Increase Trade Frequency

3:22 PM

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Increase Trade Frequency

Increase Trade Frequency. 

The Concept Always Remains the Same!

How Much Time Do You Have to Trade?

In this section of lessons you have learnt a combination of Forex trading strategies that make up a complete trading plan for the daily chart. The beautiful thing about this combination of strategies is that they can be applied to any time-frame you like. The level of complexity will change the faster you try and trade but the concept will remain unchanged.

With a proper understanding of this complete trading plan you could actually even trade right down to the 15 or 5 minute charts (only advised after you have proven to yourself that proper understanding). It would not be an easy task and does require developed skills, but the point is, these Forex trading strategies are adaptable to any time scale. Mastering the execution of this trading plan will be much easier for the amateur on the higher time frames though, which is why we started with the daily chart. The good news is that you can use back-testing software to trade a few years of the daily chart in just weeks, this will speed up your learning curve dramatically rather than waiting in real time for a daily candle to close. That said you should also in parallel be practicing on a demo account to work on your patience.

Once you consider yourself a master of these techniques you will need to decide how much time each day you would be able to dedicate to trading, this will determine what type of scale you should even think about trading at. The other thing you should consider at that stage is how quickly you can respond to email alerts and get to your charts, this will also play a role in deciding what time frame is best for you. Finally; never underestimate the role that trading psychology will play on your trading journey. Take any step you make slowly and steadily.

How Much Complexity Can You Handle?

Once you reach a point where you feel confident that you have mastered these techniques and you would like to increase your trade frequency, you have two real options that you can choose from.

1. You can keep your eye on as many currency pairs as you can handle.
2. You can trade the faster time frames but stick with just one or two pairs.

If you decide to just watch as many currency pairs as you can handle, you will just be doing the same thing as outlined in this course but on multiple pairs. If you decide to trade a faster time frame then you will be making things a little more complicated, you will be doing the same thing but with the need to keep your eye on more layers. No matter how fast you wish to trade it is good practice to at least remain aware of everything that is going on right through to the daily chart. This will help you keep your eye on the overall picture and important price areas of your currency pair, this is important even if you are day trading the 15 minute chart as it could effect your trade.

How Many Trades Do You Want Each Month?

This section of lessons has really only provided a rate of trading that would get you 1 trade per month per pair as an average. With the correct knowledge on how to trade counter-trend waves and mid-wave continuation that rate would be doubled. Those types of trade are beyond the scope of these lessons which were meant to introduce you to everything slowly. Now, if you were happy with 2 trades per month and traded 5 pairs then you would be looking for 8-10 trades per month. If you wanted to drop down to a 4 hour chart then you could start to look for the same amount of trades per week instead of per month, you would want to consider dropping down to 3 pairs as a maximum though and just look for 4-6 trades per week. The other option would be to look for 3-5 trades per pair per week and just watch 2 pairs but at a day trading scale where you are in and out of your trades in a matter of minutes-hours. The main point to be here is that there are options and you should be aware of them.

Discover Your Trading Personality and Find Your Balance

Ultimately we are all slightly different but this collection of Forex trading strategies create a complete trading plan that is very adaptable. This is because what you have learnt here is how to read price action plain and simple. Only time will help you understand what type of trader you are as you discover how often you can check the charts, how much patience you have, and what kind of trade frequency you expect each month or week. Essentially this whole process will determine what your trading personality is and help you find the right balance for you. One final note is that with the right tools and the right knowledge, you can day trade with just a few minutes effort here and there throughout the day. Join is in the VIP areas of this website if/when you are ready and you will discover all of that.

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Experiencing Trade 3

3:09 PM

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Forex Trading Strategies

Experiencing Trade 3.

The 3-Point Turn Trade from Start to Finish

Executing the 3-Point Turn Trade

With your understanding of all pieces of the puzzle and how they fit together, we will now take a look at the 3-point turn buy example from start to finish. All of the pieces of the puzzle now come together and help you execute this trade intelligently. Most of your skills will be needed before you even get into the trade so we will look at before, during, and after screenshots of the trade to better understand where everything goes.

The difference between this example and the previous two is that using layers made a big difference to the entry trigger, stop loss placement, and therefore risk:reward. We will continue to trade using just the single layer but now also start to consider the different options that the 2nd layer provides. With membership here at ElectroFX.com you will learn how to effectively use more than 2 layers and it’s good for you to start slow and steady.

Before You Enter the Trade

So let’s live through the 3-point turn trade. You have understood from the market structure what type of trade you are expecting, you have decided at what location that type of trade would make sense, and you now see an entry trigger at that location so you can take action. All of those details have been covered in this course and now we just need to look at the process of preparing for the trade. What do you know? and what can you do with that information?

Executing the 3-Point Turn Trade

With your understanding of all pieces of the puzzle and how they fit together, we will now take a look at the 3-point turn buy example from start to finish. All of the pieces of the puzzle now come together and help you execute this trade intelligently. Most of your skills will be needed before you even get into the trade so we will look at before, during, and after screenshots of the trade to better understand where everything goes.

The difference between this example and the previous two is that using layers made a big difference to the entry trigger, stop loss placement, and therefore risk:reward. We will continue to trade using just the single layer but now also start to consider the different options that the 2nd layer provides. With membership here at ElectroFX.com you will learn how to effectively use more than 2 layers and it’s good for you to start slow and steady.

Before You Enter the Trade

So let’s live through the 3-point turn trade. You have understood from the market structure what type of trade you are expecting, you have decided at what location that type of trade would make sense, and you now see an entry trigger at that location so you can take action. All of those details have been covered in this course and now we just need to look at the process of preparing for the trade. What do you know? and what can you do with that information?




Obstacle 1 may not have been used as a take profit but it is still the home of a significant high that creates the first resistance box. It would be shame to have that area hold and the trade turn around and head to your stop loss so this is a great place to move your stop loss to +1 pip or higher. Here at ElectroFX we call this a lock profit trigger and it has been marked in the above screenshot. This lock profit area is a great place for you to receive an email so that you can come to the chart and see ‘how’ price arrived to it. Based on how price has arrived you will be able to decide if you want to move your stop loss to +1 pip, move your stop loss to lock in more profit that just the +1, or even just take profit there.

After You Have Entered the Trade

Now that the trade has entered and price has made it to your lock profit trigger you can asses how price got there. In the case of this 3-point turn trade there was no hesitation at all on the way up and you can’t even make out a pullback. This ‘pullback and go’ concept should be a common theme for you now based on the previous examples, without it there is no information for you to use with regards to locking in some profit. The only real new information you now have is that a fresh high was made at the green swing scale of movement, therefore the current green swing low is now a permanent feature on the chart until the end of time. If that low were broken then your trade would not be going according to plan so there is no need to have your stop loss any lower then that.





Keeping in mind that your trade is now at +110 pips at this juncture, and you risked 210 pips, plus price is moving strongly towards your take profit, exiting your trade here doesn’t make much sense. The option to move your stop loss to +1 pip is still there but without the ‘pullback and go’ you don’t have much to work with. If you are able to maintain logical thought then your only real new information is that new green swing high which in turn makes the green swing low a latest permanent edition to your evidence box. Based on logical thought we will now move our stop loss to the new, and now permanent, green swing low to reduce risk safely. There is also now an alternate entry trigger to discuss.

Alternate Entry Trigger, New Lock Profit

If you think back to your lesson on market layers you will remember that this was the only trade example where layers made a big difference for entry. In fact it was a completely different location that was used for the entry trigger and the stop loss. This next screenshot shows you that entry and you should remember where the stop loss goes from the previous lessons, for now we won’t complicate these images with the extra lines. At the time of the above screenshot you have another way in to the same trade, or a place to add to your current position based on the new evidence that you can react to. Furthermore we now have our ‘pullback and go’ style area forming and a new lock profit area is established.





The alternate entry trigger aside; based on our original entry for this trade we now have had the first push up and price has pulled back. If you moved your stop loss to +1 at the previous juncture then this would be the end of your trade and you would have +1. There would be no shame in that and it would have just been an overly cautious move, you would just go back to waiting for the next setup. If you were able to remain objective though; the new position for your stop loss is where you see it in the above screenshot. If price heads on up from here then that will be your ‘pullback and go’ and this new lock profit area will be the next logical place for you to assess your trade. The fact that the first push up broke the previous green high is evidence that suggests the ‘pullback and go’ will push for a higher high than it just made.

The Next Juncture of the Trade

In this next image you can see that price has now come back to the previous high that was made on the first push up. You can now assess once again how price got there and make your decisions. Price action is very much in your favor as this next run up breaks the high of the first run, there is no reason not to expect this trade to reach your original take profit. The only real action to take here is to move your stop loss closer.





A this stage of the trade you are at +150 pips, still less than you risked so unless price has a hard time getting there, and was being rejected at the exact same location as that initial rejection, there is no reason to exit. With this trade price made a nice direct run on this next push up and has broken the high made by the initial push up. It should now be clear sailing up to your decided take profit and you now have an evidence based move to make with your stop loss. Due to the current structure that you see in the image above, this new low on the faster layer, if broken, would indicate that momentum is shifting. There would be no reason to lose any more than the small amount of this new stop loss.

Trade Complete – Wait for the Next

In this next screenshot price has made it to your take profit. A technically sound trade that was executed intelligently with maximum probability in your favor every step of the way. Even though this trade had a duration of 7 days, it could have been executed safely from start to finish with just a few minutes of your time using the ElectroFX.com’s VIP tools. These tools will execute, manage, and email you at the important decisive moments.




There was a fair amount of new information in this example when compared to the previous examples, make sure you understand it all correctly. If you have any questions then just grab free membership here at ElectroFX.com and you will gain access to our Forums. These forums are completely focused on these Forex trading strategies that have been covered in these lessons.

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Experiencing Trade 2

2:39 PM

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Forex Trading Strategies

Experiencing Trade 2.

The Double Top Trade from Start to Finish

Executing the Double Top Trade

With your understanding of all pieces of the puzzle and how they fit together, we will now take a look at the double top sell example from start to finish. All of the pieces of the puzzle now come together and help you execute this trade intelligently. Most of your skills will be needed before you even get into the trade so we will look at before, during, and after screenshots of the trade to better understand where everything goes.

Before You Enter the Trade

So let’s live through the double top trade. You have understood from the market structure what type of trade you are expecting, you have decided at what location that type of trade would make sense, and you now see an entry trigger at that location so you can take action. All of those details have been covered in this course and now we just need to look at the process of preparing for the trade. What do you know? and what can you do with that information?





In the above screenshot this trade has not yet triggered but you know what your entry price will be. You also know what your stop loss price will be and so therefore you know your risk. In this example the risk on the trade if you were to take it is 125 pips. When it comes to the take profit the next 2 obstacles in the trades path are obvious, due to the nature of this type of trade you could expect the lower low but it would be safer not to. The momentum behind that trade is completely horizontal so no momentum lines have been placed. For the sake of this example we will play it safe and shoot for a slightly higher low ignoring all the spikes that created obstacle 1. So now we know the reward on the trade which in this example is 200 pips. That gives you a risk:reward of just over 1:1½ which is very acceptable.

Placing a Safety Net

You now have a trade that is setting up at a good location with good structure behind it, you have an entry trigger that has presented itself, and the risk:reward makes the trade worth it. At this stage that you see in the screenshot below your stop loss price has more than one use. Since you have not yet entered the trade then if price came up and passed your stop loss your trade would be cancelled, after all, your chosen location would be broken at that point. If price heads down however and triggers your entry price then the stop loss will be as the name suggests. There is also a safety net that can be decided upon at this juncture.




Obstacle 1 has been used as a take profit but there are several indecision candles that create its resistance box. It would be shame to almost make it to your take profit then have the trade turn around and head to your stop loss, so this is a great place to move your stop loss to +1 pip or better. Here at ElectroFX we call this a lock profit trigger and it has been marked in the above screenshot. This lock profit area is a great place for you to receive an email so that you can come to the chart and see ‘how’ price arrived to it. Based on how price has arrived you will be able to decide if you want to move your stop loss to +1 pip, move your stop loss to lock in more profit that just the +1, or even just take profit there.

After You Have Entered the Trade

Now that the trade has entered and price has made it to your lock profit trigger you can asses how price got there. In the case of this double top trade it was quite one directional but on the way down you can clearly make out a slight hesitation at those two red indecision candles. This ‘pullback and go’ style area is a great place to put your stop loss instead of just moving it to +1 pip. If price comes were to break that area, things may very well be shifting the wrong way.




Keeping in mind that you are already at +150 pips at this juncture, and you only risked 125 pips, if price had displayed a hard time getting there you would have the option to exit. With this trade though price made a nice relatively direct run as it approaches take profit, it has also just broken the lows of those two red indecision candles so there appears to be nothing to worry about. It should be clear sailing down to your decided take profit.

Trade Complete – Wait for the Next

In this next screenshot price has made it to your take profit. A technically sound trade that was executed intelligently with maximum probability in your favor every step of the way. Even though this trade had a duration of 5 days, it could have been executed safely from start to finish with just a few minutes of your time using the ElectroFX.com’s VIP tools. These tools will execute, manage, and email you at the important decisive moments. 

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Experiencing Trade 1

8:16 AM

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Forex Trading Strategies

Experiencing Trade 1.

The Trend Continuation Trade from Start to Finish

Executing the Trend Continuation Trade

Now that you have all of the pieces of the puzzle and understand how they fit together, we will now take a look at the trend continuation buy example from start to finish. All of the pieces of the puzzle now come together and help you execute this trade intelligently. Most of your skills will be needed before you even get into the trade so we will look at before, during, and after screenshots of the trade to better understand where everything goes.

Before You Enter the Trade

So let’s live through the trend continuation trade. You have understood from the market structure what type of trade you are expecting, you have decided at what location that type of trade would make sense, and you now see an entry trigger at that location so you can take action. All of those details have been covered in this course and now we just need to look at the process of preparing for the trade. What do you know? and what can you do with that information?






In the above screenshot this trade has not yet triggered but you know what your entry price will be. You also know what your stop loss price will be and so therefore you know your risk. In this example the risk on the trade if you were to take it is 115 pips. When it comes to the take profit the next 2 obstacles in the trades path are obvious, due to the nature of this type of trade you can expect the higher high, and the momentum behind that trade confirms that you could easily shoot for obstacle 2 if you wanted to. For the sake of this example we will play it safe and shoot bang in the middle of obstacle’s 1 and 2. So now we know the reward on the trade which in this example is 260 pips. That gives you a risk:reward of 1:2¼ which is very acceptable.

Placing a Safety Net

You now have a trade that is setting up at a good location with good structure behind it, you have an entry trigger that has presented itself, and the risk:reward makes the trade worth it. At this stage that you see in the screenshot below your stop loss price has more than one use. Since you have not yet entered the trade then if price came down and passed your stop loss your trade would be cancelled, after all, your chosen location would be broken at that point. If price heads up however and triggers your entry price then the stop loss will be as the name suggests. There is also a safety net that can be decided upon at this juncture.





Obstacle 1 may not have been used as a take profit but it is still the home of 2 significant highs that create its resistance box. It would be shame to have that area hold and the trade turn around and head to your stop loss so this is a great place to move your stop loss to +1 pip or higher. Here at ElectroFX we call this a lock profit trigger and it has been marked in the above screenshot. This lock profit area is a great place for you to receive an email so that you can come to the chart and see ‘how’ price arrived to it. Based on how price has arrived you will be able to decide if you want to move your stop loss to +1 pip, move your stop loss to lock in more profit that just the +1, or even just take profit there.

After You Have Entered the Trade

Now that the trade has entered and price has made it to your lock profit trigger you can asses how price got there. In the case of this trend continuation trade there was not much hesitation but on the way up you can clearly make out a pullback that started with that red candle. This ‘pullback and go’ is a great place to put your stop loss instead of just moving it to +1 pip. If price comes down an breaks that area then things may very well be shifting the wrong way.





Keeping in mind that you are already at +180 pips at this juncture, and you only risked 115 pips, if price had displayed a hard time getting there you would have the option to exit. With this trade though price made a nice direct run as it passes that first high, as long as it doesn’t get caught up before breaking this resistance box there is nothing to worry about. It will be clear sailing up to your decided take profit.

Trade Complete – Wait for the Next

In this next screenshot price has made it to your take profit. A technically sound trade that was executed intelligently with maximum probability in your favor every step of the way. Even though this trade had a duration of 8-9 days, it could have been executed safely from start to finish with just a few minutes of your time using the ElectroFX.com’s VIP tools. These tools will execute, manage, and email you at the important decisive moments.

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Set and Forget Psychology

7:50 AM

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Set and Forget Psychology

Set and Forget Psychology. 

Make Your Trading Life Easier Wherever You Can!

Avoid Mistakes With the Right Tools

Experienced traders will all agree that the hardest part about successful trading is mastering your trading psychology. Everything that you have learnt so far may seem complicated to you at first but it does not continue to be that way. Once you have a solid understanding of your complete trading plan it is just a case of following your rules in a rinse and repeat fashion. As easy at that sounds, and as easy as that should be, unfortunately it is not! You will be amazed at how many stupid things you will find yourself doing, to the point where you tell yourself that you shouldn’t do something, then do it anyway. This phase of your trading journey will be a slightly different, yet similar, personal journey for everyone. You can make it as hard or as easy as you want though if you find and use the correct trading tools.

With VIP membership here at ElectroFX.com we have created some amazing tools that automate as much as is safely possible. It doesn’t matter if you use these tools or other tools that you find elsewhere, what matters is that they serve their purpose and that you know what their purpose is.

Think About the Mechanics of Your Trading Plan

So far here at ElectroFX.com you have been shown everything you need to create your own complete trading plan. You may decide to use everything exactly as it has been outlined, or you may decide to use some of what you have learnt here combined with knowledge you have obtained elsewhere. That part is up to you but what you need to now investigate is which parts of your plan are completely mechanical, and which parts need you to be present for a decision.

If we work with what you have been taught here at ElectroFX.com then your main decision is to actually pick your trade. After that point there is little for you to do other than let the trade run its course and check in every now and then. Without the correct tools this is where you may find yourself interfering and messing up perfectly good trades. What you need are tools that will allow you to set and forget your trade but receive emails at any important juncture that may require a decision. The best way for you to begin to understand that is to first see it in action.

Helping You Understand Further

In order to continue on with your understanding of the above we will use the style of trading that is taught here at ElectroFX.com, and we will use the three examples that we have been using throughout this course. In the next few lessons each trade will be demonstrated from start to finish exactly as they would have presented in real time. You will now get to live these trades just as you would have if you took them when they happened. You will also be able to see where and how the correct tools could help remove you from the equation as much as possible.

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Applying Risk Reward

7:44 AM

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Making Money With Forex

Applying Risk Reward.

Understand the Power of the Numbers Game!

Is Risk:Reward the Holy Grail of Strategies?

If you give risk:reward the thought that it deserves you will soon understand just how powerful of a role it can play. You will quickly understand how, all by itself, it could make or break you as a trader. In this lesson we will take a look at the numbers game behind risk:reward but before we do that it is also important to quickly review the power of what you have learnt so far.

If you are able to master your trading psychology and properly use the price action confluence of a solid location, chart patterns, market structure, entry trigger and market layers, your win rate will very easily be 70% or higher. There are VIP members here at ElectroFX.com who go months without a loss but this is not something you will be able to achieve overnight. You won’t know your win/loss ratio until you have been trading for a while but you will be able to determine it before you start trading live. Let’s take a look at how applying a risk:reward strategy to your trading plan can help you succeed no matter what your win/loss ratio is, this may just be the holy grail piece of your puzzle.

Use Simple Math to Your Advantage

Don’t worry if maths is not your strong point, there is nothing complicated about this. Let’s assume that you will always risk 2% of your account on every trade that you take. As outlined in the stop loss lesson; you can avoid the need to worry about different size stop loss’s on each trade by using a percentage risk. Not every trade is going to have the same size stop loss so this is a great approach if you want to eliminate the need to think about it.

In this following table we will base everything upon having taken 10 trades using different risk:reward ratio’s each time. Each example results in the same 4% profit for your trading account, yet each example has a different amount of trades won vs lost. 1:1 should always be considered as your minimum risk:reward requirement for any single trade. A 1:5 risk:reward trade is not something you will find very often but it does serve it’s purpose here as an example.

For those of you who prefer to view everything in pips instead of percentages here is another table with the exact same information. If you had a plan that allowed you to always limit your stop loss to the exact same amount of pips every time then you could look at it this way. Based on taking 10 trades this is how it would all play out for the same total profit.



The fact is that if you trade using the evidence based approach outlined here at ElectroFX.com then you do not get to decide what the risk:reward ratio on a trade will be. The strategies outlined so far will however allow you to understand what the risk:reward ratio on any given trade is, before you enter. In turn this means that you can decide what the minimum risk:reward ratio you will accept is going to be. If the trade setup that you are seeing does not meet that minimum then you just need to sit out and wait for the next one.

A Very Conservative Calculation

Earlier on in this lesson you were told that a 70% win rate is very realistic with the approach that has been outlined in these lessons. A higher win rate than that is very possible so let’s assume a lower win rate to be conservative. Based on only ever winning 60% of your trades here is another look at those same risk:reward ratios to compare the outcomes.

By always winning 60% of the trades that you attempt you can see the mathematical advantaged that a risk:reward strategy can provide. It’s not complicated, but it is powerful, and it should play a part in your complete trading plan.

Finding Your Risk:Reward Balance

Flipping a coin would give you a 50% chance of getting a trade correct. The whole purpose of you studying right now is to top the scales further in your favor than that. Knowing that it is realistic to achieve a 70% win rate, that some traders can go long periods of time without a loss, and that flipping a coin gives you a 50% chance, why not assume that with the correct knowledge you can achieve a 60% win rate. Based on that 60% win rate; if you have a minimum 1:1 risk:reward ratio as a rule then you are keeping that small advantage knowledge has given you. That 1:1 is just a minimum though and you will also get the odd 1:2 and even 1:3 risk:reward trade, pushing things even further in your favor.

If you progress along with your trading and notice that you are only winning 50% of your trades, make a small adjustment. Your minimum risk:reward rule on any one trade could be changed to 1:1½ or 1:2. That would make winning 50% of your trades profitable and you could always adjust it again later on once your win/loss rate improves.

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Take Profit Projection

6:40 AM

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Take Profit Projection.

Take Profit Projection.

Determining the Probable Future!

Predict the Future Based on the Past

You need a proper strategy for judging take profit and this piece of the puzzle basically means predicting the future. Fortunately the Forex market is a creature of habit and history tend to repeat itself. Furthermore, historical price movement allows you to assume the most probable future based on your trade being correct. This is all you can do as a trader, assume that you are correct and work with the most probable outcomes based on whatever proof you have at hand. In the previous lesson you were shown how to use a stop loss in case you are incorrect so the safety net is in place. Let’s now take a look at all of the different pieces of usable information that you will have access to before you enter any trade, and how you can use that information to your advantage.

Trend Continuation Buy Targets

Getting back to our first example we have the trend continuation trade. Whenever you enter a trade you will do so because you believe that you are correct, otherwise why would you be entering? So with that in mind there are two simple techniques that you can use to help judge where your trade will most probably reach. The first is as simple as using support & resistance and supply & demand areas which you can look at as obstacles. The second is to gauge the momentum behind your trade using the latest highs and lows that are being made.






When it comes to the horizontal obstacles in your trades path, the most conservative target is always going to be obstacle 1 and a slightly more ambitious target is obstacle 2. Taking the middle road and shooting bang smack in the middle of them both is also a very solid option. If you then apply momentum you can see make sure that all three of those options appear to be likely. If you target the edge of the predictive momentum you will be pushing the most ambitious and greedy target and it is not advised. It may have worked out in this particular trade but what you want is to be consistent rather than get the odd big win.

In order to help you understand how to plot momentum there is an a, b, and c marked on the above screenshot at the highs and lows that would be used. These are the latest pieces of information that you can use. Points a and b are permanent highs and lows that are indisputable at the time of your trade entry, point c is not yet a confirmed swing low at the time of your entry and it is your trade being correct that will make it one. Point c gets used because you are assuming that you are correct, remember? why else would you be entering the trade in the first place!

Double Top Sell Targets

Our next example is the double top which presents a slightly different scenario. Due to the nature of this pattern there is no real momentum and obstacle 2 is the momentum line itself. Obstacle 1 takes in to account all of those spikes on the candles that created the previous low (point b) and safely targets above them.






The conservative target here is obstacle 1 just as it was in the previous example, this whole concept is rinse and repeat so that part never changes. The more ambitious target is obstacle 2 which is also the momentum line and a safe play is right bang in the middle of it all. In the previous example you were following higher highs and higher lows so you could expect more of the same. In this example we have a double top to fight the uptrend so although you can expect a slightly lower low it is much safer to assume a slightly higher low.

Momentum was plotted the same as before, points a and b were permanent fixtures at the time of your trade but point c was not. At the time you would be taking this trade point c would be a prediction based on you being correct and that is why it is used.

3-Point Turn Buy Targets

Our last example is the 3-point turn which is also the break of the double top highs and back to following trend. A higher high can be expected and obstacle 2 in this trade is actually off of the screen. Obstacle 2 is exactly where the arrow indicates and if you want to take a look you will need to bring up a GBP/USD daily chart and look at 2011.08.23 to see it.






In this example you can see just how greedy and unsuccessful targeting the momentum line would have been. Try to only use the momentum line to gauge how probable obstacle 2 is vs obstacle 1, or vs the middle ground of the two. The momentum line was plotted the same way using permanent points a and b along with the assumed point c like before.

You Now Know Your Potential Reward Before Entering

You are now at a powerful position where you know how to intelligently choose your trades based on proof, and also how to judge your stop loss (risk) and your take profit (reward). In the next lesson we will look at just how important understanding risk vs reward will be for your trading career.

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