ROREX PROFIT MODEL TRADING MANUAL Pee aR oir RUT) the top traders i AUT eel RUC Cos than just about anyone out there. CON a Coe a CLE OE Camm OMI mT Um arts (-1 Cee Renu em etait} more profitable. CeCe UCR ECs help you to become a ro to do is have the do the work and learn Re ee igs BUMS deeliia tem Ce ine Ne | kind out there and no one is more Josh to teach it to you. This is yol UTES SYM UCes taco NVAC® KCL: 1eLed oe Email: support@forexprofitmodel.comwww.ForexProfitModel.com TABLE OF CONTENTS RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT .. Introduction ... Simple Moving Average... Moving Average Convergence Divergence (MACD). Bollinger Bands. Parabolic SAR (Stop & Reverse) Multi-Timeframes Buy Trade Rules Sell Trade Rules .... EXTRA TIPS... Money Management. Conclusiorwww.ForexProfitModel.com Introduction Hi, my name is Josh Schultz and | live in Michigan, USA. |'m happy to say that is exactly what I'm here for, for you. I'll be your mentor, your guide, and above all, your friend. I'm here for any questions you will have, any concerns or if you just need to blow off some steam. Trading can be frustrating, | know that first hand, but it can be VERY rewarding. In this manual, | want to lay down all the necessary concepts of trading the Forex Profit Model. You will find a lot of reinforcement in the videos I have recorded, so open your DVDs and watch the videos as you go along the topics | discuss in this manual. I'll be here for you every step of the way — every successful trade, every stinker, every question. This is what | love and I'm extremely excited to share it with you...so let's get started shall we? Simple Moving Average Our first order of business is to take a look at the different indicators we'll be using throughout the course and how they are applied to the system as a whole. The first one up is the Simple Moving Average, or SMA. The SMA shows the average price over a given period of time. They aren’t weighted at all, meaning they give equal consideration to all relevant bars or candies in a given period. It is simply determined by adding the last say, 10 periods and then dividing by ten to give an average price for the last ten bars. Traders will often take signals when price crosses above or below a moving average and will give them a bias to the market. They also look for price to return and then reject from the moving averages giving verification that the trend is still ntact. Price often moves away from and then returns to them. On the longer moving averages, like the 200 SMA, price tends to stay on one side or the other. There are four popular types of moving averages: 4. Simple 2. Exponential 3. Smoothed 4, Linear Weighted For our purposes we're only concerned with the Simple Moving Average but these other moving averages add different weights to the given data. As mentioned, the SMA has 4www.ForexProfitModel.com no weight added and gives all periods the same treatment. Moving averages help smooth out price and are great for trending markets. They don't predict price but give a clear understanding of where the general consensus of the market is. They are also used as potential places of support and resistance, making them great for targets in Counter trend trading and many traders will use a short term and longer term moving average and wait for crossovers to confirm a change in direction. This is classic trend trading. Il. Application & Settings Now we need to know how to put the moving averages on our charts. We're going to be sing two of them, the 10 period SMA and the 20 period SMA. 1. First click on the Market Watch Icon inside your MT4 Terminal. Be Market Watch Icon 2. Next, right click on a currency and then left click on Chart Window. symbol Bid Ask * Left Click on Chart Window AUDI ‘Bout. 50850 3. Once the new chart window appears, go to Insert > Indicators > Trend > Moving Averagewww.ForexProfitModel.com "> NRTTSL2 Mia Tae Alp (U5) Demo Account -(AUDUSO NAS] -# euRuso © comm © caPuso Left Click on Moving Average 4. Next, a pop up window will appear that looks like this: 5. Next, type in 10 for the period and then press the OK button on the bottom.www.ForexProfitModel.com 6. Then repeat the process and open up another moving average, only this time, make that a 20 period SMA. Just follow the previous steps again and this time, type in 20 for the period and then next to Style, select “LawnGreen” and press OK. Ill. How To Use The SMAs In The System The relative position of the 10 and 20 SMAs help indicate the direction of the market at any given period of time. This confirms the buy or sell signal from other indicators. What we're looking for in a buy situation is for price to close above the 10 SMA and the 20 SMA. In a sell situation we're looking for just the opposite, for price to close below both the 10 and 20 SMA. Buy Sell Signalwww.ForexProfitModel.com Moving Average Convergence Divergence (MACD) |. Definition/Description MACD stands for Moving Average Convergence/Divergence which basically means moving together (convergence) and moving apart (divergence). There is another definition of divergence, but that is a whole other manual altogether. This indicator is based on a short term exponential moving average, 12, a longer term exponential moving average, 26, and a simple moving average of the difference between the two, or signal line, 9 If you were to place a 12 EMA and a 26 EMA on the charts along with the MACD, each time the EMA’s would cross you would have a crossover of the MACD above or below its zero line, indicating the potential start or finish of a trend. The farther apart the 12 and 26 EMAs get, the stronger the trend — divergence. The closer they get together, the weaker the trend — convergence. This indicator was developed in the 1970's by Gerald Appel as a trending momentum indicator and moves above and below a zero line to indicate bias of the market. Above the zero line means the market is trending upwards. Below the zero line means the market is trending downwards. Now we don't see the moving averages in the MACD, instead they are represented by what's called a histogram. Other signals besides the zero line crossover include the signal line exiting the histogram. This will be the basis for our signals. Histogram Signal Line Zero Linewww.ForexProfitModel.com Il, Application & Settings We'll follow the same steps as before to load our MACD only this time we'll go to Oscillators. 1. Insert 2. Indicators 3. Oscillators 4. Left Click MACD et | Chats Took Wow Hep Left Click on MACDwww.ForexProfitModel.com 5, Next, a pop up window appears just like for the SMA. We're going to leave MACD on the default settings of Fast EMA — 12, Slow EMA — 26, and MACD SMA (single line) 9, applied to close, so your window should look just like the one below. 6. Now we're going to change the colors on the second tab ~ Colors. We're going to select Red for the Main (histogram). 10www.ForexProfitModel.com 7. Next, select the thickness setting just like this. ACD es Parameter Co" Levels | Veuatzaton Moin: Mil Red B Soe: Mi Be Number 2 Thickness 8. Next we're going to change the Signal Color to Blue and have that set on the second thickness setting as well, just like so. MACD ae 1www.ForexProfitModel.com 9. Next we'll pop over to the Levels tab and click the Add button and then press OK twice and that will add the MACD to your platform. Just Push the Add Button and Press OK Ill. How To Use The MACD In The System Now the relative position of the signal line, histogram and zero line all indicate the direction of the trend. We're going to be looking for signal line crossovers of the histogram as well as the histogram crossovers of the zero line. This will imply the direction the market is headed, either up or down. We get a buy signal if the histogram crosses above the signal line, and wé get a buy signal if the histogram crosses below the signal line. Sell Signal Buy Signal Buy Signalwww.ForexProfitModel.com Bollinger Bands |. Definition/Description Invented by John Bollinger in the 1980s the Bollinger Bands give us a visual representation of the market's volatility. The Bollinger Bands have three different parts: 1. Upper Band - 2 standard deviations above the Middle Band. 2. Lower Band — 2 standard deviations below the Middle Band. 3. Middle Band - 20 SMA. When the market is quiet, the Bollinger Bands contract, or squeeze together. When the market is active price pushes the bands outward, so they expand. When price is outside the bands, the market is showing strength. Also, when price makes bottoms outside the bands and then lower lows, but those lows remain inside the bands, there is a strong likelihood that price will reverse upwards. On the flip side, if price makes highs outside the bands then more highs, but those second highs are inside the bands, there is a strong likelihood that price will reverse downwards. Now, when price moves away from the upper band it has a tendency to go to the lower band and when price moves away from the lower band it has a tendency to move towards the upper band. This can provide opportunities for targets as well as dynamic support and resistance. The other great feature about the Bollinger Bands is that when price is at the upper band, it is considered overbought and when it's at the lower band, it is considered oversold. IL Application & Settings We're going to apply the Bollinger Bands in the same fashion we applied the other indicators: 1. Insert 2. Indicators 3. Trend 4. Left Click on Bollinger Bandswww.ForexProfitModel.com Ill. How To Use PSAR In The System We're going to use this for a few things: 4. Trend Direction — If PSAR is below price, you have an uptrend, and if PSAR is above price, it's a downtrend. 2. Entry Conditions ~ If PSAR is below price, you have a buy signal, and if PSAR is above price, it's a sell signal. This will be used in conjunction with our other indicators. 3. We can also use it as a basis for the stop loss level for trailing stops. Sell Signal Buy Signal Buy Signal Multi-Timeframes |. Definition/Description Timeframes indicate the time period of each candle or bar on the chart, which represents the time required to pass for a candle or bar to form and close before a new one is formed. We're going to be looking at two other time frames other than the one we are trading on. We're going to be looking up as well as looking down. Common time frames used together are M1 > M5 (1 Minute and 5 Minute) Ht > H4 (1 Hour and 4 Hour) M5 > M15 (5 Minute and 15 Minute) H4 > Daily ( 4 Hour and Daily) M15 > M30 (15 Minute and 30 Minute) Daily > Weekly M30 > H1 (30 Minute and 1 Hour) Weekly > Monthly We're looking for confirming signals on our indicators when we switch time frames.www.ForexProfitModel.com ‘Supposing you want to trade on the 4H chart, you look to the Daily chart and find that the signals are bullish. So, you'd want to be looking for good bullish signals on the 4H Also, you would go to the 1H chart and confirm the bullish signal there as well When trading on the 1H, you'd look to the 4H and if the signals are bearish then you'd want to be looking for bearish signals on the 1H. You'll also look down on the 30M to find the same bearish signals. If we were thinking of buying on the 15M chart as our primary trading time frame, we'd want to look to the 30M and the 5M chart to make sure we're getting bullish signals there as well. And, if we're thinking of selling and using the 15M chart, we'd want to make sure the signals on the 30M and 5M charts (one up and one down) are telling us the same thing. If they aren't...WAIT until they are. We want as much in our favour as possible. We'll be looking for at least 2 of our entry conditions to be met on each time frame, however the more the better! Il. How To Use Multiple Timeframes In The System We're mainly going to be using this approach to confirm the trade signals against the next higher and next lower time frame from the timeframe you are trading. We'll usually be looking at the M15 as the main timeframe, and checking the M5, M30/H1 for our confirmation of the signals. For example, once we've got a buy signal on the 15 minute time frame, flip to the 30 minute chart to see if at least two entry criteria are met there as well. If so, flip down to the 5 minute chart and look to see what kind of entry signals we have there. If we have at least two on either of these other time frames, then we are good to go!www.ForexProfitModel.com In the image above, you have the M5, M15 and M30 charts. The yellow vertical like indicates exactly the same time in the market. Notice how the charts look very similar? You can also trade on other timeframes depending on your trading style, however, it is best to use consecutive timeframes to make sure that you are entering on the right side of the market. The more confirmation we have the better. Buy Trade Rules |. Setup Criteria Now we are getting to the meat and potatoes of what this is all about - the Buy and Sell entry rules. By the way, if you've followed the direction on how to apply the indicators, your chart should look something like the one below. It's ok if it’s alittle different, we've included a couple of different quick start templates on DVD 4 along with instructions on how to set it up. So let's get to it! 1. Wait for PSAR to form below price. sul iil Tn Tt 18www.ForexProfitModel.com 2. Check that the MACD Histogram has crossed above the Signal Line. 2. Check that the LU Nereis Above the Signal = 3. Check that the Bollinger Bands are starting to widen. While this step is not ess if the condition is met you will usually find the signal to be stronger. Merges Ces Sere SSwww.ForexProfitModel.com 4, The 10 SMA and 20 SMA are starting to converge (move closer together) or the 10 SMA has already crossed above the 20 SMA. Peo a eur Tne er aed rm i ies gg Il. Taking The Trade When a candle has closed above the 10 and 20 SMAs, enter a buy trade. The10 SMA does not need to cross the 20 SMA at entry, but price must close above both SMAs. Pee CmC pick dats Pence! ee CLT 20www.ForexProfitModel.com Ill. Stop Loss 1. Seta stop loss under the most recent swing low up to a maximum of 25 pips deren ie Wom es ips i va 7 anne ae | 2. Move your stop loss to breakeven when price goes 10 pips in your favour. Optional — When price reaches 10 pips in profit, set a trailing stop of 15 points. eT il a int TT awww.ForexProfitModel.com IV. Take Profit Set your take profit at 7-15 pips when trading the 5 minute charts; 10-20 pips for the 15 minute chart; 30-50 pips for the 30 minute chart OR, exit the trade when a valid Sell signal appears. bea Peasy Bee cured ar I V. Further Confirmation You can check the signals on the next higher and next lower timeframes. When doing this at least two of the entry criteria need to be met on either the higher OR the lower timeframes. For example, if trading on the M15, check both the M30 and MS for confirmation, 2 entry criteria must be present on one of those timeframes, however the more that are, the stronger the confirmation! VI. Additional Notes The most reliable timeframes to trade are the 15 min and 30 minute. You can trade the 15 minute timeframe without confirmation on either the higher or lower timeframes. It's not suggested, but a signal on the 15 minute without confirmation is still quite reliable. 22www.ForexProfitModel.com Sell Trade Rules |. Setup Criteria 1. Wait for PSAR to form above price. 23www.ForexProfitModel.com 3. Check that the Bollinger Bands are starting to widen. While this step is not essential, if the condition is met you will usually find the signal to be stronger. mT a i 4. The 10 SMA and 20 SMA are starting to converge (move closer together) or the 10 ‘SMA has already crossed below the 20 SMA. rm a "A ee : 24www.ForexProfitModel.com ll. Taking The Trade When a candle has closed below the 10 and 20 SMAs, enter a sell trade. The 10 SMA does not need to cross the 20 SMA at entry, but price must close below both SMAs. i amma 0 Ill. Stop Loss 1. Seta stop loss over the most recent swing high up to a maximum of 25 pips. li ie eam | aewww.ForexProfitModel.com 2. Move your stop loss to breakeven when price goes 10 pips in your favour. Optional — When price reaches 10 pips in profit, set a trailing stop of 15 points. oer or Cesta IV. Take Profit Set your take profit at 7-15 pips when trading the 5 minute charts; 10-20 pips for the 15 minute chart; 30-50 pips for the 30 minute chart. OR, exit the trade when a valid Buy signal appears. Bae Pon iN Te ty ui ee 26www.ForexProfitModel.com V. Further Confirmation You can check the signals on the next higher and next lower timeframes. At least two of the entry criteria need to be met on either the higher OR the lower timeframes. For example, if trading on the M15, check both the M30 and M5 for confirmation, 2 entry criteria must be present on one of those timeframes, however the more that are, the stronger the confirmation! VI. Additional Notes The most reliable timeframes to trade are the 15 min and 30 minute. You can trade the 15 minute timeframe without confirmation on either the higher or lower timeframes. It's not suggested, but a signal on the 15 minute without confirmation is still quite reliable. EXTRA TIPS > Timeframes to trade - The M15 and M30 timeframes are the best timeframes to use, but depending on your preference and time available to trade, you can select from the combinations below: If you are looking to confirm the signals on your main timeframe, look at the next one or two timeframes to the right and to the left. Trading the M15 — check M5, M15, M30, H1 Trading the M5 — check M1, MS, M15, M30. > The more timeframes that have the same signal, the “safer” the trade. If the signal on the timeframe you are trading is not yet complete on the higher timeframe, it just means you either have an early signal or a retracement. In this case, be careful and make sure you protect your position with stop losses and breakeven as soon as you are in 10 pips profit. > You can check higher timeframes to see the bigger trend of the market, but itis not required. v ‘Stop loss and take profit levels may vary depending on the pair you are trading and the volatility at that given time. | personally prefer to set a take profit and stop loss of 20 pips when trading the 15 minute charts. One way of determining your stop loss and take profit levels, is to measure the number of pips from your entry price to the most recent swing low/high, middle or outer Bollinger Bands, or PSAR levels. 27www.ForexProfitModel.com > Here are general guidelines to setting the stop loss and take profit levels according to the time frame you are trading: Time Frame Stop Loss Take Profit M1 and MS 10 - 15 pips 5-10 pips M15 15-25 pips 10-20 pips M30 30 - 40 pips 25 - 30 pips Hi 40 - 50 pips 35 - 50 pips H4 60 - 80 pips 60 - 80 pips > Moving the stop loss a few pips above breakeven as soon price moves 10 pips in your favour allows you to protect your account from any losses. It is better to break even many times than to lose a trade even once. > To trail your stops, use 15 points. In some cases when the broker does not allow you to set 15 points, just use the minimum allowed trailing stop available. > Always exit the trade if a valid sell or buy trade signal appears depending on the direction of the current active order. This means you also have two consecutive timeframes that show that two or more of the indicators are in buy or sell mode. » Ifthe signal has expired or you are late to enter a trade, don't place a trade based on that signal. Wait for a retracement to the SMAs. > Before entering a trade, wait for the first candle to close or the PSAR may still reverse. Money Management You have one of two choices here. You can either trade to buy a house or trade to lose your house. If you have no money management plan, you're trading to lose your house... and possibly a whole lot more. If money management comes first, you're going to be looking at houses before you know it. Building wealth takes time. Sit down and think about where you want to be in 5 years and start building your account to get there. The following are important money management principles to take note of: 1. Risk only 2-5% risk per trade. 2. Always use a stop loss. 3. Determine your stop BEFORE you place your trade, The maximum stop loss on the M15 timeframe is 25 pips. If your trade requires a bigger stop than that, it's a high 28www.ForexProfitModel.com risk trade so no trade - money saved. The reason we say a “maximum” stop is because if we can get a smaller one, then we use it. The less risk, the better. The lot size we use should always be appropriate to the account size we have and the amount we are willing to risk. For example: If we have a $10,000 account and we only want to risk 2% per trade. The amount we are risking is $200. ($10,000 - 2% = $200) Divide the amount to risk by the stop loss and you get a lot size of $8 or 0.8 lots. ($200/25 pips max stop loss = $8 or 0.8 lots maximum in the MT4 terminal) If we have a $600 account, and we want to risk 2% per trade, we would use the same process to find our risk. $600 - 2% = $12 $12/ 25 pips (max stop loss) = $0.48 or a 0.04 lot size (40 cents) But, at 5% risk per trade, we would have this instead: $600 - 5% = $30 $30/25 pips (max stop loss) = $1.20 or a 0.12 lot size 29SLOREX PROFIT MODEL QUESTIONS? Email: support@forexprofitmodel.com Visit: ForexprofitModel.com Dem Trading Forex on margin carries a high level of risk COCs MUU RCCL R L ole CR soh Le purposes only and should not be Perlite sir eda tele BoM ele a colii a ele ol elated way connected with Forex. It is possible to sust Do not use money you cannot afford to lose. No rep being made that using a trading method or system co! Model course will ensure freedom of loss or generate pt The information provided in these videos, reports and ai format, are not intended for distribution to, or use by any perso! alae Rea ACR ems iene LR oli ens ere Ce em m UR lm creme COMUNE UC eens See emo meol tia Old Tree Publishing World Leader In Trading Education