FOREX UNKNOWN SECRET by Karl Dittmann DISCLAIMER Please be aware of the loss, risk, personal or otherwise consequences of the use and application of this book s content. The author and the publisher are not responsible for any actions that you undertake and will not be held accountable for any loss or injuries. U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risks. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading software or methodology is not necessarily indicative of future results. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. Hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. All information on this website or any e-book purchased from this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading software is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold Forex Mercenary and any authorized distributors of this information harmless in any and all ways. The use of this software constitutes acceptance of my user agreement. COPYRIGHT This book is the copyright of and cannot be re-written, re-published, STORED OR LINKED AT ANY FILE SHARING SITES or FORUMS or used for any other books without
proper referencing without permission. The use of the books is limited to your personal use. Spreading out the copies without paying for them is illegal and protected by international copyright law. Copyright 2010 www.forexunknownsecret.com INTRO Dear Members Today I want to introduce You this The World s Simplest but very profitable strategy! This simple system I have been using for years. You don t need to be a Forex guru to use this system. It is a pure mechanical mathematical system. There is almost always an opportunity to make 10-30 pips when ever you have time, keep reading and I will explain why The system will work on major Forex. The rules to this system are simple, and executing and managing trades will take no more than few minutes of your time per trade. Let me introduce you to the four simple steps below. Then I ll take you through some worked examples in order to illustrate just how easy this system is: 1. Identify your entry start/bar 2. Identify your signal 3. Place your trade 4. Close your trade with max 15-20 min with profit - THE SYSTEM The objective is not for large profits per trade, but achieving smaller gains. The strategy is very useful because smaller gains are much more frequent than larger gains. The System is price based, that means no indicators are used. From my experience - a price driven strategy is one of the easiest and most profitable ways to trade Forex because the price is the best indicator in any market. The price is telling us what is happening right now! You can use this system to trade on several pairs. -DETAILS Pairs: EUR/USD, GBP/USD, USD/CHF,USD/JPY Time Frame: 30 minutes Best trading hours: EU session, U.S. Session, Tokyo Session Stop loss: High or Low of entry bar Profit: Close of the entry bar. HOW IT WORKS:
-SETUP: Point 1 - Is a start bar and every single bar will be a start bar. The difference in high and low of the start bar has to be at least 15 pips. If it is less than 15 pips - it is not a valid start bar. Once we have found a start bar on a 30 min chart - we are looking for a point 2 - it's the open of the next bar. Now we are looking for the second bar (price) to breakout of the low of our start bar point 3. -ENTRY Next step: then we are looking for the market to reverse and in fact cross over the close of the start bar point 4. Entry: 1 pip below ( for short ) or 1 pip above ( for long ) of that point. In other words: If the market doesn t reverse exactly as explained above no entry!
-EXIT Option I Exit at point 5 and that's the close of the entry bar. Option II Make your own target for every trade 7-15 pips -STOP LOSS -We place our stop loss 1 pip below the low of our entry bar for long trades. -We place our stop loss 1 pip above the high of our entry bar for short trades. WHY DOES THIS STRATEGY WORKS? Well, there is an "unexpected" factor a very important psychological aspect. The unexpected factor is a part of market psychology. Whatever people least expect to happen that s what actually happens. So when everybody sees that the market is breaking out of the 30 min bar and the market reverses and everyone is now closing their positions, then the market turns to go to the other side! This is a unknown psychological trigger and it works! It works best on 30 min or 1 hour charts. Do not use this on smaller timeframes.
Length of trade is very important - you are looking for small profit objectives making it work even better. This is a very short term reversal. We take advantage of that. Don't expect a trade to turn into 100 pips profit, look for smaller consistent gains SAMPLES TRADES Sample 1 A good example on the average trade and average profit with a very tight stop loss: On the chart above: Stop loss 1 pip below our entry bar Entry 1 pip above start bar close price Exit close of the entry bar
Sample 2 A good example on the great trade with 46 pips profit and two very important examples of the no trade bars.
NO TRADES ( IMPORTANT!) I have shown on sample 2 above no entry 1 and no entry 2. Let me explain why there are no entry points. It is very important to understand: No entry 1: There are no signals for entry: market didn t break the low of the start bar and there is no reversal.. No entry 2: This is a bit tricky! There are no signals for entry: the bar opens at point A, then the price went to point B but didn t break the high of the previous bar (in this case our setup bar), then the price went down to the point C and went back (reversed) and closed at point D. Even here we have a reversal movement and breakout of the low of the start bar the price didn t cross our entry point Z. No signal for entry!
Money management Do not trade for more than 3-5% of your deposit (per trade) RECOMMENDATIONS 1. Open 30 min charts for EUR/USD, GBP/USD, USD/CHF,USD/JPY on the same screen (trading platform) and look for a valid start bar with a signal to enter a trade. Usually you will get at least one signal every 30 min - if you watch 4 pairs at the same time. 2. Try not to trade against a trend. 3. Do not use the system before and after major news or events. 4. Try the system at least 1-2 weeks on your demo account before go live. 5. Do not open a trade if the risk-reward ratio is too high! Example below: NO ENTRY! When the risk-reward ratio looks very high and the stop loss is bigger than your expected profit - Just ignore such signals and do NOT open a trade. Wait for the next trade opportunity Know your Risk: The Risk-Reward Ratio
Risk is a part of trading. Every trade carries a certain level of risk. Every trader must know the amount of risk that is being assumed on each trade. Knowing the amount of risk on each trade is one way to limit it and to protect your trading account. The best way to know your risk is to determine the risk-reward ratio. It is one of the most effective risk management tools used in trading. The risk-reward ratio is a parameter that helps a trader to determine the level of risk in a trade. It shows how much a trader is risking versus the potential reward (or profit) on a trade. While this may seem simplistic, many traders neglect taking this step and often find that their losses are very large. How to Determine the Risk-Reward Ratio? The first step is to determine the amount of risk. This can be determined by the amount of money needed to enter the trade. The cost of the currency multiplied times the number of lots will help the trader to know how much money is actually at risk in the trade. The first number in the ratio is the amount of risk in the trade. The reward is the gain in the currency price that the trader is hoping to earn from the currency price movement. This gain multiplied times the number of lots traded is the potential reward. The second number in the ratio is the potential reward (or profit) of the trade. Examples Here are a few examples of the risk-reward ratio: If the risk is $200 and the reward is $400, then the risk-reward ratio is 200:400 or 1:2. If the risk is $500 and the reward it $1,500, then the risk-reward ratio is 500:1500 or 1:3. If the risk is $1,000 and the reward is $500, then the risk-reward ratio is 1000:500 or 2:1. What is a Good Risk-Reward Ratio? The minimum risk-reward ratio for a Forex trade is 1:2. However, a larger ratio is better. An acceptable risk-reward ratio for beginning traders is 1:3. Any number below 1:3 is too risky so the trade should be avoided. Never enter a trade in which the risk-reward ratio is 1:1 or the risk outweighs the reward. Many experienced trader will only enter trades in which the risk-reward ratio is 1:5 or higher. This requires that the trader wait for a trade with this ratio, but the reward is worth it. A higher risk-reward ratio is a good idea in case the currency does not make the anticipated price movement. However, if the trader uses a lower risk-reward ratio, there is very little room for smaller price movements and the amount of risk will increase. The risk-reward ratio is an important risk management and trading tool. It is important for beginning traders to take the extra time to perform this task because it can help to minimize risk in every trade. Waiting for the right risk-reward ratio can take a long time. However, the benefits of waiting for a higher risk-reward ratio are worth the effort and patience. You will know your risk and know your potential profit. Most importantly, you will know whether the trade is worthy of your money. Kind Regards Karl Dittmann Copyright 2010 www.forexunknownsecret.com
Forex brokers that you may use: CMS Forex www.cms-forex.com ACM Advanced Currency Markets Fairlot Financial Group Forex Capital Markets GAIN Capital GCI Financial, Ltd. Global Forex IFX Markets Limited London Capital Meridian Forex Pty Limited MG Financial Group SaxoBank Tricom