1

STME Div Trading Plan

Disclaimer and Risk Warning:

This is my personal trading plan displayed for educational purposes only to demonstrate the potential components and content
as a guide to assist the individual investor in developing their own plan that matches their own trading objectives, style,
competence and knowledge.

Although the principles described are based on what is generally accepted as good trading practice, you must make the decision
as to which of these are right for you to incorporate into your trading plan and articulate these in a way that is using your own
words.

Any trading system developed by any trader should be tested using a simulated or ‘demo’ account and appropriate measures put
in place to ascertain whether the results merit consideration for trading in the live market.

Development date: 23 April 2019

Review date: 25 July 2019

Trading goal:
Short- and Long-term purpose for trading is:

1. Be consistently profitable for 3 consecutive months.

2. Grow my capital in the market at 10% account growth within 3 Months.
3. Dedicate my attention / time and growth to one trading mythology/strategy.
4. Long Term Goal - Take a regular income out of the market consistently.

Broad trading practice principles:

a. I understand and accept that my trading results are a direct result of the behaviours I choose to adopt both on individual
trades and with the systems I plan to us for all positions I trade. Therefore, my trading results are my responsibility.

b. Adhere to all aspects trading execution plan including pre-planning entry and exit systems.
c. I aim to maintain an account margin level of at least 20%.
d. I will position size with a tolerable risk level on any single trade of no more than 1-2% of my account balance prior to entering
any trade. This is based on risk to reward of the trade using technical analysis.

e. I will have no more than 4 positions open at any time and no more than 2 trades with identical currencies within the pairing.
f. I will journal trades including the entry and exit strategies planned, the P/L outcome and how well or otherwise I adhered to
my trading plan.

g. My first task of any trading session is to check economic data releases that may impact on any open or potential position
entries and have within my plan guidance on trade management.

h. If I am not able to watch the market, I will always have a stop placed on the platform.

All contents © www.perfecttrendsystem.com All rights reserved.

 2
STME Div Trading Plan

Trade choices:
1. The currency pairs I will focus on trading are:
All Major and Minors Forex pairs
2. Primary timeframe(s):
1Min ,5 Min and 15min Entry on 4-hour Divergence
15Min and 30 Min Entry on 1Day or Weekly Divergence
3. Primary exit timeframe
5Min exit based on Fib tool on previous swing hi or swing Low point and never a longer timeframe. This is covered in more detail
within the exit strategies of this document.

Strategy outline:

Strategy Name: Divergence with STME

Market Context and Sentiment – 4 Market Phases / Market Levels / Market Context and Sentiment
Technical Frame Work – Candle Reversals / Support & Resistance Zones + Trend Lines (speculative perspective) .
Alert System – MacD Scanner / STME Alert Scanner
Trade Setup and Rules – Div Trade set ups and rules / Invalid Div / STME Trade set ups and rules
Scaling in and Exits – Stop Loss / Scaling in
Economic Data points – Economic announcements
Quick Reference Guide – MacD Trade Variations / Trend Line Trade variations / Channel Patterns / Reversal Chart Patterns
Pending Orders – Buy and Sell Limits

Entry Overview:
a. Timeframes: 1/5/15 min on 4Hr Div, 15/30 min Entry on 1Day and weekly Div.
b. Blue and Orange momentum lines exit ATR bands and lead the price action.
c. Price action exit the ATR bands and re-enter ATR bands- first pull back (Blue and orange lines lead as price pulls back to steps).
d. Price over 200MA for Long Trades Or price below 200MA for short entries on Daily time frame.
e. No medium/high impact economic announcements within the last 30mins.
f. Delay entry if there is a key price point (resistance if going long, support if going short) within 20 pips of proposed entry price.
If subsequently there is a breakthrough on bar/candle close of that key price point, the position may be then entered.

g. Appropriate position sizing planned prior to any trade entry to within pre-defined tolerable limit.

All contents © www.perfecttrendsystem.com All rights reserved.

 3
STME Div Trading Plan

Market Context and sentiment

The 4 Market Phases

The market phase below indicates the 4 stages needed to have a valid and long-lasting entry. Note that there are typically 3day
cycles in this period. Once you have an understanding on this concept this will help you further understand the market. We need
visual confirmation with impulsive moves before any entry is made as we do need to see where the market makers are taking
price.
1# Accumulation phase from previous Downwards (up) trend.
2# Impulsive price action against the direction of the proceeding trend
3# Pre-tension Build
4# Trend continuation

Auction Zone
Vacuum gap waiting to be filled

Longley wick Decision made, and Lonely wick taken out

2.Fast Price Move

1.Accumulation Phase

4.Trend Continuation

3.Pre-Tension Build up

All contents © www.perfecttrendsystem.com All rights reserved.

 4
STME Div Trading Plan

Market Levels
Within a trend you have the following levels as the level progresses your rate of success reduces. Once you have understood the
market context and direction only then can you gain confidence within the market.

a. Early trend – Level 1

b. Trend – Level 2
c. Late trend – level 3

With STME we plan to capture Level 1 and 2, personal preference is to capture level 1 impulsive move out of the accumulation
zone this is key for our confirmation of price direction. Level 2 is the next move of the distribution phase and is the bigger move. I
prefer entering in at level 1 exiting half my position size at level 2 and hold the remining position within the duration of level 2
phase.

Previous Downward Cycle Level 3

Level 2

Level 1

Accumulation Zone
Stop hunt?

Market Context and Sentiment

What is the market context? and how STME works in trending markets, do not trade in ranging markets. Trading out of context
is pure gambling always understand what is happening in the current context of the market within the bigger picture.

In an Uptrend you buy the Bullish signals with the breakouts or invalidation of bearish signals and you take profit to secure trades,
the revers happens on down trends. To identify the context, view the daily time frame and apply a 200MA as shown below. Price
action above this is considered an upwards trend and buy signals should be taken if they conform to all rules of STME this will be
discussed in later chapters and vice versa on downward trends.

Daily Chart

200MA

Further reading please refer to smart money at exploiting smart

money

All contents © www.perfecttrendsystem.com All rights reserved.

 5
STME Div Trading Plan

Technical Frame Work

Strong Candle Reversal Patterns

Using addition technical analysis like strong candle reversal patterns can aid us at identifying possible reversal points in the market
at key support and resistance areas on higher time frames. Below are the main patterns I look for on the 1H /4H/ Daily time frames
at major support and resistance lines.

Bears Taken over Bulls Bulls Taken over Bears

Further information on Three Back Crows and Three White Soldiers

Further information on Evening Star and Morning Star

Further information on Three Line Strike

Further information on Engulfing Patterns

Please refer to external links for further information.

All contents © www.perfecttrendsystem.com All rights reserved.

 6
STME Div Trading Plan

Support & Resistance Zones/ Trend Lines and Channels

Technical analysis is a speculative perspective of the market, marking out your trendlines / support and resistance zones and
channels are key to understanding what is happening in the market. I will discuss basics in each of these sub areas just to give you
enough information to trade STME successfully.
This was a real Divergence alert trade setup, after visual confirmation trendlines are drawn from the valleys (peak for down trend)
a minimum of 2 valleys / peaks to confirm a valid trendline. This trade has an additional aggressive trend line formed along with
the descending triangle pattern. This is a quality set up with multiple confluences adding to its potential short trade. Added areas
of support and resistance zones are clearly validated and respected giving us a clean target price towards the lower trend line and
support and resistance zone.

Support & Resistance Zone

Support & Resistance Zone

Support line

Aggressive trend line

Support line
Valley 2
Valley 1
Support & Resistance Zone

Trend line and forming Descending triangle pattern

For more information on the different trend line trade information and patterns view the sections related below.

Trend Line Trade

Channel Trends

Chart Pattern Trades

All contents © www.perfecttrendsystem.com All rights reserved.

 7
STME Div Trading Plan

The following image shows the result of the trade and the entry and exit points. Entry will be discussed in the following chapter.
The technique used in this entry was two separate lot size entry’s equal too each other. 50% of the position was taken at 1R the
remaining 50% out at 2R while moving the stop loss to the entry position securing you from any losses.

Trend Line with MacD Divergence

Tight Squeeze not essential but helps

Trendline Break
Real alert Price Pull Back

Momentum Breakout

Orange & Blue Lead Price

Profit target 2R

All contents © www.perfecttrendsystem.com All rights reserved.

 8
STME Div Trading Plan

Alert System

MacD Scanner and Alert

The Scanner helps save screen time by scanning the charts for real time divergence within the market. In this section I will only
briefly discuss this topic as a vast amount of information can already be found for the divergence scanner. The basics of the scanner
is to support you identify divergences and then set alerts within your STME Scanner as needed. Below screen shot indicates a
divergence alert indicated by the scanner. Divergences can also be found within the analysis section I would always check on a day
to day basis as price feed varies from broker to broker and rather not miss out on those opportunities. First identify a divergence
on the 4h /day chart and visually confirm on the price action chart then set alert on STME alerted as shown below.

Click to visually verify 4H Long Div Alert

Indicated

STME Scanner and Alert

The STME alert is another powerful alerting indicator to help support you spending less time on screen. Again I will not go into too
much information on this as it can be found here. The best practice is once a divergence alert had been identified and visually
verified you can then go into your STME alerter and set the alerts as needed on the 1min/5min/15min and 30min. Once a
divergence has been identified you can then set the STME scanner as below, this will alert you once there is a perfect entry based
on the STME rules. Visual verification is always best and follow the proceeding rules in the following chapters for best results.

Alert has been activated notice the P within the M5

Select L for Long Div Alert on the 5Min 15 min and 30min time frame.
Select S for Short Div Alert on the 5Min 15 min and 30min time frame.

All contents © www.perfecttrendsystem.com All rights reserved.

 9
STME Div Trading Plan

Trade Setup and Rules

Divergence Trade Rules and Setup

Below image indicates a valid divergence on the 4H chart as indicated in the previous chapter: MacD Scanner Alert. Below
is the visual confirmation of this alert, you then set the STME alert to Long entries on the 5min, 15min, 30min. MacD can
give fake signals so always trade with care we can never know for sure the direction of the market. Multiple confluences like
discussed previously such as trendlines, channels, support/resistance areas and all other technical analysis to support your
trading decisions. Understand visually what is happening in the market and trade with meaning THE BIGGER TIME FRAME.
Trade structure with volatility/momentum and you will be further ahead than most traders today.

The below image shows potential entries. STME with Bullish Divergence on the 4H chart, Price making lower lows and the MacD
indicator printing higher lows then you can start looking for the first entry with STME on the M5/M15/M30 time frames.

Price

Possible entry location

MACD

All contents © www.perfecttrendsystem.com All rights reserved.

 10
STME Div Trading Plan

Invalid Divergence
Another live divergence trade that has been invalidated, invalidated divergences can occur more often than we think. This example
indicates a situation in the market we should always be prepared for. It’s essential that we validate a trade entry using our technical
analysis to avoid losses. Having said this, this set up has potential, so I held onto this pair and waited for further validation at the
support zone for possible buy entries. Divergence continues to build over time a good buy opportunity may arise in the areas
marked in fill zone below at this stage I consider setting in a buy limit order.

Failed divergence

Fill Zone

Rising Wedge

Accumulation Zone

Trend Continuation

Original Div Pre-Tension

New Div
Fast Price
Move

All contents © www.perfecttrendsystem.com All rights reserved.

 11
STME Div Trading Plan

STME Entry and Exit Rules & Setup

Below visual indicates all 3 main rules that validate an entry into a trade once your MacD has been confirmed and an alert has
been indicated within the STME alert panel. STME helps track shifts in momentum to then enter the market with a greater
probability for a secondary explosive move in the same direction.

2# Confirmation of break out direction of trend confirmed

Orange line Above dotted M/A and above ATR Band
Orange leading means two times higher timeframe agrees with
the direction of the impulse move.

3# Entry on Pullback
Blue + Orange line leads price action
even during pull back
1# Momentum + Break out
Price + Blue Line Moving Together

Signals are never 100% reliable always limit your risk on buy / sell signals by waiting for confirmation.

The below image shows other possible options indicating perfect momentum pre-tension set ups Orange line starts to lead during
the price pull back phase. screenshots below show perfect examples of pre-tension in both directions (long and short). Blue and
orange lines indicate explosive moves with the possibility for another explosive move in the same direction after re accumulation
phase.

All contents © www.perfecttrendsystem.com All rights reserved.

 12
STME Div Trading Plan

Initial stop loss Position

Set a Stop loss at 5 pips below / above previous recent swing hi/low price action point.

Stop Loss
Previous Swing Hi Point

Valid Entry Point

Profit targets
For a higher winning percentage take a relatively small target such as 1R or 2R. For greater rewards come lower wining ratios
target 3R and above using technical landmarks within the chart.

This trade produced a

nice 7R if you decided to
exit at this point.

All contents © www.perfecttrendsystem.com All rights reserved.

 13
STME Div Trading Plan

Scaling in and Exits:

Scaling into Trades and Exits

One method I love to use with STME is a method of scaling in my positions managing risk carefully. Example I take my total lot size
divided across 2 entry positions each at different entry price point see below example. Below are two examples with explanations
on how this method works. This method uses momentum lines as exit points, once momentum reaches price area, I close both
entry positions.

Entry 1 Entry 2

Exit of Position 1 & 2

Exit Position 1 & 2

Gap closed between price
and momentum lines.

Entry 2 (lower quality entry)

Entry 1

All contents © www.perfecttrendsystem.com All rights reserved.

 14
STME Div Trading Plan

Impending relevant economic announcement

a. With any open trades, if a relevant economic announcement is due, I will tighten my stop to within 10 pips of the current
price at least 30 minutes prior to the announcement.

b. Holding positions over the weekend or overnight hold risk, especially with key economic data points approaching.
c. I will close any open positions prior to the following economic announcements:
- Non-farm payrolls (US)
- Interest rate decisions with any relevant currency pairing.

All contents © www.perfecttrendsystem.com All rights reserved.

 15
STME Div Trading Plan

Additional Market Context

MacD Trade Variations

Divergence patterns below, a bullish divergence on the 4H chart and price makes a lower low along with the MacD making a
higher low. Set alerts on the lower time frames for entries on the 5 min / 10 min and 15min charts.

Divergence patterns below, a bearish divergence on the 4H chart and price makes a higher high along with the MacD making a
lower high. Set alerts on the lower time frames for entries on the 5 min / 10 min and 15min charts.

All contents © www.perfecttrendsystem.com All rights reserved.

 16
STME Div Trading Plan

Trend Line Trade variations

Trend trading using STME is more advanced and will be explained n future pdf documentation. it involves searching for STME
alerts on key support areas as indicated below.
Bullish Trend

Trend break, a 4H / 1 Day trend line

STME alert after break
Trend line acts as resistance

Trend Continuation, a 4H / 1 Day trend line

STME alert within the move phase off the trend line
Trend line acts as support

Bearish Tend

Trend break, a 4H / 1 Day trend line

STME alert after break
Trend line acts as Support

Trend Continuation, a 4H / 1 Day trend line

STME alert within the move phase off the trend line
Trend line acts as resistance

All contents © www.perfecttrendsystem.com All rights reserved.

 17
STME Div Trading Plan

Channel Patterns
Chart patterns are a great addition to STME, below are some examples of channel trades and can also be implemented with many
other chart patterns. The 2 main channels I trade with STME are channel down and channel up the most important areas I look
for in confirming these channels are uniformity of price action within the channel and uniform price action.

Exit
Entry 1Min

Entry 1Min

Exit

All contents © www.perfecttrendsystem.com All rights reserved.