Forex One Minute Strategy.“It takes a minute to create wealth.”By Kgopotso MmutlaneSponsored by: Sefosh Kings and Mmutlane traders
THIS ELECTRONIC COPY BELONGS TO: Kgopotso MmutlaneEditor: Atlegang KepadisaEmail: ders.co.zaCell phone number: 27609294089 27799457854Website: www.mmutlanetraders.co.zaRELEASE YEAR: 2018PDF NUMBER:All rights reserved. No part of this publication may be reproduced ortransmitted in any form or by any means, electronic or mechanical,including photocopy, recording or any information storage and retrievalsystem, without permission in writing from the publisher.Printing and binding by:
AcknowledgementI Kgopotso Mmutlane would like to give special thanks to my Co-Authors namelyLasmeth Mphegoleng Makhubedu, Lesly Pfundzo Sikhwari and Pontsho KhutsoMmutlane for helping me make this book a success. Your hard work and determinationis appreciated at all times, not forgetting the only lady who never doubted me, this bookwouldn’t exist if she was not part of it and she goes by the name of Atlegang Kepadisa,she is also the editor, your part is being appreciated as well.Special thanks to third parties/organizations for the information provided in some of thechapters in the book (mostly instructions), namely: 2017, Investopedia, LLC. 2001-2016, MetaQuotes Software Corp. 2005-2017 Babypips.com LLC. 2017, Wikipedia I was motivated by my best friend (he introduced forex market in my life), MorwaMerika Mphogo (inspired man) to write this book and I will forever be grateful for that;this is how friends should motivate each other. Lehlogonolo mnisi and Selby Maile, thistwo are proud owners of Sefosh Kings, one of the sponsors for the book, thank you aswell for the part you and your company played. I also thank Lehutso Serage, proudfounder of Cre4tive Ink, for choosing to be part of the sponsors of the Forex one minutestrategy book, special thanks my brother.It will be a Sin if I don’t mention my parents namely, Tshemane Frans Mmutlane andDikeledi Tears Mmutlane for the support they have shown me from the start, theireffort to take me to varsity played a huge role and I thank them equally. Everyone else isthanked as well for any part played, it doesn’t matter whether it’s huge or small, thankyou all.
Table of ContentsCHAPTER 1: Basic fundamentals of the forex market. What is forex trading?Structure of the forex market. Commercial banks. Forex brokers. Foreign exchanges.CHAPTER 2: Forex concepts. What is a pip? Currency pairs. Lot sizes. Spread. Leverage. Hedging.CHAPTER 3: Forex broker. How to find a suitable forex broker. Forex brokers.Six factors to consider when choosing a broker.How to protect yourself against forex broker scams.How to open a forex trading account.CHAPTER 4: Meta-trader platform. The importance of meta-trader platform.How to install meta-trader platform.Basic features of the platform.CHAPTER 5: How to open your first trade. How to open a trade.How to set take profits.How to set stop losses.How to close a trade.CHAPTER 6: Master pending orders. How to set pending orders.The importance of pending orders.
CHAPTER 7: The forex one minute strategy and Modifications Forex one minute strategy and modifications.Success by students.CHAPTER ONE
BASIC FUNDUMENTALS OF THE FOREX MARKET.What is forex trading?Also known as foreign exchange or currency trading, forex is the most traded markets inthe whole world. People who trade currencies on the forex market are called forextraders, their aim is to generate profit by speculating on the value of one currencycompared to another and this is why currencies are always traded in pairs. The value ofone unit doesn’t change unless it’s compared to another currency. Forex market is anonline platform where the big banks exchange currencies, they are fighting for powerconcerning which currency is strong than the other.As a forex trader you can either choose to buy or sell specified units of the basecurrency provided you believe it is going to gain or lose value against the quote currencywhich it is paired with. Let’s take EUR/USD for example, as a forex trader if you believethat Euro against united states dollar is gaining value or going up, you have to choosebuy and by doing so you will gain profit, same goes to when you believe the Euro (EUR)against united states dollar (USD) is going down, then you have to sell in order to gainprofit. If the market does the opposite of what you applied, you can lose yourinvestment.Meta-trader for computers.Meta-trader for smartphone.
FIGURE 1: List of currencies and how they are paired.There are lots of currency pairs on the forex market; figure 1 above names a few only sothat one can have a clear understanding on how currency pairs are paired.Forex market is a 24 hour market, operating during weekdays from Monday to Friday;normally it opens at 00:00 am on Monday and closes Fridays at 23:59 pm but the timesdepend on the trading platform you are on and the location as well.The forex market has about 5 trading sessions and this means within that period thereare more buyers and sellers participating in the market and in most cases traders prefertrading during these sessions in order to generate more profit as there is movement inthe market.Structure of forex market
If you want to buy or sell the foreign currencies, you should know the structure of theforex market. Foreign exchange market is the market where billions of dollar trades aredone. There are three players that make up its structure.Figure 2: Structure of the forex market.1. Commercial banks.Commercial banks buy or sell the foreign currency for their customer or for their ownaccount. So, there is major part of structure which is covered by commercial banks. Theytry to buy or sell the foreign currency on the rate which their customers are ready togive or take but it is not necessary that they will get success on their desired rate offorex. There are lots of other factors which will decide the rate of forex.2. Forex brokers.Second major part of the structure of the forex market is the forex brokers. They arecommission agents; they help to bring buyers of forex near to the sellers. Like otherindustry brokers, they sell or buy the forex on behalf of their customers. They are veryclose to the forex market.3. Foreign exchanges.
Symbol Currency Country nicknameForeign exchange is physical market which will be in the capital of each country. Majormarkets are of London foreign exchange market, New York foreign exchange marketand Singapore foreign exchange market. All are open at their fixed time. So, if it willkeep in the same series, the whole forex exchange will open 24 hours.Major currencies on forex.Figure 3: the 8 major currencies.
USDDollarUnited StatesBuckGBPPoundGreat ew ZealandCableAUDDollarAustraliaAussiFigure 3.1: more detailed information about the 8 major currencies.Forex market trading sessionsForex manyLondonGreat BritainNew YorkUnited StatesTime ZoneOpensClosesGTM 223:00 pm07:00 amGTM 201:00 am09:00 amGTM 209:00 am17:00 pmGTM 210:00 am18:00 PMGTM 215:00 pm23:00 pmFigure 4: Operating times of the forex market.These are the forex sessions and many traders should be aware that the best time totrade is when there is an overlap of sessions, for example when three sessions namelyFrankfurt, London and new York are open all at once, between 15:00 pm and 17:00 pmGTM 2 (South African time)
CHAPTER TWOFOREX CONCEPTS.What is a pip?Typically in forex, currency pairs display their prices with four decimal points. A few,such Japanese yen, display two decimal places. No matter what currency pair you aretrading, the last number behind the decimal always represents a pip, the main unit pricethat can change for the currency pair. As you trade, you will track your profits (or losses)in pips. A pip is a number value and in the forex market, the value of currency is given inpips. One pip equals 0.0001, two pips equals 0.0002, three pips equals 0.0003 and so on.One pip is the smallest price change that an exchange rate can make. Most currenciesare priced to four numbers after the point/dot.Let’s take USD/JPY for example:On the left we have 113.131 which is called the “bid price” meaning it is the price youget for buying stock and on the right we have 113.131 as well which is called the “askprice” meaning it is the price you get for selling stock. If a trader enters the market andbuys USD against JPY (USD/JPY) at the price of 113.131 and the market moves up to113.231, it means the trader got a profit of 100 pips (113.231 – 113.131 100 pips),
now provided the trader used standard lot size of 1, he/she would have been sitting on 100 (estimated R1500) profit. The numbers after the point/dot are regarded as pipsand their value depends on the lot size which a trader used. This also applies to whenthe trader is selling USD/JPY; the profit will still be the same provided the market pricemoves from 113.131 to 113.031 (113.131 - 113.031 100 pips).What is a currency pair?A currency pair is the quotation and pricing structure of the currencies traded in theforex market, the value of a currency is a rate and is determined by its comparison toanother currency. The first listed currency of a currency pair is called the base currency,and the second currency is called the quote currency. The currency pair indicates howmuch of the quote currency is needed to purchase one unit of the base currency. In thecase of EUR/USD, Euro is the base currency and USD is the quote currency.What is a lot size?A standard lot is equivalent to 100,000 units of the base currency in the forex trade. Astandard lot is similar to trade size and it is one of the three commonly known lot sizes.
Three types of lot sizes: Standard lot size – 100,000 units Mini lot size – 10,000 units Micro lot size – 1,000 unitsA standard lot represents 100,000 units of any currency, whereas a mini lot sizerepresents 10,000 units of the base currency and a micro lot size represents 1,000 unitsof the base currency as well. A one pip movement for a standard lot corresponds with a 10 change. Mini accounts are not limited to only trading with one mini lot at a time. Tomake an equivalent trade to a one standard lot, a trader can trade 10 mini lots. By usingmini lots instead of standard lots, a trader can customize the trade and have control oftheir risk exposure. When an investor places an order for micro lot, this means theyhave placed an order for 1,000 units of the currency bought or sold. Investors use microlot sizes when they prefer not to trade mini or standard lots. Ten mini lots are equal to100 micro lots, which is equal to one standard lot size.Let’s get to understand the role of standard lotsTypes of lot sizesSizeProfit/loss (per 100 pips)Standard lot size1.00 100 (R1500)Micro lot size1.00 10 (R150)Mini lot size1.00 1 (R15)What is a spread?The spread is the difference between the buy (also called bid) price and the sell (alsocalled ask) price. Two prices are given for a currency pair and the spread represents thedifference between what the market maker (type of a broker) gives to buy from a traderand what the market maker takes to sell to a trader. Every market has a spread and sodoes forex, a spread is simply defined as the price difference between where trader may
purchase or sell an underlying asset. Traders that are familiar with equities willsynonymously call this the bid: ask spread.Example of a spread:In this case we take GBP/AUD as our example, the difference between the bid and ask is25 (spread). If we open a trade of either buy/sell using standard lot size 1.00, the tradewill start being - 25 (-R375) meaning it’s a loss but provided the graph moves towardsour direction, we will be on a profit mode within 25 pips or more.In the case of USD/JPY the bid and ask are the same, which makes the spread to be 0,provided we buy/sell using any lot size, of any lot size type, our trade will be 0.00 andcount our profit/loss according to what happens after you open your trade.What is leverage?One of the benefits of this market is the ability to trade on leverage. You do not need 10,000 in your trading accounting to trade any currency pair. Currency pairs can have aleverage ratio of up to 50:1, this means you can control a large potion ( 10 000) with asmall amount of money ( 250). Many traders find the leverage that most forex brokersoffer very appealing, but you should know that trading this way can also be risky. It canproduce substantial profits as easily as it can cause substantial losses. Leverage is simplyborrowing money from the forex broker so that you can get even bigger exposure to themarkets and you do not pay interest on the loan.
What is hedging?When a currency trader enters into a trade with the intention of protecting an existingor anticipated position from an unwanted move in the foreign currency exchange rates,they can be said to have entered into a forex hedge. By utilizing a forex hedge properly,a trade that is long (buy) in a foreign currency pair can protect themselves from downrisk, while the trade that is short (sell) in a foreign currency pair can protect againstupside risk.The primary methods of hedging currency trades for the retail forex trader are throughspot contracts and foreign currency options. Spot contracts are the run of the mill tradesmade by retail forex traders and because spot contracts have a very short term deliverydate (two days), they are not the most effective currency hedging vehicle. In fact,regular spot contracts are usually the reason why a hedge is needed.Foreign currency options are one of the most popular methods of currency hedging aswith many options on the other types of securities, foreign currency options give thepurchaser the right, but not the obligation, to buy or sell the currency pair at a particularexchange rate at some time in the future. Regular options strategies can be employed,such as short straddles, long strangles and bull or bear spreads to limit the loss potentialof a given trade.An example of hedging on forex:
We bought and sold USD/JPY at the same time, one might conclude it is a contradictionbut it is not, this is part of hedging because the aim is to minimize the risk as we do notknow the direction of the market, as soon as one of the trades starts making profit weare going to close the other one which is on a loss, then start engaging in long termtrades in order to make more than what we lost.The outcome of hedgingAs we can see both buy and sell trades on USD/JPY have changed, we can confirm thatthe market is going down because the sell trade is on profit while the buy trade is on aloss. We carefully close the buy trade which takes us to a loss of - 61.11 (R916.65) andwe wait for the sell trade to generate more profit (above 61.11). Only professionalforex traders know how to use this strategy of hedging as it requires large equity.
CHAPTER THREEFOREX BROKERS.Forex brokers.Forex brokers are firms that provide currency traders with access to a trading platformthat allows them to buy and sell foreign currencies. A currency trading broker, alsoknown as a retail forex broker, or forex broker, handles a very small portion of thevolume of the overall foreign exchange market. Currency traders use these brokers toaccess the 24-hour currency market. Forex brokers are usually compensated throughthe bid-ask spread of a currency pair. For example, a retail forex broker may buy eurosfor 1.5475 U.S. dollars and, at the same time, sell euros for 1.5478 U.S. dollars. Thespread in this case is 0.0003, or 3 pips.It is valuable to do some research to find out whether a broker has a good reputationand has the functionality that you are looking for. Most major forex brokers will allowprospective clients to use a practice account so that they can get a good understandingof what the system is like. It is a wise idea to test out as many platforms as possiblebefore deciding on which broker to use.There are two main types of brokers: Dealing Desks (DD) and No Dealing Desks (NDD).Dealing Desk brokers are also called Market Makers, while No Dealing Desks can befurther subdivided into Straight Through Processing (STP) and Electronic CommunicationNetwork Straight Through Processing (ECN STP).What is a desk dealing forex trader?
Forex brokers that operate through Dealing Desk (DD) brokers make moneythrough spreads and providing liquidity to their clients. Also called “market makers,”Dealing Desk brokers literally create a market for their clients, meaning they often takethe other side of a client’s trade. While you may think that there is a conflict of interest,there really is not. Market makers provide both a sell and buy quote, which means thatthey are filling both buy and sell orders of their clients; they are indifferent to thedecisions of an individual trader.Since market makers control the prices at which orders are filled, it also follows thatthere is very little risk for them to set fixed spreads (you will understand why this is somuch better later). Also, clients of dealing desk brokers do not see the real interbankmarket rates. Do not be scared though, the competition among brokers is so stiff thatthe rates offered by Dealing Desks brokers are close, if not the same, to the interbankrates.Trading using a Dealing Desk broker basically works this way:Let’s say you place a buy order for EUR/USD for 100,000 units with your Dealing Deskbroker. To fill you, your broker will first try to find a matching sell order from its otherclients or pass your trades on to its liquidity provider, i.e. a sizable entity that readilybuys or sells a financial asset. By doing this, they minimize risk, as they earn from thespread without taking the opposite side of your trade. However, in the event that thereare no matching orders, they will have to take the opposite side of your trade. Take notethat different brokers have different risk management policies, so check with yourbroker regarding this.What is a no dealing desk broker?
As the name suggests, No Dealing Desk (NDD) brokers do not pass their client’s ordersthrough a Dealing Desk. This means that they do not take the other side of their clients’trade as they simply link two parties together.NDDs are like bridge builders: they build a structure over an otherwise impassable orhard-to-pass terrain to connect two areas. NDDs can either charge a very smallcommission for trading or just put a mark-up by increasing the spread slightly. NoDealing Desk brokers can either be STP or STP ECN.What is an STP broker?Some brokers claim that they are true ECN brokers, but in reality, they merely have aStraight Through Processing system. Forex brokers that have an STP system route theorders of their clients directly to their liquidity providers who have access to theinterbank market. NDD STP brokers usually have many liquidity providers, with eachprovider quoting its own bid and ask price. Let’s say your NDD STP broker has threedifferent liquidity providers. In their system, they will see three different pairs of bid andask quotes.Liquidity providersbidAskLiquidity provider A1.29981.3001Liquidity provider B1.29991.3001Liquidity provider C1.30001.3002
Their system then sorts these bid and ask quotes from best to worst. In this case, thebest price in the bid side is 1.3000 (you want to sell high) and the best price on the askside is 1.3001 (you want to buy low). The bid/ask is now 1.3000/1.3001. Will this be thequote that you will see on your platform? Of course not! Your broker isn’t running acharity! Your broker didn’t go through all that trouble of sorting through those quotesfor free! To compensate them for their trouble, your broker adds a small, usually fixed,mark-up. If their policy is to add a 1-pip mark-up, the quote you will see on yourplatform would be 1.2999/1.3002. You will see a 3-pip spread. The 1-pip spread turnsinto a 3-pip spread for you.So when you decide to buy 100,000 units of EUR/USD at 1.3002, your order is sentthrough your broker and then routed to either Liquidity Provider A or B. If your order isacknowledged, Liquidity Provider A or B will have a short position of 100,000 units ofEUR/USD 1.3001, and you will have a long position of 100,000 units of EUR/USD at1.3002. Your broker will earn 1 pip in revenue. This changing bid/ask quote is also thereason why most STP type brokers have variable spreads.If the spreads of their liquidity providers widen, they have no choice but to widen theirspreads too. While some STP brokers do offer fixed spreads, most have variable spreads.What is an ECN broker?True ECN brokers, on the other hand, allow the orders of their clients to interact withthe orders of other participants in the ECN. Participants could be banks, retail traders,hedge funds, and even other brokers. In essence, participants trade against each otherby offering their best bid and ask prices. ECNs also allow their clients to see the “Depthof Market.” Depth of Market displays where the buy and sell orders of other marketparticipants are. Because of the nature ECN, it is very difficult to slap on a fixed mark-upso ECN brokers usually get compensated through a small commission.Dealing Desk vs. No Dealing Desk Forex Broker.Which type of broker should I choose? A dealing desk broker? Or a no dealing deskbroker? That is completely up to you! One type of broker is not better than the otherbecause it will all depend on the type of trader you are. It is up to you to decide whether
you’d rather have tighter spreads but pay a commission per trade, versus wider spreadsand no commissions. Usually, day traders and scalpers prefer the tighter spreadsbecause it is easier to take small profits as the market needs less ground to cover to getover transaction costs. Meanwhile, wider spreads tend to be insignificant to longer termswing or position traders.Differences between market makers, STP brokers, and STP ECN brokers:Dealing Desk (Market Maker)No Desk Dealing (STP)No Desk Dealing (STP ECN)Fixed spreadsMost have variable spreadsVariable spreads or commission feesTake the opposite side of your tradeSimply a bridge between client andliquidity providerPrices come from liquidity providersA bridge between client, liquidityprovider and other participants.Prices come from liquidity providersand other ECN participantsAutomatic, no re - quotesArtificial quotesOrders are filled by broker on adiscretionary basicAutomatic execution, no re - quotesDisplays the depth of market (DOM)or liquidity informationContrary to what you may have read elsewhere, forex brokers really are not out to getyou! They want to do business with you, and not run you out of business! Think about it,if you lose all your money in trading, they too will lose customers. The ideal client ofdealing desk brokers is the one who more or less breaks even. In other words, a clientwho neither wins nor losses at the end. That way, the broker earns money on theclient’s transactions, but at the same time, the client stays in the game by not blowingout his account. In essence, brokers want their clients to keep coming back for more(trading).6 crucial factors to consider when choosing a broker.1. Security.The first and foremost characteristic that a good broker must have is a high level ofsecurity. After all, you are not going to hand over thousands of dollars to a person whosimply claims he is legit, right? Fortunately, checking the credibility of a forex broker is
not very hard. There are regulatory agencies all over the world that separate thetrustworthy from the fraudulent.List of countries with their corresponding regulatory bodies: United States: National Futures Association (NFA) and Commodity Futures TradingCommission (CFTC) United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)Australia: Australian Securities and Investment Commission (ASIC)Switzerland: Swiss Federal Banking Commission (SFBC)Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BAFIN)France: Autorité des Marchés Financiers (AMF)Canada: Autorité des Marchés Financiers (AMF)Before even thinking of putting your money in a broker, make sure that the broker is amember of the regulatory bodies mentioned above.2. Transaction cost.No matter what kind of currency trader you are, like it or not, you will always be subjectto transaction costs. Every single time you enter a trade, you will have to pay for eitherthe forex spread or a commission so it is only natural to look for the most affordable andcheapest rates. Sometimes you may need to sacrifice low transaction for a more reliablebroker. Make sure you know if you need tight spreads for your type of trading, and thenreview your available options. It’s all about finding the correct balance between securityand low transaction costs.3. Deposit and withdrawal.Good forex brokers will allow you to deposit funds and withdraw your earnings hasslefree. Brokers really have no reason to make it hard for you to withdraw your profitsbecause the only reason they hold your funds is to facilitate trading. Your broker onlyholds your money to make trading easier so there is no reason for you to have a hardtime getting the profits you have earned. Your broker should make sure that thewithdrawal process is speedy and smooth.
4. Trading platform.In online forex trading, most trading activity happens through the brokers’ tradingplatform. This means that the trading platform of your broker must be user-friendly andstable. When looking for a broker, always check what its trading platform has to offer.Does it offer free news feed? How about easy-to-use technical and charting tools? Doesit present you with all the information you will need to trade properly?5. Execution.It is mandatory that your broker fill you in the best possible price for your orders. Undernormal market conditions (e.g. normal liquidity, no important news releases or surpriseevents), there really is no reason for your broker to not fill you at, or very close to, themarket price you see when you click the “buy” or “sell” button. For example, assumingyou have a stable internet connection, if you click “buy” EUR/USD for 1.3000, youshould get filled at that price or within micro-pips of it. The speed at which your ordersget filled is very important, especially if you’re a scalper. A few pips difference in pricecan make that much harder on you to win that trade.6. Customer service.Brokers aren’t perfect, and therefore you must pick a broker that you could easilycontact when problems arise. The competence of brokers when dealing with account ortechnical support issues is just as important as their performance on executing trades.Brokers may be kind and helpful during the account opening process, but have terrible“after sales” support.Beware of forex bucket shops.
Here are the bad guys, Forex bucket shops are brokerage firms that have “questionable”trading practices (e.g., unusually frequent price misquotes or re-quotes, slippage onlyfavourable to the broker, stop hunting, etc.). The name comes from brokers back in theday who used to put their clients’ phone-in orders on slips and then dropped them (theslips, not the clients) in a tiny bucket instead of actually executing them. Withoutputting the orders out into the free market, the client is actually betting against theforex bucket shop operators who are also known as bucketeers. These old schoolbucketeers do not usually disclose the real price of the asset that their client is trading,which means that they could tell the client that the price moved or did not move–whatever was in favour of the broker!But thanks to the invention of the internet–and improving regulations andenforcement–newbies have less to worry about these days. Unfortunately, bucketshops are still out there so beware! To help you separate the good brokers from the badones, make your way to the Forex Brokers Forum, where fellow forex traderskindly share their feedback and experiences about a vast collection of brokers. So,before you deposit your money with just anyone, make sure to do your due diligenceand espionage so that you avoid fraudulent brokers and forex scams.
How to protect yourself against forex broker scams.1. Compare price feeds.Imagine a horse with blinders. This horse’s vision is limited to what’s in front of him. Ifthere is a hurdle in front, this horse has no other choice but to exert the additionaleffort needed to jump over it. This horse is a very sad horse. If you only use the pricefeed on your trading platform, you are basically trading like a horse with blinders on.You have no idea what’s going on in the rest of the forex world because you havelimited yourself to your broker’s price feed. If your broker chooses to widen spreads,manipulate rates, and run your stops, you have no way of knowing if the moveresembled the general market. You do not want to be a sad horse. Because you are asmart trader, you want to have the most complete view of the market as possible. Thebest way to do this is to subscribe to a second, third, or even fourth price feed. Thatway, you get another view of the market, and you’d have a chance to confirm whetherprice really moved the way it did.2. Record everything.Always keep detailed journals tracking all of your transactions! Always, always, always!Like in a courtroom, you need evidence to make a case. You may feel cheated, but if youhave nothing to back it up, then that feeling will remain just a feeling. The easiest way tokeep records is to take a screenshot of each order you put, each trade you take, andother suspicious broker activity like odd price feeds. Not only is this good tradejournaling, but it