Best Forex systems

Why should you trade forex market ?

noreply@blogger.com (Online secret) — Mon, 20 Aug 2007 08:14:00 +0000

Two completely opposite �??schools of thought�?? dominate today�??s public opinion when it comes to financial markets. One school of thought is advocated by academic types, mostly economics, finance and mathematics professors. They will tell you that �??markets are efficient�?? and that there is a zero chance for an individual to outperform any liquid financial market in the long run. Well, of course the guys with cushy university jobs, without any real world or business experience, will tell you that you don�??t stand a chance to succeed. You should continue to work your little day job so that they have someone to make their sandwich or to change oil in their cars. People who subscribe to this theory usually choose to stay out of financial markets and keep their cash stashed in their mattresses.

Another school of thought is advocated by financial TV and radio stations, investment firms, brokerages etc�?� �??Surprisingly�?? they are all trying to portray financial markets as an idyllic place where happy Moms, Dads and Grandpas use sophisticated software to place winning trades from their laptops while vacationing on sandy Caribbean beaches�?� Countless �??talking heads�?? are enjoying their daily parade on TV channels such as CNBC or CNN supplying mostly worthless advice to general public. Their �??analysts�?? change their opinion every day in a fashion that even George Orwell would find hard to comprehend. And everything they say always seems to �??make sense�?? at the moment when they are saying it. Next day, when it turns out that they were totally wrong, they are telling you an entirely different story as if yesterday never happened. And if you noticed, the hosts never, ever bring that up. Why? Well, �??the show must go on�??. They have to show you that every day you are missing on countless trading opportunities; you just need to watch their shows, subscribe to fancy software that they sell you and you are on your way to early retirement.

I do agree with the statement that financial markets are efficient. They are very efficient in one thing - transferring money from bad and naive traders/investors to
the pockets of those that know what are they doing. You are now probably asking yourself �??What am I doing in this field? Do I have any chance to succeed?�?? The answer is �??Yes, you do.�??. The system that we are about to reveal to you is a fail proof entry and exit strategy that will put you on equal level with big investment firms and with experienced professional traders.

A question that I hear the most from aspiring traders is �??Which market should I trade? - Stocks, Futures, Commodities...?�?? Well, with the right attitude and dedication there is money to be made in every market. However, there is one market that is still largely neglected by smaller traders even though it offers great profit potential and numerous trading opportunities. It is Forex or Foreign Exchange market.

Why should you trade forex market?

Simply said, no other trading instrument comes even closely to forex market when it comes to liquidity, 24hr market environment and last but not the least, profit potential. Forex (currency) market is the largest (most liquid) financial market in the world, with an average daily volume of more than US$ 1.5 trillion, which is more than all of the global equity markets combined. Forex trading day starts in Wellington, New Zealand followed by Sydney, Australia, Hong Kong and Singapore. Three hours later trading day begins in Dubai (UAE) and other Middle Eastern countries. In couple of hours they are followed by Frankfurt, Zurich, Paris, Rome�?� London is the last one to open in Europe and five hours later it is followed by New York, Chicago and finally the West Coast. The busiest hours are early European mornings because at that time major Asian exchanges are still open and European afternoons because at that time major US markets are open at the same time as Europe. Therefore, wherever you live and whatever your work hours are you can always find some time to participate in forex trading as opposed to stock market where you are usually limited to the regular business hours.

Another property of forex market that makes it an excellent trading instrument is use of leverage. Many beginning traders don�??t fully understand the concept of leverage. Basically, if you have a start up capital of $5,000 and if you trade on a 1:50 margin you can effectively control a capital of $250,000. However, a two percent move against you and your capital is completely wiped out. If you are a beginning trader you should not use more than 1:20 margin until you get comfortable and profitable and then and only then you can attempt to use higher margins. What does 1:20 margin mean? It means that with your $5,000 you will control a capital of $100,000. Let�??s say you are trading EUR/USD and by using our entry strategy you have decided to enter the trade on a long side. That means that you are betting that USD will depreciate against Euro. Let�??s say current EUR/USD rate is 1.305. Again, if your trading capital is $5,000 and you are using 1:20 leverage you will effectively be exchanging $100,000 to Euros. If the current rate is 1.305 you will receive 100,000/1.305 = 76,628 Euros. If the trade goes in your direction the margin will work in your favour and 1% decline in USD will mean 20% increase in your start up capital. So if EUR/USD rate moves from 1.305 to 1.318 you will be able to exchange your 76,628 Euros back to $101,000 for a profit of $1,000. Since your start up capital was $5,000 it is effectively a 20% increase in your account. However, if the trade went against you and USD appreciated 1% vs. Euro your account would be reduced to $4,000. That would not have happened as our strategy has built in hard stops to prevent such outcome.

And the third and equally important property of forex market is the fact that trends in forex market last longer and are more clearly defined than in any other trading instrument.

Which strategy should you use?

Another question that is often asked by aspiring traders is �??What kind of trading approach should I use �?? day trading, swing trading, position trading? How many indicators should I use? Should I follow the TV news channels?...�??

If you are facing similar dilemmas let me try to make an analogy. If you were attacked in a dark alley and you felt that your life was in real danger what kind of defence technique would you attempt to use. Would you attempt to kick your assailant with some fancy kung fu move that you saw in a movie? Or would you use some basic but brutally effective �??knee to the groin�??, �??thumb to the eye�?? technique that is easy to implement and that you are 100% certain will have an effect? When you have your hard earned money riding on your trades maybe your life is not at stake but your and your family�??s livelihood is. The goal of all the other traders in the market is to take your money. And if you are going to play around with some fancy tools and indicators that you don�??t even understand you can be assured that your hard earned money will be paying someone�??s BMW lease payments.

If you want to get to the top of the forex market �??food chain�?? you have come to the right place. The strategy that we are about to reveal to you is a completely new, efficient and reliable trading strategy that comes as the result of years of forex market research using sophisticated mathematical methods and is based on a fundamental property of financial markets.

Continue to Forex Cash Cow system

Continue to ICWR phenomenon system

The ICWR phenomenon

noreply@blogger.com (Online secret) — Sat, 18 Aug 2007 11:04:00 +0000

Regardless of how strong a long-term market trend is, the market never moves only in the direction of the long-term trend �?? there are always minor movements against the long- term market trend. These deviations usually don�??t last very long and after them the market moves again in the direction of the long-term trend.

The major market movements in the direction of the long-term market trend are called impulsive waves and the minor market movements against the long-term market trend are called corrective waves.

The picture below shows a snapshot of a EUR/USD candlestick chart. Although the market shows both upward and downward market movements it can be easily recognized that the long-term market trend is clearly bearish as between 07:00 AM and 11:00 AM the price failed around 140 pips (from 1.3500 to 1.3360 , that is 1.3500 - 1.3360 = 0.0140 = 140 pips). The waves (1), (3) and (5) are the impulsive waves; the waves (2) and (4) are the corrective ones.

Our main observation, until now disregarded by all traders in their trading strategies,is that when putting into relationship the height of a corrective wave and the height of the prior impulsive wave, the corrective wave tends to retrace the prior impulsive wave in Fibonacci ratios. Frequent relationships are 25%, 38%, 50%, 61% and 75%. Up to now we will refer to this effect as the Impulsive/Corrective Wave Retracement (ICWR) phenomenon. For example in the picture below the corrective wave (2) retraces the impulsive wave (1) in the Fibonacci ratio of 0.382.

The ICWR phenomenon is a typical self-similarity effect of a complex system. For all kind of complex systems in nature as social, chemical or physical systems such self- similarity effects can be found. Self-similarity is a fundamental property of self-organized complex systems and is a matter of recent intense investigation by physicists andmathematicians.

We have used the phenomenon described above as a starting point to develop a completely original and until now unpublished trading strategy that combines basic principles of Elliot Wave theory together with well-known properties of Fibonacci ratios. The result is amazing, as you will soon find out. We have named the strategy �??Impulsive/Corrective Wave Retracement (ICWR) Trading Rules�??.

Before going into the details of our strategy we will introduce it to you by showing you a simplified, shortened version and in the later chapters you will be shown how to put it to use and immediately start taking advantage of it. Our strategy gives the best possible entry as well as exit moment. In the example below we will show you only the part that is usually neglected by most of the trading strategies currently in use �?? how to find out the best moment to exit the trade. For the purpose of making the example easier to follow we will assume that we have already found the best moment to enter the trade.

While going through the trading example below you will realize that the part of our strategy related with the exit signal follows the fundamental trading rule �??cutthe losses short and let the profits run�?? - in a way that was never accomplished before.

And, why is this fundamental trading rule so important?

Because not letting the profits run will make your trading unprofitable in the long run: two losses of 50 pips followed by a win of 80 pips results in a net loss of 20 pips. In contrast two losses of 50 pips followed by a win of 250 pips, reachable with our strategy, results in a net win of 150 pips! I�??m sure you get the point.

Continue to Example part 1

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ICWR phenomenon example part 1

noreply@blogger.com (Online secret) — Sat, 18 Aug 2007 09:12:00 +0000

Here is an example of a GBP/USD trade exit by using our strategy.

The purpose of the example below is to give you a glimpse into the exit part of the strategy. Suppose we entered the market short at point A buying 10,000 USD at the entry price of 1.9075. For the first moment the market moved into our direction and reached the point B. At that point the market reached a value of 1.9028. That means 48 pips in our direction. So far, so good.

However, after the point B the market starts an upward movement. What to do now?

Inexperienced trader would close the position as a scared rabbit, happy to take even small profit from the trade. But this would be the wrong decision. Why?

Remember,we have to �??let the profits run�??, if we want to make trading profitable in the long run.

So what do we do?

The essential question is:

When do we decide that our trade has run out of steam and should be exited ?

This is where our strategy comes into play. By using the �??Impulsive/Corrective Wave Retracement Trading Rules�?? we will find the best possible time to exit the trade and extract maximum profit from each trade.

In order to apply our trading strategy the following trading setup has to be done. First of all the highest and the lowest value of the downward movement are determined. In our case the extreme values of the downward movement are point A and point B. We will connect them with the thick blue line.

Further on we draw the Fibonacci levels using the lowest value of the downward movement (point B) as the starting point (level 0.000) and the highest value of the downward movement (point A) as the ending point (level 1.000). As we are only interested in the 0.000, 0.250, 0.382, 0.618, 0.750 and 1.000 levels, only these levels will be drawn.

We are going to exit the position only in the case that the price goes beyond the 0.750 level, i.e. if it happens that a whole candlestick is above the 0.750 Fibonacci level.

Continue to ICWR phenomenon example part 2
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ICWR phenomenon example part 2

noreply@blogger.com (Online secret) — Fri, 17 Aug 2007 16:52:00 +0000

The upward movement retraced at the 0.618 Fibonacci level approximately at point E. As the price didn�??t move beyond the 0.750 Fibonacci level we remain in the market. Let�??s look what happens next.

After point E the market moves again downwards in our direction until it reaches a low point at the point F. After that, again the price starts to rise. The distance to our entry point is now around 120 pips. Again we set our trading setup: a line is drawn connecting the extreme values (E-F) of the downward movement and based on this line the Fibonacci levels are drawn. Remember, we are only going to exit the position if the price goes beyond the 0.750 Fibonacci level.

The upward movement retraced at the 0.750 Fibonacci level approximately at point G. As the price didn�??t move beyond the 0.750 Fibonacci level we remain in the market. Let�??s look what happens next. After point G the market moves again downwardsin our direction until it reaches a minimum at the point H. After that, again the price starts to rise. The distance to our entry point is now around 200 pips.

Again we set our trading setup: a line is drawn connecting the extreme values (G-H) of the downward movement and based on this line the Fibonacci levels are drawn. Remember, we are only going to exit the position if the price goes beyond the 0.750 Fibonacci level.

The upward movement retraced at the 0.250 Fibonacci level approximately at point I at 20:25. As the price didn�??t move beyond the 0.750 Fibonacci level we stayed in the market. Ok, let�??s look what happens next. After point I the market moves again downwards in our direction till it reaches a minimum at the point J. After that, again the price starts to rise. The distance to our entry point is now around 270 pips.

Again we set our trading setup: a line is drawn connecting the extreme values (I-J) of the downward movement and based on this line the Fibonacci levels are drawn. Exit signal occurs if the price breaks the 0.750 level.

Then the market trend starts to turn bullish. As the price has gone beyond the 0.750 level (the whole candlestick is above the 0.750 level at point K) we exit the trade selling 10,000 USD at the price of 1.8838.

As you can see above our exit strategy was able to determine the best possible time to exit the trade and extract maximum profit from it.

In order to show you how efficient our strategy actually is, we will compare the result we achieved with the result we would have achieved if we had used a trailing stop instead.

As you can observe from the chart above after entering the position the market was clearly going in our direction (at the point D a profit spread of almost 150 pips was already reached). However, the trailing stop doesn�??t give the trade enough space to run.

If we would have used a trailing stop to exit the trade we would have achieved a profit of only 90 pips and our trade would have finished too early. Instead, using our strategy a profit of 237 pips �?? almost three times more �?? is achieved !

....................................................

End

Read again about Forex Cash Cow system
or
Read the phenomenon strategy

ICWR phenomenon example

noreply@blogger.com (Online secret) — Fri, 17 Aug 2007 03:59:00 +0000

forex trading system

Forex Cash Cow part 1

noreply@blogger.com (Online secret) — Tue, 31 Jul 2007 09:11:00 +0000

Over time I have read and tested many trading ideas for different markets. In the past I was naive enough to think that the more complex and the more time and effort I put into designing a trading strategy the better it will work and the more money I will make. It took time and some loss of money in order for me to learn that it is the simplest and easiest to implement trading strategies that yield the best results. Using common sense with correct money management is the key. Understand and follow these two principles, and I guarantee you will be light years ahead of the 95% losing crowd.

I believe that a good trading strategy is one that exploits certain occurrences in the market that do not happen very often. While the losing crowd tries to trade every day and force trades on non- existent opportunities the winners wait like hunters for those high probability low risk trades.

Strategy Implementation

I refer to the Forex Cash Cow strategy as my bread and butter strategy! There are several reasons of why I like it so much. First, it is very accurate, probably the most accurate strategy I am currently using. Second, it does not occur every day, on an average I expect to see it 3-4 times per month. This means less stress for the trader and more free time to pursue other activities. Third, most of the time I know a day in advance if there is going to potentially be a signal or not. Fourth, it has the potential of providing a very nice profit for the patient trader.

The logic behind this strategy is simple, once the market has �??exploded�?? price wise to a certain direction it will continue moving in that direction until it runs out of fuel. The Forex Cash Cow strategy aims to catch the move from the moment the market has proven to have �??exploded�?? to the moment it runs out of fuel! The idea is simple, instead of speculating if and when a large move in price is due we just wait for the market to tell us �??I started moving hard and fast, please join!�??.

The Forex Cash Cow strategy works very well in the currency market simply because this market possesses the characteristic of having various sharp and long price swings. I have noticed that throughout the month currencies tend to have various strong two day trends. These two day trends are what this strategy aims to exploit.

The one thing that always bothered me when trading currencies are the fake moves that occur prior to the market really deciding on a direction. This phenomenon is very common in volatile markets and can kill you if you do not know how to handle it. Don�??t get me wrong, volatility is very good for a trader. Without sharp moves we cannot make those handsome profits in the short term. However, you have to know how to approach this volatility.

Continue to part 2
Or read another greatest trading system called ICWR

Forex Cash Cow part 2

noreply@blogger.com (Online secret) — Tue, 31 Jul 2007 09:08:00 +0000

The bigger the moves a currency pair makes the higher are the chances of success using this strategy. This is why I chose to use the GBP/USD pair; it has the largest short term moves of all currency pairs.

Many market analysts/system designers/technicians claim that for a trading strategy to be good it has to work in every single market. I strongly believe the opposite. For me, every market has its own personality. This is why I adapted this strategy to the GBP/USDpair. I think its personality is the most adequate for trading the Forex Cash Cow strategy (or any other trend following strategy).

The problem I encountered when designing this strategy was how to establish that a trend has started without it being too late to place a good risk/reward trade. I found that there are two problems with trying to identify and join a trend. First, you caneasily get tricked into thinking that a trend has started only to find out some time later that this was a fake move. Second, by the time you spot a valid trend it is either to late since it is ending or if it is not ending a very good reaction is due which could easily hit your stop loss.

The first requirement that must take place is an intraday �??explosion�?? in price. We want to see the market being extremely bullish or bearish within a relatively short period of time. For our purposes �??a short period of time�?? means one trading day (measured on a daily bar chart). I found that if the GBP/USD pair moves 140 pips or more to one direction in one trading day an �??explosion�?? in price has taken place and the trend will probably continue into the next trading day or two. The 140 pips is a very important number.

Less than that and it is probably just a common intraday swing which does not provide any insight as to whether a good trend is possibly developing. It is not an every day occurrence that the GBP/USD moves 140 pips or more (in a single day), it probably happens an average of six or seven times a month and that is why it is so special. As a general trading rule, the less often a certain trading opportunity occurs the more profitable it can be.

Once we spot an explosion in price as described above, step two comes into play. On the next trading day we want to see the market move 70 pips in the direction of the price explosion. We enter the trade in the direction of the move at a distance of 70 pips (it will not always be exactly 70 pips as you will see later on when the 30 pip rule comes into play). Don't worry, it is all very easy to calculate as you will learn shortly.

A stop loss of 60 pips is immediately placed. The exit is either a profit target of 100 pips or a time target of 11:30 of the next day, whichever is reached first.

Let�??s go over several examples. All times New York time.

Continue to see Cash Cow Example 1

EXAMPLE number 1

noreply@blogger.com (Online secret) — Tue, 31 Jul 2007 08:41:00 +0000

The first step is to look at a daily bar chart to spot a +140 pip day. Every trading software/platform will provide you with the high and low for every day on a daily bar chart. In the following chart we can see that on day one the first condition of the Forex Cash Cow strategy, +140 pip move, has been fulfilled.

Now a closer look on a five minute bar chart:

It is not necessary to look at the five minute bar chart since the daily bar chart will give you all the information you need. However, I just wanted you to see the first condition of the strategy on a smaller time frame.
The next requirement to be fulfilled is that the next trading day the market moves 70 pips in the direction of the price explosion. Let�??s look at the day later on a daily bar chart.

Remember, at this point we are looking for a down move since that is the direction of the price explosion. So here we can see the market first making a high at 1.7512 and then trending downward. Our entry is triggered at 1.7442 (70 pip move in the direction of the trend). We enter a short position and immediately place a stop loss order at 1.7502 (60 pips) and a profit objective order at 1.7342 (100 pips). The market reaches our profit objective on the same day and we manage to make a profit of 100 pips from this trade.
Let's look at how all of this would have occurred on a five minute bar chart.

Continue to see Cash Cow Example 2

EXAMPLE number 2

noreply@blogger.com (Online secret) — Sun, 29 Jul 2007 16:19:00 +0000

I chose this next example since it illustrates how the market can be tricky at times. Look at this next daily bar chart.

The market made a sharp down move of about 120 pips. Then, as evidenced by the close of the day (remember, the small line on the right side of the bar), it reversed and swung 155 pips. The bar itself is visually tricky since at first glace the trader sees the whole bar pointing downward! However, you must always guide yourself by the opening and closing price of the day (again, the two little lines on the sides of the daily bar). By looking at the opening and closing price of the day we can see that although it seems like a down trend bar it is not and the opposite is true. So, the first part of the strategy is fulfilled as the market moves 140 pips upward. We now want to see if the trend continues the next trading day. Let�??s look next day.

As we can see from this daily bar chart, the market continues its upward trend from the prior day. After making a low at 1.7369 it swings upward 70 pips triggering our long entry position at 1.7439. A stop loss order is immediately placed 60 pips from entry at 1.7379. Also, a profit objective order is placed at 1.7539 (100 pips). It doesn�??t take long and our profit objective is reached netting a profit of 100 pips.