FOREX50.com strategies.

This system own by Forex50.com, enjoy =D>

Forex50.com /// Small Draw Down System

 

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There is a general pattern in the market, in all markets. Every

monthly candle, weekly, daily, 8 hour, 6 hr, 4 hr, 1 hr, or even in 15

minutes, market follows this pattern.

 

After a candle is finished (up candle is finished for example

purposes), the next candle will likely do two things:

 

1. open high ( without pull back ), then go low

2. open low ( with pull back ), then go high

 

Keep this pattern in mind, of course, safest way to trade is buy on a

pull back if next candle is also up, because without pulling back, it

is not a healthy market pattern. It can open high, there is greater

chance it will go lower, because that’s general market pattern.

 

How to trade:

 

I set up my positions at week end. I am more of a short term to long

term position traders. I only trade once or twice per week but weekend

analysis is important because my system is based on how weekly candle

looks. It’s pretty huge.

 

1. So when a week is finished, you have to look at weekly candle. If

previous weekly candle finished green (up), automatically I will

assume next week’s direction is up only. I will only trade in the

direction of the previous weekly candle color. UNLESS I ran into

major tops and bottoms, I might go against the weekly color but I have

to use half of what I normally use, which will be 2% of account value

instead of 4%.

1) Look at previous week’s candle color to determine next week’s direction

2) Look at candle strength to determine entry level or whether to enter or not.

2. Look at monthly candle to make sure you next week, you will not run

into any major resistence or support. Market is very sensitive, most

definitely it will react at major areas. So you do have to remember

major monthly resistence and supports

3. To buy, if previous weekly candle is up or green color, you will

only buy up. However you need to buy following market pattern #2

above, which is on market pull back. Usually market pull back will

occur earlier in the week Sunday or Mondays, So previous week, it was

going up strong but Sunday night or Monday, market could be falling,

this is where you find your entry, not get out or short!!

1) stop loss is 100 pips of your pull back entry, if previous weekly

candle looks strong, then you use 4% to trade. If not use 2% to trade.

YOU ONLY TRADE ON A PULL BACK FOLLOW MARKET PATTERN #2.

4. If after you get in, market started going up, you need to adjust

your stops upward. Usually keep it 100 pips or so if you want longer

term gain or less depends on your comfort level.

5. Need to find all support and resistence

1) for monthly, weekly and daily candle

2) must use 5, 15, and 30 sma for all time frames, each time market

reaches these areas, it is support or resistence especially longer

time frames.

3) Find major tops and bottoms, those are possible entries or reversals

4) Calculate range or maxim capacity of a candle. This is huge! How

to calculate – look at weekly candle, calculate previous week’s lowest

level to highest level to find out next week’s approximate capacity.

More accurate if you calculate previous 3 weeks. Also, if you want to

do short term trading or get out early, you need to be good at

calculating capacity, because when it reaches maxim capacity, you need

to get out, market will not continue go up forever, it’s about

probability and averages, about math. And also, monthly capacity need

to be watched too, if first day of into next month, market already

reached it’s average monthly capacity, what’s it going to do for next

three weeks???!! It’s going to consolidate or pull the other

direction. This is huge, you need to be good at this!!

5) Need to draw lines, detect trends as well.

 

Key!!:

 

This system is only good in trading the short term direction of

previous weekly candle. No matter what, unless you run into major

resistence or support, you do not fight the trend. You must get in on

a pull back if previous week’s candle is up or vise versa. And even

if market looks weak, you still do not trade against the weekly

candle’s color = the short term trend! ONLY ONE DIRECTION REMEMBER!!

:-bd