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Disclaimer
Every individual investor’s success depends on his or her own background, instruction,
devotion, dedication, perseverance, aspiration and inspiration. As with any business
endeavour there is always the possibility of loss of capital and there is no guarantee the use
of this book will result in profits or success. The information enclosed herein is intended
strictly for instructive purposes. Nothing in this publication should be construed as an
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securities discussed. Information provided herein has been obtained from sources believed
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advice of a knowledgeable legal, tax, accounting, or business professional should be sought
at all times.
U.S. Government Required Disclaimer – Trading foreign exchange markets on margin carries
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work against you as well as for you. Before deciding to invest in the Forex market, you
should carefully consider your investment objectives, level of experience, and risk appetite.
The possibility exists that you could sustain a loss of some or all of your initial investment
and therefore you should not invest money that you cannot afford to lose. You should be
aware of all the risks associated with foreign exchange trading, and seek advice from an
independent financial advisor if you have any doubts. Readers of this publication should also
be aware of the following CFTC disclosure rule 4.41 regarding hypothetical performance
results:
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Ahoy there Shipmates and welcome aboard!
I’m going to help you pirate some pips today... or I’ll walk the plank!
Don’t let that fool you though – I’m about to show you a very simple trading
system with a very high win-rate.
It uses a standard indicator that you will find on any charting software – so you
can trade it with whatever broker or charting software you use.
Now, I’m really not big into writing; so I’m going to keep this manual short and
simple.
Here’s some good news for you. No, actually, here’s some great news for you...
Forex Pip Pirate™ works on all timeframes. That’s right, it’s pretty much
universal. Well, within reason, I mean don’t go off and start scalping the 1-
minute right from the start (it’s damn tricky!).
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#1 – Stick to 15-min and above.
#2 – Try and only trade during the London and US sessions – you’ll win more
trades that way (although, the Asian session is good for AUD, NZD and JPY
pairs!).
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Chart Setup
This is the platform that most traders are used to – and almost all brokers
provide a demo account for free.
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We then drag the MACD indicator on to the chart and enter the following
settings:
Slow EMA : 5
Fast EMA : 3
MACD SMA : 3
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Next we add another MACD indicator – this time with the following settings:
Slow EMA : 26
Fast EMA : 12
MACD SMA : 9
(NOTE: These are the default MACD settings on almost all MACD indicators)
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You chart should now look something like this:
NOTE:
I’ve removed the default Simple Moving Average line from both MACD
indicators as it’s not required.
I’ve also changed the colours and bar widths so that they are easier to see.
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The Forex Pip Pirate™ Rules
They may seem even too simple, so I highly recommend that once you have
finished reading this manual you go and check your charts.
That’s right I want you to go and see how effective this system really is!
There are just three rules for entry; and one rule for exit.
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Entry
Rule #1
- We only BUY when the lower MACD (that’s the one with the 12,26,9
settings) is ABOVE the 0.0 line.
- We only SELL when the lower MACD is BELOW the 0.0 line.
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Rule #2
If the lower MACD is ABOVE the 0.0 line we look for the upper MACD (that’s
the one with settings 3,5,3) to cross BELOW the 0.0 line and then ABOVE the
0.0 line.
Like this:
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It is the exact opposite for a sell signal.
If the lower MACD is BELOW the 0.0 line we look for the upper MACD to cross
ABOVE the 0.0 line and then cross back down BELOW the 0.0 line.
Like this:
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Rule #3
Once we have Rule #1 and Rule #2 met we are then finally triggered into a
trade if Rule #3 is met.
- If we get BUY on Rules #1 and #2, we are ready to buy, but we only buy if
the close is in the upper quarter of the candle.
- If we get a SELL on Rules #1 and #2, we are ready to sell, but we only sell if
the close is in the lower quarter of the candle.
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This is an example of two invalid BUY signals:
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Exit
The Stoploss
All we do is place it a few pips below the low of our BUY candle; or place is a
few pips above the high of our SELL candle.
A couple of examples:
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Easy, eh?
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The Take Profit
As you can expect from me now – the exit is as simple as everything else we
have done so far.
Where you take profit on a trade depends on how many lots YOU are trading.
If you can only trade 1 lot on your account then you will exit when your profit
is equal to the number of pips you risked. For example:
This is a great exit method that will give you a high percentage of winners.
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Now, if you can trade two lots, you can exit the first lot at 1x the stoploss; and
exit the second lot at 2x the stoploss. Like this:
If you three lots then you would exit the first at 1:1, the second at 2:1 and the
third at 3:1.
I don’t think I need to show an example of that as I’m sure you understand the
exit method now.
NOTE: WHEN YOU EXIT THE FIRST LOT AT 1:1 THEN MODIFY THE STOPLOSS
ON THE REMAINING LOT(S) TO YOUR ENTRY PRICE!
So, let’s say you trade nine lots, you could take profit if three lots at 1:1
(remember to change the stoploss on the remaining six lots to your entry
price!), another three lots at 2:1 and the final three lots at 3:1.
I’ll like to say here that I recommend you try various exit strategies yourself –
just to help your trading skills and knowledge in general.
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You will see that Forex Pip Pirate™ manages to pick very good entries for you.
In all honesty, you can pretty much exit using any reasonable method you have
ever learned and it will work – really!
Just be consistent in the exit method that you choose. Stick to it for every
trade!
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Real Trading
I’m not sure I really need to go through any real trades for you as the system
really is simple to trade.
As I write this it is early (too early! ) on the morning of the 12th of July 2011.
The following three charts show the London session and the start of US session
(this is all I trade – I generally don’t trade the afternoon US session):
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As I said previously, the Asian session is good for AUD, NZD and JPY pairs.
I’m sure you’ve got a good idea of how Forex Pip Pirate™ works now.
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Shiver My Timbers!
But, I recommend you take a look through your charts too; I’m confident you
will like what you see right away.
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