ZERO2HERO FOREX TRADING COURSE

This EBook has been designed to give you a running start into the
exciting world of online forex trading. Most of the subject matter
applies to the forex arena, but some topics apply to all markets as well.
If you are already familiar with the foundational principles of trading,
i.e. you are a trader of some degree, then you can go on straight to my
second EBook, Massive Profits with the Apexalpha Alerts and
Calculator.

Please take note: this is not intended as a complete guide to online

trading . However, what is written here will give you the core basics
you need to begin trading in a reasonably short period of time,
especially when you combine it with the ApexAlpha setups/alerts and
profit target calculator tool (www.apexalpha.com is still under
construction; please bear with us!)

It is recommended that you download a trading platform and open a

demo account, so you can follow along as topics are touched upon.
Any MT4 trading platform will do for a start; you just need the trading
platform to study along with for now.

Everyone's learning curve is different, so be patient with yourself and

don't rush to start trading live with real money immediately. Give
yourself time to practice, and your determination and patience will pay
off for you as you launch into the massively profitable world of online
trading!
CONTENTS

 Forex in a nutshell.

 Terminologies.

 Currency pairs, lots, leverage, brokers.

 Candlesticks(reversal candles).

 Support and resistance(dips, rallies).

 Trendlines

 Chart Patterns.

 Elliott Wave Basics.

 Indicators.

 Basic Fundamental Analysis: News.

 Trading Basics: [buy, sell, stop loss, take profit, pending order].

 Risk Management/Trade Mgt.

 Trade Plan.

 Putting it all together.

 FOREX IN A NUTSHELL

Forex simply means "Foreign Exchange".

It is the exchange of currencies(money) between two parties for

services rendered. As it applies to trading, it is simply the trading of
one currency for another, with the expectation of making some profit.

Forex is the largest financial market in the world, currently over six
trillion dollars being traded daily. No other markets come close to such
volume.

Currencies are always paired in the forex market, hence we trade two
currency pairs at the same time. E.g., Eur/Usd, Gbp/Usd, Usd/Jpy,
Usd/Chf, etc.

As one currency appreciates in value, the other depreciates. This is a

reflection of two economies; as one does well, the second loses ground
in relation to the first. As traders, we can profit either way, buying or
selling. We get to trade 24/5, since the forex market is OTC (over-the-
counter): that means there is no central marketplace, it is
predominantly done online and all trading is transparent.
 TERMINOLOGIES

In the forex environment or in most monetary markets, some

particular expressions tend to be used when talking about trades:

 Market: refers to the physical representation of price data of

trade instruments on your trade charts.

 Trend: The direction a currency pair is going: up, down or

sideways.

 Uptrend: when the market(price of a currency pair) is

appreciating in value, or going up.

 Downtrend: when the market is falling in value, or going down.

 Long: this is when a currency pair is bought.

 Short: when a currency is sold.

 Going long: you intend to buy, or you bought a currency pair.

 Going short: you sold, or plan to sell a currency pair.

 Bull, or bullish: this refers to traders who are buying or trading

uptrends.

 Bear, or bearish: traders who are selling or are trading

downtrends.
 CURRENCY PAIRS

Currencies in the forex are usually denoted in abbreviated form, and

they got nicknames too.

USD. United States Dollar (greenback, buck)

GBP. Great Britain Pound (sterling)

EUR. Euro (euro)

JPY. Japanese Yen (yen)

AUD. Australian Dollar (aussie)

CHF. Swedish Franc (swissy)

NZD. New Zealand Dollar (kiwi)

CAD. Canadian Dollar (loonie)

There are lots more, but these are the majors.

Major currencies are simply currencies that are liquid and traded
most frequently. They are usually paired against the United States
Dollar.

Crosses are traded less, and exotics are currencies of developing

nations.
 MAJORS

EUR/USD

GBP/USD

USD/CAD

USD/JPY

AUD/USD

USD/CHF

NZD/USD

CROSSES (Some)

GBP/JPY

EUR/GBP

EUR/CHF

NZD/CAD

AUD/CHF, etc.

EXOTICS (Some)

USDMXN (Mexican Peso)

USD/SGD (Singapore Dollar)

USD/ZAR (South African rand), etc.

 PIP

Unit of price measurement in forex, and is how profit or loss is

determined per each trade. Example, I buy 1 (one) lot of Eur/Usd at
the price of 1.1499; the market then moves to 1.1505. That means the
price moved 6 pips upward, and I have gained 6 pips, or $60.00 in
profit.

LOT

In the forex, we buy and sell currency pairs in lots..units of

measurement. There are various sizes; nano lots, micro lots, mini lots,
standard lots.

You need a specific amount of money to buy a specific lot size. This is
called margin.

Example, assuming I am using a leverage of 1:100 ( to be explained

later):

Micro lot would cost $1,000

Mini lot would cost $10,000

Standard lot would cost $100,000.

Your lot size determines your profit

Micro lot = $0.1 per pip

Mini lot = $1 per pip

Standard lot = $10 per pip

Values differ for the various pairs.

 QUOTE

A quote is how the price of a currency pair is represented by a broker

to you.

(Bid) (Ask)

E.g., GBP/USD: 1.31044 1.31058

Bid is buying price, Ask is selling price. You buy or sell that currency at
the price quoted.

LEVERAGE

Using a small amount of money to trade a much larger amount...think

of it like how a small doiley can move a large and heavy object.
Leverage is offered by brokers, and comes in several juicy servings; and
this is how traders are able earn incredible amounts of money if used
sensibly. Leverage can be extremely risky and a trader can lose all of
his/her capital if he/she isn't careful!

Leverages Sizes

1:50

1:100

1:200

1:400

1:500

1:1000

We made use of the 1:100 leverage as an example earlier. Let's take

1:400 now as an example:
Say I had $1000 trading capital and I opened an account with my
broker using 1:400 leverage, this means :

($1000 multiplied by 400 equals $400,000).

So my broker will let me trade with my $1000 as if I had. $400,000

trade capital.

You may be tempted to think using a very high leverage is the key to
stupendous wealth, but that is usually the fastest and most slippery
route to the loss of all your trading capital. This why you will see or
read or hear traders say, "only trade with the capital/money you are
willing to lose".

Note: Under "Risk/Trade Management" I will teach you how to

properly manage your risk even when using high leverage).

BROKERS

In the forex arena, brokers act as the middlemen between buyers and
sellers. Brokers provide the trading platforms where you can place your
trades, and in return get paid each time you enter a trade by what is
called the spread, and or commissions The spread is the difference
between the ask and the bid price of a currency pair.

Example, if you got a quote from your broker that EUR/USD is to be

bought at 1.1467 and sold at 1.1470, that would mean that the spread is
3 pips (70-67).

Major currencies typically have the smallest spread, so it is a good idea

to start with them if you are just starting out, but with a good strategy
and trading plan, discipline and a wee bit of experience, you can go on
to trade pairs with higher spreads and still be profitable.

There are tons of brokers out there, and a small bit of research is
needed to choose the right one. I trade predominantly with brokers
who offer ECN/STP accounts, have low spreads and are transparent in
their dealings with clients. Have a chat with your broker's
representative for more information about this.

Three ways the charts can be viewed on trading platforms are:

Line chart

Bar chart

Candlestick chart.

We will be using candlesticks, so I won't discuss the other two. They

are all good, and can be used quite well with my system, provided you
are already used to them and understand how they work.

CANDLESTICKS

Candlesticks are graphical and easy to interprete when viewed on

charts. They provide us with valuable information about the market
per each time period, be it minutes, hours, days, weeks or months.

A candlestick is called that because it looks like a candle, usually with

"wicks"(the highest and lowest values) sticking out of both ends. Each
candle represents the open, high, low and closing price of a trade
instrument in a particular period of time.
 Candles help traders to analyze the market graphically, faster and
more efficiently, and they also form lots of patterns which if mastered
can aid you tremendously in trading. Candles are formed as buyers and
sellers struggle for supremacy in the marketplace. Many shapes, types
and patterns have evolved from this battle over the years, but we will
however be focusing on just three types of candles called Reversal
Candlesticks. These are pretty important because they tend to occur
at turning points in the market when the trend changes direction.

1) Hammer: can also be inverted; this particular candle formation is

very powerful as it reverses the direction of the market most of the
time when it occurs at the end of an up or downtrend.

2) Spinning Top: Comes in different shapes and sizes, does just about
the same things as the hammer candle.
 3) Tweezers/ Railway Tracks: These gets their name because of their
shape; two candles standing parallel to themselves and comprised of
both a bullish and bearish candle. They also reverse the trends when
you see them at the end of a run in price, up or down.

Like I said earlier, there are so many types and variants of

candlesticks, but for now just focus on the fact that whenever you see
these particular candlestick formations at the end of up or
downtrends, expect a trend reversal to some degree. Let me give you a
little assignment: see if you can identify variants of these three reversal
candlesticks from the chart below.
 SUPPORT AND RESISTANCE

Support and resistance areas in a currency pair are levels acting like
invisible floors and ceilings which halt or stop the action of price. It is
these actions that engender price reversals or trend change; we call
these areas support when the price going down and resistance when
price is upward bound.

Therefore when you look at a currency pair, whether the trend is

moving up or down the market usually has a zigzag appearance due to
the levels of support and resistance halting or stopping price action.
This is perfectly normal, and we can take advantage of these areas to
place trades and make profit.

Let's say the market is in an uptrend (going up), and you want to enter
a trade to buy; the best way is to wait patiently for the price to hit a
resistance level, reverse, and when it hits a support level and starts to
resume its upward move, you place an order to buy.

Inversely when the market is in a downtrend, to place a sell order you

need to wait for the price to hit an area of support and reverse, then hit
a level of resistance and resume its downward move; that is the time to
go short.
Support and resistance is just about the main backbone of how the
markets move, so it goes without saying that a trader who masters this
will be very successful

As you can see from the chart, support levels can become resistance,
and vice versa.

TRENDLINES

Trendlines are simply lines drawn diagonally across your charts above
or below price to denote areas of support of resistance.

These lines aid in determining the direction of trend and also

reversals, once the lines are broken. Trendlines are usually drawn
along swing highs... the highest or lowest points of at least two or more
candlesticks.

Every trading platform has drawing tools to help you draw these lines.
 CHART PATTERNS

During the course of history, traders studying the charts discovered

that the markets moved in definite cycles and patterns that showed up
time and time again. We call them chart patterns. Recognition of
these patterns gives us marvelous opportunities to make good profits
from the markets.

Certain patterns seem to continue the trend, while others reverse it.
We will be focusing on only one reversal pattern here. You are
encouraged to study the others on your own, but recognize and master
just the one for the purpose of this course, and you will do just fine.

WAVE TOP and WAVE BOTTOM

The traditional name for this pattern is 123 top or bottom, but for this
course I call it Wave Top and Wave Bottom.

WAVE TOP

Formed when price is at the end of an uptrend, by reaching a certain

level of resistance which it is unable to break through, retries the level
again usually with lower volume, and collapses into a downtrend.
 WAVE BOTTOM

Formed when price is at the end of a downtrend by reaching a certain

level of support and halts, reverses, and retries that level again but
with lower momentum, and surges up in an uptrend.

Therefore look for Wave Tops at the end of an uptrend, and Wave
Bottoms at the end of a down trend.

Note: these patterns also occur in the middle of a move i.e. a Wave
Bottom can show up in the middle of an uptrend, and a Wave Top top
can show up in the middle of a downtrend.

ELLIOTT WAVE BASICS

In the mid 1920 to 30s, an accountant named Ralph Nelson Elliott
discovered and founded a theory based on the fact that the stock
market moved in a repetitive and recognizable manner, caused by
investors and the masses' psychology and emotions, which he called
Waves.

By identifying these waves, it was possible to accurately predict price

direction and gauge tops and bottoms in the market.

He subdivided these waves into Impulse and Corrective waves, and

postulated that the waves occur in a 5-3 pattern in a trending market.
Five waves are impulse (go along with the overall trend and are called
motive waves), and three waves corrective. 1, 3 and 5 go along with
the overall trend, 2 and 4 correct the wave.

Waves occur in both bullish and bearish markets.

In this eBook I am touching on just the core basics of Elliott Waves

because it is a complex subject that requires extensive study, but
understanding this basic aspect of it will revolutionize your ability to
analyze and determine where the market will move to, and how long.

NOTE
My system (which is explained in Massive Profits with Apexalpha
Alerts and Calculator) takes advantage of this wave counting of
Elliott Wave, especially wave 3.

Normally, out of the motive waves 1, 3 and 5, one of them is always

longer, called an Extension. Over time it has been discovered that it
is usually wave 3, though 1 or 5 can be extended sometimes.

Corrective Waves A, B, C.
Once the 5 waves are complete, the market corrects itself via three
corrective waves labeled a, b, c (refer to diagram above).
There are 24 types of corrective wave patterns but all can be coalesced
into just three:

1) Zigzag: These types of waves tend to be very steep, and its wave "b”
is usually shorter than the "a"
or "c".

2)Flat: Waves are typically of the same height, and tend to move
sideways, what traders call congestion, consolidation or "a quiet
market".

3) Triangle: These waves

are bound by converging and diverging trend lines and can be
symmetrical, ascending or descending in formation. A further study of
chart patterns will simplify this particular wave formation for you.

THE THREE CARDINAL RULES OF ELLIOTT WAVE

There are three cardinal rules that any Elliott wave technician must
observe and adhere:

1) Wave 3 is never the shortest wave.

2) Wave 2 never goes beyond the start of wave 1.

3) Wave 4 cannot cross into the same area as wave 1.

Like I said earlier, this is just a simplified look at Elliott Wave Theory,
but it will serve you greatly if you commit to studying the charts and
learn to identify and count the waves yourself. Time and practice is the
only way to become a proficient Elliott Wave technician.

If this section seems like you just ate a bag of bricks, do not worry.
You will do just fine even if you don't get this all at once. Time and
constant practice makes it easier.
Here are examples of the 5-3 wave pattern occurring in the markets.

For further study, I recommend Elliott Wave Principle, by A.J. Frost

and Robert Prechter.

INDICATORS
 Like the term implies, these are tools employed by traders to help
them make informed decisions about the direction of the market. They
can be broadly classified as Leading or Lagging indicators. Leading
indicators predict market direction or action a little bit ahead of price,
while lagging indicators tend to lag behind price action, or follow it
since their calculation is based on past price data.

There are so many of them, designed by traders and customized to fit

their requirements/objectives. All have their pros and cons, but
ultimately how well an indicator performs is up to the trader who is
using them. We will be looking at just two.

I) MOVING AVERAGE (EXPONENTIAL)

Moving averages help to smooth the action of price and follow the
trend. They tend to lag because they are based on past price data, but
they help to determine trend direction and potential areas of support
and resistance. I use EMA 21, 5 and 55. EMAs reduce the lag by
focusing more on recent price data.

II) MOVING AVERAGE CONVERGENCE DIVERGENCE (M.A.C.D)

Moving Average Convergence Divergence is an indicator that follows
price action and helps a trader to know when a new trend emerges, via
the action of three moving averages: the 12, 26 and 9. The crossing of
its signal line over or under the trigger line can indicate trend change.
However MACD is a lagging indicator, so works better on higher time
frame charts. It is a very useful indicator when it comes to detecting
divergence of the market to trader sentiment, but we will not be
focusing on that under my system. I encourage you however to do a
search on "MACD Divergence" and read up on that: you will find it
quite useful.
FUNDAMENTAL ANALYSIS: NEWS
 When I began trading, I learnt about how traders traded either by
technical analysis or fundamental analysis.

Technical analysis is trading using technical tools, indicators and

speculative analysis based on price action on charts, while
fundamental analysis deal with socio-economic factors that propel an
economy or economies, using them to gauge the direction a currency
pair(or any trading vehicle) will go.

I am primarily a technical analysis trader, but what I do is take note of

news events that are noteworthy, and staying out of the markets before
they occur and checking for trading opportunities a little bit later, like
an hour or so. Many traders trade the news and can arguably explain
their reason for doing so, but it is risky and stressful as the market can
whipsaw viciously and without warning or reason as trader emotions
rise and fall with the news.

A bit of research will give you good balance if need be, but if you are a
technical trader and trade on the high level charts( 4 hours and above)
most news events won't adversely affect your trades as much.

Sites such as www.dailyfx.com, wwwforexfactory.com, bloomberg,

cnbc are good places to get news from, and nowadays most brokers
provide news event notifications directly on their trading platforms.

TRADING BASICS
By now you should be a bit used to your MT4 trading platform, so this
next series of instructions should be easy.

Tutorial videos explaining these trading basics have been made

available for you for download.

One thing you should be mindful about when you want to trade is the
time of day. Best trading hours are usually between the London U.S
sessions. Depending on where you are, these vary so ask your broker
about the market open and close times. For me in Nigeria, I get to
trade from 8am to 7pm GMT, which encompasses the best times of the
day to trade! Lucky me, eh?

PLACING ORDERS ON YOUR TRADING PLATFORM

How to Buy: there are various ways, but the three most common are
to press the F9 key, or choose "New Order" from the toolbar menu, or
right click on the chart and select New Trade.

How to Sell: Same process as above, just click on sell.

Stop loss: This is an order you place that automatically takes you out
of a losing trade at a certain level, thus preventing you from losing all
of your capital/funds.

In a bullish trade, you place it below your entry price and if possible,
below the most recent level of support; and in a bearish trade, you
place it above your initial entry price and above the most recent level
resistance.

Take profit: This is an order you place that automatically closes your
trade for profit when it reaches a certain predetermined price level or
profit target.

In a bullish trade, you place it above your entry price at a

predetermined level of resistance if possible; in a bearish trade you
place it below your entry price at a predetermined level of support if
possible.

MARKET ORDER

This is the order you place when you click buy or sell at the current
rate offered by your broker. It is instant and gets you straight into the
trade.

PENDING ORDER

A pending order is an order you place at the price of your choosing. It

can only be filled when the market moves in your favor. There are
various types, but the most common are buy stop, buy limit, sell stop,
sell limit.

i) Buy Stop: placed above current market price, with intent to buy;

ii) Buy Limit: placed below current market price, with intent to buy;

iii) Sell Stop: placed below current market price, with intent to sell;

iv) Sell Limit: placed above current market price, with intent to sell.
 RISK MANAGEMENT

How you manage your trading capital will determine in the long run if
you succeed as a trader. The more capital you invest, the smaller the
size in percentage you ought to risk per trade. A good rule of thumb is
not to risk more than 2% of your trading capital on any single trade.
Example, if trader A opens a trading account with a broker with say,
$5000, he shouldn't risk more than[ (2÷100)×5000]=100

So, his stop loss value shouldn't exceed 100$ per trade. Depending on
the leverage he is operating under and the number of pips he chooses
to risk per trade, his lot size will differ.

Ultimately how much you want to risk is up to you. Traders with

supreme confidence in their system, coupled with experience can
decide to risk more per trade, while the conservatives risk less, even as
little as .5%. But as a beginner stick to the 2% rule to build confidence
and avoid an emotional rollercoaster when in trades.

Earlier I talked about leverage; while it is true that the lower your
leverage, the smaller your risk, if your trading capital is small, you may
have to use a higher leverage to enable you buy lots to trade with. For
example a trader starting out with a capital of $200 may choose a
leverage of 400:1 or higher, but still employ sound risk management
and make good profits. Such a trader will trade micro lot sizes until his
account is sufficiently large enough to trade mini lots, then eventually
standard lots. A seasoned trader can also use the 1;400 leverage and
open a much larger account, like $10,000, and make huge profits
because he is fully aware of what he is doing.
Be careful when using leverage, and play it safe as you begin. It is more
important for you to know how to place efficient trades than to make a
killing on each trade; you might end up being wiped out sooner than
you think!

Trading is all about putting the odds in your favor; hence a trader
using a trading system with a win ratio of about 60-70% can still come
out ahead every month if he sticks to a plan.

Say you take only trades that have a reward to risk ratio of 3:1 ( you risk
1 dollar to make 3 dollars.). If you were to place ten trades and lose
seven out of the ten, you'd still come out ahead (3*3=9; 7*1=7).

So practice sound risk management and you will be okay.

TRADE MANAGEMENT

Now you are in a trade and it's going your way. What do you do? Most
traders end up making losing trades because of lack of proper trade
management. It is essential you manage your trades carefully once
you've entered them, by making sure winning trades don't become
loser. Here are some tips you can follow:

1) Always place stops and take profit values on every trade.

2) Keep your stops at a reasonable distance from your entry point but
not too far away; just enough distance for your trade to breathe
without getting stopped out. Usually 20-30 pips will suffice if you are a
day trader. When in a long trade(buying), as much as possible, place
your stop below the last or current support level, from the point of
your entry, or below the crossing of the EMA 21 and 5, which I talk
about in my course.

When in a short position(selling), place your stop above the last or

current resistance level from the point of your entry.
 3) When you are in a trade and price has moved in your favor by at
least 15 to 20 pips, move your stop to your initial entry price to protect
your capital. I cannot stress this enough; this one reason is why most
traders lose money. Even if the market comes back and takes you out,
your capital is safe. And most times price will keep going, so now you
can keep trailing your stop every certain number of pips( ten , fifteen,
twenty...your choice), until your take profit is achieved or you get
stopped out.

These are just some things you ought to do to keep yourself trading
successfully. You will do well to imbibe these steps into your heart,
and most importantly, apply them always as you trade.

TRADING PLAN

Now that you have all your tools in your toolbox, you want to combine
it all together to work for you. Enter the trading plan.

A trading plan can be a set of rules or a checklist which you follow

religiously for every trade you place. This drastically reduces emotional
trading and gives you that edge you need to be profitable.

No trading system is perfect; they range usually between 60% to 80%

in effectiveness, but a trader who makes and sticks to his/her trade
plan can increase trading efficiency and success as high as 95%, even
more!

So how does one come up with a trading plan? It will differ from
trader to trader because we all have different traits and goals, but the
core thing is that a trading plan should be a set of rules in line with
your trading system, style and nature, that you follow strictly and with
discipline EVERY SINGLE TIME.

As an example, here is a trading plan you can follow. Study it and

adjust to your own personality and goals.
 SAMPLE TRADING PLAN

1) LOOK FOR SETUPS ON THE HIGHER TIME FRAMES,

FOCUSING MOSTLY ON THE DAILY AND 4 HOUR AND 1 HOUR
CHARTS. ENGAGE IN TOP-DOWN ANALYSIS FROM THE
MONTHLY DOWN TO THE 1 HOUR TIME FRAME TO
DETERMINE TRADE BIAS FOR THE DAY.

2) ENTER TRADES ONCE YOU HAVE CAST-IRON SETUPS, VIA

THE LOWER TIME FRAMES, 1HR, 30 MIN, 15 MIN.

3) ONLY LOOK FOR 1 SETUP: EMA and MACD

CROSSOVER/BOUNCE

( refer to my EBook for more information).

4) TRADE PREDOMINANTLY IN LINE WITH THE PREVAILING

TREND.

5) ONE TRADE AT A TIME, NO MATTER HOW MANY GOOD

SETUPS OCCUR, AND STAY WITHIN THE 2% MARGIN!

6) SCAN ALL AVAILABLE PAIRS, CHOOSE THE MOST SENSIBLE

AND VIABLE SETUP; IF IT LOOKS CONFUSING, LEAVE IT
ALONE!

7) AVOID TRADE SETUPS THAT ARE ALREADY IN MOTION,

THEY TEND TO BACKFIRE ON YOU MORE OFTEN THAN NOT!
Notice I made no reference to the number of pips to target per trade.
This is up to you, but the Profit Target Calculator can aid you to
determine profit targets per trade. You can choose to have a target
number of pips per trade if you are thus inclined or just choose a
certain target level and stick to it.

PUTTING IT ALL TOGETHER

Now you have almost everything you need to begin your journey as a
trader . . . The next step is to learn a trading system/strategy, and I am
proud to introduce to you the Wave Trader System. Follow the rules
and requirements as simply as possible, and you will succeed. Practice
at least an hour every trading day so that you can begin to get a feel for
how currencies trend, and it won't be long before you notice an
improvement in your trading.

The Wave Trader System Trading Course is available for download.

To your trading success!