detroit forex seminar 8-31-13
DESCRIPTION
Powerpoint used at the 8-31-13 Forexealywarning.com Seminar. Topics Include Resources: 3 Rules,Forex Basics, Parallel and inverse, Trends, Support and Resistance, Multiple Timeframe Analysis, ENTRY Management, Profit Taking Money Management, Process of becoming a Forex Trader.TRANSCRIPT
Metro Detroit Forex Seminar
Presented By:Dan Weiand & Rick Turner
Forex Early WarningThe low Cost Leader in Forex Trade Alerts
Copyright © 2013 MT2 Enterprises, LLC. All right reserved.
Agenda
Resources3 Rules
Forex BasicsParallel and inverse
TrendsSupport and Resistance
Multiple Timeframe AnalysisENTRY Management
Profit Taking Money ManagementProcess of becoming a Forex Trader
Reference Materials
All online at Forexearlywarning.com
Reference Materials
35 Lessons
In Order To Trade The Spot Forex
You need to know the direction of the Trend.
You need to have a valid entry point
3 Simple Rules
There are some very Simple things a forex trader can try to understand that will increase their trading accuracy from the more common 90% failure rate to as high as 90% positive trading accuracy in the matter of a few weeks.
Reference: Lesson 18
Currency Transaction Basics
Exchanging currency at the Border
Currency KioskTrade 10,000 USD for CAD at exchange rate of 1.05
Don’t spend the money.
If exchange rate moves down to 1.04.
Exchange CAD back for USD now have 10,100
Same asSelling the USD/CAD Online
Currency KioskTrade 10,000 USD for CAD at exchange rate of 1.05
Don’t spend the money.
If exchange rate moves up to 1.06.
Exchange CAD back for USD now have 9,900
Same asSelling the USD/CAD Online
Currency Pairs
If you Buy a currency pair online you want it to go up
If you Sell a currency pair online you want it to go down
Cash Transaction SAME AS
Online Transaction
Cash is Unleveraged 1:1 Online 50:1 Leverage+
Anatomy of the Transaction
Exchange rate shows how many USD needed to Buy or Sell 1 EUR
Anatomy of the Transaction
PIP “Price Interest Point”= .0001 Yen based = .01
PIP Value is based on 3 Factors
1) The currency pair2) Size of the trade3) The exchange rate
Anatomy of the Transaction
Calculating PIP Value
1)EUR/USD2)10,0003)1.4600
1) 10,000 x .0001 = 1 USD per PIP2) 100 pip movement would = 1x100= $100 USD profit or Loss
Conversion to USDNot required since USD is in pair
Anatomy of the Transaction
Calculating PIP Value
1)GBP/NZD2)20,0003)1.99451) 20,000 x .0001 = 2 NZD per PIP2) 2/1.9945 = 1.00 GBP per PIP3) 100 PIP movement = 100 x1.00 = $100 GBP profit/loss
Conversion to USD$100 x current GBP/USD rate=Profit/loss in USD1.5567 x 100 = $157.65 USD profit/loss
Anatomy of the Transaction
Calculating PIP Value
1)EUR/GBP2)20,0003).8580
1) 20,000 x .0001 = 2 GBP per PIP2) 2/.8580 = 2.33 EUR per PIP3) 100 PIP movement = 100 x2.33 = 233 EUR profit/loss
Conversion to USD233 x current EUR/USD rate=Profit/Loss in USD233x1.3364=$311.38 USD
Anatomy of the Transaction
Calculating PIP Value
1)GBP/JPY2)350,0003)152.60
1) 350,000 x .01 = 3500 JPY per PIP2) 3500/152.60= 22.94 GBP per PIP3) 100 PIP movement = 100 x22.94 = 2,240 GBP profit/loss
Conversion to USD2,240 x current GBP/USD rate=Profit in USD2,240x1.5567=$3,487.01
How Do Currency Pairs Move?
Currency Pairs ONLY move up or down based on??
Individual currency strength & weakness
Basics
CAD Weak
USD Strong
Buy the USD/CAD
Basics
CAD Strong
USD Weak
Sell the USD/CAD
USD/CAD
USD/CAD
Strength and Weakness
The individual currency pushing is STRONG
The Individual currency being pushed is WEAK
USD/CAD
USD/CAD
Time to Learn
Parallel and Inverse – 2 WeeksSupport and Resistance – 3 months (If full time)MTFA – 1 year
Parallel and Inverse
USED 2 WAYS
At Analysis&
At Entry
8 Individual Currencies
USD US Dollar CHF Swiss Franc EUR Euro GBP British Pound JPY Japanese Yen CAD Canadian Dollar AUD Australian Dollar NZD New Zealand Dollar
• GBP is Weak• CHF is strong• Sell the GBP/CHF
Parallel An Inverse AnalysisReference: Lesson 8 Forex Article
Parallel and inverse analysis is the study of how individual currencies influence the movements of currency pairs.
Individual Currency = The Country
Currency Pair = the Transaction
Individual Currency IS NOT a Pair
8 Individual Currencies
USD US Dollar CHF Swiss Franc EUR Euro GBP British Pound JPY Japanese Yen CAD Canadian Dollar AUD Australian Dollar NZD New Zealand Dollar
28 Pairs
USD US Dollar CHF Swiss Franc EUR Euro GBP British Pound JPY Japanese Yen CAD Canadian Dollar AUD Australian Dollar NZD New Zealand
USD US Dollar CHF Swiss Franc EUR Euro GBP British Pound JPY Japanese Yen CAD Canadian Dollar AUD Australian Dollar NZD New Zealand
Currency Pairs Should Be Grouped As Individual Currencies
EUR/USDGBP/USDAUD/USDNZD/USDUSD/CADUSD/CHFUSD/JPY
EUR/USDEUR/JPYEUR/CHFEUR/GBPEUR/CADEUR/NZDEUR/AUD
EUR/JPYGBP/JPYAUD/JPYNZD/JPYCHF/JPYUSD/JPYCAD/JPY
For Analysis
USD JPYEURGBP/USDGBP/JPYGBP/CHFEUR/GBPGBP/CADGBP/NZDGBP/AUD
GBP
The Market Is The Indicator
Pairs move only by Individual Currency Strength and Weakness
Parallel and Inverse analysis is the only way to measure Strength and Weakness
Technical IndicatorsDo Not Measure Individual Currency
Strength and Weakness
Why are they on charting platforms?
Technical Indicators
Strength and Weakness Examples
The individual currency pushing is STRONG
The Individual currency being pushed is WEAK
EUR/USD
EUR/USD
Strong USD
Strong EUR
EUR/USD
EUR/USD
Not Strong or Weak
Strong Vs Strong
EUR/USD
Weak VS Weak
EUR/USD
Slingshot
Slingshots
Your best and safest trade
Fastest movement in a direction
Groups of Individual Currencies
EUR/USDGBP/USDAUD/USDNZD/USDUSD/CADUSD/CHFUSD/JPY
EUR/USDEUR/JPYEUR/CHFEUR/GBPEUR/CADEUR/NZDEUR/AUD
EUR/JPYGBP/JPYAUD/JPYNZD/JPYCHF/JPYUSD/JPYCAD/JPY
For Analysis
USD JPYEURGBP/USDGBP/JPYGBP/CHFEUR/GBPGBP/CADGBP/NZDGBP/AUD
GBP
EUR/CADEUR/USDEUR/AUD
EUR Weak on All Pairs
EUR/NZDEUR/JPYEUR/CHFEUR/GBP
CAD/JPYUSD/JPYAUD/JPY
Strong on All Pairs
NZD/JPYEUR/JPYCHF/JPYGBP/JPY
EUR/JPY
Slingshot
On the Charts
EUR/JPYGBP/JPYAUD/JPYNZD/JPYCHF/JPYUSD/JPYCAD/JPY
Drivers Changing
Strength and Weakness DRIVES the Market.
Change in DRIVERS is a change in which individual currency is strong and which is weak
When Do The Drivers Switch??
During the Intraday consolidations
Usually after the Main session
Sometime News events
When Do drivers Lesson 14 - Best Times To Trade The Forex Market
When do drivers change?
Separate The Pairs
NOT EUR/USD
EUR USD
Always think of them Separate!!
Parallel and inverse
If you can identify what parallel and/or inverse group is DRIVING the market, you can successfully trade almost everyday there is movement.
Trend
Definition:
Trend on a currency pair is a long series of movements and market dynamics on both sides of the pair that favors movement in one direction.
Trends
Trends
TrendsEUR/JPY
EUR/JPY
EUR/JPY
EUR/JPY
EUR/JPY Oscillation
Choppy
EUR/JPY
Choppy
Mine Mine Mine!!
Free Trend Indicators
F.A.S. – Fresh Cross. Angle. Separation.
Fresh trends = Lower Risk and Higher Risk Reward Ratio
Over extended trend = Higher Risk and Lower Risk Reward Ratio
Trend Cycles and Fresh Crosses
Free Trend Indicators
Strong Uptrend Strong Downtrend
Trends
Trends
Trends
No Trend
No Trend
Price Chart Without Trend Indicators
You can see direction with just price
Price Chart With Trend Indicators
Price Chart With Trend Indicators
Trend indicator point to a direction
Noisy price chart
Same Chart – No Noise
Noise VS Clear Direction
Noise Direction
Support and ResistanceLesson 10 - Forex Support and Resistance and Price AlarmsArticle 2 - Effective Use of Price Alarms
The forex market is a support and resistance market.
All trends start and end at support and resistance.
All reversals and retracements start at support and resistance.
Support and Resistance
SupportA support level is a price level where the price tends to find support as it is going down. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely to continue dropping until it finds another support level.
ResistanceA resistance level is the opposite of a support level. It is where the price tends to find resistance as it is going up. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely that it will continue rising until it finds another resistance level.
Source: wikipedia
Support and Resistance
Entry Points
Targets
Stop levels
Support and Resistance
Support and Resistance
Short term Support and Resistance
M5, M15, H1 Timeframes (Intraday S&R)
Long Term Support and Resistance
H4, D1, W1, MN Timeframes
Support and Resistance
The Difference between Long Term and Short term S&R is you profit potential or “Room to Move”.
How much room to move between Long and Short term??
My personal rule is it must be AT LEAST 100 pips!
FEW is around 100-125 MINIMUM
Support and Resistance
What if you do not have 100 pips?? Road Block!
DO NOT consider the trade!
Move on and find another trade OR
Wait till that level is cleared.
Support and Resistance
Wait until the level is cleared. Temporary Road Block
Support and ResistanceVisual Examples of Support and Resistance
http://www.flickr.com/photos/forexearlywarning/
Support and Resistance
Entry = Short term Support & Resistance
Profit Target = Long term Support & Resistance
Stop Loss = Short term S&R for Beginners = Longer term S&R for Experienced Veterans(Bigger Stops)
http://www.forexearlywarning.com/forex-lessons/forex-profit-taking
Support and Resistance
S&R Numbers are REPETATIVE on ranging and oscillating pairs
Support and Resistance
Trend Indicators converging: an indication of a currency pair stalling at support or resistance
Price alarmsUsed to monitor Short term S&R for possible entry
Your Job
Yes , work is involved
Know the condition of the market by examining charts systematically to assist in planning and entries
MTFA- Multiple Time Frame Analysis
Lesson 11 - Multiple Time Frame Analysis of The Spot ForexArticle 4 - Multiple Time Frame Analysis
Multiple time frame analysis (MTFA) is the inspection of very basic forex trend indicators and forex charts, starting with the largest trends and time frames, and working backwards down through successively smaller time frames to see how the smaller time frames and trends feed the larger time frames.
MTFA- Multiple Time Frame Analysis
Lesson 11 - Multiple Time Frame Analysis of The Spot ForexArticle 4 - Multiple Time Frame Analysis
When the smaller time frames are in agreement with the larger trends you can enter a spot forex trade in the direction of the trend with very good safety.
If no trend exists on a particular currency pair the smaller time frames and trends will, at some point, build an uptrend or downtrend.
MTFA- Multiple Time Frame Analysis
Simply put:
You are looking for the BEST and SAFEST direction to trade a currency pair
MTFA Timeframes
W1- Weekly Long term TrendD1 – Daily Intermediate term TrendH4 – 4 hourly Short Term Trend
Main Direction Timeframes
MTFA – What to observe
Is it Trending or Oscillating?
Is it Choppy Ranging?
How FRESH or OLD are the Trends?
MTFA – What to observe
Is it Trending or Oscillating?
This is your Direction
Is it Choppy Ranging?
This means don’t trade it!
How FRESH or OLD are the Trends?
This is your assessment of RISK
MTFA – What to observe
Is it Trending or Oscillating?
The higher time frames trends and the direction of the major trend always
overrule the lower time frames.
What is the Largest time frame with Trend??
MTFA – What to observe
“When the smaller time frames are in agreement with the larger trends you can enter a spot forex trade in the direction of the trend with very good safety.”
New trends in the smaller time frames enable us to enter the
trends in the larger time frames if a currency pair is trending.
MTFA – What to observe
Parallel and Inverse
Are all or most of the pairs in a group of 7 going the same way or doing the same thing????
Important!!
MTFA- Smaller Timeframes
If you have a Large trend like W1 you could wait for a fresh trend on D1 or H4 back in the direction of the W1. Direction. Direction. Direction.
W1D1H4H1M30M15
What is a smaller time frame?
Depends on the trend or oscillation you are trading.
If you are trading the H4 trend,You could wait for a fresh H1 trend to get in H4 trend
MTFA for Parallel & Inverse
http://finance.groups.yahoo.com/group/4xtrendtraders/
FEW Analysis Heatmap
MTFA for Parallel & Inverse
http://finance.groups.yahoo.com/group/4xtrendtraders/
FEW Analysis Heatmap
MTFA for Parallel & Inverse
http://finance.groups.yahoo.com/group/4xtrendtraders/
FEW Analysis Heatmap
MTFA for Parallel & Inverse
http://finance.groups.yahoo.com/group/4xtrendtraders/
FEW Analysis Heatmap
JPY Weak AUD Weak CAD Mixed
What Do I Do Now?
I have analyzed currency pairs using MTFA.
I found a currency pair in a strong uptrend.
Parallel & Inverse verifies the Direction.
The difference between short term and long term resistance is 300 pips.
I have a price alarm set at short term resistance.
How Do I Enter Trades?
You enter trades with the Forex Heatmap®
In the MAIN trading session
The Forex Heatmap®
Visual map of Parallel and
Inverse at entry
The Forex Heatmap®
Main Goal at the beginning is to Learn to:
Master it!
When Do I Enter Trades?
How Do I Enter Trades?
The Forex Heatmap®
Monitors 28 Pairs in Real Time
Measures Movement of Currency Strength and Weakness
Lesson 15 - The Forex Heatmap
What the Heatmap Does NOT Do
Does NOT know the direction of or if a Trend exists
Does NOT know strength or quality of the Trend
Does NOT know if the movement has just started
Does NOT know if the pair moved hundreds of pips already,
Does NOT plan a trade for you.
Does NOT know where support or resistance is.
Does NOT know if news drivers are coming out.
What the Heatmap Does Do
Tells you which individual currencies are strong or weak or mixed.
Point you to additional trading opportunities in the same P&I group of pairs that you may have not considered during the planning process.
Anatomy of the Heatmap
Arranged by 8 individual Currencies
USD
CHF
EUR
JPY
GBP
AUD
CAD
NZD
All pairs are represented twice
CAD/JPYUSD/JPYAUD/JPY
Strong on All Pairs
NZD/JPYEUR/JPYCHF/JPYGBP/JPY
Anatomy of the Heatmap
Separated into 2 Sessions
Anatomy of the Heatmap
Current time in GMTNEXT reset to zero (countdown timer)
Refreshes every 30 seconds
Anatomy of the Heatmap
Change in price shown in percentage
Visual Bar showing price change direction
% Change and Bar Graph Move Together
Highest % UP and Down
Biggest mover UP (over.25) Gets green Arrow
Biggest mover DOWN(over.25) Gets red Arrow
Anatomy of the Heatmap
% change is based on the currency pair price movement
0.25% move up
EUR/USD current rate = 1.3330
1.3330 x 0.25% = 33 pips of movement
33 pip move on EUR/USD
33 / 1.3330 = 0.25%
Anatomy of the Heatmap
1.00% move on GBP/CAD
GBP/CAD current rate = 1.6263
1.6263 x 1.00%(.01) = 162 pips of movement
162 pip move on GBP/CAD
162 / 1.6263 = 1.00%
Anatomy of the Heatmap
Price Rising = Green Bar
Price Rising = % Rising
Price Drop = Red Bar
Price Drop = % Drop
Parallel and Inverse
The only thing that DRIVES price and price movement
EUR Strong CAD Weak
EUR/CAD
CAD STRONG EUR WEAK
EUR/CAD
EUR/CADEUR and CAD are BOTH Strong or BOTH Weak
CAD/JPYUSD/JPYAUD/JPY
JPY Strong on All Pairs
NZD/JPYEUR/JPYCHF/JPYGBP/JPY
JPY Strong on All Pairs
EUR/JPY
Slingshots
Slingshot GBP/AUD
Mixed Signals
Simply don’t trade!!
The Forex Heatmap is a GO
or NO Go indicator.
Heatmap Supplemental Trades
Point you to additional trading opportunities in the same P&I group of pairs that you may have not considered during the planning process.
Points you towards that you may not have anticipated based on the trend analysis and trade planning process. (Warning!)
Heatmap Supplemental Trades
Don’t Fall into the trap of only trading Heatmap Signals!!!
Use it for what it was designed for.
Heatmap Scenarios
The GBP/JPY is consolidating and starts a fresh movement, but only the GBP is strong, do you take the trade??
Generally speaking yes because it’s a fresh move starting after a consolidation, check the charts for next resistance point.
Heatmap Scenarios
Some news comes out and a price alarm hits, you see a strong EUR and the EUR/JPY has a fresh moving average cross trend on the H4 chart, do you take the trade??
Yes, if there is no nearby resistance.
Heatmap Scenarios
The EUR/CHF is consolidating but in a strong downtrend, the D1 and W1 timeframes are separated with no support, a fresh down cycle starts through support, the EUR is weak and the CHF is neutral. Do you enter the trade??
Yes, the trend is strong and the pair was consolidating so likely no slingshot is required.
Heatmap Scenarios
You check the heatmap in the main session and the EUR/CAD is a slingshot with EUR strong and CAD weak. You check the H4 and it is separated with no resistance. Do you take the trade??
Yes, most definitely.
Heatmap Scenarios
The AUD/JPY starts to move in the Asian session and moves 225 pips overnight, do you buy it in the main session if the heatmap signals are good??
No, definitely not, too deep into the move, it has been moving for 12 hours, you missed it.
Heatmap Scenarios
If the Heatmap gives you an unexpected or supplemental trade in the main session that is a slingshot look straight at H4 chart, if the trend is good and there is no support or resistance, would you trade it??
Yes. This is a real timesaver because you look at one timeframe to assist with your trade decision.
Heatmap Scenarios
You have a fresh or developing intermediate uptrend (D1) on the USD/JPY with some very minor resistance nearby. In the main session the USD is strong but the JPY is neutral, do you take the trade.
Yes, you have a fresh trend on a larger time frame.
Money Management
Very important IF you need it.
Do NOT need it if - The forex trading system you are using does not work and consistently give you positive pips with demo trades
Do NOT need it if - The forex system you are using works at making pips but you are not applying the system correctly or as designed and using it your own way then you will not consistently see positive pips
Loss Management – Keeping you from losing your money slower.
Money Management
Very important IF you need it.
NEED IT - If the forex system you are using works and you are using the system correctly you will consistently see positive pips. Need profit management.
Profit Management - manage the profits and the occasional small losses or break even stop outs
Good Money Management
•Having a system that works•Paper Trading (Demo) - Not as exciting as losing real money•Adjusting your risk to fit market conditions•Gaining Knowledge - Not Gambling - DTH
Knowledge Reduces EGO
If You Do Not Know?
Do NOT Trade with real money!!
Manage an Entry
1. Placement of your initial stop order2. Moving your stop order up to breakeven 3. Closing out or scaling our profitable lots as the trade proceeds into profitability.
Lesson 29 Part 1 - Profit Taking TechniquesLesson 29 Part 2 - Profit Taking TechniquesLesson 7 - Forex Trading Tips
Manage an Entry1. Placement of your initial stop order.
20-40 PipsORLows or Highs on smaller timeframes
Initial Guidelines
Manage an Entry1. Placement of your initial stop order.
20-40 PipsORLows or Highs on smaller timeframes
Initial Guidelines
Manage an Entry
2. Moving your stop order up to breakeven
•Time•Time of Day•Price Alarms•Set pip amount
Manage an Entry3. Closing out or scaling our profitable lots as the trade proceeds into profitability.
Profit Management
Profit Management Rule of Thumb
Profit Management Rule of Thumb
Close out half of your profitable lots.
Letting the rest of your lots ride to see there the trend takes the pair.
Money Management
Money Management Ratio
Minimum of +2:1 ( can reach +20:1)
Calculated in planning process
Scalpers are -3:1
Consolidation Cycles
Learn to recognize the most common types of consolidation and retracement cycles that occur
Helps with stop placement
Helps to hold on to trends longer
Consolidation Cycles
If a currency pair is consolidating or resting (moving sideways) for a good period of time, then movement starts, it tends to keep moving.
Hold on to trends longer
Profit Taking Based on Time of Day
If you choose to close out a portion of your lots after a strong move you can do so at the end of the USD session in a time window of 11:00 - 12:00 noon EST plus or minus 30 minutes.
Profit Taking Based on TRENDS
If you buy the EUR/JPY, for example, and all of JPY pairs are trending upward on the D1 time frame, then it is best to hold onto your EUR/JPY trade. Why would you exit??
Incorporating the trend into your thinking as to how to exit a profitable trade and using the D1 time frame for these decisions to hold. If you drop down to the H4 time frame you are looking to swing trade only for 2-4 days.
Plus
Profit Taking Based S&R
If you spot the next major resistance and the pair you bought is approaching this price or stalling near this price, it would be wise to scale out additional lots or possibly all of your lots.
Plus
Profit Taking P&I
If P & I is strong in whole group, Hold Longer.
If P & I is changing, Take profit.
Plus
Profit Taking P&I
Use the Heatmap??
Tells you to get in trade but can also tell you when to exit.
Also,
After a couple days if the Heatmap has slingshot the opposite direction. Take Profit
Help Avoid Stop Outs
Veteran Traders only!
After you use the “rule of thumb” to take profits,Put your stop on remaining lots equal to the amount of profit taken.
Ref:Lesson 29 Part 2 - Profit Taking Techniques
Deeper stops
“Guaranteed no-loss method of running deeper stops”
Other Profit Taking Techniques
Price alarms and Partial Limit orders
Trend Trader
Ultimate goal as a trend trader is to trade the larger time frames like D1 and W1 and just ride the major trends of the market, when those trends present themselves.
if the market is not trending you must shift your profit taking to shorter term moves
You cannot control the market only your own analysis and behavior towards the current market condition and what is presented to you today.
Trend Trader
Trend Trader
You can tell yourself you want to be a trend trader or you can actually do it with micro lots and prove that you are.
In Order To Trade The Spot Forex
You need to know the direction of the Trend.
You need to have a valid entry point