Section Three

Strategies Before you start trading there a number of really important considerations you need to be aware of

before you start parting with your hard earned cash.

1. Trading will at times seem hard & frustrating – FACT

2. You WILL lose money – FACT

3. You can have the most profitable, consistent strategy in the world – but if it does not suit

your trading style it is worthless! - FACT

There is another additional one which is the small matter that I personally prefer to call them

“Methods of trading” not strategies. I’m sure its just a big play on words there but a method to me

allows room for manoeuvre, room to enhance or more simply, less mechanical.

I’ve just mentioned another word there that you will hear often which is “mechanical” & a lot of

home traders will be looking for something that just plugs into their charts & rolls in the cash, day &

night requiring little or no input from the home trader. Now, if this sounds a lot like you are looking

for then this book really isn’t for you. Trading, in my opinion can never be 100% mechanical nor is it

a “get rich quick” scheme.

Note!

Having worked with many traders from start to full time, I can tell you that the average amount of time it takes someone to reach the status of full time trader is around 2years. The quickest I have seen it done is 9months but 2years is the average.

Why we need Methods of Trading All traders have “methods”. Think about this for a second, most of us will have seen or been sent

some kind of trading get rich quick strategy declaring that you can earn a huge income before

breakfast, or simply placing a trade from a mobile phone after receiving a text alert. If these

publicised strategies actually worked, why have the pro’s not given up the day job & just worked

from home earning millions of pounds? I think the answer is obvious.

Most professional traders are degree educated with very sharp intellect capable of transacting

millions of pounds a session. So what makes us think we can take a piece of this market with a £100

strategy bought off the web? Well, that’s where clever marketing comes into play but we are not

interested in these kind of schemes & instead, are seeking the opportunity to develop a lifelong skill

that is trading the financial markets.

Or I hope that most people are?.....

Now, the methods that the pro’s use are based on very detailed analysis of markets, trends, news

etc & they make huge sums of money from it. The good news is that the methods used by them can

be integrated into these “trade from home” methods which we use.

There is one indicator that most if not all professional trader’s use & the markets react to this

indicator around 95% of the time, but more on that later.

Tip!

To see the enormous pressures placed upon individuals within the trading world, head over to youtube & search for a programme called “million dollar traders”. This was a 3 part programme which took a number of UK individuals & trained them for 2 weeks before letting them loose on the stock market. The viewing is fascinating to say the least!

Any decent method is made up of several components. Firstly, you need a signal to indicate that a

potential trade is looming, secondly, you need a confirmation signal that gives you the “green light”

to enter a trade & then lastly you need to have an exit strategy, whether this is pips earnt/ lost or

looking out for another indicator. Simple! (Not)

Over the next few sections you are going to be learning some of my profitable methods that I use

each day & demonstrate LIVE within my own trading room however…

…is it reasonable for you to expect exactly the same results as myself using exactly the same

method?

Pause for thought.

Yes?... No?... Maybe?

The truth is no & there are several reasons behind this. Don’t get me wrong here because in time

you should be seeking to replicate the kind of numbers that I do & in fact, some Piptastic members

have gone further however you need to be aware of a couple of significant factors;

I have used these methods extensively for a long time, therefore have been exposed to its

character & best times of trading.

I can trade all day & all night if need be. Can you?

Our psychological profiles may differ

Potentially I have more screentime than you thus are more “intune” with the market

This is just a very small segment of what difference you & I could have however the purpose of using

the methods of trading is to get you going on a steady journey that will allow you to develop

confidence as a trader & also to reach whatever goals you have set yourself.

Before we move onto the methods I just want to pause at this point to speak about the strategies I

mentioned earlier, namely those that get sent through the post regarding the latest “super method”

which can never lose.

The Curse of the System Seller Ok, a little bit of fun now before the serious stuff.

If the systems are so good then why isn’t everyone using them?

If the systems are so good then why wouldn’t the author be prepared to host a live session?

Hindsight in trading is a wonderful thing

Do “system sellers” actually trade?

Any good system will show screenshots of accounts

Well, let’s take a look at these points;

If systems are so good then why isn’t everyone using them?

Systems/ strategies are exactly that. We all have them but the professional traders & the people, like

myself who have managed to trade for a living from home do so with a number of trading methods.

Notice here how I changed the terminology from systems / strategies to “Methods”.

Systems & strategies are based loosely on what we refer to as mechanical systems. This is something

that gives you precise entry & exit rules & tells you where to place stops & targets. For this method

to work, the strategy needs to have a higher win to loss ratio.

TRADING CAN NEVER BE 100% MECHANICAL

Remember those words & you will discover that you never need to spend huge amounts of money

on system sellers again.

If the systems are so good then why wouldn’t the author be prepared to host a live session?

Indeed. I think we know the answer. It is one thing to send out screenshots after the event but

emotions play a huge part in trading. Live sessions play a huge part in the support process.

Hindsight in trading is a wonderful thing

As above

Do “system sellers” actually trade?

I don’t know but my own personal feeling is that some do & some don’t. I’ve got a pretty good idea

of those that don’t.

Any good system will show screenshots of accounts

Interesting point this one. Let me start by asking you to email me your bank statements please.

What do you mean, no?... Oh I see, their private…

And so it is with trading accounts. I can speak with experience with this as my trading accounts are

my business & I personally trade with around 10-12 different methods at different times of the day

or night. My accounts would not reflect totally the method you will see in the next section & as such

you would query this. The other point is that if I am trading with over £50 per pip you may see that it

is ok to do the same – it is not! Remember I have several years of market knowledge going into my

trades.

But ok, so you still want to see accounts, well here you go, three separate mornings from the end of

December 2009.

All mine & a total of £2788 for less than three mornings work.

Fantastic! Damon you are a trading lord! Or am I?......

Did you even stop to think that I may have placed the exact opposite trades on another trading

platform so by placing a trade both ways I could not lose?…

That said, I am pleased to say that the above trades were all witnessed in front of at least 25

people via our very own Live Room

Ok, fun over, now let’s start to take a look at the methods which are going to help you achieve your

goals. What I’m aiming to deliver over the next part of the book is several methods designed for

intra-day trading across a variety of timeframes. Please note that all the methods you see in this

manual are traded live in our live rooms plus are designed to enhance your trading skills leading up

to the last method on how to let your trades run for greater profit.

Tip!

Intra-day?...What’s this all about?... You will often hear times of trading referred to by different names however the two key ones for our benefit are;

Intra-day – Trading during the day or evening often holding positions for short durations

Swing Trading – Longer term trading often holding trades for several days at a time

The other thing we need to be concerned with, is which market we wish to trade on. A lot of new

traders tend to focus on familiar names for example the FTSE100 however there are a number of

other markets that are perfectly tradable but remember that whichever market you trade on please

ensure it has a sufficiently low spread. For example, the GBPJPY (Sterling / Yen) is currently an 8pip

spread making it unlikely as an intraday market but more of a swing trade market.

Markets are split into various categories & the ones we are interested in are;

Stock Indices

Currencies (Forex)

Commodities

Stock Indices The markets you are likely to trade in this group are;

FTSE100

German DAX

Wall St (Dow Jones)

S&P500

Currencies (Forex) The markets you are likely to trade in this group are;

EURUSD

GBPUSD

EURJPY

USDCAD

Commodities The markets you are likely to trade in this group are;

Gold

Brent Oil

Nymex (US Light Crude)

Please note that these lists are not exhaustive nor will you trade them all. In fact, if you are a new

trader then you should choose one market to study whilst learning before adding in other markets. I

would recommend picking the EURUSD as it is very active during our daylight hours resulting in good

movement. Alternatively, you might choose FTSE100 due to its slower nature.

Also, before looking at the following methods please note that they are all based on core skills that

once learned will serve you well as a trader no matter what the timeframe or trading situation. In

addition to this, all methods will provide you with consistent opportunities.

Method 1 – Mastering Support & Resistance

Runtime 29min 11s

If you are a new or inexperienced trader then what you will learn in this part will stay with you

throughout your trading career. If you have already been trading then you may be aware of support

& resistance but the key here is actually trading it.

With this method not only do you learn the great art of trading support & resistance but it can be

done on any timeframe which suits you. For this example I will be showing you how it is done on the

1min timeframe as this provides the most opportunities in the day.

For reference there are many types of support & resistance but for this method we are referring to

the type that is created by the price action itself. Anytime the market creates a fresh high or low

point in price action this represents a support or resistance area. In this example see how the market

has created multiple support areas each time the price has pulled back;

And in this example see how the market has made fresh resistance areas at each turn;

Take time to look at these in detail on any chart as these are not market or timeframe specific & can

occur anywhere.

The next stage is to start joining these areas up. The most important factor here is that you must join

up support areas to support areas/ resistance to resistance areas & not support to resistance or

resistance to support. Let’s take a look at what I mean;

In this example we can see the red line clearly joining up the lower support areas & in this next

example we can see the upper line joining up the areas of resistance;

The great thing about acknowledging support & resistance areas on your chart is that this is a skill

which will last you a lifetime in trading.

Now we need to observe what happens at these areas. There will be many different reasons as to

why a market chooses to reverse at a certain level however in its simplicity all we need to do is

identify the areas i.e support or resistance & then look for any breaks of these areas.

Note

You may have already started thinking that the market can bounce as well as break a support or resistance area & indeed this is another method of trading the markets however in this section we are looking specifically at the breaks. Breaks are easier to spot & can achieve easier trade setups than looking for bounces in the early stages of your trading career

Identifying a break of support or resistance

Essentially a break occurs anytime your support or resistance line is broken by a candle but we need

to have something more solid to use than this. Ideally you must wait for a candle to break & close

these areas before committing to a trade.

1. Identify the support areas

2. Draw a support line in

3. Wait for the market to break the support line – remember it must be a break & close.

Notice the arrowed break & close beneath the support line. This is a solid break of the support line

indicating a reversal in the market price activity.

To enter this trade you would go in at the lowest price of the candle that broke & closed beneath the

support line. This includes the wick.

Enter Sell

Trade here

Now let’s look at an example of a resistance break;

1. Identify the resistance area

2. Draw a resistance line in

3. Wait for the market to break the resistance line – remember, it must break the line & close

above it.

As before, notice the arrowed break & close above the resistance line. This is a solid break of the

resistance line indicating a reversal in the market price activity.

To enter this trade you would go in at the highest price of the candle that broke & closed above the

resistance line. This includes the wick.

Enter Buy Trade here

In the above examples you can clearly see that the breaks of the support & resistance areas have

been broken & resulted in profitable trades. The next question that will emerge is exactly how much

profit to go for but also we need to introduce the importance of the stop.

Stops & how to effectively use them In the last part we saw how introducing a simple yet powerful trading method can make solid profits

in your trading however we also need to understand one very important component to your trading

which is the stop loss. We first saw this when looking at the trade tickets & make sure you never

underestimate your requirement to use a stop even when you are experienced & confident.

Stops are very important if not the most important part of a trader’s tool set. There are a few

different types of stop loss & a simple search engine check will reveal many different ways of placing

stops which can be confusing to any level of trader. The reason for this confusion tends to stem from

the fact that many trading publications are written from different angles. For example, one author

may have experience in trading individual shares which may have a different stop requirement.

Another may write from the angle of trading by using fundamental data or “trading the news” as it’s

commonly known. What is generally lacking with a lot of this information is the ideology behind the

stops & indeed how to use them effectively. In my early years of trading I used a stop loss placed

15pips behind a previous technical support or resistance level which proved successful however as

experience grows, my ability to place either smaller stops positions or wider depends on the setup

and/ or the profit target.

So who is right when it comes to stops?

Well, technically, they are all correct. Placing stops is a matter of personal choice & mainly depends

on your trading personality of which we are all different. Some prefer to be cautious, others very

confident. During this manual, I will guide you in what stops I personally use & what works for me

however these may not be cast in stone for you as a trader so please feel free to change to suit you.

Whatever your view on stops it is important to know that there is no wrong answer to this. If a

market is good & your method is strong, then your stops should not be taken out. The opposite is

also true, if the market is “choppy” or continually changing direction in a short space of time you will

not want to be involved anyhow so stops will give you the nudge you need.

Tip!

“Choppy” or continually changing direction market conditions are what we refer to as ranging markets. A market can only be trending or ranging & a ranging market is generally regarded as more difficult to trade in. They can be quite easily identified due to the sideways nature of the price action.

There are lots of different stop methods & the five most common ones are;

Percentage stop

Money stop

Technical stop

Buy stop

Sell stop

I am going to discard the last two as these tend to be for more experience traders or traders using

“set & forget” methods. I will explain the first three which will give you a broader understanding of

stops.

Percentage Stop

Assuming you had a trading account of £10,000 then you would only want to risk 1% of your account

on any one trade. This form of stop is more common with those trading in individual shares or

traders with portfolios. For example, using the account of £10,000 then you would only want to risk

a loss of £100per trade. So, if you was to enter a trade with a stake of £2 then your stop would be

50pips behind your entry (£2 x 50= £100). In real life what typically happens here is that the trader

will have a guide of not risking more than 6% at any one time (not per trade) therefore they can

have 3 trades running with a risk of 2% on each trade. Once one position has the stop moved to a

position of breakeven thus removing the risk from the trade then this would release another trade

with a 2% risk.

Money Stop

Not too different to a percentage stop but is calculated on the amount of money you are prepared

to risk per trade. This can be implemented on our style of trading & will explain further in the money

management section. For example, if you had a starting account of £200 but only wanted to risk £20

per trade then you would place a £1 stake with a stop loss of 20pips.

Technical Stop

My personal favourite & a technical stop is one which is placed behind a certain level or previous

support/ resistance area. The great thing about technical stops is that these are often used by other

traders. However, occasionally this can also be a bad thing as the floor traders or institutes decide to

have a little fun at our expense & swing the markets around technical areas in an effort to trigger

stops before making the bigger moves themselves. This is very common around market opens like

the FTSE100 at 8am.

Technical stops are very common in trading & most of the methods we discuss in this manual will

use them.

Tip!

Check out the programme “US Closing Bell” on CNBC channel at 9pm GMT weekday evenings & you will often hear market commentators & traders referring to technical levels in the markets. Watching the markets in action can be a useful learning tool however make sure you know which channel deals with what – Bloomberg tends to deal with fundamental trading i.e news & sector driven, whereas CNBC tends to lean towards technical trading.

As a general rule, when I enter a trade I set a generic stop of 25pips on my trade ticket. The reason I

do this at the start is that I want to be focussing on my trade entry not trying to calculate where my

stop should be. Once the trade is active I will then go back to my chart & identify where my stop

should be & move it accordingly. What happens to a lot of traders is the reverse; they spend a lot of

time working out where the stop should be, miss the trade entry by a few pips or more, enter trade

late & thus the stop is incorrect as it is several pips more than what it should be & then they focus on

the market, occasionally panicking when it goes against them for any length of time.

Allow me to make trading a little easier for you. Do not panic or get nervous when your trade is in

the red. Due to the spread, the very second you enter a trade you will be automatically in a position

of loss until your trade moves in your intended direction.

Profit Targets So, if using stops is one of the most important parts of a traders toolbox then profit targets is

probably the most sensitive. Throw this topic into any group of traders & the resulting conflict will

turn ugly & confrontational in less than a minute. Having trained hundreds of people to trade over

the last few years I know people who have generated full time incomes by;

Trading positions for thousands of pips a month

Targeting 50pips a week on a single high time frame

Aiming for 30pips a day across a number of trades

Aiming for 10pips a day in a single trade

Aiming for 12pips a day using multiple trades of 3pips each

Trading for 5pips a day

Most of the above traders still exist within the Piptastic community & some even trade within the

live room but how do they do it?

By using the power of leveraging we can take advantage of small market movements with high

stakes to generate a full time income but more on that in the money management section.

Just like stops, profit targets are very individual. Just because I can hold a trade for several hours

does not automatically mean you can do the same. Most of the time, I don’t want to hold a trade for

several hours because it is boring. So why all the fuss over profit targets? Many people even suggest

that a trade with less than 1:3 risk reward is pointless (meaning you are going for 3 x the profit than

your risk amount). In my opinion what has occurred is that trading books over the years have been

rewritten, passed on & some, stood the test of time & most of these in days gone by would be

correct in the assumption of going for larger profits however one thing has changed – the internet &

the increase in electronic trading. Basically in years gone by, it would take a while for a piece of news

to impact the markets however these days the impact is instant.

Tip!

To see instant news action affecting market price just watch either GBPUSD at 0930 GMT most weeks, Tuesday – Thursday or wait for the first Friday of each month & watch Wall St (Dow Jones) at 13:30pm. The UK tends to have a piece of economic news out at 09:30am most mornings especially mid-week & non-farm payroll comes out on the first Friday of each month. Both great examples of news instantly impacting the markets.

Ideally, you should make the goal of your trading to increase your confidence to aim for at least 1:1

positions however by moving your stop to break even you can leave trades to run for longer &

aiming for predetermined target areas.

Let’s start by revisiting the previous trade setups;

In the above example there are two points of potential stop placement; the “swing high” or the

opposite end of the candle that has triggered the trade

1. Swing High – the highest point of

the market before the reversal

2. Or place stop at

opposite end of candle

that triggers the trade

Trade entry when market

price hits this level after

breaking candle closes

And now for the profit target;

This move highlighted above was around 25pips so the risk was around 25pips & the target was

25pips. However, if you had used the candle entry i.e placing your stop at the opposite end of the

candle you would still have made a profit albeit a lower one but neither is wrong. Allow me to

explain;

If you had taken the first trade staking £1 per pip movement you would have made a profit overall of

£25. Awesome.

Robotrader rocks up trading the candle size for a measly 6pips. Just as you are rolling on the floor

with laughter at robotrader’s pathetic pip tally, you suddenly realise that he had staked £10 per pip

thus resulting in a £60 profit. You pick yourself up only to hear the immortal words of “you now have

20seconds to comply…”

2. Swing High – the highest point of the market before the reversal

Stop loss

1:1 Profit

Target

Ok, hopefully you get my point here. Trading breaks of sloping support & resistance also works on

any timeframe. As for profit targets, you go for what suits you & don’t be pushed around by what

anyone else claims. I’ll discuss this in more detail later in both money management & trading

psychology sections.

Trading breaks of support & resistance made easier

Runtime 45min 58s

Huh?... they can be made easier?...

Yep. Now, let’s get one thing straight here, trading these breaks of support & resistance is not a

quick way to riches, although can be depending on your risk appetite however you will need some

screen time in order to start getting those lines right & moving with the market but there is

something we can throw into the mix to make life a little easier.

Moving Averages

Welcome to your new friends. Adding these onto your charts will allow you to read the market a

little better than not having them. Don’t forget where to locate the moving averages – in the studies

/indicators section of your chart. The moving averages you require are;

5 Exponential Moving Average

18 Exponential Moving Average

Now, please do not think I’ve made up these wonderful things. I didn’t & they have been around for

years. All we are doing here is using them to start tilting the odds of a successful trade into our

favour – an edge if you like.

Your chart should now look something like this;

Notice how 2 lines now emerge on to the chart; the blue line being my 5EMA & the red line being my

18EMA.

To use these to our advantage we now must ensure that the 5EMA is above the 18EMA for buy

trades & vice versa i.e 5EMA below the 18EMA for sell trades. Anytime this isn’t true then you can

stay out of the trade until those conditions are met.

Looking at the above example you can clearly see that the 5EMA is above the 18EMA thus making a

buy trade.

Entry

Point

Entry

Point

In the above example for a sell trade, again you can see the 5EMA is now under the 18EMA thus

providing a good sell signal.

Now if you are paying close attention to the screenshots above you may notice this in the bottom

area;

Failed trade? Well, yes, unfortunately they can happen however on this occasion it isn’t even a trade

setup..

Sure, the support line has been broken, the 5EMA has crossed the 18EMA however the candle that

broke the support line has not had price reach its lowest point.

Entry Price of lowest part of candle

not hit

Tip!

Pay very close attention to what is occurring with the 5EMA. Notice how the candles tend to hug it most of the time? We can actually use this to our advantage especially when the price has pulled away from the 5EMA. This will generally signal a reversal of varying size. If the 5 has only just crossed the 18 then the pullback to the 5 is generally limited before resuming the trend however if the 5 had crossed the 18 sometime previously then the pullback may result in a trend reversal

So, by now you should be identifying support & resistance areas in your market, watching how the

market moves around the 5EMA & also looking at what profit targets you are going to be

comfortable with. This method is an excellent way to get involved in major or minor trend reversals

to make profit in the market. That is of course until this happens;

In the above example you would have had to wait over 2 hours before picking up a support &

resistance line break which isn’t that uncommon & please be assured that you will meet many

different trading conditions; slow moving, fast moving, even not moving very much at all! The key to

The time between these 2 arrows

is just over 2hours

your trading success is being ready for any market condition. So in the above example where you

would be waiting patiently for another trade signal we can now start to utilise your next method.

Method 2: The Pullback In method 1 we looked at one of the foundational skills in trading namely trading the breaks of

support & resistance & in this next section, I’m going to show you how to trade the trend

continuation. That said, you can also get a trend continuation trade via method 1 like this;

That is fine, however using the next method you can actually get involved in a trade setup earlier.

The essence of a pullback is where the market has been trending in one direction before then

reversing. This is largely down to profit taking in the bigger picture however this isn’t really our

concern as technical traders as we are looking for the chart pattern to emerge thus giving us a trade

entry.

In the following screenshots pay very close attention to how the price reacts at certain areas.

Enter here

Looking at the above three sections you can see how the market reacts once it reaches the 18EMA.

This is because moving averages also feature as a form of support or resistance.

So, using this information we can now enter trades where the market price has retreated to the

18EMA, found support & then resumed its trend by closing back over the 5EMA in the direction of

the trend.

Let’s take a closer look at the screenshot above to explain further;

1.

1

2

3

Buy Entry when price hits high of

closed candle above 5EMA

Stop placed here

2.

3.

This happens across the markets every day & ideally you should set aside some time to see how the

markets react around the moving averages.

Tip!

Learn to be active in your trading rather than a passive bystander. Too many home traders simply setup a trade and then sit & wait for its conclusion either way. By participating in your trade i.e place the trade, check or move your stop, locate your target, be continually asking questions like where is the nearest support or resistance etc.. is going to make you a better trader in a shorter space of time

There is an important factor to these style of trades & that is the 5EMA must have crossed over the

18EMA in the direction of the trend. For example, the 5 must have crossed over & be above the 18

for a buy trade & for a sell trade, the 5EMA must have crossed & be below the 18EMA.

Before we go onto the next pullback method we will take a look at one more example. This time it is

a predominately downward moving day so you will be able to see the pullbacks as they are heading

in a sell direction.

With regard to stops & targets, as per the previous method it is entirely up to you however initially I

would suggest either taking 5pips per trade which is a proven profit generator or aiming for 1:1 risk

reward i.e if your stop is 10pips, then your target is also 10pips. Personally I place my stop at the low

Buy Entry when price hits high of

closed candle above 5EMA

Stop placed here

Sell Entry when price hits low of closed

candle below 5EMA

Stop placed here

2

3

1

2

3

1

of the candle that is touching the 18EMA thus keeping the stop nice & tight. Don’t worry at this

stage about aiming for bigger profits as this will be explained in method 3.

So far we have seen two separate methods that I have been using over the last few years to make

profits in the markets. By mastering breaks of support or resistance and the pullbacks to the 18ema

which then proceed to close over the 5ema are proven setups which when traded with discipline will

support you well in trading. Before we move onto method 4 where the potential big moves are we

must learn about one more style of pullback.

Method 3: Easy as 123 This method is one which I suspect has been around since the dawn of time but probably not too

many home traders actually use it. When used properly, trading 123’s is very effective indeed. But

what exactly is a 123?

123’s can have varying numbers of candle making up its formation but the basics of the formation

always remain the same;

Sell Trade

123’s can be used on any timeframe & actually can get

Buy Trades

stronger the higher the timeframe however like the previous examples we will be focussing on the

5min timeframe. The reason for this is that we are building up to method 4 which will allow you to

take on higher profit trades or as the famous saying in trading goes;” letting your profits run”

Back to 123’s. In theory they look pretty easy, market is trending, experiences a pullback & we enter

on the trend resumption. However, the key to successful 123 trading is learning to spot them.

Let’s look at a screenshot;

Looking at the screenshot itself you should be able to spot several things;

1. In the downward trend coming in from the left notice how the market pulls back in the form

of a green candle before resuming the trend

2. In the reverse trend moving upwards, take notice of the market pulling back in the form of

red candles. These pullbacks are known as retracements

3. In both examples, please note the moving averages are also in the correct order i.e the 5ema

is below the 18ema when trending downwards & the 5ema is above the 18ema when

trending upwards. This is important

Basically, what you are spotting above is a 123 setup. The key to successfully trading them is down

to making sure the market is trending via the moving averages & then waiting for a retracement.

This will then give you the all important entry point & stop loss level.

Let’s take a closer look at one of those setups;

Entry is when price

goes past this point

after the

retracement

Stop is placed at

lowest point of the

retracement

Enter trade here

Stop placed here

In the previous two screenshots you will notice that the retracement took place over about 9

candles whereas the following 123 a little further up the trend only had about 3 candles. As you

become more confident trading 123’s you will find that a single opposite coloured candle can act as

a retracement thus prompting a 123 move like this following example;

Like before, you should be able to start seeing several more 123 moves in this downward trend with

one before the highlighted example & one after.

The next area to look at is how many pips should you target & like before, you can have a number of

different objectives here. Ideally, you want to be targeting 1:1 risk reward. This means that if your

risk i.e the amount of stop you have is 15pips, then your target is also 15pips. Most people will take

less than this when new to trading which is a confidence matter & one we will look at in a later

section.

So far in this section we have looked at three separate methods, all of which can generate a full time

income on their own. I have personally used these for a long time in my trading & we also have full

time home traders within Piptastic that have also achieved this.

Let’s think about trading in a driving at night sense; your trade is your car which would make the

moving averages your tiny lights placed inside the road surface & the methods are the white lines

keeping you on the right side of the road.

What if we could light up the road for you as well?

Enter trade here

Stop placed here