Fibbo Power System -ForStock, Commodity, Forex Sumit Das All Rights Reserved. No part of this publication may be reproduced in any form or by any means, including scanning, photocopying, or otherwise, without prior written permission of the copyright holder. Copyright Š 2014
INTRODUCTION WELL, MOST OF YOU ALREADY KNOW ABOUT FIBNACHI RATIO. THIS IS THE GOLDEN RATIO. I DON’T KNOW ABOUT WHAT MAKE’S IT SO PERFECT FOR FINANCIAL MARKET BUT IF YOU ARE TRADING FOR A LONG TIME, YOU WILL DEFINETLY WANT TO KNOW HOW THIS RATIO WORKS AND WHAT MAKES IT SO POWERFUL. THIS TOOL THE HAS POWER TO TURN YOUR TRADING UPSIDE DOWN. IF YOU KNOW HOW TO USE IT, THEN THERE IS NO ONE ON THE EARTH WHO CAN STOP YOU FROM MAKING MONEY WITH THE FINANCIAL MARKET WHETHER YOU ARE IN FOREX, COMODITY, STOCK AND FUTURES. I HAVE SEEN LOTS OF PEOPLE TRADE WITH THEIR FANCY INDICATOR AND LOOSE MONEY IN MARKET, THEY ARE INDICATOR FANS, AND THEY NEVER ACCEPT PRICE ACTION TRADING. I URGE YOU, DON’T BE A FOOL. LEARN HOW TO USE FIB AND PRICE ACTION BE ON PROFITABLE SITE AND IN THIS BOOK, I WILL GIVE YOU ONE SOLID FIB AND PRICE SYSTEM THAT WILL JUST BLOW YOU AWAY WITH A 90% WINNING RATIO. BE PATIENT AND READ THE WHOLE BOOK AND KEEP PRACTICING AND IN LESS THAN30 DAYS, YOU WILL SEE A GREAT CHANGE IN YOUR ACCOUNT. IT WILL GO UP AND UP, BUT LEARN THE PRICE ACTION METHOD. “I WISH YOU BEST OF LUCK” IN YOUR TRADING. ONE MORE THING, ALL THE SYSTEMS I MADE, I PERSONALLY TRADE AND KEEP MAKING MONEY WITH IT SO THIS IS NOT A BULLSHIT SYSTEM. TRY IT FOR 30 DAYS AND SEE THE RESULTS FOR YOURSELF. How many systems have you followed before today? How many hours did you try to learn a system and watch that fail again and again? Most of the systems look good in theory but in real life, they fail miserably. I have seen people spend almost $10,000and working on some so-called complex system from their trading guru, with lots of custom made indicator
and private coaching seminars, but still struggling to make any money out of forex. They all come with that big dream to become financially free. Want to trade from home and make millions and billions just by making a simple decision? Now I want you to ask yourself, is it really that simple to make that decision that you want to buy or you want to sell? Is it really that hard? Why do people lose money in trading? Well, to answer this entire question, the answer is simple. Trading is simple, it can be fun and easy if you know how to do it right. These people are losing money because they believe: 1. A system can make you money. 2. The more complex and expensive a system, the more money it will make. 3. If you have a good system, you cannot lose money. (That’s why most people are still searching for Holy Grail, best of luck to them!) 4. Their system is based on indicator. 5. They don’t have a trader’s mindset. 6. They are jumping from one system to another. 7. Lack confidence. 8. They are stubborn never accept the fact that market has proven them wrong. One of the biggest reasons, I found out, is that they think making money with forex is hard. To be honest, it is not. You can easily do that. Ask yourself how many times the market will prove you wrong.10 times, 50 times, 100 times. We are not Gambler who is just batting his money in the market, we have proven system. Have faith in it and you will see, at the end of the month, you will finally be able to make money and you just have to repeat it after that. This is exactly what I use when I am struggling to make money. But after using this system for just 5 months, I am able to gain 300% of my investment. Don’t believe me? Just back test it and see the results for yourself. I know how frustrating it is when you lose a trade and after you blow account after account but believe me, it is worth it! Keep practicing and stick with one
system. I am giving you what worked for me and what didn’t, how I over came my fear and the aspects you should look at before you place a trade, how to build a strong trader’s mindset for long lasting results, and how to be a profitable trader. There is lots of opportunity, there is the market that is more than enough to make you billionaire but first, you should become a trader with a proper trading system. Once you are done with this book, you will start seeing results within that month. After this book, your trading will become: Enjoyable. You really enjoy the process and learn from every trade. Peaceful. Once you gain a trader’s mindset, you will not worry about losing on any trade. You will know from the start what you are going to do with trades, like where to enter and exit. You will start making money. You will wait for proper entry and exit. You will have confidence in yourself and your trading edge. Remember; don’t look for how much money you can make with a system or a year. Try to become a trader so you can make money every year and reach your financial goal. A system can make you money for a year or 2 but if you become better traders, then you will be making money from all your life. What is the fibo power system? Well, this is basically a price action system where we are using Fibonacci retracement and price action. Don’t worry if it sounds complex. I try my best to explain every part of the system in very simple format so anyone can understand it whether you are new to trading or you have previous trading experience. When I will see the result? It all depends on you. Once you have enough practice and you basic are clear, you can start doing it. I have mentioned everything, money management rules and clear entry and exit. You just have to follow it less than one week and you will see change in your trading. Will it work for stock?
This system will work for any financial instrument, whether it is forex, stock, bond, and commodity. Can I automate my trading with this system? No, you cannot. It is based on price action so you have to search for trades. You cannot automate price action. “How many system have you tried from trading gurus who will only show you results from their best trades, and once you started trading with the system, it only produced loss”? I am not only showing you results but also telling you why it will work and where you will get your next trading opportunity. You can back test “fibo power system” with any pair and stock and you will be amazed with the results of this simple system. Why you trade with “fibo power system”: Easy to understand. Easy to enter and exit. Simple money management rules. Very little draw down on your account. Can be traded by any expert level. If you are new to forex, it will be even better for you to trade it. Instant results on your account in less than a month. Great risk reward ratio 1:5. You will enter before an impulsive move starts and can ride the full impulsive move. You will always trade with the trend so there will be no pressure on you that trade can backfire. This is powerful with almost 90% wining ratio. Learn to use Fibonacci and change your trading once and for all. See the hidden power of Fibonacci to spot bottom and top for any swing. This fibo power system is well researched and developed over many years. If you go through with this book, then you will see how every part makes sense in this system and why this system will work. Don’t be a sheep to follow others’
system, which will not do anything. Learn it, adopt it, and change your trading for once and for all.
Table of content
INTRODUCTION
Risk disclaimer FIBBNACI THE GOLDEN RATO HOW TO USE FIBONACCI RETRACEMENT TOOL Right way Wrong way Fibbo Power System Pillars of successful reading system DIREACTION Uptrend Downtrend Mindset Psychological issue Trader’s mindset. Money management Patience How to start with fibo power system Higher time frame analysis Up trend Down trend Fibbo power system in action Price action to look for Entry & exit Take profit Back testing Summary
My advice to you 3w system Modern day price action
Risk disclaimer Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Trading foreign currencies can be a challenging and potentially profitable opportunity for investors. However, before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience, and risk appetite. Most importantly, do not invest money you cannot afford to lose. There is considerable exposure to risk in any foreign exchange transaction. Any transaction involving currencies involves risks including, but not limited to, the potential for changing political and/or economic conditions that may substantially affect the price or liquidity of a currency. Investments in foreign exchange speculation may also be susceptible to sharp rises and falls as the relevant market values fluctuate. The leveraged nature of Forex trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. Not only may investors get back less than they invested, but in the case of higher risk strategies, investors
may lose the entirety of their investment. It is for this reason that when speculating in such markets it is advisable to use only risk capital.
FIBBNACI THE GOLDEN RATO
Fibonacci is the series of numbers discovered by the great mathematician named Leonardo Fibonacci. It looks something like this: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144,‌ Starting with 0 and 1, each new number in the sequence is simply the sum of the two before it. So much of the origin of Fibonacci, but it is not the number we are interested in. We will be using Fibonacci ratio for our trading and it looks like this:
.The important ratio in this sequence is: 0.0%, 23.6%, 38.2%, 50.0%, 61.8%, 100%, 161.8% ............ This is one of the most common tools that have been available for most trading platforms for quite some time. As I told you before, it is a very powerful tool if you know how to use it. This can change everything for your trading account. Fibonacci retracement-
This ratio works like magic. When we draw a Fibonacci retracement tool from lower low to higher high, you can see some time price stop going down and react to this level and form support area. Some use this tool to place stop loss, some use as an opportunity to take long, and so on.
In this picture, you can see we have lower low and higher high. I have marked A as lower low and B as higher high. Now you can see once price reached 23.6 ratio, it started to reject that area and make lower high and start moving up and continue its journey. Most of the time you see this scenario in your trading platform it is raw power of fiboratio but only if you know how to use it and that is exactly Iam going to teach you in this book. Let’s see some examples in downtrend It is downtrend scenario for Fibonacci retracement. Here, you can see there is point A, lower high, and there is B, lower low, for that move and once we use fibo tool right at the 61.8 level, it starts rejecting that level and continues its journey south. This could be a great place to short and cash from market but only you know how to use fibo. Not every time you see the Fibonacci tool work out and neither you trading nor it will work like exact point but we have an idea where it can see a support and resistance and we can plan our trade.
HOW TO USE FIBONACCI RETRACEMENT TOOL There are lots of misunderstanding with Fibonacci tool and 95% of people have no idea how to use it. Most of them only think just adding extreme with Fibonacci, will give you clear support and resistance to, trade and once they trade with Fibonacci, they lose money and start saying that this tool is not working. In my previous book, The3w System, I told you about how any financial market moves. Those of you, who don’t have it, let me describe it for you but I strongly suggest you go and read that book. It will give you clear understanding for any financial instrument movements.
Always remember that if you are new to Fibonacci, always use it in impulsive move. Point A will be the starting point and point B will be the end point for your Fibonacci retracement tool. Never draw it from B to C or else the results will be devastating for you. Understand that it only uses Fibonacci in impulsive move. You will be seeing right support and resistance area for that particular financial instrument. Here are a few examples of how to use it the right and wrong way. (Down
trend) Now, in this picture, you can see I have drawn my Fibonacci in a corrective move and there is all the mixed result and we have no opportunity to short there.
This is the same picture but this time, I have drawn Fibonacci retracement in impulsive move and we have 2 short opportunities at 38.2% level. And this level has 90% success rate; if you only trade with fib levels, you can make decent money trading but you have to know how to use it the right! So there will be no margin for error. Let’s see some examples for the right and wrong way for uptrend.
Now, in this picture, we are in uptrend and we have our 2 extreme points, A and B. Once you draw Fibonacci retracement from point A to point B, you can see price is getting support at 50% level and gives us too long opportunity at point 38.2% and one at point 23.3%, what else you ask for. Now let’s see how people draw fib.
Here, you can see there is no opportunity for long there and you must be wondering what went wrong. It is very important to use Fibonacci retracement right or you will most of your trading time or caught up with losing trade. I think you know how to draw Fibonacci for fibo power system, let’s jump in to it.
FiboPower System What is the fibo power system? Well, this is one of the most advanced price action strategies I am using for my trading. This is very easy to spot and extremely powerful, with over 90/10 win loss ratio. All we need is candlestick chart 30 moving average and Fibonacci retracement. If you read my book before, my trades are based on price action and if you know how to use it right, then there no one on the earth who can stop you from making money with trading. There is something I want to tell you before we start with the system. There is 4 pillars for any strong and profitable system and if you miss any one of them then your system will be doomed for sure. 1. Direction. 2. Mindset. 3. Money management. 4. Patience. If you ask me how I am able to turn my trading around, how I am able to make MONEY just buy trading is because before I open my trading terminal every day I know I will be doomed if I forget any of this pillars.
DIREACTION There is no money in dead market. If there is no direction then it is dead so when you are looking for stock, commodity or future market look for liquid stocks where you can see if market is going north or it is going south. We don’t want to waste our time in market if there is no direction.
YOU CAN See in this picture it has no direction, if you come across this kind of chart just pass it and look for somewhere else to trade. Let this market decide where it wants to go. There are 3 types of trend 1. Uptrend 2. Downtrend 3. Sideway UptrendI don’t want to confuse you so I will give you a simple The Definition of uptrend. When market make higher highs and higher low that means it is in uptrend it will look like this here is an example for better understanding.
Now in this picture you can see market is making higher high and higher low the B and D is higher high and point A and C is higher low. It will be very easy for us to take trading decision in trending market because we know that market has decide to go up and in this point we will be looking for long only. In this way we are making probability to our side if we only look for long then we are going with the trend here and you know what trend is your friend. Always look for trade with the trend not against is those who don’t follow this simple step they lost in big time in market.
Downtrend When price is making new lower low and lower high that clearly state that we are in downtrend. Bears have control over bull and they are pushing price to low. If we look at as supply and demand concept it will be like when supply exceed demand then price will drop and when demand exceeds supply it will be an uptrend. Take this example for clear understanding about downtrend.
In this picture you can see there are lower low at point B and D and there is lower high at point C and E this chart screaming in our face that it has a healthy downtrend and you should be looking for short at this point only a blind will look for long. This is the point where you should be looking for shorts only and start cashing the market trade with the trend not against it.
Mindset Well this is second most important point to have a clear mindset. What I am saying here is once you saw you chart then you have make a decision right there that you will be looking for only short if it is a downtrend, and for long if it is in uptrend. Once you make your mind you cannot change it no matter how tempting the long trade look or how good risk and reward ratio is. On my starting age as a day trader I make this mistake and it cost me 2 of my account. I learn it hard way and I don’t want you to do same mistake I did in my trading carrier. It is like we are going to a war as a soldier now one soldier cannot fight from both side, it should be same here choose you side once you choose it stick with it. Lots of newbie what they do when they are staring in financial world. They do not have a proper mindset they want to catch every trade they can get their hands on. If they caught up with loosing trade they want to switch side fast. And you know what happed once they switch side market has start moving in the opposite direction and that how they lose money. You can say trading is the probability game, and there is no way you can lose money with it no way on the earth you can lose money. Most of you might be thinking am I going mad, “1 just lost money yesterday.� So the answer for your question is you are doing it all wrong and your basic is not right, you all wont easy money and you want to follow that fancy indicator which has lots of cool colour in it. People ask me how to trade profitably? The answer is simple Find a liquid stock/commodity/future/bond/forex pair ===Find a good healthy trend (uptrend/ downtrend) === trade with the trend===Follow your system== with proper money management. I bet if you only do this it is impossible to lose money in market. There is one more point I want to add that most of the time I trade daily and 4 hour chart, this is safe for all of us but once you got enough practice you can trade on 1 hour chart. As I trade daily and 4 hour chart I know the trend will be last for that particular pair for weeks to days, so I never flip my trade once
I am done with my order it will hit my profit target most of the time and I am also ready to take loss so if it hit stop loss it does not matter, there is more opportunity in the market so I will look for new one. Before you start trading make sure you have strong mind set for what you are going to do once you are in trade, you should not be second guessing your analysis. Every one of us is different, we all think different we all do differently the task given to us. If I am giving this fibo power system to hundreds of you and give you same pair to trade for 1 year I am sure there will be different result in each one of your account. I am sure many of you will fail to make any money. Because you do not have proper belief on this system, in other word you lack trader’s mind set. “With a proper mindset you can make money with flip of coin. Without the mindset you will lose with Holy Grail also.” So now the question is how to develop a profitable trader’s mindset? Here are some psychological issue every newbie face when they are staring there carrier in trading. Fear of stop loss-most of people when they are in trade there is only one thing going through their mind what if I got stoped out? Well the answer for this kind of people is you lack confidence in your system. Be confident and trust your analysis respect your trading decision. Get out of wining trade- too early don’t be hasty give your trade some time to make you profit your plan. This kind of people have anxiety and they fear that position will reverse on they so bye exiting trade early will give the instant gratification that they win something today. Doubling you loosing position- some traders are so stubborn they never admit that there analysis go wrong, that market is bigger than him/her so what they do they start adding to their loosing position and end up losing more. They have ego problem you have to understand that no matter how much you add to you loosing position you cannot change markets direction. Trading with money you don’t want to lose (barrowed money) - do not trade with money you cannot afford to lose if you trade with
borrowed money then there is always a fear of losing it and it will make you scare and once you are scare you cannot make right trading decision if you don’t have any extra money then save it first and then start it. Emotional rollercoaster- After previous loosing day and losing trade don’t just jump into a new trade. Take a break because in this time you are not thinking right. This is time you feel anger, fear, and greed. Putting too much attention on trading results and not enough on the process and learning the skill of trading. Focusing on the money too much. Unrealistic trading expectations. It is very dangerous situation for you, taking a break will help you and once you are able to think straight then start you’re trading. Afraid to pull the tiger- I personally face this problem in my trading carrier when I know everything as for the system. With good risk and reward ratio I was afraid to take the trade. This can be happen to you and the reason for that is No trading system in place. Not comfortable with risk and the unknown. Fear of total loss. Fear of ridicule. Need for control. Fear of another loss. No trust in your trading. Trading day in and day out- this is very common problem and every one of it did it when starting our trading carrier, I stare my trading screen for hours and hours so I don’t miss any trade. The problem here is we think we need to conquer the market. It can also be greed, trying to get even with the market for a previous loss. The excitement of trading. The solution for this is take a break for 10 minute in every 1 hour if you are day trading. Large size lots – this is a human nature that we all are greedy. So when we see a trade setup and it looks good we bet more than we supposed to do. We think the trade will be only profitable. Not fully recognizing the risk and not understanding the importance of money management. Refusing to take responsibility for managing our risk. Always go with mm rules do not break it or else you will lose. Not following trading system- when we win in a trade it is good feeling and we start thinking that we can alter the system for it become more profitable and we start bending rules of our system that is a big no from me if you that then you are doomed for sure. The system I am
giving you is proven for time to time may be u loses some profit but it will also save you from huge losses. There is some psychological reason behind not following proven system and that is you don’t believe it really works. You did not test it well. It does not match your personality. You want more excitement in your trading. You don’t trust your own ability to choose a successful system. Hoping- well if I learn one thing in my trading carrier that is never hope and never assume anything, never hope for some loosing trade will change it wining trade because they never do you will lose more money if you start hoping in trading. It is time to take responsibility for your trade, time to take loss and go home leave god out of it. Limiting profit- that is the biggest mistake people do and it their account fast they limit profit. These people have tendency to take profit fast because they don’t trust their system, and what they do once they caught up with losing trade they let it run and hope for it to become profitable and that loosing trade cast them so much money that they cannot earn from 10 winning trade. Never cut your profit fast trust your system let it hit the profit target or stop loss please don’t second guess. Anger after losing trade - we don’t want to admit it but most of the newbie they get really pissed of once they lost a trade, and they started revenge trading to make up the loss. That is the worst thing to do without. Understand it anger is nothing to do with your trade. It is better for you to bite the bullet and calm yourself maybe take a break for 30 minute. Because revenge trading will be making you lose more money there will be more opportunity latter. These are the common physiological harder you have to overcome to require profitable trader’s mindset. Believe me it is hard process to have trader’s mindset and it will take time, I cannot give you exact time but it will happen if you keep practicing, you have to work on yourself long and hard. It will usually happen when you least expect it. Once you require trader’s mind set your trading will be different you will feel different here are list of things you will feel.
You will take full responsibility of your trading decision. Starts enjoying you’re trading. You will not fill that you are a victim of the market. You will trade with the money you can afford to risk not more than that. You stop forcing market on yourself. Start feeling confident, what you do also you will fill that you have control on yourself. After traders mindset you don’t want to conquer or control the market. You will start trading with your chosen system, and you will be not influenced by the market or others. Win or lose it will not affect you. You will start learning for your mistake and every trade you took. No anger after losing trade you will start learning from you loss. You will start thinking risk and reward and before every trade you see your risk not profit. You will see profit start to come and you skill will improve significantly. You will not care about how much money you make per trade. You will calmness and there will be no anxiety when you are trading. You will focus on reality and present not the past when you have lose a trade, past will not affect you. You will not care which way market move and break out happen. You will not feel that you miss any trade. Once you acquire trader’s mindset then you are good to go to next phase.
Money Management This is the most important factor for any system to be profitable, there are 90% people lose money because of this small factor. There are many traders and newbie you will find in the market with solid system and trade plan. one of my friend from New York show me his solid trade plan his system has 85% wining rate trough out the year, but his still lost his trading capital when I ask him what went wrong then he said the system stop working. “But do you know what really happened he starts ignoring money management rule and that’s how his wining system starts to fail.” There are many traders seems to ignore money management rule or they pay very little attention to it. This is proven fact that most of newbie lose money in market not because they don’t have solid system, because they ignore the fact completely, that they can lose money on the trade they are in. It is important for you to understand you can lose on any trade you enter. Most of trader thinks that their trade has to be winner because it looks so perfect. Greed took over them and they risk more than they are comfortable. I am admitting the fact that this can work out 2 or 3 times but in long run it will back fire. When you hit that losing trade where you risk more, you will fill emotional urge to make back the money you lost. Once trader who starts risking too much for every trade he become a gambler, and like most gambler they lose money. Here the best thing you can do “Never risk more money that emotionally you can lose par trade”. If you feel like you thinking about trade all the time or you find yourself watching your trade and not able to sleep then this is clearly a signal that you have risk to much in the trade. The amount you should be risking per trade will be not more than what you can afford to lose per trade so you can forget about it once you enter the trade. Plan your trade, trade your plan There is a saying “Every battle is won before it is fought” it means that we should have proper strategy before we place our trade; you will see planning before can often make difference between success and failure. Before enter every trade we should have this 2 levels in our mind
1. Stop loss 2. Take – profit Most of the successful traders know before every trade. What is price they are willing to pay and what is price they are willing to take for specific trade. Stop loss- stop loss is price level for that we are willing to risk for certain trade if price passes that level we are out of the trade with loss that is why it is called stop loss because it is stoping you from your loss. So this small loss will not hurt your account. Take profit- it is basically a point where we out of the position with the profit or the reward for our bet on the certain stock. You can also say it like it is the reward for the risk we take. There should be no second guessing after we set. How to set stop loss and take profit like a proMost of the time trader likes to place this 2 level using technical analysis, that is good but we cannot discord the fact about fundamental analysis. Because most of the time is when there is a big news market react to it so be careful about it and if it is possible then clear you position before there is a major new and event for that particular stock or currency pair. Remember – Your 1:2 risk reward ratio. Not less that if you don’t know what is risk reward ratio then let me explain it for you. This is amount you can risk for certain reward for example if I am risking $100 per trade then my goal should be here to gain $200 form that trade. That mean at the end of the trade I will either lose$100 or I will win $200. Most of the timeI risk for 2 to 5% of my trading capital per trade. Suppose I have $10000 trading capital Than per trade I risk $200 for profit of $400 It might be hard for you to understand it right now but always remember that money management is a key to your trading success. Summary – One should always know where to exit the trade before you enter
it. By using stop loss trader can not only minimize loses but also can save your trading capital from big loses. Make your plan ahead of the time so you will already know you have “won the war�.
Patience If you really want to be profitable then have patience and trust your trading system. Don’t chase after every trade be patience understand it “proper patience is needed thought the lifecycle of the trade, at entry, while holding the exit.” Wait for proper entryYou have your trading plan ready your system is giving you a signal that there is entry for a particular stock. You are waiting for the stock to come to your entry level but instead of come to your entry level price start moving up, you panic and you enter in trade above your system entry point. It can give you satisfaction or rush to be in trade but you have broken rules of your system. If you let your emotion does the trading then you know result can be disappointing? Never do it have patience let this trade go there are more to come you just have to find new opportunity have patience and trust your system. Understand it patience is similar to fishing when we go for fishing we know that there are so many fish in pound. We also know that we cannot catch every fish. We only want to catch those fish who take bait and fill our bucket (in trading s point of view only those trade which trigger our system and give us a nice entry.) just like we cannot catch every fish from the pond understand it we can’t trade every opportunity market give us. If you ever find yourself in situation that you have lost control and entered a stock before it’s time. Then you better exit the trade right away. You can always wait for it to develop and once it fulfil our entire trading plan then enter it. Having patience for the right entry is always crucial and it is one of the characters of profitable trader. You will find yourself lured by market to enter a trade before it is fully develop. Whenever you are tempted go over you trading rules one more time always remember your discipline and you system will make you money in long run not this one trade. Have patience for target profitI have seen lots of people exit there trade before it hit the target profit, even
though they are in profit but fear of losing and lack of patience make them exit the trade before it hit the profit target, once we are in a trade and we know that our analysis show that it will hit our target but it cannot run through the target it will go up then down then go up that is how market moves but we forget it and once the trade start to fall below our original entry point we start to panic even though it did not hit our stop loss, but fear losing take control and we exit a trade with small loss, and you know what once you exit your trade price start to move up and up, and meets your profit target. Only difference now is where you can have a winning trade you end up with loosing trade why because a lack of patience. It is better to avoid this kind of situation all you can do is set a trade add stop loss and target profit for that trade and forget it for 3 days don’t even bother to look it again for 3 days, and you will see that you have won in most of the trade where you could lose it from emotional point of view. Winning and losing is part of trading so stop bothering about it once you have a proven system in place trust it and act accordingly to it and enjoy your trading life. Have patience and you will start to see positive result from your trading.
Fibo power system What is fibo power system? As you can guess that we are going to use the hidden power of Fibonacci tool and make our trading decision with it. If you have read my previous book, you will definitely know I am price action trader. I like to trade naked price action, nothing else and I like to trade a simple system. I have made this system for my newbie friends. Why I use Fibonacci and why I have a specific rules for this system is because to clarify the concept behind price action. If I would start telling you everything from the price action point of view, you will be not able to understand it and there will be always an ambiguity in your mind. This system is made for that person who’s basic in not clear because it takes years of practice to understand price action and endless screen time, and experience to finally spot it. Then you see how price moves and why it moves. But the system I am giving you will eliminate the ambiguity and you will have proper understanding of how, this system works and why it works. Why the fibo power system will make you money: Because we are using golden ratio for our entry, which is tested and proven over time. We are trading with the trend. We are using price action for our entry. We have a solid money management rules with us. I don’t want go into detail but I would like to tell you this, as I already explain how market makes it moves. it have impulsive move and corrective move, so our plan here is to ride that new impulsive move before it even starts.
As you can see in the picture, the system gives us the opportunity to enter the market just before a new impulsive move. This means we have minimum risk and maximum reward in our hand every time, and if the market proves us wrong, then we will be out with minimum loss. Because we don’t need to use huge stop loss for this trade to work, most of the time you will see that. Once you enter the trade market, start running toward your target. It takes two years to develop this strategy and it is one proven system that has more than 90% wining ratio. All you have to do is trust it and follow with proper money management rules. Components of Fibo Power System Market directionIt is very important for us to look for the stock or commodity that has proper market direction. Or you can say like it has bias toward bull and bears. Before you choose any market to trade, look at the chart if it is making clear and new higher high and higher low then we have a nice up trending market and we will be only looking for long.
Or if it is making new lower low and lower high or market is bias toward bears. So we are in downtrend and only are looking for short in that scenario.
Let’s see what a dead market looks like.
Do not waste your time in this type of dead market because you will lose money if you are planning to trade this market. Now higher high, no new lower low, this type of stock pattern means stock is in consolidation period. If it is too hard to understand, then you can use 30 moving average. If price is above this it then it is in uptrend and if price is below this, it means it is in downtrend. Let’s take an example.
As you can see on this picture, after the green vertical line, the pair has started its downtrend journey. And we will be only looking for short after this point. You can also determine uptrend with this method. Let’s see some examples.
Only look for long after that vertical green line. Hope you got my point about how to determine if a stock is in uptrend or if it is in downtrend by simple moving average. Higher time frame analysisWe should always check higher time frame. What I mean by that is if we are looking to trade on 4 hour chart, we should first check the daily chart and determine the trend there with the 30 moving average. See if price is above or below that moving average.
This is usd/cad daily chart. As you can see here, after the red vertical line, this pair started its uptrend because price close above 30 moving average and stay there. Now once we have confirmation that we have started uptrend in daily chart, we can look for trade in 4 hour chart. By determining trade on daily time frame and trading in that direction on 4 hour, you make sure that you trade in the direction of overall trend. This thing will increase your chances of profitable trades. It is very important to trade with the trend, not against it, if you really want to make money in the long run. Now let’s move on to 4 hour time and see if there any potential trade setups for this trend.
Once you determine the trade on daily chart, there is no need for you to have 30 moving average in 4h chart so don’t worry about it anymore. In this picture, you can see we have our first long entry at 38.2% level, as we already know that we are trading with the trend as daily chart we see we have a clear and healthy uptrend.
Now it is the same pair that gives us the second opportunity to enter the market. We get a nice pin bar set up at 23.6% level and it just explodes after that. As I said with the “fibo power system”. We can just catch the whole move before it even started. With risk 50 pips, you can make 1,000 pips with one trade.Only that is a true potential of fibo power system. I am not kidding, guys, there are 10 to 20 setups you can find per month and it will make you more money than you can ever imagine in day trading. DOWNTREND Let’s see some examples of multiple time frames in downtrend.
This is same daily chart for usd/cad. After green vertical line, we are in downtrend so we should be only looking short after this. Let’s move on to 4 hour time frame.
In this picture, you can see we got a nice evening star in 61.8% level.We also have a small pin bar, which confirms our trade for short. And just look, after we enter the market, this pair started a new impulsive move. For the risk of 60 pips, we can make at least 224 pips right in this trade alone. Let’s see if we can find more short trades with this pair.
In the second impulsive move, we got 3short trade setups. At point (A), we have 61.8% Fibonacci level and evening star pattern, a perfect time for short. With the risk of 60 pips, another 200 pips trade. (B) One more evening star pattern at 50% Fibonacci level, another short trade set up for the risk of 50 pips another 150 pips reward. (C) Bearish engulfing pattern at 50% levels for the risk of 50 pips, another 150 pip trade setup. It is very important for you to see overall trend before looking for any trade setup. Always check higher time frame and see where the market is going. Once we have direction of the market, you know what to do.
How to Use Fibonacci for FiboPower System How to use Fibonacci the right wayI have no idea how you guys use Fibonacci for your trading but I am going to teach you how you can use it for “the fibo power system� and you will see how perfectly it will work for you guys to find new trading opportunities. This is the backbone of this trading system. If you do this wrong, then you will not able to see any results. So pay a great deal of attention to this part. Using Fibonacci is very tricky for the fibo power system. As I told you before, we should always use Fibonacci retracement to impulsive move, not corrective move.
In this picture, you can see the black trend line shows impulsive move and the red trend line shows corrective move. Here, let me show you how to use Fibonacci retracement here.
Let’s see some example in downtrend, too.
Here is one more.
What we trying here is to enter the market when there is a corrective move. And we will take advantage of the next impulsive move, this way, we risk very little for huge profit.
Price Action to Look For Well, we cannot just trade every price action with this “fibo power system”. We should use some of the best price action setup: 1. Bullish pin bar 2. Bearish pin bar 3. Outside bar 4. Inside bar 5. Morning star 6. Evening star Pin bar – this is one of my favourite price action setups and easy to spot. This is one candle setup and you can see it from miles away in the chart. The pin bar trade setup is the most effective price action trade setup there is. It is an extremely powerful setup when used correctly. Many traders only trade off of a pin bar formation and they are very successful traders. There two types of pin bar you can trade with this system: Bullish pin bar- when there is one small body on the top and long tail on the bottom that is bullish pin bar. We should be looking for long once this price action appears.
If you want to learn more about psychology in this price action, then you should check out my book, Modern Day Price Action. Let’s see some examples.
You can see in this first setup, we got a bullish pin bar and after that, price just rushed higher and higher. That is perfect for bullish pin bar set up.
Here, you can see a nice pin bar at 23.6% level. This is a great opportunity to take a long in this pair. Bearish pin bar – This is the same as bullish pin bar but it has small body in bottom and a long shadow on the top. It does not matter that in real body is green or red. As long as in is in bottom with big shadow on the top, you are good to go.
Let’s see some examples for bearish pin bar.
In this picture, you can see there are two short opportunities and both of them form bearish pin bar. One opportunity comes at 38.2% level and one at 50% level and price just drops so fast after our second entry.
We got a nice bearish pin bar at 38.6% level, which gives us clear short entry and price makes impulsive down move. Outside bar –
This pattern forms when a small candle is followed by big candle, which completely engulfs the small candle. It is a strong reversal pattern and one should always take this to consideration when trading. Let’s see an example.
Let’s see an example in downtrend also.
Let’s zoom in and see what is really happening there.
Inside bar – An inside bar is 2 candle pattern. The first candle is mother candle and second is baby candle. The mother candle completely contains the baby candle, which means the low and high of baby candle cannot break the mother candle.
Let’s see an example.
Let’s zoom in.
This inside bar occurs right in the 23.6% fib, good trade for short. And it turned out to be a great trade with massive profit potential. Morning starThis is three candle patterns, where the first candle will bearish candle and it will look something like this:
You can easily spot them in your chart. This is a reversal pattern and most of the time, you will see it in swing low or the end of a corrective move. Example:
In this picture, you can see there are 2 morning star patterns, one at 38.2% level and another one at 0.0% level. Evening starIt is also 3 candle pattern and easy to spot. Most of the time, it appears in uptrend if I get into more details it will be something like this it appears just before new impulsive move. One point to note here is the first candle is always a bullish candle.
Let’s see a real life example.
As you can see in this picture, we got two evening star patterns, one at 50% fibo level and another one at 38.2% level and after that, price hit rock bottom.
We got two evening star patterns, one at 61.8% level and one at 38.2% level and after both patterns, price makes an impulsive move. These patterns are low risk, high profit trades. You just need to practice and able to see where this kind of pattern can occur. I think I have given you more than enough patterns to look for. Know there will be more than 100 setups per month. Just practice, guys, and you will see profit start coming in. These 6 patterns are way more powerful and if you master only one, it can make you more money than you can imagine. Now you know where to look for this pattern and when to trade. Let’s move on to entry and exit.
Entry & Exit These two are a very crucial part for any trading system, it is make or break for any trading system. Now you will be wondering where to enter with fibo power system. Where to exit? It is very simple; let me show you some real life examples.
Evening starEntry will be same for evening star as well as morning star break of third candle. A low will trigger our short entry for evening star pattern as it is shown in the picture. As for the stop loss, I like to put 10 pip above on this high of evening star. Morning starThis will be the same as evening star. Wait for the third candle to finish and once the high of the third candle will take out, we enter our long. As for the stop loss, I like to put it in 10 pips below to morning star pattern.
In this picture, you can see once the evening star forms, the high of the third candle will not take out right away. Price has no strength and it makes an inside bar and after that, we got a huge green candle and we enter with long entry for new swing. Bearish pin bar – The entry is simple for bearish pin bar. Once the low of the bearish pin bar taken, we can incite our short for the down move. For stop loss, we can just place 10 pips above high of the bearish pin bar. If you see in this picture, you can see we got a nice 63.8% and once the low is taken, we got impulsive down move straight to the target. That is why I love to trade pin bar with the fibo power system.
Bullish pin barIt is same as a bearish pin bar. Once the high is taken, we incite our long entry for new impulsive move. It is very easy to do. Let’s see some real life examples for entry.
As you can see in this picture, we got two bullish pin bars, one at 61.8% level and other one at38.2%. The point to note here is no matter what, price always gives you right opportunity to enter the market, and you just have to wait. Stop loss will be 10 pips below the low on that bullish pin bar.
Money Management Take Profit Well, my money management and take profit rules are pretty simple and I don’t play around. In any trade, I risk 2% of my capitol, so, for example, if I have $10,000 in my account,I will risk 2% of it,$200 per trade. Let’s look at real life example.
As you can see, our risk is 40 pips. So we will divide 200/40 =5 We will be buying 5 mini lot for this trade, where 1pip =$1 Now once we are in trade, my first target is 40 pips from my entry point.I will exit half of my position here.
Once my first target hits, I will move my stop loss to my entry so if this trade backfires, I will still have some money with me.
For my second target, I like to aim for 5 times this trade. I will aim for 200 pips at least. In this way, I make: Once the first target hit: 2.5 X 40 = $100 With my second profit target, I made about 2.5 X 200 = $500 Overall, I made $600 for the risk of $200. That is good risk reward ratio, almost 1:3. Also, if the trade will backfire, we are still able to make at least $100 with this trade. That is the beauty of this system. This is profit of only one trade. You will have at least 100 trades with the system every month! Just follow the system and see how fast your account grows. Never underestimate money management rules. Never risk more than 2% in the beginning of your Forex career. Yes, once you are confident enough on the system and able to spot it right, then you can increase your risk by 4% but not more than that, guys. Also, you can go straight to 1:2 risk reward ratio and exit the trade at 80 pips profit; it is all up to you. I told you the strategy I used to exit my trade because we are in impulsive move and these moves are huge so it is better to bank big money when we know already that this trade has long way to go.
Back Testing Last time, on some of my books, I got reviews that I have no back tasting for my system, which I think is impossible to have because this is no indicator based system, sir. This is price action, you have to do it manually. So Idecidedto back test it to show you the results for a period of time. I am going to do this back testing in aud/usd and show you results and trade. I have done a back testing for last 4 months so you can see how powerful this system is.
Let’s move on to 4h chart and let’s see how many trade setups we have.
Let’s dig in.
Trade Setup #1 We got our first trade with at 50% fib level,an evening star, which turned out be a good trade with huge profit potential.
Trade Setup #2 In another swing low, we got a nice pin bar at 23.6% fibo level, which also turned out to be winner.
Trade Setup #3 As we progress through over impulsive move, we got an inside bar at 38.2% level so we short again with this trade. This one is also a winner.
Trade Setup #4 We got a nice pin bar at 23.6% level but price has other plans in mind so this trade turned out to be looser. This kind of stuff happens in the trade. Just remember, you cut your loss as soon as you can look for another opportunity in the market. Trade Setup #5 After one day, we got a nice pin bar at 38.2% level, which turned out to be a great trade for us, a complete winner.
As you can see, there is one more inside bar trade but you should not be taking that trade.Why?Because:
In daily chart, price crossed the 30 moving average so we cannot short at that movement because it is against our system. We should wait for price to come back again under 30 moving average in daily time frame to start looking for trade in 4h chart.
Trade Setup #6
Once price is below the 30 moving average in daily, we got a pin bat at 38.2% level in 4h chart as per our system and we love to trade it. This turned out to be a winner as well.
Trade Setup #7 As you can see in the picture, we got an inside at 38.2% level, which did quite well and you could have made some money with that trade. Trade Setup #8 Again, price come to that level one more time, this time, forming a pin bar but not able to break through the 30 moving average and hit our stop loss. This trade becomes a loser.
Trade Setup #9 We got a nice pin bar at 23.6% level, which turned out to be such a great trade and a big winner for us.
We got one more pin bar at 61.8% level, which, of course, is a winner at the end of the day.
Now in daily chart, price crossed above the 30 moving average so we should be only looking to be long from now on. Let’s take a look in 4h chart and see if there is any trade for us.
Trade Setup#10 We got one inside bar at 50% fibo level for our long opportunity, which turned out to be a winner later. Trade Setup#11 There is a one pin bar at 38.2 % level price, just missed our stop loss with 3 pip and started moving up. This also turned out to be a winner.
Trade Setup #12 In our next swing up, we got an inside bar at 68.1% level but it got stopped out because of a news but as you can see, price respected that level and started to move up. Trade Setup #13 We got a pin bar setup at 23.6% level and that turned out to be a winner. Summary So we got a total of 13 trades with this system and 10 of them became big winners and 3 of them became small losers. You can bank over 40% of your trading capital with this system just with one pair. If you master it, then you just double or triple your account in 2 months without any hassle. Just follow this simple system and earn big.
MY ADVICE TO YOU Financial world is a jungle and we are like sheep that are just following others’ system, indicator, and E.A. But you know what? We all have one thing in common; we all want to be rich. If someone claims they have system and they are making millions in their trading account, without even thinking, we are just ready to buy what they offer, no matter if it is there classes or magic indicator. Before you buy anything from the market, just think, if you have ATM machine in your home and you can credit as much money as you want, would you like to share that ATM machine with someone else? If you ask me, I will not do that for sure, so think, if someone make e.a. that makes money or an indicator, then why would they like to share it if they can trade that and make million and billions? I am not giving you an ATM machine in this book; I am just giving you the knowledge of price action theory. This is no new stuff; this price action was present in your chart way before you put your first indicator and started losing money. You watch this kind of price action every day if you are a trader, but people are so caught up with their indicators that they just forgot about the core of trading and value of price action. It is not a magic book that will turn you in to trader who makes smart money in the market. Being a trader is a journey that you can only gain through experience. When you become a trader, you will have your dream life. You can make all the money you want, have all the free time and wealth, but being a “TRADER is all about the journey, not the destination.” and this journey is tough and rough. You will break so many times, you will wonder why you ever choose to be a trader but if you ask me, it is worth every second you spend on it, every minute you put on the screen to figure it out, because it can change your life forever. I can only show you the way. I can light your path, I can tell you where to put effort, but you need to put effort, you need to spend time, you need to gain experience, to get what you deserve in your life. My books will show you where you should look to make this journey worthwhile. Thanks for your time and let’s start your journey as a trader.
Thanks for your time and the trust you put on me by buying this book. If you think this book is really helpful, then why not review it because it will not only make me happy but it will also help others on their trading journey. If I have any grammar mistakes or spelling mistakes, I ask for forgiveness because English is not my first language. I hope you guys don’t mind it until you get the message from this book. If you have any doubt and any question regarding price action or this book, join me on my Face book fan page. I will be more than happy to help you all.
My fan page = sumit das 3w system. Modern price action. I hope you have learned something today from this book. Some of you may agree with me, and some may disagree and think it is waste of time and money. I don’t know what you think about this system but if you think this system has potential to change your trading style and make you profitable, then let others also know. If you just review it, then others will also know about it. Why don’t you help me as I helped you and help others, too, by reviewing it. You can review it here – Thanks for your time and I wish you a very happy, profitable, and successful Forex trading life.
If you guys are looking for a solid system that can make you continuous stream of income in Forex, then I suggest you to go for my 3w system, which helped me make my dream come true. This system is based on price action so don’t worry, it has easy entry and exit rule and a simple strategy. Just read the book for better understanding of price action, you will not regret it. Here is the link 3w system.
Link This book answers this entire question.
This book will tell you when to take trade based on price action. How price action will change your trading. Difference between old and new price action trading Price action misconception. When to not take trade with price action. Why it is better to trade with price action. How just a simple price action can tell you future trade setup? Untold truths about price action lots of trader hide it because take years of practice to spot them.
With this book you will get a core of it because this book will tell you straight to the point concept. How to use price action to spot supply & demand zone. Top 6 higher probability trade setup. Psychology behind every pin bar? Why it is dangerous to trade long tail pin bar. How to use pin bar in impulsive move. How to use it in corrective move. How to filter setup for higher probability. How to get 90% target hit strategy. Concept behind price action trading. Key point to learn price action. Why novices lose money? Taking profit cutting loss.