lines, support,resistance, pivot lines &previous highs and lows.
Trade with the trend and enter after a retracement and take profits as best you can. Wait for a pivot toform and enter in the direction of the trend. Enter on a candle which makes a swing high or swing lowand closes back in the direction of the trend.
If price starts at point 1, moves up to point 2 and retraces to point 3, a trader can buy just above point 3and the target will be point 4. Point 3 is a higher low pivot point and a higher low is a safe entry. Goodrallies start from lows. Buy the first pullback from a new high. There is always a crowd that missed thefirst boat.
In a downtrend, a higher low will change the short term trend.
Similarly, if the price starts at point 1 and moves down to point 2, and retraces up to point 3, a trader cansell just below point 3. The target will be point 4. Point 3 is a lower high pivot and a safe entry. Gooddeclines start from highs. In an up trend a lower high will change the short term trend to a downtrend.
Reversals build slowly. If the market has been moving down for a long time, the first sharp rise usuallyfinds sellers. Similarly if the market has been moving up for a long time, the first sharp dip usually findsbuyers .The market does not turn on a dime.
BUY
In the diagram below, for the retracement system, the market turned at point 3(the low of the red bar).The pivot or turning point was confirmed when the green bar to the right of the red bar at point 3 wentabove the high of the red bar at point 3 by pip. You would buy there and place a stop loss just under thelow of the red bar (point 3) if the number of pips between your stop loss and your entry point was not toohigh .i.e. you are not risking too many pips. If you cannot enter the trade within a reasonable distancefrom your stop loss, you would wait for a better trade.
Our exit point will be at a trendline, pivot line, Fibonacci projection, resistance point, Candlestickreversal pattern or other reversal pattern
SELL
If you look at right half of the diagram below, you will see another point 3. A lower high pivot is formedin the downtrend when the market retraced to point 3 (the high of the green bar) when the next bar, a redone goes | pip below the low of the green bar the pivot or turning point is confirmed so you could sellone pip below the low of that green bar .The stop loss would be | or 2 pips above point 3.
46Copyright © 2003 Forex Systems Research CompanyAll rights reserved worldwideOur exit point will be at a trendline, pivot line, Fibonacci projection, support point, Candlestick reversalpattern or other reversal pattern.
  
1261.8 % 100%61.8%50%38.2%4161.8% nnn0%220%4. 161.8%38.2%50 %61.8 %100% 261.8%
 
When the retracement at 3 from the move | to 2is approximately 61.8% expect the target move to be either161.8% or 261.8% (Watch for other significant lines as well)
47Copyright © 2003 Forex Systems Research CompanyAll rights reserved worldwide 
EURUSD,MiS 1.2382 1.2384 1.2378 1.2382 34 SS A ee ST Le I ee rt eae | 1.2435
 
1.2425
Pope EPEC EEE EERE Hf gt
 
 
 
22:30 2330 030 130 230 330 4:30
 
 
EURUSD,MiS 12362 1.2304 12578 1.2582
4
H i" :
iy
4.2410
 
et
1.2405
1.2400
1.2395
 
apee yh
1.2370
1.2365
 
1.2360
1.2355
1.2350
1.2345
 
 
 
 
17100 190 19100 20.00 2100 22100 $3.00 0:00 100 200 5:00 #00 5100 6:00 7100 6100 $100 10100 11:00 1200 15100 14:00 15:00 16:00 17:00 16:00 19100 2000 21:00 2200 2300 245 S65 445
 
‘Created with Interbank FX Trader, © 2002-2003 MetaQuotes Sofware Corp.
48
Copyright © 2003 Forex Systems Research CompanyAll rights reserved worldwideWhen trading the 1234 pattern the 4 point or the 161.8% is typically the target. However if you draw allyour lines on the chart (eg. Trendlines, Fibonacci Lines and Pivot Lines) you may find a more profitabletarget.
Disclaimer
We do not guarantee that any system, including ours, will make everyone rich as there are many factorsin trading beyond our control. It is the responsibility of each and every trader to educate themselves andgain sufficient practice before live trading. You must all satisfy yourself that you understand the differentsystems and methods before using them.
The methods we have included in this book work for us but purchasers of this ebook use the informationin it entirely at their own risk. The owners of Forex Systems Research Company do not accept anyliability in respect of any loss or damage arising from any use of the information contained in this ebook.
Copyright © 2003 Forex Systems Research CompanyAll rights reserved worldwide
49Copyright © 2003 Forex Systems Research CompanyAll rights reserved worldwide<|end|>