Forex Earth Sky Trading System

Earth & Sky Trading System

By Pierre Du Plessis

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CopyrightForex MentorPro2011.Allrightsreserved.

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RiskDisclosureStatement

ThecontentsofthiseBookareforinformationalpurposesonly.Nopartofthispublicationisasolicitationoranoffertobuyorsellanyfinancialmarket.Examplesareprovidedforillustrationpurposesonlyandshouldnotbeconstruedasinvestmentadviceorstrategy.Alltradeexamplesarehypothetical.NorepresentationismadethatanyaccountortraderwillorislikelytoachieveprofitsorlosessimilartothosediscussedinthiseBook.BypurchasingthiseBook,and/orsubscribingtoourmailinglistyouwillbedeemedtohaveacceptedtheseandallothertermsfoundonourwebpageForexMentorPro.cominfull.TheinformationfoundinthiseBookisnotintendedfordistributionto,orusebyanypersonorentityinanyjurisdictionorcountrywheresuchdistributionorusewouldbecontrarytothelaworregulationorwhichwouldsubjectustoanyregistrationrequirementwithinsuchjurisdictionorcountry.

CFTCRULE4.41

HYPOTHETICALORSIMULATEDPERFORMANCERESULTSHAVECERTAINLIMITATIONS.UNLIKEANACTUALPERFORMANCERECORD,IMULATEDRESULTSDONOTREPRESENTACTUALTRADING.ALSO,SINCETHETRADESHAVENOTBEENEXECUTED,THERESULTSMAYHAVEUNDEROROVERCOMPENSATEDFORTHEIMPACT,IFANY,OFCERTAINMARKETFACTORS,SUCHASLACKOFLIQUIDITY.SIMULATEDTRADINGPROGRAMSINGENERALAREALSOSUBJECTTOTHEFACTTHATTHEYAREDESIGNEDWITHTHEBENEFITOFHINDSIGHT.NOREPRESENTATIONISBEINGMADETHATANYACCOUNTWILLORISLIKELYTOACHIEVEPROFITORLOSSESSIMILARTOTHOSESHOWN.

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Earth&SkyTradingSystem

IntroductionAboutMe

Name:PierreduPlessis

Country:SouthAfrica

Age:38years

Occupation:ProfessionalFulltimeCurrencyTrader.

BioIliveintheGardenRoute,SouthAfricaandammarriedwiththreechildren.Iamalsoknownasdaddy.daycaretomyfriends.Itradefromhomehenceveryinvolvedwiththedaytodayfamilyneeds.Schoollifts,hockey,rugby,karateyounameit,daddy.daycarewillbethere.

I`vebeenacurrencytraderforthelast4years.AlotofmyrecentsuccesscameaboutwhenIjoinedtheForexMentorProprogramandIchangedtotrading4houranddailycharts.Ihavespentyearstrading15minutechartswithsomesuccess,butthischangeofdirectionhastakenmetoadifferentlevel.Onceyouhavemasteredtradingfrombiggertimeframesyouwillneverlookback.

MytradingmethodisacombinationofMarc`sM2systemandafewtwistsofmyown.

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Withthissystemyouwilltradewiththemaintrendandthatwilltestyourpatience.

Whatdoesthewordpatiencemean?

Patience emphasizes calmness, selfcontrol, and the willingness orabilitytotoleratedelay.

I personally like the partwhere it says ability to toleratedelay.Thats the secret of trading to tolerate delay and wait for themarkettocometoyou.

Soinshort,therewillbetimeswhereyouneedtowaitforpricetocometoyou,thebestwaytodothatwithoutgettingimpatientortriggerhappyistogetahobby.Getsomethingthatwilldistractyoufromtradinguntilthepricegetstothepreferredtradingzone.

Whatdoestheworddisciplinemean?

DISCIPLINE(noun)ThenounDISCIPLINEhas5senses:

1.abranchofknowledge2.asystemofrulesofconductormethodofpractice3.thetraitofbeingwellbehaved4.trainingtoimprovestrengthorselfcontrol5.theactofpunishing

Familiarityinformation:DISCIPLINEusedasanouniscommon.

DISCIPLINE(verb)TheverbDISCIPLINEhas2senses:

1.trainbyinstructionandpractice;especiallytoteachselfcontrol2.punishinordertogaincontrolorenforceobedience

Whydidyouneedtoknowthedefinitionofthesetwowordsbefore

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westart?Asystemisuselessifyoudonthavepatienceanddiscipline.Icangiveyouthebestsystemsintheworldthatmakesotherpeopleplentyofmoney,butifyouasanindividualdonthavethedisciplineorthepatiencetotradeasystem,Iwillguarantyyou,asatraderyouwillnotbesuccessful.Thesetwofactorswillbethekeytoyoursuccessasatrader.Youmustrememberthatsomepointyouregoingtohavetofigureouthowitisthatyouwanttotrade.ThisrequiresdecidingonanapproachthatissuitableforYOU,andcommittingtoit.

Veryfewpeopleactuallydothis,ontheotherhandthosethatdo,generallygetverywellrewardedforit.

Thissystemwillguideyouintotherightdirection.

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AnOverviewofCurrencyTradingAllofusoccasionallyneedourmindsjoggingsoitishopedthiswillhelp.

ForexWhatisit?

TheForeignExchangemarketisthefullnamebutitisknownbymanyothertitles,aselectionofwhichareFOREXorForex.AdditionallytermsuchasRetailForex:,FX,orSpotFXorindeedSpotalldescribewhatis,atpresent,theworldslargestfinancialmarket.Thismarkettradesatinexcessof$4trilliondaily.ThedailyamounttradedontheNewYorkStockMarketiscirca$25billiondaily,thusonecanobservethatthemultipleis160greaterontheForexmarket.Thisleadsustoaskthefollowingquestion.

WhatistheForeignExchangeMarketconstitutedof?

Putsimplytheanswerismoney,butthismustnotbeseenasnecessarilyhardcash.Thetradesarealmostpredominantlyelectronicandassuchrepresentthebuyingofonecurrencyandthesaleofanothereffectivelybacktobacktransactions.

Tradeisconventionallyundertakenviaabrokerordealer.ThereisanestablishedpatternofpairssuchasEUROUSDorUSDGBP,butoneshouldbeawarethatwiththeintroductionofcurrenciessuchastheroublenewpatternsarerapidlybeingestablished.

Aspreviouslystatedtradeisnotalways,indeedispredominantlynot,physicalthusasoneneedstoputonesmindaroundthatconcept.IfonecanthinkinthesomewhatabstracttermsofacquiringashareinsaytheJapaneseeconomy,andsubstitutethatforthetangiblecurrency,andthenlinkthattotheinflationaryorrecessionarytrendsintheeconomy,thepictureisdrawn.

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Itisfairtosaythattheexchangerateofacurrencybearsstrongrelationshiptothestateofaneconomy.However,inthecaseofacurrencylinkedtomanycountriessuchastheEuro,itisthecombinedeffectofanumberofcountrieseconomieswhichwillaffecttheexchangerateofthatcurrency.

SpotRate

Thishasneitheraphysicalorcentrallocation.ItisaspreviouslystatedlargelyelectronicthusitisakintoanOvertheCounter(OTC)orInterbankmarket,asitisrunwithinanetworkofbanksonacontinuousbasisfor24hours5daysoftheweeki.e.MondaytoFriday.

RetailTraders

Untilabout20yearsagoForexwasthesoledomainofmajorplayersinthefieldofbanking.Substantiallimitedcapitalintheregionofbetween$10$50millionwasrequired,whichprecludedanyinvolvementbytheindividual.ThegrowthoftheInternethasrevolutionisedthatposition,andnowtradingaccountsareavailabletowhatonemaytermasRetailTraders.

Alloneneedstobecomeoneofthesetradersisacomputer,goodbroadband,solidinformationonthebasicsoftradingForexandtime.Intheinitialstagesoftrading,investmentisbestundertakeninrelativelysmallamounts,accompaniedbyplentyoftimetothinkthroughyourstrategies.Toformulatetheseoneneedtounderstandthetwotypesoftrading.

TypesofTrading

Thereexisttwotypesofanalysiswhichshouldbeexplained:TechnicalandFundamental.

TechnicalAnalysisinvolvesthedissectionandbreakdownofpricemovementsthroughthemediumofcharts.Thisallowsforthe

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identificationoftrends,allowingforanunderstandingofprofitabletradingopportunities.

Fundamentalanalysisfocusesonmarketanalysisthroughthestrengthorweaknessesofitseconomy.

Acombinationofthetwotypesofanalysiswillallowforsuccess.

ChartTypes

Thetypesare:

1. Linecharts2. Barcharts3. Candlestickcharts

Lineandbarchartswillbefamiliartoalmostallpeoplesotheyneednoexplanation,whereascandlestickchartswillbenewtomostinvestors.Thesehavebeendevelopedandevolvedtopricemovementsofasecurity,derivativeorcurrencyovergivenperiodsoftime.

Theycanbestbedepictedasacombinationoflineandbarcharts,butarefrequentlyusedtoobtaintechnicalanalysisofpricingpatterns.Candlesticksareseenasmoreinformativethanbarcharts.Theydisplayabsolutepricesandrelationshipstopriorperiodprices.Toassistindelineatingthefigures,quitefrequently,candlesticksarecoloured.

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Candlesticks(AKACandlestickCharts)Candlesticksareformedbyusingthehigh,open,closeandlowprices.

Thelines(wicks)whichprotrudeaboveorbelowthebodyofthecandleindicatethehighandlowpricingbands.Thesearecalledshadows.

Thetopoftheuppershadowisthehigh,whilstconverselythebottomofthelowershadowisthelow.

Thelongerthewickthestrongerthebuyingorsellingintheperiodinquestion.Theshorterthewicktheindicationislessbuyingandsellinghastranspired.Inthetraditionalparlanceofthefinancialworldwehavebothbullandbearmarkets.

BasicCandlestickPatterns

N.B.:Thefollowingcandlestickexamplesareblackandwhitefordemonstrationonly.Onthechartsblackequalsdown(bear)andwhiteequalsup(bull).

SpinningTops

CandlestickswithalongupperandlowershadowandsmallredbodieshavethenameSpinningTops.Thebodycolourisnot

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relevant.Thepatternindicatestheindecisionbetweenbuyersandsellers.

Thebody(holloworfilled)reflectsminimalmovementbetweenopenandclose,whilsttheshadowsareindicativethatneitherbuyernorsellercouldgaintheupperhand.

Althoughthesessionopenedandclosedwithminimalmovement,becausetherewasnoupperhandgained,therewasaneffectivestalemate.

Whenaspinningtopdevelopsinanuptrend,itwillindicatetherearefewbuyersandareversalofdirectioncouldbepending.

Shouldaspinningtopformduringadowntrend,thissignifiesfewsellersareleftandapotentialreversalindirectioncouldoccur.

Marubozu

Marubozustatesthattherearenoshadowsfromthebodies.Dependingonwhetherthecandlesticksbodyisfilledorhollow,thehighandlowarethesameasitsopenorclose.Thepicturesportraythetwotypes.

AGreenMarubozu(aJapanesecandlestickindicatingstronglytradedstockinonedirectionduringasessionandclosingatahighorlowdailyprice)normallycontainsalonggreenbodywithnoshadows.Openpriceequalsthelowpriceandtheclosepriceequalsthehighprice.Onemayrefertothisasabullishcandleasitindicatesthatbuyerscontrolledthewholesession.

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ARedMarubozucontainsalongredbodywithnoshadows.Openpriceequalsthehighandclosethelow.Asopposedtothegreencandlethisisbearishandcontrolledbysellers.

Doji

ADojicandlestickrepresentstheequilibriumbetweensupplyanddemand.Thesecandlestickshavevirtuallythesameopenandcloseprice.TheDojithushasaverysmallbodythatappearsasathinline.

Dojiisanindicationofindecisionorafighttogetturfpositioningbetweenbuyersandsellers.Pricesoscillatearoundtheopenpriceduringthesession,butcloseneartotheopenprice.Neitherbuyernorsellerhasobtainedamajoritydecision.

TherearefourspecialtypesofDojilines.

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LongLeggedDoji

Designatedbylongupperandlowershadows,almostsynonymousinlength,buttradersshouldbevigilantinobservingthecloseinrelationtothemidpoint.Aclosebelowthemidpointisashowofweakness.

DragonflyDoji

Formswhenopen,high,closeandlowcreatealonglowershadow.Theindicationsfromtheseeventsarethatsellersareforcingpricesdownduringthesession,butbuyersareforcingpricesbacktotheopeninglevelorbetter.

GravestoneDoji

Ithasalonguppershadowwithnolowershadow,andisformedwhentheopen,lowandcloseareequal.Thehighcreatesthelonguppershadow.TheGravestoneDojiindicatesbuyersdrivinguppricesduringthesession,andsellersbringingdownthepricesbelowtheopeninglevel.

FourPriceDoji

Open,low,highandcloseareallequal.Thisistheclearestexampleofindecisionbetweenbullsandbears.

Whenadojiformsonyourchart,payspecialattentiontotheprecedingcandlesticks.

IfaDojiiscreatedafteraseriesofcandlestickswithlonghollowbodies,thesignspointtowardsthebuyersbecomingweaker.Tomaintainarisingpositionmorebuyersarerequiredbuttheyareconspicuousbytheirabsence.Sellersareinthewingstodrivedowntheprices.

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RetaininyourmindthataDojidoesnotmeanashortisalwaysexistent.Lookforfurtherclarification.Waitforabearishcandlesticktoclosebelowthelonggreencandlesticksopen.

ShouldaDojiformafteraseriesofcandlestickswithlongfilledbodies,(akintoredMarubozu),theDojiisindicatingsellersarefallingaway.Theyneedmoresellerstostrengthentheirposition.Buyersareloiteringtoforcethepricesbackup.

Whilethedeclineisfalteringasnewsellersareinadearth,furtherbuyingstrengthisrequiredtocementanyreversal.Keepalookoutforagreencandlesticktocloseabovethelongredcandlesticksopen.

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ReversalPatterns

PriorTrend

Forapatterntoqualifyasareversalpatternthereshouldbeapriortrendtoreverse.Bullishreversalsaremarkedbyaprecedingdownwardtrendasopposedtotheprioruptrenddepictingabearishreversal.Thetrendistraceableviatechnicalanalysis.

Thetrendlinedeterminedthetrenddirectionbeforethereversal.

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HammerandHangingMan

Thevisualappearanceofbothchartsisthesamebutbothhaveadifferentmeaningdependingonapastpriceaction.Bothhavelittlebodies,(greenorred),longlowershadowsandshortorindeedabsentuppershadows.

Thehammerformsduringadownwardtrendandindicatesabullishreversalpattern.Thenamehasbeenappliedtothistrendasthemarketishammeringoutabottom.Hammerssignalthatthebottomisimminentandpriceswillrecover.Thistrendoccurswhenpriceisfalling.Thelonglowershadowindicatesthatsellerspushedpriceslower,andthatdespitesellingpressurebuyerscouldsustainthemarkettoallowpricetocloseneartheopen.

Onedoeshoweverneedtoretainasenseofcautionwhenseeingahammerforminadownwardtrend.Itmaybeatriggertobuybutcaveatemptorisalwaysagoodpolicy.Amorebullishindicatorwouldassistinreducingyourrisk,

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RecognitionCriteria

Thelongshadowisabouttwoorthreetimesthelengthoftherealbody.

Littleornouppershadow. Therealbodyisattheupperendofthetradingrange. Thecolouroftherealbodyisnoimportance.

Thesearesimilartotheabove,savethatthebodycolourisunimportant,thougharedbodyismorebearishthanagreenbody.

Thehangingmanwhichmarksastrongresistancelevelrepresentsabearishreversalpattern.Aspricesrise,theformationofahangingmanpredictssellersareinpreponderanceoverbuyers.Thelonglowershadowelicitsthatpriceswerepushedlowerbytheseller.Buyersdidforcepricesupbutonlytoapositionneartheopen.Theindicationisnobuyersareavailabletoraisetheprice.

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InvertedHammerandShootingStar

Theinvertedhammerandshootingstarlookidentical.Thesingulardifferenceiswhetherthetrendisupwardordownward.Bothcandlestickshaveminutebodies,(filledandhollow)longuppershadowsandsmallorabsentlowersshadows.

TheInvertedHammerindicatesthepossibilityofareversalasthepricehasbeenonthefall.Itslonguppershadowshowsthebuyerstriedtobidthepricehigher.Nonetheless,sellersreactedtothebuyersactionsandattemptedtoreversetheiractions,butthebuyersmaintainedtheirpositionbyclosingneartheopen.Thisallowsustopresumethatthesellerspositionwasweaksothebuyersassumetheirposition.

Theshootingstarisidenticaltotheinvertedhammerinthatitisabearishreversalpattern,butoccurswhenthepricehasbeenrising.Itsshapeshowsthatthepriceopenedatitslow,recovered,butfellbacktoitsbase.Inthissituationthesellers

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haveoverpoweredthebuyers.Thisisabearishindicatorduetotheabsenceofbuyers.

SummaryofCandlesticks

Candlesticksuseallfourpositions,open,high,lowandclose.

Strongbuyingorsellingisindicatedbylongbodies.Thelongerthebody,themoreintensethebuyingorsellingpressure.

Converselyshortbodiesareindicativeoflittlebuyingorselling.

Uppershadowssignifythesessionhigh.

Lowershadowssignifythesessionlow.

Candlestickswithalonguppershadow,longlowershadowandsmallrealbodiesarecalledspinningtops.Thepatternallowsonetoseetheindecisionbetweensellersandbuyers.

Marubozumeanstherearenoshadowsfromthebodies.Dependantonwhetherthecandlesticksbodyisfilledorhollow,thehighandlowarethesameasitsopenorclose.

Dojicandlestickshavethesameopenandclosepriceoratleasttheirbodiesareextremelyshort.

Thehammertakesonabullishreversalwhichemanatesfromadownwardtrend.Youwillrecallthehammerissonamedbecauseitishammeringoutabottom.

Thehangingmanisabearishreversalpatternindicativeofatoporstrongresistancelevel.

Whenpriceisfalling,thepossibilityofareversalisindicatedandaninvertedhammeroccurs.

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Theshootingstarisabearishreversalpatternthatreflectstheinternalhammer,butoccurswhenarisingpriceispresent.

Thisisimportantinformation

Makeachartofallthesebasiccandlepatternsandreversalcandlestickpatterns,laminateitandstickitonyourdeskorwall.Itwillcomeinveryhandytoidentifyreversalpatternsoncepricegetsintoyourtradingzone.

Okafterthatmouthfulletsmoveontosomeotherfunstuff,theindicatorswewillusewiththissystem.

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SupportandResistanceSupportandresistanceisoneofthemostwidelyusedconceptsintrading.Thepriceconcernpresentproducesalackofconsistencyinapplication.

Whenthereisanupwardmovement,andthenareversalinthemarket,thehighestpointbeforeitispulledbackisknownasresistance.

Whenthemarketregainsitsupwardtrend,thelowestpointreachedbeforeitstartedtorecoverisknownassupport.

Indicators

Twokindsofindicatorsoccur:leadingandlagging. Beforeanewtrendorreversaloccursaleadingindicatorwillappear.

Alaggingindicatorlagsbehindthetrend. Technicalindicatorshavetwocategories:Oscillatorsandtrendfollowingormomentumindicators.

OscillatorscanbeStochastic,RSI,andParabolicSAR. MomentumindicatorscanbeMACD,MovingAverages. Fromthetypeofmarketyouaretradinginyoucanestablishtheappropriatedirection.

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ChartIndicators

Asyouaccumulateknowledgeyouareeffectivelybuildingyouowntoolbox.Someofthetoolsyoumighthaveare:

Stochastic

Indicatesovertradedconditions. Thetimetosellbecausethemarketisoverboughtwhenthemovingaveragelinesareabove80.

Thetimetobuyiswhenthemarketisoversoldandtheaveragelinesarebelow20.

RelativeStrengthIndex(RSI)

AkininprincipaltoStochasticinthatitportraysoverbuyingoroverselling.

Whentheindicatorisabove75,themarketisoverboughtandsellingisthebestpath.

WhenRSIisbelow25,themarketisoversoldandbuyingshouldkickin.

RSIisalsoeffectiveintrendformations.IfatrendisintheoffingwaitfortheRSItogoaboveorbelow50.

Indicatorsarehoweveronlyguides,thusacombinationofthem,alliedtoyourexperience,isthewisestapproach.Yourownpreferencescanbeestablished.

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MACD

Agoodindicatorofspottingearlytrendmovements. Itismadeupoftwodiametricallyopposedmovingaveragesandverticallinesasinahistogram,achartwhichmeasuresthedistancebetweentwomovingaverages.

Movingaveragelinesarethoseofothermovingaverages. Theproblemisthatasitusesmanymovingaveragesitisalaggingindicator.

OnepossibleapproachtoaMACDistowaitforthefastlinetoeithercrossoverorcrossundertheslowlineandenterthetradeaccordingly,asitindicatesafreshtrend.

Thefollowingindicatorsarepositionedatthetopofthechart.

MovingAverage

Amovingaveragecanbeusedtoleveloutpriceaction. Therearenumeroustypesofmovingaverages.The2mostcommontypesare:SimpleMovingAverageandExponentialMovingAverage.

Simplemovingaveragesgivethemostadvantageousformofmovingaverages,butthespikingeffectrathernegatestheirbenefits.

Exponentialmovingaveragesstrengthentheweighttorecentpricesandthusgiveabetterpictureoftradingactivity.

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Thecurrentactivitiestakeprecedenceoverpastorfuturepredictedmarketactivities.

Irregularmovingaveragesrespondquickertopriceactionandreacttotrendsbetter.Thedrawbackisthatthespikingeffectagainkicksinandthatcanremoveyoufromthemarket.

Smoothmovingaverageshaveatimelagtopriceaction,butbenefitfromthedeletionofspikesandfakeouts.Nonetheless,duetotheirslowreaction,onecanmissoutontradeopportunities.Theyareratherabeltandbracesapproachtotrading.

SimplemovingaveragesaresmootherthanExponentialmovingaverages.

Longerperiodmovingaveragesaresmootherthanshorterperiodmovingaverages.

WewilluseExponentialMovingAveragesonourcharts.

BollingerBands

Ameasureofthemarketsvolatility. Seenasactinginasimilarfashiontominisupportandresistancelevels.

ThetopBollingerbandwillbeamovingresistanceareaandthebottomBollingerbandwillbeamovingsupportarea.

Weekly/MonthlyPivotPoints

Pivotpointsfallintotherealmofprofessionaltradersandmarketmakers,andareusedtoestablishentryandexitpointsbasedoncurrentdaystradinginoppositiontothatofthepriorday.Trendsneedtobefullyunderstoodbeforeusingthismethod,andprobablythisisanareaforprofessionalsandnotretailtraders.

PivotsareseenasusefulinForex,asmanycurrencypairshaveatendencytofluctuatebetweentheselevels.

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Rangeboundtradersentrancethemarketnearspecificsupportlevels,whilstwhenthepairsshowresistancetheywillissueasellorder.

BreakoutTradersusepivotpointstolocatekeylevelsthatneedtobedisturbedforamovetobeconsideredasbonafide.

Aspivotalpointsarenoncomplexinthemain,placetheminyourtoolbox.Theygivevisibilityofthecausaleffectsofpricemovement.Effectivelyyoucansynchroniseyourthinkingwithmarketchanges.

Supportpivotpointswithothertechnicalanalysistoolssuchascandlestickpatterns,MACDcrossover,MovingAveragesCrossovers,Stochasticoverbought/oversoldlevelsandtrendlinebreakatpivotpointareas.

Alwaysrememberthatinalltradingthereisrisk,sothegreatertheanalysisandsupportingpatternsyouemploytosupportthedecision

youtake,thechancesofasuccessfultradeareincreased.

ThiswasasuccinctapproachtoForex,butbynomeansacomprehensiveoutline.Ithasbeendrawnuptokeepyoufromtheinitialpitfallsoftrading.Oneshouldneverforgetthatthroughtradingyouwillbuildupabankofknowledgewhichwillbebasedonthesolidfoundationsgainedfromtheprecedingdefinitionsandtips.

Sonowwearereadytomoveon.Itisgoodtoreviewsomechartexamplesandindicators.

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Chart1:OnthischartwehaveanexampleofaBollingerbandandthreeExponentialMovingAverages

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Chart2:OnthischartwehaveanexampleofStochastic,RSIandMACDindicatorwithourEMAsandBollingerbands

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Chart3:Onthischartwehaveanexampleofweeklypivotpointsona4hourchart

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Chart4:Onthisexamplewehaveacompletechartwithallourindicators

Thisishowyour4hourorDailychartwilllooklikedontworryitisnotasbadasitlooks.

Nowyouarealmostreadytotrade

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Earth&SkyTradingSystemOverview1) MarketTraded:Currencies.2) Sessions:Thesystemissuitableforanysession.3) Pairs:Iplacemycurrencypairsinto4groupsanyoneofthe

pairscanbetradedinthisgroup.4) Charts:Dailyand4hourchartswitha30/60min.chartentry

whenpricegetstoapreferredtradingzone.5) ChartingSoftware:MetaTrader46) Accounttype:MiniaccountThemaximumamountofmoney

youcanhaveinthistypeofaccountwithsomebrokersare$50000.Whyaminiaccount?Onelotsizeequalsonedollar.ThismakesmylifeeasiertochoosethepreferredlotsizetotradewhenIplaceanorderandingeneralmakethinguncomplicated.

7) Indicators:Stochastic,MACD,RSI,Bollingerbands,EMAs,Weekly/MonthlyPivotPoints,DailyRangeCalculatorandmyverticallinesthatwillhelpyoutodrawtheFiblinesonaDailyor4hourchartyouneedfortheupcomingtradingweekormonth.(Rightclickonyourchart,gotoproperties,inpropertiesgoto`COMMON`thenclickonthe`Showperiodseparator`)

8) Thissystemwillhelpyouwithfourthingsmosttradersstrugglewith:Thepreferredtrend,areastolookforentries,areastolookforstops,areastolookforprofittake.

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AStressFreeTradingPlanandSystem

Inordertobecomeaprofitablecurrencytrader,youwillneedadescenttradingplan.Atradingplanwillbeyourrulebookandcurrencybible.Withoutityouwontsecedeasatrader.Readiteverydayandsticktoit.

Youcanhaveallthetradingtoolsintheworld,butifyoudonthaveaplanonhowyouwillusethem,youwillneverbesuccessful.

Remember,youarestartingabusiness,andifyouwantyourbusinesstosucceed,youneedtohaveaPLAN!

Whatcurrencieswillyoutrade?

1)EURUSDagainsttheUSDCHF.(Moveinoppositedirection).109pipsperday

2)EURJPYagainsttheGBPUSD.(Moveinsamedirection).112pipsperday

3)AUDUSDagainsttheAUDJPY.(Movesamedirection).72pipsperday

4)EURGBPandtheUSDJPY.(Leftoverpairs).62pipsperday

Thepipsyouseenexttoeachgrouparethedailyaverageforthespecificgroup.Thisishandyformanualprofittake.Althoughitsadailyrange,italsohassignificanceontheweeklyrange.SoletssayIaminaEURUSDtradeandIam109pipsinprofit,youmightwanttostarttolookforreasonswhypricemightstarttostruggleatthisareaandmanuallyexitthetrade.

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Letsseewhatcorrelationmeans

Correlation:Correlationisastatisticalmeasurementoftherelationshipbetweentwovariables.Possiblecorrelationsrangefrom+1to1.

Azerocorrelationindicatesthatthereisnorelationshipbetweenthevariables.

Acorrelationof1indicatesaperfectnegativecorrelation,meaningthatasonevariablegoesup,theothergoesdown.

Acorrelationof+1indicatesaperfectpositivecorrelation,meaningthatbothvariablesmoveinthesamedirectiontogether.

IdontliketheCADpairssoIdonttradethem

AfterdumpingtheCADpairsitwillleaveyouwith8pairs.Butnowyouhavetobecareful.Why?Someofthemarecorrelatedmeaningtheygointhesamedirectionorthesomeofthemintheoppositedirection.Ihave2monitorsallocatedforchartssoIplacethefollowingpairsnexttoeachotherin4groups.

The4Groupsare

1)EURJPYagainsttheGBPUSD(Positivecorrelation).2)AUDJPYagainsttheAUDUSD(Positivecorrelation).3)EURUSDagainsttheUSDCHF(NegativeCorrelation).4)EURGBPagainsttheUSDJPY(Leftoverpairs).

Sonowyouonlyhave4possiblecurrenciestotradefortheweek.

Whyonly4currencies?Becauseofthecorrelationthatcomesintoplay.Ifyougetasignalforasetupyouwillonlytakeonepairatatime.Whenthesechartsarenexttoeachotheryouwillbeabletoseethebettertradeofthetwothatisformingorwhichonehasthebiggerprofittakepotentialwiththesmalleststop.

Placingthepairsnexttoeachothercanalsobeusedasconfirmationifyouwanttotakeatrade.Sosayyoumightwanttotakeanentry

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ontheEURUSDbecauseofatrendlinebreakataweeklypivotlevelchangesaregoodyouwillseeitontheUSDCHFchartaswell.

Itcanalsoshowyouwhennottotradethisgroup.Ifitlookslikethecorrelationofthegroupisabitmessyfortheweekdonttradethat

specificgroup.

Exampleofcorrelationplacingtwochartsnexttoeachother

Thisisa4hourAUDUSDandanAUDJPYchartnexttoeachother.Thesetwopairsmoveinthesamedirection.Whenontrendsdowntheotheronewillfollow.Havealookonthechartsatthebluerectangles.NoticehowbothcurrencypairswentoutsidetheBollingerbandbeforebothstartedtotrenddown.Thisiscorrelationatwork.

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TradingTimesMondaytoThursday:

YouwillmanageopentradesonFridays. YouwillhavenonewentriesonFridays. YouwillnottradeNonFarmPayrollNews(noproblemyoudonttradeFridays).

Youwillnottradeinterestrateannouncements. Youwillnottradeanyotherkindofnews. YouwillnottradeUSAorEuropeanbankholidays.

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FibonacciYourFibonacci(Fib)Settings:0,50,62.5,75and100.(Yourtradingzonewillbebetweenthe50%and75%Fiblevel)Thatwillbethelightblueareaonmychartexamples.Thisistheonlyareawhereyouwillstarttolookforyourweeklyentries.Ifpricegetstothetradingzoneandyouhavethetimemovedowntothesmallertimeframeslikethe60minor30minchartandwaitforacurrenttrendlinebreak.Ifyouwaitforthetrendlinebreak,pricewillshowyouwheretoplaceyourstop.Thiswillbeabovetheprevioushighorlowbeforethetrendlinebreakhappenedoryoucanlookatthecandlestotheleftofthechartafterthetrendlinebrakethatwillgiveyousupportorresistancelevelsthatcanbeusedforstopareas.

ThisisyourTradingZoneBetweenthe50%and75%Fibpullbackarea.Onlywhenpricegetshereyouwillattempttohitahomerun.

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Exampleofatradingzoneona4hourchart

Gettoloveacurrenttrendline!YouwouldhavenoticeinmypreviouspoststhatIabsolutelylovecurrenttrendlines.Why?Itgivesyoutheconfirmationyouneedtotakeatrade.Youcantjusttrustareasofsupport,resistance,pivots,Fiblevelsandtherestofitforanentry!!Thiswillbetheareasofinterestforuswherewewilllookforpotentialtradesetups.InorderforustotakethetradeweneedconfirmationHow?Acurrenttrendlinebreakwillgiveyouthatconfirmation.Ifwewaitforthetrendlinebreak,wewillbeabletoseewheretoplaceourstopsandwheretolookforprofittakeareas.Hereissomethingthatissosimplethatyoualwaysmustaskyourselfbeforeyouplaceatrade.(Youcantdoitwithaforwardorder)

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Sayyouarelookingtogoshortatalevelbutpricegetstoyour50%Fibtradingzonelevelaskyourself`Self,didpricebreakmycurrentbulltrendline?`Iftheanswerisnowhydoyouwanttoshorthere?NowpricegetstothenextlevelofinterestaskthesamequestiondontjusttrustEMAspivotsandtherestoftheindicators.Toassumethingsintradingisdangerous..................assumestandsfor:MakinganASSOFYOUANDME!!Rememberalltheindicatorsweusecangiveusanindication,aguidelineifpriceisinanoverboughtoroversoldareabutatrendlinebreakwillgiveustheconfirmationthatthepricehasturnedandswingtheoddstoourside.

THEONLYTHINGYOUNEEDTOTRUSTISTHEQUESTION

`Didpricebreakmycurrenttrendline?`

WhatisthemeaningofConfirmation?1.a.Theactofconfirming.(Areawherepricemightreactlike,inthetradingzoneatEMAs,Fibs,pivotpointsthistypeofthing.)b.Somethingthatconfirms;verification.(Pricebrokethetrendlineattheseaeries)2.a.AChristianriteadmittingabaptizedpersontofullmembershipinachurch.(Sothatyoucanstartprayingthatyoudidtherightthing.)b.AceremonyinJudaismthatmarksthecompletionofayoungperson'sreligioustraining.(Everybodyishavingapartybecauseyoumadeitasatrader)Trendlinesareprobablythemostcommonformoftechnicalanalysesusedtoday.Theyareprobablyoneofthemostunderutilizedaswell.

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Ifdrawncorrectly,theycanbeasaccurateasanyothermethod.Unfortunately,mosttradersdon'tdrawthemcorrectlyortheytrytomakethelinefitthemarketinsteadoftheotherwayaround.Intheirmostbasicform,anuptrendlineisdrawnalongthebottomofeasilyidentifiablesupportareas(valleys).Inadowntrend,thetrendlineisdrawnalongthetopofeasilyidentifiableresistanceareas(peaks)Howtodrawacurrenttrendline:

1) DownTrend:Connectthelatestcyclehightothelastcyclehigh,whichmustbehigherthanthefirstonedrawingfromrighttoleft.

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2) UpTrend:Connectthelatestcyclelowtothelastcyclelow,whichmustbelowerthanthefirstonedrawingfromrighttoleft.

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Yourtradingwindowsyouwillhaveopenonyourplatform

DailychartwithmonthlyFibssetwith......200,55,34EMA,BollingerBandssetat2002.The34/55EMAsetsthemaintradingdirection.

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4HourchartwithweeklyFibs,setwith......200,55,34EMA,BollingerBandsetat2002.The34/55EMAsetsthecurrent4hourtradingdirection.

MACDwithsettings:12,26,9. Stochasticwithsettings:Kperiod12,slow6andDperiod3(8020).

RSIwithsettings:9withamiddlelineat50(7525).

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Setupforentry

Youwilltrytoonlytradethe4hourchartwhenthedirectionofthe4hourandtheDaily34/55EMAarepointinginthesamedirection.(Havealookatthe34and55EMAonbothchartstheyarebothtrendingdownaccordingtothe34and55EMA.)

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Earth&Sky34EMABlue(Sky)55EMABrown(Earth)Ifblueisabovebrown,youwilllookforlongs,ifblueisunderbrown,youwilllookforshortsinthemarket.Remembertheblue=Skyandbrown=Earth.Thiswillgiveyouanimmediatesenseofdirectioninthemarket.IftheSkyisabovetheEarththenthemarketislong,iftheSkyisundertheEarththenthemarketisshortonthatspecifictimeframe.ThisisanexamplewheretheSkyisundertheEarth=marketisshortonthis4hourchart.Thatmeanswewillonlylookforentriestoshorttofollowthe4hourtrenddirection.

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Ifthe4hourEMAisdifferentfromtheDailyEMA,thenyouwillmoveawayfromthe4hourchartonthispairandlookforanentryonlyonthedailychart.RemembertheDailychartwillhavethemonthlyFibonit,nottheweeklyFib.Let`shavealookatanexamplewithFibsonaDailychart.

The34EMAisabovethe55EMA,sothedirectionisup.LastmonthsopeningpricewaslowerthantheclosingpricesowecanFibfromthebottomtothetopfrompoint1topoint2onthechart.CanyouseehowtheverticallinesontheDailychartbreaksuptheareaintomonthlypartsalsonoticeonthechartthatpricedidntgiveasthepullbackwewantedinthebeginningofthemonthandhowIfollowedpricewithmyFibuntilwedidgetthepullback(blueareaonthechartatpoint2)Youwillonlystarttradingthe4hourchartwhenthedirectionisthesameagainastheDaily.

DailychartwithmonthlyFib

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Ifyouwanttostayonthe4hourchartbutcantFibthepreviousweekbecausetheclosingprice(likeinthischart)washigherthantheopeningpriceoflastweekbuttheEMAsstilltellsyouthedirectionisdownyoucanplaceweeklypivotsonthe4hourcharttoidentifyotherareasofinterest.Havealookatthisexample.TheEMAstoldusthedirectionisdown.Noticepriceisatthe1steweeklypivotresistanceareawitha200EMAintheway.PriceisalsooutsidetheBollingerband.Nowyouwillmovedowntoasmallertimeframe,placeyourcurrenttrendlineandwaitforthetrendlinebreakbeforeweplaceanordertogoshort.

4HourChartwithweeklypivots:

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OnaDailyChartwewillhavethemonthlytradingzonebetweenthe50%75%Fibarea.

Ona4HourChartwewillhavetheweeklytradingzonebetweenthe50%75%Fibareas.

NowyouhaveidentifiedapossibletradingzoneareawithyourFibwherepricemightreact.

4HourChartwiththeupcomingweekstradingzoneandMarcWaltonsForexMentorProAnalysisforpotentialtradeareas.

Ifpricegetsbacktoorintothetradingzone,thenyouwillpayattentiontotheMACDwhereisthehistogram?Whatisitdoing?Stochasticisitcrossinginanoverboughtoroversoldarea?IstheRSIinanoverboughtoroversoldarea?Whatcandlepatternscanyousee?Whatishappeningonthe1hour

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chartgoingthrutheaboveindicatorsagainaskingyourselfwhataretheydoing?

4HourChartwithweeklyFibsandthetradingzone

Afteryoumoveddowntoasmallertimeframelikea30or60minchart.Placeacurrenttrendlineandwaitforthebreakbeforeyouplaceanorder.Ifyouareabletowaitforthetrendlinebreak,thenyouwillbeabletoseewheretoplaceyourstopthatwillmeanyoucanhaveabiggerlotsizethanifyou

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wereonlytotradewithforwardorderthatrequiresingeneralabiggerstop.Thisisthesamecurrencypair,sametradingzonebutona1hourchartsotheverticallinesyouseeonthechartbreakstheweekupnowintodailyintervals.PayattentiontotheMACDwhereisthehistogram?Whatisitdoing?Stochasticisitcrossinginanoverboughtoroversoldarea?IstheRSIinanoverboughtoroversoldarea?

1Hourchartwithtrendlinebreak

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Whatlotsizecanyoutrade?Beforeyouplaceanorderworkoutthelotsizeyoucantrade.Todothisyouneedtoknowhowmuchofyouraccountyouaregoingtoriskandwhatisthestoppipvalue.Thishandycalculatorwillhelpyou.Neverriskmorethan2/3%ofyouraccountpertrade.

MiniAccountwith

StopsandExits:

Stopshavetobe@the75or100%Fiblevelsifyoutradeforwardorders.YouwilllookforEMAs,Bollingerbandsandpivotlines,trendlinesthatcanbeuseasabarrierbetweenyourentryandyourstop.Soletssayyouplaceaforwardorderatthe50%Fibpullbackarea,youwillhavetoplaceyourstopatthe75%Fibpullbackarea.Thisisanexampleona4hourchartwitha200EMAthatgivesyouthebarrierbetweenyourentryandstop.

Ifyouhavethetimeandtradethecurrenttrendlinebreakinthetradingzoneareaonthesmallertimeframes,thenyoucanhaveyourstopsabovetheprevioushighorlowpricemadebeforethetrendlinebreakoryoucanlooktotheleftofthecharttoidentifysupportandresistancelevelsthatcanbeusedforstopareas.LookforEMAs,Bollingerbandsandpivotlines,anythingthatcanbeuseasabarrierbetweenyourentryandyourstop.Thisisanexampleofatrendlinebreakforthesamecurrencypair,sametime,andsametradingzoneastheabovechartbutona1hourchart.Stopscanbeplacedafterthetrend

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linebreakacoupleofpipsabovethehighpricemadebeforethetrendlinebreak.

Profittake:IfyouFibtheareainbetweentheoriginal0%to50%Fibarea,itwillgiveyouyour1st,2ndand3rdprofittakeareas.(Usingthe50%asyour1stetarget,75%asyour2ndtargetandthe100%asyour3detarget).

DontworryifyoudontunderstandIwillshowyouwithan

example.

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RememberyouwillFibtheareabetweentheoriginal0%and50%Fibtogetthepotential3profittakeareas.

Youneedtohavealookwherethetop/bottomoftheBollingerbandsareinrelationtothe3rdprofittakeareabecausethiscanplacearoadblockbetweenthepriceandthe3rdtarget.

SomethingIhavenoticeovertimeisifyougetanentryatthe75%Fiblevel,youwillhavetolooktomakeyour1steprofittakeareaattheoriginal50%Fiblevel.Entrysat75%Fibleveltendstobesmallermovesthanentriesat50%Fiblevelthattendstogobackto0%Fibslevel.

WAITFORPRICETOCOMETOYOU!!

(Thisisthehardestpartofthesystem!)

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Stuffyouwillneed

1) WeeklyPivotindicator:Download2) MonthlyPivotindicator:Download3) Dailyrangecalculator:Download4) Lotcalculator:http://currensys.com/FreeForex.php

Whentotradeandwhennottotradethatsthequestion!

Yes,itistruethattheForexisopen24hoursaday,5daysaweek,butthatdoesntmeanitsalwaysactivethewholeday.YoucanmakemoneyintheForexwhenthemarketmovesup,andyoucanevenmakemoneywhenthemarketmovesdown.However,youwillhaveaverydifficulttimetryingtomakemoneyoncertaindays.

Hereisacoupleofsuggestionswhentotradeandwhentositonyourhandsgofishingorgoshoppingwiththewife.

Whentotradeifyouwanttolosemoney!

Ifyoureallydonotwanttotradeduringthebusiertimesofthemarketwhentradevolumeandpipmovementishighestandwhereyouwillmakemoneyeasier,thenbyallmeans,feelfreetotradeonthesetimesmentionedbelow.Iguaranteeyoullhaveamoredifficulttimetrading!

Fridays:Fridaysareveryunpredictableandisagooddaytotradeifyouwanttolosetheprofitsyoumadeduringtheweek.

Sundays:Thereisverylittlemovementonthesedays.

Holidays:Banksareclosedwhichmeansverylittlevolumeforwhatevercountryishavingtheholiday.Holidaysaregreattotradewhenyouwouldratherloseyourmoneythantakeadayoffandenjoytheotherthingsinlife.

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http://currensys.com/FreeForex.phphttp://www.forex-fxtrader.com/fmptrial.php

NewsReports:Noonereallyknowswherethepricewillgowhenanewsreportcomesout.Youcouldloseafortunetradingduringnewsreleasesifyoudon'tknowwhatyou'redoing.

Pipranges

Afterabitofresearchlookingatthepiprangeforthe4majorpairsforeachdayoftheweek,whatdidIlearn?

Wellitlookslikethemiddleoftheweekisthetimetolookforthat4hourordailyM2entry.ThatwillbeonaTuesdayandWednesday.Fridaysareusuallybusyuntil12pmESTandthenthemarketprettymuchdropsdeaduntilitclosesat5pmEST.

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MyWorkStationThebestwillbetohave2monitorssothatyoucanruntwocorrelationpairsnexttoeachotherlikesaythe4hourEURUSDchartagainsta4hourUSDCHFchart.Incurrencytradingyouneedtoseethingsclearly.Thisisdifficultonalaptop.Ifyouarenotabletoseeclearly,itmightcostyoumoneyoryoumightloseoutonagoodtrade.Ihavethreemonitors,oneasmymainworkstationandmysecondandthirdamallocatedformycharts.OnmydeskIhavealaminatedcopyofmystressfreetradingplan.ThishelpsmetokeepfocusedonwhatIwantpricetodobeforeatakeanentry.OnmywallIhaveablackboardwithaweeklytradingrecord.ThishelpsmetoseewhereIamfortheweek/monthandwhatneedtobedonetoreachmymonthlytarget.Thelastbutnottheleastisareliablycalculator.Youwillusethiseverydayworkingoutstops,pips,profittakeareasandlotsmore.

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Nowthatyouhaveseenthesystemhowdoesitwork?

Tradingformeisallaboutlevels.Youhavenoticetraderstalkaboutsellingtheralliesinadowntrendorbuyingthedipsinanuptrend.Thissystemwillhelpyouwithfourthingsmosttradersstrugglewith:

1) Thepreferredtrend.2) Areastolookforentries.3) Areastolookforprofittake.4) Areastolookforstops.

Thissystemwillshowyouwherethereisapotentialrallyorpotentialdipforaspecificcurrencypairinthemarket.Theseralliesordipswillusuallybeinthepreferredtradingzone.

Armedwiththisinformation,youwillbeabletoidentifythebetterlevelsinthemarketforyourpotentialentry.

FirstyouneedtoknowhowtoFibit

Thisisthebackboneofthissystem.FirstyouneedtochangeyourvaluesonyourFibtomysettings.Youonlyneedthe0%,50%,62.5%andthe100%settings.

SometimesyouneedtobealittlecreativewiththewayyoudrawyourFibs.

Remember,wearelookingforatradingzonewherewewilllookforpossibleentriesnotaspecificvalue.

Thiswillcomewithpracticeandlateryouwillfinditsecondnatureanddoitwithoutanyheadaches.

Tomakemytradingzonemoreobvious,Iwillhighlightitwitharectangle.Doitonyourchartsaswellitmakesitsomuchessayerifyougothruthechartstoseewhichcurrencypairisinthetradingzone.

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SomethingoneofourmemberspostedregardinghowtodrawFibs:

TheonlytroublewithaFibbeingsubjectiveissometimesitfeelslikeI'mtryingtomaketheFibfitandareaI'minterestedin.Butvery

oftenitiscorrect.

MaybethisisthecorrectapproachforFibbingaswearelookingforconfluencewhenlookingforareasofinterest.

Intheenditneedstobelikeapuzzlewhereallthepiecesfittogethertogiveyouthatconfluenceweneedtoidentifythemoreappropriate/bettertradingzone.

Letshavealookatsomeexamples.

1) Normalmarket:4hourchartforweeklyFibs.

Weareinadowntrend;The34EMAisunderthe55EMA.Lastweek`sclosingpricewaslowerthantheopeningprice.SonowyouneedtoFibfromlastweekshightolastweekslowtogetthisweekstradingzone.Youdonthavetochangecharts.Alltheinformationyouneedisonthe4hourchart.

RememberFibfromlastweekshightolastweekslow.

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AUDJPY4HourChart

2) FallingMarket:4hourchartforweeklyFibs.

Weareinadowntrend;The34EMAisunderthe55EMA.Lastweek`sclosingpricewaslowerthantheopeningprice.SonowyouneedtoFibfromlastweekshightolastweekslowtogetthisweekstradingzonebutpricewasfallingpastlastweekslowwithoutapullbackonMondayandTuesday.

NoproblemfollowpricewithyourFibuntilyoucanseepriceismakingthepullbackweneed.YouwillFibfromlastweekshightothisweekscurrentlowtogetthisweekstradingzone.Youdont

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havetochangecharts.Alltheinformationyouneedisonthe4hourchart.

RememberFibfromlastweekshighfollowingpriceinthecurrentweektillyouseethepullback.

EURO/$4HourChart

3) DrawingFibsonaDailychartformonthlyFibs.

SometimestheneedarisestodrawmonthlyFibsonadailychart.Thiswillbewhenthe4hourEMAsaregoingintheoppositedirectionfromtheDaily34/55EMAs.

Remembertheverticallines.Onadailychartitwillgiveyoumonthlyintervals.So,noneedtostress.Youdoexactlythesameasyouwouldhavedoneona4hourchartnowyouwillhavethemonthlytradingzoneonadailychart.NoticehowIfollowedpriceinthebeginningofthemonthwiththeFibuntilthepullback.

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Weareinanuptrendonthischart34EMAisabovethe55EMAtrendingup.Remember:SkyisaboveEarth.

SowewillhavetoFibfromlastmonthslowtolastmonthshighbutwehadtofollowpriceuntilpriceturnedforthepullbackweneedtogetthecurrentmonthstradingzone.

GBPUSDDailyChart:

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Letshavealookatsomeexamplesusingthissystem:

1) Exampleofasell:USDCHF4hourchart15Augustto22August2010

Whattolookforandwhattodo:

Mondaymorningyouopenyourchartsandstartdoingyouranalysesfortheweek.

DailyChart:The34EMAisunderthe55EMA=Maindirectiondown.

Moveto4hourchart:The34EMAisunderthe55EMA=Directiondown(SameastheDailychart)

NowweneedtoFib.Lastweektogetthisweekstradingzone.Firsthavealookatwhatpricehaddonelastweek.Alltheinformationyouneedisonthe4hourchart,youdonthavetochangetoaweeklychart.Byusingtheverticallinesonthechart,youwillbeabletoseelastweekspriceactionwithinlastweeksblockandusethattoinformationtoFibtogetthecurrentweekstradingzone.

Theopeningpriceoflastweekwashigherthantheclosingpricefromlastweek,soitwastrendingdownthatmeanswewillhavetoFibfromlastweekshightolastweekslowtogetourtradingzoneforthiscurrentweek.

Afterdoingthatwehaveour

1)0%Fibat1.02560

2)50%Fibat1.03941

3)75%Fibat1.04632

4)100%Fibat1.05322

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Youhaveidentifiedthepreferredareatolookforyourweeklyentry;thetradingzonewillbebetween1.03941and1.04632.

Nowyouwaitbutstaywiththe4hourchartforpricetocometoyou.

Pricecameintoourtradingzonewhatnow?

Askyourself:

1) WhatistheBollingerbanddoingispriceoutsideitisitaoneinamillionyearsBollingerband?Isittrendingdown?

2) Isthe34/55EMAstillopenandstilltrendingdown?3) Whereisthe200EMAinrelationtoprice?4) WhatismyStochasticdoingisitcrossingisitinthe

overboughtarea?5) WhatistheRSIdoingisitintheoverboughtarea?IstheRSIline

crossingthe50middleline?6) WhatistheMACDdoingisthehistogramcrossingoraboutto

cross?Whatarethe2movingaveragelinesdoing?Isitopenorabouttocross?

7) IsMarc`spotentialentrypointnearthisarea?8) Isthereawholenumberinthetradingzone?

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4HourUSDCHFchartwithweeklyFibs

Afteryouhadalookatalltheabovequestionsmovedowntoa30ora1hourchart.

Placeyourcurrenttrendlineandwaitforthetrendlinebreak.Thistrendlinewillalwaysbeintheoppositedirectionofthepreferredtrendinthiscaseitwillbeabulltrendlinethatneedstobebroken.Whileyouarewaitingforthebreak,gothruallthequestionsagainasyoudidonthe4hourchartbutthistimeusingthe1houror30minchart`sindicators.

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Whileyouarewaitingforthetrendlinebreak,identifyareaswhereyouwillplaceyourstoplookforprevioushighstotheleftofyourchart,pivotpoints,Bollingerbands,EMAs.Lookforsomethingyoucanplacebetweenyourentrypriceandyourstopthatwillreactasabarrier.

Okpricebrokethetrendlinewaitforthatcandletocloseunderthetrendlinebeforeyouplaceyourtrade.

Beforeyouplaceyourtradequicklygototheriskcalculatorandworkoutthelotsizeyoucantrade.Remembernotmorethan2/3%ofyouraccountpertradeandknowthestopinpipvaluebeforethecalculatorcanbeused.

Youplacethetradeyouidentifiedanareatoplaceyourstopnow(inthiscaseabovethehighpointpricemadebeforethetrendlinebreak)weneedtoidentifyareasforprofittake.

Fibtheareabetweenyourprimary0%and50%areafromthebottomtothetop.

Yourpotentialprofittakeareaswillbe

1) 50%Fibat1.032622) 75%Fibat1.029213) 100%Fibat1.02560

(This100%Fibareawillalsobetheoriginal0%ontheprimaryFib)

Pricecamedownpastourfirstprofittakeare.WedecidetotakeprofitatoursecondprofittakeareabecausewehadaBollingerbandthewayonthe4hourchartthatcouldactasabarrierbeforepricewillgettothe3deprofittakearea.(Havealookatthe4hourchartandseeifyoucannoticethebottomBollingerband.)

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USDCHF30Minchartwithtrendlinebreak

Fibtheoriginal0%to50%Fibareatogettheprofittakeareas.

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2) Exampleofabuy:

Whattolookforandwhattodo:

Mondaymorningyouopenyourchartsandstartdoingyouranalysesfortheweek.

DailyChart:The34EMAisabovethe55EMA=Maindirectionup.

Moveto4hourchart:The34EMAisabovethe55EMA=Directionup.(SameastheDailychart)

NowweneedtoFib.Lastweektogetthisweekstradingzone.Firsthavealookatwhatpricehaddonelastweek.Alltheinformationyouneedisonthe4hourchart,youdonthavetochangetoaweeklychart.Byusingtheverticallinesonthechart,youwillbeabletoseelastweekspriceactionwithinlastweeksblockandusethattoinformationtoFibtogetthecurrentweekstradingzone.

Theopeningpriceoflastweekwaslowerthantheclosingpriceoflastweek,soitwastrendingupthatmeanswewillhavetoFib.fromlastweekslowtolastweekshightogetourtradingzoneforthiscurrentweek.ThemarketopenedonMondaywithagapsowefollowedpricewithourFib.WewillFibfrompoint1topoint2.


1)0%Fibat0.9386

2)50%Fibat0.9275

3)75%Fibat0.9220

4)100%Fibat0.9160

Youhaveidentifiedthepreferredareatolookforyourweeklyentry;thetradingzonewillbebetween.9275and.9220

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Nowyouwaitbutstaywiththe4hourchartforpricetocometoyou.

Pricecameintoourtradingzonewhatnow?

Askyourself:

1) WhatistheBollingerbanddoingispriceoutsideitisitaoneinamillionyearsBollingerband?Isittrendingup?

2) Isthe34/55EMAstillopenandstilltrendingup?3) Whereisthe200EMAinrelationtoprice?4) Whatismystochasticdoingisitcrossingisitintheoversold

area?5) WhatistheRSIdoingisitintheoversoldarea?IstheRSIline

crossingthe50middleline?6) WhatistheMACDdoingisthehistogramcrossingoraboutto

cross?Whatarethe2movingaveragelinesdoing?Isitopenorabouttocross.

7) IsMarc`spotentialentrynearthisarea?8) Isthereawholenumberinthetradingzone?

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4HourAUDUSDchartwithaweeklyFib

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Afteryouhadalookatalltheabovequestionsmovedowntoa30ora1hourchart.

Placeyourcurrenttrendlineandwaitforthetrendlinebreak.Thistrendlinewillalwaysbeintheoppositedirectionofthepreferredtrendinhiscaseitwillbeabeartrendlinethatneedstobebroken.Whileyouarewaitingforthebreak,gothruallthequestionsagainasyoudidonthe4hourchartbutthistimeusingthe1houror30minchart`sindicators.

Whileyouarewaitingforthetrendlinebreak,identifyareaswhereyouwillplaceyourstoplookforprevioushighstotheleftofyourchart,pivotpoints,Bollingerbands,EMAs.Lookforsomethingyoucanplacebetweenyourentrypriceandyourstopthatwillreactasabarrier.

Okpricebrokethetrendlinewaitforthatcandletocloseunderthetrendlinebeforeyouplaceyourtrade.

Beforeyouplaceyourtradequicklygototheriskcalculatorandworkoutthelotsizeyoucantrade.Remembernotmorethan2/3%ofyouraccountpertradeandknowthestopinpipvaluebeforethecalculatorcanbeused.

Youplacethetradeyouidentifiedanareatoplaceyourstopnowweneedtoidentifyareasforprofittake.

Fibtheareabetweenyourprimary0%and50%areafromthebottomtothetop.

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Yourpotentialprofittakeareaswillbe

1) 50%Fibat0.9331

2) 75%Fibat0.9358

3) 100%Fibat0.9386

(The100%Fibwillalsobetheoriginaltop0%ontheprimaryFib)

Pricecameuppastourfirstprofittakeare.WedecidetotakeprofitatoursecondprofittakeareabecausewehadaBollingerbandinthewayonthe4hourchartthatcouldactasabarrierbeforepricewillgettothe3rdprofittakearea.Havealookatthe1hourchartandseeifyoucannoticethetopBollingerbandactingasresistanceplusthedoubletoppriceformedatourprofittakeareabeforepricestartedtotrenddown.

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AUDUSD1hourchartwithtrendlinebreak

Fibthe0%to50%Fibareatogettheprofittakeareas.

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3) ExampleofaforwardorderyoufollowedpricewithyourFibintothenewweek:

AUDUSD4Hourchart

YouwentawayfortheweekendandonlymanagetolookatyourchartsonTuesday/Wednesdaymorningtodoyouranalysesfortherestoftheweek.

DailyChart:The34EMAisunderthe55EMA=Maindirectiondown.

Moveto4hourchart:The34EMAisunderthe55EMA=Directiondown.(SameastheDailychart)

NowweneedtoFiblastweektogetthisweekstradingzone.Firsthavealookatwhatpricehaddonelastweek.Alltheinformationyou

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needisonthe4hourchart,youdonthavetochangetoaweeklychart.Byusingtheverticallinesonthechart,youwillbeabletoseelastweekspriceactionwithinlastweeksblockandusethattoinformationtoFibtogetthecurrentweekstradingzone.

Theopeningpriceoflastweekwashigherthantheclosingpricefromlastweek,soitwastrendingdownthatmeanswewillhavetoFib.Fromlastweekshightolastweekslowtogetourtradingzoneforthiscurrentweek,butyouwentawayandnoticepricealreadymadeanewlowthisweekbutisstartingtotrendbackup.Sowhatnow?

YouFibfromlastweekshightothiscurrentweekslowtogetapotentialtradingzone.


1)0%Fibat1.02560

2)50%Fibat1.03941

3)75%Fibat1.04632

4)100%Fibat1.05322

Youhaveidentifiedthepreferredareatolookforyourweeklyentry;thetradingzonewillbebetween1.03941and1.04632.

Younoticepriceistrendinguptoyourtradingzone;justunderthetradingzonewehavethe200EMAandthe55EMAonthe4hourchart.Youneedtogooutandcantwaitforthetrendlinebreakonthesmallertimeframes.

Youplaceyourforwardorderatthe50%Fiblevel1.03941

Youplaceyourstopatthe75%Fiblevelwiththe200and55EMAsandtheBollingerbandasresistancebetweenyourentrypriceandstop.Rememberforwardordersrequirebiggerstopsthanwhereyou

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havewaitedforatrendlinebreakthatmeansyourlotsizeforthistradewillhavetobesmaller.

YouFibtheoriginal50/75%FibareatogetyourprofittakeareasandnoticethattherewillbeaBollingerbandbeforepricewillgettothe3deprofittakearea.

Yousetyourprofittakeatthe75%Fib2ndeprofittakeareaandwalkaway.

Acoupleofhourslateryoucamebacknoticeyouareinprofitandmanageyourtradefromtheretillthepreferredprofittakeareaisreached.

Remembercurrencytradingisaddictive.

Mykidsalwaystellmewhentheyareupsetwithme`Youarenotthebossofme!`

Thisisthewayhowyouneedtofeelaboutcurrencytrading.Tradingisnotyourbossbutifyouarenotcarefulwithitveryaddictive.WhenIstarttofeellikeitistakingovermylifethenIknowitstimetotakeabreakfromit.Themarketwillstillbetherenextweek.

Whatismyadvicetoyouasanewtrader?

Sticktoatradingplan.Thatisyourcurrencybible.Itwillgiveyoutheguidelinestobecomeaprofitablecurrencytrader.Withoutityouwillbelost.Withityoustandabetterchangeatthebattlefield.Withit,tradingdoesnthavetobestressful.Youwillhavearoadmapfortheweeksoyoucanbefocusedonwhatneedstohappenbeforeyoutakeatrade.

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AttachedyouwillfindashorterStressfreetradingplanandaprobabilitystudyInorderforyoutokeeptradingthesystem,makeacopy,laminateitandkeepitonyourdeskfordailyreference.Usethechecklisttoassistyoubeforeyouplaceatrade.

Remembertoliveasimplelifeandgivebacktothecommunity.

Dontbebigmouthaboutyoutradesyouareonlyasgoodasyourlasttradeinthisbusiness.

Regards

Pierre.

PierreDuPlessis

Manissomadethatwheneveranythingfireshissoul,impossibilitiesvanish.

JeandelaFontaine.

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TradingCheatSheetCurrency

1)Euro/DollaragainsttheDollar/CHF.(Moveinoppositedirection).109pips

2)Euro/JPYagainsttheGBP/Dollar.(Moveinsamedirection).112pips

3)Aussie/DollaragainsttheAussie/JPY.(Movesamedirection).72pips

4)Euro/GBPandtheDollar/JPY.(Leftover.)62pips

Iwillonlytake1groupentryatatimeIdonttradetheCADpairs.

(IfyoutradetheCADPairsincludedithere.)

Whythesepairs?ThesearethepairsMarctradessoIwillgethisweekly/dailyupdatesandIwillgetbackupfromMarcandtheblogmembersifIneedit.

TradingTimes:MondaytoThursday

ManageopentradesonFridays. NonewentriesonFridays. DonttradeNFP.(NoproblemIdonttradeFridays) Donttradeinterestrateannouncements.

FIBSetting:0,50,62.5,75,100.(Mytradingzonewillbebetweenthe50%and75%Fiblevel).ThisistheonlyareawhereIwillstartlookingformyweeklyentries.Ifpricegetstomyzone,Iwilllookatmyindicatorstogivememoreconfirmationregardingoverbought/oversoldareas.IfIhavethetime,Iwillmovedowntothesmallertimeframeslikethe60minor30minchartandwaitforacurrenttrendlinebreak.IfIwaitforthetrendlinebreak,pricewillshowmewheretoplacemystop.This

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willbeabovetheprevioushighorlowbeforethetrendlinebreakhappenedorIcanlookatthecandlestotheleftofthechartafterthetrendlinebreakthatwillgiveyousupportorresistancelevelsthatcanbeusedforstops.Opentradingwindows

DailychartwithmonthlyFibssetwith......200,55,and34EMAs,BollingerBandssetat20.The34/55EMAsetsthemaintradingdirection.

4HourchartwithweeklyFibs,setwith......200,55,34EMAs,BollingerBandsetat20.

MACDwithsettings:12,26,9. Stochasticwithsettings:Kperiod12,slow6andDperiod3(8020).

RSIwithsettings:9withamiddlelineat50(7525).Setupforentry

Calculatelotsizeusinglotcalculatorsetat2/3%pertrade.

Iwillonlytradethe4hourchartwhenthedirectionofthe4hourandtheDaily34/55EMAsarepointinginthesamedirection.

Ifthedirectiononthe4hourchartEMAsaredifferentfromtheDailychartEMAs,thenIwillmoveawayfromthe4hourchartandlookforentriesonaDailychartwiththemonthlytradingzone.Onlyoncethedirectionofthe4hourEMAsisthesameastheDailyEMAswillImovebacktoa4hourchartasmymaintradingchart.

34EMABlue(Sky)55EMABrown(Earth)Ifblueisabovebrown,Iwilllookforlongs,ifblueisunderbrown,Iwilllookforshortsinthemarket.

OnaDailyChart:betweenthe50%75%=tradingzonearea=monthlyFibs.

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Ona4HourChart:betweenthe50%75%=tradingzonearea=weeklyFibs.

NowIhaveidentifiedapossibletradingzoneareawithmyFibwherepricemightreact.

Ifpricegetstoorintothetradingzone,thenIwillpayattentiontotheMACDwhereisthehistogram?Whatisitdoing?Stochasticisitcrossinginanoverboughtoroversoldarea?IstheRSIinanoverboughtoroversoldarea?

NowIwillmovedowntoasmallertimeframelikea30or60minchart.IwillplaceacurrenttrendlineandwaitforthebreakbeforeIplaceanorder.IfIamabletowaitforthetrendlinebreak,thenIwillbeabletoseewheretoplacemystopthatwillmeanIcanhaveabiggerlotsizethanifIonlytradewithaforwardorder.

StopsandExits

Stopshavetobe@the75/100%FiblevelsifItradeforwardorders.IwilllookforsomethinglikeaBollingerband,pivotpoint,EMA......thatIcanusebetweenmyentryandmystop.

IfIhavethetimeandtradethecurrenttrendlinebreakinthetradingzoneareaonthesmallertimeframes,thenIcanhavemystopsabovetheprevioushighorlowpricemadebeforethetrendlinebreakorIcanlooktotheleftofthecharttoidentifysupportandresistancelevelsthatcanbeusedforstopareas.

IfIFibtheareainbetweentheoriginal0%to50%Fibarea,Iwillgetmy1ste,2ndeand3deprofittakeareas.Iwillhavealookwherethetop/bottomoftheBollingerbandsareinrelationtomy3deprofittakeareabecausethiscanbearoadblockbetweenthepriceandthe3detarget.

IfIgetanentryatthe75%Fib,thenIwilltakemy1steprofitatthe50%Fiblevel.Entrysat75%Fibareatendstobesmallermovesthanentriesat50%thattendstogobackto0%Fibsarea.

WAITFORPRICETOCOMETOYOU!!

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ProbabilityStudyOnMondays

1) Whatisthedirectionofthedaily34/55EMA?UP/DOWN

2) Isthe4hour34/55EMAthesameastheDaily?YES/NO

3) IftheanswerisnotradefromtheDailychart.

4) DrawtheFibonyourpreferredtimeframe.

Questionsyouneedtoaskwhenpricegetsintothetradingzone

Lookingonthechart:

1) Whereisthe200EMAinrelationtoprice?Answer:..........................................................................................

2) Isthe34/55EMAstillopenandstilltrendinginthepreferred

direction?Answer:..........................................................................................

3) DoIhaveanyweekly/monthlypivotpointsinthetradingzone?

Answer:..........................................................................................

4) DoIhaveanywholenumbersinthetradingzone?Answer:..........................................................................................

5) DoIhaveanyreversalcandlepatternsformingattheselevelsin

thetradingzone?Answer:...........................................................................................

6) DoIhaveanytrendlinescomingfromolderareasinthetrading

zonethatcangiveresistanceorsupport? Answer:.........................................................................................

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7) IsMarc`spotentialentrypointneartheseareas?

Answer:............................................................................................

8) WhatistheBollingerbanddoingispriceoutsideitisitaoneinamillionyearsBollingerband?Isittrendingdownorup?Isitcurlingupordown?Answer:............................................................................................

9) WhatistheMACDdoingisthehistogramcrossingoraboutto

cross?Whatarethe2movingaveragelinesdoing?Isitopenorabouttocross?Answer:..............................................................................................

10) WhatismyStochasticdoingisitcrossingisitintheoverboughtoversoldarea?Answer:.............................................................................................

11) WhatismyRSIdoingisitcrossingthe50middlelineisitin

theoverbought/oversoldarea?Answer:............................................................................................

Iftheprobabilitystudyshowsmethatpricewillmostlikelyreactin

thetradingzonewaitforconfirmationbyaskingmyself...

Didpricebreakthecurrenttrendline?

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ExampleofaProbabilitystudy

ProbabilitystudyfortheAUDUSDonthe4hourchart:

Direction:

1) Ispriceisabove/underthe200EMA:UNDER2) Whatisthedirectionofthe34/55EMAsonthe4hourchart:

SHORT

PotentialTradingzone:

3) HowdoweFib:Lastweek`shightothecurrentlow4) TradingZone:1.5821to1.5952(5075%Fib)5) SweetSpot:1.5886(62.5%Fib)

Whatishappeninginthetradingzone?

6) DowehaveanyEMAsinthetradingzone:200,55EMAONTHE4hourchartplusthe34/55EMAonDailychart.

7) Dowehaveaweeklypivotinthetradingzone:Yes,butitisontheothersideofthe200EMAonthe4hourchart.

8) DowehaveaBollingerbandinthetradingzone:No9) Dowehaveapsychologicallevel`sinthetradingzone:Yes,15900

atthecurrent200EMAonthe4hourchart.10) Dowehaveatrendlineinthetradingzone:Yes,beartrend

linefrom4week`sback.11) Rule:ThetrendisyourfriendSelltheralliesinadowntrend

Whatwillmytradingplanbeusingtheprobabilitystudy?

Priceisunderthe4hour200EMA.Wehavegoodseparationbetweenthe34/55EMAanditisstilltrendingdown.

IfIFibfromlastweekshightothecurrentweekslowtogetthisweekstradingzone.Wehavethe55and200EMAonthe4hour

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chartplusthe34/55EMAontheDailychartinthepreferredtradingzone.

WehaveaweeklyR1pivotontheothersideofthe200EMAbutitstillfallsinmytradingzoneat1.5924.

Wehavetheweeklymainpivotandthe38.3Fibareainthesameareaat1.5759.

Wehaveatrendlineonthe4hourchartthatisinthezone,itsontheothersideofthe200EMA.Ihaveloadsofreasonstobelievethatoncepricepastthe1.5759areathatIwillstarttoseesomeresistanceandthatpricewillturn.

Mytradingplanforthispairistowaitforpricetocometome.Isetanalarmtogooffoncepricecloseabovethe1.5759area.OnlythenwillIstarttolookforreasonstoshortthispair.Thecloserpricecangettomypreferredtradingzonestartingat1.5821areathebetter.

AboutForexMentorProAsImentionedintheintroduction,IamamemberofForexMentorPro,the5StarratedtrainingandmentoringservicebyMarcWaltonandDeanSaunders.IuseMarcsanalysisasavitalconfirmationformysystem,asIhavementionedinthiseBook.

IalsoruntheForexMentorProMembersForum,andamonhandeverytradingdaytoprovidesupport,tipsandadvicetoallMembers.

Ifyouwouldliketogeta7daytrialofForexMentorProforjust$4.95,pleaseclicktheimagebelow:


Earth and Sky Trading System - Version for DeanEarth and Sky Trading System - Version for DeanForex What is it?Spinning TopsMarubozuPrior TrendHammer and Hanging Man IndicatorsStochasticRelative Strength Index (RSI)MACDBollinger BandsHenri, Portland ORTom Lee, usaBob S, Massachusetts, US

Earth and Sky Trading System - ending

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