this week we added 3 Forex market videos on our website and YouTube. Our goal is to keep these videos short by showing the conclusions rather than the entire analysis. In these bi-weekly analysis videos we also indicate if and how we would trade these trade setups.
Today’s article explains how we translated our live analysis into actual live trade setups. It allows you to learn when we entered and how we exited the trades based on our analysis, which we discussed pre-fact via the Forex analysis videos (vids are added below to re-watch). We also share how other SWAT traders have traded these setups too.
This message is important because translating proper analysis into concrete trading decisions is often one of the most difficult hurdles which traders face. This article tries to bridge that gap with a simple 3 step guide.
Step 1: Wait for Price to Reach Decision Zones
The very first step is to complete proper analysis of the chart by identifying the triangle of analysis (patterns, spotting support and resistance, and recognising trend and momentum). After that, it is important to setup key decision zones (point of confluences) and wait for price to reach these zones. Only then should traders look for trade setups! Very often traders want to find a trade immediately which leads to hasty and bad decisions and trades rather than following these 3 steps.
It is critical not to enter any trade setups before price has reached your area of interest. There are 2 main reasons why:
- Traders will feel fear and lack of confidence with early and late setups.
- Price tends to make better price movements at decision zones rather than in the “middle of nowhere”.
Key point is that you need a method that quickly shows decision zones. For us, ecs.SWAT traders, decision zones can be found within one minute on any pair. How? We simply use the ecs.WIZZ levels and moving averages to determine decision zones. Let’s show that on a chart with GBP/JPY as example.
GBP/JPY Bullish Trade
This week one of the best setups was on the GBP/JPY. The currency pair was clearly showing bullish momentum as price already broke above the 6th Wizz level (see image above). A break beyond the 3rd level already shows enormous potential and price indeed moved about 850 pips since breaking the 3rd Wizz level. But more upside was awaiting us because price was going sideways and building a range. This could easily be seen as price was staying above our ecs moving averages.
Our decision zone was the fact that price was above the 3rd Wizz level, showing very impulsive bullish price action, corrective bearish price action which stayed around the short-term moving average. That was a long sentence but is very easy to spot on a chart. The next step is our trigger and entry, which is what we will discuss in step 2 and 3.
For this particular pair, we had a 81 pip risk which is not bad for a GBP/JPY trade on the 1 hour chart. Our target was aiming at the quarter level resistance of 152.50 just below the -27.2% target for a profit of +168 pips. A great win with a nice 2.1 reward to risk ratio. Happy times 🙂 We mentioned this currency pair in all of our videos and now you can see how we actually traded this currency pair as well.
Step 2: Wait for the Trigger
Once price has reached your area of interest (decision zone), it is time to stay cool but be prepared. In this phase, traders want to make sure to follow the lead of the market rather than anticipate what the market could to. This is often where traders get into hot water. They expect that price will break or bounce and enter the trade too early. Then they start hoping. and this is not good.
Always remember, traders need to follow the market’s lead. We want to react to the signals and clues from the chart, not predict.
Of course, our analysis gives us a short-term bias or forecast. We need that bias to trade because otherwise traders will remain indecisive. But we also need to make sure that our bias (analysis) gets confirmed by actual price movement. This confirmation is called a trigger. Once a trigger appears, traders know that the market is indeed moving into the expected direction. If the trigger does not appear, then traders managed a losing trade based on a “wrong” bias.
How did we tackle this week’s market? Here we use our ecs.SWAT system for triggers: both the ecs colored candles and arrows indicate setups in our methodology. The main benefit of the SWAT triggers is its simplicity for other traders to execute the trade independently from us.
GBP/AUD Bullish Trade
Here you see a live trade example of this week with the GBP/AUD currency pair. Price already broke above the 5th and 6th level and was trending strongly, as we mentioned this as well in the analysis videos. One of our SWAT traders saw the SWAT triggers appear: first our SWAT arrow then our SWAT candle. The trader decided to enter on the 2nd setup and the GBP/AUD moved upwards like a rocket.
The trigger was the SWAT arrow and SWAT candle: simple to see and simple to trade.
The SWAT trader made a profit of +271 pips on this one trade alone. Wow. We wanted to share this success story with you because it’s not only us who are able to see results with SWAT. More importantly, our traders are able to catch pips as well. Here is a wonderful example with the GBP/AUD upside.
Step 3: Entry and Exit
Our entry is often a breakout or bounce type of setup. Once again, we use the SWAT candles and SWAT arrows to identify such high probability trades.
Our exit is primarily based on a combination of Fibonacci levels and support and resistance (S&R). Here is our main approach to finding targets:
- Draw Wizz tool and aim for next or 2nd next Wizz level.
- Add a Fibonacci tool to spot -27.2% or -61.8% Fibonacci target.
- Take into account strong round levels as potential exit point.
- Consider other S&R levels from higher time frames that could stop price.
NZD/JPY Bullish Trade
The NZD/JPY bullish trade setups were great trades too. Let’s discuss the entries and exit this around. But before we do that, here is a quick recap of the decision zone and trigger:
- Decision zone: price was again above the 3rd Wizz level and clearly above the moving averages, which means that price had reached its decision zone.
- Triggers: here again the SWAT candles and SWAT arrows.
Now let’s review our entry and exit. Our entry (green arrow) was slightly higher than the actual trigger because I just woke up just after the signal appeared. I took the price therefore slightly higher than the official trigger but there was still plenty of space left towards the first target so I decided to enter. The entry is simply based on the trigger so this is quite straightforward1. The exit always requires a bit more time because we need to see what kind of price movement is doable with over or under shooting. In all honesty, finding a good exit does take some time and practice but that is why we help traders with our videos.
We decided to exit at the -27.2% target because of the upcoming FOMC event at the time on Wednesday (20 Sept). But SWAT traders who choose to stay in for the 5th Wizz level and the -61.8% Fib target would have use a trail stop loss (grey line) and still booked at about 10-20 pips less profit. Still great!
So ultimately our trade ended for +108 pips profit. As our risk was only 43 pips, the reward to risk ratio was a handsome 2.5:1. That means for the win was 2.5x as a large as the risk. This is great for the equity curve and helps compensate any potential loss along the way.
Summary: Other Trade Setups
Besides the 3 setups mentioned above, we had trade setups this week on the EUR/GBP (1 hour), AUD/USD (15min), NZD/USD (15min), USD/JPY (1 hour) and many more pairs. It is also important to note that the GBP/JPY +168 pips, the GBP/AUD +271 pips, and NZD/JPY +108 pips were great setups, almost +550 pips over 3 trades (!), but nothing unusual for the SWAT system.
We wanted to share this article so you can see HOW we translated the analysis into actual concrete trading decisions. Hopefully you can see that the process is relatively simple.
One of our traders wrote in an email that it was really great how he could indeed trade the waves without knowing the waves, like we promised.
Most importantly: these results are not only achieved by ourselves. All SWAT traders are showing great success. For instance, Mislav started his SWAT trading 2 weeks ago and has seen these results:
- Made +700 pips
- Only 20 trades
- 70% win rate
Other traders are showing great trading too like Hubert and Ahmed. We hope that you will join them and start trading SWAT too.
Hope to see you join as an ecs.SWAT trader soon.
Many green pips,
My twitter: @ChrisSvorcik
More info on our ecs.SWAT course and trading system
Elite CurrenSea Twitter: @EliteCurrenSea
YouTube: Elite CurrenSea