SPECIFICS OF THE STRATEGY

SPECIFICS OF THE STRATEGY
SPECIFICS OF THE STRATEGYNow, lets look at specifically how to apply this strategy. We willuse chart 1 for illustration purposes, and all times will bediscussed as EST. You go to view the FundamentalAnnouncement calendars and see that the US will be makingsome announcements (one announcement is ok, but more isbetter) for 8:30am tomorrow. Very well then, you go to bed andmake sure to have the alarm set for 8:15am to be awake for thetrading opportunity. It’s a good idea to set an alarm clock 15minutes before the trading opportunity to make sure youremember it.At 8:25 you should have your charts open to the one-minutecandlesticks for EUR/USD (and/or GBP/USD, CHF/USD) andyour Forex broker account opened up and ready to place anorder.You should notice that prices are gently moving around in aconsolidation pattern waiting for the Fundamental Announcement.Now here is where you have to act quickly. At EXACTLY 8:29amyou need to look at the candle and see what the high and lowprices are (not open and close). Add 10 pips to the high price andminus 10 pips from the low price. If the 8:28am candle has higherhighs or lower lows then you may want to use those extremenumbers instead of the 8:29am candle’s prices(adding/subtracting 10 pips). Now you create two “entry orders”.An entry order, unlike a market order to buy/sell right now at thecurrent price, is an order that only kicks in when your entry priceis touched. For the first entry order you set it to “BUY” when itreaches the high+10pips price, set your Stop loss for 10 pips(VERY IMPORTANT) which is basically the same as the highwithout the extra 10 pips, and then activate your trade. For theeBook 1 “Amazing FOREX System” - © 2004 Robert Borowski – www.AmazingForexSystem.comDuplication and distribution of this material is strictly forbidden23second entry order you set it to “SELL” when it reaches the low-10pips price, set your Stop loss for 10 pips (VERY IMPORTANT)which is basically the same as the low without the extra 10 pips,and then activate your trade. This should all have happened by8:30am sharp. OPTIONAL – you could set a profit limit of 20 pipson both orders.What did you just do? You took the price range of the currencypair and stretched it 10 pips up and down to add a little bit of asafety net. You told the broker that if the price of the currencypair goes up to that high point then you will “BUY”, and if it goesdown to the low point then you will “SELL”. You also told thebroker to stop you out after losing ten pips incase that shouldhappen. If you set the optional profit limit to 20 pips then you toldthe broker that once the price moves in your favor 20 pips to exitthe trade.In chart 1 it happened to go “UP”, and you would have ended up“BUYING” the currency pair. It could have just as well gone“DOWN”, and you would have ended up “SELLING” the currencypair. It doesn’t really matter with this strategy which way it goes,just that it moves a lot of pips.IMPORTANT – Within 5 minutes one of your two trades should beoff and running. At this point you should cancel the other trade.Sometimes the market responds with a momentary whiplashwhich means both orders could have been triggered, oneresulting in a loss while the other usually goes on for a profit.Read more about this later in this document.Let’s review the above chart 1 example. At 8:29am the high was1.2002 and the low was 1.1999. At 8:28am the high was 1.2000and the low 1.1998. Since the low of the 8:28am candle waseBook 1 “Amazing FOREX System” - © 2004 Robert Borowski – www.AmazingForexSystem.comDuplication and distribution of this material is strictly forbidden24lower than the 8:29am candle’s low we will use that one. So nowyou add 10 pips to the high (1.2002 + 10pips = 1.2012) and yousubtract 10 pips from the low (1.1998 –10pips = 1.1988). So youplace two entry orders, one that if the price goes to 1.2012 youbuy a lot (or multiple lots, or mini lots), but if the price drops to1.1988 you sell a lot. Then you enter your stop losses (VERYIMPORTANT – NEVER trade without stops!!!) of 10 pips, so foryour buy position your stop loss would be 1.2002 and your stopfor the sell position would be 1.1998. Let’s say you decided to puta profit limit of 20 pips then for your buy position it would be1.2032, and for your sell position it would be 1.1968.To make calculations simpler for you I have included an MS Excelspreadsheet that does all the math for you that you can downloadfrom the resource section of my website (see Appendix A). Justenter in your high and low numbers and it will give you all thenumbers needed.Back to the example. In this case your “BUY” entry order wouldhave kicked you in for a buy position at 1.2012. If you used a 20pip limit then you would have exited at 1.2032 for a nice $200profit (trading only one regular lot). Not bad for about five minutesworth of work.If you are a beginning trader it is highly recommended that youstick with a 20 pip limit on your trades. Later you can do some ofthe more advanced suggestions below.eBook 1 “Amazing FOREX System” - © 2004 Robert Borowski – www.AmazingForexSystem.comDuplication and distribution of this material is strictly forbidden25CHARTSFor this strategy you will need access to real time charts. YourForex broker should offer you some free charts, and this is all youneed. I provide links to brokers and free charts on my website(see Appendix A). You should use the charts provided by yourbroker as those will reflect the actual trading prices of your broker,and sometimes different brokers/charts have a slight pricediscrepancy which could throw off the system for you. The freecharts are all you really need, so save your money, you don’tneed to purchase the “Pro” charts.What you will need to do is access the chart for the currency pairyou are interested in trading. Make sure that the chart is showing“Candles” rather than other types of charts. Change your view toshow you 1-minute candles. This means that each candle showsthe price action of one-minute increments. You may want tozoom in to get a clear view of the most recent candles, which areon the right of the screen. When you mouse over a candle noticethat somewhere it should display to you the opening price, highprice, low price and close price, along with the date and time ofthat candle. Remember, it’s the high and low prices, and the timeof the candle that is most important for you to read to work thisstrategy. Spend some time playing with your charts getting reallyfamiliar doing this so that when you’ll be in the time crunch ofplacing your trade you won’t be fumbling around trying to figurethings out.