Documente Academic
Documente Profesional
Documente Cultură
DEDICATION 3
ABOUT THE AUTHOR 4
THE
FX SYSTEM 7
THE 1-2-3 METHOD 10
EXERCISES E1-E2 13
SOLUTIONS E1-E2 15
THE HEIKIN-ASHI CANDLES 17
EXPONENTIAL MA CROSSOVER 18
THE EMA CROSSOVER SYSTEM
AND FX CRITERIA RULES 23
HOW AND WERE EXACTLY DO WE EXECUTE A TRADE 24
MONEY MANAGEMENT RULES 26
LONG POSITION AND
TRADE MANAGEMENT RULES 28
SHORT POSITION AND TRADE MANAGEMENT RULES 29
FX PC SCREEN SETUP & TRADING APPROACH 31
FX TRADING EXERCISES (WORKBOOK) 36-95
A TRADING ADVISOR, COACH OR MENTOR 96
A PERSONAL MESSAGE 98
NOTES 99-109
DEDICATION
ABOUT THE AUTHOR
Dear Reader!
My name is Nikos Mermigas. I was born and raised in Germany. I came to
Greece in 1993 when I was 21 years old. My job as a musician and music teacher
forced me to travel a lot and kept me frequently away from my home and family.
A good friend and I decided on a quest to find something that would untie our
hands a bit, something that would provide us with more time to spend with our
family and have extra money. So our search began! We searched for a way to be
our own bosses and a way to work from home using a computer. We searched
many months and were flooded with worthless information and ideas. We
couldnt find anything that we desired.
At that time I had some stocks which I was not trading on my own. From time to
time I would look to see how they were performing. After a conversation with a
stock broker we learned about the foreign exchange (forex) market. We had never
heard about the foreign exchange market before and were now curious. Finally we
found something we wanted to learn more about!
We learned that forex could indeed be a small, personal business that anybody
could manage from anywhere in the world with only a computer and an internet
connection. That sounded great and our hope intensified! We also learned
thousands of people are making money from their home sitting on their couch or
in their home office, and some of them had quit their full time jobs or were just
making an extra income from trading in the forex market.
For me personally, it was love at first sight!
I realized there was tremendous potential in the forex market and I started
trading forex with confidence. I opened a small account and started to buy and sell
currencies without knowing the basic rules of trading and without any knowledge
on this subject. In less than six months my friend and I lost almost all the money in
our account.
But why did we lose? Very simple! We did not trade at all. We were just gambling
like 90% of traders do.
At that point I needed a one month break to put my thoughts in order. I asked
myself a lot of questions. There were nights I couldnt sleep because of so many
questions and thoughts flying around in my mind! What did I do wrong? What
are successful traders doing differently than me? How can I improve? How can I
succeed on a long term basis and how can I handle my emotions like greed and
fear during my trading?
After a while I sat down and said to myself; every career, every job and every
business needs proper training. It is no different at all in trading the forex market
and why should it be?
I started reading lots of books (most of them did not help me at all to improve my
trading). I also went to trading psychology and technical analysis seminars. I took
all the useful information from these webinars and seminars to help me create my
own trading rules and my own trading system. It took me a while but when I
really started following my system rules, with patience and discipline, things
started to turn around in my favour. I believed in myself and my rules. When I
doubled my account I knew I had succeeded!
A person may not need a lot of coaching to become a real trader, but without the
right training I think most people are doomed to fail.
Looking back, I now see that trading is not hard to learn at all. It truly can be very
easy. We humans have the tendency to complicate things without having a real
reason to do so. That, in my opinion is why 90% of people loose in the forex
market.
The biggest advantage about the
FX ( FX) system is that you
can use it successfully in each and every market, not just the forex market. The chart
reflects every human emotion and so the signals are the same. In our case it does
not matter if we are talking about the forex market or any other financial market.
Today, I am a full time trader. My favourite market is still the fast moving forex
market. I love to do my chart analysis in the morning and then execute my trades
when I get the signal as per my system rules. Life as a trader gives me great
pleasure. I have goals, I have reasons to think positive, and I am always
confronted with new challenges and opportunities day after day and week after
week.
I have met a lot of traders and 80-90% of them have not made money consistently
over the long term. In fact they have lost it consistently. I thought this was really
interesting. Most of these guys were experienced traders with knowledge and
passion for trading. Their problem was not necessarily their trading system. They
just couldnt follow their rules because they did not believe in what they were
doing. Some had no discipline, some had too much fear, and some were unable to
pull the trigger. Their mental state was in bad condition and they looked for
excuses why things did not work out.
Later on I accidentally started to teach my system to an experienced but
unsuccessful trader through the internet. We took live trades together and I tried
to help him gain his confidence back. With a little work from both of us, he finally
made it!
It was exhilarating helping someone stand on his own two feet again. The feeling
was so great it is difficult to describe. That trader asked me if I would help some of
his friends with their trading. I started coaching those traders and one thing led
to another and hence forth I started with the
FX LIVE TRADING
courses.
FX was born!!!!
Trading took on new meaning for me. Now, not only do I enjoy trading but also
enjoy helping others overcome their obstacles and traps which are hindering them
from becoming successful in their trading.
I wish you
Health, happiness and success
Nikos Mermigas
HE
SYSTEM
On the following 100 pages I will guide you step by step through the
FX system. When I was learning about forex I spent countless hours in front of my
pc, fine tuning my system. I desperately wanted to make this work! I remember
having difficult and often torturous times before I made it, but I persisted and
therefore, I was rewarded.
The basic philosophy and goal of my system was and is, to cut my losses and let the
winners run. With the FX you will learn in a very pleasant way, how to use my
techniques and to trade successfully without going through all the trouble I
experienced in the past. You will find enough space in this book to make notes and
write down your thoughts.
Just keep it simple and you will succeed.
Have fun and enjoy!
10
How do we indentify and use the 1-2-3 method the right way!
You surely have noticed that price never really moves in a straight line during a
trend.
Price will take a breather and retrace often before it reaches a top on an up trend
or a bottom on a down trend.
The first sign of a trend change appears when the market creates a lower low (2)
and a lower high (3), after a previous high (1) in an uptrend; or a higher high (2),
and a higher low (3), after a previous low (1) in a down trend.
N1
11
In the next example (N2) and with the help of the Trend lines you will see how
easily you can locate the 1-2-3 setups on the charts.
1. You have to find and connect the lowest points in an uptrend, searching for at
least 3 touches (red line). Price follows the trend line to the upside.
2. Now connect the lowest point (1) with the following high (2) and this again with
the next low (3).
There is your first and OBVIOUS 1-2-3 to the upside.
This was easy I guess.
Price continues its move to the upside creating another bullish 1-2-3 after a while.
This is a confirmation that the uptrend is still on.
A new high is following, but the price does not show us its intentions clearly.
As you can see now, the candles are failing to bounce on the uptrend line and that
means that the buyers are slowly loosing their power.
What is happening now?
For the first time and after the highest point (1), you can see a lower low (2) and a
lower high (3).
What else do you see?
The uptrend line has broken too. This bearish 1-2-3 after the uptrend is our first
sign and warning.
As you can see now, more bearish 1-2-3s are following and the trend has now
clearly changed to the downside (blue line).
N2
12
EXERCISE
E1 & E2
Please take a pencil and a ruler to draw the trend lines and the 123 setups on the
charts.
Further try to spot the trend changes on both examples.
Look for help from the previous chart example (N4).
If you like to take notes feel free to do so. You will find enough space on the next
page.
E1
13
E2
NOTES E1:
NOTES E 2:
14
E1S.
The bullish 1-2-3 at the left bottom on this chart is the first sign for a bullish trend.
Point 3 is higher than point 1, so the price has created a higher low.
Now connect all the higher lows and you will find you have drawn the uptrend line
(red line).
After that, higher highs and higher lows are following. You can easily spot the
following bullish 1-2-3s (blue lines).
The support is strong because as can you see, the price always bounces after a
touch with this trend line.
After seven bullish 1-2-3s the buyers start to loose their power and the market is
not able to create a new high 1.
The trend line is breaking for the first time. Now you can see a lower low 2 and a
lower high 3. The support line has become a resistance line now. The first sign for
a downtrend is given here.
15
E2S.
The bearish 1-2-3 at the left top on this chart is the first sign for a bearish trend.
Point 3 is lower than point 1, so the price has created a lower high.
Now connect all the lower highs you can find to draw the downtrend line (red
line).
After that, lower highs and lower lows are following. You can easily spot the
following bearish 1-2-3s (black lines).
The resistance is strong, because as can you see, the price always bounces off the
trend line.
After eight bearish 1-2-3s the sellers start to loose their power and the market is
not able to create a lower low (after point 1).
The trend line is breaking to the upside. Now, for the first time you can spot a
higher high 2 and a higher low 3. Now the resistance line has become a support
line. The first sign for an uptrend is given here.
ALWAYS REMEMBER:
WE NEED TO FIND AT LEAST 3 TOUCHES TO CREATE A TREND LINE
16
N3
17
18
N4
On the chart (N4) you can see the nice downtrend using Heikin-Ashi candles.
Now take a look at the EMAs.
All four are above the price. It looks like the EMA 36 is pushing the price to the
downside.
During a trend, the EMA 36 is our most important resistance/support level.
If the price breaks the EMA 36 and a 1-2-3 setup forms after that, then there is a
good possibility for a trend change.
Now that you understand the basics lets start with the EMA 200.
As a general rule we can say, if price moves under the EMA 200 we are looking for
shorts, and if it goes above the EMA 200 we are looking for long trades.
Knowing this of course is not enough but at least you get the direction of the trend
and know what to look for.
Many times you will get a signal not even close to the EMA 200. Keeping in mind
this general rule of 200 EMA will help, so you are able to make your decisions
much faster.
The following example (N5) should help you understand.
After you have studied the chart two more exercises (E3/E4) will follow.
Like before feel free to use a pencil and a ruler to draw your trend lines and 1-2-3
setups. Only after you finished drawing the trend lines and 1-2-3 setups then
check the solutions.
19
N5
The price is bouncing on the EMA 200. As you can see at the blue arrows long trades are in play. The support line is holding
at first so there is no sign for a short trade. After the trend line break and the break of the EMA 200 you can spot the bearish
1-2-3. The price is not able to pass the EMA 200 to the upside again. After the 1-2-3 setup, the 2 to 3 line breaks (blue circle)
and shorts are in play now.
20
Exercise E 3
21
Solution E3S.
22
Only if you answer yes on all four rules, you should take action and
execute the trade
23
N6
Let us analyze this short trade now!
Imagine you are sitting in front of this particular chart trying to spot a trade.
So how do you start?
First you have to focus and remind yourself of the four rules you have to follow,
before you take any action.
At the upper left side you can see that the price has stopped its move to the upside
(1). After the down crossover of the EMA 12/36 the candles break the EMA 200
support quite fast, creating a lower low on the chart (2).
Then the price was able to retrace back to the EMA 200 level again (3), were it
found resistance now, creating a nice 1-2-3 setup.
Please make sure that point 3 is always lower than point 1, when we are talking
about a bearish 1-2-3 setup and higher than point one, when we are talking about
a bullish 1-2-3 setup. After the down break of the 2-3 line (look at the red arrow)
you have to take action and execute your short trade.
It is important that you enter at the right level to get the best price possible,
especially when you are scalping the market.
Look at the 2-3 break again. Notice the first red candle after the break.
You can see a big candle body with a small lower shadow exactly on the EMA
200/36 and 12 (in the black rectangle). It is important that the body of this red
candle closes at least 50% under the EMA 12 (over the EMA 12 for longs) to alert
you. Then you wait for the price to move a couple of pips under the previous
candle and off you go. You enter the trade exactly at this level.
24
N7
At the lower left side you can see that the price has stopped its move to the
downside.
At first you can see that the price is able to break the resistance line on the chart.
After the cross up of EMA 12/36 (1) the candles break the EMA 200 resistance too,
creating a higher high (2) and a higher low(3) on the chart.
Then the price was able to find support at the EMA 200 level.
You should easily spot the 1-2-3 setup now.
Please make sure that point 3 is higher than point 1, when we are talking about a
bullish 1-2-3 setup. After the up break of the 2-3 line, (look at the blue arrow) you
have to take action and execute your long trade.
Again look at the 2-3 break. Notice the first green candle after the break.
You can see a nice candle body with a small upper shadow exactly on the EMA 12
(in the black rectangle). It is important that the body of this green candle closes at
least 50% over the EMA 12 to alert you. Then you wait for the price to move a
couple of pips higher than the previous candle and there you are again. You enter
the trade exactly at this level.
Please remember that patience is the key here. Many traders dont wait for a
retracement. It is very important to give the market time to breathe and execute
your positions at the right spot.
The first reason to do so is that you will have a low risk and high probability
trade.
Secondly, you normally get a much better entry price and the third reason is that
you will be able to place your stops at the best price.
25
To make money in the forex market or in any other financial market, you have to
follow healthy money management rules.
If you think you can make money without these rules for the long term, I have to
disappoint you.
Even with the best system you are likely to loose your money if you dont know
how much to risk on each of your trades.
To protect your money you have to always place stops at the right place.
Many traders think that stop losses are their enemy and hate it when a stop gets
hit, but that is really wrong and the key to disaster.
The stop loss is there to protect you from loosing your money.
Yes, the stop loss is your ally and not your enemy. Start to believe this and trading
will be much easier for you in future.
A general FX rule says
26
N8
27
28
BY FOLLOWING THESE SIMPLE RULES I REALLY CUT MY LOSSES
AND LET MY WINNERS RUN
29
Now study the chart very carefully. Look at the entry/exit and stop levels. After this example (N9 eur/usd 5min) many
exercises will follow, so you can practice this simple but very effective trading strategy.
N9
30
FX PC SCREEN SETUP
&
TRADING APPROACH
Before we start to practice with exercises in this book, lets first organize the charts
on your screen and take a look at how to approach trading the right way.
1. Open 4 charts with the same currency pair on your screen.
Choose the daily on the first, the 4 hour on the second, the 1 hour on the third and
the 5min on the fourth chart (N10).
2. Choose Heikin-Ashi candles instead of classic candle sticks on all four screens.
3. Choose different colors for your EMA (close) setup. I prefer blue for the 12, red
for the 36, black for the 200 and gold or brown for the 633 EMA.
After your 4 screen setup is ready, you have to do your top-down approach.
Make sure you are relaxed and able to focus.
First look at the daily/4h chart, to get the direction of the trend, if there is any of
course.
Look for trend line breaks and support/resistance levels on the EMAs.
Additionally look for double tops or double bottoms, so that you can get an idea in
which direction the market could move in future.
Lets say you have spotted an up trend on the daily and the four hour charts.
Now you switch to the 1h chart to take a closer look.
If you can spot a long 1-2-3 setup with no lower high in making and the price
remains over the 200/36 and 12 EMA then you are looking 100% for long trades.
Now switch to the 5 min chart and look for a good setup according to the
FX system.
If you are in the trade, making good pips and you have already taken some profits,
always remind yourself to switch to the higher timeframes again, and look for these
important support/resistance levels.
Bounces off the Ema 200 for example on the 1h or 4h chart can be really powerful.
Now, it is important that you organize your trading. Spend a few minutes every
day to analyze your charts and the fundamental news before you take any action.
Why fundamental news? You dont need to know about the announcement results
to take an action, but what you are looking for, is the releasing time of the really
important news.
As you may already know, important news can move the markets like crazy within
few seconds.
So after you have switched your pc on, choose one good website to find out if there
is any important news during the day.
31
FUNDAMENTAL NEWS CALENDAR EXAMPLE
N10
32
FX 4 SCREEN SETUP
N11
N12
33
N12
N13
34
N14
The screen on your pc should look like this. It can be very easy to spot a trade if you can watch all four timeframes at once.
All support and resistance levels are easy to spot like this.
35
FX TRADING EXERCISES
Before you start with the exercises make sure that you have
understood the system rules.
If you are not sure of something, just take a look at that particular
subject again to remind yourself.
Also try to stay focused and relaxed when you are doing the
exercises.
Take breaks and dont get upset if you are not able to do it 100 %
right the first time.
It is normal that you have to get use to the system first, but after
a while, you will see how easy it really can be.
Use a ruler and colored pencils if you prefer to draw your trend
lines, 1-2-3- setups, targets, reasons, limits and stop orders.
This way you can make fast and easy corrections on the charts.
Later on I will show you how to manage a trade when it is not
going your way, and how to decide when it is best to stay aside
and avoid trading.
Lets start!
Take a look again at the following chart (T1) and study this
example well.
You can use it at any time as a guideline for the future exercises.
In the next 15 exercises I would like you to find the
support/resistance levels, the trend line breaks, the 1-2-3 setups,
the exact entry and exit points of all 3 positions, the stops and
trailing stops, the results and of course all the trading reasons
you can find.
Remember that you have to cut your position into 3 parts, so
every time you open a position you have to manage 3 lots.
Have fun!
36
WORKBOOK
FX EXERCISES
T1-T15
&
COMPARE YOUR RESULTS
T1-T15
37
T1
38
T1 fix
Look at the short trade. You had an EMA crossover to the downside, but there is still an EMA 200 support. This is a more
aggressive entry, but allows you to enter a position earlier. You dont have to take this short position if you prefer to trade
more carefully or conservatively.
39
T2
40
T3
41
T4
42
T5
43
T6
44
T7
45
T8
46
T9
47
T10
48
T11
49
T12
50
T13
51
T14
52
T15 FIND THE ENTRY ON THE 1 H CHART (LEFT) AND COMPARE WITH THE ENTRY ON THE 5MIN CHART (RIGHT)!
WHAT DO YOU NOTICE? JUST DO THE EXERCISE AND COMPARE THE TWO TIMEFRAMES.
53
T2-T15 SOLUTIONS
54
T2FIX
55
T3FIX
56
T4FIX
57
T5FIX
58
T6FIX
59
T7FIX
60
T8FIX
61
T9FIX
62
T10FIX
63
T11FIX
64
T12FIX
65
T13FIX
66
T14FIX
67
T15FIX
68
69
L1
70
L1FIX
71
L2
72
L3
73
L4
74
L5
75
L2FIX
76
L3FIX
77
L4 FIX
78
L5FIX
79
I hope that most of the exercises have been helpful to you. With a bit of practice I
am convinced that anybody can learn to trade this simple but most powerful
system.
It is important that you write down your questions and repeat the exercises until
you really understand the concept.
Take a look at the following 4 charts. These examples are as important as the main
system itself because, here you will learn when it is best to take a break and stay
out of trading.
Try to remember the following examples in order to spot setups like this in your
future trading.
80
O1
81
O2
82
O3
83
O4
84
85
O6
86
O7
87
O8
88
O9
89
O10
90
O6FIX
91
O7FIX
92
O8FIX
93
O9FIX
94
O10FIX
95
96
Remember this; The best system in the world is worthless if you are not able to
take responsibility for yourself and learn from your mistakes.
Your trading mentor should be able to take you to higher levels step by step and
encourage you on your journey to the top.
The student-mentor relationship should be based on respect and focused on your
professional growth.
Your personal coach is paid for one thing only; To help you achieve your goals, so
you can live the life you have always dreamed about.
Dont hesitate to seek for a trading coach if you are not satisfied with your results.
It is truly worth it, trust me.
If you have any question, or if you are interested in joining our club by
participating in one of our FX mentoring courses, please feel free to
visit our site www.
.com.
97
A PERSONAL MESSAGE
Trading in the forex market can indeed be profitable if you know what you are
doing; however you have to keep in mind.
If you are not able to follow the rules of any good system, you are simple not
able to succeed.
You should trade first with a demo account and double the money on that
account before you consider trading with real money.
You have to become confident with the system before you risk even a cent of
your own money. Then you should start with small lots and increase your lot
size according to the system rules.
If you are not able to pay your monthly bills at home, or if you need every
cent of your money to survive, you should not even think about trading with
real money.
If you dont have any experience in trading, look for a mentor or coach to
assist you. This is very important, especially for new traders.
Many people dont mind losing a lot of dollars/Euros in the financial
markets, but they never consider participating in a good training program or
trading courses. This could save thousands in the long term.
I hope this E-Book was helpful to you.
I wish you health, success and happiness in your life and of course in your trading
Nikos Mermigas
98
NOTES
99
NOTES
100
NOTES
101
NOTES
102
NOTES
103
NOTES
104
NOTES
105
NOTES
106
NOTES
107
NOTES
108
NOTES
109
FX
ALL RIGHTS RESERVED 2008
110