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Intermediate Trading Course

Make your trading more handy by studying historical data and understanding the related chart patterns.

Personalization of the chart

You can personalize your chart by loading some indicators, grids and period dividers, and you can also add or remove these components according to your needs.

Hiding the selling price line

If you add a lot of indicators or lines for technical analysis, the selling price line may appear a bit redundant on the chart. You can completely remove the price line from the chart by setting it to “None”.

Set default chart

Once you have set up a very satisfactory chart, you can save it as a template. The quickest and most convenient way to set the template is to right-click on the chart and select “Template”-“Save Template”. You can set up multiple templates to meet the analysis needs of different trading strategies.
If you want to set the most commonly used template as the default chart template, you can right-click on the chart, select “Template”-“Save Template”, and then name the template “Default”.

Economic Calendar

So, how can we keep an eye on these potential market drivers? Although we cant predict the world, we can use the economic calendar to monitor which important news releases will take place in the coming days, weeks or months.
The economic calendar lists the news and events that are publicly released in a particular country, which means that people all over the world can get the same news at the same time. Although this is a major benefit for retail traders like us, it’s best to realize that banks also have a major advantage: i.e. they can see where the money is going (and where it comes from) by seeing the flow of orders from customers.

Customization of toolbars – there are four independent toolbars on MT4 platform:

– Common
– Chart
– Draw Line
– Cycle
You can simply drag the toolbars and move them to any place you want. To customize your windows personally, just right-click on the toolbar and click the “Customize” menu
Here you can complete the function removal instruction by selecting the unnecessary function and click the “Remove” button. By selecting “Customize” on the right-click menu of each toolbar, you can remove unnecessary tools and view some hidden tools
Through the above operations, you will get a more concise and compact user interface.

Using shortcut keys

Keyboard shortcuts are a simple and quick way to perform tasks. By using shortcut keys, you can use various tools faster.
In the long run, this will save you a lot of time. You can delete redundant information and functions, and more importantly, increase your chart space.
Terminal
Control+T
This is the main window you will use when trading: manage positions, view account history, and set alarms.
Navigate
Control+N
To add indicators, EA and login functions.
Market Quotation
Control+M
View product quotation.
Data Window
Control+D
View all data information of the product in the current chart window.

Using shortcut keys

On the MT4 platform, when you switch chart templates, you will lose all analysis on the current chart. In order to prevent this from happening, you can keep the chart open and just change the indicators you use. Then you can use the shortcut keys. You can set a shortcut key for a specific indicator without switching templates to add indicators.
The specific operation method is to right-click the pointer in the navigation window and select “Set Shortcut Key”

Favorite indicator list

In order to simplify the steps of retrieving commonly used indicators, you can create a “favorites” list for frequently used indicators. The following is an introduction to you on how to add indicators to your favorites:
Open the navigation window (Ctrl+N);
Expand the relevant content directory (technical indicators, scripts, etc.);
move the mouse cursor to any of your frequently used technical indicators;
Right-click the mouse;
Select “Add to Favorites”.

Alerts

Through the alert function, you can track important price level breakthroughs, so as to adjust your trading and chart analysis in time. If you follow multiple markets at the same time, it is easy to lose track of one or several markets, especially after important news is announced, all markets operate in different ways. To set the alert function, move your mouse cursor to the chart you want to set an alert, right-click and select “Trade”-“Set Alert” in the menu.

Pay attention to the risk of each transaction

Before placing a trade, you should decide how much risk you are willing to take in this transaction. In other words, you need to determine where your trading stop loss point is if the market moves against you.
The setting of the stop loss point depends on your risk tolerance level. As a trader, you must accept the risks associated with the transaction. If you can accept the potential of losing, then continue to make this trade. If you cannot afford the potential loss, then we suggest that you do not open this trade for now, you need to consider how to reduce the risk of your trade.
Some traders are only willing to bear 1 to 3% of capital losses in any transaction. In this case, you can draw a red line at 2% of your funds and tell yourself that you will not lose more than 2%. In other words, you should determine your maximum risk tolerance level and stick to it in the following transactions.
Once you have determined this, you can decide where to set your stop price. Setting a stop loss is equivalent to insuring your trade and to ensure that you will not lose all your funds in one single transaction. However, it is important to note that stop loss does not completely guarantee safety, if a price gap occurs in the market, your transaction may not stop at the preset price.
The market price gap refers to the huge fluctuations that suddenly occur in the market within a very short period of time.

Example

uppose you have AUD 10,000 in your account, and the funds you are willing to take to bear the risk account for 2% of the total funds. Next, you will need to calculate the size of the trading position. In the calculation process, the type of currency pair you are trading will also affect the calculation of open positions. For example, the risk capital of 200 Australian dollars, when trading AUD/USD, is different from NZD/CAD, because of the difference in the value of basis point of different currency pairs.
Trade 1 lot of AUD/USD in an AUD-settled account.
Transaction volume = 100,000
1 pip = 0.0001
AUD/USD exchange rate = 0.7465
Pip value = 0.0001/0.7465 100,000 = AUD 13.39
As you can see, trading different currency pairs means that the pip value of currency fluctuations will also vary differently. When trading AUD/USD, the capital risk per pip is AUD 13.39, while trading NZD/CAD, the corresponding pip value is AUD 10.09
To calculate the specific price at which you should set the stop loss, you need to calculate the point at which the cumulative loss of the position will reach AUD 200
AUD/USD——$200 / $13.39 = 15-points stop loss
NZD/CAD——$200 / $10.09 = 20-point stop loss
If you want to set a larger stop loss, then you need to reduce the trading volume, for example, reduce the trading volume of 1 standard lot to 1 mini lot (10,000).
In the case of trading 1 mini lot of AUD/USD, your stop loss can be extended to 150 points from the opening price, while for NZD/CAD transactions, your stop loss can be extended to 200 points from the opening price.
Please remember that every trade is always accompanied by risks, please ensure that you fully understand the trading risks you are facing and are able to deal with it rationally

How to create a trading strategy

If you want to become a trader, developing a trading strategy is essential. Hereby, we will explore some of the important contents of a trading strategy.

Assess your skills

Have you tested your strategy? Are you convinced that your strategy is effective? Can you follow your strategy without hesitation? If your trading strategy is not perfect enough, it is better to keep adjusting through back-testing until you can utilize your strategy with confidence.

Psychological preparation

Trading can affect your emotions ups and downs like a roller coaster ride, so it is particularly important to work hard to keep you from being emotional. If you face personal pressure and cannot adapt to the challenges of trading, better keep out from trade. If you are emotionally and psychologically ready, then you can start trading, but please make sure you only hold one order in your account at a time.

Risks Management

When you are trading, you should set a risk level that enables you to face losses calmly. Professional traders tend to control the risk level at 1% to 5% of one’s capital, depending on your trading style and risk tolerance level.

Setting goals

Before you start trading, you should set you expected profit amount and risk-reward ratios. As a trader, you should set your goals on both a weekly, monthly and yearly basis, and evaluate them regularly to ensure that your trading strategy is effectively executed.

Prepare to trade

Before you open your first position every trading day, you should make some preparations. For example, study the market news of the day, mark support and resistance levels on the chart, and repeatedly go through your trading strategy.

Position opening and closing rules

Before opening a position, you should determine where you want to set your profit target and stop loss point.
You should open positions based on the signals sent by the trading strategies you have tested. When opening a position, your trading strategy should be able to accurately remind you when and at what price you opened a position, what indicator it is based on, what price pattern, and what happened on the charts at different time levels.
You should also close the position according to the preset target-when the market changes according to your expectations, the idea of ​​retaining your position to continue to get more profits may seem tempting, but the market may also change adversely at any time.

Record all matters:

Record the overall trading performance, which can help you analyze the effectiveness of your trading strategy. If there is a loss in a certain period, the transaction record can also help you see where the problem is.
The key information that needs to be recorded includes the following factors:
opening price；
closing price；
your initial stop loss and profit level；
position size；
reason for opening a position;
psychology during the transaction；
whether it is profit or loss;
opening and closing positions Screenshot of the time chart.
If you want to be a consistent trader, having a trading strategy is crucial-never underestimate the power of the plan.

What is a chart pattern?

In the market, buyers and sellers are playing power games all the time, and the chart is a record of the results of this game. People gradually found some typical chart patterns on the charts. With the help of them, people can clearly see whether the buyer is dominant or the seller is strong in the market. Moreover, with these classic patterns appearing time and time again, people find that the same changes in the power of buyers and sellers always appear in the market. Therefore, we can use the experience of learning patterns to predict the trend of the market outlook. This is pattern analysis.
Typical chart patterns include two types: reversal patterns and continuous patterns. In this article, we will introduce the three most common chart patterns to understand how pattern analysis predicts price movements, and how people make trading decisions through pattern analysis.

Head and Shoulders

Top and Head and Shoulders Bottom The head and shoulders pattern is one of the most valued by traders and one of the most common inverted patterns. It generally forms gradually in an upward trend and signals a reversal in market conditions. In other words, the appearance of the head and shoulders pattern often means the end of a wave of uptrend.

A typical head and shoulders pattern is shown below:

When the price rises and falls back to a fixed point, a peak is formed, which looks like a left shoulder. The price then rebounded again and created a peak higher than the previous peak, and then fell back to the support level of the first peak. The new peak is called the “head” and the support level is called the “neckline”.If the pattern is fully formed, the price will rebound at the neckline and create a lower peak, which is the right shoulder.
When you find a head and shoulders pattern on the chart, a potential entry point is when the price confirms that it has broken the neckline, that is, when the candle closes below the neckline, we open the sell at the opening of the next candle Position.
More cautious traders may be inclined to wait for the price to retest the neckline (that is, the price touches the neckline again), and then enter the market when the price fails to break the neckline upwards. Of course, sometimes the price may start to go down directly after breaking the neckline without looking back. Whether you choose to trade more cautiously depends on traders further observation of the market.
After the trade is opened, the profit target is usually set as the distance in points from the head to the neckline.
In addition, you may sometimes encounter a head-and-shoulders bottom pattern. The head-and-shoulders bottom tends to appear at the end of a wave of downtrend and means that the future price increase is more likely. The head and shoulders bottom consists of a trough, followed by a lower bottom and a higher trough. Similar to the head and shoulders, the entry timing of the head and shoulders is when you confirm that the neckline is broken by the price, or wait to see if the neckline will be backtested.

The figure below shows the head and shoulders bottom pattern in the actual market:

Double top and double bottom

Double top pattern often appears at the top of an uptrend. It is also a reversal pattern, which means the end of an uptrend. The double top pattern consists of two peaks next to each other, and the prices of the two peaks are similar. The neckline of the pattern is at the support level formed by the price. When the price breaks below the support level, the neckline, we believe that the pattern has formed.

n terms of the timing of entry, you can generally consider opening a sell position when the price falls below the neckline, or waiting for the price to retest the neckline and form a lower peak. Once the backtest fails, it often means that the price is moving The motivation is stronger.
The profit target is set at the point distance from the top to the neckline.
The reverse of a double top pattern is a double bottom pattern, which often appears at the end of a downtrend, consisting of two low troughs next to each other, and the bottom prices are similar. The appearance of a double bottom often means that an upward trend will begin next. Similarly, we can either enter the market when the neckline is broken, or wait for the neckline to fail back testing and form a higher bottom to enter the market. Failure to test the neckline back means that the price upward momentum is stronger.

flag pattern

The flag pattern is different from the head and shoulders and double top patterns described above. The flag pattern is a sorting pattern that may appear in an up or down trend. Since the price cannot always be in a clear upward or downward trend, sometimes it will take a break to sort out. At this time, you will find that the price fluctuates repeatedly, and then return to the previous trend.

The above picture is a flag shape in an upward trend, and the price is in an upward trend before the consolidation. Draw parallel lines along the top and bottom of the consolidation track to get the shape of a flag.
Take the flag trend in the above chart as an example. When the price breaks through the top flag line, you can consider entering the market to open a buy position. Or you can wait for the price to retest the flag line and create a higher trough before entering the market. This higher trough increases our confidence in trading profits.
Calculate the number of points from the previous upward trend to the bottom flag line, and use it as the target profit point.
The figure below shows the flag pattern in the actual market uptrend. After the first wave of uptrend was completed, the price continued to consolidate in the flag pattern, and finally broke through the top flag line to start the second wave of uptrend.

The above content can be used as an introductory guide for you to further study pattern analysis. In the future, you will learn more different types of chart patterns.

Stop loss can help you reduce emotional interference in trading, and is also very useful when you cannot continuously monitor the market.

Example of Stop Loss

Suppose there is an AUS200 buy position, the opening price is 50.66, and the stop loss is set at 50.26. When the price drops to 50.26, the stop loss will be automatically executed, allowing the position to be closed at the next executable price. In this example, the position lost 40 points.
It is worth noting that the stop loss is not completely guaranteed to be executed at the price you specify. Because the market may have a price gap, it will cause the stop loss to be executed at a different price. The market price gap refers to some kind or sudden price fluctuations occur in a very short period of time.

How much stop loss to set?

Once you open a position, you have to consider how much stop loss you need to set. The stop loss setting should be based on your personal risk tolerance, but the number of stop loss points should not be too small, otherwise the transaction may be stopped too soon. Normally, -you need to leave some reasonable room for floating losses. It is generally recommended that the stop loss you set should not allow the loss of funds to exceed 1% to 5%.

Trailing stop loss

Whenever the price moves a certain number of points in a favorable direction, the price of the trailing stop loss also moves. In other words, when the price moves in a favorable direction, the trailing stop loss will automatically “track” the price. This feature can help you lock in profits and automatically manage your transactions. For example, you can specify that whenever the price rises by 5 points, your stop loss will move up by 5 points. When you cannot manage the transaction in real time, trailing stop loss can help you automatically realize the above-mentioned position management. When the price starts to fluctuate in the opposite direction, the stop loss will remain at the original price. When the market price reaches the stop loss price, your position will be automatically closed-trailing stop loss is an effective strategy to reduce losses.
Profit target Profit target is a pre-set price at which you will close your position profitably. Before you plan to open a position, you should determine where your profit price is set. The profit target is an important part of order management. As long as the market price reaches the profit price, you don’t need to monitor the position next to the computer, and the profit will help you automatically close the profit.

Profit target

Profit target is a pre-set price at which you will close your position profitably. Before you plan to open a position, you should determine where your profit price is set. The profit target is an important part of order management. As long as the market price reaches the profit price, you don’t need to monitor the position next to the computer, and the profit will help you automatically close the profit.

Market order

A market order is a trader who manually opens a position and executes an order at the current market tradable price. Day traders and some scalping traders are more inclined to open market orders for trading.

Pending order

A pending order is an order with a preset opening price. When the market reaches the preset price, a pending order will automatically open a position. If you cannot monitor price fluctuations in front of your computer for a long time, then pending orders can be very useful for you. In range trading (the price moves back and forth within a range) and breakout trading (the price breaks through the range), pending orders can also be very helpful.

Types of pending orders

– Stop-loss pending orders: sell at a price lower than the current market price or buy at a price higher than the current market price.
– Take-profit pending orders: the opposite of stop-loss pending orders-sell at a higher price than the current market price, or buy at a lower price than the current market price.

Stop Loss Entry Order

The following figure shows a buy stop loss entry order (buy at a higher price) and a sell stop loss entry order (sell at a lower price). For example, you can set a pending sell stop order to hedge the risk of a previous buy order, thereby limiting potential losses. In addition, stop-loss pending orders can also be used to build a trend trading strategy (for example, you plan to open a sell order, but only enter the market after the market price confirms that it has entered a downward trend).

Take Profit Pending Order

The figure below shows a buy take profit pending order (buy at a lower price) and a sell take profit pending order (sell at a higher price). The take-profit pending order can be used to form a range trading strategy, that is, when the price moves up and down within the range, traders can set up a take-profit pending order to automatically execute range trading transactions.
Stop-loss pending orders and take-profit pending orders are good helpers to control trading risks. Please check the Trading Guide to learn how to use these two pending orders in advanced strategies

Read the chart

Charts are the core of trading. In addition to helping traders monitor the real-time value of positions, the chart can also help them understand past price trends and provide clues on the future trend of prices on this basis. Therefore, learning to understand charts is a key step to become a good trader.
The first thing to understand is that the price on the chart shows the price performance at the corresponding time.

Time: X axis (from left to right):

The X axis on the chart shows time (from left to right). The further to the left, the earlier the time. The latest candle or price bar represents the current time. Each candle or price bar represents a unit of time. Through the time period setting bar at the top of the chart, you can change the length of time represented by a unit of time. For example, suppose you set the time period to daily (D1), which means that each candle or price bar represents a day’s price fluctuations. If it is set to 5 minutes (M5), it means that each candle or price bar represents a 5-minute price fluctuation.

Price: Y axis (from top to bottom)

You can read the price of the product on the vertical Y axis. The higher the position of the candle or the price bar, the higher the price at the corresponding time. In contrast, if a candle or a price bar is at the bottom of the chart, it means that the price at the corresponding time is lower.

Price composition

On the candlestick chart or histogram, each candle or price bar shows the following four prices:
– Opening price: This is the first price at the beginning of the cycle. On the histogram, the horizontal line on the left represents the opening price. On the candlestick chart, when the candle is rising, the bottom of the candle body represents the opening price, and when the candle is falling, the top of the candle body represents the opening price
– Highest price: the highest price that occurred during the period.
– Lowest price: the lowest price that occurs during the period.
– Closing price: the last bite price at the end of the period. Color is used to distinguish between the market and the closing price.
At the end of a period, a new candle/price bar will appear, and the process will go back and forth, forming the chart we see. Below is an illustration of each chart type. The three most common and basic chart forms are: line chart, histogram and candlestick chart. Although they provide price information in slightly different ways, they all follow the concept of time (period).

Spread

The complete quotation consists of two parts: the selling price and the buying price. The difference between the two is called “spread”. The spread is actually the fee charged by the broker or bank when you open a position (ie, transaction costs). The larger the spread means the higher the cost of your transaction, on the other hand, the lower the spread means the cheaper the transaction fee.
The larger the transaction volume and the more popular currency, the smaller the spread during the transaction, and the smaller the transaction volume, the less popular currency often has a larger spread.
For traders who trade more frequently, such as day traders or short-term traders, the size of the spread is very important. Of course, for mid-to-long-term traders, the size of the spread has smaller effect.

The above is a screenshot of the MT4 opening window, in which you can see the current selling price, buying price and spread. When you open a buy or sell order, the executed price will be different.

Buy order (long position)

Quotation
The opening price for buying is

Sell ​​order (short position)

The opening price for selling is
In both cases, your profit and loss (P/L) when you first opened a position is negative because the spread is charged when the order is opened. When the market fluctuates in a direction that is favorable to you by the same number of points as the spread, your order will reach breakeven.