Beginner's Guide to Trading
1. Chart Basics
Candlestick (Single candle meaning): A candlestick shows price movement during a selected time period.
The body shows the open and close price. Wicks (shadows) show the highest and lowest price. A green
candle means the price closed higher than it opened (bullish), and red means it closed lower (bearish).
OHLC: Stands for Open, High, Low, Close - the four important data points in any candle.
Timeframe: The duration each candle represents. For example, 1min shows quick changes, while 1D or 1W
shows larger trends. Choose the right one based on your strategy (scalping, swing, or long-term).
2. Price Action
Support & Resistance: Support is where price tends to stop falling. Resistance is where price tends to stop
rising. These act like invisible floors and ceilings.
Supply & Demand Zones: Zones where strong buying (demand) or selling (supply) happened. Price usually
reacts again when it returns here.
Breakout & Fakeout: Breakout happens when price goes above resistance or below support. Fakeout is a
false breakout that quickly reverses.
Retest & Confirmation: After a breakout, price may come back to test the level it broke. If it holds, it confirms
the breakout.
Market Structure: Higher Highs (HH) and Higher Lows (HL) show uptrend. Lower Highs (LH) and Lower Lows
(LL) show downtrend. Helps understand trend direction.
3. Candlestick Patterns
Doji: Price opened and closed at almost the same level. Shows indecision.
Hammer: Small body with long lower wick. Bullish reversal signal.
Shooting Star: Small body with long upper wick. Bearish reversal signal.
Engulfing: One candle fully covers the previous candle. Bullish engulfing means buyers took control; bearish
means sellers did.
Morning Star / Evening Star: 3-candle reversal patterns. Morning star is bullish; evening star is bearish.
Pin Bar / Rejection Candle: Shows rejection from a price level. Long wick with a small body.
Inside Bar: A candle thats fully inside the previous candle. Shows consolidation before breakout.
4. Chart Patterns
Head and Shoulders: Reversal pattern. A peak (shoulder), a higher peak (head), then another lower peak
(shoulder).
Beginner's Guide to Trading
Double Top / Bottom: Price touches a level twice and reverses. Double top = bearish, double bottom =
bullish.
Flag & Pennant: Continuation patterns. Small correction before trend continues.
Triangle Patterns:
- Ascending: Bullish, flat top and rising bottom.
- Descending: Bearish, flat bottom and falling top.
- Symmetrical: Could break either way.
Wedge Patterns:
- Rising Wedge: Bearish reversal.
- Falling Wedge: Bullish reversal.
5. Indicators
Moving Average (MA, EMA, SMA): A line showing average price. EMA reacts faster. Useful for trend
direction.
RSI: Relative Strength Index. Measures overbought (>70) and oversold (<30) conditions.
MACD: Shows momentum and trend change using moving averages and histogram.
Bollinger Bands: Show price volatility. Upper/lower bands expand/contract with volatility.
Fibonacci Retracement: Helps find possible reversal points using key ratios (0.382, 0.618).
Ichimoku Cloud: Shows trend, support/resistance, and momentum in one tool.
Stochastic Oscillator: Similar to RSI. Shows momentum and overbought/oversold.
Volume / OBV: Measures strength of price move. OBV (On Balance Volume) combines price with volume.
6. Trend Analysis
Uptrend: Price making higher highs and higher lows.
Downtrend: Price making lower highs and lower lows.
Sideways: No clear direction, price ranges between support/resistance.
Trendline Drawing: Lines drawn to connect highs/lows to see trend direction.
Channel Trading: Drawing parallel trendlines to form channels. Trade inside or on breakout.
Trend Reversal vs Continuation: Know if trend is ending (reversal) or just pulling back (continuation).
7. Entry & Exit Strategy
Entry Signal: Enter trade after confirmation like candle close above resistance or breakout of structure.
Stop Loss Placement: Always place SL below recent low or above recent high. Protects from big losses.
Beginner's Guide to Trading
Take Profit Zones: Set TP using support/resistance or Fibonacci levels.
Risk/Reward Ratio: Choose setups with at least 1:2 or 1:3 RR. If you risk 100, try to gain 200-300.
8. Smart Money Concepts
Liquidity Grab: Price moves to take stop losses before real move.
Order Blocks: Last candle before big move. Shows where institutions placed orders.
Institutional Candles: Large candles created by big players. Mark them as important.
Imbalance / Fair Value Gap (FVG): Area where price moved too fast and didnt get filled. Price may return to
fill it.
CHoCH (Change of Character): When trend shifts from bullish to bearish or vice versa. Early sign of reversal.
BOS (Break of Structure): When price breaks previous high/low. Confirms trend direction.
Mitigation: Price comes back to fill orders at OB or FVG before continuing trend.
9. Risk Management
Lot Size Calculation: Use proper lot size based on your capital and stop loss.
Leverage Control: High leverage = high risk. Use small leverage to stay safe.
Risk per Trade: Never risk more than 1-2% of your account on a single trade.
Capital Protection: Your main goal is to protect your capital, not just make profit.
Never Overtrade: Avoid revenge trading or overconfidence. Quality over quantity.
10. Psychology of Trading
Fear/Greed Control: Dont let emotions control you. Stay calm and stick to your plan.
Discipline/Mindset: Be disciplined to follow your rules. A good strategy is useless without discipline.
Patience & Consistency: Be patient for good setups and consistent with your process.
Journaling Trades: Keep a trading journal to learn from wins and losses. Helps improve over time.
Bonus: Economic News
Economic News Effect: High impact news (like interest rate, inflation) can move the market fast.
High Impact News Times: NFP (US job data), CPI (inflation), FOMC (Federal Reserve meeting). Avoid
trading during these if unsure.
Trading Journal & Backtesting: Keep records of trades and test strategies on past data before using real
money.
