Eur/Gbp Trade on 3hr charts

So i'm in on this trade, short, so lets see what happens. It looks like it's going to complete an "M" pattern and on that second bump there was a consolidation and it just broke out short and pulled back..

My main concern is the timing.. it feels early, and if i'm wrong on the timing.. well it's a bad trade and i'll probably lose money even if it does eventually go down. I'd give it a 40% chance i'll make it through this.. now that i think about it, why did i get in early? maybe i should've skipped this trade.. oh well.. at least my risk is small

the kind of crap that goes through the mind of a typical trader i guess

but the completion of the next bar should give me a pretty clear sign whether to stay in this trade or not.. unless it hits my stop loss at 0.8737

Consolidation and Breakouts

I'm going to try to switch between beginner guides and more advance guides between posts.. or just do whatever I feel like. But i think if i just start writing beginner guides all the time, I'm gonna start going crazy..

Consolidations - when prices aren't really going anywhere. It's just bouncing around within a certain price range. You can also call these Ranges, but who cares what they're called.. just gotta know what they look like.

Exhibit #1


Exhibit #2




.. and these consolidations are almost always followed by a Breakout



Now market behavior, especially in vary volatile currency pairs or even stocks, cycle between these two typical behaviors. They Consolidate and Breakout.. consolidate and breakout.. consolidate and breakout..



Price breaks out to a new territory and then takes a break and rests for a while. Then it breaks out again. Couple things you can imagine is that while the price is consolidating.. investors, traders, speculators whatever you want to call them are placing their bets... Some think it's going to break UP and.... some think it's going to break DOWN.

Lets pretend after a consolidation the price broke down...

The traders who bet it was going down is saying YES and they sell more.. or do nothing..

AND the traders who bet the price was going up is saying SHIZAS! Hell NO... and what do they do? Well they have to sell out of their positions, or risk losing even more money.

There is a double selling effect that's pushing the price down... there are a LOT of sellers at this time.. much more than buyers.. and if you are buying at this time, you sir, should not be trading

This isn't the only reason why the market is going down, but it sure is a big one.

Now how do you make money from this information? Trade consolidations and make sure you're one the right end when it breaks, lol. I'll see if i can make another article sometime in the future and put some strategies to effectively trade this beast.

Chart Reading for Beginners

If you are new to reading charts for Forex, then you've come to the right place.


Now this chart won't look the same for you unless you are using the broker I am using, but the basics are all the same and you'll see them.

1. Currencies - Pretty straight forward. You can pick different currency pairs and see what's going on. Think of these as if they were like stocks. You can pick ebay stock or switch to Apple stocks.. whatever, and see whats going on with their prices.

2. Time Frame - Usually you'll see 15min charts, 5min charts, 1 hour charts.. Whatever time frame you choose, that means each bar you see on the chart (those little green and red bars) represents that amount time.

In other words, if you pick 15min charts, then each one of those red and green bar represents 15min minutes. So 4 bars represents.. 1 hour.

3. Prices - The price the currency pair is trading at. How are these prices calculated? Who cares.. all you need to know is sell if you think the price is going down.. and buy if you think the price is going up.


Now lets look at what the hell those little green and red bars mean. The two most popular type of charts are the Bar charts and the Candlestick charts. I personally use candle stick because they just look better. Either way they both tell the same story.

Bar Chart:


Candlestick Chart:






What do those little green/red bars mean? Let's look at the candle stick chart first.




Let's pretend that you are looking at the 1 hour charts. So each of these bars represent 1 hour. The green bar shows in the beginning of the 1 hour period the price started at 1.0404 area (open) and then at the end of that hour it ended at 1.0415 (close). The open and close part of the candlestick represent what the price started at and what the price ended at.

The long wick on each end shows the range of the price movement within the hour. So looking at that picture, that candlestick will tell us that in the beginning of the hour the price started at 1.0404.. then it closed at 1.0415 at the end of the hour. An within that hour the price moved as high as 1.0425 and as low as 1.0396.

If we look the red candlestick, it is pretty much the same thing except for the fact that the open is at the top and the close is at the bottom. In the picture shown below the price started at 1.4899 area and then ended at 1.4862 area.

A bar chart is pretty similiar to a candlestick except for the way it shows the open and close.

The opening price is shown by the horizontal line of the left side.. and the close price is shown by the horizontal line of the right side.

I tried to explain this as best as I can and hopefully it all makes sense. If you have any questions let me know just email me or something.

My first Forex Post

So I thought I'd share some of my experiences in the forex market today... Made about $206 I believe in the USD/JPY 30 min charts.... yeah.. it may seem like $200 a day is nothing, but just to let you know a day like this for me is pretty rare. I'll be lucky to see a $200 day once every 2 weeks.

Anyways on the 30min charts the second hump you see right before I put on my trade, it was sitting on a nice 90.50 round number, 50 fibonacci retracement, and previous support zone. As you can see I got out way early but I was more concerned that it would start to consolidate at this zone so I got out.... Wuss... actually I played this trade pretty smart.

There's a couple more things I saw in this chart that gave me some hints that it was going south but I don't feel like explaining because it'll take forever. Maybe one day I'll explain all the stuff in here.

Sorry about the trading lingo language whatever.. if you have no idea what I'm talking about just let me know, I'll try to explain it as best as I can because I do want to make this site noob friendly eventually.