Trading Tip #2: Advanced Method On Making More Than 40-50 pips Consistently with MA Combinations

I wish to appreciate the comments, and encouragements  from users of the first trading tip #1. I decided to speed up the publishing of the advanced method due to high demand from interested users. However we advise traders to completely understand the basics of this system before attempting the advanced method. This is the reason we gave time for practice, and tests before the release of the advanced method.

See the basic method here: http://fxtradecity.blogspot.com/2013/08/trading-tip-1-how-to-make-40-50-pips.html

--> In the first method we were able to prove that PRICE WOULD ALWAYS REACT AT A PARTICULAR AREA, and you can convert the reaction to your favour by setting a price trap within the reaction points.

A simple reaction can earn you at least 40 to 50 pips consistently each time it occurs (all things being equal).

The advanced method reveals some tricks, and tips to increase the profits, and helps to detect the reaction areas clearly. But before we commence i strongly advise you read the first method and practice it with a simulation software (recommended) or demo account until you get a full understanding of the strategy.

See: How To Convert Your Trading Strategy Into Forex Signal Services

KEY POINTS OF THE ADVANCED METHOD

1. The advanced method primarily increases the profit potential of the strategy.
2. Additional indicators (optional) would be introduced to aid easier detection of the reaction points, and show best places to set pending orders.

PRACTICE/TESTING MATERIALS

1. Forex Simulation Software. Forex Tester V2.0 Professional Edition was used to practice and test the
   
   strategy. You can download a demo version (with limited features) for this lesson before you decide to purchase the full edition.
2. Offline Chart (30 Mins). We do not necessarily need a demo or live account for this lesson. Right click your chart, and select properties from the menu. Select the common tab, and choose Offline Chart. Click ok.

ADVANCED METHOD OF MAKING MORE THAN 40-50 PIPS

Now lets imagine we have a strategy with 85% to 90% accuracy, and another strategy with 58% to 99% accuracy. It would be better to take more risk or increase our chances with the first strategy because out of every 10 trades we are sure of 85% minimum success compared to 58% minimum success despite its ability of achieving 99% accuracy in some runs. A trading system with 85% to 90% accuracy is worthy of taking risks but with intelligent techniques.

We said before that this strategy detects areas where price MUST REACT, and we take advantage of this reaction no matter how it reacts. This means if we get 50 reactions a day (all things being equal), and we take advantage of them using this tactics, then we should expect 100% positive returns.

The first basic strategy only showed us how to detect the areas, and how to take advantage of it by placing pending orders, but the advanced system would show us some indicators that would strengthen the detection of the reaction points, and how to multiply the profits.

 

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Advanced Method Step 1: - Eagles Eye Detection

We are going to apply some indicators to strengthen the detection of the areas where price would always react. The basic strategy depended only on the 200 SMA line.

Pic 1

Now we are going to apply some key indicators that would give us clear signals that price is actually playing around the trap area, which is within the 200SMA line. This will help us detect fake setups. 

Force Index Indicator

The force index indicator is grouped under the Oscillator Indicator. It connects the basic elements of market information such as price trend, its drops, and volumes of transactions. This indicator when combined with the Moving Average Indicator produces better results in opening and closing orders (Click to see more about Force Index Indicator).

Open your offline chart and apply the indicator with its default settings. Resize your chart where necessary.

Scroll backwards or forward on your chart history, and look for areas like the picture 1 above where price is crawling along the 200 SMA line. At those areas where price is crawling along the 200 SMA line you will notice that the Force Index Indicator is somewhat on a straight line at the 0.00 level. See illustration below

This means that the volume of transactions with regards to the bulls and bears power is indecisive. This also means that price would eventually breakout either to the bull or bear area. THAT IS THE REACTION. Price would never remain indecisive forever so the Force Index Indicator gives us more confidence to set our trap, and wait for an eventual breakout.

NB: The longer the force index stays at the 0.00 level the better the certainty of the reaction.

GBPJPY 30Mins - 30th August 2013; 19:30

RVI Indicator

The Relative Vigor Index Indicator helps to verify trend, and

trend breakout. It is already part of the basic strategy but we are going to see how it will helps us filter the detection.

Take a look at the chart in the same area, and see how the RVI reacts. You'll find out that when price crawls around the reaction areas, the RVI is either fluctuating within the 0.025 level and -0.025 level or on the 0.00 level. Anything outside these levels is not guaranteed. The RVI plays lesser role when compared to the Force Index but its still useful.

In addition to these indicators you can include the Alligator Indicator. The indicator as we know it squeezes around price when it begins to move in a sideways pattern or in a channel due to inactivity. 

Either of these indicators helps to further strengthen the signal that price is actually crawling around the reaction area waiting for an imminent breakout.

Advanced Method Step 2: Multiply The Profit

The primary goal of the advanced method is to multiply the profit potential of this strategy. 

The steps below involves some risks that may not be suitable to some account size, type, and broker. This is why we recommend using a simulation software to practice, and test this method in order to optimize it to your account size and money management rules.

Step 1:

When all conditions are met place 2 pending orders on both sides with different lot sizes. The orders should be placed simultaneously.

For example:

Order 1 - BUY STOP - Lot Size = 10.00

Order 2 - BUY STOP - Lot Size = 20.00

Order 3 - SELL STOP - Lot Size = 10.00

Order 4 - SELL STOP - Lot Size = 20.00

Take profit should be placed in this manner:

1. The higher lot size should have a closer Take Profit setting.

2. The lower lot size can have its TP set farther than the higher lot size or at the same position.

NB: A safer way is to place the higher TP much closer like 10 pips away from the order. But If the signal shows a major reversal or cross then you could increase it. The idea is to catch as fast as possible the immediate reaction with the higher lot size, and consolidate your position with the lower lot size. Take note of FIFO and Hedging rules for brokers situated in the US.

The inherent risk is that price can suddenly counter react against your position hence you should be careful trading the advanced method prior to news release. However our confidence lies on the basis that PRICE MUST REACT and 80% of this reaction showed positive returns if applied accurately.

Warning: Please practice, and perfect this method with a simulation software before applying it to your live account. You will not be able to carryout an extensive practice, and testing of this strategy with a demo account. Also be cautious of your leverage and margin size.

Step 2:

Place 1 (one) single large order rather than placing multiple

orders with different lot sizes. The question is what happens if the order doesn't get to my Take Profit or reverses negatively? Personally i use Trade Management Systems like Managed Take Profit EA to protect my orders from situations like this. The system takes partial take profits from my account, while automatically moving the Stop level till it gets to breakeven.

We've come to the end of the advance method of making more than 40 - 50 pips consistently with MA Combinations. We hope you'll find it useful to your success in Forex. 

We appreciate your feedback, and comments. 

Trading Tip #1: How to Make 40-50 pips Consistently with MA Combinations

I want to show you a method of making at least a minimum of 40 to 50 pips and above consistently through a unique combination of Moving Average Indicators. This trick has worked for me 90% consistently. 

Skip the nitty gritty and go straight to the summary tips

Before I explain how it works I’ll show you some proofs. 

SCENE 1: – Pending BUY order at 1.55724 and Pending SELL order at 1.55243. Take Profit at 1.54585. 

See what happens next below: 

Price breaks the sell pending order at 1.55243 and made more than the minimum 40 to 50 pips. 

SCENE 2: – Pending BUY order at 96.950 and Pending SELL order at 96.395. Take Profit (BUY) at 97.965. 

Once again price breaks the BUY Pending Order at 96.950 and makes over 40 pips plus. 

SCENE 3: BUY Pending Order @150.450, SELL Pending Order @149.735 & Take Profit @151.640. Got more than the 40 to 50 pips when price broke the BUY pending order @150.450. 

BRIEF ABOUT THE TRADING SYSTEM

What if you knew a particular place or location that something must occur irrespective of the circumstances? What if you had a tool that can tell you exactly where this place or location is? If you knew and had such a tool I bet you’ll definitely reap a lot of fortunes from it. Now imagine you knew a certain area in the market where something must occur apart from the news release! Also imagine you had a tool that would not only inform you of that place but also help you to take advantage from it. This is what this system is all about. 

Strategy Simulation Tool

This system shows you a particular area in the market where a reaction MUST OCCUR SOONER OR LATER. Having studied the market for many years, I discovered certain places or locations where price MUST react either to the BUY or SELL area. The big deal here is that no matter what happens, when price gets to that location or area it must react. The good thing is that this system helps you take advantage of the reaction to your gain. The system thrives on the following market state; sideways, still, horizontal, and undecided state. All you need to do is wait for the system to show you when price has entered this state, and then you set the trap with pending orders, and wait for a reaction, which would always turn out to your favour. 

HOW THE SYSTEM WORKS

The system works similar to the breakout method only that it uses the moving average indicators for its breakout mechanism. When price gets to the decisive moving average indicator it is 95% likely that a reaction would occur. 

SETUP (M30 Chart) 

INDICATORS: 200 SMA (Thick black line), 26 EMA (Red line), 10 SMA (Green Line), *RVI (Optional)

CHART: 30 Minutes chart is recommended but you can explore other timeframes. 

PROFIT TARGET: 40 to 50 Pips. This can be extended but not more than 100 pips at a trade. If you want to extend the profit range then contact me for My Advanced Method. 

• Open any chart and place a 200SMA (apply to close) on the chart. Format the indicator to be bolder than the rest indicators. 

• Place a 26EMA and 10SMA (apply them to close price). The 26EMA should be in red color and 10SMA should be in blue color (you’re free to use your choice of color). The 26EMA and 10SMA are not too important but they serve as a guide to extend the profits beyond 50 pips. 

Dont Miss Out On News Trading Event - Trade 24/7 With A Reliable VPS Step 1:  When price gets close to the 200SMA be very watchful. The 200SMA is very good at dividing the BUY Region from the SELL Region. When price crosses over the 200SMA it means a trend in that direction of the cross would last for a very long time ranging from days, weeks, and months before an opposite cross would occur. So when price gets closer to the 200SMA, it is 99% likely that a major shift or reversal would occur (this is the reaction). Sometimes a shift occurs and most times it reverses and continues in the previous trend direction. We lay the trap with our BUY and SELL pending orders when price is getting close or moving along like a channel within the 200SMA line or crawling in between the 200SMA line in a sideways pattern. We set the within this area because a definite action MUST OCCUR SOONER OR LATER (i.e. price must break out from the 200SMA line and continue or form a new trend).  Special Promo Available You can liken the 200SMA indicator to the resistance and support line. Now go back to your chart plot a 200SMA indicator and watch how price behaves when it hovers around it or gets close to it. You’ll see that it either crosses over it and forms a new trend or bounces back and continues its former trend.  Step 2:  Plot your 26EMA and 10SMA. They are more useful for the advanced method. When both indicators cross over the 200SMA line it means a very strong trend would occur in that direction.  Step 3:  Market is never static all the time so watch out for price getting close to the 200SMA indicator. When price is closely approaching or has approached or is resting on the 200SMA line then set pending orders either 5 pips away from price or a bit higher or lower than the 200SMA line. See illustration below.  Looking at the circle in the picture above, price approaches the 200SMA, crosses below it but doesn’t go further and then goes back again to the 200SMA, hovers around it, and looks indecisive in regards to the next direction it should take. Looking closely again you’ll notice that price is HOVERING BETWEEN 1.53515 and 1.53355. You can see that price seems to have bounced from the 200SMA several times and has not broken out of it to a definite direction. The system here has clearly informed us of a price trap, which is what we need to place our order.  The chart below illustrates were we place the BUY STOP & SELL STOP pending orders.  The orders should be placed in such a manner that price is safely trapped inside both orders waiting for a breakout to occur. The green star at 1.53835 indicates a place where the BUY pending order should be set. It is in a safe distance but will reduce our potential to make the minimum gain. The green star close to 1.53675 is another better position to set the BUY pending order. Either position is okay for the BUY pending order. The red star at 1.53355 is the best position to set the SELL pending order.  CAUTION: The pending should be modified as the market progresses. The essence is to keep price trapped within the order and the 200SMA. Always set the pending orders under or above the highest or lowest candle. Take Profit should be within 40 to 50 pips on both sides. Stop Loss should be above or below the opposite 200SMA line.  Let’s see more examples of how to setup the system;  Looking at the chart above, price approaches the 200SMA, crawls around it showing no sign of breaking through the 200SMA line, and hovers between 96.700 and 96.395. This is a trap. We set pending orders at this area where price is crawling along the 200SMA and wait for an eventual breakout. Few hours later, price finally breaks out of the trap, hits the BUY pending order and goes further than the minimum 50 pips.  Let’s see another example.  There are three circles labeled with alphabets A, B, & C indicating where the system gave us signals to trade. Price started crawling or moving sideways from the bigger circle A and showed intensity in circle B. Circle B is the best area to place pending orders because the candles crossed the 200SMA line a bit and remained indecisive.  Don’t forget that the pending orders must be placed a little Best Straddle EA Ever above the highest candle or below the lowest candle wick. This keeps price in a trap waiting for a breakout. Remember a reaction must always occur when price gets to the 200SMA line. It will either cross over or reverse. In this case, price reversed and broke the BUY pending order leaving us with some very good pips. The same thing happened in circle C. Price broke out from the 200SMA line and went finally went downwards after series of crawling along the 200SMA line.  --> SUMMARY We have observed after years of studying the Forex Market that price MUST REACT AT A CERTAIN PLACE IRRESPECTIVE OF THE CIRCUMSTANCES (i.e. when price gets to this location it MUST either move ahead, crossover or reverse 40 to 50 pips minimum).  Our system helps to detect this location and take advantage of them. See the steps on how to setup the system and trade with it. Setup the indicators (200SMA, 26EMA, 10SMA, RVI) on any 30 minutes chart. The other indicators except the 200SMA is less important. You can experiment other timeframes. Watch for the following price patterns before placing pending orders. The system will help you detect these patterns. Price (candles) gets to the 200SMA line, crawls around it, or moves in a sideways pattern on the 200SMA line, or crosses the 200SMA line but forms a resistance and support formation on the 200SMA line looking indecisive of the next direction. (see illustration below) The pattern should be consistent for at least 4 to 5 candles or time duration. Place a buy and sell pending order when the above pattern occurs within the 200SMA line. Place them in these forms: Place a BUY STOP pending order at the highest high candle within the pattern formation. At the same time place a SELL STOP pending order at the lowest low candle within the pattern formation. Ensure that your pending orders somewhat keeps price in a narrow channel, which we call the "Trap". It is 100% likely that price must breakout from this "Trap" Take profit should be minimum of 40 to 50 pips on both sides. Stop loss should be based on your Money Management Rules. It's recommended that the SL should be above or below the 200SMA line. The system can be traded on any chart, session, and duration. For the advanced system (over 50 pips settings) contact me Watch out for more Trading Tips from FXTradeCity. Signup to be the first to know or LIKE us on Facebook and join us in our Forex Resources Community.  Please before leaving take some time to read other articles that will improve your knowledge and enhance your success in Forex. 1. Top 7 MT4 Forex Signal Providers 2. 10 Ways of Detecting Forex Scam Deals 3. List of All Forex Trading Indicators & How to Use Them