I normally don’t share market insights and system strategies. The few times I have shared my ideas, they ended up on eBay, or being peddled in various forums. However, a few things have prompted me to share once again. One reason is that I have almost completely switched to automated trading. It’s getting to the point where I find myself with a lot of time on my hands – in short; I’m trying to stay active in the market. Secondly, I look at guys like ND, Igorad, Simba, etc. and I’m simply blown away by their endless flow of selflessness. It inspires me to get off my ass and give back.

I’m hoping this thread will shed a little light for some of you guys… if not, at least I’m staying busy. My gut instincts tell me that the trader who will get the most mileage out of this has a minimum of 1 to 2 years experience. If you just found out about the currency markets by accidentally clicking on a Google ad 3 days ago –this is definitely not the right thread for you to be reading.


Please respect this thread by observing the following rules:

1. Never ask how to perform MT4 functions. TSD has an extensive section on that… not to mention the “help” feature in the software. If it boils down to a case of laziness, then you might as well move along… this strategy (along with all others) will not make you a dime.

2. Never ask me to provide back tests, forward tests, or account statements. This is insulting to the person sharing their time and knowledge. I cringe whenever I see a new thread starter getting bombarded with “system effectiveness” requests. No one owes you an explanation, their time, or their ideas. Test it out for yourself – worst case scenario; you might actually learn something.

3. If anyone mentions the phrase “we need an indicator to filter out the bad trades”, or, “can someone make an EA for this”, my hands will magically appear out from your computer monitor and put you into a “virtual” choke-hold.

Otherwise, do what comes naturally.

INDICATORS:

I know this a big concern to many of you. Does this system rely on indicators? The answer is YES. It relies on 2 very important indicators.

1. The indication that you have half a brain.
2. The indication that you have some sense of discipline.

TIMEFRAME:

Whichever you like. However, for our purposes here, we are dealing with an intraday scalping strategy. The important thing to remember is that we will be developing a comprehension (or personal beliefs) about market dynamics. These dynamics apply to all markets - in all time frames.


CHART SET-UP:

You will need 2 charts for this strategy. A 1 min and 15 min chart (both minimized entirely). An image example of what your screen should look like is attached below.


TIME TO TRADE:
This should be an easy one. Since it’s a day trading strategy, it is most effective during active market hours. If you don’t know at what time the markets are active, you should stop reading this thread.

PAIRS:
Will work for any currency pair, futures contract, equity, or any other financial instrument that is traded on an open exchange. Remember…market dynamics. BUT… we will be using EUR/USD. Just because.

A FEW TOOLS:
You’ll need these – (attached below)

I recommend setting up hot keys for the scripts (1-Click Buy & Sell). Igorad’s Multi-Position EA can be affixed to the M15 chart. I already have the money management parameters coded into both scripts and the EA.

Unfortunately, this is not the type of system you might be accustomed to. You know the one where I tell you to buy when the 25 and 50 MA’s cross, with a hard stop of 30 pips and a TP of 45. There are plenty of those on this forum already. What we’ll be trying to accomplish here is developing a deeper understanding of what the market is doing, and how to profit from it. Now if you’ll excuse me, I’m going to take a bit of a break… and will post more in a bit.

To be continued….

Attached Images

Chart Setup.jpg (109.9 KB, 853 views)

Attached Files

	1-Click Buy.mq4 (388 Bytes, 144 views)
	1-Click Sell.mq4 (390 Bytes, 122 views)
	MultiPositionExpert_v2.mq4 (6.0 KB, 133 views)

Step 1:

We need to identify money flow. The 15 min chart posted below has a few notes on what we should be looking for. Market prices typically travel in a push & pull fashion (Peaks and Valleys). Once we identify the push (money flow), we wait for the next reaction in the chain…profit taking. I never was able to gauge how far a trend would run, but I always knew that traders would at some point want to take their profits off the table. This provides us with opportunity. Not to put on a countertrend trade move… but to trade the trend continuation.

Look at it this way. Price falls 50 pips, and a hand full of traders take their profits. The price retraces 10 to 15 pips. It’s still a great value. So every one starts to short all over again. That’s our cue to jump on board. Worst case scenario – they drop it back down to cover the 10 to 15 pip retrace and retest the bottom. At this point we’ve already booked our profit.

In summation the 15 min chart is our “Set Up”.

Step 2:

Our “set up” on the 15 min is in place as we’ve identified both the money flow and the profit taking (Peak and Valley). We now look to our 1 min chart (the “Trigger”), and start watching it like a hawk. The 1 min contains the exact same action that the 15 min (and every other TF) contains. When we see a pivot break (down in this case) on the 1 Min… we get in. I have made notes on the 1 Min chart attachment below to explain some of these principals.

Step 3:

With our EA monitoring the 10 pip TP level and the 50 pip SL level, we go drink coffee. “Are you MAD!!!!” – “ A 5 to 1 risk/reward ratio!!!”. Not to worry, we’ll get into psychology and logistics as we go along.

Step 4:

Return to the computer to realize that the last 1 min pivot break was actually a “fake”. We are now down 20 pips. Fair enough. Please take note of this next rule. If your floating loss is in double digits (>10), and you observe another 1 min pivot break in the direction of the money flow, you can add another position. This is known as “cost averaging” or “fading” the move. Please use the scripts I provided when placing ALL of your orders (the initial, and the add-on).

• You are only allowed 1 extra position. In other words you can only have a maximum of 2 orders per any given set up (original order, and the add-on… if needed).

Anyway, refer to the chart examples, because most of this should start sinking in with the appropriate visuals.

By the way, I included how the rest of this particular trade played out. The one thing to notice is that I did not cherry pick a “historical” example. All of these images are being captured on the EUR/USD pair as I type this.

Logistics and Psychology ... next.

Attached Images

	15 Min.jpg (60.9 KB, 806 views)
	1 Min.jpg (47.9 KB, 784 views)
	Trigger.jpg (60.6 KB, 783 views)
	Close.jpg (57.6 KB, 760 views)

I am going to imagine that some of you are thinking certain things, and have questions. So before I have to field random inquiries, I will address some of the concerns / issues you may have… an FAQ, if you will.

Q. What’s with the 5 to 1 risk/reward ratio?
A. If you don’t rush into the trades, and take the time to spot a nice strong move (money flow) with a decent pullback (profit taking), you will come to realize that the hit rate for this technique is astronomical. I believe that if you spend some time nailing down these concepts, and watch for (and become familiar with) setup failure patterns… you should be all good. Not to mention, we are averaging… we need a bit of a buffer. Keep in mind that if your first order is down 20, and you add your second (and final) order… you will only be able to sustain an additional15 pip move against both of your positions before the SL is activated. You should be booking most of your trades… if you’re not, practice, practice, and practice.

Q. How is the money management configured?
A. The scripts are designed to allocate position sizing based on a 10pip move equaling 1% of the total account balance. In turn, if the EA closes you out for the 50 pips…you will be down 5% on the account. Some of you may think this is a bit aggressive; and it is. However, we are exposed to the market for an extremely limited amount of time and under the highest factors of probability. If you like, you can alter the scripts to your own liking. Also, you don’t have to sit around waiting for the 5% loss… you can close the trade/s if you don’t feel right about the way the trade is developing.

Q. How often should I trade in a session?
A. I’m sure no one is thinking about this question… but I believe it needs to be addressed. Most of you are thinking that you’re going to trade your way into superstardom within the next 6 to 8 weeks. Here’s the deal. I recommend no more than 2 trades a day… one preferably. Here’s why… 1% a day (compounded over the year) will create gains over 10 times your initial investment. Or just look at it this way, a great CD account at a bank will generate 5% for 6 months (or a year depending on the terms), and they’ll lock up a healthy minimum amount while doing it. You can make that 5% in a WEEK!!! There’s no rush. When you day trade, the greatest threat is overtrading. If you plan on doing 2 trades a session, I suggest you put a 2 hour distance between the trades… go drink some coffee. If you don’t take my advice on this… you will fail – guaranteed.

Q. Why just the 10 pips, price always seems to go much further after the setups?
A. I know you’re thinking about this one. Well, actually YOU’RE not the one that’s thinking about it. Your inner monster is. You know – the inner monster, the one who’s the “not so distant cousin of fear and greed”. You better learn to recognize the sound of that voice… or he’ll screw you every single time. Here’s a little secret for you… he’s responsible not only for all of your trading failures, but also, all of your failures in life. If you don’t control it… it will control you. Do me the favor, and stick to the script. Or… you will fail – guaranteed.

Q. Why cost average?
A. Precise market entries don’t exist. I’m sure you’ve seen it before, a trend line breaks, you come in with a good sized order, and the price overextends one more time (taking out your stop) before doing what you thought it was going to do all along. Cost averaging (in this strategy) is intended to solve the problem of these overextensions.

Q. Can I add indicators to this method in order to enhance this technique?
A. My guess is that once you focus in on the “market’s rhythm”, and it becomes second nature to you, you’ll never use indicators again. Not because they’re bad, or because the “cool traders” don’t use them – simply, because they will no longer serve the beneficial purpose you once thought they did.


That’s about it for me, gang. I know it’s a bit all over the place, but we’ll work out the kinks as we go along. As always, if you’ve got a question… post it, and I’ll do my best.

Peace,
MM

I'm looking forward to your system. I especially like the idea that we will be getting a deeper understanding of the market, not just waiting for MA's to cross.

Well what a refreshing post Mr marketz, i just hope you can maintain the rules outlined in your first post and that this thread is not sidetracked with people too lazy to do their homework before posing 3rd grade questions. Waiting in anticipation....

“we need an indicator to filter out the bad trades”


Mr.Marketz hit the nail on the head here. If such and indicator existed, we would all be rich. There are plenty of indicators to show trends. Unfortunately that's only half the battle.

I'm going to start writing the final (and most important) part...Logistics and Psychology. Be back soon, to answer questions, if there's anyone askin'.

Thanks Mr.Marketz, this site has provided me with an amazing amount of info. It would have taken me years of trading to gain this much knowledge.

You're welcome J. When you make your first million, make sure to send me a postcard from one of your newly purchased islands.

If I made my first million off your system, we would be drinking margaritas on my island together. Thanks!!