Table of contents

Sr. No Particulars Page No

1 Introduction to research 1
1.1 Introduction to Forex market 1
1.2 Executive summary 3
1.3 Objectives of study 4
1.4 Need purpose of study 5
1.5 Importance of study 6
1.6 Scope of study 8
2 Theoretical framework 9
2.1 Forex technical analysis strategies 9
2.1.1 Forex trend trading strategy 9
2.1.2 Forex range trading strategy 11
2.1.3 Forex chart trading strategy 12
2.1.4 Support and resistance trading strategy 12
2.1.5 Technical indicators in forex trading strategy 13
2.1.6 Forex volume trading strategy 14
2.1.7 Multi time frame analysis strategy 14
2.2 Forex fundamental analysis strategies 15
2.2.1 Forex trading strategy based on fundamental analysis 15
2.2.2 Forex trading strategy based on market sentiments 15
2.3 Forex strategies based on trading style 17
2.3.1 Forex day trading strategy 17
2.3.2 Forex scalping strategy 17
2.3.3 Fading trading strategy 18
2.3.4 Daily pivot trading strategy 19
2.3.5 Momentum trading strategy 20
2.3.6 Carry trade strategy 20
2.3.7 Forex hedging strategy 21
2.3.8 Portfolio/basket trading strategy 21
2.3.9 Buy and hold strategy 22
2.3.10 Spread/pair trading strategy 22
2.3.11 Swing trading strategy 23
2.4 Forex strategies based on trading order types 24
2.5 Algorithmic trading strategies 25
2.6 Forex risk management 26
2.7 Currency risk management tools 28
2.8 Forex market money management 30
3 Company profile 32
4 Research methodology 35
5 Data analysis and interpretation 39
 6 Learning of students - findings 61
6.1 Contribution to host organization and recommendations 62
6.2 Conclusion 63
6.3 Limitation of study 64
7 References and bibliography 65
 1. INTRODUCTION TO RESEARCH
1.1. Introduction to Forex market
The foreign exchange market, also known as the FX or Forex market, is the largest and most traded
financial market in the world. The FX market has grown to a daily trade volume of over $5 trillion
a day which is over 200 times bigger than the New York Stock Exchange. Historically, the major
players in the FX market were large central banks, multinational firms and big financial
institutions. While these organizations are still the major players in the market, the growth of online
brokers and technology has made it possible for individual retail traders to access this market and
trade on a level playing field with the big players.

Foreign Exchange market, commonly referred to as Forex or simply FX, is the largest financial
market where currencies are bought, sold and exchanged one for another. Unlike, for example,
stocks market, it has no centralized exchange and transactions are performed over-the-counter, that
is, participants trade with one another through a worldwide network of banks, brokers and other
financial institutions.

As a global market Forex is open 24 hours a day, 5 days a week. The major financial centers are
based across almost every time zone – in London, New York, Tokyo, Zurich, Frankfurt, Hong
Kong, Singapore, Paris and Sydney. Depending on the exchange active during a specific time, one
can distinguish between three trading sessions: Asian, European and American.

In foreign exchange currencies are quoted against one another in pairs and the price indicates how
much of quote (second) currency is required to buy or sell one unit of base (first)
currency. Exchange rates are driven by forces of supply and demand: currency value usually
increases whenever demand for it is greater than supply and decreases if demand is less than
supply. Moreover, prices fluctuate in response to economic, social and political events that occur
throughout 24-hour trading day.

Political situation and economic performance of the countries involved have a profound effect on
the currency prices as well. For instance, a country with lower inflation rate will typically see
increase of its currency value in relation to the currencies of its trading partners. Inflation is also
highly correlated with central bank's interest rate: lower interest rate can depreciate exchange rate
and vice versa.

Another detrimental factor in price setting is orders from Forex market participants that are
quite diverse in volume they generate and influence they have.

Governments and central banks such as the European Central Bank, the Bank of England, and the
Federal Reserve of the US operate with the largest volumes and have the most influence on
exchange rates. Central banks try to control inflation, money supply, interest rates and are in charge
of supervising commercial banking systems. They can use foreign exchange reserves to intervene
in the market to stabilize currency rates or achieve a specific economic goal.
The second largest group comprises major banks and bank associations that form so called
interbank market, through which they transact with each other and determine the currency price
individual traders observe in the trading platform. Since forex is a decentralized market, you can

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often see that different banks offer slightly different exchange rates for the same currency. OctaFX
clients receive the best bid/ask prices quoted from our vast liquidity pool.

Another group of forex participants is brokerage firms that act as intermediaries between
individual traders and the market. They use electronic communication networks (ECNs) to offset
clients’ orders with its liquidity providers, which may comprise of various financial institutions.
This execution model eliminates a conflict of interests between the brokerage and its client when
an order is executed. An ECN brokerage, unlike a market maker, is compensated through
commission that can either be charged per each order or included in the spread as a markup. You
can learn more about ECN execution here.

An ECN brokerage allows individual traders to access the forex market, which initially was the
domain of large financial institutions only, and gain profit from price fluctuations. Even though
daily price fluctuations are seemingly small, often less than 1%, use of leverage can increase the
value of these movements.

Traders interact with a broker through a trading platform - a piece of software that allows buying
and selling currencies. It can be installed on your desktop computer, mobile device or even
accessed via web browser.

A country’s currency is a direct reflection of what the market thinks about the current and future
health of its economy. A recessionary, stagnant economy will result in a weak currency, while a
surging, growing economy will result in a strong currency. We are therefore speculating on the
strength and weaknesses of one economy or country against another.

When trading FX, currencies are abbreviated into three letter symbols. For example, the euro is
the EUR, the US Dollar is the USD, the Japanese Yen is the JPY, and the UK pound is the GBP
and so on. Currencies are generally split into two categories – the major currencies and the minor
currencies. As you would guess the majors are the currencies of the major global economies – the
US, Japan, UK, Euro Zone, Canada, Australia, Switzerland and New Zealand. A noticeable
absentee is the Chinese Yuan as the Chinese government restricts trading of its currency. The
majors are by far the most frequently traded currencies and make up around 90% of the FX market.

Minor or exotic currencies are so-called as they are the currencies of less prominent or emerging
economies such as the Hong Kong Dollar, Mexican Peso, Swedish Krona, and Hungarian Forint
and so on. They are traded in smaller quantities when compared to the majors and often the cost
of trade is much higher due to their illiquidity.

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 1.2. Executive summary
The foreign exchange market is the mechanism, by which a person of firm transfers purchasing
power from one country to another, obtains or provides credit for international trade transactions,
and minimizes exposure to foreign exchange risk. A foreign exchange transaction is an agreement
between a buyer and a seller that a given amount of one currency is to be delivered at a specified
rate for some other currency. A foreign exchange rate is the price of a foreign currency. A foreign
exchange quotation or quote is a statement of willingness to buy or sell at an announced rate.

The foreign exchange market consists of two tiers: the interbank or wholesale market, and the
client or retail market. Participants include banks and nonbank foreign exchange dealers,
individuals and firms conducting commercial and investment transactions, speculators and
arbitragers, central banks and treasuries, and foreign exchange brokers. Transactions are
effectuated either on a spot basis or on a forward or swap basis. A spot transaction is for an (almost)
immediate value date while a forward transaction is for a value date somewhere in the future.
Quotations can be classified either as European and American terms or as direct and indirect
quotes.

In the real world, quotations include a bid-ask spread. A bid is the exchange rate in one currency
at which a dealer will buy another currency. An ask is the exchange rate at which a dealer will sell
the other currency. The spread is the difference between the bid price and the ask price. This spread
reflects the existence of commissions and transaction costs. A cross rate is an exchange rate
between two currencies, calculated from their common relationship with a third currency.

The main economic theories found in the foreign exchange deal with parity conditions such as
those involving interest rates and inflation. Overall, a country's qualitative and quantitative
factors are seen as large influences on its currency in the forex market.

Forex traders use fundamental analysis to view currencies and their countries like companies,
thereby using economic announcements to gain an idea of the currency's true value.

Forex traders uses technical analysis to look at currencies the same way they would any other
asset and, therefore, use technical tools such as trends, charts and indicators in their trading
strategies.

Unlike stock trades, forex trades have minimal commissions and related fees. But new forex
traders should take a conservative approach and use orders, such as the take-profit or stop-loss,
to minimize losses.

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1.3. Objectives of study
 To study the impact of technical & fundamental analysis on forex market.

 To study the various services provided by brokers house.

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1.4. Need/purpose of study
 To understand the basic concept of forex market.

 To understand its transfer function.

 To understand its credit function.

 To understand its hedging function.

 To understand forex market yields and returns.

 To understand forex exchange rate.

 To understand direct and indirect forex quotes.

 To understand forex cross rate mechanism, spot rate, forward rate, bid and offer rate, etc.

 To understand the basic concept of how to trade.

 To understand how to technically analyze the forex market.

 To understand how to fundamentally analyze the forex market.

 To understand how to make clients interaction.

 To understand how to find investor for the business.

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 1.5. Importance of study
It’s a 24 hour’s market

The Forex market is worldwide so trading is pretty much continuous as long as there's a market
open somewhere in the world. Trading starts when the markets open in Australia on Sunday
evening and ends after markets close in New York on Friday.

Accessibility

You can start trading Forex with a relatively small amount of capital and this is truly one of the
main benefits of Forex. While you may be required to deposit around $10,000 to start trading
stocks, you can easily start trading currencies with a deposit of $100. For small size traders this
is one of the most important benefits of Forex.

Liquidity

Forex is the most liquid market in the World. Why is that? Because there is a constant supply and
demand for money. One of the benefits of Forex trading is that the market is open 24/5. This means
that you do not have to adjust your schedule for the market opening hours, as you can trade all day
long. In normal market conditions you can trade out of your positions with ease, as there is a near
constant supply and demand in the Forex market.

Technological development

Software advancement is definitely one of the most important benefits of Forex trading. While
most futures, stock and option brokers supply you with platforms that were developed years ago,
Forex brokers provide the newest trading platforms. On top of this, there is also a great amount of
third party software suppliers that provide useful trading extensions.

Short trades

While the above mentioned Forex advantages are quite important, selling currencies without
acquiring them first is one of the main benefits of Forex trading. The main trading philosophy is
to buy low and sell high, but with Forex you can also sell high and buy low. This way, you can
potentially make profits on both downward and upward trends.

While it is possible to short stocks and futures, it's much more complicated to do. Meanwhile, with
currencies you can simply sell the assets if you believe that the trend is downward with just a single
click.

Leverage

When it comes to trading, the rule of thumb is – the bigger your capital, the larger your trade
size. Leverage is an important weapon in the armory of Forex benefits. When employing that
leverage, a trader can buy or sell up to 500 times more funds than he actually has. This way, one

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can easily generate more substantial gains (or losses) even without having a large capital at your
disposal.

Above are the five main Forex trading advantages. Of course there are more, but the
aforementioned ones are the most important, especially for the novice trader.

Next to the benefits of the Forex market come the advantages of the Forex broker. With Admiral
Markets, you are provided with top-notch trading conditions and invaluable educational resources
to kick-start you’re trading. This is where a few extra Forex benefits come into play.

Flexibility

Forex exchange markets provide traders with a lot of flexibility. This is because there is no
restriction on the amount of money that can be used for trading. Also, there is almost no regulation
of the markets. This combined with the fact that the market operates on a 24 by 7 basis creates a
very flexible scenario for traders. People with regular jobs can also indulge in Forex trading on the
weekends or in the nights. However, they cannot do the same if they are trading in the stock or
bond markets or their own countries! It is for this reason that Forex trading is the trading of choice
for part time traders since it provides a flexible schedule with least interference in their full time
jobs.

Unrestricted demo account

Unlike many other providers of financial services, Forex brokers let you preview their services
and test your trading knowledge on a practice account. This way you can trade paper money while
experiencing real market conditions. What is best is that there are no restrictions applicable for
this account; you can trade for as long as you need.

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 1.6. Scope of study
There are a lot of advantages in Forex Day Trading as compared to many other financial trading,
like futures or stock trading. The forex market is open 24 hour a day.

Being the market available 24 hours a day, this gives the investors freedom to choose which time
they would like to trade. It only requires minimum beginning capital to start Forex day trading
than beginning a trade in stocks.

This can help novice investors to begin their trading business in small amount of currency. First,
beginning investors only need to focus on a few main currencies, rather than on many thousands
of stocks.

Furthermore, Forex day trading has outstanding liquidity. We can say, today, that the Forex
exchange market is the biggest financial market in the world of trading. It lends itself to an outcome
of narrow spreads and fair prices.

The stock liquidity is cut after the regular hours of trading. But the Forex exchange market does
not have this kind of problem, since Forex market never closes. Not only is the Forex market
always accessible, it is also coupled with global trading, because of the instant exit, and entries
being done electronically.

In doing Forex day trading, the investors have the liberty of choosing their most feasible time to
do the trade, as the Forex market is open round the clock. The greatest liquidity of the Forex market
is combined with a 24-hour market that is traded about 5 days a week. You can do Forex trading
whenever you want to.

The Forex market goes with the sun as it goes around the world. It jumps from one major bank to
another major financial center, first from the United States it will go to Australia, to New Zealand
and to the Far East and then it will travel to Europe and back to the United States again.
There is no doubt that Forex day trading is the biggest financial market there is today. There are
no limitations to sell short currencies, unlike in stocks and bonds. This can simply means that you
can make easy money from the rising and falling of currencies in markets.

From all the points that are mentioned above, and the benefits that Forex Day trading offers (in
regard to flexibility), it is indeed one of the most moneymaking business mediums available to us,
in this day and age.

After familiarizing yourself with how the Forex market works, you will be able to cope with the
trading business. Nevertheless, having learned the Forex market does not guarantee that you won't
go broke. All business has its downside. To avoid falling off the Forex day trading wagon, there
are Forex brokers that can aid new investors, and a 24-Hour hotline for your trading assistance.

2. THEORETICAL FRAMEWORK
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 2.1. Forex Technical Analysis Strategies
Forex technical analysis is the study of market action primarily through the use of charts for the
purpose of forecasting future price trends. Forex traders can develop strategies based on various
technical analysis tools including market trend, volume, range, support and resistance levels, chart
patterns and indicators, as well as conduct a Multiple Time Frame Analysis using different time-
frame charts.

Technical analysis strategy is a crucial method of evaluating assets based on the analysis and
statistics of past market action, such as past prices and past volume. The main goal of technical
analysts is not the measuring of asset’s underlying value, they attempt to use charts or other tools
of technical analysis to determine patterns that will help to forecast future market activity. Their
firm belief is that the future performance of markets can be indicated by the historical performance.

2.1.1. Forex trend trading strategy

Trend represents one of the most essential concepts in technical analysis. All the technical analysis
tools that an analyst uses have a single purpose: help to identify the market trend. The meaning
of Forex trend is not so much different from its general meaning - it is nothing more than the
direction in which the market moves. But more precisely, foreign exchange market does not move
in a straight line, its moves are characterized by a series of zigzags which resemble successive
waves with clear peaks and troughs or highs and lows, as they are often called.

As we mentioned above, forex trend is comprised of a series of high and lows, and depending on
the movement of those peaks and troughs one can understand the trends type on the market.

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Though most people think that foreign exchange market can be either upward or downward,
actually there exist not two but three types of trends:

1. Upward
2. Downward
3. Sideways

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Traders and investors confront three types of decision: go long, i.e. to buy, go short, i.e. to sell, or
stay aside, and i.e. to do nothing. During any type of trend, they should develop a specific strategy.

The buying strategy is preferable when the market goes up and conversely the selling strategy
would be right when the market goes down. But when the market moves sideways the third option
– to stay aside - will be the wisest decision.

2.1.2. Forex range trading strategy

Range trading strategy, which is also called channel trading, is generally associated with the lack
of market direction and it is used during the absence of a trend. Range trading identifies currency
price movement in channels and the first task of this strategy is to find the range. This process can
be carried out by connecting a series of highs and lows with a horizontal trend line. In other words,
the trader should find the major support and resistance levels with the area in between known as
“trading range”.

In range trading it’s quite easy to find the areas to take profit. You can buy at support and sell at
resistance as long as the security hasn’t broken out of the channel. Otherwise, if the breakout
direction is not favorable for your position, you may undergo huge losses.
Range trading actually works in a market with just enough volatility due to which the price goes
on wiggling in the channel without breaking out of the range. In the case the level of support or
resistance breaks you should exit range-based positions. The most efficient way of managing risks
in range trading is the use of stop loss orders as most traders do. They place sell limit orders below
resistance when selling the range and set the take profit down near support. When buying support,
they place buy limit orders above support and place take profit orders near the previously identified
resistance level. And risks can be managed by placing stop loss orders above the resistance level
when selling the resistance zone of a range, and below the support level when buying support.
2.1.3. Forex chart trading strategy

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In Forex technical analysis a chart is a graphical representation of price movements over a certain
time frame. It can show security’s price movement over a month or a year period. Depending on
what information traders search for and what skills they master, they can use certain types of
charts: the bar chart, the line chart, the candlestick chart and the point and figure chart.
Also they can develop a specific strategy using the following popular technical chart patterns:
 Triangle
 Flags
 Pennants
 The wedge
 The rectangle pattern
 The head and shoulder pattern
 Double tops and double bottoms
 Triple tops and triple bottoms
You can easily learn how to use charts and develop trading strategies by chart patterns.
2.1.4. Support and resistance trading strategy
In order to completely understand the essence of support and resistance trading strategy you should
firstly know what a horizontal level is. Actually, it is a price level indicating either a support or
resistance in the market. The support and resistance in technical analysis are the terms for price
lows and highs respectively. The term support indicates the area on the chart where the buying
interest is significantly strong and surpasses the selling pressure. It is usually marked by previous
troughs. Resistance level, contrary to the support level, represents an area on the chart where
selling interest overcomes buying pressure. It is usually marked by previous peaks.

In order to develop a support and resistance strategy you should be well aware of how the trend is
identified through these horizontal levels. Thus, for an uptrend to go on, each successive support
level should be higher than the previous one, and each successive resistance level should be higher
than the one preceding it.

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In case this is not so, for instance, if the support level comes down to the previous trough, it may
signify that the uptrend is coming to the end or at least it is turning into a sideways trend. It is
likely that trend reversal from up to down will occur. The opposite situation takes place in a
downtrend; the failure of each support level to move lower than the previous trough may again
signal changes in the existing trend.

The concept behind support and resistance trading is still the same - buying a security when we
expect it to increase in price and sell when expecting its price to go down. Thus, when the price
falls to the support level, traders decide to buy creating demand and driving the price up. In the
same way, when the price rises to a resistance level, traders decide to sell, creating a downward
pressure and driving the price down.

2.1.5. Technical indicators in forex trading strategy

Technical indicators are calculations which are based on the price and volume of a security. They
are used both to confirm the trend and the quality of chart patterns, and to help traders determine
the buy and sell signals. The indicators can be applied separately to form buy and sell signals, as
well as can be used together, in conjunction with chart patterns and price movement.

Technical analysis indicators can form buy and sell signals through moving average crossovers
and divergence. Crossovers are reflected when price moves through the moving average or when
two different moving averages cross each other. Divergence happens when the price trend and the
indicator trend move in opposite directions indicating that the direction of price trend is weakening.

They can be applied separately to form buy and sell signals, as well as can be used together, in
conjunction with the market. However, not all of them are used widely by traders. The following
indicators mentioned below are of utmost importance for analysts and at least one of them is used
by each trader to develop his trading strategy:

 Moving average
 Bollinger band
 Relative strength index (RSI)
 Stochastic oscillator
 Moving average convergence/divergence (MACD)
 ADX
 Momentum

You can easily learn how to use each indicator and develop trading strategies by indicators.

2.1.6. Forex volume trading strategy

Volume shows the number of securities that are traded over a particular time. Higher volume
indicates higher degree of intensity or pressure. Being one of the most important factors in trade it
is always analyzed and estimated by chartists. In order to determine the upward or

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downward movement of the volume, they look at the trading volume histograms usually presented
at the bottom of the chart. Any price movement is of more significance if accompanied by a
relatively high volume than if accompanied by a weak volume.

By viewing the trend and volume together, technicians use two different tools to measure the
pressure. If prices are trending higher, it becomes obvious that there is more buying than selling
pressure. If the volume starts to decrease during an uptrend, it signals that the upward trend is
about to end.

As mentioned by forex analyst Huzefa Hamid "volume is the gas in the tank of the trading
machine". Though most traders give preference only to technical charts and indicators to make
trading decisions, volume is required to move the market. However, not all volume types may
influence the trade, it’s the volume of large amounts of money that is traded within the same day
and greatly affects the market.

2.1.7. Multi time frame analysis strategy

Using Multiple Time Frame Analysis suggests following a certain security price over different
time frames.

Since a security price meanwhile moves through multiple time frames it’s very useful for traders
to analyze various time frames while determining the “trading circle” of the security. Through
the Multiple Time Frame Analysis (MTFA) you can determine the trend both on smaller and
bigger scales and identify the overall market trend. The whole process of MTFA starts with the
exact identification of the market direction on higher time frames (long, short or intermediary) and
analyzing it through lower time frames starting from a 5-minute chart.

Experienced trader Corey Rosen bloom believes that in multiple time frame analysis, monthly,
weekly and daily charts should be used to asses when the traders are moving in the same direction.
However, this may cause problems because time frame always aligns and different kinds of trends
take place on different time frames. According to him, the analysis of lower time frames gives
more information.

2.2. Forex fundamental analysis strategies

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While technical analysis is focused on the study and past performance of market action,
Forex analysis concentrates on the fundamental reasons that make an impact on the market
direction.

The premise of Forex fundamental analysis is that macroeconomic indicators like economic
growth rates, interest and unemployment rates, inflation, or important political issues can have an
impact on financial markets and, therefore, can be used for making trading decisions.

Technicians do not find it necessary to know the reasons of market changes, but fundamentalists
try to discover “why”. The latter analyze macroeconomic data of a specific country or different
countries to forecast the given country’s currency behavior in the nearest future.
Based on certain events or calculations, they may decide to buy the currency in the hope that the
latter will rise in value and they will be able to sell it at a higher price, or they will sell the currency
to buy it later at a lower price.

The reason why fundamental analysts use so long timeframe is the following: the data they study
are generated much more slowly than the price and volume data used by technical analysts.

2.2.1. Forex trading strategy based on fundamental analysis

While technical analysis is focused on the study and past performance of market action,
Forex fundamental analysis concentrates on the fundamental reasons that make an impact on the
market direction.

The premise of Forex fundamental analysis is that macroeconomic indicators like economic
growth rates, interest and unemployment rates, inflation, or important political issues can have an
impact on financial markets and, therefore, can be used for making trading decisions.

Technicians do not find it necessary to know the reasons of market changes, but fundamentalists
try to discover “why”. The latter analyze macroeconomic data of a specific country or different
countries to forecast the given country’s currency behavior in the nearest future. Based on certain
events or calculations, they may decide to buy the currency in the hope that the latter will rise in
value and they will be able to sell it at a higher price, or they will sell the currency to buy it later
at a lower price.

The reason why fundamental analysts use so long timeframe is the following: the data they study
are generated much more slowly than the price and volume data used by technical analysts.

2.2.2. Forex trading strategy based on market sentiments

Market sentiment is defined by investors’ attitude towards the financial market or a particular security.
What people feel and how this makes them behave in Forex market is the concept behind market sentiment.
The importance of understanding the opinions of a group of people on a specific topic cannot be
underestimated. For each purpose sentiment analysis can offer insight that is valuable and helps to
make right decisions.

The importance of understanding the opinions of a group of people on a specific topic cannot be
underestimated. For each purpose sentiment analysis can offer insight that is valuable and helps to
make right decisions. The market by itself is a very complex network made up of a number of

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individuals whose positions actually represent the sentiment of the market. However, you alone
cannot make the market move to your favor; as a trader you have your opinion and expectations
from the market but if you think that Euro will go up, and others do not think so, you cannot do
anything about it.

Herein, the market sentiment is considered bullish if investors anticipate an upward price
movement, while if investors expect the price to go down, the market sentiment is said to be
bearish. The strategy of following Forex market sentiment serves as a good means of predicting
the market movement and is of high importance for contrarian investors, who aim to trade in the
opposite direction of the market sentiment. Thus, if the prevailing market sentiment is bullish (all
the traders buy), a contrarian investor would sell.

2.3. Forex strategies based on trading style

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Forex trading strategies can be developed by following popular trading styles which are day
trading, carry trade, buy and hold strategy, hedging, portfolio trading, spread trading, swing
trading, order trading and algorithmic trading.

Using and developing trading strategies mostly depends on understanding your strengths and
weaknesses. In order to be successful in trade you should find the best way of trading that suits
your personality. There is no fixed “right” way of trading; the right way for others may not work
for you. Below you can read about each trading style and define your own.

2.3.1. Forex day trading strategy

Day trading strategy represents the act of buying and selling a security within the same day,
which means that a day trader cannot hold any trading position overnight.

Day trading strategies include scalping, fading, daily pivots and momentum trading. In case of
performing day trading you can carry out several trades within a day but should liquidate all the
trading positions before the market closure.

An important factor to remember in day trading is that the longer you hold the positions, the higher
your risk of losing will be. Depending on the trading style you choose, the price target may change.
Below you can learn about the most widely used day trading strategies.

2.3.2. Forex scalping strategy

Forex scalping is a day trading strategy which is based on quick and short transactions and is used
to make many profits on minor price changes. This type of traders, called as scalpers, can
implement up to 2 hundred trades within a day believing that minor price moves are much easier
to follow than large ones.

The main objective of following this strategy is to buy /sell a lot of securities at the bid /ask
price and in a short time sell/buy them at a higher/lower price to make a profit.

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There are particular factors essential for Forex scalping. These are liquidity, volatility, time frame
and risk management. Market liquidity has an influence on how traders perform scalping. Some
of them prefer trading on a more liquid market so that they can easily move in and out of large
positions, while others may prefer trading in a less liquid market that has larger bid-ask spreads.

As far as it refers to volatility, scalpers like rather stable products, for them not to worry about
sudden price changes. If a security price is stable, scalpers can profit even by setting orders on the
same bid and ask, making thousands of trades. The time frame in scalping strategy is significantly
short and traders try to profit from such small market moves that are even difficult to see on a one-
minute chart.
Together with making hundreds of small profits during a day, scalpers at the same time can sustain
hundreds of small losses. Therefore, they should develop a strict risk management to avoid
unexpected losses.
2.3.3. Fading trading strategy
Fading in the terms of forex trading means trading against the trend. If the trend goes up, fading
traders will sell expecting the price to drop and in the same way they will buy if the price
rises. Herein, this strategy supposes selling the security when its price is rising and buying
when the price is falling, or as called “fading”.
It is referred as a contrarian day trading strategy which is used to trade against the prevailing trend.
Unlike other types of trading which main target is to follow the prevailing trend, fading trading
requires to take a position that goes counter to the primary trend. The main assumptions on which
fading strategy is based are:
 Securities are overbought
 Early are ready to take profits
 Current buyers may appear at risk

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Although “Fading the market” can be very risky and requires high risk tolerance, it can be
extremely profitable. To carry out Fading strategy two limit orders can be placed at the specified
prices- a buy limit order should be set below the current price and a sell limit order should be set
above it.

Fading strategy is extremely risky since it means trading against the prevailing market trend.
However, it can be advantageous as well - fade traders can make profit from any price reversal
because after a sharp rise or decline the currency it is expected to show some reversals. Thus, if
used properly, fading strategy can be a very profitable way of trading. Its followers are believed
to be risk takers who follow risk management rules and try to get out of each trade with profit.

2.3.4. Daily pivot trading strategy

Pivot Trading aims to gain a profit from the currency’s daily volatility. In its basic sense the pivot
point is defined as a turning point. It is considered a technical indicator derived by calculating the
numerical average of the high, low and closing prices of currency pairs. The main concept of this
strategy is to buy at the lowest price of the day and sell at the highest price of the day.

In mid-1990s a professional trader and analyst Thomas as pray published weekly and daily pivot
levels for the cash forex markets to his institutional clients. As he mentions, at that time the pivot
weekly levels were not available in technical analysis programs and the formula was not widely
used either.

But in 2004 the book by John Person, “Complete Guide to Technical Trading Tactics: How to
Profit Using Pivot Points, Candlesticks & Other Indicators” revealed that pivot points had been in
use for over 20 years till that time. In the last years it was even more surprising for Thomas to
discover the secret of quarterly pivot point analysis, again due to John Person. Currently the basic
formulae of calculating pivot points are available and are widely used by traders. Moreover, pivot points
calculator can be easily found on the Internet. For the current trading session, the pivot point is
calculated as:

The basis of daily pivots is to determine the support and resistance levels on the chart and identify
the entry and exit points. This can be done by the following formulae:

Where:

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P - Pivot Point
L - Previous Low
H - Previous High
R1 - Resistance Level 1
S1 - Support Level 1
R2 - Resistance Level 2
S2 - Support Level 2

2.3.5. Momentum trading strategy

Momentum trading is actually based on finding the strongest security which is also likely to trade
higher. It is based on the concept that the existing trend is likely to continue rather than reverse. A
trader following this strategy is likely to buy a currency which has shown an upward trend
and sell a currency which has shown a downtrend. Thus, unlike daily pivots traders, who
buy low and sell high, momentum traders buy high and sell higher.

Momentum traders use different technical indicators, like MACD, RSI and Momentum
Oscillator to determine the currency price movement and decide what position to take. They also
consider news and heavy volume to make right trading decisions. Momentum trading requires
subscribing to news services and monitoring price alerts to continue making profit. According to
a well-known financial analyst Larry Light, momentum strategies can help investors beat the
market and avoid crashes, when coupled with trend-following, which focuses only on stocks that
are gaining.

2.3.6. Carry trade strategy

Carry trade is a strategy through which a trader borrows a currency in a low interest country,
converts it into a currency in a high interest rate country and invests it in high grade debt securities
of that country. Investors who follow this strategy borrow money at a low interest rate to invest in
a security that is expected to provide higher return.

Carry trade allows to make a profit from the non-volatile and stable market, since here it rather
matters the difference between the interest rates of currencies; the higher the difference, the greater
the profit. While deciding what currencies to trade by this strategy you should consider the
expected changes in the interest rates of particular currencies. The principle is simple- buy a
currency whose interest rate is expected to go up and sell the currency whose interest rate is
expected to go down.

However, this does not mean that the price changes between the currencies are absolutely
unimportant. Thus, you can invest in a currency because of its high interest rate, but if the currency
price drops and you close the trade, you may find that even though you have profited from the
interest rate you have also lost from the trade because of the difference in the buy/sell price.
Therefore, carry trade is mostly suitable for trendless or sideways market, when the price
movement is expected to remain the same for some time.

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 2.3.7. Forex hedging strategy

Hedging is generally understood as a strategy which protects investors from occurrence of events
which can cause certain losses. The idea behind currency hedging is to buy a currency and sell
another in the hope that the losses on one trade will be offset by the profits made on another trade.
This strategy works most efficiently when the currencies are negatively correlated. Thus, you
should buy a second security aside from the one you already own in order to hedge it once it moves
in an unexpected direction. This strategy, unlike most trading strategies already discussed, is not
used to make a profit; it rather aims to reduce the risk and uncertainty. It is considered a certain
type of strategy whose sole purpose is to mitigate the risk and enhance the winning possibilities.

As an example we can take some currency pairs and try to create a hedge. Let’s say that at a
specific time frame the US dollar is strong, and some currency pairs including USD show different
values. Like, GBP/USD is down by 0.60%, JPY/USD is down by 0.75% and EUR/USD is down
by 0.30%. As a directional trade we had better take the EUR/USD pair which is down the least
and therefore shows that if the market direction changes, it will go higher more than the other
pairs.

After buying the EUR/USD pair we need to choose a currency pair that can serve as a hedge. Again
we should look at the currency values and choose the one which shows the most comparative
weakness. In our example it was JPY, and EUR/JPY would be a good choice. Thus, we can hedge
our trade buying EUR/USD and selling EUR/JPY.

What is more important to note in currency hedging is that risk reduction always means profit
reduction, herein, hedging strategy does not guarantee huge profits, rather it can hedge your
investment and help you escape losses or at least reduce its extent. However, if developed properly,
currency hedging strategy can result in profits for both trades.

2.3.8. Portfolio/basket trading strategy

Portfolio trading, which can also be called basket trading, is based on the combination of different
assets belonging to different financial markets (Forex, stock, futures, etc.). The concept behind
portfolio trading is diversification, one of the most popular means of risk reduction. By a smart
asset allocation traders protect themselves from market volatility, reduce the risk extent and keep
the profit balance. It’s very important to create a diversified portfolio to reach your trading goal.
Otherwise, this kind of strategy will be aimless.

You should compile your portfolio with such securities (currencies, stocks, commodities, indices)
which are not strictly correlated, meaning that their returns do not move up and down in a perfect
unison. By mixing up different assets in your portfolio which are in negative correlation, with one
security’s price going up and the other’s going down you can keep the portfolio’s balance, hence
preserving your profit and reducing the risk.
Currently IFC Markets provides Personal Composite Instrument (PCI) creation and trading
technology based on GeWorko Method, which makes it even much easier to perform portfolio
trading. The technology allows to create portfolios starting with only two assets and include up to
tens of different financial instruments, open both long and short positions within a portfolio, view
the assets’ price history stretching up to 40 years, create your own PCIs, use a wide variety of

21
market analysis tools, apply different trading strategies and constantly optimize and rebalance your
investment portfolio. In other words, GeWorko Method is a solution that lets you develop and
apply strategies which suit best your preferences.
2.3.9. Buy and hold strategy
Buy and hold strategy is a type of investment and trading when a trader buys the security and holds
it for a long time. A trader who employs buy and hold investment strategy is not interested in short-
term price movements and technical indicators. Actually, this strategy is mostly used by stock
traders; however, some Forex traders also use it, referring to it as a particular method of passive
investment. They commonly rely on fundamental analysis rather than technical charts and
indicators. This already depends on the type of investor to decide how to apply this strategy.

A passive investor would watch the fundamental factors, like inflation and unemployment rates of
the country whose currency he has invested in, or would rely on the analysis of the company whose
stock he owns, considering that company’s growth strategy, the quality of its products, etc. For an
active investor it would be more effective to apply technical analysis or other mathematical
measures to decide whether to buy or sell.
2.3.10. Spread/pair trading strategy
Pair trading (spread trading) is the simultaneous buying and selling of two financial instruments
related to each other. The difference of the price changes of these two instruments makes the
trading profit or loss. By this strategy trader meanwhile open two equal and directly opposite
positions which can compensate each other keeping the trading balance.

22
Spread trading can be of two types: intra-market and inter-commodity spreads. In the first case
traders can open long and short positions on the same underlying asset trading in different forms
(e.g. in spot and futures markets) and on different exchanges, while in the second case they open
long and short positions on different assets which are related to each other, like gold and silver.
In spread trading it’s important to see how related the securities are and not to predict the market
movement. It is important to find related trading instruments with a noticeable price gap to keep
the positive balance between risk and reward.
2.3.11. Swing trading strategy
Swing trading is the strategy by which traders hold the asset within one to several days
waiting to make a profit from price changes or so called “swings”. A swing trading position is
actually held longer than a day trading position and shorter than a buy-and-hold trading position,
which can be hold even for years.
Swing traders use a set of mathematically based rules to eliminate the emotional aspect of trading
and make an intensive analysis. They can create a trading system using both technical and
fundamental analyses to determine the buy and sell points. If in some strategies market trend is not
of primary importance, in swing trade it’s the first factor to consider.

The followers of this strategy trade with the primary trend of the chart and believe in the “Trend
is your friend” concept. If the currency is in an uptrend swing traders go long, that is, buy it. But
if the currency is in a downtrend, they go short- sell the currency. Often the trend is not clear-cut,
it is sideways-neither bullish, nor bearish. In such cases the currency price moves in a predictable
pattern between support and resistance levels. The swing trading opportunity here will be the
opening of a long position near the support level and opening a short position near the resistance
level.

2.4. Forex strategies based on trading order types

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Order trading helps traders to enter or exit a position at the most suitable moment by using different
orders including market orders, pending orders, limit orders, stop orders, stop loss orders and OCO
orders. Currently, advanced trading platforms provide various types of orders in trading which are
not simply ''buy button'' and ''sell button''. Each type of trading order can represent a specific
strategy. It's important to know when and how to trade and which order to use in a given situation
in order to develop the right order strategy. The most popular Forex orders that a trader can apply
in his trade are:
 Market orders - a market order is placed to instruct the trader to buy or to sell at the best
price available. The entry interfaces of market order usually have only ‘‘bought'' and ''sell''
options which make it quick and easy to use.
 Pending orders – pending orders is placed to instruct the trader to buy or to sell at the best
price available. The entry interfaces of market order usually have only ‘‘bought'' and ''sell''
options which make it quick and easy to use.
 Limit order- a limit order instructs the trader to buy or sell the asset at a specified price.
This means that first of all the trader should specify the desired buy and sell prices. The
buy limit order instructs him to buy at the specified price or lower. And the sell limit order
instructs to sell at the specified price or even higher. Once the price reaches the specified
price, the limit order will be filled.
 Stop order- a sell stop order or buy stop order is executed after the stop level, the specified
price level, has been reached. The buy stop order is placed above the market and the sell
stop order is set below the market.
 Stop loss order- a stop loss order is set to limit the risk of trade. It is placed at the specified
price level beyond which a trader doesn't want or is not ready to risk his money. For a long
position you should set the stop loss order below the entry point which will protect you
against market drops. Whereas, for a short position place the order above the trade entry to
be protected against market rises.
 OCO – OCO (one-cancels-the-other) represents a combination of two pending orders
which are placed to open a position at prices different from the current market price. If one
of them is executed the other will automatically be canceled.

2.5. Algorithmic trading strategies

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Algorithmic trading, also known as automated Forex trading, is a particular way of trading based
on a computer program which helps to determine whether to buy or sell the currency pair at a
specific time frame. This kind of computer program works by a set of signals derived from
technical analysis. Traders program their trade by instructing the software what signals to search
for and how to interpret them. High-grade platforms include complementary platforms which give
an opportunity of algorithmic trading. Such advanced platforms through which traders can perform
algorithmic trading are NetTradeX and MetaTrader 4.

NetTradeX trading platform besides its main functions, provides automated trading by NetTradeX
Advisors. The latter is a secondary platform which contributes to automate trading and enhances
the main platform’s functionality by the NTL+ (NetTradeX Language). This secondary platform
also allows performing basic trading operations in a "manual" mode, like opening and closing
positions, placing orders and using technical analysis tools.

MetaTrader 4 trading platform also gives a possibility to execute algorithmic trading through an
integrated program language MQL4. On this platform trader can create automatic trading robots,
called Advisors, and their own indicators. All the functions of creating advisors, including
debugging, testing, optimization and program compilation are performed and activated in MT4
Meta-Editor.

The Forex trading strategy by robots and programs is developed mainly to avoid the emotional
component of trade, as it is thought that the psychological aspect prevents to trade reasonably and
mostly has a negative impact on trade.

2.6. Forex risk management

25
Forex risk management can make the difference between your survival and sudden death with
forex trading. You can have the best trading system in the world and still fail without proper risk
management. Risk management is a combination of multiple ideas to control your trading risk. It
can be limiting your trade lot size, hedging, trading only during certain hours or days, or knowing
when to take losses.

Why Forex Risk Management Is Important

Risk management is one of the most key concepts to surviving as a forex trader. It is an easy
concept to grasp for traders, but more difficult to apply. Brokers in the industry like to talk about
the benefits of using leverage and keep the focus off of the drawbacks. It causes traders to come
to the trading platform with the mindset that they should be taking a large risk and aim for the big
bucks. It seems all too easy for those that have done it with a demo account, but once real money
and emotions come in, things change. It is where true risk management is important.

Controlling Losses

One form of risk management is controlling your losses. Know when to cut your losses on a trade.
You can use a hard stop or a mental stop. A hard stop is when you set your stop loss at a certain
level as you initiate your trade. A mental stop is when you set a limit to how much pressure
or drawdown you will take for the trade.

Figuring out where to set your stop loss is a science all to itself, but the main thing is, it has to be
in a way that reasonably limits your risk on a trade and makes good sense to you. Once your stop
loss is set in your head, or on your trading platform, stick with it. It is easy to fall into the trap of
moving your stop loss farther and farther out. If you do this, you are not cutting your losses
effectively, and it will ruin you in the end.

Using Correct Lot Sizes

Broker's advertising would have you think that it's feasible to open an account with $300 and use
200:1 leverage to open mini lot trades of 10,000 dollars and double your money in one trade.
Nothing could be further from the truth. There is no magic formula that will be exact when it comes
to figuring out your lot size, but in the beginning, smaller is better. Each trader will have their own
tolerance level for risk.

The best rule of thumb is to be as conservative as you can. Not everyone has $5,000 to open an
account with, but it is important to understand the risk of using larger lots with a small account
balance. Keeping a smaller lot size will allow you to stay flexible and manage your trades with
logic rather than emotions.

Tracking Overall Exposure

26
While using reduced lot size is a good thing, it will not help you very much if you open too many
lots. It is also important to understand correlations between currency pairs. For example, if you
go short on EUR/USD and long on USD/CHF, you are exposed two times to the USD and in the
same direction. It equates to being long 2 lots of USD. If the USD goes down, you have a double
dose of pain. Keeping your overall exposure limited will reduce your risk and keep you in the
game for the long haul.

The Bottom Line

Risk management is all about keeping your risk under control. The more controlled your risk is,
the more flexible you can be when you need to be. Forex trading is about opportunity. Traders
need to be able to act when those opportunities arise. By limiting your risk, you ensure that you
will be able to continue to trade when things do not go as planned and you will always be ready.
Using proper risk management can be the difference between becoming a forex professional, or
being a quick blip on the chart.

2.7. Currency risk management tools

27
Getting the right protection from adverse currency fluctuation is one of the most important steps
any business dealing in international trade can take. When margins are already tight for so many,
falling foul of exchange rate volatility can mean profits are lost or in extreme cases, the end for a
struggling business. Unless specified when buying foreign currency, the conversion will be
dictated by the rate at the time and day of purchase. Don’t let adverse currency movements take
its toll on your business. Increase your competitive advantage and protect your business from
volatile exchange rates with these 3 currency risk management tools:

1. Forward contract

A forward contract eliminates the risk of exchange rate fluctuation by allowing the user to hedge
expected foreign currency transactions by locking in a price today for a transaction that will take
place in the future. For importers and those paying overseas suppliers, predicting and protecting
future cash flow can eliminate uncertainty when doing business abroad. Forward contracts can
usually be fixed for up to a year and Give Company’s greater reassurance that if exchange rates
change unfavorably, profit margins will not be negatively affected. There is also the added security
of transparency as businesses will also know the exact sums involved when dealing with overseas
suppliers.

Let’s assume that an Irish importer purchases an item from a UK supplier in Pounds Sterling with
payment due in 30 days. She can wait to see what the EUR/GBP rate will be on that date or she
can lock in the current rate with a forward contract. When payment is due she can simply contact
her payment solution provider like Fresco to pay the Sterling proceeds of the contract to the
supplier. The fixed rate now protects the importer from the potential for a sharp move against her
when she makes the payment.

2. Limit orders

A limit order can be used to set the ideal exchange rate at which to buy a particular currency. This
is a favored strategy when current market rates are less favorable for currency buyers. They are
highly favored by businesses who need to make payments but who are not confined to deadlines.
For example, if the current rate of exchange is 1EUR=0.87GBP, a business owner may not want
to send £20,000 to the UK until he can get a better rate. He then makes a limit order to his payment
provider targeting a rate of 1EUR=0.90GBP. When this rate is reached 4 months later, the transfer
is triggered and funds are sent to the UK. This is particularly useful when payment deadlines do
not have to be fulfilled. Once the rate is achieved, businesses can be assured that the payment is
made just at the right moment. Clients will make such orders with their payment providers in order
to monitor currency market movements when they themselves are not able to do so. This can
happen following overnight market sessions when volatility may have occurred and the impact on
rates may otherwise be lost if not monitored.

3. Stop loss orders

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Stop loss orders are used by business to lock in a deal so that it never trades below what it deems
to be an acceptable exchange rate. This effectively guarantees a minimum rate at which the
currency is exchanged. It is an instruction to buy or sell currency at a predetermined ‘worst case’
exchange rate. Stop loss orders are often used when there is negative sentiment about currency
movements and the risk to exposure of such movements can then be reduced.

It should be noted also when locking in an exchange rate that a company could miss out if currency
movements go in its favor. However, normal trading businesses should avoid taking a speculative
position (either deliberately or through inertia) because this can be very costly.

Fexco Corporate Payments provides international money transfer & payment solutions for
personal and business customers. If your business trades in overseas markets, you will need to
reduce your exposure to unnecessary currency risks. Let our experienced FX dealers help you with
a solution that will protect your bottom line.

2.8. Forex market money management

29
Ask any trader who is successful in the long run about the single most important factor in trading,
and the majority of them will tell it’s a strict way of managing your money and risk. Even the best
strategy in the world won’t be of much help if you don’t take care about your risk per trade, reward-
to-risk ratios, don’t use stop-loss orders or trade too aggressively. That’s why we decided to cover
the main aspects of money management in this article, to help you become and stay a successful
trader in the forex market.

1. Know your risk per trade

As it names implies, the risk per trade is the amount of your trading account that you’re ready to
risk on a single trade. It’s a key aspect of prudent money management that prevents you from
blowing your account on a series of losing trades. Many money management techniques state that
the upper limit of your risk per trade should be 2% of your trading account, or even less if you’re
a beginner in the markets.

Your risk per trade will also determine your overall position size per trade. Let’s say the size of
your trading account is $10,000, and you’ve spotted a promising trade setup with an appropriate
stop-loss of 50 pips.

Knowing that your maximal risk per trade is 2% of your account, i.e. $200, it’s easy to calculate
your appropriate position size for that trade. Simply divide your capital at risk with the stop-loss
in pips. This calculation returns your dollar value per pip of $4, or cca. 0.4 lots ($200 / 50 pips =
$4).

2. Always use stop losses

A stop-loss order is the only guarantee that you won’t lose a substantial amount of money on a
single trade. Although certain market conditions can lead to your stop-loss order not being
executed at the set price, most of the time they work just well to prevent losing your entire account
on a few trades.

Whether you use time stops, volatility stops, or chart stops, always make sure that your stop-loss
level represents a target based on actual price-action and market conditions. This includes placing
your stops around support and resistance levels, trend lines, channels, chart patterns, as well as
considering the volatility of the pair to let the price enough room to breathe. Never place your
stops based on imaginary percentage or pip amounts.

3. Consider reward to risk ratios of trades

Besides having a clear stop target for your trade, you should also know where to close your position
in advance once it gets profitable. Placing inappropriate take-profit levels can be as damaging to
your trading results as placing inappropriate stop levels, as you won’t be able to maximize the
profit potential of your trade setup.

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Your take-profit level also determines the reward-to-risk ratio of your trade, which simply
represents the amount of your risk relative to the potential profit of the trade. While R/R ratios of
1:1 mean that you’re risking the same amount as your potential gain, trades with R/R ratios of 2:1
or 3:1 have double or triple the amount of potential gain relative to the risk.

In other words, while it will take you the same amount of winning and losing trades with R/R ratios
of 1:1 to be break-even, you can have two losing trades and only one winning trade with an R/R
of 3:1 and still be profitable.

4. Use leverage wisely

Many traders are attracted to the forex market in the first place because of the tremendous leverage
that is offered by forex brokers. Although leverage is necessary in the forex market as many
currency pairs usually move less than 1% per day, traders need to understand that a higher leverage
also increases the potential loss per trade.

As said earlier, always determine your position size and leverage based on the stop-loss in pips, in
order to avoid large losses.

5. Don’t trade based on emotions

This is where many novice traders have difficulties with. Moving stop-losses once a trade is
already open, exiting early from a profitable trade or simply using too much leverage to increase
potential profits are usual mistakes that happen once traders let emotions manage their trades. If
you do your analysis right, have confidence in your entry and exit levels and let the market
determine if you were right or wrong.

Having a strict and written trading plan that contains not only your trading strategy, but also the
way you manage money and risk, can help you to avoid emotional trading.

6. Keep a trading journal and learn along the way

Keeping a trading journal will help you to identify your weak spots of money management.
Analyze your journal entries regularly and identify recurring patterns that lead you to lose money.
Are your stop-losses too tight or take-profits too far away, reward-to-risk ratios inappropriate or
risk per trades too large? This will help you fine-tune your money management techniques and
become more successful in the future.

Money management is perhaps the most important technique traders need to understand when
trading the forex market. Although money management is a wide and flexible topic, the mentioned
points in this article give you an overview of the basics you need to be aware of as a forex trader.
These points alone will already give you a significant trading edge over the majority of forex
traders who struggle to become profitable in this market.

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 3. COMPANY PROFILE
At BlueMax Capital, we are committed to complete transparency, integrity and service excellence
in all areas of our services. We believe in reaching a world of infinite possibilities and we hope to
assist you in growing your wealth with confidence.

By sharing our dedication, intelligence and passion for trading, we are aiming to be the most trusted
financial service provider. Clients and partners will be offered with the most reliable brokerage
solutions and investment options.

BlueMax Capital is a major provider of online foreign exchange (Forex) trading services, offering
margin FX and commodities trading to individuals and institutional clients world-wide. Our multi-
bank liquidity feed, fast execution and flexible leverage options set us apart as an industry leader.

BlueMax Capital is one of the best online Forex trading service providers incorporated in 2014.
The company is registered in UK, Belize, Hong Kong, and India with IFSC regulation in Belize.
Our website goes www.bluemaxcapital.com.

Primarily BlueMax Capital provides online foreign exchange trading services, offering Currencies,
Commodity, Crypto Currencies, and Indexes trading to individual and institutional clients
worldwide. We have 12000+ clients in more than 20 countries and we aim to be the best for our
customers by ensuring to trade both legally and ethically.

Our Mission

We think that the trader’s only concern should be search of a successful trading strategy. Therefore,
we strive to provide high-quality brokerage services so that you can just trade, without being
disturbed by anything else.

Integrity

We follow strict business and moral ethics in doing business. We do not interfere in clients trading
activity by any means. Client’s information and other details are kept confidential. We do every
possible thing to facilitate and make client to be profitable.

Efficiency

Time is money, especially on Forex Trading, where each second is valuable. Therefore, we know
how important fast and timely service is. We provide an instant response and support to
our valuable clients to achieve success in trading.

Professionalism

Only high-level professionals can provide brokerage services. That’s why we always improve to
provide you quality services and support. Our Company’s Quality and trust worthy services make
us a perfect professional to our clients.

32
Reliability

We value our reputation and always fulfill our obligations toward clients and partners. We use one
of the most popular trading platforms MetaTrader 4, which has already proven its reliability over
the years of excellent work.

Our vision

BlueMax Capital understands the fact, that different people need different solutions. Our aim is to
provide an ultimate solution for traders, investors, and business people and also give them a
delightful experience rather than just selling products and services. BlueMax also aspires to be one
of the most respectable and trusted organization.

PAMM Solution

Interested in trading currencies and commodities online but do not have enough time or experience
to trade in the market. Our PAMM solution might be a good choice for you. Our Percentage
Allocation Money Management system brings investors and the fund managers together where an
investor can select his/her fund manager to trade on behalf of him. The fund manager trades
multiple forex trading accounts using his own capital with the aim of earning profits.

BlueMax Capital identified the need for a new investing tool that can be beneficial for both Fund
Managers and Investors. This program gives the opportunity to Fund Managers to showcase their
performance and attract funds to be managed, and for Investors to allocate their funds to different
Fund Managers, therefore diversifying their risk and enhancing their returns.

The PAMM allows distribution of trades from a single account to a group of sub accounts. So the
Fund Managers can trade at his master account and all the trades will automatically be distributed
to the group of his managed accounts. The PAMM software uses the ratio based allocation which
allows Fund Managers to control over many sub account with variable balance. This method will
allocate positions to sub accounts based on the equity of each sub account.

Advantage of trading with BlueMax

BlueMax Capital respects its clients and cares for their investments by focusing on customer’s
profit with calculated risk. We believe in teamwork, with the passion for excellence and utmost
trust.

Global Presence

BlueMax provides forex trading services in more than 20 countries and has about 12000+ clients
across the world.

Dedicated ECN Engine

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Since we have a tie-up with various banks all over the world, it is easy to provide a reliable spread
most of the time and the trades are processed through advanced Data Centers located in different
geographical locations.

Worlds Popular Trading Platform

We provide the world’s best and the most reliable trading platform called the MT4 (MetaTrader
4), which makes trading easy and simple. The MT4 application is user-friendly; many forex traders
from all over the world use this application for its reliability and versatility. The MT4 application
can be downloaded on the following platforms:

1. Desktop - Working on with the MT4 application is easy to operate keeping, trading simple
and accessible.
2. Web trader - Trading can be done on our website directly in the internet browser without
the need to download the MT4 application.
3. Mobile app - Trade anywhere anytime using the mobile applications.

Wide Range of Trading Instruments

BlueMax has a wide range of trading instruments such as Fx Majors, Fx Minors, Fx Crosses, Fx
Exotics, Metals, Bullions, Energy, Indexes, etc.

Safety and Integrity

At BlueMax, we take utmost efforts to ensure that our client’s financial assets are safe and secure
by providing the highest level of financial confidence and investment protection.

Market Updates

We provide Forex Daily Market updates for major currency pairs, with market entry and exit
points, approximate target level and with trending news to help traders find opportunities in the
market.

4. RESEARCH METHODOLOGY

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Research design

A research design is a framework or blueprint for conducting the marketing research project. It
specifies the details of the procedures necessary for obtaining the information needed to structure
and solve marketing research problems.

Research Design

1. Exploratory research
2. Conclusive research

Exploratory research Design

 In exploratory design first collect the information about research

 Understand foreign exchange market
 About foreign exchange market in India
 About Indian economy
 Impact of currency market in Indian economy
 Collection of primary data from past research
 Then collection secondary data from Books, Magazines, Internet etc
 Then start qualitative research in this the interview of branch manager &relationship
manager of BlueMax Capital Solution Pvt. Ltd.

Conclusive research design

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  In conclusive research main part is survey.
 In this research design we get perfect conclusion.
 It is structure.

In conclusive research design two types

a. Causal research
b. Descriptive research

In this research use Descriptive research

 Descriptive research two types

I. Cross sectional
II. Longitudinal design

In cross sectional

 In cross sectional use Single cross sectional design because in our research the information
collects only one’s a time.
 In longitudinal design use panel.

Research design: -1. Exploratory research

2. Conclusive research

1. Exploratory research: - a. Secondary research

b. Qualitative research

I. Focus group interview

II. In-depth interview

2. Conclusive research > Descriptive research

Descriptive research > cross sectional

Cross-sectional > signal cross-sectional

Define the target population

1. Target population: The collection of elements or objects that process the information
sought by the researcher and about which inferences are to be made.
2. Elements: An object that possesses the information sought by the researcher.
3. Sampling unit: The basic unit containing the elements of the population to besampled.

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 4. Sampling frame: A representation of the elements of the target population. It consists of a
list or set of direction for identifying the target population.
5. Extent: Extent refers to the geographical boundaries.
6. Time: Time is time period under consideration.

Target population: All the account holders of BlueMax Capital Solution Pvt. Ltd, who trade in
currency.

Elements: investors of currency market.

Sampling unit: investor of currency market

Sampling frame: not available

Extent: Pune

Time: 10 am to 6 pm

The six ‘W’

1. Who: who are respondent?

The accounts holder in BlueMax Capital Solution Pvt. Ltd. who are trading in Forex
Market

2. What: what information should be obtained from the respondent?

A wide variety of information could be obtained, including:

a. What are income criteria?

b. In which financial instrument they invest in?
c. Factors they determine before investing.

3. When: when should the information is obtained from the respondent?

10.00a.m. to 6.00p.m.

4. Where: where should the respondent is contacted to obtain the required information?

The information was collected from the BlueMaxSecurities, Parimal Garden, and
Ahmadabad.

5. Why: why are we obtaining information from the respondent?

It is the necessary step to determine the factors of currency market impact in Indian
economy because of the research project assigned.
6. Way: In what way are we going to obtain information from the respondent?

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a. Personal interview with questioners
b. Expert opinion

38
 5. DATA ANALYSIS AND INTERPRETATION
Case study 1
Trading EUR/USD Ahead of FOMC Meeting, Euro zone CPI
Release
The trade setups are based on sound fundamental and technical analyses. On September 2018, I
was notices that technical are signaling some real downside risk in EUR/USD. The preliminary
technical analysis was prompted me to consider a sell (short) position in the pair.

Fundamental Analysis

In order to assess the macro-economic or fundamental scenario, I opened the economic calendar.
I found that two major economic events are due today:

1. Euro zone CPI: At 9:00 GMT, Euro stat is scheduled to release Euro Zone’s Consumer
Price Index (CPI) report for September 2018. CPI is considered the best gauge for inflation
over a specific period of time. After some more research on the economic release, I was
coming to know that analysts are expecting a decline in Euro zone’s CPI to 0.7% in
September 2018 as compared to 0.9% during the same duration a year before. Generally
speaking, a high CPI reading (close to 2%) is seen as bullish for EUR/USD and vice versa.
2. US Monetary Policy Meeting: At 14:00 GMT, Federal Reserve is due to announce a
Federal Open Market Committee (FOMC) decision on the pace of monthly asset purchase
program and benchmark interest rate after a two-day monetary policy meeting. I was again
opens some news websites and finds that analysts are, almost unanimously, expecting
tapering in monthly asset purchase program worth $75 billion and no change in benchmark
interest rate.

FUNDAMENTAL CONCLUSIONS

After thorough research, I concluded that the fundamentals are reinforcing his preliminary
technical analysis about the potential downside risk in EUR/USD. I had plans to conduct an in-
depth technical analysis to make a final decision.

39
Technical Analysis

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

Analysis

The current market price is 1.3800; I know that the price will face huge resistance near 1.3891 because
now it is a confluence of 261.8% fib level and the shooting star resistance. So i was making my mind to
open a sell position around 1.3800 if the Euro zone’s CPI comes worse than expectations or in line with
expectations. The data is due just a few minutes later.

I was sold EUR/USD

Euro zone’s CPI data comes worse than the forecast. Euro stat report shows that CPI declined to
0.5% in December, more than the market expectations. I was sold EUR/USD at 1.3800 with 0.10
lot and places stop loss at 1.3900, I was sets my initial target around 1.3670. The current leverage
of my account is 1:400 so $34.50 will be in use for this trade. I was in risked $100 on this trade as
Pips slide Euro halted the downside movement as investors turned their focus to FOMC
announcement.

40
End Result

At 14:00 GMT, the Federal Reserve announces a $10 billion cut in the monthly asset purchases
program, trimming it down to $65 billion and leaves the interest rate unchanged. The US dollar
appreciates after the US central bank decision and consequently, the EUR/USD accelerates the
downside movement. Fortunately, a mere couple of hours after the Fed announcement, EUR/USD
hit 1.3670 and I got 130 pips Take Profit (TP), with a dollar value of $130.

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Case study 2
Identifying the “Buy” Opportunity in USD/JPY through MACD
Divergence
My technical analysis is based on different technical indicators and price action signals. On
September 2018, my trading system generated a couple of bullish signals about USD/JPY. So I
decided to conduct an in-depth technical analysis on the pair for a potential buying opportunity.

Positive Divergence

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

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

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RSI & CCI

I noticed that both the Relative Strength Index (RSI) and the Commodity Channel Index (CCI)
were retreating from oversold territories. This was the second major signal for a potential bullish
reversal in USD/JPY.

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

Fundamental Analysis

After getting adequate bullish signals from technical analysis, I checked out the economic
calendar. I was found that no major event was due on September 2018. A few medium-level
economic reports about the US economy were however, scheduled for release on that day.

1. ADP Employment Change: The report shows the number of people who got employed in
the US over a specific period of time. It is a monthly report which stirs moderate volatility
in US Dollar (USD). On September 2018, the report gave the downbeat reading of 127K;
analysts had predicted 180K new jobs in august.
2. Markit Services PMI: The report, released by Markit Economics, measures the
performance of the US services sector during a particular time period. On September 2018,

43
 the report showed a 56.7 point reading in august; this was broadly in line with the
expectations.
3. ISM Non-Manufacturing PMI: The report, released by the Institute of Supply
Management (ISM), shows the performance of the US services sector over a specific period
of time. On September 2018, the report posted the upbeat reading of 54.0; market was
expecting a 53.7 point reading in august compared to 53.0 in the month before.

End Result

Based on the strong bullish signals from technical analysis and mixed US economic reports, I was
finally opened a long (buy) position in USD/JPY at 101.00. I kept the stop-loss at 100.50 and the
take profit at 102.50. My lot size was 0.10, i.e., I was in risked $50 for a $150 potential profit.
After two days, my analysis turned out to be correct and I was enjoyed 150 pips or a $150 profit.

44
Case study 3
Identifying a ‘Sell’ Opportunity in USD/CHF through Trend Line
Resistance
In this case my technical analysis is mainly focused on trend line support/resistance levels and
price patterns. In addition, I also keep an eye on fundamental events. On September 2018, I realized
some serious downside risk in the USD/CHF which prompted me to conduct an in-depth technical
analysis for the pair.

Technical Analysis

I drew trend lines on the daily chart which showed a downward slope channel in the pair. The
slope channel further revealed that the price faced rejection at the channel resistance three times
in the recent past.

To confirm the bearish sentiment on the pair, I was inserted Fibonacci levels on the daily chart.
He then came to know that both the 50% fib level and the channel resistance were at the same
point: 0.9027.

45
When two or more resistance or support levels combine at the same point, such point is known as
confluence. Confluence support and confluence resistance are considered the best levels for entry.
Based on the repeated rejection around channel resistance and the confluence resistance, I was
concluded that his technical analysis as very bearish for the pair.

Fundamental Analysis

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

I was sold USD/CHF and earned $100

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

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Case study 4
Long-Term Trade Opportunity Identified by Inverse H&S Pattern
My trades are based on different price patterns and extensive fundamental research. On September
2018, I had observed the Inverse Head & Shoulder (H&S) pattern in NZD/USD which gave her a
potential buying opportunity in the pair.

Technical Analysis

Inverse H&S Pattern

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

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

47
Fundamental Analysis

Since the trade opportunity identified by the Inverse H&S Pattern was long term, i decided to
study all of the major events which were due in next 2-3 weeks. I came to know that the most
significant event pertaining to New Zealand’s economy was the interest rate decision by the
Reserve Bank of New Zealand (RBNZ). The event was due on Wednesday, September 12, 2018.
I was conducted some more research to get clues on the RBNZ rate decision. I learned that the
RBNZ was expected to increase the interest rate by 0.25% to 2.75%, according to the median
projection of different economists surveyed by Bloomberg.

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

End Result

On March 3, the price broke the neckline, confirming the Inverse H&S Pattern. After getting
favorable signals from both the technical and fundamental analyses, I eventually opened a long
(buy) position in NZD/USD at 0.8350 with 0.10 lot size. I placed the stop-loss at 0.8300 and my
target was 0.8550, which means I was in risked $50 for the potential profit of $200. As expected,
RBNZ announced an increase in the benchmark interest rate by 0.25% on September 12 and
consequently, NZD/USD rallied above 0.8550. Thus, I got the Take Profit (TP) worth $200.

48
Case study 5
Identifying Long-Term Buying Opportunity in Gold for $500 Profit
The trades are based on long-term fundamental and technical analyses. I keep the trades open for
weeks and months. In August 2018, I noticed some real bullish strength in the Gold price. Like a
professional trader, I planned to conduct thorough technical and fundamental analyses for potential
buying opportunity in the precious metal.

Technical Analysis

Double bottom price pattern

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

Parabolic SAR

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

49
On August 6, I was noticed that the Parabolic SAR had generated some real bullish signals,
reinforcing the double-bottom pattern. In addition, some other technical indicators such as the
Relative Strength Index (RSI) and Commodity Channel Index (CCI) were also showing oversold
readings. These are more signals for potential bullish reversal.

Fundamental Analysis

A number of major economic events pertaining to the US economy were due on August 6. I was
decided to wait for the outcomes of the events before opening a buy trade in Gold.

1. Markit Services PMI

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

2. Factory Orders

The manufacturers in the US received 1.5% more orders in July as compared to 0.5% decline the
month before. Analysts, however, were expecting a 1.8% increase in the September orders so the
data downbeat the expectations.

50
End Result

After getting a couple of strong bullish signals through the technical analysis and downbeat US
data, I was finally opened a long (buy) position in gold. I was bought a 0.10 gold lot at $1240 an
ounce. I placed the stop-loss around the swing low of the previous daily candle which was $1218;
his long-term target was $1330. A couple of days later, US non-farm payrolls came in worse than
expectations and gold shot to $1265. This further encouraged me to keep my trade open. When the
precious metal reached $1290, I brought my stop-loss at breakeven point, i.e., at the price of entry.
Now, I was completely risk-free. Fortunately, gold never approached $1240 after my entry and
kept printing new highs until the yellow metal hit $1340 on September 2018. Thus, I was achieved
my target and earned $500.

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Case study 6
Identifying Long-Term Trade Opportunity in Silver an after
China’s Manufacturing Slowdown
I love to identify and trade the long-term trends in the metals for big profits. In August, I was come
to know about the manufacturing slowdown in China which prompted him to look for potential
trade opportunities in precious metals.

Manufacturing Slowdown in China

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

Technical Analysis

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

Macroeconomic Scenario

China grew at 7.7% in 2018, the slowest pace in more than a decade. Economists believe that the
pace of growth is expected to slow down further during the course of the current year. Slow growth
in the Asian nation means low demand for silver and other precious metals. Moreover, the Federal
Reserve policymakers clearly indicated in the January meeting that the central bank wanted to drop
the entire Quantitative Easing (QE) program by the end of October this year. The end of the
stimulus means stronger US dollar (USD) or, in other words, cheaper silver because the prices of
commodities are negatively correlated to the dollar.

52
End Result

After getting strong bearish signals from both the technical and fundamental analyses, Idecided to
go short on silver. I was sold the white metal at $21.80 with a 0.10 lot size, keeping the stop-loss
at $22.20, well above the 76.4%fib level resistance.

53
Case study 7
Identifying the ‘Buy’ Opportunity in GBP/USD Ahead of US Non-
Farm Pay
My technical analysis is based on trend line support/resistance, Fibonacci levels, MACD
divergence, and overbought/oversold signals through RSI and CCI. Moreover, I keep a close eye
on macro-economic events and daily news releases. On July, I was noted the repeated rejection in
GBP/USD around 1.6250 that prompted me to conduct an in-depth technical analysis for a
potential buying opportunity in the pair.

Technical Analysis

Like a typical technical trader, I was first inserted Fibonacci levels into the chart. I was found that
1.6250 was 50% fib support of the last major rally. 50% fib level is considered the most significant
support/resistance level among currency traders; it is observed that price takes a rebound from
50% fib level in almost 65%-70% cases. I was felt a strong bullish feeling about the pair. However,
my technical analysis was incomplete; I was wanted to get some more confirmation signals.

I had conducted swing analysis on the daily chart. I found that 1.6308 was the ‘swing low’ of the
previous downward wave. It is pertinent that in about 70%-80% cases, price takes retracement
from the very first support level after the ‘swing low’ of the previous wave. In the case of

54
GBP/USD scenario, 50% fib level or 1.6250 was the first support level after the ‘swing low’ of
the previous wave. This was the second strong signal for a long-term bullish reversal in the pair.
Therefore, I was feeling very much convinced about the buy trade. Furthermore, Angela found
that the Relative Strength Index (RSI) and the Commodity Channel Index (CCI) were also showing
oversold readings. An RSI reading below 30 and a CCI reading below -100 are considered oversold
signals among traders.

Fundamental Analysis

After getting numerous “Buy” signals from the technical analysis, I move onto the fundamental
analysis. I was found that Britain’s docket was empty for the day; however, in the US, the labor
department was scheduled to release non-farm payrolls and unemployment rate reports for the
month of July. Upon further research, I came to know that analysts were expecting a better non-
farm payrolls reading as well as a decrease in the unemployment rate for August. According to the
median projection of different analysts, non-farm payrolls rose by 150K in compared to 113K
increase in the month before. The unemployment rate ticked down to 6.7% in August compared to
6.8% in the previous month. I was decided to buy GBP/USD in case of worse than expected US
job data.

End Result

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

Case study 8

55
The “Over-Trader”
The “Over Trader” type is pretty much destined for failure right from the very start. While I know
this sounds pretty bleak, it is however a harsh fact of reality. Randomly clicking buttons and
entering the market on a whim is only going to guarantee one thing: frustration and multiple losses.
I have been guilty of over-trading myself so I know exactly the dangers that come with it. It is
especially difficult in the currency markets when you consider that you have to pay a spread as
well every time you get into a position. Imagine taking 20 trades in one day with a two pip spread
– that’s 40 pips given away before you have even had a winning trade!

Beyond that fact however, is the important question of why people over-trade. Having worked
with multiple students worldwide, my conclusion is that most traders hit the button far too many

56
times because they have a feeling that they know what is going to happen next. This is usually a
result of losing a few trades in the first place, which typically puts a person on the back foot and
creates a level of desperation with need to make the money back and get into a level of profitability.
Going home a winner for the day is a far more attractive prospect than going home a loser, so it’s
easy to understand why people try to force trades in an effort to get them back to the profitable
scenario. It amazes me how easy it is for people to stop trading when they win straight off the bat,
yet they carry on when they are losing because they are so desperate to make those losses back.
How crazy is that? I will stop trading when I win but I will carry on when I lose!

The last consideration we have to take into account here is that many of us just lack the patience
to wait for the right set up. If you want to earn income trading, you have to have a trading plan that
does not require constant activity in taking trades. Most time is spent waiting for the right set up
which will offer the maximum reward and the lowest possible risk, with a high level of probability
involved as well. When markets are moving frantically, it can be difficult to sit on your hands and
wait for the best time to pick your spot. Yes, patience takes time to develop but as they say, the
best things in life are worth waiting for.

Case study 9

57
Too Many Stop Outs
When I meet a trader who is taking far too many stop outs it usually comes down to one of two
things: either their stop losses are too tight or they don’t have a proven rules-based strategy that
they are using. Taking small loss after small loss can add up and, while we have to prevent the
large loss from happening, it is also vital to recognize that a multitude of small losses can start to
add up to one large loss over a longer period of time. I call this the “slow bleed” of the account.

Many traders I encounter use tight stop losses because they are trying to get cheap entries into the
market and huge rewards. While there are rare occasions when you can get away with a minimal

58
stop loss and make a huge reward, in real-world scenarios this is often very difficult to achieve on
a consistent basis and many times, the Forex trader will find themselves getting stopped out only
to then witness the price move in the direction in which they anticipated. The key here is giving
yourself enough room for the trade to work, while also knowing when to get out if you are wrong.

You should also ask yourself the question of whether you are following a trade plan when you find
and place your trades. If you are following a plan, you should know your specific entry price, stop
loss price and target all before you even place your order. Randomly taking a trade and applying
a stop loss and target is no guarantee of success because you should only enter a position at the
key moment when the lowest risk and the highest probability of success are present. This is what
we call “market timing.”

An inability to time the market means you will have a low success rate in your trades making it
unlikely that you are ever going to achieve your short-term income or long-term wealth goals that
you set out in advance. Using Online Trading Academy’s patented core strategy which identifies
institutional supply and demand imbalances on a price chart, students have the ability to time the
market in advance using a stop loss entry and target price which is both objective and effective in
maximizing reward and minimizing risk. This alone prevents a multitude of unnecessary stop
losses.

Case study 10
Nothing I Do Ever Work!
59
The last of our case studies is one which is probably the most common of all. It is a frustrating
time when traders go through the syndrome of feeling like every time they place a trade the market
is against them. You can feel like nothing you do is right and that you’re destined for failure no
matter what you try to do. Obviously, if you have never had any formal education in how to trade
it shouldn’t be too surprising to find yourself facing these hurdles because there are many
professionals out there who understand how the market really works and are willing to play that
against the novice.

If you have had some education however, then well for you! This is the very first step in making
sure that you are on the right track and will, no doubt, give you the best chance of success in the
long term. It should be recognized though that getting an education is step one. The second step is
being consistent enough in your actions by sticking to one proven strategy time and time again. It
can be tempting to keep reworking your system to maximize results, especially if you go through
the occasional losing period. However, in my experience, this can be a very dangerous thing to do,
especially if you’re not keeping a healthy track record of your actions in the markets.

The only way to find out what works for you and what doesn’t work for you is to simply do the
same thing over and over again for a number of times and analyze your results. Understand what
practices give you success and recognize the ones that don’t. By doing this level of ground work
you will discover the best course of action that suits your style and psychology when trading. Many
traders just fail to stick to one thing long enough to give themselves time to really figure out what
works because, after all, consistency is the true key to successful market speculation. If you can’t
be consistent enough to gain a track record, then you are doomed to failure from the very start.

I hope we found the topics in this article helpful in overcoming some of the hurdles that we may
be facing in our own trading experience. Hopefully, if we have been enjoying success up until this
point, then we can use these guidelines to know what not to do in the future.

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 6. LEARNING OF STUDENTS - FINDINGS
The project has been a great learning experience. It has provided me with learning opportunity
about currency market and various currency exchanges. The project involved gaining information
about various currency exchanges and getting awareness about various terminologies associated
with them such as trading in forex market, technical analysis, fundamental analysis, client
interaction, etc.

After i began to use the personal network of my friends and asked them to speak to their
acquaintances – personal and official and check if they know anything about currency market.

The currency market trends, the rising currency prices giving rise to inflation, how some currency
linked are to linked with an economy also helped me a lot to gain more knowledge about currency
market.

By handling the project under the guidance of company guide and faculty guide has given me
exposure of organizational culture and environment. On the whole, I understood the psyche of
prospective and current trends of the market.

In the beginning of the project I was a bit uncomfortable as I did not know anything about currency
market, but the project has made me realize that to reach heights of success and position you have
to start from the scratch.

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 6.1. Contribution to host organization and recommendations
After such observation and some conclusions made on the basis of that I would like to recommend
some important points, upon which company should focus and try to grow its business by tapping
the market through making new customers. In this recommendation part of this project work I am
suggesting these points.

First thing which I would like to suggest is the company should focus on its promotional forces,
so that it would be able to convey the product features to the company people. Once the features
will be exposed then only it can make new customers. Through the survey responses we knew that
advertisement is the most effective medium of creating awareness. So to differentiate our product
and to expose our exclusive benefits we need to take it out in front of the people.

To create awareness about the product we can take several steps such as:

 Arranging various kinds of activities at public gathering.

 Placing the customer facilitating the desks at various places.
 Approach to the various offices to get new leads or customer contacts.

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 6.2. Conclusion
Although foreign exchange may be confusing, in today’s global marketplace, there is a critical
need for almost everyone to understand foreign exchange like never before. As the world shrinks,
there is an ever-increasing likelihood that we will be required to address the risks associated with
the fact that there are different currencies used all around the world and that these currencies will
have an immediate impact on our world.

We must be able to evaluate the effects of, and actively respond to, changes in exchange rates with
respect to our consumption decisions, investment portfolios, business plans, government policies,
and other life choices (both financial and otherwise).

Moreover, there is an ever-increasing probability that we will have to transact in these foreign
exchange markets—in our personal or professional life. This book has been intended to assist with
this potentially new and doubtlessly confusing milieu.

The words that were written by Claude Tygier some 20 years ago are as true today as they were
then:

To most people, the arena where the world’s major currencies fluctuate against each other remains
very much of a mystery.

Perhaps that is why I enjoy learning foreign exchange. It is gratifying to empower people with a
new language and to assist them in entering and actively participating in a world that I believe is
truly fascinating.

At this closing stage, let me summarize what we’ve attempted to accomplish in this book by stating
why...

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6.3. Limitation of study
 Study is limited to currency trading and its usage and utility.
 Study is limited to currency exchange and factors deciding currency fluctuations.
 Study is limited to forex exchange and how forex trading is done.
 Study is limited to forex brokers.
 Study is limited to currency trading in India.
 Owing to the dynamic nature of the global economy in particular, findings of the report
will not be applicable after a point of time.
 No practical access to global market exchange.
 Time constraint.
 Counterparty risks.
 Leverage risks.
 Operational risks.
 High volatility.
 Lack of regulation.

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 7. References and Bibliography
Bibliography
1. http://www.bseindia.com
2. http://www.nseindia.com
3. http://www.investopedia.com
4. http://www.google.com
5. http://www.currencytradingweb.com
6. http://www.forexfactory.com
7. http://www.investing.com
8. http://www.babypips.com
9. http://www.marketgurukul.com
10. http://www.bazarbites.com

References
Books referred for the study
1. Currency trading for dummies by Mark Galant and Brian Dollan.
2. NCFM currency future module.

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