Notes to section 2 including setting up your charts, currency pairs to watch and the "best" time frames to trade Forex.

The default template provided by MetaTrader isn't conducive to trading simple price action. Therefore we want to change this to something that is much easier to "read".

A great color scheme to use for trading price action is a simple "black on white". MetaTrader provides this option by default. In addition to the color scheme, you will want to remove all indicators from your chart.

Once you have your chart exactly how you want it, you need to save it as a template. You can do this by right clicking anywhere on your chart, selecting "Template" and clicking "Save Template" from the drop down menu.

Now when you open a new chart, you can choose your saved template by following the directions above, only now you will select the template you just saved from the "Template" drop down menu.

Deciding which currency pairs to trade is a personal decision, however here is a list of some of the pairs I watch.

I recommend choosing at least 10 to 15 currency pairs to watch for setups. This will give you a much greater selection to choose from, which will help you avoid trading subpar setups.

You may want to go through each of these currency pairs and take a look at how each one moves. They all have their own "personalities" and it's important that you choose the ones which resonate with your own personality.

It's also important to check your broker's spread to ensure it's favorable. This is especially true for some of the more exotic currency pairs.

The two time frames we will be focusing on in this course are the:

• Daily
• 4 Hour

Although I occasionally glance at the 1 hour and even the weekly time frame, I do 99% of my trading on the daily and 4 hour time frames.

These higher time frames provide a more user-friendly trading environment. They accomplish this by doing the following:

• Act as a natural news filter
• Easier to develop a directional bias
• Produce quality over quantity
• Reduce trade frequency

There are two common objections to trading the higher time frames. Those objections are:

I don't have enough money

The higher time frames can be traded regardless of your account size. The size of your stop loss doesn't matter. What matters is your risk to reward ratio on any given trade.

Trading higher time frames is boring

Trading isn't about excitement, it's about making money. You should have a passion for trading and love what you do, but there's nothing more enjoyable than making money as a trader - that's where the higher time frames can help.

Notes to section 3 including wedge characteristics, entry strategies, stop loss placement, determining profit targets and calculating a measured objective.

Wedges, also called triangles, are consolidation patterns which typically occur after an extended move up or down. They are also considered continuation patterns in that the market generally breaks in the direction of the preceding trend.

Although typically a continuation pattern, it's important to wait until the market closes outside of support or resistance on the 4 hour or daily time frame before considering an entry.

You need three or more touches off of support or resistance before the breakout in order for the pattern to become "tradable".

The best way to identify wedge patterns in the Forex market is to look for areas of consolidation where the market is making higher lows and lower highs. Again, you need at least 3 touches on each side for it to become a tradable pattern.

The levels should be placed at the extremes of each candle while attempting to get the most touches possible. This is the most conservative approach and will help you avoid false breakouts.

In order to trade a wedge breakout, you need to wait for the market to break support or resistance. This means that the market must close outside of support or resistance on the 4 hour or daily time frame, depending on which time frame you're using to identify the pattern.

There are two main ways to enter a wedge break:

1. Enter on a 4 hour or daily close
2. Enter on a retest of the broken level

Just know that there's no guarantee that the market will retest the broken level, so there is a chance of missing the trade if you go with this approach.

A stop loss will protect you if the market moves against your position. You want to be sure to place your stop loss at a level where if hit, you no longer want to be in the trade. In other words, if the market reaches your stop loss the trade setup has been invalidated.

There are two stop loss strategies you can use when trading wedge breakouts.

1) Above or below the bar which broke the level

This is the more aggressive approach. It's best used when the bar is much larger than any of the surrounding bars.

2) Above or below the last swing high or low respectively

This is the more conservative approach and is recommended in most situations.

The first profit target for any wedge breakout should be the first swing high (for breakouts to the upside) or swing low (for breaks to the downside) that started the pattern.

The great thing about this approach is that you will always have a clear target.

The second target should be a price action level you identify in the market. There is often an obvious level at which you can identify a second profit target.

It's important at this stage to evaluate your risk to reward ratio to ensure it's at least a 2R. This should be done before entering the trade.

See the next lesson on measured objectives for an additional method of identifying a profit target.

Using a measured objective provides you with a way of identifying a profit target by using the first move of a wedge pattern.

The measured objective is found by taking the distance in pips of the very first move of a wedge pattern, and then projecting it to a future point in the market once the pattern breaks.

Although it can be quite accurate, a measured objective should be thought of as a possible target area and not an exact level in the market.

Notes to section 4 including channel characteristics, entry strategies, stop loss placement, determining profit targets and calculating a measured objective.

Channels are consolidation patterns which typically occur after an extended move up or down. They are also considered continuation patterns in that the market generally breaks in the direction of the preceding trend.

There are four parts to every channel pattern:

• Preceding trend
• Support
• Resistance
• Continuation or the resulting move after the break

Although typically a continuation pattern, it's important to wait until the market closes outside of support or resistance on the 4 hour or daily time frame before considering an entry.

You need three or more touches off of support or resistance before the breakout in order for the pattern to become "tradable".

The best way to identify channels is to look for consolidation which is making equal highs and lows in the market. In other words, look for areas where a support trend line would run parallel to a resistance trend line.

It's best to place the levels at the extremes of each candlestick while attempting to get the most touches possible. This will help you avoid false breaks once the market closes outside of support or resistance.

You need two touches in order to draw a level, but three touches makes it a tradable pattern.

In order to trade a channel breakout, you need to wait for the market to break support or resistance. This means that the market must close outside of support or resistance on the 4 hour or daily time frame, depending on which time frame you're using to identify the pattern.

There are two main ways to enter a channel break:

1. Enter on a 4 hour or daily close
2. Enter on a retest of the broken level

Just know that there's no guarantee that the market will retest the broken level, so there is a chance of missing the trade if you go with this approach.

A stop loss will protect you if the market moves against your position. You want to be sure to place your stop loss at a level where if hit, you no longer want to be in the trade. In other words, if the market reaches your stop loss the trade setup has been invalidated.

There are two stop loss strategies you can use when trading channel breakouts.

1) Above or below the bar which broke the level

This is the more aggressive approach. It's best used when the bar is much larger than any of the surrounding bars.

2) Above or below the last swing high or low respectively

This is the more conservative approach and is recommended in most situations.

The first profit target for any channel breakout should be the first swing high (for breakouts to the upside) or swing low (for breaks to the downside) that started the pattern.

The great thing about this approach is that you will always have a clear target.

The second target should be a price action level you identify in the market. There is often an obvious level at which you can identify a second profit target.

It's important at this stage to evaluate your risk to reward ratio to ensure it's at least a 2R. This should be done before entering the trade.

See the next lesson on measured objectives for an additional method of identifying a profit target.

Using a measured objective provides you with a way of identifying a profit target by using the first move of a channel pattern.

The measured objective is found by taking the distance in pips of the very first move of a channel, and then projecting it to a future point in the market once the pattern breaks.

Although it can be quite accurate, a measured objective should be thought of as a possible target area and not an exact level in the market.

The head and shoulders pattern is a topping pattern which typically occurs after an extended move up. They can be a great way to identify a possible reversal point in the market.

There are four parts to the head and shoulders pattern:

• First shoulder
• Head
• Second shoulder
• Neckline support

There are two ways to enter a break of the head and shoulders pattern:

1. A 4 hour or daily close below neckline support
2. A retest of the broken neckline support, now resistance

Using a measured objective is a great way to identify a profit target after the break.

The double top pattern is a reversal pattern which typically occurs after an extended move up. They can be a great way to identify a possible reversal point in the market.

There are three parts to the double top pattern:

• First high
• Second high
• Neckline support

There are two ways to enter a break of the double top pattern:

1. A 4 hour or daily close below neckline support
2. A retest of the broken neckline support, now resistance

Using a measured objective is a great way to identify a profit target after the break.