Intermediate Trading Course

Chart customization

You can customize your chart by loading some indicators, grids and period separators, and you can also add or remove these components as needed.

Hide the sell price line

If you have added a lot of technical analysis indicators or lines, the sell price line may seem a bit redundant on the chart. You can completely remove it from the chart by setting the price line to "None".

Set a default chart

Once you have set up a chart that you are very satisfied with, you can save it as a template. The quickest and most convenient way to set a template is to right-click on the chart and select "Template" - "Save Template". You can set up multiple templates to meet the analysis needs of different trading strategies.

If you want to set your most commonly used template as your default chart template, you can right-click on the chart, select Templates > Save Template, and name the template Default.

Financial Calendar

So how do we keep an eye on these potential market movers? While we can’t predict the world, we can use the economic calendar to monitor which important news releases will take place in the coming days, weeks or months.

The economic calendar lists news and events that are publicly released in a specific country, which means that people around the world can learn about the same news at the same time. While this is a major benefit for retail traders like us, it’s good to realize that banks also have a major advantage - they can see where money is flowing to (and from) by looking at their customers’ order flow.

Toolbar customization - There are four separate toolbars on the MT5 platform:

-Common

-Chart

-Line

-Cycle

You can move the toolbars to wherever you want by simply dragging them.

To customize your window, just right-click on the toolbar and click the "Customize" menu. Here you can remove functions by selecting the functions you don't need and clicking the "Remove" button.

By selecting "Customize" on the right-click menu of each toolbar, you can remove unnecessary tools and view some hidden tools. By doing this, you will get a simpler and more compact user interface.

Using shortcut keys

Keyboard shortcuts are a simple and quick way to perform tasks. By using shortcut keys, you can use various tools faster - this will save you a lot of time in the long run. You can remove redundant information and features, and more importantly, increase your chart space.

The following keyboard shortcuts can help you open and close the various windows on the platform more quickly:

Terminal

Control+T

This is the main window you will use when trading - manage positions, view account history, and set alerts.

Navigation

Control+N

Add indicators, EAs, and login functions.

Market Watch

Control+M

View product quotes.

Data Window

Control+D

View all data information for the product in the current chart window.

Using shortcuts

On the MT5 platform, when you switch chart templates, you will lose all analysis on the current chart. To prevent this from happening, you can keep the chart open and just change the indicator you are using - this is where shortcuts come in handy. You can set a shortcut for a specific indicator without having to switch templates to add an indicator.

To do this, right-click on the indicator in the Navigator window and select "Set shortcut".

Indicator Favorites List

To simplify accessing frequently used indicators, you can create a favorites list of commonly used indicators. Here's how to add an indicator to your favorites:

Open the Navigator window (Ctrl+N);

Expand the directory of related content (technical indicators, scripts, etc.);

Move the mouse cursor over any of your frequently used technical indicators;

Right-click;

Select "Add to Favorites".

Alerts

Alerts allow you to track important price level breakthroughs, allowing you to adjust your trades and chart analysis in a timely manner. If you are following multiple markets at the same time, it is easy to lose track of one or several markets, especially after important news is released, all markets are operating in different ways. To set the alert function, move your mouse cursor to the chart you want to set the alert, right-click the mouse, and select "Trading" - "Set Alert" in the menu.

Be aware of the risk on each trade

Before deciding to open a trade, you should decide how much you are willing to risk on that trade. That is, you need to determine where your stop loss will be if the market moves against you.

The stop loss you set depends on your risk tolerance - as a trader, you must accept the risk associated with the trade. If you can accept the potential loss, then go ahead and open the trade. If you can't accept the potential loss, then we recommend that you don't open the trade for now and think about how to reduce the risk of the trade.

Some traders are only willing to lose 1 to 3% of their capital on any one trade. In this case, you can draw a red line at 2% of your capital and tell yourself that you will not lose more than 2% of your capital on a trade. That is, you should determine your maximum risk tolerance and stick to it for the rest of your trades.

Once you have determined this, you can decide where to set your stop loss price. Setting a stop loss is like putting insurance on your trades to ensure that you don't lose all your money in one trade. But it is important to note that stop losses are not completely safe - if the market price gaps, your trade may not be stopped at the preset price.

Market price gaps refer to sudden and large market fluctuations in a very short period of time.

Example

Assuming you have 10,000 Australian dollars in your account and you are willing to risk 2% of your total funds, you need to calculate the position size of the trade. In the calculation process, the type of currency pair you are trading will also affect the calculation of the opening size. For example, 200 Australian dollars at risk will open a different position when trading AUD/USD than NZD/CAD - because the value of each point of different currency pairs is different.

Trading 1 lot of AUD/USD in an AUD-denominated account

Trading volume = 100,000

1 pip = 0001

AUD/USD exchange rate = 0.7465

Value per pip = 0.0001 / 0.7465 x 100,000 = 13.39 AUD

As you can see, trading different currency pairs means that the value of each pip of a currency pair move will also be different - when trading AUD/USD, the capital risked for each pip of market price movement is 13.39 AUD, while the corresponding value per pip when trading NZD/CAD is 10.09 AUD.

To calculate the specific price at which you should set your stop loss, you will then need to calculate how many pips of adverse movement will result in a cumulative loss of 200 AUD on the position.

AUD/USD – $200 / $13.39 = 15 pips stop loss

NZD/CAD – $200 / $10.09 = 20 pips stop loss

If you want to set a larger stop loss, you will need to reduce the size of your trade – for example, reduce the size of a standard lot to a mini lot (10,000)

In the case of a mini lot of AUD/USD, your stop loss can be extended to 150 pips from the opening price, while for NZD/CAD, your stop loss can be extended to 200 pips from the opening price.

Remember that every trade you take comes with risk – make sure you fully understand the risk you are taking and are comfortable with it.

What is a chart pattern?

In the market, buyers and sellers are constantly competing for power, and charts are records of the results of this game. People gradually discovered some typical chart patterns on the charts, with the help of which people can clearly see whether buyers or sellers are dominant in the market. Moreover, as these classic patterns appear again and again, people find that the same changes in the power of buyers and sellers always occur in the market. Therefore, we can use the experience of learning patterns to predict the future market trend, which is pattern analysis.

Typical chart patterns include two categories: reversal patterns and continuation patterns. In this article, we will introduce the three most common chart patterns to understand how pattern analysis predicts price trends and how people make trading decisions through pattern analysis.

Head and Shoulders Top and Head and Shoulders Bottom

The head and shoulders top pattern is one of the most valued patterns by traders and one of the most common reversal patterns. It usually forms gradually in an upward trend and sends a signal of a market reversal. In other words, the appearance of a head and shoulders top pattern often means the end of an upward trend.

A typical head and shoulders top pattern is shown in the figure below:

When the price rises and then falls back to a fixed point, a peak is formed, which looks like the left shoulder. The price then rises again and creates a higher peak than the previous peak, and then falls back to the support level of the first peak. The new peak is called the "head" and the support level is called the "neckline". If the pattern is fully formed, the price will rebound from the neckline and create a lower peak, which is the right shoulder.

When you find a head and shoulders top pattern on the chart, a potential entry point is when the price confirms a break below the neckline, that is, when the candle closes below the neckline, we open a sell position at the open of the next candle.

When you find a head and shoulders top pattern on the chart, a potential entry point is when the price confirms a break below the neckline, that is, when the candle closes below the neckline, we open a sell position at the open of the next candle.

After the trade is opened, the profit target is usually set as the distance in pips from the head to the neckline.

Also, you may sometimes encounter a head and shoulders bottom pattern, which often appears at the end of a downtrend and means that there is a high probability of future price increases. A head and shoulders bottom consists of a trough, followed by a lower bottom and a higher trough. Similar to the head and shoulders top, the entry time for the head and shoulders bottom is when the neckline is confirmed to be broken by the price, or wait to see if the neckline will be retested.

The following figure is a head and shoulders bottom pattern in the actual market:

Double Tops and Double Bottom

The double top pattern often appears at the top of an uptrend. It is also a reversal pattern, which means the end of an uptrend. The double top pattern consists of two adjacent peaks, and the prices of the two peaks are similar. The neckline of the pattern is located at the support level formed by the price. When the price breaks below the support level, also known as the neckline, we believe that the pattern has been formed.

In terms of the choice of entry timing, you can generally consider opening a sell position when the price falls below the neckline, or wait for the price to fail to retrace the neckline and form a lower peak before entering the market. Once the retracement fails, it often means that the price has a stronger downward momentum.

The profit target is set at the point distance from the top to the neckline.

The reverse of the double top pattern is the double bottom pattern, which often appears at the end of a downward trend. It is composed of two adjacent troughs with similar prices. The appearance of a double bottom often means that an upward trend will start next. Similarly, we can enter the market when the neckline is broken, or wait for the neckline to be broken and a higher trough to be formed. The failure of the neckline to be broken means that the upward momentum of the price is stronger.

Flag

Unlike the head and shoulders and double top patterns introduced above, the flag pattern is a consolidation pattern that may appear in an uptrend or a downtrend. Since the price cannot always be in a clear uptrend or downtrend, sometimes it will take a break to consolidate. At this time, you will find that the price fluctuates repeatedly and then returns to the previous trend.

Stop loss can help you reduce the impact of emotions on your trading, and it is also very useful when you cannot monitor your trades continuously.

Stop loss example

Assume there is a buy position of AUS200, the opening price is 5066, and the stop loss is set at 5026. When the price drops to 5026, the stop loss will be automatically executed, causing the position to close at the next executable price. In this example, the position loses 40 points.

It is worth noting that the stop loss is not guaranteed to be executed at the price you specify, because the market may have a price gap, which will cause the stop loss to be executed at a different price. Market price gap refers to a sudden and large market movement in a very short period of time.

How big a stop loss should be set

Once you open a position, you should think carefully about how big a stop loss should be set. The stop loss you set should be based on your personal risk tolerance, but the stop loss should not be set too low, otherwise the trade may be stopped out too quickly - you need to leave some room for floating losses on the trade. It is generally recommended that you set a stop loss that does not cause a loss of more than 1% to 5% of your capital.

Trailing Stop Loss

Whenever the price moves a certain number of pips in your favor, the trailing stop price also moves. In other words, when the price moves in your favor, the trailing stop automatically "trails" the price. This feature can help you lock in profits and automatically manage your trades.

Whenever the price moves a certain number of pips in your favor, the trailing stop price also moves. In other words, when the price moves in your favor, the trailing stop automatically "trails" the price. This feature can help you lock in profits and automatically manage your trades.

Profit Target

A profit target is a pre-set price at which you will close your position with a profit. Before you plan to open a position, you should determine where your profit target is. Profit targets are an important part of order management. As long as the market price reaches the profit target, you don't need to monitor the position at the computer, and the profit will help you automatically close the position and make a profit.

Market Order

Market order is an order opened manually by the trader and executed at the current market's tradable price. Day traders and some scalpers prefer to open market orders to trade.

Pending Order

Pending order is an order with a preset opening price. When the market reaches the preset price, the pending order will automatically open the position. If you can't stay in front of the computer for a long time to monitor price fluctuations, then pending orders are very useful for you. Pending orders are also very helpful in two situations: range trading (price moves back and forth within a range) and breakout trading (price breaks out of the range). Pending orders can be divided into two types.

Pending Order Types

-Stop order, sell at a price lower than the current market price or buy at a price higher than the current market price.

- Take Profit Order, which is the opposite of Stop Loss Order - sell at a higher price than the current market price, or buy at a lower price than the current market price.

Stop Loss Order

The following figure shows a Buy Stop Order (buy at a higher price) and a Sell Stop Order (sell at a lower price). For example, you can set a Sell Stop Order to hedge the risk of a previous buy order, thereby limiting potential losses. In addition, Stop Loss Orders can also be used to form a trend-following trading strategy (for example, you want to open a sell order, but enter the market only after the market price confirms a downward trend).

Take Profit Orders

The following figure shows a buy take profit order (buy at a lower price) and a sell take profit order (sell at a higher price). Take profit orders can be used to build a range trading strategy, that is, when the price moves up and down within a range, traders can set take profit orders to automatically execute range buy and sell transactions.
Stop loss orders and take profit orders are good helpers to control trading risks. Please refer to the WCG Trading Guide to learn how to use these two orders in advanced strategies.

Understanding Charts

Charts are at the heart of trading. In addition to helping traders monitor the real-time value of their positions, charts also help them understand past price movements and, based on that, provide clues to where prices may go in the future. Therefore, learning to read charts is a key step in becoming a trader.

The first thing to understand is that the prices on a chart show what the prices were doing at that time.

Time: X-axis (from left to right)

The X-axis on a chart shows time (from left to right). The further to the left, the earlier the time. The latest candle or price bar represents the current time. Each candle or price bar represents one unit of time. The time period setting bar at the top of the chart allows you to change the length of time that one unit of time represents. For example, if you set the time period to Daily (D1), this means that each candle or price bar represents one day's price movement. If you set it to 5 minutes (M5), this means that each candle or price bar represents 5 minutes of price movement.

Price: Y-axis (from top to bottom)

You can read the price of the product from the vertical Y-axis. The higher the candle or price bar is, the higher the price is at the corresponding time. Conversely, if the candle or price bar is at the bottom of the chart, it means the price is lower at the corresponding time.

Price composition

On the candlestick or bar chart, each candle or price bar shows the following four prices:

-Opening price: This is the first price at the beginning of the cycle. On the bar chart, the horizontal line on the left represents the opening price. On the candlestick chart, in the case of an upward candle, the bottom of the candle body represents the opening price, and in the case of a downward candle, the top of the candle body represents the opening price.

-High price: The highest price that occurred during the cycle.

-Low price: The lowest price that occurred during the cycle.

-Closing price: The last price at the end of the cycle. Colors are used to distinguish between opening and closing prices.

At the end of a cycle, a new candle/price bar appears, and the process repeats itself, forming the chart we see. Below is an illustration of each chart type. The three most common and basic chart forms are: line charts, bar charts, and candlestick charts. Although they provide price information in slightly different forms, they all follow the concept of time (cycle).

Spread

A complete quote consists of two parts: the selling price and the buying price. The difference between the two is called the "spread". The spread is actually the fee (i.e. transaction cost) charged by the broker or bank when you open a position. The larger the spread, the higher the cost of your transaction. Conversely, the smaller the spread, the cheaper the transaction fee.

The more commonly traded currencies usually have smaller spreads when trading, while the less commonly traded currencies often have larger spreads.

For traders who trade more frequently, such as day traders or short-term traders, the size of the spread is crucial. Of course, for medium- and long-term traders, the size of the spread does not have much impact.

The above is a screenshot of the MT4 opening window, where you can see the selling price, buying price and spread at the time. When you open a buy or sell order, the executed price will be different.

Buy Order (Long Position)

Quote: 1.36298/1.36301

The opening price of the buy order is 1.36301

Sell Order (Short Position)

The opening price of the sell order is 1.36298

In both cases, your profit and loss (P/L) when you first open the position is negative because the order is charged a spread when it is opened. When the market moves in your favor by the same number of points as the spread, your order will break even.