Three Strike Trading

8/11/2019 Three Strike Trading

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Copyright 2010 Mark Deaton inc. Do not share reproduce or copy

Trading involves risk. You could lose all or some of your money. If you cannot afford to lose your money

YOU SHOULD NOT TRADE. You should consult a financial advisor before you trade and you should use

this information for instructional purposes only. Any material contained is not a recommendation of any

kind.

Welcome to the Triple Strike Forex instruction manual. In this manual I

will show you step by step, how to use a few powerful tools that arealready at your disposal to create cash flow in the Forex markets.

For the purposes of learning this system I will recommend and use

small lots on a mini account.

Its best that you use just the minimums until you understand the

system and until you make it work perfectly for you.

Its also required that you use a paper trading account until you

completely understand the system and how it works.

In order for you to appreciate this system and how powerful it is, you

need to have a mild understanding of the following.

Swing low, swing high

Bollinger bands

Fibonacci retracements and extensions

Support and resistance

Multiple time-frame viewing

We will start with these and explain how they help to pull this off

successfully.

Dont let any of this scare you, this is easy once you understand thesequence.


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Swing Low Swing High

Take a look at figure 1 below.

Figure 1

This is an example of a swing low and swing high. Understanding these

swings is critical to any trading system so if you have any difficulty with

this please take the time to learn it. Itsvery simple and even forgiving.

What is significant is not just the swing low or high but how it forms

relative to whats behind it.

Is the new swing low lower than the last?

Is the new swing low equal to the last? Forming a double bottom?


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Or is it a higher swing low indicating a potential reversal.

Once we identify a potential reversal we then want to pay attention to

time frame and our indicators, but well get into that much later.

Letslook at a change in sentiment and how our swing lows and highs

made the change clear and set up for us a nice potential signal.

Figure 2

In figure 2, A,B,C and D are just nice consecutive lower swing lows.

Then E is actually equal to D, or darn close to it. Notice the nice push up

after price failed to make a new swing low?

Then notice the swing high, and the higher swing high. (1 and 2) Where

#2 formed almost a higher swing high, as opposed to a lower swing

high.

This interruption or change in swing structureis one key in identifying

high probability set-ups.

1 2


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Now theresactually a lot to be learned from this chart alone but lets

look at F and G. Here G makes a higher swing low. This tells us that the

trend is changing and that we should look for a bullish trigger.

Jumping the gun a little if we were on a daily chart we would now go to

a 15 minute and pinpoint a bullish trigger entry long, or we could

pinpoint a trigger on the daily using key tools Ill describe later,

Remember as indicated by the red and green dots a swing low is

confirmed when you get a low, a lower low, and then a higher low.

A swing high is confirmed when you see a high a higher high and a

lower high.

As noted in figure 2 a sloppy but equally as valid swing can form over

period of 4 or even 5 bars.

Just remember yourelooking for this in a nutshell

Figure 3


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Figure 3 shows simplified swing highs and lows. Remember its not the

swing high and low thats important as much as it is the swing low or

high relative to the last.

You are looking for a new trend even if only for the short term. Why?

Because getting in at the start of a short or long term trend is what

builds accounts up fast!

Bollinger bands

Some of you already know that this is my favorite indicator; I use it in

everything I trade. In fact I have an article I wrote for the Tycoon

Report a couple months ago that is still on the front page of their

website under Most Talked About.Also video #1 on YouTube if you

search Bollinger bands.

Bollinger bands have some simple features and some very advanced

features. For the purposes of this system we will only get into the

simple and the advanced, they will take a little practice but with clear

understanding you will command fortunes.

I like to set-up my Bollinger bands with a 2.0 and a 2.5 standard

deviation. Its just personal preference. You can use 1 set to 2.0 and

that will be fine. I just like to use 2 because I find it more pleasing to

the eye, THATS ALL.


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To do this, add Bollinger bands to your chart with 20 periods and 2.0

and then add it again with a 20 period 2.5.

Set your colors to something appealing. Appealing is important because

initially you may do a lot of staring at your monitor.

Now what concern us are 3 things with Bollinger bands.

1.

Touching of the bands or a close beyond a band.

2.

The mean or 21 period moving average. (Add a 10 period EMA)

3.Expansion or expanding and walking of the bands.

These Bollinger band set-ups will allow us to further pinpoint or trigger

entry as well as some of the most precise exits youll ever lay your eyes

on.

Touching or closing at or beyond thebandsWhen price reaches an

upper or lower band is very likely to reverse in the opposite direction.


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Figure 4

Also when price retraces to the middle of the bands it will often find

support and then continue the prevailing trend.

We will use both of these conditions to further our chances of a

profitable entry.

A squeeze of the bands is an indication of a potential explosion in price

action in one direction or the other. We will use other forms of

technical analysis like swing highs and lows to try and determine

direction.

Heres what a squeeze looks like.


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Figure 5

A squeeze simply when the bands come together tightly relative to the

bands in the past. Sometimes it looks like this, other times the bands

arent as close but are close relative to the past.

Well get into Bollinger bands in more detail later for now just getem

on your chart.

Using these simple techniques in conjunction with swing lows and highs

starts to get pretty accurate, letscontinue.

I originally wasntgoing to get into the advanced stuff on Bollinger

bands but I decided to, because I want this manual to be complete.

You may not pick it all up the first time or two through, but carefulreview, and re-review of this material is going to pay for those

committed, and I want to be sure thats the case.


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In order to make this process work for you fast Imgoing to draw

pictures by hand. (Well, by hand on the computer anyway.)

When you get a set-up and are looking for an excuse to trigger an entry

Bollinger bands can provide nice confirmation that most traders arent

even able to recognize.

This will be intuitive once you get to know Bollinger bands. For now

just follow along. I also did a video of this on YouTube you may have

seen. If you search Bollinger bands on YouTube its#1.

The initial observation is the band price is on at the time, the clue

comes from the opposing band.

1.

Extremely bearish- with bearish price action on a falling band

while the upper band is hooked up nicely. A variation of this may

be a mild arch up away from price. Sometimes slight movement

up on the opposing band evolves into a bigger hook.

2.Extremely bullishJust the opposite with bullish price action

rising up to a rising band while the lower band is moving awaysharply. Also a variation is just a slight pull away of the lower

band. Again notice that the real clue comes from the opposing

band.

3.

Low level bearish-needs to hookHere you have bearish price

action on a flat Bollinger band. Additionally you have an upper

flat tire well call it. We need one band or the other to hook for a

sign of life.

4.

Low level bullish-needs to hookThe opposite is true for bullish

confirmation where you have price up on a band that looks like

its going to fight price action rather than run from it, and more


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importantly you have a lower band that is flat and gives you NO

clues. More often than not this means that any bullish strength

just wishful thinking.

5.

Not so bearish-going flathere you may have bearish priceaction on a band that will not only NOT run from price, but

appears to be coming against it, and the opposing band is doing

the same. This is a major consolidation clue and price is likely

entering a period of rest or consolidation. Price may stay here for

days, who know. This is a pretty nice clue to move on.

6.

Not so bullish-going flatSame thing. The upper band is actually

going against price action and the lower band is also closing if youwill. A pretty good clue that theres not trigger long going to

happen any time soon.

7.

Moderately bearishHere the band price is on looks nice, but

again its the opposing band that provides the clue and itsFLAT.

At least for now there isnt likely a Bearish trigger at least

according to Bollinger bands.

8.

Moderately bullishLike #7 the upper band looks great but the

lower band tells us that it isnt going to happen at least not yet.

Use these clues for your exits as well as your triggers. I go into more

detail in the videos on using the same 8 Bollinger band signals for

monitoring your potential exit using these very signals.


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Keep in mind that there are small variations to all of these. The

principles Ive described are the basis for advanced Bollinger bandapplication.


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Fibonacci Retracements and Extensions

Fibonacci retracements, extensions, swing lows and highs and Bollinger

bands go together like Bees and honey. Elliot wave goes with them just

as well but getting that deep is totally unnecessary.

The beauty of understanding swings along with retracements and

extensions is that this is truly the heartbeat of the markets; this is how

price makes its way.

Bollinger bands are simply an additional confirmation tool.(The

Ultimate confirmation tool.)

RetracementA Fibonacci retracement is simply price retracing its

footsteps if you will. If price goes from A to B and then begins to

retrace we want to measure how much it retraces.

Does it retrace 23%, 50%, 61.8%? Does it retrace 100%?

If it retraces 100% then that means price may have been at say $40.00,

then went to $45.00 then retraced 100% back to $40.00.

If price goes beyond 100% it becomes an EXTENSION.

ExtensionSo an extension is a complete 100% retracement and then

some. The extension EXCEEDS 100% and goes beyond. Thats why anextension is measured at levels like 161.8% and 261.8% and so forth.

When using Fibonacci retracements or extensions you measure two

points, heres an example of almost a 100% retracement. When


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measuring retracements usually we are trying to pinpoint an entry or

exit.

Typically in a bull market you will measure a retracement down to

something like a 23%, 50% or 61.8% retracements, anything beyond

that means price is retracing further than it ought to if it was still

bullish.

Anything beyond 61.8% tells you of a potential weakening trend.

This is real simple stuff let me show you with a series of pictures and

notes.

Figure 6

In figure 6 when price reached B we lay down our Fibs. Lines so we can

measure the retracement from B back to A. The reason we know we

laid down the lines correctly is because the lines go from smaller togreater. 23.6% to 100%. In the event that your numbers go from 100%

to 0% just know you have them backwards and need to adjust how you

laid them down.


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Every time a line is reached an exit can be considered, every time a line

is passed staying in the position should be a consideration also. Well

get into that, for now notice how price exceeded 100% and made it to

161.8% - this is a continuation extension because we are not measuringit for reversal purposes.

Now when using Fibonacci tools you can measure any swing and this

can get kind of difficult because the question becomes which do I

measure. For example in Figure 7 here we could take a high several

weeks ago and the low both indicated by blue circles and we could

project more long term.

Figure 7

Or we could measure a smaller swing to try and project the next 5-7

trading days. As seen in Figure 8 here.


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Figure 8

Or you could do both and get we like to call confluence from multiple

Fibs zones. Letstake a look.

Heres the more long term Fibs. Measurements taken from point A and

B as indicated.


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We could spend an hour on this chart but for now just note the points

we measured from A and B, and also notice the arrows and circles.

After the B or 0.0% we get our first hesitation or consolidation from

price right at the 23% Fibs. Line. Price gaps up and shoots toward 38.2

and bounces down, not soon after it gains momentum and blows past

38.2 to tap the 50% level and so on. Letslook at the same chart a

different bottom for the 0.0% level.


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Here we see, using the higher swing low B notice how we get a better,

or more accurate zones for the channel between 23.6% and 38.2%.

Notice also how at the second orange arrow price gapped up from 50%

to 61.8% ON THE MONEY!!

Does this mean that this new measurement at the different level is

better?

No not necessarily, but both should be considered. You have to

consider various levels because longer term institutional investors may

be looking at weekly or monthly charts.

That in mind letslook at the same chart with the same Fibs. Levels on a

monthly chart


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Notice how the B level looks now on the monthly chart. The B area is

now a low and the next MONTHLY candlestick is an area where price

closed.

Look at the rest of the chart itsrather pretty from a Fibonacci

perspective.

Keep in mind we didnt SEARCH OUT this chart, we just pulled up a

random pair and looked back to 10/2008.

You can go right now and pull up any stock in any time frame and find

these cool highly predictive Fibonacci relationships.

Heres one way I identify confluence on one single chart. It can get kind

of ugly but it works well anyway.


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Lay down both sets of Fibonacci retracementsand change the colors,

this way you can use both at the same time. Now this single chartshows you what and where you consider or initiate trading decisions if

youretrading a retracement.

In reality you would have laid out your blue lines first. Then price would

have penetrated the 0.00% low on the blue Fibs. 2 or 3 weeks later at

the new B, and you would have laid out your orange.

Now this is just an example we havent yet incorporated our othertechnical analysis that gives us only the highest odds set-ups possible.

In the following pages we will cover the process of searching and

identifying candidates.

I will incorporate technical analysis exclusively. If you have any

fundamental or news type of analysis you like to apply feel free to use

that knowledge along with what you are about to learn here.


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Letsstart with a look at a daily chart of the USD/JPY understand that

there are a few POINTS that are high probability that we look for. There

are also areas that we want to avoid.

We will always start on a daily chart whether you are short term on the

15 minute or longer term on the daily. Start your analysis with the daily

chart.

STEP 1Swing analysis - long term and near term


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A trend change isnt the only trade we look forI just bring it up because

its a recent observation on this chart thats important. We could easily

jump in the past on the prevailing trend but right now we should

observe that the trend just recently changed.

Just because the trend changed doesnt mean it will stay that way

either, but your job is to make trading decisions based on the

information that you have available at the time that provide high odds

set-ups.

Notice our long term progression of lower swing lows.

Then we have some newer higher swing lows (and

highs but letsnot confuse things.)

This is where the change began. This

is where we would begin to consider a

trend change type trade. There are

many other opportunities along the

way but the trend change starts here

when price failed to make a NEW low.


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Letstake a closer look at whats happening right now.

Were jumping the gun a bit here, but read 1, 2 and 3 to see how we use

swing lows and highs to identify entry into a position. To further our

high odds set-ups we will incorporate Fibs. As well as Bollinger bands.

Notice how the second swing low underlined in red found support right

at the 21 day moving average which gave nice confirmation.(Ill

introduce the 10EMA in the videos)

That confirmation would be:

a.

A failed new low resulting in a higher swing low. (Swing)

b.

At Bollinger band 21 day MA support. (Bollinger bands)

Right now we have a failed NEW

swing-low, so we have a higher

swing low here. Here we found a

trigger long and made a killing.

We then got a new swing low and

we had a trigger entry long here

This trade (2) failed but we ended up entering

short once price failed going long because we

were at such an important zone that as soon as

price failed to follow thru, a short trade was

throw on.

1

2

3


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This is the start of probably the most successful system you will ever

trade. Lets continue.

Step #2 Fibonacci Analysis

In order for us to continue we need to understand that there are a few

key points one could consider entry and this is a preference that is

highly personal. I tend to vary my entry and exit a bit but what I want to

point out real quick is just a guide of potential entry triggers that you

may consider once you identify a signal and completed trigger set-up.

1.

Our most conservative entry would be at candlestick #1s high

2.A second potential entry is the high of candlestick #3 of the swing.

3.

The third potential entry is the close greater than candlestick #3s

close.

I personally like to enter with confirmation as soon as I have a

completed swing at a pivotal zone which Ill share in the videos.. So my

First entry

Second entry

Third entry

Hint: The best entry is closest to th

PIVOT zone!


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preferred method with confirmation is the close of candlestick #3 or

the second entry method. The best entry is to choose one that

coincides with confirmation from your other powerful tools. Lets get

into that.

And just before we do lets look at what you might encounter when

attempting to lay down your Fibs. Lines.

Letsface it I can come up with 10 perfect examples of how Fibonacci

retracements and extensions work but when it comes to the real deal

where you look at a chart and make your attempt the application will

be less than textbook.

With that said I would like to add that you can avoid trades that are less

than text book as well. Who says we have to trade something that

doesnt have recognizable high odds characteristics.

For example.

Current price action to the right of this chart doesnt really give us

anything to measure or GO BY in attempting to determine or forecast

future price direction.


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Other than the face that price is making its way down slowly there isnt

much else to be said for this pair.

There is one observation that can be made on this chart and there may

be more but on the surface we could use the last 2 major swings to see

what we can see

What I would conclude here is some definite failed Fibonacci support at

that ZERO level and what may make it significant is the fact that it held

for so long before it finally broke on that last black candlestick. Once

might consider with our other tools a short entry here, but it is rather

slow moving so one might also skip it. (Nice Bollinger band hint here.)

IF we used Bollinger bands as a tool we would look to how Bollinger

bands react to approaching price action right here. Both bands.

We could get some help from the next candlestick and Bollinger bands

lets take a look for the fun of it.


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Notice how we get a lower close and the upper bands are going up

while the lower bands are going down?

This is a clue to a potential large move downward. The key is the upper

bands hooking upward. This is a potential hint of a quick push down.

I would quite possible consider a short entry here.

a.

Confirmed Fibonacci support failure.

b.Bollinger band expansion

c.

Breakout from extended consolidation.


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What followed was a nice little move. Very large relative to anything in

the past 4 months which is why I would have skipped the trade.

Letslook at another example. I want to cover Fibonacci techniques a

little more in depth because it seems to cause a little confusion with

most people.

Take a look at this chart

Heresa Forex pair that has had little movement recently until that big

black candlestick where the bands started to widen. In this instance as

often is the case lets assume we missed that entry. We can now

observe that, had we entered there we would, right now, still be

waiting wouldnt we, traversing sideways This trade all rules

considered would have made a small profit.

So now we look at it and using that information and whatsbefore us,

what might we do to take advantage of this situation.

Would we go long here because of the higher swing low? NO we

wouldnt. Why not?


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Well look at the shallow movement from the last swing low. This swing

low isnt too far away from the last one, we need to consider our

upside potential relative to our risk, and a cursory observation reveals

that it isnt much is it?

So what do we do? We wait for now

A few days go by and we get another BLACK down day. A large move

but what does it tell us? Well in 1 single day it almost made it to the

previous swing low didnt it? Thats bearish but it could also mean a

new higher swing low is imminent (Think about it.) - theres no trigger

just yet. So we decide to pass for now. We only want high odds entries.

Now that we are feeling a potential trade coming up we decide to lay

down some Fibonacci lines using the last major swing high and low.

Last major swing high projects these levels.


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Step # 3 Fibonacci and Swing Analysis


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Due to the nature of the shallow moves I need to plan my exit properly,

but an entry here long is about to unfold.

Believe it or not a higher swing low has formed here, the long candle

throws you off, but that long candle is the middle one for the new

HIGHER swing low.

So notice how we are right below the 21 period moving average? (Greyline.)

This is our MEAN for our Bollinger bands and in this scenario a close just

beyond this would be a high odds trigger.


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We wait for itAND we get it right here, actually just a pip or two

above the 21 period MA. You could enter here or the next bars open.

In this entry Bollinger bands hasnt offered up a BIG TIP, but what we

would hope for is nice expansion right after entry.

Entry

Quick exit

The exit is quick because it is expected to

retrace right now just like the last 2 swing

highs did and the spinning top/doji

candlestick that is black is a good sign that

weakness will ensue.


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The trade is still worth following. In fact as you begin to trade 2 or 3

pairs you will find your knowledge of how they do their thing becomes

intimately familiar to you. The more you trade a pair the more you

begin to recognize all too familiar patterns that you can profit from.

The next important consideration is this. We exited because we

anticipate a correction, shallow swings and no BIG TIP from Bollinger

bands. Nice expansion on the upper but no compliance from the lower.

Slow movement lacking bands and shallow swings = end of trend.

Should we enter short since we expect a move down? The answer is

YES. Heres why. Price is bouncing of the upper Bollinger bands at a

confirmed higher swing high.

It would be a trade that is against the short term trend but a potentially

decent trade it may be. We would need to exit fast. In this situation I

like to look at the most recent swing low and the current swing high

and shoot for the middle just like I see in the recent past swings.

Heres what my target would look like

An approximate 200 pip target right between my

previous swing low and my current swing high. I if was

to lay down my Fibonacci levels this would fall right

near a 50% level.

If price changes direction on me we would likely

exceed this level but if price continues the uptrend this

is where it will likely reverse and then go up again.

I will watch price action at this level (50%) closely.

Swing high


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The next candlestick doesnt quit reach our target but theres a nice

profit on the table. What do we do now? Well lets at least watch price

the following day and consider an exit if price finds support at our

target.

Next day

Swing low

Next day price BLOWS through our target and

closes WAY down below it.

Right on top of a Fibonacci level. Were not greedy

we exit with a cool profit.


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The next day a new HIGHER swing low forms but blasts off to theupside so fast that with the majority of any move is up gone from our

reach, we decide NOT to jump in for the move up, for it may be over.

In the last trade for this example price seems to find support before

spilling over to the downside


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We go short here for several reasons. The exact reasons we look for to

build confirmation of a high odds trade set-up. First of all notice that

we now have a swing high (red dot) and a lower swing high (other red

dot) giving us LOWER SWING HIGHS (Bearisheven if only for a short

time.)

We also have a DUAL support violation of a key Fibonacci level as well

as a previous swing low.

Top that off with UPPER Bollinger bands hooking up as price falls right

here and we have a trigger entry short that almost resembles a piece of

artwork worthy of display.

Heres what follows

Bollinger bands slight upward

tendency giving off a potential

confirmation of a move down.


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Support and ResistanceThe simplest off all of the technical analysis we will do is that of

applying support and resistance to a chart, and using that support or

resistance as a guide for potential entry, exit, confirmation etc.

Keep in mind that support and resistance can come in many forms,

diagonal or horizontal lines that just seems to cause support and

resistance for whatever reason.

These are just areas you will notice when looking at a chart that appear

to be like invisible fences that stall or flat out STOP price action in its

Previous swing low support

violated also Fibs. Support.

In the videos and at the

end of the manual I

describe only 3 confirmed

entry triggers. A scenario

like this that indentifiesstrong support being

violated as well a strong 10

period EMA resistance leve

(black line) is the only time

I would consider entry. Of

course this is true for a

bullish set-up as well. You

may want to ignore this

part until you understand

the basis of the system.


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tracts and cause a reversal, a consolidation or a just slow price down for

a bit.

Other forms of potential support and resistance include Fibonacci lines,

moving averages, chart patterns, Bollinger bands and more.

Support and resistance is a BROAD term and encompasses a great many

variations of areas on a chart where price may slow, reverse, skyrocket

or consolidate.

No need to make a chapter out of this if you are new to support and

resistance search Google or even better search yahoofor support

and resistance and do some research.

I will point out support and resistance on the charts we go over in this

manual.

Step #4 Bollinger band Analysis

Letsrecap our steps. You dont necessarily have to do it in this order

and you dont necessarily have to do it separately. A structured

approach is a good idea however.

Step #1Long and near term Swing Analysis

Step #2Fibonacci Analysis

Step #3Fibonacci and Swing Analysis


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Step #4Bollinger band Analysis, Fibonacci and Swing.

So even though we are just getting to Bollinger band analysis in our

organized structure we have actually already covered it in great detail

even in the trades above.

Just note that when you make your long term swing observation you

will do so on a daily chart. You will zoom in a little and on a daily chart

focus on the last 3 months while applying the appropriate Fibonacci

retracements or appropriate extensions.

Of course Bollinger bands will already be on your chartso you can now

consider the long term swings and current near term swing structure,

the Fibonacci retracements or extensions and our Bollinger bands.

So literally in just a few minutes youreready to make some trading

decisions.

From this page forward lets do exactly this

For starters lets look at a trade I just did on the USD/JPY.

A perfect set-up trigger and entry allowed me to get in, stay in and get

out when I knew for certain the move was over.

Here in the first picture is our overall long term swing analysis showingthat we were in a longer term downward trend with lower swing lows

and lower swing highs.


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Notice that after the last swing low we get a higher swing low. This is

our first indication of a trend reversal and a great place to find long

entry. However thats not where we are. Lets zoom in se we can see.


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Here we were waiting for a long entry trigger but thats not what

happened.

Our current higher swing low is

indicated by the red dots. I like

to incorporate a slow stochastic

for evidence of overbought or

oversold conditions. As you can

see stochastics is just nowthrowing off a buy signal and

really timing is good.

We could trigger long when pric

closes above the LIGHT GREY

center line inside Bollinger band

or the HIGH the little black arro

is pointing to.

Note that the green line on

stochastics is flat as opposed to

pointing up like we like to see.

Bollinger bands is about to

EXPAND to the downside and th

UPSIDE so Bollinger bands is on

telling as that a move is to be

expected but direction is in clea

from Bollinger bands.


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Because the new swing low support was clearly broken we entered

short just after the next bars open (daily chart). We didnt get anything

strong from Bollinger bands but this sometimes simply indicates that


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the move will be delayed. Obviously it also sometimes indicates that it

isnt going to happen at all.

But right now we have a new DOWNTREND where its newest LOWER

swing low was smashed.

This is a pretty strong signal. The next daysweakness was a great

entry short.

Heres how the trade went.

Larger overview

When we laid down our Fibs. which we actually did earlier (sorry.)

before we made entry we got some great confirmation that a 50% Fibs.

Line was broken right along with our swing low break.

I want to point out that I exited here with a great profit near the close

of the long candlestick with HUGE confirmation from Bollinger bands

that the move was OVER.

Potential earlier exit


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Look at how Bollinger bands is butting heads with approaching price

action and NOT BUDGING even though there is this huge move. That is

a CLEAR indication that the move is over. (A #5 in Action from the

Bollinger band diagram.)

I circled a low prior to my exit and one thing worth noting is an exit

there would have provided nearly the same return of over 100%.

I added risk and time to my trade by waiting to gain very little more

monetarily speaking.

My stop was simply a BIT above my trigger candlestick. Not necessarily

my entry candlestick but the one that actually broke the support.


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Letsquickly analyze my reasoning for staying in the trade.


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Notice how Bollinger bands are still

slightly expanding at the point where

indicated our first potential exit.

They were both expanding even if

only slightly. This kept my greed

glands flowing. (The top maybe not

but the bottom YES.)

After that I was basically committed t

my stop.

Then price tanked and Bollinger band

told me that THIS WAS IT, THERE WAS

NO MORE.

Look at the bands its clear as

daylight!.

Then in the next picture see how pric

reversed as expected and predicted


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I dont know yet, but I can guarantee you with 99.9% accuracy that

even the next candlestick will be flat or up. Bollinger bands shines in a

few key areas and this is one of them.

Now letsgo step by step through a series of set-ups triggers and exits

and make this a permanent part of how you trade.

I will add here that if you trade stocks this analysis works equally as

well.

The key to your success will be your ability to manage your money

properly.

For example. If you have $10,000 Forex account you wouldnt put

$2,000 into the trade we just went over. I was down 50% at one point

before I made over 100% on that trade.


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You need to expect a 50% loss on any trade. If you ANTICIPATE a 50%

loss on the trade youreabout to pull the trigger on, how much would

you put into that trade if you had say $25,000?

Thats amatter of preference, but I think $500 to $1,000 is a nice range.

If you have just $5,000 and you might lose 50% on any one trade how

much would you be willing to put into the trade?

$100 or $200 maybe?

This should be carefully thought through before you trade any amount.

Then after 10 or 20 trades you can, with careful notes look at your

success rate on trades and your average % profit and come up with a

more robust approach to money management.

The point is to consider your win/loss on a successful trade and your

average gain vs. loss on a trade and do the simple math.

Imagine you might lose 50% on any 1 trade and you will probably

manage your money better.


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Heres a chart of the EUR/USD our long term swing analysis shows us

that the pair was trending up nicely for quite some time.

It had a nice correction that was pinpointed by my system and lined my

pockets with cash and now itsmaking a series of higher swing lows.

Notice how shallow these higher swing lows are JUST LIKE they were

before that huge correction. Hmmmm. Is Bollinger bands coming

together?

Now all you have to do is follow the steps. The first thing we need to

add is our Fibs. Retracements from the last major high and low.


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Now there are basically a few potential entries. We arent really long or

short focused just yet we are just trying to find a high odds entry in one

direction or another. (A Pivotal zone is at hand as wellwatch the

videos.)


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Bollinger bands are coming together tightly and may show some nice

expansion shortlybut this still doesnt provide direction it just

indicates a large potential move on the horizon.

So lets identify a short or long entry. There are a few, and I might lean

toward one or the other depending on price action. If price is

aggressive Ill be aggressive, if price is going to be a sissy Ill be a sissy

or more conservative.

Letslook at potential entry. Green lines for long triggers, and red lines

for short triggers. Im basically looking for a swing violation for long or

short entry.


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All potential short triggers.Potential long trigger

Potential short triggers if they occur at

a pivotal zone only.


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Price is aggressive so we get aggressive and choose the highest red line

for our trigger but we choose to trigger after the open the following day

with entry short right here. Right at our 10 period pivotal zone.

We expect a nice play because Bollinger bands are telling us the move

will be nice. This is a great set-up and if you will trade only this near

perfect Bollinger band, Fibonacci, and swing type set-ups you will go onto make a killing in literally any instrument you trade. On this entry our

ling trigger becomes our short stop. (Short stop, get it?)

Just look at Bollinger bands.


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We have 2 failed swing low supports and great confirmation from

Bollinger bands as well as, by daysend, a direct violation of a 0.0%

previous major swing low support from a swing which we used for our

Fibonacci retracements.

We exit here because Bollinger bands say so and the profit is excellent.

Using Multiple Time FramesThe Final Touch

ExitEntry


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To A Perfect System.

The last thing I want to cover is how to manage your exit and entry witha bit more precision.

Up to this point we have looked at a daily chart exclusively for entry

and exit and if you use all the tools and indicators exactly as Ive

described you will likely do VERY WELL.

In order to facilitate a more precise entry or exit you can zoom in to a

15 minute or 5 minute chart and trigger your entry / exit with greateraccuracy.

What you are doing by zooming into a shorter time frame is gaining the

understanding of shorter term swings.

Letstake a look at some of the same charts on our exit on a 15 minute

chart. Remember a 15 minute chart has about 96 bars for every 1 daily

bar. 96 bars will show you a series of progressing lower/ higher sing

lows and highs that you will not see on a daily chart.

If the daily chart is down for the day you will obviously see a series of

lower swing highs and lows on a 15 minute chart.

Where you might see a down day on the daily you will see on a 15

minute strength in the morning and weakness before the close or vice

versa.

The point is the transition from one trend to the other is pinpointed

much earlier on the shorter time frame.


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What I tend to do while waiting for my trigger entry on a daily is do all

of my technical analysis, draw my triggers and zoom into the 15 minute

and watch for entry. I may jump back and forth to confirm my

decisions but I pinpoint my entry on the 15 minute.

When I make my entry on the 15 minute I like to do so when a slow

stochastics is clearly oversold or overbought. Maybe some stochastics

divergence etc

When you see it may be or is definitely time to exit the shorter term

time frame is great.

Use it the same way to exit.


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The grey circle below the large black candlestick indicates our exit on

the USD/JPY lets zoom in to a 15 minute chart and see how we may

have pinpointed a precise exit.

I will add that Bollinger bands on a daily chart take precedence on my

exit especially when I get a big move like this and Bollinger bands is flat

or closing.

Bollinger bands is screaming EXIT!!

Theres the grey circle where we exited on the daily chart. If we had

stayed in this trade we might note that price, after that initial bump up

continued to make lower swing lows and highs.

Then price began to make higher swing highs and lows but they were

rather insignificant. At this point we are experiencing some sideways


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movement and one could set a precise stop that locked in profits with

the anticipation that price just might make another push down.

Note above we may have set a stop at 89.60 allowing is to lock in SOME

of the profits we have made while allowing the possibility that price

might continue to make its it way down.

Often times a good strategy is to close out 50% of the trade after the

BIG move. Zoom into the 15 minute examine the swings, set a

reasonable stop after examining swing structure and letting the rest of

your money attempt to take the long ride for larger profits.

Take a look at the image below and see what that stop on the 15

minute chart looks like on the daily chart.


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Our stop is indicated by the blue line.

You can see that although we do give up some of our profits with this

stop we are able to lock in some decent profits.

Stop


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Lets examine a more subtle move and a more subtle means of using

the power that this provides.

A lot of the time the BIG moves arent happening, so your ability tonavigate and profit from a slow move is essential.

Heres a shot of the AUD/CAD currently just plugging along in a slight

down trend.

Not making significant swings but they are CURRENTLY lower swing

lows and lower swing highs nonetheless.


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Still looking at the daily chart we zoom in and see what opportunities

we may find.

We decide based on current price support and resistance and the fact

that Bollinger bands is squeezing that we will draw a line on current

support for short entry and current resistance for long.


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This trigger will TRIGGER us into the trade and to the 15 minute chart

simultaneously.

The next day price moves down to our support line but gets bullish so

well call it a signal but NOT a trigger.

What we will do is jump to a 15 minute chart and wait for our trigger to

break. We will enter and exit on the 15 minute.


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Trigger support

Trigger support

Above we have the daily chart

with our Fibs. Laid down using the

last major swing high and low.

Nice PIVOTAL zone Bollinger band

entry, breaking support at the end

a consolidation.


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On the 15 minute chart above we see our trigger entry based on daily

chart support and we wait.

We get a trigger and enter the trade short here.

On the 15 minute chart we follow our trigger

entry short and enter the trade. We get a nice

move down and we decide to exit after a failednewer swing low.

The first black line is a continuation of the lower

swing lows and the next black line is the failed

lower swing low where we exit.


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Entry See how price found support at

the 23.6% Fibs line for this 15 in.

bar?


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A great alternative to exiting after a failed lower swing low is to set a

new stop at your trigger entry line or just slightly above it and let price

run on the 15 minute chart.

Rather than exiting at the first lower swing low violation you would stay

in the trade based on your observation of the Bollinger band expansion

on the daily chart and then identify your exit by jumping to the 15

minute and finalizing the trade.

Take a look at the next picture and notice how Bollinger bands would

have kept us in this trade this entire time.

Using this method for an exit is how you combine two time frames to

nail some HUGE Forex profits.

Using this method you would continue to move your stop down to the

major swing highs. As indicated by the blue lines.

Entry Exit

Tri er entr line


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Notice how the daily chart with Bollinger bands still expanding

aggressively gave us the confidence to NOT EXIT after that first failed

lower sing low. When that potential exit came we moved our stop to

our entry trigger line and held on.


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Only now is the upper band giving us indication that this may be over orslowing at least..

On the 15 minute we make our exit based on either our progressive

lower stop at the major lower swing high or at the point of the first

failed lower swing low we encounter.(Once the bands stop expanding

on the daily chart.)

You may consider using your current stop because that lower set ofbands is still expanding.


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1. New York open 7:00 AM to 4:00 PM

2. Japanese/Australian open 7:00 PM to 3:00 AM

3. London open 3:00 AM to 11:00 AM

Hard Fast Rules.

1. Never enter unless you get nice swing structure at a Bollinger band Pivotal

zone. There are only 3. Upper bands, lower bands, or the mean. The mean

is the true 21 day MA Mean, or the 10 day exponential.2. Pick your style of exit and stick to it as described in video 10. Dont use

them all until you really understand how to interpret Bollinger bands.

Watch the videos they are an essential part of the system and there is

information in the videos THAT IS NOT in the manual. If you are having

any problems with the videos let me know immediately.

Imposting windows media files and shortly I will also put them up as

QuickTime files both for download to your computer.

END

Documents

Three Strike Trading