Trading system and Discipline

1. Identify the actual market position in relationship to previous activity by checking higher time
frames (daily chart).
a. Prices are not near a long-term resistance or support.
b. Prices are not in congestion.
c. Prices are not overextended.
d. Prices are not near the high or the low of the previous day.
e. Check the news and economic reports.
f. Check possible gaps on weekends and holidays.

2. Identify the candlestick or bar in which you will be entering the trade so that you can confirm
a potential future direction of the trend.
Alternatives:
a. Long Main trend is rising up with a downward swing on the main indicator greater than
the two previous downswings.
Short Main trend is falling down with an upward swing on the main indicator greater than
the two previous upswings.
b. Long The secondary trend is going down and comes back up in the same direction as the
main trend.
Short The secondary trend is going up and comes back down in the same direction as the
main trend.
c. Long The secondary trend is going down and comes back up in the same direction as the
slope of the moving average.
Short The secondary trend is going up and comes back down in the same direction as the
slope of the moving average.
Risk management:
3. Buy entry price:
Buy when the prices are above the high of the signal bar plus 1 tick.
Sell entry price:
Sell when the prices are below the low of the signal bar minus 1 tick.
4. Initial risk price:
Long Risk set to the swing low (minus 1 tick) of the signal bar or of the last three or four bars
depending on the time frame.
Short Risk set to the swing high (plus 1 tick) of the signal bar or of the last three or four bars
depending on the time frame.
Long Set stop to breakeven (entry price) after a range of four bars above the entry price.
Short Set stop to breakeven (entry price) after a range of four bars below the entry price.
5. Never let a positive trade become negative!
6. Exit strategy: Take profit.
Alternatives:
a. Using one lot (or mini- or microlot) Take profit at about 60 percent of the average price
range.
b. Using two lots Take full profit in one of the lots. Trail the stops using last short-term
supports as a guide.
c. Using three lots Take full profit in one of the lots. Trail the stops using last short-term
supports as a guide. Keep the remaining positions open until a reversal signal shows up or
the end of the trading session.
FOREX Trading Plan

Market: what to buy or sell? The currency pairs you want to trade.

USD/JPY, GOLD

Position size: How much to buy or sell?

Risk Management: How much to be a safe lose if things go wrong?

Entries: When to enter the market? Market open hours and news releases

Stops: To get out of a losing position

Exits: To get out of a winning position

Strategy: How to buy or sell?

Main indicator and secondary indicator to ENTER the market

Time frames: How much can you expect to win from a particular entry?

Risk areas: Are there bars or candlesticks that show risks for your position?

Breakeven price: no gain and no loss?