Rapid Results Method

Rapid Results Method is a Forex educational course by Russ Horn, who is regarded as a very knowledgeable, successful and respected Forex trader and educator. Russ has also been providing consultation to hedge funds, financial institutions and high net worth individuals trading in the currency markets.

The main selling point of this course is Russ' new trading system that is able to make money faster than any other systems by staying ahead of market changes, giving you more accurate signals and precise entry points. As the name of the course suggests, the system performs rapidly by getting you into potentially profitable trades in not weeks, or even days, but almost immediately when you begin to trade with it. 

Rapid Results Method is a trend following trading system that offers several different entries during a trend. This means that if a trading opportunity is missed, there are others that can be taken. The system can be applied on any time frames, from 1 Minute to Monthly.

The course consists of 6 DVDs and a printed trading Manual as follows:

• DVD 1: Introduction to Forex - This is a comprehensive beginner course for new traders or even intermediate traders who want to refresh their knowledge and understanding of the Forex market. Topics covered include the most profitable currency pairs, the technical terms used in Forex trading, pips and spreads, brokers, lot size, margin and leverage, the major trading sessions and time frames, support and resistance, chart patterns, candlestick formations, peaks, valleys and trends, and the types of market orders. 
• DVD 2: The MetaTrader 4 Platform - The MetaTrader 4 (MT4) is one of the most popular trading platform among Forex traders, and Russ uses this platform for performing his trades and also throughout this entire course. This DVD will explain all you need to know to operate the MT4 platform easily and efficiently. Topics covered include the installation process and opening of an account, chart properties and tools, adding indicators and saving templates, drawing chart lines, placing orders, saving profiles, using the navigator panel and adding texts and labels.
• DVD 3: Components of The System - This DVD explains the rationale behind the Rapid Results Method trading system and the indicators that supplement it. You will learn about the different phases of the market as defined by different moving averages, the rules for entering into a trade, setting stop loss and take profit levels, and the use Russ' Dynamic Positioning Indicator (provided as part of the course). 
• DVD 4: Trading The System - Following on from DVD 3, this DVD explains in detail how the Rapid Results Method is actually being applied and how to have the charts set up. You will learn the various trading techniques under the system, known as Ribbon Trade, Ghost Trade and Shark Trade, each with detailed examples and extensive explanation. 
• DVD 5: Live Trades - Having learned the system in DVD 3 and 4, Russ now provides a recording of his real live trades, demonstrating how the system is being used to generate profits in live markets. A total of 25 live trades are being shown here. 
• DVD 6: Webinars - In order to enhance the learning of the Rapid Results Method trading system, Russ has provided 3 webinars in this DVD. The first 2 webinars will be dealing with the charts setup and an explanation of the rules of the system with a Q&A session. And the third webinar deals with money and trade management which is equally, if not more important, than the trading system itself. 
• Trading Manual and Cheat Sheets - This manual is to be used in conjunction with the DVDs and provides clear and detailed instructions on trading the system. There are also 6 cheat sheets to be used as a quick visual check on whether to enter into a trade, based on the rules of the system. 

In order to supplement the Rapid Results Method trading system, Russ has included an indicator known as Signal Automation Recognition Alert, which will scan the charts for high probability trading opportunities and alerts the trader when a setup occurs. 

In addition to the physical items above, members will also be getting access to the Think Tank, which is a private members area. Here, you can have one-on-one interaction with Russ as well as other members to discuss about the trading system. You will also have access to the webinars conducted and have your questions and doubts answered. 

In addition to all the above, the course includes 5 bonus systems as follows:

1. The One Minute Scalper - A very simple yet very profitable scalping system for trading the lowest timeframe available on the MetaTrader4 platform - M1 (1 minute) chart using only 3 indicators.
2. The Golden Strategy - A strategy that has at least a 2:1 reward to risk ratio suitable for any time frame. 
3. The Secret Method - A very profitable and accurate strategy used by hedge fund traders on the major currency pairs with the lowest spread. 
4. Sea Trading System - An almost mechanical and conservative trading system, but highly profitable. 
5. The Super System - This system is suitable for every kind of trader: scalpers, swing traders, and position traders and can be used on any currency pairs, not just the major pairs. 

Rapid Results Method which is limited to only 750 copies, is priced at $999 and includes a 60-Day Money Back Guarantee. 

Note that this is a physical product. Therefore, except for the access to the private members area, the DVDs and Manual will be delivered to your doorstep. 

For more information about Rapid Results Method and videos of Russ Horn's live trades, visit the official page here.

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Introducing Pips Blaster Pro

Pips Blaster Pro is a Forex signal indicator that works on the MetaTrader 4 platform, providing buy and sell signals based on 10 unique trading algorithms. An entry signal will only be generated when at least 7 of the algorithms are met. This ensures that the trade has the highest probability of being profitable. In addition, the indicator also indicates the strength of the trend, which is extremely critical for managing a trade, such as adjusting stop losses and take profit levels. 

The 10 trading algorithms work together like a clock. Each one of them is crucial to get the best possible prediction of the next price movement. This strategy catches big trend movements and tracks them until trend reversal or when the market starts to move in a range.

The indicator provides trading signals by displaying trend lines along with the price, which act as entry and exit signals.  Depending on the strength of the trend, the indicator will show up to 3 lines going along the price, with more lines indicating a stronger trend.  This allows us to catch the beginning of the trend as early as possible and exit as soon as there is a high probability of trend reversal. 

Uptrend is interpreted by a blue line going along with the price and downtrend is interpreted by a red line. Some parts of the trends have up to 3 lines going along with them. To put it simply, the more lines there are, the stronger the trend is.

An example of a few trades executed on the EUR/USD H1 chart is as follows:

A pop up window with sound alert showing the trade entry, time frame and currency pair will appear whenever a trade signal is generated on all opened charts. This will be useful particularly for traders who do not watch their charts all the time.

The Pips Blaster Pro package includes the following:

• Pips Blaster Pro MT4 indicator
• Pips Blaster Pro Manual
• Free Lifetime Updates
• Free Email Coaching
• Free Bonus Forex Breakout Strategy

Pips Blaster Pro is priced at $97 and comes with a 30-Day Money Back Guarantee. Therefore, traders can try it out without risks.

Find out more about Pips Blaster Pro

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Monitoring Market Trend With COT Metrics

In case you are not familiar with it, let's have a quick overview of the widely proclaimed and yet widely misunderstood Commitments of Traders (COT) report. The primary agency with regulatory supervision of commodity futures and options markets in the United States is the Commodity Futures Trading Commission (CFTC). The CFTC's stated mandate is to ''protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets".

In line with this mandate, the CFTC collects and circulates data on Open Interest (number of contracts held, long and short) for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. In practical terms, this means almost any liquid financial market publicly traded in the United States, including currencies. The reason for doing so is to nurture a level playing field, so that the price effects that could result from large swings in market participants' buying and selling activities can be known in a reasonably timely and open manner.

Now, the question is, why should we care about the futures markets since we are trading the cash market? This is because the futures market for currencies leads the cash market, and both markets actually trend in a parallel fashion. This means that, if we were to overlay the price plot for the EUR/USD Forex pair on top of the price plot for Euro futures, they would look pretty much the same. We can therefore assume that the currency futures price is a proxy for the Forex market. In simple terms, changes in buying and selling activity in the futures world would eventually affect Forex price movement.

The primary groups of traders traditionally covered by the COT report include the following:

• Commercials - Large corporate entities that use futures markets to hedge against business risks pertaining to the commodity which they manufacture or distribute (e.g. a grain pool which sells wheat on the open market). Commercial traders are typically counter-trend traders, not speculators.
• Large Traders - Financial market entities who speculate on the price movements of the underlying commodity without either providing or taking physical delivery of it (e.g. a hedge fund which trades and invests in various assets on behalf of its clients). Large Traders are typically trendfollowers.
• Small Traders - Primarily private traders holding positions in futures or options that are below the reporting threshold specified by the CFTC. Since Small Traders do not report to the CFTC, their positions are inferred as the residual of Commercials' and Large Traders' open interest in each market from the known total.

The COT report is published every Friday by the CFTC, based on reporting data submitted the Tuesday prior. COT data can show us the Net Long or Net Short positions taken by the above three categories of market participant, and highlight significant changes from one week to the next which may warn us in advance of accumulation/distribution campaigns that could affect price. The CFTC does not publish corresponding price data, but this critically important data can be obtained from other sources.

There are many different ways in which COT data can be interpreted. Some analysts look for extremes within a range of 6, 12, 24 or 36-month look-back periods by calculating a simple Stochastics index on the respective positions, often with the corresponding price series plotted as an overlay. This will tend to reveal when one category of trader hits a multi-period extreme of buying or selling activity (particularly at an apparent price high or low), which is thought to act as a warning of a potential price reversal.

While this method maybe perfectly sensible, I believe the best and simplest way to use COT data is to confirm a high level trend, and most importantly, changes in the trend. To confirm a high level trend, I do not look at the Commercial Traders' position data, but rather at the Large Traders'. Again, this group has a primary focus on trend following. As independent traders, isn't that exactly what we are trying to do as well?

In addition to the fact that Commercial Traders are counter-trend traders, studies have shown that Commercial Traders tend not to make money from futures trading, but rather to lose! Again, their primary interest is to hedge against risk in the markets in which they operate - not to speculate on price movement. Losses from futures market trading are therefore merely a cost of doing business for Commercials - just like buying insurance. In other words, go long when the Commercials are going long (or short when they are going short) and most of the time we will lose.

We want to trade with the trend, not against it. We want to pay attention to the group that is going to help with our trading, and it's usually not the Commercials! Therefore, my primary use of COT is simply to look at how Large Traders are positioned in relation to price action itself. I do not over burdened myself with look-back periods, Stochastics formula, or anything like these. Every Friday I obtain the latest COT positions data and corresponding price series, enter them into an Excel spreadsheet which then calculates the Net Position (i.e. long contracts minus short contracts) and then chart the respective series side-by-side.

If I see evidence of a high-level trend on price, and that Large Traders are on the same side of the market, I have reason to believe the trend is valid. Alternatively, if my price chart analysis shows that a high level reversal is setting up and that Large Traders have flipped from Net Short to Net Long (on a bottom), or Net Long to Net Short (on a top) consistent with the anticipated price reversal, then I have further reason to believe the reversal is actually happening. COT is therefore a high level trend confirmation tool, not usually a timing tool.

To accomplish the above objectives, I plot weekly Tuesday closing price on one chart panel, and concurrent net positions of Commercial versus Large Traders on the adjacent panel (bearing in mind that because the Commercials are always on the opposite side of the market from both Large and Small Speculators, the two plots will be perfectly symmetrical) as shown in the chart below.

In conjunction with standard trendline and Swing Point analysis, I then look for the following types of readings on the COT display:

Reading	Description
Bullish	Large Trader net positions line is above zero and rising: Net Long and following the uptrend.
Bullish Crossover	Large Trader net positions line crosses the central axis from below: changing bias from Net Short to Net Long, which may confirm a price bottom.
Positive Divergence	Large Trader net positions line makes a higher low in relation to a lower low on price: a price bottom (they are not following through to the downside).
Bearish	Large Trader net positions line is below zero and falling: Net Short and following the downtrend.
Bearish Crossover	Large Trader net positions line crosses the central axis from above: changing bias from Net Long to Net Short, which may confirm a price top.
Negative Divergence	Large Trader net positions line makes a lower high in relation to a higher high on price: a price top, (they are not following through to the upside).

It should be noted however that not all readings mean what they appear to mean, and not all actions of Large Traders can be assumed to be correct at all times. Thus, when Large Traders add to a net position but price thereafter does not penetrate an important level in line with trend, we can assume the undertaking was a failure, which could verify a technical analysis calling for a reversal of some kind. Failure signals can therefore be as useful as confirmation signals.

To some seasoned traders, the approach described above may seem to be too simple and hence questionable. However, the proof, as they say, is in the pudding. The sample COT chart for the US Dollar Index covering the period from January 2007 through December 2009 as shown above plots price versus Commercial and Large Trader net positions. I have labeled all crossovers, readings which are expected to confirm tops or bottoms based on price chart analysis undertaken separately. The results of these crossovers in relation to subsequent price action are summarized below:

• Reversal #1: Bearish crossover on Feb. 20th, 2007. Price on the USDX was 8410. Large Traders remained Net Short from that point through to Dec. 18th, 2007, when price had fallen to 7743. A short on the USDX using these two crossover signals to confirm the entry and subsequent cover long was worth (8410 -7743) = +667 points.
• Reversal #2: Bullish crossover on Dec. 18th, 2007. Price on the USDX was 7743. Large Traders went Net Short on an abortive move that ended up quickly resolving to the prior downtrend (an example of a failure), and thus their position reversed again on Dec. 31st, 2007, when price had actually fallen further, to 7670. The maximum loss on this failure signal was limited to (7670 - 7743) = -73 points.
• Reversal #3: Bearish crossover on Dec. 31st, 2007. Price on the USDX was 7670. Large Traders went Net Short again, and remained on that side of the market through to May 13th, 2008, when price had fallen to 7350. A short on the two crossover signals was worth up to (7670 - 7350) = +320 points.
• Reversal #4: Bullish crossover on May 13th, 2008. Price on the USDX was 7350. Large Traders flipped Net Long, and remained on that side of the market through both an interim top, which came Mar. 3rd, 2009 at a price of 8952, and beyond to the next crossover date of May 19th, 2009, when price had come down to 8215. To the highest high in March, the long was worth up to (8952 -7350) = +1602 points. To the May crossover date, the position was worth (8215 - 7350) = +865 points.
• Reversal #5: Bearish crossover on May 19th, 2009. Price on the USDX was 8215. Large Traders flipped short, and remained on that side of the market through to Nov. 24th, 2009, when price had come down to 7517. Using the crossover signals again to confirm an entry short and cover long yielded an opportunity worth (8215 -7517) = +698 points.

The above examples show that from February, 2007 through November, 2009, a straightforward analysis of Large Trader net position reversals on the US Dollar Index confirmed tradable opportunity in the range of 3,000 points. Note that this is not to suggest that you should approach COT data looking for extremely simplistic, 'black-box' trading signals; but rather, that you use the information to confirm other forms of analysis.

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Forex Minute Trader

Forex Minute Trader (FMT) is a Forex scalper robot (Expert Advisor) that is developed by Adam Liddiard of New Millennium Investments Inc. and works on the MetaTrader 4 platform. The robot has been programmed to work on 5 currency pairs, i.e. EUR/JPY, EUR/USD, GBP/USD, USD/CHF and USD/JPY.

The following are the features of Forex Minute Trader:

• 100% hands free, set and forget
• FIFO compliant
• No GMT or time zone trading restrictions
• No news release contingencies required
• No hedging
• No minimum or maximum leverage requirements
• Extremely low maximum relative drawdown versus monthly returns ratio
• Positive risk to reward ratio on each trade by using a small stop-loss
• A daily trader that trades frequently
• Trades close within 1- 60 minutes, never held open over weekend
• All orders are pending and hard stopped, no market execution orders
• Trailing stop-loss to lock in profits
• No martingale, grid, or cost averaging

The full package of Forex Minute Trader includes:

1. Forex Minute Trader EA
2. Forex Minute Trader Manual
3. 1 Year Of Free Updates

Forex Minute Trader is priced at $189 (one-time payment) and is only applicable on four of NMI's recommended brokers, i.e. Axi Trader, LMAX, IC Markets and Traders Way. These brokers have been tested to deliver good results with the system and therefore users must use one of these brokers in order to utilise the system.

All purchases include a 60-Day Money Back Guarantee. Therefore, interested traders can try it out without any risks.

For more information about Forex Minute Trader and its backtesting results, visit its official product page.

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PipRipper Forex System

The PipRipper Forex System is an indicator that works on the MetaTrader 4 platform providing exact buy and sell signals on the charts. Trading signals will be generated by way of arrows on the open of a bar so that each trade will be entered as soon as the bar is opened.

In addition, the arrows do not disappear or repaint when the chart is refreshed. The indicator works on any currency pairs and on any timeframes. The indicator also includes an adjustable sound and popup alerts, minimizing the need for traders to continually monitor the charts.

The input settings of the indicator can be adjusted to achieve the best results on certain currency pairs. An overview of backtesting results of the indicator over a 5-year period are as follows:

• AUDUSD (Aust Dollar / US Dollar) 89.86% Winning Trades
• CHFJPY (Swiss Franc / Japanese Yen) 90.74% Winning Trades
• EURCHF (Euro / Swiss Franc) 88.22% Winning Trades
• EURUSD (Euro / US Dollar) 90.21% Winning Trades
• GBPNZD (British Pound / New Zealand $) 91.07% Winning Trades
• USDDKK (US Dollar / Danish Krone) 89.90% Winning Trades
• USDJPY (US Dollar / Japanese Yen) 81.85% Winning Trades

For traders who prefer to automate their trades, there is also a Robot that executes this system automatically. 

A 45-page manual is included detailing the different input settings that can be made to the indicator to maximize the trading results. 

The PipRipper Forex System is priced at $67 (for the indicator only) and $97 (for both indicator and Robot), and includes a 60-Day Money Back Guarantee. Therefore, traders can try it out without risks. 

Find out more about PipRipper Forex System now!

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Trending Markets and Retracements

First and foremost, if the market you like to trade is not always trending on a higher timeframe like the Daily chart, don't worry. Due to the fractal nature of liquid financial markets, the characteristics of trending price action tend to look the same on all timeframes. Therefore, we might be in a corrective or consolidation sequence higher up, but when a high Reward/Risk setup is not available, one of those seemingly insignificant legs of the correction as seen on the H4 chart might actually be a sound short-lived 'trend', which is good enough for a scalping trade, when viewed on the M5 or M1 charts.


Identifying A Trending Market
So what do we mean by a trend? It's an extremely simple and important point, but one often forgotten: a down trending market creates consecutively lower lows and lower highs over time. Conversely, an up trending market creates consecutively higher highs and higher lows over time. So what we want to look for, before we even bother with indicators like Moving Averages, is Swing Points in succession that satisfy this relationship, as illustrated below.

Another way to identify trending markets without any technical indicators is to look for those legs in price action that have an almost 'linear' look to them. That is, those that move decisively with little interruption, and covering a relatively large amount of ground in a short period of time. When a sequence of lower lows and highs, or higher highs and lows, are strung together, it is likely that the market is trending.

Candlesticks can also be used to enhance the identification of trending markets. For instance, there are more down closes in a downtrend (red), and more up closes in an uptrend (green), as shown in the chart below.

Identifying Retracements
The term retracement (or sometimes referred to as a correction or pullback) generally refers to any type of counter-trend price action that interrupts the broader flow of the market for a defined period of time without reversing it on the degree of trend in which it is encountered. Put simply, we are looking for instances of where the market is moving in the 'wrong direction' relative to a trend, recovering a portion of the preceding impulsive movement, but without exceeding its startiog point.

The simple and practical way to explain why the market behaves this way is that at critical support and resistance levels, some portion of the market is taking profit. For example, as numerous traders cover shorts in a downtrend (effectively going long) at or near a confluence of support targets, selling pressure will disappear for a period of time before the market consolidation process is complete allowing for a return to trend. The traders who were more bearish than those covering their short positions sell into the buying, and away we go again.

Unlike the trend of the market, retracements have a very different appearance. In addition to recovering only a portion of the preceding impulsive movement, they often feature a lot of overlap in terms of the smaller waves comprising them, and often (but not always) unfold in sequences of threes. The important point is that without having a method of identifying these patterns, a lot of traders will be in despair at all the supposedly random 'noise' and compressed volatility they're seeing, hoping a trending market will return, but having no idea when.

The following diagram illustrates a typical contrast between these two varieties of price action, which we can call impulsive (the often 'linear' looking sequences aligned with trend) and corrective (the three-wave overlapping sequences which temporarily interrupt the trend). The downtrend is reflected in the relatively smooth and brisk movement of the down leg to the left. By contrast, we can see the strained, overlapping progress of price action once a temporary bottom is made (at a price level that represents one of those 'confluences of support' mentioned above).

In this example, we have plotted a Fibonacci retracement level which shows that at the point where the three larger subdivisions of the correction are finished (at the dashed horizontal line), the whole sequence has retraced - to a precise degree of accuracy - the Golden Mean ratio of 61.8%, a fairly standard proportion for Fibonacci retracements.

Putting It Together
So how do these two concepts - trending markets and retracements - combine? To put it simply, it is at the expected point of termination of a retracement where we're looking to jump into the market in the direction of a trend at higher degree. So a retracement slanted in the sideways-to-up direction against a valid downtrend is the 'rally' we're looking to sell. Conversely, a retracement slanted in the sideways-to-down direction against a valid uptrend is the 'dip' we're looking to buy.

We don't have to worry that on the hourly chart, for example, the retracement doesn't have the same look as the illustration above - often, pullbacks are briefer and simpler in construction, particularly in a fast-moving market. The key is that we're keeping the trend in mind, looking to trade only in that direction, and focusing our attention on finding a confluence of support or resistance that strongly suggests the end-point of the retracement.

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The Core Principle of Successful Trading

Trading methods come and go. Some of them are software-based, programmed from purportedly top-secret algorithms that claim to make profits with little or no involvement from the trader whatsoever (simply plug 'n play and you're a millionaire!). Some would avoid the automation route in favor of chart patterns so extremely complex that by the time you've finally recognized them, the trading opportunity has come and gone.

There is one principle however, that is not only much more simple and easier to understand and to see on your charts, but which also stands the test of time as the highest probability route to success in trading. That principle - which you have surely heard before - is as follows:

Buy the Dips in an Uptrend, Sell the Rallies in a Downtrend

Simple, isn't it? And yet so many traders, even after hearing the advice, fail to apply it in their trading. Instead, they spend much of their time trying to find the latest indicator-driven strategy, or spending thousands of dollars on those fancy charting packages (only to learn later that they didn't measure up to the sales hype). Others would give in to the temptation of chasing a  non-trending market, for fear that they would end their trading session feeling they failed simply for not taking a trade.

If you want to make your trading endeavour a success and also a whole lot easier, then make it your mission to buy the dips in an uptrend, and sell the rallies in a downtrend. OK, so as simple as it sounds, what exactly do we mean with this principle and why is this so crucial?

Firstly, note that we are trading with the trend, not against it. We buy in an uptrend and we sell in a downtrend. However, it does depend on the degree of the trend: the higher up you go (for example, to a Weekly chart) the longer the duration and the more distance covered in the significant counter-trend moves, which may in fact represent decent trading opportunity. But as a general rule of thumb - especially for day trading styles - buying the dips and selling the rallies means aligning ourselves with the market flow, the direction it is heading on the timeframe we're looking at, which is the path of least resistance.

If we do the opposite, for example, selling the rallies in an uptrend, we put ourselves in the direction of a corrective action, which can be a really bumpy ride. Corrective action tends to be unnatural, prone to whipsaws and market 'noise'. Its price targets are often much more difficult to hit, and less reliable. A trending market, by contrast, tends to move more smoothly and effortlessly towards its objective, more linear than overlapping in appearance. Putting ourselves on the right side of the trend allows us to take advantage of those really big moves that can be very profitable. 

As shown in the chart below (showing green arrows for buys, red arrows for sells), the other advantage of buying the dips and selling the rallies, is that it minimizes risk. In a trending market, a correction should only go so far. Once it's exhausted, the return to trend can be relatively quick - in other words, the market moves off the counter trend extreme with little hesitation. If we jump in at that point, then there is a much lower chance that the market will tum against us later, triggering a stop. This in turn allows precise entry points with limited risk to be set. 

In order to buy the dips and sell the rallies, we need an analytical approach that effectively comprises two  components. Firstly, we need a reliable method of identifying a market that is trending. It is going to be difficult to sell the rallies in a downtrend if we don't even know whether we are in a downtrend. Secondly, we need a reliable method of identifying the retracements (the dips in an uptrend or rallies in a downtrend): where they start, where they are likely to end, and some sense of certainty that they are merely a pullback. 

There is no point in selling a rally in a downtrend if that rally is expected to confirm a reversal. Therefore, we need to understand how to detect these important components of price action relatively unaided. This means that we need to start developing a general idea for what trending markets and retracements tend to look like on the chart with recourse only to price action itself.

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Creating Your Forex Trading Plan

Forex trading is a business and every trader should approach his or her business professionally. Contrary to what the Forex 'gurus' and 'marketers' are telling you, Forex trading isn't a video game in which you aim and shoot at a target on the screen for fun and hope to see a gold coin appear. Instead, we're effectively taking part in a highly competitive domain populated by large, powerful players like banks and hedge funds. Therefore,  a planned approach that is detailed, realistic, and well formulated will be needed if you really want to be successful in this business.

We cannot hope to compete with the professionals if we don't trade like them. The basis of a planned approach is to have a set of well defined trading objectives in terms of your personal trading situation and target profit on a monthly and/or annual basis, the opportunity profile (for each and every currency pair traded), risk management, and account equity. If you don't take the time to learn and understand how these variables can affect your results, then your chances of success will be much lower.

Your Personal Trading Situation
The first step in setting a useful target for tradiug profit is to carefully consider the variables which characterize one's personal trading situation, including the number of currency pairs traded and the volatility of each pair (measured by Average Daily Range (ADR)), personal trading style, times of day available to trade (in relation to important trading session opens and closes), and the total time available each week for trading.

As an example, here is my personal trading profile based on the above criteria:

• Number of pairs traded: 1 (GBP/JPY)
• Volatility (ADR): 250 pips (approximate)
• Personal trading style: Primarily swing trading (100 pip targets)
• Times of day available for trading: 6 hours, 8:30pm - 2:30am PT
• Total time available each week to trade: 30 hours (6 hrs/day, 5 days/week)

Based on the above profile, my starting point is a belief that by focusing exclusively on the GBP/JPY pair (which has a relatively high ADR) during the late Asian/early London session times, it should be possible to consistently earn 500 pips per month. In other words, to earn 500 pips per month is equivalent to capturing the entire ADR for GBP/JPY just twice per month.

In contrast, a target of 500 pips per month might be an unrealistic target for someone who has only, say, 2-4 trading hours per day, twice per week, focusing on scalping on a pair such as EUR/CHF, which has a lower ADR. Therefore, it is necessary for each trader to realistically consider his or her own personal trading situation in order to derive a challenging but achievable target for monthly trading profit.

Opportunity Assessment
An effective method of conducting an opportunity assessment is to look back over an intraday chart for the past 1-6 months. On the chart, highlight the times of day and days of the week when you are generally available to trade. In relation to your trading style, how many setups were apparent on that chart, and how many pips potential did they offer relative to the realistic take-profit levels where you would have exited the trade?

Performing the above assessment with respect to my chosen currency specialization over an annual cycle, I believe the following activity profile (winning trades only) represents an achievable performance target for gross profit:

Risk Management
Obviously, winning trades are only one part of the profit equation. The other part is unprofitable trades, which have to be accounted for in deriving a realistic bottom-line objective. Unless you really and honestly believe there is such thing as a 'holy grail' trading system that generates almost no losses over a long period of time, it is critical that your trading plan specifically allow for losses.

Trading loss can be divided into two components: the average size of stop loss employed, and the frequency of trades being stopped out. If you maintain a record of your trading activity, whether in a demo or live account, it can be useful to simply plug in your actual figures for average stop loss and Win/Loss and assume those performance metrics can be projected into the future.

On the other hand, if you don't know your long-term performance results, it may be safer and more prudent to allow for more conservative targets, at least in terms of Win/Loss. My trading style tends to stress a relatively low, precisely defined stop-loss risk which is employed on each and every trade. This is possible because with the time I have available to trade, I can afford to wait patiently for a well-timed, low-level entry point.

If your trading situation does not allow for this, you may need to consider wider stop losses, which will in turn have some effect on Reward/Risk and position sizing. While my Win/Loss ratio over time tends to exceed 65%, I like to allow for a lower benchmark:, as a way of building in a margin of safety in my trading objectives. Therefore, assuming a more conservative win rate of just 50%, and an average stop loss of 30 pips per trade, the annual activity profile shown in the table above can be translated into the following targets for net trading profit:

So, based on defined targets encompassing my Personal Trading Situation, Opportunity Assessment, and Risk Management, I have a plan which concludes that an annual net trading profit of about 6,800 pips is possible by targeting a 50% Win/Loss ratio, 3: 1 Reward/Risk ratio (100 pips profit, 30 pips loss) and 6-7 trade attempts per month over 11 months of the year. That equates to an average monthly target of 6,840/11 = 622 pips.

With reference to my initial assumption of 500 pips per month, I see that this is an obviously achievable target. To build an even more conservative margin for error into my planning, I defer to the original 500 pip target, which is about 20% lower than the projected activity levels.

Account Equity
Depending on Account Equity,  a lot of dollar profit can be generated from 500 pips per month. The table below  translates 500 pips per month operating profit into a financial profit in USD (assuming a US dollar trading account and 500 pips realized on a USD quote pair).

As indicated above, with a 30-pip stop and risking 1.5% of account equity on any single trade, 500 pips equates to $2,500 profit for every 10K increment in Equity. This results in an actual leverage utilization of 5: 1, which is apparently much lower than the maximum leverage traditionally offered by many brokers.

Note that the money management benchmarks in the table above are very general that they do not reflect partial lot sizing for levels of account equity between the categories quoted above. In other words, profit-per-trade potential can be further optimized by calculating position size (number of mini lots per order) each and every time a trade is about to be entered, relative to the current actual account size using the 30-pip stop and 1.5% account risk formula illustrated above.

Based on the above, we can see how Account Equity can affect our financial profit, increasing our operating profit (in pips) through leverage. Thus, the question every trader inevitably faces when opening a new account - "how much money should I put in?" - needs to reflect consideration for the maximum amount that could be lost entirely without disrupting household finances, while at the same time addressing the question "how much do I want to make?"

If you want to earn $10,000 per month on 500 pips, for example, the table above indicates that your trading account needs to be funded to the tune of $40,000. If that is not possible, then the target for financial profit (in dollars) will need to be reduced, or the target for operating profit (in pips) will need to be increased (or some combination thereof).

For some traders, the concept of not to target big profits on a small trading account can be a real letdown. However, trading with a 'slow and steady wins the race' attitude may be one of the most important safeguards to prevent you from joining the 95% of traders who blow their entire trading account before they have mastered the markets. You would certainly be much better off building up your trading confidence by building up your account slowly and consistently over time than to have to repeatedly, answering margin call after margin call from your broker not knowing when you might win it all back.

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Trend Following System With Formations

Trend Following System With Formations (TFSWF) is a Forex trading manual written by Dr. Dariusz Swierk, PhD of Forex Institute, providing a comprehensive explanation of the 3SMA (3 simple moving averages) trading system.

With this system, the moving averages are used to filter and identify a strong market trend, taking into account the existence of a price action at the trend lines. Then a confluence of support or resistance levels (such as Fibonacci levels, round numbers, previous highs or lows, etc.) are identified. A lower time frame chart is then used to determine the counter trend line and price is then being waited to break this line and then makes a pull back, from which an entry is made. This entire strategy is being referred to as Breakout, Pullback & Continuation (BPC).

The system also utilises chart formations like the flags, triangles and wedges that are considered to be good signals about the turning points in the market. There are also sections covering capital management, trade management and risk reward ratios, which are essential for beginners and intermediate traders alike.

A highlight of the contents in the manual is as follows:

• Description of the most profitable and proven formations which have been used by institutional traders
  
• Description of the real operations of the market, levels of support and resistance, round numbers, trend lines, and countertrends
  
• How to use the confluence – a tool used by the most experienced traders for predicting market turning points effectively
  
• Determining which entry is “the safest” and why
  
• Knowing when you shouldn’t enter the market, even though there is a clear signal
  
• Ways to choose exit points from the market for the most profitable formations: flags
  
• System principles to make trading easier and to not forget some significant elements of the system
  
• Carefully described and illustrated with dozens of screenshots of where markets often “turn back”, where the trend ends and starts new movement

The complete TFSWF package includes:

1. The Manual: "TFSWF - Trend Following System With Formations Version 2.0". It contains over 380 illustrations and over 270 pages in PDF format.
   
2. A Zip file with indicators and tables for the system (These indicators work in Metatrader MT4)
   
3. The system’s summary on one page (actual cheat sheet) - to print and use each day before entering the market

There are also three bonus items as follows:

1. BONUS #1: A supporting manual with 57 examples of Breakout, Pullback & Continuation (BPC), Stop loss and Entry levels illustrations with 137 illustrative charts
   
2. BONUS #2: A 54-page interview with Dr. Dariusz Swierk on the conclusions from the research on the best traders, the causes of successes, failures, problems in the path of development and how to solve them
   
3. BONUS #3: A Special Report: Illusion that Takes Away Your Money" by Dr. Dariusz Swierk that discusses the psychological aspects of Forex trading and how the right mentality can improve your trading results dramatically

Trend Following System With Formations is priced at $97 and includes an unconditional 60-Day Money Back Guarantee. Therefore, traders can try it out without any risks.

Find out more about Trend Following System With Formations now!

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DeMark Trend Indicator

The DeMark Trend Indicator is a very simple yet powerful indicator that works on the MetaTrader4 (MT4) platform, plotting two trend lines (an upper trend line and a lower trend line) that are used to identify a trading opportunity. When price breaks out on the upper trend line, a BUY signal is generated. Conversely, when price breaks out on the lower trend line, a SELL signal is generated. The indicator also plots the projected profit levels automatically. There is also a sound alert when price breaks the trend lines, so that you do not have to monitor the charts all the time.

This indicator is most profitable when used on higher timeframes, i.e. H1 and above, since these timeframes have much less market 'noise'.

The following currency pairs are recommended when using this indicator:

• EUR/USD
  
• GBP/USD
  
• USD/JPY
  
• USD/CHF
  
• EUR/JPY
  
• GBP/CHF

I have included an explanation of the principles behind this indicator for those who are interested.

Download DeMark Trend Indicator

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Understanding The Forex Market

An important aspect in trading the Forex market is to understand what drives the market and equally critical, what doesn't. Regardless of whether they can be proven practically or theoretically, the following is a summary of my core beliefs about how the market moves and why so:

• The market may react to news and fundamentals, but that reaction is often short-lived and irrational (e.g. the news is positive but the market goes down, only to go up again later) and therefore do not usually indicate high quality swing or position trades. In other words, any quality trade that does occur in connection with a specific news event is likely to be predicted by a technical setup. This simply means that you need to pay attention to chart technicals in order to trade fundamentals.
  
• The market is also driven by crowd psychology - which contains news and fundamentals - and is revealed by way of fractals. A fractal is simply a chart pattern that may be found at all degrees of trend possessing the same basic form and function regardless of where it occurs. The only difference between a fractal found on the Weekly chart and one found on the 30m chart is the distance the market is likely to travel more on higher timeframes, less on lower.
  
• As a result of the above, my belief is that it is possible to trade profitably based primarily on technical analysis, supported only by a specifically 'contrarian' reading of fundamentals. For instance, being aware of how the Carry Trade was likely to be impacted by the Sub-Prime mortgage crisis of 2007 helped position informed traders to the short side of that market.

The reason these core beliefs are mentioned is not to say whether they are right or wrong, but rather to point out that as traders, we all hold beliefs about the market. These beliefs directly affect how we trade and why, so regardless of whether you agree with those listed above, the point is you should take the time to clearly document what your personal beliefs about the market are.

Perhaps you have reason to believe, for example, that news does drive the market. How is that belief going to affect your trading plan? How are you going to trade the news, what's your game plan? When you have the answers to those questions, write them down.

Also, it is important to note that certain markets tend to maintain a strong positive (or negative) correlation over time. To put it simply, we can characterize this as a dollar-versus-everything-else scenario. As more speculators enter the market (from the former Carry Trade, to oil, stocks and gold), the US dollar has tended to weaken. Conversely, as liquidity declines, the US Dollar has tended to strengthen.

According to some commentators, this reflects the fact that the global debt market is denominated primarily in US dollars, and as these debts are retired in a deflationary trend, demand for dollars accelerates; moreover, at a faster pace than would allow for the kind of price inflation many people expect when dollars are being printed and liquidity is being expanded.

The point here is that knowing how the dollar is faring in relation to stocks and other markets can give you a much clearer perspective as to which way a Forex major pair is likely to trend over time. In addition, it is important to be aware of certain long standing rule-of-thumb relationships, such as the fact that EUR/USD and the USDX (US Dollar index) are almost perfectly inverse of one another, due to the high weighting of the Euro within the basket of currencies comprising the USDX.

Specific correlation values among individual currency pairs are available through many online services or brokers such as Oanda. If you know with a high level of probability, for example, that EUR/USD is in a prolonged downtrend, and that EUR/USD has an extremely strong inverse correlation with USD/CHF (in excess of -0.95 over time), then the probability of success with a position trade to the long side on USD/CHF will tend to increase, regardless of the intraday picture for that pair.

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How Do You Approach The Market?

The first step in trading the Forex market is to determine how you are going to approach the market itself, i.e. defining your style of trading. Personally, I consider myself as an adaptive trader, which means I adapt my trading style (defined primarily by time in the trade and size of profit objective) to suit the structural implications of chart analysis.

For instance, if I spot an upcoming corrective sequence that is expected to move 100 pips, then I will approach the opportunity as a day trader seeking a more immediate exit for fewer pips. Alternatively, if a Weekly-degree turn appears to be setting up for an expected rally of 1,000 pips, then I will approach the setup as a position trader planning to carry the trade longer with a more aggressive limit exit.

No matter what the trading scenarios might be, it is the implications of a structural analysis of price action that determines the decision as to what type of trading style to apply. The reason why I prefer an adaptive trading style is because it is much more flexible than a single-minded approach focusing only on one style of trading. It is certainly not profit-maximizing to scalp for 20 pips in a fast-moving market offering 500 pips potential; and conversely, there's no point asserting on a very large trade when the market is not breaking out on a higher degree of trend.

Regardless of these considerations, I always require a Reward/Risk ratio of at least 3:1 to
consider entering a trade. This is equivalent to a minimum profit target of approximately 100 pips with an average 30-pip stop loss, including the dealing spread. If the trade setup does not appear to be offering this potential, then I do not take the trade.

The table below summarizes the different types of trading style I use by parameters of duration, profit and risk:

Based on my trading experiences, the single most important factor that determines long-term success in Forex trading is not the individual trading methods being chosen or the level of detail of technical analysis being conducted. Instead, it is the ability to consistently apply a risk management model that completely integrates the elements of risk, reward, profit target and position sizing into a smooth decision-making system.

Put it simply, a successful trader does not spend a lot of time researching about whether Gartley patterns is better than trendline analysis, or whether Stochastics is better than MACD, but rather: what is the combination of risk and reward that will best serve his/her trading objectives over time? As long as your trading system allows for the achievement of these objectives, then it is probably the right one for you, or at least as 'right' as it needs to be.

The above principle is illustrated in the following table which shows a series of 10 trades with various Win/Loss situations, targeting a minimum Reward/Risk ratio of 3:1. By using such a systematic approach, it is possible to trade profitably even with a Win/Loss ratio of well under 50%. In fact, in this scenario, breakeven does not occur until below 30%!

Professional traders know this to be virtually an obvious truth: it's not important to make the right call every time (or even most of the time), but it is important to manage risk as a variable within a system.

The reason why a trading system like this is so critical is that it allows the trader to maintain a sense of confidence and assurance even after experiencing a series of losses over time. On the contrary, to make money with an unplanned approach that realizes a Reward/Risk ratio of less than 1:1 would require an extremely high Win/Loss ratio, which may be difficult to maintain over time. In the latter scenario, when the trader hits the unavoidable bad stretch and loses several consecutive trades, emotional stress and lack of confidence can then easily take their toll resulting in even worse tendencies, like over-trading.

The following table shows the profitability impact of a low Reward/Risk system (in this example, risking 20 pips to make 20 pips). As you can see, the breakeven point in this system occurs at a much higher win ratio (50%), and the highest Average Net of 20 pips per trade requires a 100% win ratio, whereas with a 3:1 ratio as shown in the table above, a win ratio of less than 40% could produce the same Average Net. In other words, a high Reward/Risk trading system is much more forgiving of failures than is a low Reward/Risk trading system.

With this in mind, it's time for you to determine your trading system to approach the market.

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Simple Price Based Forex System

Simple Price Based Forex System is a very interesting strategy that utilises no indicators whatsoever, but only price levels and setting of pending orders. The strategy works on higher time frame charts (H1 and above) with any currency pairs and in all market conditions.

Here is how it works:

1. Firstly, we need to calculate a "Key Value" based on the current price of the currency pair. For quotes with 4 decimal places, the key value is the current price multiplied by 10 and then rounded. For quotes with 2 decimal places, the key value is the current price divided by 10 and the rounded.
   
2. Place a pending Buy Order at Current Price + (2 * Key value).
   
3. Place a pending Sell Order at Current Price - (2 * Key value).
   
4. Place a stop-loss for pending Buy Order at Open Price - (2 * Key value).
   
5. Place a stop-loss for pending Sell Order at Open Price + (2 * Key value).
   
6. Take-profit for both orders is calculated similarly to the key value but the current price should be multiplied by 100 and then rounded.
   
7. Place a Trailing Stop to both order at 2.5 * Key value.
   
8. When one of the order get triggered, cancel the other untriggered order.

Let's look at an example of a EUR/USD H4 chart below and how these values should be calculated.

1. The current price is 1.4810 and the current candle's open price is 1.4832.
   
2. The price is quoted with 4 decimal places. Therefore, the "Key Value" is calculated as 1.4810 * 10 = 14.8. Rounding it results in 15 pips.
   
3. Pending Buy Order is calculated as 1.4810 + (2 * 15) = 1.4840.
   
4. Pending Sell Order is calculated as 1.4810 - (2 * 15) = 1.4780.
   
5. Stop-loss for pending Buy Order is calculated as 1.4832 - (2 * 15) = 1.4802.
   
6. Stop-loss for pending Sell Order is calculated as 1.4832 + (2 * 15) = 1.4862.
   
7. Take-profit for both pending orders is calculated as 1.4810 * 100 = 148.1, which is
   148 pips after rounding up.
   
8. Therefore, the Take-profit for pending Buy Order is set to 1.4840 + 148 = 1.4988.
   The Take-profit for pending Sell Order is set to 1.4780 - 148 = 1.4632.
   
9. Finally, the Trailing Stop for both orders are set to 2.5 * 15 = 37.5, which is 38 pips after rounding up.

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The Forex Profit System

The Forex Profit System is a trend following strategy that uses only 2 types of technical indicators, i.e. the Parabolic SAR and the Exponential Moving Average (EMA). These indicators will indicate the direction of the market as well as be used for determining entry and exit points.

Here is how it works:

CHART SETUP

1. Setup a H1 USD/CHF chart. This is my favorite currency pair to trade because it swings up and down the most. You can choose any major pairs that you prefer as long as they have high volatility.
   
2. Insert the Parabolic SAR indicator and set 0.02 and 0.2 for its acceleration factor and constant respectively.
   
3. Insert 3 Exponential Moving Averages, i.e. EMA 10, EMA 25 and EMA 50, all with closing prices.

ENTRY
A trading opportunity arises when the EMA 10 crosses both the EMA 25 and EMA 50.

If it crosses up from the bottom, a BUY entry should be made. Conversely, if it crosses down from the top, then a SELL entry should be made.

In addition, ensure that the Parabolic SAR is at the bottom of the price before a BUY entry is placed and at the top of the price when a SELL entry is placed.

In the chart below, notice that I placed a SELL entry as the EMA 10 (green) crosses both the EMA 25 (red) and EMA 50 (blue) from the top. In addition, the Parabolic SAR is at the top of the price when the entry was placed.

Important: If you are trading the hourly charts like in the above example, make sure that the Parabolic SAR on the M15 chart is in the same direction. Never trade against the M15 Parabolic SAR!

EXIT
The ideal time to exit the trade is when price crosses over all 3 EMAs on the chart. In the chart above, I exited the trade when price crossed over all the 3 EMAs after approximately a week. This trade generated over 140 pips profit!

STOP LOSS
The initial stop loss for the trade should be set at the most recent swing low (for BUY entry) or swing high (for SELL entry). When price moves in your direction, the stop loss should be moved to near the 50 EMA accordingly.

In the chart above, I have set my initial stop loss at the most recent swing high. I would then move my stop loss lower to be close to the EMA 50 as price gets lower. This way, if price subsequently moves against you, you would have locked in some profits.

This strategy should be used on higher time frames, i.e. H1 and above, as on lower time frames price will sometimes ‘whipsaw’ back and forth, causing trades to be stopped out early.

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The Forex Gap Strategy

The Forex Gap Strategy is an interesting trading system that utilizes one of the most disturbing phenomenon of the Forex market — a weekly gap between the last Friday's close price and the current Monday's open price. The gap itself takes its origin in the fact that the interbank currency market continues to react on the fundamental news during the weekend, opening on Monday at the level with the most liquidity.

This strategy is based on the assumption that the gap is a result of speculations and excess volatility, thus a position in the opposite direction should probably become profitable after a few days.

Here is how it works:

1. Select a currency pair with a relatively high level of volatility. I recommend GBP/JPY as it showed the best results during my tests. But other JPY-based pairs should work too. By the way, it's a good strategy to use on all major currency pairs at the same time.
   
2. When a new week starts look if there is a gap. A gap should be at least 5 times the average spread for the pair. Otherwise it can't be considered a real signal.
   
3. If Monday's (or late Sunday's if you trade from North or South America) open is below the Friday's (or early Saturday's if you trade from Oceania or Eastern Asia) close, the gap is negative and you should open a Long position.
   
4. If Monday's open is above the Friday's close, the gap is positive and you should open a Short position.
   
5. Don't set a stop-loss or a take-profit level (it's a rare occasion but a stop-loss isn't recommended in this strategy).
   
6. Immediately before the end of the weekly trading session (e.g. 5 minutes before close) you need to close the position.

The GBP/JPY chart below shows the last 7 weeks (as of May 24, 2010) and all of them have gaps. 6 out of 7 gaps gave correct signals that result in a lot of profits. The last gap gave a wrong signal and yields a medium loss. The average spread for GBP/JPY was 3 pips during this period and all gaps were much wider than 15 pips, making them all qualifying signals. The net total profit was 1,612 pips in 7 weeks, which is not bad at all!

Before using this strategy on a live account, make sure to try it out on demo first.

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