Wavytunnelmodule22012 PDF

The Wavy Tunnel
Module 2
Trend Following Trades
Jody Samuels
Welcome to Module 2!
≈ Welcome to the Wavy Tunnel Trading Technique

Module 2!
≈ We hope you are psyched about learning this

incredible method.
≈ One of the best Fibonacci and Elliott Wave

based Trading Strategies!
≈ In Module 2 we will cover the Three Trend

Following Break Out Trades – BO-1, Jody Samuels,
Trader and Coach,
BO-2, and BO-3.
Fxtradersedge.com
© 2012 FX Trader’s EDGETM All Rights Reserved

Welcome to Module 2!
≈ Trend Following Trades – Spot the Setup

Module 2
≈ Identify Trade Entry
Learning Objects
≈ Set Stop Losses
≈ Determine Profit Taking Exit Strategy
≈ Examples

Quote
“One reason so few of us

achieve what we truly want is
that we never direct our
focus; we never concentrate
our power. Most people
dabble their way through life,
never deciding to master
anything in particular.”
Anthony Robbins

Introduction
Objectives
≈ Understand the background behind each Trend Following Break Out

Trade
≈ Learn how to trade each of the three methods:
≈ Spot the setup
≈ Trigger the entry
≈ Set the stop loss
≈ Take Profits
≈ Continue picturing yourself Riding the Waves and Cashing in on Profits
using the Wavy Tunnel for Success.

Overview of Wavy Tunnel Trades

Wavy Tunnel Trades – Trend Following
Break out Trade 1 (BO-1)
Traditional Trade Entry:
Wave crosses above or below Tunnel.
Conservative Entry Point:

12 and 34 EMA cross and completely clear the Tunnel.
Angle on the 34 EMA is greater than 45 degrees as it crosses the Tunnel.
Candles are forming outside the 12 EMA.

Early Entry Point:

12 EMA crosses and completely clears the Tunnel.
Angle on the 34 EMA is greater than 45 degrees as it approaches the Tunnel.
Candles are forming outside the 12 EMA.

Spot the Setup
Source: FXtrek IntelliChart™ Copyright 2001-2012 FXtrek.com, Inc.

Spot the Setup
Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

Spot the Setup

Spot the Setup

Wave sits above or below Tunnel and “Brushes or Hugs” the Tunnel.

“Wave” and “Tunnel” have joined on a horizontal plane.
34 EMA dramatically turns and leaves the Tunnel behind.
Candles start forming beyond 12 EMA.

Spot the Setup

Spot the Setup

Spot the Setup

Spot the Setup


Price Bounces Off the Wave or Tunnel in the same direction as the initial Break
Out Point which is the new trend.
“Wave” and “Tunnel” provide significant support or resistance for price.
Candles should be forming outside 12 EMA. Watch the angle of the 12 EMA.

Spot the Setup

Spot the Setup

Spot the Setup

Spot the Setup

Trigger the Entry

“Entry” is the same for all BO trades:
Wait for the candle to close above or below the 12 EMA once the Wave, Tunnel, and
12 EMA (Filter) all come together. Price will cross the Tunnel, the Filter and the Wave
first. The order of the “crossing” depends on the BO trade setting up.
BO-1 Rules:
BUY when the candle crosses the Tunnel and candle closes above the Filter. BUY at
candle close or STOP BUY above candle high. Opposite for SELL. (Ideally Filter crosses
the Tunnel at the same time.)
BO-2 Rules:
BUY when the candle crosses the Wave and is above the Filter, with the Filter at 45
degree angle. (Opposite for SELL.)
BO-3 Rules:
Early BUY or SELL when candle bounces off Tunnel with reversal candle stick pattern;
OR, BUY when candle crosses Wave and is above Filter. Filter angle is > 45 ˚.

Trigger the Entry
Stop BUY above this

candle or at candle
close

Trigger the Entry
Stop BUY above or at

candle close
Stop SELL
below or at
candle close

Trigger the Entry
Stop BUY above this

candle or at candle
close

Trigger the Entry
Stop SELL
below

Trigger the Entry
Stop BUY above

Stop BUY above
True Breakout Trade

Trigger the Entry
Stop BUY above

Trigger the Entry
Stop SELL Stop SELL Stop SELL

Stop SELL

Trigger the Entry
Stop BUY with confirm
Stop BUY off

tunnel

Trigger the Entry
Stop BUY

Set the Stop Loss
“Stop Loss” is the same for all BO trades:
Place stop beyond the 34 EMA furthest from your entry point.
Provides for a nice risk/reward ratio of usually 2:1.
Rationale:
“Wave” and “Tunnel” provide significant resistance for price. Once price closes below (in the
case of a BUY) or above (in the case of a SELL) the Wave or the Tunnel, it is highly likely the
position will move further against the trade.

Set the Stop Loss
Stop BUY above this

candle or at candle
close
Stop loss

Set the Stop Loss

Stop loss

candle close
Stop SELL
below or at
candle close
Stop loss

Set the Stop Loss
Stop BUY above this

candle or at candle
close
Stop loss

Set the Stop Loss
Stop loss
Stop SELL
below

Set the Stop Loss
Stop BUY above

Stop BUY above
Stop loss
Stop loss True Breakout Trade

Set the Stop Loss
Stop BUY above
Stop loss

39
Set the Stop Loss
Stop loss Stop loss

Stop loss Stop loss

Stop SELL

40
Set the Stop Loss
Stop BUY off

tunnel
Stop loss
Stop loss

41
Set the Stop Loss
Stop BUY
Stop loss
Stop loss

42
Determine Profit Taking Exit Strategy
“Profit Taking” (PT) Exit when:
Candle closes on the opposite side of the 12 EMA (Filter).
Candle closes through the Wave.
Candle closes through Filter with trend line break.
43
Take Profits

PT
Stop BUY above this

candle or at candle
close
Stop loss

44
Take Profits
Break out Trade 1 (BO-1) PT
Stop loss

candle close
PT
Stop SELL
below or at
candle close
Stop loss

45
Take Profits
Stop BUY above this

candle or at candle
PT
close
Stop loss

46
Take Profits
Stop loss
PT
Stop SELL
below

47
Take Profits
Stop BUY above

Stop BUY above PT
PT Stop loss
Stop loss True Breakout Trade

48
Take Profits
Stop BUY above
PT
Stop loss

49
Take Profits
Stop loss Stop loss

Stop loss Stop loss

PT PT Stop SELL
PT

50
Take Profits
Stop BUY off

tunnel PT
Stop loss
Stop loss

51
Take Profits
Stop BUY
PT
Stop loss
Stop loss

52
Take Profits
Break out Trade (BO)

53
General Comments
On the Break Out Trades, the steeper the slope of the Wave and the 12 EMA, the higher
probability the trade will be.
Look for the Wave and the 12-EMA to be in the 12-2 position in an uptrend and the 4-6
position in a downtrend.
When the trend is steep, use the 12 EMA Filter to exit positions. When the trend is not as
steep, move to the Wave.
Try to understand where the market is in the wave count. That will help tremendously.
54
General Comments
There are a few different profit taking exit strategies.
Observe the system over a period of time or back test to become comfortable with entry,
profit taking, and stop loss.
It is important not to give back all profits made.
It is also important to try to ride the wave as far as you can for profits.
In Module 4 we will learn more about Profit Taking, Risk Management and Money
Management.
55
General Comments
Wavy Tunnel trading is a system which has rules.
It is designed to be used by following the rules without emotion.
To help avoid emotional trading use entry orders on the 1-hour charts and don’t look at the
trade except to move your stop loss.
Only take trades on the Impulse waves. They represent about 30% of the market movement
and are the strongest and most consistent moves.
Within a corrective wave, the impulsive waves are the A and C waves.
56
Observations
When the wave and the tunnel come together on the 1-day chart then a big move is about
to happen. Look for a break.
When the wave and the tunnel are separating then the current wave is likely to be an
impulse wave.
When the wave and the tunnel are coming together then the current wave is likely to be a
corrective wave.
The closer the EMA 12 to the tunnel the more likely the break will be sustainable.
The Breakout trade is often confirmed by a trend line break.
57
TRADES SAMPLED FROM BREAK OUT

HOMEWORK ASSIGNMENT
(TRADING WORK!)
58
Break out Trade (BO) – Ian from England
59
60
61
62
63
64
65
66
67
68
69
Break out Trade (BO) – Rohan from LA
70
Break out Trade (BO) – George – BO-1
About a $13.00
move in 8 days
71
Break out Trade (BO) – George – BO - 2
About a $9.00 move in 2 days
72
Break out Trade (BO) – George – BO - 3
A Quick $2.00 move, a daytrade
73
Break out Trade (BO) – Len
74
75
76
77
78
79
80

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The Wavy Tunnel

≈ Welcome to the Wavy Tunnel Trading Technique

≈ We hope you are psyched about learning this

≈ One of the best Fibonacci and Elliott Wave

≈ In Module 2 we will cover the Three Trend

© 2012 FX Trader’s EDGETM All Rights Reserved

≈ Trend Following Trades – Spot the Setup

© 2012 FX Trader’s EDGETM All Rights Reserved

“One reason so few of us

© 2012 FX Trader’s EDGETM All Rights Reserved

≈ Understand the background behind each Trend Following Break Out

© 2012 FX Trader’s EDGETM All Rights Reserved

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 1 (BO-1)

Traditional Trade Entry:

Wave crosses above or below Tunnel.

Conservative Entry Point:

Angle on the 34 EMA is greater than 45 degrees as it crosses the Tunnel.

Candles are forming outside the 12 EMA.

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 1 (BO-1)

Traditional Trade Entry:

Wave crosses above or below Tunnel.

Early Entry Point:

Angle on the 34 EMA is greater than 45 degrees as it approaches the Tunnel.

Candles are forming outside the 12 EMA.

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 1 (BO-1)

Source: FXtrek IntelliChart™ Copyright 2001-2012 FXtrek.com, Inc.

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 1 (BO-1)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 1 (BO-1)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 1 (BO-1)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 2 (BO-2)

Traditional Trade Entry:

Conservative Entry Point:

34 EMA dramatically turns and leaves the Tunnel behind.

Candles start forming beyond 12 EMA.

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 2 (BO-2)

Source: FXtrek IntelliChart™ Copyright 2001-2012 FXtrek.com, Inc.

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 2 (BO-2)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 2 (BO-2)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 2 (BO-2)

Download motive wave charts for 14-day trial at: bit.ly/FXTEcharts

© 2012 FX Trader’s EDGETM All Rights Reserved

Break out Trade 3 (BO-3)

Traditional Trade Entry:

Wave crosses above or below Tunnel.

Conservative Entry Point:

“Wave” and “Tunnel” provide significant support or resistance for price.

© 2012 FX Trader’s EDGETM All Rights Reserved