Wednesday, October 8, 2008

TRANSCRIPT OF AUDIO FILE #4496 OF PHILLIP - FOREX MARKET

Right, I am going to run through the forex market motion one more time. I see a lot of people still doing counter forex trades, counter-trend trades against the forex trend. Like the one we discuss on the daily Wrapup about that Swissy coming back to the 21EMA.

This forex chart and this MP3, you got to have it in your heart, not in your head, in your heart. If you look at the purple rectangle on the forex chart, the price break through the 89SMA blue line. Point 1, 2, 3 and 4 are just there to let you know that you can establish your forex market breathing or channel or whatever you want to call it so that you can know in what or between which boundaries does the forex market moves.

But the main thing is to remember when the price break through the 89 SMA, up or down, it doesn’t matter, as it will come back to the 21 EMA which it did and then it went up to the red number 3 on the trend line, then it came back to that red circle 21 EMA.

All those red circles are all high probabilities forex trades. They are all of the 21 EMA because we are in an up-trend; except for 4, 5 and 6. 4 is from the 89 SMA as well as the 365 EMA. It gave a nice morning star there. It was highly oversold on the MACD, below the 45 line, horizontal line and that was a high probability trade. So, the forex market moves away from the 89 SMA, pull back to the 21 EMA, then it move away, pull back to the 21 EMA, moves away, pull back to the 21 EMA.

The only time you do counter- trades, counter -trend trades is when your Risk/Reward Ratio (R/R Ratio) down to the 21 EMA and your stop loss is 1 to 1. But remember, sometime, it only come back to the 8 EMA. You need to keep that in mind as it is a high risk forex trade unless, if you see just right of number red 3 on top, you will see a lot of bars finding resistance there. If you do a trade somewhere around there, you will be probably very safe to come down to the 21 EMA. That’s how you do it.

The blue circle on top is a counter- trend trade. If you look at the 2nd blue one, you will see that the price come below the 21 EMA and the rule says that; at the end of a run, if it will push below the 21 EMA, it tend to pull back to it, sometime it goes a bit through it and then it come down to the 89 SMA. It’s exactly what happens there.

If you look at the bottom window on the MACD, the pink circles 1, 2 and 3, look at that noise there. You cannot trade the MACD like that, you gone be killed, there is no way you can do it. You have to stick with the motion of the market, around the 21 EMA, around your support and resistance lines, that’s the way to do your deals and it is very important to know that. You have to stick to that, there is no other way you are going to survive by taking every forex signals.


I still hear people on skype and talking about MACD being busy forming a round top and then there is still a 2 or 3 hours to go. You cannot do that, I mean, you can do it but it is not the way your focus should be. Your focus should be around the price movement, where it is in relation to the moving averages, where it is in relation to your forex trend lines, where is the movement in relation to your support and resistance lines. That is the way your focus should be. That is: when the MACD gives the forex signals, all that homework as been done already.

If I am sitting there in front of a 4 hours candle, if I got time to sit there for 4 straight hours, I am analyzing the forex market. I go to a monthly chart and draw my trend lines, then I go to the weekly’s one, do some in between minor trend lines or support and resistance lines. Then I go to the daily and then go to the 4 hours. Eventually, up and down according to the motion and the rules: what do I anticipate this price is going to do? Is the current movement within the rules? Is it within the system or not? If it is not, I just close it and I walk away. I don’t even think of forex trading. I do rather 4 or 5 good trades a month then do 10 of which only 4 was good and come breakeven at the end of the day. So, it is not about taking every forex signals.

Also, another thing that I want to emphasize is not to jump around between 10 currencies. Because you can get a wrong one at forex currency number one, then you jump to forex currency number 3 and get another wrong one and then you jump to currency number 8 and get another wrong one, where if you stick at currency number 1, the next forex signal would have been a good one and maybe the one after that as well. So, instead of having 3 wrong ones in 3 different currencies, you could have 1 wrong and 2 right in the same forex currency.

So be very careful no to jump around according to MACD forex signals. You’ve got to look at each pace, motion in relation to the moving averages and in relation to your support and resistance lines. Then, look at forex market emotions as I said in that summary.

Number red 5, you will see there is a morning star, if you look at 6, there is also a morning star. If you look at number 4 there is also a morning star. That is how you determine the emotions of the forex market, there is emotions involved in those candles. They tell me that those things have got high probabilities of moving in the right direction. That’s how I do it.

Get your focus on the rules, write it down, make yourself a little copy of this forex chart and write on it or next to it and try to see and look where the forex market is satisfying this type of motion. That is where your high probabilities forex trades are because, then, the Tsunami is over, it means the playing ground is over, this thing got direction now, there is a certain motion, there is a certain rhythm in it and you are going to flow in that rhythm. When you go counter-trend trade, you know that you go against the rhythm and you got to make it very sure that there is enough forex pips available to do that in a Risk/Reward Ratio, it could be 1 to1 or better, then you take it on.

You got to get this in your heart otherwise you are not going to make it.

3 Simple moving average Fractal forex system

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