TABLE OF CONTENT

About the author (4)

Introduction
What is forex (6)
Who are the Forex Market Participants (7)

Part I – Basics General Understanding

Pips (9)
Leverage and Margin (10)
Metatrader 4/mt4 (11)
How to use mt4 on your PC (12)
How to use mt4 on your Mobile Phone (15)

Part II – Candlesticks
Candlestick Description (21)
High, Open, Close, Low (21)
Bullish Candlestick & Bearish Candlestick (22)
Hammer & the Inverted Hammer (22)
Bullish & Bearish Big Shadows (23)

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Doji (23)

Part III – Technical Analysis (Chart Patterns)

Channels (25)
Rising Channel (27)
Falling Channel (29)
Double Tops (31)
Double Bottoms (33)
Head & Shoulders (35)
Inverse Head & Shoulders (37)
Symmetrical Triangle (39)
Ascending Triangle (41)
Descending Triangle (43)
Rising Wedges (45)
Falling Wedge (47)
Rising Flag (49)
Falling Flag (51)
Pennant (53)

Part IV – Fundamental Analysis

Technical Analysis vs Fundamental Analysis (54)
Economic Indicators (55)

Part V – Risk Management

Risk reward ratio (59)

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About the Author:

Ashley Ditshego CEO and Head Analyst at Ditshego Jnr. Capitals, born and
raised in South Africa. Ashley Ditshego grew up as an ordinary kid but always
believed to be having above average dreams to achieve not just for himself but
the people around him.

Straight after completing matric (Grade 12) I went out to study for my Diploma
in Agricultural Management with UNISA, by then I was still uncertain about
where my direction in life was headed. 6 months into my studies I was already
feeling bored with agriculture and my passion into entrepreneurship was
starting to develop, for some reasons I just followed my heart and believed
that even though I have limited experience and resources things will add up
and I will achieve my desired dreams and goals, which brings to me one of my
favourite quote “A burning desire backed by faith recognises no such thing as
impossible”

At age 19, few months after I had changed my course and enrolled for B com.
Business Administration with UNISA still, I had the privilege to be called at
CNBC Africa to give talks on entrepreneurship, leadership and other thought
leading topics with some of South Africa’s business gurus the likes of Sbusiso
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Leope, Sandile Zungu, CEO of the Johannesburg Stock Exchange Nicky Newton-
King and Tim Shabalala from Standard Bank. It was a life changing moment for
me and I reflect on those days till today, that was when I learned a lot about
entrepreneurship, the stock market (JSE and other international markets),
forex, banking and investments.

Years down the line, I was honoured to meet and share thoughts with all my
childhood idols, from your business tycoon Billionaire Patrice Motsepe’s to
Vusi Thembekwayo just to mention a few. At this point in my life I was
breathing, eating, sleeping and dream entrepreneurship and the purpose that I
was long searching for, I had found and made sure I grabbed it with both hands
which birthed my first investment company Ditshego Jnr. Capitals operating
from Pretoria.

Ditshego Jnr. Capitals is a trading and investment institute that provides

services on CFD’s in equity, currencies and commodities. We gather in depth
research and analysis on specific companies, currencies and commodities. Our
in-depth research on both technical and fundamental analysis on micro and
macro economy provides us with the ability to build a solid investment
portfolio. Our investment portfolio also has a touch on ETF’s which are a great
investment tool for people who are considering investing but don’t know
where and how to get started.

In this manual we hope that you will be able to take away all the basic
knowledge on trading the financial markets and hopefully you to can get
started on the journey to achieve financial freedom. Do make sure you follow
our social media platforms and YouTube channel where you can get broader
knowledge on how to analyse and trade on the financial markets.

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 Introduction

What is forex
Forex or Fx is actually an abbreviation of Foreign Exchange, which simply refers
to the exchange of one countries currency to another. Unlike the stock market,
the forex market is decentralised meaning there is no centralised point of
exchange, as a result all the trades that are conducted are done Over The
Counter (OTC) with no regulated environment.
Now take for instance Ditshego Jnr Gold Mine is a Mining company from South
Africa and want to export goods (Gold) to America. With South Africa using
Rands (ZAR) as their currency and America using US dollars (USD), in order for
Ditshego Jnr Gold Mine to sell 100 Ounce of gold to America which costs
R100 000.
With an exchange rate of USD/ZAR equalling to 1/12.5 meaning it takes R12,50
to purchase a single dollar. Now for America to purchase the 100 Ounce of
gold from Ditshego Jnr Gold Mine it would then be that R100 000 divided by
12.5 to give you $8 000. So now America finally does agree on term with
Ditshego Jnr Gold Mine to purchase the 100 Ounce of Gold for $8 000. By
simply exchanging currencies we call it Foreign Exchange or participating in
Forex/Fx.
Here is another example, it is December and summer in South Africa and
Ashley is from London in the UK and wants to visit Cape Town in South Africa
all because he has been hearing a lot of good news about the country, how fun
and exciting it gets to be during the festive season, the rich culture and
tradition that exist in South Africa. Now that Ashley is from England and his
money is in Pounds (GBP) and cannot use it in South Africa, he gets to the
airport and ask to exchange his Pounds into Rands. With GBP/ZAR costing
1/15.42, Ashley decides to exchange £10 000 and gets R154 200 to go spoil
himself throughout the festive season in Cape Town, by simply exchanging two
different currencies Ashley has also participated in Forex.

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Who are the Forex Market Participants?
What most of you might now be aware of is that Forex is a $5.3 trillion
industry. Meaning about $5.3 trillion runs through the Forex Market daily and
yes trillions I said that right, pretty much absurd, right? Well that is actually
true, every single 24 hours $5.3 trillion is exchanged making the Forex Market
the largest financial market in the world.
Who are this market participants handling all these large amounts of money?
Well firstly we have the three main banks (Deutsche Bank, UBS and Citigroup)
handling about 45% of this big pie, followed by multinationals which are the
large cooperate companies, speculators come in third this are the hedge funds
and proprietary traders included. Fourth we have the central banks.
Now you might be sitting there thinking to yourself where do I fit into this big
pool of money, with all these large institutions and cooperate companies, well
last on the list we have the retail traders, this is you and me. Yes, you too have
an opportunity to participate in the forex market not as a traveller going to
enjoy summer in South Africa but by making money by simply buying and
selling different currencies just like this large cooperate companies on your PC
or mobile phone. This gives you as retail traders an opportunity to dip your
hands in this big pool of money ($5.3 trillion) that is being traded daily.
If your excited about this opportunity just like how we are, let us take you
through the process of becoming a forex trader. We have mentorship
programs where you get to have our team of expects that will get to teach you
how to trade, we also have our social media platforms where you can engage
with us for any assistance you need, view our daily and weekly analysis. Our
market analysis is all given out for free so do follow and connect with us on our
social media platforms

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 Part I – Forex Trading 101
(Basics)

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N ow let us get started, in the forex market currencies are traded in pairs.

We have the base currency which will be the first currency on our left and the
quote currency which will now be the currency on the right example EUR/USD
where EUR is our base currency and USD as our quote currency.
The base currency is always referenced as one unit, where one unit of EUR will
be exchanged to a certain amount of USD (e.g. EUR/USD = 1/1,19947). We also
have currencies that are traded the most which we call them as major’s, this
includes EUR, USD, GBP, JPY, AUD, NZD, CAD and CHF.
Now moving on to pips or pip which is short for percentage in point(s), are
mainly used to calculate profits and losses when trading forex, take for
instance EURUSD is still trading at 1,19947 and moves up by 50 pips to reach
1,20447. Take in account that when counting the number of pips, we start off
with the fourth decimal place of the quotation, in the case of our EUR/USD
1,19947 the number 4 will be our fourth decimal place.
We also have leverage, which is very common to any person when starting out
with, so what is leverage and how does it work? Leverage allows you to borrow
a certain percentage of money from your broker to match the size of trades
you want to take, which gives you the advantage of making more profits with a
relative small amount of starting capital. Note that using higher leverage can
also work against you when your open position goes against you, as a result
more profits will be lost.
Now that you understand what are is percentage in points (pips) and what is
leverage, we now get to focus on margin and margin call which will further
explain on a later chapter under risk management, when starting out as a
trader you need to know what it is and how it works, a lot of new trader or
what they call newbies tend to receive margin calls for over trading and end up
losing their accounts not knowing why and how it all happened.
So, now what is margin and margin calls? margin is the minimum amount
needed in your trading account to open a trading position, it also gets to
protect you when trades are going against you but it all depends on the
amount that exist in your account. The more you have in your account the
more protection you get to have.

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The picture above shows you how leverage and the required margin you will
have with a $1 000 trading account.

In most instances brokers will not even allow you to reach the $2,5 margin
level, before your margin level reaches $2.5 you would have already received a
margin call. Margin call is when your broker alerts you that you are having
insufficient funds to run your current position and that you need to deposit in
more funds before blowing your trading account. Proper risk management
needs to be considered when trading to avoid losing money, most people
would say trading is risky but if one takes all the basic steps into account when
trading risk can be avoided.

Metatrader 4 (MT4)

Metatrader is a technical trading software or platform used for trading the

forex, CFD’s and futures market. The metatrader 4 platform is mainly used by
traders to analyse the various financial markets, place orders and to manage
their trading accounts, this is what we call Technical Analysis.
Technical analysis is the forecasting of future price movement based upon
previous price data. Different types of trading strategies are employed to assist
in forecasting the future price movement of the financial markets, which in

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addition helps traders to profit from the financial markets. More information
on trading strategies will be discussed on the following chapters (Part II & III)
Most brokers offer two types of MT4 platforms which can be used for technical
analysis, we have MT4 for PC’s and one for Mobile Phones/Tablets.

Metatrader 4 for PC

Market Watch – This represents different quotes of various currency pairs.

Each currency pair will have its respective Bid and Ask price
By clicking Ctrl + M on your keyboard the market watch will open and you’ll be
able to view all quotes, bid and ask prices, by clicking Ctrl + M again the market
watch will be removed from the display.

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Terminal – This window offers traders quick access to view all open trades,
account balance, equity, margin and free margin when you have trades
running.
Account history can also be viewed from the terminal window this is where
you have all the previous profits and loses as closed trades.

New Order – When placing or opening new trades, by clicking on the new
order option you will be able to place trades and select the necessary volume,
stop loss, take profit, market execution or pending order.

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Candlestick Chart – This is an option on your MT4 platform which allows you
to view your charts represented in Japanese candlesticks. The following
chapter we detail more on the types of candlesticks and how they affect the
markets.

Line Chart – Here we have another form in which one can view price on the
financial markets by simply choosing the line chart, price will be represented in
a form of a line like the picture from an mt4 depicted below.

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Bar Chart – The last form in which traders can view how price is depicted on
the mt4 is through the Bar Chart which shows the open, low, close and high of
each bar.

Indicators – They are additional tools to help traders on analysing the financial
markets, there are various indicators available on the mt4 platform to use all
working in different ways, representing price in different manners. Although
some do work more or less the same indicators do come in handy when it

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comes to technical analysis. We have indicators such as the Moving Average,
MACD, Stochastic, RSI and a whole lot more others available on the mt4.

We also have other options on the Toolbar to help utilise the mt4 more
effectively, options such Navigator, Templates, zoom in/out, Timeframes,
Cursor, Cross Hair, Shapes, Horizontal line, Vertical line and Trendlines can
found on the mt4 platform.

Metatrader 4 for Mobile Phones

When opening the mt4 from your phone for the first time, first thing you will
get to see would be the Quotes, here you will find all the currency pairs,
spread, bid and ask price.
On the top right of the screen, you will be able to see a + sign which allows you
to add more currency pair( that might have not appeared.
Another option near the + sign will be the edit option this is where you can
remove and rearrange the currency pairs in a manner that best suits you.

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Spread – The difference between the bid and ask on a currency pair is called
the spread. Take for instance from the above picture our bid price 1,12714 and
ask price of 1,12728 for EUR/USD, by subtracting these two prices you will find
that the difference between them is 14 which becomes the brokerage fee that
will be charged for trading the EUR/USD on that specific moment.
Bid Price – This is the price in which you are prepared to sell a respective
currency pair for (e.g. EUR/USD bid by 1,12714)
Ask Price – This is the price in which you are prepared to buy a respective
currency pair for (e.g. EUR/USD ask by 1,12728)

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Just next to the Quotes you get to find the Charts of different currency pairs,
you will have to select one pair to be able to view its chart. On the top section
there is + cross hair which you use just like the one on mt 4 for PC’s to find the
precise price.
The cross hair is followed F which you’ll use to insect any indicator of your
choice, while the ($) sign helps you to easily nevigate the different currency
pairs at ease, by clicking on any currency pair that appears it will automatically
load on the chart.
From the dollar sign we have a small icon of a clock, this is where you find the
different timeframes from one minute till the monthly timeframe (m1 - Mn).
Lastly on this window we have the New Order option, here we can be able to
enter our trades.
On the third window its Trade, here you will be able to see all the trades that
are currently running either in profit or loss they will all appear in this window
before closing. Trading balance, equity and your margin level can be monitored

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here which will allow you to get proper understanding on where your trading
account is standing.

The fourth window which we will deal with here will be our fourth window,
which shows us all the previous trades we have taken, the amount of money
that has been deposited or withdrawn from the account, the overall profit or
loss you have maintained in that period of trading. You can also change how
you choice to view all this trades be it in their currency pairs, time based or
profit and losses. Another thing we can do on this window is to choose from
which specific period we want to view all the previous trades, it can either be 1
day only, 1 week, 1 month or the past 3 months.

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The last two windows are not used as much but they can be helpful depending
on how you choose to trade the forex market. The fifth window is for all the
news and update on the financial markets, they will always be updated there
in real time. Our last window on our mt4 for mobile devices will be for chats
where you can engage with your fellow forex traders by either sharing signals,
market analysis or any random conversations you would share with other
traders.

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 Part II – Japanese
Candlesticks

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Part II – Candlesticks

Head –
Body –

Tail –

The above picture shows a complete candlestick, it consists of a head the

upper wick which is normally the high on a bullish and bearish candlestick,
then comes the body which would be the level from open to close of the
candlestick and lastly, we have the tail this is normally our low on the bullish or
bearish candlestick.

High – High –
Close – Open –

Open – Close –
Low – Low –

Bullish Candlestick Bearish Candlestick

High – This shows the highest level/price reached within a specific period.
Open – This shows the opening level/price of the candlestick that is formed.
Close - This shows the closing level/price of the candlestick that has formed.
Low – This shows the lowest level/price reached within a specific period.

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Bullish Candlestick – This is a candlestick that is moving in an upward
direction.
Bearish Candlestick – This is a candlestick that is moving in a downward
direction.

Types of Candlesticks

Hammer Inverted Hammer

The hammer and inverted hammer are two types of candlesticks that would
normally appear on the peak or tip of a strong downtrend or uptrend and
would represent and change in the markets direction. Traders can take
advantage of this candlesticks by either trading them knowing that after their
appearance, the market would change direction for an uptrend/downtrend or
rather understanding that if one has taken a sell/buy trade, they can simply
close their position knowing that a bull market/uptrend is follow this type of
candlesticks.

Shooting Star Hanging Man

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 Bullish Big Shadow Bearish Big Shadow

The bullish and bearish big shadows are another type of candlesticks that
would also appear on the end of a strong downtrend or strong uptrend, they
too represent and change in the markets direction. Traders can take advantage
of this candlesticks by either trading them understanding that after their
appearance, the market would change direction or traders could close their
positions knowing that if one has taken a position the market is ready to go the
opposite direction.

Doji Doji

The doji candlesticks are reversal candlesticks, they are formed in a way that
the opening and closing price is at the same point. Unlike the other
candlesticks we have just covered doji’s will tend to affect the markets
direction at certain times, which makes them to have a low rate of changing
the markets direction.

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 Part III – Technical Analysis
(Chart Patterns)

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 Channel (Support & Resistant)
Support and resistant are surely the most important price level. By only having
the lower trendline (support) and the upper trendline (resistant) price would
usually consolidate in between this price levels. They can be traded on both
the long (buying) and short (selling) position depending on the confirmation
breakout. Unlike the Flags which are solely continuation chart patterns.
How to trade Channels
Stop Loss: Slightly below the resistant trendline for long position (Buy) or
slightly above the support trendline of short position (Sell).
Take Profit: Distance between support and resistant.

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 Channel (Support & Resistant)
Channels mainly occur on the longer timeframe. It is important that traders
wait for a confirmation breakout on either the support or resistant trendline
before taking on a buying or selling position.
Always have in place the correct position size, with your stop loss and take
profit before your trade entry. Monitor your trades often enough in the case
where stop loss and take profit requires adjustment to breakeven. Exit trade
based on your trading system.

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 Rising Channel
In this case support and resistant are still playing a crucial part as price
consolidates in between this price level. Rising channels consist of rising price
on the support and rising on the resistant trendline. Unlike the horizontal
channel, rising channel is a reversal pattern and are mainly traded on a short
position (Selling) after the breakout on the Support trendline.
How to trade Rising Channels
Stop Loss: Slightly above the support trendline.
Take Profit: Distance from the lower high to the lowest low should equal
distance from the breakout to your take profit.

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 Rising Channel
You will mainly recognise rising channels when the chart pattern consists of
equal higher highs and higher lows on an uptrend market. Traders would wait
for a confirmation breakout on the support trendline for a good entry.
Always have in place the correct position size, with your stop loss and take
profit before your trade entry. Monitor your trades often enough in the case
where stop loss and take profit requires adjustment to breakeven. Exit trade
based on your trading system.

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 Falling Channel
In the case of a falling channel support and resistant still gets to play a curial
part as price would usually consolidates in between this price level. Falling
channels consist of falling price on the support and on the resistant trendline.
Unlike the horizontal channel and the rising channel, falling channels are
traded on the long position (Buying) after the breakout on the resistant
trendline.
How to trade Falling Channels
Stop Loss: Slightly below the resistance trendline.
Take Profit: Distance from highest high to the highest low should equal the
distance from the breakout level/resistance trendline to your take profit.

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29 | P a g e
 Falling Channel
Falling channels are just the opposite of what happens on the rising channel,
you will recognise falling channels when the chart pattern consists of equal
lower highs and lower lows on a downward trend. Traders would wait for a
confirmation breakout on the resistant trendline for a good entry.
Always have in place the correct position size, with your stop loss and take
profit before entry. Monitor your trade to breakeven. Exit trade based on your
trading system.

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 Double
sss Tops

Double top chart patterns are reversal chart pattern, were price gets to change
direction after the second bounce on the resistant level.
Chart formation looks like a M shape, with the two spikes bouncing twice on
the resistant level before heading downward for a strong bearish trend.
How to Trade Double Tops
Stop Loss: Slightly above the neckline.
Take Profit: Distance from support to resistant should equal distance from
support to Take Profit.

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 Double Tops
These patterns occur frequently on the financial market, it is important that
traders wait for a confirmation breakout from the neckline before selling or
going short on the trade.
Make sure your position size is correct, stop loss and take profit are set before
entry and monitor your trade according to your trading system so you can be
able to adjust your stop loss and target price. Exit trade based on your trading
system.

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 Double Bottoms
Double bottom chart patterns are also reversal chart pattern, just like the
double tops price changes direction after the second bounce on the support
level.
Chart formation looks like a W shape, with the two spikes bouncing twice on
the support level before heading upward for a bullish trend.
How to Trade Double Bottoms
Stop Loss: Slightly below the neckline.
Take Profit: Distance from support to resistant should equal distance from
support to Take Profit.

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 Double
DoubleBottoms
Bottoms

These patterns occur frequently on the financial market, it is important that

traders wait for a confirmation breakout from the neckline before buying or
going long on the trade.
Make sure your position size is correct, stop loss and take profit are set before
entry and monitor your trade according to your trading system so you can be
able to adjust your stop loss and target price. Exit trade based on your trading
system.

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 Head and Shoulder
Head and shoulder chart patterns are reversal patterns as well, which offer
great selling opportunity for traders.
The formation here is more like the triple top chart pattern but with a middle
top (Head) striking out higher than the other two tops (Shoulders).
How to trade the head and shoulder
Stop Loss: Slightly above the neckline.
Take Profit: Distance from the highest level of one of the shoulders should
equal the distance from the neckline to your take profit.

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 HeadDouble
& Shoulder
Bottoms

These patterns occur frequently on the financial market, it is important that

traders wait for a confirmation breakout from the neckline before selling or
going short on the trade.
Make sure your position size is correct, stop loss and take profit are set before
entry and monitor your trade according to your trading system so you can be
able to adjust your stop loss and target price. Exit trade based on your trading
system.

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36 | P a g e
 Inverse Head & Shoulder
Just like the previous chart pattern, the inverse head and shoulder is like the
head and shoulder turned upside down, functions similar by offering traders a
good opportunity to buy or go long on the currency pair.
How to Trade the Inverse Head and Shoulder
Stop Loss: Slightly below the neckline of the inverse head and shoulder.
Take Profit: Distance from the highest level of one of the shoulders should
equal the distance from the neckline to your take profit.
Entry: Breakout from the neckline.

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37 | P a g e
 Inverse Head & Shoulder
Traders should keep a sight on these patterns, not only do they occur a lot on
the market but also, they offer great returns if traded well as price would
normally shoot upward for a strong uptrend, it is important that traders wait
for a confirmation breakout from the neckline before buying or going long on
the trade.
Make sure your position size is correct, stop loss and take profit are set before
entry and monitor your trade according to your trading system so you can be
able to adjust your stop loss and target price. Exit trade based on your trading
system.

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 Symmetrical Triangle
One thing you can easily recognise is that these patterns look more or less like
a triangle with the peak facing the right direction. They are continuation
patterns offering price to consolidate in between the triangle before continues
with it previous trend.
How to trade the Symmetrical Triangles
Stop loss: On the apex (in between) the ascending and descending trendlines
Take profit: Distance between the highest high of the upper (descending)
trendline and the lower low of the (ascending) trendline.

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39 | P a g e
 Symmetrical Triangle
With this chart patterns traders should be constantly looking for the correct
entry, as there is a high failure rate were price fails to continue with its
previous direction, not forgetting that if traded accordingly they too can offer
great returns.
Which is why it is importantly to trade accordingly to your trading strategy at
all times. Set all you position size, stop loss and take profit correctly and
constantly monitor your trade to adjust your stop loss and take if necessary
and exit trade properly.

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 Ascending Triangle
The shape of ascending triangle is more like symmetrical triangle divided into
half, having only the lower (ascending) trendline and a resistant trendline on it.
It can act as both a reversal or continuation pattern, but favours the
continuation more.
How to trade the Ascending Triangles
Stop loss: Slightly above the breakout on the ascending trendlines
Take profit: Distance between the resistant trendline and the lowest low of
the ascending trendline.

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 Ascending Triangle
This chart patterns are one of the few traders could take great advantage of as
they have a low failure but it will be very beneficial for traders to be aware as
price can pull back straight after the breakout before continuing in its breakout
direction.
Again, it is important to trade efficiently accordingly to your trading strategy.
Set all you position size, stop loss and take profit correctly and constantly
monitor your trade to adjust your stop loss and take profits if necessary and
exit trade properly.

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 Descending Triangle
We can easily see that the shape of a descending triangle is the exact opposite
of the ascending triangle, having only the descending trendline and a support
trendline on it. This chart pattern can also act as both reversal or continuation
pattern depending on the confirmation breakout, although in most instances
the continuation pattern will occur more often than the reversal.
How to trade the descending Triangles
Stop loss: Slightly above the support trendlines for a short/selling position.
Take profit: Distance between the highest high and support trendline should
equal distance between support and your take profit.

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 Descending Triangle
Here is another chart pattern that traders could still take great advantage of,
with their low failure rate. Traders should keep in mind that with these
patterns, price would breakout and quickly come back to the support trendline
for a pull back before continuing with the breakout.
Again, to be a successful trader it will always be a great idea to follow the
correct risk management. Set all your position size, stop loss and take profit
correctly and constantly monitor your trades to adjust your stop loss and take
profits if necessary and can exit trade accordingly.

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 Rising Flag
Just like in the case of channels, flags function in a similar manner but price
would only consolidate for a short period before continuing with the trend.
Rising flags consist of narrow support and resistant levels, and they are mainly
continuation patterns and offer a great buying opportunity on the uptrend.
How to trade Rising Flags
Stop Loss: Slightly below/above the resistance or support trendline.
Take Profit: Distance from lowest high (resistance) to the lowest low (support)
should equal the distance from the breakout level (resistance) to your take
profit.

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 Rising Flag
You will normally recognise rising flags with a minor consolidation on an
uptrend, where this chart pattern creates equal higher highs and higher lows.
Traders would wait for a confirmation breakout on the resistant or support
trendline for a good entry.
Always have in place the correct position size, with your stop loss and take
profit before your trade entry. Monitor your trades often enough in the case
where stop loss and take profit requires adjustment to breakeven. Exit trade
based on your trading system.

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 Falling Flag
Falling flags can be considered the opposite of our previous rising flag as they
function the same but in a falling market (downtrend). Where price would
consolidate for a short period before continuing with the trend. Falling flags
consist of narrow support and resistant levels, and they are mainly
continuation patterns and offer a great selling opportunity on the downtrend.
How to trade Falling Flags
Stop Loss: Slightly above the support trendline.
Take Profit: Distance of the support trendline and resistant trendline.

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 Falling Flag
With falling flags traders will recognise this patterns with a minor consolidation
on a downtrend, where price creates equal lower highs and lower lows. For a
good entry, traders should wait for a confirmation breakout on the support
trendline before going short on the trade.
Always have in place the correct position size, with your stop loss and take
profit before your trade entry. Monitor your trades often enough in the case
where stop loss and take profit requires adjustment to breakeven. Exit trade
based on your trading system.

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 Pennant
More like the Symmetrical Triangle, Pennants are also similar in shape.
Pennants have a triangular shape and they are both reversal and continuous
chart patterns offering traders a good opportunity to trade them both long and
short depending on the breakout of price after the minor consolidation in
between the chart pattern.
How to trade the Pennant
Stop loss: On the apex (in between) the ascending and descending trendlines
Take profit: Distance between the high of the upper (descending) trendline
and the low of the lower (ascending) trendline.

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 Pennant
Pennants are slightly different from Symmetrical Triangles as they are normally
smaller in shape and occur for a short period of time before breaking out on
either the descending or ascending trendline. Pennants are one of those chart
patterns that if traded well they offer great returns.
It is important for traders to trade according to their trading strategy. To set all
you position size, stop loss and take profit correctly and constantly monitor
trades in the case where stop losses and take profits needs to be adjusted.

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 Rising Wedge
Rising Wedge are unique charts patterns that consist of a two rising or upward
slopping trendlines, but with the lower trendline more steeper resulting in an
intersection of the two trendlines. Rising wedges are mainly reversal chart
patterns which offer a great selling opportunity for trader after the
confirmation breakout on the lower trendline.
How to trade the Rising Wedge
Stop loss: Slightly above the support trendlines
Take profit: Distance between the high of the upper (Ascending) trendline and
the low of the lower (Ascending) trendline.

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 Rising Wedge
Just like most chart patterns Rising Wedges can be traded on any financial
market and any time frame. Rising wedges mainly occur on a rising market but
also occur in a bearish trend, which would indicate a change in the markets
directions or continuation.
It is important for traders to trade according to their trading strategy. To set all
you position size, stop loss and take profit correctly and constantly monitor
trades in the case where stop losses and take profits needs to be adjusted.

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 Falling Wedge
More like the Rising Wedge but in the opposite direction, falling Wedges are
charts patterns consisting of two downward slopping trendlines, with the
upper trendline more steeper resulting in an intersection of the two trendlines.
Falling wedges are reversal patterns which offer traders with an opportunity to
trade long (buy) after the confirmation breakout on the upper trendline.
How to trade the Falling Wedge
Stop loss: Slightly below the resistance trendlines
Take profit: Distance between the high of the upper (descending) trendline
and the low of the lower (descending) trendline.

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 Falling Wedge
Falling Wedges can be found mainly on the peak of a downward trend,
signalling a change in the markets direction or in between a trend to confirm a
continuation pattern. Falling wedges occur a lot, and they too can be traded on
all time frames in any financial markets, which becomes a great benefit for
analysts and traders to use when trading the markets.
It is important for traders to trade according to their trading strategy. To set
all you position size, stop loss and take profit correctly and constantly monitor
trades in the case where stop losses and take profits needs to be adjusted.

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 Part IV – Fundamental
Analysis

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M ore like technical analysis which we have covered in the previous

chapter, fundamental analysis also plays a huge role in the overall market
analysis which provides traders with the edge to get a better view on the
future price of a currency pair.

What separates technical analysis and fundamental is that fundamental

analysis deals mainly with external factors such as a countries unemployment,
economic and monetary policies, economic growth rates and the overall
outlook of inflation in a country. Where else technical analysis focusses solely
with what happens on the charts.

With access to internet most of this information can be easily accessed

through the internet for free, we would recommend using www.investing.com
to gain access to the relevant data, on the economic calendar section you will
find the latest and upcoming economic news and events happening all over the
globe. You will also notice that there are a lot of news and events happening
around the clock, which brings to the point that we about to cover, detailing
the importance of knowing on which economic news or events are more
significant than the other to be able to trade or close trades accordingly.

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Source: https://za.investing.com/economic-calendar/ 14/09/2017

Below are some of the economic indicators that tend to have a significant
impact on influencing the price of certain currency pairs.
1. Unemployment data
Non-Farm Payroll (NFP) – Which is one of the significant new
releases in the Forex Market, which measures the monthly
employment rate in United States releases. This is the number of
people employed in within the previous month excluding the
farming business hence Non-Farm Payroll, results are usually
released on the first Friday of the month

2. Consumer data
Retail Sales – These measures the sales of retail goods (consumer
confidence) over a specific period.

3. Interest Rates
News released by central banks and is used as a blunt instrument
to control the countries inflation.

4. Inflation
Consumer Price Index (CPI) – These measures the change in price
of goods and services from the consumers viewpoint.
Retail Price Index (RPI) – These measures the changes in price of
goods and services from the retails viewpoint.
Producer Price Index (PPI) – These measures the changes in prices
of goods and services from the producer’s viewpoint.

5. Broad Economy
Gross Domestic Product (GDP) – This is also another key factor
among the economic data being released of different countries,
the GDP measures the growth rate of a countries economy on a
yearly period.

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 Purchasers Managers Index (PMI) – These measures the
economic health of the manufacturing sector.
Trade Balance – These measures the difference between export
and import goods (Import – Export). Export data provides the
growth rate of a country, while import provides data provides
demand of good in a country.
Industrial Production – These measures the strength in the
manufacturing sector by providing the production output of
industrial activities.

6. Housing Data
Housing Price – These measures the residential building
construction, home sales and mortgage applications of a specific
period.

7. Sentiment Indicators
Consumer Confidence Indicator (CCI) – These measures the level
of confidence consumers have in an economy, which usually
tracks the consumer spending within a country.
University of Michigan Sentiment Report (UoM) – Survey
conducted by the UoM which covers samples of both retail and
business.

Visit www.investing.com for updates on the release of this economic news

A word of caution, traders need to be aware that all this economic news will
not have the same effect on the market every time of release, a lot of variables
need to be taken in place for such instances.
It is reasonable to understand that when positive results are released they
should automatically affect the market positively but that is not always the
case as sometimes the data might not come as expected from the initial
forecast which then results in price volatility as the market tries to adjust to
the new data, this gets to affect the market differently.

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From this we can also recall the phrase that “anything can happen in the
markets, you will never know what could happen next when it comes to the
markets behaviour” which is absolutely true no one know for sure how the
market behaves but certain patterns repeatedly occur in the market and
provide similar outcomes which gives us the edge to trade them, by taking
advantage that similar outcomes could occur again so we can profit from that
which in most cases it does but not always.

Source: Metatrader 4 14/09/2017

The picture above shows us a technical chart of GBPUSD before and after the
fundamental news. This is where the Bank of England about to release the
interest rate decision. We can see on the chart from the 8th of Sept. the
movement was going sideways till the 12th where price tried to rally a bit but
quickly fell through the previous low and ranged again ahead of news, in most
cases before any country gets to release strong fundamental news that would
have a huge impact price would always seem to consolidate, going sideways as
investors are all waiting and no major trades would be taking place till the
official news is being released, we can see here after the news release the US
dollar weakened as Pound got stronger. This already tells us that the interest
rate decision from the Bank of England came out positively which resulted in a
positive reaction on the Pound.

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As stated before trading fundamentals doesn’t always come as easy as having
positive results then automatically you simply buy any currency, there is a lot
to be taken place for instance GBP interest rate decision you need to know
which counties would be affect by the results, how does it affect the country’s
currency depending on the relationship between the two countries. All these
factors need to be taken in place, which means understand the relationships of
the currencies that are paired to GBP, in that manner you will be able to make
better trading decision.

When it comes to trading fundamentals, more especially high impact news

such as your US Non-Farm Payroll most traders choose to close their trades
and not trade at all during that period due to high volatility that could instantly
blow your trading account, trading high impact news needs someone with
intensive knowledge and experience or long term traders as the market tends
to react positive to technical analysis long term, that tells us that economic
news do not get to affect long term traders as much as they affect short term
traders.

My 2cents of advice to new traders is never trade fundamentals more

especially high impact news, better trade them on a demo account for some
period, measure your success rate on the demo for a while before trading
them on a live account. Once you are ready for a live account make sure you
start small grow from there, do not get in a hurry to make big bucks because of
your success on the demo account. Try by all means to respect you funds as
you can easily blow or lose a lot of money instantly, and that you could
terrifying and can have a huge negative impact on your overall trading career.

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 Part V – Risk
Management

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R isk Management is one of the most important topic when it comes to
trading, it typically separates what we call gamblers and traders, most people
tend to associate trading with gambling which is not the case.

To 'gamble' is to take a high risk with limited chance of achieving your

expected pay out. To 'trade' is to take a calculated risk which will nevertheless
provide you with a good return as well as keep you in the game for the long
run. Pursuing this kind of strategy will truly enable you to improve your
outcomes, it will as well help your mental wellbeing. When starting any type of
trading you should not be in a position in which you are sweating with the
hopes of achieving a winning trade.

Aiming and sticking with a strategy which offers successful risk management
does not just make sure you are not kept up at night-time, it will as well make
sure that a loss will not signal the end of your investing career but a key lesson
to go back and check when you went wrong with your trades, then take
responsibility of not repeating similar mistakes in future trades.

Your first concern when trading should not be focused much on the potential
rewards, but more to the risk of that given trade. Unfortunately, most traders
start trading Forex with the opposite mindset, thinking about the millions they
are going to make forgetting that they can losing everything instantly without
proper risk management.

If you want to succeed in trading any financial markets you must take into
consideration the maximum percentage of the total trading money that you
should risk in any one trade. Your ability to limit your losses is equally as critical
(or even more critical) as your success in managing winning trades.
The goal of practicing a good Forex money management is to minimize risk and
increase reward.

For starters, here are 3 quick tips to take into consideration:

1. Firstly, do not trade with money you can't afford to lose.

2. Second, never borrow money while trading, trade only with your own
money (this does not apply to leverage that is provided by your broker).

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 3. thirdly, set and stick to a budget. Write it on your forehead if you have
to, but no matter what, when you hit that number, quit trading for the
day.

Good money management calls for adopting a conservative investment

strategy that means that you should never risk your entire capital.
When you enter a trade (no matter how great it may be), always ensure to
only invest conservatively. Forex trading like any other investing is not a sure
thing, there is always a risk factor involved. A conservative investment strategy
helps you to conserve your money when things go wrong.

Trading offers a lot of choices to the trader. A good money management

strategy requires diversification, trade different currency pairs but never have
more than 10 pairs to focus on which will lead you to over trading. Remember
the saying by the greatest investor Warren Buffet “never put all your eggs in
the same basket”.

Start off slow and scale up - this has a significant role particularly for beginner
traders. Certainly, do not fall for the emotions and commit your entire
amounts right away on one trade. Investing in small amounts continually helps
you to take a self-disciplined approach. The majority of Forex brokers allow for
a small minimum trade sum. Use this advantage and be sure to trade with
patience.

Do not expect to make gains with trading as soon as you made your first
deposit. More especially to traders who start off with a $100 - $500 account.
Trade the small amounts until you have the sense of the assets that you're
trading. This can gradually build your self-confidence levels and helps to
automatically be aware of the indicators and be able to prepare your investing
strategy and ultimately help reduce the losses. One of the important things
that specifies successful traders is having a good money management strategy.

When I started out I made some commitments with myself which I would like
to also take into consideration, this will help you grow your account with
having to risk too much. Trading a $100 - $500 account make use of a 0,01 -
0,07 micro lot, trading on a $600 - $1000 make use of a 0,08 - 0,12 slowly grow
from here but keep in mind even with a huge account the basics on trading still
applies. Never risk too much thinking that you know it all, that will be your
quickest way to blow your account and lose it all.

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With this method from the picture above you will know that you are only
committed to lose a maximum of 3% of your account with a minimum of 1%
which pretty much reasonable. It’s advisable to consider losing with more with
the minimum 1% than the 3%.

We come to another important point that some traders get to neglect, the use
of Stop Loss and Take Profit. NEVER EVER and I mean NEVER place any trade
without the use of a stop loss and take profit, it’s better to have a trade hit
your take profit and regret that you could have made more, than to have a
trade go into profit for a while then go against you till it wipes your account
out.

Stop loss should go in accordance to the risk mentioned above, a $100 account
should only risk 1% with a target profit of 2 to 3%. Which results to risking $1
per trade to gain $2 to $3. While on a $1 000 account you will be risking $10 to
for a reward of $20 - $30. With this strategy, it would take 100 straight losses
for your account to be wiped out, which is unlikely you will get to profit on
certain trades which reduces your chances of being wiped out.

On the technical analysis chapter I emphasised using stop losses, take profit
and waiting for confirmation before taking on any trade, which I still stick by
even now. No matter how bad you are with trading if you have proper risk
management with a little of bit of a proper mindset any given person can
succeed in trading, but then that is where the problem lies. Not everyone has
the right trader’s mindset or practice proper risk management, some come to
Forex to make a quick buck but even up being the ones who lose, some would
simply take on trades without stop losses saying it prevents them from making
profit only to end with a wiped-out account.

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Risk management is key when it comes to trading and a believe it’s the same
with life. Before you drive a car, you should take in consideration if you brick
paddles are working properly, drivers licence is in place, head and hind lights
are also working, insurance is up to date as we know anything might happen
while on the road, but if your risk reward is in place you can drive or trade with
assurance that you will be safe even if unforeseen circumstances occur.

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Glossary

Bullish – Characteristics of a rising market (market going up).

Bearish - Characteristics of a falling market (market going down).
Broker – Middle man between traders/investors and the financial
markets, brokers usually charge fees when traders/investor execute
trades.
Candlestick – Financial charts that re used to describe price movement.
Chart pattern – System that is used to helps to identify the movement of
the financial markets.
Downtrend – Downward movement of the financial markets.
Fundamental analysis – Evaluating the financial markets by measuring
its intrinsic value (economy, financial, and other quantitative factors).
Long Position – Open trade, aimed on buying a currency pair.
Risk Reward – Money management method used to calculate potential
risk and reward of a given trade.
Resistance – Price point on a technical chart where upward movement
blocks by the overwhelming supply, which pushes price downward.
Stop Loss - Order used by traders to close out running position for after
a predetermined lose.
Short Position – Open trade, aimed on selling a currency pair.
Support - Price point on a technical chart where downward movement
blocks by the overwhelming demand, which pushes price upward.
Technical analysis – Evaluating the financial markets by analysing it on a
technical platform/software, using methods such as chart patterns,
indicators.
Take Profit – Order used by traders to close out running position for
after a predetermined profit.
Trading – Participating in the financial markets for potential profits.
Uptrend – Upward movement of the financial markets.

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(left) Billionaire Patrice Motsepe chairman of African Rainbow Minerals and
African Rainbow Capitals and (right) Ashley Ditshego CEO of Ditshego Jnr.
Capitals.

“Never depend on a single source of income, make an investment to create a

second income source”
- Warren Buffett

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 DISCLAIMER
The material is provided as a general marketing communication for
information purposes only and does not constitute independent investment
research. This should not be considered as advice or investment
recommendation or a solicitation for buying and selling of any instrument.

All the information provided is gathered from reputable sources and any
information containing an indication of past performance is not a guarantee or
reliable indicator of future performance. Users knowledge that any investment
in forex and CFD’s products is characterised by a certain degree of uncertainty
and that any investment of this nature involves high risk for which the users
are solely responsible and liable. We assume no liability for any lose arising
from any investment made based on the information provided in this
communication.

© DITSHEGO JNR. CAPITALS 2017

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