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END OF DAY TRADING STRATEGIES THE PATTERNS TO TRADING SUCCESS

What will you learn from this course?

This course has been designed for those who wish to trade on and end of day basis. What is
end of day? End-of-day trading basically allows you to fit in trading around your schedule,
whatever it may be. You can keep your day job with no problems.

In fact, being away from the market is actually good for you this is a hidden advantage to
end-of-day trading. Since you wont be as involved with the markets you will have a natural
filter against over-trading and this will likely increase your bottom line at the end of the year.

As an end-of-day Forex or Commodity trader you can live your life exactly as you are now, but
instead of spending 30 minutes watching television at night if you live in Europe, or be fresh
when you wake up in the morning if you live in Asia, you can simply analyze the markets
according to your trading plan and look for trading pattern setups. It might seem too good to be
true, but really its not; the truth of the matter is that once you learn an effective trading strategy
and develop into an effective trading plan, you really do not need to spend hours analyzing the
markets each day.

I will be teaching you 4 trading strategies on Pattern Trading the markets which can be used
across any of the trading classes:

Foreign Exchange
Commodity Markets
Stock Indexes
Individual Stocks

Studying the Daily charts will present fewer opportunities than if you were trading intra-day
however the benefits can be far greater as you may get on very large moves that will present you
with significant profits. Like any trading though we will have losing trades and it is how we
manage our trading positions that will be the difference from being a losing trader to one who
succeeds in this business.

The 3 Ps of trading are extremely important to you success.

PREPARATION

PATIENCE

PERSISTANCE
All three of these traits are just as important in end of day trading as they are if you undertake
any form of trading.

PREPARATION

The most important part of your trading day is following the same rules every day. As part of
your trading plan we should all have a routine before we sit down to actually trade the markets.

Preparation

What we do before we move into the trading session is just as important as placing a trade and
managing it properly. Being mentally prepared to sit down and trade is assisted by a routine
that we perform daily and this will include

Re-booting our computer


Setting up our charts and applying our trading templates
Reviewing our Trade Setups
Reviewing our strategy/plan and viewing previous trading charts that we have saved
showing the patterns and winning setups.
I tell a student that the most important class you can take is technique. A great chef is first a
great technician. 'If you are a jeweler, or a surgeon or a cook, a trader you have to know the trade
in your hand. You have to learn the process. You learn it through endless repetition until it
belongs to you.

Jacques Pepin

When we do the same preparation daily we are preparing ourselves to succeed. Correct
preparation allows us to then sit down and focus on our own trading rules and to follow them
without fail.

PATIENCE

Patience is a not only a virtue it is the core ingredient to TRADING SUCCESS. I have used
many of these pictures of a cat waiting for a mouse for good reason. We do not know when we
will get a TRADE SETUP, and at times it will seem that we will never get one. The markets go
through a daily process of moving back and forth; I want you to see through not only being
taught but by doing your own analysis that the patterns that we seek do appear, we just have
to be patient and the market will reveal the setups we require to then be able to act. What we
do know is

Trade setups will occur


They may appear in the first 5 minutes of our trading day
They may appear in 2 hours into our trading day
We may not get a trading setup (rare but it does happen) if we do not then we do not
trade. Stick to your trading plan!!
We just need to act when they do appear and act with confidence and be PERSISTENT

PERSISTENCE

As with any new undertaking to learn a new skill or profession or anything for that matter it will
take time and persistence to master your new skills. The learning process for TRADING THE
MARKETS is no different from any other skill or profession. Learning the rules and the trade
setups will require some time and the willingness to learn and your acknowledgement of this
process. Once learnt these skills will not be forgotten. It is a process of a step by step building
of knowledge and application. What makes trading the Markets and interesting profession is
that the patterns that we seek when making our trading decisions repeat themselves. Once we
understand this outcome then we can build a plan or TRADING PLAN.
Our Trading Plan is built around persistence and understanding and repeating positive
processes through practice and repetition. Being persistent is

Being open and willing to learn and apply the same rules over and over again
Following the rules and repeating positive outcomes, acknowledge our mistakes and
aim to limit them
Review over and over the trade setups that produce the most successful outcomes
Being prepared to do additional hours in studying and understanding the markets

The application of Preparation, Patience and Persistence will be the 3 things that enable us to
succeed in this chosen profession. How quickly you learn the skills we will be teaching is up to
you and we will offer all the support you require throughout your learning in the layering of the
skills required and the application and execution of your TRADING PLAN.
THE ABC PATTERN

At the end of this lecture and video tutorial on the ABC pattern, you will be able
to practice and recognize and apply this trading pattern on any tradable foreign
exchange, commodity, and individual stock or stock index cash or futures
contracts.

We will be using the MT4 trading platform (a free downloadable trading


platform) to show you one of the most reliable trading patterns that is repeatable
on intra-day as well as end of day charts.

What is the ABC pattern?

The ABC pattern is a corrective pattern in a trend. As a market goes through its
trending process it will do so never in a straight line but in a series of price surges
and retracements. So as traders we are attempting to identify these patterns to
allow us to trade back in the direction of the trend (whether that is a bullish trend
or a bearish trend).

START

LONG TRADE SETUP


Once a trend us underway this very specific pattern allows us to participate in the
strength of an underlying trend with the ability to enter trades that offer us low
risk and high probability winning trades.

What indicators do we do to identify this pattern on our charts?

55 ema (Exponential Moving Average)


Zig Zag indicator (Allows us to identify pivot or turning points).
Non lag moving average (length 21)
Please see video on how to download these indicators.

Long (Buy) setup

The 55 ema (magenta) is our trending moving average (note upward slope
direction) we use as a reference point for the ABC trade. A pullback into
this moving average preceded by the ABC pattern is our trade setup.
How does this trade setup?

A strong move either up through the 55 ema and a pullback to, or from the 55
ema.

The start point will be identified when the market shows us that it pivots
away from this point to form the first pivot A
The market reacts of a new pivot which becomes A
Moves in the upward direction the B pivot cannot exceed the Start pivot
The market forms another retracement pivot and breaks the A pivot to
move into the 55 ema.
How do we enter this trade?

We have two ways we can enter this trade.

We can draw a simple trend-line from the start pivot down across the
high of the B pivot and enter (long) on the confirmation of a closing bar
above the trend-line.
Non-lag (21 period) change of color.
Trend line entry for the ABC long trade.
Non-Lag Moving Average (21 period)

The Non-lag Moving Average is a fast moving average which we can highlight a
change of color on the average to indicate to us

That the C pivot has formed


The change of color indicates the exact entry bar
The general rule is that the change of color on the non-lag moving average
will be 1-2 bars quicker for us to enter the trade.

Non-lag Moving Average (21 period) entry bars are highlighted by

The change of color from red to yellow.

Please note that the non-lag moving average does not at any point break below
the 55 ema. If this were to occur then the ABC pattern following the above rules
would be invalid.
THE ABC SHORT (SELL TRADE) SETUP

DOWN-TREND

A C

START
The 55 Ema (magenta) is our trending moving average (note downward
slope direction) we use as a reference point for the ABC trade. A pullback
into this moving average preceded by the ABC pattern is our trade setup.

What indicators do we do to identify this pattern on our charts?

55 ema (Exponential Moving Average)


Zig Zag indicator (Allows us to identify pivot or turning points.
Non lag moving average (length 21)

How does this trade setup?

A strong move either down through the 55 ema and a pullback to, or from the 55
ema.

The start point will be identified when the market shows us that it pivots
away from this point to form the first pivot A
The market reacts of a new pivot which becomes A
Moves in the downward direction the B pivot cannot exceed the Start
pivot
The market forms another retracement pivot and breaks the A pivot to
move into the 55 ema.
How do we enter this trade?

We have two ways we can enter this trade.

We can draw a simple trend-line from the start pivot up across the low of
the B pivot and enter (short) on the confirmation of a closing bar below
the trend-line.
Non-lag (21 period) change of color.

The break of the trend-line in our first chart coincided with the non-lag
change of color for the sell (short entry).

How do we manage this trade?

Entry for both buy and sell trades are on the open of the next bar after
either confirmation of the trend break or the change of color of the non-lag
indicator. Our stop-loss on both short and long trades is behind the C
pivot.
Should the trade move in our direction we can trail the stop loss behind
each of the pivots that form.
If you choose to use profit targets then once a trend is underway we can
use a trend channel to identify where the market may stop.
A stop loss can also be placed above for a short trade or below for a long
trade the 55 EMA.
For a definitive target we can measure the distance from the Start of the
pattern to where the C pivot has formed and use that distance in points
as a target from our entry point.

Each individual trader has their own preference for how they manage their
trades. This particular trading pattern when we get a break below the 55 ema for
a short trade or break above the 55 ema for a long trade for the FIRST TIME
often can mean the beginning of a new trend. It is worth having patience with
this trade and trailing the stop-loss behind the pivots that form as the trend gets
underway to maximize the potential for very large trading profits.

Please see video on Trading the ABC Pattern for a full description on this trade
and the examples in this lecture.
TRADING PATTERNS SETUPS USING THE 165 EXPONENTIAL MOVING
AVERAGE AND THE NON LAG MOVING AVERAGE

The 165 Exponential Moving Average is a wonderful average to make trading


decisions off. Like any moving average it is a trending indicator which will have a
slope indicating the direction of the market. The most important component of
this trading setup is the market must respect this moving average. What is
respect? The market must touch this moving average and react from that area
back in the direction of the trend.

The first time anything happens in a market and gives you a trade setup in the
market is usually the best place to trade. What do I mean by this?

If we are using an indicator (in this case the 165 ema), when a market breaks
through this indicator with strength and pulls back to that area and respects that
indicator (the 165) and moves away from that average the chances of the success
of the trade are highly probable.

BREAK AND RETEST OF THE 165 EMA


LIKE ANY TRADE SETUP YOU WILL HAVE BOTH WINNING AND LOSING TRADES

Many new people to trading expect the holy grail I am afraid it does not exist
when trading. What we do when we trade is we stick to a strategy and persist
with it knowing that with strict money management rules we will succeed and
profit over time. The 165 trading setup aims to identify low risk entries with high
probability trade setups that can lead to large trading profits.

We stick to our trading strategy and follow the rules.

It is not unusual to have 3-4 losing trades in a row which is when traders give up
on a trading method. When you have a trading method and you need specific
rules before you enter a trade. Once the rules are met then you execute your
trade with confidence and always use a stop loss on the position and know how
you will exit that trade. Do not change the rules.
What Indicators do we use for the 165 EMA trade setup?

On our MT4 trading platform we use a 165 EMA


A non-lag moving average (length 21)
Zig Zag Indicator

Please see video on downloading the Non-lag and Zig-Zag Indicator.

The rules for a Long trade (Buy):

Market retraces back to the 165 and hits.


The non-lag moving average must stay above the 165 ema
The entry bar is the change of color from red to yellow identifying the
exact bar to enter a trade on.

Trade Setup 165 ema Long (Buy Trade)


Rules for a short trade:

Market retraces back to the 165 and hits.


The non-lag moving average must stay below the 165 ema
The entry bar is the change of color from blue to yellow identifying the
exact bar to enter a trade on.

Short Trade (Sell) Setup 165 ema.

Please see video on the 165 ema Trade setup for full trade description and money
management rules.
TRADING PATTERN 55/165 EMA TRADE

What does this pattern setup show us?

We use these two moving averages on our charts like any other indicator. These
two moving averages indicate to us trending support and resistance. And we
can make the assumption that should the market be below these averages we are
in a downtrend, and above these averages then we are in an uptrend.

This trading setup helps us identify when a market trend change may be
underway and allows us should we decide to participate in this trading setup.

Being the first time that the market is showing us that it may wish to change
direction this trade will go through a process the majority of the time of moving in
the direction of your trade and reversing. Trend changes can take time to
develop and we have to be aware that this position will move in and out of the
money. The beauty of this trade is that we know where our stop loss is and we
can potentially participate in one of the most profitable trading setups as we are
entering the market prior to other market participants recognizing that a new
trend maybe underway.

What technical indicators do we use for this trade setup?

1. 55 period exponential moving average


2. 165 period exponential moving average
3. 21 period Non-lag moving average (3 colors)

Please see video on downloading the Non-lag moving average.

What is this trade setup? TREND CHANGE early participation in a potential new
trend. This trade can achieve gains of 3-8 times what your potential loss is on any
trade. Like any trading pattern we have to be prepared for losing trades. It is part
of trading. Consistency with any trade-setup or pattern is vital to success in
trading.
Examples in this course will be done using Daily Charts. This trade setup can be
used from 5 minute timeframes to Weekly charts on and tradable market
whether they be FX, Commodities or Shares.

The LONG trade (buy setup)

Rules for this trade:

Market moves from underneath the 165 ema and breaks through.
This is confirmed by the non-lag moving average breaking through the 165
ema
The 55 ema will be in most cases still underneath the 165 ema.
Once this break is confirmed we are looking for the market to pull back to
the 55 ema. This move back must touch the 55 ema and respect that
average.
Once this is confirmed we await a non-lag moving average change of color
from red to yellow. This gives us an exact bar for entry.

The closer the 55 ema is to the 165 the greater the success of this trade.
The SHORT trade (sell setup)

Rules for this trade:

Market moves from above the 165 ema and breaks through.
This is confirmed by the non-lag moving average breaking through the 165
ema.
The 55 ema will be in most cases still above the 165 ema.
Once this break is confirmed we are looking for the market to pull back to
the 55 ema. This move back must touch the 55 ema and respect that
average.
Once this is confirmed we await a non-lag moving average change of color
from blue to yellow. This gives us an exact bar for entry.

The closer the 55 ema is to the 165 the greater the success of this trade.

Please see video on the 55/165 for money management strategies.