Maxims of equity are principles developed by the English Court of Chancery and other courts who have administered equity jurisdiction, including the law of trusts. They were often expressed in Latin but are translated into English.

The twelve equitable maxims are:

1. Equity Will Not Suffer A Wrong To Be Without A Remedy

2. Equity Follows the Law

3. He Who Seeks Equity Must Do Equity

4. He Who Comes Into Equity Must Come With Clean Hands

5. Delay Defeats Equities

6. Equality Is Equity

7. Equity Looks to the Intent Rather Than the Form

8. Equity Looks On That As Done Which Ought To Be Done

9. Equity Imputes an Intention to Fulfill an Obligation

10. Where The Equities Are Equal, The First In Time Shall Prevail.

11. Where There Is Equal Equity, The Law Shall Prevail.

12. Equity Acts In Personam.

1. EQUITY WILL NOT SUFFER A WRONG TO BE WITHOUT A REMEDY

Meaning

Where there is a right there is a remedy. This idea is expressed in the Latin Maxim ubi jus ibi remedium. It means that no wrong should go unredressed if it is capable of being remedied by courts. This maxim indicates the width of the scope and the basis of on which the structure of equity rests. This maxim imports that where the common law confers a right, it gives also a remedy or right of action for interference with or infringement of that right.

Application and cases

In Ashby v. White, wherein a qualified voter was not allowed to vote and who therefore sued the returning officer, it was held that if the law gives a man a right, he must have a means to maintain it, and a remedy, if he is injured in the enjoyment of it.

In cases where some document was with the defendant and it was necessary for the plaintiff to obtain its discovery or production, a recourse to the Chancery Courts had to be made for the Common Law becoming ‘wrongs without remedies’.

Limitation

a) If there is a breach of a moral right only.

b) If the right and remedy both were in within the jurisdiction of the Common Law Courts.

c) Where due to his own negligence a party either destroyed or allowed to be destroyed, the evidence in his own favour or waived his right to an equitable remedy.

Recognition

i) The Trust Act

ii) Section 9 of CPC- entitles a civil court to entertain all kinds of suits unless they are prohibited.

iii) The Specific Relief Act- provides for equitable remedies like specific performance of contracts, injunction, and declaratory suits.

2. EQUITY FOLLOWS THE LAW

Meaning

The maxim indicates the discipline which the Chancery Courts observed while administering justice according to conscience. As has been observed by Jekyll. M.R: ‘The discretion of the court is governed by the rules of law and equity, which are not to oppose, but each, in turn, to be subservient to the other.” Maitland said, “Thus equity came not to destroy the law but to fulfill it, to supplement it, to explain it.” The goal of equity and law is the same, but due to their nature and due to historic accident they chose different paths. Equity respected every word of law and every right at law but where the law was defective, in those instances, these Common Law rights were controlled by recognition of equitable Rights. Snell therefore explained this maxim in slightly different way: “Equity follows the law, but not slavishly, nor always.”

Application and cases

At common law, where a person died intestate who owned an estate in fee-simple, leaving sons and daughters, the eldest son was entitled to the whole of the land to the exclusion of his younger brothers and sisters. This was unfair, yet no relief was granted by Equity Courts. But in this case it was held that if the son had induced his father not to make a will by agreeing to divide the estate with his brothers and sisters, equity would have interfered and compelled him to carry out his promise, because it would have been against conscience to allow the son to keep the benefit of a legal estate which he obtained by reason of his promise. This decision was held in Stickland v. Aldridge.

Equity follows the law and even if by analogy law can be followed, it should be followed.

Limitation

i) Where a rule of law did not specifically and clearly apply

ii) Where even by analogy the rule of law did not apply

Recognition

Bangladesh has not recognized the well-known distinction between legal and equitable interests. Equity rules in Bangladesh, therefore, cannot override the specific provisions of law. As for example, every suit in Bangladesh has to be brought within the limitation period and no judge can create an exception to this or can prolong the time-limit or stop the rule from taking effect on principles of equity. Such a decision was held in Indian Appa Narsappa Magdum case.

3. HE WHO SEEKS EQUITY MUST DO EQUITY

Meaning

The maxim means that to obtain an equitable relief the plaintiff must himself be prepared to do ‘equity’, that is, a plaintiff must recognize and submit to the right of his adversary. Scriptures of Islam also inform us to be conscientious:

“Woe to those who stint the measure:

Who when they take by measure from others, exact the full;

But when they mete to them or weigh to them, minish…”

Application and cases

This maxim has application in the following doctrines-

i) Illegal loans

ii) Doctrine of Election

iii) Consolidation of mortgages

iv) Notice to redeem mortgage

v) Wife’s equity to settlement

vi) Equitable estoppel

vii) Restitution of benefits on cancellation of transaction

viii) Set-off

i) Illegal loans: In Lodge v. National Union Investment Co. Ltd., the facts were as follows. One B borrowed money from M by mortgaging certain securities to him. M was a unregistered money-lender. Under the Money-lenders’ Act, 1900, the contract was illegal and therefore void. B sued M for return of the securities. The court refused to make an order except upon the terms that B should repay the money which had been advanced to him.

ii) Doctrine of election: Where a donor A gives his own property to B and in the same instrument purports to give B’s property to C, B will be put to an election, either accept the benefit granted to him by the donor and give away his own property to C or retain his own property and refuse to accept the property of A on condition. But B cannot retain his property and at the same time take the property of A.

iii) Consolidation of mortgages: Where a person has become entitled to two mortgages from the same mortgagor, he may consolidate these mortgages and refuse to permit the mortgagee to exercise his equitable right to redeem one mortgage unless the other is redeemed. The right of consolidation now exists in England but after the enactment of the Law of Property Act, 1925, it can exist only by express reservation in one of the mortgage deeds.

iv) Notice to redeem mortgage: Notice to a mortgagor to redeem one’s mortgage is an equitable right of the mortgagor.

v) Wife’s equity to a settlement: There was a time when woman’s property was merged with that of her husband. She had no property of her own. Equity court imposed on the husband that he must make a reasonable provision for his wife and her children. But, now, Under the Law Reform (Married Women and Tortfeasors) Act, 1935, married women has full right on her property and it is not consolidated with her husband’s property.

vi) Equitable estoppel: A promissory estoppel arises where a party has expressly or impliedly, by conduct or by negligence, made a statement of fact, or so conducted himself, that another would reasonably understand that he made a promise thereon, then the party who made such promise has to carry out his promise.

vii) Restitution of benefits on cancellation of transaction: It is proper justice to return the benefits of a contract which was voidable, and, equity enforced this principles in cases where it granted relief of rescission of a contract. A party can not be allowed to take advantage of his own wrong.

viii) Set-off: Where there have been mutual credits, mutual debts or other natural dealings between the debtor and any creditor, the sum due from one party is to be set-off against any sum due from the other party, and only the balance of the account is to be claimed or paid on either side respectively.

Limitation

i) The demand for an equitable relief must arise from a suit that is pending.

ii) This maxim is applicable to a party who seeks an equitable relief.

Recognition

i) Under sec 19-A of the Contract Act, 1872 if a contract becomes voidable and the party who entered into the contract voids the contract, he has return the benefit of the contract.

ii) sec 35 of the Transfer of Property Act embodies the principle of election.

iii) Sec 51 and 54 of the Transfer of Property Act.

iv) In Order 8, Rule 6 of the CPC, the doctrine of Set-off is recognized.

4. HE WHO COMES INTO EQUITY MUST COME WITH CLEAN HANDS

Meaning

Equity demands fairness not only from the defendant but also from the plaintiff. It is therefore said that “he that hath committed an inequity, shall not have equity.” While applying this maxim the court believed that the behavior of the plaintiff was not against conscience before he came to the court.

Application and cases

In Highwaymen case, two robbers were partners in their own way. Due to a disagreement in shares one of them filed a bill against another for accounts of the profits of robbery. Courts of equity do grant relief in case of partnership but here was a case where the cause of action arose from an illegal occupation. So, the court refused to help them.

The working of this maxim could be seen while giving the relief of specific performance, injunction, rescission or cancellation.

Limitation

General or total conduct of the plaintiff is not to be considered. It will be seen whether he was of clean hands in the same suit he brought or not. Brandies J. in Loughran v. Loughran said that “Equity does not demand that its suitors shall have led blameless lives.”

Exception

i) If the transaction is a against public policy

ii) if the party repents for his conduct before his unjust plans are carried out.

Recognition

i) Section 23 of the Indian Trust Act- An infant can not setup a defence of the invalidity of the receipt given by him.

ii) Section 17, 18 and 20 of the Specific Relief Act, 1877- Plaintiff’s unfair conduct will disentitle him to an equitable relief of specific performance of the contract.

Distinction between maxim no. 3 and 4-

He who seeks equity must do equity

He who comes into equity must come with clean hands

i) It is applicable when both the plaintiff and the defendant have claims of equitable relief against each other.

i) It is applicable when the defendant has no separate claim to relief and the plaintiff’s conduct is unfair.

ii) It exposes the condition subsequent to the relief sought.

ii) It is a condition precedent to seeking equitable relief.

iii) It refers to the plaintiff’s conduct as the court thinks it ought to be, after he comes to the court.

iii) It refers to the plaitiff’s conduct before he approaches the court.

iv) The plaintiff has to mould his behavior according to the impositions by the court.

iv) If the plaintiff’s conduct is unfair, it would not entitle him to the relief sought.

v) The plaintiff has an option or a choice before him either to submit to the conditions put by the court, or to get out of the court.

v) The conduct of the plaintiff snatched his choice from him. His equitable right therefore neither be recognized nor enforced.

vi) This maxim looks to the future.

vi) This maxim looks at the past.

5. DELAY DEFEATS EQUITIES

Meaning

A Latin term in this regard is “Vigilantibus, non dormentibus, jura subvenient.” which means “Equity aids the vigilant and not the indolent”. So, if one sleeps on his rights, his rights will slip away from him. Legal claims are barred by statutes of limitation and equitable claims may be barred not only by limitation law but also by unreasonable delay, called laches.

Application and cases

To cases which are governed by statutes of limitation either expressly or by analogy the maxim will not apply. Such cases fall into three categories-

i) Those equitable claims to which the statute applies expressly.

ii) to which the statute applies by analogy.

iii) Equitable claims which are covered by ordinary rules of laches.

Doctrine of laches- Plaintiff’s unreasonable delay is a weapon of defence by the defendant against the plaintiff.

In a Bombay case, the plaintiff allowed his land to be occupied by the defendant and this was acquiesced by him even beyond the period of limitation. On a suit of the land it was decided that as the period of limitation to recover possession had expired, no relief could be granted. Also the case of Allcard v. Skinner is worth mentioning here.

Limitation

This maxim does not apply when-

i) where the law of limitation expressly applies

ii) where it applies by analogy, and

iii) where the law of limitation does not apply but the cases are governed by ordinary rules of laches.

Recognition

The English doctrine of delay and laches showing negligence in seeking relief in a court of equity can not be imported into the Bangladeshi law in view of Article 113 of the Limitation Act, 1908, which fixes a period of one year (previously three years) within which a suit for specific performance should be brought.

Section 51 of the Transfer of Property Act embodies this doctrine but with a difference.

6. EQUALITY IS EQUITY

Meaning

Plato defined that “If you cannot find any other, equality is the proper basis.” This maxim is also explained as “equity delighteth in equality”, which means that as far as possible equity would put the litigating parties on an equal level so far as their rights and responsibilities are concerned.

Justice Fry said, “When I say equality, I do not mean equality in its simplest form, but which has been sometimes called proportionate equity.”

Application and cases

Application of this maxim can be understood from the following:

i) Equity’s dislike for joint tenancy and presumption of tenancy-in-common

ii) Equal distribution of joint funds and joint purchases

iii) Contribution between co-trustees, co-sureties and co-contractors

iv) Ratable distribution of legacies

v) Marshalling of assets

7. EQUITY LOOKS TO THE INTENT RATHER THAN THE FORM

Meaning

Common law was very rigid and inflexible. It could not respond favourably to the demand of time. It regarded the form of a transaction to be more important than its substance. It looked to the very letter of the agreement and not the intention behind it. On the other hand, Equity looks to the spirit not to the letter, it looks to the intention of parties and not to the words.

Application and cases

In case of sale of land, if a party fails to complete it within the fixed for it, he is at Common Law, in breach of the contract, but equity does not take this rigid attitude. It allows a reasonable time to the party to complete it.

The application can be seen in the following instances-

i) Relief against penalties and forfeitures

ii) Relief in regard to precatory trust

iii) Relief in regard to mortgages, the doctrine of equity of redemption and the doctrine of clogs on redemptions

iv) Attitude in regard to statute of frauds.

i) Relief against penalties and forfeitures- Common Law courts insisted on the literal form of the contract that if the contract is breached, certain amount must be given as compensation, though the actual loss is not that much. Equity interpret the purpose and intent of the contract itself. The principal object of the contract is to perform it and not the compensation. The compensation is a subsidiary matter.

ii) Precatory trust- A trust is created with- (1) an intention on his part to create a trust thereby, (2) the purpose of the trust, (3) the beneficiary, and (4) the trust property. Where an author uses words such as ‘I hope’, ‘I request’ or ‘I recommend’ the first condition is missing. In cases where subsequent ingredients are found, in early days, it was held by the equity courts that he had the intention. This view is in use now but not as liberally as before.

iii) Relief in regard to mortgages- The mortgagor has a right to obtain his property back by payment of the debt and that is his right of redemption. The mortgagor’s right of redemption is guarded by courts and this has been expressed in a well-known legal maxim, “Once a mortgage, always a mortgage, and nothing but a mortgage”.

iv) Attitude in regard to statute of frauds-

Recognition

i) Sec 55 of the Contract Act- If time is the essence of the contract, and it is not performed within the stipulated time, the contract or part of it which is unperformed would be voidable. If time is not the essence, the contract will not be voidable but entitles the promisee to damages.

ii) Section 74 of the Contract Act- only a reasonable compensation can be claimed.

iii) Sec 114-A of the Transfer of Property Act- Forfeiture clauses in a lease.

8. EQUITY LOOKS ON THAT AS DONE WHICH OUGHT TO BE DONE

Meaning

If someone undertakes an obligation for the other, equity courts look on it as done and as producing the same results as if the obligation had been actually performed. Equity courts therefore look to the acts of the person bound by his conscience and interpret and construe them in such a way that they amount to what ought to be done.

Application and cases

If A makes T trustee leaving 50,000 Taka to purchase a land for the use of B. T does not purchase the land and by the time, B dies leaving all immovable property to X and all movable property to Y. Now, who should get the 50,000 Taka? Equity in such cases would definitely regard the purchase of land which ought to have been made as made. The money thus goes to X.

The working of this maxim can be seen-

i) the doctrine of conversion

ii) Executory contracts

iii) doctrine of part performance

i) Doctrine of conversion- In the case of Lachmere v. Lady Lachmere, money was taken as land. Doctrine of conversion can convert the money into immovable property and immovable property into money.

ii) Executory contracts-

(a) Assignment of future property: When an assignment of property was made for consideration equity treated it as a contract to assign. When the property came into existence in such a contract it was treated as a complete assignment. As a leading case on this point, Holroyd v. Marshall can be cited.

(b) Agreement for a transfer: In Walsh v. Lonsdale, it was decided that an agreement for lease could be treated as a lease in equity.

iii) Doctrine of part performance: Under the equitable doctrine of part performance contracts pertaining to land were allowed to be formed by oral evidence where one of the parties did acts of pats performance. Maddison v. Alderson is a leading case on this point.

Recognition

Many of the doctrines of English equity have taken statutory form in Bangladesh. Insofar as equitable assignments are concerned no equitable estate is recognized in Bangladesh. A transfer of future property for consideration operates as a contract to be performed in future.

i) The Transfer of Property Act- A Contracts to sell Sultanpur to B. While the contract is still in force, he sells Sultanpur to C, who has notice of the contract. B may enforce the contract against C to the same extent as against A.

ii) The Specific Relief Act- Section 12 relating to the specific performance of part of a contract also illustrates the application of the maxim.

iii) The Trust Act- Where a person acquires property with notice that another person has entered into an existing contract affecting that property, the former must hold the property for the benefit of the latter.

9. EQUITY IMPUTES AN INTENTION TO FULFILL AN OBLIGATION

Meaning

Equity considered and estimated acts of parties. Thus where a person is under an obligation to do a certain act, and he does some other act which is capable of being regarded as an act in fulfillment of his obligation. In other words a person is presumed to do what he is bound to do.

In Sowden v. Sowden, a husband covenanted with the trustee of his marriage settlement to pay to them £50,000 to be laid out by them in purchase of land in a particular area D. He, in fact, never paid the sum, but after marriage purchased the land at D in his own name, for £50,000. He died and could not bring the land into settlement. Equity courts construed that he purchased land to fulfill his obligation.

Application and cases

i) Doctrine of performance and satisfaction

ii) Ademption

iii) Doctrine of presumption of advancement

iv) Relief against defective execution of power of appointment.

i) Doctrine of performance and satisfaction- Sowden v. Sowden and Lachmere v. Lady Lachmere cases are examples of performance. Satisfaction is the donation of a thing with it is to be taken in extinguishment of some prior claim of donee. This maxim is helpful where the presumed intention of the testator is to be found out; where the intention is express the maxim has no application.

ii) Ademption- Ademption is a transfer of property which operates as a complete or pro tanto substitution for a gift previously made by the will of the donor.

e.g. X by his will leaves his daughter Y one-third of his residuary estate. Thereafter on Y’s marriage X gives Y 20,000 Taka. X dies. 20,000 Taka is an ademption -complete or proportionately to the gift of one-third share of the residuary estate of X.

iii) Presumption of advancement- When a purchase or transfer of property without consideration is made by a father or a person in loco parentis, to or in the name of a child, a presumption arises. And the presumption is that it was for the benefit of the child. Such presumption, is known as ‘advancement’. The doctrine applies to cases of parent and child, husband and wife, of mother and child and even to illegitimate child, but not to a man and his mistress.

iv) Relief against defective execution of power of appointment- A power is an authority vested in a person to deal with or dispose of property not his own. A power may be legal or equitable but after 1925 all powers of appointment are necessarily equitable.

e.g. A holds 50,000 Taka upon trust to divide among a certain class of persons. A has no option is this matter He is bound to carry out the trust. On his failing to do so, the court will see that the property is duly divided.

A defective execution will always be aided in equity under the circumstances mentioned, it being the duty of every man to pay his debts, and a husband or a father to provide for child.

Recognition

i) The Succession Act- Presumption against satisfaction is mentioned here. In Hasanali v. Popatal, a testator, who had a sum of Rs 9000 as deposit from his brother, gave to is brother a legacy of Rs 9000 and it was held that the brother was entitled to both, the legacy and his deposit. But as decided in Rajmanuar case where a will contained a clear indication that the legacy was meant as a satisfaction of the debt due to X, X could not claim both as the section explains.

ii) The Trust Act- Where a person contracts to buy property to be held on trust for certain beneficiaries and buys the property accordingly, he must hold the property for their benefit to the extent necessary to give effect to the contract. Equity thus imputes an intention to fulfill an obligation.

10. WHERE THE EQUITIES ARE EQUAL, THE FIRST IN TIME SHALL PREVAIL.

This maxim operates that where there are two or more competing equitable interests; when two equities are equal the original interest (i.e., the first in time) will succeed.

11. WHERE THERE IS EQUAL EQUITY, THE LAW SHALL PREVAIL.

Equity will provide no specific remedies where the parties are equal, or where neither has been wronged. The significance of this maxim is that applicants to the chancellors often did so because of the formal pleading of the law courts, and the lack of flexibility they offered to litigants. Law courts and legislature, as lawmakers, through the limits of the substantive law they had created, thus inculcated a certain status quo that affected private conduct, and private ordering of disputes. Equity, in theory, had the power to alter that status quo, ignoring the limits of legal relief, or legal defenses. But courts of equity were hesitant to do so. This maxim reflects the hesitancy to upset the legal status quo. If in such a case, the law created no cause of action, equity would provide no relief; if the law did provide relief, and then the applicant would be obligated to bring a legal, rather than equitable action. This maxim overlaps with the previously mentioned “equity follows the law.”

12. EQUITY ACTS IN PERSONAM.

In personam is a Latin phrase meaning “directed toward a particular person”

1.0 THE FOUNDATION

1.1 INTRODUCTION TO FOREX MARKET

According to the Bank of International Settlements, foreign exchange trading increased to an average of $5.3 trillion a day. To simply break this down, the average has to be $220 billion per an hour. The foreign exchange market is largely made up of institutional investors, corporates, governments, banks, as well as currency speculators. Roughly 90% of this volume is generated by currency speculators capitalizing on intraday price movements.

Unlike the stock market and future markets that are housed in central physical exchanges, the foreign exchange market is an over0 the counter market, decentralized market completely housed electronically.

Though investors are familiar with the stock market they are unaware how small in volume it is in relation to the Forex Market.

In sum, the forex market size and depth make it the ideal trading market. This liquidity makes it easy for traders to sell and buy currencies. This is the reason why traders from all over the world are turning to the FX Market.

1.0.1 KEY BASIC POINTS

Forex stands for Foreign Exchange market

Forex traders trade international currencies

The Forex market is decentralized. This means that there is no one single Forex market, like in stock trading and local exchanges for example.

The Forex market is the largest financial market in the world

The Forex market is open 24 hours a day, 5 ½ days a week

Currencies are always traded in pairs

You can buy and you can sell currency pairs

1.0.1 Advantages of Trading the Forex Market

There are many benefits and advantages of trading forex. Below is a few reasons why so many people are choosing this market:

1. No commissions

No clearing fees, no exchange fees, no government fees, no brokerage fees. Most retail brokers are compensated for their services through something called the “bid/ask spread”.

2. No middlemen

Spot currency trading eliminates the middlemen and allows you to trade directly with the market responsible for the pricing on a particular currency pair.

3. No fixed lot size

In the futures markets, lot or contract sizes are determined by the exchanges. A standard size contract for silver futures is 5,000 ounces.

In spot forex, you determine your own lot, or position size. This allows traders to participate with accounts as small as $25 to $50.

4. Low transaction costs

The retail transaction cost (the bid/ask spread) is typically less than 0.1% under normal market conditions. For larger transactions, the spread could be as low as 0.07%. Of course, this depends on your leverage and all will be explained later in this trading course with Akonnor Owusu Larbi.

5. A 24-hour market

There is no waiting for the opening bell. From the Sunday evening 8:30 PM GMT to Friday Evening 9:00 PM GMT, the forex market never sleeps. This is awesome for those who want to trade on a part-time basis because you can choose when you want to trade: morning, noon, night, during breakfast, or in your sleep.

6. No one single person can manipulate the Market

The foreign exchange market is so huge and has so many participants that no single entity (not even a central banks of US and JAPAN) can control the market price for an extended period of time. This being said, Fundamentals do play a role in volatility. Fundamentals will be explained later.

7. Leverage

In forex trading, a small deposit can control a much larger total contract value. Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum. For example, a forex broker may offer 50-to-1 leverage, which means that a

$50 dollar margin deposit would enable a trader to buy or sell $2,500 worth of currencies. Similarly, with $500 dollars, one could trade with $25,000 dollars and so on. While this is all gravy, let’s remember that leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.

8. High Liquidity

Because the forex market is very large in size, it is also extremely liquid. This is an advantage because it means that under normal market conditions, with a click of a mouse you can instantaneously buy and sell at will as there will usually be someone in the market willing to take the other side of your trade. You are never “stuck” in a trade. You can even set your online trading platform to automatically close your position once your desired profit level (a limit order) has been reached, and/or close a trade if a trade is going against you (a stop loss order).

9. Low Barriers to Entry

You would think that getting started as a currency trader would cost a ton of money. The fact is, when compared to trading stocks, options or futures, it doesn’t. Online forex brokers offer “mini” and “micro” trading accounts, some with a minimum account deposit of $25. We’re not saying you should open an account with the bare minimum, but it does make forex trading much more accessible to the average individual who doesn’t have a lot of start-up trading capital.

10. Demo Platforms

Most online forex brokers offer “demo” accounts to practice trading and build your skills, along with real-time forex news and charting services. These services are all free. Demo accounts are very valuable resources for those who are “financially hampered” and would like to hone their trading skills with “play money” before opening a live trading account and risking real money.

1.2 A Forex Pair

Currencies are always traded in pairs. This means Currencies are traded like AAA/BBB .In simple terms, one can buy and sell currency pairs.

The first currency in a currency pair is the base currency and the second one is the quote currency.

If there is a pair say, EUR/USD, you buy the base currency and sell the quote currency.

Every Forex pair has 2 prices:

1 — Ask price: The price sellers are willing to sell — The price you pay when you enter a buy trade

2 — Bid price: The price buyers are willing to pay — The price you pay when you enter a sell trade

The difference between the bid and the ask price is called the spread which is a cost of trading.

There are 3 different classes when it comes to Forex pairs: Majors (the most commonly traded),Minors and Exotic Forex pairs.

Individual currencies are most active during their own “trading session”

The table below shows the global Forex trading sessions. When the trading sessions overlap, you usually have the highest trading activity. The time is in Greenwich Mean Time. GMT is the mean solar time at the Royal Observatory in Greenwich, London, reckoned from midnight.

1.0.1 Turnover of Currency Pairs

1.1 TRADING PLATFORM

A trading platform is software through which investors and traders can open, close, and manage market positions through a financial intermediary. Online trading platforms are frequently offered by brokers either for free or at a discount rate in exchange for maintaining a funded account and/or making a specified number of trades per month.

Often times, trading platforms will come bundled with other features, such as real-time quotes, charting tools, news feeds, and even premium research. Platforms may also be specifically tailored to specific markets, such as stocks, currencies, options, or futures markets.

Trading platforms may have specific requirements to qualify to use them. For example, day trading platforms may require that traders have at least $25,000 in equity in their accounts and be approved for margin trading, while options platforms may require approval to trade various types of options before being able to use the trading platform.

They are many Trading platforms. These include:

MetaTrader 5— MetaTrader 5 is a platform for trading Forex, analyzing financial markets and using Expert Advisors. Mobile trading, Trading Signals and the Market are the integral parts of MetaTrader 5 that enhance your Forex trading experience.

Interactive Brokers — Interactive Brokers is the most popular trading platform for professionals with low fees and access to markets around the world.

TradeStation — TradeStation is a popular trading platform for algorithmic traders that prefer to execute trading strategies using automated scripts developed with Easy Language.

TDAmeritrade — TDAmeritrade is a popular broker for both traders and investors, especially following its acquisition of ThinkorSwim and the development of the Trade Architect platforms.

1.0.1 Understanding Metatrader 5 (MT4 older Version)

Metatrader 5(MT5) is the most popular trading platform among retail traders. It is simple enough for beginners to start trading with MT4 or MT5, as their first platform, but its advanced functionalities (such as dozens of built-in indicators, graphical tools, the ability to run trading robots, EAs) make it perfect for intermediate or even advanced traders.

7 Easy Steps

1. Download MetaTrader 5/MT5. The first step is to get MetaTrader 5 downloaded onto your computer or laptop or mobile phone. …

2. Follow your Computer’s Prompt. …

3. Tick the License Agreement Box. …

4. Click Finish..…

5. Open an Account. …

6. Input your Details. …

7. Save your Login and Password.

1.0.1 How to open and configure a chart in MT4 or MT5?

After installing Metatrader5 on your computer or mobile phone, the graphics in the terminal are displayed in a standard way. But all traders visually absorb information in different ways, that’s why MT5 provides the ability to change the options of charts to display them in accordance to your desires.

Standard settings are not suitable for analyzing the price movements for many traders, so if you want to change something, you can reorganize the scale, period, and the color of charts. In general, MT5 provides many functions for modifying graphs, and below I will tell about it in details.

1.0.1 Opening of the new graphics

To open a new chart in MT5, you can use one of the next ways:

1. Open the window “market watch”, click the right mouse button on the desired currency pair and choose the menu item “Chart Window”.

2. On the toolbar, click the + button , then select a group of trading instruments from the drop down list.

1. Follow the path: “Window” — “New window”, then repeat step 2.

2. Follow the path: “File” — “New schedule”, then repeat step 2.

Please note: only characters opened in the window “market watch” will be displayed in the list of trading instruments.

To display all symbols, press the right mouse button on any field of the window “market watch” and click on the row “Show all symbols”.

1.0.2 Zoom

The scale of the graph plays an important role in the observation of price movements. Zoom allows you to focus on the details while reducing the figure gives an opportunity to look at the General trend.

In MT4, you can use several ways to change the chart scale:

2. Go to the “Charts” in the main menu bar — “Increase” / “Decrease”;

3. Hold down the Shift + / — (“plus” or “minus”);

4. On the toolbar ;

5. Anywhere in the active window open the context menu by pressing the right mouse button and then refer to the command “Increase” or “Decrease”.

1.0.1 Changing time frames

if you need to determine the exact point to enter the market, You should choose a narrow time frame for plotting. However, for assessing the General trend you need a wide timeframe. When you have built the graphic, you can change time periods in the following ways:

· Go to the tool bar “chart Period”, which includes all possible time frames;

· On the toolbar the “Charts” click on the button

· In the active chart window of the shortcut menu invoked by the right mouse button, select “Period”;

· Follow the path: “Graphics” in the main menu bar — “Period”.

1.0.2 Changing the type of chart display

MT5 offers traders to switch between different chart types easily. Clicking on “Graphics” in the main menu bar you can choose the visualization of the line chart, bar chart, and the Japanese candlestick chart. The same function is available in the toolbarL: just click on the corresponding icon. You can also use Alt+1, Alt+2, and Alt+3

1.0.3 Color changing graphics

On MT5, a trader can change the chart color for his own convenience by clicking on the trend line in the popup menu chooses “Properties”. In the next window, you can define the color of each element of your schedule in the tab “Colors”.

On the terminal, three color versions are set automatically for graphics. In the “Color scheme”, you can select the yellow graphics on a black background, it is also possible to choose green on a black background, and for conservative traders there is a black-and-white palette. In addition to autocomplete in the right box you can choose the color of each element separately

1.0.1 Saving graph settings on the terminal with templates

MT4 has a built-in ability to save and then select a previously configured graph. This eliminates the need to adjust every time the visualization window. With one click You can apply a favorite solution that will allow You to analyze the price movement quickly. MetaТrader allows you to save these properties:

· color scheme;

· timeframe (period of time);

· indicators with all the settings;

· graphic tools (in this case, price values are also saved on the new graph and you will have to adjust);

· chart scale;

· the type of graph;

· attached the TA and all its settings.

In order to save all settings in the database, just press the save button on the toolbar, then select “Save template”

A similar option is available under “Graphics” in the main menu bar — “Template” — “Save template” or in the context menu of the graph.

For activating a saved template, click on the button

, then on “Load template”. Once you find the desired version of the template, click “Open” and the graph will be shown in the right

way. You can remove a template by a similar way, choosing the line “Remove template”.

With all these, you can equally trade on your mobile phone by downloading MT5 from Play Store or The App Store.

1.4 THE TRADING ORDER TYPES

Here are the basic trading order types:

1.4.1 Market Order

A Market order is the simplest order type. There are market orders to buy and market orders to sell. A market order gives you whatever price is available in the marketplace.

1.4.2 Buy Limit Order

A Buy Limit is an order to buy that is placed below the current price. The order is only filled* at or below the limit price.

1.4.3 Sell Limit Order

A Sell Limit is an order to sell (or short) that is placed above the current price. The order is only filled at or above the limit price.

1.4.4 Buy Stop Order

A Buy Stop is an order to buy that is placed above the current price. The order is only filled at or above the stop price.

1.4.5 Sell Stop Order

A Sell Stop order is an order to sell that is placed below the current price. The order will only be filled at or below the stop price.

1.4.6 Buy Stop Limit

A Buy Stop Limit order is very similar to a Buy Stop order, except that it doesn’t act like a market order. The buy stop limit will only fill at the buy stop limit price or lower.

1.4.7 Sell Stop Limit

A Sell Stop Limit Order is very similar to a Sell Stop order, except that it doesn’t act like a market order. The sell stop limit will only fill at the price equivalent to the limit price attached to the order, or higher.

Getting used to all the trading orders can be a bit confusing at first, and there are more order types than this!. Putting out the wrong order type when money is on the line can cause big problems.

2.0 THE BASICS

2.0.1 CURRENCY VALUE

The value of a currency pair Is determined by the strength or weakness of the base currency in relation to the quote currency. The base currency is almost 1 for most currencies. This means that, when you see a quote of 1.4567 EURUSD, its value is 1 EUR will buy 1.4567 of USD. If you sell EURUSD from 1.4567 to 1.4557, you would have made a profit of 10 pips.

2.0.2 WHAT IS A PIP?

PIP stands for Price Interest Points. There is Standard lot ($100,000), Mini Lot ($10,000) and Micro lot ($1000). In the standard lot, a pip worth $10. Mini lot its $1 and its worth $0.1 in micro lots. However, each currency has its own pip value.

2.0.3 PIP VALUE

The table below shows the value of a pip in each currency Pair. Remember, currencies are traded in pairs.

These values changes slightly based on the actual exchange rates, but the fluctuations are very minor.

2.0.4 AVERAGE DAILY PIPS

Getting to know the average daily pips movement is crucial in calculating profit and loss. It helps in entry price levels and getting out of the market as early as possible. The table below shows the six (6) major pairs and their average pips pulled per day.

2.0.5 TURNOVER OF THE SIX MAJOR PAIRS

Turnover is an aggregated cost of all trading deals in as specified time period. In technical analysis, the turnover measures efficiency and intensity of assets allocation. In simple terms, the turnover is the total volume of all transactions in a given time period.

2.0.6 THE US-INDEX

The U.S. Dollar Index (USDX, DXY, DX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners’ currencies. The Index goes up when the U.S. dollar gains “strength” (value) when compared to other currencies. Pay close attention to the US-Index. The US- Index sets the tone for a lot of currency moves. It can help you price analysis and trade timing in the forex market.

It is a weighted measure using the dollar’s movements relative to other select currencies in an attempt to represent major trading partners. The current mix is approximately:

· 57.6% Euro (EUR)

· 13.6% Japanese Yen (JPY)

· 9.1% Canadian Dollar (CAD)

· 4.2% Swedish Krona (SEK)

· 3.6% Swiss Franc (CHF)

The basket was altered in 1999 when the Euro replaced several European currencies. It still includes the Swedish krona and the Swiss franc despite the fact that China, Mexico, and South Korea are more important trading partners.

2.0.7 GLOBAL TRADING SESSIONS AND WHEN PAIRS MOVES

Although the forex market is open 24 hours, 5 ½ days, it is however important to keep track of the individual trading sessions as they Impact FX rates and volatility significantly.

It is vital to understand that a currency moves most when their local market is open. The most active trading session is when London and New York overlap, thus from 12:00 to 15:00 GMT each trading day.

2.0.8 THE IMPORATNCE OF CLOBAL TRADING SESSIONS

The trading session impacts multiple trading decisions on multiple levels. These include:

1. Market Selection

Choose a pair that is most active when you are infront of your charts. Choosing a pair that is not active during your trading can suck you in low volatility and boring price moves.

1. Good Entries and Exist

Before entering a trade, make sure to analyse price in context to the current trading session and then make your decisions accordingly.

2. Breakouts during active session

A Breakout that occurs during a pair’s actual trading session is much more likely to succeed. For example, a breakout move in USDCAD that happens during US trading sessions is more likely to succeed.

2.0.9 FOREX RATES CORRELATION & RISK IN TRADING

For risk management sake, apply the strongest position and negative correlations; +1 or _1 or –

!00%. A positive correlation means the market will move in the same direction. A negative correlation means it will move in opposite direction.

2.1.0 RISK MANAGEMENT

It is important to know that, trading moving currency pairs with a high positive correlation, you are increasing your risk as both pairs are moving in same direction. This means, there is likelihood of either having 2 winning or 2 loses at the same time.

2.1.1 LEVERAGE

Leverage is an investment strategy of using borrowed to increase the potential returns of an investment. Leverage allows you to enter a position or trade that is larger than your capital.

Leverage in Forex can be in the forms 1:100

1:200

1:300

1:400

1:500

For instance, a leverage of 1:100 means if you have $10,000, you can control an account size of

$ 1,000,000. The higher the leverage, the higher the win and vice versa.

2.1.0 SPREAD

Spread is the difference between the bid and ask. It represents brokerage service costs and replaces transactions fees. Spread is traditionally denoted in pips — a percentage in point, meaning fourth decimal place in currency quotation.

Types of Spreads in Forex

Fixed spread — difference between ASK and BID is kept constant and do not depend on market conditions. Fixed spreads are set by dealing companies for automatically traded accounts.

Fixed spread with an extension — certain part of a spread is predetermined and another part may be adjusted by a dealer according to market.

Variable spread — fluctuates in correlation with market conditions. Generally variable spread is low during times of market inactivity (approximately 1–2 pips), but during volatile market can actually widen to as much as 40–50 pips. This type of spread is closer to real market but brings higher uncertainty to trade and makes creation of effective strategy more difficult.

A trader needs to cover spreads in winning trades before making a profit. For example, let’s take EUR/USD, the price of 1.4652 which is the bid and 1.4650 which is the ask price. This means that the spread charge is 2 pips. Therefore, in the case of selling USD, if price moves to 1.4552,

there is a successful pull of 100 pips. However, a spread of 2 pips will be deducted, making the investor basket 98 pips.

2.1.2 LOT SIZE

The pip value depends on the lot size you enter a trade with. Lets take the EURUSD example again. At the price of 1.4652 and leverage of 1;100, if an investor sell with lot size of 0.01, when it moved to 1.4552, the 98pips would produce $9.8.

The table below shows how much profit can be made with different lot sizes.

2.1.2 Calculating Pip Value

Trading EURUSD, with account in USD, one pip = 0.001 Let say your trade accounts is $10,000

0.001*10,000 =10

If the exchange rate is 1.13798 10/1.13798=8.7875007

Therefore a pip of EURUSD @ a value of 1.13798 worth $8.79 For metal, you calculate thick value instead of pip value.

Rick value=tick in decimal(0.01) *number of trading lot of 100oz

=0.01*100

=1

Each tick is worth $1.

Modules & Content Structure to follow

Below you find some of the modules that await you.

You can equally join over 500,000 people benefiting from my articles.

1. Setting up trading charts

2. Introduction to trading principles

3. Chart reading foundation

4. Getting to know your trading tools

5. Signal introduction

6. Step-by-step setup exploration

7. Master all my setups

8. Finding the perfect entries

9. How to set effective stops

10. Defining the best targets

11. How to manage a trade

12. When to cut a losing trade

13. Position sizing

14. Risk management

15. Market selection and trading plans

16. Dealing with news events

In addition, these are the 7 price action you could master when you sign up for our Newsletter

1) Trading with trendlines -Mastering trend structure

2) The best chart patterns

3) Drawing support and resistance the right way

4) How to use the Fibonacci tool

5) The Pinbar trading signal

6) Clean vs messy charts

7) Multi timeframe analysis

Thank you for reading. — Akonnor Owusu Larbi