MACD Dots (15 MIN) MACD dot buy or sell. MACD above noise level and rolling / reversing (good for exit signal or, entry in range bound markets)

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2 MACD Dots (15 MIN) The rules/assumptions 1. Entry is 1 pip above or below the high (low) of the dot candle 2. Stop is 10 pips below a recent swing low 3. Exit is somewhat discretionary and optimistic 4. A failed dot is one that does not give +10 (including spread) before being stopped 5. The average loss is -30. Any failure is automatically assigned a -30 loss 6. No movement of the original stop is assumed 7. Spread for each pair at GFT is accounted for 8. 3 pip rule: if wick is 3 pips or less add 3 pips to the candle instead of 1 Dot Legend: TTF = Trading Time Frame HTF = Higher Time Frame OS = Oversold OB = Overbought MACD dot buy or sell. MACD above noise level and rolling / reversing (good for exit signal or, entry in range bound markets) Think of grey dots as dirty white dots. They are good exit signals but not good entry signals. Buy signal agrees with the trend of the TTF and the trend of the HTF but not OS (good continuation signal) Sell signal agrees with the trend of the TTF and the trend of the HTF but not OB (good continuation signal) SuperDot sell signal agrees with trend of the HTF (1 bar ago) and is OB SuperDot buy signal agrees with trend of the HTF (1 bar ago) and is OS

3 GBP: Signal 1: SuperDot +229 Signal 2: SuperDot +135 Signal 3: SuperDot +23 Signal 4: Blue Dot +131 Signal 5: SuperDot +94 Signal 6: SuperDot -30 Signal 7: Blue Dot +56 Signal 8: Reversal +96 Signal 9: Reversal +52

4 EUR: Signal 1: Reversal +89 Signal 2: SuperDot +105 Signal 3: Blue Dot +70 Signal 4: Blue Dot +66 Signal 5: Blue Dot +102 Signal 6: SuperDot +25 Signal 7:SuperDot +20 Signal 8: Reversal +103 Signal 9: Red Dot +137 Signal 10: SuperDot +10 Signal 11: SuperDot +109 Signal 12: SuperDot +42

5 CHF: Signal 1: Blue Dot +107 Signal 2: Blue Dot -30 Signal 3: SuperDot +27 Signal 4: Blue Dot +26 Signal 5: Blue Dot +20 Signal 6: Blue Dot +37 Signal 7: Breakout -30 Signal 8: Red Dot -30 Signal 9: Blue Dot -30 Signal 10: Red Dot -30

6 EJ: Signal 1: Blue Dot +62 Signal 2: Blue Dot +198 Signal 3: Reversal -30 Signal 4: Blue Dot +169 Signal 5: Blue Dot +188 Signal 6: SuperDot +28 Signal 7: SuperDot +10 Signal 8: Red Dot +99 Signal 9: Red Dot +60 Signal 10: SuperDot +158 Signal 11: SuperDot +70 Signal 12: SuperDot +155 Signal 13: SuperDot +170 Signal 14: Blue Dot +33 Signal 15: Blue Dot +31 Signal 16: Blue Dot trade has not reached profit or loss prior to end of week

7 Conclusions Blue/Red Dots Super Dots Reversals Breakouts Win Loss Win Loss Win Loss Win Loss GBPUSD 187 [2] 481 [4] -30 [1] 148 [2] EURUSD 375 [4] 311 [6] 192 [2] USDCHF 190 [4] -120 [4] 27 [1] -30 [1] EURJPY 840 [8] 591 [6] -30 [1] TOTAL 1592 [18] -120 [4] 1410 [17] -30 [1] 340 [4] -30 [1] -30 [1] Net Average W:L 9:2 17:1 4:1 N/A RM +200 RM Retarded Monkey = The number of pips made if each winner was only +10 pips and every loser was -30 pips [X] represents the number of trades The market actually made very little overall progress this week. The early part of the week was volatile and continued the ways of previous weeks but my mid-week things settled down a bit. I think that we will continue to see ranges tighten this week. This doesn t necessarily mean that the worst of our global financial crisis is over but it does seem that we have become temporarily saturated with bad news. Large investors seem to have a limit on how many times they switch sides before they forget why they started running in the first place. The GBPUSD and EURJPY saw very large ranges but no direction. While direction is nice and makes trading easier, it is not necessary. I would take a large range over a small trend almost any day. The white dots have returned and I suspect will continue to show up in larger numbers. They are worth a lot of pips so don t ignore them. If the market continues to consolidate, breakouts will start showing up again as well. It s clear from the results that they are still hibernating. I believe that each one of us completely realizes that these are historic times and that we are trading markets of historic volatility. However, I don t think that we are all thinking like traders. Rather than get caught up in the amazing and dizzying pace of the market, we should be looking for opportunities that don t present themselves very often. Many stocks are 50% off of their highs from a year ago. That means that the stock market is running a ½ off sale! I cannot say that the market will rebound quickly or rebound at all. I can say that it can t lose as much as it already has and that we are much closer to a low now than we were last year. If you agree, then there must be incredible market opportunities just about everywhere you look. Years from now we ll read about the few who took advantage of the situation. Instead of looking back and saying if I had only bought BigCo at $X/share I would be. You could be part of that story. I talked to a few (more than two) people this past week who let significant profits turn into losses. This is simply one of the biggest mistakes you can make in your trading life. An exit plan is more than an opposite dot or MACD crossover. You should move to breakeven, lock in profit, trail positions, and exit non-performing trades. All of these concepts are discussed in the user manual. If your broker does not offer a trailing stop you should find one that does. If you are not going to be around to manage your trade then don t take the trade. Hope is not a trading strategy. You must take responsibility of following your trade from beginning to end. Entering a trade is the easiest part, there s much to be done thereafter.

8 Disclaimer I produce this report solely for my own benefit. It helps me identify trends and verify that my system is performing as expected. I have laid out the most significant rules of my trading on page 1 of this document. I make a best effort to ensure the accuracy of these test results. The entries of the system are not up for debate. In this report the idea is see dot, trade dot. The position is held until it becomes a winner or a loser. The exits, however, are very subjective and not realistic at all. It is impossible to consistently get out of a position at the top of a long trade or at the bottom of a short trade. The purpose of the report is to show me how many pips the market made available on any given trade. It is my job to get as many of those as possible. My personal target is 10% of the total net pips calculated in any one week. Each week the distribution list of this report grows. Each individual has at some point, requested to receive this document. I enjoy sharing it because it keeps me accountable to do my homework. I am not trying to make any claims about system performance nor am I trying to sell you a product that is capable of these results. Margined Forex trading is a risky form of investment. As such, it is only suitable for individuals aware of and capable of handling the associated risks entailed. Funds in an account traded at maximum leverage may be completely lost if suitable stoploss practices and procedures are not employed. Given the possibility of losing one s entire investment, speculation in the foreign exchange market should only be undertaken with risk capital that, if lost, does not significantly affect the investor s financial well being. There is no absolute guarantee that the readers and followers of the preceding information will make money. Readers use this information entirely at their own risk. The author and publisher of this information accept no responsibility or liability in respect of any loss or damage incurred from the use of this information. All intellectual property rights in this document remain the property of the author and publisher. The author will not be held responsible for the reliability or accuracy of the information available in this document. The content provided is put forward in good faith and believed to be accurate. However, there are no implicit or explicit guarantees that the readers of this document will make profit by trading currencies. The reader agrees not to hold the author liable for decisions that area based on the information presented in this document Phil McGrew All Rights Reserved. No part of this publication may be reproduced or transmitted in any form or by and means, electronic, mechanical, recording or otherwise, without prior permission of Phil McGrew.