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WINNING TRADING

STRATEGY
THE ONE TRADING STRATEGY
YOU WISH YOU KNEW BEFORE
TRADING

Introduction
I want to thank you and congratulate you for downloading the
book, Winning Trading Strategy.
Trading is a constant battle where you have to learn the best
tools, strategies and techniques to have an edge and make
money. You too will transform your trading when you learn the
strategy and the information I am sharing with you in this
book.
To be a consistently profitable trader, you need have to have a
clearly defined strategy with rules on how to act in the market.
Find technicues in this ebook that fits you and become the best
trader you can be. Here is a preview of what you will learn:
The importance of a trading plan.
Why you should track your trades.
The importance of knowing yourself and your mind.
The one trading strategy.
A risk management strategy.
And much more!
Thanks again for downloading this book, I really hope you
enjoy it!
Best Trading,
Johan Nordstrom
http://www.TradingWalk.com
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Copyright 2015 by Johan Nordstrom. All rights reserved.

This document is geared towards providing exact and reliable


information in regards to the topic and issue covered. This
information is

for your

personal

use only.

You

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distribute, copy, reproduce, or otherwise sell this product or


information in any form whatsoever, including but not limited
to:

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without expressed written, dated and signed permission from
the publisher. All copyrights are reserved.
The information herein is offered for informational purposes
solely, and is universal as so. The presentation of the
information is without contract or any type of guarantee
assurance, and should not be considered specific investment
advice. Examples are provided for illustrative purposes only.
Past performance is not necessarily indicative of future results.
Trading is associated with risk and capital may decrease in
value. If advice is necessary, legal or professional, a practiced
individual in the profession should be ordered.

Trading Plan
One of the biggest mistakes most new traders make, is to
trade on emotions, tips and whatever catch their attention, it
can work for some time, but not in the long run. To be a
consistently profitable trader, you need to have some rules on
how to act in the market. Have you ever experienced
something like the example in the chart below?

If you have a trading plan, you will always know how to act in
the market and where you are going to place your trades and
take your wins and losses. Your trading plan primarily consists
of a set of rules you should follow to profit in trading. You will
take out much of the anxiety being in a large losing position

when you, for example, have stated in your trading plan; you
only risk one percent per trade.
Having a trading plan makes trading easy and enjoyable, it
takes the fear, anxiety and complexity out of it. If you are in
the market for the thrill, then you are not in it for the money,
so if you are in it for the money; have a trading plan.
It is difficult to follow a trading plan since it is in our nature to
bend and break rules. You need to have the discipline in order
to act consistently according to your rules. Done right and you
will profit for the rest of your life and become the best trader
you can be.
Read more in my post Trading Rule: Plan Your Trade And
Trade Your Plan.
Or go here: tradingwalk.com/trading-rule-plan-trade-tradeplan/

Track Your Trades


I know many traders that cannot figure out why they do not
have the returns they know is possible for them to have. I
have tried to explain to them that they need to track what
they are doing to identify bad habits. Without a trading
journal, it is hard to remember exactly what made you act in a
certain way at the time.

The most important answer to why you should track your


trades is because it enables you to learn from your mistakes
and thereby advance as a trader so you can make more
money. You may think you follow your trading plan when you
are not, and if you do not have a system of tracking your
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trades there is no feedback for you to fall back on when you


make mistakes and do not follow your plan.
Tracking your trading does not have to be complicated. Use a
simple Excel document or pen and paper where you write
down the security, date, price, your stop price, setup and your
thoughts. When you close your position you write down the
date, price, if you followed your rules, gain/loss and your
thoughts. Simple as that!
Tracking will tremendously help you spot your mistakes when
reviewing, I have had times when I closed a position, realized
it was not according to my plan to close when writing my
tracking, reopened the position, and made a profit instead of a
loss.
I recommend you track your trade after each action you take
or before you leave the computer for the day. Tracking the
next day often make you forget much valuable information.

Monitor Your Mind


Have you ever experienced a loss becoming a larger and larger
loss but you feel that it is going to turn since there are so
many reasons that support your trade so it has to, but it does
not and you have to sell with a gigantic loss?
First, how much risk you take in every trade, should be stated
in the risk/money management section in your trading plan.
Second, your mind has a tendency to play tricks on you.
Example; when you are in a long trade the mind gets a long
bias and, therefore, focuses mainly on positive signals and
rejects negative signals. You should, therefore, take particular
notice on how you think and what you focus on, a good way to
help you from this "mind problem" is to plan your trades,
(again Rule #1) so you will know how to act before you enter a
trade.
One of the reasons you have a before and after thoughts
section in your tracking is so you can analyze how your mind
play tricks on you.
To get your mind under control, I recommend you do some
mental exercise before you trade, it can be as simple as
repeated the five fundamental Truths of trading and from
Trading in The Zone by Mark Douglas.

See more books I recommend in my blog post on the Top 5


Trading Books Every Trader Should Have Read.
Or click this link: tradingwalk.com/top-5-trading-books-everytrader-should-have-read/

Always Use Stop Loss Orders


No trading system have a winning ratio of 100%, you will have
losing trades, and depending on how you manage your losing
trades, they can be small and under control with the use of
stop losses and money management or they can be gigantic!
Many traders have blown out their accounts because they
didn't use a stop loss order.
You should have your stop order registered at the same time
you enter the trade; it helps with the mind problem. If you
don't register the stop loss order right away, you will feel
tempted to move it when the trade start going against you.
The mind does not want to accept a loss, a defeat, even
though YOU know, that losses are part of the business.
Register your stop loss order when you initiate your trade and
leave it.
One extra thing I want to point out as an upgrade, don't move
your stop when youre in profits. Securities move in waves and
if you're too fast to move your stop to say break even, youll
get stopped out when the price retrace, and then, the market
often continues in the direction of your trade, without you.

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Focus On The Process, Not The


Money
When I first started trading many years ago, I was so caught
up in how much money I made or lost, I focused more on my
account than on the charts and my analysis. I missed many
great opportunities because of that. When I shifted to focus on
the process; to follow my trading plan, and trade what the
chart told me, my profitability skyrocketed.
You have to focus on the process; numerous examples have
shown that this is one of the single most important things to
do, to become a successful trader. I recommend you read Way
of the Turtle by Curtis Faith, which highlights this very well.
Note that I'm not saying; that you don't want to make money.
Of course you should want to make money on trading, but
what I'm saying is that, when you're trading and sitting in
front of your screen; focusing on the process, will pay more.
Can you see the red line in the five rules? It's all about
following a plan with every aspect of the trade defined before
you enter a position so you are well prepared and know what
to do, and don't get distracted by your mind.

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The Winning Trading Strategy


In this chapter, I will reveal the winning trading strategy. I
look for this setup every day because it is so powerful. You can
use it trading futures, forex and stocks. It is so powerful it
works on any security in any time frame.

The Strategy
This is mainly a reversal strategy of the micro trend in the
direction of the macro trend. An example can be a micro
downtrend in 1h chart but the daily chart, macro trend, is in
an uptrend. The strategy can be traded both long and short
and as a day trading strategy or swing trading strategy on
your favorite time frame, we mainly trade this on daily, 4h and
1h time frame. It is an ABC setup, but we will get to that.
To keep it simple, we use two charts to define the micro and
macro trend. We define trend by looking at higher highs and
higher lows and the candlesticks body range, if red candles are
bigger than the green the trend/momentum is down. You can
certainly use your favorite moving average to define trend. We
keep it simple, no need indicators. Candlesticks are our price
action and what we will use to give us the entry and exit price.

Setup
We can see that we have a downtrend, 1) the price action start
in the upper left corner and is now in lower right, lower lows
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and lower highs 2) the red candle bodies are bigger than the
green ones (the daily is also in a downtrend). Therefore, we
look at a short trades. Now to the setup, to have a short setup
we want:
A break to new lows.
A rally against the trend (A move).
A move to the downside (B move).
A Break of the rally high (A point) creating a new high (C
move).
We try to enter as high as possible on the C move before
it reverses back down with anticipation of breaking new
lows.

Setup Upgrage!
Round numbers often act as support and resistance, therefore,
place orders at these levels or just low/above round number
levels.

Setup Upgrade!
Symmetry is importaint; therefore, measure the A move and
anticipate that the C move might be similar. With symmetry
you increase the probability of a winning trade.

Illustration
Below is an illustration on how the setup should be traded, I
have illustrated it in a simple drawing and we will also use a

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1h chart (date 2015-12-15) of the currency pair GBPJPY to


illustrate the setup in a candlestick chart.

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Entry
To find the zone where the C move might end. We draw a Fib
extension between the low and high of the A move to get our
short zone between the 1.279 and 1.618 extension. When we
have the area, we look left for a green small candle body and
place the entry at the open of that candle, close to 184.100.

Target
Exit the position at 182.500 closest round number to the open
of the red candle at the low point of the A move, giving us a
positive risk reward (reward greater than our risk).

Stop Loss
Place a stop loss order just above the short areas closest
round number (above Fib 1.618 extension [184.575], closest
round number [184.600]). We place stop loss at 184.620.

The Result
Like many other times, we traded this strategy and produced a
winning trade. Be observant, these setups form over and over
again making it possible for you to profit day in day out. Did
you look left on the chart? Well then you probably found this
setup too:

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This truly is a great strategy and his is unlike anything I have


ever seen. Look how the market turned and absolutely crashed
to our profit target in the chart above. I use this strategy to
make huge amounts of $$$ and so can you.

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Risk Management Strategy


What is risk management? It is the process where you decide
the risk (potential loss) in a trade and then take the
appropriate action given your risk tolerance.
How to decide how many contracts you should buy or sell
when you have a setup? It depends on how much you are
willing to risk.
How much should you risk? We recommend that you never
risk more than two percent on trades, one percent is optimal,
but only you can decide how much you should risk. Higher risk
gives you a higher reward when you have winning trades but
also larger drawdowns when you have losing trades. Keep your
risk low, in general, just think what a 50 % drawdown would
do to your account. You may think that a 50 % win is going to
take you back to break even, no, take a look at the example
below.

Example
Your initial account capital is $100.000. You invest everything
and suffer a 50 % loss, account decrease to $50.000
(=$100.000*0,5). You invest everything again and get a 50 %
gain, account capital increase to $75.000 (=$50.000*1,5), but
that is $25.000 short of what you initially had. You need a 100
% gain after a 50 % loss to come back to break even. Have a

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risk management strategy so you do not end up in a deep


drawdown impossible to recover from.

The Risk Management Strategy


I hope you understood the need to have a risk management
strategy. It is time to calculate how many contracts you should
trade with depending on how much of your account in percent
you are willing to risk per trade, say you only want to risk one
percent. You can then calculate your risk per trade in $. With
your $1.000.000 account:
One percent (0,01) * $1.000.000 = $10.000 risk per trade
Your risk for one trade is $10.000. Now you calculate the risk
for each contract depending on where your entry and stop-loss
is. For this example, you want to buy and placed a limit order
at $40 and your stop-loss at $37. The risk per contract is then:
$40 $37 = $3 risk per contract
Now that you have risk per trade and risk per contract, you
can precisely calculate the number of contracts you can buy
for the security, taking your risk per trade divided by your risk
per contract, you will get the number of contracts you should
buy.
$10.000 / $3 = 3.333 contracts

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You can now enter your trade with 3.333 contracts and if your
stop loss is hit you will know that you only lost one percent of
your account and you will live to trade another day!
This is a simple risk management strategy, it is an essential
strategy you understand and apply to your trading if you want
to achieve trading success. Avoid blowing up your account, like
so many traders do every day.
Click here to read my blog post Do Not Dig Yourself Into A
Hole.
Or click this link: tradingwalk.com/trading-rules-do-not-digyourself-into-a-hole/

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Take Action
Yu nd to t the whl f hng to become the best
trader you can be in motion t th earliest rtunit.
Identify n tin which u can tk to get thing ging nd
tk tht action n as ibl so you get started.
Action is defined as "the act or process of doing something,
typically to achieve an aim. There is absolutely nothing more
important than taking action, because without actually getting
started, you will literally make zero progress. It does not
matter how much planning you have done, if you do not get
started you will still be sitting at square one wondering why
everyone else is making progress and you still are not.
"The secret to getting ahead is getting started"
Read the statement above three times aloud. Now think of a
time where you really wanted to do something, but you never
got it done because you never got started. It is not a pleasant
experience to reminisce about, is it? You can make up all sorts
of excuses, alibis, etc. However, the only reason why you did
not accomplish what you desired to do was because you never
even began what you wanted to do!
Perhaps you put it off until tomorrow, and tomorrow never
came. Perhaps you were just really busy and neither had the
time nor the energy to work on that side project, or finish that
book, or learn how to trade. The thing is, we as humans are
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exceptional at making excuses, especially since it is an easy


way to make ourselves feel better about not taking action.
There are plenty of excellent excuses out there for not doing
what you said you were going to do - but in the end they are
all just excuses. Are excuses going to execute that trade for
you? Are excuses going to make you a better trader? Make
you more money? I highly doubt that an excuse is going to
magically manifest itself in a physical form and take care of
what you did not.
Procrastination might be one tough adversary to beat, but we
have a simple formula to winning virtually every one of the
battles you will fight:
Motivation + Getting Started = Progress
For the sake of simplicity, let us assume that you were so
driven by the progress you made, that you continued to put
more and more effort (compounding effort) into whatever it is
you were doing. Assume that this would give us another
equation:
Progress + Time = Success
There is one truth about success that I have heard echoed
over and over again by almost every successful person I have
met: they got where they are now by getting started.

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You have motivation, and that is great, so now it is time you


get started today! I am sure you had enough time to read this
ebook, so why not set aside 15 minutes to begin working on
becoming a better trader?

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Conclusion
Thank you again for downloading this book!
The next step is to take action, practice and trade this strategy
so you learn it by heart. I belive in you!
One more thing: if you liked this book, would you be kind
enough to leave a review and feedback on this, email me at
johan@tradingwalk.com
Thank you and to your success!
Johan Nordstrom
http://www.TradingWalk.com

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