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The POWER62 System 4 FOREX

Table of Contents
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Introduction
Fibonacci University
THE FOUNDATION OF THE POWER62
CHART SET UP
ENTERING THE TRADE
ENTRY CRITERIA
STOPS AND EXITS
ALERTS WITH ALERTFX.COM
THE POWER62 ENHANCED TRADING MODEL CHEAT SHEET

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INTRODUCTION TO
ENHANCED TRADING MODEL
WELCOME TO THE POWER62 ENHANCED TRADING MODEL
Greetings! My name is Steve Gregor. I'm a Forex trader and trainer. I'm about to share with you one of the most
incredible Forex trading models that exists. What makes this model powerful is that has been refined and
enhanced, tested in various market conditions, and proven itself time and time again. We've taken a very solid
model and enhanced it considerably. I'm confident if you have the discipline to trade this model per the system
rules and criteria, you'll be amazed at just how much profit you can make. Of course, my disclaimer still stands, but
my excitement and enthusiasm remains at the highest levels.
To our GREATER trading success,
Steve Gregor
gregormks@yahoo.com

WHAT DO YOU REALLY WANT FROM THE FOREX?


Before really understanding the POWER62, or any trading model, you should first know WHAT you are looking for
... otherwise how will you know when you found it, right?
We start out our Forex training feeling overwhelmed by the magnitude of what we have to learn... all those
techniques and mechanics. Slowly, we start to make progress, and WOW, some of the things we hear are even
starting to make sense. The overwhelming sensation soon dissipates, and now we are just saddled with the
realization that all we have to do is buckle down, study some, and we'll be on our way to Forex fortunes! NOT!
While initially we think success comes from trading skills, that is just a small part of what it will take to be a winner
in this beastly market.
In addition to solid trading skills, you're going to have to have sound risk strategies, superb money management,
and yes, a top-notch psychological ability to do battle with yourself... overcoming your inner desires for greed,
your outright fears, and that bitter enemy called revenge.
Beyond all that, you're going to have to figure out how to make the Forex be a part of your life, because if you
make your life a part of the Forex, you won't have a life for very long. Burn out. See ya'. You're toast. So, balance is
vital if you're going to be a serious player in this game.
Once you understand the above, you will soon realize you must take that bundle of trading skills (which you will
always continue to evolve) and focus it on a particular trading strategy. Yes, you must have a trading plan, and that
plan will include the use of a trading strategy. When you first start trading, you'll be jumping all over, trying this
and trying that, and not settling into anything for very long, as you're looking for the Holy Grail of the Forex to
deliver you to Pip Utopia. The grass is always greener, so you jump from one thing to another. While you might
even enjoy some short-term success doing this, the reality is, you'll never be able to ante up to the plate with the
leveraged lots unless you have a focused effort and work one particular trading strategy or model. That doesn't
mean you can't change over time, but you won't find anyone successful as a trader that won't tell you that you
have to focus, almost with laser precision, where you put your effort.
All that being said, when you look for a trading strategy or model, you'll want to know your criteria, so when you
find a model that meets it, you'll know you found it. Let me share some of my criteria as I searched for a trading
model:

I wanted a trading strategy that was not difficult to learn and one in which I could start demo trading
almost right away ...

I wanted a trading strategy that was more objective than subjective, with very precise entry-points and
very precise exit points. I wanted to minimize the stress and emotional challenges of this challenging part
of trading ...
I wanted a trading strategy that would allow me to have some balance in my life (I did not want to be
stuck on the charts 14 hours a day). Never forget, time, not money, is the real currency of our lives ...
I wanted a trading strategy that had a low and very controllable risk factor, yet still delivered pips like the
Big Boys got their trading strategies (you guessed it, I wanted it ALL) ...
I wanted a trading strategy that had money management built into it. I knew I had to trade with multiple
lots to leverage up to 5% (or whatever risk factor you may use), so I wanted a model that would
accommodate the need (greed?) for quick profit, yet could maximize my return if the trade continued in
my direction ...
I wanted a trading strategy that potentially could some day be auto-traded (via a trade-bot). I knew that
an auto-traded solution minimizes the psychological aspects of trading and would allow me to trade 24/7,
keeping that "balance in life" element I desired (required) ...
I wanted a trading strategy that had an unusually high success rate (assuming the trading model was
followed). I know many models can generate wealth with 40% win-ratios, I just wanted something more
than that (partially because of my competitive nature)...
I wanted a trading strategy I could readily share with others, so they could also enjoy profiting on the
Forex

Now, these criteria may align with your criteria (you do have some, right?), or they may not. If they do, you'll
thoroughly enjoy this trading model. If you have different objectives for the market, this model may not be for you.
It's not for everyone. But, you may find some elements of it that you can personalize into whatever strategy you do
end up trading.
ADVICE FOR FELLOW TRADERS ...
Before I start into the actual trading model, I am going to give you the only bit of "fellow trader advice" I have for
you in this entire document:

Investigate a method that you believe makes money over time and stick with it (whether it's this model or
something else)
Try to understand the theoretical underpinnings of the model
Trade small units until you are totally convinced the method works
Your success (profits) comes from implementing the method correctly, not guessing where the market is
headed
Read the above again
Give up thinking during market hours. Thinking comes when the trading stations and charts are turned
off, not in the heat of battle. Markets are to be reacted.

ACKNOWLEDGEMENTS
Thank You, Rob Booker. That's right, the foundation of the POWER62 Enhanced Trading Model that we present
here originates from Rob Booker. Rob's probably introduced more people to the serious side of the Forex than any
other company or individual in the market. After hearing so much positive about Rob, I decided to purchase some
of his material, which included the original 5-13-62 Strategy upon we based this enhanced model. Rob has an
overall communication style that I personally have become very fond of, partly because his humor and sarcasm
aligns with mine, but more so, because he gets to the things that really matter. When you have the chance, I
encourage you to check out Rob's site and web blog at http://www.RobBooker.com.
I also want to personally thank Rob and Joe Manuse, two incredible trader-dudes on our FX Traders Zone trading
team from New York. These guys have tested, researched, explored, beat their heads against their monitors, drank
a few dozen cases of beer, screamed at each other, learned the hard way, and spent countless hours in online
webcast sessions with me to contribute to make this enhanced version of the model as powerful as it is. I'd also

like to thank Joe Ferris and Lou Sandwick, incredible fellow traders for helping in various ways with Intelliscript
challenges and other fine detail. As our own Dave Manning states, "Team Work Makes The Dream Work". And
Rob, Joe, Joe, and Lou are living proof. Thanks guys, I'm eternally grateful!
Fibonacci University

FIBONACCI RETRACEMENTS & EXTENSION LEVELS


One of the most skilled traders in the market today comments, "The markets move in a natural harmonic Fibonacci
sequence, similar to that found in nature. Understanding that sequence places the Trader at a huge advantage."
Trading cycles and market waves runs in synergy with the "natural movement" of the market. These are similar to
the natural cycles in nature. Knowing where the market has a high probability of "bouncing" on the retracement in
the direction of the trend, allows a trader to get in and have the market move in their direction from entry.
Knowing the Fibonacci extensions levels allows a trader to profit take before the next major retracement. Learning
and understanding the Fibonacci retracement and extension levels may mean the difference between success and
failure. Some of the highest paid positions in banks go to those analysts who understand the market in a Fibonacci
sequence in both short and long term time frames.

THE REALITIES OF FIBONACCI IN LIFE, CURRENCY TRADING, AND THE POWER62 ENHANCED MODEL
Okay, the last section was long, and by now you're thinking, "PLEASE STEVE, spare me the misery, can we just get
to it?". Well, all things in time. While you do have the option of just closing out this window and moving on to the
next link at our site, I'm going to do my best to encourage you to get totally up to speed on the realities of
Fibonacci. There's no use recreating what others have done so well, so I will just provide you with a few links here
to get you started. Check these sites out thoroughly, you won't regret it. It will help explain the magic and beauty
of the trading model you are about to learn.
Okay, here's EVERYTHING that you will want to know AND BE AMAZED with, regarding Fibonacci:

Leonardi Fibonacci - Biography and Background

How Fibonacci numbers appear everywhere in our world: Fibonacci and Nature

The Fibonacci Numbers/Sequence

The Relationship between Fibonacci Numbers and Currency Trading

History's Hidden Engine (this is a 1-hour video-documentary you can stream/download)

Fibonacci Sequence
After you have familiarized yourself with Fibonacci Numbers let's look at the first of them:
1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377
There is an intriguing set of interrelationships between these numbers. For instance, any given number is
approximately 1.618 times the preceding number and 0.618 time the following number and 0.382 is the inverse of
0.618. Note that these constants do not apply to the first several numbers in the sequence; however, the further
along you move in the sequence, the closest the ration get to 1.618 and 0.618. Ration 1.618 is also known as the
Golden Ratio or Phi.
Just as 1.618 and 0.618 describe the relationship between one numerical value and the next in the Fibonacci
Sequence, so they also describe the relationship between one surge in prices and the next in the stock market. If a
price surges from 5 to 8, then you can multiply the 8 x 1.618, to estimate that the next surge in price will be to 13.
Likewise if the price retraces from 13 to 8, by multiplying 8 x 0.618, you can estimate that the next retracement
will be to 5. We have to assume that a similar relationship will be found in price movement, whether the direction
is upward or downward. Thus, an original price change to the downside would be expected to move at a rate of

1.618, and a reversal to the upside would advance at the 0.618 rate.
Continuing that logic, just as the ratios between any two successive numbers in the Fibonacci Sequence are
important, so are the ratios between any three successive numbers, and any four successive numbers:

This gives us additional ratios of secondary importance (0.382 and 2.618), and tertiary importance (0.236, 0.764
and 4.236) as summarized in the table above.
The table also shows two other numbers that are important in the Fibonacci Sequence: 0.5 and 1.382. The first, 0.5
is an important retracement ratio because it is halfway between 0.382 and 0.618. The midway point is always
important in any growth cycle. In the financial markets, when prices drop to the midpoint of a previous trading
range, the buyers and sellers will notice this and, collectively if not consciously, pause to decide whether price
levels are likely to move back up again, or to continue on down.
1st Tier Ratios
All the ratios described above we call 1st Tier Ratios because that are derived directly from the Fibonacci
Sequences. They can be seen in abundance in the nature all around us and that is why their way to market trading
was very well welcomed. But as more and more people learn about these ratios and try to apply them to trade
stocks, mutual funds, currencies etc., their value has been diluted a little but enough for those who know 2nd Tier
Ratios to gain advantage.
2nd Tier Ratios
The relationship between numbers 0.382 and 0.618 is more rich than it was just outlined. The second part of the
story is that 0.618 is a square root of 0.382. Continuing this logic, if a square root of one Fibonacci ratio is a
significant ratio on its own, so is a square root of another Fibonacci ratio.

Other important ratio of 0.866 was discovered by some trader analyzing price chart patterns. It was then found
that it could be derived by, again, taking the square root of a number: Square root of 0.786 is 0.886.

Some people think that 2nd Tier ratios are somewhat far-fetched, others, being trader s rather than
mathematicians, are more intrigued by the fact that these ratios have a significance in determining support and
resistance levels, as well as trend reversal price zones, than they are on the logic used in the derivation.
Fibonacci Solution is the only software package that can work with both type of ratios applied to multiple Fibonacci
Shapes:

Correction / Retracement
Extension
Time Projection
Channel

Leonardo Fibonacci, a mathematician in the 1200's created a numerical sequence of numbers. From left to right
after the first two numbers, the values increase successively. Each number, in turn, is determined by the sum of
the previous two numbers.
1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, ...
The other interesting relationship of this number sequence is that if we take the ratio of two successive numbers in
the Fibonacci series (that is, we divide each number by the number after it in the sequence) we will move towards
a particular constant value. That value is 0.6180345 which has been referred to as the golden ratio?. If you also
calculate the ratios using alternate numbers in the Fibonacci series (that is, do the same calculation but skip over a
number) the resulting ratios approaches 0.38196.
From here on, skipping the numbers by going in both directions we get infinitive number of Fibonacci ratios, but
only handful of them have found application in modern markets:
0.236, 0.382, 0.618, 1.000, 1.618, 2.618, 4.236, 6.854, 11.090, 17.944
Many technicians use Fibonacci numbers in their Technical Analysis when trying to determine support and
resistance, and commonly use 38.2%, 50%, 61.8% retracements. Commonly thought, a .382 retracement from a
trend move will tend to imply a continuation of the trend. A .618 retracement implies that a trend change may be
in the making. Many such rules have been adopted by technicians.
It cannot be stressed strongly enough that Fibonacci principles is not just a numbers game; it is the most important
mathematical representation of natural phenomena ever discovered. To appreciate the great relevance of the
Fibonacci ratio as a natural constant, one need only visit The Fibonacci Numbers and Golden section in Nature and
discover a particular natural law.

Note: If you discover any of the above links are bad, or you find something else of interest regarding Fibonacci we
can add to this list, please let me know. Thanks!
2006 Steve Gregor. All Rights Reserved. No unauthorized duplication.
THE FOUNDATION OF THE POWER62

WE'RE GOING TO USE 30-MINUTE CHARTS


I reviewed my criteria for a trading system, and that included NOT sitting on the charts all day, having a system
that could yield big pips, and a system that would let me catch trades with alerts. There were more, but these

requirements alone means we're not going to be doing momentum trading on 1-Min or 5-Min charts. We're not
even going to mess with 15-Min charts. We're going to trade on 30-Min Charts.
Smaller charting periods lead to more false positives, which translates into more losses. By the time you get to the
five minute charts, the bank has you on a string and your account is going to go to them. Longer term charts, like 4Hour, Daily even the Weekly intervals, produce too much slippage in the market price for the final portions of
the position. In the Fall of 2004, when GBP/USD went 20 handles up to 1.95, the daily EMA's were 5 to 7 handles
behind. For good Forex traders, this is too much to give back on a long position, especially when your first profits
came at 34, 55, and 89.
While you can use 15-Min and 1-Hour intervals, we've seen the best opportunities using 30-Min charts. It also
provides a nice balance between being able to capture the shorter-term moves without you having to be 100%
glued to the charts all day long.

HOW WE PUT MAGIC IN OUR CHARTS ...


Okay, now that we have a better understanding of the significance of Fibonacci (you really didn't skip that review
of the sites I sent you to, did you?), I can tell you that we will exploit the realities of the Fibonacci with our
enhanced trading model. It's nothing but Fibonacci, from beginning to end. Let's first look at a simple Fibonacci
retracement so you can understand the principle behind the model.

Let's review a few important points on the above currency chart...

Point A: Go to your chart's DRAWING tab, left click, scroll to Add Fibonacci, and click again
Point B: Move your mouse to the top of the downtrend at Point B and click and drag...
Point C: continue dragging your mouse down to the bottom of this downtrend at Point C and release
Point D: Note that the top and bottom of the Fibonacci retracement is at 38%-62%
Point E: The price retraces past the 38%-62% line, closes at the 50% line, then reverses again
Point F: While the price made it through the first retracement, the EMA represented by the yellow line was
bounced away and price soon followed (actually, price retreated and the EMA followed)
So, in the above example, we had a downtrend, followed by a retracement where the market decided, in the short
term, that there was not enough turnover between sellers and buyers, the sellers prevailed, and the price favored
the sellers once again. Let's look at the next price move...

Point A: We saw the first downtrend from Point A to Point B


Point B: We then saw the price retrace to the 50% line (of the first Fibonacci we drew) at Point C, with the
yellow EMA being turned away at the 38%-62% line (of the first Fibonacci we drew)
Point C: After retracing, a new downtrend occurs, with the price dropping from Point C to Point D. So, if we
draw another Fibonacci (from the top of the new downtrend at Point C to the bottom of the downtrend
at Point D), we see the new 38%-62% retracement line at Point E.
Point E: Price is first repelled, then rallies back up and past Point E, dragging the Yellow EMA with it
When you draw enough Fibonacci's, you will see each downtrend / uptrend of significance has a retracement. The
price either reverses up past that retracement or returns in the direction of the original trend. This retracement
line represents the turnover between sellers and buyers. If we could consistently see where this retracement line
was as price moved forward, we could see the natural point that would always be the deciding price area of the

turnover between buyers and sellers. And, we can see when the price leaves that area it typically leaves with
strong momentum, and so we could capture good profit. It's all about knowing where that magic point is as price
continues to move east on our charts.
But, there is a piece of magic available. It's called the 62 EMA. Without trying to teach all about moving averages,
let's just conclude that moving averages that focus on the Fibonacci tend to have very accurate predictive abilities
regarding price movement
The 62 EMA represents, in essence, a rolling Fibonacci retracement tool, constantly showing us the natural point,
based on market conditions, where the turnover between buyers and sellers will occur. Therefore when price gets
to that point, we can expect it to be repelled or penetrated. If penetrated, it represents a turnover in the market,
we can enter a trade, and ride it until the end of that next trend. Let's look at the two above chart pictures but now
with the 62 EMA drawn on it, as well.

Well, the magic is now complete. We've drawn two red lines, which each represent the 38%-62% retracement of
downtrend A and downtrend B. Note that the 62 EMA intersect these retracement lines almost to the pip. It's just
incredible when you see this occur hundreds of times.
At Point A, we see the price penetrate Point A, but the yellow EMA is repelled; at Point B, we see both the price
and the yellow EMA penetrate the 62 EMA and continue upward substantially. Herein lies the fundamental of the
model. We will enter a trade when the yellow EMA crosses the 62EMA. More on this later, let's now set up our
charts to be able to trade this model.

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CHART SET UP

5 SIMPLE EMA's ARE THE KEY ...


I realize there are moving average cross strategies in abundance. None of them use a purely Fibonnacci-based
scenario as this trading system does. It's one thing to see nice loops with 5 & 20's, 10 and 40's, 9 and 18's, 50's,
100's, 200's, etc. While they may have their place at times, on certain chart time frames, for providing additional
confirmation and validation to advanced traders, they are not an accurate trading system in and of themselves. If
you have one that you think works, just trade it against this and you will see WHY the Fibonacci-based EMA's are
so much more predictive and accurate. Hands down!
So, we're going to use 30-Min charts and we're going to use 5 EMA's to manage this trade, and they all have major
Fibonacci elements to them.
This system will work on all the majors, and we trade the EUR/JPY with it, as well. There's plenty of opportunities
with seven currencies to watch!
We will focus on the Fibonacci numbers 5, 13, 34, 144. Closely related, as we've seen in the previous examples, is
the 62, which represents the 38%-62% Fibonacci retracement indicative of a complete turnover between buyers
and sellers in the market. Lastly, we'll use a special number, 156, while not a Fibonacci number itself, represents
the mid-point of something known as the "Fibonacci Tunnel", which also has very strong predictive abilities
regarding turnover in the market. Putting it all together, we will place 5 EMA's on our charts using these 5 numbers
as the foundation. By color coding the lines, we can all uniformly follow each others trades and it just establishes a
uniform set up.
5 EMA: Color this EMA green
13 EMA: Color this EMA yellow
34 EMA: Color this EMA purple
62 EMA: Color this EMA blue (and make it a medium thickness line)
156 EMA: Color this EMA red
Note: Be sure to use Exponential Moving Averages (EMA's) and not SMA's, or WMA's.
Note to FX Trainer Chart Subscribers:
The FX Trainer FX Lines FX1 (green) and FX2 (yellow) can be substituted for the 5 EMA and the 13 EMA,
respectively, as they are extremely close cousins to the 5 EMA and 13 EMA. While many folks in the FX Trainer
world will be advocates of this, it is not recommended.
Remember, in the "pure" POWER62 Enhanced model, the 5 EMA and 13 EMA are true Fibonacci numbers, and
thus fulfill the entire strategy being a Fibo-based model. When substituting with their close FX Trainer cousins (FX1
FX2), we are not using "exact" Fibonacci numbers and we may get slightly different entry triggers (particularly
when it comes to entry Criteria #3), thus affecting profitability. To me, achieving profit in the trade is more
important than believing using FX1 and FX2 creates some sense of "loyalty" to FX Trainer. This is a trading strategy,

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and using it in its purest form surely does not make you disloyal to FX Trainer (in fact, if you trade it often, FX
Trainer benefits!). You provide your loyalty by maintaining your FX Trainer Chart Subscription. There are plenty of
other strategies in which the FX1 and FX2 lines can be used.

ENTERING THE TRADE

THE STRATEGY BEHIND THE POWER62 TRADE ...


Okay, we've seen for the most part, that the EMA 62 represents the turn over between Buyers and Sellers in the
market. Thus, the key to this strategy is when price moves past the 62 EMA ... we can be typically assured of a new
trend emerging. But, I am a conservative trader, and I don't like "typically", so we are going to use some "filters" to
help eliminate what I call "head fakes" with the price.
Filters are used to increase overall profitability and/or reduce overall losses. If a filter does not do one of these two
things, then why use it. What good is a filter if it raises your profitability by 10% but only gets you into 1/3 as many
trades? What good is a filter if it reduces losses by 10% - 20%, but also reduces profitability on every trade by half?
I think you get the point.
Put the 13 EMA on your chart with the rest of your indicators. When everything is at the same price [62 EMA,
current market price, 13 EMA] sit up and take notice. When the market breaks away from the EMA 62, there is a
very high probability of a strong market move coming.
Need proof? Well, go back on your favorite currency pair and check it out.
This filter is so profitable, you increase the size of our trading position when we see it develop and then happen.
When you go back and check it out, you will notice many times how it just misses a move by a few hours. It is an
extremely profitable filter.
Let's take a look at two examples... first of a head fake ... then price penetrating the 62 EMA and then retreating ...
and then how we can use the 13 EMA as a filter to enter / not enter the 62 trade.

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If we had entered the trade with the Blue Candle closing past the 62 EMA,
it would have resulted in a loss. This is a price head fake!

But, let's say we used the 13 EMA as a filter. In other words, we'd only enter the
trade if a candle close brought the 13 EMA through the 62 EMA. In this same example,
the 13 EMA as a filter would have kept us out of this trade.
In summary, we can use the 13 EMA as a filter to determine true sustained market momentum. Now, let's look at
an example of using the 13 EMA to actually enter a trade.

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By waiting for the 13 EMA to cross the 62 EMA, we eliminate potential price head fakes
and their resultant losses. In this case, a candle close at 114.55 brings the 13 EMA across
the 62 EMA, and we're safe to enter the trade. This trade continues up to 115.25, for a
total of 70 pips in the move (we'll talk about how to capture profit later in this overview)
Just be aware, we'll talk about the "ideal way" to enter a 13-62 trade a little later.
But sometimes, the price will reverse shortly after the 13 crosses the 62, so how do we profit?
Can We Avoid the Opportunity Cost of Playing It Safe?
The problem with waiting for the 13 EMA to cross the 62 EMA (on a candle close) is when these trades go, we give
up "opportunity profit" (that point where the 13 EMA actually crosses the 62 EMA). And, even more importantly,
we give up our ability to have almost ZERO RISK going into the 13-62 trade. See chart below.

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We can see that by waiting for the candle close to bring the 13 EMA across the 62 EMA and
entering the trade at 114.55, we give up the "opportunity profit" from where the 13 EMA
actually crossed the 62 EMA at 114.35, or 20 pips. Again, filters are designed to keep us
out of bad trades, but we don't want to lose profits when using one to enter a trade.
So, the way we will capture back the safety net we have in place by using the 13 EMA as a filter, is to actually stack
another, smaller term trade in front of the 13-62 cross. And, that's going to be the 5-13 cross, but only the 5-13
cross that opens into the 13-62 cross (the "last" 5-13 cross before price moves across the 62EMA.
IMPORTANT NOTE about the POWER62 Enhanced Trading model: We are NOT chasing 5-13 trades with this
model (attempting to take a trade at every 5-13 cross). Our experience says that will only cause you tremendous
heartache, stress, frustration, and mediocre results when all is said and done. I will point out in Rob Booker's
original 5-13-62 system, he does state you can trade 5-13's. This ENHANCED model is not designed for that. We
will only consider one particular 5-13, and that's the one opening into the 13-62 cross. If you want to trade 5-13's
as a day trading strategy, please do not include those results with the results you achieve trading this ENHANCED
model. They really are two different strategies. Our criteria for taking the appropriate 5-13 trade is not going to
work for day trading on every 5-13 trade. Lastly, our model is about getting us off the charts, and trading every 513 trade would only put us back on them. The pip opportunity in this ENHANCED model is more than sufficient to
not encourage anyone to be motivated to be chasing pips on every 5-13 trade that takes place.

Let's see how that 5-13 cross will help us maximize our profits.

We see that if we take the 5-13 cross that opens into the 13-62 cross, we can capture
additional pips in this trade. With the Blue Candle close at 114.25, the 5 EMA crosses the
13 EMA, and we are in the trade. Note this is 30 pips EARLIER than if we waited for the
Blue Candle close at 114.55 to drag the 13 EMA cross the 62 EMA
Let's Review...

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The concept is simple, let's have a trading model that will capture EVERY BIG MARKET MOVE and not
require us to be sitting on the charts 24/7
We're going to use the realities of the currency charts, and that is that every price on the chart is a
function of a Fibonacci number, retracement, extension, etc.
In order to exploit the Fibonacci, we'll use the "rolling Fibonacci", or the 62 EMA to mark the turnover
between Buyers and Sellers
Our concept, at the big picture level, is to get in a trade when price moves past the 62EMA
But, price movement alone can give us head fakes. To avoid head fakes, we'll use the 13 EMA as a "filter"
... as it more accurately shows "sustained" price movement in the short term
So, the entry on a straight 13-62 trade would be when the 13 EMA crosses (on a candle close) past the 62
EMA
But waiting for the 13 EMA to cross on a candle close gives up opportunity pips, so we're going to take the
last 5-13 cross that opens into the 13-62 cross.

Next, we'll learn how to use some simple criteria to zero-in with laser-like precision on precisely which 5-13's to
take, and how we can trade this model consistently with NEAR ZERO LOSSES.

ENTRY CRITERIA

THE RIGHT 5-13 CROSS AND YOU WILL NEVER LOSE PIPS WITH THIS MODEL
In this section, we'll cover the criteria you should consider in taking a 5-13 cross which appears to be opening into
the 13-62 cross. Thus, we can become very selective on which 5-13 cross to enter.
THE ONLY REASON WE TAKE A 5-13 CROSS IS TO MAXIMIZE THE PIP OPPORTUNITY IN A 13-62 CROSS and TO
LOCK IN OUR ABILITY TO BE IN THE TRADE WITH ZERO RISK. Read that again, it's to "maximize" the pips in a 13-62
cross and "minimize" our risk in the the trade. What that says is IF we don't take the 5-13 cross that leads into the
13-62 cross, we can still be positive in the 13-62 if it fully develops. All this translates into NOT trying to squeeze
the 5-13 trade for every pip, or to jump-the-gun on it, etc. So, we have criteria that will help us identify when and
where to get in these 5-13's to maximize the pips in the 13-62, yet we can do it with literally minimal risk.
CRITERIA #1: Only Take 5-13's (into the 62) That Are In The Gravity Zone
Like a Fibonacci retracement line at 38% - 50% - 62%, you will note that when price gets close to the 62, it will
almost ALWAYS get sucked to it. That doesn't mean it will always penetrate it and go past it; sometimes price will
be pulled to it only to bounce it away. But, price almost always is drawn to the 62 when it's anywhere close (the
lone exception being when a super barrier is between price and the 62 ... and that barrier may be a horizontal price
level, or another EMA, such as the 34 or 156).
So, let's just define CRITERIA #1: the 5-13 cross we want to take should be no more than 20 pips away and no
closer than 10 pips away from the EMA 62. And, technically, when we say the cross, we mean the current price
when the cross occurs (we really don't care where the CROSS is, but rather where the PRICE is at the time of the
cross).
Here's the reason... If price is in that 10 to 20 pip range, and there are no super barriers between it and the 62
EMA, it will typically run to the 62 EMA (about 95% of the time!!!!). Now, you may have to trade the model some

16

to get a flavor for what you are comfortable with ... you might make that 8 to 17 pips (vs 10 to 20), etc. But, there's
that "gravity zone" that we want price to be in and if it's NOT, we will NOT take that 5-13.
If price is greater than 20 pips away at the 5-13 cross (the 5-13 coming into the 62, that is), we run the risk of price
just reversing out and not coming to the 62 (the 62 may not be strong enough at that distance to pull the price all
the way to the 62EMA). So, entering a trade with the price greater than 20 pips away has its inherent risk.
If the price is less than 10 pips away, we don't have our "wiggle Room". In other words, let's say there's a 5-13
cross and the price is 6 pips away. We enter the trade. The price starts to come to the 62, and then gets bounced
away (remember, the price will almost always come to the 62 if in the Gravity Zone). Because we entered that
trade just 6 pips away, we might not have enough room for that 5-13 to reverse as the price bounces off the 62
and to get out still in profit. It's just that simple. I like to be able to enter a POWER62 trade early, and if it doesn't
show signs of fully developing, I can get out IN PROFIT. How much risk is that? And I mean, I pull the trigger on
exiting that trade FAST. Remember, if the price reverses on you after you are in the 5-13, and you got in AT the
gravity zone, you have plenty of time to exit (whether the price bounces right at the 62 or if it penetrates 5, 10, 20
pips before reversing). I often make 15 to 25 pips on every lot on trades that never fully developed into 62 trades.
Again, how risky is that?
With price in the 10 - 20 pip range, if it gets bounced at the 62, we can exit that 5-13 IN PROFIT. This is the BEAUTY
of this trading model. We are trading this 5-13 to get into the 13-62 early (considered "aggressive trading"), yet by
using simple criteria, we can enter that 5-13 and EVEN IF the 13-62 never develops, we can exit that 5-13 as it
reverses IN PROFIT. Folks, this is EXTREMELY powerful. If you find another strategy that lets you trade aggressively
to maximize pips in the trade, and there's an "out" if the trade fails and you PROFIT in that "out", please email me
at gregormks@yahoo.com with the details of that trading model.

In our example above, the 5-13 cross going into the 13-62 wasn't confirmed until the
Blue Candle close at 114.25 (that's the price when the 5 crosses the 13).
That is 10 pips away from the 62, so we can enter this trade. If price was
repelled at the 62, we had room to let it reverse and still exit the trade
either in profit or break even. Not bad for an "aggressive trading strategy".

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Criteria #1: Only take 5-13's (into the 62) that are in The Gravity Zone
(price no closer than 10 pips, no further away than 20)

If you have a 5-13 cross (into the 62) which results in price being more than 20 pips away from the 62 EMA, you
can just wait until it gets closer. Use sound momentum trading guidelines ... steepness in the slope of the
5 EMA and the 13 EMA lines. Once it gets in the gravity zone, it should go the rest of the way to the 62. So you can
enter, and still have room to exit and profit if the 62 trade does not develop.
Momentum Price Moves (witnessed by Momentum Candles) Can Be Traded LIVE...
All of the above (Criteria #1) is intended to be acted upon based on candle closings. However, we may take a trade
into the 62 EMA riding on the coattails of a large, momentum candle. A momentum candle, for the sake of our
conversation, is one which starts OUTSIDE or NEAR OUTSIDE the gravity zone, and in the same candle (sometimes
a second, continuation candle) moves THROUGH the Gravity Zone. If we see such a candle, as it moves to the
inside boundary of the Gravity Zone, we can jump on that trade, and ride the candle all the way to (or into) the
62EMA. Again, it's why the Gravity Zone is so powerful. Be prepared to back out (exit) quickly, as the candle may
reverse on you at or inside the 62. But, if it does, you're in this trade with plenty of room to exit (and still be in a
few pips profit). On the other hand, it may be the trade that goes for 233 pips! See example below:

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GBP/USD on 08-Mar-06 at 2:30 AM EST:


Note the Momentum Candle (MC) moves from outside the Gravity Zone and right through
it on it's way to the 62. In this case, we grab it and can ride it. If we felt uneasy, we could
have exited when the price poked near the 62 and started to reverse. If we stayed calm,
realizing it could reverse to 7386, we'd then ride it on the rest of the way past the 62EMA
(at 7396). The price went up to 7419 before peaking and then reversing. If we exited at
7406, we made 20 pips on a 13-62 trade that NEVER developed. SWEET!!!!!!
Summary:
The 5-13 from the Gravity Zone is the ONLY criteria you really need (there are considerations, noted below). That
can be candle movement (based on candle closes) over time into the Gravity Zone, or one (or two) big momentum
candles moving through it (and it's okay to trade those live, as they are happening). We've also listed two
additional (optional) criteria you may "elect" to use in getting into a 13-62 trade.

OPTIONAL CRITERIA #2:


Only Take 5-13's (into the 62) That Have Momentum As Measured by the MACD
You don't have to be an expert MACD indicator user to use the MACD (with default settings 12, 26, 9) to see
momentum in a 5-13 going into the 62. If the MACD histogram bars are getting larger, and there is some steepness
to the MACD lines, you have your momentum. Note that with the default MACD settings, the MACD line will
typically cross the MACD Signal line at approximately the same time the 5-13 crosses occur!

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Criteria #2: Only take 5-13's (into the 62) that have momentum as seen in a MACD
with default settings... growing histogram and good angle on the MACD lines
OPTIONAL CRITERIA #3:
Only Take 5-13's (into the 62) That Have Relative Strength In Their Favor
This will be the most sophisticated criteria we will use, but it is almost by far the most accurate at predicting
WHERE to get into a 5-13 trade. We're going to use the RSI(14) for this purpose. Here's the set up...
Put an RSI(14) on your chart. Draw vertical lines from the last complete 5-13 cross (draw that line from the price
down through the RSI graph).
If we are looking at when to BUY into the next 5-13 cross (into the 62), we set a blue line at the HIGHEST RSI POINT
in the previous downtrend 5-13 loop. When the RSI breaks ABOVE that line (candle close) in our new 5-13 loop, we
can BUY.
If we are looking at when to SELL into the next 5-13 cross (into the 62), we set a blue line at the LOWEST RSI POINT
in the previous uptrend 5-13 loop. When the RSI breaks BELOW that line (on a candle close) in our new 5-13 loop,
we can SELL.

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#1 This is the last complete 5-13 cross (a downtrend)


#2 This is the next cross, the one we are considering BUYING into
Draw a vertical line from the start of the previous completed cross
A
(through RSI)
Draw a vertical line from the end of the previous completed cross
B
(through RSI)
Draw a horizontal Blue line at the highest point of the downtrend
C
loop(1)
Take your BUY on a candle close when the RSI graph moves ABOVE the
D
Blue line(2)
Your BUY has the proper momentum (relative to last move) to continue
E
up
(1) if the previous, completed 5-13 loop was an uptrend, you would
place the Blue line at the LOWEST point of the RSI graph and (2) take
your sell when the RSI graph moves BELOW the Blue line

Special Consideration: DNA Spirals

21

Much like the famous "Double Helix" in DNA, the 5 EMA and the 13 EMA
can cross over each other in a period of congestion/consolidation.
5-13 DNA Spiral Going Into a 13-62 Trade ...
Taking a 5-13 into the 62 is easiest to spot when you have nice, trending markets. But, what happens when the
market goes somewhat flat. When the prices go flat, and runs east in a relatively tight range, you will note that the
5 EMA and 13 EMA will often wrap around each other. Like the Double Helix in DNA, we call this situation a "DNA
spiral". If one was trying to trade every 5-13 cross, these are the times that would put you in your grave. Since
we're not trading every 5-13 cross, this DNA spiraling is merely a slight nuisance. But, we want to know when it's
really leaving the DNA spiral, as that might be the 5-13 going into the 62.
At this point, I'm going to suggest we exercise a little common sense. In other words, if we have a 5-13 DNA spiral
30 pips away from the 62, are we even interested? NO (we're not in the Gravity Zone, right?). So, the only time we
have to think too much about a DNA spiral is when it's near or in the Gravity Zone, or as is sometimes the case,
resting on/below the 62 EMA (when the 62 EMA is providing support/resistance, the 5-13 will often spiral right on
top of it or below it).
The challenge in trading a 5-13 cross that is leaving a 5-13 DNA spiral is that we don't know if it's actually leaving or
just raising (or lowering) slightly only to bend back into the spiral. Remember, we are not in a "life or death"
situation in getting into a 5-13 cross. You can always just wait. Jumping the gun on a 5-13 cross leaving a 5-13 DNA
spiral will have you crying as many times as it has you doing the Happy Charlie Brown Dance.
One simple way to judge a 5-13 cross leaving a DNA spiral is to draw a horizontal line through the center of the
spiral If the spiral is only a couple of pips wide). Draw another horizontal line 10 pips above (or below) it. When the
5 EMA clears that 10 pip distance, you have enough momentum and price has most assuredly left the DNA spiral. If

22

the 5-13 spiral is more than a handful of pips wide, instead of a single line through the middle, draw a top and
bottom boundary which encompass the upper and lower portions of the 5-13 EMA's in the spiral.

If the DNA spiral is only a few pips wide (in the above example, barely 4 pips), just draw a
horizontal line down the middle of the spiral (0.7572). When the 5 EMA moves 10 pips past
this line (which would be 0.7562), you will have sufficient momentum and price will have
left the spiral. In the above example, price has moved to this point, but the 5 EMA is not
quite there yet. We would not yet enter this trade based on the above example.

You can also use the RSI signal that we use in Criteria #3 to accurately determine when to leave a DNA spiral. One
word of caution when doing this: Be sure you have your crosses precisely marked with vertical lines. Missing the
cross by one candle in a DNA spiral can force your RSI Graph to be in the wrong time range, and that may affect
your BUY/SELL signal. Just be careful when determining where the crosses actually took place.
To be extremely safe, you can use a combination of the two... both a 10 pip move of the 5 EMA and the RSI signal
tells you to make your trade.
Remember, it's NOT about seeing how many pips you get in that 5-13, it's about getting into a 5-13 to capture
those opportunity pips in the 13-62 cross. If you get 3 less pips in the 5-13 cross, but are assured that 5-13 cross
has momentum, who really cares?
5-13 DNA Spiral Around the 62...
Sometimes, the 5-13 spiral is caused by true consolidation or congestion right on top of the 62 EMA. At these
times, the 5-13 actually loop above and below the 62 itself, adding another dimension to the spiral. However, we
know price has left this situation with momentum the same way we know price has left any spiral... with the 5
EMA moving at least 10 pips from the boundary of the 5-13 spiral. Don't lose sight of the fact that the 5-13 are in a

23

spiral, even when you have confirmation of a 62 trade via the 13 crossing the 62. The price is still in a spiral, and
you need to clear that spiral before entering the trade. See chart below.

You entered a 5-13 trade (actual cross around 1.1890) whose price
moves into the Gravity Zone. But, the 62 repels the price, and you have
enough room to exit the 5-13 trade in profit. Congratulations, you've
just proven how there's very little risk to this model, and who knows,
that 5-13 could have become a 250+ pip trade!
You then notice that the 5-13 starts to loop over itself, in a DNA spiral.
Time to sit back and wait. The price needs to break the spiral with some
momentum.
Since the 5-13 spiral is more than just a few pips wide, you're going to
create channel boundaries for the spiral. Draw a horizontal line on the
TOP of the DNA spiral. No need to be precise, just use your eyeballs. The
top boundary in this example is around 1.1906
Draw a horizontal line on the BOTTOM of the DNA spiral. No need to be
precise, just use your eyeballs. The bottom boundary in this example is
around 1.1896
Now, draw another line 10 pips above the top DNA spiral boundary,
around 1.1916. We will NOT enter the trade until the 5 EMA clears this
10 pip area. When it does, there's sufficient momentum to have
confidence the trade will continue in our direction. In our example here,
the momentum does not occur, the price reverses, so this way of dealing
with DNA spirals kept us out of the trade. Yea system!
Likewise, we would not enter a trade until the 5 EMA drops below a 10
pip line (not drawn on the above chart) before entering a trade in the

24

opposite direction. In this case, the actual 10 pip drop of the EMA was
caused by an announcement, so we would not enter at this point, either.

Special Consideration: The 34 EMA and the 156 EMA


We put the 34 EMA and 156 EMA on our charts as part of our set up for good reason. Being Fibonacci related, they
sometimes very accurately will show us things nothing else will. These are not really signals for trading, we just
need to be aware at any given time if they are showing significance in the market price. In other words, sometimes
you will see these EMA's having no impact, price will move up and down and all around them as if they were not
even there. Other times, like in the chart below, you will see these EMA's as very hard S&R. In the times where the
34 EMA or 156 EMA are serving as hard S&R, you need to exercise caution, and realize these barriers would
overrule any other Criteria we've outlined. In other words if we have a 34 EMA serving as strong resistance, even if
Criteria #1, #2, and #3 are met.

The 34 EMA is serving as strong Resistance for half the day. You would then wait for the
price to close above the 34 before "considering" the 5-13 cross into the 62. The trade still
must meet the other trade criteria we've established before you trade.
Special Consideration: Be Aware of Pivots
We always need to pay attention to Pivots. Like the 34 EMA and the 156 EMA, sometimes we will see pivots serve
as hard S&R, sometimes they do not. If the price has been in a range, it typically is bounded by pivots of some sort.
Pivots may come into play on either side of the 62 EMA. This means we may have to overcome a pivot (candle
close beyond it) before entering the 5-13 going into the 62. Remember, the ultimate objective with ANY 5-13 trade
is we want to be able to get in with momentum, and have enough wiggle-room to exit in profit if the price reverses
on us.

25

Emergency Exit From a 5-13 Trade That Reverses... Not to Panic, We're In Profit !!!
When the 62 EMA attracts the price from the Gravity Zone, the 62 will either let that price pass through, or repel it.
Sometimes it will let the price pass through, but will repel the 13 EMA (thus not allowing the 62 trade to develop).
Whenever price reverses BEFORE the 13 EMA crosses the 62 EMA, you need to be prepared to exit that 5-13 trade.
But, remember, you entered FAR ENOUGH away that you have room to manage this 5-13 trade. You'll have room
to let it move up and down some before you can decide to terminate that trade. And, if you do, you should be able
to exit with profit.
While you can set a stop at 20 pips, or beyond a recent high or low, the reality is, you are driving that 5-13, and will
not let it reverse into a loss. This is why we enter these 5-13's in the Gravity Zone, so there's enough pipage that if
the 62 repels the price and reverses the 5-13, we can exit in profit. There is NO NEED to STAY IN a reversing 5-13. If
we can exit in profit, DO JUST THAT. We can always RE-ENTER a 5-13 if one breaks back to the 62.

The above chart depicts entry into a 5-13 as it opens into the 62, and while the pending
13-62 trade does not develop (the 13EMA gets turned away along with price at the 62),
we see how by following the entry criteria we can make this "aggressive 62 trade entry"
very low risk and exit the 5-13 in profit. We can always re-enter the 13-62 trade if
another 5-13 opens up with price in the Gravity Zone, or just wait for the 13-62 to
fully develop using confirmation with a 13 EMA crossing the 62 EMA on a candle close.
Making Profit on a 13-62 That Does NOT Develop
(minimize risk with our entry criteria)
A

The 5-13 cross opens up with the candle close at 9:00 AM, but the
price is OUTSIDE the Gravity Zone (candle close was at 7673) and

26

therefore represents too early a time to enter the trade (price might
not get drawn to the 62EMA from this distance and we can get caught
in a reversal)
Price continues upward, so you can enter the trade when the price
B reaches the Gravity Zone at around 7678 (10 to 20 pips away from
the 62).
The price continues to the 62 (as it almost always will from the
C Gravity Zone), and then gets repelled and the 13 turns away. You may
want to prepare to exit the 5-13 trade.
You can let the price retreat comfortably 15 pips away from the 62
and exit at 7683, still exiting the 5-13 in profit (2 pips after Dealer
Spread). The real message here: we can be aggressive trying to get
into a 13-62 trade early, but even when the 62 trade doesn't develop,
D
we haven't risked much if we follow our entry criteria. Yet by trading
these 5-13's that open into the 62, when it does go, it goes big. Thus
we can capture every major move with minimal risk.
Now that's a "low-risk, high yield" trading model!

Initial volatility
At the beginning of the trade, you might see some initial volatility. This means that after the candle closes, you
might see the next candle go opposite from where you want it to be. Dont get overly concerned about this. You
need at least 20 pips of free room to let the trade gather momentum (especially as it moves into and across the 62
EMA). The first barrier of substance is around 21 pips after the 13 crosses the 62 in the direction of your trade.
Typically, if the price will reverse, it does so at or before that barrier. More on the barriers of interest in the next
module!

No 5-13 Cross to Enter as the 13 crosses the 62...


It can happen. The 5-13 cross (the cross itself) may develop too late, or the price from a 5-13 cross may be inside of
the Gravity Zone range (too close to the 62 to want to risk entering a 5-13 trade at that point), or there may be a
huge momentum candle creating the 5-13 that doesn't close until you are 7 pips on the other side of the 62 ... so
what do you do if the price is obviously crossing the 62 and it looks like the 13 is going with it, but there's no 5-3
trade to enter? WAIT. Period. Just wait. Wait for the 13 to solidly cross (not just equal, but be a pip on the other
side) of the 62 AND use a 30-Min candle close to confirm that. And, do not enter on the 13 crossing the 62 if the
candle close that creates that cross is RED (this does happen quite a bit). Wait for a blue candle close once the 13
has crossed the 62 before entering the trade. This provides you the most assurance that there is positive
momentum. Personally, I wait until the price moves PAST the 21 Barrier (discussed shortly) if I MISSED the 5-13
trade in getting into the 13-62 trade.

Holidays and Other Bad Days


Here's what Rob Booker (http://www.RobBooker.com) has to say about this subject:
"Try not to trade on holidays, especially U.S. holidays. Its best to stay out of
the market on those days and catch up on time with your family, see a movie,
adjust the metal rod that was placed in your back, insert a metal rod in your
back, or fire up the barbie-q and roast some weenies. Or you can back test
your strategies. Its also best to never, ever, ever, enter a trade past 14:00

27

GMT on a Friday. [9:00 AM EST]


On holidays and late on Fridays, the market is unpredictable and might not
move enough to give you any profit. Or it might move 50 points in one
direction just for the heck of it, and then move back. Of course it might move a
zillion pips, but thats the exception rather than the rule. Then youre stuck in
what might become a losing position, but meanwhile, youre losing money to
premiums/interest paid to your broker. This is a good time to shove a metal
rod into your spine.
Please take my advice and just stay out of the market, with this system, at
these times. You may lose some opportunities, but you will lose (also) the
chance of getting trapped in a motionless or unpredictable market."
Additionally, news days that can have a significant affect on prices are ignored. This would specifically mean Super
Friday (Non-Farm Payroll) and any other announcement of significance that have typically moved the market.
STOPS AND EXITS

GETTING OUT OF A POWER62 TRADE (in profit)


If the 5-13 trade was repelled at the 62, you exited in profit and we have a 13-62 that never developed.
Remember, we're really just stacking TWO SEPARATE trades together. If the momentum fades because the 62 EMA
is too strong a barrier, we come back another day. But, we didn't take a loss for trying. That's why this is a great
trading model. If the 5-13 into the 62 maintains momentum, crosses the 62 and drags the 13 EMA with it, we're
officially into our 62 trade.
There are two ways to get out of a 62 trade. We'll just label them SIMPLE and ADVANCED. (But, this is assuming
the 5-13 trade into the 62 had momentum and the 62 trade developed).
Simple Exit
When you enter the 5-13 cross into a 62, you can set your STOP LOSS 20 PIPS from the entry side of the 62 and use
a 20 pip trailing stop as your exit strategy. That's it. You will be stopped out of some of the bigger trades, but you
will also have good profit in many other trades. This is easy to manage, and I recommend using it for your first 10
or so POWER62 trades.
Alternatively, set a stop of 20 pips, and set a profit target at a recent high or low (something that creates a double
top or double bottom)

Advanced Exit
Everyone should know that all moving averages are lagging indicators. It makes no difference the type, they all lag.
Only after-the-fact can they tell you the market has turned. Even though that is valuable information and is acted
upon by taking a position, it isn't going to help you much in getting the best profit potential out of your trade. If
you use them exclusively to then get out, you will discover 2 things:
1) you get chopped when you had a profitable trade at one point, and/or
2) they took you out on a retracement and now you don't know what to do.
We can sum up everything you need to know about Fibo numbers and the corresponding Fibo ratio of 1.618.
Nature and the physical universe loves them. They are everywhere from the pyramids, to mountain ranges,
seashells, forests, etc. So why not markets?

28

Fibo numbers are real-time. This is not a lagging indicator here. When a market hits a Fibo number from the cross
of the 13 EMA and the 62 EMA, it is telling you that here is a natural stopping point, please take some profits off
the table. When a market goes through a Fibo number, like a hot knife through butter, it is giving you further
information about momentum in the move. Currency pairs that are relatively more volatile than others will
experience the higher fib numbers more often than the less volatile pairs. Of the major pairs, GBP/USD, and
USD/CHF are the most volatile, followed by the EUR/USD, and then USD/JPY.
Now, we're going to rely very heavily on more of these realities of the Fibonacci. If you've done your review
(Fibonacci University), you'll recall we've pointed out that knowing where the market has a high probability of
"bouncing" on the retracement in the direction of the trend, allows a trader to get in and have the market move in
their direction from entry. Knowing the Fibonacci extensions levels allows a trader to profit take before the next
major retracement. Learning and understanding the Fibonacci retracement and extension levels may mean the
difference between success and failure.
So, let's just cut to it, we're going to use target prices, very specific target prices, based on Fibonacci extensions
from the 13-62 cross. That is, we will exit positions at 34 pips, 55 pips, 89 pips, 144 pips, and 233 pips from the 1362 cross (it's NOT relevant where we ENTERED the trade, these price exits are calculated from the 13-62 cross). To
do this, we've put together a little Excel Calculator (62Calc).

In the above example, the 13 crossed the 62


at 1658 and we entered the Sell at 1640.
You only need to enter two (2) prices in the 62Calc ... the price where the 13 EMA crosses the 62 EMA, and your
entry price (either a SELL or a BUY). The same calculator is used for Buys and Sells (but only one at a time ... LOL).
At a minimum, you should be able to trade 5 lots to implement the POWER62 Enhanced Trading Model. Use the
34, 55, 89, 144, and 233 price target levels to take 1/5 off at each level (or let the last lot ride until the price crosses
over the 62 again). Note: As you build funds in your account, you should use multiples of 5 lots but still staying
within your targeted risk strategy for your trading account.
And yes, this means way-back-when, you enter that 5-13 trade going into the 62 with 5 lots (or multiples of 5).
Again, the real power of this model is the ability to lock in profit EARLY, and ALL 5 of those lots are guaranteed
profit when you do this.

29

Note how precisely the 62Calc determines our target exit prices at
natural points where price decides to reverse or proceed further
One of the greatest advantages of this model is its flexibility in its design to allow you to choose the level of
risk/reward you desire in trading. You can make this as aggressive or as conservative as fits your style.
The Exit Calculator tells us precisely where to exit. That removes the stress, the emotion. Simply enter the price the
13 crossed the 62, and then draw lines on your chart for your target exits.
Recommended Stop Loss Settings When Using the Advanced Exit Strategy
When Price Reaches
Trade Entry
21 Pip Barrier

Conservative Trader

Aggressive Trader

20 Pips outside of 62 EMA 20 Pips outside of 62 EMA


20 Pips behind this price

At the 62 EMA

34 Pip Exit

At the 21 Barrier

Around 8 to 13 pips past


62

55 Pip Exit

34 Pip Target Exit Price

At the 21 Pip Exit

89 Pip Exit

55 Pip Target Exit Price

34 Pip Target Exit Price

144 Pip Exit

89 Pip Target Exit Price

55 Pip Target Exit Price

233 Pip Exit

20 Pip Trailing Stop Price

89 Pip Target Exit Price

You will notice that as price moves in major trends, the 62 will go chasing it (after all, it is an average). For the
Aggressive Trader, this means many of the Stop Losses you utilize (from the table above) will actually fall OUTSIDE
of the 62 EMA. If the trend is steep enough, you can use the price outside the 62 at that point as your stop loss
rather than the table values (as it will be a shorter stop), as when price crosses back across the 62, we're out of
that trade, anyway.
The bottom line on stop loss management ... trade the model and adjust the stop loss setting to what you feel
most comfortable with based on your risk strategies and objectives.
To download the 62Calc, click here.

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Price Bounces: Missed The Initial Trade ... or Want to Re-Enter?


I want you to also focus on the fact that the pair, after this crossover occurs , may return to hit the 62 EMA again
and this is an excellent time to sell/buy the pair all over again. This means that if you miss the original trade, its
totally acceptable to enter the trade when the pair drops down and hits the 62 (this can be just a wick). This works
for long and short trades the 62 EMA will act as a dynamic level of support and resistance. A solid bounce here
means more favorable price movement (it isn't ready to cross back over the 62 EMA).

I personally wait to see the 5-13 open in the direction of my trade and for the 5EMA (the EMA itself, not the candle
for that price) to move at least 10 pips away from the 62 in the direction of my trade.
The only consideration for taking a price BOUNCE is how mature the 62 trade is. By that, I mean the longer the 62
trade has been going on (the more target price exits you have achieved), the less likelihood the bounce will propel
the price much further. In other words, for the EUR/USD and USD/JPY and EUR/JPY, a price bounce before the 89
price target still has a likelihood of delivering more good pips. Much after 89, into the 144 target, a price bounce
may not have sufficient strength. On these currencies, I watch very carefully if entering after the 89 price target on
a bounce. For the GBP/USD and the USD/CHF, price bounces after the 89, even up to 144, are not nearly as driedup as they are on the other pairs mentioned.
When entering off a bounce, consider your money management. As an example, with the EUR/USD, if the price
bounce occurs AFTER the 55 exit, realize you've would have already legged down on 2 lots (taken 2 lots out in
profit), so I would not enter with a full contingency of lots on a bounce as I would from the beginning.
Set your intital stop loss 7 to 9 pips on the other side of the 62EMA, and then move it along the 62 (on that 7 to 9
pip buffer) as price moves.
YOU CAN LEVERAGE HERE LIKE NO WHERE ELSE...
Okay, let's think about this.... you enter a 5-13 trade WITH 5 LOTS (or multiples of 5) hoping to get into a 13-62
trade early (just to capture those extra pips, right?). You feel comfortable, NO STRESS, because you know 95% of
the time, the price (at that point) will go to the 62 ... and even if it reverses there, you can get out "in profit". So
your 5 lots are not at very much risk!!!! Let's say you do get in at the Gravity Zone, and the price continues. At the
time the market price reaches the 21 Barrier, you move your stop loss to the 62. Something VERY POWERFUL JUST
TOOK PLACE, did you catch it? You moved your stop loss 10 pips PAST your entry point. This means EVERY LOT

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you have in the trade is ALREADY protected. This trade can totally reverse on you, and you have ZERO at risk - in
fact, you will profit. This also means, whether this was 5% or 10% (or whatever risk strategy you utilize) of your
funded account, you now have nothing at risk and you can put that 5% into another trade. Did you catch that? The
real beauty of a 62 trade is they typically at least get into profit VERY RAPIDLY, and this allows you to leverage
OTHER PEOPLE'S MONEY (the infamous "OPM") to reach your financial goals.
Let That Profit Run...
Developing your psychological management in your trading is important, and the 62 model can reinforce those
efforts. Look, if you have ALL your lots locked into profit, and the price is moving from the 55 target to the 89
target, do you really need to dog that stop loss along as the price may start to reverse around the 89? We don't
want to be foolish, but the point is this: Instead of worrying about price reversing on the active lots, remember
they are ALREADY in GOOD profit (guaranteed 45 to 65 pips at this point, depending on your stop loss settings).
Don't be RUSHED to move the stop loss up to "protect" your profits ... this will limit you from the BIGGER profits.
You are ALREADY in profit. Instead of micro-managing this trade which is ALREADY PROFITABLE, look to see if there
are other POWER62 possibilities where you can leverage your 5%. It is POSSIBLE to enter into 3, even 4 or more,
13-62 trades in a 24 hour period and NEVER have more than 5% of your funds at risk. WOW. Show me another
model that provides that kind of financial leverage! Once you have profit locked in, just follow a consistent money
management approach on moving the stop (per the charts above) and let the profits run. YES, sometimes the price
will reverse down to your stop, and you'll be thinking, "Darn, if I only moved my stop closer....", but there will be
BIGGER dollars given up when you do. Just let the profits ride!
CONCLUSIONS...
When you get right down to it, once you have adapted it into your own trading style and personal risk model,
POWER62 trading will give you all you want momentum to catch the bigger moves over time, early profit points
that allow you to catch short-term movements, and the lowest risk you can possibly have in a trade (because you
are typically only risking 10 to 25 pips on each trade - and even less if you utilize our 5-13 criteria). If your odds of
success on each trade were 50-50 (they aren't this low), over time you would make a fortune. If you don't believe
me, then do the math.
Precisely because of this flexibility, the POWER62 Enhanced Trading Model is the best Forex trading model I have
ever seen.

ALERTS WITH ALERTFX.COM

TRADE THE 62 MODEL WITHOUT SITTING ON THE CHARTS!!!


We've enhanced a great trading model that allows us to capture every major move that occurs. We just have to
know when they are happening!
You can use AlertFX.com, a free alert service, to notify you of just about any kind of alert you may desire. They will
send alerts to anything that has an email address. Most people obtain their mobile device (cell phone, smart
phone, etc.) email address from their service provider, and then have the alerts sent to their cell phone.
Many traders ask me what I use for alerts. My response is always the same ... "It depends on where price is in
relation to the 62 EMA".
Here are a few examples...

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During the day, I might just use simple 5 EMA - 13 EMA crosses. AlertFX allows you to use these two EMA's. While
we're not chasing 5-13 trades, I can be brought to the charts just to be sure the 5-13 cross isn't the last one going
into the 62 (and being the one I want to trade).
When going to bed at night, or if running errands for a while, I might set specific price alerts... if the price gets to
such a spot, send the alert.
You might also use the 34 EMA as sort of a warning (if price is moving past the 34, it will be obviously approaching
the 62). AlertFX does not have a 34, but you could use the 5 EMA or the 13 EMA crossing a 36 EMA and be close
enough. The alerts are for no purpose other than to alert you of a pending trade and to bring you to the charts. I
like being able to be in my back yard playing baseball with my son and still being able to catch the big trades,
versus him being out there by himself or just the neighbor kids. Like I stated earlier, I wanted a great trading
model, but I wanted balance in my life, too.
Since we are trading 30-Min charts, unless there is an extremely fast break, most trending will take many hours, so
you can actually be at dinner, receive an alert, finish your dinner, and then check your charts. And, there's always
another trade, so let's not fret missing any particular trade.
You can register for your free AlertFX account at http://www.AlertFX.com
I have found their alerts to be very accurate and timely, notifying my cell phone within seconds of the actual price
or indictor triggering the alert.
We will also be introducing Intelliscript Alerts for the Intellichart charts. Look for a link on the main menu and you'll
know we've implemented this option.
In the near term, we'll be introducing trading off mobile devices, such as the Treo or Palm, where you can get
notifications, check your charts, enter or leg-down in a trade, all remotely with your handheld mobile device.
THE POWER62 ENHANCED TRADING MODEL CHEAT SHEET

REGISTER FOR UPDATES: Keep the POWER62 Enhanced Model Dynamic and Fresh
Register for notification of site updates; trade-of-the-week; and more

CHART SET-UP
Using 30-Min charts, draw these EMA's
5 EMA: Color this EMA green
13 EMA: Color this EMA yellow
34 EMA: Color this EMA purple
62 EMA: Color this EMA blue (and make it a medium thickness line)
156 EMA: Color this EMA red

TRADE CRITERIA #1:


Only Take 5-13's (into the 62) That Are In The Gravity Zone (10 - 20 pip range from the 62)
OPTIONAL TRADE CRITERIA #2:
Only Take 5-13's (into the 62) That Have Momentum As Measured by the MACD

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OPTIONAL TRADE CRITERIA #3:


Only Take 5-13's (into the 62) That Have Relative Strength In Their Favor (using RSI high/low peak strategy)
TRADE CONSIDERATION: DNA Spiral
Use a 10-pip departure to ensure you've left the spiral; use the RSI(14) strategy to ensure move
TRADE CONSIDERATION: 34 EMA and 156 EMA
Be aware of the 34 and 156 serving as Support or Resistance; Use candle close to get past
TRADE CONSIDERATION: Pivot Points
Be aware of the pivots serving as Support or Resistance; Use a candle close to get past
TRADE CONSIDERATION: Emergency Exit from the 5-13
Don't let a 5-13 go negative; Exit when the price is repelled from the 62; Exit in profit; Re-enter trade later
There is NO 5-13 Trade to Enter Per the Criteria
If you could not get in on a 5-13 per the criteria, then WAIT for the 13 to cross the 62 (cross, not equal) on a BLUE
candle close.
TRADE CONSIDERATION: Volatility After You Enter the Trade
Once price crosses the 62, it may retreat back to it before going back in direction of trade (allow 20 pips)
TRADE CONSIDERATION: Missed the Trade? Want to Re-Enter
If price crosses the 62 and retreats back to it (even with just a wick), you can re-enter or leg-up on lots
TRADE CONSIDERATION: Holidays / Bad Times
Don't trade on Holidays, Fridays after 9AM EST, or Non-Farm Payroll/Super Friday

STOP LOSS AND EXIT: Simple


Set a Stop 20 pips back from the entry side of the 62 EMA; use a 20 Pip Trailing Stop
STOP LOSS AND EXIT: Advanced
Set a Stop 20 pips back from the entry side of the 62 EMA; use 62Calc to establish target exit prices
Recommended Stop Loss Settings When Using the Advanced Exit Strategy
When Price Reaches
Trade Entry
21 Pip Barrier

Conservative Trader

Aggressive Trader

20 Pips outside of 62 EMA 20 Pips outside of 62 EMA


20 Pips behind this price

At the 62 EMA

34 Pip Exit

At the 21 Barrier

Around 8 to 13 pips past


62

55 Pip Exit

34 Pip Target Exit Price

At the 21 Pip Exit

89 Pip Exit

55 Pip Target Exit Price

34 Pip Target Exit Price

144 Pip Exit

89 Pip Target Exit Price

55 Pip Target Exit Price

233 Pip Exit

20 Pip Trailing Stop Price

89 Pip Target Exit Price

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The 5-13-62 Enhanced Trading Model from the FX Traders Zone

The enclosed pics show the profit levels, using the 62s target price exits (as calculated by the 62Calc) to leg down
at the specified Fibo Extensions.

Note that the target exit prices are NOT determined by where we enter the trade (the market can care less about
that), but rather precisely where the 13EMA intersects the 62EMA.

The trades enclosed for the EUR/USD, GBP/USD, USD/CHF, USD/JPY, and USD/CAD occurred in the last week of
January 2006.

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