Universal Codified Traders LLC Trading Plan

​Golden ratio is a series of numbers that create ratios describing the

natural proportions of everything in the known universe.

0,1,1,2,3,5,8,13,21,34,55,89,144…

After the first few numbers if you measure the ratio of any number to
the succeeding number you get ​.618 or 61.8%

If you measure the ratio between alternate numbers you get​ .382 or
38.2%. (34\89=.382)

These ratios can be used to determine where the market may find
support and resistance levels.

The fibonacci retracement levels: ​0.236, 0.382, 0.500, 0.618, 0.764.

​The fibonacci extension levels: ​0, 0.382, 0.618, 1.000, 1.382, 1.618.

Fibonacci levels need significant swing highs and swing lows to be properly
measured.

​ ***​To find the fib ​retracement​ levels for a downtrend find a swing
high and drag the cursor to the most recent swing low. The strongest levels
are ​0.618, 0.236,​ and ​0.382.
*** ​To find the fib ​retracement​ level for a uptrend, find the swing low
and drag the cursor to the most recent swing high. The strongest levels are
0.618, 0.236,​ and ​0.382.
***​To find the fib ​extension​ levels for a uptrend find swing low, drag
the cursor to recent swing high, then drag the cursor to any retracement
level...Reverse for downtrend.
Universal Codified Traders LLC Trading Plan

BOLLINGER BANDS

1. Bollinger Bands are used to measure volatility in a pair. When the

bands contract there is no volatility, and vise versa.
2. Bands are another form of dynamic support and resistance, they work
best on longer time frames and ranging markets.
3. If volatility picks up and it's a break in the band, that breakout is
usually consistent.
4. When using Bollinger Bands its best to overlay 2 BB and change
the standard deviation on one of the bands to (1), this will create
a upper and lower channel. Only trade when price is in one of
those channels.
5. When the bands squeeze tight together anticipate a strong breakout.
6. Bollinger Bands are to ONLY be used in ranging, slow,
consolidated, markets, because that’s when they are most
effective.
7. Bollinger Bands are the more accurate on ​longer​ ​time​ ​frame​ ​charts.

Universal Codified Traders LLC Trading Plan

Stochastic Oscillator

1. The Stochastic Oscillator helps determine where a trend might be

going. During a uptrend prices will remain equal to or above the
previous closing price.
2. During a downtrend price will remain equal to or below previous
periods closing price.
3. It also helps to identify if the market is overbought or oversold.
4. The stochastic can be used as a leading indicator for ​Divergence​.

DIVERGENCE
Divergence is a signal for a ​reversal​ or ​continuation​. It should be
used as a leading indicator.

● The 2 main types of divergence is ​Trend​ and ​Hidden​. Regular

divergence is a signal for a reversal, hidden divergence is a
signal for a continuation.

● Trend​ ​bullish​ divergence is when price is making LL and

the oscillator is making HL, price may go up. This usually
happens on downtrends.

Universal Codified Traders LLC Trading Plan

Divergence cont…
 ● Hidden​ ​bullish​ divergence happens when price make HL
and the oscillator is making LL, price may continue in the
uptrend.

● Trend​ ​bearish​ divergence is when price is making HH and

oscillator is making LH, price may reverse and go down. This
usually happens on a uptrend.

● Hidden bearish​ divergence is when price is making LH

and oscillator is making HH, price may continue down.

Universal Codified Traders LLC Trading Plan

Parabolic SAR

Parabolic stop and reversal helps identify when a trend ends. When dots are below
the candles it's a buy signal, when dots are above the candles it's a sell signal.
This indicator is best used in ​trending​ ​markets​.
● 3-5 dots=​EXIT

ADX

Average Directional Index indicates Strength of trend. It does not indicate direction of
trend, this is best used to see extreme highs and extreme lows.

MACD

● Moving average convergence and divergence is used to identify moving

averages that are indicating a new trend.
● The first number is the faster moving average, the second number is the slower
moving average, and the third number is the moving average of the difference of
the first 2. The third number is displayed as a histogram.
Universal Codified Traders LLC Trading Plan
Ichimoku Kinko Hyo

1. Ichi indicates future price momentum and determines future areas of

support and resistance. It's actually 3 indicators in one.
2. This indicator performs best with JPY pairs.
3. The blue line is also called the standard or base line, if price is higher
than the blue it could go higher. And vise versa.
4. The red line is market trend, if its pointing up then the market should
be in a up trend, and vise versa. (pay attention to the angle of the
trend line)
5. If the green line crosses the price going up then its a buy signal, if the
green line crosses the price going down it's a sell signal.

***This indicator its best used on the longest time frame chart I use
when doing my technical analysis. As most technical indicators
performs best on longer time frame charts. Areas to pay attention to
is the baseline and the market trend angle.***

Universal Codified Traders LLC Trading Plan

RSI

The Relative Strength Index also identifies overbought and oversold

conditions.
It's also used for center line crossovers. If a rising centerline crossover
happens it generally indicates a trend is rising in strength until it reaches
overbought conditions. And vise versa.
RSI is also used to confirm trend formations, if a trend is forming, see
if the RSI is above or below the centerline.

Moving Averages

Exponential Moving Averages help to identify trends. When using a moving average, its
best to plot 3 moving EMA’S on the chart, 5 period, 15 period, and 40 period. When the
5 period moving average crosses the 15 period going up then it may be the start of a
new trend. If the 5 period crosses the 15 and the 40 period going up then the trend is
almost confirmed. Vise versa for a downtrend. Moving averages can also be used as
dynamic support and resistance.

Universal Codified Traders LLC Trading Plan

 Harmonic Price Patterns

Harmonic​ ​Price​ ​Patterns​ help spot retracements of recent trends to catch the
price at the ​perfect​ ​entry​.
If a Harmonic Price Pattern is spotted wait for the entire pattern to complete
before taking any short or long trades.

AB=CD Pattern
Fib retracement on leg AB the retracement BC should be 0.618 line CD should be 1.272
extension of BC.

***This is an example of a bearish AB=CD pattern. The length of line AB should

be equal to the length of CD, and the time for the price to go from AB should be
equal to CD***
Universal Codified Traders LLC Trading Plan
 Bullish 3 Drive

***The time is takes to complete drive 2 should be equal to drive 3.

The time it takes to complete retracement A should be equal to B***

Universal Codified Traders LLC Trading Plan

Gartley Pattern

These patterns help find good entry points to get in the overall trend.

1. Move ​AB​ should be the .​618​ retracement of move ​OA​.

2. Move ​BC​ should be either .​382​ or .​886​ retracement of move ​AB​.
3. If retracement of move ​BC​ is .​382​ of move ​AB​, then ​CD​ should be
1.272 ​of move ​BC​. Consequently, if move ​BC​ is ​.886​ of move ​AB​ the
CD​ should extend ​1.618​ of move ​BC​.
4. Move ​CD​ should be ​.786 r​ etracement of ​OA​.

Universal Codified Traders LLC Trading Plan

Bearish and Bullish Crab

1. Move ​AB​ should be the ​.382 ​or ​.618​ retracement of move ​XA​.
2. Move ​BC​ can be either ​.382​ or ​.886​ retracement of move ​AB​.
3. If retracement of move ​BC​ is ​.382 ​of move ​AB​, then ​CD​ should be ​2.24​ of move
BC​, consequently, if move ​BC​ is .​886​ of move ​AB​, the ​CD​ should be ​3.618
extension of move ​BC​.
4. CD​ should be ​1.618 ​extension of move ​XA​.

Universal Codified Traders LLC Trading Plan

Bat
Bat is defined by the ​.​886​ ​retracement of move ​XA​ as a potential reversal zone.

1. Move ​AB​ should be the ​.382​ or ​.500 ​retracement of ​XA​.

2. Move ​BC​ can either be ​.382​ or ​.886 ​retracement of move ​AB​.
3. If retracement of move ​BC​ is​ .382​ of AB then ​CD​ should be 1
​ .618
extension of move ​BC​. Consequently if move ​BC​ is ​.886​ of move A
​ B
then ​CD​ should be ​2.618​ extension of ​BC​.
4. CD​ should be ​.886​ retracement of move ​XA.
Universal Codified Traders LLC Trading Plan
Butterfly
The perfect butterfly is defined by the ​.786​ retracement of ​AB​ with respect to ​XA​.

1. Move ​AB​ should be the ​.786​ retracement of ​XA​.

2. Move ​BC​ can either be​ .382 ​or ​.886​ retracement of move ​AB​.
3. If retracement of move ​BC​ is .​382​ of move ​AB​ then ​CD​ should be
1.618​ extension of move ​BC​. Consequently, if move ​BC​ is​ .886 ​of
move ​AB​ then ​CD​ should extend ​2.618 ​of move ​BC​.
4. CD​ should be​ 1.27​ or ​1.618 e
​ xtension of move ​XA.
Universal Codified Traders LLC Trading Plan
 Risk Management Codes

The risk management code system outlined in this Trading Plan is centered
and designed around long term survival and overall account growth. If
these codes are followed in their entirety, success will be the
consequence.

​ f my
1. Under no circumstances do I ever risk more than​ 2%​ o

account balance on any single trade, including fees and pip

spread.
2. Always place stop loss at​ ​35% ​of the ​2% ​at risk.
3. Monthly risk capital limit is​ ​6%-8%​. This will ensure survival of
drawdowns and survival of maximum drawdowns.
4. If monthly ​8%​ limit is reached, all trading will ​CEASE​ for the
remainder of the month. This will help to ensure a favorable
trading record.

​ f my account balance.
5. Take profit orders will be set at ​1%​ o

6. When ​1%​ profit target is triggered, adjust stop loss to​ 50%​ of
profit. Every percent gained thereafter adjust stop loss to ​50%​ of
gains.
7. Daily allocated risk capital of ​2.5%​.
8. If daily ​2.5% ​ limit is reached, all trading for the day will ​CEASE.
Universal Codified Traders LLC Trading Plan
 TRADING CODE SYSTEM ​(TRENDING)

1. Look at the 4 hour chart to ascertain the long term trend, using a
trend indicator to make sure I measure the angle of the trend line to
gauge the strength and “feelings” of trend. (trend must be healthy)
2. Then look at the 15 min chart, using stochastics for a entry signal. If
the trend on the 15 min chart is going away from hourly trend. When
stochastic is showing overbought or oversold it will be pointing in the
direction of long term trend, I can look to get in going in the direction
of hourly trend, the opposite way of the 15 min trend.
3. If the first 2 charts give the proper signals look on the 2 min chart look
for “trailing entry stops” using price action to pinpoint entry points.
When the hourly trend is up and the 15 min trend is down and
oversold, on the 2 min chart look to get in when the previous 15 min
high is exceeded by 1 pip. Keep lowering the buy order to the
previous bars high every 15 min until Im stopped in.
4. When I'm in the market just use my risk management codes for taking
profits and exiting.
5. After I exit make sure I write every aspect of my trade in my trading
journal, including length of time I held on to trade, and feelings
entering and exiting.
Universal Codified Traders LLC Trading Plan

Commitment of Traders report (COT)

● The Commodity Futures Trading Commission CFTC publishes the COT report
every friday @2:30. The COT measures the net long and short positions taken by
speculative and commercial traders. ​Im looking for extreme long and short
positions because a reversal is coming.

U.S Dollar Index

● The USDX provides a very clear picture of the USD strength at any moment. If
the USDX is up, Euro is down and vise versa.

GOLD
● The price of gold has a ​positive​ ​correlation​ with ​AUD/USD​. When gold is up
AUD/USD is up, and vise versa.
● Gold has a ​negative​ ​correlation​ with ​USD/CHF​ because 25% of switzerland
money is backed by gold reserve. When USD/CHF goes down, gold goes up.

Oil
● Oil has a ​negative​ ​correlation​ with ​USD/CAD​ because the USA imports
3 million barrels of oil a day from Canada.
● 85% of Canada exports come to the USA, so we always need CAD.
Universal Codified Traders LLC Trading Plan
 Psychology
The study of the human mind and human behaviors.
The key to winning is Psychological, and the most essential
element to winning is managing my feelings and emotions!!! I must
observe myself and notice changes in my mental state as I trade
because success or failure ​only​ depends on how I control my feelings
and emotions.

The markets is a huge mass of people, I have to understand the

mass psychology of crowds and crowd behavior. A fact of nature is,
people are different when transformed into a crowd! Crowd suck us in
and cloud our judgement.
● Individual behavior is difficult to predict because the human
mind is very flexible.
● Crowd behavior is primitive and easy to predict. An example of
that would be a 3 bar reversal, handing man, double top ect.
All price action patterns are a birds eye view of crowd
behavior, I have to be able to analyze group behavior but be
careful not to get caught up in the groups I’m analyzing
because I could miss a strong reversal when the trend looks
strong from one angle.