Forex Trading Strategies Combination

 

  FOREX SLOW AND STEADY:  

My Customized Version of  The Pivot Trading Method   By: Robert Glover 

 

  Introduction   Wel elcome come to the the wonderfu wonder ful, l, exciti e xciting ng,, and sca scary ry wor world ld of Forex For ex trading tradi ng.. I am going to  begin  beg in with some some point pointss and tips th that at I wis wish h I had had k kn nown bef before ore I started started trading trading and and th then en I will wil l go over my system. This is not an exhaustive exhaustive book on currency curr ency ttra rading ding and and is not mea eant nt to take the the pl plac acee of demo accounts and y your our ow own n rese re sear arch. ch. I am assum as suming, ing, and and yes, I know what that means, that if you are reading this book to learn my trading system/met system /method, hod, y you ou alrea already dy h have ave som s omee Forex Fore x ttradi rading ng knowl knowledge. edge. If not, not, plea please se revie r eview w the the re resources sources detailed detail ed at the the end of tthis his book tto o learn lea rn abou aboutt Forex in greater rea ter depth. The The more you learn, the better equipped you will be to trade Forex.   Alw ays remem Always remember ber that tradi trading ng is risky r isky.. Noth Nothing ing is certai c ertain n an and d th there ere is no way to predic predictt futu future re movements movements in the the mar market. ket. Howe However, ver, I als also o don’t consid consider er my trading trad ing of Forex Fore x to  be gam gambling bling as I pu putt in sign significant ificant tim timee research resear ching ing new styles as wel welll as refin re fining ing my current tradi trading ng style. I will wil l show you later on in this this book boo k some some of th thee resear re search ch tth hat was util utilized ized to shape th thee trading tradi ng system I u use se on a dai daily ly basi basis. s. Making Making trades and/or  transactions without knowing something about the trade or purchase is a dumb way to approach any portion of commerce.   I am constantly looking for ways to improve my trading system, so use this as a tool and don’t assume assume tradin tradi ng this this way wa y on a permanen permanentt basis will wi ll result res ult in massive ass ive wins. w ins. I have have lear le arned ned the the hard way w ay n not ot to be g gre reedy edy when it com comes es to tra trading. ding. A system that prom pro mis ises es huge wins and very few losses (if any) is exactly what you know it to be: too good to be true. I have have llost ost sign si gnifica ifican nt perce percen ntages of m my y deposits (som ( sometim etimes es eent ntire ire accounts) accounts) to my own greed and the promises of automated trading systems that look good for a while,  butt can lose ever  bu every yth thing ing in a matt matter er of a cou couple ple trades.   In short, I don’t make any promises about profits after reading and applying the lessons in thes thesee chapters chapte rs.. I do m make ake a plea pl ea to you that that I make make to m my y son; lear le arn n from from m my ym mis istakes takes so you don’t h have ave to make make th thee same on ones es yourself. yoursel f. Granted, Gra nted, som somee of the the best lessons les sons ar aree the ones you learn from falling the hardest…tough love or trial by fire comes to mind!  

 

Good luck and happy trading!

 

About Me   I am a Professional Engineer with a mechanical engineer degree and a minor in mathem athematics atics.. I am a Chri Christian stian who ffully ully believe believess th that at I cannot cannot su subvert bvert God’s will wi ll.. I have been blessed with so many things that I am not worthy of and I would be remiss if I did not mention where my strength comes from.

I started trading tradi ng several seve ral years ago and lost money money in all but my last three three years. I have have made enough mistakes for me, you, and most others I can think of (granted my son still thinks he can make new ones!)   I mentioned mentioned my son, but ther theree ar aree others in m my y ffamily amily.. I am marri ar ried ed with w ith a total of thre threee kids, two horses, two dogs, and (thank (thankss to my wife and daught daughters ers)) fi five ve chick c hickens. ens.

I love lov e life l ife and doi doing ng things things with wi th my my famil family y. I als also o foun found d that I enjoy som something ething many  people don’t don’t en enjoy…I joy…I like looking looking at data data to det determ ermine ine pat pattern terns. s. According According to my my wife, this is a strange gift that I want to use to help our family and others.  

 

TABLE OF CONTENTS   1. What What is Forex   2. Demo Demo Accoun Acco unts ts   3. Autom Automated ated Trade raders rs / Expert Expert advisors   4. Stop/Loss Stop/Loss an and d Take/Profit   5. My System   6. Exceptions Exceptio ns to My System   7. Ong Ongoing Research Resea rch   8. Resources  

 

 

What is Forex?   For ex is the tter Forex erm m used for foreign fore ign currency curr ency ex exchang changee or for forei eign gn exchange exchange (Fo (ForEx). rEx). You might have heard how the dollar is strengthening or weakening against another currency (maybe the the Euro or Y Yen). en). Maybe y you ou have have been b een travel trav eling ing outside of the the US and and had to get you yourr dol dollar larss converted iint nto o the the local loc al ccurrency urrency.. Forex allows all ows you to bu buy y and sell currencie curr enciess ar aroun ound d th thee worl w orld d from the the comfort of you yourr co com mputer. The Forex mar market ket is open for trading trad ing si six x days a w week. eek. If you watch wa tch tthe he GM GMT T (Gre (Greenwi enwich ch Mean Mean T Time), ime), you ill see the Forex market open on Monday morning (12am) and close when the US markets end on Friday. Technically this is only 5 days; however, since I am based in the Eastern Time zone the markets open for me on Sunday evening which make is every day except Saturday Saturda y. This way w ay you you can take Saturdays off tto o re renew new your your sanity sa nity!!   So, let me give you an example of this foreign currency exchange to help:   At th thee beginning of my trip tri p to Toky okyo, o, I have 100 USD (US Dollar Doll ars) s) that I want wa nt to convert conver t to Japanese Japa nese Yen. Yen. If the the curre current nt exchange exchange ra rate te is 100 Yen Yen for every ever y 1 US Dollar, Dolla r, you would have 10,000 Y Yen en after your your conversion conversi on (you sold sol d US Dollar Dollarss and a nd  boug  bou ght Japanese Japanese Yen Yen). ). Stran Strang gely, ely, after after spendin spending g a week in Japan I never spent my money (m (my y kids kids will wi ll be upse upsett that that they did didn’t n’t g get et any gifts!) gifts!).. I go go to conver convertt m my y 10,000 Yen back into US Dollars, but due to market moves and news releases, the exchange rate is now 105 1 05 Yen Yen for every ever y 1 US US Doll Dollar. ar. My 10,000 10,0 00 Yen Yen is exchanged exchanged for 95. 95.24 24 U US S Dollar Doll ars. s. I just lost 4. 4.76 76 US Dollar Doll arss eve even n thou though gh I didn’t do anything anything wi with th my money but but exchangee it. exchang  

 

The opposite can also happen and I might have made money during my week trip in Ja Japan. pan. The currency curre ncy exchang exchangee mar market ket opens u up p num numerous er ous pai pairs rs o off curre currency ncy for you to  buy  bu y an and d sell iin n the the com comfort fort of you yourr hou house.   The above exam The e xample ple eequat quates es to the the U USD/JPY SD/JPY curre currency ncy pair. Most m majo ajorr curren curre ncies cie s can  be traded in similar similar pairs: pairs : EU EUR/U R/USD SD (Eu (Euro/US ro/US Dollar), GBP/JPY (Great Britain Pound/Ja Poun d/Japanese panese Yen), Yen), etc. Th Thee first currency listed li sted in the the pair pai r is the “base” currency. currency. If  the USD/JPY number goes up it means the US Dollar is strengthening against the Ja Japanes panesee Yen. Yen. Conversel Convers ely y, if th thee USD/JPY chart iiss going down dow n th then en the the US US Dollar Doll ar iiss  becoming  becom ing weaker against against tth he Japanese Yen Yen..  

Figure 1

The table shown in Figure 1 only shows a fraction of the currency pairs available for  trading. trad ing. You al also so see that ther theree is a “Bid” colum co lumn n and an “Ask” colum col umn. n. The prices pri ces shown in the Bid column is the price you pay to buy the currency pair (you expect the chart to go up) up) and th thee Ask colum col umn n details the the pr price ice for the sale sal e of the currency pair  (you expect the chart to g go o dow down). n). Think of this this like l ike an aucti auction, on, a bid is a quote to buy buy the the ite item m in question. At tthis his sam sa me auctio auction n I am asking as king a cer certai tain n price pri ce for an a n item ite m I want to sell – Bid=Buy, Ask=Sell.   The difference between The betw een th thee Bid and Ask price iiss the the spread. spr ead. If you were to buy the the AUDCAD AU DCAD pair li listed sted on th the table above you would enter the the trade aatt 1.00533. The The

 

currency pair would have to move above the sale (Ask) price (above 1.00547) before you make money money.. In other wor words, ds, the spread spre ad for this this exam e xample ple w would ould be 0.00014 0.000 14 whic which h is 1.4 pips. pi ps. The The currency pri prices ces in i n Figu Figure re 1 are ar e given to increment incrementss of 1/10th  of a pip (or unit unit of m movem ovement). ent). The The spread spr ead is i s one wa way y in which a brokera brokerag ge hou house se mak makes es their  money oney.. Som Somee firms offer offer low l ow ssprea preads ds on certain certai n h high ighly ly traded curre currency ncy pair pairss and som somee firms offer fixed spreads which means that during high volume trading, the spreads on’t increa increase. se. resea Som Some e brokers utili ze a to combination com bination oflspread an a nd for com comm ission iss ion per  trade. You can research rch Forex utilize brokers see what wil will work wor k best you. ym ou.   The movement of the currency pairs is due to trends and news releases and is tracked on a chart that has has tim ti me incremen incr ements. ts. You can revie re view w charts char ts and trends from one minute minute incre inc rem ments through monthly onthly.. This means that on the char chart, t, the move movem ment of tthe he currency curr ency over the specified period of time is noted as a line or candlestick.  

Figure 2

 

 

The chart shown in Figure 2 is a snapshot of the EURUSD currency pair with each candlestick representing the movement of the currency pair over four hour increments (H4).. The th (H4) thin in lines li nes show how far the pai pairr m move oved d during the time time segment segment and and th thee ider portion shows where the currency pair opened and closed for the same four hour  se segm gment. ent. This char chartt her heree indicates indic ates that the the pai pairr m moved oved up when tthe he open box of th thee ca candles ndlestick tick is empty and moved moved down do wn when the the open box of th thee candles candl estic tick k is white. w hite. It seems redundant to mention this, withize small andhowever large charts, colori col oring ng can reall rea lly y help. You can ca nbut custom customize your youcandlesticks r charts char ts to look howev er you the want wa nt to suit your trading needs.    Now I want want tto o ex explain plain some some details on tth he candlestick shapes tth hat will help you when I am discussi disc ussing ng my system. system. Wh When en I am talking tal king about candl candles es aand nd the the high highss or lo lows ws associated with the candles, I mean the lowest portion or highest portion of the candle. A candle iiss made made of four parts, Open, Close, Close , High, High, and L Low. ow. The The Open is where w here the the ca candle ndle starts sta rts at a t th thee beginning or ccre reati ation on of th thee candle. ca ndle. For any a nyth thing ing other than than Su Sunday nday openings, this point is the openings, the same as th thee Clos Closee of th thee pre previous vious candle. Now for the Close, as you probably guessed is where the candle stops during its timeframe before starting a new candle. candle . The High is the high highes estt value val ue obtained obtai ned du duri ring ng th thee candle’s candle ’s life. The Low is the lowest value obtained during the candle’s life.   Plea se rem Please re member ember that this this is i s only a very brie brieff overview overvie w of Forex. There There is i s so m much uch more you ca can n le lear arn n th through rough readi re ading ng,, on onli line ne clas cl asse ses, s, and y your our own experiment exper imentati ation. on. I have several resources listed in the last chapter that can help you learn more about all aspects of Forex.  

 

 

Demo Accounts   Do you you like th throw rowing ing away aw ay m money? oney? Have you ever jum j umped ped int i nto o a get-rich-quic get-ri ch-quick k schem sc hemee to only find find that y you ou have have lost lo st m more ore money than than you made ade?? Forex For ex tradi trading ng is seen se en by many as the g get-ri et-rich-quick ch-quick opt option ion that that wi will ll sol solve ve al alll of their needs. Don’t Don’t get me me wrong w rong,, if you re rese sear arch ch an and d trade wis w isel ely y, y you ou can get get decent dece nt return re turns. s. You could ev even en mas master  ter  Forex For ex trading trad ing well we ll eenou nough gh to make make excell excellent ent retu re turns. rns. Howeve How ever, r, m more ore often what happens is people invest needed money and come away with nothing.   One of the reasons One re asons w wh hy people lose significant ffun unds ds iin n Forex is because th they ey try to make quick wins and ttra rade de wi withou thoutt learning lear ning how to ttra rade. de. Som Somee people peop le think they are ar e smart enough enough to trade without w ithout practic pra cticing ing and they they can be quickly h hum umble bled. d. Practi Pra ctice ce trading comes in the form of Demo Accounts.   A demo account is exactly as it sounds, you have fake money in an account through a trading company/broker, and you can buy and sell currency pairs without risking anything any thing.. Demo accoun acc ounts ts are ar e good ways to try ou outt different differe nt trading trad ing strategie str ategiess that you feel might work, but it is also a good way to try out the various trading brokers to determine which company is best for you.   You have demo and try several different at once,  bu  but t I can would sug sugseveral gest you you keepaccounts notes notes onopen trades made made an and d th their eir result r esults. s.strategies Try differen different t currency pairs and different time time fra fram mes as a tra trading ding sy system stem may may work wor k well wel l for one

 

spec ific pair and time specific time frame, but but not not others others.. Look over the the charts and find patt patterns erns that you can utilize to make profitable trades.   There are pros and con There conss to trading tradi ng on a demo demo accoun acc ount. t. The The pros pro s definitely outwe outweigh igh the the cons, so never sstart tart trading tradi ng with wi th real money until until you feel comfortable comfortable with wi th a demo demo accou acco unt. nt. I ju jum mped in too earl early y and and too conf confidently idently and and lea learned rned several sever al pa painfu infull lless essons. ons. Some of the pros are listed below: 1. Learn/devel Learn/de velop op a trading tradi ng strategy str ategy – Not only can you you try ou outt tthe he tra trading ding strategy detailed in this book, but you can be creative and look for trends or breakouts of your own. 2. Research Resea rch diff differe erent nt strategies – You You can ttrade rade multiple multiple pairs pai rs and timeframes tim eframes and gather gather data that will wi ll help your your pr profitabil ofitability ity down th thee road. 3. Become Become famil familiar iar w with ith trading platforms platforms – Y You ou wi will ll need to practice how to set trades as well w ell as m many any oth other er aspects as pects of trading trading.. Th There ere are a re man many y tools available on trading platforms that you can play around with without risking your money. 4. Learn tra trading ding disc di scipl ipline ine – On Once ce you have a strategy strate gy in place plac e you you may be inclined to change it in the middle of a trade or start second-guessing yourr trade you trades. s. You must learn lea rn tto o be dis discipl ciplined ined to foll follow ow you yourr strateg stra tegy y through on each trade made. 5. Develop Devel op trading rules – Every ttradi rading ng strategy needs to have rules rules that you abide by ffor or every eve ry ttrade rade.. Th This is goes along al ong with wi th #4, but early ear ly on I found that, by having written rules in place you are less inclined to deviate devi ate due to whim whimss aand nd em emotions. otions. 6. Lear earn n to to elim eli minate em emotional otional tradi trading ng – This This iiss difficult to learn lear n on a demo ac account count,, but it will wi ll com c omee into play on a li live ve account ac count.. I have have made m many any mistakes due to emotional trading and they all have cost me real money. 7. Learn that that you you can’t ca n’t W WISH ISH a currency curr ency pai pairr back bac k in your your favor – This goes in tandem tandem wi with th #6 above. above . Just like playing pla ying golf or bowl bowling ing when you you lean your body to the side to push the ball in the desired direction, you can try and tell or cconvin onvince ce the the ccu urr rrency ency pair to turn turn aroun around, d, but it does doesn’t n’t normally respond to visual cues.

 

8. Lear earn n how to set reaso reason nable llimits imits tto o your your losses – Y You ou wi will ll lose l ose money money at some poi point nt in time time during trading. trad ing. Protect Pro tect you yourr inves investm tment ent and lea learn rn what your profits and losses need to be to have an overall positive outcom out come. e. I wil willl talk m more ore abo abou ut this this later. 9. Lear earn n to not not be gree greedy dy – This This iiss a g good ood less lesson on for all of life, but will wi ll help you better manage your trading system/strategy when the market moves oves.. Stic Stick k to y your our rules and a nd do not lo look ok to devi deviate ate from your your rule ruless to make u up p for losses or o r increase increa se gains. It genera generall lly y does not wor work k we well ll iin n the end! 10. Learn ea rn to manage your your expec expectations tations – Expect los losse sess to occur occ ur.. You may g get et started and expect to on only ly win and have have profitable pr ofitable trades. tra des. Be ready for losses; however, expect to win more than you lose.

W ith all of thes these PROS, whatstart could possib poss ibly ly be th the CONS to to a demo dem o accoun acc ount? Well, elseen l, as stated earlier, I ewould never trading without aedemo account; however, It?have firsthand how a demo account does not react in precisely the same as a live/real ac account count.. You might might have a great system tthat hat h has as a lar l arge ge percentage perc entage of wins wi ns versus vers us losses and the profit margin is great, but when you decide to start live (real money) I ould still start off with the smallest trade possible for a little while and make sure it is orking the same as planned.

Always remember that there are no certainties when it comes to the market movement and you lose em money oney. . There atrade re noamoun fortune fortun e telle tel lers rs giv giving ingw Forex For ex tradi trading ng tips that know kn owyou of.can Belos prepa prepared red and only only are am ounts ts that that y you ou are wil illi ling ng to lose. Plan to Iuse use Forex For ex ttra rading ding as a way w ay tto o dive divers rsify ify your your accoun acc ounts ts and make make some some good returns. I am satisfied satis fied ri righ ghtt n now ow with w ith averaging 10-20% pr profits ofits per month month.. I cou could ld rris isk k more to win w in more, but I could just as easily lose more.  

 

 

Automated Traders / Expert Advisors   Automated Traders Are you waiting wa iting for th thee ca cars rs that drive th them emsel selves? ves? Do y you ou like th thee idea id ea of put putting ting money into something and winning winning big bi g without you you h hav aving ing to do anything? anything? Sounds gre great at ri righ ght? t? A pro program gram th that at makes makes your trades trade s automatic automatical ally ly,, with wi thout out you having to even be at the the compu computer, ter, is call c alled ed an autom automated ated trade trader. r. Th There ere are system systemss or programs programs that  promise  prom ise 100% profits each month onth.. Th There ere are ar e on ones es that that claim a 98% win percentage. percentage. There are ar e systems tthat hat sound like li ke Mid Midas as himself touched touched it. You can proba probably bly find some decent systems out there for Forex trading that actually produce profits without risking your entire account; however, I have found through experience that the old adage is true: if it sounds too good to be true, it probably is.   Automated traders are programs that you can attach to your trading platform and it will make th thee trade tradess based bas ed upon the the strategy stra tegy and rules embedded embedde d in the the program. This is exactly how I want to trade and would hope that you trade – abiding by the rules and strategy str ategy cr crea eated ted withou wi thoutt deviation devia tion due due to emotion emotion or greed. I h have ave eeven ven th thoug ought ht of  turning my system into an automated system so that I don’t have to check my charts at midnight and 4am.   Some of the Some the system systemss that prom promise ise hig high h rates of return returnss do so s o at si sign gnific ificant ant ri risk. sk. I pride prided d myself on the research I put into the automated systems and thought I had one that  produced  produ ced decent retu returns rns with withou outt mu much loss. I purchased purchased tth he syst system em and and placed it on my

 

demo account demo account and and it performed as expected. I decided to put it on a live li ve accoun acc ountt with re real al money money and I was happy for th thee first fir st two mon month ths. s. Then, while whil e on vacati vacation, on, the the system was pluggin plugging g away w withou ithoutt care car e from m mee when w hen I watched tw two o trades trade s iitt entere entered d go south south.. I mea ean n REALLY SOU SOUTH! TH! I was wa s incre incredulous. dulous. The two bad trades trade s nea nearl rly y emptied em ptied my account account.. Not on only ly did two bad b ad trades trade s negate negate the ffifty ifty plus positive posi tive trades, tra des,  butt it also ttook  bu ook away m most ost of my starting starting fu fun nds.   Expert Advisors Expert advisors can work the same as Automated Traders, but they can also work like the the GPS in y your our car. You can get (purchase, cr create, eate, dow download nload for free, etc.) expert advisors that will provide guidance and allow you to make the trade or not as you see fit. Som Somee advisors advi sors wi will ll use colorful col orful in indic dicators ators to let you know know w when hen it is good to buy or sell se ll.. Some Some expert advisors advis ors are ar e si sim mple ((th they ey use use only one or two meth methods ods to determinee w determin when hen to trade) and others others are much more complex complex (sever (s everal al meth ethods ods and a nd indicatorss ar indicator aree involved). involved) . Either way, way, you are stil stilll able abl e to u use se your your jju udgment dgment on wh wheth ether  er  or not to to g get et in tthe he ttrade rade.. Th This is can c an be g good ood or bad.   If you start to let your emotions govern your trading, it will be inconsistent and most likely li kely n negative. egative. If you you see patterns or have iint ntuition uition regardi regarding ng the the currency curre ncy pair since you have w watched atched it ffor or a wh w hile, il e, you can increase your chances chances of positive trades. tra des. If  you know that a news release is coming and you aren’t sure how it will affect the market, you can wait on the trade.

Expert Advisers and Automated Traders have the potential to be good, but beware of  lofty lo fty prom pro mis ises es.. I haven’t tried trie d too m many any and som somee can cost a substantial fee, but never  use an automated trader on a live (real money) account without first doing plenty of  resear res earch ch and trying trying tthem hem out on some some de dem mo ac accoun counts. ts. Als Also, o, Expert advisors advi sors can be great tools if if u used sed pr properl operly y and without without emotion. emotion. Alway Alwa ys le learn arn th thee pros and cons cons of any advisor you use, if you choose to, and become familiar with the currency pair(s) you trade as it will help turn the odds in your favor.  

 

 

Take/Profit and Stop/ S top/L Loss   When you enter into a trade, either buying or selling (up or down), you can let the trade ride ri de for as much much tim timee as you want want.. Some Some traders trade rs have a strategy s trategy based base d upon res resear earch ch and history which maintains they wait for a positive move of 20 pips (a pip is the unit of  movement on Forex charts – most charts actually show movement to 1/10th  of a pip)  before exiting exiting the the trade. An Anoth other er m meth ethod od of tradin trading g is to scalp, or take take several very little gains, to turn a small profit (commission from your broker and spreads can become critical in this method).

Take/Profit A Take/Profit Take/Profit iiss aan n option y you ou can select sel ect on you yourr trade that that w wil illl autom automatica aticall lly y close out the the trade once it gets gets to th thee profit pro fit point you you set. Som Somee systems, systems, or trading strategies strategies,, il illl use iin ndic dicators ators to let l et you know know when w hen to g get et out of a trade. A Take/Profit wil w illl not help for indicator based bas ed exits. Since I work a regu regular lar day job, I can’t sit and watch a tradee through trad through th thee entir entiree durati duration on of its movement movement or I would llose ose th thee da day y job! job ! Any Anytime time I research a strategy, I like to see how far the trade would usually go before turning around and I try to maximize my profits while minimizing my losses.  

 

Stop/Loss A Stop/Loss is the same as a Take/Profit, but for the losing side of a trade. THIS IS THE MORE CRITICAL PORTION OF THE PAIR!!!   I hope the the em emphasis phasis was wa s cl clea ear. r. If you make nothing nothing but profitabl pro fitablee tra trades des I wo would uld like li ke y you ou to contact m mee immedi imm ediatel ately y. The point poi nt of trading trad ing is to make make m more ore pr profits ofits th than an lo loss sses es.. I set se t a Stop/Loss on every trade trade now now.. I say n now ow be because cause it wasn’t w asn’t u unt ntil il I emptied emptied se severa verall demo accoun accounts ts and a couple live l ive accoun a ccounts ts (Ouch (Ouch!) !) before I lear l earned ned m my y lesson. Think Think of the the Stop/Loss as insu i nsurance rance for you yourr tra trading ding accoun acc ount. t. If tthe he cu curre rrency ncy pair rapidly rapi dly m moves oves iin n tthe he wrong direction, your Stop/Loss keep you from losing your account.   Resea rch you Research yourr strategy s trategy and determine determine how much you are wi will lling ing to to ri risk sk losi losin ng on a trade and then then make make sure you don’t g go o past pas t th that at for you yourr Stop/Loss. Stop/ Loss. Also, Als o, re resea searc rch h your  your  strate ategy gy.. You need to in/loss ratio to determine if you should change your existing  existing str maxim aximize ize you yourr profit pr ofit per trade tra de and m minim inimize ize your your lloss oss per trade. tra de. Ag Again, ain, from experience, experie nce, I alw always ays set a St Stop/Loss op/Loss for every ttrade rade.. Many Many traders trader s do n not ot set Stop/Loss Stop/Loss  pointss and som  point somee of tth hem do well well.. I have have lost sign significant ificant money oney (both real aan nd imaginary) from trades that were moving in my direction when some influential member  of government decided to step up to the podium and mention something that causes the currency pair to rapidly rapidl y go in the the wrong direction. dir ection. News rrele eleases ases can be good good for y your  our  trade, trad e, but they they can also als o be bad. ba d. If you you want to see so som mething move quickly q uickly,, w watch atch the the USDJPY or EURUSD currency pair when the Fed Chairman changes the interest rate for   bank  ban ks.   Without a Stop/Loss in place, you can hope to exit when your indicators tell you, but market forces might drive the trade quickly in the wrong direction and you could lose si sign gnifi ifica cant nt amount amountss of money money.. I k know now I keep re repea peating ting th this is concept, concep t, but ttrust rust me me w when hen I say it needs to be repeated!   If you have a 55% win percentage and you have a Stop/Loss of ten pips versus a Take/Pro ake/ Profit fit of five pi pips, ps, you wil willl go through through your your money money very fast. If you you h have ave a 40% in percent perc entage age and you have a Stop/L Stop/ Loss of ten pips versus ve rsus a Take/Profit of eigh e ighty ty pips, you will wi ll retire r etire wealthy wea lthy and soon soon!! Good luck with wi th that. that.  

 

Take/Profit and Stop/Loss NOTICE! Plea se un Please unders derstan tand d this before using rea reall money…th oney…thee T Take/Profit ake/Profit an a nd Stop/Loss are tools and they they are not perfect. per fect. Wh When en you you en enter ter or exit a tra trade de you cl clic ick k a button on your  your  tradin tradi ng platform and it must must be process proc essed. ed. Th This is usually takes takes place pl ace w within ithin one or two se seconds. conds. I sa say y usually usuall y, because beca use li like ke other lessons les sons I hope you you lear le arn n throug through h readi re ading ng this  book inst instead ead of tth hrough rough your our own experience, experience, I have have had some some trades th that at didn didn’t ’t close immediately.   When there is a news release or breaking news, the market can spook or react violently. Your trading platform will process the request to close a trade as quickly as possible; however, if the market moves ten pips in two seconds you could be out more money that  planned.  plann ed. Gran Granted ted th this should should be the the case for closi closin ng a trade on the the profitable side, bu butt it seems to be skewed in the loss direction.   All of o f my my trades trad es use both the the Take/ Take/Profi Profitt an and d Stop/Loss tools. tools . I might might be ab able le to m make ake more money without these in place, but the peace of mind and stability helps me maintain my sanity.  

 

 

My System   So, now that you have some background, I will take some time to explain the system I use. Granted, the the title of th this is cchapter hapter is “My Sy System stem”, ”, but the the basic basi c principle pri nciple is is a common comm on trading tradi ng system use used d by many many peop people le throug throughou houtt th thee Forex For ex wor world. ld. The system is a pivot trading tradi ng method. ethod. I have have jjust ust resear researched ched and n narr arrowe owed d down th thee currency pair  and set entry/exit entry/exit points points for fairly fairl y consistent g gains. ains. I will wil l continue continue to resear res earch ch other  other   pairs an a nd timefram timeframes es and encou encourage rage y you ou to do th thee same. same.   So, what is the piv pivot ot m method ethod y you ou ask? as k? Gre Great at qu ques estion. tion. As you you open u up p a curr currency ency chart on a trading platform you will notice that the pair rises and falls throughout the day. There Th ere wi will ll be man many y peaks and vall valleys eys created cr eated during the the w weeks eeks and mont month hs o off currency fluctuation. One re reas ason on theand curr currency encyturns pair pai r to might might chang changeedownwards dir directi ections ons direction) (if it was wa s movi m oving ngbein a general upwards direction then a general could due to a resistance that the currency pair encountered (a relative ceiling or floor to the trade).. This trade) This ceil ce iling ing or floor that that is indicated by th the peak or valley valle y is w wh hat the the pivot trading method uses to make money. Take a look at the picture in Figure 3 to see the mountain range of a four hour currency chart.

 

Figure 3

  When the When the currency c urrency pair brea break ks throug through h the the rresi esistance stance (the ceili cei ling ng or th thee floor floor)) iitt genera gen erall lly y continu continues tra traveli veling ng in that that dire direction ction for a peri period od of tim time. e. The The concept is that you need to have a strong enough resistance or pivot that when it breaks through it will continue in the direction you want and that you can capture enough of that movement to make a profit.

There are some resistance indicators that help show strong and weak resistance values and there there are som somee natu natural ral currency res resistance istance val valu ues iinh nhere erent nt in the the currency pair. The The resistance res istance indica indicators tors ar aree too com complex plex for m mee as I am a very simple pers person. on. I like to full fully y unders understand tand what is going on if I am to wager wa ger my money. oney. If you you res resea earc rch h an and d fully unders un derstan tand d the “Fibonacci Retractment Retractment”” indicator/ i ndicator/tool, tool, you m may ay be able a ble to ut util ilize ize it i t to increase the profitable trade ratio of my system.   I also mentioned mentioned som somee inhere inherent nt resistances res istances iin n cer certain tain curre currency ncy pair pairs. s. Think Think of large, round nu num mber berss and these can be n natural atural rres esis istances tances for curr currency ency pai pairr movement. movement. One  pair that that comes comes to mind, mind, pretty much because it is the the major major pai pairr I trade, trade, the the USDJPY USDJPY (US Dollar/ Dollar / Japa Japanese nese Y Yen), en), likes li kes to fluctu fluctuate ate aaroun round d 100 (100 Yen for every eve ry 1 US

 

Dollar). There There is a natu natural re resistance sistance at th this is 100 level. Each cu currency rrency pair has its own set of natural resistances and depending on the strength of the market for that pair, it can make a consider considerable able move when w hen it br breaks eaks throug through th thee rresi esistance. stance.   I trade the USDJPY USDJPY on the the four hour hour chart. This m means eans that each candle stic s tick k repre re prese sents nts the th em move ent ofupon th thee curr currency pair o over ver during d uring a four hour hour period per iod.natural . The pivot system I use isovem notmbased theency Fibonacci Retractment indicator or the resistances (although I will not disregard a natural resistance if it might enhance or interfere with my trade).

I use a four candlestick pivot method which means that a high peak must have four  ca candles ndles to the left and four four candle candless to th thee righ ri ghtt that that ar aree not as high as my pi pivot vot peak. In other words the peak must have nothing above it for sixteen hours prior and nothing abovee for sixteen hours abov hours after. Oth Other er pe peopl oplee li like ke to change change th thei eirr pivot piv ot m method ethod to to thre threee candles or o r five ccandles. andles. Granted you you cou could ld use any num umber ber of candles for the the pivo pivott strategy str ategy,, but th thes esee are ar e the m most ost co com mmon. Using si ng a three candle c andle pi pivot vot method method m means eans that you might have more possible trades, but the pivot might not be as strong as a four or  five candle c andle system s ystem.. Using si ng a five candle c andle ssystem ystem means that you you wo won’t n’t tra trade de as often, bu butt the the stre streng ngth th of the the pivot pi vot shou should ld be better. This all depends on your your prefere preferences, nces, but mine was chosen based upon research gathered over 1.5 years of USDJPY chart review along with real trade data.  

 

Figure 4

Looking at Figure 4, you can see the candles Looking candl estick tick mar marked ked with wi th th thee arrow. ar row. The top of this candle is higher than at least four candle peaks to the left and four candle peaks to the right, so this makes it a pivot that I might use (I will detail why I say “might” later on). This Th is would w ould be a “buy “buy”” pivot. In oth other er w words, ords, I w would ould set the the trade so s o that that if the the currency pair moves up through through th thee pivot pi vot (the currency pair value goes above the the highest value of my pivot candle), I am betting that the pair will continue to move to somee d som determin etermined ed p profit. rofit.  

 

Figure 5

As you you probabl probably y already alr eady g guessed, uessed, the opposite is true. If one candle candle is i s low lower er than th thee fourr to the left and fou and th thee four to the the right, right, then then it is a “sell” “sel l” pi pivot. vot. See Fi Fig gure 5 to review revi ew the look of this type of pivot.    Now, a true  Now, true pivot meth method od system system is going going to mak makee th thee trade at tth he actual actual pivot value indicated. Let’s look at an exam example ple.. If the the pivot point shown shown in Figure Figure 4 is 101.745 (candles one, two, three, and four are below 101.745) then I would set the trade for  anything any thing th that at moves m oves above a bove 101 101.745. .745. Theore lly y, I could set se t my my pair trade trad ehto once the the currency pair rreaches eaches 101.746. This Theoretica would ticall be when the the currency as start broken throug through h the the pi pivot, vot, but ex experi perience ence and re resea search rch has lled ed me to never take such a quick  approach.   I don’t don’t lo look ok at th thee pivot piv ot point as a th thin in line li ne th that at once broken you you are ar e good to ttra rade. de. I think think of it as a pliable plia ble line l ine th that at g gives ives before iitt breaks. More li like ke th the old game game of Red Rover. You could run an and d try to break bre ak th through rough th thee line, l ine, but b ut it might might give aand nd absor absorb b the  push.  pu sh. However, if you break th throug rough h, then then you win! The The true true pivot migh mightt n not ot be a value value that that can g go o three three deci decim mcan al plac places es aas s indicated ithe ndicated bytomovem m101.749 ovement. ent.before May Maybe be the pivotor is 101.750, sotothe currency reach all way up matching  breaking  breakin g th this is pivot. You have to remem remember ber that that th the m market arket moves and reacts const constan antly tly

 

and the the candle c andle is i s su s ubjec bjectt to noise (sl (sligh ightt m movem ovement entss that don’t don’t neces necessar saril ily y transla translate te into direction dir ection movem movement ent). ). You want to to start your your trade tra de as clos closee to the the pi pivot vot point as  possible to max maxim imize ize tth he g gains, ains, but but get get in far en enou oug gh from th thee pivot to to escape the the n noise. oise.  

Figure 6

Take a look at Figu Figure re 6. Th Thee red line l ine is dr drawn awn at tthe he pivot point point ffor or a “buy” “buy” trade. If  you follow th thee red r ed line li ne to tthe he righ rightt you you can see where is hits a candle. Th This is means that that the the ccandle andle broke br oke th throug rough h the the pi pivot vot point which would aactivate ctivate a trade tra de set s et to enter rrigh ightt at the pivot location. the loca tion. Wcandle ell ell,, th theecarried candle the bac backt ktrac rack ks and migh ightto th have ave slightly been bee n a los loss. s. The Ththe e momentum of the “hit” currency pairm up and beyond  pivot point point indicated, indicated, but but th the currency currency pair wasn’t w asn’t really real ly breaking breaking th throug rough h th thee resistance.   Due to this compensation for noise and momentum, I set my trades to enter two pips above a “buy” “buy” pivot and two pips bel below ow a “se “sell ll”” pivot. So, for the the example example w with ith th thee  pivot at 101.745, I would set my my trade to en enter ter at 101 101.765 .765 (on (onee incremen incrementt of movement ovement on my my cu curre rrency ncy charts is equal to 0.1 pi pip). p). Since the ch chart art shown in Figu Figures res 4, 5, and 6 are of my currency chart that I trade, cantwo statepips thatiissmy didffer notfor enter too early pairs and s the the res resu ult was profitable. pr ofitable. I can can’t ’t sayItthat hat a good gtrade ood bu buffer for all al l currency pair and time increments, but for the USDJPY chart with four hour increments, it works for 

 

me.   Based upon my research, as well as my vast and sometimes painful experience, I have come up up wi with th th thre reee current curr ent pre prese sett exit points for th this is strate s trategy gy.. Let me explain expla in m my y research for a minute so you have a better understanding of what went into this method. Iyear’s revie wed reviewed fou fourar rough hour hour candles caidea ndles th theefar USDJPY USDJPY chart for a year. year. pair After After I review revi ewed ed th thee data,aall Illhad of of how the USDJPY currency will move after   breaking  breakin g th throug rough h a pivot before before backt backtrackin racking g. I also h had ad to figu figure re out how far the the currency pair might ight retra retract ct (go in the wr wrong ong direction) dir ection) and a nd still proceed proce ed throug through h to  becomee a profitable trade.  becom

After the run for the currency pair was evaluated I started trading a demo account with my set par param ameters eters (I actu ac tuall ally y tried fou fourr cu c urr rrency ency pairs origin ori ginall ally) y) and I document documented ed the re results sults for about a bout si six x month onths. s. The his histori toricc data ccom ombined bined w with ith the the six month monthss of dem demo o tradin tradi ng caused m mee to rreduce educe the currency pairs to two and a nd again again sl sligh ightly tly adjust th thee exit e xit  points. I decided to ris  points. risk k my money oney and try a sm small, all, llive ive account account with both currency currency  pairs an a nd the the set entry entry/exit /exit point pointss th thee data led me me to con conclude clude would would be profitable.   I have said before that live trading isn’t exactly the same as demo trading for a couple re reas asons. ons. With that that in mind I knew knew that I would wo uld nee need d to track all of my my li live ve trades tra des to further further refine my my system system.. I h have ave ssince ince dropped dropp ed the second currency pair and been left ith the the USDJPY USDJPY pair. pai r. Th Thee spread spre ad for th this is pair pai r is generall generally y low aand nd rel relativel atively y stable. stable . The movement is enough to allow for profitable trades using this system.   All that said to say this: I set three trades for a “buy” pivot and three trades for a “sell”  pivot. Th Thee trades are set to enter enter at ttwo wo pips above th thee four four candle pivot point for a “buy”” trade and two “buy two pips be below low the four four candle candle pi pivot vot poin pointt ffor or a “sell “se ll”” trade. The The first trade has exit param para meters of a ten pip T Take/Profit ake/Profit and a ten pip Stop/Loss. As a note, I generally like to trade larger Take/Profits than the Stop/Loss, but the research shows that that I would los losee m more ore often. The second ttrade rade iiss for 15 pips iin n both directions dir ections (i.e. (i .e. 15 pip T/P and 15 pip S/L). Th Thee thir third d trade is for 20 pips in both dir directions. ections.   Constantly evaluate/track your trades and trade history to see if anything needs to be re refined. fined. I am constantly g gatheri athering ng data, one because bec ause I en enjo joy y it (s (sad, ad, I know) know),, and two

 

 because it is my my mon oney ey out out th there and I want to mak makee sure I don’t don’t let it do down. wn.   As an example of the data I gather, I can tell you that my current system has current win  percentag  percent ages es of 70% ffor or th thee 10 pip trade, 72% ffor or th thee 15 pip trade, an and d 73% for for th thee 20  pip trade. Th These ese percentages percentages can chan chang ge and I could could start losing mon oney ey tomorrow, tomorrow, but but I  

anted to give you information regarding what currently works for me.

I promise the next chapter is shorter, but equally important regarding my trading system  – Exception Exceptionss T To o My My Sy System stem.. Th Thee win wi n percentag percentagee m ment entioned ioned was not not tth hat h high igh until I started looking for reas reasons ons NOT to trade trade.. Th Thee win wi n rate was wa s still stil l above 60%, but an extra ext ra 10% in i n profitable trades is not somet somethin hing g I will wil l ignore ignore and you you shouldn’t shouldn’t eith ei ther. er.  

 

 

Exceptions to My System   Hopefully Hopefull y you you full fully y unders understand tand my my system now. At lea least, st, you should should under understand stand how to rec recogn ognize piv pivot ot points s and I use when Isetting settin ttrade rades. s. The Th e problem prple oblem that that comes com es ize up is th that at point Im must ust lookwhat ffor or reas rparameters easons ons to NO NOT T trade. will wil lggive you a couple cou examples of when the pivot is in place, but due to other knowledge, I decide against enteri ent ering ng a trade. Th These ese wil w illl be bro brok ken into into som somee m minor inor g groups. roups.   Days of the week  You can technically trade Sunday evening through Friday afternoon (based upon GMT). However, I do not place trades (or enter into trades) on Sunday or Friday based upon a couple observations obser vations (and some some data!). You see, see , just because th thee Forex market market close closess on Friday Fri day,, the the wor world ld does doesn’t n’t stop creating news that affects the the currency pairs pairs.. You can look at many many cu curre rrency ncy pair pairss on a trading chart chart and a nd see that that the the location l ocation w wh here the the currency curr ency starts star ts movi moving ng on Sun Sunday day isn’t the the sa sam me locatio loc ation n as iitt stopped on Frida Friday y. This eekend movem movement ent can throw throw off a trade or enter enter into a trade incorrectly incorre ctly..   Let me me give you a h hypoth ypotheti etical cal exam example ple.. Let’ Let’ss sa say y that tthe he U USDJPY SDJPY is tra tradi ding ng at 104.000 104. 000 on Friday Fri day afternoon when tthe he m mar arkets kets cl close ose.. You may may h have ave hea heard rd that th thee government governm ent likes to rele r elease ase bad news on Friday afternoon to to m minim inimize ize the news re rele leas ase. e. Wel ell, l, in i n this h hypoth ypotheti etical cal exam example ple,, the the U US S Government Government foun found d th that at ther theree was wa s a computing error and instead of being in debt by 17 trillion, we are actually in debt by 19 tri trill llion ion (I h hope ope this is i s hy hypothetica pothetical!) l!).. Wh When en the the Forex For ex m mar arket ket opens on Sun Sunday day y you ou can

 

 pretty wel welll gu guess ess that that tth he USDJPY USDJPY currency currency pair pair will w ill not open open at 104.000. 104.000. Probably not not even at 103.500, or anywhere close.   If a Friday trade does not close, it will be in effect for the Sunday opening which means that that all news throug through tthe he weekend will wil l aff a ffect ect th thee trade trade.. My system is based base d upon m om omentu entum m and we weekend ekend new ewss ccan an th throw row th the e trend tre nd out ou t completel completely y. Meanwhile, the trends. SundayA opening of of then currency market is when traders are reacting to the weekend news releases and no trend has yet formed.   By th thee way wa y, I m mention entioned ed data for this concern, so let m mee provi provide de it. I never never rea reall lly y traded much on Sundays, so there is less data to go on for Sunday trades, but here are the inning percentages for trades placed (and entered into) on each day: Sunday Monday Tuesday Wednesday Thursday 50% 73% 69% 91% 66% These percentages are based upon 189 trades entered.

Friday 57%

  Since I have stopped trading on Sundays and Fridays, the data may change some, but hy ri risk sk m my ym money oney when the the data da ta shows show s me it is more of a true gamble gamble.. By the the way wa y, I have tracked movement of the USDJPY currency pair without trading it on Sundays and Fridays Fri days and h have ave noticed that tthe he percentag percentagee is i s cl closer oser to 40-50% now. You can imagine imagine that I really like Wednesdays and have even dabbled with the idea of increasing my risk   based upon upon the the percent percentag ages es obtain obtained, ed, bu butt I have seen wh where ere greed h has as a wa way y of  hu hum mbli bling ng this me, out so s o why w risk rillsk it sider ri righ ghtt now. naow. If ted afterrisk another year of data tr tracking acking the the num number berss still bear out, , Ihy wi will con consider weigh w eighted approach.  

 

 

Pivots th that at don’t indicate trends

Below is a picture of a pivot that was formed due to a news release:

Figure 7

The bottom portion of candlestick that The that the arrow arr ow is pointing pointing at was th thee result r esult of some news rele r eleases ases.. If you see th thee trend to the the le left ft of th thee indicated indica ted candle you can see th that at the the currency pair was tracking upwards and created a peak or “buy” pivot, but during this four hour increment there was some news released that weakened the US Dollar against the the Japa Japanese nese Y Yen. en. This This long l ong “whisker” “w hisker” cre creates ates a “s “sell ell”” pivot, but not based upon trends. tren ds. The The “sell” “sel l” pivot is bas based ed solel solely y on the the news th that at was release re leased d and and th thee reaction reac tion of the the market. market. Once Once the imm immedia ediate te reac reaction tion ran its course course,, the the currency pair crea c reated ted a new downward trend (we like l ike tren trends). ds).   Consequently, you can see that the “buy” pivot resulted in a breakout trade which was  profitable (look at th the pivot and and the the candles to th the righ rightt tto o see where it broke broke th throug rough h th thee  pivot and and was a good ttrade). rade). Likewise, you can see w wh here th thee “sell “sell”” pivot, tth he one one formed due to the quick reaction of the market and was not due to a trend, would have entered and resulted in a loss.  

In Inherent herent resistances resi stances

 

I dis discussed cussed inh inhere erent nt resistances res istances ear earli lier, er, bu butt let me me restate it h here ere.. Curr Currency ency pair pairss h have ave natural nat ural or inhere inheren nt resis resistan tances ces where w here th thee value cros crosses ses a si sign gnifica ifican nt tthreshold. hreshold. Just as you have regular regular anniver anniversar saries ies and bir birth thdays, days, some hold more more si sign gnific ificance ance than oth others ers.. Turning 40 is not the same as turning 39 or 41 (many never break through this resistance as they celebrate their 39th  birthday many times before accepting that 40 mark). Celebrating Cele brating 25 years of marr marriage iage is not th thee sam sa me as the celebra cel ebration tion ffor or 24 or 26. Why Why do you think think that tthe he item y you ou want to buy is $999.99 $999. 99 and not $1000.00? $1000.0 0? A penny difference really is insignificant, but marketing shows that the one penny can make a reall rea lly y big difference in the the sal sales es and on y your our mind. mind. Th Thee sam sa me concept is at a t work on currency movement.   Well ell,, as I sai said d ea earl rlier, ier, the US USDJPY DJPY pair likes li kes to fluctu fluctuate ate aaroun round d the 100 mark (1 US Dollarr = 100 Japanese Dolla J apanese Y Yen). en). Som Sometim etimes es the currency pair w wil illl jjust ust go go th throug rough h tthis his 100.000 value va lue as th thoug ough h it was wa s any a ny other other place plac e on th thee currency c urrency chart; chart; however, sometimes this this value va lue can res restri trict ct fu further rther m movement ovement.. I like to tre treat at most most whole number numberss as slight resistances, and as the increment grows (every 5 or every 10 – 105.000 or  90.000) the strength of the resistance grows.   When my trade requires it to cross an inherent resistance, I prefer to hold off on setting my ttrade rade.. I have have sseen een where the resistance resi stance m made ade no difference and it would have have bee been na  positive trade, but but I have also see seen n where the the resistan resi stance ce would have have caused tth he trade to start, star t, but cl close ose o out ut negativ negative. e. Wh Why y push my luck on something something li like ke this? this? As a m matter atter of  o f  fact, while writing this chapter, I had an opportunity to set trades for the USDJPY that required it to move above 104.000 while starting below (pivot was at 103.956, so my entry would entry would have been at 103.976). The The trade wou wo uld have also bee been n on a Fri Friday day.. Two of the the trades would w ould have have been negative negative and one positive. posi tive. Overall, Overal l, th these ese were w ere good results res ults of m mee decidi de ciding ng to not trade trade..   Recap I have seen my win percentages grow from slightly over 50% to slightly over 70% just  by utilizin tilizing g th these ese exceptions exceptions an and d learning learning how th thee curren currency cy pair likes l ikes to to m move. ove. Th Thee longer long er you work wor k with a ccurrency urrency pair, th thee more famil familiar iar you wil willl become and the the more knowledgeable you yourr trades wil willl be.  

 

You will have plenty of pivot points to trade, but if you want to increase your   percentag  percent ages es (and ttrading rading account) account) look for reasons to to not not ttrade. rade.   Ongoing Research   As I said in the introduction of this book, I cannot assure you that using this system will result res ult in profitabl profitablee trades trades.. All I can vouch for is my system’s system’s past perform perfor mance and re retu turns rns for my my acc accoun ount. t. I wil willl al also so sa say y that my system does lo look ok exactl exactly y sam sa me today as hen I started tr tradi ading ng the the pivot pi vot m method. ethod. The concept is the same and I li like ke to say sa y th that at it has been refined.   As with many aspects in life, you need to re-evaluate this system on a regular basis to fine tune tune it to th thee curr current ent situ si tuati ation. on. Let me me give you my real re al w worl orld d exampl examples es that were wer e used to refine repairs fine m my y system. concepting is the eas y, butshows you m. ust become famil familia iarr w with ith the the currency and be open ope nThe to everything everyth teasy he data shows.   When I first When firs t star started ted trading trad ing th the pivot meth method, od, aafter fter ru r unn nning ing ex exten tensive sive res resear earch ch on several sever al time frames and currency pairs, I settled on trading four currency pairs: AUDJPY, GBPUSD, GBPU SD, NZDJPY NZDJPY,, and U USDJPY SDJPY.. I decided deci ded to tra track ck ever every y trade trad e I made made to see what orks and what doesn’t. I didn’t want to rely only only on the the historic data.   I found out quickly, after about three months, that the NZDJPY pair that looked  promising th  promising throu roug gh historic data was not produ producing cing con consistent sistently ly positive positive res resu ults. Let me me ac actu tual ally ly be more more frank, it was losi l osing ng me money money for three mon month thss strai str aigh ght. t. As I notic noticed ed that it was losing money I started to reduce the amount of money risked in that currency  pair, but but I didn’t didn’t want to jum jump the the gu gun and drop a currency currency pair for a bad m mon onth th or two. Even the the stock stoc k m mar arket ket h has as good mon months ths and bad month months. s. However, Howe ver, after further  further  tracking, this currency pair had to be removed from my system.   The same concept that gradually caused the removal of the NZDJPY currency pair is hat final finally ly took out the the AUD AUDJPY JPY and GBPUSD GBPUSD pai pairs rs.. When When I fir first st started star ted tradi tra ding ng th thee AUDJPY and GBPUSD currency pairs the history told me to trade with a 10 pip Take/Profit and Stop/Loss, a 15 pip pi p T/P and S/L, S/L, and a 20 pip T/P an and d S/L. The The data

 

 being gathered athered from ong ongoing trading trading gradually reduced th the AU AUDJPY DJPY to only only th the ten pip trades trad es and a nd the GB GBPUSD PUSD to on only ly the the 20 pi pip p trades trad es.. Again how howeve ever, r, I noticed that the the system trades for the remainder of the the AUD AUDJPY JPY and and GBPU GBPUSD SD pairs pai rs was too close cl ose to 50% (actually ( actually 55% win w in rate) for me me to feel com comfortable fortable ri risking sking my money money.. That That would  be the the same same as betting betting hard earned mon money ey on on a coin flip. flip. This This was w as not not h how ow I wanted wanted to ork an investment account.   So, after removing r emoving th thre reee of my my four initial curre currency ncy pai pairs rs I was wa s down, dow n, but not out. The USDJPY currency pair was performing performing well and I was wa s happy wi with th the the results. re sults. Now, at the time, the history had indicated that I should be trading the 10 and 15 pip Take/Profit and Stop/Loss positi pos itions. ons. Due to me me wa watching tching the charts I wa wass noticing notici ng th that at the the currency curre ncy  pair was w as starting starting to h have ave longer longer run runss th that at migh mightt m make ake tth he 20 pip opt option ion p possibl ossible. e. After  After  running my own tracking on live trades, but without real money (the real money was on the 10 and 15 pip trades, but I could follow the trend) I started to feel confident enough to allow all ow som s omee re real al money to ent enter er the equation. equation. I started addin addi ng tth he 20 pi pip p trade to my my system wi with th th thee sm s mall allest est lot l ot size that m my y brok broker er allowe all owed dw with ith m my y account. account. As the results came in I ttrac rack ked th thee wi win n/loss /l oss per percentag centages. es. Th Thee current win percentage percentage for th thee 10 pip trade is 70%, for the 15 pip trade it is 72%, and for the 20 pip trade it is 73%.   As a result of my engineering background, I felt that I could delve down into the data a little li ttle fu further rther.. Since the the tradi trading ng platform logs all trades made and th their eir results, res ults, I reali rea lized zed that that I could look at th thee w win/los in/losss per percentag centages es by the the day the the trade was wa s m made. ade. I had had to keep in mind that the trading platform is on GMT and not on Eastern Time Zone, but I as able to break brea k down my my trades by th thee da day y of the the week w eek and this this allowe all owed dm mee to further  further  tai lor my system. I foun tailor found d that that trades trade s entere entered d into on Sunday Sunday and Friday Fri day h had ad a win w in  percentag  percent agee of less th than an 60%. Monday Monday was up to to 73%, Tu Tuesday was holding holding stron strong g at 69%, an a nd Thu Thursda rsday y was aatt 66%. Wednesday’s ednesday’s data w was as wh w hat rea reall lly y caugh caughtt m my y eye eye as it as at a 91% win w in rate. As stated in a previous chapter, I will wi ll cont c ontinu inuee to watch tthis his trend and may start to set my trade risk based upon the day of the week.

I will continue to monitor my system and revise the system as needed to maintain  profitable results. results. I may may add some some currency currency pairs back bac k in depen depending ding on their their new data, or I may may incre increase ase the profit of each trade trade while reducing th thee los loss. s. I am also als o going going tto o be looking lo oking at expanding my trading trad ing into additional addi tional system s ystems. s. I am looking loo king at se setting tting trades trad es  based upon upon news release r eleasess and seeing which currency currency pair pair travels th thee most most wh while ile util utilizing izing a traili trai ling ng stop. I wil willl never sstop top the the re resear search ch on this this aand nd ot oth her tra trading ding options

 

and I encourage you to never stop researching as well.

 

 

Trading Resources   http://www.babypips.com/ http://www.babypips.com/  - This site is an excellent resource for learning about Forex and discussing discussing various Forex Forex rela related ted topics wi with th others others.. I can’t can’t recomm recommend end this this si site te enough, especially for beginners to the Forex world.   http://www.forexfactory.com/ http://www.forexfactory.com/ - This site is great for news related to each currency as ell as a s a grea greatt location loca tion for additional blogs with Forex experts experts and novices. The The calendar cal endar feature iiss top notch and and you can see how large lar ge th thee im i mpact may be for the the news release rel eased. d. I plan on using th this is site ext e xtensivel ensively y ffor or my news trading tra ding system. system.   https://www.finfx.fi/?q=en – This https://www.finfx.fi/?q=en – This is i s th thee websi we bsite te for tthe he broker broker I currently use. I have have used others in the past and will mention a couple great options, but I am not here to push one broker over ove r anot a noth her.   http://www.fxstreet.com/ http://www.fxstreet.com/  - This site si te is anot anoth her llocation ocation for n news ews and analysis analysis as well wel l as many other aspects of Forex that can be utilized to your benefit.   http://www.dailyfx.com/  - As though you don’t have enough news and analysis sites, http://www.dailyfx.com/ this this site is another another good resource res ource of cu c urr rrent ent Forex informat information. ion.  

 

The Forex Trading Manual: The Rules-Based Approach to Making Money Trading Currencies by Javier H. Paz. – This book is a great introduction into the world of  Forex. For ex. In it Mr. Paz disc discusses usses many of th thee mis mistakes takes I m made ade in i n my my ffir irst st four yea years rs of  o f  Forex For ex tradi trading ng.. If you have the ability abil ity to lear le arn n from another another’s ’s m mis istakes, takes, I suggest suggest you you re read ad this book. boo k. If y you ou are llike ike me me and stubborn, you can ca n make your your ow own n mis istakes takes and ri rite te about them them later!