#TheBasicsofForexTrading Option trading, Forex trading ...

The intention of this post is to create a guide for struggling traders to turn their trading around and show a clear performance record. It's my way of paying it forward and contributing to technical analysis. We will be compiling evidence for why technical analysis works and how to take advantage of indicators.
There comes a time in a person's life when the wealth accumulation phase becomes more of a person's central focus and what we will do is use a point system that indicates the number of pips or Satoshi's required to reach a difficult economic goal
The strategy works in most trending markets but with your help we can make a reliable strategy better by trading in range bound environments too. It is by no means 100% accurate but very much functional and consistently profitable once all of the realized losses and gains are factored.
It's really a collection of ideas, personal experience, thoughts , chart patterns and things I put together that changed my trading system to dial in the best results. There has been so much attention put on Bitcoin and other cryptocurrencies over the years that by necessity I am journaling the results of my filter in both Fiat/FOREX and Cryptos.
I'm open to suggestions and ideas on how to improve what I consider a very good system for day trading with a 20 point filter as well as holding positions overnight
My focus is on improve the system and any contributions or feedback from you would be helpful
Hope it helps and since I designed it I will put together as many charts that are timestamped and I'll provide as much proof and commentary as possible.
The Bank Forty System - BFS for short. As we improve it we can increase the version number to possibly involve a higher point value or pip count. Know this it's a good working strategy for trading on multiple time frames it has been my means for quite some time now
Help me help you and feel free to help us by tipping with Basic Attention Token, it helps support our operation
I shall start by laying the first of four bricks
Concept #1 THE TREND - Market Players need a trend to make money
Look and see if there is a powerful trend PRESENT
There are two types.
The dominant ones
Downtrend = it is a series of lower highs and lower lows Uptrend = a series of higher highs and higher lows
HH - Higher High - uptrend
HL = Higher Low - uptrend
LL = Lower Low - downtrend
LH = Lower high - downtrend
The ones you should ignore (for now) because they require greater skill to consistently profit from or simply, the sideways trends - in these there is a lot of Congestion/Indecision = higher lows, lower highs (Symmetrical Triangle formations) or if it consolidates- lows and highs are horizontal lows/highs, no meaningful change in direction
As you get more experienced you can profit off consolidation by fading support/resistance but for now, stick only to the meaningful trends.
I often use the terms consolidating gains and consolidating losses.
Bull Flags often result in the consolidation of gains followed by a continued move up.
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Bull Flag in Action October 2021
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Bear Flags often result in the consolidation of losses followed by a continued move down.
Breakouts of consolidations and sideways trends are profitable, and as you get more experienced you can profit off symmetrical triangles (HL LH) because they tend to give birth to POWERFUL new trends but for now I would rather you stick to the meaningful trends.
CONCEPT # 2 - What to do after a trend has been set
- If a MEANINGFUL TREND has been found we need a logical entry.

• Let's start with the UPTREND.

We BUY a pullback and we are nimble with our target.
Where exactly ? Well, it can be a 50% Fib retracement from the recent High to Low swing, MOVING AVERAGE, OR we take advantage of minor WEAKNESS in a STRONGTREND to get a good fill.
What's your target ? It can be a few ticks below previous resistance, it can be a defined level above a moving average. This is entirely up to you and only in time you will master this. You could trail the stops - or exit orders to ride break outs
Most trades here have very defined exit levels especially FOREX
Where do you Stop ? Whatever would make it a lower low aka a CHANGE of trend.
Now, lets talk about the other side, the DOWNTREND.
We SHORT a pop up and again, we are flexible with our target
Where exactly ? Well, it can be a 50% Fib retracement from High to Low- a measured move, whatever you are comfortable with. We take advantage of STRENGTH against a WEAK TREND to get a good fill.
What's your target ? It can be a few ticks above previous support, it also can be a lower moving average or support level This is entirely up to you and only in time you will get good at this. You could trail the stop to ride those plunges, all very discretionary.
Stop ? Whatever would make it a higher high aka a CHANGE of trend.
Important, we fight the trend or go against the current. When the trend is strong we buy a pullback. When the trend is weak we short a rise up. No exceptions, don't play hero or Fortune Teller. There is not a soul in this world who can predict the market consistently and what we want is consistency in making reactive decisions based on the trend, and defined (accurate) trade set ups.
If STOPPED OUT or trade did not go our way - it means the CHANGE of a trend, we stay ON THE Side until a direction is given and then ride the trend that is most meaningful or relevant.
We always define and take stops like responsible traders.
If we get faked out, so be it, plan your trade and trade your plan. Losses are inevitable and quite alright as long as they are reduced to small numbers
The amount gained in a positive trade should always significantly outweigh the amount lost in a pre-defined losing trade.
Who is our nemesis?
Reversals. These are some of the hardest to time, and REVERSALS stop us out; that is they take us out of a position sometimes at a loss. Fortunately for us, they are not very common which is exactly why this strategy works. Some days will be filled with them and sadly I don't know how to overcome this. On days like this, I lose money or break even
Surprisingly enough, people call reversals all the time and its no wonder why 90% of traders lose money ?
We never call a top, we never call a bottom, we never say "Oh it's too high" or "It's too low", the market has no limits and boundaries, yet to some degree the currency markets tend to have the most range bound conditions, but in the heat of the moment and with enough leverage, it would seem that FOREX's trend is so clean in one direction, it would feel limitless.
In equities, and in recent years Bitcoin have shown that they are WITHOUT BOUNDARIES There are so many variables in the market it is IMPOSSIBLE to predict accurately AND on a consistently basis. So the best I can do is analyze what is happening NOW and try to profit from the available volatility and situate myself calmly in a strategic place, with patience and conviction.
CONCEPT # 3 INDICATORS and price patterns
I'm not the biggest supporter of technical indicators, mainly because I have no interest in using something that tells me what happened so far away in the past. Price action is all I need and when using a one hour chart, and I hardly use a volume indicator.
On the other hand, there are some I use for strength/weakness references ,entries and exits.
For example:
THE 50 PERIOD MOVING AVERAGE ON THE EMA - (EXPONENTIAL MOVING AVERAGE) this tells me the most about whether price is positive or negative - with or against the dominant trend.
When price is continuously moving far away from the moving average it would be harder to chase it going up more and the relative strength of the asset: Bitcoin, a FOREX pair would probably continue going until we reach our target.
TRENDLINES just the right amount to stay with current direction
FIBONACCI RETRACEMENT LINES, my favorite. 50% from last swing low/high and you got an excellent entry point. Problem is sometimes the trend is so strong it won't even give you your wish and you miss the chance to get in
CONCEPT # 4 MONEY MANAGEMENT
As you get more experienced, I highly recommend you use an average up approach. ADDING TO WINNERS
We will touch more on this after when the lot size or number of satoshi's play a role in changing your average fill. For heaven's sake DO NOT AVERAGE DOWN unless you are just trying to get fills for your intended car size, never surpassing it. I previously stated and those that known me for awhile know I support averaging into strength. I feel this is an advanced money management technique and for now it involves layering positions, but generally I will add to something twice, or as many as three times, it only gets more slippery as price moves in our favor.
A word on DISCIPLINE
I'll be blunt. Trading is not for the irresponsible. Break the rules about money management and you will eventually lose big, period. Trading will forgive you from time to time if you were wrong on a play even several bad entry, it won't forgive or tolerate idiocy and stupidity. All I need to say on this and you have been warned.
A call to the Charts
I prefer to have multiple time frames (it has been called the tide, the ripple, and the wave) to dial in an entry to give us the best advantage, but for the most part our filter is set up on 60 minutes, and lasts anywhere from 1 to 8 hours
Bye for now,
Damian