LifeStyle Trading Method

LifeStyle Trading Method
A trading system with some education materials for beginners.

System: LS1 + LS2

Main Time Frame: 30m
X- Crossing
ZL – Zero Line.

Indicators Explanation
1) Fozzy System: To look out for healthy trend, usually when the MA is out of the channel the trend is strong. If fall inside the channel the trend is not so good. Trick behind is to see the blue line outside the green line.
2) WPP and Alligator: Usually when both indicators are in line with the trading direction then it is a continual trend.
3) CCi 14 and 6 – They are so entry purpose, but they are not the initial indicators that trigger the entry. One has to look for other criteria and cannot enter blindly with just CCI Xing ZL.

Trading Practice 123:
1) Read the forex news- To understand the fundamental of market.
2) Analysis higher Time Frame – Refer to Daily and 4 hours chart and identify strong Support and resistance.
3) Switch back to 30m – Use the trading system for entry criteria.





LS1 Entry Method:
 AOAC- Ideally, they are coincide on both 30m and H1. (@ least one of the TF has the same color).
 CCi 50 & CCi 14- In line with trading direction.
 CCi 6 X - Market did not hit "00" during Xing.
 Market Setup - Bar mustn't be too long, wait and see situation.
 Fozzy - Must be good.
 WPP & Alligaotr - Ideally they are coincide to prove the continual trend.


Refer to chart 1

LS2 Entry Method
This is another good reversal system that based on HAMMER.

1) Hammer appear on both 30m and H1 chart. Both TF must exhibit a sign of reversal.
2) An obvious hammer also occurred on the previous day (about the same level).
3) Wait till a confirmation bar before entry.
4) Refer to 15m or 5m for CCi 6 to X ZL.
5) Entry - @ 15 TF when the CCi 6 X ZL.

Note: In fact, all hammer with a previous reference has a good chance of reversal and should refer to 15m entry criteria.
Note2: So long you see a reversal setup in the 30m and H1 TF and the 30m TF CCi shows a sudo CCi reversal setup then a good 15m reversal will form!


Refer chart 2, 3 & 4

TP and SL

1) TP – Based on 2 situation:
a) Setting the nearest “00” or “000” as priority. Whole number e.g. 1.2000 or 1.8900.
b) +20 pips take 75% (or 50%) of the volume entered and let the TP continue.
2) SL – Based on 2 situation:
a) When the CCi 14 turned against the trading direction and the market setup is against you.
b) OR When the market is against you by 20pips.


Refer to chart 5



NO NO Trade

1) No trading during news release – Don’t ask for trouble. Wait for 30mins before entry if there is a setup
2) When the market hit whole number like “00” and “000” e.g. 1.4000.

Abnormal Exit Criteria

Doji and Hammer setup can be an indication of a change in market trend. It can be used on the following situation:

 

1. Trade entry
2. An exit criteria - When market don't move anymore and doji setup start to form up.

There are some doji setup to be take note of:

 

1. When long bar tails is in line with doji tail
2. Doji hide inside the long bar tail
3. Two or three doji lined up in the same level

Candlestick Basic Education
There are really only 12 major Candlestick patterns that need to be committed to memory. The Japanese Candlestick trading signals consist of approximately 40 reversal and continuation patterns. All have credible probabilities of indicating correct future direction of a price move. The following dozen signals illustrate the major signals. The definition of "major" has two functions. Major in the sense that they occur in price movements often enough to be beneficial in producing a ready supply of profitable trades as well as clearly indicating price reversals with strength enough to warrant placing trades.

Utilizing just the major Japanese Candlesticks trading signals will provide more than enough trade situations for most investors. They are the signals that investors should contribute most of their time and effort. However, this does not mean that the remaining patterns should not be considered. Those signals are extremely effective for producing profits. Reality demonstrates that some of them occur very rarely. Other formations, although they reveal high potential reversals, may not be considered as strong a signal as the major signals.

DOJI STAR



Refer to chart 6



The Doji is one of the most revealing signals in Candlestick trading. It clearly indicates that the Bulls and the Bears are at an equilibrium, a state of indecision. The Doji, appearing at the end of an extended trend, has significant implications. The trend may be ending. Just this fact alone creates a multitude of investment programs that can produce inordinate profits. What is the best method for making big trading profits? Knowing how to read the stock charts! Knowing the direction of a trading entity and the strength of that move! Candlestick analysis perfects that trading strategy. Candlestick charts reveal high probability profitable reversals. Hundreds of years of investing refinement have proven that point.

The Japanese say that whenever a Doji appears, always take notice. A well-founded rule of Candlestick charts followers is that when a Doji appears at the top of a trend, in an overbought area, sell immediately. Conversely, a Doji seen at the bottom of an extended downtrend requires buying signals the next day to confirm the reversal. Otherwise, the weight of the market could take the trend lower. Knowing how to read the stock charts reveals the parameters that make a major signal most effective.
The Doji signal is comprised of one candle. It is formed when the open and the close occur at the same level or very close to the same level in a specific timeframe. In candlestick charting, this essentially creates a cross formation. As the following illustration demonstrates, the horizontal line represents the open and close occurring at the same level. The vertical line represents the total trading range during that time.
Upon seeing a doji in an over-bought or oversold conditions, (over-bought or oversold conditions can be defined using other indicators such as stochastics), becomes an extremely high probability reversal situation. When a doji appears, it is demonstrating that there is indecision now occurring at an extreme portion of a trend. This indecision can be portrayed in a few variations of the doji.
Criteria
1. The open and close are the same or nearly the same
2. The length of the shadow should not be excessively long, especially when viewed at the end of a bullish trend.
Signal Enhancements
1. A gap away from the previous day's close sets up for a stronger reversal move.
2. Large volume on the signal day increases the chances that a blowoff day has occurred, although it is not a necessity.
3. It is more effective after a long candle body, usually an exagerated daily move compared to the normal daily trading range seen in the majority of the trend.

HAMMERS AND HANGING MAN

Refer to chart 7

Description
The Hammer is comprised of one candle. It is easily identified by the presence of a small body with a shadow at least two times greater than the body. Found at the bottom of a downtrend, this shows evidence that the bulls started to step in. The color of the small body is not important but a white candle has slightly more bullish implications than the black body. A positive day is required the following day to confirm this signal.
Criteria

 

1. The lower shadow should be at least two times the length of the body.
2. The real body is at the upper end of the trading range. The color of the body is not important although a white body should have slightly more bullish implications.
3. There should be no upper shadow or a very small upper shadow.
4. The following day needs to confirm the Hammer signal with a strong bullish
   day.

Signal Enhancements

 

1. The longer the lower shadow, the higher the potential of a reversal occurring.
2. A gap down from the previous day's close sets up for a stronger reversal move provided the day after the Hammer signal opens higher.
3. Large volume on the Hammer day increases the chances that a blow off day has occurred.

Pattern Psychology

After a downtrend has been in effect, the atmosphere is very bearish. The price opens and starts to trade lower. The bears are still in control. The bulls then step in. They start bringing the price back up towards the top of the trading range. This creates a small body with a large lower shadow. This represents that the bears could not maintain control. The long lower shadow now has the bears questioning whether the decline is still intact. A higher open the next day would confirm that the bulls had taken control.
MORNING STAR


Refer to chart 8

Description
The Morning Star is a bottom reversal signal. Like the planet Mercury, the morning star, it foretells that brighter things - sunrise, is about to occur, or that prices are going to go higher. It is formed after an obvious downtrend. It is made by a long black body, usually one of the fear-induces days at the bottom of a long decline. The following day gaps down. However, the magnitude of the trading range remains small for the day. This is the star of the formation. The third day is a white candle day. And represents the fact that the bulls have now stepped in and seized control. The optimal Morning Star signal would have a gap before and after the star day.
The make up of the star, an indecision formation, can consist of a number of candle formations. The important factor is to witness the confirmation of the bulls taking over the next day. That candle should consist of a closing that is at least halfway up the black candle of two days prior.
Criteria

 

1. The downtrend has been apparent.
2. The body of the first candle is black, continuing the current trend. The second candle is an indecision formation.
3. The third day shows evidence that the bulls have stepped in. That candle should close at least halfway up the black candle.

Signal Enhancements

 

1. The longer the black candle and the white candle, the more forceful the reversal.
2. The more indecision that the star day illustrates, the better probabilities that a reversal will occur.
3. A Gap between the first day and the second day adds to the probability that a reversal is occurring.
4. A gap before and after the star day is even more desirable.
5. The magnitude, that the third day comes up into the black candle of the first day, indicates the strength of the reversal.

Pattern Psychology
A strong downtrend has been in effect. The sellers start getting panicky. There is a large sell-off day. The next day as the selling continues, bulls are stepping in at the low prices. If there is big volume during these days, it shows that the ownership has dramatically changed hands. The second day does not have a large trading range. The third day the bears start to lose conviction as the bull increase their buying. When the price starts moving back into the trading range of the first day, the sellers diminish and the buyers seize control.

Indicators
********

Use common indicators:

1) CCI 14, 6 and 50
2) Woody Pivots Point
3) Alligators
4) Fozzy Method - Bollinger Band, MA and RSI
5) AO
6) AC
7) Sweet Spot - This indicator indicator whole number e.g. "00" and "000"

Two similar situations but different outcome!
Market shoot out go all the way and the other looks good but ended up never go further.

Always wait for the fozzy method to break out!

you have great trading system, thanks for share,...

I have an candlestick pattern indicator, maybe you can use it. this indicator has different calculation for candlestick pattern, you can check it with metaeditor.

Attachment

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Long Body Candlestick

The trade on Thursday was interesting, the EUR/USD and CHF/USD move up at the same time before the news released, however after the news was released the situation changed. The EUR hit "000" and then cannot sustain for long and turned down.

As for the CHF, the situation is just opposite, a reversal setup was formed and I enter the trade using 15m chart when CCi 6 crossed the ZL. It was a nice trade which is according to the system I put up earlier.

Why trade news? The simple answer to that question is "To make more money!" Traders on the Foreign Exchange market, Forex market for short, can potentially make thousands of dollars based on the volatility and fluctuations of a country’s currency. To better themselves and have a leading advantage over other traders, some Forex traders and investors participate in a practice known as news trading. The risks are very high, but the potential gains can be worth thousands of dollars and many traders and investors use this technique.
Like any investment, there is always a risk, and news trading on the Forex market is no different. Though the potential profits are huge, the losses are also equally as large. The dangers of news trading come from the fact that a trade must be made quickly or else you are going to lose. If you are caught on the bad side of a trade, your money will be gone quicker than you can blink your eye. You will lose money so fast that there won’t even be time for you to manually close your trades, leaving you with nothing. Stop-loss orders are also potentially dangerous as there is a high probability of slippage because of the sudden price fluctuation.
Dangers of trading the news is that as with any trading strategy, there are always possible dangers that you should be aware of. Here are some of those dangers:
a) Because the market is very volatile during important news events, many dealers widen the spread during these times. This increases trading costs and could hurt your bottom line.
b) You could also get "locked out" which means that your trade could be executed at the right time but may not show up in your trading station for a few minutes. Obviously this is bad for you because you won't be able to make any adjustments if the trade moves against you!
c) Imagine thinking you didn't get triggered, so you try to enter at market... then you realize that your original ordered got triggered! You'd be risking twice as much now!
d) You could also experience slippage. Slippage occurs when you wish to enter the market at a certain price, but due to the extreme volatility during these events, you actually get filled at a far different price.
e) Big market moves made by news events often don't move in one direction. Often times the market may start off flying in one direction, only to be whipsawed back in the other direction. Trying to find the right direction can sometimes be a headache!
f) Profitable as it may be, trading the news isn't as easy as beating Pipcrawler on Call of Duty. It will take tons of practice, practice and you guessed it... more practice! Most importantly, you must ALWAYS have a plan in place. In the following lessons, we'll give you some tips on how to trade news reports.



Attached is a good example of trade that failed during news time!!! When report released, no matters how good the setup will be the trade might still fail you. There is no reason and no logic behind this failure, market just behave like that during news release!!!

I would say 1 or 2 more indicators on those charts and I believe you will have found the Grail.

I have seen worse, but come on..... There is really no reason for all of that.

One trade on EUR, by 30 mins Cci 6 Xing ZL. Clear cut.

Trading on GBP / USD
******************

The trade was made after PPI news was released on Tuesday, notice that during the news there is a very high peak the market turn to become a hammer bar indicating that the market has no intention to move upward.