KISS FOREX

How to Trade
Bollinger Bands
for big profits

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To my Man for being my Alter Ego.
 TABLE OF CONTENTS
Introduction
1. Bollinger Bands at a glance
2. Bill Williams’s Fractals
3. Bill Williams’s Alligator
4. The System
5. Valid Entry Signals
6. Confirming the Entry
7. Placing the STOP. Trailing the Stop.
8. Picking Time-Frames
9. Rock it !
10. Giving Back
Resources
Legal Disclaimer
Introduction

What is currently happening in my motherland, Greece,

in Cyprus and in other European Countries such as Portugal, Spain and Italy, shows how
important it is for the individuals to open their eyes to the new global landscape and
adapt to it as fast as possible. The collective consciousness will wake up only after the
individual expands beyond its limits.

War, victory and defeat start and end in our heads. We can choose to take our lives up
to new levels of accomplishments pulling our Nations out of any sort of crisis, if we
make our Individual Revolution.

Ancient Greeks paid tremendous attention to the individual not as an impersonal unit but
as the fundamental “measure” of the whole society’s status. They had expressed this
principle saying “Μέτρον πάντων άνθρωπος” (Man measure of all things.)
There are two schools of thinking among Forex Strategists and Markets Analysts. Those
who believe in the use of Technical Indicators and those who prefer “naked” Charts. To
my opinion, it is perfectly acceptable for a Trader to go with the “naked” Charts
approach as long as the financial results are rewarding, but I’m against statements such
as “Indicators are useless” or “Indicators are outdated”. Indicators are tools based on
Mathematical Formulas. We can’t blame Indicators for our inability to use them or
interpret their Signals. While I was a Dental Medicine Student at the University of
Athens, many of my colleagues, including myself, kept asking our Professors at the labs,
which was the best filling material to use with our patients. One material was more
resistant in time but its aesthetic results were not optimum, the other required
exceptional skills, the other was looking nice but wouldn’t last for many years. We
were totally confused. The reply that was given to us by one of our Professors will
always remain carved in my mind and applies to most systems, materials, methods etc.
He said :
“The best filling material you can use on your patient’s teeth is the one you
are most familiar with and feel extremely confident about using.”

This Book is dedicated to the presentation of a System consisted of three Technical

Indicators : Bollinger Bands, Fractals and Alligator. Your Trading results can be
excellent if you learn to use this System very well.

There are leading, lagging and coincident indicators in Trading.

“Coincident indicators occur at approximately the same time as the conditions they
signify. Rather than predicting future events, these types of indicators change at the same
time as the economy or stock market. Personal income is a coincidental indicator for the
economy: high personal income rates will coincide with a strong economy.”
INVESTOPEDIA

But this is a bilateral correlation which means works both ways. Once the individual’s
micro-economy expands and reaches new breakthroughs of success and
accomplishments, society advances and its macro-economy emerges and raises to
higher levels. It is almost impossible for Governments or Institutions like IMF
/EUROGROUP and others -no matter how competent technocrats their coordinating
teams are consisted of- to control and reverse the declining factors of indebted nations’
economies. They’re doomed to fail not because of their Systems’ Inefficiency but
because of the mere fact that they try to fight a beast with too many heads just like Greek
Mythology Hero Hercules did with Lernaia Hydra. For each head they cut off, new
heads grow and this turns to be a never-ending asymmetrical battle.

I am a big believer of Individual Revolution, the most silent and peaceful Revolution of
all, yet the most powerful. Being helplessly optimistic, I see Life as a Gift that holds the
great potential of self-discovery. One of the reasons why I love FOREX Trading so
much, is because it sets the field for an excellent exercise in Individual Expansion and
Appreciation. People need education, stimulation and guidance. The rest is up to them
to discover on their own. Once they improve their own financial “indices”, they’ll be
able to help their neighbors improve theirs because the whole society works as the
whole of interconnected parts. Eventually Nation’s economy will recover.

Not everybody can be a Professional Trader, neither should be. But everybody can
enter the Capital Markets practicing the art of Self-Development. With the token that
most essential things are excruciatingly simple, I am intrigued by the possibility that my
personal quest in the currencies trading ecosystem, can trigger the Self-Improvement
and Individual-Revolution Reflexes of other people. Being a humble student of the
Markets myself, I can’t claim any higher title than that of the Greek Girl who dares to
walk barefoot in the Capital Markets, charting the landmines of self-exploration.

I’m not scared in my trip because life without challenge is the life of a vegetable. I’m
perfectly sure I’ll manage to shine through, because I carry the Ancient Greek Spirit in
my genes and so do all people on earth. In the era of Internet, there shouldn’t be poverty
in the world. This is a paradox we must all do our best to eradicate. Familiarizing
ourselves with the Capital Markets, definitely makes for a brilliant starting point.

Kind Regards

Sofia Stavropoulou
 1. Bollinger Bands at a glance

John Bollinger, a long time technical analyst of the Markets, devised Bollinger Bands in
the 1980’s. Basically this valuable tool which has been among traders’ most popular
choices for years, consists of three Lines. It uses a 20 period SMA (Simple Moving
Average) as its Median Line and a Standard Deviation of 2 Above and below 20-SMA
as its upper and lower Lines.

So practically it creates a price-channel which “contains” price action, measuring

Market’s VOLATILITY. What is shows in a glance is how “vivid” the Market is at a
particular time. If price moves to extremes away from the Median Line, then Volatility
is high. If Market moves sideways at the Median Line’s level, then it is at an
Equilibrium or Stasis State practically “sleeping”.

Two phenomena run the core concept of Bollinger Bands and these are :

Volatility begets Stasis and Stasis begets Volatility. This means that always
after a trend Market slows down at its resting level of almost non-existed
Volatility and price moves SIDEWAYS on Bollinger Bands Median Line.
During the “sleeping phase” of Consolidation where Market’s Dynamic Energy
is accumulated as it happens in a coiled spring, Bollinger Bands contract
coming pretty much close to each other. This is a sign that a strong Breakout is
coming. As breakout happens, Volatility explodes shooting price to extremes,
while Upper and Lower Bands expand to contain it.
The three Lines, Upper, Median and Lower act as significant support or
resistance levels. Upper Band signals Overbought Levels inviting Sellers to
jump in while Lower Band signals Oversold Levels, inviting Buyers to jump in.
Median Line acts as a “Price-Magnet”. While price is pushed by High Volatility
to the Upper or Lower Bollinger Band, it runs along that Band for a while. As
 initial Trend’s Strength starts weakening, price begins to oscillate from one Band
across Median Line to the opposite Band. Depending on Market’s Biases, price
will either go : Strong Trend - Range Bound and/or
Consolidation Continuation of previous Strong Trend or Strong Trend -
Range Bound and/or Consolidation - Trend Reversal.

Q: What are we looking for when adding Bollinger Bands to our Chart?
A: We’re looking for ENTRY-SIGNALS on any of the three Lines. Upper or Lower
Band will give us a Reversal or Continuation Signal. Median Line may give us a
Continuation or Reversal Entry Signal.

Q: How do Bollinger Bands help us with our Trade’s Setup?

A: If we entered at any of the two Bands, we can place our initial Stop-Loss above it,
if it was the Upper BB and we entered Short, or below it if it was the Lower BB and we
entered Long. The Same happens with the Median Line. We’ll discuss about the
precise Stop-Loss placement and the Trailing-Stop criteria in the following chapters.

Q: Do Bollinger Bands tell us anything about Market’s short-term intentions?

A: YES, if we learn to read their angles and edges.

READING BOLLINGER BANDS EDGES

Figure 1 BB edges are turned outwards while 20-SMA slopes up. That means extreme Bullish Move on
Upper Band will last more.

When BB edges are turned outwards : In this case, Market’s volatility

increases and that means price starts moving away from its Equilibrium Level
represented by the 20-SMA (Median Line). Because of the increasing volatility,
Bollinger Bands expand to “contain” expected price action. Observing the BB
edges we get the valuable information that price will keep moving at extreme
levels on the upper Bollinger Band which is climbing upwards on an Uptrend or
the lower Bollinger Band which is slipping downwards on a Downtrend.
Median line – 20 SMA- will point to the direction of the trend. The piece of
information we should take away from this observation is that price has not ran
out of steam yet and will continue trending strongly for a while.
Figure 2 When BB edges are parallel to each other slopping upwards or downwards with 20-SMA parallel
too, it means Trend will Continue.

When BB lines are parallel angling upwards or downwards : In this case,

Market’s volatility has reached its extremes and is now stabilized while trend
holds strong. We notice that the BB which is to the direction of the trend is
almost parallel to the 20-SMA and to the opposite BB, with a distinct angle. The
closer to 90 degrees the angle, the stronger the trend.
Figure 3 BB and 20-SMA run horizontally and parallel to each other. The Calmness before the Storm.

When BB lines are parallel and horizontal : In this case, Market’s

volatility has decreased with price either ranging within a narrow zone or
moving sideways almost “attached” to the 20-SMA or oscillating at its close
proximity. This picture is the definition of BB CONTRACTION. Market has
entered a Consolidation Phase. Always a Consolidation Phase is followed by an
Explosive Breakout, but how long it will last and how explosive the breakout
will be can only be estimated on a per case basis.
Figure 4 When Bollinger Bands edges are turned inwards, this is a sign of decreased Volatility.

When BB lines edges are turned inwards: In this case, Market’s volatility
is decreasing and although 20-SMA may give us a sign of current Market’s
“mood” with its inclination, this is not necessarily a bias. Market may decide to
take a plunge before climbing higher, or perform a gradual dive. Imagine the
outer edges of the BB as accelerator or break pedals depending on the direction
they’re pushed. If they’re pushed outwards, trend goes wild, but if they’re pushed
inwards, price action slows down.

2. Bill Williams’s Fractals

Fractals is an Indicator designed by Bill Williams, which demonstrates every Swing

High or Swing Low that is formed in sets of 5 Candlesticks. What does it mean? A
Swing High is a Candlesticks Formation where price goes up and then falls down.
Since a Fractal is made of 5 Candlesticks, on a Swing High Fractal, we have three
successive Bullish Candlesticks (each closing at a higher price than the previous)
followed by two Bearish Candlesticks (each closing lower than the previous one).
Figure 5 Bearish Turning Point Fractal, representing the Swing High among 5 candles. Arrow shows up.

This type of FRACTAL can be called a “Bearish Turning Point of the Price” Fractal, an
“Upward Pointing” Fractal or any way it helps us understand that it’s about a SWING
HIGH.

It can also be called RESISTANCE Fractal because it highlights a price level where
Bulls failed to push price higher. Maybe it represents a point where Bears have placed
their orders, Bulls tend to take out their profits, or both. Its strength as a RESISTANCE
Point depends on two factors :

The time-frame : the higher the time-frame the more valid the resistance
The number of fractals present at this level during past price action : the
more resistance or support fractals accumulated at this level in the past, the
more valid this fractal becomes.
Figure 6 A Bullish Turning Point FRACTAL is the Swing Low among 5 Candlesticks. Arrow shows Down.

On a SWING LOW Fractal, we have three successive Bearish Candlesticks (each

closing at a lower price than the previous) followed by two Bullish Candlesticks (each
closing higher than the previous one).

This type of FRACTAL can be called a “Bullish Turning Point of the Price” Fractal, a
“Downward Pointing” Fractal or any way it helps us understand that it’s about a
SWING LOW.

It can also be called SUPPORT Fractal because it highlights a price level where Bears
failed to push price lower. Maybe it represents a point where Bulls have placed their
orders, Bears tend to take out their profits, or both. Its strength as a RESISTANCE
Point depends on two factors :

The time-frame : the higher the time-frame the more valid the resistance
The number of fractals present at this level during past price action : the
more resistance or support fractals accumulated at this level in the past, the
more valid this fractal becomes.
Without going deep into “chaos theories” or other approaches associated with Bill
Williams’ presentations of his Indicator, I will keep it simple the way I understand it and
has proven to bring me profits with my Trades.

So, I see FRACTALS as Support or Resistance levels. A Fractal Pointing Up tells me

that “price won’t go higher for now”. A Fractal Pointing Down tells me that “price
won’t go lower for now”.

Fractals are considered to be a Lagging Indicator, because when they are formed, price
is already two candlesticks ahead. But this is not necessarily a weak point. Or to
rephrase…we can turn this “weakness” into a “strength”.

Is this information enough for making trading decisions? No, it’s not enough on its own
because Fractals are being formed all the time. In the following chapters we’ll see
which are the Valid Fractals and how we evaluate their signals in conjunction with other
Indicators.

3. Bill Williams’s Alligator

Figure 7 ALLIGATOR : not just 3 SMA's

As Forex-Indicators.net tells us : “Alligator indicator consists of 3 Moving averages:
Alligator’s jaws (blue line) – 13-period Simple Moving Average built from
(High+Low)/2, moved into the future by 8 bars;
Alligator’s teeth (red line) - 8-period Simple Moving Average built from
(High+Low)/2, moved by 5 bars into the future;
Alligator’s lips (green line) - 5-period Simple Moving Average built from
(High+Low)/2, moved by 3 bars into the future.”
Pay special attention to a key-detail about ALLIGATOR that differentiates it from other
Moving Averages Combinations. It’s the leading characteristic of the Indicator. All
three SMA’s are fast and moved into the future so that their sensitive responses to
Price’s Moves give a visual “hint” about where the Market is heading and that creates a
very powerful criterion we’ll use in our System.

Figure 8 On an uptrend, Alligator runs upwards BELOW Price with its SMA's in Bullish Order

On Fig.4 watch how Alligator’s SMA’s are in proper Bullish order, BELOW Price.
Lips are just below price, teeth are just below lips and jaw is just below teeth, all
slopping upwards in a distance from each other.
Figure 9 On a Downtrend Alligator runs downward ABOVE Price with its SMA's in Bearish Order.

On Fig.5 watch how Alligator’s SMA’s are in proper Bearish order, ABOVE Price.
Lips are just above price, teeth are just above lips and jaw is just above teeth, all
slopping downwards in a distance from each other.

When there is no trend and Price moves sideways within a narrow range, in a
consolidation mode, Alligator “falls asleep” and its SMA’s are moving horizontally
intertwined. (see Fig.6)

Alligator practically shows us TWO THINGS:

Whether there is Trend

The Direction of the Trend

When a price reversal is taking place, Alligator gives us a relatively early Signal when
Lips become curvy to the direction of the new trend and so do slightly Teeth and Jaw.
Figure 10 Alligator runs horizontally in a Consolidating or ranging Market.

4. The System

Now that you got the picture of this System’s elements, let’s see how they’re combined
in order to give us Valid Signals and help us with Profitable Trade Setups.

I’ll use a sequence of Questions and Answers to present the System’s Concept before I
move on to the Criteria and the Case Studies.

Q: Which are the steps we have to take towards setting up a trade?

A: We need a Valid Entry Signal, a “secure” price point to place our Stop-Loss and a
set of criteria for our Exit.

Q: Which is the time-frame we trade at?

A: We first start looking at higher time-frames to get the feeling of Market’s Sentiment
and then narrow down to the smaller time-frames which we check one by one to spot
Trades that meet our criteria. The time-frame we’ll be trading at depends on our
account’s risk tolerance. What does it mean? If on a higher time-frame (i.e. Weekly),
we notice that placing our Stop-Loss at the point indicated by our System, we’ll be
risking more than 3% of our Account’s Equity, we go to the next smaller time-frame and
applying our System’s Criteria we seek for an Entry Point with a risk not bigger than 3%
of our Account’s Equity. The smaller the time-frame the higher our exposure though.
What does it mean? Lets assume that on the Daily Time-Frame I will have a Risk of
90pips when setting up my Trade and placing my Stop-Loss, while on the M15 Time-
frame the risk decreases to 10pips. Which STOP-LOSS is more vulnerable to sudden
Market’s fluctuations? The 90pips or the 10pips one? Of course the 10pips. That
means that although I have secured a decrease in my Risk, my position is not secured at
all. Sudden ups and downs in the Market, happen all the time, especially when BIG
FUNDS Orders get hit, without cancelling the main trend. The only side-effect is that
they kick out small players like you and me, hitting our STOPS at the blink of an eye.
My advice? Go for the golden middle road. If you can’t afford trading on the DAILY
Chart, pick the H4 Chart. You now know exactly why.

Q: What are we actually looking for on each time-frame’s Chart?

A: We look for STRONG Reversal or Trend Continuation Signals close to any of the
Three Bollinger Bands.

Q: What do Strong Reversal Signals look like?

A: At Strong Reversals, we have a Bullish Reversal Fractal formed at lower BB and
below Alligator’s Teeth, with Alligator’s Lips curved upwards, or a Bearish Reversal
Fractal at upper BB, above Alligator’s Teeth, with Alligator’s Lips curved
downwards. Sometimes price doesn’t have enough “fuel” to go all the way up to the
upper BB before it reverses, or down to the lower BB. So we get Strong Reversal
Signals right at the Median Line when either a Bullish Reversal Fractal forms below
Alligator’s Teeth or a Bearish Reversal Fractal forms above Alligator’s Teeth while
leading Alligator’s Lips are curved to the corresponding direction (upwards on bullish
reversal, downwards on bearish reversal) This is more valid in Consolidation Phases
where Bollinger Bands are in Contraction. Seek BB Contractions even if you have to
go a couple of time-frames down. Once you have noticed a strong Reversal Signal on a
bigger time-frame, try to locate your ideal entry from a lower time-frame where BB ‘s
are in Contraction, you have a valid Bullish/Bearish reversal Fractal on one of the two
Bands and Leading Alligator has started getting curved to the direction of the new trend
which is in accordance to the Higher Time-Frame Sentiment.
System’s Name Bollinger Bands + Fractals +Alligator Setups
What Trading Style/s is it Intraday , Swing Trading, Position Trading
Suitable for?
When to Use it? Applicable on all Market’s Conditions : Trending,
Ranging, Consolidating
How much Capital to Risk? Don’t risk more than 3-5% of your Trading Capital
which means that if your capital is for example
$1000, you shouldn’t risk more than $50 when
placing your Stop-Loss
What Leverage to Use? 1:4 is the ideal for ZERO Risk. Don’t exceed 1:10.
How Many Positions to Open? Open 1 Position. Add to your Position as Trade
Progresses profitably, always checking Higher
Time-Frames
What Time Frame? Preferably trade from H4 Time-Frame having got
Confirmations from Daily and Weekly
Tools to be Used? Bollinger Bands, Fractals, Alligator
Trade Setting Condition? A Fractal is formed on Upper or Lower BB and
BB’s edge is curved (turned inwards)
Entry Condition? For LONG Entry, Fractal must be below
Alligator’s Teeth and BB’s lower Band’s edge must
have turned inwards. For SHORT Entry, Fractal
must be above Alligator’s Teeth and BB’s upper
Band’s edge must have turned inwards.
Entry Confirmation? Leading Alligator must have turned towards the
direction of our trade : upwards if we enter Long,
downwards if we enter Short.
Where to place Stop? A few pips Above BB upper Band if we enter
Short, or a few pips Below BB lower Band if we
enter Long. We trail our Stop 20pips Above each
new Resistance Fractal (pointing up) if we have
entered Short, or Below each new Support Fractal
(pointing down) if we have entered Long.

Exit Confirmation? Price starts moving sideways touching Alligator’s

Lines, while Alligator starts running horizontally.
 This is the Conservative Exit Strategy. If you prefer
to be more aggressive, you can exit once you get a
Valid Reversal Signal.

Q: What do Strong Continuation Signals look like?

A: We look for STRONG Continuation Signals at BB Median Line (20-SMA) when
we have a Swing Low right at 20-SMA (Bullish Fractal) or a Swing High right at 20-
SMA (Bearish Fractal) with leading Alligator curving upwards or downwards. Strong
Continuation Signals we have right after BB Expansion when BB’s edges are both
turned outwards and leading Alligator is clearly angling towards trend. Strong
Continuation Signals we have right after volatility has reached its peak, when upper or
lower BB is strongly angling, with its edge parallel to 20-SMA , to the opposite Band
and to leading Alligator which has its three lines apart from each other running upwards
on an uptrend or downwards on a downtrend. Ignore Trend Continuation Signals
generated in Bollinger Bands Contraction Phase, below or above the Median Line,
unless the Fractal is CLEARLY below or above Alligator’s teeth and at the same time
leading Alligator has CLEARLY turned towards the continuation of the trend. It is
extremely risky to base your trading decisions on Signals around the Median Line inside
Contractions, because usually price moves sideways forming very small candlesticks,
Fractals neutralize each other and Alligator is horizontal and parallel to the 20-SMA or
intertwined in a horizontal mode. If you decide to enter from Median Line in a Bollinger
Bands Contraction, make sure that the Fractal is definitely above or below Alligator’s
Teeth and leading Alligator is NOT horizontal, but has already turned to the direction of
your entry. The only way to save yourself from Wrong Entries and Losses, is if you take
the trade from a relatively high time-frame, but still the best entry confirmation when
entering from the Median Line of a BB Contraction Zone, is the Market’s picture on
Higher Time-Frames.

5. Valid Entry Signals

See some examples of Valid Entry Signals on the following Charts.

Figure 11 USDJPY, M15 05/04/13 @15:18 GMT : Strong Uptrend after BB contraction
Figure 12 USDJPY, H1 Chart, 05/04/13 @15:29 GMT : Support/Resistance and Trailing-Stop Levels

Figure 13 USDJPY, Daily Chart, 05/04/13 @15:35 GMT : Watch the BB Angles
Figure 14 USDJPY, M1 Chart, 05/04/13 @15:51 GMT : Valid and Invalid Fractals

Figure 15 AUDUSD, H1 Chart, 05/04/13 @16:27 GMT : Valid Fractals Signaling Entries in conjunction
with BB.
Figure 16 AUDUSD, Daily Chart, 05/04/13 @16:31 GMT : Valid Entry Signals from Fractals on BB or
Median Line.

Figure 17 EURUSD, Daily Chart, 05/04/13 @17:28 GMT : Valid Entry Signals given by BB, Fractals &
Alligator

Figure 18 GBPUSD, H1 Chart, 05/04/13 @17:58 GMT : Valid BUY/SELL Signals given by
BB+Fractals+Alligator

We ENTER to the direction of the forming trend, just once a VALID Fractal has been
formed.

6. Confirming the Entry

Here are the ENTRY Confirmation Criteria and they must ALL be met before we enter :

Type of Fractal must agree with Market’s Sentiment which we have

confirmed from higher time-frames. We avoid taking trades against the main
trend. So we will take a Long Trade at a Valid Support Fractal or a Short Trade
at a Valid Resistance Fractal.
Fractal’s position related to Alligator. A Support Fractal (pointing down)
must be below Alligator’s Teeth, while a Resistance Fractal (pointing up) must
be above Alligator’s Teeth.
 Fractal’s position regarding Bollinger Bands. We only take trades where
valid Fractal is at Upper or Lower Bollinger Band. In some cases we may enter
when a valid Fractal Forms below or above 20-SMA.
Bollinger Bands’ edges must confirm our entry. If we enter Long, BB edges
must either be turned outwards while price climbs the upper Band, or lower BB
must be curved upwards while upper Band must be turned upwards in an angle.
If we enter Short, BB edges must either be turned outwards while price falls
down the lower Band, or upper BB must be curved downward while lower Band
must be turned downwards in an angle.
Leading Alligator must be clearly curved to the direction of our trade.

7. Placing the STOP. Trailing the Stop.

We place our initial STOP-LOSS just below -10 to 20pips- the Support Fractal if we
entered Long, or just above the Resistance Fractal if we entered Short. There is a
Barrier between our SL and price action and that is Bollinger Bands. Remember,
Bollinger Bands “contain” price action, therefore they create a channel within which all
price move takes place. Upper Bollinger Band represents Resistance and Lower
Bollinger Band represents Support. Ideally we enter Long at Support or Short at
Resistance.

In order to Trail our Stop once the trade starts unfolding to the desired direction, we
have the following options depending on our trading profile:

We trail our Stop-Loss above 20-SMA when we have entered Short, or

below 20-SMA if we have entered Long. Median Line -20 SMA- represents a
pivot level which price will cross on its way to the opposite band. This means
trend reversal if we entered the trade when price was strongly trending to one
direction.
We trail our Stop-Loss above each new valid Resistance Fractal if we have
entered Short, or below each new valid Support Fractal if we have entered
Long. This is my favorite SL Trailing Mode.
We trail our Stop-Loss a few pips above Alligator’s Teeth if we have entered
Short, or a few pips below Alligator’s Teeth if we have entered Long.
 8. Picking Time-Frames

“Picking” is not the right word, because ideally once we notice a Valid Fractal on the
Monthly Chart, we’d rather go for a trade of potentially thousands of pips. But we either
don’t have the style and patience of a Position Trader or we can’t take a risk of
hundreds of pips. What do I mean?

Look at the following Charts.

Figure 19 GBPUSD, Weekly Chart, 09/04/13 @11:31 GMT : Valid Bullish Reversal Fractal invites us to
enter LONG.

We see on the above Weekly Chart of GBPUSD, that we have all criteria met for a
LONG Entry. Let’s suppose that we just noticed this trade setup so we missed the exact
timing of entering just when the Fractal was formed, two candlesticks ago. If we enter
now @1.5298 , we should place our initial STOP-LOSS a few pips below Fractal
@1.4815 That makes a 483pips safety-pillow against Market’s fluctuations. If
483pips is less than 3% of our Account’s Equity, that’s OK. It means we’re into Position
Trading and approach the Market as investors rather than as Traders.
So we narrow down our focus to the smaller Time-Frame which is the Daily one.

Figure 20 GBPUSD, Daily Chart, 09/04/13 @11:56 GMT : If we had entered Long right upon Fractal's
formation (opening of Bearish Candle) we would have put our SL 334pips lower, just below Fractal

Again, 334pips is not a risk everybody can tolerate. So we have two alternatives. We
either wait for a new Support Fractal to be formed on Daily Chart, hoping for a shorter
ENTRY-SL distance, or we go to the smaller time-frame looking for a valid Long Entry
Signal.
Figure 21 GBPUSD, H4 Chart, 09/04/13 @12:07 GMT : We had a Valid Support Fractal formation here
and if we had entered at the open of the 3rd Candle after Fractal, we would have risked 32pips

On the H4 Chart of the pair, things look more “friendly” risk-wise. Because if we had
entered right after the formation of the Valid Fractal, at the open of the bearish candle
-3rd after the Fractal- placing our Stop-Loss a few pips below the Fractal, we would
risk 32pips. Although smaller time-frames mean higher “noise” in terms of Market’s
fluctuations, we have the reassuring hints of our System’s elements that odds are highly
to our favor rather than against us.
-Why do I say that?
-Because we have all signs that this is a relatively newborn uptrend. BB edges are
turned upwards in a parallel mode, 20-SMA is slopping upwards and leading Alligator
is curved upwards.

So we let the Market and our Money Management Principles “pick” the most suitable
Time-Frame for our Trade.

9. Rock it !
I believe in backtesting’s value but only on a theoretical basis. Every System should be
evaluated under REAL-TIME Trading Conditions. So instead of showing you past
“potential golden trades” of hundreds of pips in profits, I’d rather guide you through my
way of picking my Trades. Copy my method and make it better so it suits your personal
trading style and Account’s Equity.

Below I’ll show you Charts of lucrative Trade Setups using the Bollinger
Bands+Fractals+Alligator System presented in this book. Don’t let any kind of noise
shift you apart from the System’s Principles. Just because a friend in a FORUM, hasn’t
been successful with Bollinger Bands, it doesn’t mean Bollinger Bands are useless or
you should take his opinion seriously. Let Mathematics work for you, but be respectful
to their rules.

EUR/USD : 9TH OF April 2013.

Figure 22 EURUSD, Monthly Chart, 09/04/13 @12:54 GMT : A Valid Resistance Fractal signals Short
Entry. BB edges turned inwards show decreased volatility telling us that pair enters a Consolidation
Phase.
Figure 23 EURUSD, Weekly Chart, 09/04/13 @13:07 GMT: We missed a great SHORT Trade Setup
signaled by a valid Resistance Fractal. We'll wait for the next.

On the EURUSD Weekly Chart above you may ask me :

-Why should we ignore the Bullish Reversal Fractal if it forms, since we’re going to
have a profitable ride even if it lasts a couple of weeks?
My point is that :
-I wouldn’t dare taking a Long Trade on the Weekly Chart with BB turned downwards
and a clearly Bearish Alligator. But I wouldn’t reject the idea if I had all stars aligned
to my favor on the Daily Chart as you’ll see below. The Daily time-frame makes
counter-trend trading worthy if all our System’s Criteria are met.
Figure 24 EURUSD, Daily Chart, 09/04/13 @13:32 GMT : Although main trend is Bearish, we can jump on
a nice Corrective Bullish Move here since we had a strong Support Fractal, BB's and Alligator being
Bullish.

Figure 25 EURUSD, H4 Chart, 09/04/13 @13:57 GMT : Will wait for a valid Support Fractal to form
before I enter Long.
Figure 26 EURUSD, H1 Chart, 09/04/13 @14:03 GMT : A nice Long Trade Setup was signaled a few hours
ago.

Figure 27 EURUSD, M15 Chart, 09/04/13 @14:09 GMT : We had a valid Support Fractal a few candles
ago, signaling a Long Entry.
USD/JPY : 9TH OF April 2013.
Figure 28 USDJPY, Monthly Chart, 09/04/13 @14:20 GMT : We missed an excellent Long Entry signal 5
months ago so we'll enter long through a smaller time-frame.

Figure 29 USDJPY, Weekly Chart, 09/04/13 @14:28 GMT: waiting for the next Entry Signal
Figure 30 USDJPY, Daily Chart, 09/04/13 @14:38 GMT : we missed a great Long Entry Signal so we'll
wait for the next or go to smaller time-frame

Figure 31 USDJPY, H4 Chart, 09/04/13 @14:44 GMT : The last Support Fractal does NOT give me a Valid
Long Entry Signal.
Figure 32 USDJPY, H1 Chart, 09/04/13 @14:51 GMT : last valid Signal was Bearish, so I'll wait for the
Bearish Corrective Move to finish before I enter Long.
AUD/USD : 9TH OF April 2013.

Figure 33 AUDUSD, Monthly Chart, 09/04/13 @14:59 GMT : We stay flat waiting for a Bullish Reversal
Fractal to form or enter Long in a smaller time-frame
Figure 34 AUDUSD, Weekly Chart, 09/04/13 @15:04 GMT: Missed the last valid Long Entry Signal. Will
wait for the next.

Figure 35 AUDUSD, Daily Chart, 09/04/13 @15:09 GMT : Today we had a valid Long Entry Signal from
the System.
Figure 36 AUDUSD, H4 Chart, 09/04/13 @15:13 GMT : we got a vaid Long Entry Signal yesterday.

Figure 37 AUDUSD, H1 Chart, 09/04/13 @15:20 GMT : We had a valid Long Entry Signal a few hours ago.
Figure 38 AUDUSD, M15 Chart, 09/04/13 @15:24 GMT : waiting for a valid Long Entry Signal.

USD/CAD : 9TH OF April 2013.

Figure 39 USDCAD, Monthly Chart, 09/04/13 @15:34 GMT : We had a valid Long Entry Signal a month
ago.
Figure 40 USDCAD, Weekly Chart, 09/04/13 @15:40 GMT : waiting for the next Signal.

Figure 41 USDCAD, Daily Chart, 09/04/13 @15:51 GMT : Short Entry Signal but I'll wait for the next.
Figure 42 USDCAD, H4 Chart, 09/04/13 @15:57 GMT : Short Entry Signal.

Figure 43 USDCAD, H1 Chart, 09/04/13 @15:57 GMT : Long Entry Signal but I’m reluctant to enter due
to pair's volatility. I would check smaller time frame before I enter LONG.
Figure 44 USDCAD, M15 Chart, 09/04/13 @16:08 GMT : I got a Valid Long Entry Signal so I entered
LONG.

10. Giving Back

Maybe you didn’t expect this kind of advice on a Forex Trading book, but since
BOLLINGER BANDS+Fractals+Alligator System is based on a holistic perception of
the Market, I believe we should look at FOREX Trading through a holistic perception
about Life.
You belong to a privileged minority of people who have access to cutting edge
technology and advanced knowledge. That’s a blessing. Most people live their whole
lives deprived from basic human rights, in poverty and constant struggle for survival.
Always keep in mind that money is like electrons. For the current to be on, electrons
must be in constant flow. Once you get into the Markets’ rhythms –and BOLLINGER
BANDS+Fractals+Alligator System is a great tool for that purpose- you must realize
that part of your profits must go to other people, adding value to their lives. Sustaining
the electrons flow, you are guaranteed to enjoy affluence.
Money is a useful tool that can make people’s lives better. Becoming a successful
Trader, you’ll break the code of making more money easier than most people. That’s a
gift that has been given to you requiring your ethical commitment to use money in a
meaningful manner. Try to offer at least 10% of your FOREX Trading profits to the
community. Wealthy is not the one who possesses but the one who gives. Be a truly
wealthy person bringing smiles to people’s faces and sweet warm feelings in their
hearts.
Our time on earth is extremely brief. Let’s make it worthy.

Thank You!
Thank you for going through this book and I hope it has been a revealing and interesting
read for you. Most of all I hope it caused a stir in your thinking and will effectively
guide you through the fascinating world of Forex Trading using an amazing System that
gives you strong and reliable Signals to base your Trading Decisions upon, for big and
consistent profits.

If you found it useful, please leave your REVIEW on book’s page on AMAZON :
http://www.amazon.com/dp/B00CA5P4SQ so that more people benefit from it.
I apologize for my not so perfect English, Greek being my mother-language.

If you want the Book in PDF Format so you can Print it out, you can Download it from
here : http://payhip.com/b/3hGr

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Out of every 100 Forex Traders, 90 lose money and soon are out of the Markets, 7
struggle for their survival in the Market’s environment and only 3 are true winners.
Apart from proper education, having a “Mentor” in FOREX Trading is an essential
element that can elevate you to this exceptional 3%. I can be your Coach and Mentor.
Sign-Up for ForexID Academy WEBINARS at : http://forexid.com/forex-webinars/

Happy pips!

Sofia Stavropoulou
RESOURCES
Books I found valuable
Emotional Intelligence – Daniel Goleman
Forex Patterns and Probabilities – Ed Ponsi
The Little Book of Currency Trading – Kathy Lien
Chart Your Way to Profits – Tim Knight
Getting Started in Forex Trading Strategies – Michael Duane Archer
Way of the Turtle – Curtis M. Faith
Trade Your Way to Financial Freedom - Van K. Tharp
The Complete Turtle Trader - Michael W. Covel

Sites I love visiting

http://www.bollingerbands.com/
BabyPips.com
ForexFactory.com
http://www.profiforex.com/pages/Learning/bill03
http://forex-indicators.net/bill-williams/alligator-indicator
http://stockcharts.com/school/doku.php?
id=chart_school:technical_indicators:bollinger_bands
Bloomberg.com/news/currencies/
Bloomberg.com/markets/currencies/
http://investopedia.com
My Forex Sites
Forexid.com : Forex Training Site. Here you can signup for the Newsletter, join
ForexID Academy and join our Group of Friends in SKYPE Room at a tiny Monthly
Membership Fee.
FXholic.com : Forex e-Magazine. Soon to be released on iPAD
NEWSSTAND. Here you can join the Community, and the big FXHOLIC Contest.
Forexid.tumblr.com : Tumblr Blog on FOREX

FOREX YouTube Chanel : http://youtube.com/user/forexid

Profile Page : about.me/ssofia

Personal Blog : SSofia.com

Follow me on Twitter : @ssofia , @forexid, @fxholic

Follow me on INSTAGRAM : @fxholic

SKYPE ID : dianysma
LEGAL DISCLAIMER

Trading foreign exchange and other on-exchange and over-the-counter products carries a
high level of risk and may not be suitable for all investors. The high degree of leverage
associated with such trading can result in losses, as well as gains. The past
performance of any trading strategy or methodology is not indicative of future results,
which can vary due to market volatility; it should not be interpreted as a forecast of
future performance. You should carefully consider whether such trading is suitable for
you in light of your financial condition, level of experience and appetite for risk, and
seek advice from an independent financial adviser, if you have any doubts.