TRADING

Trading typically refers to the buying and selling of financial

instruments, such as stocks, bonds, currencies, commodities,
or derivatives, with the aim of making a profit. Traders can
operate in various markets, including stock markets, foreign
exchange (forex) markets, commodity markets, and
cryptocurrency markets.

There are different types of trading strategies.

Day Trading: Buying and selling financial instruments
within the same trading day, with the aim of profiting
from short-term price movements.

Swing Trading: Holding positions for several days or

weeks to capitalize on price "swings" or fluctuations.

Position Trading: Holding positions for an extended

period, ranging from weeks to months, based on
fundamental analysis and long-term trends.

Algorithmic Trading: Using computer algorithms to

execute trades automatically based on predefined criteria,
such as price, volume, or technical indicators.

High-Frequency Trading (HFT): Executing a large

number of trades at incredibly high speeds using
sophisticated algorithms, often taking advantage of small
price discrepancies
 TYPE OF TRADERS

 RETAIL TRADER
A retail trader refers to an individual or small-scale
investor who trades financial instruments for personal
investment and individual investor who buys and sells
securities using their own personal funds and may trade
through online brokerage platforms or traditional brokerage
firms

 DOMESTIC INSTITUTION TRADER

A domestic institution trader refers to an individual or
a team of traders employed by domestic financial
institutions, such as banks, investment firms, hedge funds,
or asset management companies, to execute trades in
financial markets within their home country. These traders
operate with the institution's capital and responsible for
managing portfolios, executing trades, and generating
returns for the institution's clients.
FOREIGN INSTITUTION TRADER
A foreign institution trader is a team of traders
employed by financial institutions based in foreign
countries to execute trades in financial markets outside
their home country.
 BASIC TERMINOLOGY

 ASK PRICE
This is the price at which a broker is willing to sell
a currency pair to a trader. It represents the lowest price a
seller is willing to accept for a particular currency
at a given time.

 BID PRICE
This is the price at which a broker is willing to buy
a currency pair from a trader. It represents the highest
price a buyer is willing to pay for a particular currency
at a given time.

 SPREAD

The difference between the bid and ask price is

called the spread.

Traders aim to buy low (at the bid price) and sell
high (at the ask price) to profit from the spread
 TIME FRAME

• position trader - use higher time frames like a weekly

chart
• swing trader - use intermediate time frames like a 4-
hour chart
• intra-day trader - use lower time frames like a 15-
minute chart

 INDICATORS
Indicators are technical analysis tools that traders
use to identify potential trading opportunities in the
market. They are mathematical calculations applied to
historical price data and displayed on charts as lines,
oscillators, or other visual elements.
 SUPPORT AND RESISTANCE

SUPPORT
Support is a price level where a downtrend can
be expected to pause due to a concentration of buying
interest. It acts as a "floor" that prevents the price from
falling further.
RESISTANCE
Resistance is a price level where an uptrend
can be expected to pause due to a concentration of selling
interest. It acts as a "ceiling" that prevents the price
from rising further.

SUPPORT AND RESISTANCE ROLE REVERSAL

A key concept of technical analysis is that when a
resistance or support level is broken, its role is reversed. If the
price falls below a support level, that level will become
resistance. If the price rises above a resistance level, it will
often become support. As the price moves past a level of
support or resistance, it is thought that supply and demand has
shifted, causing the breached level to reverse its role.
EXAMPLE OF SUPPORT BECOMING RESISTANCE

EXAMPLE OF RESISTANCE BECOMING SUPPORT

 LONG TERM STOCK ANALYSIS

Book value (Basic Price)

Fair value
Book value X 10 (may be possible)
Example:
TATA STEEL
Book value :82
Fair value :82x10=820 (Price)
Promoter Holding
In shareholding promoter must be 40%

Pledge
Pledge must be 10%
 TREND LINE

TRENDS
 BULLISH
Higher highs and higher lows, uptrend line,
increased buying pressure

 BEARISH
Lower highs and lower lows, downtrend line,
increased selling pressure
  SIDEWAYS
Horizontal price movement, range bound,
consolidation period.

PHASES OF MARKET

Accumulation phase
 In this phase, the market is characterized by relatively
low volatility and a lack of clear trend or direction. Prices may
move within a range or consolidate in a sideways pattern.
Markup phase
During the markup phase, price breaks out of range and
begins a sustained uptrend. An uptrend is defined as a series of
higher pivot highs and higher pivot lows. This stage is when
the price begins moving up. The big money has established a
position and retail investors are now invited to join in
the profit party
Distribution phase
The distribution phase begins as the markup phase ends
and price enters another range period. The shares are being
sold over a period of time—the opposite of accumulation. This
time, the sellers want to maintain higher prices until the
shares are sold.
Markdown phase
The last and final stage of the market cycle is labeled as
the markdown phase. This process occurs after the distribution
of the higher price. The selloff drags price and the market
begins a downtrend. This process provides an indication that
the bears have taken over the market and have gained enough
power to take price within the market to a cheaper level in the
bearish direction

TRENDLINE
Trendlines are easily recognizable lines that traders draw on
charts to connect a series of prices together or show some
data's best fit. The resulting line is then used to give the trader
a good idea of the direction in which an investment's value
might move.
The minimum number of swing highs or lows needed to form
a valid trendline is three. However, it's best to connect as many
swing highs or lows as possible, as the greater number of
points leads to better trendline analysis. If you connect
multiple swing highs or lows to form a trendline, it will remain
valid even in the long term.
• When the market is bullish, trendlines are plotted below the
currency pair’s price action, and the trend channel line is
placed above the high price levels of the price movement,
indicating an uptrend continuation.
• When the market is bearish, trendlines are plotted above the
currency pair’s price action, and the trend channel line is
placed below the low-price levels of the price movement,
indicating a downtrend continuation.
 BREAKOUTS
A breakout is any price movement outside a defined
support or resistance area. The breakout can occur at a
horizontal level or a diagonal level, depending on the price
action pattern

 When there is a breakout in the upward direction,

beyond the resistance level, it signals traders to place
buy/long orders as prices are expected to rise further
 When there is a breakout in the downward direction,
below the support levels, it signals traders to place
sell/short orders as prices are expected to fall further

False breakouts
It occurs when
the price breaks past
a certain level
(support, resistance,
triangle, trend line,
etc.) but don’t
continue to accelerate
in that direction
 CANDLESTICKS

Every candlestick tells a story of the showdown between

the buyers and sellers
At candlestick is a visual representation of price movements
for a specific time period. Each candlestick typically
represents four pieces of information the open, high, low, and
close prices for that period. The body of the candlestick
represents the price range between the open and close prices,
while the wicks (also called shadows) represent the highest
and lowest prices reached during the time period Candlestick
patterns can provide valuable insights into market sentiment
and potential future price movements.

Maru Bozu
The Marubozu pattern is a candlestick with a long body
with no shadows. It can either be bullish or bearish
depending on its color.
Bullish marubozu
A long green
candlestick with no
upper or lower shadow.
This candlestick
indicates that buyers
controlled the market
price from the open to
the close, suggesting a
strong bullish sentiment.

Bearish Marubozu
The opposite of a
bullish Marubozu. The
candlestick has a long
red body with no upper
or lower shadow,
indicating that the
price opened at its high
and closed at its low.
This suggests that the
bears were in complete
control of the market
Doji
A classic doji pattern is a candlestick
pattern that indicates indecision and
uncertainty in the market. The pattern
indicates that neither the buyers nor
sellers are in control and that the market is in a state of
equilibrium.
Hammer
The hammer
candlestick pattern is
formed of a short body
with a long lower
wick, and is found at
the bottom of a
downward trend.
A hammer shows that
although there were selling pressures during the day,
ultimately a strong buying pressure drove the price back up.
The colour of the body can vary, but green hammers indicate a
stronger bull market than red hammers.

Shooting Star
This is a
candle with a short
body and a long
upper wick. It is
usually located at
the top of an
upward trend too.
Usually, the
market opens
higher than the
previous day and rallies a bit before crashing like a shooting
star. It indicates selling pressure taking over the market.
Spinning Top
The spinning top candlestick
pattern has a short body
centred between wicks of
equal length. The pattern
indicates indecision in the
market, resulting in no
meaningful change in price:
the bulls sent the price
higher, while the bears
pushed it low again.

DIVERGENCE
Bullish divergence
The currency pair
prices make a new
low in the market,
but the technical
indicators mark a
higher price. This
signals that bears in
the market are no
more in control,
and bulls are getting stronger, indicating a bullish reversal
after the downtrend ends. At this point, traders can place long
orders to benefit from the increasing market prices.
Bearish divergence
The currency
pair prices make a
new high in the
market, but technical
indicators mark a
lower price. This
signals that bulls in
the market are no
more in control and bears are getting stronger, indicating a
bearish reversal after the uptrend ends. At this point, traders
can place short orders to benefit from the decreasing market
prices.
 SMART MONEY CONCEPT

Market structure
Market structure is the behavior, condition, and current
flow of the market. It highlights support and resistance levels,
swing highs, and swing lows. A trend is simply a consistent
direction of price movement over time. Market structure can
tell you if the market is trending or not.There are 3 basic
movements that the market trends in Uptrend , downtrend ,
and a ranging market and each one is compromised of 4 swing
points , Higher High (HH) ,Higher Low (HL) , Lower High
(LH) and Lower Low (LL)
 Uptrend
 As seen in the above example, the market is uptrend since
it creates successive higher highs and higher lows.
 Downtrend

The market is bearish; as shown, there have been

numerous lower highs and lower lows, indicating a downtrend.
 Ranging
 A ranging market is when price is moving with no
direction and just consolidating between levels of support and
resistance printing Equal Highs and Equal Lows

BOS vs CHoCH
 Break of structure (BOS)
When price breaks its structure in direction of previous
trend its called break of structure (BOS). So its a trend
continuation pattern.

 Change of character (CHOCH)

Change of character refers to the reversal of market trend
either from bullish to bearish or bearish to bullish.CHOCH is
also a break of market structure but in opposite direction.
 Orderblocks
An orderblock is a visible spot on the chart where a
large order is being placed on the market. You'll notice
the order being placed, followed by a quick move from
that region, leaving behind imbalances and a structures
would be broken The candle before that impulsive move
is what we call an "order block," but I want you to
remember that order blocks are essentially areas of
supply and demand in the markets.
 Bullish Order Block – A bullish order
block is the last bearish candle before the
bullish impulse (strong sudden) move, it
typically consist of two candles, with the
first candlestick being a bearish and the
second candlestick being a bullish one.
 Bearish Order Block – A bearish order
block is the last bullish candle before the
bearish impulse move, it typically consist of
two candles, with the first candlestick being a
bullish and the second candlestick being a
bearish one.
 RULES OF VALID ORDER BLOCK
 BOS (or) CHOCH

 High volume at the Order Block.

 Unmitigated

 Imbalance must

TYPES OF ORDER BLOCK

 Opposite Colour Candle OB

 Wick OB
 50% Body Candle OB
 Inside Bar
 Range OB
 Hidden Demand/Supply OB

OPPOSITE COLOUR CANDLE OB

WICK ORDER BLOCK
50% BODY CANDLE ORDER BLOCK
INSIDE BAR ORDER BLOCK
RANGE ORDER BLOCK
 In Higher Timeframe (HTF) you can easily mark
single candle as an order block with Imbalance.

 when you refine/analyse HTF in Lower

Timeframe (LTF) sometimes you cannot mark
single candle as an OB. In that case you can
mark the whole range as order block and
execute the order.
HIDDEN DEMAND/SUPPLY ORDER BLOCK
 Hidden Supply/Demand OB is that when you
analyse in HTF there may be only wick projection
but in LTF that wick can be the candles.

 We can’t mark the exact Order block as it cannot

be seen naked whereas when you refine in it in
LTF we can see the naked candles.

 We usually doesn’t prefer this type of OB like

other types because it is quite risky to execute as
we follow only simple setup.
 IMBALANCE

Imbalance consists of three candles. The second candle is

an impulse in any direction. The first and the third candles
create the border of the imbalance. The imbalance has formed
after the third candle closes.

 if the price impulsed to the upside and left behind

imbalance, it means that a lot of buyers have come into
power
 if the price impulsed to the down-side and left behind
imbalance, it means that a lot of sellers have come into
power

choch choch

imbalance filled

FVG
ENTRY
 PREMIUM AND DISCOUNT

PREMIUM
The premium portion of
the range is where prices are
the highest and therefore at a
premium - when price is
within the top portion of the
range you ideally want to be
a seller.

DISCOUNT
The discount portion of the range is where prices are the
lowest and therefore at a discount - when price is within the
bottom portion of the range you ideally want to be a buyer.

EXTREAM AND DECISIONAL

Extream zone :
Trading strategies around extreme zones often
involve contrarian approaches, where traders expect a
reversal or correction in price direction due to the
extreme nature of the move.
UP TREND

DOWN TREND

Decisional zone :
 Decisional zones might coincide with major support
or resistance levels, Fibonacci retracement levels, or
trend lines. These are areas where traders might decide to
enter or exit trades, based on their strategies and market
analysis.
UP TREND

DOWN TREND
 LIQUIDITY
The forex market is the most liquid market in the world, with
a daily volume of $6.6 trillion. Liquidity is what drives the
market. So it’s an absolute necessity that we understand where
large amounts of liquidity is resting in the market as this is
what makes this strategy so powerful and so consistent. Let’s
go through it one by one

Types of liquidity

 SWING HIGHS & SWING LOWS

 EQUAL HIGHS & EQUAL LOWS
 TREND LINE LIQUIDITS
 ASIA SESSION LIQUIDITY

SWING HIGH: BUYSIDE LIQUIDITY STOP HUNT

Swing High that has not yet been broken, there will be
Buy Side Liquidity resting above in the form of Buy Stops.
Traders will place these Buy Stops above Swing Highs in the
hope that once price breaks above, it will go higher and higher
but what will usually end up happening is the market will
reverse after triggering those buy stops leaving those traders
stuck in drawdown or a hit stop loss.
SWING LOW: SELLSIDE LIQUIDITY STOP HUNT
Swing Low that has not yet been broken, there will be
Sell Side Liquidity resting below in the form of Sell Stops.
Traders will place these Sell Stops below Swing Lows in
the hope that once price breaks below, it will go lower and
lower but what will Liquidity University 2usually end up
happening is the market will reverse after triggering those
sell stops,leaving those traders stuck in drawdown or a hit
stop loss

EQUAL HIGHS & EQUAL LOWS

The next form of liquidity we will through are Equal

Highs, Equal Lows. Just like the Swing Highs and Swing
Lows we just went through, traders place Buy Stops above
Equal Highs and Sell Stops below Equal Lows.
EQUAL HIGHS: BUYSIDE LIQUIDITY STOP HUNT

EQUAL LOWS: SELLSIDE LIQUIDITY STOP HUNT

TREND LINE LIQUIDITY:
The next form of liquidity we will go through is Trend
Line Liquidity. This is a very obvious form of liquidity build
up for us. It’s very well known from a huge percentage of
traders to try and trade the Trend Line Bounce and Trend Line
Break & Retests
TREND LINE: BUYSIDE OR SELL LIQUIDITY STOP
HUNT

ASIA SESSION LIQUIDITY

 The final form of Liquidity we are going to talk about is
the Asia Session Liquidity. Above the Asia Highs and below
the Asia Lows rests a lot of liquidity. Since Asia is generally a
consolidation period, more so in non Asia Pairs, there are
traders who will attempt to buy once price breaks out above
the Asia Highs and traders who will attempt to sell once price
breaks out below the Asia Lows once again in the form of Buy
Stops and Sell stop
ASIA HIGHS: BUYSIDE LIQUIDITY STOP HUNT

ASIA LOWS: SELLSIDE LIQUIDITY STOP HUNT