Forex Momentum Strategy

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No representation is being made that any account will or is likely to achieve profits or losses similar tothose shown. In fact, there are frequently sharp differences between hypothetical performance results

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WelcomeHello and thank you for purchasingMomentum Power Strategy.

Here's just a quick hello, and then Im getting straight to the strategy.

So lets get to it


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A Few Notes

A few little things I want to mention before we start going through theactual strategy

Its Not a Set-And-Forget Strategy

This strategy is not automated and it doesnt tell you exactly when to

buy or sell. It's requires you to use discretion in trading.

However, as you will see, the amount of decision-making required fromyou is very limited. Our rules for trading are easy to follow and fairly

strict.

Money Management

If youve got a profitable trading strategy, then as long as youre notirresponsible with your risk, money management is very simple.

In fact, money management is very simple...it just requires a littlecommon sense and doing what successful traders do.

What do successful traders risk per trade? Its pretty much in the one to

three percent area. Risk that amount of your capital per trade and youwont have any sleepless nights.

Give It Time

Im hoping that, because youve been intelligent enough to buy this Forex

strategy (and not the other questionable ones that promise you riches

overnight with only the click of a button) you are also going to be

intelligent enough to give it a chance by trading with it in real time and

with real money.

I urge you: once youve finished going through this eBook, open your

charting package and look back through your charts with this strategy.


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Only then will you realize that I have not cherry-picked the trade

examples in this eBook; the trades that I go through happen every few

daysbut some trades are better than others.


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System Briefing

What Do We Trade?

You can trade all the pairs you want.

It is possible to trade other instruments such as futures and stock, but

there are some tweaks that would have to be made to the strategy, so we

shall not cover these herewe will stick to Forex only.

When to Trade

You can trade with this strategy 24 hours/5 days a week.

When to NOT Trade

We are not recommending to trade during major announcements or news

stories, such as those that might affect markets across the globe. We waita few minutes after the announcement, and if the market is going the

same direction we planned earlier, we will then enter the trade.

You can check the announcements at this site:http://forexfectory.com

Which Timeframes Do We Trade?

We strongly recommend sticking to the daily or four-hour time framesonly. Although you can trade in any time frame, such as is used forscalping, but we still use it only in daily or four-hour time frames, as that

works best.
http://forexfectory.com/http://forexfectory.com/http://forexfectory.com/http://forexfectory.com/


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Which Broker to Trade With

No matter which strategy you are planning to use, you should trade with

the best broker you can find.

And by "best broker" I mean: low spreads no fees, no dealing desk, good

customer service, etc


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Tools You Need

What Tools Do I Need To Trade?

Momentum Power Strategy only requires a basic charting package.

We use Momentum (7) for daily and 4H timeframes and Momentum (5)

for 15M and 30M timeframes.

How The Chart Should Look?

Set up your chart so that it is nice and clear like this

(You can use the template provided)


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Strategies

The Strategy

Simple: look for technical divergences, where the price goes onedirection and the technical indicators go the opposite direction.

Most of the time you can see a technical divergence before the trend is

about to change direction.

Trade

OK How do we trade?

We are looking for momentum divergence on price action.

When we find Higher High & Higher Higher High on the chart and at thesame time we see a Higher High & Lower Higher High on the

momentum, it means we should be prepared to go short.

When we find Lower Low & Lower Lower Low on the chart and at the

same time we see a Lower Low & Higher Lower Low on the momentum,

it means we should be prepared to go long.


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Example #1


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Example #2


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When to Enter the Trade

After we find a divergence between the price and the momentum

indicator, we enter the trade when the momentum breaks his

lowest/highest point in the divergence range.

Example #1


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Example #2


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Money Management

Where to Set the SLIf we go long, we set the SL 5 pips below the previous lowest low.

If we go short, we set the SL 5 pips above the previous highest high.

What about Trailing Stop?

If we are in long, once the current bar close above the previous candle's

high and a new bar has opened, we will move the SL 10 pips below thesecond last bar low.

If we are in short, once the current bar close below the previous candle's

low and a new bar has opened, we will move the SL 10 pips above the

second last bar high.

Profit Profit Profit...

I'm using Fibonacci to set 2-3 profit targets.

I will show you how I do that at the example below.


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Example #1


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Now let see how we set the TP:

We draw Fibo line from lower low to the higher high (see red dotted

arrows) and we will get 3 targets at 161.8, 261.8 and 423.6


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Example #2


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Example #3


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Increasing Winning Rate

Find Support and Resistant Levels

Before you enter a trade you should check if the divergence is near a

support or resistant levels, if it is, then you should enter the trade.

As you can see, we found divergence and we draw a line need the lowestlow, now we will take a look at the weekly and monthly chart and find

out if that line is a support or resistant level.

And as you can see, that line is a support and resistant level, so it's a good

trade for us.


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Where to Set the SL (Different Approach)Here you will see a different approach to set the SL.

At the previous section you've been told to set the SL 5 pips below theprevious lowest low if you're long and 5 pips above the previous highest

high if you're short.

Now you're going to set the SL based on the Momentum indicator so you

will set the SL below/above the Momentum lines.

At the example above you can see that we set the SL on the last

Momentum's higher low, so if the Momentum breaks the purple line, we

exit the trade with a loss.

This approach can cause a bigger loss but in most cases it will keep you

out of losses from movements after announcements when the market's

volatility is big.

We can't really recommend on that approach because it's depends on your

trading style but give it a try and you'll see it works very well.


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Adding Confirmation

Another way to increase your winning rate is to add a second indicator

just to confirm the divergence before you enter the trade.

For that reason, we will use the RSI(7).

You can see at the example above that we find divergence between the

Momentum and the price but there was no divergence between the RSI

and the price so it's a no go.

So this trade really didn't work out that well, it did made some profit but

it didn't rich the TP.

So you could use the RSI as a filter to spot good trades and to filter out

bad trades.


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That's It!

Wash, Rinse & RepeatI hope you now see that if you follow these simple instructions carefully,

then you can reap many profits. Just remember, it takes practice, patience,

persistence...and wise choices!

Forex Momentum Strategy

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