Lim Strategy

#1 - MADAM LIM
Trading System
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WorldClassTradingStars.com Page 1
TABLE OF CONTENTS
RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT ................................. 1
Introduction ........................................................................................................................ 4
Madam Lim’s Profile ......................................................................................................... 6
My Trader Bio................................................................................................................... 10
System Description ......................................................................................................... 12
Components Of The System .......................................................................................... 15
Correlation ...................................................................................................................... 15
Diversification ................................................................................................................. 17
Hedging .......................................................................................................................... 17
Indicator: Moving Averages ........................................................................................... 18
Simple Moving Average (SMA) .................................................................................. 18

Exponential Moving Average (EMA) .......................................................................... 18
Drawdown......................................................................................................................... 20
Maximum Drawdown ..................................................................................................... 21
Risk/Reward Ratio ......................................................................................................... 21
How To Determine The Risk-Reward Ratio .............................................................. 22

What Is A Good Risk-Reward (RR) Ratio?................................................................ 22
Money Management ...................................................................................................... 24
Why Is Forex Risk Management Important? ............................................................. 24

Controlling Losses ...................................................................................................... 24
Using Correct Lot Sizes.............................................................................................. 25
Tracking Overall Exposure ......................................................................................... 25
The Bottom Line ......................................................................................................... 25
Setting Up Your Charts.................................................................................................. 26
How To Setup Your Charts............................................................................................ 27
Properties, Colors Tab............................................................................................... 27

Common Tab .............................................................................................................. 28
Indicators & Settings ...................................................................................................... 28
Exponential Moving Average (10 EMA) ..................................................................... 28

Sell/Short Trade Rules .................................................................................................... 30
Exceptions To The Rules.............................................................................................. 31
Sell/Short Trade Examples............................................................................................. 32
Sell/Short Example 1 ..................................................................................................... 32
Buy/Long Trade Rules .................................................................................................... 39
Exceptions To The Rules.............................................................................................. 40
Buy/Long Trade Examples ............................................................................................. 41
Buy/Long Example 1...................................................................................................... 41
Buy/Long Example 2...................................................................................................... 43
Buy/Long Example 3...................................................................................................... 44
Buy/Long Example 4...................................................................................................... 45
Buy/Long Example 5...................................................................................................... 46
Things To Consider........................................................................................................ 47
Tips/Guidelines/Comments/Notes ................................................................................. 47
Advanced Example 1 ..................................................................................................... 48
Introduction
Hi friends,
I am Madam Lim, 60 years of age, married and have 4 sons. I’m retired from being an
art institute teacher and have since been a fulltime mother and housewife.
Though I’ve had some exposure on the stock market, I never thought I’d be trading
Forex. But last New Year, I noticed that trading was all that two of my sons talked about.
I had no idea what they were saying, so to join in their conversations and get to spend
time with them, I decided to learn how to trade.
Trading is one of the best ways for me to bond with my sons. And because I love to
learn new things, I have become more and more interested in it. I was very happy with
the results in my demo trading with my system. It has very consistent performance, and
it has never burned an account so far.
So later on, when I learned about the Surefire Trading Challenge, I decided to join just
to test my trading strategy even more and to see how I would do as a trader.
My trading method is very easy to apply. It’s simple enough to learn and master. But,
there’s something very special about it. There’s a very good reason my system works,
and it’s not as easy to explain compared to how it’s applied.
My system takes advantage of the correlation of the currencies I trade and applies risk
management in the form of diversification and hedging. By buying/selling 3 currency
pairs when they are going in a specific direction, I increase my chances of becoming
more profitable. And if the trade goes against me, I get to decrease my losses as well.
My charts are clean and clear as I trade with only 1 indicator which helps me identify the
trend on the 4 Hour charts of the 3 currency pairs that I trade with. I’m a day trader, and
I only check the charts every 3 to 4 hours or whenever I have free time.
Trading for me needs patience, if there’s no setup, I just leave the computer and do
other things. There’s no need to rush and risk a lot. That’s why I avoid big news
releases especially the Nonfarm Payrolls. I also trade conservatively. I found this to be a
very effective way to save my account from too much loss.
In cooperation with the SFTC team, this manual is made to provide you the best written
guide to trade with my system. Read this manual and practice what you learn on your
charts, and you’re sure to master this system very quickly.
Madam Lim’s Profile

Gender: Female
Birthday: 07/28/1951
How many years have you been trading?
I had been trading for less than a year before the start of the competition.
Tell us a little bit about yourself.
I am a retired art institute lecturer, and I have been learning Forex trading. Win or lose,
it’s not a big issue to me. I just treat it as a part of life.
I am married and have 4 sons, 2 of them are involved in Forex trading. I am a simple
and happy person. I love to learn new things. I spend most my time studying new age
spirituality. I love to study about spirituality, and do meditation as well.
Why did you want to become a trader?
Last year, I kept hearing 2 of my sons talking about Forex trading. So in order to join
them, I learned about trading. To me, it was a brand new thing, and I did not intend to
be a professional trader. But later, I appreciated it very much and thought that Forex
trading can be a good source of income for me.
How old are you now and when did you start trading?
I am 60 years old. I learned about trading Forex last year.
How did you start learning more about how to trade when you first started?
When I first started, I learned a lot from my sons about Forex. They taught me about
how to make a simple and easy trading plan, so I came up with my system.
Do you have any favorite book/s on trading?
No, all Forex trading books are too technical for me.
Do you have any favorite website/s on trading?
No, I seldom surf the internet.
What do you enjoy most about trading?
What I enjoy most about it is when my sons are spending time with me, and we chat
about something that we have in common. That's the thing that makes me the happiest.
Do you routinely trade on a demo account?
Yes, I was using a practice account for a long time before the competition.
What is your normal day to day trading strategy like?
I am a housewife now, and at any time, I can check the charts. There’s no fixed period, I
just trade during my free time. It could be at any time in the morning, afternoon or
evening.
How did you find out about the Surefire Trading Challenge?
My sons told me about the competition.
Why did you enter the Surefire Trading Challenge?
I am practicing a simple trading method that is suitable for me. I’ve achieved really good
results, so I wanted to test my skills in the Surefire Trading Challenge.
What was your strategy in the demo round?
I was using a hedging method on the EURUSD, GBPUSD and USDCHF. I entered
trades in these 3 pairs at the same time, based on the 10 EMA in each of the 4Hour
charts. I entered a trade if the prices in two or three pairs were in the same direction.
When the total balance showed a positive profit, I closed all positions and waited for a
new cycle.
How do you feel your trading went in the Demo round?
It was very exciting when I saw myself at the top of the list while other contestants were
rising and falling. I never thought that my trading strategy would put me on that list.
Initially, I was only trying to test my system.
How do you think you performed in the Live Trading round of the competition?
I did my best to do the same thing that I did in the Demo round. I did get really nervous
in the beginning. Later, I got used to it and just traded as best I can. I actually did better
during the second month of live trading.
How did it feel to be trading live for two months?
Like I said, I felt nervous in the beginning, but I later realized that if I just trade like I
normally do, then all is well. It took a lot of patience for me to wait for the right setups
but it was worth it. I’m very happy about my trading and I feel that I’m improving so
much.
How would you best describe your trading system? (Swing trading, Scalping,
Breakout, Other)
It’s hedging 3 currency pairs in the same direction at the same time. So even if I
guessed the main currency movement incorrectly, the other hedged pairs will cover up
some of the loss.
How long have you been trading this particular trading system?
I have been trading this since January of 2011.
What was your goal for the Live Trading round? Was there a percentage gain that
you have set as a target?
I hoped I will make at least 20% profit per month with this system trading on the live
account. Based on my tests, it’s a conservative estimated gain that I can achieve every
month.
We have provided you with a $1000 Live Account, how much of this money were
you willing to risk and lose?
I have slightly reduced the lot size compared with what I used in the Demo round. The
maximum drawdown should be 20%, and that’s when I considered closing my trades in
loss. I wanted to give my trades enough leeway to be in profit.
My Trader Bio
How much time each day/week/month (whichever is most appropriate) can you
dedicate to the various requirements of trading and managing a trading system?
I am a full-time housewife, so I can always check my trading status from the morning
until the evening, because my trading system is used on the 4 Hour chart.
Do you pay any attention to News releases or Fundamentals? If so, how do you
approach this and are there any in particular that you avoid or look to capitalize
on?
Yes, I learned to be aware of some big news events during the London and New York
sessions. I skip trading during that period.
How many trades do you expect to place each day/week/month (whichever is

most appropriate)?
I normally expect there to be, on average, 3-4 trade setups in a week.
Which kind of returns do you expect to make?
A month of 10-20% growth is very good for me. It’s been so different with other types of
investments.
Which currency pair/s do you trade?
I only trade the EURUSD, GBPUSD and USDCHF.
Which timeframe/s in which you will be trading?
I only look at the 4 Hour charts.
Which session/s do you trade?
I trade all sessions when I’m free to go online and take a look at my charts.
Are there any currency pairs, timeframes or sessions that you avoid trading?
Yes, I only trade on 3 pairs (EURUSD, GBPUSD and USDCHF) and only on 4 Hour
charts. I am not interested with the other currency pairs which are not in my trading plan.
I do not avoid any sessions.
Describe your daily trading routine?
From the morning, Asia time, I switch on the computer and take a look at my open
trades or look for a potential trade setup. After that, I will go off and come back around 3
to 4 hours later to check for any setup again. I normally do that until night time which is
during the New York session.
What hardware/software and/or other tools do you use?
I use a basic home PC and the MetaTrader 4 trading platform. I don’t use any other
tools.
System Description
How did you come up with the system you have traded during the competition?
After learning how to trade with my sons, I got very interested in trading so I decided to
go a little further. With their help, I came up with this system as it is very effective but
easy to follow. The system is a modified hedging system.
Is the trading system you are using unique?
Perhaps, there might be some similarities with other hedging systems in the market. But
the ratio of lot sizes is quite unique.
Does your system use any custom indicators?
No, I don’t use any custom indicators at all.
Which currency pairs do you trade with this system?
I only trade with the EURUSD, GBPUSD, and USDCHF. They must be entered at same
time and in the same direction.
Does your system use multiple timeframes? If yes, please post the timeframes
that your system uses.
I just trade on the 4 Hour timeframe. It does not need a trader to stay in front of the
monitor to always keep an eye on the price.
During what hours are you actively trading this system? Please include your time
zone.
The system is suitable for any time zone so it can be traded at any time of day.
Do you follow a set number of rules on each and every trade or does it vary?
I follow the main rules. Of course, there are a few times when it will vary. The main rule
recommends that all 3 pairs follow the conditions. Sometimes, only 2 of the 3 pairs
follow the conditions and I may choose to enter a trade.
Are there exceptions to your trading system rules?
No, it is dangerous for me to stray from the rules and just starting guessing.
How would you describe your trading system in just a few sentences?
It is a simple and easy to learn system. It is suitable for those who are tired of guessing
the direction of the market and hedging in different direction on too many different pairs.
It will suit most traders because you only need to check your positions every few hours.
Do you enter trades using market orders or pending orders?
I use market orders, no pending orders required.
If you use a pending order, how long do you wait before you cancel the order?
I don’t use pending orders.
How do you determine the level/price where you will enter a trade?
I enter Buy trades on all three pairs when all of them (EURUSD, GBPUSD, and
USDCHF), or at least two of them, stay above the 10 EMA (on the 4H charts), and vice-
versa for Sell setup.
What percentage of your account balance do you risk on each trade?
If the drawdown is more than 20% of the account, I will need to close all open positions.
How long will you remain in a trade once it is opened?
If the total floating profit is already around 5%-10%, sometimes 20% profit, or the
drawdown is 20%, I would exit the trade.
Do you place a take profit? If so, how do you determine this level?
No Take Profit is required. All positions have to be closed at the same time. Closing any
single order while leaving some open will weaken the hedge, and it is dangerous.
Do you place a stop loss? If so, how do you determine this level?
No Stop Loss is needed. USDCHF will hedge with GBPUSD and EURUSD.
Do you exit trades before your stop/target is hit? If yes, please explain further.
Yes, if the total floating amount seems like it has reached a resistance area and refuses
to grow, I will close them and accept a small loss, a small profit or close at breakeven. I
will then look for a new setup.
Which signals will cause you to exit early?
If the price in all pairs move to the opposite side of the 10 EMA, that is a clear indication
that I’m trading in the wrong direction. I will not wait for the drawdown to reach 20%, and
I will exit the position as soon as I can.
Do you use trailing stops?
No, I don’t use trailing stops.
How does your system factor in the Fundamentals or News releases like the NFP,
FOMC announcements?
I avoid placing trades on big News like NFP and FOMC.
Components Of The System
Correlation
Technically speaking, correlation is a statistical measure of the relationship between

currency pairs, which helps to quantify the relationships and help traders better
understand the interdependence of certain currency pairs.
The correlation coefficient (or value) of +1 means that the pairs perfectly (100%) move
in tandem at all times, while -1 means that they perfectly move in opposite directions at
all times.
I only trade with three currency pairs, the EURUSD, GBPUSD, and USDCHF. The first
two, EURUSD and GBPUSD, are well known to be positively correlated to each other.
But each one is negatively correlated to USDCHF.
Years of data show that these correlations may only change slightly but they hold true
significantly. Have a look at the correlation of these three pairs for the past 3 years.
These are based on the monthly closing prices.
Table 1: 3-Year Correlation of Monthly Close Prices
Year EURUSD GBPUSD USDCHF Pairs

1.00 0.88 -0.93 EURUSD
2008 0.88 1.00 -0.73 GBPUSD
-0.93 -0.73 1.00 USDCHF
1.00 0.90 -0.99 EURUSD
2009 0.90 1.00 -0.88 GBPUSD
-0.99 -0.88 1.00 USDCHF
1.00 0.76 -0.46 EURUSD
2010 0.76 1.00 -0.71 GBPUSD
-0.46 -0.71 1.00 USDCHF
Recent data still support these correlations. Below is the correlation between the
EURUSD, GBPUSD, and EURCHF based on the closing prices in the 4 Hour chart for
the past 6 months.
Table 2: 6-Month Correlation of 4-Hour Close Prices
Month EURUSD GBPUSD USDCHF Pairs

1.00 0.76 -0.70 EURUSD
Jan-11 0.76 1.00 -0.17 GBPUSD
-0.70 -0.17 1.00 USDCHF
1.00 0.54 -0.87 EURUSD
Feb-
0.54 1.00 -0.63 GBPUSD
11
-0.87 -0.63 1.00 USDCHF
1.00 0.03 -0.72 EURUSD
Mar-
0.03 1.00 -0.07 GBPUSD
11
-0.72 -0.07 1.00 USDCHF
1.00 0.92 -0.90 EURUSD
Apr-11 0.92 1.00 -0.84 GBPUSD
-0.90 -0.84 1.00 USDCHF
1.00 0.81 -0.53 EURUSD
May-
0.81 1.00 -0.75 GBPUSD
11
-0.53 -0.75 1.00 USDCHF
1.00 0.71 -0.41 EURUSD
Jun-11 0.71 1.00 0.17 GBPUSD
-0.41 0.17 1.00 USDCHF
Knowing the correlation of the currency pairs to trade is very important in risk
management. Now that we are well aware of how the EURUSD, GBPUSD, and
USDCHF are correlated, the next challenge is how to best make use of this knowledge.
Diversification
One of the functions of correlation in risk management is diversification. Diversification

is basically opening separate positions to distribute the risk instead of concentrating it
on one position. In the long run, the returns are much higher and more stable.
Diversification requires that both pairs are not perfectly correlated, just like the EURUSD
and the GBPUSD. Both pairs generally move in tandem but the Euro and the Pound are
not equally affected or reactive to adverse moves in the Dollar.
For example, instead of opening just one buy trade on the EURUSD, it’s better to
distribute the lot size to open buy trades on both EURUSD and GBPUSD. Aside from
keeping the trades on the same direction, it also smoothens out the risk between the
pairs. So when one position is in profit, it neutralizes the loss on the other.
Hedging
Another way of using correlation to reduce the risk is by hedging your positions.
Hedging is a technique used to protect a trade from unwanted price movement – that is,
a sudden fall of price in a long position or a sudden upward surge in a short position. A
hedge is the position opened for the main purpose of protecting a present or a future
exposure to unfavourable market movement.
Basically, a trader in a long position also opens a long position in a negatively correlated
currency pair to protect the initial trade from a downside risk. On the other hand, a
trader in a short position also opens a short position in a negatively correlated pair to
protect the initial trade from an upside risk.
Both EURUSD and GBPUSD are negatively correlated to the USDCHF. So, the
USDCHF can be used to hedge the positions on the EURUSD and/or the GBPUSD.
For example, instead of just opening a buy trade on the EURUSD and/or the GBPUSD,
also open a buy trade of equal lot size in the USDCHF. In case the USD suddenly
moves up, the profit on the USDCHF trade offsets any losses on the initial trade.
Indicator: Moving Averages
The Moving Average is an indicator that helps smoothen price movement to identify the
trend. It is so called because a moving average is an average that moves. It moves
along time and is based on the latest number of candles specified. Once a new candle
forms, it drops the data of the oldest candle and uses the data of the new candle.
Take note that a moving average cannot predict the direction of the price. It can only
identify the current direction based on the previous prices. It’s a lagging indicator
because it is based on the average of the prices from the past. The main purpose of the
moving average is to filter out the noise and smoothen the price action to identify the
trend.
There are many types of moving averages, and all of them are computed beginning with
the Simple Moving Average. However, I only use the Exponential Moving Average.
Simple Moving Average (SMA)
Plain and simple, this type of moving average is the average of the price of the previous
number candles. It is computed as the sum of the prices divided by the number of prices.
For this kind of moving average, all the prices are of equal importance or weight.
Exponential Moving Average (EMA)
On the other hand, the Exponential Moving Average takes the weighted average of
price of the previous number of candles, giving more importance to the more recent
prices. So, the value of the EMA decreases exponentially with every previous price.
For this kind of moving average, the more recent prices have more weight over the
older prices. This helps to reduce the lag and makes the indicator more reactive to the
more recent prices.
I use this specific type of moving average to identify the trend according to the most
recent price, but without neglecting the previous data. Applying a 10 EMA to the 4 Hour
chart is sufficient for me.
Drawdown
Drawdown refers to the decline in an account’s value, usually represented as a
percentage amount or as a full dollar figure.
After a series of losing trades, the value of one’s capital decreases. This reduction is
referred to as the drawdown. To calculate the drawdown, one needs to compute for the
difference between a relative peak in equity capital minus a relative trough.
Here’s an example:
If you have a $1,000 account and you lose $500, what percentage of your account have
you lost? You know that the answer is 50%. This percentage is what is called a
drawdown. It is that simple.
Now, if you started with $1,000 and over the course of time, the account grew to $2,000
and you lost $500, then your drawdown would be 25%.
Here’s another example:
Imagine that you start your trading account with $10,000 and after a few trades, you
lose $2,000. Your drawdown would be 20%.
Now, let’s say you make more trades and gain $4,000 which brings you to $12,000
($8,000 + $4,000 = $12,000). After this, on the next trade you lose $2000. You’re
drawdown would be 16.7% ($2,000/$12,000). The $12,000 was your equity peak - as
that was the highest point in the period we looked at.
Maximum Drawdown
Maximum drawdown is the lowest point your account reached between peaks. If you
started your account with $10,000 and the lowest amount you had in your account over
a six-month period was $5000 then you had a 50% drawdown.
You would need to make $5,000 from the lowest point in order to get back to even. The
problem is that even though you lost 50% from your high of $10,000, you would need to
make 100% on the $5,000 to get back to even.
As your drawdown increases, the amount you need to make it back increases even
more.
Drawdown may be a negative term, but it is part of trading. Since it is inevitable, it is

vital to have risk management rules to become successful at trading. Risk management
allows you to risk only a small percentage of your account balance so that it can survive
losing streaks.
Risk/Reward Ratio
Risk is another aspect of trading that will always be present in every trade. There is
always a certain degree of risk in each and every trade that you enter. As a trader, one
must be sure to know the amount of risk that is being taken because this is very
important.
Knowing how much you are risking will enable you to limit the risk and protect your
account as you trade. Initially determining the risk-reward ratio is the best way to
measure the level of risk before entering a particular trade. This ratio is one of the most
effective risk management tools being used by successful traders.
This ratio is a parameter that will enable the trader to calculate the level of risk every
time a trade is entered. The risk-reward ratio represents the level of risk versus the
potential reward/profit for a trade. Showing how much risk will be taken makes this ratio
a very simple and effective tool, yet many traders neglect this tool, only to find large
losses in their accounts when it’s too late.
How To Determine The Risk-Reward Ratio
The risk-reward ratio is composed of two numbers. The amount of risk is represented by
the first number, while the potential reward/profit is the second number.
In order to calculate the risk-reward ratio, one must first identify the amount of risk and
the target. If for example, you decided to risk $300 and your target was to make $600,
then you would have a 1:2 risk reward ratio. You are prepared to lose $300 in order to
make $600.
Here are a few examples of the risk-reward ratio:
 If the risk is $200 and the reward is $400, then the risk-reward ratio is 200:400 or 1:2.
 If the risk is $500 and the reward it $1,500, then the risk-reward ratio is 500:1500 or
1:3.
 If the risk is $1,000 and the reward is $500, then the risk-reward ratio is 1000:500 or
2:1.
What Is A Good Risk-Reward (RR) Ratio?
When trading with Forex, especially if you are new to trading, the bigger the rewards
compared to the risk, the better (high RR). Try and avoid trades that have a low
breakeven RR. The higher your RR, the less accurate you need to be. The lower your
RR, the more accurate you need to be.
If you only take trades that have a 1:3 RR, then you are making three times as much as
when you lose. So if you lose only a few times, it is no big deal. You can easily recover
the losses with the wins. But if you are taking 1:1 trades, then you only need to lose a
few times to go into the negative.
However, if the win rate is big enough to recover any losses and increase the profits,
then traders may use a different RR ratio. For example, in my trading system, I would
take 5-10% of growth in my balance for every trade, but I would exit in loss if my
balance reaches 20% drawdown. I can still expect my balance to grow over a period of
time because my win rate is 85% or more. So even if I risk 20%, but gain 5-10% of the
balance 85% of the time, then it is acceptable for me.
Many experienced traders wait for trades with a risk-reward ratio before entering the
trade. It’s always good to take trades with a higher RR in case the price does not make
the anticipated price movement. If, on the other hand, the trader enters a position with a
lower RR, the risk is increased since there is very little room left for smaller price
movements.
It is essential for every trader to use the risk-reward ratio as it is an important money
management tool. New traders must make an effort to form the habit of completing this
extra step because it can help protect their accounts by identifying low risk trades that
they may enter.
It takes a lot of patience and effort to wait for the right risk-reward ratio, but the benefits
are worth the hard work. This ratio enables the trader to identify the amount of risk and
the amount of potential profit in every trade, enter only in trades that are worth taking,
and avoid trades that are more likely to bring about losses.
Money Management
Money management can make or break your Forex trading career. Even if you are
using the best trading system out there, you can still fail without the right risk
management. Risk management combines multiple means to limit the risk in trading. It
may include, but is not limited to, controlling the lot size, hedging, trading only during
certain hours or days, or knowing when to take losses.
Why Is Forex Risk Management Important?
Risk management is very important in trading Forex. In fact, it is one of the key
concepts for survival as a Forex trader. This concept is quite easy to understand, but it
is difficult to apply.
Traders are always bombarded with the benefits of using leverage but are not well-
informed about its drawbacks. This gives them a mindset that they should take trades
despite large risks with the expectation to earn a large profit. Trading may seem too
easy using a demo account, but once real money and emotions are involved, it won’t be
the same. This is why true risk management is critical.
Controlling Losses
You can control the amount of losses as a form of risk management. When the price
goes against the expected direction, you must know when to cut the losses on a trade.
This can be done in two ways, with the use of a hard stop or a mental stop.
A hard stop is placed when you set a stop loss as the trade is initiated. On the other
hand, a mental stop is being used when you exit the trade based on a certain limit or
drawdown that you are willing to take for the particular trade.
Identifying the ideal stop loss level may vary among traders. What’s important is that it
should reasonably limit the risk in as much as you are comfortable with it. As soon as
you have identified your preferred stop loss, stick with it. Otherwise, you could fall into
the trap of moving your stop loss farther and farther out, defeating its purpose which is
to efficiently cut your losses.
Using Correct Lot Sizes
At one point in time, you may have thought that it is possible to open an account with
$300, and use a 200:1 leverage to open mini lot trades of $10,000 dollars, and double
your money in one trade. Nothing could be farther from the truth.
There is no magic formula that can accurately tell the lot size that you should be trading
with. But for beginners, the smaller the lot size, the better. Each trader has his own level
of risk tolerance. As a rule of thumb, it is best to remain as conservative as possible.
Not everyone has enough resources to open a $5,000 account, but this is not a reason
to use larger lots if you have a small account. It is important to understand the risk of
using larger lots with a small account balance. Trading with smaller lot sizes allows one
to stay flexible and manage trades based on logic than on emotions.
Tracking Overall Exposure
Reducing the lot size is good for managing your risk, but it cannot help when you open
too many trades amounting to too many lots. There is a correlation between currency
pairs, and this is important for any trader to understand.
An example would be going short on the EUR/USD and long on the USD/CHF. In this
scenario, the account is exposed twice to the USD in the same direction. This means
that the overall exposure to USD is long two times the lot size. So, if the USD goes
down, both trades lose. The importance of keeping the overall exposure limited is that it
reduces your risk and keeps you in the game in the long run.
The Bottom Line
Risk management is all about keeping your risk under control. The more controlled your
risk is, the more flexible you can be when you need to be. If you notice, Forex trading is
about opportunity, and traders need to be able to act when such opportunities arise. By
limiting your risk, you insure that you can continue to trade even if events do not go as
planned. Using proper risk management can be the difference between becoming a
Forex professional and being a quick blip on the chart.
Setting Up Your Charts

Here’s how my charts look like when they’re all set to trade my system.
As you can see, I have three charts open at one time. I have the EURUSD, GBPUSD,
and the USDCHF all set to display data from the 4 hour timeframe. I usually keep the
terminal window open so I can monitor the trades.
How To Setup Your Charts
Here are the steps in setting up the charts for my system.
Once you have opened a chart for a currency pair, select Candlesticks, Zoom in, and
Chart shift. After that, right-click on the chart and select Properties.
Properties, Colors Tab
In the Properties of your chart, go to the Colors tab and make sure that the following
settings have been set to the corresponding colors.
Background - Black
Foreground - White
Bar up - SpringGreen
Bar down - Red
Bull candle - SpringGreen
Bear candle - Red
Here’s an image to guide you.
Common Tab
Open the Common tab, and make sure to select Chart shift, Chart autoscroll, and
Candlesticks. Remove the grid by unselecting Show grid. Here’s how the settings
should appear:
Indicators & Settings
As I’ve said before, I only use the 10 EMA as my indicator. Apply the 10 EMA on each
chart based on the list of parameters below.
Exponential Moving Average (10 EMA)
These are the parameters of my 10 EMA:

Period - 10
Shift - 0
MA Method - Exponential
Apply to - Close
Style - Yellow
This is what it should look like:
As soon as you’ve set all three charts as indicated, you’re ready to trade my system. In
the next section, you will learn how to trade according to the system rules.
Sell/Short Trade Rules

My trading system is very easy to follow. I use only the 10 EMA on 3 charts (EURUSD,
GBPUSD, and USDCHF), all on the 4 Hour timeframe.
Here are the rules to enter a sell trade:
1. Wait for the price to be below the 10 EMA on two or three pairs.
If the price is below the 10 EMA, then the trend is going downwards. This ensures that
you are trading on the right side. There’s very little difference in the results when trading
with only 2 pairs in the same direction compared to trading with 3 pairs in the same
direction.
2. Enter a sell trade on each currency pair when price is below the 10 EMA on two or all
three pairs.
The recommended lot size ratio for the three pairs is 20% for GBPUSD, 30% for
EURUSD and 50% for USDCHF. Diversification is applied between the EURUSD and
the GBPUSD. The main reason that the GBPUSD gets a smaller percentage is because
it is more reactive and fluctuates more than the EURUSD. The USDCHF is used to
hedge the other positions, and that’s why it’s of equal lot size to that of the EURUSD
and the GBPUSD combined.
So if the maximum lot size you would like to trade is 0.5, enter 0.1 lot on the GBPUSD,
0.15 lot on the EURUSD, and 0.25 on the USDCHF.
3. Monitor the trade every 3 to 4 hours, and exit if the total loss is 20% or if the price
crosses and closes above 10 EMA in all currency pairs.
When the price in all 3 pairs cross and close above the 10 EMA, this is an indication of
a change in the direction of the trend. It is better to exit the trades early than to wait for a
significant loss. The maximum drawdown I would allow for my open trades is 20%.
4. Wait for the profit to reach 5% - 10% or higher and close all positions. Don’t leave any
trades open.
Exceptions To The Rules
1. If any pair is moving too steeply below the 10 EMA and the price is too far away from
the 10 EMA, wait for price to pull back before entering a trade.
2. If the price of any two or all pairs are ranging along the 10 EMA, skip the trade and
wait for a clear downward price movement.
Sell/Short Trade Examples

Let’s take a look at some examples of short trades…
Sell/Short Example 1
When I opened my platform, I found that the price in the three currency pairs had been
below the 10 EMA in the 4 Hour timeframe. This is an ideal condition to enter a trade.
I entered a sell trade for 0.1 (20%) lot on the GBPUSD, 0.15 (30%) on the EURUSD,
and 0.25 (50%) for USDCHF all at the same time. There’s no need to pinpoint the entry
in a shorter timeframe, and there’s no need to stay in front of the monitor to watch the
trades all the time.
Once I have entered the trades, I just checked every few hours to make sure it did not
exceed 20% in loss. I would have exited the trades if I reached 20% drawdown or if the
price crosses and closes above the 10 EMA on the three currency pairs. But later, the
trade went my way and after a couple of days, I closed the trades with $543.23 profit.
On this example, the price was above the 10 EMA on the EURUSD 4 hour chart, but it
was below the 10 EMA on both GBPUSD and USDCHF 4 hour charts. This is a sell
trade setup even if only 2 out of 3 prices are below the 10 EMA.
I entered a sell trade on each pair following the standard ratio, 0.1 lot on the GBPUSD,
0.15 on the EURUSD, and 0.25 for USDCHF.
I just checked on these trades every few hours to see the progress and cut any losses if
any. I then exited with $55.17.
Here’s another ideal sell trade setup. In this example, the price was below the 10 EMA
on all three charts.
I entered a sell trade on each pair following the standard ratio, 0.1 lot on the GBPUSD,
In the next hour, I was already in profit, so I exited all the trades with a total of $38 profit.
As you can see, the price was below the 10 EMA on all three currency pairs in the 4
hour timeframe.
I entered a sell trade on each pair all at the same time, with 0.1 lot on the GBPUSD,
I monitored my trades every 3 to 4 hours to see if everything is alright. If the trades went
against me for 20 %, or if price closes above the yellow EMA on all currency pairs, I
would exit the trade.
On the next day, the profit went up to $ 162.41 so I closed the trades.
As you can see, the price is below the 10 EMA in all currency pairs.
I entered a sell trade on each pair all at the same time, with 0.1 lot on the GBPUSD,
After less than an hour, I noticed that the price had been quite far from the 10 EMA on
all the 3 pairs for a long time when I entered the trade. The price could reverse soon, so
I exited the trades while the total profit is $ 86.57.
Notice that the price eventually moved up towards the 10 EMA.
Here’s the last sell trade example, I adjusted the total lot size of the trades, but the ratio
remains the same.
As you can see, the prices were below the 10 EMA on all three currency pairs. I entered
a sell trade on each currency pair. For a total of 0.3 lot, the trades I entered were 0.06
lot for GBPUSD which is equivalent to 20 %, 0.09 for the EURUSD which is 30 %, and
0.15 on the USDCHF which is 50 %.
After four hours, the price continued to decline on the EURUSD and GBPUSD but it
went up on the USDCHF. I did not expect the profit to be too big because the lot sizes I
used were small. I exited the trades with a total of $ 51.67.
Buy/Long Trade Rules

The rules for a buy trade are basically opposite in direction to the rules of a sell trade.
Here are the rules to enter a buy trade:
1. Wait for the price to be above the 10 EMA on two or three pairs.
If the price is above the 10 EMA, then the trend is going upwards. This ensures that you
are trading on the right side. There’s very little difference in the results when trading with
only 2 pairs in the same direction compared to trading with 3 pairs in the same direction.
2. Enter a buy trade on each currency pair when price is above the 10 EMA on two or all
three pairs.
The recommended lot size ratio for the three pairs is 20% for GBPUSD, 30% for
EURUSD and 50% for USDCHF. Diversification is applied between the EURUSD and
the GBPUSD. The main reason that the GBPUSD gets a smaller percentage is because
it is more reactive and fluctuates more than the EURUSD. The USDCHF is us ed to
hedge the other positions, and that’s why it’s of equal lot size to the lot size of the
EURUSD and the GBPUSD combined.
So if the maximum lot size you would like to trade is 0.5, enter 0.1 lot on the GBPUSD,
0.15 lot on the EURUSD, and 0.25 on the USDCHF.
3. Monitor the trade every 3 to 4 hours, and exit if the total loss is 20% or if the price
crosses and closes below 10 EMA on all currency pairs.
When the price on all 3 pairs cross and close below the 10 EMA, this is an indication of
a change in the direction of the trend. It is better to exit the trades early than to wait for a
significant loss. The maximum drawdown I would allow for my open trades is 20%.
4. Wait for the profit to reach 5% - 10% or higher and close all positions. Don’t leave any
trades open.
Exceptions To The Rules
1. If any pair is moving too steeply above the 10 EMA and the price is too far away from
the 10 EMA, wait for price to pull back before entering a trade.
2. If the price of any two or all pairs are ranging along the 10 EMA, skip the trade and
wait for a clear upward trend.
Buy/Long Trade Examples

Let’s take a look at some examples of long trades…
Buy/Long Example 1
In this example, you’ll notice that before entering a trade, the price had been above the
10 EMA on all three currency pairs. This was an ideal setup for a buy trade.
I entered a buy trade for 0.10 lot on the GBPUSD, 0.15 lot on the EURUSD and 0.25 on
the USDCHF.
There’s no need to pinpoint the entry on a smaller timeframe. And as soon as the trades
were entered, there’s no need to stay in front of the monitor all the time.
I left the trades alone and checked every 3 or 4 hours, just to see if price has crossed
below the 10 EMA on all currency pairs, or if I get a running loss of 20% so that I can
exit the trades.
The trade went in my favor, and after 2 days, I closed the trades with a total of $110.49.
Buy/Long Example 2
On this example, the price was above the 10 EMA only on the EURUSD and GBPUSD
4 hour charts, and it was below the 10 EMA on the USDCHF 4 hour chart. This is still
considered a valid buy trade setup.
I entered a buy trade on each pair following the standard ratio, 0.1 (20%) lot on the
GBPUSD, 0.15 (30 %) on the EURUSD, and 0.25 (50%) for USDCHF.
I checked the trades after 4 hours and was already in profit, so I exited the trades with
$76.04.
As you can see, I could have kept the trades open as the price continued to go up. But,
I was already at 7% profit which is within my profit target, so I was happy to close the
trades.
Buy/Long Example 3
In this example, you’ll notice the price was above the 10 EMA on all currency pairs. I
waited for the price to pull back on all the pairs and entered the trades when the price
was much closer to the 10 EMA.
The total lot size for these trades was 0.3, which was smaller but the ratio is the same.
You can see that I placed a buy trade for 0.06 (20 %) on the GBPUSD, 0.09 lot (30 %)
on the EURUSD, and 0.15 lot or (50 %) on the USDCHF.
I checked on the trade every few hours. On the next day, I could see that there wasn’t
much profit because the price was just ranging along the 10 EMA on the GBPUSD and
the USDCHF. So, I decided to close the trades with only $8.43.
Buy/Long Example 4
Here’s another variation of the lot size that you can use. In this trade, the prices on the
EURUSD and GBPUSD have been above the 10 EMA for some time, but the price has
been below the 10 EMA on the USDCHF. Again, this is a valid setup.
As you can see, I only entered the trades when there was some pull back. This is very
important because I will have a lesser drawdown on the open trades, and it also
increases my profits.
I entered a total of 0.1 lot for these trades with the same ratio, 0.03 lot (30 %) on the
EURUSD, 0.02 lot (20 %) on the GBPUSD, and 0.05 lot (50 %) on the USDCHF.
In three hours, the prices on the EURUSD and GBPUSD had already moved up, but the
price on the USDCHF continued to go down. I still managed to close the trades and
ended up with a small gain.
Buy/Long Example 5
This is the same setup but with different results. The prices on the EURUSD and
GBPUSD have been above the 10 EMA for some time, but the price had been below
the 10 EMA on the USDCHF.
As soon as there was some pull back, I entered the trades according to the
recommended lot size ratio.
On the next candle, the price barely moved up on the EURUSD, but the prices
continued to increase on the GBPUSD and the USDCHF.
This is a quick trade. The total profit was already $ 115.51, so I closed the trades right
away.
Things To Consider
Tips/Guidelines/Comments/Notes
You see, it’s so simple to trade with my system. All you need to do is check for the main
trend direction and enter a trade on each currency pair with the recommended lot size
ratio in the same direction.
As you may have seen on each example, no two trades are the same. The results vary,
but they are favourable. The losses are favourable as well, because when an inevitable
loss comes, it’s compensated by the profit of the other positions. Maximizing our
knowledge of correlations give us the synergistic effect of diversification and hedging.
However, it is important to begin with entering the trades in the right direction. Buying in
an uptrending market and selling in a downtrending market is necessary to ensure that
you will gain some profit. You cannot force the market to go in the direction you want it
to, if it’s really not going there. So, always check the position of the price relative to the
EMA.
Another important thing to remember is to wait for the price to pull back from a very
steep move. If you have observed in some of my examples, I would have ended in a big
loss had I not waited. Patience is very important to become successful. Like I always
say, trading is like fishing. Just wait and act when the time is right.
I trade with the EURUSD, GBPUSD and USDCHF permanently on the 4 Hour chart.
They are more stable pairs and the 4 hour charts help clear up a lot of time for me to do
other things. I can trade during any session as long as I have a few minutes to check for
the trend and enter trades. Monitoring for trade setups and managing open trades
should only take 10 minutes, every 3-4 hours.
As with any trading system, the best way to master my system is to just practice. You
will know that you are doing it right if you are gaining steady profits. Once you can do
this, you can start experimenting by testing other lot size ratios or by changing the lot
sizes depending on the situation.
There’s one more thing I would like to share with you. But, take note, this is not
advisable if you are just starting to learn this system.
On a couple of my videos, you will see advanced examples where I increased the lot
size percentage. I only do this when I’m sure that the trend will continue on certain
currency pairs. Have a look at the example on the next page.
Advanced Example 1
On this example, the prices on the EURUSD and the GBPUSD are above the 10 EMA
while the price on the USDCHF is below the 10 EMA.
The prices were far from the 10 EMA so I waited for the right time to trade. The prices
on the GBPUSD and the USDCHF pulled back, so I entered my trades.
The trend is very prominent on each pair. The best way to tell is when the prices on the
EURUSD and the GBPUSD are showing higher highs, while the USDCHF is showing
lower lows.
I will be entering buy trades, so to increase my profits, I would increase the lot size
allocated for the GBPUSD. I would also decrease the lot size on the USDCHF because
it is in a downtrend. Basically, I transferred 0.01 lot from the USDCHF to the GBPUSD.
As usual, I monitored these trades every 3 to 4 hours. As I have predicted, the prices
continued to go up on the EURUSD and the GBPUSD, but the price continued to go
down on the USDCHF.
After a couple of days, I exited the trades with a total of $ 115.51.
So far, I am very happy trading Forex, and I will continue to trade for as long as I can. It
has not only given me a way to bond with my sons, it has also given me a way to earn a
lot of extra money.
The Surefire Trading Challenge has opened up a new world of possibilities for me. I
guess I am a living example of a new trader who has gained success in the Forex
market because of my trading system.
I’m sure that with my trading system, you will gain success too. It will give you steady
profits as long as you are patient, and follow the rules each time you trade.
Good luck!
Madam Lim

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#1 - MADAM LIM

RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT

RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT ................................. 1

Madam Lim’s Profile ......................................................................................................... 6

System Description ......................................................................................................... 12

Components Of The System .......................................................................................... 15

Indicator: Moving Averages ........................................................................................... 18

Simple Moving Average (SMA) .................................................................................. 18

Maximum Drawdown ..................................................................................................... 21

Risk/Reward Ratio ......................................................................................................... 21

How To Determine The Risk-Reward Ratio .............................................................. 22

Why Is Forex Risk Management Important? ............................................................. 24

How To Setup Your Charts............................................................................................ 27

Properties, Colors Tab............................................................................................... 27

Exponential Moving Average (10 EMA) ..................................................................... 28

Exceptions To The Rules.............................................................................................. 31

Sell/Short Trade Examples............................................................................................. 32

Sell/Short Example 1 ..................................................................................................... 32

Sell/Short Example 2 ..................................................................................................... 34

Sell/Short Example 3 ..................................................................................................... 35

Sell/Short Example 4 ..................................................................................................... 36

Sell/Short Example 5 ..................................................................................................... 37

Sell/Short Example 6 ..................................................................................................... 38

Buy/Long Trade Rules .................................................................................................... 39

Exceptions To The Rules.............................................................................................. 40

Buy/Long Trade Examples ............................................................................................. 41

Buy/Long Example 1...................................................................................................... 41

Buy/Long Example 2...................................................................................................... 43

Buy/Long Example 3...................................................................................................... 44

Buy/Long Example 4...................................................................................................... 45

Buy/Long Example 5...................................................................................................... 46

Advanced Example 1 ..................................................................................................... 48

Madam Lim’s Profile

How many years have you been trading?

Tell us a little bit about yourself.

Why did you want to become a trader?

I am 60 years old. I learned about trading Forex last year.

Do you have any favorite book/s on trading?

Do you have any favorite website/s on trading?

No, I seldom surf the internet.

What do you enjoy most about trading?

Do you routinely trade on a demo account?

What is your normal day to day trading strategy like?

My sons told me about the competition.

Why did you enter the Surefire Trading Challenge?

What was your strategy in the demo round?

How do you feel your trading went in the Demo round?

How did it feel to be trading live for two months?

I have been trading this since January of 2011.

How many trades do you expect to place each day/week/month (whichever is

I normally expect there to be, on average, 3-4 trade setups in a week.

Which kind of returns do you expect to make?

Which currency pair/s do you trade?

I only trade the EURUSD, GBPUSD and USDCHF.

Which timeframe/s in which you will be trading?

I only look at the 4 Hour charts.

Which session/s do you trade?

Describe your daily trading routine?

What hardware/software and/or other tools do you use?

Is the trading system you are using unique?

Does your system use any custom indicators?

No, I don’t use any custom indicators at all.

Which currency pairs do you trade with this system?

Are there exceptions to your trading system rules?