Friday, 27 May 2011

The Strategy in a Nutshell

The most important POINT for Entries:
Know exactly where your exit should be in case it turns around. Note: This is initial point of entry. This exit would usually be with a negative balance. This is what we call rent.
Moreover this exit point must be less than what you are willing to risk. e.g if you do money management on 15 or 20 pips. That initial exit point must be less than 10pips. This is a guide for our pair EUR/USD other pairs might behave a bit differently.

The most important POINT for Exits:
We better Call it Profit Taking Techniques. Do not confuse this with exit discussed above.
Exiting (with profit) is  always an executive decision.

But dont worry, if you dont want to burden yourself with making decision with every candle choose just 1 exit strategy. let it be either of the 3 as below.

How to Avoid 4th Wave Trading
Revisited: Sat, 28.5.11
Always Trade from a saddle point. In attempt to trade the 5th wave always be careful with the AIMS level on the left. e.g. if peak of third is far from your entry make entry and be watchful how it reacts when it reaches the peak. If its too near consider taking trade above the peak of wave 3.
Follow M5 alligator. If M1 AO peaks on one side and coming back to ZL check price whether its reach green/red/blue lines on M5. Also check how to behaves when it touches the lines. If price was to go into 4th wave on M5 it could change things etc.

I know this is tricky but it becomes clear after some time. Just dont give up.

3 Simple Rules and Visualisation
Download Print and Display on your wall or next to your computer. Read it slowly and thoroughly everyday before trading and after taking a break.  Visualise your trades using the rules over and over. Trust me you'll forget within a week so read it everyday.  Visualise really good trades over and over in your mind. Set aside at least 7 minutes before trading session for this process. Visualise in your mind how you spot a saddle point, then bracket the market each side. Visualise how it kicks in and then forms an AIMS Level, (perhaps add on, in fact add on 10 times every 10 pips) make a 100 pips 3-4 times per session. This advice could be worth a few extra zeros to you in the coming months.

Image remvoed - Rules are here now : Click on this Link

Wednesday, 25 May 2011

EUR/USD Strategy

EU is still range bound on the H4/H1 chart. However it did provide a nice short during Asian session. I woke up to what many call choppy period. Hence I started waiting for that right moment. When the setup is just right. Finally the AO was close to ZL and Allgiator lines inter twined. It was a setup on M1 as well. But following my rules of not trading m1 if M5 is at a saddle point I put pending on M5 level. Later added on at the peak of 3rd wave on m1 chart and exited on what I thought was a completed 1-5. (time will tell.) Note that 5th wave could not be confirmed on AO since its peak is higher than previous but I believe that is because we dont have sufficient number of bars on AO. we need atleast 100 bars whereas at this point we have only 65 or so.

Setup 1 : Picture of M5 to the left in the picture below is an Example of Setup 1. Alligator mouth was closed.  Setup 2 : M1 shows two entries both from Open Alligator. The first entry is higher probability where the second entry is only only only taken because there was already a profitable position otherwise the second entry will not not not be taken on its own. Had we missed the first entry we would wait for next Setup patiently.

Edit: 11.35am While Creating this stuff I forgot to pay attention to the charts hence missed the following. But I thought I'll do my analysis on it and post it here. and never again post during trading time....

The Following is also Example of Setup 2. The Short trade that triggered at 1.40678 an Open alligator setup 2 Trade. 

Edit: 16.26

another example.

The Setup  - Setup 1 and Setup 2 Example

This is very interesting. The fist entry is based on Setup2 since at the time of entry Alligator was open to upside but all three rules were met. AO was close to ZL and price was not away from alligators mouth. The "Opposite side of AIMS" that is the lower aims on the opposite side of where we entered the market was also not far. That is where we put our SL.  The second entry at 1.40788  was example of Setup 1. Alligator was asleep. AO was just below ZL and ready to crossover, perfect Wave 5 situation. (not because it was setup 1 or setup 2, but becaue AO had peaked Green so the next Wave could only be Wave 5. )

Edit: 16.41

Even Better

Note: You must understand I dont do this for you, its for me. Please dont wonder why I'm doing this. Without this I forget. So I keep doing this day in and day out. I've been doing this for 2 years now still If I have a blissful weekend I struggle on Monday.

H1 AIMS Levels.

When H1 is doing a 4th wave i.e. sideways its AIMS Levels become very important.
Like the classic range bound trading technique we can sell the peaks and buy the bottoms.
The following picture shows a bit of what I'm trying to record.
Entries to be made only when a setup appears however, Targets can be very easily identified
with combination of our usual exit techniques.

Tuesday, 24 May 2011

EUR/USD another story

Click to view animation

EUR/USD Strategy M1 Pre News

Sold break of M5 AIMS Level with trailing on M1 aims level.
thoughts: For News in case it goes in the direction of short trade would be good, but if it reverses since the short term trend was up, put a stop and reverse order.

looked like this on m5

EUR/JPY Animations

Setup 1 and Add ons Animation. 
Click on the Image for Animation to Start

Setup 2. Short Reversal Open Alligator Trade Animation
Click on the Image for Animation to Start

Saturday, 21 May 2011

The Blog is Back

I had no idea that quite a few people wanted access to the blog. I received quite a few requests so I've decided to make the blog available to everyone again. Thanks for making me feel special. And please accept my apologies for taking it off without prior notice. cheers

Wednesday, 18 May 2011


yesterday triggered a short on GBP/CHF. though I was aware of the drop before my entry. Hence I stayed in the trade despite the fact it closed on Red Line. However that was not the only reason I stayed in the trade. I would have closed it had it gone a bit furhter after the 8am candle close but it dropped at London Open which indicated it should give it another hour or so. I'm trailing candles due to consecutive red candles and bars. Not only that forex is highly volatile this pair is one of the top in volatility and sudden moves. My point is we must protect our realised profits. AS I write its still nicely dropping.

Similar  with GBPJPY entered prior to news. News brought the price back right back to entry price but candle closed with new low and never closed even closer to red line.

EUR/USD Strategy

Same stuff over and over again. never boring always exhilarating

Monday, 16 May 2011

EUR/USD Strategy

Some of you might say its getting boring same stuff over and over again. But really its not boring. Doing a simple thing over and over and making pips is the secret. I wont be here for long but these pictures might help some of you. I really do hope that it does.

Today I traded many a times but the following EU trade an EJ from Earlier were my favourites.

EU Late Trade. It does not really matter what the time is as long as the ticks are coming in. Ticks is "Chaos".

you'd be able to see that both had target points set based on TZ 62 and TZ100. I closed EU trade just now only because I am drained. There is divergence, but no yet a clear exit signal.  I hope it helps in our understanding of the way it is to trade. Wish you all many pips.

EU how it looked on M5

It looked like this when I was trying to enter the 2nd position.

I dont trade EJ on this TF but I was just checking and saw the setup so I just put the pending and the EA do its thing. But I also set a TP.
AO Peaks then turns green that is 3rd and 4th. I put pending and put TP at TZ100 and let the EA do its thing

Thursday, 12 May 2011

EUR/USD Strategy

An Excellent morning session. Later another prettier campaign was on offer but fortunately and unfortunately I was not available to trade it since I had taken what I wished for.

After closing multiple trade it setup again for what I thought was a fifth wave. That trade closed for BE and I left. I can now see that even a better 1-5 sequence was on offer for those who were still around.

This could also have been a very profitable trade using M5 on its own.

Wednesday, 11 May 2011


"Hello, erik here and thanks for your chart!
I have few questions regarding setup to enter new trade.
I am struggling making profit so I wonder:

ME: Firstly, profit and loss is a bi-product of trading chaos. You have to trade at least a month to 3 months and then conclude whether you're making money or not. However, I can assure you following this strategy you wont lose your account provided you follow the "Exit" signals correctly. Note that I stressed on Exit not Entry. You can make entry where ever you want but exit appropriately and you will create profits. Before putting a pending we should know exactly where we would exit otherwise once in a trade taking that decision could mean the difference between a consistently successful trader or otherwise.

1) When the alligator is sleeping and you break a fractal, would not be this fractal, often, inside the alligator so not a valid one?

ME: When the alligator is sleeping and AO is close to Zero line and AIMS Levels are not too far away from each other or entry not too far from red line,  you will always have two options. 

1. bracket the market above and below the AIMS Levels outside alligators mouth each side. however 
2. if you see that a time frame 1 step up  e.g. M5 for M1, shows a trend direction then you have an option not to bracket rather put a pending in the direction of the trend on m5. Choose to exit if price close on red line.

2) When aligator is sleeping, trend can easily go either ways, so would you not get your SL reached often before getting a trade following the market? Specially has wave 4 can last longer than the other waves

ME: targeting a saddle point requires a mind set, that is that we dont care which way the market moves once we have achieved a saddle point at a given time frame we get great advantage, since no one knows which way the market might go this helps us get rid of the anxiety that most "speculators" have. We dont care. We just follow the break out. You might at times end up, what we call "paying rent" a few times but eventually you will make so much more when the trend starts that it will cover all the rent paid. Remember trading from a saddle point is like living in low rent district. We dont want to trade saddle point off the 4th wave. off a 4th wave we normally try to get into a 5th wave and for that we use m1.  We prefer trading saddle point after a complete wave sequence but I know its not always easy but it certainly is simple. 

3) Would you not have a safer entry (but later one) like a new break of aims outside the alligator?
ME:  Every entry is safe and unsafe. It all depends on how you define "SAFE". If you consider closing a trade for a negative balance as "un-safe" that shows you are protective of your money. Now this might sound a bit  nonsense since every one's focus is on "protecting" your money, but the fact of the matter is that as long as your focus remains on "protecting" your money all you'd achieve is just that. "Protection of what you have". We want to trade so that we can "CREATE PROFITS". Having said that, I certainly am not saying to lose as much as you can , we just need to think "Positive" and remain focused on "Creating Profits" rather then "being safe". My friend Robert said once, "We create risk in order to create profits". Think about it. 

And having said that, of  course we have an "alternative" entry technique.  if you dont want to trade off the saddle point, wait for 2nd fractal. e.g. when you see a saddle point, instead of bracketing you wait for price to break out, let the alligator open its mouth and then wait for a fractal. as soon as you have an AIMS Level measure your risk from red/green line and put a pending. the only problem with this is that during high volatility (which is second name of forex markets) you might miss a few trends but one can live with that. My stats show that without adding on you'd be getting around 40% success rate which is why keeping your losers small i.e. entry off saddle point, and letting your winners run i.e. follow the red line is what makes us profitable. 
My friend G shares with us, (i hope you dont mind me sharing this in public) his stats. His losers were over 50% during the past 4 months. yet he managed to keep his average lower to 7pips (or so) and average winner to 16pips or so. That resulted in a massive Over 15% during Jan/Feb Each and around 10% during March/April. He achieved this while working. So he trades whenever he gets time.  Full Timers have a great advantage.

There is one VERY IMPORTANT POINT here to remember. During the time when you are trying to learn how to trade off a saddle point your aim is to remain consistent and not lose money. Once you learn how to enter and exit appropriately you will become profitable. but the REAL target is not just that. the REAL target is to get to the stage when you will be adding on each AIMS Level and balance line trade. once you achieve that you will be called "Competent Trader". Then you'd make so much during a trend that paying "rent" wont be a problem for you.Once you are consistently winning the bread and butter it will be time to "maximise" your profits by trading the shit out of a trending market. Add on as much as you can, be aggressive as much as you can, create risk as much as you can, invest as much as you can when in a trend. and play very very safe when market going sideways.

I hope it all makes sense to you and all of us include on top priority myself. 


ME:Thank you for your questions. Keep em coming. 


GreenRiver: About Money Management: If we want to trade off the saddle point and add on the way we should be, e.g. All Fractals and Balance Line Trades (Only when close to Lip/Teeth/Jaw) this would make us so profitable that rent paid wont matter. So I suggest depending on the size of your account, one can go with a fixed percentage. e.g. for account over 10K I'd suggest .25% each trade. e.g. for m5 I'd position size on 25pips for EU. Once can find the same relevant number of pips for other time frames. Then take a dimension only when your exit point is within the range of that number of pips. e.g. we have new AIMS level but if we put a pending exit would be more then 25 pips that would mean risking more then what your normal position size would be so we could ignore that entry. 

Trade crazy when its trending and trade only one trade when its sleeping. Once alligator open take each and every valid entry signal. Even trading only aims levels would be sufficient. more over, if you were to trade H4 on H1 but trade only off H4 saddle point, and add on each and ever fractal on H1 you would eventually end up trading almost all 5 dimensions. This is my research our group knows about it. You can do your research and I'm sure you'd find 90% of trades would be either one of the dimension. e.g. we trade M5 trends with entry on each m1 aims level and found that it covered nearly all dimension. Bill Williams is so clever that by making you trade all 5 dimensions on your chosen time frame he makes you trade nearly all relevant time frames. this might sound a bit bazzare but I'm sure you'd find the sense in it. I hope you agree. cheers.

Tuesday, 10 May 2011

EUR/USD Strategy

I have just a picture to share!

بس ایک تصویر۔ کیا آپ بتا سکتے ہیں کہ یہ کیا ہے؟ 

If you want to succeed, you must be happy!

The Secret to success is to be happy. While many believe "I'll be happy when I'm successful" the reality is quite different. You cannot be successful unless and until you are happy now. So the question arises

How to be Happy Now?

There are many ways to do this. I'd like to talk about it in more details later.

Friday, 6 May 2011

M5/M1 Trade on EU - Setup 1 and Setup 2 Examples

 The following is a pictorial account of how we trade EUR/USD using our EUR/USD Strategy.
We Display M5 and M1 Charts side by side and compare both charts for entries.
Making sure we trade in the direction of Alligator on M5 (Trend Trading) and while
alligator on M5 is open we wait for Alligator to sleep on M1 to make new trades/entries. Simple.
We also do reversals like this. Which is also simple. if you see price gone too far too fast away from
Alligator on M5, any setup on M1 in opposite direction would be our reversal setup. I'll discuss this some other day in more detail, for now enjoy this story. thanks for watching!

and yes, at 17.25 (chart time) before this trade we took a saddle point entry off M5. For some reason I later exited for 66 pips without an M5 exit signal. I was perhaps in a different sort of mood yesterday. 
Setup 1 - Initial Entry

Here we being a trade off a saddle point 3 Rules are there

Looking at M5 chart you'd see a beautiful Saddle point after 17.20 candle. following or AIMS EA or Red Line could have brought 140pips. Still working on belief system I guess..... nah! it happens just move on...
The Above picture to the right side of the chart or M1, Setup 2 is developing. The two green candles should create an AIMS Level. 

The chart below shows it clearer . Alligator is open if we have this AIMS Level confirmed we will take another trade. 

This is where patience and belief come in handy

Setup 2.  We remained patient and we waited for our exit signal and did not exit just because price was retracing a bit. In fact it was creating a beautiful Setup 2. We have AIMS level now and Alligator is open. Though the "Opposite Side of AIMS",  is a bit away from us but trend is confirmed. Opposite AIMS is the AIMS level where our "maroon" stop loss line is. Upper AIMS are for Long Trades and Lower AIMS are for Short trade. (depending if the criteria for Setup, the Three Rules is Met) 

Some Sigh of relief han! I thought this might create an upper aims level
Here we now have AIMS level advanced warning
Again this is how it looked on M5/M1
here I was thinking "if it just breaks this aims level we will laugh"

Setup 2: Above we see that we now have upper AIMS Level not far from our Entry Spot and its a High probability Setup 2. Had we not entered at Setup 1 we would definitely take this trade. Though on this occasion I did not add on, this is a perfect spot for an add on. 2-3 add on is enough. For beginners I will not recommend adding on. If you are a beginner you need to trade only 1 trade until you remain profitable for at least 6 months. 

So it does, no worries relax chill out!
Since I was targeting peak of 3rd wave, ie. AIMS level on M5 I moved SL to BE (scalping methods)
Since its going just fine we lock in some pips just in case it decides to go crazy nearly there
Nicely done with 20 pips, however following our candles trailing strategy meant +35 pips. 
A Final Look at how it looked using M5/M1 window. Fifth wave Divergence in making on M5, while m1 going to fourth wave.
and here is a picture of a completed EW on M1 towards the end of the day. What a beautiful picture I say....
Please enlarge to fully appreciate the beauty what we call in our Group "Picasso". 

Post NFP

NFP Brings alot of "chaos", that is new incoming information. We want this. We like volatility/volume. We want Chaos to be around us. All we have to do is look/wait for a setup. We need to have an attitude of Gratitude. We need to have a clear mind. We need to have mindset of being in the "Now". Which means stay on a chosen Time Frame and Ask, Is this a setup?.

Have a look please at this example.

Erik Asks a series of Questions!!! I reply with thanks...

Erik: "hello and thx for this great exemple..."
Me: thank you,  my Pleasure Erik!
I have few questions regarding Entry Set up:
1)Would you not use Wiseman1 and WM2 as its a contretrend technique and it means that entry point is far away from red line and ZL? Am I correct?
Me: We dont use counter trend techniques. My understanding is that the first step is to understand that the market is structured. It has a structure. that structure is the EW, then EW has a structure that is AIMS. So our job first of all is to trade "With the Trend" following the structure of the market. In doing so we would be able to "change" our under-lying structure and hopefully be "in-tune" with the market. This effectively will help us achieve the Holy Grail, that is "Want what the market wants". 

Once we have mastered this, we could look into trading reversals. So No we dont use WM techniques for now. 

2) Do you use any technique for new entries while you are in long bearing (bullish) trend in order to pyramid?.
Me: We only add on using AIMS levels. But for beginners we dont recommend that. We have to prove (not to anyone else but yourself alone) that we satisfy the requirements of being a Beginner then an Advanced Beginner trader. Which means to be able to stay through entire sequence of 1-5 on any time frame of your choice. once we hit that, and keep doing it consistently we could perhaps look into "Trance-Ending" experience and somehow jump into the next "trance/level". The competent trader. Since trading is 90% mental and the mind has alot of "issues" that we have to deal with, it would be counter productive to subject our minds to 2,3 or more pressures before it is properly trained to deal with one issue, ie. how to stay in during the entire sequence of 1-5. This could be staying through Wave 3 of chosen time frame using 1-5 on certain lower time frame or staying through 1-5 on your chosen time frame without going a step up or down. I hope it makes sense. 

For exemple in EU/US today with 400pips, would you just have only one entry at the break of AIMS level?
Me: we would have added on every fractal.
3) AIMS level, the limits are fractals but no matter where they have been set up including Inside the alligator?
Me: sorry I didn't quite get that.
Thank you very much for your help

and some more....
Me: its ok Erik keep em coming. In fact I love questions. Reason being, we are energy beings. and energy is only useful when its focused. Questions bring attention and focus to stuff that I some how forget to bring in to the concious mind. These questions help me bring them back in to life. So thank you and please ask more more more and some more ...

P.S.: 4)for entry setup you would look at the alligator sleeping while in BW New Trading strategies, it is said that this is ranging market and we should stay out the market…Is it in order to pick up an early wave 3 or 5?

Me: Again, I'd say many people are under the impression that the 3rd book meant markets have now so changed that trend trading does not apply. In fact in their most recent interview with one of leading magazine they comprehensively said something like this, oh yes we certainly are trend traders but we "also" have a very good reversal techniques. So, they are "firstly" Trend Traders with a  very effective strategy for Reversals as well. They say the adopted the reversals because markets have changed and now we see more reversals as compared to in the past. Yes, when alligator is sleeping you stay out of the market. But what you do is you bracket the outer most fractals. The longer the alligator sleeps the hungrier he's going to be. We dont want to miss that action do we? 

So Yes, that is to catch (Grounded) the next impulse wave perhaps a possible 1-3 or 5th , a or c wave. (ungrounded) 

5)I see that you trade very low TF (M1 or M5) do you look at higher TF first and then zoom until the lower TF in order to count waves as it said in BW trading chaos ed1?
Me: We trade M5/M1 combination as introduced in EUR/USD Strategy above. We can use the same strategy for any time frame combination such as H4/H1 , H1/M15, etc.  (this answers another question by another good person from somewhere).  
During trading M5 and M1 we dont always have the luxury in our time-space reality to check whether 1 is 1 or not by going down to count waves. I have a remedy for this. When AO is clsoe to ZL you will find your 1-2 in that area, with or without seeing it. 
Sorry for all these questions and thanks again
Me: I thank you my friend.
P.S. how i can login in your blog?
Me: I have no idea tbh, Haha! 

A Quick Attempt While Answering your Questions. 

AIMS Trading System | Forex | Stocks | Futures: A Perfect Example of Wave Counting

Thursday, 5 May 2011

A Perfect Example of Wave Counting

This EJ trade started off a saddle point on M5. It dropped 100 pips. Then performed a bautiful 4th wave and then dropped for a perfect 5th wave. It does not get any better than this. Trust me.

~EU M5 played well

Just a quick update on an M5 EU trade which I thought was not good. Of course the ones that I "think" are good or bad are the ones that do the opposite. Being right in trading is a rarity. Anyway here is the picture.

A Twin Peak sell signal was created indicating some sort of short momentum. at 11.20 Alpari UK on m1 starting 1.4880 was an m1, First bar of AO setup. I chose not to take it due it price being insides AIMS on M5. But I thought I must give it a shot using m5 rules. It worked well.

Sunday, 1 May 2011

Trading is 90% Mental

Hi perhaps a quick Sunday Service! LOL

Just a simple question how much do you agree with this statement

Trading is 90% Mental?

If you are like me, and you believe in the above statement, how much effort and energy do you think you should invest in Entry, Exit and Money Management side of trading? should it be 50% , 100% or less than 10%? 
Think about it! 

Then tell me, have you ever asked yourself, 
Hmmm, so How do I work on my "Mind"? Did it ever cross you? 
Have you ever come across a Blog, a Website a "Guru" who talk about 
what I have just created

"Mental Setup"? 

Here we are with 
1. Entry Setup
2. Exit Setup
3. Money Setup
and now
4. Mind Setup. or (Mental Setup)

Did it ever occur to you, what mental setup should we have?
How many "Indicators" do we have, if any, in order for us to identify whether we have the correct "mental Setup" when we trade? 

think....... (this post is straight out of the box no editing)