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Tradeonix Review, Tutorial and Cashback Bonuses

Tradeonix Review: All You Need To Know


What is Tradeonix? And what are the bonuses?

by emailing hkgoldstein@gmail.com and get the $100 dollar cashback and find out about the other courses worth $1000 (most of them are TBA)


“Turning Losing Forex Trades into Winners – Proven Techniques to Reverse Your Losses” (Normally $199)

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Tradeonix refers to innovative software which serves as a tool for information for those dealing in the foreign exchange trade. The software aims at imparting all the relevant knowledge and skills that are beneficial both to those already established in this field or even those aspiring to venture in it.

It helps build capacity for different entrepreneurs, both at an individual and corporate level. Its innovation was inspired by the fact that there are numerous challenges facing the currency exchange system all over the world, and it therefore seeks to provide solutions to each and every one of these challenges.

The Problem:

How You Can Lose Money With Forex?

The foreign exchange market (FOREX) is very tricky especially for the beginners, further more it would be unwise to dive head first in something you know very little about. This is the global market for exchanging foreign currency dominated by the larger international banks around the world.

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If you are not familiar with the operations of this market place you could be making unwise investments flushing your hard earned money down the drain, especially if you don’t have the professional advice to assist which is also a different cost to your pockets.

Because of the amount of money being traded daily there is a major security issue as there is no supervisory body to ensure fair trade is always practiced. Your intentions to actually make money may actually cause you to lose more than you earn, so how do we remedy this situation? Really simple as explained in the subsequent sections.

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About the Creator: who got the balls rolling:

The creator of this software is one Russ Horn. Russ may not be a household name in the Forex trade but he claims that this trade has actually been his passion for a long time. Russ goes on to say that his passion for the trade is not just a misguided cause, as he makes a lot of cash from it as well. According to Russ, the need to come up with such ingenuous software was inspired by the fact that many people face challenges in this trade due to the ever-changing dynamics of it.

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It is due to this reason that he decided to design a program that would help many out there who keep getting bogged down by the shifting sands of the Forex trade. He meticulously designed the program into a full DVD instruction and training course, with each covering the various areas of the trade. The DVDs contain information that is easy to digest, even to the least experienced Forex trader.

How it Works


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Join now and get the cashback before this offer goes down

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What do you get?

In addition to the four DVDs, the program also comes with other bonus packages. Some of these include a battlefield manual’, a useful Marksman Trade Alert’ as well as a plenty of cheat sheets.

Additionally, you get unlimited and unbiased access to a personal online Russ Horn’s member’s area and more. This is how far Russ is willing to go to ensure that he assists all excel in the field of Forex trade.


-The program is unbiased as it targets both professional and rookie Forex traders.

-The program is easy to follow as it contains illustrations.

-While it targets a rather technical area, the language used is rather simple for anyone to digest.

-Its availability makes it easier for anyone to access it.


-Being a program targeting a technical area, it demands for some academic background in this field.

-The program is presented in stages that are so intertwined that the learner has to go through each stage in order to get it right.

This company has thought of it all for you giving you more time to aspire to your best potential. Getting with this program can and will improve your chances of making the most lucrative trades on the foreign exchange market!

Final Word on the Tradeonix Indication

We all understand that the Foreign exchange landscape has its many challenges and all can admit that even those who are most refined in this sector often experience various challenges.

Often times, these are challenges that are beyond our reach as this trade is governed by global trends. Therefore, there is a need to keep abreast of all the developments and emerging trends in this sector, and this is where the Tradeonix comes in.

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With its in-depth analysis into the Forex market, this program is what everyone needs to understand this trade. While it may have certain drawbacks, the advantages, as pointed out above clearly outweigh the downsides, and should therefore be recommended for everyone.

In summary, this is a program that should be promoted across various sectors of every economy as it is the only existing perfect tool for assisting the technocrats get it right in the Forex trade.

Join the Program!

  • TRADEONIX indicators

Tradeonix Bonus and question

Tradeonix Bonus and question


You guys pick up the $125 dollars cash? I upped the ante! You guys pumped for the 1000 dollar value in Forex bonuses (TBA)???


Tradeonix Bonus

Tradeonix Bonus:

Have you guys picked up the tradeonix Bonuses?

So heres the deal $125 cashback + a couple forex courses (TBA)….Yes, I don’t want to give it all away now.
PM at hkgoldstein@gmail.com for more details on how to get your bonuses!!


Tradeonix And the Forex Market

1. Introduction The foreign currency trading originated in 1973 and built over the ruins of the Bretton Woods agreement that used gold to back each currency (who was abandoned in 1971), what made the FOREX (shown in the Tradeonix reviews) a free market based on supply an demand for all. In the beginning the main players were the exchange consumers such as: imports, exports, foreign companies etc.

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Since the existence of the market, this market has undergone many drastic changes such that nowadays the foreign exchange market comprises over 97% private investors and brokers, a fact which has made it impossible for central banks, commercial banks and hedgers (large mutual fund companies that control vast amounts of money and are able to manipulate the value of a currency through speculation) to influence the market for the long term.

Now each country is able to select any currency rate policy according to their own country’s interest provided that they do not peg their parity rate at the gold value, This causes different policies in practice.

Because the lack of any clear system among all important exchanges in the world, we could name the present system ‘‘NO SYSTEM”. Different proposals for governing the new system are offered which in general restrict the waving domain of main exchange against each other.

Unlike other financial markets, the Tradeonix reviews spot market has neither a physical location nor a central exchange. It operates through an electronic network of banks, corporations, and individuals trading one currency for another.

The lack of a physical exchange enables the Tradeonix reviews market to operate on a 24-h basis, spanning from one time zone to another across the major financial centers.

This fact that there is no centralized exchange is important to keep in mind as it permeates all aspects of the Tradeonix reviews experience. Just as on any other market the trading on Tradeonix reviews, along with an exclusively high potential profitability, is essentially risk-bearing one.

It is not possible to gain a success on it unless a certain training including a familiarization with the structure and kinds of Tradeonix review, the principles of currencies price formation, the factors affecting prices alterations and trading risks levels, sources of the information necessary to account all those factors, techniques of the analysis and the prediction of the market movement as well as with the trading tools and rules is achieved.

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Portfolio risk evaluation in Tradeonix review market is essentially a multiple criteria decision making (MCDM) problem, which involves multiple evaluation criteria such as technology, trading psychology, trading system, capital management and so on. Therefore, MCDM approaches can be used for portfolio risk evaluation. TOPSIS is an MCDM technique with cardinal information, a ratio scale, on the criteria/attributes given as AHP (Hwang & Yoon, 1981). According to the simulation comparison of Zanakis, Solomon, Wishart, and Dublish (1998), TOPSIS has the fewest rank reversals among the 0957-4174/$ – see front matter 2009 Published by Elsevier Ltd. doi:10.1016/j.eswa.2009.05.041 * Corresponding author. Tel./fax: +98 21 88091567. E-mail address: m_zandieh@sbu.ac.ir (M. Zandieh). Expert Systems with Applications 37 (2010) 509–516 Contents lists available at ScienceDirect Expert Systems with Applications journal homepage: www.elsevier.com/locate/eswa eight methods of MCDM. Thus, TOPSIS is chosen as the target technique of development. Interested readers can check the contents of Shih, Shyur, and Lee (2007) for more details of TOPSIS. In the management literature, efficiency is often associated with performing activities as well as possible or ‘‘doing things right”, whereas effectiveness is often equated with the proper selection of the activities or ‘‘doing the right things” (Anthony, Dearden, & Bedford, 1989; Drucker, 1977; Griffin, 1987). Thus, decision making unit (DMU) effectiveness of an organization is measured with respect to their degree of their goal achievement. Measures of effectiveness evaluate the performance of business units’ efforts with respect to strategic goals, and serve as a critical component in the management planning and control processes (Griffin, 1987). While several different approaches have been developed to model organizational effectiveness (Hall, 1991), there appears to be a lack of analytical tools to measure and assess effectiveness.


Several DEA research efforts have explicitly addressed the critical management issue of effectiveness analysis (Golany, 1988; Golany, Phillips, & Rousseau, 1993; Kornbluth, 1991). In this paper, we make decision with respect to all these criteria and rank some portfolios in Tradeonix reviews market with an integrated eigenvector–DEA–TOPSIS methodology.

The rest of this paper is organized as follows. In Section 2 we will define the problem, and then develop an integrated eigenvector–DEA–TOPSIS methodology for the MCDM problems. Section 3 presents an application of the proposed eigenvector–DEA–TOPSIS methodology to portfolio risk evaluation, where 10 portfolios are to be prioritized in terms of their overall risk scores. Conclusions are offered in Section 4. 2.

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Problem definition and the proposed methodology 2.1. Portfolio risk evaluation A portfolio is developed as soon as you decide what securities you are going to trade. If you are trading stocks and scanning 10,000 equities for buy and sell signals, that can hardly be called a portfolio. However, if you have chosen meats among commodities or indexes among futures, you have a portfolio – an identifiable congregation of selected markets to which you devote your attention.

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We use a 10-Tradeonix reviews market portfolio in our course, simply because they are widely traded and have enough activity among them so that there are ample trading opportunities from which to draw lessons. 2.2. The eigenvector–DEA–TOPSIS methodology In order to rank the 10 Tradeonix reviews market portfolio according to their risks we use an integrated MCDM method called the eigenvector–DEA–TOPSIS methodology.This methodology can be defined in the following steps: Select appropriate decision criteria including sub-criteria if any and construct a hierarchical structure for the MCDM problem under investigation. Consider a generic MCDM problem with m criteria and n decision alternatives. Where any decision criterion can be further broken down into more sub-criteria if necessary.


Determine the weights of criteria and sub-criteria using the eigenvector method. Define a set of evaluation grades for each criterion or sub-criterion and ask experts from different domains to assess decision alternatives using the defined evaluation grades with respect to each criterion. Each expert may only participate in the evaluation of one criterion. Different criteria may have different numbers of evaluation grades and different numbers of experts participating in evaluation. Determine the local weight of each decision alternative by DEA. Aggregate the local weights of each alternative with respect to different criteria or sub-criteria into an overall weight by TOPSIS method. Rank or prioritize alternatives by their overall weights.

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The bigger the overall weight, the higher the rank or priority of the alternative. 2.2.1. Selection of evaluation criteria and construction of hierarchical structure Portfolio risks are those events or hazards that could hinder the achievement of business goals or the delivery of stockholder expectations and can be assessed in terms of the following criteria: Technology The foreign exchange is a rapidly growing market and will continue to do so over the reasonably foreseeable future. Currently exceeding $2 trillion daily, volumes will go above $3 trillion by 2010. Electronic transactions represent a growing proportion of all trades, including more than half of client volumes rising to more than 75% by 2010. The technology infrastructure needed to enable and support those trades is now fundamentally interlinked with the infrastructure needed to support and render profitable non-electronically transacted trades. The challenges implied by the venues and modes of trading and distribution required of banks to achieve and maintain profitability oblige wide-scale revision of the infrastructure already in place at most firms and a limited lifecycle of any solution implemented.


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The challenges of delivering robust solutions for key components of the dealing architecture are driving a tendency to buy rather than build, even if internal builders are used to combine heterogeneous systems and components. Banks are dependent on their technology infrastructure not only to improve or protect net trading revenue capture but also to drive down human and processing costs. Therefore, we should expect to see technology spends maintained and increased in this space, both in absolute terms and as a proportion of costs. Today’s spend of around $400 million annually by the sell side on ecommerce components will rise to closer to double that by 2010.


Trading psychology Generally effective factors in trading psychology can be classi- fied as follow: i. Trading commitment ii. Determine your trading style iii. Overcoming fear iv. Discipline v. A trading coach vi. Secrets of highly successful traders Trading system A trading system is simply a group of specific rules, or parameters, that determine entry and exit points for your trade. These points, known as signals, are often marked on a chart in real time and will prompt you to pull the trigger. Improving the trading system is possible through art, knowledge and thought. Making a system with high productivity is not the aim.We want to obtain a formula which justifies the past events and will be operating well in the future. In general we could consider the following five phase plan for designing and applying a trading system: i. Starting with a general idea ii. Adjusting the idea with a set of scientific rule iii. Surveying and testing the idea superficially on graphs iv.

Testing the idea with the help of computer v. Evaluating the results 510 M. Amiri et al. / Expert Systems with Applications 37 (2010) 509–516 Therefore trading systems optimize the operation and help to implement a trade successfully (Murphy, 1999). Capital management techniques Capital management techniques can be investigated in the three following category: a. Tools b. Objectives c. Costs a. Capital management techniques: We use the term capital management techniques to refer to two complementary (and often overlapping) types of financial policies: policies that govern international private capital flows, called ‘‘capital controls”, and those that enforce prudential management of domestic financial institutions. Regimes of capital management take diverse forms and are multi-faceted.

Moreover, some capital management techniques are static while others are dynamic. b. Objectives of capital management techniques: Policymakers use capital management techniques to achieve some or all of the following four objectives to promote financial stability; to encourage desirable investment and financing arrangements; to enhance policy autonomy; and to enhance democracy. c. Costs of capital management techniques: Critics of capital management techniques argue that they impose four types of costs they reduce growth; reduce efficiency and policy discipline; promote corruption and waste; and aggravate credit scarcity, policy abuse, uncertainty and error. Critics argue that the benefits that derive from capital management (such as financial stability) come at an unacceptably high price. Technical analysis Technical analysis is a method of predicting price movements and future market trends by studying what has occurred in the past using charts.

As the Tradeonix reviews market is said to follow trends this is obviously a very advantageous activity. Technical analysis is concerned with what has actually happened in the market, rather than what should happen, and takes into account the price of instruments and the volume of trading, and creates charts from that data as a primary tool. One major advantage of technical analysis is that experienced analysts can follow many markets and market instruments simultaneously. This makes sure you always are looking at the wider picture, you learn to spot which currency is about to rise and which is about to fall (Murphy, 1999). Successful technical analysis is built on three essential principles: a. Market action discounts everything. This means that the actual price is a reflection of everything that is known to the market that could affect it. Some of these factors are: fundamentals (inflation, interest rates, etc.), supply and demand, political factors and market sentiment. However, the pure technical analyst is only concerned with price movements, not with the reasons for any changes. b. Prices move in trends. Technical analysis is used to identify patterns of market behavior that have long been recognized as significant. For many given patterns there is a high probability that they will produce the expected results.

There are also recognized patterns that repeat themselves on a consistent basis. This means the trader who can correctly identify the next move of a given currency is the trader who can limit their losses and maximize their profits. c. History repeats itself. Tradeonix reviews chart patterns have been recognized and categorized for over 100 years, and the manner in which many patterns are repeated leads to the conclusion that human psychology changes little over time. Since patterns have worked well in the past, it is assumed that they will continue to work well into the future. Here are some of the most common tools used to construct a technical Analysis (Murphy, 1999): i. Chart patterns ii. Indicators iii. Candlestic patterns iv. Support and resistance v. Fibonacci numbers vi. Elliott wave Trading tools This is a collection of Tradeonix reviews ‘‘tools of the trade” products and services that we have found to be the best of all we have tried over many years. To trade Tradeonix reviews successfully you will need the basic: a. A reliable, reasonably fast computer, preferably with high speed access to the internet (DSL or cable modem for example).

An internet dial-up account or the telephone becomes your back-up should your primary access fail. b. good foreign currencies ‘‘charting software” with a reliable, accurate data feed so that you can track currency movements in real time and perform the technical analysis necessary to trade effectively. c. Most importantly, you will need effective training and/or mentoring to master the techniques and discipline which 90% of beginning traders lack. This can be home study via cd’s or on-line lessons, classes you travel to, or trainer/mentors who come to you. Tradeonix reviews Broker Finding a Tradeonix reviews broker is a tough process to navigate through and for most people, the necessity of outside assistance is needed. Trying to trade in the Tradeonix reviews market without a broker could lead to devastating results for the normal trader. Similarly, hiring the wrong Tradeonix reviews broker can lead to the same result as trying to muddle through it alone. It is highly important that you be diligent in researching any prospective brokerage firms to handle your financial portfolio. A good Tradeonix reviews broker will supply you with clients that were successful and can attest to the specific broker’s qualifications and success history. To choose a suitable broker,paying attention to the following factors is inevitable. i. Tight spread ii. Leverage iii. Requote iv. Maintenance margin v. Services vi. number of trading items vii. Trading platform viii. Requirement document for opening an account ix. Regulated by financial fundation x. No slipage xi.

Real quotes The hierarchical structure presented in Fig. 1 shows the aforementioned criteria and the alternatives. 2.2.2. Determination of the criteria weights Constructing the pairwise comparison matrix of criteria. we construct pairwise comparison matrix of criteria through transferring oral judgements into quantitative value from 1 to 9 as can be seen in Table 1.

The pairwise comparisons between the m decision criteria can be conducted by asking the decision maker (DM) or answering the expert questions such as which criterion is more important with regard to the decision goal and by what scale (1–9). The answers to these questions M. Amiri et al. / Expert Systems with Applications 37 (2010) 509–516 511 form an m m pairwise comparison matrix which is defined as follows: A ¼ ðaijÞmm ¼ c1 c2 . . . cm a11 a12 a1m a21 a22 a2m . . . . . . . . . am1 am2 amm 2 6 6 6 6 4 3 7 7 7 7 5 ð1Þ After forming the pairwise comparison matrix A, the weight vector W can be determined by eigenvector method. The eigenvector method. Saaty’s eigenvector method (Saaty, 1980) is one technique for generating weights. The eigenvector method results in final weights that are an average of all possible ways of comparing the alternatives.

The weights from the eigenvector method are calculated by raising the matrix of alternatives A ¼ faijg to increasing powers of k and then normalizing the resulting system: Brans, Vinke, and Mareschal (1984) where aij represents a quantified judgment on wi=wj with aii ¼ 1 and aij ¼ 1=aji for i; j ¼ 1; … ; m: W ¼ limk!1 Ak e eTAK e ð2Þ Investigating the consistency of the critera matrix. After determining the weight of criteria, we calculate kmax by using Eq. (3) AW ¼ kmaxW ð3Þ Next we investigate the consistency of matrix A, through calculating the inconsistency ratio of this matrix as it is defined in Eq. (4). IR ¼ II IIR ð4Þ where II stands for inconsistency index and IIR stands for inconcistency index of random matrix. Table 2 shows the IIR values for the pairwise comparison matrices with the order from 1 to 10. Furthermore II is calculated through Eq. (5). II ¼ kmax  n n  1 ð5Þ If IR 6 0:1 the pairwise comparison matrix is thought to have an acceptable consistency, otherwise, it need to be revised. 2.2.3. Definition of evaluation grades and acquirement of evaluation data To quantitatively describe portfolio risks, it is necessary to define a set of evaluation grades for every one of the seven criteria. we assess each portfolio against each defined criteria in three levels such as high, medium and low by asking from corresponding experts. G ¼ fHigh; Medium; Lowg¼fH; M; Lg Note that more number and different sets of evaluation grades can be defined if necessary.

For simplicity, we use the above same set of evaluation grades for all the seven criteria in this illustrative example. Having defined the sets of evaluation grades, the portfolio that needed to be prioritized were assessed one by one against the selected criteria. This can be done by Tradeonix reviews experts. For example, technology experts can be invited to evaluate the risks of the portfolios against the technology criterion, technical analysis experts can take part in the evaluation against the technical analysis criterion, trading system experts focus on the evaluation of trading system criterion, and so on. Different criteria may have different number of experts invited and one expert may also participate in the evaluation of multiple criteria. Evaluation results form a distribution decision matrix. 2.2.4.

Data envelopment analysis for calculating the local weights DEA is a linear programming methodology that evaluates the efficiency of a number of units. These units are called decision making units (Charnes, Cooper, & Rhodes, 1978). The DEA is designed to measure relative efficiency in such situations where there are one or multiple inputs and one or multiple outputs. The goal of method is to calculate a ratio of total weighted output to total weighted input.

This ratio is the relative efficiency of a decision making unit (DMU). In this case, to characterize the relative importance of each alternative with respect to each criterion, we define for each criterion a set of evaluation grades: Gj ¼ fHj1; … ; Hjkj gðj ¼ 1; … ; mÞ where Hj1; … ; Hjkj represent the importance from the most to the least important and Kj is the number of evaluation grades for criterion j. Trading system Capital management Technical analysis Trading tools Portfolio risk evaluation Technology Trading psychology Broker Portfolio 1 Portfolio 2 Portfolio 9 Portfolio 10 Fig. 1. The hierarchical structure for portfolio risk evaluation. Table 2 Random inconsistency index for pairwise comparison matrices with the order from 1 to 10. n 1 2 3 4 5 6 7 8 9 10 IIR 0 0 0.58 0.90 1.12 1.24 1.32 1.41 1.45 1.49 Table 1 The 1–9 scales for pairwise comparisons. Importance intensity Definition 1 Equally important or preferred 3 Slightly more important or preferred 5 Strongly more important or preferred 7 Very strongly more important or preferred 9 Extremely more important or preferred 2,4,6,8 Intermediate values to reflect compromise Reciprocals Used to reflect dominance of the second alternative over the first 512 M. Amiri et al. /

Expert Systems with Applications 37 (2010) 509–516 This definition allows for different criteria to be evaluated using different numbers of evaluation grades and provides flexibility for setting up linguistic grades. We then ask the experts from different domains to assess the decision alternatives and classify them into their corresponding evaluation grades in terms of their relative importance with respect to the criterion under consideration. Without loss of generality, assume that criterion j will be assessed by Nj experts ðj ¼ 1; … ; mÞ. Then, evaluation results can be characterized by the following distribution evaluation vectors (Yang, 2001): RðCjðAiÞÞ ¼ fðHj1;NEij1Þ; … ;ðHjkj ;NEijkj Þg; i ¼ 1; … ; n; j ¼ 1; … ; m; ð6Þ where NEijkðk ¼ 1; … ; KjÞ are the numbers of the experts who assess alternative Ai to grade Hjk under the criterion j. It is obvious that PKj k¼1NEijk ¼ Nj for i ¼ 1; … ; n and j ¼ 1; … ; m. All the distribution evaluation vectors form a distribution decision matrix, as shown in Table 3. Let sðHjkÞ be the scoring of grade Hjkðk ¼ 1; … ; KjÞ. Then, the local weight of each alternative with respect to every criterion can be defined as vij ¼ XKj k¼1 sðHjkÞNEijk; i ¼ 1; … ; n; j ¼ 1; … ; m ð7Þ To determine the local weight of each decision alternative with respect to every criterion, we view each decision alternative as a decision making unit (DMU), sðHjkÞ as a decision variable and also the weight assigned to the output NEijk, and construct the following DEA model with common weights (Wang, Chin, & Yang, 2007): Maximize a Subject to a 6 vij ¼ XKj k¼1 sðHjkÞNEijk 6 1; i ¼ 1; … ; n sðHj1Þ P 2sðHj2Þ P P KjsðHjkj Þ P 0 ð8Þ where sðHjkj Þ are decision variables and sðHj1Þ P 2sðHj2Þ P P KjsðHjkj Þ P 0; is the strong ordering condition imposed on evaluation grades, which is similar to the strong ordering condition on different ranking places in voting systems proposed by Noguchi, Ogawa, and Ishii (2002) and adopted by Liu and Hai (2005) in their voting AHP. By solving model (8) for each criterion sðHjkÞðj ¼ 1; … ; m; k ¼ 1; … ; KjÞ, are the optimal scorings of the evaluation grades determined by model 8.

Then the local weights ðv ijÞ of each alternative with respect to the m decision criteria can all be generated by Eq. (7). 2.2.5. TOPSIS method for calculating the overall weight We apply the TOPSIS method to calculate the overall weight. TOPSIS derives from the concept of displaced ideal point from which the compromised solution would have the shortest distance. The following characteristics of the TOPSIS method make it an appropriate approach which has good potential for solving selection problems: An unlimited range of portfolio properties and performance attributes can be included. In the context of portfolio selection, the effect of each attribute can not be considered alone and must always be seen as a trade-off with respect to other attributes. Any change in technology, trading system, capital management, technical analysis, trading psychology, trade tools and Broker performance indices can change the decision priorities for other parameters. In light of this, the TOPSIS model seems a suitable method for multi-criteria selection problems as it allows explicit trade-offs and interactions among attributes. More precisely, changes in one attribute can be compensated in a direct or opposite manner by other attributes. The output can be a preferential ranking of the alternatives (candidate portfolio) with a numerical value that provides a better understanding of differences and similarities between alternatives, whereas other MADM techniques (such as the ELECTRE methods Roy (1996)) only determine the rank of each portfolio. It can include a set of weighting coefficients for different attributes.

It is relatively simple and fast, with a systematic procedure. The TOPSIS solution method consists of the following steps: (a) Multiply the columns of the normalized decision matrix by the associated weights. The weighted and normalized decision matrix is obtained as: Vij ¼ v ijwj; j ¼ 1; 2; … ; n; i ¼ 1; 2; … ; n: ð9Þ where wj are the criteria weights determined by the eigenvector method. (b) Determine the ideal and nadir ideal solutions. The ideal and the nadir value sets are determined respectively as follow: Vþ 1 ; Vþ 2 ; … ; Vþ n ¼ fðMaxiVijjj 2 KÞ;ðMiniVijjj 2 K0 Þ ji ¼ 1; 2; … ; mg ð10Þ V 1 ; V 2 ; … ; V n ¼ fðMiniVijjj 2 KÞ;ðMaxiVijjj 2 K0 Þ ji ¼ 1; 2; … ; mg ð11Þ where K is the index set of benefit criteria and K0 is the index set of cost criteria. (c) Measure distances from the ideal and nadir solutions. The two euclidean distances for each alternative are respectively calculated as: dþ i ¼ Xn j¼1 ðVij  Vþ j Þ 2 ( )0:5 ; j ¼ 1; 2; … ; n; i ¼ 1; 2; … ; m ð12Þ d i ¼ Xn j¼1 ðVij  V j Þ 2 ( )0:5 ; j ¼ 1;2;…;n; i ¼ 1;2;…;m ð13Þ Table 3 Distribution decision matrix for decision alternatives. Alternative Decision criteria C1 … Cj … Cm H11 … H1K1 … Hj1 … HjKj … Hm1 … HmKm A1 NE111 … NE11K1 … NE1j1 … NE1jKj … NE1m1 … NE1mKm . . . . . . … . . . … . . . … . . . … . . . … . . . Ai NEi11 … NEi1K1 … NEij1 … NEijKj … NEim1 … NEimKm . . . . . . … . . . … . . . … . . . … . . . … . . . An NEn11 … NEn1K1 … NEnj1 … NEnjKj … NEnm1 … NEnmKm M. Amiri et al. / Expert Systems with Applications 37 (2010) 509–516 513 dþ i : Distance of design to the ideal solution for the ith candidate portfolio. d i : Distance of design from the negative ideal solution for the ith candidate portfolio. Remark 1. In the so-called ‘block TOPSIS’ method, the two distances are obtained as: dþ i ¼ Xn j¼1 Vij  Vþ j       and d i ¼ Xn j¼1 Vij  V j       (d) Calculate the relative closeness to the ideal solution. The relative closeness to the ideal solution can be defined as: Cli ¼ d i dþ i þ d i ; i ¼ 1; 2; … ; m; 0 6 Cli 6 1 ð14Þ Cli : The relative closeness of i th candidate portfolio to the ideal solutions The higher the closeness means the better the rank. Fig. 2 shows the structure of the eigenvector–DEA–TOPSIS methodology. 3. An application to portfolio risk evaluation in the Tradeonix reviews market 3.1.

Determination of criteria weights The weights of criteria should be determined by top manager or the DM of the Tradeonix reviews portfolio. The eigenvector method is the most widely used approach to determining the weights of criteria. Suppose the pairwise comparison matrix for the seven evaluation criteria provided by the DM is as follow: A ¼ 1 1 1 2 2 13 1 1 4 5 2 47 1 1=41 2 2 13 1=2 1=5 1=21 1 22 1=2 1=2 1=21 1 45 1 1=411=2 1=413 1=3 1=7 1=3 1=2 1=5 1=3 1 2 6 6 6 6 6 6 6 6 6 6 6 4 3 7 7 7 7 7 7 7 7 7 7 7 5 Therefore the matrix of weights is calculated by eigenvector method as Then by Eq. (3) maximum eigenvalue is kmax ¼ 7:6256. The inconsistency index for the above paired comparison matrix is II ¼ kmaxn n1 ¼ 0:1042 and the inconsistency ratio of this matrix is IR ¼ II IIR ¼ 0:0789. Due to the fact that IR 6 0:1, we can conclude that the pairwise comparison matrix of criteria is consistent.

Evaluation results form a distribution decision matrix as shown in Table 4. The distribution decision matrix for 10 portfolio which are evaluated by four technology experts, six trading psychology experts, six trading system experts, six capital management experts, seven technical analyzer, five trading tools experts and four broker experts in terms of seven criteria is shown in Table 4. This table shows the number of experts who assess each alternative under each criterion in three grades. 3.2. Generating the local risk scores For the risk evaluation data in Table 4, we solve model (8) for each of the seven criteria to generate the local risk scores of the 10 Tradeonix reviews portfolio with respect to the seven criteria. Note that local weights can be interpreted and understood as local risk scores in risk evaluation applications.

For Trading psychology criterion, we have the following optimal solution to model (8): s  ðHÞ ¼ 0:1818; s  ðMÞ ¼ 0:0909; s  ðLÞ ¼ 0:0606 and a ¼ 0:5757 As such, the following optimal solutions have been obtained from model (8) for technical analysis, technology, trading system, capital management, trading tools and broker criteria, respectively: s  ðHÞ ¼ 0:1538; s  ðMÞ ¼ 0:0769; s  ðLÞ ¼ 0:0512 and a ¼ 0:6666 s  ðHÞ ¼ 0:2857; s  ðMÞ ¼ 0:1429; s  ðLÞ ¼ 0:0952 and a ¼ 0:4761 s  ðHÞ ¼ 0:2000; s  ðMÞ ¼ 0:1000; s  ðLÞ ¼ 0:0667 and a ¼ 0:6333 Select appropriate decision criteria and construct a hierarchical structure for the problem Determine the weights of criteria using the eigenvector method Define a set of assessment grades for each criterion and ask experts to assess decision alternatives Determine the local weight of each decision alternative by DEA Calculate the overall weight by TOPSIS method Rank or prioritize alternatives by their overall weights Fig. 2. A structure showing the eigenvector–DEA–TOPSIS methodology for portfolio risk evaluation. W1 ¼ ð0:1225; 0:3267; 0:1395; 0:0980; 0:177; 0:0953; 0:0410Þ T W2 ¼ ð0:1480; 0:3273; 0:1444; 0:0966; 0:1581; 0:0851; 0:0405Þ T . . . . . . . . . . . . . . . . . . . . . . . . W7 ¼ ð0:1491; 0:3255; 0:1432; 0:0949; 0:1571; 0:0884; 0:0418Þ T W8 ¼ ð0:1491; 0:3255; 0:1432; 0:0949; 0:1571; 0:0884; 0:0418Þ T 514 M. Amiri et al. / Expert Systems with Applications 37 (2010) 509–516 s  ðHÞ ¼ 0:1818; s  ðMÞ ¼ 0:0909; s  ðLÞ ¼ 0:0606 and a ¼ 0:6666 s  ðHÞ ¼ 0:2222; s  ðMÞ ¼ 0:1111; s  ðLÞ ¼ 0:0741 and a ¼ 0:5925 s  ðHÞ ¼ 0:2857; s  ðMÞ ¼ 0:1429; s  ðLÞ ¼ 0:0952 and a ¼ 0:5238 Based upon the above optimal solutions, the local risk scores of the 10 Portfolio with respect to each of the seven criteria are calculated by Eq. (7) and presented in Table 5. 3.3. Aggregation of local risk scores into overall risk scores Once the local risk scores of the 10 Portfolio with respect to the seven criteria are generated, they will be aggregated with the weights of criteria into an overall risk score of each Portfolio by TOPSIS method.

The results are shown in Table 6. 3.4. Prioritization of portfolio in terms of their overall risk scores The portfolio which have the lower risk, usually considered as a desirable alternative from a conservative manager’s point of view. But regarding to the nature of the Tradeonix reviews market and depending on the decision maker’s skills and him/her awareness about identified effective factors in this market, his/her may choose the Portfolio with higher risk to obtain more benefits. So the presented priorities for 10 considered Portfolio are useful for both risk averse and risk taking managers. Therefore from a conservative manager’s point of view the following priorities are obtained: p7 > p1 > p9 > p5 > p8 > p4 > p3 > p2 > p6 > p10 in addition priority ranking may change with the relative weights of the seven evaluation criteria. So, if necessary, a sensitivity analysis to the weights of criteria can be conducted.

4. Conclusions In this paper, we have proposed a new integrated eigenvector– DEA–TOPSIS methodology to evaluate the risks of portfolio in Tradeonix reviews market. The proposed eigenvector–DEA–TOPSIS methodology uses eigenvector method to determine the weights of criteria, linguistic terms such as high, medium and low to assess Portfolio risks under each criterion, DEA model with common weights to determine the values of the linguistic terms, and the TOPSIS method to aggregate the Portfolio risks under different criteria into an overall risk score of each portfolio. A numerical example has been investigated to illustrate the applications of the proposed eigenvector–DEA–TOPSIS methodology.


Russ Horn: Behind the Tradeonix Review

Russ Horn: Behind the Tradeonix Review


Russ Horn has created magic again and is releasing his brand new creation, TRADEONIX will be made available to the masses. Sales are anticipated to be in the millions within a few days of its launch!

Russ Horn has created magic again and is releasing his brand new creation,  will be made available to the masses. Sales are anticipated to be in the millions within a few days of its launch!

This program is a new developed Forex System created by expert Forex strategist and Author, Russ Horn. This exciting new product launch is expected to surpass all expectations and surpass any other previously created product currently available. Developers estimate the value to exceed over $2000!

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TRADEONIX is not hard to understand software. It is a physical product that gets delivered to your doorstep complete with DVD’s, Manuals, Webinars, and Online Support that allows interaction with other traders and also Russ Horn himself.

Russ Horn, the creator of this program, will get the attention of many. He brings his fourteen years of expertise in this area and illuminates the secrets to more effective trading.

This new system even challenges the effectiveness of binary trading systems, and shows new traders how to begin building wealth with different tried and true strategies.

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Russ Horn has an established history of developing successful products. His first success, The Forex Rebellion and then later his phenomenal blockbuster hit, The Forex Master Method. He has mastered the understanding of how to be successful in these arenas and has taught them to millions of people.

This software is designed to take the new trader and provide expert education on how to gain momentum in the Forex marketplace. With over five trillion dollars traded every day, the Forex trading market attracts many beginning customers wanting to know how to start earning more money. TRADEONIX prepares customers fully by providing market indicators, guidance, and valuable insight making this program a must for all those learning the Forex Markets.

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Tradeonix Forex Methodology review

Tradeonix Review: Methodology


The methodology just discussed can be programmed in most software. The method is extremely robust and can be improved with just a few simple discretionary inputs, such as take sell signals at resistance, ignore the buy signals when they are generated near resistance, only take buy signals Pivot Point Analysis, Filtering Methods, and Moving Averages 103 c02.qxd 2/17/07 4:32 Tradeonix Review 103 at or near support, and ignore sell signals. Use the predicted support and resistance levels as profit-setting targets; and, most important of all, wait for the signal to trigger—do not anticipate a signal. This system works across various time periods and under different conditions, such as bullish, bearish, or neutral. This gives it a high rating for being a very robust methodology. As I stated earlier, the parameters I use in this book are a variation of what is programmed in my proprietary library with Genesis software. This is a system that generates buy and sell signals based on the principles we have gone over so far. The greatest feature with this software is that it highlights a sell signal with a red triangle pointing down, and it signals when the trigger occurs to buy with a green triangle pointing up. These signals coincide against resistance levels to sell and support levels to buy. As you will see in many of the charts in this book, when the arrow indicators line up against pivot point support and resistance numbers, it offers a fantastic visual trade confirmation, based on solid technical analysis theory using predefined strategies. It is a system like this that can definitely help traders stay focused and can help reduce the destructive emotional element of fear that forces traders out of winning trades too soon and the greed that generally gets traders to buy the top of rallies. These indicators help traders develop patience by waiting for the actual signals to generate, rather than acting on anticipation. These signals and methods covered in this book can 104 FOREX CONQUERED FIGURE 2.29 Entry Triggers and Profit Target Methods Used with permission of GenesisFT.com. c02.qxd 2/17/07 4:33 Tradeonix Review 104 be applied with most charting packages. In fact, 26 years ago, I was calculating the pivot point support and resistance numbers with a hand-held calculator; and I was not using candle patterns, which show depth and breadth of the current market condition in a colorful manner versus onedimensional single-colored bar charts that we used in those days. One of the neat things about this book is that it comes complete with your own pivot point and Fibonacci calculators. All that needs to be done is to input the data for the high, the low, and the close; and you will have R- 3 down to the S-3 numbers calculated for you. It is very easy to use; all you need are the prices for the forex market for the time frame you wish to research, such as the daily, the weekly, the monthly, or even a quarterly time period. Pivot Point Analysis, Filtering Methods, and Moving Averages 105 c02.qxd 2/17/07 4:33 Tradeonix Review 105 c02.qxd 2/17/07 4:33 Tradeonix Review 106 107 CHAPTER 3 Candlestick Charting T he first recorded futures transactions occurred in the 1700s in the Japanese rice markets, where Munehisa Homma amassed a fortune trading the market. His system included the study of price action, the psychology of the market, and the seasonality of the weather. Candlestick charts evolved from Homma’s system and are the subject of this chapter. This section covers the fundamentals of candlestick charting and explains how to utilize candle charts to analyze, enter, and exit trades. The main advantage that candlestick charting provides over bar charting is that the candlestick provides immediate visual recognition of the open, the high, the low, and the close. Many traders who employ candlestick charting techniques set their charting software so that the candlesticks are one color for a lower close than the open (such as red or black as shown in Figure 3.1) and another color for a higher close than the open (such as green or white as shown in Figure 3.2). For the purpose of this book, a candle with a higher close than the open will be referred to as a white candle. A candle with a lower close than the open will be referred to as a black candle. A single candle does not tell you if the close is higher or lower than in the previous time period. The single candle only shows whether the close is higher or lower than the open for each candle. Each candle has different characteristics that provide insight into price movement by the distance between the open, the high, the low, and the close. The candlesticks formed for each time session also indicate if the price movement shows a level of increasing or decreasing pressure by the size of the candle, or its “real body.” Each candle pictured has a differc03.qxd 2/27/07 4:45 Tradeonix Review 107 ent characteristic that represents the difference or the distance between the open, the high, the low, and the close. Candlestick charting techniques can be used from data for whatever time period you are looking at from as little as one minute to one hour, one day, one week, or one month. The candle still allows for use of traditional Western philosophy of technical analysis of pattern recognition, trend-line support and resistance, and other helpful tools as we will go into in detail in Chapter 5. COMPONENTS OF A CANDLESTICK The components of a candlestick are derived from the open, the high, the low, and the close. The main components that we need to identify are: • Relationship between open and close (the candle bodies). • Real-body colors. • Shadows and correlations to the candle body. • Size of shadows. • Range or length of the candle. In uptrends or bullish market conditions, buying comes in on the open; and the market should settle closer to the highs and should close above the open. That is why in bullish market conditions, we see hollow or white candles. And I assign a higher close than the open. This helps me to identify that buyers are supporting prices. I can tell if the bulls are dominating the market by the distance between the open and the close. If the market opens on the low and has a large range where it closes at the high of the session, that 108 FOREX CONQUERED FIGURE 3.1 Selling, or Short FIGURE 3.2 Buying, or Long c03.qxd 2/27/07 4:45 Tradeonix Review 108 signifies that the bulls are firmly in control. However, if we have a widerange session and the market price closes back near where it opened, let’s say in the middle of the range, that is not a good sign that bulls dominate the market for that particular time period. In a bearish market condition or in a strong downtrend, we would see black or red real-body candles as shown in the accompanying CD. This represents sellers entering the market on the open and dominating the session right into the close of that time period. If the market opens on the high and prices decline where the close is at or near the low, this shows that the bears are firmly in control. This is why I assign these candles a negative (–) reading. The distance factor between the open and the close is illustrated in a much more defined way in candle charts than in bar charts due to the shape and color coordinates. Shadows and Correlations to Candle Body The shadows or wicks are what are made from the distance of a low and/or a high in relationship to the real body as created by the open and the close. They can really illustrate the market’s denial of a support or resistance level. Long shadows or tails or wicks that form after a long downtrend indicate a potential that the trend has exhausted itself and that demand is increasing or supply is dwindling. Shadows formed at the tops of real bodies, especially after a long price advance, indicate that demand is drying up and supply is increasing. The overall size of shadows is important to watch in relationship to a real body and they can be easily identified. Size or Length of the Overall Candle A long real-body candle is hard to miss using the color-coded method of candle charts. An extraordinarily long-ranged candle that opens at the bottom and closes at the high would be an abnormal occurrence and has significant meaning. After a long downtrend, seeing this formation indicates that a major trend reversal is taking place. After a long uptrend, seeing an unusually long candle that closes above the open or a positive value would indicate that an exhaustion, or a blow-off-top condition, may exist. The reverse is true in downtrends; after a long price decline, a tall red or dark candle represents the market closing below the open or a negative assigned value and may indicate that a capitulation or exhaustion bottom has formed. After a long uptrend or price advance, if that same candle was formed, it might indicate that a major trend reversal is occurring. The candle development will give us immediate identification of the current market’s environment and the market participants’ acceptance or rejection of a support or resistance level in a clearly visual manner. Pay Candlestick Charting 109 c03.qxd 2/27/07 4:45 Tradeonix Review 109 special attention to the shadows and closes of ranges in relationship to past highs or lows and to where the market closes. The Doji The secret weapon of candlestick charting is the doji. Dojis indicate indecision; the market close ends where it began, on the opening of the time session. Figure 3.3 shows a full-range high and low with the cross mark across the line, representing that the market has no real body as prices closed exactly where they opened. This goes to show that confidence is lost from buyers or sellers on the open because the market made a lot of intraday noise as the range was established. In a bullish or bearish trending market, indecision is the last thing you want to see. 110 FOREX CONQUERED FIGURE 3.3 Doji Strong rejection or failure from the high and/or the low is a significant telltale sign that changes are coming. In a strong uptrending market, usually the prices will close near a high since larger capitalized traders will hold positions overnight. If the large money traders are not confident that the market will move higher in price, then usually the market closes back near the open. Traders use the phrasing of Newton’s law in the markets an awful lot because it really applies to market moves. “A body in motion tends to stay in motion until a force or obstacle stops or changes that motion.” I believe and teach that the doji represents that force; it generally stops or changes the motion or momentum due to the uncertainty or indecision that is created at peak and troughs. Doji formations help confirm reversals. There are different names and nuances associated with certain dojis, such as the gravestone shown in Figure 3.4, the dragonfly shown in Figure 3.5, and the long-legged or rickshaw doji shown in Figure 3.6. All have the same qualities—they close where the session began. After a major trend has occurred, when one of these candles forms, it signals that the trend is near an end or that there is a change in market conditions. What distinguishes the doji from all other c03.qxd 2/27/07 4:45 Tradeonix Review 110 candle formations is that the close of this candle is nearly exactly at the same price as the open. I am generally a little more lenient with this formation. If after a long-range trading session the close is less than 8 percent of the overall high and low, I consider it a doji. In spot forex markets, if, for example, the British pound had a 150-point range and the market closed within 12 points of the open, I would consider that a doji formation. Candle patterns can be subjective, and there are many variations to each pattern. The key element to this system is identifying where a market closes in relationship to the prior highs or lows. Certain candles have significant meaning besides the doji. Bearish reversal patterns include dark clouds; engulfing, harami, and harami doji crosses; falling three methods; and evening doji stars. These are all indeed powerful setup chart patterns. The reverse of these are the bullish bottom pattern formations, such as bullish piercing, bullish harami, morning doji star, and even the hammer candle. The candle hammer is what I call the “stop,” or “seek and destroy” action. The bearish version is a shooting star candle. The Hammer The hammer shown in Figure 3.7 indicates that a reversal or a bottom is near in a downtrend. When this pattern appears at the top of an uptrend, the name becomes hanging man, and it indicates that a top is near. You Candlestick Charting 111 FIGURE 3.4 Gravestone FIGURE 3.5 Dragonfly FIGURE 3.6 Long-Legged (Rickshaw) Doji c03.qxd 2/27/07 4:45 Tradeonix Review 111 112 FOREX CONQUERED FIGURE 3.8 Shooting Star FIGURE 3.7 Hammer need to know that there are three main characteristics necessary in order for a candle to qualify as a hammer: 1. The real body is at the upper end of the trading range; the color (white or black) is not important. 2. The lower part or the “shadow” should be at least twice the length of the real body. 3. It should have little or no upper shadow, otherwise known as a shaved head candle. The Shooting Star One of the single most important bearish candle formations that I wish to share with you is the star, sometimes referred to as the shooting star candle. It is the inverted formation of the hammer and forms at tops. The shooting star in Figure 3.8 is the reverse of the hammer, but it forms at the top of an uptrend. It usually signals a major reversal. Here again, the color does not matter, but the body should be at the lower end of the trading range with a long shadow. Its significance is that it shows the market opening near the low of the day, followed by an explosive rally that failed and then closed back down near the low of the day. c03.qxd 2/27/07 4:45 Tradeonix Review 112 Usually there is little or no lower shadow, like a shaven bottom. When it is at the bottom of a downtrend, it is known as an inverted hammer. The Morning Doji Star The morning doji star is a major bottom reversal pattern that is a threecandle formation. The first candle has a long black real body; the second candle has a small real body or doji, as shown in Figure 3.9, and gaps lower than the first candle’s body. The third candle’s body sometimes gaps higher than the second one, but this does not happen often. It is important that it is a white candle and closes well above the midpoint of the first candle’s real body. Candlestick Charting 113 FIGURE 3.10 Evening Doji Star FIGURE 3.9 Morning Doji Star The Evening Doji Star The evening doji star shown in Figure 3.10 is the exact opposite of the morning doji star. This is the second-most-bearish top pattern next to the abandoned baby or island top formation. HOT TIP Gaps are not too prevalent in forex trading. Therefore, it is very rare to see a textbook morning or evening doji star formation. In candlestick terminology, a gap is called a “window.” It is said, generally speaking, that if a gap forms or a c03.qxd 2/27/07 4:45 Tradeonix Review 113 window opens, the market will most times trade back to fill the gap or close the window. The trick is knowing when gaps are sometimes “filled” right away and when prices do not return to fill the gap or close the window for quite a while. Gap levels can and do act as support and resistance. So pay attention to the price behavior at these loctions. The Harami The harami is a small real body within the body of the prior body’s candle. This is known as a reversal pattern or a warning of a trend change, especially at tops of markets. It is not important that the colors be opposite, but I notice that the more reliable signals are generated when they are. After a long uptrend, if there is a tall white candle, it can indicate an exhaustion especially followed by a small-real-body candle, as shown in Figure 3.11. 114 FOREX CONQUERED FIGURE 3.11 Harami FIGURE 3.12 Bearish Harami Doji Cross Bearish Harami Doji Cross The bearish harami doji cross shown in Figure 3.12 is a formation that appears when a long white candle occurs, signifying that the market has closed above the open with little or no shadows at both ends of the candle; this candle is then followed in the next time period by a doji within the middle of the white candle’s real body. This tells me bulls no longer dominate. c03.qxd 2/27/07 4:45 Tradeonix Review 114 Bullish Harami Doji Cross The bullish harami doji cross in Figure 3.13 is the opposite of the bearish harami. This pattern will form in a downtrending market. The first candle is usually a long dark candle, signifying that the market has closed below the open with little or no real shadows at both ends; a doji then forms during the next trading session. Candlestick Charting 115 FIGURE 3.14 Dark Cloud Cover FIGURE 3.13 Bullish Harami Doji Cross The Dark Cloud Cover The dark cloud cover is a bearish reversal signal. Usually it appears after an uptrend. The first white candle is followed by a black candle. The important features here are that the dark candle should open higher than the white candle’s high and that the close should pierce well below the midpoint of the white candle’s real body, as shown in Figure 3.14. c03.qxd 2/27/07 4:45 Tradeonix Review 115 The Bullish Piercing Pattern The bullish piercing pattern is the opposite of the dark cloud cover, as you can see in Figure 3.15. It requires that the first candle be a long dark candle and that the second candle gap open lower than the first candle. The other important characteristic is that it closes well above the midpoint of the long dark first candle. Look for 50 percent penetration of the long dark candle. 116 FOREX CONQUERED FIGURE 3.15 Bullish Piercing Pattern The Bullish Engulfing Pattern The bullish engulfing pattern is a powerful setup. Study the pattern as shown in Figure 3.16. It forms when a white candle’s real body completely covers the previous black candle’s real body. It is also relevant to note that the more “wraps,” or past candles, that are engulfed, the stronger the signal. FIGURE 3.16 Bullish Engulfing Pattern The Bearish Engulfing Pattern The bearish engulfing pattern shown in Figure 3.17 is the opposite of the bullish engulfing pattern. When a black candle’s real body completely covers the previous white candle’s real body and even closes below the prior candle’s low, it is a more potent signal. It is also relevant to note that the more “wraps,” or past candles, that are engulfed, the stronger the signal. c03.qxd 2/27/07 4:45 Tradeonix Review 116 Falling Three Methods The bearish falling three methods is a continuation pattern often used like a bear flag formation. The three little candles usually remain within the range of the first black candle that includes both the real body and the shadow. Some argue that it works with from two up to five candles in the middle. The last dark candle closes below the first candle’s close, as Figure 3.18 shows. Candlestick Charting 117 FIGURE 3.18 Bearish Falling Three Methods Rising Three Methods Rising three methods is a bullish continuation pattern with the same characteristics as in the bearish falling three methods but just the opposite. During the beginning stages of an advancing price trend, an unusually long white candle is preceded by three smaller dark or black candles. The three bullish methods pattern needs to stay within the range of the first long white candle. Again, it can have from two up to five candles; but the textbook version is three smaller candles, as Figure 3.19 shows. The last white candle shows a powerful advancing white candle that should open above the previous session’s close and should close above the first long white candle’s close. FIGURE 3.17 Bearish Engulfing Pattern c03.qxd 2/27/07 4:45 Tradeonix Review 117 Tweezers Tops and Bottoms The tweezer is a double-top or double-bottom formation that can be disguised by a few variations. The tweezer top forms after an uptrend followed by two consecutive time periods making an equal high. This signals that there is strong resistance and a short-term top is in place. One variation is that the first day usually consists of a long body candle with a higher close than open (+). The second day is usually an equal-and-opposite-color real-body candle that has a high equal to the prior day’s high. A strong signal exists that a reversal is forming when the second candle’s color is the opposite of the first candle’s color. A tweezer bottom would be the exact opposite of this formation. Other variations are called equal-and-opposite or chopstick patterns. In Chinese, it would be called the yin (black or negative close candle) and the yang (white or hollow positive close candle). At times, these real bodies are not perfectly opposite in size, but they should be close. In Figure 3.20 the tweezer bottom looks more like a pair of thin chopsticks. In Figure 3.21, the tweezer top resembles a pair of fat chopsticks; but notice that the dark candle engulfs the first candle’s real body. That is evidence that a top or a peak price has been established. The equal-andopposite formations occur with false breakouts and key reversals; they are powerful signals that should be respected. 118 FOREX CONQUERED FIGURE 3.19 Bullish Rising Three Methods FIGURE 3.20 Tweezer Bottom FIGURE 3.21 Tweezer Top c03.qxd 2/27/07 4:45 Tradeonix Review 118 YIN AND YANG: THE EQUAL-AND-OPPOSITE TRADE STRATEGY Forex traders take note: These equal-and-opposite patterns show up frequently in the currency pairs as well as in cross-currency markets. We see periods of low volatility between the European and the U.S. sessions; and, as a result, sideways channels form, otherwise known as a longer-term intraday consolidation period. Oftentimes, we see false breakdowns and breakouts that create the equal-and-opposite (yin and yang) formations. We, therefore, have a trigger to enter a position if the market price is near an important pivot point support level. We would buy on the close of the second candle’s time period or the immediate opening of the next time frame. Place a stop at least 10 PIPs (percentage in points) beneath the lowest low point. You should see immediate results as the markets move higher. Adjust your stop accordingly. Figure 3.22 is a 60-minute chart on the euro currency versus the U.S. dollar on July 19, 2006. The exact low occurred at 9:00 A.M. (EST) and was not prompted by any special report. That morning the German Producer Price Index (PPI) came out, but at 2:00 A.M. (EST). Two U.S. economic numbers—housing starts and real earnings—were released; but those reCandlestick Charting 119 FIGURE 3.22 Equal-and-Opposite Candle Revelations Used with permission of GenesisFT.com. c03.qxd 2/27/07 4:45 Tradeonix Review 119 ports were released at 8:30 A.M. (EST), one and a half hours earlier. The dollar got pummeled as U.S. traders started to digest the news. It seems to happen at times that there is a delayed reaction to the economic reports. But looking at the false breakdown of the low of the range that was created in the prior 22 hours of trading shows that an equal-and-opposite candle formed, and it was at that time that the buy programs kicked in as a very powerful reversal took place. In fact, the majority of the move on this 60- minute chart took place in 10 minutes. The market ruthlessly exploded and increased in value over 90 PIPs in just 10 minutes. The 60-minute chart showed an equal-and-opposite pattern. Basically the market went hunting for stops as it broke the low, and shorts covered as the market reversed like a rocket. You need to look for these opportunities because the price action in the forex market behaves like this on a frequent basis. This is a classic failed-pattern breakdown. Traders saw the market making newer lows as prices broke below the low; and when there was absolutely no follow-through, it had a slingshot effect in the opposite direction. This was an ironclad bear trap. By following the rules on equal-and-opposite patterns, especially when a setup fails to materialize, such as a breakdown of support, this is a powerful signal to take a long position. We exercise prudent risk-management techniques placing a stop 10 PIPs below the lowest low point; and as the trade progresses, you can adjust your stop or look to exit if the market gives you a windfall profit that is equal to or exceeds the normal daily range. MULTIPLE TIME-FRAME CONFIRMATION TACTICS Using multiple time-frame analysis will help you confirm a great trading opportunity. Through various time dimensions, if a buy signal is evident, you should see confirming patterns throughout these various time periods. If the 60-minute chart is showing a high-probability bullish reversal pattern, such as the equal-and-opposite candle, then if we break it down to a smaller time frame, we should see signs or bullish patterns as well. Look at Figure 3.23; this is a five-minute chart detailing how the low was formed. We are going to cover the high close doji pattern in the very next section; but for now, I want you to see the magnitude of this strong breakout and the fact that the lower time frame confirmed the higher time frame’s bullish signal. To summarize, there are many candle patterns that indicate reversals. Some are more potent than others, and some work better in various time frames. But many traders have trouble adapting; they get stuck in a rut looking for the same results and fail to exploit highly recognizable pattern failures, such as false breakouts. If you learn to understand the sequence 120 FOREX CONQUERED c03.qxd 2/27/07 4:45 Tradeonix Review 120 and the value of the open close relationship, then you will have a betterthan-average chance of making serious money. The best trades usually come in the form of blindsiding traders who are heavily positioned the wrong way or who have overstayed their welcome in a position. It is this rush for traders to get to the exit door in a panic that accelerates market moves. The equal-and-opposite pattern is a major sign of a false breakout. Think about this: If a market does not do what is expected, such as when it breaks a long-term support and there is no follow-through, who wants to hold a short position in the hole? Not many people. Watch for the yin and the yang, especially at extenuated trend extremes or at congestion points. HIGH CLOSE DOJI SETUP Out of all the candlestick reversal patterns, the high close doji (HCD) is the best and most reliable setup that I have encountered. Figure 3.23 showed a classic pattern on a five-minute chart period. It is based off a simplified morning doji star formation. Instead of looking for the traditional threecandle pattern, this setup merely focuses on the doji and the event that follows the formation of the doji. Candlestick Charting 121 FIGURE 3.23 Candles Light the Path to Profits Used with permission of GenesisFT.com. c03.qxd 2/27/07 4:45 Tradeonix Review 121 Figure 3.24 shows the exact sequence we need: the next one to three time periods after a doji forms to close above the high of that doji candle. That is the key; the close is the confirmation that a bullish transition took place. All that is left is for a trader to act when there is a shift in momentum. In this pattern, we are looking for a specific conditional change to take place in the market, namely, a higher closing high above a doji’s high, especially when it occurs near a pivot point support level. This is the pattern I call the high close doji, or the HCD, method. It has dimensions of specific criteria that need to fall in place, which will help to eliminate and filter out false signals. It is a simple and basic approach that is a high-probability winning strategy. 122 FOREX CONQUERED FIGURE 3.24 High Close Doji Here are the rules to act on when this pattern develops: • Buy on the close or on the next time period’s open once a new closing high is made from the previous time period’s bullish candle reversal pattern or if a doji forms against a pivot number. • Initially, use a hard stop or a mental stop close only (SCO) below the low of the doji. Once the market begins to produce a profit and moves in the desired direction, then you can change to a hard stop and continually trail the stop. Whatever time you are trading, the SCO is specific for that time frame wherever the signal might occur. For example, if it is an intraday signal, then you need to use a mental stop that requires you to wait until the end of the time period, whether that is based on a 5-, 15-, 30-, or 60-minute time frame. Most trading platforms do not have intraday SCO features, rather just the end-of-day SCOs. • Sell or exit the trade on the close or on the first open of a candle that makes a lower low at or near a pivot point resistance calculation. • Use a “filter” or backup process to confirm the buy signal, such as a bullish convergence pattern on stochastic or moving average convergence/divergence (MACD). c03.qxd 2/27/07 4:45 Tradeonix Review 122 The term extreme range expansion, or what I call overoverstretched and unsustainable valuations, is valuable information when it occurs near pivot point calculations. Especially in a runaway bull market, when I start to see a sudden loss of momentum and halting or reversing price action at a resistance level, I certainly consider that I have sufficient cause to begin taking profits from a long position or establishing a new short position. If I see evidence that the move is getting drained by smaller ranges or subsequent closes closer to each low, or if I see a climax with a larger-thannormal-size real body or other evidence that supply is returning to the market, thus turning back price, I start to take several forms of action. I reduce my position by at least one-half to two-thirds and tighten stops. Now, let’s put these rules into practice by examining active trading markets, such as the foreign currency market. The first example, Figure 3.25, is a 15-minute time period candle chart on the spot British pound. Taking the data from September 29 and using the close from the 5 P.M. (EST) New York bank settlement, we have a high of 177.04, a low of 175.92, and a close of 176.13. Once we calculate our pivot points, we have our first support (S-1) figured as 175.68. Our first resistance (R-1) is figured as 176.80. As you can see, the market trades for almost two hours at the pivot support; but at 4:30, a doji forms. Two time periods later, a close above the Candlestick Charting 123 FIGURE 3.25 HCD Triggers Action to Buy Used with permission of GenesisFT.com. c03.qxd 2/27/07 4:45 Tradeonix Review 123 124 FOREX CONQUERED doji’s high occurs. Also note that the market closes above both moving-average values. In addition, the COMAS™ method shows the shorter-term moving average crossing above the longer-term average, confirming a trigger to go long. The trigger to enter a long position would be on the time period’s close or on the very next session’s open; the entry price would be 175.95. As the market blasts off into trend mode, you can see the money-making sequence of events transpire: higher highs, higher lows, and higher closing highs. As the trade matures, watch the reaction at the pivot resistance R-1 of 176.80. Observe the bullish momentum dry up; and for the first time, we have a lower closing low and price closes below both moving average values. The moving averages also form a negative cross, confirming a trigger to exit the long position. As a day trader, you have completed your mission to capture money from the market. This example would have had you exit the position at 176.57. For each full-lot-size contract, that would be a 62-PIP profit, or $620 gain. Granted, we did not buy the low or sell the high, but we certainly did what you always want to do: capture a nice chunk of the middle of a price move. If you understand that markets move from trend mode to consolidation or congestion phase, then you will realize that at this time it is best to walk away, as you are now vulnerable for getting whipsawed in the market. That is why most successful traders make their money and walk away. As you look at the chart in Figure 3.26, notice how the pattern seems to look identical to the pattern in Figure 3.25. The market bases out in a consolidating sideways pattern, a doji forms, the moving averages cross over, and a high close doji triggers a buy signal. Almost instantly, we see positive results as the market makes higher highs, higher closes than opens, and prices are maintaining values above the moving averages. One thing about this particular chart is that the market did not trade down to the S-1 or quite make it to the midpoint between the pivot point and S-1. That is why I use pivot levels as a guide rather than the signal itself. I am interested in what the price action does at the pivot support levels. As we learned earlier, if the market is truly bullish, the pivot point will act as a support level on its own. That is the case in this example; and this is a very important point, so take note. In bullish conditions, the pivot will act as support. Once again, as shown in Figure 3.27, we have a similar pattern as the doji forms at or near the pivot point support level. The pivot support helps target a potential low and a spot where the market may react by reversing direction. We have a few considerations in order to make a trade. For starters, we look for the doji pattern; but it is not until the market closes back above the doji’s high that the trigger to go long is generated. As you see, the moving averages also cross over, and prices close above both moving average values. That is the true trigger to go long; once prices close c03.qxd 2/27/07 4:45 Tradeonix Review 124 Candlestick Charting 125 FIGURE 3.26 The Power of the Doji Signal Used with permission of GenesisFT.com. FIGURE 3.27 The Doji Setup Provides Consistent Results Used with permission of GenesisFT.com. c03.qxd 2/27/07 4:45 Tradeonix Review 125 above the doji high, a higher assigned value has taken place, and the market takes off for almost a 200-PIP move. This market moves immediately with no pressure on the trade whatsoever. I want to now show you how the signals work using the Genesis Software with my formulas plugged in, which identify the momentum shifts with the buy and sell signals indicated by the arrows as shown in Figure 3.28. The system gives buy and sell signals based on the moving averages and on the proximity of the pivot support and resistance levels. In addition, there is an algorithm designated for depicting when a high close doji occurs. As you can see, the buy signal triggers perfectly off the pivot support level; and the market trades right up to the pivot point resistance where a doji forms, alerting you to scale out of partial positions to lock in your gains and to tighten stops accordingly. This is a 15-minute chart; so you can see the system kept you in the trend the entire length of the trade, which was initiated by the high close doji. This trade worked out for $630 per lot or position. To summarize, when you identify a doji at or near the pivot support target level, wait for confirmation of the next candle up to the next three candles to close above the doji’s high. This event of the higher closing high 126 FOREX CONQUERED FIGURE 3.28 Pivots, COMAS, and Candles Generate Consistent Signals Used with permission of GenesisFT.com. c03.qxd 2/27/07 4:45 Tradeonix Review 126 constitutes a higher assigned value, and you should see immediate results to follow. BEARISH TRADING PLAN FORMULA: LOW CLOSE DOJI The next trading signal, the low close doji (LCD), is the opposite of the high close doji. It is a setup developed on the premise that once the market has rallied and established a high, if a doji forms, it is indicating that there is indecision. Then once we establish a lower closing low below the doji’s low, this establishes that there is a loss in bullish momentum and we can initiate a short position. Figure 3.29 shows that the black candle closes below the low of the doji. Candlestick Charting 127 FIGURE 3.29 Low Close Doji Watch for this setup after the market has had an extended advance to the upside; and if it is near a predetermined pivot point resistance level, generally speaking, the market will reach an overbought condition as well. Once the doji appears, it is indicating indecision and weakness of buyers to maintain an upward trend. Those conditions make it ripe for a sharp reversal, allowing for a juicy high-probability, low-risk trade. Here are the rules to act on when this pattern develops: • When prices are at or near a pivot point resistance number, sell on the close or the next time period’s open when a new closing low is made from the previous time period’s (or past three candles) doji. One can use a filter-confirming signal, such as a bearish divergence stochastic pattern or an MACD zero-line cross. • Initially use an SCO above the high of the doji. Once the market begins to produce a profit and moves in the desired direction, then you can change to a hard stop and continually trail the stop. Whatever time you c03.qxd 2/27/07 4:45 Tradeonix Review 127 are trading, the SCO is specific for that time frame, wherever the signal might occur. For example, if it is an intraday signal, then you need to initially use a mental stop that requires you to wait until the end of the time period, whether that is based on a 5-, 15-, 30-, or 60-minute time frame. Most trading platforms do not have intraday SCO features; rather, they have just the end-of-day orders. • Buy or exit on the open of the first candle after the previous candle makes a higher closing high than the previous candle. Let’s examine market price action and how to execute this signal. You have your predetermined pivot point resistance levels already mapped out for you. Once you have the predetermined support and resistance numbers, it is the second variable that is just as important, which is looking for a signal that triggers a call to action. Figure 3.30 is a spot forex euro currency that shows once again why it is important to wait for sell signals at resistance rather than buying breakouts. The euro chart shows the market breaking out above the R-1 level. As a standard rule, I do not like to take buy signals at resistance. I would rather wait for a sell signal to develop and then go with the declining momentum. I believe one reason why this signal works so well is that many traders 128 FOREX CONQUERED FIGURE 3.30 The LCD Pattern Is a High Quality Setup Used with permission of GenesisFT.com. c03.qxd 2/27/07 4:45 Tradeonix Review 128 are trying to trade breakouts of pivot point resistance levels by going long once they see the breakout above the R-1 level. Once there is little followthrough and prices start to retreat, then they are scrambling to sell to get out of their losing trade. In this chart example, notice, too, where we have a moving average crossover and not only do prices close below the doji, but they also close below both moving-average values. The trigger to sell short was executed at 1.2815, and an immediate reaction occurred as prices plunged. The sequence of events that we want to see, as we do in this example, is lower close than the openings; lower highs; lower lows; and, most important, lower closing lows. Now we can make a decision. Instead of keeping the mental SCO above the initial doji high, we could decide that since the move was a decent distance away from our initial entry, we can place a hard stop on the position. As the market enters in a consolidation phase, we see that prices never close above the high of the first reactionary low’s high. That keeps prices contained in a sideways channel or similar to a bear flag formation. As we follow the flow of the market, notice how the market declines by the end of the day to the S-1 of 1.2750. As a day trader, there is no question as to where you need to exit the position. It is the end of the day, and you have managed a trade all day and ridden a very nice trending market condition. This is a great example of how to use the pivot levels for a profit target. Figure 3.31 shows a textbook setup in the Japanese yen. This is a fiveminute chart without the pivot point moving averages overlaid to help you see the progression of the trade and the sequence of the open/close relationship that candlestick charts display. As the market advances toward the projected pivot point daily R-2, traders may assume the market conditions are in a bullish mode. When you get in that mindset, you tend to forget to look at the current market conditions. The top pattern is not a traditional or classic morning doji star formation because the third candle does not close below the midpoint of the tall white candle. However, it does close below the doji’s low. That is the conditional change that takes place, giving us the clue that the bullish momentum has dried up. First, we have a lower closing low; then the market closes below the open, and prices reverse direction once we tapped the pivot point resistance level. Therefore, we want to sell on the close or the very next time period’s open, placing our stop (initially) as a mental SCO above the high of the doji, which is 118.18. That is just three PIPs above the daily pivot point resistance level, too. Again, what we want to see is almost instant follow-through for the price to decline. As you can see, with this trade, there was immediate follow-through. Notice the progression of the market as it declines from the entry price at 118.07 straight down to 117.87, for a quick 20-PIP gain. The market then Candlestick Charting 129 c03.qxd 2/27/07 4:45 Tradeonix Review 129 trades back and forth, creating small-range candles, which form a sideways channel. If you look closely at each candle’s close, notice how it does not close back above the high of the candle that established the first reactionary low. As a trader, you may want to hold all positions or, at this time, cover half of your position. One reason we do that is because, as powerful and reliable as these triggers are, we still do not know the outcome of how far prices can or will actually move. The markets could easily reverse back and challenge the highs. By taking money out of the market, you immediately have profits on half of your positions; and then you also reduce your risk exposure in the market. Examine this chart further and see how the candles show the true direction of the market: The dark candles reflect closes below the open, and there are more of those and they are bigger than the white candles. For the most part, there are more of the dark or negative assigned candles, which are establishing lower closing lows, than there are white or positive assigned candles; but notice that these candles have smaller ranges and hardly ever make higher closing highs. This shows that every time the market rallies just a little bit, sellers are present. Long negative assigned candles represent bears, or sellers, dominating this market. Therefore, staying short on the balance of the position is warranted. Now as the market price disintegrates, demonstrating the conviction of sellers, we can place a hard 130 FOREX CONQUERED FIGURE 3.31 The LCD Pattern Provides Consistent Results Used with permission of GenesisFT.com. c03.qxd 2/27/07 4:45 Tradeonix Review 130 stop at breakeven on the balance of the position and start to adjust the stop to protect profits accordingly. As a short-term trader, it is imperative to trade with the current flow or momentum of the market. Since there are so many variables that can influence your trading decisions, using the methods described here will help you keep focused and alleviate the problems of trading on emotional impulses. When you are focused on what the potential resistance levels are, have learned what to look for (such as a low close doji signal), and then applied trade management techniques, you can capture profits. It is literally up to you to pull the money out of the markets. This method cannot tell you how much money you will make on each trade; every outcome will be different. However, there is a strong possibility that based on historic reference, you will see a decline in prices. In Figure 3.31, we see an immediate reaction as a sequence of lower highs, lower lows, and lower closing lows occurs. In fact, by using the moving averages, you will notice the confirmation of a negative crossover and prices closing below the moving averages as well. This short-term downtrend ends when we see a change in conditions once the moving averages cross back up and prices start to close above both moving-average values. This is a sign that the negative forces or selling pressure are fading and it is time to exit our position. The key is in being able to identify true conditional changes that will make you act on facts, triggering a call to action by a set of rules rather than on emotional impulses. If you have the discipline to trade by a set of rules and follow those rules, you will increase your trading profits. Here are guidelines for trade and risk management: • Get out of half of your positions on the first shift in momentum by a higher closing high, and move your stops. There will be times that you have to make a judgment on whether the risk is too excessive by the distance of the proposed entry and the SCO. • The SCO is for whatever time period you are trading in. For example, if it is an intraday signal, then you need to use a mental stop that requires that you wait until the end of the time period, whether that is based on a 5-, 15-, 30-, or 60-minute time frame. Most trading platforms do not have intraday SCO features, rather just end-of-day SCO. Candlestick Charting 131 c03.qxd 2/27/07 4:45 Tradeonix Review 131 c03.qxd 2/27/07 4:45 Tradeonix Review 132 133 CHAPTER 4 Traditional Chart Patterns FLAG PATTERNS A flag formation or pattern generally develops after significant or abrupt price moves. It is a pausing formation before the trend continues. You want to remember that the body of the flag is generally angled or sloped against the initial trend, as Figure 4.1 shows, but can be found with a sideways pattern. The base of the flag is the starting point for a substantial price advance (or decline, in the case of a bear flag formation). It is then followed by erratic and choppy downward or sideways price action that lasts for several time periods, like a consolidation time or a “time out” before prices continue on. Analysts measure the distance from the bottom of the “flagpole” to the top of the pole (the distance between point A and point B). They then take that distance and measure from the bottom of the flag (point C) and extend it up to the resistance line drawn from the top of the flag pattern (point D), or down to the support line in a bear flag formation, to get an idea of how far prices will move. The length of time that the flag portion of this pattern takes to evolve varies, depending on the time frame in which you are trading. As far as on a daily chart, we should see the breakout occur within two weeks. In daytrading, we should see this pattern evolve within 10 bars, candles, or time periods. Figures 4.2 and 4.3 depict a more common setup, with flags as they occur in the forex market. c04.qxd 2/27/07 4:48 Tradeonix Review 133 134 FOREX CONQUERED FIGURE 4.1 Flags as a Measuring Tool FIGURE 4.2 The Flag Measures out the Price Objective Used with permission of GenesisFT.com. c04.qxd 2/27/07 4:48 Tradeonix Review 134 HOT TIP If a pattern fails to move in accordance with its predisposed tendency, it is generally a great reversal opportunity. For example, if a bull flag does not have the follow-through momentum or upward thrust that is typically associated with the breakout, then it is a failed pattern and can be traded from the short side. TRIANGLE CHART PATTERNS There are three main types of triangle patterns, as shown in Figures 4.4, 4.7, and 4.8 which are symmetrical, ascending, and descending, respectively. A fourth type, known as a pennant formation, resembles the symmetrical triangle—it has two equal sides—as shown in Figure 4.5. The ascending triangles indicate an upward bias, and the descending triangles indicate a downward bias. They are used as a measuring guide for continuation price moves. The length of time, being the distance the “triangle” or congestion area takes to form, is believed to be the distance the market will move once the market “breaks out” of the triangle pattern. Traditional Chart Patterns 135 FIGURE 4.3 Bull and Bear Flags Meet Price Objectives Used with permission of GenesisFT.com. c04.qxd 2/27/07 4:48 Tradeonix Review 135 1. Symmetrical triangles are considered consolidation patterns that occur within a trending phase. The symmetrical triangle develops when prices consolidate as the trading range narrows; the shape forms as prices compress in a coiling pattern. The highs are lower and the lows are higher, as shown in Figure 4.5. As with any time you draw a trend, you need two points of interest, such as two consecutive highs or lows. When drawing out the trend for the triangle, we look for at least four to six points of interest. The true test on determining whether a triangle 136 FOREX CONQUERED FIGURE 4.4 Symmetrical Triangle FIGURE 4.5 Pennant Formation Resembles a symmetrical triangle. c04.qxd 2/27/07 4:48 Tradeonix Review 136 has formed is that prices do not come to test the apex of the triangle. In fact, the reliability of this pattern depends on the fact that the consolidation period in price only reaches three-quarters of the distance to the apex. This pattern is considered a neutral indication, which requires one to watch and wait for a breakout. In order to determine the direction of the breakout, I like to look for a two-period close above the upper resistance trend line. The opposite is true for a breakdown. 2. Pennant formations have the same characteristics as the flag in the sense that they represent a price consolidation after a sharp rally. As Figures 4.5 and 4.6 show, the shape resembles a symmetrical triangle, and the measuring technique is similar to that used with the flag. The difference in the shape of the pennant’s consolidation is obvious compared to the flag. The difference is that pennants take less time to form—generally one week or 10 periods—and lean toward the direction of the price move. In order to use this formation as a measuring tool, we take the distance from the base of where prices started (point A) to the peak or top of the extended move (point B), as shown in Figure 4.6. Consider this consolidation as the midpoint of the overall move, which would give a targeted price projection that would mark point C as the objective for the price move. Traditional Chart Patterns 137 FIGURE 4.6 Pennants Act Similar in Nature to Flags Used with permission of GenesisFT.com. Resembles a symmetrical triangle (also an HCD)! c04.qxd 2/27/07 4:48 Tradeonix Review 137 3. Ascending triangles are similar in nature to symmetrical triangles but have a slight twist in how to use them for price measurement techniques. The bottom trend line slopes up, as shown in Figure 4.7, giving us the clue that the breakout will be to the upside. We can take the widest part of the difference between the upper trend line and the lower trend line and use that amount to gauge how far prices may extend once we see a definitive move. 138 FOREX CONQUERED FIGURE 4.7 Ascending Triangle 4. Descending triangles are the opposite of ascending triangles. The resistance line slopes down, as shown in Figure 4.8. What I do to help determine the true breakout is to watch for a two-period close below the horizontal support line. If you use this pattern to enter a trade, you can FIGURE 4.8 Descending Triangle c04.qxd 2/27/07 4:48 Tradeonix Review 138 use a stop above the resistance line that slopes downward. Measuring the greatest distance from the beginning point of the descending trend line to the bottom of the support line will give you the price measurement; we should see a breakdown in price occur to help determine a profit objective. HOT TIP • Many technicians feel that triangles will have no less than six and no more than eight bounces between the support and resistance lines that determine the triangle formation. We like to see the number three as the “hit” number as that represents triple bottoms and triple tops. • Watch for the false breakout by avoiding trading the pattern until there is a two-period close outside the trend lines. • Watch for pattern failure traps as well. This is when the market moves in the desired direction but suddenly reverses and closes back into the body of the congestion pattern. Let’s examine the euro currency chart in Figure 4.9. The symmetrical triangle is a neutral pattern, meaning it does not give a solid clue as to Traditional Chart Patterns 139 FIGURE 4.9 Single-Close Trap Used with permission of GenesisFT.com. Symmetrical triangle c04.qxd 2/27/07 4:48 Tradeonix Review 139 the direction of the breakout. We want to watch for what I call the singleclose trap, which is what occurs when we see a false breakout on one side for a single period and then an immediate reversal. What you want to focus in on is a sustained price move as prices close at least twice outside the trend lines. Here is how the measuring technique can help you: Take the widest distance between point A and point B, and then extend that down from the break at the apex of the triangle. That measurement will give you your initial price objective. 1-2-3 PATTERNS One of the more reliable 1-2-3 patterns is a “W” bottom. It is also known as a double bottom with a higher right side breakout; and, of course, it is similarly dubbed a 1-2-3 swing bottom formation, as shown in Figure 4.10. The opposite is what we call an “M” top, or double-top pattern, as illustrated in Figure 4.11. You want to be sensitive to these chart patterns due to the higher frequency of occurrences. Not all “W” bottoms have the same type of reaction and come disguised as rounding bottoms or the cup-and-handle pattern. Let’s examine Figure 4.12. As you can clearly see, the 1-2-3 formation was confirmed once the market closed above the first high, or point 2. Once that occurs, look for a two-period close to confirm that prices have adjusted to test a new range expansion. Fibonacci techniques can be introduced in helping to identify point 3. We will generally see a 0.50 percent but more 140 FOREX CONQUERED FIGURE 4.10 1-2-3 Bottom c04.qxd 2/27/07 4:48 Tradeonix Review 140 Traditional Chart Patterns 141 FIGURE 4.11 1-2-3 Top FIGURE 4.12 U.S. Dollar/Canadian Dollar (5-minute bars) Used with permission of GenesisFT.com. than likely a 0.618 percent retracement from the low of point 1 to the high of point 2. The Canadian dollar chart shown in Figure 4.12 is a five-minute chart. We see that prices did trade back as point 3 formed, but never did the price violate or close below the 0.618 percent retracement level. This market broke out once confirmed by the two-period close, which it added on a 48-PIP (percentage in points) gain in less than 50 minutes. c04.qxd 2/27/07 4:48 Tradeonix Review 141 HOT TIP The 1-2-3 bottom formations are the beginnings of an Elliott wave pattern. These are generally some of the most powerful buy signals. Watch for point 3 to hold a 0.50 percent or 0.618 percent Fibonacci retracement. MODIFIED PATTERNS Falling Wedge Patterns A falling wedge pattern is simply a long-term price pattern that resembles a downward sloping triangle formation, as Figure 4.13 shows. The measurement from the distance of the wedge “opening” to the point of the breakout that occurs near the apex gives the extension or measuring distance used to determine a price objective. 142 FOREX CONQUERED FIGURE 4.13 Declining Wedge Watch for the first dip or retest of the trend-line resistance line once the breakout is confirmed. This action usually has prices responding like bouncing off a springboard. Remember the two-period close rule: If prices start accepting the new trading zone outside the wedge formation by more than two periods, odds increase for prices to press or test a new high territory. That’s not to say that they want to wash you out of the game by retracing and retesting the point of breakout. Once again, that point is the upward resistance line. The 30-minute chart on the Japanese yen versus the U.S. dollar in Figure 4.14 helps highlight the sequence of the breakout and retracement job right before the violent and explosive short covering move takes place. c04.qxd 2/27/07 4:48 Tradeonix Review 142 Rising Wedge Patterns Rising wedge patterns are narrowing peaks, as Figure 4.15 illustrates. We can generally see these show up on our radar screens when using moving average convergence/divergence (MACD) or stochastics as they form bearish divergence patterns. We see this formation at the fifth extension wave, which is the end of an Elliott wave cycle. The markets hardly ever reward the masses; and when we see this pattern form, the natural tendency is for traders to overlook the negative implications and only see that prices are making new highs. Be warned, because after a prolonged uptrend, the narrowing effect of each price range that completes the rising wedge gives a clue that prices are ready to reverse. Keep in mind that after a prolonged uptrend, bulls may be overextending their welcome in the trade. A classic example is shown in Figure 4.16, as descending triangle patterns form as prices plummet. You should watch for these narrowing patterns, and keep in mind that the markets can retest the breakdown support line before resuming the descent, as shown in the Canadian dollar chart. Traditional Chart Patterns 143 FIGURE 4.14 Declining Wedges Warn of Sharp Reversals Used with permission of GenesisFT.com. c04.qxd 2/27/07 4:48 Tradeonix Review 143 144 FOREX CONQUERED FIGURE 4.15 Rising Wedge FIGURE 4.16 Rising Wedges Warn of Impending Tops Used with permission of GenesisFT.com. c04.qxd 2/27/07 4:48 Tradeonix Review 144 Sideways Trend Channels A sideways trend channel is a type of flag formation. There is not much to explain on how to identify a channel; the market bounces between two parallel trend lines between highs and lows, namely, the support and the resistance trend lines. Figure 4.17 shows it best. There is a trick, and that is to successfully identify the support or resistance lines early in the channel’s development. Once they are established, traders can go long or buy near the support line or sell short or liquidate longs near resistance lines. The element of risk exists when the market finally breaks out from this channel, or band. Chartists can trade another method of these so-called bands by buying once the market breaks out above the resistance line, as confirmed by two consecutive closes above the resistance line, or by taking a short position once the market breaks below the support line, as confirmed by two consecutive lower closes below the support level. Forex traders will see countless opportunities to trade these patterns because they form frequently. One rule of thumb is that the longer the channel, the bigger the breakout. Also watch out for the false breaks. There are many instances where an equal-andopposite candle pattern will form, thus tricking traders into losing positions. Since sideways channels indicate indecision or a pause, it is only natural for dojis to appear with these ranges. Therefore, I like to watch for shifts in the momentum by trying to spot a high close or a low close doji. Figure 4.18 shows a great example of a low close doji signal within the sideways channel. Treat this setup as you would an LCD pattern. That involves selling on the close of the candle that closes below the doji low or the next time frame’s open. Traditional Chart Patterns 145 FIGURE 4.17 Narrow Sideways Channels c04.qxd 2/27/07 4:48 Tradeonix Review 145 Head and Shoulders Head and shoulders patterns are types of “M” tops. The head and shoulders top or inverted head and shoulders bottom can be used not only as a directional price-indicating pattern but also as a measuring or priceprojecting indicator. A textbook topping pattern is illustrated in Figure 4.19 as the head and shoulders top formation. Head and shoulders tops or bottoms are considered to be strong indicators of major trend reversals. There are four components involved with the head and shoulders pattern: (1) The left shoulder is formed. (2) A higher high occurs forming the head. (3) The development of the right shoulder is formed. (4) The so-called neckline is formed. The symmetry or distance is important. The distance from the left shoulder to the head should be about the same as the distance from the right shoulder to the head. If you measure the distance from the bottom of the head to the neckline, that will give you the next price target level. In other words, by measuring from the bottom of the head to the bottom of the neckline in a head and shoulders top formation, you will be able to project approximately where prices may go. Figure 4.20 shows a perfectly conceived head and shoulders top pattern. If you are looking for a trade based off this formation, keep in mind that this type of pattern is easily recognized by the 146 FOREX CONQUERED FIGURE 4.18 LCD Setups in Sideways Channels Used with permission of GenesisFT.com. c04.qxd 2/27/07 4:48 Tradeonix Review 146 Traditional Chart Patterns 147 FIGURE 4.19 Head and Shoulders Formation FIGURE 4.20 Euro/U.S. Dollar (5-minute bars) Used with permission of GenesisFT.com. masses and, therefore, sometimes does not work. If you sell short, look for a two-period close below the neckline, and make sure the price action does not rally back and take out the high of the right shoulder.