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If you are interested in �nding out how professional forex traders successfully trade step by step, this is the e-book for you! Forget about vague and boring theory. Here, you will see real trade examples and strategies based on real market situations.

�e purpose of this e-book is to share some of the best tips, techniques, and observations that have worked for successful traders.

You will see how experienced traders analyze the market, what signals they are looking for, and how they determine the entry and exit points of a trade.

What is a day like in the life of a pro forex trader?

Case study 1

Trading EUR/USD Ahead of FOMC Meeting, Eurozone CPI Release

Eric Dale is a seasoned currency trader. His trade setups are based on sound fundamental and technical analyses. On January 4, Eric notices that technicals are signaling some real downside risk in EUR/USD. �e preliminary technical analysis prompted him to consider a sell (short) position in the pair.

In order to assess the macro-economic or fundamental scenario, Eric opens the economic calendar. He �nds that two major economic events are due today:

Fundamental Analysis

At 9:00 GMT, Eurostat is scheduled to release Eurozone’s Consumer Price Index (CPI) report for December. CPI is considered the best gauge for in�ation over a speci�c period of time. A�er some more research on the economic release, Eric comes to know that analysts are expecting a decline in Eurozone’s CPI to 0.7% in December as compared to 0.9% during the same duration a year before. Generally speaking, a high CPI reading (close to 2%) is seen as bullish for EUR/USD and vice versa.

Eurozone CPIAt 14:00 GMT, Federal Reserve is due to announce a Federal Open Market Committee (FOMC) decision on the pace of monthly asset purchase program and benchmark interest rate a�er a two-day monetary policy meeting. Eric again opens some news websites and �nds that analysts are, almost unanimously, expecting tapering in monthly asset purchase program worth $75 billion and no change in benchmark interest rate.

US Monetary Policy Meeting

A�er thorough research, Eric concludes that the fundamentals are reinforcing his preliminary technical analysis about the potential downside risk in EUR/USD. He plans to conduct an in-depth technical analysis to make a �nal decision.

Fundamental conclusions

Case study 1

A long shooting-star candle on the daily chart gave Eric a preliminary indication for the potential downside risk in near future. A�er applying Fibonacci extension levels on the daily chart, Eric comes to know that the price took retracement from 261.8% �b level resistance as demonstrated in the following chart.

Technical Analysis

�e current market price is 1.3800; Eric knows that the price will face huge resistance near 1.3891 because now it is a con�uence of 261.8% �b level and the shooting star resistance. So he makes his mind to open a sell position around 1.3800 if the Eurozone’s CPI comes worse than expectations or in line with expectations. �e data is due just a few minutes later.

Analysis

At 14:00 GMT, the Federal Reserve announces a $10 billion cut in the monthly asset purchases program, trimming it down to $65 billion and leaves the inter-est rate unchanged. �e US dollar appreciates a�er the US central bank decision and consequently, the EUR/USD accelerates the downside movement. Fortunately, a mere couple of hours a�er the Fed announcement, EUR/USD hit 1.3670 and Eric gets 130 pips Take Pro�t (TP), with a dollar value of $130.

Eric earns $130 as Fed announces tapering

Eurozone’s CPI data comes worse than the forecast. Eurostat report shows that CPI declined to 0.5% in December, more than the market expectations. Eric sells EUR/USD at 1.3800 with 0.10 lot and places stop loss at 1.3900, he sets his initial target around 1.3670. �e current leverage of Eric’s account is 1:400 so $34.50 will be in use for this trade. Eric risked $100 on this trade as his stop loss was exactly 100 pips. EUR/USD began falling following the CPI release but a�er 40 pips slide Euro halted the downside movement as investors turned their focus to FOMC announcement.

Eric sells EUR/USD

Case study 2

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Case study 3

Identifying the “Buy” Opportunity in USD/JPY through MACD Divergence

Paul Anderson is an experienced technical trader. His technical analysis is based on di�erent technical indicators and price action signals. On February 5, Paul’s trading system generated a couple of bullish signals about USD/JPY. He decided to conduct an in-depth technical analysis on the pair for a potential buying opportunity.

Paul was excited to see some strong positive divergence within the four-hour timeframe. MACD was showing Higher Low (HL) while the price had printed a Lower Low (LL), as demonstrated in the following chart.

A strong bullish signal is generated when the price prints LL but the oscillator (such as MACD, RSI or CCI) fails to follow the price movement and shows HL. Similarly, a strong bearish signal is generated when the price prints HL but the oscillator shows LL. Divergence is considered one of the most authentic tools for technical analysis.

Positive Divergence

Paul noticed that both the Relative Strength Index (RSI) and the Commodity Channel Index (CCI) were retreat-ing from oversold territories. �is was the second major signal for a potential bullish reversal in USD/JPY.

RSI & CCI

Fundamental Analysis

Case study 3

A�er getting adequate bullish signals from technical analysis, Paul then checked out the economic calendar. He found that no major event was due on February 5. A few medium-level economic reports about the US economy were, however, scheduled for release on that day.

An RSI reading below 30 is considered an indication of oversold sentiment while a reading above 70 shows overbought sentiment among traders. Similarly, a CCI reading below -100 gives an oversold signal while a reading above +100 shows overbought sentiment. In the oversold market, price mostly takes bullish reversal and vice versa.

�e report shows the number of people who got employed in the US over a speci�c period of time. It is a monthly report which stirs moderate volatility in US Dollar (USD). On February 5, the report gave the downbeat reading of 127K; analysts had predicted 180K new jobs in January.

ADP Employment Change

�e report, released by the Institute of Supply Management (ISM), shows the performance of the US services sector over a speci�c period of time. On February 5, the report posted the upbeat reading of 54.0; market was expecting a 53.7-point reading in January compared to 53.0 in the month before.

ISM Non-Manufacturing PMI

�e report, released by Markit Economics, measures the performance of the US services sector during a particular time period. On February 5, the report showed a 56.7-point reading in January; this was broadly in line with the expectations.

Markit Services PMI

Based on the strong bullish signals from technical analysis and mixed US economic reports, Paul �nally opened a long (buy) position in USD/JPY at 101.00. He kept the stop-loss at 100.50 and the take pro�t at 102.50. His lot size was 0.10, i.e., he risked $50 for a $150 potential pro�t. A�er two days, his analysis turned out to be correct and he enjoyed 150 pips or a $150 pro�t.

Paul went long and earned $150

Case study 4

Identifying a ‘Sell’ Opportunity in USD/CHF through Trendline Resistance

Abdullah Khan has been trading currencies for a long time. His technical analysis is mainly focused on trendline support/resistance levels and price patterns. In addition, he also keeps an eye on fundamental events. On February 12, he realized some serious downside risk in the USD/CHF which prompted him to conduct an in-depth technical analysis for the pair.

Abdullah drew trendlines on the daily chart which showed a downward slope channel in the pair. �e slope chan-nel further revealed that the price faced rejection at the channel resistance three times in the recent past.

To con�rm the bearish sentiment on the pair, Abdullah inserted Fibonacci levels on the daily chart. He then came to know that both the 50% �b level and the channel resistance were at the same point: 0.9027.

Technical Analysis

When two or more resistance or support levels combine at the same point, such point is known as con�uence. Con�uence support and con�uence resistance are considered the best levels for entry. Based on the repeated rejection around channel resistance and the con�uence resistance, Abdullah concluded that his technical analysis as very bearish for the pair.

Based on the strong bearish signals from the technical analysis and a relatively calm fundamental outlook, Abdullah decided to open a short (Sell) position in USD/CHF at 0.9027. He placed the stop-loss at 0.9057 and the take pro�t at 0.8927. His lot size was 0.10, which means he risked $30 for a potential $100 pro�t. �e analysis turned out to be correct and Abdullah got his target within 24 hours.

Abdullah sold USD/CHF and earned $100

Fundamental Analysis

Switzerland’s Consumer Price Index (CPI) for the month of January was due on that day. Analysts had predicted 0.1% reading against the same reading the month before. �e actual outcome came exactly in line with the expectations. In the US basket, the monthly budget statement was due for release. Economists were expecting a $27.50 billion de�cit for the month of January. However, the actual de�cit came out to be $10.42 billion. Since the US budget statement is considered a medium-level economic report, high volatility was not expected in USD/CHF.

Case study 4

Case study 5

Long-Term Trade Opportunity Identi�ed by Inverse H&S Pattern

Sarah Robertson is an experienced independent trader. Her trades are based on di�erent price patterns and extensive fundamental research. On February 27, Sarah observed the Inverse Head & Shoulder (H&S) pattern in NZD/USD which gave her a potential buying opportunity in the pair.

Inverse H&S is one of the most famous and reliable price patterns among traders. �e pattern consists of a head, two shoulders and a neckline. �e neckline is derived by joining the peaks of the two shoulders. A breakout through neckline con�rms the authenticity of the H&S pattern. Traders tend to buy an asset if the price breaks the neckline of the inverse H&S pattern.

Sarah decided to wait until the price breaks the neckline, which was around 0.8347. Meanwhile, she decided to go over the fundamental events relating to NZD/USD.

Inverse H&S Pattern

Since the trade opportunity identi�ed by the Inverse H&S Pattern was long term, Sarah decided to study all of the major events which were due in next 2-3 weeks. She came to know that the most signi�cant event pertaining to New Zealand’s economy was the interest rate decision by the Reserve Bank of New Zealand (RBNZ). �e event was due on Wednesday, March 12. Sarah conducted some more research to get clues on the RBNZ rate decision. She learned that the RBNZ was expected to increase the interest rate by 0.25% to 2.75%, according to the median projection of di�erent economists surveyed by Bloomberg.

Generally speaking, the currency of a country is positively correlated to the interest rate, i.e., if the country increases the interest rate, the currency also tends to appreciate and vice versa. Sarah was very optimistic that if the RBNZ announced an increase in the benchmark interest rate, NZD/USD would rise considerably.

Case study 5

Fundamental Analysis

On March 3, the price broke the neckline, con�rming the Inverse H&S Pattern. A�er getting favorable signals from both the technical and fundamental analyses, Sarah eventually opened a long (buy) position in NZD/USD at 0.8350 with 0.10 lot size. She placed the stop-loss at 0.8300 and her target was 0.8550, which means she risked $50 for the potential pro�t of $200. As expected, RBNZ announced an increase in the benchmark interest rate by 0.25% on March 12 and consequently, NZD/USD rallied above 0.8550. �us, Sarah got the Take Pro�t (TP) worth $200.

Sarah Earned $200

Case study 6

Identifying Long-Term Buying Opportunity in Gold for $1000 Pro�t

Jonathan Millet is a seasoned commodity trader. His trades are based on long-term fundamental and technical analyses. He keeps the trades open for weeks and months. In January 2014, he noticed some real bullish strength in the Gold price. Like a professional trader, Jonathan planned to conduct thorough technical and fundamental analyses for potential buying opportunity in the precious metal.

Jonathan found that a classic double-bottom price pattern was obvious on the weekly chart of the yellow metal. Among traders, the Double-Bottom Pattern is considered one of the strongest signals for bullish reversal. Techni-cally, Jonathan was 70% convinced of the buy trade. However, before making an entry, he wanted to see more con�rmation signals through technical indicators and fundamental analysis.

Double-Bottom Price Pattern

Markit Services PMI�e services sector Purchasing Managers Index (PMI) released by a private �rm Markit Economics showed that the services sector in the US grew by 55.7 points in December compared to 55.9 points the month before. A lesser reading is seen as bullish for Gold.

Fundamental AnalysisA number of major economic events pertaining to the US economy were due on January 6. Jonathan decided to wait for the outcomes of the events before opening a buy trade in Gold.

Case study 6

�e Parabolic Stop and Reverse method or simply Parabolic SAR is a famous technical indicator. It generates buy or sell signals through the placement of dots. When the dots show below the candles, it means the bulls have started dominating the price and the upside rallies are likely in the near future. Conversely, if the dots show above the candles, then the indicator generates the opposite i.e., bearish signals.

On January 6, Jonathan noticed that the Parabolic SAR had generated some real bullish signals, reinforcing the double-bottom pattern. In addition, some other technical indicators such as the Relative Strength Index (RSI) and Commodity Channel Index (CCI) were also showing oversold readings. �ese are more signals for potential bullish reversal.

Parabolic SAR

Factory Orders�e manufacturers in the US received 1.5% more orders in November as compared to 0.5% decline the month before. Analysts, however, were expecting a 1.8% increase in the November orders so the data downbeat the expectations.

Jonathan Goes Long and earns $1000A�er getting a couple of strong bullish signals through the technical analysis and downbeat US data, Jonathan �nally opened a long (buy) position in gold. He bought a 0.10 gold lot at $1240 an ounce. He placed the stop-loss around the swing low of the previous daily candle which was $1218; his long-term target was $1330. A couple of days later, US non-farm payrolls came in worse than expectations and gold shot to $1265. �is further encouraged Jonathan to keep his trade open. When the precious metal reached $1290, he brought his stop-loss at breakeven point, i.e., at the price of entry. Now, Jonathan was completely risk-free. Fortunately, gold never approached $1240 a�er his entry and kept printing new highs until the yellow metal hit $1340 on March 3. �us, Jonathan achieved his target and earned $1000.

Case study 7

Identifying Buying Opportunity in USD/RUR amid the Ukraine Crisis

Samuel Rae is an experienced currency trader. He loves to trade exotic currency pairs. Sam came to know about the Ukraine crisis through the media. Being a vigilant news trader, he soon realized that the Russian ruble might hit fresh all-time lows against the greenback in such a scenario. He decided to buy USD/RUR on dips.

A referendum was due on March 16 in Crimea (a Ukrainian territory where almost 70% are Russian-speaking) to decide whether the people want to join Russia or restore the 1992 constitution. A�er conducting an extensive research on the referendum, Sam found that an overwhelming majority of Crimea was likely to vote in favor of Russia. �e western countries had already threatened that if Russia recognized Crimea, it would have to face strict sanctions, similar to what it had su�ered in the Cold War era.

Two things were clear from the news analysis:• Crimea was expected to vote in favor of Russia• Russia was expected to face sanctions from the western countries

It was very obvious that the Russian currency and stock markets would react sharply on any sanctions from the west. It was a strong indication that a�er the referendum, the Russian ruble could hit new lows against the dollar.

Crimea ReferendumIt is generally observed that in a crisis situation, the Russian Central Bank always intervenes into the open market to support its currency. �ere was a possibility that the Russian bank might cap the USD/RUR a�er the referendum. �us, Sam decided not to open a buy position ahead of the referendum. He wanted to see the actual results of the referendum and then the reaction in the market.

Central Bank Intervention

�ings happened exactly as Sam expected. Crimea voted to join Russia and Russia promptly recognized Crimea. �e western countries rejected the referendum and started imposing sanctions on Russia. To avoid the steep fall in ruble, the Russian central bank intervened which consequently appreciated the Russian currency against the US dollar. �is was an ideal scenario for Sam because he knew that the bank would not be able to support the Russian ruble for a long time, especially when the US monetary policy was due on March 19. Sam was ready to buy USD/RUR on dips.

Crimea Joins Russia, USD/RUR Tumbles

Case study 8

Identifying Long-Term Trade Opportunity in Silver a�er China’s Manufacturing Slowdown

Michael Harding has been trading commodities for the last 10 years. He loves to identify and trade the long-term trends in the metals for big pro�ts. In February, Mike came to know about the manufacturing slowdown in China which prompted him to look for potential trade opportunities in precious metals.

On Wednesday, February 19, HSBC Holdings PLC said that China’s manufacturing activity slowed down in February for the third month in a row, a sign that the world’s second largest economy is struggling to maintain steady growth. �e HSBC Manufacturing Purchasing Managers Index (PMI) declined to 48.3 points compared to 49.5 points in January; analysts had predicted a decline to 49.4. A PMI reading above 50 shows expansion in the manufacturing activity and vice versa. Since the Asian nation is the largest consumer of the precious metals, investors always tend to sell gold and silver on negative developments relating to China.

Manufacturing Slowdown in China

Mike found that silver was testing the crucial resistance area around $21.80-$22.00, i.e., the 76.4% �b level. Moreover, the current level was the last major resistance before the swing high of the previous wave. Technically, price mostly takes deep correction from the last resistance level before the previous high.

Technical AnalysisChina grew at 7.7% in 2013, the slowest pace in more than a decade. Economists believe that the pace of growth is expected to slow down further during the course of the current year. Slow growth in the Asian nation means low demand for silver and other precious metals. Moreover, the Federal Reserve policymakers clearly indicated in the January meeting that the central bank wanted to drop the entire Quantitative Easing (QE) program by the end of October this year. �e end of the stimulus means stronger US dollar (USD) or, in other words, cheaper silver because the prices of commodities are negatively correlated to the dollar.

Macroeconomic Scenario

Case study 7

�e Federal Reserve kept the interest rate unchanged and reduced the QE by $10 billion to $55 billion as expected. USD/RUR shot up and within a six-hour duration, Sam collected the $125 pro�t. Sam’s patience and extensive research is a perfect role model for beginner traders who o�en lose in the volatile market.

Sam Earned $125

Traders were widely expecting another tapering (activities used by the central banks to improve the conditions for economic growth) on March 19 from the US Federal Reserve a�er a surprise jump in February non-farm payrolls. Sam bought USD/RUR with a 0.50 lot size at 35.90, which was the 161.8% �b level. He carried out the trade with 15 pips stop-loss just ahead of the monetary policy decision from the Fed. His target was 36.15, i.e., 25 pips or $125 pro�t.

Technical Analysis

Case study 8

Mike Concludes His Analysis & Sells Silver

A�er getting strong bearish signals from both the technical and fundamental analyses, Mike decides to go short on silver. He sells the white metal at $21.80 with a 0.10 lot size, keeping the stop-loss at $22.20, well above the 76.4% �b level resistance.

Identifying the ‘Buy’ Opportunity in GBP/USD Ahead of US Non-Farm Pay-

Angela Ripley is an expert currency trader. Her technical analysis is based on trendline support/resistance, Fibonacci levels, MACD divergence, and overbought/oversold signals through RSI and CCI. Moreover, she keeps a close eye on macro-economic events and daily news releases. On February 7, Angela noted the repeated rejection in GBP/USD around 1.6250 that prompted her to conduct an in-depth technical analysis for a potential buying opportunity in the pair.

Like a typical technical trader, Angela �rst inserted Fibonacci levels into the chart. She found that 1.6250 was 50% �b support of the last major rally. 50% �b level is considered the most signi�cant support/resistance level among currency traders; it is observed that price takes a rebound from 50% �b level in almost 65%-70% cases. Angela felt a strong bullish feeling about the pair. However, her technical analysis was incomplete; she wanted to get some more con�rmation signals.

Angela conducted swing analysis on the daily chart. She found that 1.6308 was the ‘swing low’ of the previous downward wave. It is pertinent that in about 70%-80% cases, price takes retracement from the very �rst support level a�er the ‘swing low’ of the previous wave. In the case of GBP/USD scenario, 50% �b level or 1.6250 was the �rst support level a�er the ‘swing low’ of the previous wave. �is was the second strong signal for a long-term bullish reversal in the pair. �erefore, Angela was feeling very much convinced about the buy trade.

Technical Analysis

Case study 9

Furthermore, Angela found that the Relative Strength Index (RSI) and the Commodity Channel Index (CCI) were also showing oversold readings. An RSI reading below 30 and a CCI reading below -100 are considered over-sold signals among traders.

Fundamental AnalysisA�er getting numerous “Buy” signals from the tech-nical analysis, Angela moves onto the fundamental analysis. She found that Britain’s docket was empty for the day; however, in the US, the labor depart-ment was scheduled to release non-farm payrolls and unemployment rate reports for the month of Janu-ary. Upon further research, Angela came to know that analysts were expecting a better non-farm payrolls reading as well as a decrease in the unem-ployment rate for January. According to the median projection of di�erent analysts, non-farm payrolls rose by 150K in January compared to 113K increase in the month before. �e unemployment rate ticked down to 6.7% in January compared to 6.8% in the previous month. She decided to buy GBP/USD in case of worse than expected US job data.

In the US morning session, the labor department released the reports showing that non-farm payrolls in the US rose just by 75,000 in January, missing the median projection of analysts by a long shot. Moreo-ver, the unemployment rate also rose to 6.9% contrary to the forecast. Angela bought GBP/USD promptly a�er the releases; her order got �lled at 1.6287. She placed the stop-loss at 1.6230 and the take pro�t at 1.6650. She bought the pair with a 0.10 lot size which means the values of her risk and reward were $57 and $363, respectively. Just an hour a�er the entry, Angela’s trade was in $110 pro�t. Being a seasoned trader, Angela didn’t close the order before her target. Even-tually a�er the one-week patience, she got her target and earned $363.

Angela bought GBP/USD and earned $363

Case study 9

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