A Complete Trading System Used by Professionals to Make Millions

The Forex Trend Secrets trading systemA Complete Trading System Used by Professionals to Make Millions. The Forex Trend Secrets trading system is a simple yet powerful system that has performed well during Demo and the Live Rounds of the recent Surefire Trading Challenge.

It is a simple system that would be ideal for new traders that are still getting up to speed with trading the Forex market but can also be very powerful in the hands of more advanced traders.

The system relies on two key standard indicators that many traders tend to overlook. The system has also been designed to work on an intraday basis but it can be traded on all timeframes and all available currency pairs.

The Forex Trend Secrets system is very easy to apply once you are familiar with the rules. It uses a 1:1 to 1:1.5 risk/reward ratio which means you could potentially gain as much as you risk or more on each trade that you enter.

The indicators that are part of this system are very easy to understand and interpret making it a great system for new traders. The Forex Trend Secrets system can be considered as a conservative strategy which means that the risks are relatively low.

This is a trend following strategy and the entire strategy revolves around ensuring that traders remain on the right side of the trend at all times.

As you know, the trend is your friend and if you can follow the rules of this trading system you can be sure that you will remain on the right side of trade for the majority of your trading endeavours.

 

SETTING UP YOUR CHARTS

 

This system uses two standard indicators that are available on nearly all trading platforms available on the web. The primary indicator is the Alligator indicator which is one of the most overlooked indicators in trading. The second indicator used in this system is the Relative Strength Index (RSI) indicator.

We’ll go into greater detail about how these indicators are used as part of the trading system but before we can get to that, we will need to setup our charts by applying each of the indicators and configuring the settings.

Setting up your charts to trade this system is very easy. Once you are done setting up your charts, this is what your charts should look like:

 

As you can see on the chart image above, the Forex Trend Secrets system relies on an uncluttered chart setup. Once you are familiar with the Buy and Sell entry rules, identifying trade setups becomes very simple.

Before we get to the rules for entering trades, we will need to prepare our charts so let us now take a closer look at how to accomplish this.

The first step is to open up a blank chart and change the properties. If you would like your charts to look exactly like mine, start by changing the properties on the Colors tab to match the image below:

 

Next, change the properties on the Common tab to match the image below:

 

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At this point, we can start to add our indicators to our chart. Let’s begin by adding the Alligator indicator. On your MT4 platform, go to the top menu and click on Insert > Indicators > Bill Williams > Alligator as shown on the image below:

 

As soon as you have completed the steps above, you will be presented with the RSI indicator parameters window. The RSI indicator uses the default setting of 14 and the settings on your Parameters tab should be set as follows:

 

On the next tab you will find the Levels settings. There’s no need to make any changes here so make sure that your settings match the image shown below:

 

The final tab is the Visualization tab which may remain unchanged as shown on the image below. Simply click on the OK button and the RSI indicator will now be added on to your chart.

 

The final step is to add the Levels we will be using on the RSI. These levels can be added by simply clicking on the Horizontal line tool on the MT4 toolbar.

 

There are 3 horizontal lines that need to be inserted on the RSI indicator. As you can see on the image below, we will insert the lines at the 30, 50 and 70 levels:

 

The key level that we will be monitoring when trading this system is the 50 level. If the RSI line is above the 50 level it tells us that the trend is up and if the RSI line is below the 50 level it tells us that the trend is down.

 

PUTTING IT ALL TOGETHER

 

Now that you know how to setup your charts we can take a closer look at how the different components of this system work together to produce trade signals. This system works on all currency pairs and all time frames.

This system is ideal for day trading and has been found to work best on the 1 Hour time frame. The Alligator indicator is the core of the system. This indicator determines the direction in which we will trade. The Alligator is essentially made up of three key components, the Jaw, the Teeth and the Lips.

  1. The Alligator’s Jaw is represented by the Blue line. This line is a 13 period Smoothed Moving Average which is shifted 8 bars into the future.
  2. The Alligator’s Teeth is represented by the Red line. This line is an 8 period Smoothed Moving Average which is shifted 5 bars into the future.
  3. The Alligator’s Lips is represented by the Green line. This line is a 5 period Smoothed Moving Average which is shifted 3 bars into the future.

As you can see on the image below, when the Alligator Lips (Green line) and Teeth (Red line) are above the Jaws (Blue line) the market is considered to be in an uptrend.


 

 

 

On the image above, you can see that when the Alligator Lips (Green line) and Teeth (Red line) are below the Jaws (Blue line) the market is considered to be in a downtrend.

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As you can see, the Alligator indicator helps us determine the trend direction and the RSI serves to confirm the signal. On the image below you can see an example of how the RSI indicator helps confirm the trend direction we have determined using the Alligator indicator.

 

If the RSI line is above the 50 level it serves as confirmation that the market is in an upward trend. On the other hand, if the RSI is below the 50 level it serves as confirmation that the market is in a downward trend.

Now that you have a basic idea of how the Forex Trend Secrets system works, let’s take a closer look at the rules for entering Buy and Sell trades.

 

BUY TRADE RULES

 

These are the rules for entering a Buy trade:

  1. Wait for the Alligator Lip to cross above the Jaw.
  2. Wait for the Alligator Teeth to cross above the Jaw.
  3. Wait for the RSI 14 to cross above 50.
  4. Enter a Buy trade at the open of the next candle.
  5. Insert your Stop Loss below the most recent Swing Low.
  6. Set your Take Profit the same number of pips away from your entry price as your Stop Loss, i.e. a 1:1 or greater Risk/Reward Ratio.

 

On the image above you can see an example of a Buy trade as per the rules of entry. As you can see, the Lips crossed above the Teeth. The Lips then crossed above the Jaw and the RSI was above the 50 level.

At the open of the next candle I opened a Buy trade order and placed my Stop Loss below the most recent Swing Low around the 20 pips level. My Take Profit was set at the same number of pips as my Stop Loss. Within the space of about 5 candles price had moved in my favour and taken out my Take Profit level.

 

SELL TRADE RULES

 

These are the rules for entering a Sell trade:

  1. Wait for the Alligator Lip to cross below the Jaw.
  2. Wait for the Alligator Teeth to cross below the Jaw.
  3. Wait for the RSI 14 to cross below 50.
  4. Enter a Sell trade at the open of the next candle.
  5. Insert your Stop Loss above the most recent Swing High.
  6. Set your Take Profit the same number of pips away from your entry price as your Stop Loss, i.e. a 1:1 or greater Risk/Reward Ratio.

 

On the image above you can see an example of a Sell trade as per the rules of entry. As you can see, the Lips crossed below the Teeth. The Lips then crossed below the Jaw and the RSI was below the 50 level.

At the open of the next candle I opened a Sell trade order and placed my stop loss above the most recent Swing High around the 50 pips level. My Take Profit was set at the same number of pips as my Stop Loss. Within the space of about 3 candles price had moved in my favour and taken out my Take Profit level.

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BUY TRADE EXAMPLE

 

Here is another example of a Buy trade using the Forex Trend Secrets system:

 

On the image above you can see an example of a Buy trade as per the rules of entry. As you can see, the Lips crossed above the Teeth. The Lips then crossed above the Jaw and the RSI was above the 50 level.

At the open of the next candle I opened a Buy trade order and placed my stop loss below the most recent Swing Low around the 90 pips level. My Take Profit was set at the same number of pips as my Stop Loss.

Price moved in my favour immediately but it took a bit of time before price made its way up to my Take Profit level which was set just over 90 pips away from the entry level.

 

SELL TRADE EXAMPLE

 

Here is another example of a Sell trade using the Forex Trend Secrets system:

 

On the image above you can see an example of a Sell trade as per the rules of entry. As you can see, the Lips crossed below the Teeth. The Lips then crossed below the Jaw and the RSI was below the 50 level.

At the open of the next candle I opened a Sell trade order and placed my stop loss above the most recent Swing High around the 100 pips level. My Take Profit was set at the same number of pips as my Stop Loss.

Price moved in my favour immediately but it took a bit of time before price made its way down to my Take Profit level which was set just over 100 pips away from the entry level.

 

CONCLUSION

 

By now I am sure that you will agree that the Forex Trend Secrets trading system is a simple yet powerful system.

Remember, this system has performed very well during Demo and the Live Rounds of the recent Surefire Trading Challenge so I am sure that this system will work well for you when applied in the correct way.

Take your time and practice using this system and you will see that this strategy can be very powerful in the hands of responsible traders. By trading this system you will always be on the right side of the trend and this is a vital part of being a profitable trader.

Stick to the rules and I am sure that you will be very happy with the results.

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