Forex Cheat Sheet

Overwhelmed at trying to learn Forex (FX) trading? Don’t worry. We’ve got you. Forex trading seems tough, but if you’re reading this, you already have the dedication you’ll need to master FX trading.  

All you need now is a little more help understanding the basics.  

And that’s where our cheat sheet comes in. Below, we’re offering some insight into key Forex terms and strategies you should know as you begin your journey as an FX trader.  

What Is Forex Trading?

Forex trading is the buying and selling of currency. It takes place in a global marketplace. The goal is to buy one currency, exchange it, and sell it back at a profit. Meaning, you want to profit from the exchange rate.   

• You buy and sell Forex in “pairs” e.g. GBP/USD. The first currency is the “base” currency. This is the currency you buy. The second is the “quote” currency. This is the currency you will sell back in.  
• Your “bid price” is what someone will pay for a pairing. The “ask” price is what the seller will accept. The “spread” is the difference between the bid and the ask prices.  
• How do we know if the gap between what someone will pay, and what the buyer will accept, is getting smaller or bigger? We measure the spread using “pips”. Pips are, essentially, tiny price movements.     

Forex trading all comes down to trends. To patterns. To make gains, you need to identify market shifts which suggest it’s a good time to buy or sell. And that’s why understanding the gap between bid and ask prices is so important.  

Best Hours to Trade Forex

You can trade any time since it’s a 24/7 marketplace. But there are good and bad times to trade, based on the major Forex markets.

There are four markets in Forex trading: 

• New York 
• London 
• Tokyo 
• Sydney 

The best time to trade is when markets are open at the same time. This is when we see the most price action. The worst time to trade is when only one market is open. Prices may be locked in at this point.  

Types of Forex Trading Strategies 

There are various strategies for trading Forex. And every day traders find the style that works for them. But there are two key trading strategies you should know about, regardless of how you trade. Those are the five minute trading strategy, and the one hour trading strategy. 

Five Minute Trading Strategy

This strategy is all about momentum. You’re trying to make a profit from short, fast price changes (i.e. within a few minutes).  

The idea is to make gains from quick market surges. As soon as you spot the momentum waning, or going down, you get out. This strategy suits day traders who enjoy constant action, rather than waiting for a “perfect” time to open and close. 

Is it perfect? No, but there’s no such thing as a perfect strategy. There’s just what works for you. 

One Hour Trading Strategy

Rather than trading based on short “bursts” of activity, this strategy means you wait at least an hour before making moves. You’re cutting through the “noise” and (potentially) misleading short-term price actions. And instead, you’re looking at more meaningful changes over longer time frames.  

Again, it’s not perfect, but some traders may find it a less volatile way to trade Forex. 

What Are Forex Trading Chart Patterns?

Forex trading patterns and cheat sheets go hand in hand. Why? Because – let’s face it – trading chart patterns are tricky. So, having a quick overview to refer to is super helpful for new traders. 

Although there are many different patterns out there, we can group them into three categories. 

• Continuation patterns: These patterns suggest that the current trend will likely continue.  
• Reversal patterns: There’s a trend reversal i.e. it is about to end.  
• Bilateral patterns: The trend could go either way. Prices could go up or down.

These categories sound technical, but don’t worry. They’re easier to grasp than they seem. Remember, Forex trading is all about spotting trends. And so, when you’re looking at trading chart patterns, you’re looking at how trends are moving.  

Candlestick Patterns 

A cheat sheet for candlestick patterns could get complicated to say the least! But here’s the basic points you should know right now.  

The most common type of chart to use in Forex trading is the candlestick pattern. Unsurprisingly, it’s based on elements which resemble candlesticks.  

The candle’s shape and size reveals things such as: 

• Opening and closing prices 
• The day’s high and low price points  

You can learn a lot about the relationship between buyers and sellers from a simple candlestick pattern. And you can build your own candlestick cheat sheet the more you learn and make successful trades. 

Trading Using Chart Patterns

Now we know how chart patterns work, let’s check out how you might trade with these patterns.  

• First, identify the type of pattern you’re looking at. This won’t be easy at first, but you’ll get the hang of it the more you study patterns.  
• As the pattern forms, pay close attention to how it moves. Double-check that the pattern is moving the way you expect. This isn’t about second guessing yourself. It’s just about staying smart!  
• If you’re happy with the pattern you’re seeing, set your entry and exit points. Be strict about when you’ll get in…and get out. Risk management is key to successful trading. 

Here’s another tip. Keep an eye on market trends, breaking news, and other factors which could change how the Forex marketplace moves.

Join the Maven Trading Community

Honestly, there are no “shortcuts” to becoming a good Forex trader. But with the right support, you can learn the right skills to improve over time. And that’s just what we can help with, at Maven Trading. 

We’re building a community of talented Forex day traders. We’d love to have you join us. All you need to do is choose an account, pass the challenges, and get verified.  

That’s it! We’ll give you a simulated funded account and you can learn the art of Forex trading.  

You don’t risk a dollar – we provide the simulated funds. All we take is a small fee from your profits in exchange for the funding. Together, we can take on the Forex market…and succeed.  

Learn more about day trading with Maven Trading or start your journey today.