The Complete Guide to Trading

Master the Art of Profitable Trading

Ahmed Bahroun
 Summary

Summary ............................................................................................................ 2
Disclaimer .......................................................................................................... 4
What is Trading?.................................................................................................. 5
Forex Markets ..................................................................................................... 6
How Do Forex Markets Works ? ................................................................................... 6
Key Participants in the Forex Market: ........................................................................... 6
Why Trade Forex? ....................................................................................................... 7
How To Trade Forex ? .................................................................................................. 7
Trading Terminology ............................................................................................ 8
Currency Pair : ............................................................................................................ 8
Bid, Ask and Spread : .................................................................................................. 8
Pip : ........................................................................................................................... 9
Lot Size :..................................................................................................................... 9
Pips and lot sizes Relation : ......................................................................................... 9
The formula to calculate position size is : .................................................................. 10
Leverage And Margin : ............................................................................................... 10
Equity and Balance : ................................................................................................. 10
Stop Loss (SL) And Take Profit (TP) : ........................................................................... 11
Risk-Reward Ratio (RR) : ............................................................................................ 11
Forex Market Sessions ...................................................................................... 12
Types of Traders ................................................................................................ 13
Prop Firms ........................................................................................................ 14
How Prop Firms Work : .............................................................................................. 14
Key Features of Prop Firms : ...................................................................................... 15
Charts .............................................................................................................. 16
Line Chart : ............................................................................................................... 16
Bar Chart : ................................................................................................................ 17
Candlestick Chart : ................................................................................................... 18
Candles in a Candlestick chart : ................................................................................ 18
Bullish And Bearish Candle : ..................................................................................... 19
Trading Strategies ............................................................................................. 20

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Market Structure ............................................................................................... 21
What are the Trends ? ............................................................................................... 21
An UpTrend : ............................................................................................................. 21
A DownTrend : .......................................................................................................... 22
SideWay Trend : ........................................................................................................ 22
Break of Structure ............................................................................................. 23
Change of Character ......................................................................................... 24
Support and Resistance .................................................................................... 25
What is Support ? ..................................................................................................... 25
What is a Resistance ? .............................................................................................. 26
Role Reversal :.......................................................................................................... 27
Trendline Support and resistance levels : .................................................................. 28
How to Identify Support and Resistance ? .................................................................. 29

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 Disclaimer
Trading in the financial markets involves significant risk
and is not suitable for everyone. It requires patience,
discipline, and consistency to achieve success. This guide
is based on my personal knowledge and experience in the
markets and should be used for educational purposes
only.

This PDF is the first part of my trading course, created to

share insights and help you understand the basics of
trading. I am not charging for this material, as my goal is to
provide value and share my journey to empower others in
their trading education.

Remember, trading is a skill that demands continuous

learning and risk management. Always trade responsibly
and never invest money you cannot afford to lose.

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 What is Trading?

Trading refers to the buying and selling of financial instruments such

as currencies, stocks, commodities, and cryptocurrencies in various
markets with the aim of making a profit. It involves speculating on
price movements, where traders seek to capitalize on market
fluctuations over different time frames.

There are several types of trading, including:

• Forex Trading: Buying and selling currencies in the foreign

exchange market.
• Stock Trading: Trading shares of publicly listed companies.
• Commodities Trading: Trading physical assets like gold, oil,
and agricultural products.
• Cryptocurrency Trading: Buying and selling digital assets
like Bitcoin and Ethereum.

Traders participate in financial markets through brokers or trading

platforms, using strategies based on technical analysis,
fundamental analysis, or a combination of both.

In this course we will mainly focus on the forex markets – it is my

personal favourite – and we will deeply get into them step by step so
grab a drink and take notes .

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 Forex Markets

What are the Forex Markets ?

The Forex market (Foreign Exchange market) is the global
marketplace where currencies are bought and sold. It is the
largest and most liquid financial market in the world, with a daily
trading volume exceeding $6 trillion. The primary purpose of the
forex market is to facilitate international trade, investment, and
currency exchange.

How Do Forex Markets Works ?

In forex trading, currencies are exchanged in pairs (e.g.,
EUR/USD, GBP/JPY). When you buy one currency, you
simultaneously sell another. For example, if you buy the
EUR/USD pair, you are buying euros and selling U.S. dollars.

Key Participants in the Forex Market:

• Central Banks: Influence currency values through monetary
policies.
• Commercial Banks and Financial Institutions: Conduct large-
scale currency transactions.
• Retail Traders: Individual traders speculating on price
movements.
• Corporations: Engage in forex trading for international business
operations.

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Why Trade Forex?
• High Liquidity: Easy to enter and exit trades.
• 24/5 Market: Open 24 hours a day, five days a week.
• Leverage: Ability to control larger positions with smaller
capital.

How To Trade Forex ?

To Trade Forex we’ll need a broker

A Forex Broker is a financial intermediary that provides traders
with access to the foreign exchange market.
They offer a trading platform where you can buy and sell currency
pairs.
Brokers connect retail traders to the global forex market by
facilitating transactions between buyers and sellers.

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 Trading Terminology

Currency Pair :

A currency pair is the quotation of two currencies where one is

traded against the other.
Let’s take EUR/USD for example :
When Trading EUR/USD we are Trading The Euro Against The US
Dollars .
When Buying EUR/USD we are buying Euro and we are selling the
US Dollar .
And When We are Selling EUR/USD we are selling the Euro and
buying The US Dollar .

Bid, Ask and Spread :

• Bid Price: The price at which the market will buy a currency pair
from you (selling price).
• Ask Price: The price at which the market will sell a currency pair
to you (buying price).
• Spread: The difference between the Bid and Ask price (trading
cost).
For example if EUR/USD is quoted as 1.2000/1.2002
1.2000 is the bid price
1.2002 is the ask price
The difference between the Ask and Bid prices:
1.2002 - 1.2000 = 0.0002 (2 pips).
So the spreads are 2
Spreads change and vary from broker to broker

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Pip :
A pip is the smallest price movement in a currency pair.

• Most currency pairs are quoted to four decimal places.

• 1 pip = 0.0001 for most pairs.
Example: If EUR/USD moves from 1.2000 to 1.2005, it moved 5
pips.

For pairs involving JPY like (USD/JPY), 1 pip is 0.01

For example if USD/JPY move from 100.00 to 100.05 , it moved 5
pips

Lot Size :
A lot is the standard unit for measuring trade size.

• Standard Lot: 100,000 units of the base currency.

• Mini Lot: 10,000 units.
• Micro Lot: 1,000 units.

Example: Buying 1 standard lot of EUR/USD equals buying

100,000 EUR.

When we say a standard lot we mean 1 lot size

Mini lot is 0.1 and Micro lot is 0.01

Pips and lot sizes Relation :

The pip value is directly linked to the lot size traded
For most Pairs like (EUR/USD)

Standard Lot (1.00) -> Pip Value is 10$

Mini Lot (0.10)-> Pip Value is 1$
Micro Lot (0.01) -> Pip Value is 0.1$

For example if we bought 1 lot size of EUR/USD and price moved

from 1.0000 to 1.0005 the price moved 5 pips so we made 50$

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The formula to calculate position size is :
Risk Amount / (Stop loss (In pips)* Pip Value)

For example :
Account Balance : 10000$
Risk Percentage : 2% -> 200$
Stop Loss : 20 pips
Pip Value : The standard as we said is 10$

Putting it all together :

Risk Amount (200$) /(stop loss(20 pips) * Pip Value (10$))
200/(10*20) = 1 lot size

Leverage And Margin :

Leverage allows you to control a larger position with a smaller
capital.
Example: A leverage of 1:100 means you can control $100,000
with just $1,000.
Higher leverage = Higher risk.

Margin is the amount of capital required to open a leveraged

trade.
Example: If you use 1:100 leverage and trade $100,000, you'll
need $1,000 as margin.
Margin ensures you have enough funds to cover potential losses.

Equity and Balance :

Balance is the total Amount of money in your account before any
trades .
Equity is your balance + floating profit/loss from open trades .

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Stop Loss (SL) And Take Profit (TP) :

Stop Loss: Automatically closes a trade when a specific loss

level is reached.
Take Profit: Automatically closes a trade when a specific profit
level is reached.

Risk-Reward Ratio (RR) :

RR is the ratio between the potential profit and the potential loss
of trade
For Example if we are risking 10 pips in hope of making 20 pips
The RR is 2.0

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 Forex Market Sessions

The Forex Market is Open 23/5 from Monday to Friday , but

liquidity and volatility vary depending on the time of the day and
the session you are trading on .

The Forex Market opens on Sunday 23:00 Tunisia Time (GMT+1)

and closes on Friday

Forex Market Mainly Has 3 sessions :

• Tokyo Session -> it opens 1:00 and closes 10:00
• London Session -> it opens 9:00 and closes 18:00
• New York Session -> it opens 14:00 and closes 23:00

Take in mind the overlapping of the session when trading during

them you may experience higher liquidity and volatility

• Tokyo and London overlapping -> from 9:00 to 10:00

• London and New York overlapping -> From 14:00 to 18:00

-Keep in Mind that all the times shown are Tunisia GMT+1-

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 Types of Traders

There are several types of forex traders, each with different

strategies and timeframes for holding trades. Here's a breakdown
of the most common trading styles :

• Scalpers: Traders who aim to profit from small price

movements, holding trades for a few seconds or minutes.
• Day Traders: Traders who open and close positions within the
same day.
• Swing Traders: Traders who hold positions for several days or
weeks, seeking to capture medium-term price moves.
• Position Traders: Traders who hold positions for weeks or
months, focusing on long-term trends.

Traders also can trade with their own money or with other firms’s
money known as prop firm and they are known as Funded Traders

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 Prop Firms

Proprietary trading firms (prop firms) are companies that

provide traders with access to large amounts of capital for trading
in exchange for a share of the profits. Instead of trading with their
own money, traders use the firm's funds to maximize their
earning potential.

How Prop Firms Work :

1. Evaluation Process (Challenge Phase) :
• Traders must pass a funded account challenge or
evaluation.
• This usually involves achieving a profit target while staying
within risk limits (like maximum drawdown and daily loss
limits).
2. Funded Account Stage :
• Once a trader passes the challenge, they are given access
to a funded account with a specified capital size.
• Traders can keep a percentage of the profits they generate
(often 70-90%).
3. Profit Sharing Model :
• The prop firm retains a portion of the profits as
compensation for providing the capital and infrastructure.
• Example: If a trader earns $10,000 and the profit split is
80/20, the trader keeps $8,000 and the firm keeps $2,000.

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Key Features of Prop Firms :
• Capital Access: Trade with up to $100,000 - $1,000,000+ in
funding.
• Profit Split: Usually between 70% to 90% for the trader.
• Risk Management Rules:

• Daily Loss Limit: Maximum loss allowed in a single day.

• Maximum Drawdown: Overall loss limit before

disqualification.

• One-Time Fees: Traders often pay an entry fee for the

challenge, which may be refundable if passed.

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 Charts

Forex charts visually represent price movements over time. They

help traders make informed decisions based on patterns and
historical data.

And we can see the charts on multiple platforms (TradingView

/Meta Trader /StockCharts …) I Personnaly Recommend
TradingView

There is multiple types of Charts :

Line Chart :
As it is shown here Line charts is the simplest form of charts it connects
closing prices with a line and it is the best for identifying general trends :

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Bar Chart :
It Displays Open , High , Low and Close prices
A vertical Line in a bar chart is a price range
And A horizontal tick on the left is the open price and the one on
the right is the close price

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Candlestick Chart :
This type of charts is the most popular and will be our favourite
and we will mainly use it for the rest of this course so let’s break it
down
It displays the same Open , High , Low and Close prices as bar
chart but in a more visual way

Candles in a Candlestick chart :

The Candlestick chart consist of a lot of candles (bullish and
bearish )
And each candle is made of body and a wick
A candle Shows That price moved from Point A to Point B that are
shown as the body.
Wicks represent the highest and the lowest that candle reached
but didn’t close there
For example: We are on a chart of EUR/USD 4H TimeFrame
This means that each candle represents a period of 4H and each
4H a new candle will be made .

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Bullish And Bearish Candle :

A Bullish Candle (green) is a candle that shows that the price

opened at point A and went all the way up and closed in point B .

A Bearish Candle (red) is a candle that shows that the price

opened at point A and went all the way down and closed in point
B.

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 Trading Strategies
A trading strategy is a set of rules and guidelines that help
traders make decisions on when to enter and exit trades. A well-
defined strategy provides structure, reduces emotional decision-
making, and increases consistency in trading results.

Some well known strategies are Support and Resistance / Range

Trading / Following The trend / Breakout Strategy …

Every Trader has his unique Trading Strategy and later on this
course I will simplify mine for you (not today) But let’s break down
some essentials before getting into my trading strategy

With every Trade Placed we need to make sure that we are

following our rules and be consistent with our trading plan

Today we will cover the trends and Market structure and the
support and resistance also known as supply and demand
These 2 are essentials for every beginner Trader

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 Market Structure
Market structure refers to the way price moves and forms
patterns on a chart, giving clues about trends, reversals, and
continuation patterns. Understanding market structure is
essential for identifying trade opportunities and making informed
decisions.

What are the Trends ?

A trend in forex trading is the overall direction in which the price
of a currency pair is moving over a period of time. Identifying
trends helps traders make informed decisions by aligning their
trades with the market’s momentum. Keep in mind that trend is
our friend and we don’t want to go against it .

!!! TRENDS DON’T LAST FORVER !!!

An UpTrend :
An UpTrend is a bullish trend that shows that price is moving in an
up direction .
In an UpTrend we can see on a chart that price is making higher
highs (HH) and higher lows (HL) .
An UpTrend shows that there is a buying pressure on the market
and we want to look for opportunities to buy.

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A DownTrend :
A DownTrend is a bearish trend that shows that price is moving
down.
In a DownTrend we can see on a chart that price is making lower
lows (LL) and lower highs (LH) .
A DownTrend shows that there is a selling pressure on the
market and we want to look for opportunities to sell.

SideWay Trend :
In a SideWay trend prices moves within a horizontal range
between support and resistance levels known as Sideways Trend
Line

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 Break of Structure
If we are in an UpTrend and we notice a high being taken out by
another higher high we count that as a break of structure (BOS).
In an Uptrend a BOS is made of a HH then a HL then another HH .

If we are in a DownTrend and we notice a low being taken out by

another lower low we count that as a break of structure (BOS).
In a DownTrend a Bos is made of a LL then a LH then a LL .

We must see a full candle closure to count it as a break of

structure .

Break of Structure Indicates trend continuation.

!!! WICKS DON’T COUNT !!!

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 Change of Character
A Change of Character (CHOCH) occurs when the price action
shifts from the current trend, indicating a potential trend reversal
or a weakening of the existing market structure. It signals that the
momentum may be shifting from bullish to bearish or vice versa.

A CHoCH represents that price is breaking the previous (high/low)

against the trend .
For example we are in an UpTrend and we see price breaking the
previous low making a lower low instead of a higher low that
indicates a CHoCH .

If Bos confirms a trend continuation then ChoCH indicates a

price reversal or weakening a trend .

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 Support and Resistance
Support and Resistance (S&R) are fundamental concepts in
technical analysis, representing key price levels where buying or
selling pressure tends to reverse or slow down market
movement.

What is Support ?
A support level is a price level where demand is strong enough to
prevent the price from falling further .
Buyers and retail traders step in causing the price to bounce
upwards .
Think of a Support level a floor and think of price as a ball
What happens if a ball hits the ground ?
Exactly it will bounce off the floor that’s exactly what price do
when it hits a Support level .
To Count A Support level it must’ve been tested multiple times .

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What is a Resistance ?
A Resistance level is a price level where selling pressure prevents
the price from rising further .
If a Support level is a floor then Resistance Represents the ceiling
here .
Like A support level A resistance level must’ve been tested
multiple times .

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Role Reversal :
As we mentioned before, trends don’t last forever ,even support
and resistance level don’t last forever .

When price breaks a support level it is a signal of a bearish

continuation and that support level is switching to a resistance
level.

Same thing with resistance, if price breaks a resistance level it is

a signal of bullish continuation and that resistance level is
switching to a support level .

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Trendline Support and resistance levels :
As I showed before Support and resistance levels may look
usually as horizontal levels but not always

Trendline Support and Resistance are diagonal lines drawn on a

price chart to identify dynamic price levels where buying or selling
pressure tends to reverse or slow down. They help traders track
market structure and price trends more effectively.

And like support and resistance levels if price breaks one it

switches to the other one it’s the same with trendline support and
resistance

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How to Identify Support and Resistance ?
1- Look for historical price actions :
Look for past price levels where price frequently reversed from .

2- Trendlines :
Diagonal support/resistance during trends.

3- Moving Average :
Indicators like the moving average can help us identify support
and resistance levels .

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