10.3/10.

2A JANUARY 2013
It used to be I loved writing these booklets. Now I get tired of writing booklets and I am hoping this will be my last major booklet to write. I have written about every kind of trading there is and in a sense they are all combined now into one final system. I will call it 10.3 Simple original huh? Actually I am going to explain probably the simplest and easiest to understand trading system I have seen. If you will just trade these basic trades, you will find they will work in just about any market condition. You will see other traders add to it and make suggestions, which are OK, but this was designed with simplicity and ease of understanding in mind. It is also designed to be combined with a traders knowledge of FOREX so the trader can add what he knows to the system and make it fit his style and personality. However, if you are a novice trader you should find in this simple system everything you need to begin trading and being successful. 10.3 is an outgrowth of the whole 10.0 series. Each series adding to the knowledge of the previous system, however, we have now added a scalping or quick profit system to the rest. From 10.3 your trade can grow into a longer term trade by following other indicators or fundamentals. If you do not wish to do that, 10.3 should give you enough sound trades to keep you busy every day, but the option is there to take the trade and extend it out into a longer term trade. So flexibility is its greatest hallmark. Do not let this flexibility confuse you. If there is one thing I have learned about trading Forex it is this. There are always other trades out there if you look for them. So what if you took a profit trade of 20 and it could have been 40, or 40 and it could have been 100. The key is raking in on a regular basis profitable trades. Day after day, week after week, month after month, keep those accounts growing on a regular steady pace. So how did 10.3 get into service? Well, boredom was one reason. I had been trading 10.2 and 10.2a successfully for several months but the markets really went dead and for about 6 weeks trades seemed few and far in-between. Sitting and looking at my screen and not seeing trades session after session and day after day set my mind into thinking of, why havent I come up with

something I can trade every day, no matter how dead the market was. I was looking at daily candles and there still was 40-80 pip moves going on out there during a day. Couldnt I get something from those? The second reason was for over the last couple of years I had been playing with trading daily candles. I was trying to come up with something where I could determine which way price would go after the open of the candle. I had tried everything I knew to try to guess which way price would go after the open of the daily. Try as I might I just couldnt find anything that worked consistently day after day after day. This has always been on the back of my mind as I read and looked at everything I could find. As 10.0 developed into 10.1 and 10.1 developed into 10.2 then a variation of 10.2 popped up into my mind which I called 10.2A. Very simply it played with the weekly and monthly pivots to determine trends. Simply put if the weekly pivot was greater than the monthly pivot the market was trending up and if the weekly pivot was trending below the monthly pivot the market was trending down. If price was between the two the market was ranging. Very simple and easy to understand. When the markets trended it was an easy read and easy to trade successfully. Then came the dead time of Oct. 2012 which dragged on into November and I would go days without a real good trade. What to do when the markets just ranged and ranged and ranged? So if weekly is less than monthly works, how about if the daily is less/greater than both what then? Picture below shows great 10.2a buy trade in light color but no trade area in pink. Long wait before a trade set up again. Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

So from my very early days I remembered being trained on the daily pivot line. Peter Bains course Trading like the Big Dogs was a good book on trading daily pivot lines. I never got good at it but decided to look again. It looked like this.

Now I was ready to add something I had been looking at on and off for years. The daily candle open (white) and it looked something like this.

I saw I could simplify it even more and go to a 1H chart. I dropped the monthly and weekly pivot lines and went to this very simple formula: If the daily open is greater than the daily pivot or white is above the green BUY; if the daily open is less than the daily pivot SELL or white line below green. It looked something like this.

Two lines on the screen and I had a simple and easy to follow trading system. Almost every day on almost every currency pair there would be a successful trading setup. An occasional loser and some days you would miss the trade. Other pairs would look like this.

Here is the eur/usd for an 11 day trading period. Most of the time price is ranging and as you can see fewer successful trades. However, it is still profitable. There would be 11 trades with 5 winners and 6 no trade or loser days. However, the winners were bigger than the losers. That is the basic system on the 1H and 30M chart. Just this alone will produce more winners than losers and will give you trades almost every single day on every single currency. This allows even the most novice trader to trade Forex in a simple noncomplex way.

Here is a lousy week, this was the last week of 2012 for the aud/cad basically a flat week where price only moved 100 pips from high to low. Profitable trades were a minimum with one losing trade. Two days were no trade days. Some weeks will not produce good trades, just the way Forex is at times.

So if you did nothing else but trade the green line and white line the system would be profitable.

IS THAT ALL?
Well not quite, there is a bit more but I promise not to confuse you. Now for some extra additions if you want to use them. I like to keep my charts simple and clean. This way a trader can add whatever he/she wants to the system and keep familiar indicators they like to use. I am going to add one more indicator to the system to help you determine where to take a profit. It is Baludas DWMP ver. 6. This is what it does. First it plots the daily pivots on the screen for you so you have a profit target. You can see the green dotted to the right of the screen. Since this was the last week of the year you can see prices were quite flat. Your profit goal would have been 50+ pips but it would not have been reached that day. It did move up over 20+ at the beginning of the day however. Each line has the number of pips from price to the dotted lines so you can set your profit target.

The second thing this indicator does is to give you a quick buy/sell read on both the 10.3 and 10.2a trading systems. Look at the lower right hand corner at bars colored there. The top bar is the 10.2a reads the bottom bar is the 10.3 reads. One look and you will know if there is a trade set up or not. First the lower bar and the 10.3 reads. On the chart below you will see the bottom bar is green and has a white arrow showing it is a buy scenario. What this means is the white daily open is greater than the daily pivot but price is below the daily open at this time. So it shows green as a possible buy set up. You will see price had gone up about 20 pips earlier during the day. 10.2a also is green meaning the weekly pivot is above the monthly pivot and daily pivot is above both showing that the higher charts are showing an uptrend. You can see 10.2a trade on the 4H chart but that is for later.

In the pic below you will spot an aud/jpy 1H chart. 10.2a read is green meaning uptrend and 10.3 is showing sell meaning a sell trade. When

arrows are pointing in opposite directions it probably means your trade will not be as big. Smaller profit goal. Price moved 20+ pips down and then went back up again. So the 10.3 trade was a valid signal but short term.

Aud/chf shows both red colors and should be a strong sell trade, but being the last day of the year it was a dead day but I wanted to show you the colors. Price still moved down 15 pips. (If you are wondering about the whiplash we have a cool EA to help with that problem)

In this pic you see the 10.3 read is grey. This means price has already crossed the pivot in the right direction and you missed the trade. This one went about 40 pips.

In this pic you see 10.2a is gold color. That means price is between the monthly and weekly pivots and price is ranging for now. The 10.3 bar is grey showing you missed the 10.3 buy trade.

So as a reminder 10.2a Gold mea ns price is ranging and 10.3 gray means you missed the trade. The red colors on either one means sell and green colors mean buy. If both are green then you can look at a strong buy and both red means strong sell since 10.3 and 10.2a agree on direction. If one is green and one is red then the 10.3 trade is most likely short lived. Price is either retracing or changing direction.

10.2A

Now if you go to the 4H chart we have our 10.2A trades. You can trade from the 4H chart or the daily chart but these are for your longer term traders. You entered but you wish to stay in longer. The weekly pivot is gold and the daily pivot is green and is the same green line as in 10.3. When daily pivot (green) is greater than weekly pivot (gold) you have an uptrend on the 4H chart. The 10.2a will show a green background on all charts. When daily pivot (green) is less than weekly pivot (gold) you have a downtrend. It will show a red color background on all charts. If daily pivot (green) is greater than weekly pivot (gold) but the bid is less than both it will show gold and price is considered in a range or change of trend direction. If daily pivot (green) is less than weekly pivot (gold) but the bid is greater than both it will show gold and price is considered in a range or change of trend direction. 10.2a will show weekly support and resistance lines instead of daily support and resistance lines like 10.3 does.

I know I made a big deal how I was going to use the normal TMA but for this 4H chart I am going to use TMA true . The reason is you will see why on the chart. As soon as that puppy is no longer red or green you are out of the trade. Second reason is as long as that thing is red you are going to add to your positions until it does change colors. In other words with 10.2a we will try to do multiple entrances and add to winning positions. Before we do though let me review 10.3

REVIEW 10.3 Main Points

10.3 can use any chart 1H or lower. Makes no difference whether you use 1H 5M 15M 30M etc. the daily pivot, daily open, and bar colors will be the same for all those charts. 10.3 will use two lines only for indicators, daily open (white) and daily pivot (green). White above green you look for a buy, white below green you look for sell. You can trade these alone with tight money management and be successful. You are looking for daily scalp trades from 15 to 50 pips. Support and resistance lines are your profit targets. Green background means a buy set up. Red background means a sell set up. Grey background means you missed the trade. Both backgrounds 10.2a and 10.3 are red strong sell Both backgrounds 10.2a and 10.3 are green strong buy (Consider piggy backing your trades when both colors are green or red. You will have to go to 4H chart to confirm.) Money management and stop losses, etc. are later. If you only trade 10.3 you can have a successful trading career but if you have the skill and patience you can add another dimension to your trading arsenal.

10.2A ADDING TO A WINNING POSITION

The ultimate in trading is the ability to add to a position and increase your profits not by lot sizes but multiplying your positions. What this means is if you take a loss it is done with smaller positions but in a strong trend you multiply the size of your positions and make your winners bigger than your losers. As price moves in a trend you want to keep adding a position to the winning position and with this you may be able to do it every day. Lets take a look at the eur/aud with 10.2a and see how it could work. 10.2A eur/aud 4H chart (December 12 to December 28 2012)

1. Price crosses weekly pivot (gold line) 2. TMA turns green and crosses 4 line on TMA 3. Price stalls but green stays above 8 line 4. Price stays outside the daily pivot 5. Price breaks inside green daily pivot 6. TMA breaks inside 4 line Time to get out of all trades. What you want to see on the 4H chart is the following TMA above +4 green on buys -4 red on sells Price has moved above the weekly pivot and daily pivot It stays above the daily (green pivot)

10.3 1H chart/30M chart (December 12 to December 28 2012) 1. This is the same start position on the 4H chart. We have a green 10.2a and a green 10.3. 2. (Pink) Every day we can enter a buy. 4H TMA is telling us it is above +4 and by #2 it is above +8 showing a strong trend after 3 days. By now we

can have 2 or 3 entrances going. Pocketing half every day and letting the rest run. 3. (Pink) We are above +8 on the 4H TMA and showing strong moves but price ranges for 3 days. 4. 10.3 is showing sell trades but with 4H TMA above +8 we can ignore the signal even though one day would make a small 10.3 profit trade.\ 4-5. Price continues to give 10.3 buy signals and price stays out side of weekly pivot. 5. Price finally breaks into a no trade day for 10.3 and TMA on 4H chart goes below +4. Time to close all positions. Depending on how you trade, open and close trades you could have as many as 4-8 trades going during this run. 6. Obviously this will take practice and skill to learn but I believe it is viable.

7. EACH REENTRY NEEDS A NEW MAGIC NUMBER YOU CANNOT HAVE TWO TRADES ON THE SAME CHART WITH A MAGIC NUMBER 8. OR SET MPTM AND JUMP EAs MAGIC NUMBER TO 0 SO THEY HANDLE ALL TRADES NO MATTER WHAT MAGIC NUMBER IS AND THEN ONLY CHANGE EA MAGIC NUMBER EACH TIME 9. MANUAL OR PENDING TRADES HAVE NO MAGIC NUMER SO MPTM AND JUMP EAs SET TO ZERO WILL MANAGE EACH TRADE.
10.2a reads with 10.3 entrances using 10.2 TMA reads from the 4H chart.

Stop losses and money management.

I will try my best to keep this short and easy to understand. I will have several tools for you to use. Steve Hopwoods famous MPTM. After a trade is entered it will automatically set a TP and SL. You can adjust the settings but I have mine set at -18 SL and +100 take profit. Steve also made a jump EA which I will have two kinds set. Both will jump 10 pips for every 5 pips of profit. So at +5 it moves the SL to -8 and at +10 it will move SL to +2. So every trade that moves at least 10 pips of profit will be a profitable trade. After a trade makes it to +2 the two different jump EAs will diverge into different trade management. One will move the SL up +1 for every 5 pips of movement. This is for trades you think will have bigger moves and you want to give the trade room. You also want to make some pips if it doesnt. The other one will tighten the SL every 5 pips by moving it 6 pips. This is for trades you dont expect to move much more than 20-40 pips. Its movement will look like this. At +15 SL will be +8 +20 SL will be +14 +25 SL will be +20 +30 SL will be +26 +35 SL will be +32 +40 SL will be +38 +45 SL will be +44 and will get hit for sure by this point.

This formula was designed to prevent whiplash and to make your profitable trades stay profitable even if your pip total is small. One of my fundamentals of trading is never let a winner turn into a loser. That is very discouraging to have 10-20 pip profit turn into a 20 pip loss. So that is the why behind the jump EA. Yes you will get some bigger moves knocked out early but your losses will be much less. If you dont like manually controlling your trades these EAs will help manage your trades. Once an entrance EA enters the trade the MPTM will place SL and TP on your brokers server. The Jump EAs however are controlled by your computer so if you lose internet connection they will not work but the SL and TP were added at the time the trade was taken so you should be protected. Make sure everything works by using them on a demo first before going live. Added to this list are entrance EAs. Open buy and open sell EAs. You place these on the screen and they will enter when price crosses the Daily open line. Enters when price crosses white line. 5MA shift 1 LWMA OPEN Buy or Sell EAs. Enter off of the 5MA average line on any TF. Slate Gray line on the screen. 10MA no shift SIMPLE OPEN buy or sell EA. Enters when price crosses the 10 MA on any TF. Dark Gray line on the screen.

Review of Entrance and MM EAs

All EAs are set to a Magic Number 103 so they will not interfere with your other trades. If you use pending orders the EAs will not work unless you set the Magic number to 0. Then they will work on all your trades included pending orders when they enter. All EAs will work on any TF frame so be careful with switching screens. They do have a safety feature and will ask if you want them on or off every time you change Time Frames. If you answer yes they will be live, if no they will not work. All entrance EAs only work on the currency chart you place them on. All MPTM and JUMP EAs will work on all trades with the magic number of 103 but they only need to be placed on one chart. I do not trade the eur/chf or eur/dkk so I use those charts to put Jump and MPTM EAs.

If you want to use different jump EAs for different pairs you need to change the magic number on the EA and Jump EA. For example if you put the open BUY EA on the gbp/chf and set the magic number at 104 you will also need a MPTM set at magic number 104 and the jump EA set at 104 and then they will monitor that trade and not monitor the ones set at magic number 103. Make sure you have the expert advisor button on your MT4 for the EA to work. Drag the buy or sell EA onto the screen you want to use and click yes when the EA asks for confirmation. You will see a happy face in the upper right and corner and you are live.

Some trading advice.

After trading 10.3 for several months I have learned some things. To get the fewest amount of SL hits I found setting my trades just before market opens seem to work best. For example before the JPY open is the best time to trade Asian pairs. Those are NZD, AUD, JPY crosses. If after 2-3 hours into a session you dont have a trade then kill them and wait for the next session. At the Euro session is a good time for GBP, EUR, and CHF cross pairs. I like to place my EAs about an hour before the Euro Open and check on them about 4 hours into the session. The USA session is good for any pairs since the first 4 hours the USA and EURO sessions are both open and there usually is a lot of activity. Generally the USD/CAD is only active during the USA session and have found it a waste of time to trade at other times. At the end of the USA session is when the AUD and NZD markets open and those crosses will have some movement then. Generally I trade the Euro and USA sessions and set up my trades about a half hour before they open. I also found out that the best moves of the week happen Wednesday through Friday with Monday and Tuesday setting the trend for the week. Most of my SL hits are early in the week. My trading is very simple now. I look for green or red bars and set up my trades. The rest I will leave until the next trading session. Usually there will be several trades every session. Follow the % to 1% trade rule on every trade and you will always have a tomorrow. What does that mean? If you have 1000 dollars in an account 1% of that is 10 dollars. If my SL is a max of 20 pips and my lot size is 50 cents then the most I can lose on one trade is around 10 bucks. If I trade twenty five cents a lot then at -18 pips I can only lose 5 dollars a trade. It would take 20 losing trades in a row to lose about 100 dollars. I dont think I have ever had 20 losing trades in a row. My average for years has been over 70% win ratio. With the jump EAs I cut my max loss in half after +5 pips and eliminate it at +10. That makes for a nice steady increase in my account over time. Every week I have traded 10.3 my winners have been bigger than my losers and I have had more winners than losers. So I am looking forward to a successful trading year.
Happy trading,

Nanningbob
Jan. 1, 2013

Addendum
There are many additions to 10.2 10.3 trading systems. Some of these you may find helpful. You can find them at: http://www.stevehopwoodforex.com/phpBB3/viewforum.php?f=45 If you want to know more about pivot points and how they are used by traders all over the world go to: http://www.babypips.com/school/forex-pivotpoints.html for a 7 lesson treatment on the subject or order Peter Bains course Trading like the Big Dogs. You can also put pivot points in a search engine and read how they are used by traders.