FOREX TREND SECRETS

Forex Secret Protocol

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RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT


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TABLE OF CONTENTS

RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT ............................... 1
INTRODUCTION ............................................................................................................. 3
SETTING UP YOUR CHARTS ....................................................................................... 4
PUTTING IT ALL TOGETHER ..................................................................................... 12
BUY TRADE RULES .................................................................................................... 14
SELL TRADE RULES ................................................................................................... 15
BUY TRADE EXAMPLE ............................................................................................... 16
SELL TRADE EXAMPLE ............................................................................................. 17
CONCLUSION .............................................................................................................. 18











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INTRODUCTION

The Forex Trend Secrets trading system is a simple yet powerful system that has
performed well during Demo and the Live Rounds of the recent Surefire Trading
Challenge.

It is a simple system that would be ideal for new traders that are still getting up to speed
with trading the Forex market but can also be very powerful in the hands of more
advanced traders.

The system relies on two key standard indicators that many traders tend to overlook.
The system has also been designed to work on an intraday basis but it can be traded on
all timeframes and all available currency pairs.

The Forex Trend Secrets system is very easy to apply once you are familiar with the
rules. It uses a 1:1 to 1:1.5 risk/reward ratio which means you could potentially gain as
much as you risk or more on each trade that you enter.

The indicators that are part of this system are very easy to understand and interpret
making it a great system for new traders. The Forex Trend Secrets system can be
considered as a conservative strategy which means that the risks are relatively low.

This is a trend following strategy and the entire strategy revolves around ensuring that
traders remain on the right side of the trend at all times.

As you know, the trend is your friend and if you can follow the rules of this trading
system you can be sure that you will remain on the right side of trade for the majority of
your trading endeavours.

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SETTING UP YOUR CHARTS

This system uses two standard indicators that are available on nearly all trading
platforms available on the web. The primary indicator is the Alligator indicator which is
one of the most overlooked indicators in trading. The second indicator used in this
system is the Relative Strength Index (RSI) indicator.

Well go into greater detail about how these indicators are used as part of the trading
system but before we can get to that, we will need to setup our charts by applying each
of the indicators and configuring the settings.

Setting up your charts to trade this system is very easy. Once you are done setting up
your charts, this is what your charts should look like:



As you can see on the chart image above, the Forex Trend Secrets system relies on an
uncluttered chart setup. Once you are familiar with the Buy and Sell entry rules,
identifying trade setups becomes very simple.

Before we get to the rules for entering trades, we will need to prepare our charts so let
us now take a closer look at how to accomplish this.
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The first step is to open up a blank chart and change the properties. If you would like
your charts to look exactly like mine, start by changing the properties on the Colors tab
to match the image below:



Next, change the properties on the Common tab to match the image below:


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At this point, we can start to add our indicators to our chart. Lets begin by adding the
Alligator indicator. On your MT4 platform, go to the top menu and click on Insert >
Indicators > Bill Williams > Alligator as shown on the image below:



As soon as you have completed the steps above, you will be presented with the
indicators parameters window. The Alligator indicator uses the default settings so there
should be no need to make any additional changes at this point but heres what the
settings on your Parameters tab should be set to:


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On the next tab you will find the Colors settings.



As you can see on the image above, the 3 most important components of the Alligator
indicator are the Jaws, the Teeth and the Lips. Ive decided to use the default colors but
you will notice that I have changed the thickness of the lines to make them appear bold
on my charts.

The final tab is the Visualization tab which may remain unchanged as shown on the
image below. Next, simply click on the OK button and the indicator will now be added on
to your chart.


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The Alligator indicator helps us to identify the overall trend and the direction in which we
should be looking to trade.

When the lines representing the Lips and the Teeth cross below the Jaws it is a good
indication that the market is starting to move downwards.



And in the same way, when the lines representing the Lips and the Teeth cross above
the Jaws it is a good indication that the market is starting to move upwards.



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Now that we have inserted the Alligator indicator on to our charts, we can move on to
inserting our next indicator which is the Relative Strength Index (RSI). On your MT4
platform, go to the top menu and click on Insert > Indicators > Oscillators > Relative
Strength Index as shown on the image below:



As soon as you have completed the steps above, you will be presented with the RSI
indicator parameters window. The RSI indicator uses the default setting of 14 and the
settings on your Parameters tab should be set as follows:


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On the next tab you will find the Levels settings. Theres no need to make any changes
here so make sure that your settings match the image shown below:



The final tab is the Visualization tab which may remain unchanged as shown on the
image below. Simply click on the OK button and the RSI indicator will now be added on
to your chart.



The final step is to add the Levels we will be using on the RSI. These levels can be
added by simply clicking on the Horizontal line tool on the MT4 toolbar.


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There are 3 horizontal lines that need to be inserted on the RSI indicator. As you can
see on the image below, we will insert the lines at the 30, 50 and 70 levels:



The key level that we will be monitoring when trading this system is the 50 level. If the
RSI line is above the 50 level it tells us that the trend is up and if the RSI line is below
the 50 level it tells us that the trend is down.
















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PUTTING IT ALL TOGETHER

Now that you know how to setup your charts we can take a closer look at how the
different components of this system work together to produce trade signals. This system
works on all currency pairs and all time frames. This system is ideal for day trading and
has been found to work best on the 1 Hour time frame.

The Alligator indicator is the core of the system. This indicator determines the direction
in which we will trade. The Alligator is essentially made up of three key components, the
Jaw, the Teeth and the Lips.

The Alligators Jaw is represented by the Blue line. This line is a 13 period
Smoothed Moving Average which is shifted 8 bars into the future.
The Alligators Teeth is represented by the Red line. This line is an 8 period
Smoothed Moving Average which is shifted 5 bars into the future.
The Alligators Lips is represented by the Green line. This line is a 5 period
Smoothed Moving Average which is shifted 3 bars into the future.

As you can see on the image below, when the Alligator Lips (Green line) and Teeth
(Red line) are above the Jaws (Blue line) the market is considered to be in an uptrend.


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On the image above, you can see that when the Alligator Lips (Green line) and Teeth
(Red line) are below the Jaws (Blue line) the market is considered to be in a downtrend.

As you can see, the Alligator indicator helps us determine the trend direction and the
RSI serves to confirm the signal. On the image below you can see an example of how
the RSI indicator helps confirm the trend direction we have determined using the
Alligator indicator.



If the RSI line is above the 50 level it serves as confirmation that the market is in an
upward trend. On the other hand, if the RSI is below the 50 level it serves as
confirmation that the market is in a downward trend.

Now that you have a basic idea of how the Forex Trend Secrets system works, lets
take a closer look at the rules for entering Buy and Sell trades.
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BUY TRADE RULES

These are the rules for entering a Buy trade:

1. Wait for the Alligator Lip to cross above the Jaw.
2. Wait for the Alligator Teeth to cross above the Jaw.
3. Wait for the RSI 14 to cross above 50.
4. Enter a Buy trade at the open of the next candle.
5. Insert your Stop Loss below the most recent Swing Low.
6. Set your Take Profit the same number of pips away from your entry price as your
Stop Loss, i.e. a 1:1 or greater Risk/Reward Ratio.



On the image above you can see an example of a Buy trade as per the rules of entry.
As you can see, the Lips crossed above the Teeth. The Lips then crossed above the
Jaw and the RSI was above the 50 level.

At the open of the next candle I opened a Buy trade order and placed my Stop Loss
below the most recent Swing Low around the 20 pips level. My Take Profit was set at
the same number of pips as my Stop Loss. Within the space of about 5 candles price
had moved in my favour and taken out my Take Profit level.
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SELL TRADE RULES

These are the rules for entering a Sell trade:

1. Wait for the Alligator Lip to cross below the Jaw.
2. Wait for the Alligator Teeth to cross below the Jaw.
3. Wait for the RSI 14 to cross below 50.
4. Enter a Sell trade at the open of the next candle.
5. Insert your Stop Loss above the most recent Swing High.
6. Set your Take Profit the same number of pips away from your entry price as your
Stop Loss, i.e. a 1:1 or greater Risk/Reward Ratio.

On the image above you can see an example of a Sell trade as per the rules of entry.
As you can see, the Lips crossed below the Teeth. The Lips then crossed below the
Jaw and the RSI was below the 50 level.

At the open of the next candle I opened a Sell trade order and placed my stop loss
above the most recent Swing High around the 50 pips level. My Take Profit was set at
the same number of pips as my Stop Loss. Within the space of about 3 candles price
had moved in my favour and taken out my Take Profit level.
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BUY TRADE EXAMPLE

Here is another example of a Buy trade using the Forex Trend Secrets system:



On the image above you can see an example of a Buy trade as per the rules of entry.
As you can see, the Lips crossed above the Teeth. The Lips then crossed above the
Jaw and the RSI was above the 50 level.

At the open of the next candle I opened a Buy trade order and placed my stop loss
below the most recent Swing Low around the 90 pips level.

My Take Profit was set at the same number of pips as my Stop Loss. Price moved in my
favour immediately but it took a bit of time before price made its way up to my Take
Profit level which was set just over 90 pips away from the entry level.




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SELL TRADE EXAMPLE

Here is another example of a Sell trade using the Forex Trend Secrets system:



On the image above you can see an example of a Sell trade as per the rules of entry.
As you can see, the Lips crossed below the Teeth. The Lips then crossed below the
Jaw and the RSI was below the 50 level.

At the open of the next candle I opened a Sell trade order and placed my stop loss
above the most recent Swing High around the 100 pips level.

My Take Profit was set at the same number of pips as my Stop Loss. Price moved in my
favour immediately but it took a bit of time before price made its way down to my Take
Profit level which was set just over 100 pips away from the entry level.



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CONCLUSION

By now I am sure that you will agree that the Forex Trend Secrets trading system is a
simple yet powerful system.

Remember, this system has performed very well during Demo and the Live Rounds of
the recent Surefire Trading Challenge so I am sure that this system will work well for
you when applied in the correct way.

Take your time and practice using this system and you will see that this strategy can be
very powerful in the hands of responsible traders. By trading this system you will always
be on the right side of the trend and this is a vital part of being a profitable trader.

Stick to the rules and I am sure that you will be very happy with the results.

All the best!