1. Preschool
    >
  2. Kindergarten
    >
  3. Elementary
    >

    Elementary

    = Lesson Status ?
    1. Grade 1 Support and Resistance Levels
      1. Support and Resistance
      2. Trend Lines
      3. Channels
      4. Trading the Lines
      5. Summary: Support and Resistance
    2. Grade 2 Japanese Candlesticks
      1. What is a Japanese Candlestick?
      2. Sexy Bodies and Strange Shadows
      3. Basic Candlestick Patterns
      4. Lone Rangers - Single Candlestick Patterns
      5. Double Trouble - Dual Candlestick Patterns
      6. Three's Not A Crowd - Triple Candlestick Patterns
      7. Japanese Candlesticks Cheat Sheet
      8. Summary: Japanese Candlesticks
    3. Grade 3 Fibonacci
      1. Fibonacci Who?
      2. Fibonacci Retracement
      3. When Fibonacci Fails
      4. Combining Fibs with Support and Resistance
      5. Combining Fibs with Trend Lines
      6. Combining Fibs with Candlesticks
      7. Fibonacci Extensions
      8. Placing Stops with Fibs
      9. Summary: Fibonacci
    4. Grade 4 Moving Averages
      1. Silky Smooth Moving Averages
      2. Simple Moving Averages
      3. Exponential Moving Average
      4. SMA vs. EMA
      5. Using Moving Averages
      6. Moving Average Crossover Trading
      7. Dynamic Support and Resistance
      8. Summary: Moving Averages
    5. Grade 5 Common Chart Indicators
      1. Bollinger Bands®
      2. Moving Average Convergence Divergence (MACD)
      3. Parabolic SAR
      4. Stochastic
      5. Relative Strength Index
      6. Average Directional Index
      7. Ichimoku Kinko Hyo
      8. Putting It All Together
      9. What is the Most Profitable Indicator?
      10. Summary: Common Chart Indicators
  4. Middle School
    >
  5. Summer School
    >
  6. High School
    >

    High School

    = Lesson Status ?
    1. Grade 9 Trading Divergences
      1. Divergence Trading
      2. Regular Divergence
      3. Hidden Divergence
      4. How To Trade Divergences
      5. Momentum Tricks
      6. 9 Rules for Trading Divergences
      7. Divergence Cheat Sheet
      8. Summary: Divergences
    2. Grade 10 Market Environment
      1. Trendspotting
      2. What is a Trending Market?
      3. What is a Ranging Market?
      4. Retracement or Reversal?
      5. Identifying Reversals
      6. Protect Yo Self From Reversals
    3. Grade 11 Trading Breakouts and Fakeouts
      1. Trading Breakouts
      2. Ways to Measure Volatility
      3. Types of Breakouts
      4. Spotting Breakouts
      5. Measuring the Strength of the Breakout
      6. Trading Fakeouts
      7. Fade the Breakout
      8. How to Trade Fakeouts
      9. Summary: Trading Breakouts and Fakeouts
    4. Grade 12 Fundamental Analysis
      1. What is Fundamental Analysis?
      2. Interest Rates 101
      3. 411 on Monetary Policy
      4. The Who's Who of the Central Bank
      5. Long-term Market Movers
      6. News and Market Data
      7. Market Reaction
    5. Grade 13 Currency Crosses
      1. What is a Currency Cross Pair?
      2. Crosses Present More Trading Opportunities
      3. Cleaner Trends and Ranges
      4. Taking Advantage of Interest Rate Differential
      5. Obscure Crosses
      6. Planning Around News and Fundamentals
      7. Creating Synthetic Pairs
      8. Euro and Yen Crosses
      9. How to Use Crosses to Trade the Majors
      10. How Cross Currency Pairs Affect Dollar Pairs
      11. Summary: Currency Crosses
    6. Grade 14 Multiple Time Frame Analysis
      1. Multiple Time Frame Analysis
      2. What Time Frame Should I Trade?
      3. Time Frame Breakdown
      4. Long or Short?
      5. Time Frame Mashup
      6. Time Frame Combinations
      7. Summary: Multiple Time Frame Analysis
  7. Undergraduate
    >

    Undergraduate

    = Lesson Status ?
    1. Market Sentiment
      1. What is Market Sentiment
      2. Commitment of Traders Report
      3. 3 Simple Steps to Access the COT Report
      4. Understanding the Three Groups
      5. The COT Trading Strategy
      6. Picking Tops and Bottoms
      7. Your Very Own COT Indicator
      8. Getting Down and Dirty with the Numbers
      9. Summary: Market Sentiment
    2. Trading the News
      1. Importance of News
      2. Why Trade the News
      3. Which News Reports are Trade-Worthy?
      4. Directional Bias vs. Non-Directional Bias
      5. Trading with a Directional Bias
      6. Letting the Market Decide Which Direction to Take
      7. Summary: Trading the News
    3. Carry Trade
      1. What is Carry Trade?
      2. How Do Carry Trades Work for Forex?
      3. To Carry or Not to Carry
      4. Carry Trade Criteria and Risk
      5. Summary: Carry Trade
    1. The U.S. Dollar Index
      1. What is the Dollar Index?
      2. How to Read the Dollar Index
      3. Trade-Weighted Dollar Index
      4. Using the USDX for Forex
      5. The Dollar Smile Theory
    2. Intermarket Correlations
      1. As Gold as it Gets
      2. Black Crack
      3. The 411 on Bonds
      4. Bond Spreads
      5. Bond Markets, Fixed Income Securities, and the Forex Market
    3. Using Equities to Trade FX
      1. Forex, Global Equity Markets, and You
      2. The Relationship Between Stocks and Forex
      3. Correlations Between Stocks and Currencies
      4. EUR/JPY: Your Very Own Barometer of Risk
      5. Intermarket Analysis Cheat Sheet
    4. Country Profiles
      1. Forex Traders' Guide to Major Economies
      2. United States of America
      3. Euro Zone
      4. United Kingdom
      5. Japan
      6. Canada
      7. Australia
      8. New Zealand
      9. Switzerland
      10. China
    1. Developing Your Own Trading Plan
      1. What is a Trading Plan?
      2. Why Do you Need a Trading Plan?
      3. Justified vs. Unjustified
      4. Getting to Know Yourself
      5. Motivation and Goal Setting
      6. Risk Capital
      7. Lifestyle Considerations
      8. Expectations
      9. Daily Pre-Market Routine
      10. Weapons of Choice
      11. Stick to the Plan
      12. Summary: Developing a Trading Plan
    2. Which Type of Trader Are You?
      1. Each Trader is Unique
      2. Time is Money
      3. Scalping
      4. Day Trading
      5. Swing Trading
      6. Position Trader
      7. Summary: What type of Trader are you?
    3. Create Your Own Trading System
      1. Mechanical Trading Systems
      2. Design Your Trading System in Six Steps
      3. Build Your Trading System in Six Steps
      4. The 'So Easy It's Ridiculous' System
      5. Summary: Creating Your Own Mechanical Trading System
    4. Keeping a Trading Journal
      1. Why Keep a Trade Journal?
      2. Benefits of Keeping a Journal
      3. What Should You Record in Your Journal?
      4. Potential Trading Area
      5. Entry Trigger
      6. Position Sizing
      7. Trade Management Rules
      8. Trade Retrospective
      9. Trading Journal Statistics
      10. Reviewing Your Trading Journal
      11. Difficulties of Keeping a Trade Journal
      12. MeetPips.com
      13. Summary: Keeping a Trade Journal
    5. How to Use MetaTrader 4
      1. Introduction to MetaTrader 4
      2. MT4 Basics: How to Set Orders
      3. MT4 Basics: How to Install an EA
      4. MT4 Basics: How to Use Indicators
      5. MT4Pips.com
    1. Risk Management
      1. What is Risk Management?
      2. Capitalization
      3. Drawdown and Maximum Drawdown
      4. Don't Lose Your Shirt
      5. Reward-to-Risk Ratio
      6. Summary: Risk Management
    2. The Number 1 Cause of Death of Forex Traders
      1. Leverage the Killer
      2. Leverage and Margin Defined
      3. Margin Call Exemplified
      4. Margin + Leverage = Possible Deadly Combination
      5. Negative Effects of Leverage
      6. More on Leverage
      7. How Leverage Affects Transaction Costs
      8. Don't Underestimate Leverage
    3. Position Sizing
      1. The Importance of Correct Position Sizes
      2. Calculating Position Sizes
      3. Complex Position Sizing
      4. Summary: Position Sizing
    4. Setting Stop Losses
      1. Stop Loss? What's That?
      2. Equity Stop
      3. Chart Stop
      4. Volatility Stop
      5. Time Stop
      6. Top Usage Mistakes
      7. How to Execute Stops
      8. Summary: Setting Stops
    5. Scaling In and Out
      1. What is Scaling?
      2. Scaling Out
      3. Scaling Into Losing Positions
      4. Adding to an Open Winning Position
      5. Summary: Scaling In and Out
    6. Currency Correlations
      1. What is Currency Correlation?
      2. How to Read Currency Correlation Tables
      3. Always Know Your Risk Exposure
      4. How to Use Currency Correlation in Your Trading
      5. Know that Currency Correlations Change
      6. DIY - Calculating Currency Correlations using Excel
      7. Summary: Currency Correlations
  8. Graduation
    >

    Graduation

    = Lesson Status ?
    1. Forex Trading Scams
      1. Forex Account Managers
      2. Don't Be a Sucker!
      3. Automated Robots and Systems
      4. Signal Services
      5. Some Brokers are Scammers Too!
      6. Regulatory Agencies
      7. Foreign Regulatory Agencies
      8. Scam FAQ
    2. Binary Options 101
      1. What Are Options?
      2. What Are Binary Options?
      3. How to Make Money Trading Binary Options
      4. Types of Binary Options
      5. Market Analysis for Binary Options
      6. Are Binary Options Regulated?
      7. Binary Options vs. Spot Forex
    3. Personality Quizzes
      1. Which Trading Style is Best for You?
      2. Which Currencies Should You Trade?
      3. What is Your Level of Trading Experience?
      4. Should You Be a Discretionary, Mechanical, or Hybrid Trader?
      5. What Kind of Mechanical System Suits Your Personality?
      6. What is Your Attitude Towards Risk?
      7. What Kind of Stop Suits Your Trading Style?
    4. Graduation Speech
      1. Congratulations! You Made It!
      2. Focus on the Process. Not on the Profits.
      3. Holy Cow! There's No Holy Grail!
      4. Be Patient. Stay Disciplined.
      5. Love the Game
      6. School's Over! Now What?

Creating Synthetic Pairs

Sometimes institutional traders can't trade certain currency crosses because they trade in such high volume that there isn't enough liquidity to execute their order.

In order to execute their desired trade, they have to create a "synthetic pair".

Let's say that an institutional trader wants to buy GBP/JPY but can't because there isn't enough liquidity. To execute this trade, they would have to buy both GBP/USD and USD/JPY (earlier in this lesson, we learned that these pairs are called its legs).

They are able to do this because there is plenty of liquidity in GBP/USD and USD/JPY which means they can make large orders.

Legs of a synthetic pair

If you're a retail trader, and you wanted to pretend to trade like an institutional trader, then you could technically trade synthetic pairs as well. But it wouldn't be too smart.

Ever since the great Al Gore "invented the internet," technology has improved to the point now that even weird crosses like GBP/NZD or CHF/JPY can now be traded on your broker's platform. Aside from having access to a larger "menu" of currency pairs to trade, the spreads would be tighter on the crosses compared to the synthetic pair you'd create.

And let's not forgot about margin use! Creating a synthetic pair requires you to open two separate positions and each position requires its own margin. This locks up unnecessary capital in your trading account when you can simply trade the cross-currency and save on margin.

So unless you're trading yards (slang term for one BILLION units), forget synthetic pairs and stick to crosses. You will be savings yourself some pips (thanks to a tighter spread) as well as freeing up your capital so you can take on more trades.

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  1. What is a Currency Cross Pair?
  2. Crosses Present More Trading Opportunities
  3. Cleaner Trends and Ranges
  4. Taking Advantage of Interest Rate Differential
  5. Obscure Crosses
  6. Planning Around News and Fundamentals
  7. Creating Synthetic Pairs
  8. Euro and Yen Crosses
  9. How to Use Crosses to Trade the Majors
  10. How Cross Currency Pairs Affect Dollar Pairs
  11. Summary: Currency Crosses

Forex Training in the School of Pipsology

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