US DOLLAR INDEX COURSE

US DOLLAR INDEX COURSE 2 © Copyright Market Traders Institute Trading foreign exchange on margin carries a high level of risk, and may not be suita...
Author: Baldwin Webster
1 downloads 0 Views 7MB Size
US DOLLAR INDEX COURSE 2 © Copyright Market Traders Institute

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Any statements regarding income, whether expressed or implied, do NOT represent a guarantee. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Any opinions, news, research, analysis, prices, or other information contained in this e-mail or promotional material is provided as general market commentary, for educational purposes only, and does not constitute investment advice or a solicitation to buy or sell any Forex contract or securities of any type. MTI will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

US DOLLAR INDEX COURSE

FOREX DISCLAIMER

ANY RESULTS PROVIDED ARE BASED ON SIMULATED OR HYPOTHETICAL PERFORMANCE RESULTS THAT HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE THE RESULTS SHOWN IN AN ACTUAL PERFORMANCE RECORD, THESE RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, BECAUSE THESE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THESE RESULTS MAY HAVE UNDER-OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED OR HYPOTHETICAL TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THESE BEING SHOWN. The information as presented is based on simulated trading using systems and education developed exclusively by MTI. Please note that simulated trading results may or may not have been back-tested for accuracy and that spreads/commissions are not taken into account when preparing hypothetical results. Pips captured represent net or overall pips for the trading period indicated. All results are based on simulated trading and are not live trading accounts. Please read the General Disclaimer and the Risk Disclaimer located on MTI’s website at http://www.markettraders.com/about-fx-company/general-disclaimer/ and at http:// www.markettraders.com/forex-risk-disclaimer for more information.

© Copyright Market Traders Institute

3

US DOLLAR INDEX COURSE

9/25/2014

CLASS AGENDA First Hour - Introduction

Third Hour

• Accessing your course content • Introduction to the different types of US Dollar Indexes • What is the DOW JONES FXCM US Dollar Index • Relationship between USD pairs and the USDX • Creating Pages to easily analyze USD pairs with the US Dollar Index 15 minute Break

• USDX Strategies 1 - 2 1. Scalping and Swing Trading Automated Trendline Breaks and Hand Drawn Trendline Breaks on 120, 60, or 15 minute Time Frames 2. Trading Candlestick Formations in the Direction of the Trend After a Counter Trendline Break on 120, 60, or 15 Minute Time Frames 15 minute break

Second Hour • Average Daily Trading Ranges (DTR) and respective movements vs. the USDX

Fourth Hour

• Equity Management

• USDX Strategies 3 - 4 3. Trading the Stochastic RSI Buy and Sell Zones in the direction of the trend on a 120, 60, or 15 Minute Time Frame

• Stops and Limits • Tips on Trading the USDX on Currency Crosses (USD pairs) • Active Zone vs. Dead Zone

4. Using the FX Crossfire v2 for Entries into the Market

• Spreads in the Market 15 minute Break

KEY TERMS USDX – United States Dollar Index Basket – Trading a group of currency pairs that have a relationship to one another

1

4 © Copyright Market Traders Institute

9/25/2014

The Trade-Weighted Dollar Index The US Dollar Index – USDX The DOW JONES FXCM Dollar Index

US DOLLAR INDEX COURSE

There are 3 US Dollar Indices

The Trade-Weighted Dollar Index • The Trade-Weighted US Dollar Index was created by the Federal Reserve and is known as the Trade-Weighted USD Index. • The Federal Reserve wanted to create an index that could more accurately reflect the dollar’s value against the world’s major foreign currencies based on how competitive U.S. goods are compared to goods from other countries. It was formed in 1998 in order to keep up-to-date with U.S. trade.

• The Trade-Weighted US Dollar Index consists of 26 countries.

© Copyright Market Traders Institute

5 2

US DOLLAR INDEX COURSE

9/25/

26 Currencies and Weights Country

Weight

Country

Weight

Euro Zone

17.66%

Switzerland

1.42%

China

17.33%

Thailand

1.40%

Canada

15.22%

Australia

1.20%

Mexico

9.72%

Russia

1.17%

Japan

8.71%

Israel

1.12%

United Kingdom

4.32%

Sweden

1.00%

Korea

3.50%

Indonesia

0.92%

Taiwan

2.37%

Saudi Arabia

0.82%

Singapore

2.02%

Chile

0.82%

Brazil

1.95%

Philippines

0.65%

Malaysia

1.87%

Colombia

0.50%

Hong Kong

1.75%

Argentina

0.48%

India

1.61%

Venezuela

0.47%

Trade Weighted US Dollar Index Trade Weighted US Dollar Index: Broad (TWEXB) 2012-07-25: 102.002 Index January 1997=100 Weekly, Ending Wednesday, Not Seasonally Adjusted, Updated: 2012-07-30 3:46 PM CDT

6 © Copyright Market Traders Institute

9/25/2014

• The basket of currencies used in the trade-weighted dollar index is much larger and their relative weights are very different. • The Trade-Weighted Dollar Index includes countries from all over the world, including some developing countries. Given how global trade is developing, this index is probably a better reflection of the dollar's value across the globe. The weights are based on annual trade data. • The USDX has only a basket of 6 currencies, used more by professional traders and more directed towards the mirroring effect in trading the major world currencies.

© Copyright Market Traders Institute

US DOLLAR INDEX COURSE

Trade-Weighted Dollar Index vs. USDX

7 4

US DOLLAR INDEX COURSE

9/25/2014

Six Foreign Currencies • The USD Index consists of six foreign currencies called The USDX Basket of Currencies: • • • • • •

Euro (EUR) Yen (JPY) Pound (GBP) Canadian Dollar (CAD) Swedish Krona (SEK) Swiss Franc (CHF)

The US Dollar Index (USDX) • An index (or measure) of the value of the United States Dollar relative to a basket of foreign currencies. • It is a weighted geometric mean of the dollar's value compared only with this basket of the following currencies: • Euro (EUR), 57.6% weight • Japanese yen (JPY) 13.6% weight • Pound sterling (GBP), 11.9% weight • Canadian dollar (CAD), 9.1% weight • Swedish krona (SEK), 4.2% weight • Swiss franc (CHF) 3.6% weight

8 © Copyright Market Traders Institute

5

9/25/2014

• Note: Not every country is the same size. It's only fair that each is given appropriate weights when calculating the USD Index.

EUR JPY GBP CAD SEK CHF

57.60% 13.60% 11.90% 9.10% 4.20% 3.60%

US DOLLAR INDEX COURSE

Geometric Weighted Average

US Dollar Index Example

© Copyright Market Traders Institute

9 6

US DOLLAR INDEX COURSE

9/25/2

The USDX • In the Forex, the USDX can be used as an indicator of the U.S. Dollar's strength against other world currencies. Because the USDX is comprised of more than 50% by the euro zone, EUR/USD is quite inversely related. • With its 18 countries, the euro zone makes up a big chunk of the USD Index. The next highest is the Japanese yen, which would make sense since Japan has one of the biggest economies in the world. The other four make up less than 30% of the USDX.

The US Dollar Index (USDX) • USDX goes up when the US dollar gains "strength" (value) when compared to other currencies. • USDX started in March 1973, soon after the dismantling of the Bretton Woods system. At its start, the value of the US Dollar Index was 100.000. It has since traded as high as 148.1244 in February 1985 and as low as 70.698 on March 16, 2008. • The makeup of the "basket" has been altered only once when several European currencies were subsumed by the Euro at the start of 1999. • USDX is continuously updating whenever US Dollar markets are open which is from approximately 5:00 PM ET Sunday to Friday.

10 © Copyright Market Traders Institute

9/25/2014

• If you answered "6,” you're wrong. • If you answered "23," you're a genius! • There are 23 countries total. There are 18 members of the European Union that have adopted the euro as their sole currency. Plus, there are the other five countries (Japan, Great Britain, Canada, Sweden, and Switzerland) and their accompanying currencies. • It's obvious that 23 countries make up a small portion of the world but many other currencies follow the USD Index very closely. This makes the USDX a pretty good tool for measuring the U.S. dollar's global strength.

US DOLLAR INDEX COURSE

How Many Countries Represent 6 Currencies?

24 Hours – 5 ½ Days Per Week • The USDX measures the dollar's general value relative to a base of 100.000 points that was established in March of 1973.

• Examples • A current reading of 87.070 means that the dollar has fallen 13.03% since the start of the index. • A current reading of 110.250 means the dollar has risen 10.25% since the start of the index. • Once again, the start of the index was March 1973 when the world's largest nations met in Washington D.C. and all agreed to allow their currencies to float freely against each other. The start of the index is also known as the "base period.”

© Copyright Market Traders Institute

11 8

US DOLLAR INDEX COURSE

9/25/2014

Six Foreign Currencies • The USD Index consists of six foreign currencies called The USDX Basket of Currencies: • • • • • •

Euro (EUR) Yen (JPY) Pound (GBP) Canadian Dollar (CAD) Swedish Krona (SEK) Swiss Franc (CHF)

EUR/USD in the USDX Basket

9

12 © Copyright Market Traders Institute

9/25/2014

US DOLLAR INDEX COURSE

GBP/USD in the USDX Basket

USD/JPY in the USDX Basket

10

© Copyright Market Traders Institute

13

US DOLLAR INDEX COURSE

9/25/2014

USD/CAD in the USDX Basket

USD/CHF in the USDX Basket

11

14 © Copyright Market Traders Institute

9/25/2014

US DOLLAR INDEX COURSE

Aggressive Currency Pairs • Most of the widely traded currency pairs with the tightest spreads are included in the USDX. • For example: EUR/USD, GBP/USD, USD/SEK, USD/CHF, USD/JPY, and USD/CAD. • What does this mean? If you trade any of these pairs, the USDX can take lead as to the direction of the currencies against the US Dollar. • The USDX can be used as a stand alone indicator that can give you an idea of the relative strength of the USD around the world. In fact, when the market outlook for the USD is unclear, more often times than not, the USDX provides a better picture.

USDX Relationships • The relationship between the USDX and the EUR/USD has a tendency to move in the opposite direction from one another.

• If the USD goes up, the EURO most likely goes down. Trendlines are typically broken simultaneously. This can be beneficial when trading EUR/USD and other USD pairs. • The USDX can be monitored as an indicator for EUR/USD as well as other currencies traded against the USD.

12

© Copyright Market Traders Institute

15

US DOLLAR INDEX COURSE

9/25/2014

EUR/USD in the USDX Basket

The Dow Jones FXCM Dollar Index • The Dow Jones FXCM Dollar Index basket is designed to correspond to the price performance of the US Dollar as represented by the Dow Jones FXCM Dollar Index. It reflects the change in value of the USD measured against a basket of the most liquid currencies in the world: the Euro, British pound, the Japanese yen, and the Australian dollar. • The Dow Jones FXCM Dollar Index began on January 1, 2011 at a value of 10,000 points. It represents an equivalent $10,000.00 position in each of the four currencies that comprise it.

13

16 © Copyright Market Traders Institute

9/25/2014

• The Dow Jones FXCM Dollar Index consists of 4 currencies in its basket of currencies. They include: • Euro (EUR) 25% • Yen (JPY) 25% • Pound (GBP) 25% • Aussie Dollar (AUD) 25%

US DOLLAR INDEX COURSE

The Dow Jones FXCM Dollar Index

The Dow Jones FXCM Dollar Index $10,000 25% $10,000 25%

$10,000 25% $10,000 25%

© Copyright Market Traders Institute

Euro Aussie Dollar Japanese Yen Great British Pound

17 14

US DOLLAR INDEX COURSE

9/25/20

The Dow Jones FXCM Dollar Index • The value of the index is the value of the equivalent USD position against these currencies. It rises when the dollar rises against the Euro, the British pound, the Japanese yen, and the Australian dollar and falls as the USD depreciates compared to these currencies. For example, if the USD rallies 100 points against each the EUR, GBP, JPY, and AUD, the index will appreciate by approximately 100 points. It's that simple. • The Dow Jones FXCM Dollar Index Basket, which is shown on FXCM's trading platforms as USDOLLAR, is composed in the same way. Its tradable quotes are based on the current EUR/USD, USD/JPY, GBP/USD, and AUD/USD rates quoted by FXCM.

The Dow Jones FXCM Dollar Index • The Dow Jones FXCM Dollar Index (USDOLLAR) is a tradable instrument only to non-U.S. forex trading accounts but is a valuable tool to all traders. • The NFA (National Futures Association) and CFTC (U.S. Commodity Futures Trading Commission) are the U.S. Government regulators for the Forex. *It is prohibited for U.S based accounts to directly trade the US Dollar Index.

• Like most currency pairs at FXCM, USDOLLAR is available 24 hours per day, 5 ½ days per week.

18 © Copyright Market Traders Institute

9/25/2014

• Low Spreads: USDOLLAR combines four of the lowest-spread currency pairs in Forex to make a low-spread, inexpensive, and very liquid trading instrument with no commissions* or expense ratio. • Earn Rollover: Take advantage of higher interest rates outside the USA when selling USDOLLAR. Interest is paid daily. • Geographic Diversification: USDOLLAR was equally weighed at its inception against the Euro, the British pound, the Japanese yen, and the Australian dollar, giving traders more exposure to the global market place. • Available 24 Hours: Like most currency pairs at FXCM, USDOLLAR is available 24 hours per day, 5 ½ days per week.

US DOLLAR INDEX COURSE

The Dow Jones FXCM Dollar Index Benefits

*Broker commissions vary.

The Dow Jones FXCM Dollar Index Vital Statistics • Spreads are 2 to 3 pips on average when trading the USDOLLAR directly.

• Margin Requirements are usually between $230 - $360 USD per mini lot. • Minimum Trade Size is 1 mini lot. • Pip cost $1 USD per lot traded. • In 2014 it has an average daily trading of 22 pips. • 1 lot was equivalent to $10,000 USD on January 1, 2011. The value of the lot changes as the price of the USDOLLAR changes.

© Copyright Market Traders Institute

19 16

US DOLLAR INDEX COURSE

9/25/201

Example of the USDOLLAR on FXCM’s trading platform

USDOLLAR Typically has a 3 pip spread

1 lot requires $230.00 in margin and pays $1.00 per pip.

10 lots require $2,300.00 in margin and pays $10.00 per pip.

20 © Copyright Market Traders Institute

100 lots require $23,000.00 in margin and pays $100.00 per pip.

1

9/25/2014

• If the Dow Jones FXCM Dollar Index makes significant movements, anticipate that professional currency traders will react to the movement accordingly. • Both the Dow Jones FXCM Dollar Index and spot currency traders react to each other. • Breakouts in spot USD pairs will almost certainly move the Dow Jones FXCM Dollar Index in similar breakout fashion with other currencies. • Professional currency traders use the Dow Jones FXCM Dollar Index as a key lead indicator for the direction they desire to trade.

US DOLLAR INDEX COURSE

The Dow Jones FXCM Dollar Index

Keep the Trend in Mind • Always keep in mind the trend of the Dow Jones FXCM Dollar Index compared to the currency pairs being traded. • For example, if the Dow Jones FXCM Dollar Index is strengthening or rallying, most currency pairs starting with the foreign currency pair first (i.e. EUR/USD , GBP/USD, AUD/USD, NZD/USD, etc.) should start to dip, showing a strong USDOLLAR and will show a down trend on their charts. • If the Dow Jones FXCM Dollar Index is strengthening or rallying for currency pairs that start with the US Dollar first (i.e. USD/CAD and the USD/CHF), they should begin to rally on the chart which will mean they are weakening against the USDOLLAR.

© Copyright Market Traders Institute

21

18

US DOLLAR INDEX COURSE

9/25/2014

The Dow Jones FXCM Dollar Index A 41 point move on the Dow Jones FXCM Dollar Index created 407 pips when trading the basket of 6 currencies.

The Dow Jones FXCM Dollar Index

19

22 © Copyright Market Traders Institute

9/25/2014

US DOLLAR INDEX COURSE

USDX Page Setups

Equity Management

Gains and losses

Gains and losses

At the end of the day, there were more gains than losses .

20

© Copyright Market Traders Institute

23

US DOLLAR INDEX COURSE

9/25/20

Equity Management

Successful Basket Trading Depends On Proper Equity Management

Dow Jones FXCM Dollar Index Equity Management • Due to trading a basket of currencies, equity management must be based off of a percentage of the entire account. • Stops and limits can be based on a Dollar amount and not a necessarily a number of pips.

• The Equity Management module of The UTP recommends risking no more than 2.5% of a trading account balance. • 5% is considered overtrading an account. • Average stops will be 40-50 pips per currency and Limits can be figured out by either a dollar amount or going to the D extension on the Dollar Index.

24 © Copyright Market Traders Institute

9/25/2014

• Open a demo account and practice, practice, practice until strategies are completely understood. • When ready, start off with trading Mini or Micro lots. • Build confidence with strategies on Mini or Micro lots. • Maximum risk of 2.5% is recommended on any given trading day. • Do not over trade. • When increasing lot sizes, consider small incremental adjustments (e.g. 1 to 1.1 lots rather than 1 to 2 lots).

US DOLLAR INDEX COURSE

Dow Jones FXCM Dollar Index Equity Management

• After mastering a successful technique, increase the lots per currency and avoid regressing.

Managing Risk 100K Lots - $10.00 a pip 1 currency $3,000

$5,000

$15,000

$20,000

$25,000

Dollars Risked

$500

$500

$500

$500

$500

% Risk to Margin

16%

10%

3%

2.5%

2%

In Margin

Mini lots - $1.00 a pip 1 currency $1,000

$2,500

$5,000

$10,000

$15,000

Dollars Risked

$50

$50

$50

$50

$50

% Risk to Margin

5%

2%

1%

.5%

.3%

In Margin

© Copyright Market Traders Institute

25 22

US DOLLAR INDEX COURSE

9/25/2

Trading a Basket of 6 Currencies 100K Lots - $10.00 a pip 6 currencies 50 pip stops In Margin Dollars Risked 6 Lots % Risk to Margin

$15,000

$20,000

$30,000

$75,000

$3,000

$3,000

$3,000

$3,000

20%

15%

10%

2.5%

Mini lots - $1.00 a pip 6 currencies 50 pip stops $3,000

$5,000

$10,000

$15,000

Dollars Risked 6 Lots

$300

$300

$300

$300

% Risk to Margin

10%

6%

3%

2%

In Margin

Do Not Over Trade Your Account. (Over Trading With Mini Lots)

6 Mini Lot Currencies at a Time With 50 Pip Stops $2,000

$3,000

$5,000

$10,000

$15,000

Risk 50 pips 6 lots

$300

$300

$300

$300

$300

% Risk to Margin

15%

10%

6%

3%

2%

Number of Consecutive Losses an Account can Endure with a Minimum of $300 per Lot or $1,800 in Margin

1

4

10

27

44

In Margin

26 © Copyright Market Traders Institute

9/25/2014

Stops will be an average of 40-50 pips per currency pair. However they can be greatly reduced by learning how to draw retracement and extension trendlines during the Active Zone.

US DOLLAR INDEX COURSE

Dow Jones FXCM Dollar Index Equity Management

Traders Tips • Stay current with the A,B,C,D’s and sub-a,b,c,d’s. • Be mindful that the market moves at different speeds and creates aggressive trendlines as well as subtle trendlines of 25 – 80 degrees. • On retracements, use a 45 degree counter trendlines. On extensions, use a 25 degree trendlines during the active zone. • From experience, when the market breaks the 25 degree trendline, it has a high percentage chance of going the other way during the active zone. • When buying or selling the C, keep up with the aggressive trendline and immediately draw a 25 degree extension trendline. • During the dead zone the market tends to go sideways and easily breaks the 25 or 45 degree trendlines – stay current with the A,B,C,D’s.

© Copyright Market Traders Institute

2427

US DOLLAR INDEX COURSE

9/25/2014

Automated Trendlines • • •

25 degrees on extensions 45 degrees on retracements RULE: There needs to be a minimum of 3 Bearish candles of retracement in an uptrend for a counter uptrend line to be effective. 25

Automated Trendlines • • •

25 degrees on extensions 45 degrees on retracements RULE: There needs to be a minimum of 3 Bearish candles of retracement in an uptrend for a counter uptrend line to be effective.

25

28 © Copyright Market Traders Institute

9/25/2014

US DOLLAR INDEX COURSE

Appropriate Stops • Stops should be approximately 40-50 pips in risk per currency and maximum 2.5% of total account. • EXAMPLE: If you are trading a basket of 2 currency pairs, the maximum you want to let the market move against you is 80 – 100 pips. That is 40 -50 pip stops per currency and to stay within 2% of your margin account at a $1.00 per pip, you would need to have $5,000 in your margin account. If you went to a 5% risk, trading at a $1.00 per pip, you would need $2,500 in your margin account. • Risking only 2.5% per trade at a $1.00 a pip, would require $2,500 in margin per currency pair per trade. • Risking 5% per trade at a $1.00 a pip requires $1,200 in margin per currency pair per trade.

Active Zones and Dead Zones

26

© Copyright Market Traders Institute

29

US DOLLAR INDEX COURSE

9/25/20

Active Zones and Dead Zones Active

60-Minute Chart

Dead

Active Dead

Active

Dead

Active

Dead Active

• The Active • The

Zone is between 2:00 AM EST to 12:00 PM EST. Dead Zone is between 12:00 PM EST to 2:00 AM EST.

Entering the Market • Trader’s Tip: Spreads are usually 1.5-3 pips per lot on the 6 majors traded against the US Dollar per currency during the active zone which is 2:00 AM EST - 12:00 PM EST and the spreads are 2-4 pips per lot on the 6 majors traded against the US Dollar per currency during the dead zone which is 12:00 PM EST - 2:00 AM EST. • EXAMPLE: If trading a basket of 2 currency pairs during the active zone, the trade will immediately be 3-6 pips in the red upon entry. If trading 2 currency pairs during the dead zone, the trade will immediately be 4-8 pips in the red upon entry. • 4 pairs –Active zone, 6-12 pips in red, Dead Zone, 8-16 pips in the red • 6 pairs –Active zone, 9-18 pips in red, Dead Zone, 12-24 pips in the red • 8 pairs –Active zone, 12-24 pips in red, Dead Zone, 16-32 pips in the red • In other words, when entering the market, the currencies that have the smallest spread should be taken into consideration.

30 © Copyright Market Traders Institute

9/25/2014

“The ultimate beauty of learning to trade the Dow Jones FXCM US Dollar Index is instead of analyzing 4-8 charts at a time on all different time frames, you only analyze 1 chart and then trade your basket of 1-8 currencies at a time.” - FX CHIEF – Jared Martinez

US DOLLAR INDEX COURSE

FX CHIEF’s Advice

The MTI US Dollar Index Strategies Strategy 1: Scalping and Swing Trading Automated Trendline Breaks and Hand Drawn Trendline Breaks on 120, 60, or 15 minute timeframes Strategy 2: Trading Candlestick formations in the direction of the trend after a counter trendline break on 120, 60, or 15 minute timeframes Strategy 3: Trading the Stochastic RSI Buy and Sell Zones in the direction of

the trend on a 120, 60, or 15 minute timeframe Strategy 4: Using the US DOLLAR CROSSFIRE for entries into the market

© Copyright Market Traders Institute

31 28

US DOLLAR INDEX COURSE

9/25/20

Strategy 1

Scalping and Swing Trading Automated Trendline Breaks and Hand Drawn Trendline Breaks on 120, 60, or 15 minute timeframes.

Strategy 1 This strategy uses the USDX Strata 1-2 system to provide alerts for potential entries in the market

32 © Copyright Market Traders Institute

9/25/2014

This system is comprised of 3 indicators:

• T-3 Tilson length setting – 5 (Blue) • T-3 Tilson length setting – 60 (Red) • Stochastic RSI – default setting (bottom of chart)

US DOLLAR INDEX COURSE

USDX Strata 1-2 System

USDX Strata 1-2 System Important information about the system: This system is used for Strategy 1 and 2. Only Strategy 1 is used to enter the market when a buy or sell signal is present. Strategy 1 will then use different exit stop and limit targets to close out of the trade.

© Copyright Market Traders Institute

30 33

US DOLLAR INDEX COURSE

9/25/2014

Strategy 1 – Pre-trade Step 1: Compress the charts and see if the market is in an uptrend or downtrend.

Strategy 1 Pre-trade Step 2: Identify the A,B,C,D’s, sub a,b,c,d’s, and Fibonacci’s on the Daily chart, 2-hour chart, and 15minute charts. Adjust as needed.

34 © Copyright Market Traders Institute

31

9/25/2014

Step 3: On the Dollar Index chart, when the blue line crosses the red line from the south to the north, that is a Buy Signal and enter the market with a basket of currency pairs.

Buy Signal Appears

US DOLLAR INDEX COURSE

Strategy 1 Pre-trade

Strategy 1 Pre-trade Step 4: Identify if the market is in a retracement or an extension.

The market has retraced to the 0.86 and appears to be rallying to the D extension

© Copyright Market Traders Institute

35 32

US DOLLAR INDEX COURSE

9/25/2014

Strategy 1 Pre-trade Step 5: Identify if the market is in the Active or Dead Zone.

Alarm appears during the Active Zone

Strategy 1 Trade Plan Step 1: When entering on an extension, draw a 25 degree angle line from the most recent MAJOR retracement LOW if buying, HIGH if selling. When entering on a retracement, draw a 45 degree angle line as a counter trendline. Then draw a trendline on top of the angle line, extend it, then activate the alarm “on close past line.”

Alarm appears during the Active Zone

36 © Copyright Market Traders Institute

33

9/25/2014

Step 2: Place stop 40-50 pips below the entry per each USD currency pair being basket traded.

GBP/USD 15 minute Stop loss 40 pips from entry

In this example the USDX shows dollar strength. Short the USD secondary pairs (quote) and buy USD primary pairs (base).

US DOLLAR INDEX COURSE

Strategy 1 Trade Plan

Strategy 1 Limit Targets Option 1: Exit at the Fibonacci D extension of the US DOLLAR Timeframe used for entry or the Fibonacci D extension of the currency pairs traded in the basket (a price alarm on the D extension can be set to alert when reached).

USDX 15 minute

© Copyright Market Traders Institute

D extension on USDX 15 minute is reached

34 37

US DOLLAR INDEX COURSE

9/25/2014

Strategy 1 Limit Targets Option 1: Exit at the Fibonacci D extension of the US DOLLAR Timeframe that was used for entry or the Fibonacci D extension of the currency pairs traded in the basket (a price alarm on the D extension can be set to alert when reached).

GBP/USD 15 minute

112 pips captured

D extension of USDX 15 minute is reached

Strategy 1 Limit Targets Option 2: Place the limit at a 1:1 ratio (example… if the stop is 40 pips, place the limit 40 pips away from the entry).

GBP/USD 15 minute

40 pips risk 40 pips reward

40 pips captured

38 © Copyright Market Traders Institute

35

9/25/2014

Option 3: Exit if the market breaks the 25 degree angle trendline.

12 pips captured Market breaks 25 degree angle line

USDOLLAR 15 minute

GBP/USD 15 minute

US DOLLAR INDEX COURSE

Strategy 1 Limit Targets

Strategy 1 Limit Targets Option 4: Exit if the net positive in pips and the candles start to cross the blue line of the USDX Strata 1-2.

86 pips captured

Indicator crosses from North to South

USDOLLAR 15 minute

GBP/USD 15 minute

© Copyright Market Traders Institute

36 39

US DOLLAR INDEX COURSE

Strategy 1

Scalping and Swing Trading Automated Trendline Breaks and Hand Drawn Trendline Breaks on 120, 60 or 15 minute time frames Pretrade Checklist Compress the charts and see if the market is in an uptrend or downtrend. Find and mark your A,B,C,D’s, sub a,b,c,d’s, and Fibonacci’s on the Daily chart, 2-hour chart, and 15-minute charts. Adjust them as needed. On the Dollar Index chart, when the blue line crosses the red line from the south to the north, that is a Buy Signal, enter the market with your basket of currency pairs. Figure out if you’re on a retracement or an extension. Figure out if you’re in the Active or Dead zone. Trade Plan If you’re entering on an extension, draw a 25 degree angle line from the most recent MAJOR retracement LOW if buying, HIGH if selling. If you’re entering on a retracement, draw a 45 degree angle line as a counter trendline. Then draw a trendline on top of your angle line, extend it, then activate the alarm “on close past line”. Place your stop 40-50 pips below your entry. Limit Targets Exit at the Fibonacci D extension of the US DOLLAR Timeframe that you used for your entry or the Fibonacci D extension of the currency pairs that you’re trading in your basket. (you can put a price alarm on the D extension to notify you when it’s hit). Place your limit at a 1:1 ratio (example…if your stop is 40 pips, place your limit 40 pips away from your entry). Exit if the market breaks the 25 degree angle trendline. Exit if you’re in net positive in pips and the candles start the cross the blue line of the USDX Strata 1-2.

40 © Copyright Market Traders Institute

Let’s take a look at the live market for some recent examples

US DOLLAR INDEX COURSE

Strategy 1

37

© Copyright Market Traders Institute

41

US DOLLAR INDEX COURSE

9/25/2

Strategy 2

Trading Candlestick formations in the direction of the trend after a counter Trendline break on 120, 60, or 15 minute timeframes

5 Bullish Candlestick Formations

Rules for Trading Bullish Candlestick Formations

42 © Copyright Market Traders Institute

9/25/2014

50%

• This is a Bullish pattern. • It is the opposite of a Dark Cloud. • This indicates a potential reversal or turning point from a Bearish move. • The pattern is more significant if the second Bullish candlestick‘s body is above the center of the previous Bearish candlestick‘s body.

US DOLLAR INDEX COURSE

Piercing Line

The Bullish Piercing Line Buy in the direction of the trend at the opening of the next candle or when it meets the criteria of the Bullish piercing line.

Buy at the opening of the next candle

Close of the Bullish candle must be beyond a 60% u-turn of the Bearish candle

Protective Stop Loss order 40 - 50 pips below the low

© Copyright Market Traders Institute

43 39

US DOLLAR INDEX COURSE

9/25/2014

Bullish Shooting Star • A Bullish pattern • Suggests a reversal when it appears after a dip. • The Spinning Top’s body can be Bullish or Bearish. • The wick on the south side of the Spinning Top must be longer then the wick on the north side of the body of the candlestick.

The Bullish Shooting Star Opening price of the Bearish candle

Buy in the direction of the trend at the opening of the next candle or when it meets the criteria of the Bullish shooting star.

Buy at the opening of the next candle

Protective Stop Loss order 40 - 50 pips below the low

44 © Copyright Market Traders Institute

40

9/25/2014

A Bullish pattern signifying a potential bottom and potential reversal. Tweezer Bottoms can consist of two or more candles. Bodies can be Bullish, Bearish or both. At least two candlesticks must have long, equal wicks on the south side. The wick must be least 60% of the total candle’s height. Ideal

Realistic OR Wick min. 60%

US DOLLAR INDEX COURSE

Tweezer Bottom Formation

Equal height within a couple of pips

The Tweezer Bottom Formation • After 2 candles meet the criteria of a Tweezer Bottom… • Buy at the opening of the next candle with a Protective Stop Loss order approximately 40-50 pips beyond the lows of the wicks.

Long Wicks Small Bodies

Buy at the opening of the next candle Wick min. 60%

Protective Stop Loss order 40 - 50 pips below the low

© Copyright Market Traders Institute

45 41

US DOLLAR INDEX COURSE

9/25/2014

Morning Star Formations These Bullish patterns signify a potential bottom and reversal. Morning Stars come in many shapes, and may consist of more than three candlesticks. Ideal

Realistic OR

The Morning Star Buy in the direction of the trend at the opening of the next candle or when it meets the criteria of the Morning Star Formation. Opening price of the Bearish candle

Buy at the opening of the next candle Close of the Bullish candle must be beyond a 60% uturn

Protective Stop Loss order 40 - 50 pips below the low

42

46 © Copyright Market Traders Institute

9/25/2014

A candlestick formation that engulfs the previous Bearish candle or candles after a down swing price move. The closing price of the Bullish Engulfing Candle must be equal or higher than the opening of the previous Bearish candle.

The closing price of the Bullish Engulfing Candle must be higher than the opening of the previous Bearish candle or candles.

US DOLLAR INDEX COURSE

Bullish Engulfing Candle

The Engulfing Bullish Candle After the Bullish Engulfing candle appears in the direction of the trend, buy at the opening of the next candle with a Protective Stop Loss Order approximately 10 pips beyond the lows of the wicks.

Buy at the opening of the next candle

Protective Stop Loss order 40 - 50 pips below the low

© Copyright Market Traders Institute

47 43

US DOLLAR INDEX COURSE

9/25/

5 Bearish Candlestick Formations

Rules for Trading Bearish Candlestick Formations

48 © Copyright Market Traders Institute

9/25/2014

• A Bearish pattern • Suggests a reversal when it appears after a rally. • The Spinning Top’s body can be Bullish or Bearish. • The wick on the north side of the Spinning Top must be longer than the wick on the south side.

US DOLLAR INDEX COURSE

Bearish Shooting Star

The Bearish Shooting Star Sell in the direction of the trend at the opening of the next candle or when it meets the criteria of the Shooting Star. Protective Stop Loss order 40 - 50 pips above the high

Opening price of the Bullish candle

Sell at the opening of the next candle

© Copyright Market Traders Institute

45 49

US DOLLAR INDEX COURSE

9/25/2

Evening Star Formations These Bearish patterns signify a potential top and reversal. Evening Stars come in many shapes and can consist of more than three candlesticks.

OR Ideal

Realistic

The Evening Star Sell in the direction of the trend at the opening of the next candle or when it meets the criteria of the Evening Star Formation. Protective Stop Loss order 40 - 50 pips above the high

Close of the Bearish candle must be beyond a 60% u-turn

Sell at the opening of the next candle

Opening price of the Bullish candle

50 © Copyright Market Traders Institute

9/25/2014

• Bearish pattern. • Indicates a potential reversal or turning point from a Bullish move. • The pattern is more significant if the second Bearish candlestick‘s body is below the center of the previous Bullish candlestick‘s body.

50%

US DOLLAR INDEX COURSE

Dark Cloud Cover

The Dark Cloud Cover Sell in the direction of the trend at the opening of the next candle or when it meets the criteria of the Dark Cloud Cover Formation. Protective Stop Loss order 40 - 50 pips above the high

Close of the Bearish candle must be beyond a 60% u-turn Sell at the opening of the next candle

Opening price of the Bullish candle

© Copyright Market Traders Institute

51 47

US DOLLAR INDEX COURSE

9/25/2014

Bearish Engulfing Candle A Bearish candlestick formation that engulfs the previous Bullish candle or candles after an upswing price move. The closing price of the Bearish Engulfing candle must be equal or lower than the open of the previous Bullish candle.

The Engulfing Bearish Candle After the Bearish Engulfing candle appears in the direction of the trend, sell at the opening of the next candle with a Protective Stop Loss Order approximately 15 pips beyond the highs of the wicks. Protective Stop Loss order 40 - 50 pips above the high

Sell at the opening of the next candle

52 © Copyright Market Traders Institute

48

9/25/2014

A Bearish pattern signifying a potential top and reversal. Tweezer Tops can consist of two or more candles. Bodies can be Bullish, Bearish, or both. At least two candles must have long, equal wicks on the north side of their bodies. The wick must be a at least 60% of the candle’s total height. Equal height within a couple of pips OR Wick min. 60%

Realistic

Ideal

US DOLLAR INDEX COURSE

The Tweezer Top

The Tweezer Top When 2 candles meet the criteria of a Tweezer Top, sell at the opening of the next candle with a Protective Stop Loss Order approximately 40-50 pips beyond the highs of the wicks. Protective Stop Loss order 40-50 pips above the high

Long Wicks Small Bodies

Wick min. 60% Sell at the opening of the next candle

© Copyright Market Traders Institute

4953

US DOLLAR INDEX COURSE

9/25/2014

Counter Trendlines

Counter Uptrend Line Breaks

Counter uptrend lines go across the highs of the retracement. The 3 Bearish candle rule: • There needs to be a minimum of 3 Bearish candlesticks of retracement for a Counter Uptrend Line to effectively trade. • Trade the first Bullish candlestick that closes north of the Counter Uptrend Line.

54

50 © Copyright Market Traders Institute

9/25/2014

Buy at the break of the Counter Uptrend Line. • There must be a minimum of 75% of a closed Bullish candle on the north side of the Counter Uptrend Line. • Once again, a minimum of 3 Bearish candles of retracement are needed to trade a Counter Uptrend Line. •

BUY BUY

BUY

BUY

BUY

BUY

US DOLLAR INDEX COURSE

Counter uptrend lines go across the highs of the retracement.

Counter Trendlines

Counter Downtrend Line Breaks

© Copyright Market Traders Institute

55 51

US DOLLAR INDEX COURSE

9/25/2014

Counter downtrend lines go across the lows of the retracement. The 3 Bullish candlestick rule is: • There needs to be a minimum of 3 Bullish candles of retracement for Counter Downtrend Lines to be effective. • Trade the first Bearish candle that closes south of the Counter Downtrend Lines.

Counter downtrend lines go across the lows of the retracement. Sell at the break of the Counter Downtrend Line. • There must be a minimum of 75% of a closed Bearish candle on the south side of the Counter Downtrend Line. • Once again, a minimum of 3 Bullish candles of retracement are needed to trade a Counter Downtrend Line. •

SELL SELL SELL

SELL SELL

56 © Copyright Market Traders Institute

52

9/25/2014

US DOLLAR INDEX COURSE

Strategy 2 This strategy also uses the USDX Strata 1-2 system to give alerts of potential entries

USDX Strata 1-2 System Important information about the system for Strategy 2: When using the USDX Strata 1-2 System for strategy 2, only use the buy and sell symbols as alerts for a potential trade set up. Wait for a candlestick formation to appear before entering.

© Copyright Market Traders Institute

57 53

US DOLLAR INDEX COURSE

9/25/2014

Strategy 2 – Pre-trade Step 1: Compress the charts and see if the market is in an uptrend or downtrend.

Strategy 2 Pre-trade Step 2: Identify the A,B,C,D’s, sub a,b,c,d’s, and Fibonacci’s on the Daily chart, 2-hour chart, and 15-minute charts. Adjust as needed.

58 © Copyright Market Traders Institute

54

9/25/2014

Step 3: On the USDOLLAR chart, preferably during the Active Zone, draw a Counter Trendline across the current retracement, look for Bullish candlestick formations when the market is above the red Automated Trendline or hand drawn trendline, and Bearish candlestick formations if the market is below the red Automated Trendline or hand drawn trendline.

Bullish Engulfing appears at the break of the Counter Trendline

US DOLLAR INDEX COURSE

Strategy 2 Pre-trade

Strategy 2 Pre-trade Step 4: Identify if the market is in a retracement or an extension.

The market has retraced to the 0.382 and appears to be rallying to the D extension

© Copyright Market Traders Institute

55 59

US DOLLAR INDEX COURSE

9/25/2014

Strategy 2 Pre-trade Step 5: Identify if the market is in the Active or Dead zone.

Alarm appears during the Active Zone

Strategy 2 Trade Plan Step 1: When a Counter Trendline Break and a Candlestick Formation appear, enter the market trading a basket of currencies according to the direction of the trend from the USDOLLAR 120, 60, or 15 minute chart.

Entry from USDX 60 minute

60 © Copyright Market Traders Institute

56

9/25/2014

US DOLLAR INDEX COURSE

Strategy 2 Trade Plan

SELL

SELL

BUY

SELL

SELL

BUY

Strategy 2 Trade Plan Step 2: When entering on an extension, draw a 25 degree angle line from the most recent MAJOR retracement LOW if buying, HIGH if selling. When entering on a retracement, draw a 45 degree angle line as a Counter Trendline. Then draw a trendline on top of the angle line, extend it, then activate the alarm “on close past line.”

25 degree angle line drawn on USDX 60 chart

57 © Copyright Market Traders Institute

61

US DOLLAR INDEX COURSE

9/25/2014

Strategy 2 Trade Plan Step 3: Place a stop 40-50 pips below the entry for each currency pair being traded.

SELL

All 6 pairs have stop of 40 pips

BUY

Strategy 2 Limit Targets Option 1: Exit at the Fibonacci D extension of the USDOLLAR Timeframe that was used for entry, or the Fibonacci D extension of the currency pairs that were traded in the basket (a price alarm on the D extension can be set to alert when reached).

USDX 15 minute

D extension on USDX 60 minute is reached

58

62 © Copyright Market Traders Institute

9/25/2014

US DOLLAR INDEX COURSE

Strategy 2 Limit Targets

49 pips

SELL 26 pips

TOTAL 246 pips in 10 hours

35 pips

52 pips

BUY 39 pips

45 pips

Strategy 2 Limit Targets Option 2: Place the limit at a 1:1 ratio (example: if the stop is 40 pips, place the limit 40 pips away from the entry).

40 pips

40 pips

SELL 40 pips

TOTAL 240 pips in 10 hours

40 pips BUY 40 pips

40 pips

59

© Copyright Market Traders Institute

63

US DOLLAR INDEX COURSE

9/25/2014

Strategy 2 Limit Targets Option 3: Exit if the market breaks the 25 degree angle Trendline on the USDOLLAR chart.

Market breaks 25 degree angle line

Strategy 2 Limit Targets Option 3: Exit if the market breaks the 25 degree angle Trendline on the USDX chart.

GBP/USD

26 pips

64 © Copyright Market Traders Institute

60

9/25/2014

Option 3: Exit if the market breaks the 25 degree angle Trendline on the USDX chart.

EUR/USD 0 pips

US DOLLAR INDEX COURSE

Strategy 2 Limit Targets

Strategy 2 Limit Targets Option 3: Exit if the market breaks the 25 degree angle Trendline on the USDX chart.

AUD/USD

© Copyright Market Traders Institute

26 pips

65 61

US DOLLAR INDEX COURSE

9/25/2014

Strategy 2 Limit Targets Option 3: Exit if the market breaks the 25 degree angle Trendline on the USDX chart.

NZD/USD

-11 pips

Strategy 2 Limit Targets Option 3: Exit if the market breaks the 25 degree angle Trendline on the USDX chart.

USD/CHF

0 pips

66 © Copyright Market Traders Institute

62

9/25/2014

Option 3: Exit if the market breaks the 25 degree angle Trendline on the USDX chart.

USD/CAD

0 pips

US DOLLAR INDEX COURSE

Strategy 2 Limit Targets

Strategy 2 Limit Targets Option 3: Exit if the market breaks the 25 degree angle Trendline on the USDX chart.

TOTAL 41 pips 0 pips

© Copyright Market Traders Institute

67

63

US DOLLAR INDEX COURSE

9/25/20

Strategy 2 Limit Targets Option 4: Exit if the net positive in pips and the candles start to cross the blue line of the USDX Strata 1-2.

49 pips captured Indicator crosses from north to south

USDOLLAR 60 min

GBP/USD 60 min

Strategy 2 Strategy 2: Trading Candlestick formations in the direction of the trend after a counter trendline break on 120, 60, or 15 minute timeframes Pretrade Checklist  Compress the charts and see if the market is in an uptrend or downtrend.  Find and mark your A,B,C,D’s, sub a,b,c,d’s, and Fibonacci’s on the Daily chart, 2-hour chart, and 15-minute charts. Adjust them as needed.  On the Dollar Index chart, preferably during the Active Zone, draw a Counter Trendline across the current retracement, look for bullish candlestick formations when the market is above the red automated trendline or hand drawn trendline, and bearish candlestick formations if the market is below the red automated trendline or hand drawn trendline.  Figure out if you’re on a retracement or an extension.  Figure out if you’re in the Active or Dead zone. Trade Plan  Once a Counter Trendline Break and a Candlestick Formation appears, enter your basket of currencies according to the direction of the trend from the US DOLLAR 120, 60, or 15 minute chart.  If you’re entering on an extension, draw a 25 degree angle line from the most recent MAJOR retracement LOW if buying, HIGH if selling. If you’re entering on a retracement, draw a 45 degree angle line as a counter trendline. Then draw a trendline on top of your angle line, extend it, then activate the alarm “on close past line”.  Place your stop 40-50 pips below your entry for each currency pair that you’re trading. Limit Targets  Exit at the Fibonacci D extension of the US DOLLAR Timeframe that you used for your entry or the Fibonacci D extension of the currency pairs that you’re trading in your basket. (you can put a price alarm on the D extension to notify you when it’s hit).  Place your limit at a 1:1 ratio (example…if your stop is 40 pips, place your limit 40 pips away from your entry).  Exit if the market breaks the 25 degree angle trendline.  Exit if you’re in net positive in pips and the candles start the cross the blue line of the USDX Strata 1-2.

68 © Copyright Market Traders Institute

Trading Candlestick formations in the direction of the trend after a counter trendline break on 120, 60 or 15 minute time frames Pretrade Checklist Compress the charts and see if the market is in an uptrend or downtrend. Find and mark your A,B,C,D’s, sub a,b,c,d’s, and Fibonacci’s on the Daily chart, 2-hour chart, and 15-minute charts. Adjust them as needed. On the Dollar Index chart, preferably during the Active Zone, draw a Counter Trendline across the current retracement, look for bullish candlestick formations when the market is above the red automated trendline or hand drawn trendline, and bearish candlestick formations if the market is below the red automated trendline or hand drawn trendline. Figure out if you’re on a retracement or an extension. Figure out if you’re in the Active or Dead zone.

US DOLLAR INDEX COURSE

Strategy 2

Trade Plan Once a Counter Trendline Break and a Candlestick Formation appears, enter your basket of currencies according to the direction of the trend from the US DOLLAR 120, 60, or 15 minute chart. If you’re entering on an extension, draw a 25 degree angle line from the most recent MAJOR retracement LOW if buying, HIGH if selling. If you’re entering on a retracement, draw a 45 degree angle line as a counter trendline. Then draw a trendline on top of your angle line, extend it, then activate the alarm “on close past line”. Place your stop 40-50 pips below your entry for each currency pair that you’re trading. Limit Targets Exit at the Fibonacci D extension of the US DOLLAR Timeframe that you used for your entry or the Fibonacci D extension of the currency pairs that you’re trading in your basket. (you can put a price alarm on the D extension to notify you when it’s hit). Place your limit at a 1:1 ratio (example…if your stop is 40 pips, place your limit 40 pips away from your entry). Exit if the market breaks the 25 degree angle trendline. Exit if you’re in net positive in pips and the candles start the cross the blue line of the USDX Strata 1-2. © Copyright Market Traders Institute

69

US DOLLAR INDEX COURSE

9/25/2014

Live Market Examples

Strategy 3

Trading the Stochastic RSI Buy and Sell Zones in the direction of the trend on a 120, 60, or 15 minute timeframe

65

70 © Copyright Market Traders Institute

9/25/2014

• • • •

The Stochastic RSI Indicator sits in a boundary from 0% to 100%. The red lie at the bottom of the indicator is at 20% and the red line at the top is at 80%. The area below the bottom red line is a Buy Zone and the area above the red line is a Sell Zone. The Blue moving line is monitoring price against time. It moves from the top creating peaks, to the bottom creating valleys. • From Valley (the Buy Zone) to Peak (the Sell Zone) and from Peak to Valley, there are usually 7 to 11 candles (it would be wise to become a good candle counter). At the blue line moves from Peak to Valley it is basically stating that the market is going to be Bullish for 7 to 11 candles and then turn Bearish for 7 to 11 candles on all time frames. • If you are watching a 2 hour chart it is basically saying for 7 to 11 candles (or for 14 to 22 hours) the market will be Bullish and then the market will turn Bearish for 7 to 11 (or 14 to 22 hours). SELL ZONE

Peaks

Valleys

BUY ZONE

US DOLLAR INDEX COURSE

How to Read the Stochastic RSI

Introduction to Stochastic RSI

© Copyright Market Traders Institute

71

66

US DOLLAR INDEX COURSE

9/25/2014

Strategy 3 – Pre-trade Step 1: Compress the chart and see if the market is in an uptrend or downtrend.

Strategy 3 Pre-trade Step 2: Identify the A,B,C,D’s, sub a,b,c,d’s, and Fibonacci’s on the Daily chart, 2-hour chart, and 15minute charts. Adjust them as needed.

72 © Copyright Market Traders Institute

67

9/25/2014

Step 3: When BUYING, wait for the Stochastic RSI to enter the Oversold Zone (Valley).

Stochastic RSI is in the Overbought Zone (Peak)

When SELLING, wait for the Stochastic RSI to enter the Overbought Zone (Peak).

US DOLLAR INDEX COURSE

Strategy 3 Pre-trade

Strategy 3 Pre-trade Step 4: On the Dollar Index chart, preferably during the Active Zone, look for Bullish candlestick formations when the market is ABOVE the hand drawn trendline, and Bearish candlestick formations if the market is BELOW the hand drawn trendline.

Stochastic RSI is in the Peak (overbought) zone

Evening Star formation appears

© Copyright Market Traders Institute

68 73

US DOLLAR INDEX COURSE

9/25/2014

Strategy 3 Pre-trade Step 5: Identify if the market is in a retracement or an extension.

The market has retraced to the 0.618 and has crossed below the C.

Strategy 3 Pre-trade Alarm appears during the Dead Zone

Step 6: Identify if the market is in the Active or Dead zone.

74 © Copyright Market Traders Institute

69

9/25/2014

Step 1: Once the Stochastic RSI enters the Oversold Zone (Valley) if BUYING in an Uptrend, or it enters the Overbought Zone (Peak) if SELLING in a Downtrend, wait for a candlestick formation to appear in the direction of the trend for an ideal entry on either the US DOLLAR 120, 60, or 15 minute chart.

Evening Star formation

Stochastic RSI in Overbought (Peak) zone

US DOLLAR INDEX COURSE

Strategy 3 Trade Plan

Strategy 3 Trade Plan Step 2: When entering on an extension, draw a 25 degree angle line from the most recent MAJOR retracement LOW if buying, HIGH if selling. If you’re entering on a retracement, draw a 45 degree angle line as a counter trendline. Then draw a trendline on top of your angle line, extend it, then activate the alarm “On Close Past Line.”

25 degree angle line drawn

© Copyright Market Traders Institute

70 75

US DOLLAR INDEX COURSE

9/25/2014

Strategy 3 Trade Plan Step 3: Place a stop 40-50 pips beyond the entry.

40 pip stop

Strategy 3 Limit Targets Option 1: Exit at the Fibonacci D extension of the US DOLLAR Timeframe that was used for the entry or Fibonacci D extension of the currency pairs traded in the basket (a price alarm on the D extension can be set to alert when reached.)

USDX 15 minute

D extension on USDX 15 minute is reached

76 © Copyright Market Traders Institute

71

9/25/2014

Option 1: Exit at the Fibonacci D extension of the US DOLLAR Timeframe used for the entry or Fibonacci D extension of the currency pairs traded in the basket (a price alarm on the D extension can be set to alert when reached).

USD/CHF 120 minute 228 pips captured

D extension of USDX 120 minute is reached

US DOLLAR INDEX COURSE

Strategy 3 Limit Targets

Strategy 3 Limit Targets Option 2: Place the limit at a 1:1 ratio (example: if the stop is 40 pips, place the limit 40 pips away from entry).

USD/CHF 120 minute

40 pips risk/40 pips reward

40 pips captured

© Copyright Market Traders Institute

77 72

US DOLLAR INDEX COURSE

9/25/2014

Strategy 3 Limit Targets Option 3: Exit if the market breaks the 25 degree angle Trendline from the USDOLLAR chart or the currency pairs in the basket being trading. 25 degree angle line is broke

Strategy 3 Limit Targets Option 3: Exit if the market breaks the 25 degree angle Trendline from the USDOLLAR chart or the currency pairs in the basket being trading.

USD/CHF 120 minute

25 degree angle line was broken on USDX chart at this point

78 © Copyright Market Traders Institute

73

Trading the Stochastic RSI Buy and Sell Zones in the direction of the trend on a 120, 60, or 15 minute time frame Pretrade Checklist Compress the charts and see if the market is in an uptrend or downtrend. Find and mark your A,B,C,D’s, sub a,b,c,d’s, and Fibonacci’s on the 2-hour chart, 60-minute and 15-minute charts. Adjust them as needed. Draw your Trendlines to determine market direction. If BUYING, wait for the Stochastic RSI to be in the Oversold Zone (Valley). If SELLING, wait for the Stochastic RSI to be in the Overbought Zone (Peak). On the Dollar Index chart, preferably during the Active Zone, look for bullish candlestick formations when the market is ABOVE the hand drawn trendline, and bearish candlestick formations if the market is BELOW the hand drawn trendline. Figure out if you’re on a retracement or an extension. Figure out if you’re in the Active or Dead zone.   Trade Plan

US DOLLAR INDEX COURSE

Strategy 3

Once the Stochastic RSI enters the Oversold Zone (Valley) if BUYING in an Uptrend, or it enters the Overbought Zone (Peak) if SELLING in a Downtrend, wait for a candlestick formation to appear in the direction of the trend for an ideal entry on either the US DOLLAR 120, 60, or 15 minute chart. If you’re entering on an extension, draw a 25 degree angle line from the most recent MAJOR retracement LOW if buying, HIGH if selling. If you’re entering on a retracement, draw a 45 degree angle line as a counter trendline. Then draw a trendline on top of your angle line, extend it, then activate the alarm “on close past line”. Place your stop 40-50 pips beyond your entry.   Limit Targets Exit at the Fibonacci D extension of the US DOLLAR 120, 60, or 15 minute chart (you can put a price alarm on the D extension to notify you when it’s hit). Place your limit at a 1:1 ratio (example…if your stop is 40 pips, place your limit 40 pips away from your entry). Exit if the market breaks the 25 degree angle Trendline from the US DOLLAR chart or the currency pairs in the basket you’re trading. © Copyright Market Traders Institute

79

US DOLLAR INDEX COURSE

Live Market Examples

80 © Copyright Market Traders Institute

9/25/2014

Using the US Dollar Crossfire v2 for entries into the market

US DOLLAR INDEX COURSE

Strategy 4

Strategy 4 Trading the US DOLLAR CROSSFIRE and US DOLLAR CROSSFIRE v2

USDOLLAR 60 minute

© Copyright Market Traders Institute

81

75

US DOLLAR INDEX COURSE

9/25/2

Strategy 4 • The US DOLLAR CROSSFIRE and US DOLLAR CROSSFIRE v2 are both designed to give Buy, Sell, and Exit signals. • Designed exclusively for the USDOLLAR 60-D-W timeframe only. • Has a 30 point stop and 60 point limit built in. • The US DOLLAR CROSSFIRE system is recommended for use when the EUR/USD has a Daily Trading Range greater than 80 pips. • The US DOLLAR CROSSFIRE v2 system is recommended for use when the EURUSD has a Daily Trading Range less than 80 pips.

How to Trade the US DOLLAR CROSSFIRE Systems The US DOLLAR CROSSFIRE systems consist of alarms that will appear when the Red indicator crosses over the Blue indicator. How to read system alarms:

1

1

BUY order where no previous trade was active

2

Reversal BUY order where a previous SELL trade was active

1

SELL order where no previous trade was active

2

Reversal SELL order where a previous BUY trade was active 1

Stop, Limit, or Exit the trade. This symbol closes the position out

82 © Copyright Market Traders Institute

Trading a basket of currencies when either system calls a buy or sell symbol Pretrade Checklist Buying When a green arrow appears Buy all USD primary pairs Sell all USD secondary pairs Trade Options Stops 40 pips from entry per currency pair Limits 40 pips from entry or wait for the red sell reversal arrow to appear or the black stop or limit arrow to appear

US DOLLAR INDEX COURSE

Strategy 4

Selling When a red arrow appears Sell all USD primary pairs Buy all USD secondary pairs Trade Options Stops 40 pips from entry per currency pair Limits 40 pips from entry or wait for the green buy reversal arrow to appear or the black stop or limit arrow to appear

© Copyright Market Traders Institute

83

US DOLLAR INDEX COURSE

Live Market Examples

9/25/

Market Traders Institute

“A Brand You Can Trust” It is not Just A Forex Education… It Is A Belief! 84 © Copyright Market Traders Institute

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Any statements regarding income, whether expressed or implied, do NOT represent a guarantee. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Any opinions, news, research, analysis, prices, or other information contained in this e-mail or promotional material is provided as general market commentary, for educational purposes only, and does not constitute investment advice or a solicitation to buy or sell any Forex contract or securities of any type. MTI will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

US DOLLAR INDEX COURSE

FOREX DISCLAIMER

ANY RESULTS PROVIDED ARE BASED ON SIMULATED OR HYPOTHETICAL PERFORMANCE RESULTS THAT HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE THE RESULTS SHOWN IN AN ACTUAL PERFORMANCE RECORD, THESE RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, BECAUSE THESE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THESE RESULTS MAY HAVE UNDER-OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED OR HYPOTHETICAL TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THESE BEING SHOWN. The information as presented is based on simulated trading using systems and education developed exclusively by MTI. Please note that simulated trading results may or may not have been back-tested for accuracy and that spreads/commissions are not taken into account when preparing hypothetical results. Pips captured represent net or overall pips for the trading period indicated. All results are based on simulated trading and are not live trading accounts. Please read the General Disclaimer and the Risk Disclaimer located on MTI’s website at http://www.markettraders.com/about-fx-company/general-disclaimer/ and at http:// www.markettraders.com/forex-risk-disclaimer for more information.

© Copyright Market Traders Institute

85

Suggest Documents