TABLE OF CONTENTS

CHAPTER 1. INTRODUCTION...............................................................................3
Entering the Trade ......................................................................................................................... 4 Exiting the trade............................................................................................................................. 6 Cut Your Losses Short .................................................................................................................7 Let Your Profits Run .....................................................................................................................8 Trading Mindset ............................................................................................................................. 8 Trading plan. ................................................................................................................................ 13

CHAPTER 2. GENERAL FOREX TRADING INFO ................................................15
Understanding Forex Trading .................................................................................................... 15 About Currency Pairs and Exchange Rates ............................................................................. 15 Understanding the Standard Contract Size .............................................................................. 17 What is the Pip?........................................................................................................................... 18 How to Calculate the Profit......................................................................................................... 18 Step 1: Calculating the Pip Value per Lot ................................................................................. 19 Step 2: Calculating Your Profit in Terms of the Quote Currency .............................................. 19 Step 3: Converting Your Profit to Your Deposit Currency......................................................... 20 Summary Tables ....................................................................................................................... 22 The Concept of Leverage............................................................................................................ 23 Your Trading Equipment............................................................................................................. 24 Your Computer Equipment........................................................................................................ 24 How to choose your Forex Broker............................................................................................. 25 Charting Software...................................................................................................................... 31

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Monitor More Than One Currency Pair...................................................................................... 38

CHAPTER 3. TECHNICAL ANALYSIS .................................................................39
Why Does Technical Analysis Work?........................................................................................ 39 Moving Average ........................................................................................................................... 41 Relative Strength Index RSI........................................................................................................ 42 Support and Resistance Levels ................................................................................................. 43

CHAPTER 4. TRADING STRATEGY .....................................................................46
How To Prepare For A Trading Day ........................................................................................... 49 Economic Calendar ..................................................................................................................... 52 Calculating Major S/R Areas....................................................................................................... 55 How to set up our trading screen? ............................................................................................ 57 When to enter the trade? ............................................................................................................ 58 Entering on the bullish side. ...................................................................................................... 58 Entering on the bearish side...................................................................................................... 59 What kind of order should you use to enter the trade?........................................................... 60 What size should you be trading with? ..................................................................................... 60 Money Management .................................................................................................................... 61 When To Exit The Trade? ........................................................................................................... 62 Recursive Trailing Stops ............................................................................................................ 64

CHAPTER 5. EXAMPLES ....................................................................................67
Trading Example 1. EUR/USD .................................................................................................... 67 Trading Example 2. GBP/USD .................................................................................................... 70 Trading Example 3. USD/CAD .................................................................................................... 72 Trading Example 4. EUR/USD .................................................................................................... 74 Trading Example 5. GBP/USD .................................................................................................... 77 Trading Example 6. USD/CAD .................................................................................................... 79

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CHAPTER 1. INTRODUCTION

The obvious reason as to why you are interested in trading currencies is the unparalleled profit potential that forex market has to offer. Therefore, the purpose of this course is to prepare you to enter the exciting field of currency trading and what is more important, to put you on equal ground with successful traders. You may be a beginning trader, made a few trades, lost some, won some, however you have come to the conclusion that you don’t have a real edge and if you continue you will slowly burn most of the capital in your trading account. Or maybe you are already actively trading currencies and you are always looking for new ideas to improve your trading…

In any case you have come to the right place.
As I have promised there will be no unnecessary information in this course. I assume that you are already familiar with the concept of forex trading. If you are totally new to the forex trading game you can find all of the necessary basic info inside the Chapter 2. All of the other chapters deal directly with the system itself. You should read each chapter carefully. Everything is explained in detail. The first chapter that you are just reading is just a short introduction to the logic that is behind my trading system. The basic skeleton of each trading system consists of two elements. Entering the trade and exiting the trade. Each of those elements is equally important.

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If you were ever swimming in the river you would know that it is much easier to swim with the current than it is to swim against the current. Any system that generates entry points will provide us with entry points both against and in the same direction as the long-term trend. Although there are always minor movements against the current trend they usually don’t last very long and after them the market moves again in the direction of the current trend.forextradingtips. by following only the entry points in the same direction as the long-term trend we will get the higher quality trades leading to the higher profits in the long run.com 4 . Well the truth is you can’t. It is based on the quality of entry signals. However it is precisely those minor movements that are likely to produce losing entry signals.Entering the Trade The profitability of a trading system is not based on the quantity of entry signals that it produces. that is. Let’s have a look at the figure below: www. One of the greatest myths that most of the forex trading strategies propagate is that at the same time you can be looking for both buy and sell opportunities. If you want to make profit. They were producing way too many entry signals which as a result is greatly reducing the profitability of a trading system. The entry signal needs to have the highest possible probability that the trade will move in your desired direction. Even though there is money to be made in both cases. After years of trading many different trading strategies I have found out that most of them have one large flaw.

com 5 . meaning that we were much more likely to make a profit during this period if we were looking only for buying opportunities instead of focusing on both buy and sell opportunities. Those strategies usually concentrate mostly on lagging indicators that are most likely to get you into the trade when it is already too late.Figure 1-1 As we can observe on the chart above the trend during the given period is clearly bullish.forextradingtips. Let’s have a look at the figure below: www. On the other hand if we were looking only for buy positions we were likely to make some very profitable trades. Another misconception that most of the forex trading strategies make is to underestimate the power and importance of support and resistance areas when looking for entry opportunities. It is clear that in most of the cases if we were taking sell positions we would be stopped out resulting in losing trades.

“the job is done”. Average traders typically use www. and if they have found an entry strategy with positive expectations. Exit strategy is equally if not more important than entry.Figure 1-2 As we can observe on the chart above the support and resistance areas have extremely important role when it comes to price movement. Nothing could be further away from the truth. What would you say if you were told that these lines were drawn before the start of this trading day? That's right.com 6 . Successful traders know where the major support and resistance areas will be located before they start looking for entry opportunities.forextradingtips. Exiting the trade Most traders make a mistake by thinking that entering the trade is more important than exiting the trade.

which are the basic fundamental requirements for a proper exit strategy? Well. let’s show them to you: “Cut your losses short”  “Let your profits run” Cut Your Losses Short This requirement is linked to the question how much capital we can risk on one trade. The key to currency trading success is to catch a major movement. You have probably heard hundreds of times that you need to protect yourself against large losses in order to protect your start up capital. However if by cutting your losses short you think running out of a trade like a scared rabbit as soon as the trade goes against you. So.a simple trailing stop as their exit strategy. You will not be able to do that if you don’t give your trade a chance. Especially when it comes to “let your profits run”. no questions asked.com 7 . It is true that sometimes price will turn www. Failure to follow the stop loss rule is the number one reason for failure among beginning traders. It needs to be followed every single time without exception. You need to give it some space. This is where it gets tricky. it doesn’t mean that it will do so immediately after you placed a trade.forextradingtips. definitely it is not the best option for a proper exit strategy. If our stop loss is reached we will get out of the trade immediately. Even though a trailing stop may work ok in certain cases. You CAN NOT trade currencies in such fashion. How much space? Enough space so that you don’t get stopped out all of the time while at the same time tight enough so that if you are wrong you preserve majority of your capital to fight another day. However. you will be in a big trouble. By properly implementing our entry strategy you have done everything you can to enter the trade with a high probability that it will go in your direction. Why? Because a trailing stop does not fulfil all the basic fundamental requirements for a proper exit strategy. You cannot cut corners with the stop loss rule.

Number one reason is that you are not trading with your own hard earned money and the second reason is that everything seems simple after it has already happened. So we need to stay in the trade as long as the trade goes in our direction. Trading Mindset If you were ever watching somebody else trade. do not fulfill above requirement as they will lead to exiting a position too soon. It is not the same situation. as for example a trailing stop.com 8 . the key to currency trading success is to catch major market movements. you have probably quickly come to the wrong conclusion that trading is fairly easy. when you just have entered a trade or when you are already in with a current positive balance of 150 pips. For this purpose I have developed a Recursive Trailing Stop formula that extracts as much profit from our trade as possible. The focus hereby is to give your trade more space than when you entered the trade in order to make even more money. It seems that nothing is easier than predicting www.around just after you get out. In the first case the main focus is to protect your trading capital. In order to be profitable in the long run we need to extract as much profit as possible from every single trade. It only takes a few stubborn incidents to entirely devastate your initial trading capital. Let Your Profits Run As mentioned above. Most exit strategy methods out there. The same applies if you are just observing the price action on the chart and placing the trades on paper or in your head. You will learn about it in the Trading Strategy chapter. The key issue is hereby to determine the proper space depending on your current trade situation. There are two reasons for that. but there is no way to know this in advance.forextradingtips. And for that purpose we need to give our trade a chance by giving it some space for moving in our desired direction. in the second case you don’t need to protect your capital any more as you definitely will close your position with profits.

price movement by watching the chart. I am not sure if you have experienced such situations but I definitely did back in my beginning trading days. Then. There were some big down movements in the morning. Now let’s assume that you have an open 5 minute chart at 2 p. See the figure below. Figure 1-3 Can you make the prediction as to where the price will move by observing the chart above? Will it go down and for how many pips? Will it go up and for how long? Tricky. for some short period of time it was a sideways market and now it is going down again.m. For the inexperienced observer it seems irrelevant since he is sure that he would have reacted in the same way even if he did not see the whole picture. Basically we have seen the outcome of the trades that have already ended. At 14:25 you want to take some action.com 9 . isn’t it? www. That is a mistake. The problem with such conclusion is that the certainty of the outcome comes after we have already seen the whole picture. and you want to enter a trade.forextradingtips.

Such price movements happen all of the time.forextradingtips. In order to deal with them. Basically you need to learn how to deal with your emotions whether you are on a winning or a losing streak. however another aspect that we need to master in order to deal with such erratic price movements is to have a winning trading mindset. Even the best forex traders have losing streaks as even the most consistent trading systems do not produce winning trades only. www. Now think again about the situation from the chart that we have observed earlier. the first move was down. first of all you need to have a winning and proven trading strategy. One needs to understand that forex trading even though it offers great opportunities to make income is also a very risky endeavor. We will get to the strategy later in the course. Again. taken your 30 pip profit and exited the trade. it is easy to speculate about this when you have already seen the whole chart.com 10 . then it went up and at present it is moving down again. If you entered on a long side would the price action trigger the stop loss? If you entered on a short side would the price touch the take profit? You may say that you would have entered on a short side.Figure 1-4 As we can see from the chart above. At 14:25 you did not have the information that you have now.

You are monitoring the charts and observing price action. Now you are really nervous. This is more than you can take and you get out of the trade.To have a winning mindset means to be able to deal with emotional highs that happen during the winning streaks and emotional lows that happen during the losing streaks. You decide to follow your own instincts instead of following the strategy you were testing in your demo account. You want to get out but you still believe that the price will change the direction. One hour later and you are 40 pips in minus. as soon as you have entered the trade the price starts to move up. However. You are starting to get nervous. Half an hour later you are 20 pips in minus. You want to make up for your loss as quickly as possible and before you know it you are making the same mistake again. Another fifteen minutes and you are 60 pips in minus.forextradingtips. You are quite sure that the price will reach your take profit of 20 pips so you don’t even bother placing a stop loss. You enter a trade on the sell side. This is a typical scenario. you just wanted to make 20 pips and you ended losing 60. After demo trading for a while you have just funded your forex account with real money. You realize how different it feels when you are trading with real money. And your goal was 20 pips in plus. Let’s go through some mistakes that a lot of aspiring traders make. www. You see some bearish movement and you are eager to take action. You want to make 20 pips just to get a feeling of how it is to make real money. The adrenaline is rising. Therefore – Don’t trade impulsively.com 11 .

That way you are already one step ahead as you are not under pressure of losing the capital that you can not afford. Look at the picture below. At least that’s what you believe. purchased a system that appears to make sense however you don’t have a startup capital. Everyone likes to see action. read several books on the subject. Most people do not have a clear mind and are unable to keep cool under pressure and that especially rings true if they are trading with borrowed money. You should enter only those trades that meet all of the criteria that your trading system requires. you have to keep in mind that no matter how good a trading system is. you really haven’t missed anything. Again. You were successfully trading a demo account and now you feel confident that forex is a way out of your financial troubles. You have done your homework regarding forex trading. So. I can understand that. never. They think that if they didn’t enter some trade – the opportunity is lost.Here is another typical scenario. www. And what if they happen at the beginning? You should trade with money that you can afford to lose.forextradingtips.com 12 . It is hard enough to lose money that you own. Since you are so sure in your ability to make money you decide to borrow your initial capital. With the profits that you are going to make you will easily repay the borrowed money. there will be some losing trades. However. Don’t forget that many people fail to become successful traders not because their trading system but because they couldn’t take the pressure. ever invest money that you can not afford to lose… Yet another mistake that many beginning traders make is that they are too eager to enter a trade. losing money that you don’t own is even harder.

Don’t feel bad that you have missed some trades. It is much better to miss a trade than it is to enter a bad one. How much money? This may sound as a dumb question as obviously you want to take as much money as possible.forextradingtips. Don’t overtrade. Enter only those trades that fully meet your criteria. On the other hand you need to understand that making more money involves taking more risk and investing more time. Our trading system is outlined in the last chapter of this course and should be taken as is – without improvisation. Trading plan. Of course. So the next question is: How much time can you invest? How much risk can you handle without falling under www. There are several variables that need to be taken into account when creating a trading plan. The trading plan on the other hand should be created by each trader individually. Please do not confuse a trading plan with a trading strategy or a trading system. your trading objective is to make money. many opportunities to enter a trade.Figure 1-5 Those are the price movements that happened during one trading day. No compromise there. There were and there will be many. It should take into account what is your trading objective. Price is constantly moving.com 13 .

plans to fail…” www.forextradingtips.pressure? How much money can you invest – money that you can afford to lose? All of those questions fall under the definition of a trading plan. Trading should be treated as any other business venture and every successful business venture must have a business plan. “He who fails to plan.com 14 . Most people do not think of trading as a business and that is a mistake.

e. especially if you are a novice trader.CHAPTER 2. GBPUSD or USDCAD. That’s the reason why when looking at forex quotes you will always see the currencies quoted in pairs. If you are already an experienced trader this chapter might not be of interest to you. so you might just throw a glance at it.forextradingtips. you don’t trade a single currency.com 15 . The exchange rate gives the amount of the “quote” currency which needs to be sold to buy 1 unit of the base currency. To every pair you will see an exchange rate quoted. For www. EURUSD is the rate of 1 euro in US dollars. GBPJPY – 1 British pound in Japanese yens.. GENERAL FOREX TRADING INFO In this chapter I want to give you some general trading tips that may help you to improve your trading. i. the first currency is always defined in terms of the second one. The first currency of the pair is known as the “base” currency. but always currency pairs. Understanding Forex Trading About Currency Pairs and Exchange Rates When trading currencies. the second one as the “counter” or “quote” currency. as for example EURUSD.

It is estimated that activity in these currencies comprises more than 85% of the daily foreign exchange volume. which are the most traded.5736 means that for 1 euro you can get 1.forextradingtips. and they are also often more susceptible to short term market manipulation or deception. The major currency pairs are assumed to be: EURUSD USDJYP USDCHF GBPUSD AUDUSD USDCAD GBPEUR Euro and US dollar US dollar and Japanese yen US dollar and Swiss franc British pound and US dollar Australian dollar and US dollar US dollar and Canadian dollar British pound and Euro www. Figure 2-6 Even though there are 100’s of currency pairs out there.example in picture below the exchange rate of 1.com 16 . You could also write it like 1 euro / 1.5736 US dollar. Currencies that are illiquid generally will have wider trading costs (spreads). Liquidity is essential when trading foreign currencies. you should pay only attention to the major currency pairs. like false technical breakouts.5736 US dollars. they also will have a much greater chance to have "fast market" conditions where liquidity can be non-existent and volatility greatly increased.

we give money for goods.000 US dollars. If the current exchange rate of USDCAD is 1. the second currency (quote currency).000 British pounds 10.000 US dollars and give $110. it means that we get $100.000 units instead of 100.000 US dollars Table 2-1 MINI LOT SIZE 10.com 17 . But with currencies. A standard lot for USDCAD is $100.000 US dollars 100.000 of what? When we buy.000 US dollars and get $110.000 times the actual exchange rate.000 euros 10.000 US dollars 10. which are one tenth of a standard lot (for example 10.1.000 euros 100. When we sell.000 US dollars www. Here you can find the lot and mini lot definition for the major currency pairs: CURRENCY PAIR EURUSD USDJYP USDCHF GBPUSD AUDUSD USDCAD LOT SIZE 100. If we buy one lot of USDCAD.000 Canadian dollars.000 units. But 100. we get money for goods.000 US dollars 100.000 Canadian dollars. we buy and sell simultaneously since we get one currency for another one. the major currency pairs have the lot value equal to 100. A lot can have different values for different currency pairs. The other way round if we sell one lot of USDCAD at the same exchange rate.000 British pounds 100.Understanding the Standard Contract Size When trading a currency pair.forextradingtips. respectively.000 US dollars 10.000 Australian dollars 10. Most of the forex brokers offer also the possibility to trade mini lots. At present. This is why it is common practice to consider that we get the first currency of the pair (base currency) when we buy and give.000 Australian dollars 100. the standard contract size is called a "lot”.000 US dollars and give a number of Canadian dollars equal to 100. then buying one lot of USDCAD means that we get $100.000 units). it means that we give $100.

com 18 . Below you can find the pip definition for the major currency pairs: CURRENCY PAIR EURUSD USDCHF GBPUSD AUDUSD USDCAD USDJYP Table 2-2 PIP SIZE 0.0001 0.0001 0.0001.What is the Pip? The pip is the smallest price change of the exchange rate.5232 is called a 1 pip move.0001 0.0001 0.5231 to 1. For example when trading EURUSD the smallest price change is 0.01 How to Calculate the Profit The profit of your trade is calculated in the three steps:    Step 1: Calculating the Pip Value per Lot Step 2: Calculating Your Profit in Terms of the Quote Currency Step 3: Converting Your Profit to Your Deposit Currency www.0001 0. for example a move from 1.forextradingtips.

In this example.5610. so the total profit = 3 lots x 65 pips x 10 USD pip value per lot = 1.950 US dollars.forextradingtips. The pip value for EURUSD is 10 USD.Step 1: Calculating the Pip Value per Lot The pip value per lot is calculated according to the following formula: Pip Value per lot = lot size x pip size in units of the quote currency (second currency of the pair) Below you can find the pip value per lot for the major currency pairs: CURRENCY PAIR EURUSD USDCHF GBPUSD AUDUSD USDCAD USDJYP PIP VALUE PER LOT 10 US dollars 10 Swiss francs 10 US dollars 10 US dollars 10 Canadian dollars 1000 Japanese yen Table 2-3 Step 2: Calculating Your Profit in Terms of the Quote Currency The profit is calculated according to the following formula: profit = lot size x pip size x pip value per lot in units of the quote currency Example 1: Sold 3 lots of EURUSD at 1.5675 and bought them at 1.com 19 . we made 65 pips profit (as we sold at a higher price than we bought). www.

of course.85 US dollars). if it is euro.000 US dollars.2 lots x 80 pips x 10 USD pip value per lot = 160 US dollars. If you live in France.5 lots x 100 pips x 10 GBP per pip = 500 British pounds. then in euros. profits and losses will be shown in US dollars. then you will probably run your account in US dollars.8500 (for 1 British pound you can get 1. In the following example we will assume that the deposit currency is US dollars. when the position was closed: www. Step 3: Converting Your Profit to Your Deposit Currency Though it is possible to make trades using various currency pairs.9250: In this example. For example if your account is in euros and you made a profit of 1.com 20 . we made 80 pips profit (as we bought at a lower price than we bought). the trading result is always written in only one currency . then you can convert your profit in euros by dividing with the actual exchange rate for EURUSD. The pip value for GBPUSD is 10 USD. If you live in US. The pip value for EURGBP is 10 GBP.7815: In this example we made 100 pips.forextradingtips. The profit is converted into your deposit currency by using the appropriate exchange rate. If the deposit currency is US dollar.the deposit currency. they will be. in euros.9170 and sold them at 1. so the total profit = 0.7915 and bought them at 0. The most usual is that you run your forex account in the deposit of your country. so the total profit is 0. The exchange rate of GBPUSD was 1.Example 2: Bought 2 mini lots of GBPUSD at 1. Example 1: Sold 5 mini lots of EURGBP at 0.

80. when the position was closed.60 and sold them at 105.000 JPY yen x 1 US dollar / 105. In order to get the amount of dollars we need to divide by the exchange rate.500 British pounds x GBPUSDJPY exchange rate = 500 British pounds x 1. The pip value for USDJPY is 1000 JPY.20 (for 1 US dollar you can get 105.46 US dollars www.000 JPY yen / USDJPY exchange rate = 80.85 US dollars / 1 British pound = $925 US dollars Example 2: Bought 2 lots of USDJPY at 105. we made 40 pips (as we sold at a lower price than we bought).com 21 .forextradingtips. so the total profit is = 2 lots x 40 pips x 1000 YPJ pip value per lot = 80.20 JPY yen = $760. The exchange rate of USDJPY was 105.20: In this example.000 JPY yen.20 JPY yen).

10 US dollars / AUDUSD 10 Swiss francs / USDCHF / AUDUSD 10 US dollars / AUDUSD 10 US dollars / AUDUSD 10 Canadian dollars / USDCAD / 1000 Japanese yen / USDJPY / AUDUSD Currency Pair EURUSD USDCHF GBPUSD AUDUSD USDCAD USDJYP Profit in British pounds: ”number of lots” x “pips” x . 10 US dollars x USDJYP 10 Swiss francs / USDCHF x USDJYP 10 US dollars x USDJYP 10 US dollars x USDJYP 10 Canadian dollars / USDCAD x USDJYP 1000 Japanese yen www.com 22 . 10 US dollars / GBPUSD 10 Swiss francs / USDCHF / GBPUSD 10 US dollars / GBPUSD 10 US dollars / GBPUSD 10 Canadian dollars x USDCAD / 1000 Japanese yen / USDJPY / Table 2-6 Profit in Japanese yens: ”number of lots” x “pips” x ..... 10 US dollars x USDCAD 10 Swiss francs / USDCHF x USDCAD 10 US dollars x USDCAD 10 US dollars x USDCAD 10 Canadian dollars 1000 Japanese yen / USDJPY x Table 2-5 Profit in Australian dollars: ”number of lots” x “pips” x . 10 US dollars 10 Swiss francs / USDCHF 10 US dollars 10 US dollars 10 Canadian dollars / USDCAD 1000 Japanese yen / USDJPY Table 2-4 Profit in euros: ”number of lots” x “pips” x .... 10 US dollars / EURUSD 10 Swiss francs / USDCHF / EURUSD 10 US dollars / EURUSD 10 US dollars / EURUSD 10 Canadian dollars / USDCAD / EURUSD 1000 Japanese yen / USDJPY / EURUSD Currency Pair EURUSD USDCHF GBPUSD AUDUSD USDCAD USDJYP Profit in Canadian dollars: ”number of lots” x “pips” x .Summary Tables Currency Pair EURUSD USDCHF GBPUSD AUDUSD USDCAD USDJYP Profit in US dollars: ”number of lots” x “pips” x .....forextradingtips..

000 and you are using 1:20 leverage you will effectively be exchanging $100.816 Euros back to $101.forextradingtips.000 it is effectively a 20% increase in your account.567 to 1. If the current rate is 1. our deposit currency is in euros and the actual EURUSD exchange rate is 1. What does 1:20 margin mean? It means that with your $5. if your trading capital is $5.816 Euros. www.000 you will control a capital of $100. then our profit in euros is: 3 lots x 50 pips x 10 US dollars / 1.000 euros The Concept of Leverage Many beginning traders don’t fully understand the concept of leverage. That would not have happened as our strategy has built in hard stops to prevent such an outcome.567 = 63. a two percent move against you and your capital is completely wiped out.5 (EURUSD exchange rate) = 1. if you have a start up capital of $5.000. If you are a beginning trader you should not use more than 1:20 margin until you get comfortable and profitable and then and only then you can attempt to use higher margins.000. Euro your account would be reduced to $4. Again.000.The table is to be used as following: we trade 3 lots AUDUSD. Let’s say you are trading EUR/USD and by using our entry strategy you have decided to enter the trade on a long side. Basically.000 to Euros.000 and if you trade on a 1:50 margin you can effectively control a capital of $250.000. Let’s say current EUR/USD rate is 1.000/1. if the trade went against you and USD appreciated 1% vs.583 you will be able to exchange your 63. However.com 23 . However.000 for a profit of $1. So if EUR/USD rate moves from 1.567 you will receive 100. make a profit of 50 pips . If the trade goes in your direction the margin will work in your favour and 1% decline in USD will mean 20% increase in your start up capital.567. That means that you are betting that USD will depreciate against Euro. Since your start up capital was $5.5.

com 24 . This is trader’s suicide. starting with the weakest part of the chain. directly after you enter a position.Your Trading Equipment Before you can start trading you need the following trading equipment:    appropriate computer equipment a forex broker a suitable charting software Your Computer Equipment Unfortunately. it could happen that you are not able to place your stop order. That way you could miss a proper exit signal which would have protected your already achieved profit or what is much worst. you cannot go into real forex trading with an outdated computer system or an unstable and slow Internet connection. you should enhance your computer equipment. as you could lose all of your trading capital. If you enter a position. www.forextradingtips. As a rule of thumb you can use the following check: Is your computer and Internet connection 100% stable? Are you able to follow the market price and to place market orders in real-time without any time delay? If not. because this will cost you lots of money in the long run. you cannot afford that your computer system crashes or that your Internet connection fails. if suddenly the price of the currency pair drastically changes in opposite direction of your trade! On top of that you cannot afford that you follow the market price or place market orders with a considerable time delay (either because your Internet connection or your computer is too slow). because your Internet connection or computer fails.

Every trader I know has at least one horror story about his/her broker.5701 / 1. even the best traders may have a limited chance of success. you’ll need to take into account several factors. There are literally hundreds of brokers that you can choose from. Equities and futures brokers make their profits on commissions that traders pay to them for every trade they make. that is the spread your www. Although you can always change your broker later it is often a frustrating experience. If you are not happy with the service and performance that you receive from your broker you should look for another one. Your forex broker should have the following properties:  Low Trading Costs Although brokers do say that it is not in their interest that you lose your money.5703 means bid(sell): 1. When choosing your broker.5701 and ask(buy): 1.How to choose your Forex Broker Without a reliable broker. Spread is the difference between bid price (the price you sell at) and ask price (the price you buy at). Forex brokers make their profits from spreads. By the time they fix the problem you may be out of 100’s even 1000’s of dollars. take the time to get informed about several prospective brokers. This is especially true when trading currencies. It is not worth your time or money to be loyal to someone whose service isn’t working for you. Didn’t you notice that every time you enter a trade. What happens if you try to sell your position because the value of your holdings is quickly depreciating only to find out that your broker’s server is down. you start with a negative balance account? Well.forextradingtips. For example.5703. a EUR/USD quote of 1.com 25 . Every currency quote has these two numbers displayed. a spread of 2 pips. When it is time to choose your broker. you need to remember that they make profit whether you win or lose. You also need to understand that while one broker may be an excellent choice for one form of trading it may be a terrible choice for another form of trading. so try to do everything in your power to make sure that you do it right the first time. By choosing your broker carefully you will save yourself valuable time and money.

Adds up quickly.forextradingtips. The importance of spreads depends greatly on your trading style and your trading strategy.1. Here is an example of the danger of such a strategy.000 per trade and let’s say that he trades 20 times daily as some of these courses and strategies teach. Although this approach has worked out for some traders who were trading highflying Nasdaq stocks in the late ‘90s for a currency trader it is a sure way to slowly lose all of his money. then spread size is very important to you. $9.5703 → $100. then you would make a loss of $20: as you would buy at 1. With such trading style the difference between a broker that has average spread of 4 pips and a broker that has an average spread of 8 pips is of huge importance.broker is earning from you. Let’s say a trader has $2.5703 . Average spread being around 5 pips he would spend $5 per trade. 20 trading days a month and it would equal 100% of trader’s capital each month.000 x (1. You are better spending your money anywhere else. Figure 2-7 More trades you do. At 20 trades per day this would equal $100 per day in spreads. If your strategy generates several entry signals per day and you are using relatively tight stops in order to limit your losses. 5 trades per day can mean $40 per day. It is five percent of the trader’s capital each day just in spreads.5701) = $20. If you would buy and sell immediately 1 lot EUR/USD. doesn’t it? www. This is why many brokers that cater to currency traders prefer traders who make many trades during the day. more money your broker makes.000 in capital and is using 1:5 leverage to buy/sell $10.com 26 . They even hold courses that teach you how to scalp in and out of positions all day long.600 per year if you are trading in $10.5701 and sell at 1.000 per trade. $800 per month.

Some forex brokers will request, in addition to the spread, a commission per trade. For example they may ask 5$ for every lot you want to trade. One would normally assume that brokers asking for commission are in any case more expensive than the other “commission-free” ones. Well, that is not always the case, as brokers asking for commissions offer typically much lower spreads than the “commission-free” ones. For example assume that we have a broker A that requests for trading the major currency pair EUR/USD 3 pips and a broker B that requests for trading the same currency pair 1 pip plus 5$ per lot. Which would be the costs for trading 1 lot EUR/USD? With broker A the costs would be $30 per trade (3 pips x $100,000), with broker B the costs would be $15 per trade (1 pips x $100,000 + 5$)! So don’t automatically disregard the brokers requesting commissions. Sometimes they are cheaper than the “commission-free” ones! In the table below you can find the trading costs of several forex brokers at the time of this writing.

Fast Execution of Market Orders In order to successfully place a trade you need to be able to get the most favorable price at any given time. This is especially true for market orders. When trading currencies, prices move extremely fast and by the time your order gets filled it may be at a price that is very different from the price you were trying to get, which was exactly the price displayed at your monitor at the time you place your order. The losses we suffer in case such a scenario occurs are known as slippage costs. Even the brokers that normally provide fast executions occasionally may take longer to fill your order. High trading volumes may affect the speed of their executions and when prices move quickly your limit orders may become outdated.

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Appropriate 24-hour Customer Service You should be able to contact the customer service even if the brokerage firm has technical problems and lots of clients call the customer service at the same time. Further you should be able to contact the customer service by different ways, 24-hour phone service as a must-have. Think about the possibility, that while you have an opened position your internet connection fails. In such case you need somebody on the phone being able to let you know what is happening with your trade.

High System Reliability If you find out that the brokerage system is down too often, then you have to choose another brokerage. You cannot afford that after you enter a position, the brokerage system fails! For the same reason you need stable computer equipment, you also need reliable brokerage system.

High Company Reliability If you do not completely trust your broker, you won’t feel comfortable transferring your funds to those guys, so that you can start trading. Of course, there is no 100% guarantee in life, but you can minimize possible risks. First you will request that the brokerage company is regulated by a governmental agency from a country of your trust. Brokerage companies are usually regulated by the US agencies CFTC and NFA, sometimes also by agencies from other countries such as FSA (UK), SFBC (CH) or ASIC (AU). Would you trust a brokerage company which is not regulated or even one which is regulated by an offshore island? Second you will request that the brokerage company is over five years in the market. And third that it has offices in several places around the world, desirable of course also in your residence country.

Below you can find a list of brokers that are appropriate for forex trading (see Table 6.1).

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Account Conditions

Trading Costs Spread on Majors

Company Reliability

Forex Broker
Min. Deposit Max. Leverage Commission

Since

Regulated By

$200 www.alpari-idc.com $2,000 www.ac-markets.com

100:1

No

2 to 4

2004

FSA (UK)

100:1

No

2 to 3

2002

SFBC(CH)

NFA(US), FSA(UK), $2,000 www.cmcmarkets.com/us 100:1 No 2 to 3 1989 ASIC(AU), BAFIN(DE), OSC(CA)

$200 www.cmsfx.com $300 www.crownforex.com $250 www.forex.com

400:1

No

3 to 4

2003

CFTC/NFA (US)

200:1

No

1 to 2

2004

SFBC(CH)

200:1

No

2 to 3

1998

CFTC/NFA (US)

$2,000 www.forex.ch

200:1

No

3 to 4

2006

Polyreg (CH)

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Forex Broker

Account Conditions Min. Deposit Max. Leverage

Trading Costs Spread on Majors 2 to 4

Company Reliability

Commission

Since

Regulated By

$500 www.fxlite.com $250 www.fxsol.com $500 www.gfsforex.com

200:1

No

2004

NFA (US)

400:1

No

3 to 5

2001

CFTC/NFA (US)

200:1

No

3 to 5

CFTC/NFA (US) CFTC/SEC (US),

$250 www.gftforex.com

400:1

No

3 to 5

2001

FSA (Japan), ASIC (Australia)

$7,500 www.hotspotfx.com

50:1

$3/100k

1 to 2

2000

CFTC/NFA (US)

www.interactivebrokers.co m

$5,000

50:1

$2/100k

2 to 2

1998

$250 www.interbankfx.com $400 www.mbtrading.com

100:1

No

2 to 3

2001

NFA(US), CFTC(US)

100:1

Yes

1 to 2

2002

CFTC/NFA (US)

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2 to 2. Usually when you open an account in a brokerage firm. we recommend that you to take a closer look at the following charting software programs.mgforex. so you should be able to implement our strategy regardless which charting software you are using.5 2001 CFTC/NFA (US) 100:1 No 2 to 3 1998 DFSA(DK) Table 2-7 Charting Software In order to implement our strategy you need charting software capable to place some TA indicators (MA and RSI) and capable to draw lines on the chart.$200 www.oanda.forextradingtips.saxobank.com 31 . Here is a short list of some of the software providers. There are many others out there and you can find them by doing simple Google searching.000 www.ch $1 www.com $2.com 100:1 No 3 to 5 2000 CFTC/NFA (US) 200:1 No 2 to 3 2005 SFBC(CH) 50:1 No 1.000 www. Most of them provide a one month free trial period so you can try several of them before you decide which one suits your needs. www.migfx. These features are usually provided by any charting software.com $2. you get free or discounted charting software. If you do not feel comfortable with the provided charting software.

and automatically trigger trades generated by your strategy.com 32 . www. It is the best charting software for free out there. enter pending orders.forextradingtips.metaquotes. but what sets the package apart is its built-in language for programming custom indicators and trading strategies. With this feature you can analyze the market.net/metatrader/ Metatrader offers several technical indicators and time frames.Free Charts Metatrader Website: http://www.

asp Costs: $115/Month plus Data feed $50/month for the FX FXtrek offers a suite of increasingly sophisticated packages. Java-based. In addition.com 33 . it offers the most commonly used indicators used for FX analysis.forextradingtips. Here you can gain access to FXtrek's free package.com/misc/fxcm2.Fxtrek Website: http://quote2. The charts feature the most popular time frames.fxtrek. including tick and 1 minute. which makes for an extremely efficient starter kit for the beginning technician. www.

The user friendly layout offers you the ability to organize and tile workspaces. 7 different time frames.fxcorporate. This package includes 14 technical indicators.Stratagem Website: http://scharts.forextradingtips. www. Java-based. and a multiple-chart viewing capability.com/ Designed for ease of use. this package contains a menu bar that allows you to execute the most common charting actions with a single click of the mouse.com 34 .

drawing tools. E-signal offer reliable charts with a slew of technical indicators. back testing capabilities.esignal.com 35 . as well as alerts. and a helpful support team. www.com Costs: $115/Month plus Data feed $50/month for the FX E-signal is a well established name in the charting software arena. Windows based.Premium Charts Esignal Website: http://www.forextradingtips.

Amibroker Website: http://www.00 one time purchase fee. Windows based. which distinguishes itself with superior service quality and efficiency.$229. user-friendly interface.00 one time purchase fee. www.amibroker. AmiBroker is also noted for their exceptional Customer Support team.com/ Costs: SOFTWARE COST: Professional . Standard $149. and indicator customization all accessible via a clear.com 36 . FX DATA FEED COST: Varies based on Data feed Provider AmiBroker offers a robust professional charting package with such features as alerts back-testing.forextradingtips.

Windows based. FX DATA FEED COST: $100/month CQG charts offer a robust charting solution with alerts.CQG Website: http://www.com 37 .forextradingtips. options.com/ Costs: SOFTWARE COST: $545/month. www. back testing. the ability to export to excel. CQG provides worldwide data coverage including futures. and stock exchanges.cqg. and a large number of technical indicators.

forextradingtips.Monitor More Than One Currency Pair As we did not want to confuse our reader with too much information at once. Once you get more comfortable using our strategy. then we concentrate only on that currency pair until we exit the position. you will get more entry signals and in consequence you will enter more trades generating a higher profit. as it is a manageable number of currency pairs. you can just increase the number of monitored currency pairs. If at any time you do not get enough entry signals. After closing the trade. First you have to decide how many currency pairs you are going to monitor at once. we decided to monitor only one currency pair in our examples. www.com 38 . We recommend starting with two currency pairs. we recommend that you monitor more than one currency pair at the same time. we return again to monitor more currency pairs to get an entry signal. That way. Once we enter a trade for a particular currency pair.

The “voodoo science” theory would make sense if it wasn’t for a fact that there is a significant number of traders who are able to consistently make profits in currency markets. Since any trader has or can have access to the same TA tools we have to ask how can a small group of traders consistently win and the other larger group. MA.CHAPTER 3. Many successful traders don’t want to share this secret. technical analysis is not an exact science. TA works because many people use it. if you use TA to find your entry positions.forextradingtips. Unfortunately. Those traders use technical analysis as their main tool. winning traders are winning because they know how the losers are going to react based on this data. In other words. For example. What is it that winning traders know about technical analysis that gives them the upper hand? The answer is simple: Technical Analysis works but not necessarily for the reason most people believe. Market efficiency means that all the available information is already calculated in the market prices. and successful traders are able to predict how will other people react on different TA indicators and signals. while the losing traders are using TA to determine their trades. you’re no better off than someone who chooses those positions randomly. when a price goes below one of the key moving averages. many www. and that you can only guess how wills the price behave in the future. They claim that due to market efficiency. TECHNICAL ANALYSIS Why Does Technical Analysis Work? Technical analysis describes different ways of predicting the future of the underlying market based on its history.com 39 . Many prominent scientists label it as “voodoo science”. more or less consistently lose in the currency trading game.

However. The same thing happens in currency markets. Historians are usually able to make the most accurate predictions of future and outcomes of events. Every time when there has been a long lasting bull market in any major currency. Usually the past repeats itself. forcing traders who were long on that particular instrument/currency to sell their positions because it is going below their stop limits.com 40 . www. If traders who were among the last to join the party looked at the charts of previous times. There is no Holy Grail or magic black box that will give you the perfect. They start to enter the positions on the buy side and more often than not price starts to reverse. fundamentals are strong there are hundred reasons why this currency should continue to appreciate. No TA tool by itself will give you reliable buy or sell signals. Technical Analysis is similar to studying history. new experts come from the woodwork claiming that this time it is different. it has to start to feed of itself. Prices continue the downward trend. The winning traders buy the instrument/currency because they understand that fluctuation was temporary. By doing so. successful traders realize that most of the current price action was created artificially. accurate signal. at this point. The losing traders have already sold their positions based on the TA tools. However. they would have noticed that many technical indicators were behaving similarly as they had in the past.traders will sell to protect themselves against additional losses. and they seize the opportunity based on the losing trader’s reactions. And now everybody starts to buy this currency more and more. when no fresh money is coming in to feed this beast. Money is borrowed. This creates a domino effect as the price continues to decline. combining of the right group of TA indicators with discipline and adequate trading capital has been the road to fortune for many traders. There is no reason why you cannot emulate their success. that for this currency sky is the limit. leveraged and put into this currency. However.forextradingtips. There comes the bear. History proves that people historically behave in the same manner in the similar situations. Great empires start to fall when everybody starts thinking that they are invincible. they will drive the price of that instrument/currency lower and that will prompt some traders to start short selling in anticipation of further decline.

The sell signal occurs when current price crosses MA from above to below. It is called a ‘moving” average because as the newest period is added.forextradingtips. Usually combinations of two or three MA intervals are used. not beforehand. As we can observe from the chart when the price crosses blue line from the above to below it is usually a negative www. If you learn while in the battle.com 41 . Blue line represents 20 day Moving Average. Figure 3-8 Figure above is a daily candlestick chart for EUR/USD covering a five-month period. Buy signals occur when the current price crosses MA from below to above. This is the last lesson you want to learn the hard way when entering the currency trading battle. MA crossovers are used in many trading systems as buy or sell signals. longer term MA such as 20 day MA. your chances of success will most likely be lost. the oldest period is dropped. Moving Average Moving average is one of the most widely used TA indicators. history is doomed to repeat itself. We will now examine the most important TA indicators and how can they be effectively used in predicting future movements in currency prices. Another popular way of observing buy and sell signals is by using single.When you’re unprepared and unaware of historical facts. Moving average is calculated by finding the average price of the trading instrument over a set number of periods.

forextradingtips.signal and the trend becomes bearish for a certain period of time. Figure 3-9 Figure above is 1-hour candlestick chart for EUR/USD covering a five-day period. The www. Relative Strength Index RSI Relative strength index is a momentum indicator. Then. sentiment changes and the trend becomes bullish for a certain period of time. Red line represents 4 hour moving average and blue line represents 12 hour moving average. when the price crosses the blue line from below to above. It is an indicator that measures an instruments price relative to itself. It usually moves ahead of price. Buy signal occurs when 12 period MA (blue line) crosses 4 period MA (red line) from above to below and sell signal occurs when 12 period MA crosses 4 period MA from below to above.com 42 .

From the chart above we can observe that when the RSI starts reaching upper horizontal line price is often peaking and is starting to reverse its course and when the RSI starts reaching lower horizontal line price is often bottoming and is starting to reverse. RSI value of 30 or less is generally considered as buy signal and RSI value of 70 or more is considered as sell signal. RSI is usually used in combination with other indicators.forextradingtips. And as we www. Therefore.values that it can have are between 0 and 1000. The RSI value is represented by the blue line on the bottom part of the chart. it looks at the overall picture and eliminates much of the marketplace noise. Sudden short-term movements in an instruments price do not affect it. There is no wonder since support and resistance are based on supply and demand. it is very likely that price is about to change direction.com 43 . Traders also look for the divergence between price movement and RSI (price moving up and RSI moving down and vice versa). Figure 3-10 Figure above is a daily candlestick chart for EUR/USD. Support and Resistance Levels Support and resistance is the most basic concept of technical analysis. If you see such movement.

So if we can find out what are the support and resistance levels. If the price breaks through support then support becomes resistance level and if the price breaks through resistance then resistance becomes support. 0. Sometimes they simply establish around round numbers such as 1. Resistance is created at points above the current price where there are enough sellers to stop and eventually reverse advance in the underlying instruments price.forextradingtips. 1.15. To recollect the law of support and demand in forex: as the demand for some currency increases the price of this currency will also increase and v. is nothing else than forecast the price of currencies at the given time.com 44 .10.v. we could with high probability tell in which direction price will move. What are then support and resistance? Support is created at points below current price where there are enough buyers to prevent and eventually reverse decline of the underlying instruments price. if the supply for some currency increases the price will decrease. And what we are trying to do.all know supply and demand determine the price of goods in this case of the currencies traded. Support and resistance are often established around key exponential moving average such as 20 day MA and 50 day MA or around key Fibonacci Retracement levels.75 etc… www.

com 45 .forextradingtips.Figure 3-11 www.

you will realize that using only one monitor puts you at a disadvantage.com 46 . Before you go any further ask yourself the following questions: Are you willing to invest your time. www. if you are serious enough about trading. Have you found a decent data feed and charting software provider? Before we start. Eventually.CHAPTER 4.forextradingtips. you will have to jump between the screens. TRADING STRATEGY Now the battle is about to begin and you should get ready for it.. money and effort in a profession in which success is not guaranteed? Are you comfortable with and aware of the fact that the chances of failure are high? Do you have a comfortable basic knowledge of the Currency Markets in general? Are you familiar with key concepts and terms as related to currency/forex trading? Have you opened an account with an online broker/dealer that meets the criteria that we have outlined? Have you set aside the amount of money that you are willing to risk? Are you set up with the necessary hardware and Internet connection? We will assume that you will be using two monitors for the purpose of this strategy.. If you haven’t installed two monitors yet.

If the current price is above the blue line the market sentiment. Most of the trading systems out there use MA crossovers as buy or sell signals. the oldest period is dropped. If the current price is below the blue line the market sentiment for the purpose of our www. The blue line represents 150 Period Moving Average. Let’s have a look at the figure below: Figure 4-1 Figure above is a 5 minute candlestick chart for EUR/USD currency pair.com 47 . It is called a ‘moving” average because as the newest period is added. The only purpose of using MA indicator in our strategy is to determine current market sentiment. Moving average is calculated by finding the average price of the trading instrument over a set number of periods.Although the core of our strategy is Support and Resistance we will also be using two of the most basic technical tools that are used for confirmation purposes. Our strategy will not be using MA indicator for such purposes. 150 Period Moving Average Moving average is one of the most widely used TA indicators. 150 Period means that in your charting software you will enter value of 150 when you are setting your MA indicator. for the purpose of our strategy is considered bullish.forextradingtips.

The lower portion of the figure represents RSI(4) and the black lines are representing 30 and 70 areas. Figure 4-2 Figure above is a 5 Minute candlestick chart for the EUR/USD currency pair.forextradingtips. 4 Period means that in your charting software you will enter the value of 4 when you are setting your RSI indicator. Most of the trading systems use 14 Period Relative strength index or RSI(14) in order to determine overbought or oversold market conditions. 4 Period Relative Strength Index For the purpose of our strategy we will be using RSI in a different manner than it is used by most of the trading systems out there.com 48 . In our strategy we will be using 4 Period Relative Strength Index or RSI(4) in order to confirm whether the price is likely to make a breakthrough through predetermined support and resistance lines or to bounce off them. For the purpose of our strategy we only need to determine if the www. Let's have a look at the figure below. The application of this will be shown later in the chapter.strategy is considered bearish. the market sentiment is bearish. Also during the setting make sure that upper and lower bands are set up at values of 70 and 30. Obviously in the figure above.

GBP. CAD.current RSI(4) is above 70. if you live in European Union you are best off trading EUR/USD and finally if you live in the United States you should trade USD against the currency that you are most familiar with (EUR. if you live in Australia you should trade AUD/USD. SFR). How To Prepare For A Trading Day For the purpose of this course we will be using Esignal charting software. JPY. however our setup will give you a general idea of what capabilities should your software have. Lets have a look at figures below: www. Which software and which trading platform you will be using is entirely up to you. for the purpose of our strategy we will define when does the trading day start and when does it end. below 30 or in between those two values. Principles that are explained in this strategy can be used to trade any of the above currencies. Our examples will deal mostly with EUR/USD however if you live in Canada I would encourage you to trade USD/CAD. Although forex markets are in essence 24-hour markets. For example a person who lives in Canada remembers approximate range of CAD vs. if you live in East Asia you should trade USD/JPY.com 49 . trading currencies that you have never used. The application of this will be shown later in the chapter. Trading the currency that you are familiar with has lots of advantages vs.forextradingtips. if you live in UK you should trade either GBP/USD or EUR/GBP. USD during past ten years or more and has much better understanding of those currencies than average person from Japan.

com 50 .forextradingtips.Figure 4-3 Figure 4-4 www.

Therefore we will use 10pm GMT as the time when previous trading day ends and the new trading day begins. That is the time when almost all of the forex trading centers around the world are closed. Another example: You live in North America. Previous trading day has started on Tuesday 5pm EST and it has ended Wednesday 5pm EST.forextradingtips. It is Thursday morning 9amGMT. 2 and 3 are 15-min candlestick charts for EUR/USD. It is Thursday morning 9amEST. USD/CAD and GBP/USD respectively.Figure 4-5 Figures 1. What do they all have in common? We can observe that the time of the lowest trading volume for all of them is at approximately 5pm EST or 10pm GMT. Here is an example: “You live in Europe.” For those who don’t know: Eastern Standard Time (EST) = Greenwich Mean Time (GMT) – 5 Why it is important to determine when does the trading day start and when does it end? www. Previous trading day has started on Tuesday 10pmGMT and it has ended Wednesday 10pmGMT.com 51 .

CPI. If you are already in the market you should watch the situation closely at those times and be ready to quickly react. price has already started moving. Federal Reserve or Central Bank Meetings … However you will not look at those indicators as trading signals because by the time you get the news it is already too late. Majority of those sudden moves happen immediately after the economic reports that we have described above come out. We will get to that later in the strategy. Those reports come out almost every day so you cannot avoid them. You can notice that majority of the time price is trading in a close range and then suddenly there is a sudden upward or downward price move. www. If you are trading EUR/USD you need to pay attention to the reports coming out of EU and US.It is important because our strategy will be based on 3 day Pivot Points and in order to calculate 3 day Pivots we will need to combine 3 trading days into a single period. The reason you need to be aware of those reports and events is that at those times markets can get extremely volatile and for a beginning trader it is best to stay out of the market at such times. University of Michigan Sentiment. if you are beginning trader. Again. It doesn’t mean that you cannot have a trade going on if there is a report due to come out. don’t enter your trades just before such reports are due to come out. Economic Calendar Another important place to look at is Global Economic Calendar that has exact times and dates of all the major economic reports and events during current week.com 52 . If you are trading USD/CAD you need to pay attention to the reports coming out of US and Canada etc… Some of the important indicators that you should pay attention to are Weekly Jobless Claims. Figure shown below is an hourly EUR/USD candlestick chart.forextradingtips.

msn.dailyfx.com/investor/calendar/econ/current.com/calendar/ Or if you are looking for a US calendar you may find it at: or http://biz.forextradingtips.com 53 .com/c/e. Here is another place where you may find a complete economic calendar: http://www.forexnews.yahoo.html http://moneycentral.asp www.Figure 4-6 One of the places where you can find economic calendar is: http://www.com Figure shown below is an example of how a Global Calendar can look like however at the time when you are reading this course the website mentioned above can change and you will have to find the calendar someplace else.

we have to choose the best possible place of entry or the place that has the highest probability that the trade will go in our direction. However.com 54 .forextradingtips. Before we start to look for the place of entry (it doesn’t matter at what time of the day we plan to place our trades) we need to do a preparation. in order to be able to do so.Figure 4-7 As we have already mentioned our goal is to catch larger currency swings as that’s where the real money is in currency trading. www.

Calculating Major S/R Areas Support and resistance is the most basic concept of technical analysis.com 55 . Support is created at points below current price where there is enough buyers to prevent and eventually reverse decline of the underlying instruments price. First we need to calculate 3 day pivot points as those are the most important S/R areas that we will be looking at. Resistance is created at points above the current price where there are enough sellers to stop and eventually reverse advance in the underlying instruments price.forextradingtips. Let’s say it is 8pm EST or 1am GMT and we are planning to trade tomorrow morning. How to calculate 3 day pivots? You may be asking why aren’t we using a single day pivot points and the answer is that our particular approach will attempt to catch larger moves and 3 day Pivots will be better at eliminating much of the intraday noise. www.

4805 3 Day Close = 1. PP = (High + Low + Close)/3 Support = 2*PP – High Resistance = 2*PP – Low In our example: 3 Day High = 1.5016 3 Day Low = 1.Figure 4-8 Figure above is a 15 minute bar chart covering a three day period for EUR/USD. From the chart we can observe values for the 3 Day High. 3 Day Low and 3 Day Close. In our example those are the values covering period from Nov/15/2009 to Nov/18/2009.forextradingtips. From those values we will calculate pivot values.com 56 . Those are the values that we would use if we were to trade on Nov/19/2009. We will use classic formula to calculate pivot values. If we were to trade on Nov/6/2009 we would then calculate pivot values for the period Nov/16/2009 to Nov/19/2009.4960 www.

R1. 3 Day Close Please note that Pivot Point and 3 Day Close are acting both as Support and Resistance Areas. Pivot Point and 3 Day Close.4927 Support (S1) = 2*1.4805 + 1.4838 Resistance (R1) = 2*1. R1 3. S1 3. 3 Day Low 2. Resistance Areas are: 1.5049 For the purpose of our strategy Resistance Areas are 3 Day High.PP = (1. www. 3 Day Close Support Areas are: 1. S1.5016 + 1.4927 – 1.4927 – 1. Pivot Point 4.5016 = 1. Pivot Point and 3 Day Close. We now need to set up our chart with the necessary info and tools. How to set up our trading screen? OK. our trading day is about to start. Pivot Point 4. 3 Day High 2.4960)/3 = 1.com 57 .4805 = 1.forextradingtips. Support Areas are 3 Day Low.

If the current price is above 150 MA it means that the price is trading in a bullish medium term trend and therefore we will adopt a bullish strategy.Figure 4-9 Figure above is a five minute candlestick chart for EUR/USD currency pair. Entering on the bullish side. 3 Day Close. www. On the figure above you can not see R1 and 3 Day Low as they are not close to current price action.com 58 . Support and resistance lines are R1. 3 Day High. When to enter the trade? We will now define our entry strategy. The thin blue line is representing 150 Period Moving Average and on the bottom of the chart there is 4 Period Relative Strength Index. S1 and 3 Day Low. As you can see we have drawn the support and resistance lines that we have already calculated. Pivot Point.forextradingtips.

Confirmation with 4 Period RSI. 3 Day High and S1) resistance lines and on the upside bounces from the (Pivot Point. Figure 4-10 Please note that Pivot Point and 3 Day Close are acting both as Support and Resistance lines. 3 Day Close.com 59 . Bullish Breaktrough signal will be taken ONLY if current RSI(4) is higher than 70.forextradingtips.If bullish we will be looking to enter our position on upside breaktroughs through (Pivot Point. 3 Day Close. Entering on the bearish side. 3 Day High and R1) resistance lines. www. Bullish Bouncing signal will be taken ONLY if current RSI(4) is in between 30 and 70. If the current price is below 150 MA it means that the price is trading in a bearish medium term trend and therefore we will adopt a bearish strategy. 3 Day Low and S1) support lines. If bearish we will be looking to enter our position on downside breaktroughs through (Pivot Point. 3 Day Low and S1) support lines and on the downside bounces from the (Pivot Point. 3 Day Close. 3 Day Close.

It is better to miss a trading opportunity than to have your order filled at a price that is far from your entry target price. To get into the trade you should always use Limit orders. You need time to perfect www. Bearish Bouncing signal will be taken ONLY if current RSI(4) is in between 30 and 70. It’s worth it to save your money than risk losing it simply because you’ve got an itchy “trigger finger”. Bearish Breaktrough signal will be taken ONLY if current RSI(4) is lower than 30. What kind of order should you use to enter the trade? The only negative consequence you may get from not entering a trade is just that. This applies even if you are starting with substantial start up capital.forextradingtips. What size should you be trading with? If you are a beginning trader you should start very small and when you are able to build up your account you can start trading with larger amounts.Figure 4-11 Please note that Pivot Point and 3 Day Close are acting both as Support and Resistance lines. Confirmation with 4 Period RSI. simply wait for the next opportunity to come along.com 60 . If you feel the opportunity gap is closing too quickly. you haven’t entered a trade.

Now. 100 pips stop loss Well. let us assume that you want to trade EURUSD using our Support Resistance Strategy and that your account size is $1.1 lot size when entering a trade. That way he is able to control larger lot size and to make higher profit. 40 pips stop loss Well.1 That means that in this case we would be using 0. let’s say you want to take a risk level of 4% per trade ($40 per trade). Ok. Money Management As explained earlier in the course the leverage basically gives a trader the possibility to control a higher capital.000. we need to calculate the lot size we will use according to the defined risk level of 4%: Maximum loss in dollars $1000 * 0. leverage is a powerful tool but it should be used by traders carefully! Example 1: EURUSD. if the trade goes in his direction. let us assume that you want to trade GBPUSD using our Support Resistance Trading Strategy and that your account size is $2.your trading strategy. when you become more formidable market participant. That means the maximum loss we may suffer is 40 pips.forextradingtips. First of all you need to define how much risk you want to take very time you enter a trade. For example. It is much better to preserve your capital for later on. in our Support Resistance Trading Strategy after entering the market we place a 40 pips stop order in order to cut possible losses short.000 account size. than his real start up capital. $2.com 61 . if the trade goes against him. Example 2: GBPUSD. Resuming. let’s say www. 4 percent per trade risk level. For example.04 = $40 Lotsize = maximumloss in dollars/stoploss in pips * $10 = $40/40*$10 = 0.000 account size. $1. But at the same time he is taking higher risk. 4 percent per trade risk level.000. First of all you need to define how much risk you want to take every time you enter a trade.

is the single most important factor that will either make you or break you in the active trading business.08 lot size when entering the trade. It is true that sometimes price will turn around just after you get out. Now.you want to take a risk level of 4% per trade ($80 per trade). Failure to follow the stop loss rule is the number one reason for failure among beginning traders. That means that in this case we would be using 0.04 = $80 Lotsize = maximumlossindollars/stoplossinpips*10 = $80/100*$10 = 0. Cut Your Losses Short Immediately after entering the market we place a stop order a number of pips below entry price if the entry signal was bullish or a number pips above entry price if the entry signal was bearish.com 62 . When To Exit The Trade? “Let your profits run. The majority of successful traders will tell you that proper trade management. That means the maximum loss we may suffer is 100 pips. You cannot cut corners with the stop loss rule. It only takes a few stubborn incidents to entirely devastate your initial trading capital. If our stop loss is reached we will get out of the trade immediately. no questions asked. It needs to be followed every single time without exception. it is about to calculate the lot size we will use according to the defined risk level of 4%: Maximum loss in dollars = $2.forextradingtips. cut your losses short. www.08 lot size. in our Support Resistance Trading Strategy after entering the market we place 100 pips stop order in order to cut possible losses short. but there is no way to know this in advance.” Sounds easy. doesn’t it? It is actually much harder than most beginning traders realize. once you are in the trade.000 * 0. Ok.

How can a trader lose if he only takes small profits at a time? Profit is profit. www. If such profits are followed by three losses of $200 each. This will also make you lose money in the long run. Not being able to do so will make you a losing trader in the long run. If you have plenty of time and if you wish to monitor your trade often you should use 40 pips as your initial stop loss. you need to extract as much profit as possible. profit of $550 will become a $50 loss.forextradingtips. isn’t it? Not exactly… Profit of $550 is not the same as a profit of $850.How many pips away from the entry price should you place your stop loss. The risk per trade should stay constant at 4% per trade and it is controlled by lot size as explained in the earlier paragraph. If you have very little time to monitor your trade you should place your stop loss at most at 120 pips away from the entry price. Let Your Profits Run Once you are in the trade and the price has started moving in your direction. The best solution to resolving these conflicts is to use Recursive Trailing Stops. 120 pips is the maximum. If you can monitor your trade but not that often you should place your initial stop loss at 80 pips away from the entry price.com 63 . This depends on how much time do you intend to spend in front of the screen monitoring the trade. Again 40 pips is the minimum. Everything in between is up to you and shoud reflect your available time and trading style. However. while profit of $850 will become a $250 win. becoming too greedy can turn a small profit into a loss. Do you get my point? Profits are always followed by losses and if the profits are small they will not make up for the losses that will eventually and surely follow.

also shows small movements against it. And that is the right thing to do..forextradingtips. As the information about the last stop order goes into the calculation of the new stop order it is a so called recursive formula. What they key question is. So in order to avoid that we are stopped out just at the moment when our trade needed just a little more space. Let us give you an example in order to make this idea clearer. every market trend. This method behaves that way that the more space we want to allow to our trade the more the market moves in the direction. the more space we want to allow to our trade in order to make even more profit.com 64 . . Let it be 40 pips (in this example) from the entry price. regardless of how strong it is.85 Equation 1 www. as we want to cut the losses short in case the market moves against our trade. how much exactly we want to risk in order to able to make even more profit? We have answered this question by using a recursive formula for recalculating the stop order every time the market moves in our direction. we need a wider space to the actual price than 40 pips.Recursive Trailing Stops The basic idea of our “Recursive Trailing Stop” is as follows: The more the market moves in the direction of our trade. the question that arises is. once we know that a tight stop order of 40 pips is not required for fulfilling the requirement “cut the losses short”. 40 pips in our direction? In that case we do not need any more to have a tight stop order 40 pips below the actual market price for cutting the losses short. Once you enter a trade one always places immediately a stop order at the certain distance in pips. let’s say. as only in case the market would move 40 pips against our trade we would have to face losses in the actual trade.Every time the price moves 40 pips in our direction we readjust the stop order by using the following “Recursive Trailing Stop Order” formula: Current stop order = Old stop order + Previous Stop Loss x 0. Ok. what is the right stop order for fulfilling the requirement “let the profits run”? As said before. But what happens if the market moves.

0034 = 1. then the stop order is readjusted to: New Stop Order = 1.0029 = 1.85 = 1.4274 + 0. here it means that the price reaches 1.4240  If the price moves 40 pips in our direction.Here an example for the usage of the “Recursive Trailing Stop Order” formula: Figure 4-12   We enter long (bullish) the market at the entry price of 1. then the stop order is readjusted to: New stop order = 1.0034 x 0. here it means that the price reaches 1.4240 + 0.forextradingtips.85 = 1.4360.4280 – 0.4274  If the price moves again 40 pips in our direction.0040 = 1.4274+ 0.4280 First stop order is set 40 pips below the entry price: First Stop Order at 1.com 65 .4303 www.4240 + 0.4320.0040 x 0.

You cannot afford to stay in a bad trade. When exiting a trade the opposite is true.forextradingtips. when exiting we will use market order. What type of order should you use when exiting the trade? When entering a trade I have recommended using a limit order because you can afford not to take a trade at a price that doesn’t meet your standards. In that case we would wait the price to move 120 pips in our direction before applying the formula. www. Therefore. which will get us out of the trade quickly.com 66 . And so forth… If we were using 80 pips as our initial stop loss than we would wait the price to move 80 pips in our direction in order to start using our Recursive Trailing Stop. The same applies if were using 120 pips as our initial stop loss. even though it will cost us additional spread points.

Figure below is a 15-minute candlestick chart for EUR/USD covering period of the previous three trading days. EXAMPLES Trading Example 1. 10pm EST and we are getting ready for the next trading day as we have described earlier in the strategy.com 67 . EUR/USD It is December 3. Figure 5-1 www.CHAPTER 5.forextradingtips.

forextradingtips.5133 Ok.4969 3 Day High = 1.As we can observe from the chart during the period of the past three days we can determine the values of 3 Day Low. Figure below shows us what happens the next day.4969 = 1.4969 + 1.5141 + 1.5141 3 Day Close = 1. www.5051 Support (S1) = 2*PivotPoint – 3 Day High Support (S1) = 2*1.5051 – 1.5141 = 1.4961 Resistance (R1) = 2*PivotPoint – 3 Day Low Resistance (R1) = 2*1. now we have the necessary S/R lines for the next trading day.5043)/3 = 1. They are as follows: 3 Day Low = 1.5051 – 1. 3 Day High and 3 Day Close. Pivot Point = (3 Day Low + 3 Day High + 3 Day Close)/3 Pivot Point = (1.5043 From those values we will now calculate Pivot Point and major S/R areas.com 68 .

The lot size is calculated according to our Money Management formula.Figure 5-2 Figure above is a 5 min EUR/USD candlestick chart for the December 4. RSI was below 30 and the price made a bearish breakthrough through the Support line (in this case 3 Day Close).com 69 .. After that. we would manage the trade using our Recursive Trailing Stop formula. Green lines represent Resistance levels. www.forextradingtips. covering the period of approximately 10 trading hours. Blue lines represent Support and Resistance levels and Red lines represent Support levels that we have calculated the previous night. Of course. At that time we would have placed sell order for EUR/USD and placed our stop loss at (40 – 120) pips above the entry price. As we can observe on the chart an excellent entry opportunity occured at approximately 8:30 am as at that time the price moved below 150 MA. we could have calculated those levels at any time during the current trading day as they would stay the same. The thin blue line represents 150 period Moving Average and TA tool on the bottom of the chart is 4 period RSI.

forextradingtips. They are as follows: 3 Day Low = 1.Trading Example 2. www. It is December 2.6632 From those values we will now calculate Pivot Point and major S/R areas.6695 3 Day Close = 1.6378 3 Day High = 1. 9pm EST and we are getting ready for the next trading day as we have described earlier in the strategy. GBP/USD Figure below is a 15-minute candlestick chart for GBP/USD covering period of the previous three trading days. Figure 5-3 As we can observe from the chart during the period of the past three days we can determine the values of 3 Day Low. 3 Day High and 3 Day Close.com 70 .

6378 + 1.6632)/3 = 1.6568 – 1.com 71 . Figure 5-4 Figure above is a 5 min GBP/USD candlestick chart for the December 3.Pivot Point = (3 Day Low + 3 Day High + 3 Day Close)/3 Pivot Point = (1.6695 = 1. Blue lines represent Support and Resistance levels and Red lines represent Support www. Figure below shows us what happens the next day.6695 + 1..6568 – 1.6758 Ok.6568 Support (S1) = 2*PivotPoint – 3 Day High Support (S1) = 2*1. covering the period of approximately 9 trading hours.6378 = 1.6441 Resistance (R1) = 2*PivotPoint – 3 Day Low Resistance (R1) = 2*1. Green lines represent Resistance levels.forextradingtips. now we have the necessary S/R lines for the next trading day.

After that.com 72 . In this case we can not see the Red lines as they are out of focus. we would manage the trade using our Recursive Trailing Stop formula. The thin blue line represents 150 period Moving Average and TA tool on the bottom of the chart is 4 period RSI. The lot size is calculated according to our Money Management formula. USD/CAD It is December 3. 10pm EST and we are getting ready for the next trading day as we have described earlier in the strategy. RSI was below 30 and the price made a bearish breakthrough through the Support line (in this case 3 Day Close). we could have calculated those levels at any time during the current trading day as they would stay the same. At that time we would have placed sell order for GBP/USD and placed our stop loss at (40 – 120) pips above the entry price.20 am as at that time the price was below 150 MA. Figure below is a 15-minute candlestick chart for USD/CAD covering period of the previous three trading days.levels that we have calculated the previous night. As we can observe on the chart an excellent entry opportunity occured at approximately 7. Figure 5-5 www. Trading Example 3. Of course.forextradingtips.

0522 – 1. Figure below shows us what happens the next day.0573)/3 = 1.0522 Support (S1) = 2*PivotPoint – 3 Day High Support (S1) = 2*1.com 73 .0584 = 1.0410 = 1.0584 3 Day Close = 1. 3 Day High and 3 Day Close.forextradingtips.0410 + 1.0522 – 1. Pivot Point = (3 Day Low + 3 Day High + 3 Day Close)/3 Pivot Point = (1.As we can observe from the chart during the period of the past three days we can determine the values of 3 Day Low.0410 3 Day High = 1.0584 + 1.0573 From those values we will now calculate Pivot Point and major S/R areas.0460 Resistance (R1) = 2*PivotPoint – 3 Day Low Resistance (R1) = 2*1.0634 Ok. now we have the necessary S/R lines for the next trading day. They are as follows: 3 Day Low = 1. Figure 5-6 www.

Trading Example 4. After that. covering period of approximately 9 trading hours. www. 10pm EST and we are getting ready for the next trading day as we have described earlier in the strategy..com 74 . The thin blue line represents 150 period Moving Average and TA tool on the bottom of the chart is 4 period RSI. we could have calculated those levels at any time during the current trading day as they would stay the same. we would manage the trade using our Recursive Trailing Stop formula. Green lines represent Resistance levels. Figure below is a 15-minute candlestick chart for EUR/USD covering period of the previous three trading days.Figure above is a 5 min USD/CAD candlestick chart for the December 4. At that time we would have placed sell order for USD/CAD and placed our stop loss at (40 – 120) pips above the entry price. As we can observe on the chart an excellent entry opportunity occured at approximately 7:00 am as at that time the price was below 150 MA.forextradingtips. The lot size is calculated according to our Money Management formula. EUR/USD It is November 30. Blue lines represent Support and Resistance levels and Red lines represent Support levels that we have calculated the previous night. RSI was below 30 and the price made a bearish breakthrough through the Support line (in this case Pivot Point). Of course.

5084 + 1. 3 Day High and 3 Day Close.5006 From those values we will now calculate Pivot Point and major S/R areas.4972 – 1. They are as follows: 3 Day Low = 1.5084 3 Day Close = 1.4972 – 1.forextradingtips.5006)/3 = 1.4826 + 1.4826 3 Day High = 1.5084 = 1.4826 = 1.com 75 .4972 Support (S1) = 2*PivotPoint – 3 Day High Support (S1) = 2*1.4860 Resistance (R1) = 2*PivotPoint – 3 Day Low Resistance (R1) = 2*1.5118 www. Pivot Point = (3 Day Low + 3 Day High + 3 Day Close)/3 Pivot Point = (1.Figure 5-7 As we can observe from the chart during the period of the past three days we can determine the values of 3 Day Low.

Ok.com 76 . The thin blue line represents 150 period Moving Average and TA tool on the bottom of the chart is 4 period RSI. covering the period of approximately 11 trading hours. If this opportunity was missed there was another buy signal at 8. Blue lines represent Support and Resistance levels and Red lines represent Support levels that we have calculated the previous night. RSI was above 30 and the price made a bullish breakthrough through the Support line (in this case 3 Day Close). The lot size is www. now we have the necessary S/R lines for the next trading day. In this case we can not see the Red lines as they are our of focus.25 am as the price made a bullish breakthrough through 3 Day High Resistancel line. Figure 5-8 Figure above is a 5 min EUR/USD candlestick chart for the December 1. As we can observe on the chart an excellent entry opportunity occured at approximately 2..00 am as at that time the price moved above 150 MA. Green lines represent Resistance levels. Figure below shows us what happens the next day.forextradingtips. we could have calculated those levels at any time during the current trading day as they would stay the same. Of course. At that time we would have placed buy order for EUR/USD and placed our stop loss at (40 – 120) pips below the entry price.

It is November 30. 10pm EST and we are getting ready for the next trading day as we have described earlier in the strategy. 3 Day High and 3 Day Close. After that. Trading Example 5.6593 3 Day Close = 1.forextradingtips.com 77 .6268 3 Day High = 1.6439 www. GBP/USD Figure below is a 15-minute candlestick chart for GBP/USD covering period of the previous three trading days. Figure 5-9 As we can observe from the chart during the period of the past three days we can determine the values of 3 Day Low. They are as follows: 3 Day Low = 1. we would manage the trade using our Recursive Trailing Stop formula.calculated according to our Money Management formula.

forextradingtips.6268 = 1. Pivot Point = (3 Day Low + 3 Day High + 3 Day Close)/3 Pivot Point = (1.6433 Support (S1) = 2*PivotPoint – 3 Day High Support (S1) = 2*1.6439)/3 = 1. Blue lines represent Support and Resistance levels and Red lines represent Support levels that we have calculated the previous night.6268 + 1.6433 – 1. covering the period of approximately 8 trading hours.6593 + 1. Figure 5-10 Figure above is a 5 min GBP/USD candlestick chart for the December 1.6433 – 1.6273 Resistance (R1) = 2*PivotPoint – 3 Day Low Resistance (R1) = 2*1. Figure below shows us what happens the next day. In this case we can not see the www. Green lines represent Resistance levels.6598 Ok.From those values we will now calculate Pivot Point and major S/R areas. now we have the necessary S/R lines for the next trading day.com 78 .6593 = 1..

forextradingtips.Red lines as they are out of focus. we could have calculated those levels at any time during the current trading day as they would stay the same. USD/CAD It is November 30. RSI was below in between 30 and 70 and the price made a bullish bounce off the Support line (in this case 3 Day Close). www. we would manage the trade using our Recursive Trailing Stop formula. The lot size is calculated according to our Money Management formula. As we can observe on the chart an excellent entry opportunity occurred at approximately 3. Trading Example 6. After that. At that time we would have placed buy order for GBP/USD and placed our stop loss at (40 – 120) pips below the entry price. Of course.05 am as at that time the price was above 150 MA. Figure below is a 15-minute candlestick chart for USD/CAD covering period of the previous three trading days. 11pm EST and we are getting ready for the next trading day as we have described earlier in the strategy.com 79 . The thin blue line represents 150 period Moving Average and TA tool on the bottom of the chart is 4 period RSI.

0528 + 1.0612 – 1.0560 From those values we will now calculate Pivot Point and major S/R areas.0750 3 Day Close = 1.0750 = 1. now we have the necessary S/R lines for the next trading day.0612 Support (S1) = 2*PivotPoint – 3 Day High Support (S1) = 2*1.com 80 . 3 Day High and 3 Day Close.0612 – 1.0560)/3 = 1.0696 Ok.forextradingtips.0474 Resistance (R1) = 2*PivotPoint – 3 Day Low Resistance (R1) = 2*1.0750 + 1.Figure 5-11 As we can observe from the chart during the period of the past three days we can determine the values of 3 Day Low. Pivot Point = (3 Day Low + 3 Day High + 3 Day Close)/3 Pivot Point = (1. They are as follows: 3 Day Low = 1.0528 3 Day High = 1. www.0528 = 1.

In this case we can not see the Green lines as they are out of focus.Figure below shows us what happens the next day.20 am as at that time the price was below 150 MA.forextradingtips. As we can observe on the chart an excellent entry opportunity occurred at approximately 2. The lot size is calculated www. If this opportunity was missed another sell signal occurred at 4. RSI was below 30 and the price made a bearish breakthrough through the Support line (in this case 3 Day Low).00 am as the price made a bearish breakthrough through S1 support line. Figure 5-12 Figure above is a 5 min USD/CAD candlestick chart for the December 1..com 81 . covering the period of approximately 9 trading hours. Green lines represent Resistance levels. The thin blue line represents 150 period Moving Average and TA tool on the bottom of the chart is 4 period RSI. At that time we would have placed sell order for USD/CAD and placed our stop loss at (40 – 120) pips above the entry price. Of course. Blue lines represent Support and Resistance levels and Red lines represent Support levels that we have calculated the previous night. we could have calculated those levels at any time during the current trading day as they would stay the same.

S.Commodity Futures Trading Commission Futures and Options trading has large potential rewards. U. The past performance of any trading system or methodology is not necessarily indicative of future results. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets.com 82 . OF CERTAIN MARKET FACTORS.according to our Money Management formula. we would manage the trade using our Recursive Trailing Stop formula. www. After that. This is neither a solicitation nor an offer to Buy/Sell futures or options. Government Required Disclaimer . ALSO. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. CFTC RULE 4. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. SUCH AS LACK OF LIQUIDITY. but also large potential risk. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. UNLIKE AN ACTUAL PERFORMANCE RECORD.41 . Don't trade with money you can't afford to lose.forextradingtips. SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING.HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT. IF ANY. SINCE THE TRADES HAVE NOT BEEN EXECUTED.