Module 1

Getting Started
Setting Up the Charts,
Timeframes, and Currency Pairs

1
Precursors

This system is easy enough to learn
even for newcomers, however you
will be better off if you have
knowledge of the following:

− The basics of Forex

− The basics of Charting
− How to make a trade using your
brokers software

For those unfamiliar with Forex,

start with a practice account

2
In This Video

Overview – Indicators, Timeframes,
Currency

The elements of the trading system

Setting up your charts to get ready

to trade

Saving the system as a template to

easily access it later.
Note: This system will work with most charting software, however
since Metatrader is the most popular all examples will show
that software

3
Meta Trader

If you don’t yet have it, get
MetaTrader from one of the following
brokers
− Alpari
− FXDD
− FXCM
− Any other broker that has Metatrader
as an option.

Even if you don’t plan to use it

always, open a practice account and
use MetaTrader to follow through
the videos.

4
Components of the System

MACD Histogram (3,6,3).

Exponential Moving Average 9-

period

Exponential Moving Average 20-

period

Exponential Moving Average 50-

period

Exponential Moving Average 200-

period

5
Timeframes to Use

This system can be used with the
following charts:

− 1 hour
− 4 hour
− Daily

We will use the 1 hour and 4 hour

charts in our videos.

6
Currency Pairs

The following currency pairs are
recommended to start:

− EUR/USD
− GBP/USD
− GBP/JPY
− USD/CHF
− EUR/JPY
− USD/JPY

You can use other currencies, but

back test first!

7
Setting up a Chart – First
Time

Open up a chart. At this point it
doesn’t matter which one, we just
want to setup a template in
metatrader.

Add the elements of system:

− MACD Histogram (3,6,3).
− EMA 9, Purple Color
− EMA 20, Blue Color
− EMA50, Green Color
− EMA200, Orange Color

8
The Finished Chart

9
Save the System as a
Template

Move on to the next video.

10
Module 2
System Overview
Reading the charts, and
determining trends

11
System Overview

This trading system used the trends
and is essentially a TREND system.

You need to be able to read the

uptrend and downtrends

Longer term charts (ie 1 hour, 4

hour, or Daily) are best if you are
just starting out.

12
In this Video

Determining an Upward Trend using
our charts

Determining a Down Trend using our

charts

What a retracement is and how to

chart them with this system.

We won’t be covering entry signals

just yet, but we need to be able to
read the charts.

13
Trend Basics

When the currency is moving up, and has been
for a while, we are in an up trend.

14
Trend Basics 2

When the currency is moving down, and has
been for a while, we’re in a down trend

15
Trend Basics 3

Trading with the trends allows us a
certain margin of safety.

By using the trends and specific

indicators to help us determine when
the best time to enter/exit is, we
help to increase that safety margin.

You need to be able to quickly

determine the trends using our
indicators.

16
The Trends with Our Charts

Up Trend
− Price is above both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently above
EMA200.
− MACD value is positive.

17
The Trends with Our Charts

Down Trend
− Price is below both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently below
EMA200.
− MACD value is negative.

18
Retracements

Even when trending prices to move
in waves. They move with the trend,
then retrace slightly, and then
continues to move with the trend.

19
MACD Indicator and
Retracements

This can help us find entry points

20
Conclusion

Take some time to study the trends,

and watch how the MACD reacts to
price movement. Specifically when a
retracement occurs.

Then move onto the next video to

start with short trades.

21
Module 3
Short Trades and
Examples
Entry signals, exit strategies,
and sample trades.

22
Short Trades Overview

We determine the trend is in fact
down.

We look for a sell indicator

We enter the trade as per our rules

We use our exit strategies to exit

the trade at the right times.

23
Entering a Trade

Trend Determination
− Price is below both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently below
EMA200.
− MACD value is negative.

Entry Signal - Retracement

− When price rises, it makes MACD value increase and MACD
value eventually becomes positive.
− The trigger is when MACD value turns from positive back
to negative.

Place the Order

− When that happens, we enter at market price with two
lots.

24
Rules for Entering the
Trade

Enter at market price with 2 lots (or
multiples of 2)

We place a protective stop loss 1 pip

above the Highest Price of the Pull-
Back (Retracement).

Follow one of our two exit strategies

(covered shortly)

25
Entry Example - Trend

We are in a down trend.
− Price is below both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently below
EMA200.
− MACD value is negative.

26
Entry Example - Signal

Entry Signal
− When price rises, it makes MACD value increase and MACD
value eventually becomes positive.
− The trigger is when MACD value turns from positive back
to negative.

27
Entry Example - Order

We place an order for two lots.
− Enter at market price with 2 lots (or multiples of 2)
− We place a protective stop loss 1 pip above the Highest
Price of the Pull-Back (Retracement).
− Follow one of our two exit strategies (covered shortly)

28
Exit Strategy 1

We exit the first lot when MACD
turns from negative to positive. At
this time, we might also move the
stop loss for the second lot to break-
even.

29
Exit Strategy 2

We exit the second lot when EMA9
cross EMA20 to the upside.

30
Trade Examples

Watch the trade examples

Once you’re done move onto video 4

to learn about long trades.

31
Module 4
Long Trade and
Examples
Entry signals, exit strategies,
and sample trades.

32
Long Trades Overview

We determine the trend is in fact up.

We look for a buy indicator

We enter the trade as per our rules

We use our exit strategies to exit

the trade at the right times.

33
Entering a Trade

Trend Determination
− Price is above both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently above
EMA200.
− MACD value is positive.

Entry Signal - Retracement

− When price falls, it makes MACD value decrease and MACD
value eventually becomes negative.
− The trigger is when MACD value turns from negative back
to positive

Place the Order

− When that happens, we enter at market price with two
lots.

34
Rules for Entering the
Trade

Enter at market price with 2 lots (or
multiples of 2)

We place a protective stop loss 1 pip

above the Highest Price of the Pull-
Back (Retracement).

Follow one of our two exit strategies

(covered shortly)

35
Entry Example - Trend

We are in an up trend.
− Price is above both EMA50 and EMA200
− EMA50 just crossed EMA200, and is currently above
EMA200.
− MACD value is positive.

36
Entry Example - Signal

Entry Signal
− When price falls, it makes MACD value decrease and MACD
value eventually becomes negative.
− The trigger is when MACD value turns from negative back
to positive

37
Entry Example - Order

We place an order for two lots.
− Enter at market price with 2 lots (or multiples of 2)
− We place a protective stop loss 1 pip below the lowest
Price of the Pull-Back (Retracement).
− Follow our exit strategies.

38
Exit Strategy 1

We exit the first lot when MACD
turns from positive to negative. At
this point we may set our stop loss
to break even.

39
Exit Strategy 2

We exit the second lot when EMA9
cross EMA20 to the downside

40
Trade Examples

Watch the trade examples

Once you’re done move onto video 5

for money management rules and
tips to stay profitable.

41
Module 5
System Advanced
Money management, and tips to
stay profitable in the long run.

42
Why Money Management

There is no such thing as a trading
system that wins 100% of the time.

By managing our money correctly

we capitalize on our winning trades
and protect the money we have
earned.

We also protect ourselves from large

drawn downs if we do encounter a
losing streak.

43
Elements of a Good Money
Management System

A clearly defined %R – that is the

amount we are willing to risk on any
given trade defined as a percentage
of our account balance.

A method to calculate the correct

trade size according to our stop loss
and our %R

44
Calculating Per Pip Value

(one pip, with proper decimal
placement/currency exchange rate)
x (Notional Amount)

Example 1 USD/JPY (.01/126.26) x

USD100,000 = $7.92

If the USD is on the right the value

is $1 per pip for a mini-lot and $10
per pip for a full lot

45
Using the Per Pip Value to
Calculate Potential Loss

We enter a long trade on the
EUR/USD at 1.5020

Our initial stop is set to 1.4995

We are risking 1.5020 – 1.4995 =

0.0025 or 25 pips.

25 pips x $10 per pip = $250 risked

with every lot we trade.

46
Calculating Trade Size

With our per lot risk, we can then
calculate a trade size. Assuming
your account balance was $120,222
and your %R is 2%:

You can risk 120,222 x .02 =

2404.44 with any trade.

From that we can trade 2404/250 =

9.61 lots

47
With Our System

Since the system we are teaching
uses multiples of 2 for trades you
need to trade 2 lots or multiples of
2.

If you could trade both full lots and

mini lots, using the last example you
would trade 4 lots and 8 mini lots
twice.

If you can’t trade mini lots you

would round down to 8 or 9 lots for
the trade.

48
Tips to Stay Profitable

Start with longer term charts.
Trends are more defined over the
longer term.

Use a practice account until you are

completely comfortable trading the
system.

Practice money management rules

religiously.

Learn the currency pairs you trade

well. This will help you to avoid false
signals

49