Forward test the rules.

PRACTICE IS THE KEY to success

18th September 2014, 02:23 PM

Testing is to trading what meditation is to your soul

To be a master of your craft, to be legendary, to be the best there ever was in your field, to live a life
that inspires everyone around you, you've got to be willing to suffer a LOT. Suffering for your dreams,
for your goals, for your craft, for your values.

There are no short-cuts to success and becoming a profitable trader. It's a daunting task, you will suffer
a lot. There is no magic potion you can drink that will allow you to understand the supply and demand
set of rules, we don't live in Harry Potter's world, this is real life. Practice is the mother of all sciences.

Trading the markets is not a 100 meters hurdles race with hurdles every 10 meters, but a marathon race
with hurdles every 100 meters.

You may be wondering: why should I be forward testing the methodology if somebody else has already
done it for me? I don't want to do that work, it's already done for me and I want to take advantage of
it. WRONG QUESTION!

Luck does not exist, our lives are the result of all the decisions we take (correct and incorrect ones).

No matter how smart you think you are, your mind needs to create neuron connections, patterns and
habits. Patterns can only be created through repetition. Habits will help you remove the fear of pulling
the trigger. Only then fear and stress may be removed from the equation.

• How long will it take me to live test the rules from September to December in the live
markets? 4 months, you don't have a time machine to fast forward time, you need to wait and
be patient. The problem is that you will want to trade, you will not be happy by spending a
couple of hours a day or more and getting no triggers

• How many months can be tested in Forex Tester with just 2 hours of practice? About 4 months

• 4 months versus 2 hours? Wait wait! How can that be possible? This is the power of testing

We need an edge! No matter how good our strategy is or how much money we have on our live
account, we need an edge and a carefree state of mind in order to have consistent results. Forward
testing your strategy will give you that edge, it will give you the belief in the system and will create the
habits that will help you become a successful trader.
Heavy dedication and forward testing simulation is virtually identical to real trading. The brain simply
doesn't know the difference between what is real and what is not, our brains need to be fed with
information, it doesn't care where it comes from, it just needs food.

Don't give up, as you go to your edges, your edges expand

BENEFITS OF BACKTESTING

If you want to have the results only 5% of traders have, you must be willing to do and think LIKE only
5% do and think

MASTERY AND WORLD-CLASS IS SO MUCH MORE ABOUT

PRACTICE, DISCIPLINE, DEVOTION,
DEDICATION, GRIT AND RELENTLESSNESS

SMALL DAILY IMPROVEMENTS OVER TIME LEAD TO

CONSISTENTLY PROFITABLE RESULTS

Backtesting is the process of applying a trading strategy or analytical method to historical data to see
how accurately the strategy or method would have predicted actual results.

Before we start, what tools should we be using for testing? I am sure there are a few but Forex
Tester www.forextester.com is great because it allows us to choose the instrument and time we want to
back test from, without seeing what's going to happen next, so we can pretend we are trading without
any advanced warning of what is going to happen. This is very powerful and flexible because we can
move through many days, weeks, years at the touch of a button without have to wait for the live
situation to evolve.

A demo account, such as one with a broker e.g. GKFX, Oanda, etc, allows us to scroll back in time (as far
as the data will allow) or travel forward in time along with the live market. I find it most helpful to use
this for forward testing so that I can test out a strategy in a real life situation (e.g. you can watch the
candles evolve in real time, see the impact of news events etc.) without knowing what's going to happen
next and without trading real money. It would be helpful to become consistently profitable on a demo
account before venturing to a live account. If you look around on the site you will see a 3:1 challenge or
similar name which focuses on a sensible suggested route to take in your development.

There is one thing that will slow down your progress and that is the mindset "I have to have this
mastered in 1 year, 2 years, 3 years". If you put a timeframe on this you will rush, skip ahead and not
learn each element properly. Then you will have to go back to it and relearn because you rushed it the
first time. If you want to get there quicker you must go slow.

As traders, we need to practice a lot in order to train our eyes to spot different patterns and scenarios.
Do you ever think of learning to speak a second language by just reading the dictionary and a grammar
book? You won't learn to speak a language unless you immerse yourself in the culture and people who
speak that language. You need to listen to many individuals talking before you yourself start to think and
talk like them. By doing so, you will hear different pronunciations and nuances of the language you are
trying to learn. Testing and trading are like this. Skipping this process will just create a lot of problems
and add a few years to your learning curve.

The fact that I'm encouraging you to use Forex Tester testing software does not mean that testing this
software can be used only to practice how to trade Forex supply and demand imbalances. There are
many platforms that allow you to test all kinds of different scenarios, Trade Station, eSignal and MT4 are
just other examples.

Supply and demand rules can be applied to any market and instrument: Forex, Futures, CFDs, Indexes,
Commodities, Equities and Stocks. Supply and demand is the force that governs the markets and our
lives.

The law of conservation of energy states that Energy can be neither created nor destroyed,
but can change form

There is a law I would call "The law of conservation of your capital", it states that Money goes from the
hands of those who don't know what they are doing to the hands of those who know what they are
doing (professionals).

Some of the benefits of testing:

We get what we focus on. Winners win because they focus on winning. This is what the law of attraction
also says.

Our brain is not able to differentiate between actual experience and a strong input through imagination.
If we are able to generate strong sensory visions of success, it produces a strong passion to focus on
what is desired to achieve it....that's to follow the rules, the trade plan, a disciplined routine with proper
protocol.

• Gaining new insights and aha moments. Each time you complete a testing sessions you will gain
fresh insights, you will say to yourself "Can you believe people trade without having tested their
strategy? Crazy!"

• Gaining an edge and proving to yourself that the edge works over time and under any market
scenario

• Stamping out your ego. You will learn a lot about mood control and controlling your ego (ego = I
can do this supply and demand stuff "my way"). Trade as much as you can as long as you don't
become anxious. One of the keys is fostering a calm, relaxed rhythm while drawing zones and
trend lines, and assessing trend, control and SD Range. Later you can expand that to setting up
simulated trades. It feels so clumsy at first but gets easier the more you progress. You are
training a subconscious part of your mind - like learning to drive, mastering a sport or playing
guitar.
 • Speed up your learning process by fast forwarding time, scenarios will be presented to you
without having to wait for weeks or months.

• Gaining confidence in the set of rules

• Helps to remove emotions and fear when we switch to live trading mode because we will
know we have an edge and the odds are with us

• We want to know if the strategy works before we trade live

Like everything in life, there is a trick to it when it comes to bringing your experiences and lessons
gathered in testing to your actual trading. Those that have tested the rules have experienced that by
themselves. We have also heard this phrase from the traders we're in touch with: "I can make money
with my strategy when I test, but then I lose money when I try to do it live."

Testing your strategy will help you build new neural pathways to cement confidence in the system inside
and out. With proper confidence, when the trade setups appear in live scenarios, pulling the trigger
becomes a natural and emotionless thing to do.

A word of advice on tricky scenarios...

Let me share what I've learned through the years. Complex and tricky scenarios? I ignore them, I don't
test them, I don't waste my precious time on them, why should I? I don't need to understand every bit
of price action and what is going on on every single candle, I just ignore that and focus on what is clear
and obvious, tricky scenarios are just the opposite. I decided to focus and test only scenarios that have
high probability, time is the only thing we can't buy with our money, I just don't waste it. I believe the
elder we get the closer we get to this realisation.

HOW TO MAKE THE TRANSITION FROM TESTING TO LIVE TRADING

There is a complex transition when we decide to go from reading the lessons to forward testing. Then an
even bigger transition going from forward testing to demo trading. Now imagine going from demo
trading to live trading. The leaps are profound and a vital learning experience for every trader. Each
phase has its own challenges, and the mental/motivational challenges are the hardest. These are the
'frustration' barriers one has to keep pushing through, over and over again, until a break through occurs,
and the new understandings snap into place and become natural reactions. It only happens with
forward testing practice and hours upon hours of screen time.

Your forward testing will show slow but steady improvement, but overall your results should show
better consistency with time. You will be quite amazed at how supply and demand works! This will keep
you motivated if you are doing the things the way you have to.

You will encounter a whole new set of obstacles that you need to get out of the way, which takes time.
After you make hundreds of trades trading will become a boring routine, at that point you will probably
get close to your testing results. Learning the rules is the easy part that does not need to take more than
a year, but the emotional and psychological component takes much longer. You basically need to change
you nature completely. Reprogram your mindset.

Markets go against the innate instincts and everything you have ever learnt in "normal" life. That is why
only a small percentage of people can make it. That is why the retail traders are called "the herd".
Because they follow what they think/feel is good for them. But it does not work in this special
environment.

Some people are lucky to have a good mindset right from the start, maybe because they were raised in a
proper environment, maybe for other reasons, you don't need to know why really. But most of us are
bearing some burdens from the past (seemingly long forgotten) that will become apparent when we
step into the markets with our own money. All those fragments from the past are still with us and we
need to deal with them.

People always ask me for advice, guidance or some secret pill that will make you profitable. There is no
trick, there is no one thing I can say to you that will change your entire trading game and make you a
millionaire over night. Your choices are that you can give up or keep going and eventually make a little
bit of cash from your trading, and then more and more.

"On the left, there is a history. On the right, there is a mystery".

1. Be a scientist, don't cheat

• It can be challenging to use the tester software and plan a trade without wanting to look
ahead first to see what has happened. I know this because I did it in the beginning,
believe me but it's true

• You can't cheat when you trade live, so you have to develop the discipline to prevent
you from doing exactly that when you test

• If you fast forward to see what happened before placing a trade, the only person you're
cheating is yourself

• Look at testing as scientists do, do not care about the outcome of any one experiment.
They're just looking to see what happens, without bias, without emotion

2. Testing should be part of your daily/weekly routine

• It's funny but when we start testing we think that a few days or a couple of weeks is just
enough. When we see that we are getting more or less the entries that we want, we'll
rapidly switch to live trading and try to obtain the same results. It doesn't work like that

• Don't stop testing after a few days or weeks. Testing should be part of your weekly
routine. Will you stop eating tomorrow or after tomorrow because you had a feast
today? No, you won't, you need food as much as your trading needs testing

3. Don't get excited when a trade is successful and don't get upset when it fails. You're just
gathering data and statistics while you test so there's no point cheating to balance the results
one way or the other
4. Use a honest position sizing. Win/Loss Ratio and Risk/Reward is what matters

• If you just want to test how the set of rules work and how all pieces of he puzzle are put
together, you don't really need to use the exact position size (lot or contract) for every
single trade that you take while testing, that would slow the process down

• The tendency is to use the same position size for all the trades you take on the tester,
because it's easy and fast and because it's too tempting to get lazy about taking the
extra time to use a lot or contract size calculator to determine your exact position size
every time

• Win/Loss Ratio and Risk/Reward is what matters. You want to test how good you are at
spotting your entries and exiting them when you have to close them, that is all

• If you want to test how equity changes with real money management in play don't used
1 standard lot for each trade because that could represent about 5% or more of your
account per trade. Your testing account can go into serious drawdown and the results
won't be real

• If your testing is sloppy and is based on mistakes, you're just going to get garbage as
your results

5. Is your strategy really the same?

• If you are fuzzy about what your personal trading rules really are then there will
certainly be a big difference between your testing and your live trading. Take time to
write out your Trading Plan and then read it through before each testing session you do
and before each live trading session. Use a check list, ask the right questions. Watch for
specific areas you might be missing when you test and trade

6. Start thinking that your live trading is a video game. It puts you in a state of mind that helps
remove emotion from trading. If you can't think of a trade as a video game... if you break out
into sweating with each trade you take... you are simply using a very high risk profile. If you can
take a trade without breaking out into a sweat as you contemplate losing that amount of money
on that particular trade then you're using the correct risk profile for you

7. "All or nothing” attitude: If you can’t back test at least 1 hour a day and 3 times a week, don’t
back test.

8. Re-program yourself, create a life of balance in all areas. Your entire way of being needs to
change. You have to do lot of work on yourself, including creating a life of balance in all areas
before you are able to back test consistently, keeping a schedule, back testing at the same time
every day. This all may sound easy to accomplish for some, but you'll have to start to re-program
your attitude about work, life and about yourself, attitudes that you will have probably had your
entire life as long as you can remember. You have to project yourself as a successful consistent
trader. If you want that future self you have to grow and growth requires expansion. It may be
uncomfortable for a while and you may slip up but you will be learning that being a trader is far
more than just following a set of rules. Your entire way of being needs to change. These
inspiring words were posted by April (one of our members) on her testing journal, thanks April.
9. Match emotional states

• Are you patient when you test? Virtual time goes by very quickly, you press the forward
icon and 1 day or 1 week has passed. That does not happen in live trading, 24 x hourly
candlesticks are needed for a daily candle to close, 1 full day, not 1 second. You will be
impatient with how slowly the live market unfolds in real time and end up making rash
decisions because you can't handle the timing differences. If that's happening for you,
the first step is to acknowledge it, then you need to come up with methods to work with
your impatience.
For instance:

• Multi task with a different activity - it doesn't even have to be related to trading.
The more fun, the better. While you wait for a good trade setup, do a crossword
puzzles or sudoku or do some work for a volunteer, offer you support. This is
valid only if you are doing tick testing and not candle close testing as we
normally do

• Practice outdoor activities, get involved in any outdoor activity that keeps you
away from your trading platform

• Meditate. Half hour a day - great for managing emotions

• Use Forex Tester or similar to practice your trading while you wait for real trade
setups to form

• Notice I don't include chat rooms, Skyping, testing or reading on forums. You
will see your trading improve dramatically when you stop participating in chat
rooms and stop listening to other peoples chats. The community is a great place
to get advice and new trade setups but take them only if those setups make
sense to you and if they follow your trading plan, don't let others trade for you

10. You will feel overwhelmed but the amount of rules and work you need to do, will make you
think of giving up. Take you time to spot your trading zones. You will start getting really good
results back testing if you keep on working day after day, the thing that will help you loads will
be to just slow down and observe, once you have observed everything click for another candle,
go at a snails pace! If you have 1 or 2 hours set aside for your testing each day it really doesn't
matter if you take a trade and make money on your back testing account. Analyse candle by
candle as and it really does become a lot clearer at this pace.

11. Live trading is a different beast. Your testing sessions may be going great, you can do great top
down analysis of any instrument really well but live trading is a different animal. You need to
tame the beast. The live market is very different, you don't just trade one instrument but MANY
at the same time, that is a big psychological weight that can't be measured while testing
because you can only test one single instrument at a time so losses won't affect you that much
while testing. It's common to have a win/loss ratios of 60-75% while testing but when you start
to trade live that % goes as low as 40-50%, that's just how it is, psychology is very important
 12. There is no such thing as "the last piece of the puzzle". Too often you may have heard about
"the last piece of the puzzle" and other stuff that prevented people from becoming profitable.
People feel so close but they just cant make it. So they try to find that piece of the puzzle to
make them complete. There is no last piece. It is a trap that makes people insane. Like a dog
chasing his tail. Chasing a new indicator, new rule or a new pattern. If there is anything that can
be called the last piece, it is in our heads

13. Just like in forward testing, planning our trades and having them scrutinised is how you
learn. Only the live markets will have your emotions more involved and therefore manipulate
your judgement. I believe it's important to have your live trading set-ups analyzed by the
community so that you can tweak your brain and it's ability to analyse the charts to make you a
profitable trader until you have mastered your ability. Ask your ego to stop talking and let your
inhibitions take a back seat, get your studying of the rules right and lets start posting more trade
set-ups!

START YOUR TESTING ROUTINE

CUT YOUR EXCUSES IN HALF

AND DOUBLE YOUR ACTION

YOUR EXCUSES ARE NOTHING MORE THAN YOUR FEARS

COMING TO GET YOU

Testing the rules you trade by yourself can't beat anything. The experience and confidence you will
gain from it can't be found on textbooks, you have to learn it through experience. Even if it was on a
book, you have to experience it for it to sink in your brain. You have to see the supply and demand
imbalances being respected and/or consumed... over and over again to see the patterns that keep
repeating. After months/years of doing this, it will become second nature to you. That does not mean
you won't make any mistakes when trading live. You will make many, but that's part the trading game,
making mistakes, you have to account for them and move forward

How can you decrease the number of errors that you make? By doing the same thing over and over
again for months and months without switching to another set of rules. It's only through repetition that
success can ever happen.

Check out what other members are doing with their own testing and 3:1 challenges, you will understand
what I mean.

Does the market you are testing really matter? I trade futures and Stocks, why should I test Forex pairs
if I am not trading Forex but stocks or indexes?

The market you test doesn't really matter. Supply and demand is a "universal" rule that applies to all
markets, Forex, equities, indexes, shares, commodities, bonds, anything. Forex Tester software will give
you the opportunity to test Forex, other platforms can give you that functionality as well. The
experience you will gain can be applied to all markets, so do not underestimate it. It's also possible to
import historical data from any instrument into Forex Tester, so the platform is even more powerful. It
can also help the fact that we've created several indicators for Forex Tester that will help you a lot in
your tests.

I won't stop testing and fine tuning the entries. Why? It's now part of my trading routine, I just have to.
If I have doubts about a pattern or want to test a specific scenario, what do I do? I test them.

By forward testing the rules at the Classroom channel you will gain confidence with the strategy thus
having less fear and indecision pulling the trigger. Obtaining a 50% or 60% win/loss ratio on your testing
for months is all you need. You can't get that confidence in live trading unless you spend years, you can't
fast forward time in real live but you can with testing software. By using a software like Forex Tester you
can accomplish that task in about 4-6 months instead of 2+ years.

Still not convinced?

Well, it's up to you really! It's your trading career and your life! I can't help you there. You know that this
is the way you have to go but something within yourself believes it's a waste of time and you will not
probably spend the time you need to become a successful trader in any given strategy. The only thing I
can say is that you will not have the right to complain to others if you don't do your homework, if you
don't do what you have to do in order to think and behave like a professional. You probably think you
are smarter than others and you can make it without the testing but even professionals test.

Is forward testing a waste of time?

No, it's not. In fact it will open your eyes to any strategy that you are looking to learn and gain
confidence in. Instead of being in front of your trading platform for hours every day, why don't you
spend a few months forward testing the strategy to gain confidence?

Doubts about everything

It will be absolutely normal that you doubt about your trading setups. You will have doubts about
everything and start taking lots of losses. This is why you are testing in the first place. Imagine yourself in
live scenarios with real money, your own money You have to reach a point where testing and rules
are second nature to you only then finally switch to live demo account, and then to a live account.

A horrible little demon that can get to you are the negative feelings when you lose a trade and even
worse when you suffer a series of consecutive losses. It can get so bad that you could literally end up
stomping around the house and shouting, just to let off steam. Finally, you will learn to say 'thank you'
to each loss. At first the losses are learning tools to correct mis-application of the rules. But later, at a
deeper level, you will realize that the losses ARE NECESSARY for the wins. You will already know that
intellectually but not in your gut. The losses are telling you that the currents are shifting. You had better
love them -- they are your friend.

This is a process we all need to go through. Those that think testing is not needed will most likely be
trying to outsmart the markets because they "think" they don't need to go through months of boring
tests without earning a single dime. The results are well known to most of us, it's normally disastrous.
All change and challenges are hard at first, messy in the middle but SO BEAUTIFUL AT THE END

Go for what's difficult, run to your fears, go to the edges of your capability

It just works guys! If you don't believe me, I can't do anything about it, it will help you a lot but it's your
decision not mine.

Watch this Forex Tester Teach the Teacher session held the 7th November 2014
You will then see how testing can be of help to your trading, in fact it's the only "shortcut" I'm aware of
to have a chance of success in trading. It's a 2 and a half hours video, long but worth every single
minute.

What you intend to do now?

Whatever legacy you are going to leave, leave your legacy. Wins and losses come a dime a dozen but
effort? Nobody can judge effort.

Everybody is got a dream, everybody is got a goal. The question is when you wake up in the morning,
what effort will you put in for?

If you died now at this very moment, what would die with you? What dreams? What ideas? What
talents?
How to build a Trading Plan

2nd February 2016, 10:50 PM

Fail to plan and you plan to fail. If you are serious about being successful in any business and trading is
not an exception, you should follow those words blindly as if they were carved in stone.

If you are one of the few traders who have written a trading plan, you are in luck! While writing a trading
plan is no guarantee of success, you have started the process to eliminate one major roadblock, the
emotional mind, so create a trading plan and start trading like a robot instead. If your plan uses flawed
techniques or lacks preparation your success won't come immediately, but at least you will be in a position
to detect those flaws through the execution of your plan and modify it in the process. By documenting
the whole process, you will learn what works, what doesn't work and how to avoid repeating old and
costly mistakes.

Trading is a business, so you have to treat it as such if you want to succeed. Reading some trading books,
studying multiple strategies, buying the best trading software, opening a brokerage account or starting to
trade is NOT part of a plan - it is a recipe for disaster. If you don't follow a well written trading plan, you
are doomed to fail every single time you try to trade any market.

A plan should be carved in stone before you start trading, but it should always be subject to re-
evaluation. A trading plan is subject to change as the trader's skill level and understanding of the market
improves. Each trader should write their own plan, taking into account personal trading styles and
goals. Using someone else's plan does not guarantee you will be able to execute it the same way that
person does.

Traders who win consistently treat trading as a business. While it's not a guarantee that you will make
money, having a plan is crucial if you want to become consistently successful and survive in the trading
game.

WHAT COMPONENTS MAKE A GOOD TRADING PLAN?

Your skills as a trader and your edge

Are you really ready to trade this strategy? Have you tested this supply and demand strategy by paper
trading it? Do you have confidence that it works? Can you follow your own trading decisions without any
kind of hesitation?

Professionals trade based on probabilities and an edge. They don't gamble. As supply and demand traders,
your edge is supply and demand, trading with the footprints of the big fishes, the dinosaurs.

A professional trader is ready every single day to execute his trading plan, he will take profits from the
rest of the "herd" who, lacking a plan, give their money away by always making the same mistakes over
and over, for instance, taking low odds counter-trend trades, buying into bigger timeframe
supply/demand in control or after a very strong rally in price are just a few of the mistakes the herd
continually makes.
Don't get overly hooked up on whether you are drawing a level right or wrong/ properly, because on quite
a few levels there is no right or wrong, and no 'proper' way to draw them - they are nuanced, and on
different days I might draw them differently, and my analysis and therefore conclusions would therefore
be slightly different because you mind has gained more experience and knows that you should 'tweak'
them a bit. Some levels of course are very clear and there's only one way to draw them, bullish or bearish
engulfs for example. Pretty much all of your decisions in trading should boil down to not worrying too
much, and just accepting that about 40/50% of the time you'll be right, and 40/50% of the time you'll
be wrong.

Managing your emotions

Are you emotionally and psychologically ready to battle in the markets? Emotions will take control every
time you analyse the markets, you need to have a sound plan to combat anger, fear, pain and greed.
Because if you don't, your emotions will kill your trading plan. You need to have a proper control of your
emotions in order to execute your trading plan, let your emotions take over and you will blow up your
trading account over and over.

This is the most difficult aspect of trading. You can read dozens of books, be good at spotting trading
setups and pulling the trigger but if you let your emotions control your trades and your goals, you will not
become successful.

Daily routine and trade preparation

Executing a daily routine is key to your trading success. You are already executing a bunch of habits and
routines every single day of your life. You wake up at 7 a.m, have breakfast, read your favourite
newspaper, drive to work, lunch at 1 pm etc.

Your trading space (area) should not offer any distractions. Remember, this is a business and distractions
can be costly. You must create new habits and a daily routines for your trading. Read more about it in the
Daily Routine lesson

Set a maximum number of hours to trade a day

Time variable is key to trading, it can lead to over-analysis. In order to prevent that from happening, you
must set a maximum number of time you'll spend in front of the charts. 1 hour a day, 2 hours a day. Set
that limit and stop analyzing the markets once the that deadline been hit.

Select your Trading Sequence and Entry Timeframe

You know there are different timeframes you can trade, you can hold a trade for hours, days, even weeks
and months. First of all, you should decide which type of trader you are, select your entry timeframe and
that will be law! You won't be allowed be break that rule unless there is an exception described in full
detail in your trading plan.
You have a few choices: longer term, swing and intraday/scalping.

Select the trading sequence that best fits your personality and your job. If you are not a full time trader
already, you will probably have a full time job or a half time job. You will not have time to spend in front
of the charts for hours every day, you must choose a bigger timeframe sequence because they are slower
and will let you do your analysis without feeling you're missing all the moves.

If on the contrary you are more aggressive and love fast charts, you will probably go for a smaller
timeframe trading sequence with an entry timeframe like M15 or M5. You must choose the sequence that
fits your personality, one you feel comfortable with. Remember, what works for me or someone else will
probably not work for you.

Choose your Entry rules and IF THEN scenarios

Before you start writing your own plan you need to have a strategy and an edge, a set of rules you've
consistently tested for months and most importantly a series of rules you feel comfortable with and
believe in. You need to see your trading patterns playing out for months. When I say months, I mean
months and months of intense testing. Do not trade live unless you've been testing your strategy
profitably for at least 6-9 months consecutive months, else you'll be blowing up your account very quickly.

You should list all IF THEN scenarios that are high odds according to the set of rules you are trading and
only take those you've listed on your trading plan. Ignore and negate any other scenario that has not been
included in your trading plan. If in doubt, stay away from the markets and wait for a clear setup and
scenario.

A couple of examples of IF THEN scenarios that could be used:

• Daily demand zone nested within weekly demand zone, with weekly and monthly charts in an
uptrend

• Daily demand zone nested within monthly demand zone, with weekly downtrend and monthly
chart still in an uptrend

Set Risk Level and Risk Tolerance

Having a good understanding of risk tolerance is crucial to your success. It is also a key component of any
good investment policy. You must be a methodical investor and follow a disciplined, mechanical trading
strategy. As a methodical investor you will make decisions based on hard facts.

How much of your portfolio should you risk on any one trade? It can range anywhere from around 0.5%
to as much as 3% of your portfolio on any given trade.

Establish the maximum risk you will take on any one trade and don't change it during the first year of
execution of your trading plan. Set a small risk, one you feel comfortable with, where losses won't affect
you psychologically. It may be 0.5% or 1%. The bigger the risk the faster you might blow up your account,
so trade with a small risk for months, you will stay longer in the market with your initial equity and you
will learn that trading live is a different monster.

Don't choose a high risk level, you won't be ready to accept the big drawdown your account will probably
suffer. You will blame the markets for your losses, you will blame the strategy, you will blame everything
and everybody except yourself, however the only one to blame will be yourself because you were the one
who chose to set a high risk level you were not ready for yet.
Set Exit Rules and your Risk Reward per trade
Most traders make the mistake of concentrating most of their efforts in looking for trade signals, but pay
very little attention to when and where to exit. Many traders won't close their losing trades because they
don't want to take a loss. You must get over it or you will not make it as a trader. If your stop gets hit, it
means you were wrong, that's all, go for the very next valid trade! Don't take it personally, remember,
trade like a robot. Professional traders usually lose more trades than they win but by managing money
and limiting losses they still end up making profits.

What is the minimum risk/reward you will accept? Many traders will not take a trade unless the potential
profit is at least three times greater than the risk. For example, if your stop loss is a dollar loss per share
or pip, your goal should be a $3 profit. Set weekly, monthly and annual profit goals in dollars or as a
percentage of your portfolio and re-assess them regularly.

Before you enter a trade, set realistic profit targets and risk/reward ratios. You must set an exit rule.
Choose a fix exit ratio like 3:1 (three times your risk), this means that you are willing to risk $100 trying to
make $300. It's very important that you are happy with your earnings and exits, don't think every trade
you take will give you a 10% benefit, that's probably not possible, it's not sustainable as a trading plan. Be
realistic and set a fix exit ratio for at least 1 year and re-evaluate your trading plan and exit rules after
that.

By setting a fixed risk/reward for every trade, you will be removing most of the emotions and
psychological issues in your trading. Where to exit your trade? Is there more than 3:1 for my entry? Am
I trading with the trend? Yes to both, pull the trigger and expect the edge is on your side this time, else
next one.

The smaller the risk reward for your trades, the easier you will hit your take profit and targets. Expecting
5, 7 or 10 to 1 per trade is not realistic and you will end up blowing up your account. Don't be greedy. Any
hedge fund or serious investor will probably be happy with 3-5% a month, or even 5% a year.

Set Realistic Monthly Goals and stop trading when reached

Many aspiring traders have unrealistic goals. They start with a $5,000 account and expect to make $5,000
in their first month of trading. No wonder many traders fail.

Trading is a function of risk and reward. The more you risk, the higher the profit potential. Or the larger
the stop loss, the higher you can set your profit target.

What is the monthly account growth you are expecting? Are you happy with 5%, 10%, 40%? Of course it
will be much better to have a monthly account growth of 40%, that means more money for you, I don't
think anybody would deny that.

Are you looking for a pay check or trading as a longer term investment? This is very important because
it will dictate the type of trades you are looking to trade. You want to trade as a long term investment
with money you don't really need for your everyday life? Or you need a monthly pay check because trading
is your only source of income and you don't have much money to invest?

If you're trading a $50.000 account, are you happy with a 10% monthly income? That means $5.000 a
month. Is that enough for you? Be realistic, expecting a monthly goal of %30, %40 or more is not
sustainable, you will probably blow up your account very easily. Big investors are happy with 5-10% profit
a year but it's common to see small investors aiming for a 30%, 50% or higher per month. Put your feet
on the floor and be realistic!

You reached your monthly goal the 5th of current month? Stop trading. You reached it the 20th? You stop
trading. Stop trading and enjoy the money you've earned. FULL STOP.

A 5-10% monthly goal can be reached and it's sustainable. The problem is that most small investors don't
have the money needed to earn their living with that small account growth percentage. If you have $5000,
you can expect an average of $400-$500 a month. What can you do with that money if you live in Europe?
Not much really. No wonder why many traders aim for a very high monthly account growth.

Money will come to you if you do things right over a large period of months, believe me, money will knock
on your door. Follow your trading plan, take a small risk, be happy with a small 5-10% monthly account
growth and let the universe do what it has in store for me. It just works like that.

Have realistic expectations and understand the risks of trading. Stop reading web site's articles selling you
to become a millionaire overnight, that doesn't happen. Set small achievable goals. Don't shoot for the
stars. Try to make $100 per week on a trading account of $5,000. That would be $400 per month or 8%
based on your capital. Per month!

You might not achieve your weekly goal every week. There might be some weeks when you make less. Or
you might even lose some money. But in the long run you should be ahead and see your account grow.
And with proper risk and money management you should be able to control your risk while growing your
account.

So the key is to have a trading strategy with a winning percentage of 50% while achieving a reward-to-risk
ratio of 3 to 1. This formula is mathematically guaranteed to be consistently profitable.
For example:

• If you have a $10.000 account with 1% at risk per trade = $100

• 3:1 R:R = $100 per loser and $300 per winner

• 10% monthly return is $1.000

• 20% Monthly return is $2.000

• 30% monthly return is $3.000

Are you happy with $1.000 a month? $3.000? You need more money to reach the end of the month and
pay your monthly expenses? Should you set a higher monthly goal then? 40%? 50%? Remember the higher
the monthly goal the more difficult, unsustainable and unrealistic it will be. You'd better increase your
equity rather than risking a bigger percentage per trade.

Think like a professional, a professional trader will not put at stake all of his capital or a big amount of it,
he will just risk a small percentage. He will put a limit on both sides of the equation by setting a credible,
feasible and realistic monthly goal but most importantly he will also limit his losses and maximum
drawdowns.

Your Win/Loss Ratio is key

Now let's say you are right every other trade, i.e. your trading system has a winning percentage of 50%.
This means that in the long run you can expect as many winning trades as losing trades.

For our example, let's say you place 10 trades risking $100 on each and a 3:1 exit for $300 - five of them
are winning trades and five of them are losing trades. So you would make $1.500 on your winning trades
(5 * 3 * $100) and lose $500 on your losing trades (5* $100). Your gross profit after 10 trades would be
$1.000. You now need to deduct your commissions, which would vary depending on your broker and the
markets you trade.

Therefore your net profit after 10 trades would be around $1.000.

If trading Forex you can use platforms like MyFxBook to track your results in a very detailed way. There
are other platforms and tools that will allow you to analyze your results in a lot of detail.

Set Maximum Monthly Drawdown

Risk management will make money for us in the long run, but there is always another side of things. What
would happen if you didn't use strict risk management rules?

Consider this example: Let’s say you have a $10,000 and you lose $5,000. What percentage of your
account have you lost? The answer is 50%. Simple enough.

That's what we call drawdown. A drawdown is the reduction of one’s capital after a series of losing trades
during a specific period of time. This is normally calculated by getting the difference between a relative
peak in capital minus a relative trough. We normally note this down as a percentage of their trading
account.

We need to have an edge on our trading, that is the whole reason why traders develop and/or follow
trading strategies. Supply and demand is our edge. A trading strategy that is 60% profitable sounds like a
very good edge to have. But just because your trading strategy is 60% profitable does that mean for every
100 trades you make, you will win 6 out of every 10 trades? Not necessarily!

How do you know which 60 out of those 100 trades will be winners?
The answer is that you don’t. You could lose the first 40 trades in a row and win the remaining 60. That
would still give you a 70% profitable system but you have to ask yourself this question: Would you still be
in the game if you lost 30 trades in a row. I think you wouldn't
This is why risk management and drawdown is so important.

Drawdowns are part of trading whether we like it or not. The key to being a successful trader is coming
up with a trading plan that enables you to withstand these periods of losses. And part of your trading plan
is having risk management rules in place, drawdowns included.

The same way we set a monthly goal, we must also set a maximum monthly drawdown that will prevent
us from taking more losses. It might be 5% or 10% but you need to set a maximum drawdown. Once this
drawdown % has been hit you will stop trading that month. It can happen on the 5th of the current month
or the 20th, it just doesn't matter, you will stop trading, you'll then analyze your losses and take the steps
necessary to prevent them from potentially happening again in the future.

A 5-6% monthly drawdown is a decent drawdown. Remember that you will have to recover that
drawdown the next month before reaching your target. If your target is 10% a month, you will need to
make at least 15% to recover from a losing month.

Remember you can also experience a consecutive streak of losing months, so the drawdown will
accumulate over a period of time. If your maximum drawdown is high, you might end up with an
accumulated drawdown of 30% or more in 2-3 months. It's very difficult to recover from such a big
drawdown, the psychological impact on your trading will be so big that you will end up taking more risk
to recover the losses and eventually blow up your account by breaking every single rule in your trading
plan.

Maximum number of trades open at one time

Setting the maximum number of trades open at any one time is directly related to your monthly
drawdown. You must have a way to limit the number of trades you can be triggered on at any given
moment, else you might end up with a number of losses that will exceed your maximum drawdown.

Consider this scenario. You have established a 5% maximum drawdown, you risk 1% on each trade and
you are allowed to have 5 trades open at the same time. If more than 5 trades at 1% risk are open your
drawdown might end up being 6% or more. If you are risking 0.5% on each trade you are allowed to have
10 trades open at the same time.

You must trade like a professional, a professional trader will establish a maximum monthly drawdown and
respect it. His career and success depends on it.

Filter out the instruments that are not clearly trending

Try to locate the best looking charts and trends on your trading portfolio. Do this analysis the first day of
your trading week and arrange a bad and a good lists. Focus only on the instruments that are clearly
trending and providing you with the setups established in your trading plan.

• Go through all the instruments you trade and filter out the ones that are clearing trending from
those that are not
 • Ignore the ones that are ignored until next week. Set alerts for an specified event to happen
before you look at it

• Do the same process every week and filter out instruments. You will be switching them from the
bad list to the good list and vice versa every week

• On Metatrader platform you can minimize the charts so you can only see the instrument and
timeframe. Arrange the instruments you trade in such a way so you can have 2 lists (a good one
and a bad one). On the left side if you want to trade them this one, or on the right side of the
window if you are not interested in to trade them this week

CORRELATION
Correlation is something very common in Forex, it's also common in stocks and its indexes. We're not
going to deal with correlation in much detail, but we should be aware that it exists and it can be a handicap
if you have a few positions opened in correlated instruments, no matter if they are currency pairs, stocks
or commodities.

Many Forex currency pairs are highly correlated, that is, they move in the same direction at the same time
with very similar price action patterns. Correlation is not a science, they can work for an extended period
of time and then stop working completely for some time.

As a rule of thumb, avoid trading highly correlated instruments at the same time. Why? A change of
market dynamics or big news event could cause an unexpected movement in price and cause you several
losses at the same time.

For instance, if trading Australian dollar currency cross pairs, taking a short on AUD/USD, AUD/CAD,
AUD/JPY, AUD/SGD and a long on EUR/AUD would not be a good idea. At 1% risk, you'd be positioned
short with 5% of your account. If all the trades fail to work, you would not be allowed to trade any more
than month if your maximum drawdown was 5%.

In order to account for correlation, it'd be safer to set a maximum number of correlated instruments you
can trade at any one time. Two or three would be a good number to start with.

How many trades do you need to reach your target?

The number of trades you will need to reach a specific target depends on a bunch of variables you need
to set before you start trading.

These variables are:

• Entry timeframe. The timeframe chosen will directly affect the number of trades you'll see. The
bigger the timeframe, the least trades

• Number of traded instruments. The more instruments you track, the more trades you will have.
This is directly related to the entry timeframe
 • Your monthly goal. If you monthly goal is low, your target can be easily reached with a large
timeframe and a small number of instruments

• Win/Loss ratio. This ratio is crucial, it will influence what you expect from your trades and how
losses can affect you

• Risk/Reward. The higher the risk reward, the more difficult to reach it will be. Be flexible. 3:1 is
good to start with. Five/six to 1 is good when WK and MN zones are in control and trending

Keep records of each trade

You must log each trade you take so it can be analyzed after the fact and learn from it. This will also help
you to adjust your trading plan in the future.
If you win a trade, you want to know exactly why and how the trade was won. More importantly, you
want to know the same when you lose, so you don't repeat unnecessary mistakes. Write down details
such as targets, the entry and exit of each trade, the time, the trend for each timeframe in your sequence,
and record comments about why you made the trade and lessons learned.

Also, you should save your trading records so that you can go back and analyze the profit or loss for a
particular system, draw-downs (which are amounts lost per trade using a trading system), average time
per trade (which is necessary to calculate trade efficiency) and other important factors, and also compare
them to a buy-and-hold strategy. Remember, this is a business and you are the accountant.

Conclusions after the trading week is over

Set a date and time at the end of every week and go through all the trades you've taken and/or planned
during the week. Did they work? Was the trade missed? If so, why? Why did the losses happen? An error,
trading plan broken? Learn from each trade you took or planned every week, see if you missed something,
confirm that you've been following your plan and kicked your emotions out of the equation.

Do this every single week and only once at the end of the month. This will help you to be on the right
track, if you see you are consistently stepping off your track, stop trading and go back to testing mode.

A money management strategy to start with would be something like this:

• Risk per trade: 1%

• Risk/Reward for each trade: 3 to 1, that is $300 per $100 invested

• Monthly goal: 5-10%. Once reached, you stop trading

• Monthly drawdown: 5%. Once reached, you stop trading

• Max of 5 open trades at any one time (5% risk). If more than 5 are taken, you would be breaking
the maximum drawdown % specified in the plan 5%)

Revise your plan every 3 months

Having a trading plan does not mean you can't change it. You should establish a fix period after which the
whole plan should be revised. This will help you to learn about the errors you have made. Each loss is a
lesson.
After three months executing your trading plan, you will have accumulated a bunch of losses you will need
to review and get some feedback from. This feedback will allow you to confirm that what you have being
doing has followed the plan, or on the contrary it will tell you that you've broken a few of the rules.

Establish a minimum of three months before you revise your trading plan. After three months, study all
the trades you have taken and adjust the plan if you need to. Stop trading if your results are not as
expected and go back to the testing stage on Forex Tester before you decide to trade live again.

The next post will show a real example of a supply and demand trading plan to trade with a trending
market.
The Power of Risk Reward, what to expect from supply and demand

24th February 2014, 08:21 PM

This lesson will take you on a journey that will hopefully prove to you that if you simply implement proper
risk reward and have a willingness to learn a high probability trading strategy like supply and demand, you
have all the ingredients to become a consistently profitable trader. To some this lesson may open his eyes,
to others it may show things you already knew about but you didn't implement on your trading plan.

What do you expect from trading?

You want to double your equity in a couple months, in 6 months' time, in a year? Are you happy with 10%
account growth every month, 20%? What is it that you want from your trading? It's paramount that you
decide what is it that you want and put it down on your trading plan, because a lot of frustration may
happen if you do not have a know what you want. Most people won't get anything in life not because they
can't, but just because they don't know what they want, they don't have goals to achieve, they just wander
without a final destination. Most big investors and hedge funds are happy with a 5% monthly growth. Why
we retailers want a 50% or even a monthly 100% account growth? The least money a person has the more
benefits he/she wants to obtain. Money is not a problem, it will come to you if you do the things right.

The Power of Risk Reward, what to expect

In order to first demonstrate the power of risk reward, I have used an Excel spreadsheet that was originally
created by Forex Smart Tools (Cindy and Mindy are great girls, they created a great product) to randomly
enter calculate the risk reward based on a randomly generated set of Wins and Losses. No supply and
demand setups were used, nor was there any method or strategy of any kind implemented when
generating this random number of trades. The parameters were simply to fill in the cells highlighted in
yellow:

• Stop Loss pips to risk on each trade

• Take Profit

• Number of wins per 100 trades

• Starting equity

• Risk %

A total of 100 trades are generated every time one of those parameters are changed. These small
experiments (calculations) were meant to prove the power of risk reward. Results showed profit after
entering randomly 100 times with a risk reward of 1 to 3 on every trade, this after having lost 65 or 63
trades out of 100. This means the winning percentage for this series of trades was about 40%, so we lost
on 60% of the trades and won on only 40% as you can see by the trade history, this random entry model
combined with a 1 to 3 risk reward still profited after 100 trades, this with no edge applied at all and just
a 40% winning ratio. Find attached an Excel spreadsheet that will calculate a random number of trades
for you automatically like these below.
What is the lesson to learn here?
While the trade history above certainly proves the true power of risk reward, we have to ask ourselves
how much better we could do by applying a true edge in the market, like the edge of using supply and
demand rules or any other strategy you are proficient at. When combined with experience and education,
any strategy can certainly provide you with trade setups that give you a better than 50% probability in the
market, assuming you apply discretion, patiently wait for the best setups and do not over-trade. So, if we
assume we can attain at least a 50% win rate by using simple supply and demand strategies, and we use
a risk reward of at least 1 to 3 on every trade, over a series of 100 trades where we risk 1% of our equity
per trade, we would be making a nice profit.

We know that supply and demand works (at least I know that, which is what counts for me), there are
many strategies that work, rest assured. There is no doubt about that at all; you randomly enter the
market and if you make at least 2 times your risk on your winning trades, you will likely breakeven or turn
a small profit over a series of trades. When we combine this knowledge of the power of any given strategy
with a high-probability edge, what we have is a professional money management and trading strategy,
which when combined with proper discretion will make money over a series of a defined trade's sample.

Professional traders know that their winners have to be higher than their losers to make money.
If you have no edge in the market that can get you to the point of winning at least around 50% of your
trades, you are probably going to only breakeven over any series of trades, assuming you still implement
a risk reward of at least 2 to 1, more if 3 to 1.

Most traders do not implement risk reward properly; they take profits of less than 2 times risk which
inherently forces them to have a very high overall winning percentage to make money. By taking a profit
of less than 3 times risk, you are basically PURPOSELY putting the odds against you, because you then will
have to win over 50% of your trades to make money, and most trading strategies do not give you an edge
that will allow you to consistently win over 50% of your trades. The key is to not get discouraged if you
have a few losers or become over-confident if you hit a few winners.

What if you lose on the first 8 trades out of 20? Look at the results of the experiment above; did you notice
that we lost many trades in a row before hitting a series of winners? This is called trading, and sometimes
you will hit a string of losers or a string of winners, but you can’t let this influence your trading plan, you
have to have a longer-term outlook and remind yourself that your edge, combined with risk reward, needs
time to play out.
Risk Reward should be dynamic and flexible
Each trade is taken based on a different IF THEN scenario, a HTF could be in control (momentum and
location type of trade), main trend could be ranging in a box, etc. You can decide to go for a 3:1 exit but if
Monthly is trending up and MN DZ is in control, this is the time where you should expect a bigger risk
reward, a HTF is in control, let the trade breath and become a potential runner.

Why is it that you are not making money?

There are many factors that will influence your trading decisions. When emotions take control they will
prevent you from executing your plan and money management strategy. Have you ever tried the same
exit money management exit strategy for at least 3 months?

For example execute this basic exit strategy for 3 months

• Risk only 1% on each trade setup that you take

• Set a fix Take Profit of 3:1, that is, 3 times your risk

• Risk Reward is different to profit margin, RR validates the imbalance, profit margin validates the
exit/TP

• Make sure there is a least 4:1 profit margin to opposing SD zone

• Set and forget your trade and don't touch it

• Do not move your SL to breakeven

• The trade will be either a loss or a winner

What do you think is going to happen after 1 or 3 months if your success ratio is 40%?
You will be on the winning side. What if you have 50% or more, you will be making a nice monthly profit.

Why is it that you are not implementing this exit strategy till now?

• You are not aware of how powerful logic and mathematics can be

• You wanted to achieve 5:1 and more

• You expect your trades to be runners always, that is not the case always, in fact it happens a small
% of times, 3:1 is MUCH more common

• You had a series of losses and you stay away from the markets, then all those trades you didn't
take are the ones that would have made you 3:1

• You had a series of losses and you want to let your trades run to become runners and recover the
losses but you don't realize that those runners that did not run as you expected DID achieve 3:1

Spend quite some time with Forex Tester 2 and try to calculate your winning % ratio. After some weeks
of forward testing, you will be feeling more confident with the rules.
Imagine you get 3 trades a month per each of the 15 currency pairs that you trade
That is a total of 45 swing trades a month risking 1%. The percentages below will vary depending on the
number of consecutive losses (check out the spreadsheet)

• With a 40% win/loss ratio:

• 18 winning trades at 3:1 exit will give you approx. 54%

• 27 losses equals approx. 27%

• The resulting equity growth will be around 20-25% a month

• Isn't that enough for you?

• With a 50% win/loss ratio:

• 23 winning trades at 3:1 exit will give you approx. 69%

• 23 losses equals approx. 23%

• The resulting equity growth will be around 40-45% a month

• Isn't that enough for you?

This is only with a 40-50% winning ratio. Why do we want more and more? Ask yourself

IDEA:

• You could set up 3 different accounts

• The first one would exit always at 3:1, no breakeven, with an adaptive position size

• On the second one you would let profit runs trailing the SL technically above/below new SD zones
and exit at opposing fresh/original zone

• The first 3:1 account would be the "the paycheck"... the second one would be the one to grow
your equity

• Patience is key. Wait for the best setups, be aware of these numbers, it's pure mathematics... Wait
and wait... Results will speak by themselves if you do what you have to do

Edit the attached Excel spreadsheet and see the power of a 3:1 exits. Apply this to your live trading and
do not let any other factors influence you. Do not worry if your 3:1 exit made 10:1, you made your profit,
1 more winner added to your stats, that's all you need to think about.

Come back after 3 months and write about your results. You will be surprised

EDIT: the attached spreadsheet was modified by George (batuco9); he added new features like
drawdown, he made a great job!

Video: https://www.youtube.com/watch?v=6ToFTuY79Rk
The 3:1 Trading Plan Challenge

18th March 2014, 11:52 AM

THE 3:1 RISK REWARD TRADING PLAN CHALLENGE

Refer to the lesson called The Power of Risk Reward before proceeding to read this lesson.

All change and challenges are hard at first, messy in the middle but it's SO BEAUTIFUL AT THE END

CUT YOUR EXCUSES IN HALF

AND DOUBLE YOUR ACTION

In order to succeed in the trading business you need a sound methodology, common sense, discipline and
a rock solid understanding that if you do not treat this as a business you have a ZERO CHANCE of long
term success. I believe the statistics say that 95 percent or more of new businesses fail even when the
owner knows what they are doing. Do you really think trading Forex is going to be an exception and work
for you after 3 months practice or less?

Remember this: small trading accounts will probably not keep me focused to be super picky about your
entries and you will almost surely find the same thing. Small accounts normally equals to over trading and
YOU SIMPLY MUST LEARN TO BE PICKY ABOUT YOUR ENTRIES. Is there any solution? Force yourself to be
ultra-picky (virtually impossible) or follow the plan below while you are doing it.

Before I lay out a basic trading plan, I want those of you that are new or struggling to read the following
sentence and think about it:

Words won't be able to describe where your trading will be after 6 months compared to where it is now if
you follow this plan.

MINIMUM REQUIREMENTS
If you are new to supply and demand trading or any other trading methodology, and/or you have had
difficulty finding some consistent success, you must understand something. Trading is not a game, trading
is not gambling and it's not a way to get rich quick. If you approach this business without a business plan
and the willingness to follow it, you are almost certainly doomed to failure. A doctor or a lawyer spends
ten or more years in a very steep learning curve to be successful and earn a six figure income; anyone who
thinks that their success in this business is a couple of months down the road is going to have a rough
time.

Below is a minimum requirement (in my opinion) to find out without losing your money if this business is
for you. By following these recommendations, you will be treating trading like a business and you will be
learning and gaining confidence in the rules laid out at Set and Forget classroom. I think this is so
important:

If you start out in this business using no common sense, you have no one to blame other than yourself
when you lose all your money.
There is no reason to ever lose a dime of your money while learning to trade. A well thought-out business
plan, common sense and hard work is required for anyone who wants a chance to have success at trading.
Many people meet those requirements and still fail, but it does not mean you have to watch your bank
account go to zero

Whatever you decide you must complete these steps at a minimum:

1. Forward test the methodology for at least 3 months under Forex Tester (check the Forex Tester
section to learn about it). You first need to do your homework and learn about the methodology,
the lessons and threads will help you. A couple of fully concentrated hours a day, 3-5 days a week
should be enough. DO NOT STOP forward testing just because you are seeing that you are having
success after a few days or a couple of weeks, that's a big mistake. If after this process you are
being profitable each and every month, proceed to Step 2

2. Demo trade for 3 consecutive profitable months in a row making at least 5% a month. Entries
on H4 and D1 timeframes, you only. Do not stop using Forex Tester while you are doing this. You
do not proceed to step 3 until completed.

3. Open a live account with half of the investment you intended to go full with and continue to
only trade H4 and D1 timeframes until you are profitable 3 months in a row minimum. You will
never risk more than 1% of your account on any one trade. Do not stop using Forex Tester while
you are doing this. You do not proceed to step 4 until step two is completed.

4. Fund a full account and continue to only trade H4 and D1 timeframes until you are consistently
building your account with a minimum 5% growth for at least 6 months. You will never risk more
than 1% of your account on any one trade.

5. If you are going to follow Set and Forget's SD methodology (I believe this should be the reason
why you subscribed) or any trading style, and you don't follow this template as far as the demo
process, you are not treating it as a business and you have no one to blame other than yourself if
you lose your money

6. If you ever suffer the loss of 20 percent of your account, you STOP trading. PERIOD. You should
go back to demo and analyze all of your trades to figure out what went wrong. While doing this,
you refund your account back to its original amount. You won't go back to live trading again until
your demo has shown you what went wrong and your account is back to full strength by whatever
means. If it takes 1 month or 6 months, it does not matter. You must follow this approach if you
don't want a blown account after blown account.

Your goal should be this. Learn, learn and learn some more and don't do anything stupid while you are in
the process. The ultimate goal of any trader is to build an account to a size where just a few good trades
a month produces a staggering income. Hardly anyone ever gets there because they don't treat it as a
business. We do stupid things that they would never do in any other area of their life and it's because of
the money that can be made. If it takes you a couple of years or even five or ten to reach the level of a
staggering income, is it worth it? The choice is yours.
I am sure you can think of a million excuses for not doing this (job, kids, computer too slow, too tired, etc)
but you should lay those aside and commit yourself to the work. "A journey of a thousand miles begins
with a single step".

A SIMPLE TRADING PLAN

You need a plan, here is the one you must follow. Make it yours, embrace it and treat it with care because
it's as fragile as a glass of very thin glass. Follow these rules one by one and do not break them while you
follow all the stages described under minimum requirements. This plan has nothing to do with your
personal goals as a person, it's just about the rules.

Believe that you can make it. 3:1 is a very reasonable target and relatively easy to obtain when trading
with a clear trend on good levels. But have you ever experienced several consecutive months profitable
executing a very simple trading plan?

Before executing this plan you need to complete Forex Tester forward testing Stage 1 described above.

• Risk per trade: 1% of your account balance

• Number of open trades at the same time: 4. That is a 4% risk

• Maximum loss per month: 4%. Stop trading after 4 consecutive losses. Analyze your trades and
learn what you did wrong, if you are not sure, PLEASE ask in the forum

• Maximum drawdown: 10%. If you ever suffer the loss of 10 percent of your account, you stop
trading. PERIOD. You should go back to demo and analyze all of your trades to figure out what
went wrong. While doing this, you refund your account back to its original

• Monthly goal: 6%. Once you reach your goal 6% goal, STOP trading. You reached it the 5th day of
the month? Congratulations, you have 25 days off this month! Enjoy your free time. When I say
STOP, I mean STOP. Do something else, practice on Forex Tester, practice your favorite hobby or
find new ones, stay away from your computer screen and trading platform

• Log all your trades. Make a log and safe a screenshot of both your entry and your exit on your
entry timeframe and SD Range timeframe, that is 4 screenshots

• Stop trading on Friday right before the US Market Opens. Don't add new H4 trades on a Friday
afternoon, don't take the risk of a Sunday open gap. This does not apply to Forex Tester trading

• Analyze all the trades taken during the week at the end of Friday. Turn off your trading platform
and analyze your winners/losses, learn from them. Do it before Friday ends or when you some
spare time during the weekend (better on Friday so that you completely disconnect from trading
during the weekend)

Is a 6% monthly account growth enough?

Yes, it's. You don't have enough money to become a full time trader and earn your living with it? You are
wrong. Others have the money, investors will kill to find a trader that makes 6% a month. Money will
come to you once you have a proven 6% account for at least 6 consecutive months, believe me.
SEPARATE DEMO/LIVE ACCOUNTS FOR H4 AND D1 ENTRIES

You'll need separate demo/live accounts to test the H4 and D1 entries. We can't and shouldn't mix. This
is exactly what I've been doing for months on my live H4 and D1 accounts, we need to separate them in
order to get the right picture and analysis on each account. You may decide to make the tests and challenge
only on H4 or only on D1, or both, you decide, but they should be separate

THE ENTRIES

• Type of trading: swing, medium term

• Entry timeframes: H4 and D1, only these. Use the wiggle room and padding settings as described
in the lessons

• Type of levels: FRESH levels only

• Type of trading: trend trading. Never counter-trend unless you have D1 direction and lots of room
to opposing higher timeframe SD zone. Needless to say that we need to buy as low in the SD
Range as we can and sell high, the lessons and webinars explain all this in detail. Stay away from
consolidation

• SD Range timeframe: D1, WK and MN together with the realignment concept and the sequence
as explained on the lessons and one of the last webinars

• Minimum requirements for a trade:

• Super clear D1 direction, a D1 trendline should be possible.

• Minimum Risk/Reward imbalance of a level: 2:1. We need at least 1 full OHCL candle
consolidating away from the level

• Target: 3:1. That is, 3% benefit on every single trade. You need at least 4:1 profit margin
to the opposing SD zone or SR to validate a trade

• If you spend more than 10 seconds analyzing the entry timeframe before you plan your
trade, skip that pair, it's not a trade for you

• Breakeven: None. There is no breakeven, either you win or you lose 1% of your account
on any given trade

• News: stay away from high impact news as described in the news lesson. Plan the news ahead of
time on Monday, and be aware of the days when they will be released

• Time in front of the charts: 2 hours a day maximum. Choose a market, London or New York,
maybe at night after you arrive home from your work, but choose a time. Make your analysis
always at the same time, place your trades and spend a maximum of 2 hours a day in from of your
trading platform. If you are done with the 15 pairs analysis and placed your trades in only 30
minutes, close your trading platform. Do not open your charts till next day at the same time, no
matter what happens, DO NOT open your charts, you don't know how important this is, it's
paramount
LIST OF INSTRUMENTS TO TRADE
There are dozens of instruments you can trade, but you need to focus on a few only. This is an important
part of the trading plan, don't try to trade all instruments.

Trade these 15 instruments during the first 3 stages, you need to prove yourself that you can make it:

1. AUD/USD

2. AUD/CAD

3. CAD/CHF

4. EUR/USD

5. EUR/JPY

6. EUR/AUD

7. EUR/NZD

8. EUR/GBP

9. GBP/USD

10. GBP/CAD

11. GBPY/JPY

12. NZD/USD

13. USD/CAD

14. USD/JPY

15. S&P 500 e-mini (if you have it on your broker)

NOTE: you can add more instruments to this plan, Forex Tester allows you to import CSV files with
historical data from any instrument, Stock, Index, Commodity, anything

THE 3:1 CHALLENGE

Follow this basic and simple trading plan for the months described on each stage at the minimum
requirements zone. Keep us informed of your progress (I have created a new zone so you can track your
progress, The 3:1 Trading Challenge).

A 3:1 exit is enough to make you profitable and earn a lot of money. But have you ever experienced it?
No, never. Why? Because traders don't want a 3:1, they want 10:1 on each trade. Greed is our enemy,
our ego gets along very well with greed.

I hope that you see the sense of creating this lesson and a challenge for yourself. It's a very simple set of
rules and exits that will remove most emotions from your trading decisions and at the time will allow you
to see that a 3:1 target is enough to become a profitable and successful full time trader.
Let me repeat what I said at the beginning of this post:

Words won't be able to describe where your trading will be after 6 months compared to where it is now if
you follow this plan

MY COMMITMENT

I just wanted to let you know about an important thing that may be of interest to most of you, hopefully.
It's hard work for me, but I am here to help you understand how supply and demand works and on your
trading. Money is secondary, a few euros is nothing, helping others is a LOT, it's MUCH more gratifying
than anything else.

I want to make a commitment to those that complete the 3:1 Risk Reward Challenge:

• I will personally review all of your trades on a 1 to 1 webinar session every time you complete a 3
months stage as explained in the 3:1 Risk Reward Challenge. Of course, no cost, I want to here, I
am here to help... but you need to do your work. It will take you some months, the trading career
is a marathon not a sprint

• This process will take you around 6-9 months, that's NOTHING unless you prefer to stay in a
unbreakable loop mode for years. Be patient since there is no other way of doing it. This is the
fast mode

CONDITIONS:

• You have to create your own journal and track progress under the 3:1 Challenge channel. Mr.
Robin Flow was the first one to start such a challenge. It would be great that you follow the same
template that he's created on his own journal

• You have to follow all the stages, one by one as described on the challenge, Forex Tester, Demo
mode and Live mode. Doing it is key. Maybe you will think it's a waste of time, that's up to you.
How many times have you started to make things in your life and you didn't finish them and
looked back and said, what if I had not stopped doing what I had to do? Don't let that happen in
your trading

• You have to log all of your trades, otherwise we won't be able to revise them later, it will be
impossible. Logging your trades will help you a lot on your trading

• Recording videos of your trades (optional). This will help you A LOT, and I mean a LOT. Even if you
don't share them as unlisted like I've done, it will help you so much

• You'll need separate demo/live accounts to test the H4 and D1 entries. We can't and shouldn't
mix. This is exactly what I've been doing for months on my live H4 and D1 accounts, we need to
separate them in order to get the right picture and analysis on each account. You may decide to
make the tests and challenge only on H4 or only on D1, or both, you decide, but they should be
separate
It will help you a LOT as well as others. Helping yourself is great, helping others is more gratifying. Your
learning curve will get better, that's for sure, as well as the confidence in the rules. This works not only on
supply and demand trading, but on ANY strategy that you may have tried before. Why do most traders
fail? Because they are not patient enough, they don't have strict rules and they switch from one strategy
to another hoping that the next one will be the Holy Grail one, but that never happens. ALL strategies
work if you have a sound set of rules, correct money management and you take most of your emotions
away.

I commit to reviewing all of your trades in the challenge personally. That is translated in quite a few hours
of work to help, but I love the idea and I love helping.

But you know the funny thing about it? The funny thing is that most of MOST will not accept the
challenge, because you will not believe in it, you will not consider it necessary, and a few more reasons. I
have something to say about that, let's about this in 6-12 months' time and see where you are if you didn't
do things as you had to do, and compare your situation with those that DID do the things they knew they
had to do. You can't learn medicine and expect to make a heart operation after 1 year or 2 studying
medicine, you will kill all of the patients. But we think we can be great price surgeons... ego... you know
what I mean. It's human nature, we need to fight against that, most can but they don't want to.

Remember this VERY important thing:

95% of traders fail because they don't do what they know they have to do. A person with a good discipline
but a poor trading method will outperform a person with a poor self-discipline but the best trading method
currently available

You have a good method to follow, that's not the problem. But do you have the discipline? Let's find out.

That's my commitment, it's now up to you. I can't force you to do this. I know what the result will be if
you make it and which one if you don't make it... but up to you! It's funny to see that we always find the
time to take wrong trades but we don't want to find the time to work on improving and gaining confidence
in our entries. We want to believe that we can't make it with so much practice, but that's our ego trying
to play tricks with you. Listen to your thoughts!

My best wishes to all of you.

Trade Management and Exit Tactics

14th October 2013, 02:44 PM

Let me quote Mark Douglas from his book Trading in the Zone before starting this lesson:

"To think in probabilities, you have to create a mental framework or mindset....A probabilistic mindset
pertaining to trading consists of five fundamental truths:

1. Anything can happen

2. You don't need to know what is going to happen next in order to make money.

3. There is a random distribution between wins and losses for any given set of variables that define
an edge.

4. An edge is nothing more that an indication of a higher probability of one thing happening over
another.

5. Every moment in the market is unique.

When you adopt these five truths, your expectations will always be in line with the psychological realities
of the market environment. With the appropriate expectations, you will eliminate your potential to define
and interpret market information as either painful or threatening, and you thereby effectively neutralize
the emotional risk of trading.

Mark Douglas

Pulling the trigger to enter a trade can be the easiest part. Exiting can be very tricky. Our results will not
be measured by how well we pull the trigger, but how successful we are managing our trades and exits.

A TRADE SETUP IS COMPOSED OF 3 STAGES:

1. PRE-PLANNING (Before you enter a trade)

• Do not take any trades if it's not pre-planned

• Analyze the market and decide if you have a valid trade as per the rules, room to opposing
HFT SD area, that is, following your trade plan

• Calculate the most logical stop loss placement according to the rules. Don’t place your
stop loss to too close to your entry just because you want to trade a bigger position size.
You need to place your stop loss strategically so that the trade has proper room to
breathe, usually adding about 20-25% wiggle room away from the proximal line of the
imbalance you are trading

• Set your limit order and wait for the setup to be triggered
 • Accept the potential for loss. You need to mentally accept that any one trade can lose.
No matter how good a trade setup looks or how confident you are, it can still end up being
a loser. This will help you not to risk more than you’re comfortable with losing or do things
like trying and avoid a loss by moving SL to breakeven too soon

• Accept that the trade needs time to play out. The market usually fluctuate before it hits
your profit target. If you try to react to every little fluctuation in the market by switching
to lower timeframes to see what's going on down there, you will end up modifying your
trade and affect the results of your trading account. You need to accept that your trade
will need time to work itself out before you enter it, so be prepared to do nothing.

2. TRADE EXECUTION (During the trade, the trade is triggered)

• The trade is executed by your broker. Now you are in the trade

• This is the moment where most people screw it all up. They sit for hours staring at their
trades, watching the charts, switching to lower timeframes to see some signals to modify
their stop loss, etc

• Control your emotions at this stage. You risked a % of your equity, it's a number's game,
accept the loss

• Let the market prove you wrong. Your goal is to leave the trade alone and either the
market proves your trade idea wrong or right

• Don't modify the trade, let it breathe and play out. Do nothing!

• Walk away from the charts. If you don’t leave the trade alone and let time pass, your
trading edge won’t have a chance to work for you. There are going to be ebbs and flows
for and against your trade. If you sit in front of your charts watching every little move,
you’re probably going to react by closing the trade early or making some other stupid
trading mistake. The most important thing you can do once your trade is all set up, is
nothin

• If you find that you’re constantly wanting to adjust profit targets, stop losses or close or
add to positions, you are probably over-thinking it.

3. MANAGING YOUR SL AND TARGETS (Take Profit and exiting your trade)

0. Moving SL to Breakeven

• When to move your SL to Breakeven to protect your trade

1. Targets and Take Profit

• Which are your targets? You have 1 or more targets?

• Will you exit at an opposing SD area?

• Will you trail your SL above/below new SD zones until price reaches a HFT SD
zone?
AFTER THE TRADE IS OVER
The first thing you should do after a trade, no matter the result: win, lose or breakeven, is to relax for a
while. Forget about the market and that particular instrument you traded for a while and take a break.

After your last trade ends, it can be very hard to get back to where you need to be mentally in order to
wait for the next high-probability trade without over-trading. A winning trade is almost worse than a losing
trade due to the fact that it can make us over-confident about our trading.

We've already covered how to pre-plan a trade and what to do when the trade has been executed. It's
time to cover what to do when the trade is running.

WHEN TO MOVE STOP LOSS TO BREAKEVEN + SPREAD (and/or commission)

As a rule of thumb we'll be moving our SL to Breakeven once our trade has moved at least 2:1 R/R
(Risk/Reward) from our entry point.

For example:

A common big mistake is putting your stop losses too close to your entries. Good trades often take longer
to play out than we expect, and with that comes the fact that markets fluctuate across time, often
meaninglessly, so you don’t want to get stopped out of a good trade setup prematurely just because your
stop loss was too close.

What you want to do, is find the closest opposing imbalance on the chart that will invalidate put your
entry in jeopardy if price moves beyond it. Often, this level is further away than most people want it to be
or think it should be. The difficult thing about having wider stop losses, is that if you want to manage risk
properly, it means you have to reduce your position size down as your stop loss distance grows.

Let's cover some examples:

• Long entry triggered at 1.1000, our SL is set 25 pips below at 1.0075, THEN we'll move our SL to
BE at 1.1050 once price has travelled 50 pips (2 RR) in our direction

• Short entry triggered at 1.5500, our SL is set 35 pips above at 1.5535, THEN we'll move our SL to
BE at 1.5430 once price has travelled 70 pips (2 RR) in our direction

RULES TO MOVE SL TO BREAKEVEN

• Move your SL to BE + Spread/Commissions after 2:1 R/R

• Other options:

• Move to after 3:1 R/R to allow price to breath a bit more You trust in your level and you
don't want to have your entry retested and kicked out of a winning trade

• Don't move your SL to BE, your trade is either a win or a loss You don't care what price
does, you want your trade to move far away from your entry price before you touch your
SL
PROS AND CONS OF MOVING YOUR SL TO BREAKEVEN AT 2:1 R/R

• PROS

• Your trade is safe, your ego will feel satisfied and you will breath better

• Your fear of losing is under controlled

• You can concentrate on other setups and forget about this one since it's now safe, you
can't lose (exception: Sunday open gaps and big news events do not respect your SL)

• CONS

• Price can retest your entry before it finally takes off of your entry level, this happens
VERY often

• Your ego will fight against you if it sees that price kicked you out of a valid trade on a first
retest and the trade played out really well without you riding it

• You can miss very good trades if you don't allow price to breath enough to
accumulate/distribute before taking off

WHAT CAN YOU DO TO PREVENT PRICE FROM KICKING YOU OUT OF THE TRADE ON A RETEST?

You are tired of seeing your entries retested and then see your level working well without you riding it?
We need to let price breath and orders be filled by market makers and big institutions. There are some
options to prevent that from happening:

1. Move your SL to BE + Spread/Commissions after 3:1 or 4:1 R/R allowing price to breath a bit
more

2. Do not move the SL to BE after your minumum R/R ratio has been reached

• Leave the SL where it originally was, above/below your level's distal line, and let the trade
breath and take off

3. Close half of your position at 2:1 R/R or even 3:1 R/R and leave your SL alone

• By doing this, your trade is safe, you can't lose, fear is under control and you will feel more
relaxed

• If you close 1/2 of your position at 2:1 R/R, you will sacrifice half of your position but you
will kick your ego hard in the ***, the trade is now safe, you can't lose

• Manage your SL manually as described below

TARGETS: HOW TO MANAGE YOUR STOP LOSS WHEN YOUR TRADE IS RUNNING
Once your trade is running, there are several ways of managing your SL. Managing your SL is key to
become profitable, you have to have rules in order to prevent you from closing your trade too soon. First
of all you need to define your targets. A target can be either fixed or dynamic. A fixed target (exit) is a
specific price where you will exit your trade. This price can be different depending on which type of exit
you decide. You must make a decision before on the pre-plan stage of your trade.
TYPE OF FIXED EXITS: be realistic!!!

• Targets 1, 2, 3 or more can be at opposing SD areas

• You analyze your entry TF and locate good opposing SD areas where you are going to set
your Targets at. Always a few pips before within the zone, never at the zone

• Exit at a specific $ amount

• Define a price based on a specific $ amount you want to earn

• Exit at a specific % amount

• Define a price based on % amount you want to earn

• Exit at a specific R/R ratio amount

• Define a Risk/Reward ratio at which you want to exit your trade, minimum 3:1. You can
set it at 4:1 or 5:1, no matter what zones you have above/below your entry

• Be realistic, don't set a 5:1 ratio if there is a fresh D1 supply area right at 3:1 off your long
entry at demand

TYPE OF DYNAMIC EXITS:

• Technical Stop

• After your entry place your initial SL under the nearest demand

• After a new Highe High has been printed on the charts, move your SL under Higher Low

• This is the exit that I normally use. Learnt it the hard way

• Trendlines

• Since we are using Trendlines in order to assess our trend, it's also logical to use them to
exit our trades if they are solidly broken in the opposite direction

• Let price breath and use the TL rules to move your SL, moving SL underneath your TL if
you are long, exiting the trade when there is full OHCL candle below the ascending TL.
Opposite for a short entry

• There are others like Moving Average tradiling, but I won't use them

TOO MANY OPTIONS? DON'T WORRY, THERE IS A PLAN

I guess that now your head is clouded with so many different exits rules. You need to make a decision
based on what type of trader you are. If you can't make it or are unsure, let me give you some hints.

The exits strategies you chose will be directly related to where you are located in your Higher Timeframe
SD Range. If you are right at fresh Weekly supply, don't move your SL to Breakeven at 2:1, come on, BE
REALISTIC! Let price breath! If you don't, you will probably have quite a few breakeven trades, you will
most likely miss big runners!
These are the exits strategies that I use, it might help you make a decision. You can use mine as well, you
ned to make up your mind.

• MOMENTUM Trade Setups with room to HTF SD zone

• Close 25% or 1/2 of your position at 2:1 or 3:1 R/R and leave your SL alone a few pips
away from my zone's distal line

• By doing this, your trade is safe, you can't lose, fear is under control and your ego
won't be bothering you

• You will sacrifice part of your position but you will kick your ego hard in the ***,
the trade is now safe, you can't let it run hundreds of pips IF there is room for
that of course, but fear of losing is out of the game

• Manage your SL manually using Technical Stops

• LOCATION and MOMENTUM+LOCATION Trade Setups with room to HTF SD zone

• Close half of your position at 3:1 or 4:1 R/R and leave your SL alone

• A location type of trade can be a turning point in the markets, not to say if it's a
fresh WK supply with a Monthly downtrend, that trade can be a runner, don't
play with your SL, leave it alone

• A location + momentum setup can become a rocket, don't play with rockets, you
may regret

• Wait for a nice departure off your level and for brand NEW SD zones to move your
SL a few pips above/below those new zones distal lines

• Manage your SL manually using Technical Stops

You can change the R/R mentioned on this lesson, you have to do whatever fits better with your personality
as a trader.
LIVE EXAMPLE ON HOW TO MANAGE YOUR TRADE USING TECHNICAL STOP LOSS

• Once a trade is going your way (example for a long trade t H4 demand) you will move the SL
underneath new valid H4 demand zones as per the rules

• Every time there is a new H4 demand level that would be valid for a new long, having made a new
High High, enough profit margin (RR) to trade it, etc, we will move the SL

• Until when? Until we reach an opposing HTF area or we're trailed stopped out because there is
no HTF are like in this case. The Russell 2000 index it making all time history highs
The screenshot and attached PDF visually shows the basics on how to manage entries and exits. The flow
chart was entirely created by one of set and forget's members, Robin, who has also created other great
flow charts for the community, a perfect example on how we can all work together to form a community.
 READ THIS FIRST!

To understand this tutorial

you should have these
prerequisites:
None
Entry and exits
EURUSD Proximal line 2
Spread: 2 pips pips entry
padding + 2
H4
pips spread.

At least 2:1
RR.

Price has Distal line 7

Price retraces moved away pips wiggle
too fast into the from the level room.
level.

Now you need to know the spread and what pair

We start with trending markets and CP patterns.
First we need a RR of 2:1. That price moves
away from the proximal line at least 2 times the
risk.
Price has made two legs away from the base and
We don't want price to drop in to the level right
has not yet touched the level. Now we can setup
after the first leg is created.
our trade.
you are trading and what timeframe. As for my
setup I need 2 pips entry padding + spread, 7
pips wiggle room and taking profit 30 pips
before a level.

Close
half SL to BE
position

Less than
2:1 still
vailid if
At least price
2:1 already
We are in the
moved 2:1
trade now we
have to manage
our trade. 2:1 2:1
Padding +
spread +
wiggle room
1:1 1:1
1.4517 ENTER STOP-LOSS STOP-LOSS

1.4500 STOP-LOSS
When you put in the order it should be a "buy
limit" type of order. The order should be When price has moved 2:1 you can either close
Our order got triggered. Now we have to manage But if you wan't to move your stop-loss to break
executed at 1.4517 and the stop loss at 1.4500. half the position OR move you SL to break even.
our trade and there are many ways we can do even after 2:1 you can do this as long as price
Now we have setup our trade with padding + Price must be more than 2:1 if you want to close
this. Let's look at some of them. has moved to 2:1.
spread + wiggle room. Now we just have to wait half of your position.
for it to get triggered.

H4 H1

EURUSD No levels
Spread: 2 pips Move SL to to move
2:1 distal line + your SL Add extra
H4 wiggle room. wiggle
under
room if
needed.
1:1

Previous Previous
Wiggle resistance resistance
room STOP-LOSS
New 2:1
valid level
created. Extra wiggle
room

The trade is moving in your direction. You now

wait for new demand levels to form so you can
move your SL under those levels. These levels
can be both CP or Drop-Base-Rally patterns.
They have to remove previous supply or
resistance and have a 2:1 RR. In this case a CP.
Now you add wiggle room to the level and move Let's say your using MN-D1-H4 and the momentum is strong and you don't want to give back all
your SL to the levels distal line + wiggle room. those pips. Look inside those ERC H4 candles with the H1 for a level and move your SL under it. If
You can also scale into position (Trade this level there is previous resistance near then it's even better. If there is resistance near make sure you
and also keep the other position.) include it even if that means you have to make your risk a little bigger for higher odds.
How to pre-plan a supply and demand trade in a mechanical way

2nd October 2013, 10:47 PM

There are certain variables you need to take into account when planning a trade, these variable's default
values differ whether it's a long or a short trade.

Remember we must PRE-PLAN,every single trade. A manual market execution order is probably driven by
emotions, this is why we have to make a thorough multiple timeframe analysis before planning a trade.
By doing so you will prevent the emotions from taking control of your analysis.

The variables we need to take into account to plan a trade are:

• Entry price. This is the SD level proximal line we plan to trade

• Stop Loss. This is the price that will protect our trade. Always protect your entry by adding a %
wiggle room to your SL (imbalance distal line)

• Targets. These are the price areas where you intend to lock in some profits or exit your trades
entirely

• Entry padding. Percentage of pips/ticks above/below our SD level's proximal line

• SL padding or Wiggle Room. Percentage of pips/ticks above/below our SD level distal line we
need to add to protect our trade from market makers and spread widening (slippage)

You must know where you will be exiting your trade before you open a new trade. By knowing where
to exit your trade before pulling the trigger, you will be making an objective and rational decision ; once
you are in a position you will lose objectivity

It's paramount that you take into account these variables, otherwise you might probably miss many
entries or fall short of reaching your take profit for a few pips/ticks. These variables will be the same for
all instruments since we will be dealing with percentages and not a fix number of ticks, pips or points.

As a rule of thumb use 25% the width of the level as wiggle room instead of a fix pips/ticks for any
instrument. Experience will tell you when to widen it.

This calculation should be done based on the average width of a level on that particular instrument and
timeframe. Remember each instrument is different so using a % rather than a fix number of
ticks/pips/points is more logical.

Below are the percentages you have to use to plan any trade on any timeframe and/or instrument.

These percentages are irrelevant to the markets your are trading, these percentages apply to all
markets, futures, spot Forex, ETFs, commodities, indexes and Stocks.

• Stop Loss Wiggle Room: 25% the width of the imbalance

We must protect our entries with a minimum of 25% padding to our Stop Loss (wiggle room). We
just can't place our SL at the distal of the imbalance we're trading. Often times the imbalance will
be overshot and price will move in your direction but you won't be in the trade if you don't protect
 your SL by adding some padding. If the imbalance is 100 pips/ticks wide, then your SL wiggle room
should be 25 pips/ticks, if the imbalance is 200 pips/ticks then your wiggle room should be 50
pips. The wider the imbalance, the bigger the wiggle room since this padding is a percentage.

• Entry Padding: from 0 to 5% the width of the imbalance + the worst scenario spread
The same concept applies to your entry, but it is optional. Often times price will retrace to your
entry but your broker will not trigger your entry. Why? Because of the slippage (difference
between the bid and the ask price). An imbalance has a range of attraction, an aura, it's advisable
that you add some padding to your entry + the worst scenario spread

• Take Profit (exit): from 5 to 10% off opposing level, unless you have a fix target. Target and Risk
Reward should include every you are risking including SL padding 25%. If your risk is 100 pips +
125 pips, a 3:1 target will be reached at 375 pips not at 300 pips
AUDNZD WEEKLY IMBALANCES
There are three demand zones marked on AUDNZD weekly chart. We must add 25% padding below the
distal lines. The red lines show where the stop losses should be placed approximately. Distal lines of
imbalances [1] and [3] were respected, however distal line of imbalance [2] was overshot AT [4] by a few
ticks and then went in the direction we expected.
COTTON DAILY IMBALANCE OVERSHOT
It's common to see levels overshot by a few ticks and then have price going in the direction we expected.
It's mandatory and crucial to add padding to your stop loss, at least 25-30% of the width of the imbalance.
Daily demand in Cotton chart is about 1.25 points wide, our stop loss should not be set at 76.27 but 30%
lower, approximately 0.36 points lower at the red line.
Daily Routine. Checklist to become a Top Performer

12th October 2013, 10:48 AM

WHY IS TRADING SO ELUSIVE?

If we want to lose 10 kg but refuse to eat well, exercise, and change the habits that created the extra
weight in the first place, affirmations by themselves probably won't work. The same applies to our
finance and trading, if we want to become financially successful but don't set goals, have plans and act
upon them in meaningful ways, we can visualize all we want and we're probably going to remain where
we are. Maybe in some other parallel universe we have yet to experience, we only need to hope and think
about something and it will happen automatically, but here in this world we live in, action is required. If
this analogy was not good enough for you think about why can't people give up smoking or why is it so
difficult to break up a relationship with your girl-boyfriend...

No matter how many books on self-help, self-esteem or law of attraction you read, reading them will
not help you achieve your goals. A plan of action is required to attract the circumstances that will make
it happen

When we first learnt to ride a bicycle, at first it seemed impossible, didn't it? But once we got it, it was
easy, and we have never lost that ability. The same applies to trading.

The biggest hurdle is our doubt that we can do it. With practice we will find this is easier than we originally
thought, and the results that we obtain will speak for themselves.

To be successful you have to do more than just think about success; you must act in meaningful ways,
attracting the circumstances that make it happen. If we want a healthy body, a promotion in our full time
job, a million dollars, success in trading, or any other goal we have envisioned for ourselves, we need to
do more than thinking we can do it and then sit back hoping for the best.

When you believe it's possible a thousand unseen helping hands will come to your aid when we embark
on a course of action that has passion for us. Passion is key in the former statement. We must feel passion
about what we do, because passion will keep us focused, attentive and alive

It's through daily repetition that the conscious mind imprints patterns into the subconscious. This is why
I am always emphasizing the importance of a daily routine and practice. Sacrifice is needed, it sounds
unpleasant but it is not. We sacrifice watching TV so we can work out at the gym or going out for dinner
with our friends. We must not be ignorant about what is required to become successful in trading or in
life, we have to be willing to make whatever is necessary to achieve our goals.

PLAY TRICKS WITH YOUR MIND & EMOTIONS

You may think that you are in control of your behavior, unfortunately none of us is. Our behavior is
controlled by our thinking, and our thinking is controlled by our feelings and emotions, and then by our
physiology. Read about this in more detail here

Trading is emotional, we need to take control of our emotions in order to have success in trading. We
need to listen to our body and measure our emotional temperature. Our body will tell us how we feel if
we ask him and we're ready to accept what it is telling us. Don't trade when you are low, sad or very high,
you will make many mistakes.

We have to play tricks with our mind so that those emotions can be overridden. In order to achieve that,
we need to have a plan and follow it successfully. We need to create habit, repeat the same thing over
and over until our mind can't think of anything else but the newly created habit.

Some of the tricks that I use:

• Get up and get dressed as if you had to drive to your office. Most of us work from home since
we are retailers that trade for ourselves, we don't have a physical office other than our private
office at home (our bedroom, living-room, whatever). Working from home is a dream for those
that do not work from home, but it has a lot of disadvantages. The main one is that you time flies
and you can spend 10 hours in front of the computer non-stop, that would be over-trading and
over-analysis if we apply it to trading. Wake up, have breakfast, get dressed as if you had to drive
to your office down town, this will allow get your mind into thinking you are leaving home and
you have a boss (subconscious) to make happy

• My office closes at midday. Imagine you work for a company and your office closes at midday,
just 3 hours after you start working. You have to be very efficient and know what you are doing
because after that time is past you will no longer have access to your computer and you will won't
be able to make any further analysis or placing any trades till next day at 7 or 8 a.m when you
start working

• Don't run your trading platforms to watch your charts till next day. Once you have finished your
analysis, close your trading platform and do not open it till next day, it's completely forbidden.
Remember you don't have access to your trading platform since the office is closed, be efficient
and have all your work ready in 3 hours or you will have to complete on the next working day. If
somebody asks you about a trading setup or you think you have to load your trading platform to
check a doubt, you can't do it, you have no access to your office remotely

• Uninstall your trading platform from mobile. Do not install Metatrader or whatever trading
platform you are using on your mobile. Remember your office is closed and no remote access is
permitted. If your boss learns about it, you are fired. Be consequent with your actions, you might
lose your job

• Forward test with Forex Tester when your live trading hours are over. Once your office is closed,
you just can simulate price action by forward testing with Forex Tester 2 or any other software
that will allow you to hide future price action. Do not backtest or visual back test with your trading
platform (Metatrader or similar) because you will be tempted to look at current price action and
then your boss (subconscious) will know about it, you will break the rule and your emotions will
gain control again

• Practice, practice, practice. In a diet and you feel the urge to eat some sugar? Eat an apple! Still
feel the urge to trade but no access to live feed? (remember it's forbidden). Use your time to
practice and forward test
DAILY ROUTINE

Without a daily trading routine, you won’t make it.

Top athletes perform well because they have rituals and routines for everything single thing they do in
life. I think we can all agree that habits are what determine our success or failure in any endeavour or
challenge in our lives, trading is not an exception. How do we develop the type of habits that will lead us
to become profitable traders? The answer is straightforward: Routine

Proper trading habits do not just magically appear out of thin air. These habits can sometimes take years
to form. Not everything is loss luckily for you because you have the power to come up with a plan and put
it into motion, a plan that will bring forth the proper trading habits. The development of positive habits,
the ones that lead to success in any field, is something you can make a conscious effort to achieve simply
by implementing consistent daily routines.

When you think about your daily trading routine, what do you think about? Do you even have one? Are
you aware that professionals, not only professional traders, but lawyers, doctors, have strict routines
whether they realize it or not? They follow these plans and routines like clock-work, everything from diet,
exercise, sleep and meditation. One thing that any successful professional has in common is that they
have gone from daily routines to ingrain those habits that virtually guarantee consistent and on-going
success in their field.

I am not talking about just having a trading plan either, I’m talking about what you do from the time you
wake up to the time you sleep, this is all part of your daily trading routine. Professional traders have
developed a daily routine that maximizes their ability to trade successfully.

This routine can take you about 1-2 hours every day, some days it can take you less, about 30 to 60 minutes
maximum. It will depend on how many instruments and which entry timeframe you are trading, as well
as how experienced you are.

Since I am on GMT +1 by living in Spain, I can trade the best 2 markets, London Open and NY Open. I have
chosen to trade the London market, since it's the biggest market and it is on my time zone. However, it
doesn't really matter which market you choose since we are focusing on swing and position trading. You
can trade at nights after work, from work or from home when you have some spare time, SD levels have
no waking time, they just exist.

The beauty of supply and demand swing trading and having a strict plan is that you don't have to be in
front of the computer all day long

One you have your HTF zones painted on your charts (D1, WK and MN), you won't have to draw them every
day. Those zones hold longer than you think on a WK/D1 and MN/WK combos. Your homework is done
from the previous day, you just have to look at your entry chart and decide if you can buy or short according
to the strict rules you should know by heart. If the decision process takes longer than 10-20 seconds, you
are in trouble, skip to the next instrument.

1. Check your emotional temperature. What the heck is this?

 • If you feel anxious, sad, low or exactly the opposite, don't trade, you will not be making
the right decisions. Take your day off

• Being in control of your feelings and emotions is essential for trading, you need to have a
clear mind. If you feel emotional, auto-sabotage will probably occur

• Ask yourself how you are feeling, take your emotional temperature and make an objective
decision

2. Check what the US Dollar Index is doing, or what the major Indexes are doing if you are trading
Stocks

• Forex is all about trading currencies and speculating on other countries' economies

• The US Dollar is one of the strongest ones if not the strongest. The dollar index is a major
index and key to Forex traders

• Check the S&P500 and Nasdaq indexes if trading US Stocks. Check the Nifty and Nifty bank
indexes if you are trading Indian stocks, etcetera

• If the dollar index has hit a fresh and original HTF supply, the euro and the major will
probably start bouncing off if they are also close to an opposing HTF demand area. Similar
on the major indexes

3. Check Forex Factory site to see if there are major news event coming soon

• Check the news only if you are trading H4 and lower imbalances, news are not taken into
account if trading a longer term trading sequence like Monthly, Weekly and Daily
timeframes

• Create the habit of checking out FF for majors news event for the day and week

• Plan your week head with the major high impact news in mind

• News can easily remove SD levels if these are not located within a HTF zone

• Avoid unnecessary losses by staying out of the markets before, during and after major
news events

• Refer to the news lesson in order to learn more about it

• Alternatively you can use www.myfxbook.com, it has a news calendar where you can set
alerts and receive them by email if you are logged in

4. Load your Metatrader 4 platform

• When you first load MT, which instrument will you look at first? You should pay attention
to those that are close or at HTF SD zones or have had the zone broken

• Start doing your top down analysis on all the instruments you are tracking, there is no
order in particular. I have them ordered alphabetically, I always start from AUDUSD and
end with USDxxx cross pairs
 • Ignore those that are unclear and skip them during current week, don't look at them until
next week. You will do the analysis again and decide if those instruments ignored last
week are now providing a clearer picture

• Why should you start with EURUSD if that instrument is doing the same thing it was doing
yesterday? Leave it for later in the process, first things first

• Broken zones might be providing some nice long/short opportunities, if you look
at them the last you might miss those setups

• Price at HTF SD areas might have setups ready to take out, look at those first as
well

5. Check what the MAJORS are doing in the specific order you like the most

• For me the majors are the majors economies currencies: EURUSD, USDCHF (euro's
mirror), GBPUSD, AUDUSD, NZDUSD, USDCAD, and USDJPY

• Check FIRST those majors that have some HTF zone broken, then those close to a HTF SD
zone

6. PRE-PLAN all of your trades

• Decide what direction you can take on the setups you located and place your limit orders

• Decide which conditions would prevent you from taking the trade or make you cancel
them (TL break, HTF too close, etc.)

• ALWAYS pre-plan all of your trades, do not use Market Execution orders because those
orders will be driven by your emotions. You will see that you missed a setup, trade is
already playing out, you want to be in... but you know what? You missed that train, skip
it!

7. WALK AWAY, TURN OFF YOUR COMPUTER

• All previous tasks are overridden by this one task. If you don't stay away from your
computer and leave your trades alone, you will be wasting your time and your money
since you will be changing them depending on your emotional status at the time

8. PRACTICE FORWARD TESTING IF YOU HAVE SPARE TIME

• You've been a good boy/girl by finishing your daily job quite fast and you have spare time.
What to do? Add more instrument and trade more? No way

• Use the remaining time to practice on Forex Tester, stay away from the live charts (you
are not allowed)

• Allow for at least 3 sessions (1 hour each) a week of forward testing with Forex Tester.
Recommended 5 hours a week, organize your time as you like

• Record the sessions and listen to some of them after some time
 • Speak to yourself, by talking out loud you will be more objective and listen to your
thoughts, you will black out the noise

9. RITUALS ARE IMPORTANT. MANAGE YOUR ENERGY AND FATIGUE

• Managing your energy is a decision factor for your trading routine or any other routine
that you have in your life

• Rituals are important, it's preferred that do the same thing at the same time and the same
way. By doing so, a new habit will be created and it will be second nature for your mind,
no further thinking will be needed to execute a routine or a habit

10. ENJOY LIFE

• Once your daily trading routine is over, enjoy your spare time, your family and friends.
Let the market do whatever it has to do, you are not in control. No matter how much you
look at the charts, you are not going to cause the move of a single pip

You may have other tasks to add to your routine, this is just what I personally do. This trading routine is
pretty simple and straight forward.

An example? This is what I do approx.:

• Wake up at 7 a.m my time. I have a shower and healthy breakfast, get dressed and get everything
ready to go drive to my office Eat a good and healthy breakfast

• Analyze the charts on my account, adjust my levels and place any trades that I see

• Check your charts and apply the realignment rules to your 3 timeframes sequence and decide
what is the highest odd direction

• I scan through my charts tp identify key supply and demand levels I want to trade at

• I plan my trades, most of the time trades have been planned days before, I just double check that
rules still permit those trades

• I filter all them out and post the some potential scenarios in the forum

• After 1-2 hours I should done with my analysis and submitting the posts

• I will turn off my trading platform and will not look at the live charts till next day, the office is
closed

• I will check the forum from time to time using my mobile but I will not load charts on my mobile
or at home, it is strictly forbidden. But I can answer any question that requires my attention

• By 9 a.m I should be ready, many times it's sooner than that

• The rest of the day is "free". I will practice with Forex Tester 1 hour a day, 3-4 times a week. It will
normally be the day when I finish very soon with everything

• Monday morning is very slow (no work normally), no work Friday afternoons
 • Will read a bit, go have a walk, work out, do nothing, anything but trading!

• Then lunch, beach, gym, friends, dinner out sometimes

• 1-2 times a week I will have a massage on the beach, a Chinese girl that does lovely massages.
These massages are priceless

• Free weekends to practice outdoor activities: canyoning, trekking, caving, diving, water sports, or
just beach with friends that do not share these passions and hobbies with me

• I take some days off often, and will do it more often from now on since I am trading the D1
imbalances more and more

Whilst brief and simple, the above is an example of a my daily trading routine. The biggest thing to notice
about the above routine is that I am not spending a lot of time analyzing the market or entering trades.
Instead, I am approaching the market the same way and at the same approximate times every day, this
way, by doing so my bran is primed to begin turning this low-maintenance, simple routine and trading
approach into a positive trading habit.

It’s important that you develop your own trading routine, one that makes sense with your schedule and
daily life. The same routine will likely not work for every trader.

It’s always good to remember why we got into trading in the first place. Escape the 9 to 5 daily job routine
is probably one of them, besides the monotony of work, bosses and the 'rat race and call modern-day
slavery. Keep all that in mind, I don't think you want to end up turning trading into the same exact thing
you were trying to escape. Trading is all about freedom, so don’t become a slave to the markets and your
charts. There is life out there away from the charts, don't feel passionate about trading, leave passion for
your couple, family, friends, and those things you love doing.

Create a habit!
 Think of exiting your long
Are you in a long positions OR trail you SL
No position? Yes
closer to price to lock in
profits.

No

Buy ALL valid higher odds

Do NOTHING find
fresh ENTRY TF demand
another pair.
Are you below 80% in levels, as long as you have
the Curve? Yes
a minimum 3:1 RR to
opposing supply level or
Up resistance.
Yes Yes

Switch to entry TF. Draw Are you in the middle of the

Choose a TF Check Curve TF Draw/ Is price at Curve's Are you in a up, down
TL (connect the last two Is the TL broken? curve without momentum? Do NOTHING find
Combination (MN/ Update SD levels in No No No No
supply or demand? obvious valleys or or no trend? another pair.
D1 combo) control Diddle in the middle
peaks).

Yes
Down
Sell ALL valid higher odds
fresh ENTRY TF supply
Are you above 20% in levels, as long as you have
the Curve? Yes
a minimum 3:1 RR to
Do NOTHING find Is the Curve's level opposing demand level or
Yes used-up? support.
another pair.

No

No

Think of exiting your short

Do NOTHING find Are you in a short positions OR trail you SL
No position? Yes
another pair. closer to price to lock in
profits.
Is the Curve's level Switch to your entry TF. Is your entry TF SET AND FORGET YOUR
fresh? Yes fresh? Yes
Draw SD levels. TRADE.

No No

Switch to your entry TF

and wait for a
Confirmation Entry.

Wait for the opposing

entry TF level to be taken
out before taking the
trade.
Trend Trading plan

3rd February 2016, 01:07 PM

Now that we know what we need for a trading plan it's time to write your own. There are a series of
variables we will need to consider. Flexibility is allowed but how flexible, where and why needs to be
covered in the plan in a lot of detail, otherwise subjectivity and emotions will take control over your
trading and will produce unnecessary losses.

A trading plan is directly related to the type of trader you are and the timeframe sequence you've chosen
to trade. You first need to decide which timeframe sequence you want to trade, one that suits your
personality, job and needs. Do not fall in the trap of setting unrealistic goals like 20 or 30% monthly return,
that will just not happen, it just can't be consistent.

The following trading plan is just one of many different plans you can create and follow. This plan is
entirely focused on trading with the trend, counter-trend scenarios can be added to it but this trading
plan is exclusively a trend trading plan. Remember that counter-trend trades will most of the time be the
trades that diminish your capital and take away the hard earned money in clear trend trades. Hopefully
you will learn that over the months and years in your trading career.

The following trading plan takes for granted that you've done your homework:

• Back tested Set and Forget's supply and demand strategy for a minimum of 6-9 months on a back
testing software and been profitable in your tests

• Achieved 50% win/loss ratio or bigger on your paper trading

• Paper traded the strategy for 6-9 months and been profitable for at least 6 consecutive months
with an average of 5% monthly return

• You have not started to trade live without having going through those stages with success

Use the trading plan below as a wire frame to build yours on top of it.

THE TRADING PLAN

TYPE OF PLAN: Trading with the trend using a Monthly / Weekly /Daily Sequence. Revise every 3-6 months

DAILY ROUTINE
You probably wake up, have breakfast, lunch and dinner every day at the same time. Why shound't you
treat trading the same way?

• Wake up at 6:30-7:00 am

• My analysis and trading should be done at 7:00 am. I am not allowed to look at my live charts until
the next trading day. I am not allowed to modify any of my existing orders once I'm done for the
day. My office is closed, I have no keys

• Focus on the instruments that are clearly trending in the direction I want to trade
 • I am only allowed to trade for 1 hour a day

• Update the Set and Forget community and reply to emails from 7:00 am to 8:30 am

• Keep on replying to urgent posts from my mobile after 8:30 am

• Enjoy the rest of the day doing the things I like

• Allocate some time for testing if then scenarios as I see fit

• I'm allowed to do all -ing activities except trad-ing

• I'm not allowed to look at the live charts during the day. I'm not allowed to install any application
on my mobile.

Routine for holidays or travelling or located at different time zones: if I am on holidays, I must be flexible
and trade whenever I have access to a decent DSL connection and resting at the hotel.

WEEKLY ROUTINE

• Monday morning. Check all the instruments I trade. Filter them out to trade only those that are
clearly trending and offering clear setups. Ignore the rest

• Filter out instruments that are not trending (Monday morning or during the weekend)

• Go through all the instruments I trade and filter out the ones that are clearing trending
from those that are not

• Ignore the ones that are ignored until next week. Set alerts for a specified price area of
imbalance before I even look at that instrument again

• Allocate a minimum of 3 days a week for half an hour meditation

• Log all trades taken on Friday morning before ending daily routine

TIMEFRAME SEQUENCE

• Monthly: bigger timeframe direction and SD Range. Anything against it will require confirmation

• Weekly: intermediate timeframe for direction and SD Range

• Daily: execution timeframe

• H4 (optional):

• Used as WoW confirmation at nested Daily imbalances

• At Weekly imbalances, H4 will only be used if it's nested within a Daily engulfing pattern,
opposing area has been taken and no Daily opposing imbalance is in control

INSTRUMENTS I CAN TRADE

There are many different markets you can trade, if you are a Forex trader you have a limited choice of
instruments. If you trade Stocks and ETFs you will be able to lean on many more clear trend scenarios
more often since there are thousands of assets that you can trade, there will always be many offering
clear set and forget text book scenarios.

Forex Traders

• Avoid highly correlated pairs. Forex majors, cross pairs and exotics. like GBPCHF and EURGBP,
EURCAD and EURCHF, etc. Taking a long on EURGP is almost the same as taking a short on GBPCHF
therefore doubling your risk and potential loss, same on similar cross pairs.

• Indexes correlations. Similar correlations can happen on Indexes, if SP500, Nasdaq, Dow Jones
and Russel 2000 american indexes have very similar entries, don't take all of them at the same
time, choose 1 or 2 only

• Similar cross pairs correlations. For instance, JPY cross pairs. CADJPY, EURJPY, GBPJPY, AUDJPY,
NZDJPY, SGDJPY... if all have similar setups on your entry timeframe, don't make the mistake of
taking all 6 trades at the same time, these instruments are highly correlated, you would be over-
exposed in the JPY market

• Gold and/or Silver, Brent or WTI

• S&P 500, Nikkei Index

• Commodities

Stocks Traders
There are virtually unlimited equities and ETFs to choose from, filter them out and have an ample selection
of stocks you look at every week. Lean on clear trending scenarios. If you have the slightest doubt on a
trade, skip it, there are thousands of stocks, be picky! You just need a couple of good trades a month to
hit a 6% target.

Diversify my portfolio. If trading Stocks, diversify my portfolio. Most Tech companies are rallying together
with the Nasdaq? Choose the best looking ones. Put your money at risk in different sectors and industries

Do not trade Stocks unless there is a bullet proof protection (options or married puts), Trading the
underlying stock or CFD is very risky. Gaps make it impossible to have a fix drawdown in a trading plan.. A
single gap can cause a -10% drawdown or bigger, and break my trading plan overnight.

ENTRY AND EXIT:

• Complete trading plan before each & every trade!

• Once an opportunity has been identified, if set and forget, plan the trade in my platform

• Order placement using levels for protection and set alerts

• Place orders and let the trade breathe if triggered

MONEY AND TRADE MANAGEMENT

• Risk per trade: 1%.

 • Risk a maximum 1% of your account per trade and 3-4% of your equity at any time. Or risk
0.5% and take more trades with the same amount of risk. You might want to trade 4
correlated instruments, instead of taken 2 x 1% risk trades, you would take 4 trades at
0.50% risk, risking a total of 2% in all the trades. This is just an example, there are multiples
ways of doing this. Keep it as simple as possible.

• Reward/Risk for each trade: 3 to 1, that is $300 per $100 invested

• Monthly goal: 6-8%. If goal is reached, stop trading for that month

• Monthly draw-down (loss): 5%. If max drawdown is reached, stop trading for that month

• Maximum trades open at the same time: 4

• I would be breaking the maximum drawdown % specified in the plan (5%). -1.0% risk
multiplied by 5 = -5%

• I will be able to open another trade only if one of the running trades is at breakeven, but
I should justify the reasons and explain them in detail in the trade log

• Max of 2 losses at any one instrument. If I have 2 losses in an instrument that is clearly trending,
I will stop trading that instrument that month. Market dynamics might be changing if 2 valid high
odds imbalances have been taken out

• Max of 3 correlated instruments at any one time

• Max 1 counter-trend trade per month

Money management exceptions:

When to keep on trading once my goal has been reached:

Once my monthly goal has been reached, I will be allowed to risk 1 more trade under very -specific
scenarios.

• Take only on nested zones, that is, Daily imbalances within Weekly and Monthly zones

• Take only trades with the bigger picture trend

• No more than 1 trade at time. On a one by one basis

• If the trade is a winner, I am allowed to take a new one until 20% goal is hit or I have a loss

What to do when there is a losing month:

• If current month has been a -5% loss, next month's goal will be +5%, we will try to recover last
month's loss

• Once 5% has been reached, I will switch to one by one trade as if my full monthly goal had been
reached

What to do when there are two consecutive losing months (-10% drawdown):

• Stop trading for a full month

 • Analyze the losses in detail and adjust trading plan

• Back to testing on Forex Tester for a full month, test high odds scenarios and avoid the ones you've
had losses at

What to do if my Take Profit is very close but not hit and I see a strong support/resistance is being
created and no Daily/Weekly candle close, opposing engulfing pattern, opposing pin candle, etc?

• Close the trade before 3:1 profit is reached and wait for a new setup

• It's better to buck in profits rather than giving it all away. A bigger retracement might happen

When to move SL to breakeven?

• It's either a winner or a loss

• Exceptions:

• I will move SL to breakeven only under special circumstances, for instance, when opposing
candlestick patterns are being formed that are jeopardizing my TP. Patterns like those
mentioned in previous point where TP was almost hit and strong SR is being created

• If price has been doing nothing for a long time and started to range. Closing the trade
could also be an option

TRADE SET-UPS I'M ALLOWED TO TAKE

This trading plan only accounts for trades that follow a clear trend by applying the realignment rules. Only
a timeframe of the sequence has been broken, a trade is possible only at 1 TF higher (realignment), else
confirmation to resume trading in the direction of the broken timeframe's direction.

Trade scenarios listed below account only for long trades in an uptrend. The same setups will be available
in a downtrend.
SD Range values to be used:

• Stop trading at 90% of a fresh Weekly/Monthly SD Range unless level is nested within 1 TF higher.
For instance, D1 zones nested within Weekly zones in a trending weekly chart

• Wait for a bigger retracement, at least 1 TF higher than the highest TF in control to keep on trading
on nested zones

Monthly, Weekly and Daily UP

1. D1 demand zones without over-extension

2. D1 WoW long at D1 demand. Take all valid D1 demand zones

3. H4 WoW long as confirmation if D1 demand is not set and forget

4. H4 WoW long at D1 WoW long

Monthly and Weekly UP, Daily DOWN

1. D1 demand zone nested within Weekly demand

 2. D1 WoW long at Weekly demand

3. D1 WoW long at Weekly WoW long

4. D1 demand set and forget long nested within Weekly WoW long

5. Weekly demand (full zone) if it's just slighter wider than the nested D1 demand. Adjust lot size
and take full Weekly zone

Monthly UP, Weekly and Daily DOWN

• D1 demand zone at Monthly demand

• D1 WoW long at Monthly demand

• WK WoW long at Monthly demand if Weekly demand zone's width is not much bigger than nested
D1 demand zone

• D1 Wow long nested at WK WoW long

TRADE SETUPS AT CONFLUENCES

• D1 WoW long at D1 20 EMA with Weekly uptrend

• D1 WoW long nested at Weekly WoW long at Weekly and/or Monthly 20 EMA

• H4 WoW long at D1 20 EMA with Daily and Weekly uptrend, and compression to the left

• D1 WoW long at D1 bullish Trendline with Weekly uptrend

• D1 WoW long within Weekly WoW long at WK bullish trendline or Weekly/Monthly bullish
trendline with Weekly and/or Monthly uptrend

• H4 WoW long at D1 bullish trendline with Daily and Weekly uptrend, and compression to the left

OPTION B: WAIT ALWAYS FOR CONFIRMATION

It's not easy buying when price is dropping like a rock or selling when price is rallying strongly, but that's
what we should usually be doing when setting and forgetting our trades using supply and demand
imbalances.

There is an option for newbies or those that do not have the experience or guts to plan a set and forget
trade. You can always wait for confirmation at the imbalances you are planning to trade.

How will I execute the confirmation type of trade?

• Always wait for price to reach the HTF imbalance you are planning to trade and wait for a new
imbalance to be created, that is, one that takes opposing zone out or breaks the trendline. A WoW
trade is a confirmation type of trade. Read more about the WoW trade and what a confirmation
type of trade is here

• Instead of setting and forgetting at the D1 imbalance, wait for a new D1 or H4 imbalance to be
created formed by at least 2 strong ERC candles in the direction of the main trend
 • Avoid over-extended scenarios where there are 3 or more consecutive CPs in the same direction

Once you have executed this confirmation plan for a few months you will have start seeing how set and
forget levels work and you will have more confidence to plan set and forget trades. Alternatively, you
could also decide to trade exclusively on confirmation always, the WoW trade is the most powerful
pattern in the set and forget rules set after all. You will probably be missing many good trades but at least
you will be more relaxed and confident.

TRADE SET-UPS I'M NOT ALLOWED TO TAKE:

This trading plan is intended for clear trending markets so the following setups cannot be taken.

MONTHLY CONSOLIDATION AND/OR IN A TRADING RANGE

• I will need at least a clear D1 trend bouncing off MN DZ, not just a WoW. I will always trade in the
direction of the MN chart, thus I will take only D1 uptrend in a MN bullish consolidation

Do not take CT trades, work on your patience. Take counter-trend trades only under the circumstances
below and only if you have been profitable for 9 or more months in a row

• Brand new Weekly imbalance required, by either taking out previous zone or a WoW trade, as a
reaction to a 3 months, Monthly or Weekly imbalance

• Use lower timeframe sequence (Weekly/Daily/H4) with at least WK out of alignment to take
counter-trend until a HTF odd limiter is in control

• Weekly clearly trending

• Compression and tested levels to the left

• At least one WK engulfing pattern, or one WK bearish engulfing + piercing pattern with nested D1
imbalances

• No HTF WK and MN 20 EMAs and flip zones

• If new WK engulfing patterns are created on the way down, price is probably moving to opposing
MN imbalance. Wait for retracements to nested D1 imbalances

• Don't take correlated CT trades

Most common high odds trade scenarios

14th March 2016, 12:33 PM

In this lesson you will find a cheat sheet with a series of high odds scenarios for trending markets. Most
of these scenarios are mentioned in the trading plan lesson, make sure you read that lesson as well.

This cheat sheets is primarily based on trend trading setups only.

Only MN / WK / D1 and WK / D1 /H4 screenshots have been attached. Remember the lower the timeframe
fractal sequence you use, the more levels and noise you will see and the more difficult it's to trade.

MONTHLY / WEEKLY / DAILY SEQUENCE

WEEKLY / DAILY / H4 SEQUENCE

Other setups...

• Nuances and tweaks of the rules. There are other setups available based on many nuances and
some tweaks of the rules. You will start seeing them after months of practice. Nuances and tweaks
won't be added to the lessons because most traders will start seeing the patterns mentioned in
the nuances without understanding where and when those nuances are happening and which
kind of tweak can be done. In the past some of the nuances have been added and had to be
removed for this exact reason
• Develop your own nuances. Once you gain a good understanding of the strategy you will start
seeing other patterns that can be used to take a trade or confirm a trade. There are others, I have
quite a few. You will start seeing them if you test the strategy long enough, others have done in
the past. You will start develop your own rules/nuances that will help you get more trades and
skip others you'd initially have taken based on your experience, that's how experience
works Give yourself enough time to test the rules and time will do the rest.
Questions you need to ask yourself in order to plan a trade

10th October 2013, 10:40 PM

First and foremost, ask yourself what kind of trader you are. You MUST choose your timeframe combo and
STICK to it.

Refer to the Timeframe Combinations Lesson to learn more about what type of trader you are. It's also
important that you review the Core Strategy Flow Chart created by one of the members (Robin), it's key
to understand supply and demand rules laid out in the lessons.

ASK YOURSELF THESE QUESTIONS BEFORE PLANNING A SWING TRADE (MN/WK/D1/H4 combo):

You must ask the charts the same questions over an over. See each chart as the ancient Greek Oracle
that has the answer to everything, you just have to ask and offer a sacrifice, your time. Ask the Monthly
Oracle the right questions, then the Weekly Oracle, they will always answer you. The questions are always
the same when it comes to spotting and drawing Supply and Demand zones:

1. Is the Monthly in a Downtrend or in an Uptrend? The answer will dictate which longer
term direction you want to trade for a position type of trade, long or short

2. Refer to How to define the trend lesson

3. What zone is in control? Supply or Demand?

• Is price bouncing off high/low in the SD Range with a supply or demand area in control?
Pay attention if price is already bouncing off your SD Range TF

• This is key. If price is bouncing off my SD Range TF, hit the proximal line and it's dropping
to 70%, does that mean I can buy because it's lower than 80%? No, your SD Range TF is in
control. It would be a different thing if price was bouncing off WK demand and it's now at
70%, with room to fresh (not in control) WK supply

4. Is the Weekly in a Downtrend or in an Uptrend? The answer will dictate which direction you want
to trade, long or short for a swing type of trade

5. What is the trend on the D1 timeframe? Don't go against the D1 trend, respect the D1 trend for
better odds

6. Which is the last valid Trendline that I can draw? Ascending (two valid valleys) or Descending
(two valid peaks). If you can't draw a TL or you have removed an opposing demand zone when in
an uptrend, then no TL is possible and price should be consolidating

7. Has the SD zone I've drawn removed an opposing SD area or broken a Trendline? SD price action
is a chain reaction, if you miss a link in the chain the whole analysis will be broken, ask the charts
those two questions to learn if a potential imbalance becomes a zone. Read the lesson on how to
validate a zone, also watch this short video that explains it visually
 8. Is current price high or low in my SD Range timeframe? It will tell you if you can keep on
buying/selling or stop doing it and start looking for an opposite trade. Refer to The SD Range
lesson lesson to learn about altitude in terms of %

9. Do I have enough room to my opposing SD SD range timeframe SD zone?

If I am too close to my SD Range TF, I must not trade against it

10. Is price too close or at my SD SD Range TF's 50% retracement? Diddle in the middle. Wait for
momentum to either direction and trade with the D1 trend, don't try to outsmart the market,
50% is used by many to exit their positions

11. Am I close to or reacting to a last week/month high/low (support or resistance area) or a higher
timeframe trendline hit?

0. The template shows red/blue beads on the charts. These beads are support and
resistance areas (WK/MN highs/lows)

1. If we are very close to them or reacting from them, stay away, don't trade, wait for a close
on D1 candle, or a brand new level created after those highs/lows are out of the way

IF THEN SCENARIO #1: too high in the MN SD Range

• Question 1: Is the Monthly in a Downtrend or an Uptrend? UP Trend

• Question 2: How high or low is current price in the Monthly timeframe? I am high in the MN SD
Range, 85%

• Question 3: Do I have enough room to Monthly supply? Yes, only 15%

• Question 4: Is MN supply or MN demand in control? Where is price bouncing off? Comes

bouncing off MN demand, MN demand in control

• Question 5: Am I close to a last Week/Month high/low or HTF trendline hit? No

• Question 6: Can I buy or sell? We're too high in the SD Range, it would be a bit aggressive, longs
could work. If you are aggressive, smaller lot sizeswould be advisable

IF THEN SCENARIO #2: low in the SD range, MN demand in control

• Question 1: Is the Monthly in a Downtrend or an Uptrend? UP Trend

• Question 2: How high or low is current price in the Monthly timeframe? I am low in the MN SD
range, 25%

• Question 3: Do I have enough room to MN supply? Yes, 75%

• Question 4: Is MN supply or MN demand in control? Where is price bouncing off? Price bouncing
off MN demand, MN demand in control

• Question 5: Am I close to a last Week/Month high/low or HTF trendline hit? No

• Question 6: Can I buy or sell? Buy all H4 levels of demand that follow the TL rules, or full D1
levels while the D1 TL is respected
IF THEN SCENARIO #3: middle of the SD Range, diddle in the middle, last month high

• Question 1: Is the Monthly TF in a Downtrend or in an Uptrend? DOWN Trend

• Question 2: How high or low is current price in my Monthly timeframe? I am in the middle of the
Monthly SD Range, 45%

• Question 3: Do I have enough room to Monthly demand? Yes, 45%

• Question 4: Is MN supply or MN demand in control? Where is price bouncing off? MN supply in

control, last month high (blue beads)

• Question 5: Am I close to a last Week/Month high/low or HTF trendline hit? Yes

• Question 6: Can I buy or sell? Do nothing. Wait. Diddle in the middle

These are the same questions you should always ask yourself over and over and OVER again. Create a
habit! Make a posit and place it where you can see it all the time
The Psychology of Trading, change your mindset and think like a robot

25th December 2013, 09:52 AM

You can't always win, but don't be afraid of making decisions. He who says he can and he who says he
can't are both usually right

If you listen to anybody's opinion, no matter how good they are, no matter how smart they are, it's going
to blow up in your face.
You just cannot get ahead by listening to anybody's opinions, you have to generate your own ideas

WATCH THIS 6 MINUTES MOTIVATIONAL VIDEO BEFORE YOU READ THE LESSON

https://www.youtube.com/watch?v=g-jwWYX7Jlo

There are 3 stages to master anything in life: being, knowing and doing

This post contains many statements that have to be attributed to Mark Douglas, a leader in trading
psychology and successful trader.

It's so obvious what the great potential trading has, however there are these invisible barriers that
prevents your from getting into that potential.

You will be ridiculed in front of your friends for trying to become a trader, but eventually you will become
revered for what you've accomplished. You will be the one with the courage to be called weird, strange
and eccentric.. but still they will revere you.

We need an edge! No matter how good our strategy is or how much money we have on our live accounts,
we need an edge and a carefree state of mind in order to have consistent results in our trading

What is an edge? A higher probability of one thing happening over another over is the randomness of a
series of trades.

Trading is not about being right or wrong, it's about having the odds on your favor and another person
(or group pf people) believing the same you believe to make the markets move in the direction of your
trade

Trading results are random, you have to learn to think in probabilities

You can't know what the result of any given trade will be, nobody knows.

We need to accept the randomness of trading and accept that once we take a trade, we may have a loss.

• Our trades have to be seen as the risk we're willing to take to learn the result of any given pattern
that we trade

• However, even if you learn to think in probabilities, it does not mean you are ready to accept a
loss
 • If I have to take a loss on the trade, your mind will have a tendency to associate a loss with real
life painful situations, your emotions might take control and interfere with the outcome

• When you really understand that and you go through the process of accepting the risk of losing,
then everything about your trading

• You have to believe in what you are doing and focus only on the patterns that gives you the highest
odds

How can we use the methodology laid out at Set and Forget and get the maximum potential out of it?
You need mental skills to do it.

If consistent results are what you are looking for, then you are going to have to learn to think like a
professional trader. That's why they are pros, that's why people give their money to them and that's why
they have jobs. They actually trade for a living, because if they didn't make consistent results they would
lose their jobs.

If the pattern presents itself, there is absolutely nothing to think about, trade the pattern and the trade
associated with it since you don't know what's going to happen next. Thinking is not allowed

There is no way that you can know what the outcome is going to be

You have to learn to think in a way that will not put you into a situation where you feel emotional pain,
feel betrayed or disappointed with the markets, because you don't know what the market is going to do
next.

You need to get a carefree state of mind, once your perspective changes then everything changes, it's not
about being right or wrong.

Paper trading versus live trading

There's a substantial difference between the results you obtain by paper trading (demo) and backtesting,
and the results of your live trading. So many people think that paper trading or backtesting is futile and
unnecessary.

However I believe they are wrong, what paper trading and backtesting can do for you are showing you a
graphical representation of the mental skills that you don't have, those mental skills that you REQUIRE in
order to become a consistent profitable trader.

Everything changes in real trading, because there is no correlation with both results, that is, demo versus
live trading.

Paper trading shows a graphic demonstration of the gaps in mental skills that you need to acquire, it
helps you to familiarize with platform and gain confidence with the methodology. It shows you what
you could be if you had a carefree state of mind, if you had the skills that allowed you to do exactly what
you need to do, without reservations, without hesitation and without fear.
http://www.set-and-forget.com/forum/...orward-testing Check out what other members are doing on
the Forex Tester backtesting channel.

Thinking and Trading like a Robot

Through backtesting not only will you be able to gain confidence in your trading rules and plan, you will
also be building the grounds for a change of your mindset. Little by little you will start thinking like a robot,
taking the patterns as they happen without any further thinking, because remember "thinking is not
allowed". You will be able to grasp what you could become if you had the correct mindset. However, take
into consideration that you will need mental skills to become a consistent and profitable when trading
your live account.

You need to accept that each individual trade, even though it's the same exact pattern as the previous
trade, does not necessarily imply that the result is going to be the same. Why? Because taking a trade is
based on human behavior, it's what you think it's going to happen. In order to have a winning trade, you
also need that many others think the same way you do so that price goes in your direction. Not only that,
but you need that many other traders are proven to be wrong in order to have a winning trade. If you win
it means that another person on the other side is losing money.

Money is transferred from those that know what they are doing (novices without a carefree mindset)
to the accounts of those that know what they are doing (professionals)

Use a sample size of 20 trades

The outcome of any given number of trades is random. We need, we have to accept randomness. Even if
the same exact pattern happens 10 times in a row, it does not necessarily mean the outcome is going to
be the same.

This is why we need to trade in sample sizes by considering a trade part of a bigger sample trade. Mark
Douglas suggests a sample size of 20 trades.
You are going to take the next 20 trades. You are going keep yourself in the game with 20 trades. If you
don't get the results you want, then you will have to tweak your entries to get better results, or ask in the
forum any doubts you have about your trades.

WATCH THIS MARK DOUGLAS INTERVIEW AS MANY TIMES AS YOU NEED TO

https://www.youtube.com/watch?v=GhKJ9P3agRc

Analysis Paralysis

Losing is part of the game.

Most traders have problems with having too many trades, what if you find yourself having too few? What
to do when you get analysis paralysis and no longer see any good trades. This is a common problem for
traders, that may default to doing nothing.

At the core of this paralysis there may be too issues - psychological damage from too many losses and
a fear of being wrong.

In the first case, it's advisable that you stay away from the instrument that caused the losses until there's
a clear move in any one direction. It is not a good idea to keep pressing the issue with the same instrument
that has caused losses of 1/2/3/4/5/10% of your account. In the past you may have lost a lot of your
account or even blown it up trying to trade the same instrument that has caused you losses and pain, and
it feels like every decision is a bad one. Don't trade until you've accepted that you're wrong and you're
ready to objectively look at the price movement again.

The answer to the second cause (fear of being wrong). You must accept that we can be wrong and when
you are, accept that you've been wrong. Part of that is accepting the consequences. When your ego admits
that losses can and will happen to, just as winner can and will happen to you, you become free to do as
you see fit.

One final little thing - internally you need to look at it as giving and taking. When you win you take from
the market and you sometimes have to give back, just as it is in relationships with people in your life.

Trading is not easy. Takes a lot of time. It varies from trader to trader and hard work and dedication does
not necessarily bring success. If that were the case I would not be in this forum. Its about attaining clarity
and a deep fundamental understanding of the setups and the rule set.

Let's not beat the hell out of ourselves and lets not blame our perceived inadequacies or lack of discipline,
etc.- this will all fall into place with time, with deliberate practice of our defined trade setups and by
committing to never giving up.

Having a robust trading strategy is only one part of the equation as to what return you will make
consistently. It all changes when you have to place your hard earned assets on the line. Suddenly what
were obvious tradable zones can transform into emotional monsters. Forget about projected percentage
returns, that will only kick start the emotional demons. Consistency and the ability to place your bet each
time the edge presents is the aim of the game. The only pressure you should on yourself in this business
is to protect your assets, and stay true to your strategy, and swing the bat and take the trade when it
presents (easier said than done). Set and Forget provides you with the first part of a blue print for success.
It's up to each of us to govern what's in our heads.
BOOKS TO READ THAT WILL HELP YOU OBTAIN A CAREFREE STATE OF MIND AND A BETTER PERSPECTIVE

• Trading in the zone, by Mark Douglas

• The Disciplined Trader, by Mark Douglas

• The Universal Principles of Successful Trading, by Brent Penfold

• The Secret, the Law of Attraction, by Rhonda Byrne

• The science of getting rich, being well and being great, by Wallace Wattles in 1910

• Creating a bug free mind, by Andy Shaw, 2 books

• Delfin Trilogy, by Leslie Fieger

• The Universal Principles of Successful Trading by Brent Penfold

• The Quantum Warrior by John Kehoe

• Attractor Factor by Joe Vitale

• Life's missing Instruction Manual by Joe Vitale

Find your WHY, it's all about the mindset

1st September 2015, 04:27 PM

We like it or not, as human beings we need motivation to propel us, to drive us towards the achievement
of our dreams. This is easier said than done, believe me, but without a reason, without whys, it will be
extremely difficult to reach your goals.

Life is going to hit you in your mouth, your why has to be greater than that knock-down. If you don't
know what your why is, you are going to be knocked down every single day

In this short story, I will be paraphrasing some of the content of a YouTube video by Mateus M (watch it
below) but adding some of my experiences and relating it to trading.

I am a big fan on Mateus M YouTube channel, I thought I had watched all of his videos, but I was wrong.
A few days before I returned from my Thai holidays in August, I was browsing his channel and located a
video I had not watched, one called DESIRE. It struck me, I could see myself reflected in that video a few
years ago and recently as well. There are very wise words in this video, it's what life is all about, we need
a why, a reason, a motivation within ourselves other than earning a lot of money and getting rich quick,
something that moves us, that drives us, that will allow us to work 25 hours a day, something deep within
ourselves that will hasn't been triggered yet, that if triggered, will change our lives and allow us to be in
control of our destiny.

These words may sound like one of those videos on The Secret, but I could tell you a couple of stories that
I've lived that are related to this, so I talk from experience and not from what somebody told me or what
I read on a self help book.

Let me tell share with you 3 personal stories that have happened to me in the last 10 years and you will
see what I'm talking about... it will all make sense at the end of the lesson.

Learning salsa, our brains need time to settle and digest what we've learnt
I wanted to learn how to dance salsa and I ended up becoming a teacher, I've taught hundreds of people
in my city since then, I was the person to talk to in my city when it was about salsa. How did that happen?
15 years ago I was having dinner with two close girlfriends of mine, we were walking on the beach
promenade when we listened to salsa music. We stepped in the venue and a Cuban couple was dancing,
it was incredible how well they danced, my hair put on end, I was excited, I wanted to dance like that
Cuban guy (Luis, now it's a very good friend of mine).

We left the venue and I told my girlfriends, I will NOT stop until I learn how to dance like that guy, never,
ever, I will not give up. They laughed at me because they knew I was hopeless as a dancer, inept, and I
knew I was, but I also knew I could make it.

After a couple of months I learnt about a venue where a Cuban was teaching salsa, I signed up and started
to learn. I spent 2 intensive months with him but I realized he was limited, he couldn't teach me, I didn't
progress. I decided to quit and learn by myself. I downloaded dozens of salsa videos from YouTube, used
my mother to practice the figures and twists with the hands/feet, went out dancing every night for
months, from Monday to Sunday there was a club with daily live Cuban music in my city then, not any
more I spent months trying to learn and hiding in the toilet when salsa music played, I was ashamed
of how bad of a dancer I was and I didn't want to dance salsa with the beautiful girls, I was afraid of the
thought of them refusing to dance with me, that they laughed at me and they didn't like me.

I met a girl I really liked, I wanted to go out with her, she danced really well but I was hopeless, I couldn't
grasp the rhythm, I had 2 left feet. I was lucky and she become my girlfriend for many years, we went out
dancing many many times, yet I couldn't dance well, it didn't click... what did I do? I gave up! I had been
trying to learn for almost 2 years and it just didn't click in, I was tired, disappointed with myself, I gave up
on salsa. I went out with my girlfriend to salsa clubs many times but I sat in a corner watching other men
dancing with her, sad because I was not able to do it myself, I always refused to dance with her when she
asked me, I didn't dance at all for more than a year, believe me.

One day after a long time, she asked me to dance again with her, and that day I don't know why, I accepted
her offer and decided to try it one more time. Something within myself told me I had to stop being so
negative, that it was only me who was stopping me from dancing, my negativity and giving up on dancing.

Believe me when I tell you that that day was the inflection point in my salsa learning curve and career. I
danced with her all night, I COULD dance, I hadn't practised at all, the rhythm clicked, I could feel the
music, I was really excited, I couldn't believe it.

The only explanation for this is that it looks like my brain needed time to digest all moves I had learnt,
understand musical patterns and make out the instruments in the songs (conga, drums, piano, bass, etc)
since each of them played an important part in dancing, I had to be one more instrument.

Doors started to open, life took me along a path I would have never imagined. I created a salsa academy
and taught salsa for 7 years. That Cuban dancer is now a very good friend of mine (I was introduced to
him a few years later), and for years he contacted me from time to time asking me to teach him some new
moves/figures because he had run out of ideas. I was so proud of myself, I was excited to have him asking
me for advice on new salsa moves, he was the reason why I wanted to learn salsa in the first place. I will
never ever dance like him, he's been dancing and playing congas since he was a child, when he moves he
does it with all of his body/muscles. I'm taking about the fact of asking for tips and advice on new moves.

Lesson learnt: you can't give up, our brains need time to digest knowledge. One day it will click, but you
can't give up, you cannot quit doing the process. Once you make a decision, the universe conspires to
make it happen

Photography, passions are above everything else

Years later I decided to stop teaching salsa, I had no motivation, I had lost it because of the students, they
didn't attend their classes as usual, I had to change plans every day, the owner of the venue I was teaching
at wanted to charge me double for the rental... A series of events in a row made me take that decision.

I loved photography, I knew I could spend all day long looking for spots to photograph, watch
sunsets/sunrises every day and get excited with the shapes and colors of the clouds. I knew it was one of
my passions but I didn't know how to start. I had read about panoramic photography and that was is, it
clicked. I wanted to shoot 360º panoramas. I created a web site called Panoramia
at www.panoramia.net (reason why my Forex Factory nickname is panoramia) and started to promote it
with the little money I had. I run out of money and no success, clients were not calling so I was broke. My
whole motivation was to be able to fulfill my passion, traveling around Spain taking photographs of
beautiful landscapes, I wanted to do things that I enjoyed, not because of the money but because I had
passion for it, money would be a result of hard work on my passion.

Shortly after, a very good girlfriend of mine told me she believed in me and she'd help me with the
telemarketing and start calling potential clients. She did so for free for a few weeks and I got me my very
first client 600 km away from home, my car was broken and I was broke. She drove me with her car to see
the client, a rural cottage in the north of Spain, Casa Dionisio (you can see the first virtual tour I made for
my that client here.)

She continued to call more potential clients, the business started to grow. I spent a few years traveling
and shooting photographs around Spain. This passion of mine about photography has now derived into a
passion for timelapses. You can watch my first 5 minutes timelapse with music on Tenerife island, it took
me 10 months to create all those movies. Watch it here

Lesson learnt: do what you feel passion about, believe in yourself, don't give up. Your dreams are more
important than anything else, your attitude and your goals, the pleasure of doing things is far more
important than having a job.

Trading
5 years ago, crisis struck Spain and the whole world. Photography was no longer an option, the first thing
entrepreneurs did was to stop investing on their businesses, thus they no longer hired me for shooting
photos of their accommodations. I had saved some money, but I didn't know what to do, I was lost, no
plan B or C, nothing. Wherever I looked I saw pain and desperation, people had no money, lost their
houses and businesses, Spain was broke so would I if I didn't come up with something.

Andres, a close friend of mine contacted me one day (some of you met him live at the London 2014 and
2015 meetups). He wanted to talk to me about something very important. I was leaving on holidays 2 days
later for a full month to India in December. We had a drink that night and he told me that one of his clients
(he owned two hardware stores), an american guy, came to him and told him that he wanted to have a
coffee with him, that he'd change his life. He liked Andres attitude and how he dealt with clients and I
don't know, he thought that he could help him by telling me something about "the markets".

He told him he was a trader, he was trading options, he started to teach Andres options while I was away.
I had downloaded a couple of books on options and the markets to my eBook before I left so I could read
them while I was in India. I read all I found but there was something missing, besides I needed a lot of
money to trade options, money I didn't have obviously, I had spent most of the money I had left in my trip
to India. Why would I go to India if I had little money left? Because I know life will always offer me another
opportunity, no matter how much money I save, how careful I am with it, a trip to India to disconnect and
get some new visions and energy, will not make me even broker, I was broke, a trip to India would not
change that fact.
I learnt about Forex shortly after I returned from my trip to India. Googled for weeks but I didn't find
anything clear. One day I located a web site from a couple of American guys that were teaching an intraday
strategy based on EMA crosses, Bollinger bands and MACD, watched a few videos and something within
myself told me they were the guys... I signed up with them, my friend Andres paid half of the fee and we
shared the membership. We learnt the strategy, well it was complex and had many nuances. I had a
programmer that was working for me to create web pages for my photography clients, he had been
working for me for 3 years already, his name is Oktay, he is Turkish and lived in Ankara (Turkey). I talked
to him about Forex and he told me, "Hey Alfonso, I think I can help you, I am a Metatrader programmer,
I've been doing a lot of indicators for a client in the past". I didn't even know what Metatrader was when
he told me about it. I was shocked, what? He was a Forex programmer and I didn't know. It was too big of
a coincidence. I had to follow my guts. I stopped all web page programming for the few clients I had from
time to time and focused exclusively on creating tools to manage my trades, get alerts, log the trades, etc.
We created some sophisticated tools to do it, after almost a year I had it all ready and shared it with the
community of traders I belonged to, they were so happy to have those tools. They are still using them.

I hadn't been focusing too much on trading, I was obsessed with the programming of the tools, I wanted
to have 100% confirmation to take an entry and I kept on building more and more tools (does it ring a bell
to any of you?). I was so wrong about it. I learnt the lesson after a few months. It was a hard decision to
make but I decided to stop the development of the tools and focus exclusively on my trading. After 6
months I was making an average of 15% on my account per month, but not making much money because
my account's equity was very small. The teachers had a chat we used everyday for intraday, I talked a lot
there and I realized that I was wasting my time with too much talking, rather than focusing on my trading,
so I stopped using the chat room overnight... One day one of the traders in the chat room contacted me
on private, he wanted to see if my results were what I said they were, he wanted me to trade for his hedge
fund. I didn't even know what a hedge fund was I googled that word and learnt what it was, I thought
about it, I was broke, I had little money left, my girlfriend had to pay me some of the monthly expenses,
even the flights to Tenerife island to visit her, she believed on me and in what I was doing. I had nothing
to lose, I had no money left, I didn't have anything let in my take, but I didn't give up, I had learnt that
lesson long ago. I had to do it for her, she had been supporting me for a long time, she believed in me, I
couldn't let her down.

I shared my live results with this person via a myFxPro private link, the fund analyzed the results and
agreed to assign me 50k euros that soon later became 100k euros. Things started to change from that
moment on. I was trading the first strategy based on EMA crosses and MACD, I didn't know about supply
and demand yet. However, I was very stressed for a few months since I was trading intraday and a lot of
money (risk), I was used to trading a small amount of euros with small micro lots and now suddenly I was
trading many full lots, too much risk, I was not ready for it psychologically. I talked to the hedge fund and
decided to pause it, I had a tick on both eyes, I couldn't sleep well, it was too much for me.

One day I was Googling for information on Forex and I came across some videos from Sam Seiden on
supply and demand. Watched one of them and that was it, I knew I had finally found what I was looking
for, the missing piece of the puzzle, it was all about supply and demand. But it was not easy, there were
many pieces of the puzzle missing as you probably know if you have watched some of his videos,
something important was missing, so I decided to test some ideas I had, it took me almost 2 years to come
up with Set and Foget's set of rules. In the process I came up with more new ideas, you can read about
these fully tested ideas in the Classroom now. In the last year I had more new ideas that I tested before
adding them to the lessons, for instance, realignment rules, WoW, and probably more to come in the
future like the WD trade.

Lesson learnt: believe in what you are doing, you cannot quit. It's all about the mindset. Focus on your
trading and not on external tools that will help you in your trading, you will enter a never-ending loop of
perfection that will prevent you from trading.

FIND YOUR WHY

The reason why most of us won't get what we want is mainly because we don't know what we want in
the first place.

We don't know what we want because we haven't found our why, this is directly related to lack of
motivation and focus. There are a lots of people who are not successful in life, not because they haven't
got any talent, not because they haven't got any skill, but because their character isn't right.

What happens to the gazelle when the lion aren't chasing her? What happens is, he does nothing, he stops
running, why? Because he always needs something external to motivate them. Your motivation should
live within yourself.

WHAT IS YOUR MOTIVE? WHAT IS YOUR WHY?

The reason why you can't get up at 4 o'clock in the morning to trade before you go to your full time job.
The reason why, I say 'Get up at 6' and you are looking at me like I'm crazy.The reason is because you
don't have this thing that is driving you, that's pushing you to say 'NO' to your alarm clock and wake up,
'NO' to your snooze button.

When you get that extra assignment, that extra leap, things start happening.

The reason why you can't do it is because you don't have that motive that's pushing your action.

You are doing everything you can to become a full time successful trader, you are putting in hard work on
your testing, rules, reading the lessons, watching the webinars, asking questions and solving doubts, the
archives on past trades, and yet still you are not seeing any results.

You did all you've been told to do, read the lessons, practiced on Forex Tester for months, read books to
help you with your motivation. You put in hours you were told to put in. You are doing it and still you are
not seeing anything.

Why you're doing what you're doing, that's so important.

IT'S ALL ABOUT THE MINDSET

Listen to yourself when you talk to yourself or to others, listen carefully to what you say and how you say
it. It seems you always need something external to motivate you.

It's not enough just to be a doctor, you got doctors who got terrible bedside manners, terrible. You got
lawyers who are skilled but very arrogant, you got teachers who don't know how to teach or talk to their
students.

We are talking about character right now, what's your motive, what moves you, what drives you, what's
the spirit behind you becoming a trader. Whatever it is, sports, life, business, health, you have to change
that mindset.

What is the reason behind what you do, what's the purpose behind you becoming a trader? What drives
you, what moves you? There must be something else non related to money that moves you. When you
want to succeed as bad as you want to breathe...When you haven't got none left in your take, when you
can't go one more mile...you have to think about people in your life you are doing this for, and if you can
think about them you can go one more mile, you can go one more day at work, or you can find a
scholarship.

When you are doing it for someone else, when you are like that lion we talked about...

I wish I could tell you, 'You're tired, go take a break',

I wish I could tell you, 'You are tired, rest for a year'.
I wish I could tell you 'It will get easier in a few weeks'
I wish I could tell you 'Your trading will be in the money in 3 months maximum'

I wish I could tell you that, if you just keep going it's going to get lighter, the weight is going to get lighter,
I wish I could tell you that, but that's not the truth.

The truth is, you have to find something within yourself. You have to find something within! And that's
going to push you, that is going to elevate you, to drive you, that's going to move you.

When you find what your 'Why' is, your 'Why' is going to be deeper than you!
When you find your 'Why'... you won't hit the snooze button no more.
When you find your 'Why'... you will find the way to make it happen.

It's time for you to look within yourself and decide... that you are in charge of your destiny as a full time
trader. I'm in charge here.

Time to face yourself and talk to yourself in the mirror. I'm not going to allow anybody to turn me
around. I'm determined that I'm going to make it.

The time for just wishing is past, time for doing, that's the time right now.

Time for acting on your dream! Find out what it is you want and go after it as if your life depends on it.
We can decide to take charge of our own destiny, begin to truly live our dream.
When you get to the point when enough is enough, when you get to the point where it hurts really bad,
when you get to the point where you can't take it no more...

When you get to that point? I'm telling you, I can't explain it to you, but doors start opening, opportunities
start to happen.

But what you cannot do, is you cannot quit doing in the process.

You cannot give up because it is not what you see or expect. Champions keep going when they don't have
anything left in their take.

That's the difference between greats, that's what separate them, when they don't have no more! When
it's over, when they're tired, when they're frustrated, they're ready to give up, that's when they get
started! When you have nothing left.

It is when you deplete all your money, when all your energy is gone, when you have nothing left, that's
when it's showtime.

When you find a way, out of nowhere no way.

When you find breathe, breath that you don't have.
When you find energy that did not exist.
When you want this thing as bad as you want to breath.

Let me ask you.

What you intend to do now?

Whatever legacy you are going to leave, leave your legacy. Wins and losses come a dime a dozen, but
effort? Nobody can judge effort.

Everybody is got a dream, everybody is got a goal. The question is when you wake up in the morning, what
effort will you put in for?

If you died now at this very moment, what would die with you? What dreams? What ideas? What talents?
What greatness that you showed up to brand?

https://www.youtube.com/watch?v=CMm6tDavSXg

https://www.youtube.com/watch?v=UNQhuFL6CWg