Ken's Continuing Successes with EO's system

I hate to keep talking about Fib levels. We really don't need them . But I can't seem to get across what makes a good 35/50 and 62 ema trade without them. Plus they are usefull when analysising possible entry levels on wicks of daily and 4 hr candles. But as seen here if price action is forming a pattern that looks like a check mark and price hasn't been near the levels in a while the chance they are good is greatlly improved.

For a 1 touch trade the best 62 ema trades are simply ones where price has not visited it in a couple of days, for a trade where price has been through the 62 recently look at the PA on the 15min chart around the 248 ema(the 62ema equivalent on the 15 min chart) just like you would with a s/r level. For me fibs just complicate the whole thing and are yet another thing to throw on the chart that cause you to think about the trade even more resulting in you missing the trade you have just agonized over.

Thanks for the above posts, Ken. Very helpful. For my weekend homework I'm going to put the MA's on a GBP/USD 15M, 1H, 4H and Daily chart one at a time and see if I can figure out what they are for. There's a lot of conversation around the 35/50 and 62. As to the rest of them, I've no idea.

Enjoy your weekend!

I have been thinking over the last few days how to explain to people to approach this style of trading. Because as we all know everyone has reached this thread by different paths some have been trading a long time using all the time honored basic tools and analysis others are very much in tune with software driven tools that pick all their levels and areas of interest. Others may have none of these skills at all and just look at a chart as a alien type of language not understanding what they are seeing at all.

First we must understand the difference between trading tools and Indicators. Tools help us to find and see area we my be interested in entering a trade. Manageing a trade and closing a trade. It is not affected by price. It does not move when price moves or change color or anything else it is static alway fixed where we place it. To me these are the best analytical tools as we can use them to make choices by where we place the tools.

But using them to some seems to be diffucult or alien. That can be just from lack of understanding or use. The only thing any tool does is help to pin point a area of interest. A trendline , a channel 2 trendlines and S/R lines are all the same thing.

In the Picture below. The black zig zag line represents the price action. The blue lines are S/R and will become PPA. It is easy to see in this perfect swing. The trendlines and channels are nothing but lines touching the S/R levels on the Price Action. The Orange circled areas would be Fib levels. The purple circles Fib extsentions. But the point I am trying to make is that they are all using one thing Price Action or S/R areas.

It doesn't matter what you use to see the unfolding of price action. It is just learning to see it. Like Fibs I don't leave them on my chart plus I can see those levels pretty well without the tool now day. But if it helps soemone else to see which S/R level maybe the next possiblity then it is usefull. If it just confuses you don't use it. Most tools are like that put them on find the best S/R area that is close to the best Trading level. Then maybe use a trendline or a MA. The more tools and indicators that agree to a level the stronger price will react at that level.

Moving Averages or MA's are indicators by description. Because when price moves they move. Price goes up the MA's move up and so forth. It is a little confusing because we are always saying that we are using them just as Support and Resistance areas . Which for the most part we do. But in the Intraday worksheet from EO he does make refrence to the direction they are pointing ina ranging market to help choose a direction.

But for our purpose they are mainlly again just used as a tool to help locate the best possible areas to enter trades. Like any S/R line it can be a area where price turns . So we use them to decide if we are looking to go long or short. And it's strength is determined by any other confirmations we may be getting from other tools as well.

This next pictuse is the GBP/USD. 15 Min on Top. 1 Hr. in middle then the 4 Hr. On all three charts the Main MA is The Green Line. AS we discussed in the last post we are using the MA's mainly as S/R areas. But they are floating not static (They Move) Buat as we can see clearly looking at these three charts price is acting like it is hitting a Support or Resistance line when it hits them. The strength of the lines though comes from being able to see Price Action at the same area as the MA is at. Again the easyist is just S/R lines. But fib levels and trend lines any tool that helps you works.

Also notice that as the time increases on the charts that the price tends to stay on one side of our MA. hasn't gotten above the 50 on the 4 HR. In a while. So what would that tell you . If we see a short signal on a 15 min or 1 Hr and we are at the MA on the 4 HR it is a good bet that it would hold again. If not there is no doubt where to place your stop.

You can also start to see when price is showing a possiblity of turning back up. Again looking at the 4 Hr. we see that the price and the Major
MA have started to get closer together the first signs of a change. Also the minor MA's have been getting Broken , ( closes above the 5 and 10)

So when we use this Information together we can the edge we are always looking for. Plus when we can't get a clear idea about what is going on . Look higher till it does show itself. If price does break that 4 Hr we would then look to our Daily to seen where it might turn back.

Other than the 1 and 5 O'clock trades the 5,10 and 21 ma's on the 15 or best used to manage a trade. As each gets broken it is telling us that our price on that chart is turning back. Wiether we decide to close the whole trade or not migt depend on how the 1 Hr and 4 HR or looking . If they are showing a rnge bound market we could decide to use the faster chart as our guid but if it was a steady drop like the left of that 4 hr we might stay in.

So in summary: If I had to give a direction to use this system . The only thing I can come up with that appplies to everything would be the S/R areas. I would suggest that learning to place those lines on your chart as close as you can would be the first goal.

Then watch how the price unfolds around those lines. Some basic candlestick education wouldn't hurt. We have some good sheest on those in the PDF. The same signal on a 1 Hr is normally more important than a 15 MIN and so on up the charts. If you see a signal and take atrade but it isn't at a level then it moves against you and you get another signal at the next area . You were just to early try again. That happen to me thursday afternoon. I was trying to get the high on the gbp to drift down into Asia. Had a pin on the 1 hr. But my next line was about 20 pips higher. at 1.5707. I was scaling in and out as I didn't like the trade it had not started down like I felt it should. It finally did make a push through tha level and formed another pin on the 1 HR. which was the top. Wasn't a great trade. But was the better entry area.

So again the S/R level proved to be the most important thing. You shouldn't worry about taking every trade. There are to many entries within this sytem to be expert with right away. You need to go over your charts everyday after trading and mark those you can see. Then in time you will start to see how price action leads into those trades. Then one day you will say I know this it is fixing to turn here at my level. Then you have started to see. But pick one or two tops and get those right first then add to it. Some people love the 1 and 5 O'clock trades others can't ever see those.

Also while you are trying to learn to see the entries in real time start looking at how you would manage that trade you missed. Just because your not in a trade doesn't mean you can't learn. If your just sitting there hoping one day a lightning bolt hits you it may never happen.

So disect this Forex trading. Learn what the candles really mean. Why one with a small nib is better than not. Why sometimes a group of wicks doesn't mean it will turn and is just testing a area until it breaks. These are all learnable skills some learn by just trading and over great amounts of time but if you apply basic learning skills like anything else you can cut down the time required.

But start marking those S/R areas if your not good at picking them out. EO I am sure is still mentioning them so write them down put it on your chart and then you can look to your left and see where they came from.

Learn Price Action , The great thing about this is that you have a lot of history to look at. you can go back and see what Price Action is. How candles start to form before a trade happens. and with enough looking you will start to see those in real time. Remember that a canlde hasn't formed until it closes That doesn't mean that we always wait for that the 62 ema touch trade comes into mind. But you will see that a good signal on the 15 min leads into a signal on the 1 HR . so it can give you the confidence to stay int the trade.

I hope this helps some. It is hard at times to put in writing what I am thinking . Why it is important for people to ask questions.. so A better explannation can be given.

Hope you are all having a great weekend.. Ken

The minor MA's are best used to manage the trades as you can see below they are letting us know that the price is tryng to turn around. It does this by closing above the lines (Circled Areas) We still have to decide what we will do close all the way or partial. That is where looking at the higher time frame charts can help us decide. This could be just a small retrace and the major move is just getting started.

But it has been said time and again when trading towards the Major Ma's taking profits at the ma's is the idea. some may decice to wait to see if the main MA's hold. THat all is dependent on your trading style. If you are basiclly just using the 15 MIn for good entries but basiclly a longer term trader you may not even look at a 15 Min chart once your in a trade. If your a scalper you could close it all when it closed above the 5 ema first circle. AS we gorw as trader we tend to allow our trades a bit mnore freedom to become bigger trades. But in the beggining as has been said no one went broke taking profits.

Hope between this and the other post might understand a bit better if not just ask. Ken

I agree if it takes your eye away from what you already know it is not of any value. I tend to use them more for a overview of a larger move. As on the smaller charts they are obvious to me. I also don't leave them on. Just find the nearest area of interest and take note of it ,then remove the tool. Normally at begining of trading.. Because we have enough lines already as you said..


Hope your trading is going well. Ken

After 2 month learning of this strategy, I find it is better to use some other tools (such as Fibo) to confirm for trading 15m 35/50 mas and 1h62ema. you can see so many failed 1h62ema trading from the following picture if we blindly trade 1h62ema. So we need theose tools provided by KEN such as Fibo, PA, MA and S/R.
Thanks again, KEN, for all your hard work to make the strategy becoming perfect.

AS you can see below with just a basic understanding of Price Action and known levels (S/R) Then some simple candlestick entries. We can achieve some great results.. The levels are our guide to when a signal is worth the risk. So many are always wondering why this one or that one didn't workout. Normally is nothing more than price not being at a good level yet. Being to early or late. even if price does continue threw a area it normally gives ample chances to get out with none or a little loss.

You have to notice when price isn't turning and just continues to test a area unil it breaks. Like at 1.5707 on that leg down.


When the MA's are added to the chart you will see the 62 ema trade and the retest of that as well as the 200 sma . which supportd the break of the 1.5707 line.

Ken

Hey Ken
I have not had much time over the past month to trade so I need to reread the PDF again....But here is my question. Watching the EUR/JPY right now 7:50pm EST
The daily is approaching the 5ma, (123.36)
The 4h 50 ma (123.51)
The 1h 62ma (123.66)
The 15 min 200 ma (123.69)
There has been a big drop and it bounced back up from here about 8 hours ago. Had I been in the short I would be looking to take profit right now. But since I just got on and it looks like a long position will be coming up soon. I am still confused on if I should take the 1h 62 ma trade long or in this situation since it has gone below the 62....do I go short when it retraces back to the 1h 62?
Sorry I havent learned to post charts on this forum yet.
Thanks
Jack

The 62 ema trade didn't yeild many pips on that one but was a quick 30 with low risk. The exact same trade on the Eur/jpy yielded 80 pips. But the best 62 ema trades would have sent price back past the top of the swings and the same distance from the entry to the top. So if it is 80 pips from the top down to the 62 ema and it broke past the top it could have been worh 160 or more. Those are what we really want. But if you traded both pairs and took 30 on gbp and 80 on e/j that is a good pay day.

I was going to say I would prefer a long. It is at a very questionable area I would wait to see if it breaks the low or a signal on the one Hr to turn it.
It is closing below the Ma's on the one hour . Care should be used..Not in a clear area.

Anybody can recomend a good software to draw the S/R ?

Hi, Ken and all
Recently I tried to look at high time frame, But I always have those following confusion. Can anybody give me some suggestions?
1) Normally 1h, 4h and 1d charts are conflicting, how to handle this?
2) How to dicide that 1h, 4h and 1d are supporting bull or bear?
3) How did you handle the current candlestick (which has not closed)?

I use GFT they don't have software for this.. Lots out there for MT4 though. Sorry Ken

PS why trust a machine anyway ?

Lets Look at this for a moment. Here we have our 3 GBP/USD charts 15 min.,1 hr. and 4 Hr.

I understand what your asking . There is not any anwser you will like. Sometimes it requires nothing more than a leap of faith. ( you have to trust what you see ) Here I have all the charts no S/R line no MA No trend line. Nothing to help . All we have is Price Action. How the price is acting at this area right now at this time.

The three arrows Green , White and Orange. They are all marking a point in time. On each chart. Showing when the same time is on each chart. That way you can tell when and what each chart may have looked like. The arrow is marking the open of the candle on the lower time charts . The Green is where the 1 Hr. Opened and lasted the same distance between the green and the white candle on the 15 min chart.

I am showing on the 4 Hr how far down that wick the body would have extended at each point in time. you can see at 5:00 the green candle the red body would have almost been at the very bottom a very bearish candle. At 6:00 the white candle it had started to retrace a bit but was still bearish almost equal wicks.So looking at that 4 Hour chart would you say go long at the green arrow ? Of course not.

So looking at the 1 Hr chart. The 5:00 green arrow the candle just opened and came down a few pips and started up. But could continue short at anytime. The candle never went long enough to even break our trading zone levels. So would you enter long on this candle ? Of course not.

Now lets look at the 15 Min chart. The circled candle is actually a news candle. But doesn't mattter for our example.But it can show you that even after news we can have trades with little risk. So what are we looking at and how is this low risk? I had mentioned a while back instead of looking for great entries maybe look for great p[laces to put a stop then try and enter as close to it as possible in that way you limit your risk to as tight as possible. Our stop on this trade would be at the bottom of that news candle plus a few pips maybe 5 max. The reason it was severlly rejected at that spot the next candle tries to make another attempt down and it fials to make it any lower matter of fact it is in our trading zone of that previous candle. But we aren't using that here. Just say it was rejected a second time . I happened to enter this trade on this candle when it started back up from the low.

The most logical place to enter would be after the green arrow candle as it is a IB and Green showing a Bullish signal. The stop would still be below the pin over 35 pips away. But I wanted to be close to my stop was less than 15 pips. A entry on the open of the green candle once price started back up would not be unrealaistic also giving us a tight stop.

The same IB Harami entry is shown on all time frames after the 15 min entry. The white candle on the 1 HR is the entry candle. stop again about 35 not to bad. But if your waiting for the 4 HR confirmation entry candle after the Orange stop over 60 pips. I can't afford stops like that myself plus half the 100 pip trade is gone by then .
So how does this help us to enter trades against the different trends of different time charts ? First the 15 min is always going to be the first to show the change has to be this way. You look at the 4 Hr and Daily charts it is still a very strong Downtrend. But it had a move over 200 pips the previous night so a 100 pip retrace is not uncommon. But it could go all the way back to the top. We don't know but price will tell us.

So price was heading down. Had consolidated for a while something made price shoot down
(news). We see price shoot right back up REJECTION. This is our signal to pay attention. We now want to see what happens. and Price Action takes effect. We could draw our line across from the bottom of the wick on that pin and see that nothing crosses it. But we see 45 minutes later it still has not been breached. So we with our stop in mind we take the trade.

These can happen at any S/R area or trend line or Channel. But S/R is favored. But the process is the same. Price stops progressing it gets rejected following candles fail to break through and we get a signal. Your precentage of failures and successes will be more based on your ability to know your at a level of interest than anything else. If price is going side ways you have to wait for a move trying to progress further than it has been. It can also break out of that sideways consolidation then retest the break but being reject entry back into the consolidation. ( a retest of a breakout)
We can wait for all the time frame chart to agree but doing so will limit our potential to make profits. At times we may not make any as by the time they all agree the turn back. That happens in a ranging market a lot.

So the key is to understand how price moves and what type of Zig Zag pattern your in. We wnter on the 15 and watch the higher to let us know that we may need to exit. As in this trade the long is a counter trend trade we are right now at a area where price could turn back down but it also could go another 100 pips and still be in our trading zone. So all we can do is wait agian for Price Action to lead us. But this time we would be with the trend un less of course the trend is reversing. So you can see trying to decide weither we are with the trend or not could make us lose or miss every trade. Just let the Price Action lead the way.
The best you can do is to get a good entry on the 15 Miin then watch to see if you get confirming signals on the 1 Hr then the 4 Hr. Which is what happened on this trade. That is the way it should unfold. Turned 15 first then 1 Hr then 4 Hr and maybe daily. We don't know be we always know to keep our eyes on the charts.

Hope this helps. Ken

This is where higher time frame chart traders have a problem with this type of trading . They should know that to get a good signal on the 4 Hr chart that a good portion of that working candle has had to already changed direction. But to wait for those signals off that candle requires great big stops.

All we are doing is entering where that reversal started to form that 4 Hr or Daily signal. But if we get that signal on the higher charts we can really be in the right place at the right time. Giving us the chance to be in a risk free trade before they even consider a entry. But if it fails to make a signal we could have still banked some green.

There are things that maybe we shouldn't post or talk about as they may make us seem less professional or take away from our creditablity. I consider myself to be a successfull trader , The Reason I say this is because I know why when I have a loss what happened and that it wasn't a whim of the market but was a bad choice on my part.

To have gotten to this point has taken some time and I still have a ways to go to be the consistent trader I know I can be. I just hear time and again on forums the group that continually tells people that a gain of 10% or 20% over six months or a year is the norm. I don't believe this. With my limited successes and constant 10% to 20% a week I am fully aware that a person with full control of their emotions can and does have the potential to pretty much limit their gains by nothing more than their willingness to increase their trades based on their equity.

MikeW. got me to thinking about this stuff. He has a thread titled Motivation. But when I can make 10% a day or even more and all it would take to do this on a dailly basis not even thinking weeklly and to see so many other deserving good hard working people also struggle and so few get theirs brings up some of that Law of Atraction thoughts.

If you have ever read the Trading in The Zone Book. ( if not you should)
It is highly known as a very good book about the traders mind. It explains some of the reasons we traders may fail due to nothing more than ingrained thought patterns that society at large takes as the truth.

To that end I would like to address all those that get upset when I or anyone else says that a normal person with due deligence should be able to have returns of 20% a week (actually considerable more). If all you want or expect from trading is those small gains that you feel is all that is possible maybe that is the reason you have only ever achieved those types of gains or may not be achieving.

To the point if there is one. I know by now most of us have seen or heard about the movie The Secret http://www.thesecret2u.com/ It is a nice movie to get a feel for the law of attraction. But it has been out to the public a lot longer than that movie makes you believe. The hard part is taking a entertaining movie and then applying it to a real life. I posted the Master Key Pdf last week I am reattaching it here as well. It is a study guide to help teach you to use the law of atraction to help you achieve what you really want to.

We have all heard it takes money to make money. We assume it means that you need money to invest to make more money. I now think that it means that a person that once has made lots of money always knows that it is nothing to do again. It isn't the money it is the thought that they have the money already that attracts the money. Now you know why I said sometimes we should just not say anything. LOL

So I consider myself a reasonable person with reasonable ideas and a questioning mind. So I learnded a little bit about the Law of Attraction and then started to try and qualify that. It isn't that hard start thinking about the world around you and the people you know. I am sure you know some people that seem always to have a smile on thier face and upbeat about everything. Yes they have bad days but seem to bounce back so easy, On the other side we all have and many more people we know that are always miserable and nothing goes right thier health is bad and they never catch a break.

As humans we tend to think of this as luck of the draw. I have found that this isn't so. It takes so little to shift our lifes. Why do abused women or men stay in those relationships and even move from one to the other ? Do you really think that want that ? If all you had to do was to have consistent thougths of change to have change wouldn't we want to learn to do this. I am not a great writer I struggle trying to offer advice to others. so forgive my butchering.

So how can we make this work for us. You now have seen the secret Movie. It is a easy to watch movie about this subject. A movie prior to that was titled; (What The (Bleep) Do We Know.) Should be available at any rental place or Library. It actually goes into the Physical aspects of why people attract what they are. Why people keep getting bad or good from life. The key is the fact that we can and do have control of where our lives go.

When you have a choice do you go and hangout with your buddies at the pub that are complaining about their lack of money or how bad everything is. Next time hangout with those celebrating something and are in a great mood. Do this always and you will then start to see that your attitude will change to the positive also. Then other people will start being attracted towards your positve energy.

When you have one of those great trades or great days. I want you to
STOP !!!

Then I want you to remember exactlly how your feeling at that moment then everyday prior to trading do your very best to duplicate that feeling. Going through your mind exactlly how that trade unfolded. What you saw how you entered how you managed the trade and why you closed. Make a copy of that winning trade ad some text explaining your feelings. Because we are always told to think positive. This is the feeling you are exactlly looking for. no one can tell you what that feeling is but if you stop and observe yourself you will have found that feeling that can change your life.

Yes we need some understanding about trading but apparentlly that gets us only so far. So many have the tools but can't use them. Why do commercial traders do so well. What is the greatest emotion FEAR. They are scared to lose their jobs and livellyhood. So they can do what they are told or taught.

I hope some can get something from this I do. another book of great learning is THINK AND GROW RICH. These are books from people that have succeeded not wanted too. They have now laid it out for others to use. I also am attaching the Zurich Axioms. If any group knew how to achieve finacial greatness the Swizz Bankers did.

I hope your all having a great weekend. Ken

Hi, Ken
Thank you very much for this highly valuable explaination.
To be honest, recently my trading was not good. After some failed 1h62ema and 15m 35/50mas tradings, I started to look for how to increase the sucess percentage. Also I know I should know how to use high time frame to guide me to keep my trading longer.
I still have a long way to go. but I will work harder, I do not want to give up.
You, as a forum friend, spend your time and give your valuable experience. what I can say is THANK YOU!