FX Master

Session 3
Price Correction Setups
 Session#2Review
TradingBasicsandHighProbability
Trading
TheHigh/LowBaseSetup
Riskvs.Reward
PivotPoints&SupportandResistance
PositionSizing
 ThePredictionTrap
Tradingisnot aboutbeingableto
predictthefuture
Propertradingisbestsummedup
bythismaxim:
Probabilitynotprediction

Wewillsimplylooktoputasmany
factorssuggestingthehigh
probabilityofanupside,downside,
orlateralmoveinourfavorpriorto
everriskingourcapital
 HighProbabilityTrading
High Probability Trading and Investing means

Only putting our money to work in the market

when the number of factors suggesting a
meaningful move in one direction is great
enough to justify the acceptance of the risk
of failure

That the higher the number of factors the

higher the odds of success, as a general rule

That the Reward potential outweighs the Risk

Everything in this course is designed to help increase our odds of

success in the currency marketplace
 RiskManagement
Tradingisnotgambling.
Thefirstruleoftradingisto
protectyourcapital!
Howmuchcapitalwillyou
allocatetoanyoneposition?
Howmuchcapitalareyou
willingtoputatriskona
singletrade?
Howmuchexposuretorisk
areyoucomfortablewith?
Beforeyouputyourchipson Somepeopleunfortunatelyequate
tradingtogambling.
thetable,firstconsiderthe
risk. Educatedtradersunderstandrisk,and
developskillsandstrategiestomanage
it.
 TradeManagementStyles
ActiveManagement
Pros
GreaterFlexibility
Allowstighterstops
Allowsyoutotakeprofitsat
anyprice
Cons
Greatertimecommitment
Emotionalmistakesmore
likely
NoSleep
PassiveManagement
Pros
Handsoffapproach
Smalltimecommitment
Removesriskofemotional
decisions
Cons
LessFlexible
Willnotbeabletotake
profitsintraday
Willmissoutonlarge
profits
 TradeManagementStyles
onHighBaseSetup
ActiveManagement PassiveManagement
1st Entry Uponbreakoutof 1st Entry Uponbreakoutof
highbasewithCCI+100 highbase.
1st Stop Placeinitialstop1 1st StopandLimitSell Use
ATRbelowentrypriceor bracketorders
belowlastpivot/support Sellstopat1ATRorbelow
2nd Stop Movestoptobreak lastpivot/support
even(makesuretoadjust Selllimitattarget
fornewsize)
TrailingStop Exituponthe
currencybreakingthe50
SMAon15minutechart
StrategicPlaybook

Astepbystepguideto
placingahighpercentage
trade
Thoroughlyunderstand
eachstepinthestrategyto
masterthetrade
Knowwhattodo(whenyou
seeagreatplay,howyou
canexecuteitthroughyour
Forex brokerage)
Knowwhentodoit(itsOK
tositonthesidelineswhen
nothingjumpsoutatyou)
Playbooksetupsheets
BullPullback
Tactic
Thissetupisdesignedto
purchaseastrongcurrency
demonstratingastrong
uptrendonthedaily,
hourly,andshortterm(15
minutechart)
Thissetuptendstohave
longerlastingtrends,
allowingustolegintothe
positionastheuptrend
continues
Ourpositionmanagement
strategywillbetofollow
thetrendhigherandmove
upatrailingstopasweadd
totheposition.
BullPullbackSetup

ATR=.41
stochastic
Oneentryfoundforstochastic.MainEntry:
stochastic
Pronunciation:stO'kastik
Function:adjective
Etymology:Greekstochastikos skillfulinaiming,from
stochazesthai toaimat,guessat,fromstochos
target,aim,guess
1 :Random;specifically : involvingarandomvariable
<astochastic process>

2 : involvingchanceorprobability:
*MiriamWebsteronlinedictionary.
 StochasticOscillator

AnoscillatingindicatordevelopedbyDr.GeorgeC.Lane
Stochasticcanhelpinterpretthependulumlikeswingsinprice.
Measuresthepricerelativetoitsownselfoveraspecifiedperiodoftime.
Usedtoindicateoverboughtoversoldconditionsbycomparingacurrencysprice
totherangeofitsrecentpriceactivity.
 ThedefaultStochasticissetto14periods
Theformulacalculates
Thehighesthigh Thelowestlowinthespecifiedperiod
Thedifferencebetweenthetwogivesusthe14periodrange
Todaysclosingpriceiscomparedtothelowestpriceinthe14period
range,andthencomparedtothetotal14periodrange.
 HowtoInterpretTheStochastic
Ifpriceistrading
highcomparedto
the14periodrange,
itcanbeconsidered
overbought
Ifpriceistrading
lowcomparedto
the14periodrange
itcanbeconsidered
oversold
The20and80lines
representthetop
andbottom20%of
therange
 CorrectChartSettings
Candlesticks
20SMA
50SMA
ATR(50)
CCI(50)
Stochastics (14,5,3)
BullPullbackSetup

ATR=.29
BullPullbackSetup

ATR=.25
BearRally
Tactic
Thissetupisdesignedto
sellaweakcurrency
demonstratingastrong
downtrendonthedaily,
hourly,andshortterm(15
minutechart)
Thissetuptendstohave
longerlastingtrends,
allowingustolegintothe
positionasthe
downtrendcontinues
Ourpositionmanagement
strategywillbetofollow
thetrendlowerandmove
downatrailingstopaswe
addtotheposition.
 LeggingInStrategy
ThisStrategywill
allowustominimize
riskattheonsetof
thetradeandallow
ustoaddtowinning
positionsasthey
moveinourfavor.
Badtradesareleft
quicklywitha
smallerlossthan
usual.
BearRallySetup

ATR=.21
BearRallySetup
 Homework
Findtwobullpullback/bearrallytradethis
weekandvirtualtradeit
Useactivemanagementononetrade
Usepassivemanagementontheother
Bracketorder