Daily Forex Fanatics 2012 Slides

Disclaimer Do not trade the strategies in these slides. You can use them as examples of how to develop YOUR trading system. You will only be successful by testing and evaluating them yourself.

1. Mindset (You) 2. Trading Plan -Strategy 1. Setup (Charting, Time frame) 2. Trigger 3. Entry 4. Exit -Money Management -Risk Management -Trade Management -Time Management The Complete Trader

Our Strategy 1. Set -up Chart – 1 hour charts Pairs – AUD/USD and EUR/USD Indicators – HMA, SMA, Stochastic 2. Trigger Trend – SMA (50) 1 hour in alignment with 4 hour -Uptrend – 50 is up and price above it -Downtrend – 50 is down and price below it If trend is defined then: - enter when HMA(14) turns bullish (blue) or bearish (red) And when stochastic: -has been above 80 or below 20 and changes direction 3. Exits Stop loss – Above or below either the last swing or 50 sma whichever is further away Trailing stop – 3 pips above 50 sma Targets – 50 pip 1 st profit target (close half), Trail remaining position

Preparation Traders Mindset (Discipline, Emotional Control) >>>>>>>>>>>Trading Knowledge (Strategies, Risk/MM, PP) >>>>>>>>>>>>>>>>>>>> >>>>>Someone Else (Apiary, Mentor, Other Traders, Books, Videos) >>>>> STOP! Activation >>>>>>>>>>> Application/Implementation (Trading, Trading, Trading) >>>>> >>>Experience >>>>>>>>>>> Confidence or Frustration Evaluation Success

What is the best strategy? What is the best way to determine this issue? Is testing option the only valuable tool to understand it? Renko 7 indicator strategy Bollinger bands with ATR and RSI Crossovers Bankers close Alignment strategy Break outs Trading the bands Get a strategy

Types of Strategies 1. Trending strategies 2. Non-trending strategies 3. Counter trend strategies Primary 1. Trend 2. Support and Resistance 3. Entry Triggers Secondary 4. Exits 5. Money Management 6. Trading Psychology Order of Importance 1. Trading Psychology 2. Money Management 3. Exits 4. Entries

Developing Our Strategies Define 1. Triggers (conditions needed to trade) 2. Entry 3. Exits 4. MM 5. Adjustment

Triggers/Conditions for Trade 1. Price Action -Trends -Support and Resistance 2. Indicators -Looking for specific conditions to happen 3. Time Frame - 15 min chart Example: 1. Trade must occur in direction of the trend on the 60 min chart, with the 50 period SMA 2. Outline areas of support and resistance by connecting highs and lows on chart. Look to buy in areas of support and short in areas of resistance. 3. Wait for 3 ema to cross 10 ema for entry.

Entry Long Entry SMA going up 2. Near Support 3. Price closes and the 3 period EMA has closed above the 10 period EMA. 4. No trade if Major (red) news expected in the next 30 min. 5. Trade valid only during the London or US markets 6. Only take trades on EURUSD, GPBUSD and AUDUSD

Trade Management 1. Once in a position a. Adjustments -stops (positive movement) -target (positive movement) Entry Initial Stop Placement (Predetermined) Initial Target Placement (Predetermined ) Emotions Expectation of what is going to happen Time

Trade Management 1. Once in a position a. Adjustments -stops (positive movement) -target (positive movement) Entry Initial Stop Placement (Predetermined) Initial Target Placement (Predetermined) Emotions Unfortunate event #1 Solution: 1. Have a predetermined point to adjust stop up pip moves - Auto trailing - MA - # Candles - Adjust to Support +100 pips

Trade Management 1. Once in a position a. Adjustments -stops (positive movement) -target (positive movement) Entry Initial Stop Placement (Predetermined) Initial Target Placement (Predetermined) Emotions Do we need a time stop? Unfortunate event #2 Solution: 1. Set time to be done 2. Cut our winner 3. Look for other setup 4. Adjust stops

Trade Management 1. Once in a position a. Adjustments -stops (positive movement) -target (positive movement) Entry Initial Stop Placement (Predetermined) Initial Target Placement (Predetermined) Emotions Unfortunate event #3 Solutions: a. Close 1/2, 1/3, ¾ b. Move stop up c. Adjusting stop d. Evaluate current target placement

There are no certainties in this investment world, and where there is no certainties, you should begin by understanding yourself. James L. Fraser What do we need as a trader: 1. System, Method, Rules, Strategy (Important) a. Self learn it b. Find one c. Buy one 2. Know who we are (Critical) a. Time frame b. Schedule c. Current trading knowledge d. Trading Mindset

I. What is needed in a system? (Consistent, repeatable results) A. Rules - Risk Management Rules a. Single trade risk (1% max.) -Position size b. Portfolio risk (5-10% max.) c. Trade risk (Max. number of trades) d. Max # losses e. Max loss per day f. When not to trade (mindset, news, market....) - Entry Rules a. Identify Trend b. Identify Support/Resistance c. Indicators aligning d. What defines the trigger e. Specify R:R ratio - Exit Rules a. Stop loss b. Targets (single or multiple) c. Trailing stops d. When to adjust - Contingency Rules

Our Trading Mindset 1. Emotions (Human) - CONTROL! Need: Confidence in our System – tested and traded Leads to Discipline in following our system which leads us to become successful and profitable traders. a. Fear - of security (wars,natural disaster) - losing money - news - market never going to recover - losing out b. Greed -”Greed is Good” Gordon Gekko - Take inappropriate risks c. Over trading d. Hope

In order to avoid the issues that arise with my emotions such as fear and greed and hope, I must learn to trade what I see, not what I think or feel is going to happen.

Volatility 1. Good Volatility -Consistent movement -Big movement -Small movement -”Normal” candles/bars -Small wicks/shadows 2. Bad Volatility -Inconsistent movement -Big movement -Small movement -”Un-normal” candles/bars -Large wicks/shadows

Todd's General Rules For Managing Risk In A Trade. (TGRFMRIAT) Risk: Scalp %-0.50% Longer Term - 1% Reward: Risk Ratio: Scalping ? - Target = 5 pips 10 pip sl Longer Term - 1:1 Win ratio: Scalping > 90% Longer Term >60 1. Shorter term trading = higher w/l ratio with lower R:R ratio 2. Longer term trading = Lower w/l ratio with higher R:R ratio

The Forex market may be bad, but I slept like a baby last night.

I woke up every hour and cried.

● 5 Min. Chart (1am – 4am or 8am – 12pm NY time) ● INDICATORS: ● 10 period WMA and 20 period SMA ● Slow Stochastic (10,6,6) ● RSI (28) ● MACD (24, 52, 18) ● SMA (50) ● ATR(14) ● RULES: ● ● Buy: 10 WMA crosses above 20 SMA, STO up, RSI > 50, MACD > 0 ● Sell: 10 WMA crosses below 20 SMA, STO dn, RSI<50, MACD < 0 5 Min. Strategy

● RULES: ● ● Buy: 10 WMA crosses above 20 SMA, STO up, RSI > 50, MACD > 0 ● Sell: 10 WMA crosses below 20 SMA, STO dn, RSI<50, MACD < 0 ● Stop Loss: Below 50 SMA or 2ATR (Whichever is greater) ● Trailing Stop: Close ½ trade at Target 1, Adjust to low of last 3 candles ● Target 1: 2ATR ● Target 2: Exit on trailing stop 5 Min. Strategy

● 30 Min. Chart (1am – 4am or 8am – 12pm NY time) ● INDICATORS: ● 6 period SMA and 17 period SMA ● CCI (40) ● MACD (24, 30, 30) ● SMA (50) ● ATR(14) ● RULES: ● ● Buy: 6 SMA crosses above 17 SMA, CCI > 0, MACD > 0 ● Sell: 6 SMA crosses below 17 SMA,CCI<0, MACD < 0 30 Min. Strategy

● RULES: ● Stop Loss: Below 50 SMA or 2ATR (Whichever is greater) ● Trailing Stop: Close ½ trade at Target 1, Adjust to low of last 3 candles ● Target 1: 2ATR ● Target 2: Exit on trailing stop 30 Min. Strategy

Trading Times or Sessions - NY Sydney – 5:00 PM - Lower Tokyo – 7:00 PM – Lower -Overlap: 7:00 PM – 2:00 AM -Best Trading Time: 7:00 PM - Mid-Night London – 3:00 AM – Higher New York – 8:00 – Higher -Overlap: 8:00 AM – Noon -Best Trading Time: 3:00 AM – 5:00 AM 8:00 AM – 11:00 AM Days: 8:00 AM Mondays – Noon Friday

Money Management -Position Sizing – SL Pips – Act. Size – ITR% 200 pip - $1,000 – 2% ITR$ = $20/200 = 1 mini lots -Individual Trade Risk – Max 2% -Account Trade Risk – Max 5-10% R:R ratio - Minimum R:R – Depends - W/L ratio = 95% - R:R ratio can be less - W/L Ratio = 50% - R:R ratio need to be higher Entries - Rules Based – Swing, Position, Scalping - Trigger to enter - Time frames Exits - Rules Based - Take Profit - Stop loss - Adjustment Trading Psychology - Mental Makeup, Mood - Distractions - Ability to trade well

Any intelligent fool can make things bigger and more complex..... It takes a touch of genius – and a lot of courage to move in the opposite direction. Albert Einstein

Trade bad>losses 1. Make losses part of the plan 2. Losses are not an extension of who I am 3. Using Stops appropriately 4. Evaluate loss as a bad trade vs. trading badly 5. Make our losses acceptable – lower our risk 6. Controlling our position size

Successful Traders do Do the right things – Have Rules, Know Rules, Trade Rules 2. Worry about trading WELL, not the money 3. Know that by doing the right things well, profits will take care of themselves.

Trading Plan - Basics 1. Written Plan 2. Trading Motto/Mission Statement 3. Goals – Long Term and Short Term 4. Detailed Trading Rules – Entry, Exit, Adjustment 5. Detailed Money Management - Risk I'm a good loser and I know it!

Risk: 1. Define Your Risk - % 2. Justify Your Risk – SL 3. Quantify Your Risk -PS

Trading Strategy 1. Trend 2. Support 3. Resistance 4. Entry 5. Exit 6. Money Management 7. Trade Management

"He who wishes to be rich in a day will be hanged in a year." Leonardo da Vinci

The market can stay irrational longer than you can stay solvent!!

Until one is committed, there is hesitancy, the chance to draw back -- Concerning all acts of initiative (and creation), there is one elementary truth that ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then providence moves too. All sorts of things occurs to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one’s favor all manner of unforeseen incidents and meetings and material assistance, which no man could have dreamed would have come his way. Whatever you can do, or dream you can do, begin it. Boldness had genius, power, and magic in it. Begin now. Goethe Commitment