The Laws of Charts and Men

T H E L AW S
O F C H A RT S
AND MEN
Trading by the Universal Laws
of God and Nature
PAID
VERSION
REGISTERED
STUDENTS
ONLY!
brought to you by Jerry Stewart

!
SECTION CONTENTS
TRADING PIVOT REVERSALS - When the man pivots the law of momentum is on
your side.
ENTRY AND EXIT RULES - That keep your stops safe, gives you maximum profit, in
the shortest time.
TRADING CONTINUATION MOVES -How to know if current move will continue,

use sacred geometry to project length of current swing.
RECOGNIZING SWING FAILURE -So you can exit early if wrong and reverse directions quickly.
23
RECOGNIZING FAILED BREAKOUTS -To avoid bull and bear traps.1,2
24
ONE BAR REVERSALS AND COMPLEX PIVOTS -Give more players time to enter
the market to fuel the next swing.
25
FIRST HIGHER BOTTOM FIRST LOWER TOP -Signals 1st reversal in in the balance of supply and demand. Provides largest profits.
26
THE CYCLE OF SWINGS -Give you a roadmap of where the man is planning to go.
27
FIBONACCI PROJECTIONS
30
CONFIRMING INDICATORS -Line up like a cross-hairs or scope on a rifle to give you

the right timing.
31
PREDATOR ZONES -Alert you to areas where predators lie in wait to ambush you.
35
WHY USING PHYSICAL STOP-LOSS ORDERS - Puts you in the predator zone
and makes you a target.
35
TRADING THE NEWS -How predators use news to spook the herd into panic.
37
PRE-TRADE CHECK LIST -How he system is like a robot that automatically tells you
when and where to enter and exit. Mechanical trading keeps you from emotional, panic
decisions with the herd.
43
IF YOU MUST DAY-TRADE THE FOREX MARKET -Why you should day- trade
within the context of the pivots on the daily chart.
46
KNOWING WHEN A GAP MEANS BUSINESS -How to know when a gap open
signals an explosive up-move or a shooting star about to flame out.
47
THE LAWS OF CHARTS AND MEN!
PAID VERSION
SYSTEM OVERVIEW
Where to trade, When to trade, What to trade, When to open trade, Where to place stop-loss, When to
close the position
UP TREND
SWINGS
USE PIVOT PATTERN TO DETERMINE DIRECTION
( Pivot forms top/bottom)
I. Wait for pivot to form.
1.
After pivot has formed what happens next

a.
If price backs up and touches the range of the pivot bar before it goes up
to test the high, you will enter within the range of the pivot bar with a
stop loss order below the range of the pivot bar and your target will be
the most recent high.
b.
If price goes up and tests the high before testing the pivot, price will not
close above the high before testing the pivot bar range. So, you will
execute a short entry in the range of the pivot bar that formed, the high.
with a stop above the range of the pivot bar high. The target for your
short will be the range of the prior pivot.
II.If price closes above the old high.

1.
What happens after new high is made

a.
If price backs up and tests the old high before continuing higher price
will continue up near the high of the highest 2 bars above the old high or
the prior bottom above the old high . So, you will enter long at the old
high with a target at the high of first 2 bars above the old high or the next
highest bottom, whichever is closer. Your stop will be the low of the pivot
bar that formed the old high.
b.
If price first continues up before testing the old high it will not continue
past the high of the next highest 2 bars above the old high or the next
bottom before testing the old high. So, you will enter a short trade at the
high of the 2 bars after the old top or bottom whichever is closer. Your
stop will be the high of the highest 2 bars above the old high.
If a prior bottom is closer you will enter short at the low of the pivot bar that formed that
bottom. Your stop will be the high of that pivot bar and your target will be the old high.
BY JERRY STEWART!
PAGE 2
PAID VERSION
THE 3 BAR CHART PATTERN THAT SIGNALS

PRICE REVERSAL WITH 90% ACCURACY
What is a pivot point reversal...
What is a complex pivot...
How to trade pivots...
This section will bring together the universal concepts we have discussed into a
profitable trading system. The system naturally incorporates the principles of
Balance, Cycles, and Sacred Geometry.
With this system you will know exactly when to enter a trade. When to exit.
Where to place your stop loss. And most importantly when to sit on the sidelines.
The formation of a pivot point tips you o to a change in the balance of supply
and demand.
A pivot point formed at a support or resistance level is telling you that the market
is about to turn in the opposite direction.
If price flips past the pivot point you should exit the trade.
You should never enter a trade until a pivot is formed on the chart for the time
frame you are analyzing.
Just as weather occurs in recognizable patterns that tip you o with high probability that it is
about to rain, market prices occur in recognizable patterns that let you know price is about to
turn. Just as with weather, sometimes the pattern will not fulfill the anticipated result but the
probability of the prediction is very high. The key to successful trading is to know early on when
you're wrong so you can get out with only a small loss.
BY JERRY STEWART!
PAGE 3
PAID VERSION
PIVOT REVERSALS
Pivot Point - The point at which resistance or support disintegrates and the stock price begins
to rise or fall past the prior resistance level. This point can be considered the optimal time to
buy as the bulls are gaining strength or to sell because the bears are gaining strength.
You cannot predict highs and lows but you can spot one after if occurs. It happens the same on
monthly, weekly, daily, and intra-day charts. Price has not turned until a pivot has formed. You
will see this pattern occur at a support or resistance level before a price reversal 9 times out of
10.
The pivot point focuses on the closing price relative to
the bar with the highest High (or lowest Low).
This is what is meant when you hear the term buy low and sell high. You can look at a historical
chart of any market and this pattern will follow through 80 to 90 % of the time. Just look at the
charts of the various markets used as illustrations throughout this book. Then get on the web
and look at charts as far back as you can go. You can go back a hundred years And see the same
thing.
BY JERRY STEWART!
PAGE 4
PAID VERSION
COMPLEX PIVOT POINT

Complex pivots are a common variation of the pivot point. Complex pivot points sometimes
occur, where it may take several days to form a pivot.
SYSTEM OVERVIEW
After a market forms a pivot on the daily chart, the range of the pivot bar is now
short term support/resistance and the most recent top or bottom from the pivot is
the next price target. If a pivot fails, a big move in the opposite direction will follow.
BY JERRY STEWART!
PAGE 5
PAID VERSION
After a pivot is formed price will do one of two things:

1. Back up and test the pivotor
2. Continue to next support or resistance
Whichever scenario occurs first signals the most probable short-term price direction and distance
with a high degree of accuracy.
After a pivot is tested, price will reach a counter-trend target within 3 trading days.
After a pivot has formed, price will reach a with-trend target within 5 trading days. (INSIDE
DAYS DON'T COUNT AS A TRADING DAY).
Counter-trend target is extreme range of 2 bars preceding the pivot bar unless it runs into a prior top
or bottom first. (AND EXTENDED RANGE BAR COUNTS AS 2 BARS AND THE RANGE OF A
GAP COUNTS AS 1 BAR).
If trade is with the trend the target will be the most recent bottom or top.
Stop-loss is beyond the extreme range of the pivot bar you are trading off of.
BY JERRY STEWART!
PAGE 6
PAID VERSION
FOR THE TIME BEING WE WILL USE THE CHART BELOW AS OUR REFERENCE CHART. IT IS A CHART FROM A NEW YORK STOCK EXCHANGE
STOCK. BUT THAT DOES NOT MATTER BECAUSE ALL MARKET CHARTS
WORK THE SAME WHETHER IT IS A STOCK, INDICE, COMMODITY, FUTURES, CURRENCY, WEATHER OR ANY OTHER DATA SET THAT IS BEING
CHARTED.
IN THE CHART ABOVE EACH ARROW IDENTIFIES A SWING PIVOT.

When price hits a support or resistance level only two things will happen.
Price will either CONTINUE past the S/R level or touch the resistance level and REVERSE.
This section will focus on the trading rules for both possibilities. If you follow these rules you
will
Achieve up to 80-90% accuracy on your trades. The rules automatically apply the principles of
balance discussed in this body of work.
BY JERRY STEWART!
PAGE 7
PAID VERSION
TRADING RULES (REVERSAL MOVES)

ENTRY RULES FOR A REVERSAL TRADE - Pivot reversals occur at support or resistance levels, more commonly referred to as tops and bottoms. As illustrated by arrows A,
through H above, When price rises up to a resistance level and then forms a swing pivot, this is
your signal that price momentum has reversed from up to down so you should look for an opportunity to go short.
As illustrated by arrows D through F above, when price falls down to a resistance level and
forms a pivot, that is your signal that momentum has reversed from down to up and you should
look for an opportunity to go long.
WHEN TO ENTER - Notice how, after a pivot reversal has formed, price will pullback to
test the pivot level before continuing the reversal. You should enter when price pulls back to
touch the pivot level. SEE PAGE 16.
WHERE TO PLACE STOPS - Place your stop above the high of the high bar of the pivot
formation for a short trade or below the low of the low bar of the pivot formation for a long
trade. SEE PAGE 16.
HOW MUCH TO RISK - The amount to risk on a trade is determined by the distance from
the pivot level to the high/low of the pivot formation. If that distance is $100 and you cannot
aord to lose $100 do not enter the trade.
HOW TO ENTER - You should enter with a conditional (limit) order. After a pivot has
formed you should enter a standing (waiting) limit order which will automatically execute your
buy or sell order when price pulls back to the pivot. No need for you to watch the computer.
HOW TO EXIT -You should exit with a standing limit order that will automatically liquidate
your position at a loss if price goes past the high/low of the pivot bar. You should simultaneously
have a standing limit order that will automatically liquidate your position at a profit when price
touches the low of the last bottom occurring before the swing.
Your order should go like this: Buy at 1.2200--Stop at 1.2100- Take profit at 1.2400. Then go
on about your day. If price never touches 1.2200 your order will not be filled.
OR
If you enter a trade and a pivot reversal occurs before your target is reached, but your stop has
not been hit, you should exit the trade immediately, regardless of profit or loss.
HOW TO IDENTIFY YOUR PROFIT TARGET - On a short trade your target should be
the most recent bottom or most recent lower top, whichever occurs first.
On a long trade your target should be the most recent top or most recent higher bottom,
whichever occurs first.
BY JERRY STEWART!
PAGE 8
PAID VERSION
THE STOP-LIMIT ORDER - This type of order puts your trading on automatic pilot.
This order does three things for you simultaneously. It will execute your order to enter at the
price you have specified. It will execute your stop-loss order at the price you have specified, and
execute your take profit at the price you have specified. This is all on one order ticket. This
means that you don't have to watch the market. Just take 15 minutes to look at your end of day
charts at close of each trading day.
Now that you know how to trade a reversal move it's time to look at the second type of trading
opportunity, THE CONTINUATION MOVE. A continuation occurs when price moves
through a support or resistance level and continues on to the next support or resistance level.
But, how do you know the move will continue? Many times price will go through a support or
resistance level and then reverse. Commonly know as a "Head Fake". You are about to find
out how to spot a continuation and how to profit from it.
TRADING RULES (CONTINUATION MOVES)
REACTION - Look at the chart above. Look at arrow (A), It shows a breakout bar that indicates a closing price below the prior bottom set in early September. This event signals that a
possible short term down trend will follow. As you can see, in the bar highlighted by arrow (B),
before price could continue down to test the next bottom (support level), it had to pull back up
to test the previous bottom (support level) which has now changed to resistance. You will notice
that when the pullback bar (B) moved up to touch the resistance line, price immediately fell
BY JERRY STEWART!
PAGE 9
PAID VERSION
back down and closed lower than the open. If bar (B) had closed up within the resistance area it
would be a sign of a false breakout as this would have formed a pivot reversal back up.
PULLBACK - After the pullback, price will continue in the direction of the breakout until it
forms a pivot reversal, usually before it hits another support/resistance. This reversal will push
price back to test the breakout level for the second time. This second test is called a reaction.
If the reaction forms a pivot before or at the breakout level, price will continue in the direction
of the breakout with a target of the next support/resistance level.
Look at the (P) arrow. Price has closed below support a arrow (A) for a valid breakout and has
pulled back to test the breakout at arrow (B). After the pullback price fell for the next 3 bars
before forming what, at first glance, appears to be a reversal pivot and heading back up to test
the breakout area. But, before price can go all the way back up, another reversal pivot occurs
before it can get there. This is a strong signal that the downtrend has resumed, as evidenced by
the next bar which gapped down violently.
ENTRY RULES FOR A CONTINUATION TRADE - A continuation move occurs after a support or resistance level, more commonly referred to as tops and bottoms, has been broken. As illustrated by arrow (A) above. It is important to note that it is not enough for
price to merely move past a support or resistance level. Price must CLOSE past the
support/resistance level. When price pulls back to the broken resistance level and does not
close above it, this is your signal that price will continue in the direction of the break, as shown
at arrow (B). Therefore you should look for an opportunity to enter in the direction of the
break.
After the pullback price will continue in the direction of the break before the reaction reversal
pushes price back up to the broken resistance level for the second test. If a pivot reversal occurs
at or before the broken support/resistance level, this is a sign that the move will continue in the
direction of the break and you should look to enter in that direction.SEE ARROW (P).
WHEN TO ENTER - On a pullback to the broken support/resistance level or the reaction
pivot
WHERE TO PLACE STOPS - Place your stop beyond the range of the pivot bar that
formed the support/resistance level that is being tested.
HOW MUCH TO RISK - The amount to risk on a trade is determined by the distance from
the entry level to range of the pivot bar that formed the support/resistance level
If that distance is $100 and you cannot aord to lose $100 do not enter the trade.
BY JERRY STEWART!
PAGE 10
PAID VERSION
HOW TO ENTER - You should enter with a conditional (limit) order. After a support/
resistance level has been broken as evidenced by a close price beyond the level, you should enter
a standing (waiting) limit order which will automatically execute your buy or sell order when
price pulls back to the support/resistance level. No need for you to watch the computer.
OR
Enter after the reaction pivot using the reversal entry techniques
HOW TO EXIT - You should exit with a standing limit order that will automatically liquidate
your position at a loss if price goes past the high/low of the pivot bar that formed the support/
resistance level being tested. You should simultaneously have a standing limit order that will
automatically liquidate your position at a profit when price touches the next resistance level in
the direction of the break.
A short entry order should go like this: sell at 1.2200--Stop at 1.2300- Take profit at 1.2000.
Then go on about your day. If price never touches 1.2200 your order will not be filled.
OR
If you enter a trade and a pivot reversal occurs before your target is reached, but your stop has
not been hit, you should exit the trade immediately, regardless of profit or loss.
HOW TO IDENTIFY YOUR PROFIT TARGET - On a short trade your target should be
the next bottom in the direction of the break..
On a long trade your target should be the next top in the direction of the break
THE STOP-LIMIT ORDER - The name for the type of conditional order we have been
discussing.
BY JERRY STEWART!
PAGE 11
PAID VERSION
TRADING RULES ILLUSTRATIONS
In the illustration above the market has started a down swing as evidenced by pivot point (1).
Pivot point 2 indicates a change in the balance of supply and demand and that an up swing is
now imminent. Once the up swing pivot has been established ( the close of the pivot bar is
higher than the high of the measuring bar ) you have what is called a "TRADE SETUP." Pivot
point (2) has now become the first area of support. Pivot point (1) becomes the first area of
resistance.
NOTE; THERE ARE THREE VERY, VERY IMPORTANT TERMS YOU
SHOULD REMEMBER, AND THEY ARE PRINT, TEST AND RANGE.
A PRINT IS THE PRICE A BAR CLOSES AT IN WHATEVER
TIME FRAME YOU ARE ANALYZING. DAILY PRINT, WEEKLY PRINT,
MONTHLY PRINT, INTRA-DAY PRINT ( 1 HOUR BAR, 4 HOUR BAR, 5 MINUTE BAR, TIC BAR, ETC
FOR A TEST, PRICE ONLY HAS TO TOUCH A SPECIFIED PRICE DURING
THE TIME FRAME YOU ARE ANALYZING.
A TEST WILL MOVE ANYWHERE WITHIN THE RANGE OF THE MEASURING BAR. THE RANGE OF A BAR IS THE DISTANCE BETWEEN THE HIGH
AND LOW OF THE BAR.
BY JERRY STEWART!
PAGE 12
PAID VERSION
Once the pivot point is established one of two events will happen.
1.
Price will continue up to the first area of resistance ( pivot point 1)
2.
Price will back up to test support (pivot point 2)
WHICH EVER EVENT OCCURS FIRST WILL DETERMINE YOUR NEXT

MOVE:
Price will not print a new high ( close above measuring bar (A) until pivot point (2) has been
tested (touched). SO:
If event 1 occurs first, price will not print above the high of measuring bar (1) it will
only test this level then retrace to at least test pivot (2)
EVENT 1
BY JERRY STEWART!
PAGE 13
PAID VERSION
HOW TO KNOW THE DIFFERENCE BETWEEN A PRICE

RETRACEMENT AND A PRICE REACTION:
A MOVEMENT CAN ONLY BE CALLED A RETRACEMENT IF IT OCCURS
OFF OF A PIVOT. A REVERSAL WILL CONTINUE IN THE SWING DIRECTION UNTIL THE NEXT PIVOT REVERSAL.
A REACTION IS WHEN PRICE REVERSES DIRECTION WITHOUT FORMING A PIVOT. IT CAN BE A SINGLE BAR OR A SERIES OF BARS. A REACTION ONLY OCCURS LONG ENOUGH TO TEST THE LAST SUPPORT OR
RESISTANCE LEVEL BEFORE CONTINUING IN THE DIRECTION OF THE
SWING.
BY JERRY STEWART!
PAGE 14
PAID VERSION
EVENT 2
If event 2 occurs first, and price does not print below the low of the measuring bar,
price will usually continue up to print a new high.
BY JERRY STEWART!
PAGE 15
PAID VERSION
ORDER ENTRY AFTER PIVOT IS FORMED

PLACE 2 SEPARATE LIMIT ORDERS:
1. BUY (LONG) ON TEST OF PIVOT (2) - WITH TARGET (EXIT-TAKE PROFITS)
ON TEST OF PIVOT (1) - EXIT (STOP LOSS) ON PRINT BELOW MEASURING
BAR (B).
2. SELL (SHORT) ON TEST OF PIVOT (1) - WITH TARGET (EXIT-TAKE PROFITS) ON TEST OF PIVOT (2) - EXIT (STOP LOSS) ON PRINT ABOVE MEASURING BAR (A).
TYPE; ONE CANCELS OTHER--WHEN ONE ORDER IS EXECUTED THE
OTHER ORDER IS AUTOMATICALLY CANCELED.
CANCEL ORDER IF A REVERSAL PIVOT OCCURS BEFORE

EVENT 1 OR 2. THEN ENTER NEW ORDER BASE ON THE NEW
PIVOT.
ADVANTAGE
You don't have to watch the market. Since the strategy is based on print (closing bar) prices and
your trade is only executed if one of your limit prices is tested, you can enter your order and go
on about your business.
In addition; You know your entry and exit points in advance. No guessing. This eliminate trading o hope, fear, and greed.
The example we have covered was for a market which was in an up-trend. In the midst of the
up-trend the market suered a down-swing against the trend and then had an up-swing reversal
in the direction of the trend. Therefore in the example there was an upward bias. While you can
be successful trading a counter-trend swing your chances of getting stopped out are greatly decreased when you enter a trade in the direction of the trend.
The trading rules are exactly the same for a market which is in a down-trend and
then occurs an up-swing against the trend. Everything is simply reversed. You will
have a short bias in a down-trend.
When you only trade with the trend you will only enter after an event 1 occurrence.
This means that you would only enter one limit order instead of two.
Now that you know how to trade swing reversals lets take a look at illustrations on how to
trade;
BY JERRY STEWART!
PAGE 16
PAID VERSION
TRADING CONTINUATION MOVES

Since we now know that a swing reversal with the trend will usually print a new swing high or
low in the direction of the trend we need to know if the new print will hold or continue in the
direction of the trend. If a continuation is confirmed it will be a good setup for a new trade entry.
ILLUSTRATED CONTINUATION SETUP
After printing a new high the market will do one of two things;
1.Continue higher
2.Test the range of measuring bar (A) (the range of the next closest prior
swing pivot)
Whichever occurs first will determine your next move:
BY JERRY STEWART!
PAGE 17
PAID VERSION
CONTINUATION EVENT 1
As you can see above the market has printed a new high above the old high. This is what is
commonly termed a 'BREAK OUT' of the prior high. Many traders enter on breakouts and
lose money. Why? Because they are a part of the herd.
The herd enters on breakouts without waiting for a TEST of the old high!
The range of measuring bar (A) has changed from RESISTANCE to SUPPORT.
Never trust a move that has not TESTED support. If the next bar after the breakout bar
blows higher the herd feel like they are about to miss the move and rush into the trade and that
is when the trap is sprung.
The market will immediately retrace to TEST the range of measuring bar (A) until the stops
placed by the herd have been taken out. Price may even exceed the low of measuring bar (A) but
will not PRINT below that point. If price does print below the low of measuring bar (A) you
have a FAILED BREAKOUT.
BY JERRY STEWART!
PAGE 18
PAID VERSION
During the test most of the herd will either be stopped out or will bail out because they have
CHASED the move without waiting for a TEST. This is called a "SHAKEOUT." The herd
enters a move too early because of GREED and they get shook out of their soon to be profitable position because of FEAR.
That is the reason for the old saying that, MARKETS ARE RULED BY FEAR AND
GREED.
The vast majority of traders are undercapitalized so their account balance cannot withstand a
shakeout. That is why precise entry and exit points are crucial to the small market player and
that is the reason for the term "WEAK HAND." JUST AS ALL PREDATORS SINGLE
OUT THE WEAKER AND SICK ANIMALS, A MARKET OPERATES LIKE AN
ORGANISM AND PREYS UPON THE WEAK IN ORDER TO MAINTAIN THE
STRONG (properly capitalized traders).
Now, look at the test bar in the illustration above. What does it tell you? You would be right if
you said it has formed a pivot or swing reversal. This tells you that the breakout has most likely
failed and your bias should be for a short trade back down to test the range of pivot point (2).
BY JERRY STEWART!
PAGE 19
PAID VERSION
HOW A TRUE CONTINUATION BEHAVES
In the illustration above the market prints a new high. The next bar retraces and tests the old
high then closes above the old high. This is a positive test and confirms the breakout. The
breakout can be expected to move up to the next resistance level. The next resistance level
will be the next closest swing low or the next closest swing high whichever is closest.
This is the form in which a market moves form one support or resistance level to the
next. Just as an man walks with a specific identifiable form a market moves in the
same way.
If you see a man walking in one direction and his form begins to break down it is a
signal to any observer that a change in direction, or speed is likely. In this way you
can judge a market. If it doesn't move in the way it is supposed to move then you
have uncertainty and you should exit if you are in the market.
BY JERRY STEWART!
PAGE 20
PAID VERSION
HOW A CONTINUATION MOVES TO THE NEXT

RESISTANCE LEVEL DURING AN UPSWING.
In the illustration above we see that the market was in a downtrend and formed a pivot reversal
at point (P) 1. After the pivot the market continued to move up without testing the pivot
range. As expected the market did not go up to make a new high, instead it formed a pivot reversal (P) 2 and turned back down but this pivot was not tested either so you could assume
price will not print below support. Armed with that knowledge you could expect price to
test pivot
(P) 1 and continue upward to at least test (P) 2 which, by it's creation has formed resistance
level (1).
Now look at the third pivot (P) 3. Notice that the first bar after the pivot backed down to
test the pivot, then printed above the pivot. Since (p) 3 has experienced a positive test the
market can be expected to print a new high above resistance level (1), which it did. We now
have a breakout of resistance level (1).
After the breakout, if the market continues up without testing resistance level (1),
It will not print above resistance level (2) which is the next closest resistance level which is
(P) 4. Price may test the full range of the (P) 4 measuring bar but will not print above the
measuring bar before reversing to test resistance level (1).
BY JERRY STEWART!
PAGE 21
PAID VERSION
YOU CAN LOOK AT A CHART OF ANY MARKET IN ANY TIME FRAME, INCLUDING INTRA-DAY MOVEMENTS AND SEE THAT THIS IS HOW A MARKET MOVES. MARKETS CYCLE FROM PIVOT TO PIVOT, BOUNCING BETWEEN SUPPORT AND RESISTANCE.
BREAKOUT THEN TEST, BREAKOUT THEN TEST. THE CYCLE CONTINUES IN ONE DIRECTION UNTIL THE TREND IS REVERSED, THEN BEGINS AGAIN IN THE OPPOSITE DIRECTION.
THE METHOD OF ENTRY AND EXIT WE HAVE ALREADY COVERED.
BY JERRY STEWART!
PAGE 22
PAID VERSION
FAILED PIVOT TEST ILLUSTRED
In the illustration above, the market was in the midst of a downswing and then formed a bullish
pivot reversal (pivot point (1). But the next bar after the pivot closed back inside the range
of measuring bar (1) and also forms a second bearish pivot (pivot point (2). An experienced trader would not enter long until price printed back above the high of measuring bar
(1).
However, the next bar printed (closed) below the low of measuring bar (1). This is a
failed pivot test and prices can be expected to continue down to the next support level.
It is not unusual for a market to test (touch or go below) the low of measuring bar (1), as an attempt to shake out the weak hands (the herd), but not print (close) below the low of measuring bar (1) before continuing the upswing as illustrated below.
BY JERRY STEWART!
PAGE 23
PAID VERSION
FAILED CONTINUATION BREAKOUT
In the illustration above the market experienced a breakout of the old high. The next bar after
the breakout continued up without testing the old high, which is now considered support. But
then bars 1 and 2 turn around to test the old high.
Bar 2 has closed below the measuring bar of the old high. This is a signal that the breakout has
failed and a long entry should be avoided unless price rises back up and prints (closes) above the
high of measuring bar (A). Especially since bar 1 has created a pivot reversal, the market can
be expected to continue down to test the last pivot (measuring bar (B) ).
BY JERRY STEWART!
PAGE 24
PAID VERSION
SINGLE BAR SUPPORT RESISTANCE
In the illustration above you have support and resistance levels that most traders do not acknowledge but any chart analysis will bear the reality. From time to time a market will experience a bar that is 2 to 3 times the of the range of an average bar for that market. This type of
bar is called a RANGE BAR. The high and low of a range bar serves as support and
resistance. A range bar should be traded according to the entry and exit rules of any other
support/resistance level.
BY JERRY STEWART!
PAGE 25
PAID VERSION
PRECURSOR TO BIG MOVES

FIRST HIGHER BOTTOM--FIRST LOWER TOP
In illustration (A) above the market is in a down-trend and then forms a bottom at point 1.
From there the market swings up counter-trend to form a top at point 2. The market then
swings back down to form a second bottom at point 3.
The pivot forming the first higher bottom is the signal that a trend reversal is in eect, at least
for the short term. This is where the most profitable trades occur because it starts the largest
swing in the cycle of swings.
Illustration (B) below shows a trend reversal for a market that is in an up-trend and reversing to
a down-trend.
BY JERRY STEWART!
PAGE 26
PAID VERSION
THE CYCLE OF SWINGS

Ralph Nelson Elliott developed the Elliott Wave Theory in the late 1920s by discovering that
stock markets, thought to behave in a somewhat chaotic manner, in fact, did not. They traded
in repetitive cycles, which he discovered were the emotions of investors as a cause of outside
influences, or predominant psychology of the masses at the time. Elliott stated that the upward
and downward swings of the mass psychology always showed up in the same repetitive patterns,
which were then divided into patterns he termed "waves".
What is a wave?
A wave is measured from pivot to pivot. For an upswing you would measure from the low of
the measuring bar of the pivot reversal at the 1st bottom to the high of the measuring bar of the
pivot at the top for wave 1. Measure from the high of the measuring bar at the top to the low
of the measuring bar at the 2nd bottom for wave 2. The measurement for wave 3 would begin
from the low of the measuring bar at the 2nd bottom. See the illustration below.
Elliott was able to spot unique characteristics of wave patterns and make detailed market predictions based on the patterns he identified. Fractals are mathematical structures, which on an
ever-smaller scale infinitely repeat themselves. The patterns that Elliott discovered are built in
the same way. An impulsive wave, which goes with the main trend, always shows five waves in its
pattern. On a smaller scale, within each of the impulsive waves of the before-mentioned impulse, five waves can again be found. In this smaller pattern, the same pattern repeats itself ad
infinitum. These ever-smaller patterns are labeled as dierent wave degrees in the Elliott Wave
Principle. Only much later were fractals recognized by scientists. NOTE: AN IMPULSE
WAVE CAN BE CONSIDERED AS A STEP BY THE MAN ON THE CHART.
HE MUST PUSH OFF SUPPORT BY USING HIS LEG MUSCLES TO GENERATE THE IMPULSE. ONCE IMPULSE ENERGY IS GENERATED IT DOES
NOT HAVE TO CONTINUE. MOMENTUM FROM THE IMPULSE WILL
CARRY HIM A MINIMUM DISTANCE AFTER THE ENERGY THAT CREATED
THE IMPULSE IS CUT OFF.
BY JERRY STEWART!
PAGE 27
PAID VERSION
Every action is followed by a reaction.

There are five waves in the direction of the main trend followed by three corrective
waves (a "5-3" move).
A 5-3 move completes a cycle.
This 5-3 move then becomes two subdivisions of the next higher 5-3 wave.
The underlying 5-3 pattern remains constant, though the time span of each may vary.
Look at the following chart made up of eight waves (five up and three down) which are labeled
1, 2, 3, 4, 5, a, b and c
You can see that the three waves in the direction of the trend are impulses, so these waves also
have five waves. The waves against the trend are corrections and are composed of three waves.
BY JERRY STEWART!
PAGE 28
PAID VERSION
COMBINING ELLIOT WAVES WITH SACRED

GEOMETRY
In the chart above you can see how wave 3 is the longest wave in the impulse waves with the
trend as well as the third wave of the corrective cycle (B). Using sacred geometry (Fibonacci
numbers) the length of the third wave is predictable.
The Fibonacci sequence involves the use of ratios, and the two ratios that are focused on in a
3rd wave impulse movement are 1.618 and 2.618.
Fibonacci ratios are easy to use and just as easy to calculate. You take the range from one
pivot to the next and add or subtract the ratios. Simple. Many traders now use spreadsheets
and simple charts and graphs to do basic fibonacci ratios. Some common ratios are .382, .500,
.618 1.00 1.382, 1.618, 2.00 and 2.618.
Since my primary aim for this book is to keep things as simple as possible I wont go
into a long detailed explanation about Elliot waves and Fibonacci. You don't really
need it to achieve the results I advertise for this book. However, it would be helpful
if you are aware of the basics as it will enhance any trading methods that you may
use. There is plenty of free information on these subjects on the web if you choose
to learn more. There are entire books on these subjects alone. My aim here is to
show you how they fit in for purposes of our discussion.
Just like any other trading knowledge that involves price projections, the knowledge is useless if
you don't know how to trade it. By that I mean when to enter, where to place your stops,
where to take profits, when to add to your position and when to sit on the sidelines.
The key with Fibonacci ratios is that they work magic when they fall in conjunction with another support or resistance level such as a prior high or low.
Also, like any other support or resistance level you only want to enter o a pivot at the Fibonacci level.
BY JERRY STEWART!
PAGE 29
PAID VERSION
FIBONACCI MEASURING RULES
It is important to note that you must wait for waves 1 and 2 to form before you can project the
distance of wave 3.
Not knowing wave structure can hurt you as a trader. In illustration B above let's say that the
market is in a downtrend and you are waiting for a correction to enter. Most traders will enter
short at the reversal back down after the completion of wave 1. If you understand wave structure you know that corrections take the form of 3 waves. If you enter at wave 2 you are entering too early. You need to enter short after the completion of wave 3, at the beginning of wave
4 which will complete the correction.
It is also beneficial to note this; When the waves are in the direction of the trend, and wave 3 is
the longest wave, then waves 1 and 5 will be approximately the same length. Refer to the section of the book that explains the golden ratio.
THERE SHOULD BE NO NEED FOR US TO COVER FIBONACCI RETRACEMENTS HERE. THIS WAS COVERED IN AN EARLIER SECTION ON PROJECTED SUPPORT AND RESISTANCE.
BY JERRY STEWART!
PAGE 30
PAID VERSION
CONFIRMING INDICATORS
10 PERIOD EXPONENTIAL MOVING AVG.

20 PERIOD EXPONENTIAL MOVING AVG.
200 PERIOD MOVING AVG.
SLOW STOCHASTICS
M.A.C.D
You will hear a lot these days about this indicator or that indicator, and many will say that in the
age of electronic trading indicators no longer work. But this is the thing. INDICATORS
DO WORK WHEN THEY ARE APPLIED TO A RELEVANT SITUATION! THE
ONLY TIME AN INDICATOR IS RELEVANT IS WHEN PRICE IS AT A SUPPORT OR RESISTANCE LEVEL.
The most accurate indicator I have ever seen is the most simple. I am speaking of the 10 and
20 period exponential moving averages. Only go long when the 10 period avg. is above the 20
period avg. or crossing up through the 20. Only go short when the 10 period avg. is below the
20 period avg. or crossing down through the 20.
BY JERRY STEWART!
PAGE 31
PAID VERSION
When the 10 is above the 20 and price prints below the 10 avg. It will at least continue down
to test the 20 avg. Or when the 10 is below the 20 and price prints above the 10 avg. it will
at least continue up to test the 20.
When the 10 is above the 20 and the 10 falls to the 20 only to bounce back up you should go
long. When the 10 is below the 20 and rises only to bounce back down you should look to
go short.
This indicator alone will keep you on the right side of the market at least 80% of the time.
These two moving avgs., when used together, create a formidable support or resistance level on
their own. But when use in conjunction with highs and lows or swing pivots the signal is
awesome. If price action has given you a long signal you should only enter if the signal is confirmed by the 10/20 avg. crossover.
The keys to the 10/20 crossover are the same as for any indicator. You must ask yourself the
following questions;
Where
Where
Where
is the 10/20 at the pivot.

is the 10/20 at the high or low.
is the 10/20 at the trend-line.
BY JERRY STEWART!
PAGE 32
PAID VERSION
THE SLOW STOCHASTICS INDICATOR

There is enough information out there about the stochastic indicator. My intention is to show
you how to trade it. You already know it is an overbought oversold indicator. It is commonly
said that when the stochastic is above 80 the market is overbought and poised for a fall and
when the stochastic is below 20 the market is oversold and poised to rise.
The main thing is, where the stochastic is when price is at a support or resistance level? The
three questions above for the 10/20 crossover also apply to stochastics.
If price is giving a buy signal based on the criteria we have already discussed, then you want the
stochastic to be crossing up through 20. If price is giving you a sell short signal you want stochastic to be crossing down through 80.
Now, if price is giving you a buy signal and the 10/20 crossover is giving you a buy signal with the
stochastics also giving you a buy signal then, like the sights on a gun, everything is lined up for a
bulls-eye shot.
The hardest part about trading is the waiting. Waiting for the proper setup. When you have
everything in your favor your odds of a successful trade go up geometrically. Okay, let's make it
a slam dunk by adding a third indicator.
BY JERRY STEWART!
PAGE 33
PAID VERSION
THE M.A.C.D
The same thing that is said for the stochastic indicator applies to the MACD indicator with one
dierence. Pay attention to the zero line. If the MACD is above the zero line the trend is
up. As long as the MACD is below the zero line the trend is down. If the stochastic is up
and the MACD down you do not have a valid signal.
If you have 3 indicators, the 10/20, the stochastics, MACD, and price is all giving you the same
signal you have a go.
When you have all signals lined up and execute your entry and exits as we have detailed in this
book you will have a success rate approaching 90% on your trades.
BY JERRY STEWART!
PAGE 34
PAID VERSION
PREDATOR ZONES
Stop running
Just like any jungle the market jungle has it's predators. We have already discussed the nature
of the predators (operators). Market predators are ambush hunters. If the prey (you) can stay
out of the ambush zone they can survive. So, you need to know where the predators are
hiding. The predator zones.
The other key to avoiding predators is to wait until they have eaten their fill and are no longer
hungry. Have you ever seen one of those nature shows where the lions have killed their prey
and eaten their fill. After that the other prey animals do not run when they see the lions.
They have no fear at that moment.
In a market the predator zone is created when a swing pivot is formed. The predator zone is
the length of the measuring bar of the pivot. Once the pivot has been tested the predators
have eaten their fill. Before a predator picks out a specific prey they will spook the herd. By
making the herd run they can see who is weak, sick, or young (inexperienced). In market language spooking the herd is called stop-running.
Market predators know that many stops are below the low of the measuring bar in the case of
an up-swing or above the high of the measuring bar in a down-swing. Operators will manipulate price through these levels in an attempt to spook out the weak hands. In most cases they
succeed.
That is why I do not set physical stops when I trade.

Operators can see your stops and your stop becomes the target. Price will not close (print)
above/below the predator zone.
BY JERRY STEWART!
PAGE 35
PAID VERSION
You have to understand that market operators have positions in the market also. They want
the market to go up or down according to their position. If they can take your position from
you at a better price they make more money. They want as many shares as possible as cheaply
as possible. That's where you, the herd, comes in. Everybody is told by the so-called professional where to place their stops so all the stops are in the same area for easy cleanup. The operators are not smarter than you they just have a window on everyone's positions. They then
give advice and you believe they must be right because they are making money, driving expensive cars, luxurious homes. As far as I am concerned, you are smarter because most of the time
you are right but you are a victim. Take away their cheaters advantage and they are dumb.
They are that's why they have to cheat.
THE SHOCKING TRUTH ABOUT STOPS

The truth about physical stops is that large traders don't use them. Only undercapitalized
traders use physical stops. Have you ever seen an interview with a successful trader, a hedge
fund or mutual fund manager talk about their stops being hit. You have not because they don't
use the. The truly knowledgeable players use" buy on close or sell on close orders" to enter
and exit the market. Small traders cannot find a broker who oer this option. This option is
usually reserved for traders with large accounts. Now what does that tell you? It tells me
that stops are for the herd and the herd gets eaten. Operators know, If you use physical stops,
you are a weak hand and even if your stop is a long way from the market it still signals you have
fear. Furthermore, if your stop is a long way from the current market price you may as well use
a mental stop anyway.
You also become a target if you take a position that takes up more that 25% of your equity.
Your broker knows what your equity is. Do you know what real program trading is?
Brokers and operators who buy order flow from brokers have computer systems that make the
one on your desk look like a pencil and note pad. Their computing power is a thousand times
yours. It is a simple procedure for their computers to see where most of the stops are and initiate buying and selling to force price to the level of most stops. The matrix is real. This is
why you should make your trading decisions based on the print (closing) prices.
The sad truth is that most retail traders look to their broker for advice and even pay for the
brokers training programs. Yes, people actually pay to learn how to give their money away!
THE ALTERNATIVE TO STOPS

Advance hedging orders/mental stops. The market is driven by the position accumulations in
extremes and the fearhedging in the same pair - oered by many online platforms ,is the best
way to protect equity.
Keep hedging order 30 pips from the position. so risk at a time only 30 pips whether it is bullish or bearish market conditions.
BY JERRY STEWART!
PAGE 36
PAID VERSION
TRADING THE NEWS

You will be told that the Forex market is too large to be manipulated by a single trader or large
groups of traders. Listen 97% of the wealth of the world is controlled by a relative small
group of people an currency is the medium of exchange!
Think about a rocket launch into space. A space rocket is composed of three parts. The
rocket, the booster and the capsule. The powerful first stage rocket launches the capsule to
near space then separates. Then the less powerful booster kicks in to kick the capsule into
outer space.
In the market, news is the first stage rocket and when momentum starts to fade from that stage
the operators provide the additional boost to push the capsule (price) into the space they
desire. That space is where your stops are located!
The news is merely used as an ATTRIBUTE for the market to react. market facilitators will
use media, free analyses and other rumors.
Once enough traders take positions they are committed and to limit the risk they place stops/
advance hedging orders/mental stop. Now the market is either net long or net short.
Net long or net short means the combination of already held positions plus waiting orders.
When there are more orders waiting to exit above the market than there are orders waiting exit
below the market the game plan begins. The operators create false moves using -the news,
data release, rumors, breaking news etc. to shake out the net positions.
You can prove this too yourself by looking at a historical chart of the commitment of
traders report.
So quick market moves and the tension till the breakout of the news through media, surprise
the trader just to finally realize (after being shook) out that they were on the right side of the
market all along.
The larger moves in the market need special volumes and special trades. Many traders will
place a buy order above the market or a sell order below the market? Now the question is,
how do the stops get filled? In what order do the stops get filled? Such order placing facilities are with the banks!
Also understand that operators use the data release time as market trigger and the market does
not necessarily move as per the expectations of the larger number of traders.
Because the operators create the market sentiments to seduce the traders to commit by taking
position, later they reverse the market move quickly using dierent interpretations of the news.
The media is eectively used for that purpose. So if you avoid following such interpretations,
your trades will make profit. By the time the news is released it is too late for the retail trader.
BY JERRY STEWART!
PAGE 37
PAID VERSION
A market makes swings. They don't be related to any another other factors other than the net
long and short built up in that market. If you relate market moves to any other factor then confusion arises.
Also you need to understand that the operators are big traders and they also need to book profits, their intentions will become visible to you, and you will be able to sell when they sell and
buy when they buy and book profit along with them.
Big traders also have the limitations because they are trading through the banks
-they also have the margin requirements. They don't have unlimited money to rig
the market. simply rising or dropping levels will not give them profit - they also
need to close the open positions.
Actually the operators create the market sentiments and induce traders to commit and then
suddenly reverse as surprise to traders using some hype of data, rumor etc. All of them are short
lived as they continue to come day in and day out and provide surprise to traders. The same data
may have dierent interpretations to justify the moves...actually the moves are determined
based on the traders commitments. When traders are net long or net short, operators will
engineer a correction regardless of the news or data to the contrary.
By following the trading rules outlined in this book you will automatically trade with the operators and against the herd.
BY JERRY STEWART!
PAGE 38
PAID VERSION
HOW TO SPOT TRADES WITH 2 TO 1 RISK/

REWARD RATIO
In the illustration above we will see an explanation of a 2 to 1 risk/reward ratio, meaning the
amount you could lose if you get stopped out is only half the amount you stand to gain if your
target price is reached.
For example; If you were thinking about going long in the chart above, you would measure the
range of the measuring bar at pivot (1). We will say that the range of the bar is 100 pips.
Since this is the range in which you have placed your stop-loss, 100 pips is the amount you stand
to lose if you get stopped out.
Now, the range from the pivot breakout of the measuring bar to the low of measuring bar at
pivot (2), which is the first place you should look to take profits.
The range of that distance is 200 pips. So, 200 pips is the amount you stand to profit if you
are correct about the direction of the trade.
You don't have to trade only 2 to one risk ratio. It is up to you how much you want to risk. 2
to one is a fair standard. It is the same as saying I won't enter a trade unless I can double my
money.
BY JERRY STEWART!
PAGE 39
PAID VERSION
HEDGING; THE ALTERNATIVE TO STOPS
Here is why you need a broker that oers advance hedging. In the illustration above let's say
you saw that a pivot has formed at (1). After the pivot prints at the close of the pivot bar the
setup is now in place.
You will place 2 separate orders, one cancels other, meaning that when one of the orders is executed the second order is automatically canceled.
Order 1; place limit order to enter long at point (A) with a hedge below point (1).
Order 2; place limit order to enter short at point (B) with hedge above the high at the measuring
bar for the pivot at point (2).
BY JERRY STEWART!
PAGE 40
PAID VERSION
Since price continued up to point (B) before testing the pivot at point (A) our order will be executed short at point (B). On the short entry the range of the measuring bar is 75 pips. Now,
Since the pivot has not been tested at point (A) the target for the short trade will be 200 pips
with a stop of 75 pips. It this case you are risking 75 to make 200. Or a 2.6/1 risk reward
ratio. Even better than 2/1.
But what if, instead of placing stops you placed advanced hedging orders. A hedge means that
if price goes beyond the range at which you would have placed a stop, instead , you will enter
long. When the hedge is executed you will be short and long in the same market at the same
time. The two positions cancel each other out. Once the hedge is on you can neither lose
nor make money.
This gives you time to stay in your position until you can see if the market will print (close) beyond your stop level or if the move was a shakeout of the herd (price does not print (close) beyond the stop level.
Using advanced hedging puts you on a level playing field with the operators because you can
withstand a move against you of any magnitude. When the shakeout is over and price is heading back in your direction you can take o the hedge and still be in the trade.
BY JERRY STEWART!
PAGE 41
PAID VERSION
FINE TUNE YOUR ENTRY TECHNIQUE
In the illustration above a pivot reversal has formed on the daily chart at (1).
The following day you wait until a pivot has formed above the daily pivot point before you enter
long. Now you are protected by two areas of support. You could place your stop below the
measuring bar of the intra-day pivot (2).
You would wait for the intra-day pivot to print above the daily pivot level and enter on a pullback of the intra-day chart to the daily pivot level.
This method could lower your stop to 30 pips or you could hedge below the intra-day pivot instead of the daily pivot.
BY JERRY STEWART!
PAGE 42
PAID VERSION
PRE-TRADE QUESTIONS
WHERE IS CURRENT SWING IN RELATION TO:
1.
WHAT IS THE TREND?
2.
WHAT IS DIRECTION OF CURRENT SWING PIVOT, UP OR DOWN?
3.
WHERE IS THE NEXT CLOSEST PIVOT HIGHER OR LOWER?
4.
IS THE MOVE AN IMPULSE OR RETRACEMENT OR REACTION?
5.
WHERE ARE THE NEXT 3 PIVOT LEVELS IN BOTH DIRECTIONS?
6.
WHAT IS YOUR EXECUTION PRICE LONG AND SHORT?
7.
WHAT TYPE OF BREAKOUT IS IT A PIVOT OR IS IT A BREAK-OUT OF A

HIGH OR LOW?
8.
WHERE IS CLOSEST HEAD AND SHOULDERS ?
9.
HOW DO THE INDICATORS CONFIRM THE SWING?
10. WHICH WAVE
OF THE MOVE IS THE CURRENT SWING?
11.
WHERE ARE THE FIBONACCI RELATIONSHIPS?
12.
WHERE ARE THE TREND-LINES?
1. WHAT IS THE TREND?

Because; The trend is your friend and any surprises will occur in favor of the trend
2. WHAT IS DIRECTION OF CURRENT SWING PIVOT, UP OR DOWN?
Because; The goal of the market is to reach the next closest pivot in the direction of the swing
3. WHERE IS THE NEXT CLOSEST PIVOT HIGHER OR LOWER?
Because; This location is you first profit taking opportunity
4. IS THE MOVE AN IMPULSE OR RETRACEMENT OR REACTION?
Because; An impulse generate momentum, A retracement gains traction, A reaction is crowd
psychology
5. WHERE ARE THE NEXT 3 PIVOT LEVELS IN BOTH DIRECTIONS?
Because; A test of the third level usually begins a trend reversal or a correction
6. WHAT IS YOUR EXECUTION PRICE LONG AND SHORT?
Because; It keeps you out of the market when you don't need to be in
7. WHAT TYPE OF BREAKOUT IS IT A PIVOT OR IS IT A BREAK-OUT OF A
HIGH OR LOW?
Because; A failed breakout has more room to move against you than a failed pivot.
BY JERRY STEWART!
PAGE 43
PAID VERSION
8. WHERE IS CLOSEST HEAD AND SHOULDERS?

Because; This is truly the man on the charts. All trends and moves occur within the context of
the position of the man.
9. HOW DO THE INDICATORS CONFIRM THE SWING?
Because; They provide additional layers or bricks to the walls of support or resistance making
them harder to break through therefore making the outcome more predictable.
10. WHICH WAVE OF THE MOVE IS THE CURRENT SWING?
Because; It tells you where crowd psychology is beginning or ending
11. WHERE ARE THE FIBONACCI RELATIONSHIPS?
Because; When a number falls in the same area as support or resistance, and the indicators the
trade becomes a slam dunk
12. WHERE ARE THE TREND-LINES?
Because; They add one more major layer to the walls of support, resistance, indicators, and sacred geometry.
1. WHAT IS THE TREND?
Your need to know what the trend is in all time frames from monthly to intra-day to determine
if the current swing is with the trend or against the trend because a swing against the trend reacts dierently than a swing with the trend.
A swing with the trend will have a dierent Fibonnaci projection than a counter-swing move.
2. WHAT IS DIRECTION OF CURRENT SWING PIVOT, UP OR DOWN ?
You need to know the direction of the current swing for the reasons mentioned above and let's
you know where the swing is in relation to the next closet top or bottom. The next closest top
or bottom will be the next area of support or resistance.
3. WHERE IS THE NEXT CLOSEST PIVOT HIGHER OR LOWER?
Knowing where the next closest top or bottom (pivots) tells you where to place your target and
stop-loss.
4. IS THE MOVE AN IMPULSE OR RETRACEMENT OR REACTION?
missing answer
5. WHERE ARE THE NEXT 3 PIVOT LEVELS IN BOTH DIRECTIONS?
A major move with trend usually suers a major correction at the third level.
6. WHAT IS YOUR EXECUTION PRICE LONG AND SHORT?
Determine your entry and exit price in advance. You then remove emotion from your trading
when you know exactly the price you want to enter, take profits or take a loss. This allows you
to place your order and walk away.
7. WHAT TYPE OF BREAKOUT IS IT A PIVOT OR IS IT A BREAK-OUT OF A
HIGH OR LOW?
You are only going to enter on a test of a support or resistance level that has printed. If you do
BY JERRY STEWART!
PAGE 44
PAID VERSION
this you will be trading with the operators by buying when the herd is selling and selling when
the herd is buying. Only enter after breakout of a pivot reversal, a top, or bottom. If it is a
breakout of a high or low you need to know if the breakout is in the direction of the trend or
countertrend.
8. WHERE IS CLOSEST HEAD AND SHOULDERS ?
Go back and find the most recent head and shoulders pattern on the charts for the time frame
you are analyzing. The breakout of the head and shoulders pattern will almost always begin
and end a trend. The position of the head and shoulders tells you the direction of his
imbalance. When counting waves the wave count should begin from the top of the head of
the man on the charts.
9. HOW DO THE INDICATORS CONFIRM THE SWING?
There are six simple indicators that need to confirm the direction of the breakout. After price
has printed past a support of resistance level, where is the location of the 10/20 exponential
moving average crossover, 200 period moving average, Slow Stochastics, MACD, trend lines,
and Fibonacci levels. If price prints beyond a support/resistance level and all indicators are
pointing in the same direction the breakout is valid with 90% probability.
10. WHICH WAVE OF THE MOVE IS THE CURRENT SWING?
Since only waves 3 and 5 can be projected via Fibonacci, knowing which wave you're in helps
predict likely turning points so you can be prepared to enter and exit before the herd.
11. WHERE ARE THE FIBONACCI RELATIONSHIPS?
By knowing where the current swing is in relation to the next closest bottoms and tops along
with Fibonacci levels you will know the most likely place the move will encounter the most resistance.
12. WHERE ARE THE TREND-LINES?
If a swing is pivoting o a trend-line with the trend, you know the move should continue to the
opposite trend-line.
When you can answer the previous 12 questions you will be prepared to analyze and trade any
market according to the:
"LAWS OF CHARTS AND MEN."
BY JERRY STEWART!
PAGE 45
PAID VERSION
IF YOU MUST DAY-TRADE

THE FOREX MARKET
Only trade the European and New York sessions
Only go long near the low set for the day and only go short near the high of the day
Only enter if market has moved 75 pips
Only enter long on a intra-day pivot above yesterdays low or close
Only go short on a intra-day pivot below yesterdays high or close
Handling hedging: if hedging facility is available in the platform or with the bank, then use it
instead of stoponce the position is hedged you get the time to observe the market move without losing the position.
Why wild swings happen it is man made. Mainly to trap traders either way.you need to be
defensive all the time using hedging order - limit risk
When, European Economic data release is weak then Euro drops by the data release..sensible
then during US session the US Economic data also comes as weak or less than market expectation, then Euro rises. But the real economic situation does not get improved in a few hours
from European to US session. So the data release time is used for the market to become active
and to show big swings and spikes as the interpretations and media hype on that situation induce the traders to go in their height of imagination as if the economy of that country is either
going to collapse or grow big.
So day traders need to understand the market limitations for the day and set the trades accordingly. The market makes swings, if you follow carefully in a day, in dierent pairsthe understanding can come easily - around 150 -200 pips moves are the daily potencies.
So even if you take position at the wrong side, still the loss can be to the tune of 150 pips in a
worst scenario. If the day trader decides to take sell near the high set for the day or buy near the
low set for the day, then the wrong side position will limit the loss to only 75 pips.
Never try a trade of sell after the visible drop or buy after a visible rise unless you can
read well the market potency for the next day.
There are 3 days in 24 hrs market in dierent parts of world. i.e. there are 3 sessions (active
day time) in a day - Japanese, European and US sessions. each session will be the day trading
opportunity for the respective country traders..Each session runs around 6:30 hrs as follows.
Japanese session 00:30 - 07:00 GMT, European session 07:30 - 13:00 GMT and US session 13:30
-20:30 GMT, based on their geographical positions. In between time of the sessions is called
Gap time. If you watch the market during these gap times there will be big swings.
Keep in mind that the operators make the market active during start and end of the sessions
BY JERRY STEWART!
PAGE 46
PAID VERSION
and the gap time. Rest of the time (with in the sessions), the moves will be mostly swings between the high and low or from low to high. Always aim to take positions when the market is
active to grab the swing trade profitsthat will reduce the waiting time to book profit. There is
no need to burn the candle and wait over night awake and stress your body and mind. fatigue
condition will lead only to distress trading. How long you trade is not greatness, how smart you
trade and earn is important.
Operators don't make one-sided moves for more than 2 sessions; they have the task of maintaining volatility of the market and earn for them.
So aim to set your convenient day trading time and only focus to do day trading without bothering about the big calls, then trading becomes easier.
Never enter between pivots to stay out of the predator zones.
Expect a bounce- never enter on first touch of a support or resistance level because, even if
price does eventually print beyond the support or resistance level, it will first bounce o like a
ball hitting a wall and may bounce beyond your ability to stay in your position.
HOW TO KNOW WHEN A GAP MEANS BUSINESS

The easy way to know if a gap open is signaling a rapid move in the direction of the gap of signaling an exhaustion of the move in the current direction.
1.
If price gaps beyond the closest support/resistance level it is a continuation gap and a
rapid price movement in the direction of the gap can be expected.
2.
If price gaps, but is still inside the support/resistance area, it signals an exhaustion of
the current move and when price hits the next support/resistance it will bounce and
reverse.
HOW TO RECOGNIZE BULL AND BEAR TRAPS

Consolidation is making swings in a range of 150 -200 pips and do it for a week or 2 in that narrow range to addict the traders to sell during rise and buy during correction. When they shift
the consolidation level to higher level, the usual either way traders sell during initial rise and
find they are trapped. So what they earned in swing trades they lose during the extended moves
or spikes. So what little the traders earn also is lost to the operators because the traders presume what is visible in the market is true.
The easiest way to recognize a bull or bear trap is to recognize when a high or low is broken if
the swing pivot has yet been tested. If the swing pivot has not been tested the odds are high
that it is a trap.
BY JERRY STEWART!
PAGE 47
PAID VERSION
Now that you know how markets really work you are not only ready to
make successful trades but you are also prepared to defend yourself.
You are ready to break away from the herd and ride a symbiotic relationship with market operators.
You are ready to read a market's moves for what they are;
The manipulations of men, who are unknowingly working within the
fundamental laws of nature by accident or design.
You now understand that you are actually trading...
"THE LAWS OF CHARTS AND MEN"
BY JERRY STEWART!
PAGE 48

The Laws of Charts and Men

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T H E L AW S

brought to you by Jerry Stewart

TRADING CONTINUATION MOVES -How to know if current move will continue,

RECOGNIZING FAILED BREAKOUTS -To avoid bull and bear traps.1,2

CONFIRMING INDICATORS -Line up like a cross-hairs or scope on a rifle to give you

THE LAWS OF CHARTS AND MEN!

After pivot has formed what happens next

II.If price closes above the old high.

What happens after new high is made

THE LAWS OF CHARTS AND MEN!

THE 3 BAR CHART PATTERN THAT SIGNALS

What is a pivot point reversal...

What is a complex pivot...

How to trade pivots...

THE LAWS OF CHARTS AND MEN!

THE LAWS OF CHARTS AND MEN!

COMPLEX PIVOT POINT

THE LAWS OF CHARTS AND MEN!

After a pivot is formed price will do one of two things:

THE LAWS OF CHARTS AND MEN!

IN THE CHART ABOVE EACH ARROW IDENTIFIES A SWING PIVOT.

THE LAWS OF CHARTS AND MEN!

TRADING RULES (REVERSAL MOVES)

THE LAWS OF CHARTS AND MEN!

TRADING RULES (CONTINUATION MOVES)

THE LAWS OF CHARTS AND MEN!

THE LAWS OF CHARTS AND MEN!

THE LAWS OF CHARTS AND MEN!

TRADING RULES ILLUSTRATIONS

THE LAWS OF CHARTS AND MEN!

Price will continue up to the first area of resistance ( pivot point 1)

Price will back up to test support (pivot point 2)

WHICH EVER EVENT OCCURS FIRST WILL DETERMINE YOUR NEXT

THE LAWS OF CHARTS AND MEN!

HOW TO KNOW THE DIFFERENCE BETWEEN A PRICE

THE LAWS OF CHARTS AND MEN!

THE LAWS OF CHARTS AND MEN!

ORDER ENTRY AFTER PIVOT IS FORMED

CANCEL ORDER IF A REVERSAL PIVOT OCCURS BEFORE

THE LAWS OF CHARTS AND MEN!

TRADING CONTINUATION MOVES

ILLUSTRATED CONTINUATION SETUP

THE LAWS OF CHARTS AND MEN!

THE LAWS OF CHARTS AND MEN!

THE LAWS OF CHARTS AND MEN!

HOW A TRUE CONTINUATION BEHAVES

THE LAWS OF CHARTS AND MEN!

HOW A CONTINUATION MOVES TO THE NEXT

THE LAWS OF CHARTS AND MEN!

THE LAWS OF CHARTS AND MEN!

FAILED PIVOT TEST ILLUSTRED

THE LAWS OF CHARTS AND MEN!

FAILED CONTINUATION BREAKOUT

THE LAWS OF CHARTS AND MEN!

SINGLE BAR SUPPORT RESISTANCE

THE LAWS OF CHARTS AND MEN!

PRECURSOR TO BIG MOVES

THE LAWS OF CHARTS AND MEN!

THE CYCLE OF SWINGS

THE LAWS OF CHARTS AND MEN!

Every action is followed by a reaction.

THE LAWS OF CHARTS AND MEN!

COMBINING ELLIOT WAVES WITH SACRED

THE LAWS OF CHARTS AND MEN!