Module 1
Getting Started
Setting Up the Charts,
Timeframes, and Currency Pairs
1
Precursors
This system is easy enough to learn
even for newcomers, however you
will be better off if you have
knowledge of the following:
− The basics of Forex
− The basics of Charting
− How to make a trade using your
brokers software
For those unfamiliar with Forex,
start with a practice account
2
In This Video
Overview – Indicators, Timeframes,
Currency
The elements of the trading system
Setting up your charts to get ready
to trade
Saving the system as a template to
easily access it later.
Note: This system will work with most charting software, however
since Metatrader is the most popular all examples will show
that software
3
Meta Trader
If you don’t yet have it, get
MetaTrader from one of the following
brokers
− Alpari
− FXDD
− FXCM
− Any other broker that has Metatrader
as an option.
Even if you don’t plan to use it
always, open a practice account and
use MetaTrader to follow through
the videos.
4
Components of the System
MACD Histogram (3,6,3).
Exponential Moving Average 9-
period
Exponential Moving Average 20-
period
Exponential Moving Average 50-
period
Exponential Moving Average 200-
period
5
Timeframes to Use
This system can be used with the
following charts:
− 1 hour
− 4 hour
− Daily
We will use the 1 hour and 4 hour
charts in our videos.
6
Currency Pairs
The following currency pairs are
recommended to start:
− EUR/USD
− GBP/USD
− GBP/JPY
− USD/CHF
− EUR/JPY
− USD/JPY
You can use other currencies, but
back test first!
7
Setting up a Chart – First
Time
Open up a chart. At this point it
doesn’t matter which one, we just
want to setup a template in
metatrader.
Add the elements of system:
− MACD Histogram (3,6,3).
− EMA 9, Purple Color
− EMA 20, Blue Color
− EMA50, Green Color
− EMA200, Orange Color
8
The Finished Chart
9
Save the System as a
Template
Move on to the next video.
10
Module 2
System Overview
Reading the charts, and
determining trends
11
System Overview
This trading system used the trends
and is essentially a TREND system.
You need to be able to read the
uptrend and downtrends
Longer term charts (ie 1 hour, 4
hour, or Daily) are best if you are
just starting out.
12
In this Video
Determining an Upward Trend using
our charts
Determining a Down Trend using our
charts
What a retracement is and how to
chart them with this system.
We won’t be covering entry signals
just yet, but we need to be able to
read the charts.
13
Trend Basics
When the currency is moving up, and has been
for a while, we are in an up trend.
14
Trend Basics 2
When the currency is moving down, and has
been for a while, we’re in a down trend
15
Trend Basics 3
Trading with the trends allows us a
certain margin of safety.
By using the trends and specific
indicators to help us determine when
the best time to enter/exit is, we
help to increase that safety margin.
You need to be able to quickly
determine the trends using our
indicators.
16
The Trends with Our Charts
Up Trend
− Price is above both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently above
EMA200.
− MACD value is positive.
17
The Trends with Our Charts
Down Trend
− Price is below both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently below
EMA200.
− MACD value is negative.
18
Retracements
Even when trending prices to move
in waves. They move with the trend,
then retrace slightly, and then
continues to move with the trend.
19
MACD Indicator and
Retracements
This can help us find entry points
20
Conclusion
Take some time to study the trends,
and watch how the MACD reacts to
price movement. Specifically when a
retracement occurs.
Then move onto the next video to
start with short trades.
21
Module 3
Short Trades and
Examples
Entry signals, exit strategies,
and sample trades.
22
Short Trades Overview
We determine the trend is in fact
down.
We look for a sell indicator
We enter the trade as per our rules
We use our exit strategies to exit
the trade at the right times.
23
Entering a Trade
Trend Determination
− Price is below both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently below
EMA200.
− MACD value is negative.
Entry Signal - Retracement
− When price rises, it makes MACD value increase and MACD
value eventually becomes positive.
− The trigger is when MACD value turns from positive back
to negative.
Place the Order
− When that happens, we enter at market price with two
lots.
24
Rules for Entering the
Trade
Enter at market price with 2 lots (or
multiples of 2)
We place a protective stop loss 1 pip
above the Highest Price of the Pull-
Back (Retracement).
Follow one of our two exit strategies
(covered shortly)
25
Entry Example - Trend
We are in a down trend.
− Price is below both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently below
EMA200.
− MACD value is negative.
26
Entry Example - Signal
Entry Signal
− When price rises, it makes MACD value increase and MACD
value eventually becomes positive.
− The trigger is when MACD value turns from positive back
to negative.
27
Entry Example - Order
We place an order for two lots.
− Enter at market price with 2 lots (or multiples of 2)
− We place a protective stop loss 1 pip above the Highest
Price of the Pull-Back (Retracement).
− Follow one of our two exit strategies (covered shortly)
28
Exit Strategy 1
We exit the first lot when MACD
turns from negative to positive. At
this time, we might also move the
stop loss for the second lot to break-
even.
29
Exit Strategy 2
We exit the second lot when EMA9
cross EMA20 to the upside.
30
Trade Examples
Watch the trade examples
Once you’re done move onto video 4
to learn about long trades.
31
Module 4
Long Trade and
Examples
Entry signals, exit strategies,
and sample trades.
32
Long Trades Overview
We determine the trend is in fact up.
We look for a buy indicator
We enter the trade as per our rules
We use our exit strategies to exit
the trade at the right times.
33
Entering a Trade
Trend Determination
− Price is above both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently above
EMA200.
− MACD value is positive.
Entry Signal - Retracement
− When price falls, it makes MACD value decrease and MACD
value eventually becomes negative.
− The trigger is when MACD value turns from negative back
to positive
Place the Order
− When that happens, we enter at market price with two
lots.
34
Rules for Entering the
Trade
Enter at market price with 2 lots (or
multiples of 2)
We place a protective stop loss 1 pip
above the Highest Price of the Pull-
Back (Retracement).
Follow one of our two exit strategies
(covered shortly)
35
Entry Example - Trend
We are in an up trend.
− Price is above both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently above
EMA200.
− MACD value is positive.
36
Entry Example - Signal
Entry Signal
− When price falls, it makes MACD value decrease and MACD
value eventually becomes negative.
− The trigger is when MACD value turns from negative back
to positive
37
Entry Example - Order
We place an order for two lots.
− Enter at market price with 2 lots (or multiples of 2)
− We place a protective stop loss 1 pip below the lowest
Price of the Pull-Back (Retracement).
− Follow our exit strategies.
38
Exit Strategy 1
We exit the first lot when MACD
turns from positive to negative. At
this point we may set our stop loss
to break even.
39
Exit Strategy 2
We exit the second lot when EMA9
cross EMA20 to the downside
40
Trade Examples
Watch the trade examples
Once you’re done move onto video 5
for money management rules and
tips to stay profitable.
41
Module 5
System Advanced
Money management, and tips to
stay profitable in the long run.
42
Why Money Management
There is no such thing as a trading
system that wins 100% of the time.
By managing our money correctly
we capitalize on our winning trades
and protect the money we have
earned.
We also protect ourselves from large
drawn downs if we do encounter a
losing streak.
43
Elements of a Good Money
Management System
A clearly defined %R – that is the
amount we are willing to risk on any
given trade defined as a percentage
of our account balance.
A method to calculate the correct
trade size according to our stop loss
and our %R
44
Calculating Per Pip Value
(one pip, with proper decimal
placement/currency exchange rate)
x (Notional Amount)
Example 1 USD/JPY (.01/126.26) x
USD100,000 = $7.92
If the USD is on the right the value
is $1 per pip for a mini-lot and $10
per pip for a full lot
45
Using the Per Pip Value to
Calculate Potential Loss
We enter a long trade on the
EUR/USD at 1.5020
Our initial stop is set to 1.4995
We are risking 1.5020 – 1.4995 =
0.0025 or 25 pips.
25 pips x $10 per pip = $250 risked
with every lot we trade.
46
Calculating Trade Size
With our per lot risk, we can then
calculate a trade size. Assuming
your account balance was $120,222
and your %R is 2%:
You can risk 120,222 x .02 =
2404.44 with any trade.
From that we can trade 2404/250 =
9.61 lots
47
With Our System
Since the system we are teaching
uses multiples of 2 for trades you
need to trade 2 lots or multiples of
2.
If you could trade both full lots and
mini lots, using the last example you
would trade 4 lots and 8 mini lots
twice.
If you can’t trade mini lots you
would round down to 8 or 9 lots for
the trade.
48
Tips to Stay Profitable
Start with longer term charts.
Trends are more defined over the
longer term.
Use a practice account until you are
completely comfortable trading the
system.
Practice money management rules
religiously.
Learn the currency pairs you trade
well. This will help you to avoid false
signals
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