Forex Trend Directive

FOREX GEMINI CODE Presents Forex Trend Directive Forex Gemini Code Published by Alaziac Trading CC Suite 509, Private Bag X503 Northway, 4065, KZN, ZA www.forexgeminicode.com Copyright 2014 by Alaziac Trading CC, KZN, ZA Reproduction or translation of any part of this work by any means, electronic or mechanical, including photocopying, beyond that permitted by the copyright law, without permission of the publisher, is unlawful. Trademarks: Alaziac Trading CC, Forex Gemini Code, Forex Trend Directive

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Introduction Welcome to the Forex Trend Directive Report! In this report you will learn how to trade this incredible system and also get a chance to see how you can install the chart template that is provided together with this powerful trading system. The Forex Trend Directive system was developed and has been traded by professional hedge fund traders. This is in fact, the very first time that the details of this unique trading system are being released to the public. The Forex Trend Directive system relies on using standard indicators that are available on all trading platforms available on the web. The indicators that are used with this system are the Moving Averages. If you ve been trading for any amount of time, you may already be familiar with the Moving Averages indicator. However, when trading the Forex Trend Directive system we will be using this indicator in a unique manner. The trading method you are about to learn relies on 3 different moving averages, each with a different configuration. But that s not all, the true power of this system comes from the manner in which we identify trade signals. To aid us in identifying valid trade signals, we will refer to multiple timeframes but in specific combinations. We ll take a look at the specific details of the system in the following chapters. All of the system settings are provided for you in a chart template that can be applied immediately onto your MetaTrader 4 trading platform. This system performs extremely well on its own, but the techniques you will be learning about can also be applied to any other trading systems you may already be trading. The system is versatile as it can be used on all timeframes and currency pairs. The rules are simple and straight-forward, so you can start using it immediately after reading this manual. So, let s get started and take a closer look at how it works. 3

Setting Up Your Charts In this section we will take a closer look at the indicators and how to prepare your charts for trading. Before you can proceed with the steps in this chapter, please ensure that you have downloaded the MT4 trading platform or any other trading platform of your choice. Once the system indicators are applied to your charts, it should look similar to the chart shown on the following image. The first thing you will need to do is configure your charts to display price as bars instead of candlesticks. The system itself can also be traded with candlesticks but I ve found that reading the opens and closes on bars can be easier. In order to do this, open a new chart on your trading platform then press the F8 key on your keyboard to open the chart Properties window. Next, click on the Common tab and click on the Bar chart option on the right hand side of the window. You can see an image showing you these settings on the following page. 4

Once you have selected the Bar chart option on the right hand side of the window click on the Chart shift and the Chart autoscroll options on the left had side of the window to ensure the most recent activity on the chart remains in constant view. On the following image you can see an example of how the Properties window should appear once you have configured the settings. Once you have selected the options shown on the image above, simply click on the OK button and you re ready to add the rest of the indicators. The next set of indicators we will be adding to our charts are the Moving Average indicators. The Moving Average indicator is included among the standard indicators that come bundled with the Metatrader (MT4) trading platform and nearly all other trading platforms available to traders these days. In the following section I will show you how to add the 3 variations of the Moving Average indicator we will be using to your charts and how to configure the settings of each to accommodate our trading method. 5

To apply the Moving Average indicator on to your chart you will need to click on Insert on the top menu of the trading platform. Next click on the Indicators link then click on Trend and finally click on Moving Average. You will then be presented with the Moving Average properties window as shown on the following image: As you can see on the image above, there are a few parameters to be set on this indicator. The first setting to change is the Period setting which must be set to 5. Next, choose the Simple MA Method from the dropdown list then choose Low from the Apply to dropdown box. Finally set the Style color to Red and click on the width dropdown and select the second line to ensure that the line is thick enough to be visible on your charts. If you feel that the line you see on your chart is either too big or too small. Simply choose a different line thickness suit your viewing preferences. Once you have configured the settings on this window, simply click on the OK button and the first Moving Average indicator will now be applied to your chart. Let s now take a look at the next Moving Average indicator we will be using in the Forex Trend Directive system. 6

The next indicator we will add on to our chart is a 5 period Simple Moving Average of the Highs. Once again, to add this indicator to your chart simply click on Insert on the top menu of the trading platform. You then click on Indicators then click on Trend. Now locate the Moving Average option and click on it to apply it on to your chart. You will again be presented with the Moving Average properties window as shown on the following image: On the Parameters tab change the Period setting to 5. Next, select the Simple option from the MA method dropdown list and finally select the High option from the Apply to dropdown list. You also have the option to set the Style properties of this indicator. I personally like to use a DarkOrange colored SMA and also increase the width of the line so that it is a bit clearer to see on my chart. You are welcome to configure the Style options to suit your personal preferences. Once you have configured the settings on this particular window, simply click on the OK button and the indicator will now be applied to your chart. At this stage we need to add just one more indicator to our charts before we can start trading the Forex Trend Directive system. So let s take a look at the final Moving Average indicator we will apply to our chart. 7

The final indicator we will add to our charts is a 50 period Exponential Moving Average. To apply this indicator to your chart simply click on Insert on the top menu of the trading platform. Next click on Indicators then click on Trend. Now locate the Moving Average option and click on it to apply it on to your chart. You will again be presented with the Moving Average properties window as shown on the following image: On the Parameters tab change the Period setting to 50. Next, select the Exponential option from the MA method dropdown list and finally select the Close option from the Apply to dropdown list. Once again, you have the option to set the Style properties of this indicator. I personally like to use a Blue colored EMA and also increase the width of the line so that it is a bit clearer to see on my chart. Of course, you are welcome to configure the Style options to suit your personal preferences. Once you have configured the settings on this particular window, simply click on the OK button and the indicator will now be applied to your chart. Congratulations! You ve now configured the indicators that we will be using to trade the Forex Trend Directive system and you are now ready to learn how to identify Buy and Sell trade signals with this system. Let s begin with the Buy trade rules and an example of a Buy trade. 8

Buy & Sell Trade Rules LONG ENTRY RULES: 1. On the higher timeframe the 5 SMA of the Highs and the 5 SMA of the Lows should be above the 50 EMA (see timeframe combinations below). 2. On the higher timeframe, wait for a bar to close above the 5 SMA of the Highs. 3. Switch to the lower trading timeframe (see timeframe combination below) and confirm that the 5 SMA of the Highs and the 5 SMA of the Lows are both above the 50 EMA. 4. Wait for a bar to close above the 5 SMA of the Highs then enter a Buy trade at the open of the new bar. 5. Set a Stop Loss at or below the 5 SMA of the Lows. 6. Set a Take Profit at two times the size of your Stop Loss (2:1 Risk/Reward Ratio) or exit the position manually when a new bar closes below the 5 SMA of the Lows. 7. Move your Stop Loss to breakeven when price reaches 50% of your Take Profit. Here s a list of Lower timeframes and Higher timeframes. On the right side we have the Higher timeframes used to identify potential trade entries and on the left side we have the Lower timeframes where we place our trades. M1 M5 M5 M30 M15 H1 M30 H4 H1 H4 H4 D1 D1 W1 W1 MN 9

LONG/BUY Example www.forexgeminicode.com This is a trade taken on the USDJPY currency pair on the M15 timeframe. Since we are trading the M15 timeframe, we begin on the H1 timeframe to identify a potential trade setup. At point 1 on the H1 timeframe, the 5 SMA of the Highs and the 5 SMA of the Lows are above the 50 EMA. At point 2 we have a bar that closes above the 5 SMA of the Highs. At this point we may switch to the lower timeframe and identify our entry level. On the image below you can see the M15 chart where we placed our entry. At point 3 the 5 SMA of the Highs and the 5 SMA of the Lows are both above the 50 EMA. At point 4, we have a bar that closes above the 5 SMA of the Highs so we may now enter a Buy trade at the open of the next bar. At point 5 we set a Stop Loss at the 5 SMA of the Lows. At point 6 we set a Take Profit at two times the size of our Stop Loss. With this trade there was no chance to exit early as no bars closed below the 5 SMA of the Lows. At point 7 we could have moved our Stop Loss to breakeven but as you can see we were taken out in profit a few bars later. Excellent trade! 10

Now let s take a look at the rules for sell/short trades: SHORT ENTRY RULES: 1. On the higher timeframe the 5 SMA of the Lows and the 5 SMA of the Highs should be below the 50 EMA (see timeframe combinations below). 2. On the higher timeframe, wait for a bar to close below the 5 SMA of the Lows. 3. Switch to the lower trading timeframe (see timeframe combinations below) and confirm that the 5 SMA of the Highs and the 5 SMA of the Lows are both below the 50 EMA. 4. Wait for a bar to close below the 5 SMA of the Lows then enter a Sell trade at the open of the new bar. 5. Set a Stop Loss at or above the 5 SMA of the Highs. 6. Set a Take Profit at two times the size of your Stop Loss (2:1 Risk/Reward Ratio) or exit the position manually when a new bar closes above the 5 SMA of the Highs. 7. Move your Stop Loss to breakeven when price reaches 50% of your Take Profit. Similar to Buy trades, we have a list of Lower timeframes and Higher timeframes that are part of the Forex Trend Directive system. On the right side we have the Higher timeframes used to identify potential trade entries and on the left side we have the Lower timeframes where we place our trades. M1 M5 M5 M30 M15 H1 M30 H4 H1 H4 H4 D1 D1 W1 W1 MN On the following page you can see an example of a Sell trade. 11

SHORT/SELL Example www.forexgeminicode.com This is a trade taken on the EURUSD currency pair on the M15 timeframe. Since we are trading the M15 timeframe, we begin on the H1 timeframe to identify a potential trade setup. At point 1 on the H1 timeframe, the 5 SMA of the Highs and the 5 SMA of the Lows are below the 50 EMA. At point 2 we have a bar that closes below the 5 SMA of the Lows. At this point we may switch to the lower timeframe and identify our entry level. On the image below you can see the M15 chart where we placed our entry. At point 3 the 5 SMA of the Highs and the 5 SMA of the Lows are both below the 50 EMA. At point 4, we have a bar that closes below the 5 SMA of the Lows so we may now enter a Sell trade at the open of the next bar. At point 5 we set a Stop Loss at the 5 SMA of the Highs and at point 6 we set a Take Profit at two times the size of our Stop Loss. Once again, with this trade there was no chance to exit early as no bars closed above the 5 SMA of the Highs. At point 7 we could have moved our Stop Loss to breakeven but as you can see we were taken out in profit a few bars later. Another excellent trade! 12

Installing the Template The installation of Forex Trend Directive chart template is actually very easy, as it comes with an autoinstaller which will take care of everything for you. After you download ForexTrendDirective.zip, if you have Windows 7 or higher you can either right click on the file and choose Extract or simply double click to open it. If you have a Windows version prior to Win 7, you ll have to download a free tool for extracting zip files, like WinRar. After you ve opened (or extracted) the downloaded archive, simply double click on the ForexTrendDirective.exe file inside to start the autoinstallation process. If you get a security warning, click Run. If you get a User Account warning, click Yes. First, you ll be prompted with the main installation window, where you can simply click Next. 13

Next step is to read the licence agreement, check I accept this agreement and click Next Next step is to select the MT4 folders in which you wish to install the software. If your broker/platform is installed, but not showing up, you can use the Add a MetaTrader folder button to manually select the folder where your platform is installed. After that, hit the Next button. 14

For the next three steps, you can just click Next and the indicator will be installed for you. Simply click Finish and you re done. If you open your MetaTrader4 platform, open a new chart then click on the Templates button, you should see Forex Trend Directive there. Simply click on this item to apply the chart template to your chart. And that s all there is to it! You should now have the ability to apply this system to any chart and identify trade signals whenever the conditions for a Buy or Sell trade have been met. At this stage you should have a good understanding of how the Forex Trend Directive trading system works and you should be ready to start applying it on your own. As with any other trading system out there, trading the system does require practice and discipline on the part of the trader but with a little time and effort, you too can enjoy the benefits of this system. 15

Conclusion You will notice that the examples used in this manual show trades taken on the H1 and M15 timeframes. These are the timeframes that I personally enjoy trading with this system but it can be applied to all timeframes and all currency pairs with similar results. When trading on the lower timeframes it is recommended that you enter trades only during the most active trading sessions and avoid trading during range-bound conditions. When trading on the higher timeframes you will find that signals occur less frequently but you can be sure that that signals tend to be a lot more reliable and less prone to whipsaw. Avoid entering trades when the Moving Averages appear to be flat or in a ranging pattern (i.e. moving horizontally). The best trades can be found in areas where the Moving Averages are sloping either upwards for Buy trades or downwards for Sell trades. In cases where you find that your Stop Loss is too large it would be better to skip or avoid the trade. For example, if you are trading the 15 minute timeframe, a Stop Loss of 50 pips is simply too large and you should not enter such a trade. It is strongly recommended that when trading this system you use a Risk to Reward Ratio of 1:2 or greater. In the examples you have seen that I tend to prefer the RR Ratio of 1:2 to suit my trading style. You are welcome to use a maximum RR Ratio of up to 1:4 with this system for the best results. Using trailing stops and exit strategies that allow you to move your Stop Loss to breakeven when in profit also have a positive effect on the system s performance. I know that you will enjoy trading this system either as a standalone technique or an additional filter as part of a larger system. Once you have mastered this system I am certain that you will enjoy similar success. I wish you the very best in your trading adventures! 16