A Basic Trading System (BTS)

http://img442.imageshack.us/img442/6012/gb2wy6.jpg

It's official. Let's hope for the best

Our risk is about 35 Pips on this trade. We stand to win much more.

http://img514.imageshack.us/img514/6460/29204115ha7.jpg

First of all thank you for this very interesting trading method and for your general help. I certainly need all the help I can get!!!
I have a question re Divergence. Should divergence on any time frame be taken into account or should I only look for a divergence on the time frame I am trading. What happens when 2 different time frames give opposite divergence signals.

There are some Divergence indicators:
http://codebase.mql4.com/1115
http://codebase.mql4.com/1040

http://img230.imageshack.us/img230/5...nce1gl2.th.gif

Hey effi,
I was wondering where you got your SL from.The setup candle on my chart (MT4 is only 17 pips,any reason for the change?

30 Pips SL here.

R/W 1:1, 1:2, Take Profit, Trail

Thats all from me for today, i'm off to bed.

http://img245.imageshack.us/img245/8111/usdchf2ku1.jpg

Ooohh... i knew someone was gonna ask sooner or later damnit

There is a prior high there, so i wanted to give it a little more breathing space. In this case i don't mind increasing the stop because the potential of the movement is pretty big in comparison.

The USD/CHF trade i just posted has a normal SL : )

Thanx.

Regards,
E. Lang

Effi, just want to thank you for the videos, I appreciate them a lot.

Effi, I'm sorry, I don't get why you went short on that trade. Please see my attached chart.

You entered on the the break down of the candle in the red box. This candle was the first to have it's low broken since the up leg, it thus appears to me that you would have taken a trade on any of the candles in the blue box if they were broken...is this correct?

When I was looking for opportunity earlier today I thought that looking for a long trade would be what we are looking for atm on a possible retrace, since there has not been one yet on this leg? I was actually waiting for the close of the current 4HR candle (green box) to make my decision, preferably long...LOL.

Anyway your comments will be appreciated.

I think these repaint, unfortunately. Or they lag pretty bad.

Hello Oromis,

No probs at all, more are to come.

You're right in saying that you would have taken a short on a break of any of those candles, in most situations, yes. However this one is a little tricky, we didn't have a change of polarity from Long to Short until a divergence was evident, so either we continue taking Longs till we are stopped out or if we manage to spot the Divergence in time we start taking shorts immediately. This answers your question, because if you note on the candles in the blue box, Stochastics had an under-developed peak to use in guaging the divergence.

I can understand why you would have been waiting for a long position considering we really haven't had a retracement on this upmove yet, but it is not always necessary. More so in this scenario because the underlying price psychology has now changed and we are trading between a defined downwards channel, most of the moves will be with few corrections if none.

The reason for this is because the price targets are now very clear; top of the channel and bottom of the channel. Thusly the lack of the commonly appearing profit taking corrections can be attributed directly to the fact that more traders in the movement will be taking profit at the same target.

I've posted a chart below here to define the channel. Talk about getting in at the top eh?

Regards,
E. Lang

http://img401.imageshack.us/img401/6...idationvo8.jpg

Anyways, both trades are up and running fine now.

The analysis can take a short period of time, the patience required after execution can be excruciating

Regards,
E. Lang

Well, very nice trade and prediction on your side...for me, I need to go read everything again and try to process it again.

Thanks for your reply.

My Pleasure.

Let me know if you need any additional assistance.

Effi

http://img178.imageshack.us/img178/5272/slks0.jpg


A lot of trades will fail because the price will retrace after the entry has been executed. This is due to the fact that like yourself other traders are taking partial profits at 1:1.

Moving your SL to b/e prematurely, can cost you the remainder of the trade.

I normally wait for a retracement to complete first, before moving to b/e.

B/E does not necessarily have to be right at the correction, it could be above, but the limitation provided by the corrections peak will ensure that the price will have a hard time moving back in that direction to stop you out of the trade on your remaining lot.

None the less, if you should get stopped out at B/E with your second lot, then it's also ok, because you have a new setup at the retracement.

Regards,
E. Lang

PS: Both trades today have been great.

We've had 5 successful trades based on the system rules so far.

GBP/USD:
50%: +2.5%, +1.0%
50%: +0.0%, +0.0%

GBP/JPY:
50%: +2.5%, +1.0%
50%: +0.0%, +0.0%

AUD/JPY:
50%: +2.5%, +1.0%
50%: +0.0%, +0.0%

GBP/USD:
50%: +2.5%, +1.0%
50%: +0.0%, +0.0%

USD/CHF:
50%: +2.5%, +1.0%
50%: +0.0%, +0.0%

Overall secured net gain: +12.5% based on a 5% per trade risk.
Overall secured net gain: +5.00% based on a 2% per trade risk.

Another long trade on the Daily Chart

http://img180.imageshack.us/img180/8470/gyhj3.jpg

Hey Effi!

Thanks for the elaboration on the TP! Great stuff

Will watch de vid now!

Ciao
Matt

http://img442.imageshack.us/img442/1156/tpbw3.jpg

Here is a real world example of what i am talking about.

As you can see here, if you were quick to move your SL to B/E after taking out half your lots at 1:1, you would have missed out on the whole trade.

Note how, traders commonly take profit at 1:1. This is no coincidence and is something i emphasize on a lot. We are all people trading here. Every time a professional trader enters a position, they have their SL and TP set. Everyone wants minimum 1:1.

If you have a good system (This is a good system) - your determined entry points, should be able to align with that of the market, allowing you to pinpoint your exits or profit taking levels with almost surgical precision.

Once people take out partial profits and the top of the correction starts forming and a ceiling is created, new sellers who missed the initial short will enter because they now have a stable resistance to place their SL above. The pressure from these new sellers and the new positions being added by the initial short traders (who've taken partial profits) on the peaks and dips creates the new impulsive movement.

Regards,
E. Lang

Effilang

Where do you find the time? Keep up the good work.....

The new highs were rejected with a bearish divergence on H1.

We will be shorting on H4.

The long summary is:

USD/CHF:
50%: +2.5%, +1.0%
50%: +0.0%, +0.0% ( I actually closed with +10, but just to keep it tidy)

http://img238.imageshack.us/img238/9...hfshorthe3.jpg