Zero Mistake

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 CONTENT
O V E R V I E W

Psychology

Principles that governs the trading stimulus into

making actions from defined situations.

Risk Management
Measurable dependent matrices for solid
compounding forecasts and effective positioning.
.

Strategies
Styling tactics in consideration to play with big
players while seeking liquidity in the market.

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 Introduction
In order to succeed in the trading business you need a sound methodology,
an edge and a lot of common sense. Not only that but a lot discipline and a
rock solid understanding that if you do not treat this as a business you have a
zero chance of long term success.

The question should be “Who is Forex?”. Working for a company without

knowing its principles and culture, surely doesn’t drive innovation and
diversification that can result in satisfaction.

Forex is a smart guy called the dealer. His objectives in trading business are
simple, manipulate the market participants’ and get what belongs to him.
The main aim is to move the money, and this liquidity is not enough.
Therefore, he uses techniques to accumulate liquidity as far as he can. And
these techniques happen in cycles over and over. Simply, the dealer creates
reactions in the market that has defined solutions to help him achieve his
goal.

Your only duty as a trader is to understand what lies beneath price moves
and most importantly, mastering reactions the dealer presents in the market.

Flush everything written in retail technical books and go ahead connect the
3 missing dots.
 Psychological Vehicles
Now that you know there is small elite group of traders, the dealer, that
do in fact control how the market will play out on any given day, furtherly,
understand that for every action, there will be reaction. A strong trading
psychology entails being able to richly react to reactions existing at that
time in the market.

The chaotic theories, the Action-Reaction Theory and Hegelian Dialectics

Theory, similarly governs the market participants’ perceptions and action-
Trading Psychology Principles reactions, which used to manipulate actions.

 The Action-Reaction Theory:

 For every reaction that occurs in the market is pre-arranged
chaotic action intended to distract the participants, with varying
reactions. This give rise to fear , hence informed advantage can
be taken of those affected.

 Hegelian Dialectics Theory:

 Similarly, it is controlled-opposition that guides perceptions into
conflicts that leads to synthetic solutions which can only be
introduced once those being manipulated take a side that will
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advance the pre-determined agenda. It’s simply the rise of
problem, action and reaction in the market.
 Reaction Cycles
The psychological cyclic process below explains the relationship between our
feelings and judgement. This principle is also used in the market at Macro or
Micro levels.

Trading Psychology Principles

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 Psychological Application Summary
Ensure the following basic psychological concepts are understood and
planned out before trading:

 Understand the asset class you are trading:

 Don’t follow 20 pairs at once.

 Develop and adhere to your personal style and complete trade

Summary & Tips plan:
 Every trader has distinctive trading style.

 Utilize and exercise perfect risk management:

 Adhere to 1-1.5% risk per trade.

 Don’t assume to know where price will go:

 Setup your trades per your analysis in anticipation and act on
the planned.

 Think in terms of probability, not in absolutes:

 There are no absolutes in trading.
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 Introduction
"If you are unable to trade without the slightest bit of emotional discomfort (specifically, fear), then you
have not learned how to accept the risks inherent in trading. This is a big problem, because to whatever
degree you haven’t accepted the risk, is the same degree to which you will avoid the risk. Trying to
avoid something that is unavoidable will have disastrous effects on your ability to trade successfully.”
— Mark Douglas, Trading in the Zone

Risk management focusses on mainly understanding risks and making

proactive decisions about them. It is not practical, and rarely
necessary, to manage all risk measures with the regular intensity of
Risk Management Principles approach. It highly entails minimising voluntary and unanticipated
circumstances of a value at that time, for case in point, the
liquidity/volatility, time-zone, position-holding period and keeping
risk-reward in efficient proportion for particular time.

Opportunely, there are tools to measure effectual value at risk for

consistency in management. Position Sizing and protection

We’re dealing with probabilities, not certainties. The future remains

open. That is the real insight of the traders who know what they are
7 doing. Losses are certain. Profit is still possible.
 Risk Dependants
Each trader has specific risk tolerance, and it is important that you
fully understand your own risk tolerance so that you may define the
risk you are willing to take for a given opportunity.

Determining your risk tolerance:

Conservative: A conservative trader focuses on capital preservation

Risk Management Principles and growth, and looks to produce income trades while limiting risk.
Moderate: A moderate trader focuses on growth and looks to
increase and decrease risk exposure according to the odds of
profitability for a given opportunity.
Aggressive: An aggressive trader seeks to rapidly grow an account,
and will place directional trades under most favourable situations,
increasing exposure as odds increase.

Your goal is to be able to execute your bias in the market without

error, as execution error is generally the most costly of all trading
errors. Practice flawless execution of your strategies for each and
every trade. Thus scaling into position depends on the risk tolerance
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 Risk Executions
Trade execution entails risking portion of account equity for
calculated reward. Consequently, when the progressing trade is in
your favour, the technique of scaling is executed.

Scaling-into trades is a procedure of increasing positions by first

entering trade with smaller size/risk, and later adding more exposure
of positions to the account as preceding trade progressively
Risk Management Principles commences as predicted. This approach is effective as it reduces risk
while increasing the reward.

Together with the technique of scaling-out of trades which implicates

reducing risk when the odds against anticipated moves or gradually
taking of profits from trades in your favour, offers greater risk
tolerance to provide consistency, reduce risk exposure, and increase
flexibility in active trades.

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 Risk Management Summary
Trade executions depends on the following parameters below.

 Trade Allocation:
 Note the trade allocation that you have chosen for the trade to
measure risk exposure.

 Setup:
 Note the setup that you have chosen to trade.
Summary & Tips
 Strategy:
 Note the strategy that you will be executing from.

 Entry Allocation:
 Note the execution technique that you will be using to enter
and manage the preceding trade(s).

 Targets & Risk:

 Note the profit targets that you have forecasted for the trade.
Also, the stop level to keep the risk-reward ration constant.

10  Entry Level:
 Note the entry price for the trade.
 Introduction
The price movement impersonates participants’ perceptions in two
structures, the micro and macro manipulation phases. Obviously, in any
given trading day, the open , low , high and close price are created. Thus,
the dealer utilise those components to control our action-reaction.

MICRO STRUCTURES:
Defined as cycles of fractal price over smaller scales, visible on smaller
timeframes (H1-M5). Simply characterised by price movement through
Trading Strategies Principles sessions (Asian, London and New York).

 Asian Session:
 Accumulation of contracts. Dealer creates a problem in the market.

 London Session:
 Liquidity Adding for next session. Breakout or Stop-Hunt of major
price levels.
 New York Session:
 Release of liquidity. Continuation or Reversals of price as per prior
added liquidity to meet ADR of that instrument.

MACRO STRUCTURE:
11 Cycles of fractal price over bigger scales (W1-H4). Simply characterised by 1-3
Days Reversals as per trading instruments’ ADR.
 Trading Sessions Timings
There is a time to make money and to avoid losing money. Knowing
the difference is a skill. Dealer creates problem in Asian (00:00-
08:00Am) session and accumulates contracts by trapping traders.

Trading Strategies Principles

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 Trading Sessions Timings
00:00-08:00Am, 08:15Am-14:25Pm, 14:30-21:45Pm GMT.

Trading Strategies Principles

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 Asian Session Defined
As a result of creating a problem through accumulations of contracts,
there exists little activities in cycles between two price point
boundaries, the Asian-Low and Asian-High.

This is the effect of Bank A buying a quantity of currency from Bank B

(at Asian-High price), which causes price to rise, and followed by
Bank B selling the same currency to Bank C (at Asian-Low), causing
Trading Strategies Principles price to fall.

This is a synchronised process in a range that when the boundaries

breaks, widely triggers the pending orders placed by breakout
traders, hence accumulation achieved, and later, the dealer is only
left with stopping them out extensively, in the London session.

Therefore, the Asian session is mostly used to gauge the daily

directional bias in most trading days. The gauging indicator can be
downloaded here.

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 Daily Directional Bias
Recall that a trading day price footprint is characterised by, B (OPEN),
Asian High & Low, High & Low, and N (CLOSE).

Trading Strategies Principles

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 Asian Session Determinants
Asian-Half trade’s are confirmed by price-close below/above ½ Asian
Low and High, and this average price will be used to gauge the
London session’s reversal price for optimal Entry E into New York
session.

Trading Strategies Principles

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 Asian-Half Example
Entry of the Bullish type is confirmed by price-close above the
average of Asian Low and High, until clear high of the day formation.

Trading Strategies Principles

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 Asian-Half Example
Entry of the Bearish type is confirmed by price-close below the
average of Asian Low and High, until clear low of the day formation.

Trading Strategies Principles

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 Candlestick Structure
Candle activity to validate the high/low of the day (HOD/LOD).
The Open O, Close C, High H and Low L, are also observed on any
fractal price level. The bearish engulfing pattern mostly confirms the
end of falling market, hence confirms the LOD. Contrary to HOD, the
exhaustion of rising market is confirmed by bullish engulfing pattern.

Also, Price-Behaviour and the Pin is highly probable to confirm the

Trading Strategies Principles validity of the LOD/HOD. Pay no much attention to the C/O, rather
the engulf of the body.

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 Oscillator-Price Behaviour
Price behaviour with the oscillator, mainly the RSI, can also be used to
confirm the validity of the LOD/HOD. The convergence price
behaviour signals the end of bearish moves, hence price will soon
rise. And vice versa.

Trading Strategies Principles

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 LOD/HOD Validation
Don’t be stereotyped trader. When the dealer presents the Pin in
London or New York session, he is working the LOD/HOD, therefore
the Entry is potentially above/below the presented Pin, respectively.

Trading Strategies Principles

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 LOD/HOD Validation Example
Dealer will create W/M while working LOD/HOD, respectively and
later present a Pin or Engulfing behaviour for confirmation.

Trading Strategies Principles

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 LOD/HOD Validation Example
Dealer will create W/M while working LOD/HOD, respectively and
later present a Pin or Engulfing behaviour for confirmation.

Trading Strategies Principles

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 London Session Defined
Were taught to trade breakouts and go blindly with trend without
understanding when it will reverse. Dealer unnoticeably accumulates
more liquidity.

Trading Strategies Principles

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 London Session Defined
The accumulated liquidity is released and reversal happen in the
New York session.

Trading Strategies Principles

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 London Session Determinants
The London Breakout and New York Reversal sessions offers best
opportunities. London Breakout session offers Asian-Half and Stop-
Hunt trade types that can be traded until New York Reversal.

London session’s price movement is used to gauge New York session’s

price reversal for optimal entry, E.

Trading Strategies Principles Bullish Stop-Hunt Type Bearish Stop-Hunt Type

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 Stop-Hunt Example
Entry of the Bearish Stop-Hunt Type is confirmed by price-close
above LOD, normally in the New York Reversal session.

Trading Strategies Principles

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 Stop-Hunt Example
Entry of the Bullish Stop-Hunt Type is confirmed by price-close
below the HOD, normally in the New York Reversal session.

Trading Strategies Principles

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 Variated Stop-Hunt Example
Variation, Entry of the variated Bearish Stop-Hunt Type is confirmed
by convergence of price with the oscillator indicator.

Trading Strategies Principles

29 Convergence
 Variated Stop-Hunt Example
Variation, Entry of the variated Bearish Stop-Hunt Type is confirmed
by hidden-convergence of price with the oscillator indicator.

News

Trading Strategies Principles

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Trading Strategies Principles
Trend Cycle
At this level, it is also important to understand the fundamentals as they are used
to complete discussed structures. Also, on macro scale, these moves must comply
with government regulations to keep the economy of the country in the state
suggested by those releases, hence drive supply and demand of the base currency;
these moves are mostly restricted to 3xADR (3 times the Average Daily Range from
previous three 3days’s open, low, high and close, the OLHC. This techniques keeps
retail traders in the game.

Micro Cycles

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 Intraday Cycle
The structure is observed on micro scale in effect of liquidity
acquisition over real trend creation. Thus offers multiple Entries after
counter-trend, in CONSIDERATION to clear formed W/M at the
LOD/HOD, respectively.

Rise/Drop count STARTS after a clear W/M.

Trading Strategies Principles

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 Intraday Cycle Example
Considered clear W which confirms LOD with COUNT after the
formation.
Rise 3

Rise 2
Trading Strategies Principles

Rise 1

Counter-trend

Clear formed W
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 Intraday Cycle Example
Clear W over a short period of time during formation with a Pin,
which confirms the LOD.

Rise 3

Trading Strategies Principles Rise 2

Rise 1

Counter-trend

34 Clear formed W
Pin
 Intraday Cycle Example
Considered clear M with Pins which confirms HOD.

Pin
Clear formed M

Drop 1

Trading Strategies Principles

Counter-trend

Drop 2

Drop 3
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 Trend Cycles Summary
The 3-Days trend cycle structure can easily be viewed on H1, and
characterised by:

 Day 1 Rise/Drop is the reversal day (lowest/highest price level in a week),

and can be noted with the W/M formation at the low/high, respectively.

 It comes as a surprise, catching everyone following traditional

indicators and strategies off guard, news can be used to justify or
Trading Strategies Principles falsify the actions.

 Day 2 Rise/Drop is a confirmed reversal day which validates the traditional

trading strategies which is noted by V/A formation is a rising/dropping day,
at the low/high, respectively.

 For example, the moving averages crossings fire, formation of right

shoulder of the heard & shoulder pattern, etc.

 Day 3 Rise/Drop is also a trap day which seduces retail technical trend
followers to trade in, while the dealer working to make the high/low of the
week.

36  The LOD/HOD is validated by formation of M/W the second day

(referred to as multi-session W/M) or 3xADR completion.
 Decision on Pair to Trade
Below are critical number of questions that must be addressed when you
analyse each chart:

1. What has happened in the last 3 days?

 This provides macro information about where price has come

from, where trade is in the cycle and possible structure
completions.
Trading Strategies Principles
2. What day of the week is it?

 This will reasonably help identify the macro scale cycle the trade
is in. Also, for that day, what trade completions should probably
be, based on the preceded price movement and trade structure
nature; reversal or continuation.

3. What level are we in?

 Examined on the micro scale, mainly 1-hour and the 15-min

chart. Thus, to decide whether the trade is proceeding for setup
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and worth monitoring.
 Trading News Releases
Dealer’s ONLY objective during fundamentals announcements is to complete the
structures while trapping orders and profiting. Thus, we are only concerned of the
high impact news releases ahead of the pair we are going to trade. Most USD and
CAD releases are on Wed, Thu &/Or Fri, on New York session. AUD, NZD and JPY in
the Asian session, Mon/Tue. Is VERY critical to understand news release NATURE
per instrument to a SESSION.

Fundamental Trading Principles

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 Higher Timeframe Analysis
The following are summarised top-down technical approach on HTF
(macro) to LTF(micro) analysis:.

 Monthly Chart:
Identify key Support & Resistance levels and
directional bias.
 Weekly Chart:
Identify key Support & Resistance levels and
Higher Timeframe Analysis directional bias.
 Daily Chart:
Identify key Support & Resistance levels and
directional bias. Also, the nature of the cycle to
whether is a reversal day or not, by identifying
peak formations.
 1-Hour/4-Hour Chart:
Spend most of your time here analysing
tendencies of hourly(ies) price movement.
 5-Min/15-Min Chart:
Trends, projections, objectives are made, thus
39 referred to as trade management and executions
timeframe.
 Summary And Tips
Learn to pick and choose trades, hence one pair at a time. You cannot
hit two birds with one stone.

 Appreciation and Patience:

 Patiently wait for anticipated price projections.
 Act only when your set of criteria are met, and tolerate the
outcomes, and be highly selective.

Summary & Tips  Time Frames Synchronising:

 The higher the timeframe the more reliable the projection.
 Looking at macro timeframes does not only give sufficient
projections to trade from, but also synchronises the base
micro timeframes objectives to identify high value and
probable price levels, hence active trades can easily be
managed.

 Fear and Greed:

 Fight natural tendencies of fear and greed by carefully
documenting and following a trading plan.
40  Rather stick to rules, plans and management than relying on
emotions.
HOD

Multiple Entry

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Approximately 3xADR HOD

Liquidity Acquisition

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 Counter-trend,
After Rise 1

LOD with Pin & W

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CLAIM
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TRY
“ Don’t fret over a losing trade. Opportunities in
the market are like buses, if you miss one, there
will be other for the same route.
Incognito Investor

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“ Those traders who have confidence in their own trades, who trust
themselves to do what needs to be done without hesitation, are
the ones who become successful. They no longer fear the erratic
behaviour of the market. They learn to focus on the information
that helps them spot opportunities to make a profit, rather than
focusing on the information that reinforces their fears.
Mark Douglas, Trading in the Zone

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 DISCLAIMER:
Nothing presented in this eBook presentation, either vocally or visually, is to be taken as trading advice. All content of this
eBook presentation is for educational purposes only. Any trades taken which are influenced in anyway by your participation
in any facet of the Incognito Investor are strictly at your own risk. You should consult your broker or financial advisor before
placing any trade. Also, no representation is being made that any trading account will or is likely to achieve profits and or
loss similar to those discussed. The past performance of any trading system or methodology is not indicative of future
results. Trading involves risk of loss of all or part of your trading account or more!. Never trade any market with money you
cannot afford to lose.

By downloading this eBook presentation stipulates your agreement to these rules. Further, you agree to hold harmless any
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– CFTC RULE 4.41 –

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD,
SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE
UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED
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 PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

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