There are some traders who are extremely patient and love to wait for the perfect
setup while other traders are extremely impatient and need to see a move happen
quickly or they’ll abandon their positions. These impatient traders make
perfect momentum traders because they wait for the market to have enough
strength to push a currency in the desired direction. Then they piggyback on
the momentum in the hopes of a profitable extension move. With these types of
trades However, once the move shows signs of losing strength, an impatient
momentum trader will also be the first to jump ship. Therefore, a true momentum
strategy needs to have solid exit rules to protect profits while still being
able to ride as much of the extension move as possible.

. What’s a Momo?

The Five Minute Momo Trade looks for a momentum or “momo” burst on very short-term (five-minute) charts.
First, traders impose two indicators on their historical data, the first of
which is the 20-period exponential moving average (EMA). The EMA is chosen over
the simple moving average because it places higher weight on recent movements,
which is needed for fast momentum trades. The moving average is used to help
determine the trend. The second indicator to use is the moving average
convergence divergence (MACD) histogram, which helps us gauge momentum.

This interesting strategy waits for a reversal trade; however, it only takes advantage of the reversal trade when momentum supports the reversal move enough to create a larger extension burst. When this happens,
the position is split in two separate segments; the first segment helps us lock in gains and ensures that we never turn a winner into a loser. The second segment lets us attempt to catch what could become a very large move with no risks simply because the stop has already been moved to the breakeven point.

Rules to follow for a Long Trade

1. Look for currency pair trading below the
   20-period EMA and MACD to be negative.
2. Wait for price to cross above the 20-period EMA,
   then make sure that MACD is either in the process of crossing from
   negative to positive or has crossed into positive territory no longer
   than five bars ago.
3. Go long 10 pips above the 20-period EMA.
4. For an aggressive trade, place a stop at the
   swing low on the five-minute chart. For a conservative trade, place
   a stop 20 pips below the 20-period EMA.
5. Sell half of the position at entry plus the
   amount risked; move the stop on the second half to breakeven.
6. Trail the stop by breakeven or the 20-period EMA
   minus 15 pips, whichever is higher.

Rules
to follow for a Short Trade

1. Look for the currency pair to be trading above
   the 20-period EMA and MACD to be positive.
2. Wait for the price to cross below the 20-period
   EMA; make sure that MACD is either in the process of crossing from positive
   to negative or crossed into negative territory no longer than five bars
   ago.
3. Go short 10 pips below the 20-period EMA.
4. For an aggressive trade, place stop at the swing
   high on a five-minute chart. For a conservative trade, place the stop 20
   pips above 20-period EMA
5. Buy back half of the position at entry minus the
   amount risked and move the stop on the second half to breakeven.
6. Trail stop by lower of breakeven or 20-period
   EMA plus 15 pips

Long Trades

Let’s look at our first example in Figure 1.
We will use the example of The EUR/USD on
March 16, 2006, when we see the price move above the 20-period EMA as the MACD
histogram crosses above the zero line. Although there were a few instances of
the price attempting to move above the 20-period EMA between 1:30 and 2:00 EST,
a trade was not triggered at that time because the MACD histogram was below the
zero line.

As you can see, We waited for the MACD histogram to cross the zero line
and when it did, the trade was triggered at 1.2044. We entered at 1.2046 + 10
pips = 1.2056 with a stop at 1.2046 - 20 pips = 1.2026. Our first target that
we set for this momo trade was 1.2056 + 30 pips =
1.2084. It was triggered approximately two and a half hours later. We then exited
half of the position and trail the remaining half by the 20-period EMA minus 15
pips. The second half is eventually closed at 1.2157 at 21:35 EST for a total

profit on the trade of 65.5 pips.
The next example, shown in Figure 2, is USD/JPY
on March 21, 2006, here is when we see the price move above the 20-period EMA.
Like in the previous EUR/USD example, there were also a few instances in which
the price crossed above the 20-period EMA right before our entry point, but we
did not take the trade because the MACD histogram was below the zero line.

The MACD turned first, so we waited for the price
to cross the EMA by 10 pips and when it did, we entered the trade at 116.67
(EMA was at 116.57).

The math here is a bit more complicated on this
one. The stop is at the 20-EMA minus 20 pips or 116.57 - 20 pips =
116.37. The first target for us is entry plus the amount risked, or 116.67
+ (116.67-116.37) = 116.97. It gets triggered five minutes later. Once again, We exit half of the position and trail the remaining half by
the 20-period EMA minus 15 pips. The second half is eventually closed at 117.07
at 18:00 EST for a total average profit on the trade of 35 pips.

In Example 2,
we see that although the profit was not as attractive as the first trade, the
chart shows a clean and smooth move that indicates that price action conformed
well to our rules and expectations.
Short Trades
Now let’s look On the short side, our first example is the NZD/USD on
March 20, 2006. We see the price cross below the 20-period EMA, but the MACD
histogram is still positive, so we wait for it to cross below the zero line 25
minutes later. Our trade is then triggered at 0.6294. Like the earlier USD/JPY
example, the math is a bit messy on this one because the cross of the moving
average did not occur at the same time as when MACD moved below the zero line
like it did in our first EUR/USD example. As a result, we enter at 0.6294.

Our stop is the 20-EMA plus 20 pips. At the time,
the 20-EMA was at 0.6301, so that puts our entry at 0.6291 and our stop at
0.6301 + 20pips = 0.6321. Our first target here is the entry price minus the
amount risked or 0.6291 - (0.6321-0.6291) = 0.6261. The target is hit two hours
later and the stop on the second half is moved to the breakeven point. We then
proceed to trail the second half of the position by the 20-period EMA plus 15
pips. The second half is then closed at 0.6262 at 7:10 EST for a total profit
on the trade of 29.5 pips.
The example we use in in
Figure 4 is based on an opportunity that developed on March 10, 2006, in the
GBP/USD. In the chart above, the price crosses below the 20-period EMA and we
wait for 10 minutes for the MACD histogram to move into negative territory,
thereby triggering our entry order at 1.7375. Based on the rules above, as soon
as the trade is triggered, we put our stop at the 20-EMA plus 20 pips or 1.7385
+ 20 = 1.7405. Our first target is the entry price minus the amount risked, or
1.7375 - (1.7405 - 1.7375) = 1.7345. It gets triggered shortly thereafter. We
then proceed to trail the sec­ond half of the position by the 20-period EMA
plus 15 pips. The second half of the position is eventually closed at 1.7268 at
14:35 EST for a total profit on the trade of 68.5 pips. Coincidently enough,
the trade was also closed at the exact moment when the MACD histogram flipped
into positive territory.

Momo Trade Failure

As you can see, the Five Minute Momo Trade is an extremely powerful strategy to capture mo­mentum-based
reversal moves. Unfortunitly, it does not always work and it is very important
to explore an example of where it fails and to understand why this
happens.
The final example we will use is the Five Minute Momo trade using EUR/CHF on March 21, 2006. In Figure 5, we
see that the price crosses below the 20-period EMA and we wait for 20 minutes
for the MACD histogram to move into negative territory, putting our entry order
at 1.5711. We place our stop at the 20-EMA plus 20 pips or 1.5721 + 20 =
1.5741. Our first target is the entry price minus the amount risked or 1.5711 -
(1.5741-1.5711) = 1.5681. The price trades down to a low of 1.5696, which is
not low enough to reach our trigger. It then proceeds to reverse course,
eventually hitting our stop, causing a total trade loss of 30 pips.

When trading using the Five Minute Momo strategy, the most important thing to be wary of is
trading ranges that are set too tight or too wide. In the quiet trading hours
where the price simply fluctuates around the 20-EMA, the MACD histogram will
flip back and forth causing many false signals. Then again, if this strategy is
implemented in a currency paid with a trading range that is too wide, the stop
might be hit before the target is triggered.

Conclusion

The Five-Minute Momo
Trade allows traders to profit on short bursts of momentum, while also
providing the solid exit rules required to protect profits. Our program Win4x Software™
lets you customize your parameters for Momo trading.
When you customize your settings of Win4x Software™, maximum profits will be
realized

To be successful, you need courage under fire, especially when the outcome is uncertain.

The bottomline is this, you can have all the foreign currency exchange trading knowledge
in the world, but it is completely useless, unless you put your money at risk.
It is like trying to win the lottery without buying a ticket. When it is your
own hard earned cash that is on the line, you are a bit more cautious.

With yourown hard earned cash on the line, I know you will feel anxiety, even fear. I
know I was there. Here, in that moment I realized that I could loose a lot of
my hard earned money. Here was that moment of truth, did I have the courage to
be afraid and act anyway?

Picture a fireman as he runs into a burning building, I have to assume he is afraid but
he does it anyway and achieves the desired result. It is the same here, unless
you can overcome or accept your fear and risk that money, you will not be a
successful trader.

The Good news is that once you learn to control your fear, we have a product that will
help you to get to the point where it gets easier and easier to risk that
money, (especially if you made a lot on your last investment) and in time there
is no fear.

Win4x software. The ultimate tool for people who want to make a profit in the foreign currency exchange trading market.

When you have made that first large profit that’s when you have to become very careful.
When you’re overconfident and not focused enough on the risk you’re taking that’s
when you make silly mistakes. Unfortunately, just one mistake with your hard
earned cash can ruin you.

There are two main issues to watch out for, the inability to initiate a trade, or closing
a losing trade. Both instances can create serious psychological issues for a
trader, and kill any desire he or she may have to go forward. By making sure
that you watch for these two things from the start, with our software you
manage to avoid these potential stumbling blocks before they happen. By
following the advice of this cutting edge technology, you can properly prepare
prior to your first real trade and develop good trading habits from day one.

When you begin to trade, start by analyzing yourself. Ask yourself, “Are you the type of
person that can control their emotions and flawlessly execute trades,
oftentimes under extremely stressful conditions?” and “Are you the type of
person who’s overconfident and prone to take more risk than they should?” Both
of these traits are important. Before your first real trade is made you need to
look inside yourself and make sure you know the answers.

Our Software is here to help you correct any problems before they result in
paralysis (not pulling the trigger) or a huge loss (overconfidence).

The difficulty with doesn’t just end with “pulling the trigger”. In fact what comes
next is equally or if not even more difficult. Once you are in the trade, the
next difficulty is staying in the trade. When you enter into a trade with foreign
exchange currency trading you must exit the trade as soon as possible when it
is not working. Unfortunately, for most people who have been successful in
non-trading ventures, they find this concept difficult to apply.

For instance, take real estate tycoons who make their fortune riding out the bad times and
selling during the boom periods. The problem with trying to use a ‘hold on
until it comes back’ strategy in foreign exchange trading is that most of the
time the currencies are in long-term persistent, directional trends and your
equity will be wiped out before the currency comes back.

Of course, the other side of the coin is staying in a trade that is working. The most common
pitfall that you have to watch out for is closing out a winning position
without a valid reason. Once again, fear is the culprit. I hate to say it, your
subconscious demons will be scaring you non-stop with questions like “what if
news comes out and you wind up with a loss?” The truth of the situation is simply
that when news comes out in a currency that is going up, the news has a higher
probability of being positive than negative.

So your fear is just a baseless annoyance really. Don’t try and fight the fear. Accept it. Have a laugh about
it and then move on to the task at hand, which letting us help you in
determining an exit strategy based on actual price movement. Remember Garth
form “Wayne’s World” when he said “Live in the now man”. Worrying about what
could be is a waste of energy. Studying your chart and determining an objective
exit point is your best bet. That’s where we come into play, We can help you
find the best exit point using real time Forex knowledge and our amazing software.

Be careful of another common pitfall, closing a winning position because you are bored
with it; or it’s not moving. Look at it this way, in Football; after a star
running back breaks free for a 50-yard gain, he comes out of the game
temporarily for a breather. When he comes back into the game he is a serious
threat to acquire more yards – this is indisputable. So when your position
takes a breather after a winning move, the next likely event is further gains –
so why close it? That’s where we come in. Our software will help you analyze
the data and come up with a perfect exit strategy.

If you can be courageous under fire and strategically patient, foreign exchange currency trading
may be for you. However, If you’re a natural gunslinger and reckless you will
need to tone your act down a notch or two and our software will help you make
the necessary adjustments. If putting your money at risk makes you a nervous
wreck it’s simply because you lack the knowledge to be confident in your
decision making. With our amazing software, success is assured.

There Must be Patience to Gain Knowledge through Study, Application and Focus!

There are several new traders who believe all you need to profitably trade foreign
currencies are charts, technical indicators and a small bankroll. Most of them
blow up (and by that I mean lose all their money) within a few weeks or months;
however there are some who are initially successful and it takes as long as a
year before they blow up. Then there is a tiny minority with good money
management skills, patience, and a market niche who go on to be successful
traders. Truth is even armed with charts, technical indicators, and a small
bankroll, the chance of succeeding is probably 500 to 1.

If you want to increase your chances of success to almost near certainty, it requires
knowledge; and acquiring knowledge takes hard work, study, dedication and
focus.

Here at win4x software we put together what you know, without taking any shortcuts,
with the dedication and focus that is required and step out into successful and
profitable trading future.

As every trader knows, Trading requires reference points (support and resistance), these are used to determine when you need to enter the
market, when to place stops and when to take profits. Unfortunately, many
beginning traders just starting out divert too much attention to technical
indicators. These indicators are the moving average convergence divergence
(MACD) and the relative strength index (RSI),(to name
just a few) and they also fail to identify a point that defines the risk that
they must take. With the unknown risk, it can lead to margin calls, but if you
carefully calculated the risk it significantly improves the odds of success
over the long haul.

Over the years, I have found that the one tool
that actually provides potential support and resistance and helps minimize risk
is the pivot point and its derivatives. Another tool that I have found useful
is Win4x Software. However, In these pages, we’ll
argue why a combination of pivot points and traditional technical tools offered
by Win4X Software and how it is far more powerful than technical tools alone.
Bear with me; I plan to show how this combination can be used effectively in
the Forex market.

Pivot Points 101

First employed by floor traders on equity and
futures exchanges, the pivot point has proved exceptionally useful in the Forex
market. In fact, the projected support and resistance generated by the pivot
points tends to work better in Forex (especially if they are truly a liquid
pair) because of the large size of the market, it guards against market
manipulation. In truth, the Forex market sticks to technical principles such as
support and resistance better than less liquid markets.

Calculating Pivots

Pivot points can be calculated for any time
frame. Say you wanted to go to the previous day’s charts, and see the prices that
are used to calculate the pivot point for the current trading day.

The functional pivot point can then be used to
calculate estimated support and resistance for the current trading day.

To truly understand how well pivot points can
work,
our cutting edge software compile
statistics for the EUR/USD on how distant each high and low has been from each
calculated resistance (R1, R2, R3) and support level (S1, S2, S3).
If you were to do the calculations yourself
you would need to:

• Calculate the pivot points, support levels and
  resistance levels for x number of days.
• Subtract the support pivot points from the
  actual low of the day (Low – S1, Low – S2, Low – S3).
• Subtract the resistance pivot points from the
  actual high of the day (High – R1, High – R2, High – R3).
• Calculate the average for each difference.

That’s a
lot of work just to find out that the results
since the inception of the euro (January 1, 1999, with the first trading day on
January 4, 1999) were:

• The actual low is, on average,
  1 pip below Support 1
• The actual high is, on average,
  1 pip below Resistance 1
• The actual low is, on average,
  53 pips above Support 2
• The actual high is, on average,
  53 pips below Resistance 2
• The actual low is, on average,
  158 pips above Support 3
• The actual high is, on average,
  159 pips below Resistance 3

Judging
Probabilities

Win4x
software computes the statistics that indicate that the calculated pivot points
of S1 and R1 are a decent gauge for the actual high and low of the trading day.

Now, let’s go a step farther, when we calculated
the number of days that the low was lower than each S1, S2 and S3 and the
number of days that the high was higher than the each R1, R2 and R3.
The end result, a lot of time and energy used
to figure out that the result is: there have been 2,026 trading days since the
inception of the euro as of October 12, 2006.

• The actual low has been lower
  than S1 892 times, or 44% of the time
• The actual high has been higher
  than R1 853 times, or 42% of the time
• The actual low has been lower
  than S2 342 times, or 17% of the time
• The actual high has been higher
  than R2 354 times, or 17% of the time
• The actual low has been lower
  than S3 63 times, or 3% of the time
• The actual high has been higher
  than R3 52 times, or 3% of the time

This information is useful to a trader; if you know
that the pair slips below S1 44% of the time, of course you can place a stop
below S1 with confidence. Our Software has calculated an understanding that
probability is on your side. Furthermore, If you want
to take profits just below the R1 because you know that the high for the day
exceeds R1 only 42% of the time. Again, with Win4x Software, the probabilities
are with you.

It is very important to understand, on the other
hand however, that theses are probabilities and not
certainties. On average, the high is usually 1 pip below R1 and exceeds R1 42%
of the time. This does not mean that the high will exceed R1 four days out of
the next 10, nor that the high is always going to be 1 pip below R1, however
based on current info, Win4x Software will advise you. The definite power from this
amazing software lies in the fact that you can and should confidently gauge
potential support and resistance ahead of time, have reference points to place
stops and limits and, most importantly, limit risk while putting yourself, and you’re
hard earned cash in a position to profit.

Using the Information

By now you hopefully understand that a pivot
point and its derivatives are potential support and resistance. Look at the examples
below that show a setup using a pivot point in conjunction with the popular RSI
oscillator.

RSI Divergence at Pivot Resistance/Support

This is
generally a high reward-to-risk trade. The proposed risk is well-defined, due
to the recent high (or low for a buy).The pivot points above, are examples that
are calculated using weekly data. The above example shows that from August 16
to 17, R1 held as solid resistance (first circle) at 1.2854 and the RSI divergence
suggested that the upside was limited. This information gathered by Win4x
software suggests that there is a definite opportunity to go short on a break
below R1 with a secure stop at the recent high. This also shows that a pivot
point, which is now a support:

• Sell Short at 1.2853.
• Stop at the recent high at 1.2885.
• Limit at the pivot point at 1.2784.

This
first trade generated a 69 pip profit with 32 pips of risk. The reward to risk
ratio was 2.16.

The next week trading produced nearly the exact
same setup. When the week began it had a rally to and just above R1 at 1.2908,
which also was accompanied by bearish divergence. The short signal is then generated
on the decline back below R1. At this point we can sell short with a stop at
the recent high and a limit at the pivot point (which is now supported):

• Sell short at 1.2907.
• Stop at the recent high at 1.2939.
• Limit at the pivot point at 1.2802.

This trade netted a 105 pip profit with just 32 pips
of risk. The reward to risk ratio was 3.28.

The rules that must be followed are simple:

For shorts:

1. Identify bearish divergence at the pivot
point, either R1, R2 or R3 (most common at R1).

2. When price declines back below the reference
point (it could be the pivot point, R1, R2, R3), initiate a short position with
a stop at the recent swing high.

3. Place a limit (take profit) order at the next
level. If you sold at R2, your first target would be R1. In this case, former
resistance becomes support and vice versa.

For longs:

1. Identify bullish divergence at the pivot
point, either S1, S2 or S3 (most common at S1).

2. When price rallies back above the reference
point (it could be the pivot point, S1, S2, S3), initiate a long position with
a stop at the recent swing low.

3. Place a limit (take profit) order at the next
level (if you bought at S2, your first target would be S1 … former support
becomes resistance and vice versa).

Summary

A normal
day trader can use daily data to calculate the pivot points each day, then there is a swing trader who can use weekly data to
calculate the pivot points for each week. A position trader can use monthly
data to calculate the pivot points at the beginning of each month.
Which do you want to be?

Using
our software, Investors can even use yearly data to approximate significant
levels for the coming year. No matter what the time frame, the trading
philosophy remains the same. That is, the calculated pivot points give the
trader an idea of where support and resistance is for the coming period, however,
the trader who uses our software is always prepared to act. We all know that
nothing in trading is more important than preparedness and our software helps
the trader be prepared.

It is important for you to
know about Forex market drivers before you start investing in currency trading.
By knowing what Forex market drivers are, you gain to have a better foothold in
the trading activity with currency. The knowledge of what actually drives the
currency market provides you with the best trading opportunities. These are the
market drivers that help run the Forex business, providing a high liquidity at
over $2 trillion transactions each day.

Trading in currency involves
buying a currency of one country and selling them for another currency of a
different country, and thus making a profit. With the market providing trading
opportunity for 24 hours a day, there is constant buying and selling of
currencies going on, which makes this trade highly liquid. You are always going
to find someone who will either buy or sell currencies. To trade in Forex, you
need to know the terms used in such trades, such as, “spread”, which
is the difference between the currency that you are buying and the one that is
being sold. The terms “bidding” is when you are buying a currency,
while “asking” would be the asking rate when you are selling.

It is important for you to
know how rise in gold prices affect currency exchange ratings. With the
volatile nature of gold prices, you can take advantage of this in innovative
ways. As an example, if gold breaks through an important price level, the
expectation of gold price moving higher is usually expected. With gold being a
country-neutral alternative to US dollar, you would be looking to sell your dollars
for either Euros or UK pound sterling. In this regard, it should always be
noted that with the price of gold rising, the currency rate of major gold
producing countries are also affected.

Considering that Australia
is the third country in the world exporting gold, and Canada being the third
largest country in the world to produce gold, if there should be a situation
where the gold price is continuing to rise, “long” positions
vis-a-vis the Australian or Canadian dollar could be established by you. Even
you could take “long” positions in these currencies against other
major currencies of the world.

The other market driver is
the oil prices. Rising oil prices affect Forex market in an adverse way, same
way as stock prices have negative impact. The rising oil prices have impact on
airlines, the road transports, and many other related matters, with the result
of higher expenses for the services. The currency prices dependent on the oil
price situation of a country. As far as the US is concerned, because of its dependency
upon import of oil, the US dollar currency exchange value is quite sensitive
with oil price changes. Any sharp price rise in oil, the US dollar is negatively
affected. If you should speculate that the oil price will continue to rise, you
may consider favoring commodity-based economies like Australia and Canada with
the view point of the currency market, or sell to other countries dependant on
oil, such as, Japan.