Education only. These lessons explain how tools and methods work. They are not advice or recommendations, and examples are illustrations, not trades.
Lesson 1 · Beginner · 8 min read
Trend and timeframes
A trend is simply the direction price has been travelling. In an uptrend, each rally makes a higher high and each pullback stops at a higher low. A downtrend is the mirror image. When neither is true – highs and lows overlap – the market is moving sideways, or ranging.
A simple, objective test
Eyeballing a chart works, but two people can see two different trends. A rule removes the argument. One of the most common is a moving average: the average closing price over the last N candles. If the latest close is above the 50-period average, call it up; below, call it down. It's crude – but it's consistent, and consistency is what lets you learn from your results.
Why timeframes disagree
The same market can be in an uptrend on the daily chart and a downtrend on the 30-minute chart. Both are true: the 30-minute chart is showing a pullback inside the bigger move. That's why our daily briefs show four timeframes side by side.
Gold (example)
30m
1H
4H
1D
Case A – aligned
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Case B – pullback
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Case C – mixed
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Case A: every timeframe agrees. Case B: the short-term charts are pulling back against a higher-timeframe uptrend. Case C: no clear picture – the market is likely choppy.
What to take away
Decide which timeframe you are actually trading, and use one higher timeframe for context.
"Aligned" doesn't mean "guaranteed" – trends end, often without warning.
Sideways markets are where trend-following tools lose the most. Recognising them is half the skill.
Lesson 2 · Beginner · 10 min read
ATR and the trailing line
Every market has its own rhythm. Gold might move $15 in a 30-minute candle on a normal day; EUR/USD might move 0.0010. The Average True Range (ATR) measures this: the average size of recent candles, including any gaps. It doesn't tell you direction – only how much the market is moving.
Building a trailing line
A trailing line uses ATR to follow a trend. In an uptrend, it sits a set number of ATRs below the price – for example 3 × ATR. Each time price rises, the line moves up with it. When price falls, the line stays where it is. It only ever moves in the trend's direction.
Illustration: the coloured line trails beneath price as the uptrend builds, and rises only when price makes progress.
When a candle closes on the other side of the line, the trend is considered to have flipped, and the line jumps to the other side of price. That gives you an objective answer to the hardest question in trading: "is this still a trend, or is it over?"
Choosing the distance
Closer (e.g. 2 × ATR): reacts faster but gets shaken out by normal noise more often.
Further (e.g. 4 × ATR): sits through bigger pullbacks but gives back more before it flips.
There is no perfect setting. What matters is testing one setting honestly and sticking with it.
Its weakness
In a sideways market, price crosses back and forth and the line flips repeatedly. Each flip is a small loss for anyone following it. That's normal for every trend-following method: many small losses, paid for by a few long trends.
Lesson 3 · Beginner · 8 min read
Risk and position size
Most beginners choose a trade size first and think about the loss later. Professionals do the opposite: they decide how much they are prepared to lose, then work out the size that keeps the loss to exactly that amount.
The formula
Position size = amount at risk ÷ (stop distance × contract size)
Example: a $5,000 account risking 1% is willing to lose $50. If the stop is $15 away on gold, and one lot of gold is 100 ounces, then each lot loses $1,500 at the stop. $50 ÷ $1,500 = 0.033 lots, so about 0.03 lots. Try it with the position size calculator.
Why 1% matters
Even a sound method has losing streaks. Eight losses in a row at 1% costs about 8% of the account – painful, but recoverable. The same streak at 10% per trade costs more than half the account, and you'd need to more than double what's left just to get back to the start.
Losing streak
1% per trade
2% per trade
5% per trade
10% per trade
5 losses
−4.9%
−9.6%
−22.6%
−41.0%
8 losses
−7.7%
−14.9%
−33.7%
−57.0%
12 losses
−11.4%
−21.5%
−46.0%
−71.8%
Account drop after consecutive losses, each sized as a percentage of the remaining balance.
What to take away
Set the stop where the idea is proven wrong – then size the position to fit it, never the other way round.
Keep the risk per trade small and constant.
Contract sizes differ between brokers. Always check yours before you calculate.
Glossary
ATR (Average True Range)
The average size of recent candles, including gaps. A measure of volatility, not direction.
Backtest
Applying a set of rules to past price data to see how they would have behaved. Useful, but past results never guarantee future ones.
Bollinger Bands
Lines drawn a number of standard deviations above and below a moving average. They widen when markets get volatile.
Drawdown
The fall from an account's peak to its lowest point before a new peak.
Lot
A standard trade size. What one lot means depends on the instrument and the broker.
Moving average
The average closing price over a set number of candles.
Profit factor
Total gains divided by total losses over a set of trades. Above 1 means gains exceeded losses.
R (risk unit)
The amount risked on one trade. Results expressed in R can be compared regardless of account size.
RSI (Relative Strength Index)
An oscillator from 0 to 100 that measures how stretched recent up and down moves are.
Spread
The difference between the buy and sell price – a cost paid on every trade.
Stop-loss
A pre-set order that closes a trade at a chosen price to limit the loss.
Support / resistance
Price areas where buying (support) or selling (resistance) has appeared before.
Swap
An overnight financing charge or credit for holding a leveraged position past the daily close.
Volatility
How much and how quickly price moves.
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