50 pips a day forex strategy - pdfdrive...revenge trading 50 pips a day forex strategy components...
TRANSCRIPT
![Page 1: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/1.jpg)
![Page 2: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/2.jpg)
50PipsADayForexStrategy
HowToBuildASolidTradingSystem
ByLaurentiuDamir
Copyright©2012byLaurentiuDamir
Allrightsreserved.Nopartofthisbookmaybereproducedortransmittedinanyformorbyanymeans,electronicormechanical,includingphotocopying,recording,oranyinformationstorageandretrievalsystem,withoutpriorwrittenpermissionoftheAuthor.Yoursupportofauthor’srightsisappreciated.
BooksinPDFformat
TradethePriceActionFollowPriceActionTrends
DayTradingForexwithPricePatternsForexRangeTradingwithPriceAction
TradetheMomentumDayTradingForexwithS&RZones
AllinOnePDF
![Page 3: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/3.jpg)
TableofContents
IntroductionComponentsPriceTrendsSupportandResistanceFibonacciRetracementsPatternsNotechnicalindicators200EMAThe4hoursanddailytrendSolidmoneymanagementPositionsizingRisk-RewardratioStoplossplacementPatience,noemotions,nooutsideinfluenceDon’tdothisPricepatternbreaksCandlestickconfirmationFibonacciretracementlevelsSupportandresistanceCuttingprofitsshortLettinglossesrunRevengetrading50PipsADayForexStrategyComponentsStoplossmanagementandtakeprofitlevels
![Page 4: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/4.jpg)
IntroductionBeforeyoustarttoconstructyourtradingsystem,youmustfirstthinkaboutwhatisthetradingstylethatsuitsyoubetter.Doyouwanttositinfrontofthecomputerthewholedayenteringandclosingtradesonthe5minutestimeframeordoyouthinkthattradingonahighertimeframewillsuityoubetter?Myadvicetoyouisverysimpleandclear:alwaysseektotradeonthehighertimeframes.Itiseasiertotradethiswayanditwillmakeyoumuchmoremoneyinthelongterm.Ifyouareabeginnerintrading,itisbestforyounottodaytradeuntilyougainexperience.Tradingonsmalltimeframescarrieshighriskduetoshort-termrandommovesthatarealmostimpossibletopredict.Nottomentionthattradingthiswaymakesyouvulnerableagainsteconomicnewseventsthatcomeoutmultipletimesperdayandusuallyhaveabigimpactonthesmalltimeframes.Evenafteryougetmoreexperiencedbytradingsuccessfullyonthehighertimeframesandyouthinkyouarereadytodaytrade,myadviceisdonottradeonanyintervalsmallerthanthe30minutes.Moreover,whenyoudodecidetodaytrade,consideritasabackuptradingstyle,daytradeonlywhentherearenotradesetupsaccordingtoyoursystemonthehighertimeframes.Alwaysseektotradeonthehighertimeframe.Nevertheless,asIsaidbefore,ifyouareabeginnertrader,andyouprobablyare,Istronglyrecommendthatyoudevelopyourtradingsystemaroundahighertimeframelikethe4hoursorthedaily.Forgetaboutdaytradingforawhile.Buildyourtradingsystemandtradeonthe4h/dailychartsuntilyoustarttoaddtoyouraccountconsistently.
![Page 5: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/5.jpg)
ComponentsWiththeaboveinmind,thenextthingyoushoulddecideiswhatyouwillincludeinyourtradingsystemfromthetechnicalpointofviewtohelpyouwinasmanytradesaspossible.Decidewhatwillbethecoretechnicalpartsofyourtradingsystem.Frommyexperience,Icantellyouwhicharethetoolsthatworkbestinforextrading,thathaveagreatrateofsuccessandtheyrepeatoverandoveragainwithexcellentresults.Thesearepricetrends,supportandresistancelevels,Fibonacciratios,pricepatternsandbarpatterns/candlestickpatterns.Thesearethethingsyoushouldconsiderincludinginyoursystem.Theyarethemostpopularthingsintheforexmarketthus,theyhavethehighestrateofsuccess.
![Page 6: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/6.jpg)
PriceTrendsYousurelyknowwhatatrendisandyouknowthatyouseethemonyourchartsoverandoveragain.Thetrendisacoreprincipleoftheforexmarketoranymarketforthatmatterandshouldalwaysbetakenintoaccountwhenconstructingyourtradingsystem.Itisalwayseasiertotradewiththetrendthanagainstit.Atrendsignifiesthatthemajorityoftradersdecidedtopushthepriceinonedirection.Youmustalwaysknowwhatthatdirectionisandtradeinlinewithit.Ifyouwanttoknoweverythingthereistoknowaboutforextrends,howtospotthembyreadingthepriceaction,howtorecognizewhenthetrendischangingwithoutthehelpofanytechnicalindicators,youcancheckoutthebookFollowPriceActionTrendsthatexplainsthisingreatdetail,withmanychartillustrations,andputsittogetherintoacompleteforexpriceactiontradingsystemthatcanyieldthousandsofpipsbytradingthesechangesintrend.
![Page 7: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/7.jpg)
SupportandResistanceSupportandresistancelevelsarealsoakeycomponentoftheforexmarket;alargenumberoftradersoutthereemphasizesthemontheirchartsandbasetheirtradingdecisionsonthem.Therefore,itisadvisablewhenyoudecidehowtoconstructyourtradingsystemthatyoutakethemintoaccount.
![Page 8: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/8.jpg)
FibonacciRetracementsFibonacciratiosareanotherforextoolthatworksextremelywellintheforexmarket.JustpullupanychartanddrawyourFibonaccilevelsfromthestarttotheendofanybigmoveinonedirectionoranother.Youwillseehowmanytimestheselevelsactasstrongsupportandresistancezoneswherepricebouncesbacktoresumetheprevioustrend.
![Page 9: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/9.jpg)
PatternsPricepatternsandcandlestickpatternsarealsoverypopularwiththevastmajorityoftraderstherefore,theytoohaveagreatrateofsuccess.Pricepatternsareusedassignalsthatpriceispreparingforamoveinadirectionandcandlestickpatternsareusedmainlyasaconfirmationwhenenteringatrade.Ifyouwanttolearningreatdetailaboutalloftheseabovepowerfultradingtoolsandmasterthem,youcantakealookattheTradethePriceActionbookthatexplainsthemverywellwithmanychartillustrationsandputsthemtogetherintheformofanextremelypowerfulpriceactiontradingsystem.Inconclusion,thesearethethingsthatyoushouldincludeinyourtradingsystembecausetherearebyfarthemostsuccessfultoolstotradetheforexmarket.Itiscompletelyuptoyoutodecideifyoucombinethemallinyoursystemorjustusesomeofthem.Therewillbemoreaboutthesepowerfultoolsinalatersectionwhereyouwilllearnhowtoavoidmakingtradingmistakeswhenworkingwiththem.
![Page 10: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/10.jpg)
NotechnicalindicatorsNowthatyouhaveanideaofwhatwouldbebesttoincludeinyourtradingsystemyoualsomustknowwhatnottoincludeinit.Donotuseanytechnicalindicatorsinyourtradingbecausetheyareabsolutelyworthless,andtheywillloseyoumoneyinthelongrun.Youmightwinatradetodayusingthembutyouwillsurelyloseallthatmoneybackandmorebytheendoftheweek.Youshouldconsideryourselfveryluckyifinthecourseofamonthyoumanagetobreakevenbytradingwithindicators.Allindicatorsarebasedonpastpriceaction,themacd,rsi,orstochasticarenotleadingindicators.Theyareonlyleadingyoutolosses.Beingconstructedofpastpriceactiontheyarealllaggingbehindtheprice.Bydesigntheyfollowthepastpriceactiontherefore,evenifthesignalstheygivewouldbeaccuratetheyareuselessbecausetheycometoolateforyoutocapitalizeonthem.Alwaysrememberonething:priceleadstheindicator,nottheotherwayaround.Donotbefooledwhenyoudoabacktestonyourchartsandyouseethatusinganindicatororatradingsystemwithindicatorswouldhavemadeyouthousandsofpips.Thatisjustatrick.Realtimetradinghasnothingtodowithbacktesting.Whenyouputthatindicatortoworkinrealtime,youwillsoonseethatyouarewastingyourtimeandmoney.Alwaysrememberthatpricetellstheindicatorwhattodonotviceversa.Theultimateindicatorisandalwayswillbethepriceactionitself.Youshouldfocusonlyonreadingandinterpretingthepriceactionmovementsandnotovercomplicateyourtradingsystemwithuselessindicators.
![Page 11: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/11.jpg)
200EMAFrommyexperience,thismovingaverageistheonlyindicatorthatisworthincorporatinginyourtradingsystem.Itisthemostimportantmovingaverageofthemall,allretailandprofessionaltraderskeepaneyeonitthereforepricetendstobouncewhenittouchesit.However,itisbesttouseitinyourtradingsystemasguidance,asaconfirmationofwhatpriceactiontellsyouandnotasatooltobasetradingdecisionson.Forexample,ifyoursystemisdesignedforthe4hchart,youwillwanttoreadthepriceactiononthatcharttoknowwhatthetrendis.Afteryoudothatandseethatthecurrenttrendisupordown,youcanthenlookatthe200EMAonthesamecharttoconfirmandenforceyourpriceactionreading.Letussaythepriceactiontrendonthatchartisup.Ifthatspecificforexpairtradesabovethe200EMAatthattimeonthesamechartthenyouhaveaconfirmationofyourpriceactionreading.YoucancheckouttheTradetheMomentumbookforacompletetradingsystemthatusesthismovingaveragealongwithsomeotherpowerfulconceptsoftradingtomake200pipsperweekormore.Letusseeachartwiththismovingaveragesoyoucanbetterunderstandhowpricereactstoit.
![Page 12: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/12.jpg)
The4hoursanddailytrendAgoodtradingsystemistheonethatalwaystakesintoaccountthebiggerpicture.Thebiggerpictureinforexisrepresentedbythetrendsonthehighertimeframes.Thesetrendscontrolthepricemovementonthelowertimeframes.Ifyoudesignforyourselfasystemthattradesonthe4hcharts,youmustalwaystakeintoaccountthetrendonthedailychart.Ifyoutradeonthe1hor30minutescharts,youmustalwaystakeintoaccountthetrendonthe4hchart.Forthetrendonthedailychartyoucanusethe200EMAdiscussedearlier.Ifthepairistradingabovethe200EMAonthedailychart,itmeansthatthetrendisuponthedailychart.Ifthepairtradesbelowthe200EMAonthedailychart,itmeansthatthetrendisdownonthedailychart.Therefore,anytradesenteredonthe4hchartaccordingtoyourtradingsystemshouldonlybeenteredinlinewiththedailytrend.Thisisthewaybywhichyoucanavoidseverelossesandachievelong-termsuccess.Letmeshowyouatradesetuponthe4hchartgeneratedbymyFollowPriceActionTrendstradingsystem:
![Page 13: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/13.jpg)
Inthe4hchartabove,atradesetuptookplaceaccordingtomytradingsystematthatlevelwherethetrendchangedfromdowntrendtouptrendonthe4hchart.Ishouldhaveboughtthispairatthatcircleinthechart.Well,youcanclearlyseethatpricewouldhavegoneforawhileinmyfavoronlytoretracebackdownlatereatingallmygainsandhittingmystoplosslevel.Isthetradingsystemnotgood?Thetradingsystemisverygoodbecauseitkeepsmeoutoflosingtradeslikethisone.Italwaystakesintoaccountthedailytrend.Andthedailytrendforthatpairatthatmomentwas:
Well,thedailytrendwasclearlydownatthemomentwhenIwassupposedtoenterthebuyorder.Thepriceactionforthatpairatthatmomentwaswaybelowthe200EMAonthedaily.Youcanseehowpricejusttouchedthe200EMAonthedailychartandbouncedbackdownlikecrazytoresumethedowntrend.Accordingtomytradingsystem,Iwouldhavetakenthistradeonlyifthepairhadbeentradingabovethe200EMAonthedailychart.Mytradingsystemkeptmeoutofthislosingtradebecauseitalwayslooksatthebiggerpicture,yoursshoulddothesame.Whenyougetmore
![Page 14: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/14.jpg)
experiencedandyouwanttostarttradingonalowertimeframelikethe1-hourorthe30minutesthebiggerpictureinthiscasewillalwaysbethe4htrend.However,Idonotrecommendyoutograspthe4htimeframetrendjustbylookingatthe200EMA.Themovingaverageworksbesttofindthetrendonthedailychart,forthetrendonthe4hchartyouwillhavetoreadthepriceactioninordertogetthebestresultpossibleoutofyourtrading.Youmustdeterminethetrendonthe4hchartbyreadingthepriceaction,themovingaverageisnotthatcorrectonthistimeframeanditcanleadyoutolosses.Thesmallerthetimeframe,thelessaccuratethe200EMAbecomes.TheFollowPriceActionTrendstradingsystemteachesyouwithgreatdetailhowtospotpriceactiontrendsonthe4hcharts.Inaddition,theDayTradingForexwithPricePatternstradingsystemdoesagreatjobteachinghowtocorrectlyestablishthepriceactiontrendonthe4hchartsbutwithadifferentapproach.
![Page 15: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/15.jpg)
SolidmoneymanagementThetechnicalpartofyoursystemdiscussedearlieronlysolveshalfoftheproblem.Theotherhalfandequallyimportantisrepresentedbythemoneymanagementcomponent.Averygoodmoneymanagementtechniquegivesyoutheopportunitytobeextremelyprofitablewithyoursystemevenifletussay,outoftentrades,fivearelosers.Ofcourse,ifyoubuildyoursystemrespectingalltherulesaboveandtherulesthatwillfollowyouwon’tbeinthissituation,butifforanyreasonyoushouldfindyourselfinit,correctandstrictmoneymanagementruleswillmakeyouprofitableeveninsituationslikethismentioned.
![Page 16: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/16.jpg)
PositionsizingThisisthefirstruleofmoneymanagement.Foryoursystemtobeagoodone,itmusttellyouhowmuchmoneyyouaregoingtoloseonatradebeforeyouenterthetradeinthemarket.Toachievethisyoumustfirsthaveachatwithyourselfandthinkaboutwhatpercentageofyourequityyouarewillingtoriskonatrade.Myadviceisdonotriskmorethan2-3%pertrade.Next,yourtradingsystemshouldgiveyoutheexactlevelswhereyouwillenterthetradeandwhereyouwillplacethestoplosslevelbeforeyouenterthetrade.Letusdothefollowingexercise:Youhave1000$inyourtradingaccountandyoudecidedthatyouwillonlyrisk2%ofyourmoneyperonetrade.Thismeansthatforthenexttradeyouwillhavetorisklosingonly20$.Now,whenatradesetupbeginstotakeshape,youdecidewhereyouwillenterthetradeandwhereyouwillsetthestoplossaccordingtoyourtradingsystem.Letussaythatyoufindoutyouwillhaveastoplossof50pipsforthistrade.Thismeansthatifthetradegoeswrongandyourstoplossishityoushouldloseonly20$.Youthendivide20$/50pipstoseethevalueindollarsforeverypipthatyoulose.Andthatvalueis0.4$.Thismeansthatforeverypipthatgoesagainstyoutowardsyourstoplossyoushouldloseonly0.4$.Onlyafteryouhavethisvalueyoudetermineyourordersize,whichisasimplethingtodosincenowyouknowthepipvalue.Thismeansyouwillhavetotradewithanordersizeof0.04lots(4000$).Ifyoulosethetrade:50pipstoplossmultipliedby0.4$perpipequals20$.Youhavetodothiseverytimewhenpreparingtoenteratrade,alwaysdetermineyourordersizethisway,manageyourrisk,alwaysputthebadscenarioinfrontnomatterhowpromisingandrewardingthepotentialtradelooks.Don’tyoueverthinkabouthowmuchmoneyyoucouldwinonthatonetrade.Thiswillmakeyouemotional,itwillcloudyourjudgment,andyouwillbetemptedtoenterwithabigordersizetowinmoremoneyoutofthetrade.Instead,alwaysthinkofhowmuchmoneyyoucouldloseanddothemathexplainedearliertodeterminethesizeofyourorder.
![Page 17: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/17.jpg)
Risk-RewardratioYoursystemshouldspottradesetupswheretherewardisatleast2timesbiggerthantheriskforeverytrade.Thismeansthatapartfromtheentryandstoplosslevels,yourtradingsystemshouldtellyouthetakeprofitlevelalso.Youshouldknowbeforeenteringthetradewhatistheriskandwhatisthereward.Ifyoursystemgivesyoutradeswheretherewardisnot2timesgreaterthantheriskorworse,therewardissmallerthantheriskforeverytradethenitisnotagoodtradingsystem.Youwillloseyourmoneyinthelongterm.Wheneveryoursystempresentsyouatradelikethis,donottakeit,nomatterhowpromisingitlooks.Letusdoanotherexercisetoseehoweasyitistobeprofitableifyouhaveagoodsystemwithsolidmoneymanagementrules:youhaveasystemthatgivesyoutradeswith1:3risk-rewardratioormore.Thismeansthatforeverypipyourisklosing,therewardis3timesgreater.Ifyouenteratradewith50pipsstoplossthismeansthatyourprofittargetis150pips.Letussaythatonagivenmonthyoumade15tradesaccordingtoyoursystem,eachofthemwitha50pipsstoplossand150pipsprofittarget.But,themarketwentcrazythatmonthandoutofthose15tradesonly5ofthemwerewinners.10werelosers.Therefore,youhaveonlymanageda33%successrateswithyourtradingsystem,whichisverylow.Hereiswheremoneymanagementshowsitsvalue.Letusdothemath.Youlost10tradeswith50pipsstoplossoneachofthem.Thismeansyoulostatotalof500pipsthatmonth.Youonlywonfivetrades.Withtheprofittargetbeing3timesgreaterthantherisk,thatis150pipswonpereverytrade,thismeansyouhavewonatotalof750pipsonthatmonth.Therefore,youhavelost10tradesoutof15whichisdreadfulbutyou’vestillmadeaprofitof250pipsonthatmonththankstomoneymanagementrules.
![Page 18: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/18.jpg)
StoplossplacementYourstoplossshouldexistforeverytrade,butthestoplossmustalwaysbesetatlogicalplacesinthemarket,notrandomly.Myadvicetoyouistoalwaysputyourstoplossatthelevelwherethepricehasverylittlechancetoreachgiventheconditionsofthemarketatthatmoment.Letusseeanexample:
Asyoucansee,whenyousell,youputyourstoplossjustabovetheswinghighsthatpricemakes.Whenyoubuy,youputyourstoplossjustbelowtheswinglowsthatpricemakesonitswayup.Ifatthetimeyourtradingsystemgivesyouapotentialtradeyoudonotseealogicalpointinthemarketliketheseinthechartabove,youdonotenterthetradenomatterhowlucrativeitmightappear.
![Page 19: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/19.jpg)
Patience,noemotions,nooutsideinfluenceThisdoesnothavemuchtodowithmoneymanagementbutitisveryimportantandithastobeoutlined.Withoutpatiencewhentradingintheforexmarket,youhaveonlysmallchancesofsuccess.Ifyouconstructyourselfatradingsystemand2or3daysgobywithoutatradesetupyouhavetobepatient,thesetupwillcome,don’tstarttobendtherulesandchasetrades,thereisnorulethatsaysyouhavetotradeeverysingledayinordertomakemoney.Forexisaboutpatientlywaitingforthemarkettopresenttoyoutheperfectconditionsforawinnertrade.Respectyourtradingsystemandtradeonlybyitsrules,thetradeswillcome.Donotbeemotionalwhentrading,leaveyouremotionsatthedoor,anddoexactlyasthesystemtellsyoutodo.Ifyoursystemtellsyouthatyouhavetotrailmanuallythestoplossaboveeveryswinghighbutthetradehasalreadygone100pipsinyourfavoranddidnotmakeanyswinghighyet,wait.Leaveyourstoplossatitsoriginalplace;donotthinkemotionally,thatyouhavetosecurethose100pipssoyoudonotlosethem.Thismakesyoulosemoney.Completelydisregardanycommentsfromindividualsonforexforumsthattellyoutobuyorsellbecausetheyhavetheholygrailandtheyknowbetterthanyouwhatisabouttohappen.Onlytradewhatyoursystemtellsyoutotrade,donotletyourselfbeinfluencedbyanyone,nomatterhowconvincingtheysound.Ifyoupayattentiontosomefellowthattellsyoutobuyaspecificpairyouwillloseyourclearandunbiasedjudgmentandwithoutevenknowingyouwillstarttobrowsethroughthechartslookingfortradesetupsthatsustainthatguy’stheoryandthathavenothingtodowithyourtradingsystem.Itisyourmoney;wouldn’tyoufeelstupidifyouwouldlosethembytradingwhatsomeoneelsesuggestsyouto?
![Page 20: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/20.jpg)
Don’tdothisNow,afteryoufinallyconstructyourtradingsystemaccordingtoalltherulesaboveyoumustlearnhowtoavoidmakingmistakeswhenputtingyoursystemtowork.
![Page 21: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/21.jpg)
PricepatternbreaksIfyoursystemincludestradingpricepatterns,youmustknowthatforapatterntobeconsideredbrokenpricemustcloseoutsideofit.Ifyouhaveatradingsystemusingpricepatternbreakstosignalyourentrythenyoumustwaitforacandleorbartocloseoutsidethepatternonthesametimeframewhereyouspottedthepattern.Donotmakethemistaketospotapatternonthe4hchartandthengothe15minuteschartandwaitfora15minutescandletocloseoutsideandcallthisabreakofthepattern.Ifthepatternresidesonthe4hchart,youmustalwayswaitfora4hcandletocloseoutsidewithmomentum,meaningthatthecandleshouldhaveatleasthalfofitsbodyoutsidethepatterntoconsideritabreak.Letusseeanexample:
Inthechartabove,youhaveadescendingtrianglepattern.Youcanseethatthereisacandlethatclosesbelowthepatternbutonlywithsmallpartofitsentiresize.Onthenextcandle,pricequicklyretracesbackintothepattern.Thisisnotapatternbreak.Thenextcandlethatclosesoutsidethepattern,youcanseethatitdoessostrongly,withmomentum;
![Page 22: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/22.jpg)
3quartersofitslengthareoutsidethepattern.Thisisapricepatternbreak.Ifyouarelookingforapowerfultradingsystemwithpricepatternsandpriceactiontrendsthatcandelivermorethan1000pipspermonthyoucancheckoutmybookDayTradingForexwithPricePatterns
![Page 23: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/23.jpg)
CandlestickconfirmationIfyournewlydevelopedsystemusescandlestickpatternstoconfirmthetradeentryyoumustalwayswaitforthatcandlestickpatterntocomplete.Waitforthelastcandleofthepatterntoclosebeforeyouenterthetrade.Ifrightatthecloseofthepatternthereissomeimportanteconomicnewscomingouttheycouldinvalidateyourpatternandwithityourentrysignal.Rememberthatcandlestickpatternsworkwellbecausealotoftraderswatchthemandactonthem.Ifyouenterbeforethepatterncompletesandwhenthelastcandlefinallyclosesyouseethatthepatternisnotvalidanymorethenalotoftraderswillnottradeatthatlevelbecausethereisnovalidpatternsoyouwillbeintheminority.Theminorityalwayslosesinforex.Inaddition,youhavetoknowthatcandlestickpatternshavetheirgreatestsuccessratewhenfoundatpriceextremes.LetmeshowyouwhatImean:
Allthepatternsinthechartabovearesituatedatextremesofprice.Thereisnorecentpriceactionatthatlevelprecedingthem.Thesekindsofcandlestickpatternshaveaveryhighrateofsuccess.Ifyourconfirmationpatterntakesplaceatalevelwherepriceactionistrading
![Page 24: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/24.jpg)
sidewaysitmightnotbeaverygoodconfirmationsignal.
![Page 25: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/25.jpg)
FibonacciretracementlevelsIfyouuseFibonaccilevelsinyourtradingsystemthenalwayswaitforthepricetotouchthelevelyouarewatchingbeforeyouconsiderenteringatrade.DonottradeifthepricecomesclosetoyourFibonacciretracementlevelbutdoesnottouchit.LetmeshowyouwhatImean:
InthefirstattemptpricecomesclosetotheFibonaccilevelbutdoesnottouchit.Itevenmakesareversalcandlestickpatterntheresuggestingthatpricewillresumethetrenddownbutsoonafterpriceclimbsbacktothelevelthistimetouchingandpiercingit.Thisisthetimetotrade.Ifyouhadsoldonthefirstattempt,youwouldhavehadyourstoplosshit.
![Page 26: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/26.jpg)
SupportandresistanceWhentradingwithsupportandresistancelevelsmakesurethatyoudrawthemostimportantones,thepivotaloneswherepricebouncesofthemfromeitherside.Thesepivotalsupportandresistancezonesarebyfarthemostimportantonestheyattractthemostattentionfromthetradersoutthere.Donotbeatyourselfupwithsmall,meaninglesssupportandresistancezones.Theyareallovertheplaceandtheywillclutteryourchartsfornothing.Letmeshowyouwhatapivotalsupportorresistancezonelookslike:
Youcanseeherethatpricecomingfromtheupsidebounces3timesofthesupportshowbytheredline,finallygoesbelowit,andthenstartstobounceoffofitcomingfrombelow4times.Itisnowresistance.Itfinallybreakstotheupsideandatthetimeofthiswriting,thatzonehasturnedintosupportagainbecausepriceiscomingagainfromtheupsideandbouncesoffthatlevel.Theseareverystrongsupportandresistancezonesthatyoualways
![Page 27: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/27.jpg)
havetotakeintoaccount.
![Page 28: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/28.jpg)
CuttingprofitsshortThisisaverycommonmistakemadebynovicetraders.Whenatradegoesinyourwayfor100pipsdonotcloseitinfearthatpricewillcomebacktotheentrylevelandeatallyourprofits.Respectthetradingsystem’srulesandletthetraderununtilithitsyourprofittargetoruntilithitsyoustoplosslevelthatyoumanuallytrailedaboveorbelowswingsinthemarket.Youwillnevermakemoneyifyoukeepcuttingyourprofitsshortbecauseyoufearoflosingthem.Howwouldyoufeelifafteryouclosethetradewith100pipsinprofit,pricegoesonfurtherandhitsyourtargetlevelat200pipsinprofit?
![Page 29: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/29.jpg)
LettinglossesrunThisisalsoaverycommonmistakemadebynovicetraders.Whenyouseethatpriceisgoingtowardsyourstoplossdon’tevermoveitfurtherawaythinkingthatitisjustaspikeinpriceandthetradewillgoyourwayeventually.Thesecondyouremovethatstoplossfromitsinitialplacedecidedbythesystemyouconstructedyouputyourselfundergreatrisk.Acceptthesmalllossandwaitpatientlyforthenexttradesetup.Therewillbesomeoccasionalloses;nosystemisperfect,justbecauseyouhadalossdoesnotmeanthatyouhavetochangethesystembecausethereissomethingwrongwithit.Acceptthesmalldrawdownandleavethestoplosslevelinitsplaceotherwise,insteadofa20pipsloss,youwillquicklyfindyourselfinapositionwhereyouhavenochoicebuttoacceptamuchbiggerloss.Itdoesnotmatterifyouloseonetrade,asyouhaveseenearlier,youcanbeprofitableevenifyouonlywin33%ofyourtradeswithsolidmanagementrules.
![Page 30: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/30.jpg)
RevengetradingIfyouloseonetrade,keepcalm,donotthinktoyourselfthatyouhavetorecuperatethelossrightaway.Thisistheworstthingyoucoulddo,toenterthemarketrandomlyandwithabiggerordersize,notobeyingyourtradingsystem,thinkingthatyoumustgetbackthemoneyyoulostotherwiseyouwon’tsleepwellthroughthenight.Thisiscalledrevengetrading,anditcloudsyourjudgmentsohardthatyoucouldloseallyourhard-earnedmoneyinasingleday.Closethecomputerandgoaboutyourbusiness.Tomorrowisanotherdayandyouwillgetthemoneybacksurelyifyoutradeaccordingtoyourtradingsystem.
![Page 31: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/31.jpg)
50PipsADayForexStrategy
Components200periodsExponentialMovingAverageSupportandResistancelevelsCandlesticksThisisaclean,easytofollow,andextremelyprofitabletradingstrategytogetyoustartedintradingandtoputyouonthepathofconsistentprofitability.Itisbettertotradewiththisstrategyonthe4hchartbutyoucantradeitonthedailyaswell.Thebiggerthetimeframe,themoreimportantitisfortheoverallmarketmovements,therefore,themoreprofitableyourtradingwillbe.Itisveryeasytounderstandandtoputinpracticeimmediately,anyonecandoitiftheyknowthebasicsofhowtheforexmarketworks,whataforexpairis,andhowtoopenandcloseanorder.Iwillnowexplainhoweachofthethreecomponentshelpsustowintradeswiththisstrategy.Themovingaveragetellsuswhatthemaintrendisonthe4hchart.Thisisverysimpletodo,justplotthe200EMAonyour4hchartandobservewherethecurrentpriceissituatedinrespecttothemovingaverage.Ifthepairatthecurrenttimetradesabovethemovingaveragethentheoveralltrendisup,ifittradesbelowthemovingaveragethenthetrendisdown.Themovingaverageitselfmusthaveaclearslopeinonedirection.Thismeansthatforyoutoconsiderthatthetrendonthe4hchartisupthemovingaveragemustbeslopingupwardsandthepairhastobetradingaboveitatthattime.Foradowntrend,themovingaveragemusthaveaclearslopedownandthepairhastotradebelowit.
![Page 32: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/32.jpg)
Thisdiagramshowsexactlyhowtospotanuptrend.Afterweestablishthatthereisacleartrendwethenmoveontothenextlevelandwewilltrytofindasupportorresistancelevel.Ihavetoldyouthatthemovingaveragehelpsustogaugethetrendonapair.Ifwefindatrend,wegoonfurtheranalyzingthatpairtofindasupportoraresistancelevel,whereitismostlikelythatwhoeverisinchargeofthatpair(thebuyersorthesellers),willpickupthepace,andresumethetrend.Thesupport/resistancelevelhastobeadiagonaloneandthetrendlinedrawnonthecharttoconstructithastobeslopingagainstthetrend.Youdrawthistrendlineonyourchartbyconnectingatleasttwodistinctpointsinthemarketalthoughthreepointswillbebetter.HereiswhatImean:
![Page 33: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/33.jpg)
Inthisdiagram,youcanseethatafterrecognizingacleardowntrendwemoveforwardtodiscoverthreeresistancelevelsoneafteranother.Onthefirstonewedrawatrendlinetoconnectthethreedistinctswinglowsfoundthere,onthesecondone,wehaveonlytwodistinctpoints,andonthethirdone,wehavefourpointstoconnectwithatrendline.Themorepointstherearetoconnectthebetter,themoreimportantthesupport/resistanceis.Youcanalsoseethatallofthesethreelevelsarepointingupagainstthemaintrend,whichisarequirementforthistradingstrategy.Thesethreelevelsatfirstservedassupportforpriceactionbutoncetheywerebrokentothedownside,theyturnedintoresistancelevels.Now,aboutthethirdcomponentofthisstrategy.Thisstrategyusescandlestickstoentertrades.Afterfindingacleartrendandasupportorresistancezone,youhavetowaitforpricetogobacktothatsupport/resistancelevelandretestit.Thisiswherethecandlestickscomeintoplay.Beforeyouenteratradeinthedirectionofthemaintrend,therehastobeacandlestickconfirmationthatthetrendisindeedresuming.Youwillbelookingforbigbodycandlesticksthatcloseatornearthehighorlow,whichshowsthatthereismomentuminthemarketandthedominantside(buyersorsellers)havedecidedtostepinandcontinuethetrend.LetmeshowyouthesamechartaboveagaintoseewhatImeanbyretestoftheresistancelevel:
![Page 34: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/34.jpg)
Youcanseethateachtimethesupportwasbrokentothedownside,itturnedintoresistanceaspricegetsbackuptoretest/touchthetrendlinepreviouslydrawn.Itwillnotalwaystouchthetrendlinelikeintheexamplesabove;sometimesitwillgetnearitandthenresumethetrendwithoutatouch.Thisisalsoaretest.Inthediagramabovewherewehaveacleardowntrendandresistancelevelsinplace,wealsohavenowretestmovements.Afterthispointwewillbelookingforbigbearishcandlestickswithbigbodiesandwithnoorsmallwickattheclosetosignifythatthesellershaveenteredintothemarketagaintopushthepricefurtherdownandextendthetrend.Letuslookatthesamechartagainbutthistimefocusingonwhathappensaftertheretest.
![Page 35: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/35.jpg)
Thisisthefirstresistanceleveloutofthosethree.Thereisatouchoftheresistancetrendlinemadebythatbigbullishgreencandle.Afterthispricemakesthreeverysmallcandlesthattellusthislevelofpriceisakeylevelwherebuyershaveaveryhardtimetryingtopushthepricefurtherup.Thistypeofcandlesrepresentsindecisioninthemarket,representsequilibrium.Fromthebeginningoftheretest,buyershadnoproblempushingthepriceupwhichyoucanclearlyseebythosebigconsecutivebullishgreencandles.Whenpricegottheresistancelevel,thesituationchanged.Asthemaintrendwasdown,sellerswereincontrolofthispairandtheywerejustwaitingforamoreadvantageousleveltosellagainthispairandresumethedowntrend.Theseadvantageouslevelsarealwayssituatedatasupportorresistancelevel.Itcanbehorizontalsupport/resistance,itcanbediagonalliketheoneswearediscussing,itcanbeaFibonacciretracementlevel,whichalsoactsassupportandresistance,itcanbethe200periodmovingaverageonthedailychartoritcanbeacombinationofsomeoralloftheabove.Theimportantthingtorememberisthatthesearelogicalpointsinthemarketwherebuyersorsellersaremostlikelytostepinandresumethemaintrend.Okay,afterthosethreesmallcandlesthattellusthebuyersarelosingtheirpower,comesabigredbearishcandle,muchbiggerthanthe
![Page 36: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/36.jpg)
precedingthree.Thiscandlehasabigbodycomparedtotheprecedingcandlesandalsoclosesnearitslow.Thiscandleisthefootprintofthesellerscomingintothemarkettopushthepricebackdownandresumethetrend.Thecloseofthiscandleisthelevelwhereyouwouldhavetosellthispair.Whenlookingafterbigcandlestoenterthemarketafteraretestofsupport/resistanceitisimportanttoalwayscomparethatcandlewiththepreceding2-3-4candles.Theentrycandlealwayshastobebiggerthantheprecedingones,hastohaveabigbodyandcloseatornearthelowifitisbearishoratornearitshighifitisabullishbigcandlethatsignifiestheuptrendwillresume.YoumightthinkthatIamexaggeratingtheimportanceofthisentrycandle.Well,tohelpyourealizewhatitreallymeansandwhyIsayitisthefootprintofthesellerscomingintothemarket(inthisdowntrendexample)youmustthinkofthese4hcandlesfromatimeperspective.Beforethisbigredcandleintheexampleabovetherewerethreeverysmall4hcandlesthatdidnotpushthepriceupordown,itjusttradedthereinaverysmallrange.Whenthebigcandleemerges,weseethatthepricepusheddownandawayfromthatsmallrange.Thissignalcandleisbiggerthanalloftheprecedingthreecombinedanditwasformedin4hours.Thelastthreetook12hourstoform.Thisiswhatshowsusthesellershaveenteredthemarket.Inonly4hours,theymanagedtomovethepricedownmorethantheydidinthelast12hours.Letusseethesecondexample:
![Page 37: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/37.jpg)
Inthissecondexample,youcanseethataftertheretestoftheresistancetrendlinetherearethreebearishcandleswithdecentbodysize,whichwouldimplythatsellershavesteppedintothemarketagain.However,thefirstcandleofthesethreeisprecededbyahugebullishgreencandle.Thisisnotoursignaltosell.Thesecondoneisbiggerthanthefirstandalsohasnobigcandlesprecedingit.However,youcanseethatitdoesnotcloseatornearitslow,ithasabigwickthere,pricehasretracedfromthelowofthiscandleandclosedalmostatitsmiddle.Thisdoesnotgiveusthemomentumwewantwhenenteringatrade.Finally,thethirdcandlemeetsourrequirements;therefore,weentertheshorttradeatthecloseofthiscandle.
![Page 38: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/38.jpg)
Thisthirdexampleisaveryinterestingonebecauseitbringsupanimportantpointaboutretestmovementsofsupportandresistancelevels.Youseeherethatafterpricebreaksthetrendlinetothedownside,itcomesbackupveryquicklytoretestit,atrendlinethathasnowturnedintoresistance,andthenitmakesabearishredcandlethatcouldmeansellershaveenteredthemarket.However,thisisthe4hchart,thisresistancelineholdsgreatsignificance,ittookquitesometimetodevelop,andalotof4hcandles,theretestabsolutelyhastobebiggerthantwo4hcandles.Thisiswhyyouwouldhavetodisregardthatfirstredcandleasasignaltosellcandle.Itcomeswaytooearly,theretesthastobebiggertwocandles.Ifthiswouldhavebeenthe5minutesorthe15minuteschart,andtheresistanceleveldevelopedin3hoursorsothenyes,theretestcouldhavebeencomposedofjusttwocandles.Still,thisisaveryimportantresistanceonthe4hchartthattookdaystodevelop;theretestwillmorethanlikelybebiggerthantwocandles.Afterthisredcandle,weseethatthereareadditionalcandlesthatjuststagnatearoundthatareacompletingtheretestoftheresistancelevel.Finally,wehaveavalidsignalcandlethatindeedpushesthepricewaydown.
![Page 39: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/39.jpg)
StoplossmanagementandtakeprofitlevelsNowthatyouknowhowandwhentoenteratradeletusdiscussaboutwheretosetyourstoplosslevels,howtotrailthemmanually,andhowtodetermineyouridealtakeprofitlevels.Theinitialstoplosslevelthatyousetwhenenteringthetradehastoalwaysbesetataboveorbelowthelevelwheretheretestofthesupport/resistanceends.Afterthis,whenpricegoesinyourfavoryoutrailmanuallyyourstoplossaboveorbeloweveryswing/turningpoint/minorsupportorresistancepricemakes.Inadditiontothis,youwillalsobedeterminingyourtakeprofitlevelbeforeyouactuallyenterthetrade.Thisisveryimportantfromthemoneymanagementperspectivebecausetherewillbesomerareoccasionswhenaftercalculatingyourtakeprofitandstoplosslevelbeforeenteringthetradeyouwillfindthattheriskyouwillbetakingwiththattradeisgreaterthanthepotentialreward.Otherwisesaid,youwouldhavetorisklosingmorepipsthanyoucouldpotentiallywinwiththatparticulartrade.Therisk-rewardratiointhiscaseisnotasatisfactoryone.Whenyoufindtradeslikethis…DONOTTRADE.Waitforthenextopportunity.Moneymanagementmakesyouprofitableinthelongrun;alwayskeepthisinmind.Beverydisciplinedwhenanalyzingchartsandenteringtrades.Alwaystreattradingasabusinessandnotasagame.Letusseeanexampleofhowtomanagethestoplossandtakeprofitlevels.
![Page 40: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/40.jpg)
Thisisthatfirstresistancelevelwetalkedabout.Beforeenteringthetradeatthecloseofthesignalredcandle,youpredetermineyourtakeprofitlevelinthefollowingway:joinwiththetrendlinetwopoints,thefirstswingoftheresistancetrendlineandthepointwheretheretestmovementstarted.Thefirstswingoftheresistanceistheupperblackcircleinthischartandthestartoftheretestisthesecondblackcircle.Afterthis,extendthistrendlinedown,andwherethefuturepriceactionwilltouchit,thatisyourtakeprofitandthelevelwhereyouexitthetrade.Thestoplosswillbesetinitiallywheretheretestfinishedlikeshowinthischartandafterthis,aspriceprogressesdownitgivesyoulogicalturningpointsinthemarketwhereyoucantrailthestoplosslikeinthischart.Alsointhisexample,youcanseebeforeenteringthetradethattheriskisfarlessthanthereward.Thiswasa420pipswinningtrade.
![Page 41: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/41.jpg)
Inthissecondexample,thetrendlineforthetakeprofitlevelextendsfaroutofreachforthepriceaction,butaslongastherewardisgreaterthantheriskanditis,youwillhavenoprobleminenteringthetradeandtrailingyourstoplossaboveeveryturningpointuntilitfinallygetshit.Thistradeactuallywentmoreinfavorthanthischartshowsandgave550pipsofprofit.
![Page 42: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/42.jpg)
Thisistheexamplewiththatsmallretest.Beforeenteringthetrade,youdrawthetrendlinetofindoutwhereyourpotentialtakeprofitwillbeandyouseethatyouwouldhavetoexitthetradebeforeyouevenenteritwhichisofcoursenonsense.Inaddition,ifthattrendlinewouldhavebeen10pipslowerandyouwouldhavethechancetoenterthetrade,thiswasstillnotagoodtradebecausetheriskwouldhavebeengreaterthanthe10pipsreward.Stayoutoftradeslikethisone.Therewillbeplentyofopportunities,thesekindsoftradeshappenfrequently.Analternativewaytopredetermineyourtakeprofitlevelwhenthefirstmethodrendersthetradeunsatisfactorybecauseofthehighriskandlowrewardisthefollowing:
![Page 43: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/43.jpg)
Connectwithatrendlinethelastminorswingthepairmadebeforethetrendlinewasbrokentothedownside(inthecaseofadowntrend)andthesamestartoftheretestmove.Usewhichevermethodgivesyouabettertakeprofitlevelaslongasitisnotexaggeratedandyouthinkthereareextremelylowchancesthatthemarketwillactuallygotothatlevel.Ifthismethodalsodoesnothelpyouachieveagoodrisk-rewardratiothenignorethetradecompletely.Asecondmethodthatyoucanusetotakeadvantageofthefactthateverysupportbecomesaresistanceandeveryresistancebecomesasupportlevelaftertheyhavebeenbrokenittousethesamerulesaswiththemethodabove,butapplyingthemtohorizontalsupportandresistancezonesthistime.However,withthediagonalsupportandresistancezonesyouhaveseenthattheyareformedbyconnectingtwoormoredistinctswingsinthemarket.Withthehorizontallevels,oftentimes,youwillnothaveaseconddistinctswingthatyoucanusetodrawahorizontalline.Knowingthis,youmustleavethecandlestickchartandgotothesame4-hourschart,butabarchartthistime,andzoomedoutcompletely.Letmeshowyouanexampleofthis.
![Page 44: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/44.jpg)
Pleasenotethatthesehorizontallevelscomeintoexistencejustbydrawinganextendedhorizontallineatthelevelwheretheimportantswingsinthemarketare.Ifyouwanttotradetheretestoftheselevelssuccessfully,youhavetomakesureinitiallythattheyholdgreatimportancetotheoverallmovementsofyourparticularforexpair.Awaytomakesureofthisisbyzoomingoutcompletelythechartlikeintheexampleabovetoseethebigpictureofthepriceactionmovements.Thisway,youcanputyoursupportorresistancelevelintocontext,youcanjudgebylookingatthesurroundingpriceactionifaswingisindeedimportantornot.Forexample,inthechartabove,afterthefirsthorizontallevel,thereisaminorswingthatpricehasmadethere.YoucanseethatIhavenotconsidereditasIthinkthatthisswingissmallerthantheprecedingonesonthispairanditdoesnotholdgreatsignificancetotheoverallcontextofthispair.Inadditiontothis,afterthelasthorizontallevelthatI’vemarkedontheabovechartthereatthetop,youcanseethatpricegoesdownforawhile,onlytocomebackupagainandresumetheuptrend.Atthispointintime,ifIwaslookingatthezoomedincandlestickchartinsteadofthischart,Icouldhavemadethemistaketothinkthatthoseswingsthepricemakesonitswayup,aresignificantforthebigpictureonthispairwheninfact,theyholdnosignificanceastheyarecontainedwithintheswinghighthatmakesuptheforthhorizontal
![Page 45: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/45.jpg)
resistancelevelonthischart.However,thisisonlyvisiblewhenlookingatthezoomedoutchart.Letusseethischartagaintoexplainthis.
Afteryouidentifythesemeaningfulhorizontallevels,youwillhavenoproblemtradingaretestofthem,exactlylikeinthemethodabovewiththediagonalsupportandresistanceareas.Letusseeanexample:
![Page 46: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/46.jpg)
Asyoucansee,thingsareclearinthistradeexample.Themovingaverageisslopingupandthepairistradingaboveit.Thereisaclearuptrend.Youzoomoutthechartandyoufindthatthisswingisactuallyquitesignificantbylookingatthebigpicture.Youdrawtheextendedhorizontallineandyougobacktothecandlestickzoomedincharttowaitfortheretesttotakeplace.Theretestdoesindeedhappenrightatthehorizontalsupportlevelandsoonenough,youhaveaconfirmationthatthebuyershaveenteredintothemarketagainatthislevelandtheyaremostlikelytopushthepriceupwardsandextendtheuptrend.Theconfirmationisrepresentedbythatbig,green,bullishcandlethatisalsoyoursignalcandletoenterabuyorder.Thebuyorderisopenedatthecloseofthesignalcandleofcourse.Trademanagement(stoplossandtakeprofit)ismadeexactlylikewiththediagonallevelsmethod.Thisisaboutit.IhopethishelpsyouinyourtradingIntheendIwouldliketoapologizeifIsoundalittletorigidinmyexplanationsandifthereareanymisspellings.Englishisnotmyfirstlanguage.IamdoingthebestIcan.
![Page 47: 50 Pips A Day Forex Strategy - PDFDrive...Revenge trading 50 Pips A Day Forex Strategy Components Stop loss management and take profit levels Introduction Before you start to construct](https://reader035.vdocuments.site/reader035/viewer/2022062311/5fc956fc0169fc6f1e140f0a/html5/thumbnails/47.jpg)
IfyoufindthatthisaddsvaluetoyourtradingpleaseconsiderwritingareviewofthebookonAmazon.Itdoesnothavetobelong,justafewwordstostateyouropinionaboutthetradingsystempresentedinordertohelpotherpeoplemakemoreinformeddecisions.Pleaseemailmeafterwardsatdamirlaurentiu@yahoo.comandyouwillreceivethePDFversionofthise-booksothatyoucanreaditmoreeasilyandprintthecontentsonpaperifyouwant.
50PipsADayForexStrategy
Thankyouverymuchandhappyforextrading.
Also,ifyouareinterestedincompleteforextradingpriceactionsystemsthatrespecttothelettereverysinglepieceofinformationfoundinthisbook,thereforemakingthemverysolidtradingsystemsthathavethepotentialtomakethousandsofpipspermonth,youcanhavealookatthembyfollowingthelinksbelow:
TradethePriceActionTradetheMomentum
FollowPriceActionTrendsDayTradingForexwithPricePatternsDayTradingForexwithS&RZones
ForexRangeTradingWithPriceAction
ThesetradingsystemsarealsoavailableinPDFformatifyouwanttobeabletoprintthemandreadthemmoreeasily.Herearethelinks:
TradethePriceActionTradetheMomentum
FollowPriceActionTrendsDayTradingForexwithPricePatternsDayTradingForexwithS&RZones
ForexRangeTradingwithPriceAction50PipsaDayForexStrategy
Inaddition,Ihavecombinedalloftheabovetradingsystemsintoone