Rana - Three Lines Forecasting Forex Price Action

The market does not know if you are long or short and could not care less. You are the only one emotionally involved with your position. The market is just reacting to supply and demand and if you are cheering it one way, there is always somebody else cheering it just as hard that it will go the other way

- Marty Schwartz, Pit Bull

Copyright 2016 R. Rana

All rights reserved.

Color print

ISBN-10: 1530292018

ISBN-13: 978-1530292011

B&W print

ISBN-10: 153029181X

ISBN-13: 978-1530291816

TO MY LOVELY WIFE AND TWO DAUGHTERS

Forex technical analysis using demand and supply strategy

THREE LINES

TABLE OF CONTENTS

WORD/ABBREVIATION LIST

Australian Dollar (AUD)

Bank for International Settlements (and Triennial Central Bank Survey)

Bloomberg

Bretton Woods Agreement

British Pound (GBP)

Canadian Dollar (CAD)

Charles Collins

Charles Dow

CNBC

CNNMoney

Commodity Channel Index (CCI)

Dow Jones & Company

Dow Jones Industrial Average

Dow Jones Transportation Index

efficient market hypothesis

Elliott Wave Theory

Euro (EUR)

European Central Bank (ECB)

Federal Open Market Committee (FOMC)

Federal Reserve

Fibonacci

Financial Times

Forex

Fundamental analysis

FXCM

Japanese Yen (JPY)

Mario Draghi

Marketwatch

MetaQuotes Software

MetaTrader 4/5

Momentum Index

National Stock Exchange (India)

New York Stock Exchange (NYSE)

New Zealand Dollar (NZD) OK (computer button)

Online Trading Academy (OTA)

Purchasing Managers Index (PMI)

Random walk hypothesis

R. N. Elliott

Relative Strength Index (RSI)

Smithsonian Agreement

Stochastic Momentum Index

Swiss Franc (CHF)

Swiss National Bank (SNB)

Theory of rational expectations

United States Dollar (USD)

Wall Street Journal

Yahoo Finance

INTRODUCTION

J ust a few years ago, it was almost impossible for the average investor to trade in the foreign exchange market (Forex) online. It was the domain of corporations, large financial institutions, hedge funds, central banks, and very wealthy individuals. However, with the advent of Internet access to brokerage houses, it became easier to integrate financial trading platforms worldwide; thus today almost anyone can trade on foreign exchanges.

The Bank for International Settlements Triennial Central Bank Survey report on global foreign exchange market activity of 2013 showed that the daily turnover of Forex is about $5.3 trillion. It is one of the largest financial markets in the world. Generally speaking, in Forex there are two actions, BUYING and SELLING, which lead people to either EARN money or to LOSE money. The end result a trader can expect is either financial success or financial loss.

Taking action to either buy or sell using a computer platform is very simplealmost everyone could do that. However, making money in Forex is not easy. The market does not move in a logical fashion. Emotions, greed, and wariness move the market. Therefore, you need to change your habits and have discipline to be consistently profitable over the long term. This book provides information in detail on how you can be successful in a Forex trading career. This book contains all the skills you will need to become a successful Forex trader.

This book will give you a clear idea of when to buy or sell, how protect yourself in case you make a bad decision, and to give you tips on when to get out. These parameters must be learned before you make your first trade. This book will help you to be a rule-based trader, not one overcome by greed or fear. I have tested this strategy on myself for almost five and a half years, and I am very happy with the resultand I have decided to share the approach in this book.

Before going into further details, I would like to mention that this book is for those who like to trade using technical analysis. Analysis of the foreign exchange market falls into two broad methods: technical and fundamental. Fundamental analysis looks at the price of a currency in respect to many factors that may affect it, including political stability, economic performance, interest rates, and a market development. On the other hand, in technical analysis, an investor studies the behavior of different indicators, such as momentum indicators, support and resistance levels, price indicators, statistical price, and oscillator indicators in order to predict a future price. These days, technical analysis is growing in popularity due to its accuracy and simplicity. I am not saying that a technical trader should ignore all fundamental analysis indicators, but any decision should be made based on a technical point of view rather than a fundamental one. In short, as a technical trader, a trader should be aware of fundamental factors, but act based on technical analysis.

WHY TRADE FOREX?

The objective of buying and selling currencies is to get profit in order to fulfill desireswhether they are personal or for social causes. I have met a fifty-three-year-old woman, for example, who was trading Forex to support a nonprofit company. Forex offers numerous of benefits, such as:

The market is open twenty-four hours a day, five days a week. This means traders can make trades any time of the day or night.

There are two ways of earning moneyin many financial markets, going short may cause difficulties. In Forex there is no restriction on either buying or selling. Both ways, traders can earn money.

Excellent liquidity. Liquidity makes it easier to get in and out of a trade at any time (if the market is not liquid, the trader may stock up to buy or sell instruments when they want). Forex is one of the most liquid financial markets in the world.

High leverage. Leverage allows someone with a small amount of capital to control large amounts of money. Which means gains can be maximized.

Low trading cost. Nothing is free in the financial marketevery transaction costs money. Any person who decides to open a trade must pay fees to brokers as spread (you open an account with a broker for a Forex trading account). Spread is just the difference between the bid and ask (I will explain more about these terms in a later section).

Anyone who has Internet access, a personal computer or laptop, who knows how to use a computer, and who has this book can trade. In the beginning, you do not even need real money to get experience in trading. Large numbers of Forex brokers offer demo accounts. There is no difference between demo and real account platforms, except that you will trade without emotions! Real accounts can be opened for as little as twenty-five dollars (not recommended).

Forex trading can be done without leaving your current job, too; however, you need to develop a strategy that fits your lifestyle. In general, traders are categorized into four types: scalping, day, swing, and momentum. Scalping and day-trading styles consume more time, whereas swing and momentum trading requires very little time.

This book is divided into three broad sections:

Enriching your knowledge about Forex trading

Introducing a great strategy for buying and selling currency pairs

A sample trading plan, journal, and money management tips

The method for trading on almost any Forex platform is similar, however, we will show a step-by-step process with clear pictures using the MetaTrader 4 platform (a free Forex trading platform for all) and most for Forex brokers provide this platform for clients, too.