Ultimate guide to forex trading PDF by TopstepFX offers a comprehensive introduction to Forex, targeting traders seeking funding without risking personal capital.
It covers basics like currency pairs (e.g., EUR/USD), pips, leverage (up to 100:1), and margin, highlighting advantages like 24-hour trading and high liquidity. The guide explains trading mechanics—lot sizes, best trading times (e.g., 8 AM-12 PM ET), pip value calculations, and rollover costs—plus order types (market, limit, stop) and technical indicators (e.g., MACD, RSI).
It explores market drivers like interest rates and key economic data (e.g., GDP, employment), alongside currency correlations. Advanced topics include leverage management and strategies: scalping, day trading, swing trading, and position trading. TopstepFX emphasizes matching strategies to personality, market state, and risk tolerance, offering $500,000 in trading capital to successful candidates.
Excerpts
What are some of the advantages of trading forex?
Forex trading has a number of advantages. Here are just a few:
1. 24-hour trading. The forex market is open 24 hours a day from Sunday at
5 PM ET to Friday at 5 PM ET. This means that traders can trade forex part-time,
during any free time.
2. Low minimum trade sizes. Forex trading also allows you to trade in very small
sizes, which allow traders to open smaller accounts. Forex traders can open
positions in standard lot sizes, mini lots or micro lots.
CHAPTER 1: THE BASICS OF FOREX
8
A standard lot is 100,000 units of the base currency, which is the first currency
listed in a pair. In EUR/USD, a standard lot would be €100,000 (approximately
$160,000). In any U.S. Dollar-based pair, like USD/JPY, USD/CAD, or USD/CHF, a
standard lot is $100,000.
A mini lot is 10,000 units of the base currency, while a micro lot is just 1,000
units of a base currency. In accounts that offer 20:1 or 50:1 leverage, it takes just
$20 or $50 in capital to open a micro lot position in USD-based pairs.
3. High liquidity. Unlike other markets that trade 24 hours a day, like futures
markets, the forex market is highly liquid for much of the day, particularly during
times when one major market overlaps with another. Those times include when
the Asian trading session overlaps with the start of the European session (2 AM
ET to 4 AM ET) and when the European session overlaps with the start of the
U.S. session (8 AM ET to 12 PM ET).
4. Easy to buy or sell. Unlike in equities or options trading, in forex trading,
it doesn’t matter to your broker if you go long or short the currency pair.
Regardless of which side of the trade you are on, the margin requirements are
the same. This means that you can more easily capture rising or falling prices.
5. Variety of currencies to choose from. If a trader is bullish the U.S. Dollar, there
are a variety of currency pairs to choose from to express that view — going short
EUR/USD or GBP/USD or going long USD/JPY or USD/CAD among them.
Contents
CHAPTER 1: THE BASICS OF FOREX 4
What is forex trading? 5
Who trades forex? 5
How are forex prices quoted? 5
Why might you see different prices for different currencies? 7
What are some of the advantages of trading forex? 7
What are some basic terms to know? 8
CHAPTER 2: TRADING FOREX 13
What currency pairs are the most liquid? 14
What size do currencies trade in? 14
When are the best times to trade? 14
How do you calculate pip value? 15
What is the rollover? (What is the carrying cost?) 15
What types of orders do traders place? 16
What are some technical indicators that forex traders use? 18
CHAPTER 3: UNDERSTANDING THE FOREX MARKET 20
What factors drive the forex market? 21
What are the most important economic numbers to forex traders? 21
How are currencies correlated? 21
CHAPTER 4: ADVANCED FOREX TRADING 22
How much leverage should traders use? 23
What are different forex trading strategies? 23
Which trading strategy is best? 24
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