Forex pdf 3

Trading Plan Template for Any Trading Asset for 2022.

Needless to say that having a plan before you start trading is essential to your success as a trader. After all, when you enter the markets, you risk your money and, more importantly, your ego and confidence in yourself.

Ironically, some people have special trading skills , but they cannot develop and build a successful trading plan. Luckily, in today’s day and age, you can browse online and get a built-in PDF, Google Sheets doc, or Word document with a trading plans forex template.

This article will help you with everything you need to know about developing a trading plan . We’ll also include a forex trading journal that you can download and use in your trading journey.

What is included in this blog post:

What is a Trading Plan Template How to Build Your Own Trading Plan Template 1. Set Your Goals – Financially and Emotionally 2. Get Familiar with Trading Jargon and Analysis Methods 3. Develop a Trading Strategy 4. Set a Risk Reward Ratio 5. Always Learn and Grow 6. Make an Organized Trading Track Record Trading Plan Infographic Trading Plan Template Downloads.

What is a Trading Plan Template?

As the name implies, a trading plan is a set of rules and guidelines that a trader follows to execute a trade. Besides that, a trading plan might include suggestions for a healthy trading daily routine and tasks that will help you manage your account and control your emotions.

For example, with a trading plan, you can define your trading goals, strengths and weaknesses, risk management strategy, trading strategy, entry rules, exit rules, daily routine, etc.

How to Build Your Own Trading Plan Template – Trading Plan Outline.

So, now that you understand what a forex trading plan is, you need to create your own specific plan that matches your style and personality. Personally, while working as a trader in a proprietary trading firm, I remember every trader had a different method, routine, tasks, and rules.

For example, some traders like adding sticky notes on their desktops while others prefer a clean table. Further, some traders enter hundreds of trades in one trading day while others enter one or two trades in a day. So, it’s up to you to define your own plan.

Nonetheless, based on my knowledge and experience, there are some must-have steps you need to consider to develop a successful trading plan .

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1. Set Your Goals – Financially and Emotionally.

First and foremost, you must define your goals. In other words, you will need to know what you plan to achieve from your trading experience.

To help yourself, ask these questions :

Is it an additional income only? Your main income? Do you plan to get rich from trading? What is the trading capital you are willing to risk and what is your profit target? How many hours a day do you plan to spend on trading?

In that aspect, you’d be surprised to know that many people who become professional successful traders do not necessarily do it to make money.

Instead, some traders do it for fun, a hobby, or a competitive game. So consider these factors as well. If this is the case for you, then you need to know it before you start trading. Maybe it gives an advantage over other participants in the forex market.

2. Get Familiar with Trading Jargon and Analysis Methods.

Before you make your first trade in the forex market, you first must understand the trading jargon and the different analysis methods.

If needed, take a quick trading course to learn how the forex or the stock market works, read articles, books, financial sites, etc. Additionally, you better explore the two methods to analyze financial assets – technical analysis and fundamental analysis.

Then, find the best way for you to analyze the markets and read forex charts. It’s up to you to decide whether you want to use line, bar, or candlestick charts and, more importantly, what technical indicators you want to use.

Additionally, you can learn how to read popular chart patterns and use them to find trading opportunities. Once again, you have to try before you know it… go ahead and try.

No one is born a great Trader, one gets great by learning.

3. Develop a Trading Strategy.

There are no two traders that are precisely the same. Therefore, you must find your own trading strategy and trading style. And this is a result of trial and error. It might take weeks or months until you get to the point where you have established a successful trading strategy, and there’s no way to escape this step.

When you make your first step in the trading world, you’ll get familiar with the different trading strategies – position trading, swing trading, day trading, and scalping trading.

Keep in mind that there are many trading strategies to choose from, but you’ll find your unique trading style and strategy within time. For that matter, you need to use a trading plan at the beginning of your journey to find the right strategy that matches your personality.

4. Set a Risk Reward Ratio.

Trading risk management is a predefined strategy to minimize losses and maximize profits. There are lots of tools and risk management rules a trader can use to protect themselves from losses and effectively manage their trading account.

Having said that, there’s one tool used by many traders, which is the most basic and the most effective of all – That is the risk-reward ratio.

In simple terms, a risk-reward ratio is a method to calculate the potential profit of a trade/day/week/month to a potential loss. In other words, it is a method to define your trade risk, that is how much risk you are willing in a trader, or in a day (the method is particularly for day trading).

For example, if you decide to use a risk-reward of 2:1, you are essentially willing to risk $1 for each trade for the purpose of earning $2.

5. Always Learn and Grow.

Trading is not like most professions. The markets always change, the technology evolves, and even the dynamic of the markets is constantly changing. Trust me, financial markets are not the same as they used to be fifteen years ago, and most likely, they will change again in the future.

I mean, the cryptocurrency market is one good example of the unpredictable nature of the trading world and financial markets.

This way or the other, you must read trading books and articles, watch movies, listen to podcasts – everything you can do to increase your knowledge. Yes, knowledge is power, but in trading, knowledge is essential.

6. Make an Organized Trading Track Record.

In the final step, make sure you analyze your trading past performance and keep track of your winning and losing trades. Yes, it’s an annoying task, especially when you have a losing day.

Writing down your losing trades is a punch to your ago, but it will help you improve your performance and trading decisions in the future. By doing so, you can learn your worst-performing days of the week, hours, financial instruments, etc.

Luckily, in most retail investor accounts, you can enter your trading platform and extract your daily/weekly/monthly performance. So, in the words of Forrest Gump: “one less thing to worry about”.

I’m not better than the next trader, just quicker at admitting my mistakes and moving on to the next opportunity. George Soros.

Trading Plan Infographic.

Here is an infographic with 6 action steps for your trading plan.

HowToTrade Trading Plan Template Download.

To sum up, we have created a trading business plan template that you can use for free in the format of your preference.

Forex Trading Plan Template PDF [Download] Forex Trading Plan Template Google Sheets Forex Trading Plan Template Word.


In a nutshell, every trader must have a well-defined solid trading plan. Developing an organized trading system is the first step in becoming a professional and successful forex trader and will increase your chances of success over the short and long term.

For now, you can use our free forex trading plan template to start with. Then, add notes, tasks, or any other inspirational quotes you think will help you to trade better.

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Forex pdf 2

Chapter 16. Forex Risk Management Strategies.

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It’s pretty common for new Forex traders to think making money through online Forex trading is fast and easy.

However, it’s a process that takes time, dedication, commitment, and patience, if you want to be successful and profitable in the Forex markets in the long run.

You can’t just open a position in your trading platform without taking into account the trading conditions set by your Forex broker, the market, leverage, liquidity and counterparty risks, that affect your capital. A legendary Forex trader once said:

Don’t focus on making money; focus on protecting what you have. Paul Tudor Jones.

You also need to apply tools and techniques to manage your money and risks – if you don’t do those things, you wouldn’t be trading – you’d be gambling.

#1 Only trade money you don’t need.

It might sound obvious, but the first rule in Forex trading, or any other kind of trading for that matter, is to only risk the money you can afford to lose. Many traders, especially beginners, skip this rule because they assume that it “won’t happen to them”.

If trading were like gambling at a casino, you wouldn’t take all the money you have to the casino to bet on black, right? Well, it’s the same with trading – don’t take unnecessary risks by using the money you need to live on.


Because it’s possible to lose all your trading capital, and secondly, because trading with funds you live on will add extra pressure and emotional stress to your trading, compromising your decision-making abilities and increasing the chances of making mistakes.

The Foreign Exchange markets are volatile, so it’s better to trade “conservative amounts” from your disposable income. If you can’t afford to lose the money you’re trading, then, unfortunately, trading is not for you.

#2 Always use stop-loss and limit orders.

Orders are instructions to your broker to place a trade when the price in the underlying market hits a certain level. By way of a reminder, here is how stop and limit orders work:

Stop-loss orders are placed on an open position to get you out of a trade if the market moves against you, it ‘stops your loss’.

There are three reasons why you should set stop-losses and limit orders on every trade:

It is just common sense to protect your downside. Your mindset is better, you can leave your trading screen knowing there is some degree of protection in place. The process helps you sense-check the trade against your trading plan.

#3 Think about your risk tolerance.

Before you start trading, you need to determine your risk tolerance, depending on:

Your age Your knowledge of FX trading Your experience How much you’re willing to lose, and Your investment goals.

Having a feel for your risk tolerance is not just about helping you sleep better at night, or stress less about currency fluctuations. It’s about knowing you are in control of the situation because you’re trading the right amount of money vis-à-vis your personal financial situation in relation to your financial objectives.

Keep your trading within your risk tolerance and you increase the likelihood of trading success.

#4 Set your risk/reward ratio to a minimum of 1:2.

Knowing about the risk/reward ratio (RRR) will definitely improve your chances of becoming profitable in the long run, and setting stop-loss and limit orders that protect your capital.

A RRR measures and compares the distance between your entry point and your stop-loss and take-profit orders.

We’ll get onto trading styles in the next chapter but scalpers and day traders should aim to have a minimum RRR of 1:2 , longer-term swing and position traders should aim for a wider minimum of 1:3 .

For Example.

If the distance between your entry-level and your stop-loss order level is 50 pips, and the distance between your entry point and your take-profit limit order level is 150 pips, then you would be using a RRR of 1:3, because you’re risking 50 pips to potentially make 150 pips (150/50 = 3).

The risk/reward ratio is a necessary tool to set your stop-loss and take-profit orders depending on your risk tolerance, and every wise trader should control the downside risk.

Read: What are pips?

#5 Control your risk per trade.

You also need to consider your risk per trade as a percentage of your trading capital and set it at a conservative level, this is especially important when you’re new to trading and are likely to make more mistakes than someone with experience.

You should only risk a small portion of your trading capital per trade: a good starting point would be to not risk more than 1% of your available capital per trade. If you’re applying sound RRR then that means risking 1% to potentially return 3%.

Here is the impact of three different per trade risk levels – 1%, 2% and 10% – on an account balance of 100,000 over a 30 trade losing streak. The trader risking 10% per trade has lost 95.3% of their account balance, the trader risking 2% is down 44.3% and the 1% trader is down 25.2%.

#6 Keep your risk consistent.

Most beginners will increase the size of their positions as soon as they’re making profits, which is one of the best ways to get your account wiped out. Keep your risk consistent.

Do not become over-confident and less risk-averse.

Just because you’ve made a few winning trades doesn’t mean the next one is going to be profitable.

Do not become over-confident and less risk-averse, as that will lead to you changing your money and risk management rules without solid reasons.

When you worked on your trading plan, you had to set up rules to decide about an effective size for your positions. This is just one step in establishing a successful trading method, now you need to stick to and follow your trading plan!

#7 Understand and control leverage.

The three margin products we’ve introduced so far in the guide – spot Forex, CFDs and spread bets – are all leveraged products.

Leverage means that you can trade more money than your initial deposit, thanks to margin trading. Your broker will only ask you to put aside a small portion of the total value of the position you want to open as collateral.

When using leverage, your profits can be magnified quickly, but remember the same applies to your losses in equal measure . This is why you need to understand how leverage and margin trading work, as well as how they impact your overall performance and trading.

Forex traders are often tempted to use high leverage to make significant profits, but if you’re over-leveraged one quick change in the market, or a simple mistake, could end up with an outsized hit.

In August 2022, the European Securities and Markets Authority (ESMA) imposed limitations on the leverage offered by brokers. These leverage limits on the opening positions by retail traders vary depending on the underlying:

30:1 for major currency pairs, and 20:1 for non-major currency pairs.

ESMA did this for a reason: retail traders, especially new ones, are normally bad at managing leverage and end up losing money because of it.

If there was only one titbit you took from the whole guide it would be to really learn about how leverage risk works and how you need to actively manage it to be a good trader.

#8 Take currency correlations into consideration.

Because currencies are priced in pairs, it’s important to understand that currencies are linked to each other, or correlated.

Knowing about Forex correlations will help you better control your Forex portfolio’s exposure by reducing the overall risks. Correlation represents a measure of how one asset’s price changes in relation to another.

If two assets are positively correlated, it means that they tend to move in the same direction, while if they are negatively correlated, they will evolve in opposite directions.

Live Forex pair correlations: heatmap.

Exchange Rates by TradingView.

To use FX correlations to your advantage, you need to remember a few things:

Avoid opening several positions that cancel out each other.

For instance, if you go long on the EUR/USD and the USD/CHF, you can expect both currency pairs to evolve in opposite directions, which is almost like having no trading position in your account.


Because the USD is used once as a base currency (USD/CHF), and once as the quote currency (EUR/USD), which means that if the USD strengthens against its major counterparts, then the EUR/USD will go down, while the USD/CHD will go up – the evolution of one exchange rate cancelling out the other one.

Avoid opening positions with the same base currency, or quote currency.

For instance, if you go long on the EUR/USD, the AUD/USD, and the GBP/USD, you can expect these currency pairs to be positively correlated because they all have the same quote currency, the USD.

It means that when the USD strengthens/weakens, your portfolio will go up/down.

Be aware of commodity currencies.

Commodity currencies represent currencies that move in accordance with commodity prices, because the countries they represent are heavily-dependant on the export of these commodities.

As a general rule, if the price of commodities strengthen, then the currencies of the commodity producers will go up – and vice-versa.

The main correlations to know about are the Canadian Dollar (CAD) and oil, the Australian Dollar (AUD) and gold/iron core, as well as the New-Zealand Dollar (NZD) and wool and dairy products.

To improve your Forex trading performance, you should understand your exposure: some currency pairs move together, while others evolve in opposite directions. The key is to diversify your portfolio to mitigate risks.


These pointers are just the cornerstone to better manage your risk – as you research further, you’ll find other Forex trading tools and techniques for beginners you can use to improve your trading strategy.

Before using a live trading account, try to back-test your trading plan on a demo account, and improve your strategy if needed.

Review your trades on a regular basis with a trading journal that will help you understand what you did right, and what you can improve.

Learn from your mistakes, and accept responsibility for losses.

Regardless of the timeframes you use, whether you rely on technical analysis or fundamental analysis, always follow your trading plan. Control your emotions and be patient enough to wait for your trade setups to be confirmed before opening/closing a position.

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Livre Forex 6

Qu'est-ce que le Forex ?

Apprendre comment fonctionne le Forex est important pour tout trader FX, notamment pour ceux qui découvre le trading sur le Forex.

Un trader débutant a tendance à faire ses premiers pas sur le Forex. Ainsi, il est primordial de connaître la définition du Forex, ses avantages et ses inconvénients, le vocabulaire de base et son fonctionnement.

Cet article explique en détail comment fonctionne le Forex, appelé le marché des devises ou le FX Market.

Table des matières.

Définition Forex Comment débuter sur le Forex ? Les caractéristiques du Forex Comment fonctionne le Forex ? Le Vocabulaire du Forex Les ordres du Forex Les facteurs qui influencent le FOREX Les participants du Forex.

Définition Forex.

Qu'est-ce que le Forex ?

Le Forex (Foreign Exchange) est le marché de change, où se négocient les paires de devises, comme l'EURUSD ou GBPUSD. Le Forex est un marché de gré à gré (OTC) ou les investisseurs ou les spéculateurs vont acheter et vendre les paires de devises.

Le Forex, ou le FX, est la contraction de Foreign Exchange. Nous pouvons traduire le Forex en français par Opération de Change.

En finance, le Forex est le marché des changes, où la monnaie d’un pays, appelée devise, est échangée contre une autre devise à un taux de change qui varie en permanence.

Le Forex permet de spéculer à la hausse ou à la baisse d’une devise face à une autre devise.

Le marché Forex et le marché de la crypto-monnaie sont différents. Le forex permet de trader les devises alors que le marché crypto permet de faire du trading crypto.

Ainsi, si vous souhaitez trader les crypto monnaies et en savoir davantage sur miner la crypto monnaie, nous vous invitons à lire notre article pour comprendre les cryptos.

Maintenant que vous connaissez la Forex définition, découvrez les 10 étapes pour débuter sur le Forex (le FX) en ligne.

Tradez le Forex et les CFDs.

Accédez à plus de 40 CFDs sur paires de devises, 24h/24 et 5j/7.

Comment débuter sur le Forex ?

Découvrez les 10 étapes pour débuter sur le Forex :

Trouver le broker qui vous convient. Exercez-vous sur un compte démo et formez-vous avec ce broker. Choisissez une stratégie de trading Forex sur laquelle vous vous sentez à l'aise. Ouvrir un compte réel chez ce broker et déposez des fonds. Installez la plateforme de trading Forex en ligne. Recherchez la paire de devises que vous avez sélectionné pour votre stratégie. Passer votre ordre. Fixer votre Stop Loss et votre Take Profit. Clôturer votre ordre. Continuer à vous former sans relâche.

Le trading sur Forex n'est pas un jeu. Le trading comporte un certain nombre de risques dont celui de perte d'argent.

Tradez de l'argent dont vous n'avez pas besoin ni pour faire face aux dépenses de votre quotidien ni pour financer un projet à court terme.

Soyez raisonnable et ne prenez pas des risques inutiles durant vos trades.

Si certains termes vous sont encore inconnus, lisez cet article jusqu’au bout pour découvrir leur sens !

Les caractéristiques du Forex.

Le marché du Forex est le plus gros marché financier en volume, avec plus de 6 595 milliards de dollars échangés en moyenne par jour, en 2022 (Source : Banque des Règlements Internationaux).

Ce volume moyen journalier se décompose de :

3 203 milliards $ de Swaps FX. 1 987 milliards $ de Spot également appelé transaction au comptant. 999 milliards $ de contrats à terme, options et autres instruments.

La Banque des Règlements Internationaux met à jour ses données sur le volume de transaction sur le Forex, tous les trois ans.

Dans son dernier rapport, nous pouvons également analyser que la devise la plus négociée est le dollar américain (USD), puis l’euro (EUR) et enfin le Yen (JPY).

Même si le marché Forex est mondial, en 2022, deux pays détiennent une grande part du marchén : 54 % des opérations de change sont réalisées au Royaume-Uni, 21 % aux Etats-Unis, la France ayant 2,9 % de part de marché sur le market Forex.

Attention : cette étude a été réalisée avant le Brexit.

Comment fonctionne le Forex ?

Pour apprendre à trader, il est très important de commencer par savoir comment fonctionne le Forex et connaître le vocabulaire de base.


Il existe deux types de devises :

Les devises fixes : elles sont contrôlées par les Etats, telles que le dollar US contrôlé par les Etats-Unis. Les devises flottantes dont le prix varie en fonction de l’offre et de la demande.

Nous parlerons exclusivement de ces devises dans cet article.

Parmi les devises flottantes, il existe trois types de devises :

Les paires de devises majeures. Les paires de devises mineures. Les paires de devises exotiques.

Les paires des monnaies les plus populaires du monde sont le dollar américain, l'euro, la livre sterling, le yen japonais et le franc suisse.

Ces devises font partie d'un groupe des paires de devises dites majeures : EURUSD, GBPUSD, USDJPY et USDCHF.

Il y a trois autres devises qui sont fréquentes dans les opérations sur Forex : le dollar néo-zélandais, le dollar canadien et le dollar australien.

Si elles sont associées avec le dollar américain, on obtient un groupe de devises mineures : NZDUSD, USDCAD et AUDUSD.

Toutes les autres paires de devises présentes dans le trading sur Forex sont généralement appelées « paires de devises exotiques » et représentent moins de 10 % de toutes les opérations de change :

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En Forex, une devise est cotée par paire , c’est-à-dire qu’elle sera toujours comparée à une autre devise.

Par exemple, la valeur de l’euro (symbole : EUR) sera exprimée par rapport à une autre devise, comme le dollar américain (symbole : USD), qui formera la paire euro dollar, notée EUR/USD.

Quand vous lisez le nom d’une paire de devise, vous devez bien regarder le symbole de gauche et celui de droite .

À gauche, c’est la devise de base , celui que le trader Forex achète et vend. À droite, c’est la devise de cotation ou de contrepartie.

Également, la devise de base vaudra toujours 1. Le terme financier est « certain » puisque cette valeur sera toujours égale à 1, c’est certain.

La devise de cotation (ou de contrepartie) fluctue et le terme financier est donc « incertain » puisque cette valeur variera en fonction de l’offre et de la demande et que sa valeur ne peut être connue à l’avance.

Important ✍ : vous devez savoir que la variation de la cotation est calculée en PIP , ou Percentage in Point. Un (1) PIP est la plus petite variation de la cotation et représente, en général, la quatrième décimale de la cotation. Si la cotation de la paire de devises EURUSD varie de 1,1243 à 1,1246 alors le cours aura augmenté de 3 PIPS.

Il y a deux choses à prendre en compte.

les traders n'achètent ou ne vendent jamais de la monnaie physique. l'achat et la vente ont lieu dans toutes les transactions de change.

Vous ne pouvez pas simplement acheter ou vendre de l'EUR / USD, comme vous le feriez par exemple avec les actions d'une entreprise. Pourquoi ? Parce que la paire de devises EUR / USD n'existe pas.

La monnaie existe seule, pas en couple. Les traders spéculent simplement sur les mouvements futurs des cours, sans acheter des devises.

La logique du trading sur Forex est simple à comprendre. Un trader achète une paire de devises dans l'espoir que sa cotation va augmenter. Le trader vend la paire de devises quand il pense que la paire de devises va baisser.

Deux exemples de cotation.

L'euro est à 1.1230 face au dollar US. Le trader pense que le prix de l'euro va augmenter dans les prochaines 24 heures.

Le trader place un ordre d'achat.

Si le lendemain l'euro est à 1.1235 et que le trader ferme sa position, il aura un profit de 5 pips.

Le montant du gain dépendra de la taille du contrat du trader pour cet ordre de bourse sur devise. Le gain peut être de 50 centimes ou de 50 000 euros, tout dépend de la taille de son ordre.

N'oubliez pas non plus que des commissions seront dues sur la transaction et qu'elles auront un impact sur votre profit (ou votre perte).

L’euro-yen est à 127.80. Le trader pense que le prix de l’euro va baisser dans les prochaines 24 heures.

Il place le même ordre que dans l’exemple précédent.

L’euro-yen augmente malheureusement à 127.85, soit une perte de 5 pips pour le trader.

Horaires de cotation.

Ouverture Forex : le Forex est ouvert du dimanche à 23 h jusqu'au vendredi 22 h . Vous pouvez ainsi trader même la nuit !

Il est fermé le weekend à partir du vendredi à 22 heures jusqu'au dimanche 23 heures.

Important : même si le marché est ouvert 24h/24, la plus grande activité et donc les plus grandes variations ont lieu lorsque les bourses de Londres et des Etats-Unis (Dow-Jones, Nasdaq, S&P500) sont ouvertes.

Pour en savoir plus, lisez l'article consacré aux horaires du Forex et des places boursières dans le Monde.

Le Vocabulaire du Forex.

La connaissance du langage des courtiers Forex ne fera pas de vous un trader excellent, mais il vous aidera à comprendre les données nécessaires pour en devenir un.

Voici les termes les plus importants du Trading Forex :


Le pip est une unité de mesure incrémentale, c'est-à-dire que le pip permet de mesurer les variations d'un actif financier en se basant sur sa plus petite unité de cotation.

Le pip permet d'avoir une unité de mesure standard pour tous les actifs afin de faciliter la communication entre les analystes et les traders du monde entier.

Pour en savoir davantage, lisez l'article "Qu'est-ce qu'un PIP ?"


Un lot correspond à une unité de valeur qui mesure le montant d'une transaction.

C'est souvent la taille d'un contrat financier. Autrement dit, selon le nombre de lots que vous tradez, le montant investi sera plus ou moins important.

Plus le nombre de lots est important, plus le montant investi est important et réciproquement.


Le spread est l'écart entre le prix d'achat et le prix de vente autrement dit la différence entre prix de l'offre et le prix de la demande (les prix BId et Ask).

Cet écart de prix, le spread Forex, est une partie de la rémunération du broker.


La marge est un montant retenu momentanément par le courtier lorsque le trader ouvre une position sur le marché.

Dans le trading sur marge, le trader emprunte de l'argent au courtier pour investir et en contrepartie, ce dernier retient une marge qui sert de collatéral et qui est ensuite rendue au trader lorsque la position est clôturée.

Pour découvrir en détail la notion de marge, lisez l'article évoquant le trading sur marge.

Envie de passer à l'action ? Télécharger la plateforme de trading en ligne la plus réputée dans le monde du trading : MetaTrader 5.

La première plateforme multi-actifs au monde.

Effet de levier.

L'effet de levier un outil financier qui permet au trader d'investir des sommes d'argent plus importantes que ce qu’il possède réellement sur son compte de trading.

Ainsi, le trading avec effet de levier permet de négocier des volumes beaucoup plus importants à l’achat et à la vente.

Pour en savoir plus, lisez notre article consacré à l'effet de levier.


Le swap forex, aussi appelé Rollover, est un intérêt payé par le client au broker en ligne pour les positions ouvertes d'un jour à l'autre. Le mot swap provient de l'anglais "swap" qui veut dire "échange".

Money Management.

Le money management est un terme anglais qui veut dire "gestion de l'argent".

C'est un terme employé dans le monde de la finance et surtout dans l'investissement en ligne pour désigner la gestion des risques liés à l'investissement. Le money management est votre capacité de gérer vos gains et votre investissement de façon à ne pas prendre des risques en dehors de votre stratégie de trading.


Les CFDs (Contracts for Difference) sont des contrats dérivés pour la différence qui peuvent avoir plusieurs sous-jacents (comme des actions, des indices ou matières premières).

Le gain ou la perte d'un CFD est donné par la différence entre le cours d'entré en position et le cours de fermeture de la position.

Un CFD est un moyen de spéculer sur la baisse des marchés financiers.

Tout investisseur qui souhaite se lancer dans le trading sur devises doit comprendre comment le forex fonctionne et les termes de bases de ce marché.

Tester le trading forex sur un compte de démonstration est une façon d'apprendre à trader les devises en ligne et de mieux comprendre le Forex.

Tradez avec un compte démo sans risque.

Entraînez-vous à trader avec des fonds virtuels.

Les ordres du Forex.

Apprendre à trader les devises en ligne demande aussi de connaître les différents types d'ordres du Forex.

Le trader Forex peut utiliser différents types d'ordres pour trader les devises :

Ordre au marché : permet d'acheter ou de vendre une paire de devises au prix de marché actuel. Ordre en attente Buy Limit : permet d'acheter automatiquement une paire de devises à un prix inférieur au prix actuel si le prix est atteint. Ordre en attente Buy Stop : permet d'acheter automatiquement une paire de devises à un prix supérieur au prix actuel si le prix est atteint. Ordre en attente Sell Limit : permet de vendre automatiquement une paire de devises à un prix supérieur au prix actuel si le prix est atteint. Ordre en attente Sell Stop : permet de vendre automatiquement une paire de devises à un prix inférieur au prix actuel si le prix est atteint.

Stop Loss et Take Profit.

Il existe aussi deux outils importants à intégrer à l’ordre pour le trader Forex :

Stop Loss (SL) : permet de clôturer automatiquement une position en perte à un niveau précis. Le trader peut à l'avance délimiter sa perte maximale avant d'entrer en position avec le stop-loss. Take Profit (TP) : permet de clôturer une position gagnante et prendre automatiquement les bénéfices à un prix spécifique s'il est atteint.

Nous vous conseillons très vivement de trader en utilisant à chaque trade un Stop Loss et un Take Profit.

Lorsque vous prenez un trade FX pendant votre session de Trading Forex, vous pouvez également choisir votre effet de levier.

Il est important que vous appreniez les avantages, mais aussi les inconvénients de l’effet de levier, surtout si vous débutez.

Effet de levier.

Pour comprendre comment le Forex fonctionne, il est important de bien comprendre le fonctionnement de l'effet de levier.

Cet outil vous permet d’investir une partie de votre capital et de vous faire prêter l’autre partie par votre broker. Attention, l’effet de levier est à double tranchant : augmenter vos profits comme vos pertes.

Exemple 1 : trader l'EURUSD avec un effet de levier maximum de 30.

Vous voulez trader avec 100 € de votre capital, vous allez en fait trader avec 3000 € sur les marchés financiers. Mais vos gains ou vos pertes seront également multipliés par 30.

Exemple 2 : trader l'EURGBP avec un effet de levier maximum de 20.

Vous souhaitez négocier avec 500 € de votre capital, vous négocierez en fait avec 10 000 € sur les marchés financiers. Vos gains ou vos pertes seront également multipliés par 20.

Soyez prudent et attentif .

Important✍ : beaucoup de débutants perdent leur capital à cause d’une utilisation non adaptée de l’effet de levier. Le trading n’est pas une partie de Poker et encore moins un jeu. Soyez raisonnable et attentif pour pouvoir trader sur du long terme.

Admirals vous offre l'accès à la plateforme en ligne MetaTrader. Grâce à ce logiciel de trading, vous pourrez trader les devises telles que l'euro dollar avec des cotations en temps réel.

Ouvrez un compte réel.

Tradez les marchés en direct et tradez efficacement.

Les facteurs qui influencent le FOREX.

Plusieurs facteurs contribuent aux variations de cotation des paires de devises.

Apprendre les facteurs influençant ces cotations permet au trader de progresser dans leurs stratégies de trading Forex.

Le marché Forex et les prix des devises sont influencés à la hausse comme à la baisse par plusieurs facteurs :

Les Taux d'intérêt. L'inflation. Les événements politiques. Les événements économiques (Ex : réunions des banques centrales). Catastrophes naturelles. Les taux de croissance économique. L'offre et la demande d'une paire de devises.

Par exemple, certains traders vont se consacrer uniquement aux publications de résultats économiques et monétaires comme le montant de la dette publique, le niveau de l’inflation, la modification d’un taux directeur d’une banque centrale majeure, le niveau de chômage, les créations d’emplois, etc.

C’est pourquoi, nous vous mettons à disposition le calendrier économique.

Nous vous conseillons de regarder tous les jours ce calendrier afin de connaître à l’avance, les horaires ou la volatilité est susceptible d’être plus élevée, ce qui vous permettra de trader dans de meilleures conditions.

Les participants du Forex.

Pour répondre à la question principale de cet article le Forex c'est quoi et comment ça marche, il est primordial de connaître les différents participants sur le marché FX Trading.

Les acteurs les plus importants du marché forex sont :

Les Banques Centrales. Les Etats. Les Banques. Les Hedge Funds. Les Fonds d'Investissements. Les Brokers. Les Investisseurs Professionnels et Particuliers.

Parmi les participants au marché des devises, les banques centrales ont le plus de poids le marché des devises.

Une banque centrale est en fait le fournisseur de monnaie pour le pays où elle agit et elle est de ce fait l'offre sur ce marché. Ces décisions ont un impact très important sur le prix des paires de devises.

Les petits investisseurs, comme les traders particuliers, influencent le marché très légèrement, mais cette influence est évidente grâce à leur nombre élevé.

Pour comprendre le forex, il faut savoir que l'offre et la demande des devises est en constante évolution et on peut voir le mouvement des prix.


Le Trading Forex permet de pouvoir trader rapidement pour un trader débutant. Certains traders expérimentés se spécialiseront même dans quelques paires de devises à trader.

D’autres pourront se diversifier avec le trading sur les indices et les actions.

Dans tous les cas, le trader investira beaucoup de temps à apprendre et à analyser les facteurs économiques, monétaires et politiques qui font varier les cotations des devises.

C'est pourquoi la prévoyance et l'anticipation sont très importante lorsque vous tradez le Forex.

L'importance est de comprendre comment le Forex fonctionne et de mettre en pratique vos acquis, dans un premier temps en tradant sur un compte de démonstration, puis lorsque vous serez prêt, sur un compte de trading réel.


Quelles devises acheter en ce moment ?

Tout dépend de l'actualité et de vos envies. Certains traders se spécialisent dans quelques paires de devises. Cherchez celles que vous appréciez.

Comment je peux faire pour gagner au Forex ?

La pratique, les formations en ligne et le travail permettent de vous faire progresser.

Où se trouve le Forex ?

Le Forex n'est pas un lieu fixe et n'a pas d'adresse comme les places financières.

Comment investir dans le Trading Forex ?

Vous devez ouvrir un compte chez un Broker Forex et passer des ordres sur le Forex.


Banque des réglements internationaux - site officiel Autorité des Marchés Financiers - site officiel.

Pour aller plus loin.

Le guide du débutant Forex : Apprendre à trader les devises en ligne Effet de levier Forex Comment trader l'euro dollar ?

À propos Admirals.

En tant que broker régulé, Admirals vous fournit un accès aux plateformes de trading parmi les plus utilisées dans le monde. Avec nous, vous pouvez trader les CFD, les actions et les ETF. Voici un récapitulatif Pourquoi Trader avec Admirals !

Florent Dubreuil.

Analyste Marchés, Admirals France.

Florent est analyste marchés. Passionné par l'environnement économique et financier, il est diplomé d'un master II en Finance et en Gestion de Patrimoine.

Rencontrez Florent Dubreuil le.

Commencez à Trader !

Ouvrez un Compte de Démonstration Sans Risque pour vous exercer au trading. Vous êtes prêt à passer en réel ? Ouvrez un Compte Réel et commencez.



Janvier 03, 2023.

14 Min de lecture.

Les taux d'intérêt remontent faisant réapparaître l'inflation, alors que les taux étaient extrêmement bas depuis plus de quinze ans grâce à une politique monétaire très souple.L'inflation est un sujet très actuel (inflation 2022, inflation 2023). En effet, vous voyez actuellement les prix augmenter.

Janvier 03, 2023.

16 Min de lecture.

Devenir trader est pour certaines personnes un rêve, pour d'autres un simple métier. Dans cet article, nous allons traiter du métier trader, comment devenir trader, quel parcours est à privilégier pour devenir trader, quelles études faire pour être trader, mais aussi les étapes pour y parvenir lorsq.

Janvier 03, 2023.

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Choisir un bon courtier en ligne est l'une des conditions pour commencer à investir en bourse. Le courtier bourse est un partenaire indispensable à tout investisseur qui souhaite avoir une bonne évolution sur les marchés financiers.Identifier le meilleur courtier bourse en ligne peut sembler une tâc.

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Forex pdf 1

Download Our 2022 Forex Trading PDF!

Our Forex trading PDF, it is widely believed that forex is one of the biggest and most fluid (or liquid) asset markets in the world. Sometimes referred to as FX, currencies are traded 24 hours per day – 7 days per week.

The term ‘forex’ is a blend of ‘foreign exchange’ and ‘currency’. In simple terms, refers to the process of exchanging one currency to another – and generally speaking, this will be for tourism, commerce, trading and many other reasons.

In this forex trading PDF we are going to talk about what forex trading is and some of the commonly used terminology in the industry. We will also explore the many different forex charts available, and we’ve thrown in some tips along the way to help you to become a better forex trader from the offset!

Table of Content.

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What is Forex Trading?

With an average of around 5 trillion dollars traded daily in the forex arena, it’s clear that this particular financial instrument is very popular with traders and investors the world over.

Essentially, it is the action of selling or buying foreign currencies. Of course, these are all used by banks, corporations and investors for a variety of reasons like profit, making a trade, exchanging foreign currencies and tourism.

One of the major benefits with forex trading is that after opening a position, traders are able to put in place an automatic stop loss as well as at profit levels (this closes the trade).

The forex market is a place to buy or sell against each other a variety of national currencies, globally. The currency will be changed from one currency to another, and currency pairs from all over the world are continuously trading 24/7.

Wherever two foreign currencies are being traded, you can be sure that a forex market exists regardless of the time zone.

Commonly used Trading Terminology.

In this section of our forex trading PDF, we are going to run through some of the most commonly used forex trading terminologies in the industry.


Pip stands for ‘point in percentage’, and depicts any small changes noted in currency pairs within the forex market. The pip represents the smallest amount possible a currency quote can alter. For instance, 0.0001 of a price quote – when it comes to the price of a currency pair. This is referred to as the ‘base unit’ of the pair.

If the bid price for GBP/USD pair changes from 1.2590 to 1.2591, this illustrates the difference of one pip.


The differentiation between the sale price and the purchase price of a currency pair is known as the spread. The least popular (least commonly used) currency pairs usually have a low spread. In some cases, this can be even less than a pip.

When trading the most commonly used currency pairs the spread is often at its lowest. The total value of the currency pair needs to surpass the spread in order for the forex trade to become profitable.


We couldn’t create a forex trading PDF without mentioning leverage. In order for forex brokers to increase the number of trades available to its customers, they need to provide capital in the way of leverage.

Before you can trade using leverage, you must sign up to a forex broker and open a margin account. Contingent on the broker and the size of the position, leverage is usually capped at 1:30 if you are a retail client (non-professional trader). Some offshore forex brokers will offer much more than this if you are seeking higher limits.

Here are a few examples for a better idea of leverage:

Let’s say that you are trading EUR/GBP which is priced at 1.1700. Then, you think the price will increase you you enter a buy position. Plus, you only have £500 in your forex trading account. You want to trade with more, so you apply the leverage of 20x. The value of EUR/GBP increase by 2%. On a standard stake of £500, you would have made a £10 profit. But, as you applied leverage of 20x, this increased to £200.

However, if the value of the pair went down by 2%, you would lose £200.

It is because of the aforementioned example that you should exercise caution when using leverage. Should the worst possible scenario happen and your account falls below 0, you should contact your forex broker and ask for its policy on negative balance protection.

The good news is that all forex brokers which are regulated by ESMA (the European Securities and Markets Authority) will be able to provide you with this extra level of protection, ensuring that you never become in debt with your broker. It’s like a stopper which prevents you from dropping below 0.


Margins are a good way for traders to build up their exposure. Put simply, in order for a trader to maintain position and place a trade, the trader needs to put forward a specific amount of money first – this is the margin. Rather than being a transaction cost, the margin can be compared to a security deposit. This will be held by the broker during an open forex trade.

It is commonplace for forex brokers to give their customers access to leverage (see above). This is because generally speaking, the retail forex trader doesn’t have enough of a margin so that they can trade in high volumes (well, high enough to make a decent enough profit).


In order for you to lower your risk of exposure and offset your balance, you might consider hedging. This is a procedure which involves traders selling and buying financial instruments. When there are movements in currencies, a hedging strategy can reduce the risk of disadvantageous price shifts. The protection of this technique is often a short term solution.

Traders often turn to hedge in a panic as a result of the financial media reporting volatility in currency markets. This is usually down to huge events like geopolitical turmoil (conflict in the middle east), global health crisis (COVID-19) and of course the great financial crisis of 2008.

To counteract negative price movements, market players will tactically take advantage of attainable financial instruments in the market. This is hedging against risk in its truest form. Hedging will give you some flexibility when it comes to enhancing your forex trading experience, but there are still no guarantees that you will be totally protected from any losses or risks.

A hedging strategy example would be:

As a concerned investor, you open a contrasting position on trade. To further explain, let us say you have a long position on GBP/USD. You might decide to open a short position on GBP/GEURBP as well. This is also commonly referred to as a direct hedge.

While it can take some time to get your head around heading in the forex markets, the overarching concept is that it presents both outcomes. That is to say, irrespective of which way the markets move, you will remain at the break-even point (less some trading commissions).

Spot Forex.

The exchange rate of two currencies is often referred to as a ‘spot’ exchange rate. More specifically, the spot trade is a spot transaction, with reference to the sale or the purchase of a currency. Essentially, spot forex is to both sell and buy foreign currencies.

A good example of this is if you were to purchase a certain amount of South African rands (ZAR), and exchange that for US dollars (USD).

If the value of the ZAR increases, you are able to exchange your USD back to ZAR, meaning you get more money back in comparison to the amount you originally paid.

Contract for Difference (CFD)

CFD is basically a contract which portrays the price movement of financial instruments. So, without having to own the asset, you can still make the most of price movements, whilst also avoiding the need to sell or buy vast amounts of currency.

CFDs are also accessible in bonds, commodities, cryptocurrencies, stocks, indices and of course – forex. With a CFD you are able to trade in price movements, cutting out the need to buy them at all.

Different Forex Charts.

This section of our forex trading PDF is all about forex charts. When it comes to a MetaTrader platform, traders can use bar charts, line charts and candlestick charts. You can usually toggle between the different charts, depending on your preferences, fairly easily.

Below we’ve put together an explanation of each type of chart for you.

Candlestick Chart.

The first record of the now-famous candlestick chart was used in Japan during the 1700s and proved invaluable for rice traders. These days, this price chart is without a doubt one the most popular amongst traders all over the world.

Much like the OHLC bar chart (see below), candlestick charts provide low, high, open and close values for a predetermined time frame. Live forex traders love this chart due to its visual appearance and the range of price action patterns utilised.

It’s always advisable, unless you are a seasoned trader, to make use of free demo trading modes. This allows you to gain a better understanding of how live trading works before you take any big financial risks in the market.

OHLC Bar Chart.

Standing for ‘Open, High, Low, Close’, the OHLC chart is great for portraying any movement in the price of an asset, done over a specific time (for example – one hour, or a trading day).

As the title suggests, this one is a bar chart, and each time frame a trader is looking at will be displayed as a bar. In other words, if you are viewing a daily chart you will see that every bar equates to a full trading day.

Unlike the line chart (see below), the OHLC bar chart is unique in the sense that it displays a wider variety of values and information like ‘open’, ‘high’, ‘low’ and ‘close’, hence the name.

The highest market price traded within the selected timeframe will be represented by the high of the bar. The lowest market price traded within the selected time frame is represented by the low of the bar. The dash on the right will represent the closing price, and the dash on the left will be the opening price. The red bars are also called seller bars; this is due to the fact the closing price is less than the opening price. The green bars are also referred to as buyer bars; opposite to above. This is because the opening price is lower than the closing price.

With this price chart, traders are able to establish who is controlling the market, whether it be sellers or buyers.

OHLC analysis was the starting block for the creation of the ever-popular candlestick charts (please further down).

Line Chart.

This chart is considered to be the most elementary type of price chart, but that doesn’t mean it’s not useful. It is a great tool for looking at the bigger picture when it comes to trends.

It does depend on what time frame you are viewing (this can be anything from minutes to months), but for argument’s sake let’s say you are using a daily chart. The line chart arranges the close prices at the end of that time frame; so in this case, at the end of the day, the line will connect the closing price of that day.

Forex – How to Trade.

In this section of our forex trading PDF, we are going to talk about the different ways in which you can sell and buy a forex position as well as things to look out for.

Pricing and Quotes.

When it comes to forex trading you will see both ‘bid’ and ‘ask’ prices:

Bid price : This is the price you can sell currency at. Ask price : This is the price you are able to buy currency at.

When it comes to forex trading you can trade both short and long, but always make sure you have a good understanding of forex trading before embarking on trades. After all, forex trading can be a bit complex to begin with, especially when mixing long and short trades.

Long Trade (Buy)

In a nutshell, going long is usually a term used for buying. So, when traders expect the price of an asset to rise, they will go long.

As an example of a long position:

Say you’ve held a long position in the primary instrument purchased. For example, USD/JPY. This means that you are anticipating that the USD is going to increase in value against the JPY. If you invest £1,000 into USD/JPY through a long position, then you simply £1,000 staked that the pair will increase in value.

Short Trade (Sell)

When forex traders expect the price of an asset to fall, they will go short. This means benefiting from buying at a lesser value. To achieve this, you simply need to place a sell order.

Current Prices and Demand.

The current exchange rate of a forex pair is always based on market forces. This will change on a second-by-second basis. As we noted earlier, you also need to take the spread into account, so there will always be a slight variation in pricing.

For instance, if you exchange 1 USD for 17 ZAR, the sale and purchase price offered by your forex broker will be either side of that figure. The currency pairs with the most notable supply and demand attached to them will be considered the most liquid in the forex market. The supply and demand aspect is thanks to the investment of importers, exporters, banks and traders – to name a few. This is how the forex arena is home to over $5 trillion worth of buy and sell positions each and every day!

The most liquid currency pairs are therefore the ones in high demand. As an example, GBP/USD offers a lot of short-term trading opportunities due to the sheer amount of pips moved each and every day (90-120 on average). On the contrary, AUD/NZD doesn’t tend to move many pips in a day. Having said that, if you have a good understanding of some of the more exotic currencies- we at Learn 2 Trade are not saying it’s impossible to do well.

Forex Trading System to Consider.

When you feel you are ready to take the plunge and begin live trading, you need to select a forex trading system. There is a vast amount of trading strategies for you to pick from. This is because investors, speculators, corporations and banks have been trading for decades.

In this part of the forex trading PDF, we are going to explain a few of the strategies available to you.

Intraday Trade : Concentrating on 1-hour or 4-hour price trends, forex intraday trading is considered more of a conservative way of trading. Focusing on the leading sessions for each individual market, these trades remain open for anywhere between 1 and 4 hours. As such, this could make it a suitable option for beginners . Currency Scalping: This particular strategy is often viewed as a low-risk form of trading. It is focused on selling and buying currency pairs within an extremely short time frame. This is usually anywhere between a matter of seconds, and 2 to 3 hours at the most. This strategy makes it very practical to potentially gain a number of smaller profits, with the hope of creating a stockpile of profits. Swing Trading: Often referred to as a medium-term approach, unlike scalping and intraday, swing trading concentrates on bigger price movements. With this strategy, traders are able to leave their trade open for days or even weeks. Some traders like to use this option in order to embellish existing daily trades.

Trading Platforms – Explained.

If you want to buy and sell currency pairs from the comfort of your home (or even via your mobile device), you will need to use a trading platform. Otherwise referred to as a forex broker, there are literally hundreds of trading platforms active in the online space. This makes it extremely difficult to know which broker to sign up with.

In the below sections of our forex trading PDF, we explain some of the considerations that you need to make.

Analysis Tools and Features.

You should also look out for analysis tools available to you. In some cases, this might be embedded, while some offer tools such as technical analysis and fundamental analysis. There’s no doubt that having access to a range of technical indicators, live price charts, and current news and data from the financial market is an essential part of forex trading.

However, if you can access these technical indicators within your trading platform, it’s going to prove to be very useful. This is because it will save you a lot of leg work having to move between different sites and sources of information.

Some of the fastest and easiest trading platforms are MetaTrader 5 (MT5) and MetaTrader 4 (MT4). Whilst MT4 was created especially for forex traders, MT5 gives traders access to CFDs (For CFDs, please see explanation under ‘Commonly used Trading Terminology’ in this forex trading PDF).

Crucially, both MT4 and MT5 are fast and receptive trading platforms, both providing live market data and access to sophisticated charts.

Confidence in Your Forex Broker.

It is essential before you begin trading seriously that you fully trust the trading platform you intend on using. This is especially the case if you intend on using a scalping strategy, for example.

However, if you like to trade, it is vital for your peace of mind and your finances that you are fully confident with the fast execution of data transfer. This is also the case with the precision of quoted prices, and the speed of order processing. All of these things are going to help you to have a successful forex trading experience.

To enable you to make the most of new opportunities, the ideal forex broker will be available to you 24 hours a day and 7 days a week, in line with the forex market opening hours.

Independent Account Manager.

To save you from having to request that your broker takes action for you, your forex broker should enable you to manage your account and your trades separately.

By doing this, you will be in a much better position to quickly react to any shifts in the market, and hopefully, make the most of potential opportunities. This will enable you to gain better control over any open positions as and when they arise.

Safety and Security.

It is important to ensure that your forex broker of choice is a reputable company, who will ensure that your personal information and trading funds are fully protected and backed up.

Segregation is frequently used amongst forex brokers as a way to separate your funds from the funds of the company (i.e. their daily costs, debts and running costs). So, no matter what happens to the forex broker, your money is safe and segregated.

If you find that a forex broker is unable to do this, we would suggest you find a better broker as it is standard practice these days. All of the brokers listed towards the end of this forex trading PDF are regulated by at least one reputable licensing body.

Forex Trading – Getting Started.

In terms of getting set up as an online forex trader, the steps remain constant regardless of which broker you decide to join. Below we list some of the steps that you will need to take.

Step 1: Open an Account.

In order to open an account, you will need to enter some personal information. Standard details requested by the broker will be things like your name, residential address, and contact details.

Some brokers will also require your tax status and will ask you to provide more financial details such as employment status, net worth and any regular income.

Step 2: Trading Experience.

Forex brokers will often want to ensure you have some level of trading experience (however this isn’t always the case). In this instance, you will usually need to answer some multiple-choice questions based on your experience. This is usually a fairly simple process.

Step 3: Verifying your Identity.

Known as KYC in the industry (Know Your Customer), this simply means that the forex broker is going to need you to prove who you are. Some brokers will verify this using scanned copies of documentation. This is typically a government-issued ID (passport or driver’s license) and a proof of address (utility bill or bank account statement).

Step 4: Depositing Funds.

Now you need to select your payment method of choice (usually from a drop-down list). Bear in mind that how long this takes to go into your trading account will largely depend on the payment method – so always check this before parting with your cash.

Supported payment methods typically include a debit/credit card or bank account. Some brokers even support e-wallets like PayPal and Skrill.

Step 5: Begin Trading.

After reading our forex trading PDF you should now be feeling confident enough to begin trading. However, we do recommend that you always try out a free forex trading demo first. This will allow you to test out your newly formed trading strategies before risking your own capital.

Forex Trading Strategies.

In the next section of our forex trading PDF, we explore some of the more important technical indicators and market insights used by seasoned traders.

Donchian Channels.

First invented by Richard Donchian, the donchian channels can be adapted as you like, in terms of parameters. Should you choose to view a 30-day breakdown, for example, the indicator will be created by taking the lowest low, and the highest high of that period (so in this example 30 periods).

When observing the moving average on a donchian channel you can look at averages stretching from 25 days to the last 300 days. The direction which is permitted is determined by the direction of the short-term moving average.

With this in mind, you should think about opening one of the following two positions:

Long – If t he last 300-day moving average is lower than the 25-day moving average. Short – If t he last 300-day moving average is greater than the 25-day moving average.

You will need to sell your pair in order to exit your trade if you open a long position (and visa-versa).

Simple Moving Average.

This is another commonly used forex indicator. The simple moving average (aka SMA) operates at a slower rate than the present market price (known as a lagging indicator). Furthermore, it uses a lot of historical price data. In fact, more so than most other strategies.

A good indication that the latest price is higher than the older price is when the long-term moving average is below the short-term moving average. This could be considered a buy signal due to an upward trend in the market.

In the opposite scenario when the long-term moving average is higher than the short-term moving average, this of course points towards a sell signal due to a downward trend. Moving averages are usually used as evidence of an overall trend, rather than purely forex trading signals.

This means you can blend both strategies in order to ditch breakout signals which don’t match up to the general trend the moving averages suggests. Of course, this is a great way to make your breakout signals much more productive. If you are alerted to a sell signal, this indicates that the short-term moving average is below that of the long-term moving average, so you might want to place a sell order.

However, if you are given a signal to buy, this usually means that the short-term moving average is higher than that of the long-term moving average.


Using breaks as trading signals, the breakout is considered a long-term strategy. Commonly referred to as ‘consolidation’, markets sometimes alternate between resistance and support bands. The breakout itself occurs when the market goes further than these consolidation limits – whether that be lower or higher. As such, a breakout must take place whenever a new trend occurs.

By looking at breaks, you will have a good indication of whether or not a new trend has begun. With that said, this doesn’t mean that a breakout is 100% accurate in signalling a new trend. In this case, you might want to use a stop-loss order to give you a better chance of avoiding a substantial loss.

Forex Trading: Possible Risks.

As glamorous as a career in forex trading might sound, there are a number of risks that you need to take into account. In the below sections of our forex trading PDF, we explore these possible risks in more detail.


The transaction risk is in relation to the exchange rate and any time zone differences. This means there is a chance that at some point between the beginning and end of a contract that the exchange rates could be subject to change. The risk of this happening elevates with the more time that passes between entering a contract and settling the same contract.

Interest Rates.

The risk here is that if a country’s interest rate falls, the currency of that country will probably be weaker. This generally leads to investors withdrawing investments, and as a result, your return will be lower.

The good news is that when a currency rate is on the rise, chances are that the respective currency will be stronger. When this does happen, your returns could be higher. This is because seasoned investors like to gain exposure to stronger currencies.

Leverage Risk.

The higher your leverage is, the higher your losses or benefits will be. Of course, this means leverage can affect your trading in a positive or negative way – depending on which way it goes.

Best Forex Trading Brokers of 2022.

The final part of our forex trading PDF is to explore which brokers are popular with both newbie and seasoned traders. Each of the forex trading platforms listed below has been pre-vetted, meaning that you can be confident they tick most boxed.

This means that each platform is regulated, offers heaps of forex pairs, has low commissions and fees, and supports several payment methods.

1. AVATrade – 2 x $200 Welcome Bonuses.

AvaTrade is an established broker that offers thousands of financial instruments. On top of stocks, indices, commodities, and cryptocurrencies (all via CFDs), you can also trade heaps of forex pairs. There are no trading commissions to pay, and spreads are very competitive.

You can either trade via the AvaTrade web-platform, or via popular third-party provider MT4. Minimum deposits stat at $100, which you can facilitate with a debit/credit card or bank account. The platform is heavily regulated, with several licenses under its belt.

20% welcome bonus of up to $10,000 Minimum deposit $100 Verify your account before the bonus is credited.

75% of retail investors lose money when trading CFDs with this provider.

2. VantageFX – Ultra-Low Spreads.

VantageFX VFSC under Section 4 of the Financial Dealers Licensing Act that offers heaps of financial instruments. All in the form of CFDs - this covers shares, indices, and commodities.

Open and trade on a Vantage RAW ECN account to get some of the lowest spreads in the business. Trade on institutional-grade liquidity that is obtained directly from some of the top institutions in the world without any markup being added at our end. No longer the exclusive province of hedge funds, everyone now has access to this liquidity and tight spreads for as little as $0.

Some of the lowest spreads in the market may be found if you decide to open and trade on a Vantage RAW ECN account. Trade using institutional-grade liquidity that is sourced directly from some of the top institutions in the world with zero markup added. This level of liquidity and availability of thin spreads down to zero are no longer the exclusive purview of hedge funds.

The Lowest Trading Costs Minimum deposit $50 Leverage up to 500:1.

75.26% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

To Conclude.

Having made it this far through our forex trading PDF, you should by now have an understanding of how technical analysis works, and have a good grasp of the macroeconomic fundamentals which guide currency values. Armed with all of the useful information included in this guide, you should be ready to get out there and start trading forex. Hopefully, making a profit and learning more along the way.

If you are a trader with somewhat limited funds, you might find that swing trading suits you best. If you have a larger trading fund available to you, you might have a more profitable experience with fundamental based trading. Either way, w e do recommend trying out a free demo account where possible before trading with your hard-earned money. As well as reading helpful guides like ours, actually learning by doing will also provide you with a better sense of how it all works and how you might like to trade yourself.

Learn 2 Trade Free Signals Service.

Get 3 Free Signals per Week No Payment or Card Details Needed Test the Effectiveness of our High-Level Signals Major, Minor, and Exotic Pairs Covered.


What does forex mean?

Forex as a term refers to 'foreign exchange'. More specifically, it refers to the process of buying and selling currency pairs like GBP/USD and USD/ZAR.

How do you make money in forex?

You will make money in two different scenarios. You either buy a currency pair for less than you sell it for (long order), and you sell a currency pair for less than you bought it for (short order).

What is the spread in forex?

The spread is the difference between the bid and ask price of a forex pair. This gap in pricing must be included in your profit and loss forecasts, and it is how the broker ensures that the platform always makes money.

What is a good spread in forex trading?

This depends on the type of forex pair you are trading. If you are trading highly liquid majors like EUR/USD, you should not be paying more than 1 pip.

What is the pip in forex?

The pip refers to the movement of one decimal place in a pair. For example, if GBP/USD is priced at 1.2450, and it moves to 1.2451, then this is a movement of 1 pip.

What leverage limits are in place when trading forex?

This depends on several factors, such as your location, the currency pair, and the broker itself. In most cases, traders from the UK and Europe are capped to leverage of 1:30 on major pairs and 1:20 on minor and exotic pairs.

What is slippage in forex?

Slippage means that your forex order is executed at a slightly different price to what you had asked for.

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Forex pdf

Forecasting directional movement of Forex data using LSTM with technical and macroeconomic indicators.

Forex (foreign exchange) is a special financial market that entails both high risks and high profit opportunities for traders. It is also a very simple market since traders can profit by just predicting the direction of the exchange rate between two currencies. However, incorrect predictions in Forex may cause much higher losses than in other typical financial markets. The direction prediction requirement makes the problem quite different from other typical time-series forecasting problems. In this work, we used a popular deep learning tool called “long short-term memory” (LSTM), which has been shown to be very effective in many time-series forecasting problems, to make direction predictions in Forex. We utilized two different data sets—namely, macroeconomic data and technical indicator data—since in the financial world, fundamental and technical analysis are two main techniques, and they use those two data sets, respectively. Our proposed hybrid model, which combines two separate LSTMs corresponding to these two data sets, was found to be quite successful in experiments using real data.


The foreign exchange market, known as Forex or FX, is a financial market where currencies are bought and sold simultaneously. Forex is the world’s largest financial market, with a volume of more than $5 trillion. It is a decentralized market that operates 24 h a day, except for weekends, which makes it quite different from other financial markets.

The characteristics of Forex show differences compared to other markets. These differences can bring advantages to Forex traders for more profitable trading opportunities. Some of these advantages include no commissions, no middlemen, no fixed lot size, low transaction costs, high liquidity, almost instantaneous transactions, low margins/high leverage, 24-h operations, no insider trading, limited regulation, and online trading opportunities. Two types of techniques are used to predict future values for typical financial time series—fundamental analysis and technical analysis—and both can be used for Forex. The former uses macroeconomic factors while the latter uses historical data to forecast the future price or the direction of the price.

The main decision in Forex involves forecasting the directional movement between two currencies. Traders can profit from transactions with correct directional prediction and lose with incorrect prediction. Therefore, identifying directional movement is the problem addressed in this study.

We chose the Euro/US dollar (EUR/USD) pair for the analysis since it is the largest traded Forex currency pair in the world, accounting for more than 80% of the total Forex volume.

In recent years, deep learning tools, such as long short-term memory (LSTM), have become popular and have been found to be effective for many time-series forecasting problems. In general, such problems focus on determining the future values of time-series data with high accuracy. However, in direction prediction problems, accuracy cannot be defined as simply the difference between actual and predicted values. Therefore, a novel rule-based decision layer needs to be added after obtaining predictions from LSTMs.

In this work, we propose a hybrid model composed of a macroeconomic LSTM model and a technical LSTM model, named after the types of data they use. We first separately investigated the effects of these data on directional movement. After that, we combined the results to significantly improve prediction accuracy. The macroeconomic LSTM model utilizes several financial factors, including interest rates, Federal Reserve (FED) funds rate, inflation rates, Standard and Poor’s (S&P) 500, and Deutscher Aktien IndeX (DAX) market indexes. Each factor has important effects on the trend of the EUR/USD currency pair. This can be interpreted as a fundamental analysis of price data. The other model is the technical LSTM model, which takes advantage of technical analysis. Technical analysis is based on technical indicators that are mathematical functions used to predict future price action. The feature set in our model uses popular technical indicators such as moving average (MA), moving average convergence divergence (MACD), rate of change (ROC), momentum, relative strength index (RSI), Bollinger bands (BB), and the commodity channel index (CCI).

The contributions of this study are as follows:

A popular deep learning tool called LSTM, which is frequently used to forecast values in time-series data, is adopted to predict direction in Forex data. Both macroeconomic and technical indicators are used as features to make predictions. A novel hybrid model is proposed that combines two different models with smart decision rules to increase decision accuracy by eliminating transactions with weaker confidence. The proposed model and baseline models are tested using recent real data to demonstrate that the proposed hybrid model outperforms the others.

The rest of this paper is organized as follows. In “Related work” section, related studies of the financial time-series prediction problem are thoroughly examined. “Forex preliminaries”–“Technical indicators” sections provide background information about Forex, LSTM, and the technical indicators. Then, “The data set” section presents the data set used in the experiments. “LSTM-based hybrid model using macroeconomic and technical indicators” section introduces the proposed algorithm to handle the directional movement prediction problem. Moreover, the preprocessing and postprocessing phases are also explained in detail. “Experiments” section presents the results of the experiments and the classification performances of the proposed model. “Discussion” and “Conclusion” sections discuss the experimental results and provide insight for future research directions.

Related work.

Various forecasting methods have been considered in the finance domain, including machine learning approaches (e.g., support vector machines and neural networks) and new methods such as deep learning. Unfortunately, there are not many survey papers on these methods. Cavalcante et al. (2022), Bahrammirzaee (2010), and Saad and Wunsch (1998) have provided overviews of the field. The most recent of these, by Cavalcante et al. (2022), categorized the approaches used in different financial markets. Although that study mainly introduced methods proposed for the stock market, it also discussed applications for foreign exchange markets.

There has been a great deal of work on predicting future values in stock markets using various machine learning methods. We discuss some of them below.

Selvamuthu et al. (2022) used neural networks based on Levenberg–Marquardt, scaled conjugate gradient, and Bayesian regularization for stock market prediction based on tick data and 15-min-interval data for an Indian company.

Patel et al. (2022b) developed a two-stage fusion structure to predict the future values of the stock market index for 1–10, 15, and 30 days using 10 technical indicators. In the first stage, support vector machine regression (SVR) was applied to these inputs, and the results were fed into an artificial neural network (ANN). SVR and random forest (RF) models were used in the second stage. They compared the fusion model with standalone ANN, SVR, and RF models. They reported that the fusion model significantly improved upon the standalone models.

Guresen et al. (2011) explored several ANN models for predicting stock market indexes. These models include multilayer perceptron (MLP), dynamic artificial neural network (DAN2), and hybrid neural networks with generalized autoregressive conditional heteroscedasticity (GARCH). Applying mean-square error (MSE) and mean absolute deviation (MAD), their results showed that MLP performed slightly better than DAN2 and GARCH-MLP while GARCH-DAN2 had the worst results.

Weng et al. (2022) developed a financial expert system using ensemble methods (i.e., neural network regressing ensemble (NNRE), support vector regression ensemble (SVRE), boosted regression tree (BRT), and random forest regression (RFR)) to predict stock prices 1 day ahead. Market prices, technical indicators, financial news, Google Trends, and the number unique visitors to Wikipedia pages were used as inputs. They also investigated the effect of PCA on performance. They reported that ensembles with PCA performed better than those without PCA. They also noted that BRT and RFR were the best while SVRE was the worst in terms of mean absolute percentage error.

Huang et al. (2005) examined forecasting weekly stock market movement direction using SVM. They compared SVM with linear discriminant analysis, quadratic discriminant analysis, and Elman back-propagation neural networks. They also proposed a model that combined SVM with other classifiers. They used not only the NIKKEI 225 index but also macroeconomic variables as features for the model. Their direction calculation was based on the first-order difference natural logarithmic transformation, and the directions were either increasing or decreasing. SVM outperformed the other models with an accuracy of 73% while the combined model was the best, with an accuracy of 75%.

Kara et al. (2011) compared the performance of ANN and SVM for predicting the direction of stock price index movement. Ten technical indicators were used as inputs for the model. They found that ANN, with an accuracy of 75.74%, performed significantly better than SVM, which had an accuracy of 71.52%.

Patel et al. (2022a) compared the performance of four classifiers (ANN, SVM, random forest, and naive Bayes) for stock price index direction using two approaches. In the first approach, they used 10 technical indicator values as inputs with different parameter settings for classifiers. Prediction accuracy fell within the range of 0.7331–0.8359. In the other approach, they represented same 10 technical indicator results as directions (up and down), which were used as inputs for the classifiers. Using this approach, they enhanced accuracy by about 15% for all of the classifiers. Although their experiments concerned short-term prediction, the direction period was not explicitly explained.

Ballings et al. (2022) evaluated ensemble methods (random forest, AdaBoost, and kernel factory) against neural networks, logistic regression, SVM, and k-nearest neighbor for predicting 1 year ahead. They used different stock market domains in their experiments. According to the median area under curve (AUC) scores, random forest showed the best performance, followed by SVM, random forest, and kernel factory.

Hu et al. (2022) introduced an improved sine–cosine algorithm (ISCA) for optimizing the weights and biases of BPNN to predict the directions of open stock prices of the S&P 500 and Dow Jones Industrial Average indices. Using Google Trends data in addition to the opening, high, low, and closing price, as well as trading volume, in their experiments, they obtained an 86.81% hit ratio for the S&P 500 index and an 88.98% hit ratio for the Dow Jones Industrial Average Index.

Gui et al. (2022) investigated SVM for predicting stock price index direction with different parameter settings. That study also compared the result for SVM with BPNN and case-based reasoning models; multiple technical indicators were used as inputs for the models. That study found that SVM outperformed the other models with an accuracy of 57.8313% while the other models had accuracies of 54.7332% and 51.9793%, respectively.

Qiu and Song (2022) developed a genetic algorithm (GA)—based optimized ANN to predict the direction of the next day’s price in the stock market index. GA was used to optimize the initial weights and bias of the model. Two types of input sets were generated using several technical indicators of the daily price of the Nikkei 225 index and fed into the model. They obtained accuracies 60.87% for the first set and 81.27% for the second set.

Zhong and Enke (2022) investigated three-dimensional reduction techniques applied to ANN for forecasting the daily direction of the S&P 500 Index ETF (SPY). Principal component analysis (PCA), fuzzy robust principal component analysis (FRPCA), and kernel-based principal component analysis (KPCA) were used to reduce the number of features. Their experiments indicated that ANN with PCA performed slightly better than the other two techniques.

Zhong and Enke (2022) used deep neural networks and ANNs to forecast the daily return direction of the stock market. They performed experiments on both untransformed and PCA-transformed data sets to validate the model.

In addition to classical machine learning methods, researchers have recently started to use deep learning methods to predict future stock market values. LSTM has emerged as a deep learning tool for application to time-series data, such as financial data.

Zhang et al. (2022) proposed a state-frequency memory recurrent network, which is a modification of LSTM, to forecast stock prices. By decomposing the hidden states of memory cells into multiple frequency components, they could learn the trading patterns of those frequencies. They used state-frequency components to predict future price values through nonlinear regression. They used stock prices from several sectors and performed experiments to make forecasts for 1, 3, and 5 days. They compared the results with LSTM and autoregressive integrated moving average (ARIMA) in terms of mean-square error. They obtained errors of 5.57, 17.00, and 28.90 for the different steps, which outperformed the other models.

Fulfillment et al. (2022) studied stock market forecasting in six different domains using LSTM. He aimed to predict the next 3 h using hourly historical stock data. The model was trained to classify three classes—namely, increasing 0–1%, increasing above 1%, and not increasing (less than 0%). The accuracy results ranged from 49.75 to 59.5%. That study also built a stock trading simulator to test the model on real-world stock trading activity. With that simulator, he managed to make profit in all six stock domains with an average of 6.89%.

Nelson et al. (2022) examined LSTM for predicting 15-min trends in stock prices using technical indicators. They used 175 technical indicators (i.e., external technical analysis library) and the open, close, minimum, maximum, and volume as inputs for the model. They compared their model with a baseline consisting of multilayer perceptron, random forest, and pseudo-random models. The accuracy of LSTM for different stocks ranged from 53 to 55.9%. They concluded that LSTM performed significantly better than the baseline models, according to the Kruskal–Wallis test.

More recently, Fischer and Krauss (2022) applied LSTM to the stock market. They investigated many different aspects of the stock market and found that LSTM was very successful for predicting future prices for that type of time-series data. They also compared LSTM with more traditional machine learning tools to show its superior performance.

Similarly, Di Persio and Honchar (2022) applied LSTM and two other traditional neural network based machine learning tools to future price prediction. They also analyzed ensemble-based solutions by combining results obtained using different tools.

In addition to traditional exchanges, many studies have also investigated Forex. Some studies of Forex based on traditional machine learning tools are discussed below.

Galeshchuk and Mukherjee (2022) investigated the performance of a convolutional neural network (CNN) for predicting the direction of change in Forex. Using the daily closing rates of EUR/USD, GBP/USD, and USD/JPY, they compared the results of CNN with their baseline models and SVM. While the baseline models and SVM had an accuracy of around 65%, their proposed CNN model had an accuracy of about 75%.

Meanwhile, Kayal (2010) investigated the use of MLP in Forex. That work used basic technical indicators as inputs.

Ghazali et al. (2009) also investigated the use of neural networks for Forex. They proposed a higher-order neural network called a dynamic ridge polynomial neural network (DRPNN). In their experiments, DRPNN performed better than a ridge polynomial neural network (RPNN) and a pi-sigma neural network (PSNN).

To predict exchange rates, Majhi et al. (2009) proposed using new ANNs, referred to as a functional link artificial neural network (FLANN) and a cascaded functional link artificial neural network (CFLANN). They demonstrated that those new networks were more robust and had lower computational costs compared to an MLP trained with back-propagation.

In what is commonly called a mark-to-market approach, market prices are increasingly being used to calibrate models to quantify risk in several sectors. The net present value of a financial institution, for example, is an important input for estimating both bankruptcy risk (e.g., Kou et al. 2022) and the likelihood that shocks will propagate throughout the financial system (Kou et al. 2022). In such a context, stock price crashes not only dramatically damage the capital market but also have medium-term adverse effects on the financial sector as a whole (Wen et al. 2022). Credit risk is a major factor in financial shocks. Therefore, a realistic appraisal of solvency needs to be an objective for banks. At the level of the individual borrower, credit scoring is a field in which machine learning methods have been used for a long time (e.g., Shen et al. 2022; Wang et al. 2022).

Deep learning methods such as LSTM are rarely used for Forex. In one recent work, Shen et al. (2022) proposed a modified deep belief network. They were able to show that deep learning approaches outperformed traditional methods.

Even though LSTM is starting to be used in financial markets, using it in Forex for direction forecasting between two currencies, as proposed in the present work, is a novel approach.

Forex preliminaries.

Forex has characteristics that are quite different from those of other financial markets (Archer 2010; Ozorhan et al. 2022). To explain Forex, we start by describing how a trade is made. Profit/loss calculations are made using the difference between the final ratio and the initial ratio of the currency pair that has been traded. If the ratio of the currency pair increases and the trader goes long, or the currency pair ratio decreases and the trader goes short, the trader will profit from that transaction when it is closed. Otherwise, the trader not profit. For example, let us assume the EUR/USD ratio was 1.1500 when the trader started a transaction, going long with an initial amount of $10,000. When the position closes (i.e., the transaction ends) with a ratio of 1.1550, the trader will gain \(\) . When the position closes with a ratio of 1.1450, the trader will lose \(10000 * (1.1500 - 1.1450) = \$50\) . Furthermore, these calculations are based on no leverage. If the trader uses a leverage value such as 10, both the loss and the gain are multiplied by 10.

Detailed definitions of commonly used concepts and terms in Forex can be found in Forex (2022), Archer (2010) and Özorhan (2022). Here, we explain only the most important ones.

Base currency, which is also called the transaction currency, is the first currency in the currency pair while quote currency is the second one in the pair. To illustrate, in the EUR/USD pair, EUR is the base currency, and USD is the quote currency.

Being long (or going long) means buying the base currency or selling the quote currency in the currency pair. Being short (or going short) means selling the base currency or buying the quote currency in the currency pair. Pip is an abbreviation for “percentage of point,” defined as the smallest amount of change occurring in the currency ratio. In general, pip corresponds to the fourth decimal point (i.e., minimum as 0.0001) of that currency. Pipette is the fractional pip, which corresponds to the fifth decimal point (i.e., as 0.00001). In other words, 1 pip equals 10 pipettes.

Leverage corresponds to the use of borrowed money when making transactions. A leverage of 1:100 indicates that if one opens a position with a volume of 1, the actual transaction volume will be 100. After using leverage, one can either gain or lose 100 times the amount of that volume. Margin refers to money borrowed by a trader that is supplied by a broker to make investments using leverage. In this way, one can multiply his/her gains or losses.

Bid price is the price at which the trader can sell the base currency. Ask price is the price at which the trader can buy the base currency. Spread is the difference between the ask and bid prices. A lower spread means the trader can profit from small price changes. Spread value is dependent on market volatility and liquidity. Stop loss is an order to sell a currency when it reaches a specified price. This order is used to prevent larger losses for the trader. Take profit is an order by the trader to close the open position (transaction) for a gain when the price reaches a predefined value. This order guarantees profit for the trader without having to worry about changes in the market price. Market order is an order that is performed instantly at the current price. Swap is a simultaneous buy and sell action for the currency at the same amount at a forward exchange rate. This protects traders from fluctuations in the interest rates of the base and quote currencies. If the base currency has a higher interest rate and the quote currency has a lower interest rate, then a positive swap will occur; in the reverse case, a negative swap will occur.

Fundamental analysis and technical analysis are the two techniques commonly used for predicting future prices in Forex. While the first is based on economic factors, the latter is related to price actions (Archer 2010).

Fundamental analysis focuses on the economic, social, and political factors that can cause prices to move higher, move lower, or stay the same (Archer 2010; Murphy 1999). These factors are also called macroeconomic factors. Economic data reports, interest rates, monetary policy, and international trade/investment flows are some examples (Ozorhan et al. 2022).

Technical analysis uses only the price to predict future price movements (Kritzer and Service 2012). This approach studies the effect of price movement. Technical analysis mainly uses open, high, low, close, and volume data to predict market direction or generate sell and buy signals (Archer 2010). It is based on the following three assumptions (Murphy 1999):

Market action discounts everything. Price moves in trends. History repeats itself.

Chart analysis and price analysis using technical indicators are the two main approaches in technical analysis. While the former is used to detect patterns in price charts, the latter is used to predict future price actions (Ozorhan et al. 2022).

Long short-term memory (LSTM)

Long short-term memory (LSTM) was proposed by Hochreiter and Schmidhuber (1997). LSTM is a recurrent neural network architecture that was designed to overcome the vanishing gradient problem found in conventional recurrent neural networks (RNNs) (Biehl 2005). Errors between layers tend to vanish or blow up, which causes oscillating weights or unacceptably long convergence times. The initial LSTM structure solves this problem by introducing the constant error carousel (CEC). In this way, the architecture ensures constant error flow between the self-connected units (Hochreiter and Schmidhuber 1997).

The memory cell of the initial LSTM structure consists of an input gate and an output gate. While the input gate decides which information should be kept or updated in the memory cell, the output gate controls which information should be output. This standard LSTM was extended with the introduction of a new feature called the forget gate (Gers et al. 2000). The forget gate is responsible for resetting a memory state that contains outdated information. Furthermore, peephole connections and full back-propagation through time (BPTT) training are final features that were added to the LSTM architecture (Gers and Schmidhuber 2000; Greff et al. 2022). With these modifications, the architecture was renamed Vanilla LSTM (Greff et al. 2022), as shown in Fig. 1.

Vanilla LSTM (Greff et al. 2022)

LSTM offers an effective and scalable model for learning problems that includes sequential data (Greff et al. 2022). It has been used in many different fields, including handwriting recognition (Graves et al. 2009; Pham et al. 2014) and generation (Graves 2013), language modeling (Zaremba et al. 2014) and translation (Luong et al. 2022), acoustic modeling of speech (Zia and Zahid 2022), speech synthesis (Fan et al. 2014), protein secondary structure prediction (Sønderby and Winther 2014), audio analysis (Marchi et al. 2014), and video data analysis (Donahue et al. 2022; Greff et al. 2022).

Forward pass.

One of the two main operations of LSTM, shown in Fig. 1, is called the forward pass. In the forward pass, the calculation moves forward by updating the weights (Greff et al. 2022). The weights of LSTM can be categorized as follows:

Input weights: \(W z, W i, W f, W o \, \in \, \mathbb >\) Recurrent weights: \(R z, R i, R f, R o \, \in \, \mathbb >\) Peephole weights: \(p i, p f, p o \, \in \, \mathbb \) Bias weights: \(b z, b i, b f, b o \, \in \, \mathbb \) ,

where z is the block input, i is the input gate, f is the forget gate, o is the output gate, N is the number of LSTM blocks, and M is the number of inputs. By introducing \(x^t\) as the input vector, \(y^t\) as the block output, and \(c^t\) as the cell at time t, the formulation of the forward pass in Vanilla LSTM can be defined as below: