Forex Trading Lecture Notes

Jun 21, 2024

Forex Trading Lecture Notes

Welcome and Introduction

  • Goal: Create concise and manageable tutorials for new traders
  • Focus: ICT (Inner Circle Trader) concepts
  • Topics: Theory of liquidity raids, stop runs, liquidity pools, ICT order block, high accuracy entry points, low drawdown tactics, high probability targeting, benefits of scaling profits, making money when wrong

Price Action and Forex Market

  • Market Characteristics:
    • Exciting, fast-paced, 24-hour market
    • Variety: day trading, scalping, position, and swing trading
    • Learn from mistakes: experienced traders often err too
  • Core Message: Think opposite to retail concepts (Elliott Wave, supply/demand, harmonic patterns)
  • Key Price Points: Open, high, low, close
  • Fractality of Price: Patterns repeat across timeframes

Essential Market Understanding

  • Importance of Demo Trading:
    • Develop habits risk-free
    • Must excel in demo before live trading
  • Observe Price in Demo Account: Study where traders might fail
    • Look for equal highs and equal lows (double tops/bottoms)
    • Institutional Insight: Double tops/bottoms = liquidity (buy/sell stops)
  • Note Areas of Liquidity: Use horizontal lines on charts
    • Above double tops: denote as buy stops
    • Below double bottoms: denote as sell stops
  • Study Period: Watch this phenomenon for 1 month in demo (15-minute timeframe recommended)

Practical Application

  • Order Blocks:
    • ETF bearish order block (up candle before down move)
    • Re-trace to order block low = low risk entry point
    • Target: 10-20 pips beyond double tops/bottoms
  • Example: Detailed explanation of trade setup for Eurodollar
    • Shorting at bearish order block low: 62-79% retracement
    • Target: 20 pips below equal lows
    • Fibonacci Levels: Used for optimal trade entry

Trade Management

  • Risk and Discipline:
    • Aim for 20-30 pips/week as a new trader
    • Trade one execution in the demo account, then stop
    • Patience and Discipline: Key elements
    • Monitor price action and adjust stops
    • Example: Live short trade with step-by-step execution, stop adjustments

Conclusion

  • Post-Trade Reflection:
    • Price moves to liquidity zones before reversing
    • Monitor resistance, patience
    • Profitable trades: Breaks below equal lows or highs, collect liquidity, scale profits

Key Concepts to Remember:

  • Liquidity raids and stop runs
  • ICT order block
  • High-probability entry points, low drawdown
  • Scaling profits and making profit even when wrong