A trader’s intuition, a trader’s judgment, or his ability to foresee what is going to happen, I don’t think there is any trading system yet that can actually replace these qualities of a trader. So, which is why I always prefer a discretionary trading approach where I want to rely on my ability to read the market rather than a system’s ability to exit or entry a trade. There’s one more point I want to highlight and that is in discretionary trading your trade management is a lot better because you, at times you look at the screen and you know that in case you are long you know that a sudden selling pressure comes into the market you can immediately, based on your intuitive skills, you can exit that trade. But that does not happen in a trading system, which is why my personal bias is always towards discretionary trading, but I leave it up to you whether you want to follow this approach or you want to prefer something like a automated trading system. That is also fine, because there are traders who get wonderful results out of a trading system because they remove their emotions out of their participation in the market. So that also works. I’m not saying that does not work. But I personally prefer to be completely involved in trading and I believe that there is no system out there that can actually replace your ability to read the overall market. So now we come to our trading approach. Now as we’ll be covering up more & more parts in swing trading you would see more of this in detail. So there are two sorts of approach that you can follow. One is the top down approach and another one is the bottom up approach. Now I have a completely different part for the top down approach. In top down approach is what happens is we start with the broader market index, then we move on to sector, and then we kind of pick individual stocks. So this approach is a more holistic approach. In my opinion, you get more high probability trades when you sort of follow this approach rather than bottom up approach where you don’t look at the index, you don’t look at sectors, you simply go to, you simply follow a stock specific approach and you pick up stocks for swing trading. Now, luckily I am doing this swing trading series in the kind of market environment which is not conducive for long trades. There are many stocks that are available for swing trading as of now on the long side, but look what will happen. If you are doing the bottom up approach you’ll be selecting stocks for a long trade but the overall context or the overall direction of the market at least for the short term has been down and volatile, and which is why I think you will have more whipsaws if you sort of follow bottom up approach, that is stock specific approach, in current market conditions. So I hope my point is clear, which is why if you start with top down approach that is you take the trend of index then you move to trend of sectors and then you pick out stocks from those sectors in the direction of trend and I feel the probability of picking out winning trades is more. So personally I practice this top down approach and that is what I’ll be showing you in subsequent parts. So before ending this part I’ll just take up the subject of platform, tools, and broker. Now again, I’ve taken up this very basic topic because traders out there are not familiar with basic concepts and these things also need to be covered in depth. Now, by trading platform I mean technical analysis softwares or a web based technical chart platform. Now for swing trading I think both of them can work. In case you have a technical software, that’s great. You can actually customize your indicators, have a pre screen ready. Every morning you can get up and directly pick out trades from that software. A web based system, web based technical chart platform does have some drawbacks, but in case you don’t want to invest in a stock software, then that’s completely fine. That does not matter. When it comes to tools I would still maintain that a proper technical analysis software has more tools and more sort of ability for you to manage or read your analysis well, just because of the amount of, or the volume of tools that are available on a proper technical analysis software. You can pick out any software you want. I personally use Ninjatrader, Amibroker, Market Delta. So it’s completely up to you in case you want to. The most important topic that I want to focus on is broker. Now quite often for swing trading I think I will encourage you to go out and pick out a discount broker that is a low cost broker because margins as such are low when it comes to swing trading profits. But do your research properly while picking out a broker, especially have a different account for positional trading and investment, because have a full time account or a full time service brokers are there. Keep your positional trading and investment portfolio with them. As far as swing trading portfolio is concerned you can maintain that with a low cost broker. Try and research on the kind of broker you’re choosing from because especially on event heavy days you do tend to see that these low cost brokers kind of, their system freezes. The orders don’t go through. So these are the sort of things you need to consider before trying to short list a low cost broker. So, do your research well. There are a lot of social platforms available where you will come to know whether on an event day that particular broker his system froze or not. What about his customer service when such things happen? You need to sort of take those things into account as well. So, keep a sort of prize on your account that you’re going to hand over to your broker. Don’t think that you have a small account today which is why you need to compromise on this broker aspect. Today you might be small but tomorrow you may grow into a very big trader. So, which is why always, value yourself more, and ask questions to your broker before trying to sign up. Have a demo of his trading platform. See whether his systems are capable enough to handle an event heavy day, and only then you will go out and pick out a broker. So, I’ll just summarize the key points here. So this part was a very basic part that I wanted to do for even beginners who don’t know much about swing trading.

There are a lot of unethical educators out there a lot of people selling dreams you know false expectations and people are really falling for this stuff and losing a lot of money that they really are and I lost a lot of money myself and over the years I’ve worked with thousands of traders and I’ve seen a lot of predictable patterns I’ve seen what works what doesn’t work and it is a massive failure rate it is a massive failure rate we know that from local statistics that about 90 percent of people lose 90 percent of their capital within 90 days and I had an appetite for risk and I wanted to just accelerate a little bit so I started exploring speculative markets like options and Forex and I went into Forex and I blew around 36 to 38 grand initially that’s how much that the learning curve that people usually experience or is that just kind of I think I think I made every mistake possible okay yeah I followed you know signals and all the bad stuff that I’m gonna go through with your listeners but after that I became very good I learned a lot about what didn’t work which allowed me to become really good and I later on realize that it’s actually you should be focused on not what you’re not losing rather than what you’re gaining and and if you can just focus on that you become very good what we’ve seen is is very predictable patterns in why people fail because we’ve been analyzing data on the behavior patterns of people what that you know how engage they are sure how accountable they are what are they watching what process are they taking are they going from the start to the finish and they skipping and they jumping you know jumping ahead and that do they actually want it you know they got realistic expectations and I’ve produced a framework almost that will that will guarantee your highest probability of success obviously it’s down to you as a show either in the end based on looking at the behaviors of past students of those people who haven’t had a good experience with it absolutely and if you follow the framework in this way which a lot of it is down to psychology by the way you know the skill is is the minority believe it or not and that’s pretty much the same thing as well with investing in the stock market it’s the psychology of it you know as far as the investing goes and the fundamental analysis that’s based on looking at the numbers and the principles but it’s a totally different experience actually doing it so I’m gonna go for a bit of a framework from basically information and the data that I’ve analyzed over the years and I want to just before we get right into that I just wanted sort of be bunks and MIPS because some of you reading are probably thinking I get asked all the time isn’t it gambling is it risky sure I know I’ve said things about the channel about it yes to be honest I don’t know a lot about the trading side of really I don’t watch enough don’t know much about it at all so and and like anything you know the markets or the market they just do what they do and it’s not the market that’s risky it’s the approach you take to the market that’s risky so if you think about a casino for instance you’ve got one-armed bandits you’ve got cusine you’ve got poker table you’ve got blackjack got roulette and the reason the casino comes out on top in the end is because there’s no one who’s consistent there’s no one with an edge they just go there blow some money they’ve got no strategy no plan and they are approaching the casino as a gamble right whereas if you look at the winning poker table it’s always the same players they’re always the same players at the top of the tournament they’re winning the tournament time and time again because they’ve got an edge they’re not approaching the casino as a gambler they’re approaching the casino as a business it’s like they’ve got an edge they’ve got a risk management strategy and money management strategy they know when to get in and get out they know when to stop and then I went to continue and the markets are exactly the same they the market you cannot control it just does what it does so it can’t be risky the market can’t be risky your approach to the market is what’s riskier that’s their make sense yeah so lots of people think that it’s risky gambling but it’s down to you to approach it professionally as a business the next thing is that people think you need to know about all the global affairs you know what’s going on in the country or current events and how what’s going on and the political landscape and absolutely you know unemployment rates bank rates all that type of stuff and that’s not true either so as technical as a technical trader I’m looking for patterns in the market I couldn’t care less what’s going on in the world if you you know the market doesn’t affect me the bank rates don’t affect me bricks it doesn’t affect me I’m just looking for a problem a probable edge out of patterns in the market that are predictable so you absolutely don’t need to know about all the global affairs of what’s going on and lastly on that people think you need lots of equipment lots of peace you know you know obscenely TVs six computer screens and all kinds of stuff going on in short subdue you need all that or is that just kind of and something that helps you or is it yeah I have to keep the process I started trading on a 15-inch laptop so you absolutely don’t need all those screens I say once you get down the road you know it’s good to have two screens at least you don’t you absolutely don’t need six screens down the road you might the reason they have six screens or eight screens is because it’s they’ve got a lot going on and and to make it easier they have different charts and different screens sure you’re not going to be on Wall Street from from day one and you absolutely don’t need tons and tons of equipment there’s a saying there you don’t own money from trading your own money from waiting ok and and it’s absolutely true although you know essentially is trading in the end but you you trading requires a lot of patience and one of the other myths is that people think that you always have to be in a trade when you absolutely don’t you what we’re waiting for is a set of rules to play out and then we know we have a paper-thin edge over market sure the probability of what’s likely to happen next based on that pattern happening provides us with our edge and if we can consistently trade that pattern that’s how we earn the money so that could be one week that could be five in a day that could be once a month Wow and and that’s how it goes don’t look at it as a get-rich-quick vehicle like if you’re trying to think about how much money you can earn from trading you’re really missing the elephant in the room it’s it’s it can be the fastest way to grow your wealth I’ve you know I’ve I’ve invested in businesses I’ve invested in in property of invested in stocks and shares and you know this really is the most rapid way to accelerate wealth but if you’re just chasing the money from day one you’re enough your own reason you’re in the wrong reasons the first step in in the framework the most important thing is to actually want it right and and what I mean by that is so many people out there are sort of fantasizing over someone else’s dream they see someone that’s hit a trade and or they you know this crap where they’re flying around in rented helicopters and Lambos and yeah and the money I’ve seen it all of course of course and flashy lifestyle that kind of in-your-face you own up your rich absolutely yeah and what people do is they go what you doing and they say well I’m trading and then they go oh I want to trade but do you want to trade because I’m telling you if you don’t enjoy actually looking at the markets and you know enjoy solving the puzzle sure you’re not going to stick with it because there’s lots of hard work down the line you’ve got to put in if people tend to ignore that hard work piece and they just see oh this guy’s driving a Lamborghini I can do that too if I started doing whatever he’s doing the second thing is expectations so this is the next problem people because of the way it’s advertised on TV or these adverts people think they massively overestimate what’s achievable in the short space of time for the first 12 months sake sure they think that they’re going to double their account in a month they think they’re gonna be on yachts in a year yeah and and it’s just it’s just not realistic it’s not realistic it’s not going to take you I’ll be very surprised if it takes you less than 12 months to really go through the process and learn properly Evie and have a system that you’ve tested and you know paper traded even and then gone out into the markets I’ll be very very surprised but then because of that when they actually start doing it they figure that’s quite hard they blow a load of money and then what they do then is they underestimate what’s achievable from 12 months sort of 24 months say sure and you know that’s when the results can really really compound and you see exponential growth and people get turned away by that so what I want to do is just give you some expectations so it’s gonna take you around 12 months to really really learn and then after that you know the money if you can just go through and go through the process then right wait the money just comes now in that 12 months how many hours a week or a day are we talking about you it depends what type of trade you’re gonna be and I’m gonna go through that in a bit more detail but you can do anything from the testing is what takes the most time I’ll test the testing is what takes the most time because you you’re essentially testing a strategy back in time and and that can take you know you want to go back about five years and I’ll go that can take a long long time depend on how many markets are going to be looking to trade sure so that’s that’s the most time consuming and the most grueling bit first thing I want to talk about is the difference between fundamental analysis and technical analysis because there’s no right or wrong you know there’s people that rubbish either or yeah and the truth is there’s no analysis that tells the future so as much analysis that you do you have no idea what’s gonna I mean you can kind of manage your risk involved with investments but there’s never a guarantee that the markets gonna go any one way or another no so I think it’s crazy when people say oh that’s you can’t use technical assets it’s crazy right so fundamental analysis is more news based more you know the economic data what’s going on in the world and really the reason that I don’t like to use fundamental analysis for trading is because you’re not guessing the the figure or the result you’re guessing the the market participants reaction to the result which is impossible like it’s you can’t you don’t know how people are going to react to a certain news release with technical analysis and Colossus is is based on psychology so there are patterns in the market although people think the patterns are you know they we never know what’s going to happen next in the markets right but contrary to popular belief there are patterns in the market that stood the test of time they’re not entirely random and the way that we build our edge is to identify a sequence of patterns in the market so that we know that if we get this pattern then it’s likely to do this and it should and that is and then what we’re looking to do is build rules around that pattern so if we see something that happens frequently and we go back and test that and it’s happened frequently for five years or six years or ten years then if we can build rules around entering that exiting there that move then we’ve got a high probability we’ve got a positive expectancy you’ve got a system that provides us with a positive edge of statistical positive itch and that’s really all we’re looking to do so the reason I love technical analysis is because we don’t have to worry about what’s going on in the world there’s a saying that a technical trader can trade the market regardless of no in the market and although that’s not entirely true because you have to test the markets sure that what is what they’re saying is because of the technicals it’s the patterns we’re looking for it’s not necessarily the market even it could be Apple Google it could be currencies it could be futures it’s the patterns we’re looking for in the psychology we can only look at the way that markets move and how we can identify some patterns and I’m going to be going for a simple pattern that I want to share with you that then you can go and identify for yourself so the first thing I want you to be aware of is the market moves how the market moves a cake because what you’ve probably seen the market move up and you’ve probably seen the market move down and you’ve probably seen the market move sideways well what we’re moving up we call this a a bullish trend and when we’re moving down we call this a bearish trend and we’re moving sideways this is either called ranging or consolidation now when we see the market moving in any direction there’s certain things that we can pay attention to that are likely to cause a reaction or the markets likely to respect the first thing is going to be even handled numbers so if we’re talking about the market being driven and you know the patterns in the market being respected by psychology patents being psychologically driven sorry one of the things we’re paying attention to even handle numbers so anything like a dollar flat or 1.5 or 1.1 1.2 anything with an even handle number the market tends to respect more often than it doesn’t okay so not every time but more often than it doesn’t remember we’re going for that statistical edge another thing that the market respects are numbers with fifty in it so anything with 50 so 1450 1550 1350 so 50 and even handle numbers just bear in mind that that’s respected and any time that the market respects any psychological number what we see is structure so the next thing we’re gonna show you is how the market moves so what you’ll see is this sick lissa T where we see cycles in the market of a new high a replacement and then we’ll see a new high and then we’ll see a retracement and then we’ll see a new high and the market moves in herbs and flows like this and usually the structure this is what creates structure and normally these structure levels are created by even handle numbers or significant levels of importance that have been respected previously in the market now what also tends to happen is as we push up what we call this is a resistance level and what we call this is a support level so this is like the ceiling where we hit resistance this is like the floor where we bounce we hit that support level what we normally find is that when we put in new highs and we push back down previous resistance then become support so the structure is actually respected as well so one of the things I just want to touch on is how to identify a trend and then what I’m going to talk about is how we look at the end of the trend and we can predict a reversal so first of all to identify a confirmed trend we’re looking for a repoint move so we’re looking for this move the retracement and then the new structure hi and then what we know is we have a high probability that the market is going to continue up until we violate this previous outside return or retreat here at which point we’re in consolidation and then we need to look for that free point move again 1 2 3 in order to make a prediction that we’re likely to see a continuation to the downside so normally we see this this this this until we end up reversing again violating this outside return or a tray sment and then we look for that free point move again and it just continues like that and the reason we do that is because once we hit that 3-point move we know we have a higher probability that the market is going to move up or down depending on what direction we go in it now the pattern I want to talk to you about today there’s many many different ways to make money in the market and I’ve been over certain things that effects structure in the market like even handle numbers 50 levels previous structure and historical levels that have been respected time and time again um but what I want to go over in this video is when we spot a reversal so there’s a there’s a pattern that happens frequently at this point that we can use to short the market at the end of a bullish trend or if we’re in a bearish trend we can then look to by the end of the bearish trend and look to buy this up so there’s a simple pattern here called a double top now you might have heard of this referred to as a V top but it’s a double top and essentially what it looks like is this we get to the end of the trend we then have a small retracement here and then one final push up we get rejected at this test and then we fail to put in a new high and then we roll over and this is called a V top or a double top and I’m gonna go through the rules of this right now okay so let’s just say for instance that the markets been pushing up and we’ve identified our test our initial test and then we’ve started to retrace what we’re looking for for this to be considered a valid double top is a test of this high so this high wick of the candle we’re looking for a test of this level so this zone here for the second test so what we’re looking for is a test of this high and what we can’t do is close above this previous high so if the if the candle pushes up and closes above this previous high what we’re talking about then is a continuation to the upside so it’s important that we wait and we wait for the close of this candle and as long as it doesn’t close above the high it can do this it can push up and put in a higher high but it can’t put in a higher close so we’re looking for a test of this zone we cannot close above this high and as soon as we get a valid retest which can look like this it can look like this okay it can even look like this or it can look like this okay because we’ve tested this zone and we haven’t closed above soon as we get this formation this is considered a valid double-top now normally the double tops are price and time symmetry on the retracement so we have price and time symmetry on the replacement as well but essentially what we’re looking for is this little V and then we’re looking for a retest of the initial test high but not a close above the high and this is what we call a double top and and what typically what we’re looking for after this is to enter a trade on the next candle and then we’re looking for the market to roll over when can you consistently be in front of your charts because people have jobs people run errands people take the kids to school sure they’ve got their shopping coming on Tuesdays got the pins going out on the first Yeah right when can you actually consistently dedicate time to being in front of your charts because what we’re going for here is consistent profits so everything needs to be great based off of a consistent plan so it makes no sense for someone who’s got a full-time job to try and check charts at between to a client or they’re rushing people meeting it’s just it’s silly just you don’t want to do that first thing want to do is go right whenever I got an hour to dedicate it might be at lunch it might be an hour after work after the gym when I can interrupted time veces interactive time it doesn’t matter it doesn’t matter if there’s more you know volatility it doesn’t matter what’s going on just make sure it’s a dedicated time that you can just dedicate to being consistent and then just find one pair for now one market so don’t try and you know find lots and lots of different markets don’t scale through different markets just get to know one the markets behave in different ways there’s different markets that behave different ways and it’s best just to know one pair and if you if you’re looking at what market to look at just pick one of the majors so one with the dollar in it so you’re gonna get a bit of movement any pair of the dollar is gonna be dollars the base currency for the world and if you pick up a pair with the dollar you gonna have some movement sure though it’s not gonna be boring there’s gonna be some something for you to test there’s going to be something going on but just pick one so euro dollar pound dollar you know trading is a business and these markets that I’ve got on my screens a my employees they my employees they’ve got different personalities some perform better under pressure some perform better in the summer some sharp late you know it’s very very similar to running any type of business and if you look at it like that you’re gonna appreciate that some are going to perform differently and also if you did start a business you wouldn’t employ 30 people and a one it’s very that’s a very good way to explain that yeah right it’s insane you just wouldn’t it’s kind of like cuz I talk a lot about passive income on the channel they say the average millionaire has seven sources of income you would get people who want to start all seven at once and it’s like what are you gonna do dedicate one hour a day to each one and then become a millionaire so you you do one very well and then you move on to the next one so it’s so there’s a lot of ways that that’s applicable and then once you’ve got your pair then and you’ve got the strategy what you want to do is you don’t just want to take every single setup that you see you know if you if you was to go through different markets and apply one strategy you probably have thousands of thousands of different opportunities per month what we want to do is we want to add some filters to that so that we get the higher probability move so although we’ve got an edge by identifying a pattern in the market what we really want to do is identify the really high probability and you can add things like filters and what I want to do now if your listeners is just show you how we go back to that example I just gave and then add some filters to that to really give you the higher probability trades so let’s jump back to the desk all right so what else we’re building out a trade plan what we want to do now is take the double top principle and we want to apply some filters so we’re not taking every double top that we see because if you if you just apply those rules and you look for those rules for a valid double top you are actually going to see them form in many places that don’t provide high probability trading opportunities so what we’re doing is we want to build some rules build out a plan and say I’m gonna have some filters in place so that I only look for these trades in the highest probability zones so taking into consideration what I’ve been over already what we’re going to look at is we’re gonna see that we’ve pushed up here and you can see that we’ve we’ve held this level before we’ve started to see a rat race Minh so we’re monitoring the market pushing up and we’ve seen a hold of this level which just so happens to be the zero 950 level so if you look over here on the right we’re at a psychological number that 50 level and we’ve hit that level and what I’m gonna say is if we zoom out now so if we just zoom out this market and we go back in time we’ve put our horizontal line in and we’ve scrolled back in history and we’ve seen actually we’ve tested this level once twice three times four times five times six seven right and we’ve held this level much more often than we we’ve broken through so every time it’s tested it holds more often than it doesn’t okay before it’s violated so what I’m gonna say is you have a rule in your trade plan to say I need at least three previous touches of this level before I consider entering this trade so the first rule is a minimum of three previous touches of this level before I take the trade the next thing I’m gonna look for is something called the RSI so this little squiggly line down here is the RSI which stands for relative strength index and what this does is it indicates overbought conditions in the market now I’m not going to go into too much detail on this right now but just know that if we’ve pushed above the overbought condition it indicates that the markets running out of steam so if we couple this as a filter with the fact that we’re at a psychological number that’s been tested three times at least three times previously we’re likely to see a little retracement now we’ve seen the retracement already so now what we’re looking for is that second test and that rejection that hold of this level so what we’re going to do is we’re going to watch what price action does next we know we’re interested in this level now we’re going to peel our eyes and wait for the rest of our rules to be met which I’m going to explain right now okay so you can see that price action started to push back up but remember the rules of the double top we are actually we need a test of the higher the previous high which is this little zone here the wicks the high wicks of the candle we need the price action to push up and at least test that zone and not close above the higher of that test so let’s see what happens next all right you can see that this candle here hasn’t quite tested the zone it’s pushed up but it hasn’t quite tested the zone therefore it’s not valid so we can’t take the trade yet and what I’m going to be looking for on the second test you know I mentioned that we were overbought what I’m gonna look for is some bearish divergence so I’m looking for equal tests of this high and I’m looking for bearish divergence so a slope down on the RSI equal tests of the high on price bearish divergence on the RSI and that’s going to be used as a another filter so so far we have psychological number okay which I’ve moved psychological number at least three tests of the of the level previously overbought condition on the initial test and then bearish divergence on the second test and by waiting for those filters alone it’s going to turn your trading opportunity that you’re looking for your trading strategy and your plan into a very very high probability system so let’s see what happens in it alright so you can see on this candle we’ve actually tested the zone we haven’t closed above the high so what we can do now is actually sell the market next bar market so what that means is as soon as this candle closes and we have to wait for this to close because if we don’t wait for this to close the chances are we can push up and close above the previous high which would mean it’s invalid so we wait for the clothes we wait for the candle to close and then we sell the next bar market and then what we want to do is we want to put our stop loss above the high and I’m going to use a 10 pip stop-loss we’re gonna go 10 pips above so we going to be up at 6009 60 and we’re gonna take profits off for this example at a retest of the low so we’re just looking for a pullback down into a retest of this low so we’re gonna sell this now next bar market and we’ll see what happens next so there we have it you can see that we’ve rolled over this is a high probability because we waited for those filters to be met we didn’t just take any double top that we saw we waited for those filters which gave us an extremely high probability of being right and in fact you can see here that we continued down even further so that’s how you identify a trading strategy and put a pattern in the market that happens frequently that’s how you add filters to it to make it a very very high probability trade rather than just taking those low-quality trades and that’s how we combine it together to really give you those high probability moves so let’s just say for the sake of this this example that this risk here where we entered was 1% of your account then if we just clone this you’re gonna see that this was a 1 about a one and a half risk one and a half to one risk reward which means this would be a one and a half percent profit on your account in one trade we’re hunting into like ten opportunities a month here to really get those high probability trades out of the market and what that does it suits many people’s personality because if you like me I personally like to be right more than I’m wrong and I like to win more when I’m right than I lose when I’m wrong and I just like that edge something some traders I know they’re happy being wrong you know seven times out of ten and they’re happy with that because they’ve got a much bigger risk reward profile okay so is that based on your personal preference or is it kind of based on your risk tolerance or you just kind of figure that out through testing it out absolutely it’s your personality really you know it’s so important to build it around your person as if you’re not happy taking you know if you’re not happy being wrong more than you’re right then just don’t do don’t have a system that doesn’t sure yeah right I like being right at least fifty percent of the time because then I know I can make money with money management and I’m going to talk about money management now so once you’ve found the system that is profitable and it’s proven to be profitable what we did where the real moneys made is through money management so this is a strategy if you think about a coin flip if I was to flip a coin if you flip a coin a hundred times over that hundred times you’re likely to be right fifty times there’s a 50/50 flip if every time it was heads I paid you a dollar and every time it was tails you had to pay me 50 cent you’re gonna want to flip that coin as many times as possible because you’ve got a statistical edge sure of having 50% but you’re gonna win more over time you’re not gonna lose as much when you lose you’re gonna make more when you’re right absolutely so that’s called risk management if we was to add a money management strategy to that let’s say for instance every time you hit ten winning trades or ten winning flips we we increase the size and every time you lost five you decrease decrease so what we’re doing is we’re protecting our capital as we’re going for a bad period because there will be losses sure our losses and then we’re increasing your capital or your position size as we’re as you’re doing well is you’re going for those hot streaks and what that does is it allows you to accelerate your account and protect your capital and with the markets it’s the losses are the same as any other business it’s it they don’t come in the same order so if you think about a product if we sell a physical product we’ve got a markup on that but with your overheads okay and we’ve had a cost of producing the product so if we sell the product for ten dollars we might get three dollars profit at the end of it and every product we sell we know that we’ve got to pay the overheads we get three dollars and we’ve got the profit we’ve trading the losses are just the cost of doing business and then the profits they don’t come on every trade okay it come it’s overtime so you could have a week of losses and then you could have two weeks of winning trades so it doesn’t it’s not on every single trade that you get the profit and loss that’s what people really struggle with because they’re they think I’ll god I’m losing trades but that’s why it’s important to stick with a plan because you know you’ve got a statistical edge over time sure we’re gonna talk a bit about back testing now because now you’ve got the plan and you’ve got the rules and you’ve got you know you you understand money management the first thing you need to do or the last thing you need to do I should say before you go live is to test the system and this is the thing that skipped most this is you know I would say that 98% of the people that go into trading don’t do this bit really yeah do you think this is a big part of why that failure rate of so high 100 yeah for me take my example for instance for me personally it was a turning point it was it was what changed me from just blowing money to being very consistently vulnerable and I’m gonna talk a bit about back testing so once you’ve got your market and you’ve got your system your strategy you want to go and test that over time so use your historical data that I went through on the trading platforms and what you were looking for is a minimum of five years or a hundred trades whatever comes so depending on the timeframe if you’re if you’re very small timeframe you’re looking for you know hundred trades which might be two years or if you’re on a higher time frame on the four hour or the sixty you might have to go back five years to get 100 trades right so you want a minimum of a hundred trades and all five years of data okay what the back testing phase does is it gives you black and white results on the probability of your trading system so what you then want to do is go out and replicate in the markets what you’ve tested you don’t want to deviate from that at all you don’t you literally want to build the rules off of your back tested plan and say this is what I’m gonna do going forward and it’s a set of tangible rules that says this is the results you’re likely to expect so go out and do these done the historical data look at it so if you’re if you’ve got a system that provides a return of you know forty percent fifty percent return on investment per year you want to stick with it you want to go with that right you don’t want to tweak it but the amount of people then get that and then go out and start breaking the rules I think oh why am I losing money or the other problem that ADA is a test one market and because that’s profitable they bring in another market and they assume that the strategy works on that or they try to take that strategy and apply it to a different market they can’t be bothered to test it right because that’s probably is this the most time-consuming aspect of it yeah it takes around it’s gonna take it takes me around 20 hours per market to test about test and I would say that you need to test one market one strategy one time frame at a time so you don’t to be jumping around strategies you don’t to be jumping around markets you just want to get one whole set of results done sure it’s gonna take about 20 hours to do one can this be a hobby or is this something you really have to be all-in about I mean can you just day trade casually or you know get involved with trading casually where maybe a couple days during the week you want to sit down and trade or do you really have to have that dedication to this yeah that’s a really great question and my answers no you cannot dabble okay in trading you have to show up you know summer months are gonna be quiet Christmas is quiet the the big institutional traders who move the market they’re the ones that go to the Hamptons for the summer and you have to understand we don’t the market in reach our traders we have no power moving the market that’s the same way with retail stock market investors as well your by order of 10 shares of Facebook it’s not going to move that you know so all we have to do is you know during those slow periods we just have to show up because there’s gonna be maybe one trade two trays that we catch that keep us afloat sure a summer and we’re really looking at a return on investment over time here we’re not looking at you know a consistent hundred pips per day or a thousand pounds per month its it’s over time it sure you’re gonna you might have a month where you lose you might have a negative month you might have a break-even month you know June for me was extremely profitable May was flat and then February was very profitable and and you know April’s back so it’s just looking at the average over time okay and you have to show up you have to be consistent but there that is very interesting because I’m sure a lot of people maybe don’t want to go all-in with this and it’s important to realize that it can’t just be a hobby no it can’t be a hobby you need to want it you need to know why you want it you need to have realistic expectations you need to hold yourself accountable you need to learn the right way start at the beginning in the process go for it the right way and then you’ll have the results that you want to do that you want it’s as simple as that the results are inevitable if you just go through that process sure alright so finally let’s just talk about results then if you’ve gone through that process realistic results so people think they’re going to double their account week off the week that’s absolutely ridiculous what you don’t want to do is risk so much that you’ve taken a big hit and you are now having to make up so much money just to get back to break-even sure you know I use a a smooth ratio money management strategy which I’ve been over most people some people who’ve just get into trading use a minimum percent risk of their account so some people like to say 1% I’d say that’s a good start right you don’t want to risk more than 1% of your account on any one trade and if you can consistently do that and just focus on I’m not breaking that then it’s gonna take you a long time to be out of the game right you’re gonna you’re gonna have it you can have your poker chips if you risk if you blow 50 percent of your account you’ve got to make up a hundred percent of your account yes I’ve mentioned that too before people think like 50 percent lost 50 percent gain but that’s not going to get you back where you started if you have a 50 percent loss you don’t have to double your money to start back and it’s very hard to double your account it’s very very hard to cure account so realistically in terms of results what you’re looking at is if you can be consistent and you can go through this process and learn the right way you’re looking at around three maybe four percent conservative per month which compounds out you know forty percent per year which is which can do them astronomical things to your money I mean I know a lot of people don’t understand the power of compounding but that’s I know it sounds like a little bit but that’s that’s has you know a huge impact on your of cause and if you couple that with obviously passive investment sure you know and then something else that we could also tie in here as well as do you do you recommend that a lot of people maybe like take some of the profits from the high risk side of investing and put it into a more passive strategy so when I started when I started trading well sure I was investing anyway I’ve got automated systems that do my investments and everything and I was when I started trading I started splitting the money 70/30 so I had a 70/30 split and then as I became better and better I went to a 50/50 but absolutely if you take some of the profits that you’re getting from your investments and you put them into your trading account then you’re talking about a serious sure acceleration strategy there or the other way around as well where maybe you want to take some of your profits and put them into into an investment strategy were okay so you don’t have to be polarized there where you’re one or the other you can do a mix of both of these things just find your strengths you know again you’re not going into trading as the beer one end or this is another wealth acceleration strategy it’s not something that’s the end sure it’s it’s just gonna help you achieve financial independence quicker that’s that’s it .

What are pip how do you calculate your value per pip on your profits and losses. I’m gonna talk about that today.So once the pip is the smallest movement in a currency pair, now pip is actually a short form because it actually stands for percentage in points. Exchange rates are total in either two decimal places or four decimal places meaning that one pip is 0.01 of the price one pip is equal to zero point zero zero zero 1 of the price so which are currency pairs that are coated two decimal places and which I’ll concede pairs that are coated at four decimal places so why do you need to know this because you need this to calculate your value per pip later on and why do you need the four because you need that to calculate your profit and also your position size for you to remember it easily so they don’t memorize it one by one currencies with the yen in it would be coated at two decimal places where’s the rest of the currency pairs they will be quoted at four decimal places so if I take dollar yen for example okay because you see again right here in this pair then one pip would be equal to 0.01 so to give you an example how do you calculate the amount of pips so let’s take for example say today the price of dollar yen earlier in the morning it was at about one one 0.294 okay and then right now it is about one one zero point six five eight so if you calculate how many pips did it move from this morning all the way to right now based on this two decimal places one one zero point six five minus one one zero point two nine you realize that I ignore the last number because most empty four platforms they give you and at this number so when you calculate this you will get 36 pips movement well if you go to empty for you use the crosshair function you will get the number 360 that’s actually 360 points but your contents or pips it will be 36 pips but then again if you want to be more specific then you can add in the last number four and eight okay so when I put this in and four you get the D six point four pips so let’s take an example your dollar okay we are near. Take your dollar would be quoted in for the small pieces okay 0.001 so let’s say if you make a sell trick at one point one five seven nine three and then you take your profit at one point one five three six five how many pips did you just harvest the same thing again we ignore the last number because most empty four platforms they would have an extra number the back alleged using a different form different broker so we take one point one five seven nine minus one point one five three six okay we are math 9-6 three then for the trip you put in the last number three and five point true now do your math in mind 610 would be forty two point two pips okay for the two point two pips so before I talk about value per pip for different country pairs you need to understand the number units per lot first once their lot would be hundred thousand units right after that you have one mini lot where your training ten thousand units of the base country well today you have one micro lot we’re trading 1000 units of the base currency and followed by that you have not hundred units of the base currency so to give you an example so when you buy one lot, you’re always buying the base currency so for example if you buy one standard  lot of your dollar what you’re doing is that you are buying 100 of Euro with u.s. dollar now that you have known oh these things nice time to calculate the value per pip all right so the formula goes like this depending on the can see pair with us tool of all this what pays us you need to determine what is the decimal place of that currency pair then times that with your tree size where that’s hundred thousand units 10,000 units divide that by the current exchange rate or current market price meaning that this is where you look at a chart and determine okay what price is your dollar at right now what price is dollar yen at right now and here’s the good news nowadays you don’t need to calculate this yourself manually because number one what people are very lazy number two a lot of people are very busy number three a lot of people calculate wrongly when there is an online calculator and it’s there for free you use it when there’s something that’s given to you for free you take it so why don’t you have you this formula for is just for you to double confirm let’s say if you don’t trust the online calculator that some random person gives you or if you’ll know if your computer then you can calculate it manually let’s say when you’re traveling you’re using your phone to trade then you calculate this manually to give you an example .

Hope this will help you calculate Pip value in Forex.

Let’s say that you made 10 pips. Is that a lot of money? Is it not a lot of money? How much money is it if you make 10 pips? Well, it all depends. There are in the world of currency trading, three different primary trade sizes and this applies to 99% of all of you that are gonna be doing trading. The first trade size is the smallest and it’s called a micro lot. This is what we use when we first start trading and it’s the smallest trade size possible. Now inside of your trading account, you might see, when you open up an order window, the word volume. This refers to your trade size, okay? So it might say volume but it refers to trade size. And there is a bunch of number with decimals and I wanna break those down, as I mentioned starting with, if I can anyway, starting with the micro lot. So this is referred to as a micro lot. I don’t know why they use the word lot but it’s a lot size or it’s just trade size, lot size, micro lot, whatever. A micro lot represents 1,000 units of currency. So 1,000 units of currency. And it is generally shown in your trading account as .01 as the volume or as the trade size. So I’m gonna use the word volume here because most of you are gonna use Meditrader and that’s the word you gonna see. So that would be the volume. This is worth 10 cents or 10 pennies or what’s the fraction in Pounds? Fraction of a Pound is? – 10 pence or whatever currency that you’re dealing with in your country. The trade size is a micro lot, it’s the smallest one you can probably trade, it’s 1,000 units of currency, it’s a trade size of .01 or a volume size of .01 lots and for every pip moved it’s 10 cents. So going back to our original question. If you made 10 pips trading one micro lot, what would that be worth? And if you’re playing along at home, let me know. If you made 10 pips what would that be worth? And you can shout it at your computer screen. 10 cents? No. A dollar? – A dollar, so 10 pips, great job 10 pips equals one dollar or if you’re trading in the UK one pound or if you’re trading in a euro denominated account one euro or if you’re trading in a yen account it would be 100 yen, if you’re trading in Australia with Australian dollars, it would be one Australian dollar because you made 10 pips, each one was worth 10 cents. Now these numbers are approximate. For most currencies this is exactly what it will look like. If you’re trading the Japanese yen, it might be seven cents per pip or eight cents per pip. If you’re trading the British pound, Australian dollar, it might be 13 cents a pip or some other number close to this number. That makes sense? So it’s close to this number, that’s a general range. The next trade size that you can trade is a mini and it’s 10 times larger than a micro. What’s 10 times larger than a micro 1? – So .1 is the volume, excellent. That’s the volume and you would be trading in this case 10,000 units of currency instead of 1,000. So if every micro lot was worth 10 cents, what’s every mini lot worth approximately?  One dollar. One dollar, one Australian dollar, one pound, one euro, 100 yen and so forth on down the line, depending on where your account was initiated. One dollar per pip. Now this is a general number. If you’re trading the US dollar, Japanese yen in the United States it might be worth 79 cents, might be worth 80 cents. You’re trading the British pound, Australian dollar it might be worth 1.20 dollar or something along those lines. It’s gonna change but it’s gonna be in this range. So if you make 10 pips on a mini lot? How much money have you made? 10 dollars. – 10 pips on a mini lot would be? – [Nate] I was gonna say that was 100 but I guess I’m gonna go with 10. – It would be 10 dollars because one pip is worth a dollar and 10 of them would be worth 10 dollars. Now what if you made 10 pips but you traded two mini lots.20 dollars.How many units of currency would a mini lot be worth? 20,000? – 20,000 units of currency. What would the volume number look like? Ah, .2. – .2 and what would the dollar value per pip be? Two. – Two dollars. If you traded, what if you traded five mini lots, play along with me at home. What’s your value per pip on five mini lots?Five dollars. – Five dollars, there you go. The mini lot is one of the most commonly traded units. When I started trading in the year 2000, you couldn’t trade a micro or a mini. You had to trade what is called a standard. Standard lot was the original largest trade size. Well it was the original trade size, everything was quoted in standard lots. If a standard lot is 10 times larger than a mini lot, 10 times larger than a mini lot, what’s the standard lot in units of currency? 100,000 units of currency. Okay, so you’re controlling the euro, dollar for example, if you trade one standard lot, you’re controlling 100,000 dollars worth of euro, US dollar. Sounds crazy, sounds big, it’s not really that big. Standard lot is 100,000 units of currency and how would you quote that with volume? One. – It would be a one, a 1.0 volume or trade size, one lot. That was what they used to call it, they didn’t have to call it a standard lot cause it was just the only one available. And what’s the value per pip? 10 dollars per pip. So if you made 10 pips with a standard lot, how much money have you made? – [Nate] 100. – You’ve made 100 dollars. Now we’re gonna talk later on about how much money you need in your trading account to trade these sizes. But now you have a good idea of what each of these is worth. So we’re gonna do a little quiz here and you can play along at home. Using the stuff that you learned inside of this lesson, if,  if you made seven pips with, no. If you made 10 pips with 7 mini lots, how much money have you made?You’ve made seven dollars.Seven dollars. I gotta write slower here or else the board really dislikes me. If you have made 10 pips on five micro lots, how much money have you made? 50 cents or 50 pence or whatever. This is great. If you have made 10 pips with 20 standard lots, how much money have you made? Thousand? – So you’ve made 20 times 10.Oh. Which would be 200. – 20 standard lots, 10 pips, 200 dollars. Okay, so now you know about trade sizes and pip values. Remember these numbers are approximate. If you’re trading the euro, US dollar these are exactly correct. And if you’re trading the pound, Japanese yen these numbers slightly change but stay in a range that is very similar. The best way to experiment with this is to open up your demonstration trading account and to play around with taking orders and taking trades and whatever else.

What Market is telling us in different time frames.
Overall still down let see how it plays in M5 time frame.

 

M1=Down 

M5=UP 

M15=Down big bounce from bottom

M30= Down resistance near 1.1675 area

H1=Down resistance near 1.1692 area

H4=Down resistance near 1.218 area  

D1=Down

W1=Down

What Market is telling us in different time frames.
Overall still up let see how it plays in M15 and M30 time frame

 

M1=Down bounce to break resistance around 112.35

M5=Down 

M15=Down

M30=UP Pullback testing support near 112 area

H1=UP Pullback Resume 114.55 support around 110.75

H4=UP Consolidating 114.5 area to resume  

D1=UP Major Support at 100.6 resume up around 114.75

W1=UP Major Support at 75.5 resume up around 118.70