Hello again Traders --captgrumpy with Part 2 of the plan .
As promised this part will be devoted to how to spot potential trade points using the chart as set up and
a lot of practice to prove to yourself that good results can be had.So lets get started first off with the features of
of the plan
Features Of The Plan
Some of these features may be a little different than you may be used to–
1.Everything in this plan is based on the OANDA charts and platform
2 The plan is for swing trading–from 6 hr to 1 week charts–lower frames could be used with slight modification
3.Only one currency pair is traded as it moves across the chart
4.Chart is checked about 15 min. before CTFC (chart time frame change)-for 1 day charts,which will be used
on any demos etc,for this plan,that would be once a day at about 2345 hrs EST–8 hr charts checked 3
times daily–6 hr charts checked 4 times,etc.
5. All information about each trade as well as all financial matters is recorded on a special Work Sheet
6.If more than 1 currency pair is being traded at the same time each has it’s’own Work Sheet and
it’s own account balance
7.The aim of this part of the plan is to spot 'potential trade points (PTP’s) when the chart reverses or ASAP
after this happened
8.Whenever a trade is closed and the chart HAS ALREADY reversed a new trade is opened in the new chart
direction…
9.The financial plan, which I call Progressive Investment and Re-investment plan,covers just about every-
-thing concerning the financial side of Fx trading which means the trader has fewer tough decisions to make.
Now we move on to the heart of the plan–The Chart Set Up
THE CHART SET UP
1.Select 4 or 5 (or more) currencies to your quote list any combination of the top 7 or 8 major currencies
can be used
2.Bring up the GBP-_JPY chart on your screen
3.Choose the Heikin-Ashi as the chart line–give the up and down blocks contrasting colors
4.Add the WMA 14 (W14) weighted moving average–give it a contrasting color–and set the ‘style’ at THICK
5.Add the RSI 4 ( RSI Graph)–color it white and set the 'style’at THICK (manditory ! )
6.Zoom in on the chart to maximum resolution -then back off 4 clicks(the small + and - icons Rt lower corner
control resolution)
7 Enlarge chart to full screen size
The Chart is now ready to help you spot those potential trade points
SPOTTING POTENTIAL TRADE POINTS
You now have the heikin ashi blocks (HAB’s) moving across the chart in a series of up and down runs with
the W14 running along with them plus the RSI 4 at the bottom of the chart.It is the interaction of these
3 elements that will spot, or point out, the potential trade points (PTP’s).These are as stated POTENTIAL
TRADE POINTS-there are some checks to be done before trades are made–sometimes even though the PTP
is spotted indicating the chart is reversing the chart may go the wrong way so there are 4 checks that are done to help you decide whether to trade or wait.When a PTP in indicated you have 2 choices–1-- make the trade as indicated by the PTP – OR – Wait for the next PTP. All 3 elements contribute for the PTP’s–the W14 has two functuons …1…it clearly shows the general chart trend and…2…when it is running quite a ways from the HAB it indicates the chart is on a definate run AND will remain on that run untill the next PTP.(more on this later).The HAB gives the chart more color,shows lots of action (volitility) and it is one of the HAB that the
trade(s) will be made.This leaves us with the RSI4 which actually points out the PTP—looking over the chart
(GBP-JPY 1 day)notice that when the chart goes on a run at about half way the RSI4 will usually form what
I cal la ‘cloud’–as you chech the chart every day at chart at CCT (chart check time)(15 min.before CTFC)the
cloud gets larger until eventually it STARTS TO RETURN TO IT’s graph—At thus point place the line from the mouse over this spot–follow the mouse line up to see which HAB is hit—THIS IS A POTENTIAL TRADE POINT —Now,as mentioned before,this is where you quickly do the 4 checks to help you decide whether to
make the trades at the HAB indicated by the RSI4 or wait for the next PTP to consider trades—with some
practice you’ll find that you will make the right decision most of the time–if you do make a trade and the chartSTARTS going the wrong way you close the open trade ASAP to limit the possible loss–then follow the
chart lines to the next PTP–open a new trade and carry on trading—This Is An Important Part Of The Plan for money management by quickly limiting losses when they occur.Go over the bove to be sure you know how to first all see how the RSI 4 indicates a PTP just as it STARTS back to it’s graph…Sometimes the RSI4 only forms a ‘spike’in this case same thing–when it STARTS to go back to it’'s graph is where the mouse line is placed and followed up to the HAB. Do a lot of practice on this and other charts as far back as you like until you can spot just about all the PTP’s on all the charts
THE 4 CHECKS TO BE DONE BEFORE EVERY TRADE
1.if the chart in on a long or sharp run it may not reverse
2.if the chart is on a very flat run it may not reverse at this time
3.remember about the W14 running away from the HAB-?–if the W14 is still quite a long way from the HAB
at time of the PTP -there is a good chance the the CHART WILL NOT reverse right now
4.if the PTP occurs close to the top or bottom of the chart you should make the trades anyway because there
is a better than 50/50 chance it WILL REVERSE as expected.When these checks are done every time a PTP
is spotted it will help you make the right choice–this is where a lot of practice comes in.The HAB hit by the mouse pointer is either the first block in the new color --or–the last block of the old color–if it is the latter
it means the PTP indicated will make the trades BEFORE THE CHART REVERSES–this gives really good prices
,but there is a slightly better chance the chart may not reverse as indicated.The better price possible over-
rides the added risk because you will close the trade if the chart does not reverse as hoped
TRADING ROUTINE USING THE PTP
For the initial trade look for a PTP at the beginning of a run-do the checks --if OK open a trade at the HAB
indicated by the RSI4 at the current price–follow the chart lines to the next PTP-do checks–if ok close the
open trade–now as part of the plan because the CHART HAS ALREADY REVERSED a new trade is opened in
the new chart direction–again follow the chart lines to the next PTP–do checks-if ok close the open trade and immediately open a new trade in the new direction–keep repeating–as mentioned if the chart STARTS going in the wrong direction the open trade is closed–follow the chart lines to the next PTP to open a new trade.
Every time a PTP is spotted— do the checks --many times it will be obvious whether the chart will reverse
and trades are made or if you should wait for the next PTP–I can’t emphasize enough–practice makes perfect.—Well that is how the chart will help you spot potential trade points,now it’ up to you to do the
necessary practice .Not only practice spotting the PTP’s but also do some basic trading to see actual gains
(or losses) in PiPs and money–no money is used for these practices full trading won’t be done until we get
to part 3 of the plan–lots of time for more serious trading after you are sure you can spot the PTP’s on a
concistant basis For practice set up a practice work sheet that is set up with these settings: currency pair–date —buy/sell —units ----price —diff —pip value --gain / loss
10000 1000 pips pips $
The end if Part 2 of the ESP Fx Trading Plan–Next post will be Part 3-- the Financial plan !Until then may your PTP’s make you pippin’ happy!!
about everything