Forex Profit Harvester Prepared by: Frank Lucas - Pips Pulling Machine Team Hallo and welcome to my video. I am Frank Lucas from the Pips Pulling Machine Team and I am planning over the next few minutes to introduce to you a powerful FREE Forex trading strategy. I am sure you will be delighted by the Forex Profit Harvester (FPH) which will help you capture serious quantities of pips on a regular basis. I and many others have already enjoyed its benefits. Before explain my system in depth, let me first provide you with some fundamental guidelines that have helped me progress from losing my hard-earned money from Forex trading to becoming a pip pulling pro. These ideas will help you as well gain an appreciation of the central concepts behind the Forex Profit Harvester. You should also find that these powerful ideas will provide you with the momentum to advance your Forex career in leaps and bounds. For instance, you may be surprised to discover that many major Forex institutional trading companies only utilize a maximum leverage of 10:1 and risk less than a maximum of 1% of their entire account balance per trade and even less in most cases. This is because they appreciate and respect Forex and, as such, place the control of their risk exposure as their number one priority. In comparison, most Forex novices attempt to utilize leverage facilities that often exceed 100:1 and risk well over 2% of their balances per trade. In addition, they take these actions even though they do not fully understand how to trade Forex successfully. As you can readily conclude, this is a recipe for disaster. Beginners just dreams of the profits that they can make without paying any serious attention to the dangers and complexities that Forex poses. If you identify yourself with the latter group, is it still worth your time and effort elevating your Forex trading skills? I asked this very question many times during my early trading years before discovering the following concepts that have laid the foundation for my belief in Forex trading. Let me share them with you now. Awesome Daily Turnover Forex possesses a gigantic daily turnover which is reputed to be in the region of $3 Trillion daily. This staggering figure should certainly be enough to capture your attention and provide enough incentive for you to stay onboard and last the course. The Power of Compound Interest When Albert Einstein was asked what did he think was the most powerful force in the universe, he replied that he thought that it was compound interest! Just for clarification, you will experience compound interest everytime your profits are added to your account balance. This means that from that time onwards you will earn interest on your new balance which is equal to the old one plus your profits. For instance, Forex trading presents you with the possibility of compounding your money on a daily basis. By continually reinvesting your profits back into your trading, you can potentially achieve significant financial growth within a relatively short period of time. Once you realize that there exists no better opportunity than Forex to use compound interest to grow your account balance rapidly, then you too will acquire the drive to strive on and master this amazing subject. You should be excited to know that my Forex Profit Harvester harnesses this concept to the full. The following chart demonstrates vividly how compound interest can grow your account balance exponentially. Grasping such insights into the size of the potential profits available from Forex trading provided me with the energy and incentive to understand and master as much Forex information as I could. My Forex Profit Harvester is one of the successful products that arose from all my efforts and studies. I would now like to take a few more minutes to introduce you to a few more important concepts that are inherent features of my trading system. The Importance of Risk and Money Management You need to understand as soon as you can that minimizing your losses must always be your number one trading priority. A well-tested Risk and Money Management Strategy can help you achieve this objective. In addition, such a tool can prevent you from selecting bad position sizing which can lead to excessive losses. In other words, if you use a Risk and Money Management strategy well then it will prevent you falling into the temptation of over-trading by selecting position sizes that are too big for your account balance to handle comfortably. For example, how would you respond to this simple question? Assume you have a balance of $5,000 to trade, how much of this amount would you risk on your next trade? Some of the common answers are as follows:- 1. 25%, because if I can suffer 3 losses I can still recover. 2. Others replied, ’I would risk half because should I lose, then I still have the other half remaining‘. However, these replies indicate that their authors do not understand that their losses can compound rapidly. You must always remember this important point. For example, consider that you risked your entire balance of $5,000 on one trade and lost 50% as a result. You will now have only $2500 remaining and will require your next trade to realize a 100% profit just to recoup your losses and return your account back to its original value. Every time you suffer a 50% loss, you then need a subsequent 100% win to recover. Should you endure two consecutive 50% losses, you would then be left with $1,250. This means that that your next trade must return a 400% win just to regain your original account value. The following chart illustrates this effect graphically. You are well advised to drum the following concept into your head which states that a loss always requires a bigger win to recover. For instance, if you risked 10% of your $5000 per trade and suffered 10 consecutive losses, then you would be left with only $1700 of your account. If, instead, you risked only 2% per trade, then you would still have $4,100 after ten losses. Clearly the second option provides you with far better protection. This is why expert consensus recommends that you should not risk more than 2% of your account per trade. If you are prepared to adopt the right attitude, then you will find that Forex trading is a very worthwhile pursuit which can be a very profitable activity. This is because you can achieve above-average returns if you are able to control its above-average risks. I am very glad that I invested my time to master this intriguing subject. In addition, you will discover that your free version of the Forex Profit Harvester includes an innovative risk and Money Management Strategy that will cultivate and grow your account balance in leaps and bounds. Learning to Control Your Emotions When trading Forex, you cannot allow your rational trading judgment to become heavily influenced by your feelings at any time. For instance, you must not give way to despair and frustrations if you are suffering losses. Similarly, if you are winning then you must not permit greed and over-excitement to cause you to become over-confident and start overtrading. You will attain larger Forex profits consistently if you concentrate on utilizing your new Forex trading strategy with discipline and confidence. When trading Forex, you will have to cope with a series of complex situations that will require you to react with quality trading decisions. You will find that that trading can be difficult if you try to make your trading decisions using your gut instincts only. This is one of the main reasons why Forex experts advise that a strategy should be used for trading comprising a set of trading rules that have been well-tested. You will discover that your free Forex Profit Harvester meets this requirement exactly and as a result will help you capture large quantities of pips regularly. Introducing the Forex Profit Harvester Let’s know delve into my trading strategy which I will do in a series of simple steps. Basically, I intend to first define for you each component required to create a Forex strategy before presently the specific selection (in blue) for the Forex Profit Harvester. To begin with, however, you need to state the requirements for a trading strategy that the components will need to satisfy. For instance, should you ever decide to construct your own trading strategy then experts recommend that you should base it on the following 3 key points: If you can lay the foundation of your strategy on the following requirements, then you will greatly improve your chances of profitable Forex trading. I have done exactly this when constructing the Forex Profit Harvester. • Identify a technique that will detect good quality trading opportunities possessing minimum risk and excellent profit potential. Inputs • Construct an exit strategy that will maximize your profits. Exit Positions • Design a strategy that can distinguish false set-ups or signals from real trading opportunities as accurately as possible. Protection I then used the following steps to achieve this objective. 1. Choosing the Optimum Time Frame When selecting this parameter, you need to determine how much available time that you will have daily to trade Forex. For example, you will have to reserve a serious proportion of your daily time to monitor your open positions if you intend to utilize strategies such as scalping that use the very short time frames, e.g. 1, 5, 15, 30 minutes. If you are a Forex beginner then you should strongly consider basing your strategy on the longer time frames such as the hourly or daily. This is because you can then make use of the superior statistics that are associated with these longer time frames that can help you identify price formations more easily. Consequently, you will be able to define your risk exposure better for each trade that you open which will assist you in achieving the maximum protection for your equity. My Forex Profit Harvester uses the DAILY time frame because the statistics generated by this time frame are very reliable and accurate. In addition, this timeframe as the benefit of being great for those traders who do not have the time to monitor Forex trades during the day. 2. Selecting a Technical Indicator You will find that you can chose from a vast array of technical indicators, such as the Simple Moving Average, the Relative Strength Index, and the Stochastic Oscillator, etc. Fundamentally, you will need to experiment with as many as possible in order to determine the ones that produce the best quality trading opportunities for you. You can perform this task by adjusting the key parameters of each of your preferred technical indicators using a demo account. After each test, you will then need to re-evaluate the performance of the technical indicator by calculating the new key performance parameters of your trading strategy, such as its win-to-loss ratio. The Forex Profit Harvester utilizes the Exponential Moving Average EMA (9, close) and EMA (50, close) as its primary technical indicators. The following diagram demonstrates them in action using the daily time frame. 3. Which Currency Pair/s to Trade Choosing this component is very important because each currency pair possesses its own trading dynamics and behavioral patterns. If you are a Forex beginner, then you are advised to trade just the EUR/USD currency pair to begin with until you become more experienced. This is because you will then be able to take advantage of a number of major attributes that this currency pair possesses such as its constant high liquidity and low spreads. You should also realize that nearly 80% of all Forex transactions include the EUR/USD. You should always aim to select currency pairs that exhibit the lowest spreads. You will find that the EUR/USD is always a good choice because it often possesses one of the smallest spreads possible. The following diagram shows a spread of just 2.5 pips for the EURUSD, which is the difference between the SELL and BUY prices. If you attempt to trade other currency pairs possessing wider spreads, then you will find that achieving a consistent profit is a much harder task. The following diagram shows that the EURCAD has a spread of 4.2 pips whilst the NZDJPY has one of 4.0 pips. For example, if the present spread of a currency pair is 6 pips, then you have to gain a profit of at least this value just to achieve breakeven. This is one of the main reasons why you are recommended to trade the EUR/USD because its spread is normally 3 pips or less. The EUR/USD also enjoys high liquidity. This means that you will always be able to open positions whatever you want to because there will be other traders present to support your transactions. I have designed the Forex Profit Harvester so that you can trade using any of the major currency pairs i.e., EUR/USD, USD/YEN, GBP/USD, USD/CHF, USD/CAD and the AUD/USD. They are shown in the following diagram: However, if you are a novice to Forex trader then I strongly recommend that you should start trading my Forex Profit Harvester by using the EUR/USD currency pair for the reasons outlined above. 4. Confirming Entries and Exits Once you have completed the first three steps, you will then have a basic strategy which has been constructed using your choice of time frames, technical indicators and currency pairs. At this point, you should be able to identify good quality trading opportunities possessing minimum risks and optimum profits. However, you now need to safeguard your account further by providing increased protection against false signals. You can do this by designing a confirmation technique which you can then integrate into your trading strategy. You can be accomplished this task by investigating other technical indicators that complement your primary one and that can generate verification signals. You must not omit this important step because it will provide additional protection for your account. The Forex Profit Harvester uses support and resistance levels to act as its confirmation tool. As these levels will be produced on trading charts using the Daily time-frame, you can be assured that they will provide very strong indications that price has the potential to proceed further in its current direction. The following chart demonstrates this technique in action by clearly identifying key resistance and support levels. You must take these extra measures to safeguard your account from serious price reversals and fakeouts. You should take careful note that this important step will provide you with increased confidence that your new positions will possess the maximum potential to succeed. 5. Entry and Exit Rules Our next task will be to define a set of rules which you can easily use to identify the entry and exit points of new trading opportunities. The Forex Profit Harvester is based on the following very simple and easy-to-use set of entry and exit rules detecting the openings and closings of all trading positions: 1. BUY positions will only be entered when the currency pair is moving in a BULL trend. You will be able to detect such situations everytime EMA9 is above EMA50 as shown in the next chart. 2. Under bullish conditions, you should then open a new position once price has first broken through Resistance Level 1 and then attained an additional 20 pips. 3. You must close your position once price touches Resistance Level. The following chart shows point 2 and 3 in action. 4. Sell positions must only be entered when price is in a BEAR trend which you can confirm by detecting that EMA9 is below EMA50 as shown in the next diagram. 5. Under bearish conditions, you should then open a new position once price has first broken below S1 and then achieved an additional 20 pips. 6. You must close after price reaches S2. The following chart demonstrates points 5 and 6 in action. 7. Only risk a maximum of 2% per account equity per trade. An example about how to do this is presented in section 6 shortly. Example 1: On the following EUR/AUD chart, you will first observe that the EMA9 is lower than the EMA50 which implies that you must only open SELL positions. Such a trade was activated on the 20th of August 2010 after price penetrated the S1 level at 1.4263 by a further 20 pips. On the 23rd of August 2010, the position was closed after price achieved S2 realizing a profit. Example 2: In the next example, you can once again confirm that price is in a bearish trend because EMA9 is below EMA50 on the USD/CHF daily trading chart. You should then note that a new SELL position was opened on the 26th of August after price dropped below S1 at 1.0259 by a further 20 pips. On the 31st of August 2010, the trade was terminated after price touched S2 located at 1.0192 achieving a profit. You should not concern yourself if you are having any trouble understanding how the Forex Profit Harvester fully operates. This is because, in my next training video, I will provide you with more insights and tools that will make all the above tasks become much easier to understand as well as aiding you to trade much faster and profitable. I will also provide more live trading examples so you can understand the workings of the Forex Profit Harvester much better. So just keep an eye for my next email as you will find that my next training video will be both very informative and exciting 6. Minimizing Your Risk Exposure I have already advised that you simply cannot ignore this aspect of trading. You must devise a simple money management strategy so that you will know precisely what your risk exposure will be for every position that you open. In addition, you should only execute new trades if you have determined that your predicted reward will be at least double that of your maximum loss. In fact, a risk-to-reward ratio of 1:3 or higher is preferable. As such, you will need to know exactly where to locate your stop-losses and targets even before you open new positions in order that you can satisfy this requirement. The Forex Profit Harvester risks a maximum of 2% of your entire equity per trade. This requirement implies, as stated above, that you need to always know precisely the size of your position and stop-loss even before activating any new trades. You can calculate these two parameters so that they comply to your risk strategy as follows. Assume you have an account balance of $50,000 and each 1 pip movement is worth $1. In the diagram below, the blue bull candle on the 1st of September surged above Resistance Level 1(R1) by an additional 20 pips. At that point, you should open a new BUY position as near to the price of 0.8986 as possible. You need now to calculate your position size so that you will only risk a maximum of 2% of your total equity. The diagram below illustrates how you can do this. For example, you could opt to locate your stop-loss below S1 by a distance of 24 pips. You can now calculate your position size by using the following formula: Position Size = (%risk X free_margin) / (pip_value X stop_loss) Assuming that you have no other trades open, your free margin will equal your entire equity, i.e., $50,000. The size of your stop loss equals 0.8986 – 0.8816 = 170 pips. Account_Balance = $50,000 USD PIP_Value: $1 USD Stop_Loss (SL): 170 Pips %Risk: 2% Position size = (%risk X free_margin) / ((pip_value X stop_loss)) Position size = (0.02 X $50,000) / ($1 X 170) = 5 lots Note that your Position Size is rounded down to the nearest whole figure in order to ensure your new trade complies with your risk strategy. Consequently, if your 5-lot position was stopped out, then you will endure a loss of 5 X $1 X 170 equaling a total loss of $850, which complies with your 2% maximum risk strategy, i.e. 2% of $50,000 = $1,000. If you follow that above six steps carefully, then you will be able to start designing your own strategies in just the same as I have done to produce the Forex Profit Harvester. I would now like to introduce you to some an additional skill that will enhance your Forex experience. Trading Professionally In order to satisfy this objective, you will need to enhance your patience and learn specifically to concentrate on the risks involved when you open a new position as opposed to its potential profits. Why does patience play such an important role in trading? To answer this question, you should compare the different ways that experts and novices use to trade. For example, novices constantly seek excitement by having a tendency to trade a large number of positions using the shorter time frames, i.e., 1m, 5m, 15m, etc. As such, they have a leaning to open new positions prematurely at high levels of risk. In contrast, experienced traders know that the effectiveness of important price levels such pivot points, resistance, and support levels reduce dramatically as time frames shorten. When I am trading the Forex Profit Harvester, I constantly seek to achieve only realistic targets and do not attempt to achieve the impossible. As such, I strive to exert patience consistently. In fact, the Forex Profit Harvester encourages such an approach because, for one reason, it is based on the daily time frame. You will be able to confirm after using the Forex Profit Harvester for a while that important indicators such as resistance and support levels are far more effective when a longer time frame is used. You will also discover that my system is very helpful in enabling you to carefully select the entry points of new trading opportunities so that the maximum risk per trade will be compliant with its risk and money management strategy. Your new FREE Forex Profit Harvester will not make you expend excessive quantities of time and energy pursuing trades with little real profit potential. Instead, you will be encouraged to only activated new positions after making decisions based on the superior statistics attributed to the daily time frame. Consequently, although you may open fewer positions than with other strategies, you will discover that they will be of much higher quality. In the next training video I will provide you with a more in-depth understanding of the operation of the Forex Profit Harvester. In addition, I will also give-away another free simple trading strategy which will again increase your ability to capture large quantities of pip profits constantly. I will also provide many more live trading examples so you can understand the operation of the Forex Profit Harvester much better. So please stay tuned for the next training video. I hope you enjoy this one in which I have presented to you a FREE trading system that works under many different market situations. This is just a small present from me to you to show that I am really keen to assist you in attaining serious profits from Forex trading. Soon, I will introduce to you a more powerful Forex trading system as well as software that will increase your trading profits in leaps and bounds! Thank you for listening to my video!