Congratulations on taking your first steps to
Financial Freedom.
Welcome Trade4Africa’s Financial
Transformation Class!!
Simz D'mandla is the CEO & Founder of Trade4Africa.org and The African Millionaires Den. He is Serial Entrepreneur,
Forex Analyst & active trader. Wealth Coach, Motivational Speaker, Angel Investor, Business Strategist, Philanthropist and
is one of South Africa's Youngest Self-Made Millionaires.
He has mentored and motivated thousands people all across South Africa and out-skirts of Africa. This includes Financial
planners, Hedge fund managers, Bankers, and Ordinary South African Citizens with Big dreams and aspirations of living
financially free lives.
He’s Vision for Trade4Africa is to uplift African Economies by bridging the gap between social classes, allowing people
from all financial backgrounds the ability to reach financial freedom.
Contents
1 What Is Forex Trading
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Types Of Analysis
2
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Classroom examples/ Patterns
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3 High Probability Trading
Forex stands for foreign exchange, which is
exchanging one currency for another.
It is the largest financial market in the world.
Compared to the $74 billion day trading on the
New York exchange, the forex market has an
enormous day trade of 5.5 trillion Dollars.
When trading Forex, You buy and sell currency
Assuming you are in America visiting Japan, you
have traded the Dollar for the Yen.
Buying a currency is like buying a share in a
country, The price of the currency, is a direct
reflection of what the markets think of the future
health of that economy.
Market Sessions
The Forex Market is a 24 hour market.
It has 3 major market sessions.
1. The Asian Session.
2. The London Session.
3. The New York Session.
Although the Forex Market is a 24 Hour Market,
the markets close on Friday evening at 0:00am
And open at 0:00am on Sunday Evening
Symbol Currency Country Nickname
Currencies
USD Dollar United States Buck
EUR Euro Europe Fiber
GBP Pound Great Britten Cable
CHF Franc Switzerland Swissy
CAD Dollar Canada Loogie
JPY Yen Japan Yen
AUD Dollar Australia Aussi
NZD Dollar New Zealand Cable
There are 8 major currencies traded in the forex market.
They are called ‘majors because they are the most widely
traded ones.
As illustrated on the left, Symbols always have three letters in
them, with the first two letters representing the country, and
the last letter representing the currency.
For example, the letters US represent ‘United States’, while
the letter D represents the ‘Dollar’. (USD)
Currency Pairs
Forex is traded in pairs
1 currency is always traded against another
For example, we trade the Euro against the
Dollar (EURUSD)
In EURUSD, the Euro is the Base Currency
while the Dollar is the Quote Currency.
Example
In the pair EURUSD, if the Euro is rising in value,
it is rising in value as compared to the Dollar, which
would make EURUSD go up.
If the Euro is losing value, EURUSD will go down.
In the pair EURUSD, if the Dollar us rising in
value, it is rising in value as compared to the Euro,
which would make EURUSD go Down.
If the Dollar is losing value, EURUSD will go Up.
Leverage
Leverage is borrowing money from
the forex broker so that you can get
an even bigger exposure to the
markets.
You don’t pay any interest on the
loan.
So a small amount deposited into
your trading account can control a
much larger contract value.
With $100 you can handle currency
that’s worth $1 000
For example, if you make 2% from
the $1 000 that means that you
have made $20 and your trading
account is $120 now.
PIPS
Pip: Percentage in point.
A pip is the 4th decimal point in the
exchange rate.
When the YEN is in the currency
pair then it only has 2 decimal
points.
The amount of Pips the market
moves determines your profit or loss.
Example
You enter the market at GBP/USD:
1.5734 and you exit at 1.5818. How
many Pips did the market move?
You would do your calculations as
follows:
TYPES OF MARKET ANALYSIS
Fundamental analysis is based on
FUNDAMEMTAL ANALYSIS economic data.
Traders who trade fundamentally wait for
specific press releases and attempt to
jump into big moves.
This is very dangerous because the
market is normally very volatile during a
news release.
If the trader takes the bait and jumps in
on a false buy or sell signal and the
market moves quickly in the opposite
direction, it is very difficult for the trader
to get out of the position without taking a
hit.
With that in mind, there are also huge
benefits to trading the news.
Large pip scores can be made very
quickly, and this type of trading can prove
to be very profitable to the seasoned
trader.
TECHNICAL ANALYSIS
Technical analysis is based on chart
interpretation.
Technical traders are looking for the
charts to show very clear setups. Once a
setup appears, the trader is then able
to precisely determine the entry, stop
loss, and take profit prices.
This is the biggest practical difference
between the two styles: fundamental
trading is more free flowing; technical
trading is more accurate and specific.
2
TECHNICAL ANALYSIS
THE STORY
Forex is Fight between the Bulls and the Bears
The Bulls push the market up
The Bears push the market down
The Forex Market is a Free Market and is not centrally
governed or owned by anyone.
This means that if 1 Million people decide to buy at the same
time ,the people buying would be regarded as Bulls, and will
likely push the markets up, and if 1 Million people decide to
sell, they would be regarded as Bears
JAPANESE CANDLESTICKS
Candlesticks are graphical representations of
market price movements within a specified
time period.
A candlestick may represent price movement
that occurred in the:
5 minutes
15 minutes
30 minutes
1 hour
4 hours
1 day
1 week
1 month
BULLISH CANDLESTICKS
A bullish candlestick represents market prices that
are moving up.
The 'close' (end) price is higher than the 'open'
(beginning) price.
This means that in that 1 hour, the market has
moved from the 'open' price, up to the 'close' price.
The 'open' would be the market price at beginning of
the 1 hour.
The 'close' is the market price at the end of the 1
hour.
The 'high' and 'low' are the highest and lowest prices
that were traded within that 1 hour, respectively
BEARISH CANDLESTICKS
A bearish candlestick represents market prices that
are moving down.
If you look back at the 1 hour candlestick (in the
previous page), you'll see that the 'close' (end) price
is higher than the 'open' (beginning) price.
This means that in that 1 hour, the market has
moved from the 'open' price, up to the 'close' price.
A Bearish candlestick is the opposite of a Bullish
candlestick.
It shows how prices have moved down within the
time frame that the candlestick represents.
Bearish candlesticks are usually represented by the
color red.
• What you are looking for are two
BULLISH RAILWAY candlesticks with the almost the
same lengths. They look like
parallel railway tracks
• A bearish Railroad Track
• A bullish Railroad Track Pattern has a green
Pattern has a red candlestick candlestick in front and a
in front and a green red candlestick after it.
candlestick after it.
BEARISH RAILWAY
• If you are in a downtrend, you will see the forming
of a long bearish candle and immediately a long
bullish candle will be formed. What happened here
was that those traders who enter SHORT, forming
the long bearish candle realized that they are in
the wrong side of the market and they immediately
exit their trades and then get into the opposite side
of the market causing the formation of the long
bullish candle. Vice Versa
TRENDS
A trend is the movement of price up or
down or sideways over time.
When price is consistently moving up, forming Higher
Highs and Higher Lows, this is called an uptrend.
When the price is consistently moving down, forming
Lower Highs and Lower Lows, this is called a downtrend.
When Price is travelling sideways, it is called sideways
trend. In such a sideways trending situation, price is
neither going up or down.
HIGHS GETTING UPTREND
HIGHER
H
H
H
L
H
L
An uptrend means that there are more buyers than sellers
The buyers are pushing the price of that particular
currency up,
L Trading is about supply and demand. If there are more
buyers than sellers, the price will go up
In this case it’s due to demand (there are more buyers than
they are sellers), demand pushes the price up.
L
DOWNTREND
HIGHS GETTING
H Highs getting Lower
LOWER
And Lows getting Lower
H
H
H
L
H
L
A Downtrend is the direct opposite of an uptrend,
Downtrend is when there are more sellers than buyers L
The sellers are pushing price down. L
Remember that the charts represents the current and
historical price of that currency, so when there is more
sellers than buyers, this causes price to go down
SUPPORT & RESISTANCE
Support and Resistance levels
represent key price levels where
the forces of supply and demand
meet.
In the forex market, the
prices are driven by supply and
demand.
If there is an oversupply, prices
will go down
If there is a demand, price will go
up.
#NB: Demand is synonymous with Bulls (buyers) and
supply is synonymous with Bears(sellers).
SUPPORT
Support is the price level at which demand is thought to be
strong enough to prevent the price from declining further.
As the price declines towards support(which means it gets
cheaper), buyers become more inclined to buy and sellers
become less inclined to sell.
By the time the price reaches the support level, it is
believed that demand will overcome supply and prevent
the price from falling below support
RESISTANCE
Resistance is the price level at which selling
is thought to be strong enough to prevent the
price from rising further.
As the price advances towards resistance,
sellers become more inclined to sell and
buyers become less inclined to buy.
By the time the price reaches the resistance
level, it is believed that supply will overcome
demand and prevent the price from rising
above resistance.
TAKE-PROFIT
STOP LOSSES ARE USUALLY
PLACED
ABOVE HIGHS OR LOWS
A Take Profit order is an order used to exit a trade with profit.
They are represented by the number of points or pips a trader
believes a currency pair will rise or fall depending on his or her
strategy and time frame.
Calculations can be made using several tools, supports and
resistance, depend heavily on the time frame being traded.
Entry points TakePROFITS
TAKE profits are
ARE They are usually placed at previous support and resistance levels
are usually
ENTRYplaced
POINTS ARE usually placed
USUALLY PLACED
after AT PREVIOUS A higher time frame will allow the setting of wider targets, but this
USUALLY PLACED AFTER DOING At previous
doingYOUR
analysis
ANAYSIS SUPPORTS & RESISTANCES
Support & also will require a wider stop loss.
Resistance
PRACTISE MAKES PERMINANT
HORIZONTAL SUPPORT & RESISTANCE
Resistance Resistance
Resistance
Support
Support Support
Support
Support
DIAGONAL RESISTANCE IN A DOWNTREND
Resistance
Resistance
Resistance
Resistance
Resistance
DIAGONAL SUPPORT IN AN UPTREND
Support
Support
Support
Support
Support
Support
BULLISH CHANNEL
Resistance
Resistance
Resistance
Support
Support
Support
BEARISH CHANNEL
Resistance
Resistance
Resistance
Support
Support
Support
DOUBLE TOP
Resistance
Support
The double top is a reversal pattern that can be seen
in all timeframes.
It often forms when price has moved up for an
extended amount of time.
The tops are formed when price hits a certain
resistance levels where it cannot break it to the
upside.
When price does not break this resistance level above
top2, this is a strong indication that a reversal is
going to occur.
DOUBLE BOTTOM
Resistance
The double bottom is a reversal pattern that can be seen in
all timeframes.
It often forms when price has moved down for an extended
amount of time.
The bottoms are formed when price hits a certain
resistance levels where it cannot break it to the upside. Support
When price does not break this support level above
bottom2, this is a strong indication that a reversal is going
to occur.
TYPES OF TRIANGLES
SYMMETRICAL TRIANGLE
The Symmetrical Triangle is a chart formation(also addressed as a consolidation), is
generally formed while the trend occurs as a continuation pattern. This pattern
incorporates lower highs and higher lows. Although it is a trend continuation pattern,
many reports have shown the importance of symmetrical triangle and even they play a
dominant role in the trend reversals. They result with a continuation with the present
market trend. Never mind whether it is reversal or continuation, the succeeding moves
could be fairly discovered by means of a potential breakout.
BULLISH TRIANGLE
•The Bullish pattern forms when two converging trendline (support levels
& resistance levels) converge to form a point.
•The Bullish pattern is generally considered a bullish formation and
it usually forms during a currency pair uptrend as a continuation pattern.
•This Bullish pattern is confirmed when the currency pair price breaks out
of the ascending triangle formation to the upside and closes above the
upper resistance trendline.
•If however, when the currency pair breaks out to the downside, the Bullish
triangle now is a reversal pattern.
BEARISH TRIANGLE
•The Bearish pattern forms when two converging trendline (support levels
& resistance levels) converge to form a point.
•The Bearish pattern is generally considered a bullish formation and
it usually forms during a currency pair uptrend as a continuation pattern.
•This Bearish pattern is confirmed when the currency pair price breaks out
of the ascending triangle formation to the upside and closes above the
upper resistance trendline.
•If however, when the currency pair breaks out to the downside, the
Bearish triangle now is a reversal pattern.
HEAD & SHOULDERS
Head
Right Shoulder
Left Shoulder Head-and-shoulder patterns usually form after
an uptrend, indicating a reversal.
It can also be a continuation pattern for a down
trend.
It is a bearish indicator so when you see this
pattern you know price is going to drop.
Neckline The lows formed at support of the shoulders
and the head create the neckline.
When your neck line has been broken you
would calculate the pips from the top of the
head to the neck line to determine how many
pips the break out will be.
INVERSE HEAD & SHOULDERS
Neckline
•Inverse Head-and-shoulder patterns usually form after a downtrend,
indicating a reversal. Left Shoulder
•It can also be a continuation pattern for an uptrend.
•It is a Bullish indicator so when you see this pattern you know price is
going to raise. Right Shoulder
•The highs formed at support of the shoulders and the head create the
neckline.
•When your neck line has been broken you would calculate the pips
from the bottom of the head to the neck line to determine how many
pips the break out will be.
FLAGS & PENNANTS
The Flag and Pennant are treated the same because they show up
in similar situations and they are both continuation patterns.
They appear after the market ascends or descends with
momentum, forming a series of long candles or a pole like
structure.
After the pole the market consolidates and forms either a Flag or
Pennant.
FLAGS
Breakout Impulse Continuation
Flags are short-term continuation patterns and
are among the most reliable of all continuation
patterns, they are formed when there is a sharp
price movement followed by a consolidation phase
(sideways action), thereafter the previous up or
down trend is expected to resume.
Flags are marked by two trend lines. At its top,
there is a line of resistance where traders are
willing to sell the currency pair.
At it's bottom, there is a line of support where
traders are willing to buy the currency pair.
Impulse
Breakout PENNANTS
Impulse Continuation Flags are short-term continuation patterns
and are among the most reliable of all
continuation patterns, they are formed
when there is a sharp price movement
followed by a consolidation phase (sideways
action), thereafter the previous up or down
trend is expected to resume.
Flags are marked by two trend lines. At its
top, there is a line of resistance where
traders are willing to sell the currency pair.
At it's bottom, there is a line of support
where traders are willing to buy the
Impulse currency pair.
RISING WEDGE
Rising wedges slope up and have a bearish bias. These formations are usually found in
up-trending markets. They can become a reversal pattern if the price move below the
lower (support) trendline.
FALLING WEDGE
Falling wedges slope down and have a bullish bias. These formations are usually
found in down-trending markets. They can become a reversal pattern if the price
move above the upper (resistance) trendline.
DIVERGENCE
BULLISH DIVERGENCE
Price is more likely to Rise to the next Resistance
Bullish divergence warns of a
possible change in the trend from
down to up. This is because even
though the price went lower the
volume of sellers that pushed the
price lower was less as illustrated
by the MACD indicator. This
indicates underlying weakness of
the downward trend.
BEARISH DIVERGENCE
Bearish divergence warns of a possible Price is more likely to fall to the next suppot
change in the trend from up to down.
This is because even though the price
went higher the volume of buyers that
pushed the price higher was less as
illustrated by the MACD indicator.
This indicates underlying weakness of
the upward trend
FIBBONACCI
Fibonacci retracement is a very popular tool used by
many technical traders
to help identify strategic places for transactions to be
placed, target pricesor stop losses. The notion of
retracement is used in many indicators such as,
Gartley patterns, Elliott Wave theory and more. After a
significant price movement up or down, the new
support and resistance levels are often at or near these
lines.
See the chart below, note how close the market bounces
are to these levels.
REVERSAL
• A reversal is a change in trend, when a down trend changes to an
uptrend or vice versa, the market has reversed.
• Reversal patterns as well as candlesticks are good indications hat
the market is likely to turn
RETRACEMENT
• It is important to note that at the point where the trend starts
changing the market can either reverse (change direction
• A retracement is a correction that occurs during a completely) or just “rest” and carry on in its original direction. What
prevailing trend. it is often regarded as a period of rest we aim to do with the Fibonnaci tool is to identify when it is a
before a trend continues on its original. reversal and when it is a retracement.
• We only trade retracements as it is in the direction of the trend. You
may have heard the expression used “the trend is your friend” and
for our method of trading this is 100% true.
RETRACEMENT
The market will often pull back or retrace a
percentage of the previous move before reversing.
These Fibonacci retracements often occur at three
levels – 38.2%, 50%, and 61.8%.
After a significant price movement up or down,
the new support and resistance levels are often
at or near these lines.
HIGHEST PROBABILITY TRADING
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