Between 04:00 & 08:00 GMT the EUR/USD had a 150 pip move and the headlines gave every reason under the sun about why this occurred. Some thought it was mere short covering and others gave every other reason under the sun.

As for me, I have no idea. I know nothing. The market moves and I react. I see this as nothing more than a perfect opportunity to sell some Euros. If you are buying at these levels are a 150 pips move you will now understand why you are often on the wrong side of the trade.

Can you buy this move? Yes, if the resistance is broken you can buy on the break and/or buy on the first pullback and test of the resistance which has now become support.

EUR/USD: Short Setup

With price trading at resistance my risk to reward is fantastic at 1:3. With a 50 pip stop I am above the 1.3220 level and a 150 pip take profit places me well within the recent 1.3025 low on this current widening pattern.

With currency pair ranges at so low the market is waiting to open up. Will it be news out of the EU specifically the imminent Greece default. Will the Bank of Japan will intervene and pop the YEN 300-400 pips. All the time there are opportunities waiting for us.

Here is an opportunity I see right now in the markets.

EUR/AUD: Trade Of The Week

If you notice over the last couple of weeks the EUR’s countertrend rally has been the weakest against the AUD. This is exactly the currency I want to be in for when the next wave of pressure on the EUR occurs since it most likely will break the hardest against.

Notice the bear flag pattern which normally is a sign of consolidation before a continuum of the current trend in place.

Initially, I am looking for a risk to reward of 1:3 with a stop around 100 pips and a take profit of 300 pips below.

I would like to thank you for the opportunity to learn from you the nuances of forex trading and the use of your Conquer V2 Trading method.

A brief history – I am 57 years old – have been on the sidelines for a longtime now in regards to live trading. I got started trading in 92’ with futures – acct. $ 3,000 – learned very quick what leverage can do for you (corn trade- up $7,000-in about 2 weeks) when market had a favorable news and what it can’t (watching these profits erode in about 3 days) eventually being disheartened after losing most of the acct. and closing it with a small balance.

I then heard about the Forex in 99’ through a local newspaper ad but it turned out to be a scam. Well this is all beside the point as I am sure you have heard it all before. I could go on and on about several other Forex Trading programs I have been involved with over the last decade and the 1,000’s of dollars lost and squandered – the library of trading books, etc. So I’ll just stop right here.

The passion and challenge just keeps me moving forward though. But I refused to lose more money without first trying to find a method that fits right with me. So in that sense I am still lacking any real practical experience trading and of course look forward to a time when I am trading successfully. I do like the fact that your method follows the Trend as well as captures the smaller counter trends and has a strong emphasis on Money Management-which is the key. Seems like a great well thought out system.

I believe blowing out an account or two is part of the learning curve of becoming a trader. If you never experienced that sinking feeling in your stomach that comes from being over leveraged and holding onto to a trade that is moving against you then it is hard to ever come to a place where you respect the markets so much that you money management becomes your strongest focus.

Early market education

Books were also an important part of my trading foundation. Early on I spent all of my time reading everything about the markets I could get my hand on. Some of my favorites were Steve Nilson Japanese Candle Sticks, the Market Wizards and New Market Wizards books, and of course Reminiscences of a Stock Operator. Especially the New Market Wizard books because it was reading the lives of other traders that inspired me to believe that I could do this too. There came a point though that I could see through all of the stuff “traders” were writing through magazine articles and the only piece I came across that helped my trading was about five years ago an online piece called Phantom of the Pits.

It all comes down to money management

I have to quote you for a moment, “I do like the fact that your method follows the Trend as well as captures the smaller counter trends and has a strong emphasis on Money Management-which is the key. Seems like a great well thought out system.”

The Conquer V2 system unfortunately does not capture smaller counter trend moves, yet. You can see from this post on hedging that I am working towards adding a solution to capture counter trend moves (small and large) but it is a work in progress. Actually the system has not been updated since December of 2009 outside of one minor adjustment. Knowing the system needs a good counter trend addition is one thing, being able to add it without messing things up is another! Anyway, I know exactly what needs to be done and in time it will be added and it will increase performance and smooth out the equity curve. It is a trend following system with a strong emphasis on money management. A trading style that encompasses everything you know a good system should include.

Questions and Answers for Conquer V2

I need to copy and paste your questions at this point to continue:

I am familiar with Mt4. I have downloaded the ibfx platform and set-up the charts with all the indicators properly. The only exception being that when I tried to type in the proper demo acct. according to the instructions it actually reads back (IBFX-MT4-Demo2) Interbank FX Trader4 Ver.4 Build 409. Does this matter or is this just an updated version of their platform?

The data feed you have is perfect, any platform and feed can be used outside of FIFO rule following brokers (IBFX has found a way around it).

I am in the Eastern time zone and trading with ibfx would cause me to have to get up and place orders at 3am est. interrupting my sleeping pattern (causing health issues). I was thinking that I could either use the shift feature in the Period Converter indicator to accommodate a more reasonable bar period such as 3pm/11pm/7amest. Or 4/pm/12am/8am or 5pm/1am/9amest – being the worst case scenario. Or use another mt4 broker to accommodate one of these time periods. I understand that you are on the west coast so I can see how ibfx works out well for you. What would your recommendation be?

Is it possible to use the Period Converter to set different bar period opening? I am not sure of that, I am under the impression only to set bar periods outside of MetaTrader 4 default periods. If you are able to do so I am interested to know how to share with the others.

You can use a different broker that has different time periods though. I am a technician, I have always traded with the belief that you trade what is on your charts. Many “systems” are created through backtesting from a certain set of data from one broker which is why it only works, for a period of time, on that one given broker. That’s curve fitting, that’s not trading. The Conquer v2 trading system is a true market model that can be traded with any broker. It is the time frame that matters here, not when the bars open and close.

I have used Oanda before and agree with your assessment of them. I am setup with them as well on a demo acct. per your recommendations and actually was able to access my old demo account. I have gone over to their website and see that they are still having problems with their bridge between the 2 platforms (Oanda FxTrade and Mt4) and with the FIFO-Reg. not working properly along with some other problems. Is this something that you are hoping that will come to fruition – So that the ConquerV2 (Expert Advisor) can be implemented using their platforms?

While I am a huge fan of Oanda and the FXTrade platform I do not believe their metatrader 4 platform will ever be able to trade the Conquer V2 since I believe they will always abide by FIFO. I use IBFX USA, since I am from the US, as they have found ways around the FIFO rule. Obviously traders from outside the USA although still cannot use Oanda are able to use a whole host of brokers as FIFO rules only apply to brokers within the United States.

Which also begs the question – Should I go ahead and purchase the ConquerV2 (EA) now and set it up so that I can get familiar with it?

When you are ready. I offer free access to the system now so that you can first of all understand it and trade it. When the Conquer EA was released there were many traders ready to purchase it because they has been trading it from anywhere from months to years. They know the system inside and out and you need to also. There is no rush, the market is always going to be there!

I am also having trouble downloading and saving the Trade sheet. It may be that I don’t understand the directions or that I’m trying to download as an excel spreadsheet and since I don’t have the template setup it will not work. I go to File and there is no way to copy it. But when I go to edit and then the drop down includes a copy selection but the data does not translate properly into excel. Do you have any idea what I could be doing wrong?

I recommend using Google docs which are free to use, are saved online so you can access them anywhere, and the program the spreadsheet was written in.

I am sure that there are other questions that will come to mind and some of these here may not necessarily be the most important but I wanted to get started here.

Yes, we went a little above and beyond here but that is good. I elaborated in detail so that this can also be helpful to others. Traders helping traders!

Presented in no particular order other than that in which they were tweeted by @jordanclindsey

Japan’s endgame nears – MarketWatch

Greek default is essentially a given: S&P – CNN Money

Less Than Two Months Ahead Of The Greek D-Day, Rogoff Says “Europe Is Clearly Not Ready For A Greek Default” – Zerohedge

New Year, Same Crisis – George Soros – Project Syndicate

IMF warns over risk of Iran oil price shock - BBC News

Printing Money to Lead to ‘Uglier’ End-Game: Rogoff – CNBC

On MetaTrader 4 we use a custom indicator called ATR_MTF which is an indicator that gives the Average True Range (ATR) reading of the daily time frame no matter what time frame you are viewing and also ignores the Sunday pre-market bar that appears on MT4 so that data is not used in the calculation.

When the Conquer was first released we traded off of the H4 and H8 time frames. The same exact rules were used for each time frame. As it turns out we moved solely to the 8 hour time frame because the longer period price bars turned out to be  a good filter for ‘false entries’ helping control the normal market price fluctuations.

Which Time Frame is more Profitable?

Overall the 8 hour time frame produces a better return. However, a little known secret that only those who were with the group during the 2008 financial crisis are aware of: during high volatility periods the 4 hour time frame is more profitable. Mainly because of the three extra time periods a day which equals extra entries and positions. When the market is moving hundreds of pips a day dropping down to the 4 hour time period is highly recommended. It is more difficult to trade the six signal periods a day rather than the three signal periods on the 8 hour time frame, especially in the middle of the night. However, with the Conquer EA you can just load the expert advisor to the 4 hour charts and enjoy the ride!

But why is the ATR Period Set to DI?

The reason the ATR is used to set both the stop losses and take profit levels is because it is a measure of the market’s current volatility. We all know the markets continually move from periods of contraction to periods of expansion. A currency pair’s ATR will rise when the market is expanding allowing for larger take profits to occur as the market opens up and as the market contract the ATR will also fall which also reduces our stop loss levels. The Conquer V2 is a trend following system that cuts its losses quickly and holds onto winning positions allowing them to run. When the market is contracting trend following systems perform poorly, which for the Conquer equates to small controlled draw down partially because of our favorable risk levels and partially because of our shrinking stop loss levels. This is the same reason why when the market begins to expand we recover quickly from any draw downs and move onto new account highs; since our reward ratios are ranging from 3 to 12 times as much as our risk levels and our take profit levels during periods of expansion are also expanding increasing our profit potentials at the right time.

We use the daily ATRs since this is a swing strategy that is looking to hold onto winning positions. The 8 hour time frame allows for more precise entries into the market but we are gagging our stop loss and take profit levels by the current range of the market using the daily time frame.

You can subscribe to these posts by email or rss feed to stay updated with the group.

The EUR is falling vs the USD after the Euro Zone finance minsters reject the Greek PSI offer. Let’s see if this brings any follow through in the coming trading sessions. Lately, the Euro has been pretty resilient to bad news, a sign it could be ready to rally. The Federal Reserve’s two-day policy meeting begins tomorrow. We could see some market moving action on Wednesday as a result. Lastly, and most interesting to me, Iran asks for oil payments from India in Yen and Japan has asked the USA for an exception in the Iran ban. The US Dollar is slowing losing it’s reserve currency status. Oh, I also enjoyed this read – Davos guide: what you need to know about the World Economic Forum Conquer V2 Trading With only one open position you know we are in a slow market! All currencies have extremely low ATRs (average true ranges) which is also a sign of a contracting market. A good place to be, it only means things are going to open up soon! GBP/USD Forecast: The GBP did not look to strong into the 1.5600 level where it met strong resistance from early December. I do not believe we will see an entry on this pair but just n case they are waiting at the 1.5599 area to go long. EUR/USD Forecast: The EUR continue to take back gains vs the USD trading all the way up to the 1.3050 area where it met resistance from December. Many technical traders had sell orders waiting. We will see if this momentum continues and picks up, I have sell orders in at the 1.3000 area.   You can subscribe to all of these updates by email or rss feed to stay up to date with the group.

What a journey it has been! It has been an honor and I am delighted to work with all of you and I believe this team we have put together will continue to be a success. Endless hours in the “lab” working on system development produced the Conquer V2 back in 2009.

Since we have looked for a monitored auto trading solution, a good idea for traders like me who dont have time to watch the market all the time.

Finally, we have the Conquer EA!

Here’s the deal. Since many of you have been waiting for this for a long time I am releasing a few copies so that you can auto trade the Conquer V2 on your own computer. After that, those that were not able to purchase a copy will still have the opportunity to auto trade the system on their computers through a trade copier with a monthly, semi annual or yearly subscription.

Only a few number of licenses will be released to a limited amount of traders (first come, first serve)

Limitations: Trader from the USA like me can only use IBFX USA or FXDD USA who both are not affected by the FIFO. Oanda is not an option for the expert advisor. I opened an account about five weeks ago with IBFX and literally within an hour it was open and funded.

Two choices, a one time payment now or a reoccurring subscription going forward.

Click here to purchase your copy

Some Frequently Asked Questions

1) I am assuming that 154 Euro is one time fees. How much it is for subscription.

The 154 Euro is a one time fee. The subscription will be around $30 monthly.

2) Once I open an account with IBFX, how do I link it with your account.

You receive the EA and can trade it off of your own desktop. Once the trade copier is launched (not sure exactly when) people will also receive an EA that links to my EA and only works with an active subscription.

3) When will you release this for public.

Today I will sell a limited number of copies and then take it from there. I may only have the EA available for subscription through trade copier at a later time as it is a more profitable model for me.

4) Can we buy this program in USD in place of Euro.

Yes, you can use this link instead of the one above.

5) For investment purpose are you recommending people to open an account with X amount?

You can trade as little as $500 per pair and still use the correct money management of each trade (3 orders) being stopped out is less than a 0.50% loss.

Currency Pairs Traded

I am dropping one of the six pairs found under ‘Recommend Currencies’ in the rules of the Conquer V2 system, the AUD/JPY. I looked into replacing it with either the EUR/GBP or USD/CAD which both seemed like viable options and also not replacing it but instead doubling the position sizes of one of the other five pairs; the EUR/USD.

I decided to replace the AUD/JPY with the EUR/GBP for the time being (this means at least three months) and then reevaluate.

The six recommend pairs for trading are now: GBP/JPY, EUR/USD, GPB/USD, EUR/JPY, AUD/USD, EUR/GBP

Advanced Money Management

This is also now appears in the rules of the CV2 section on the member area. Before each year begins I expect to have at least up to a 10% draw down during the course of that year. When creating the system I set the position sizes so that the max expected draw down was to be 10% knowing that if things turn out worse I will still be under a 15% draw down. A 15% is considered to be an acceptable draw down by serious investors. To be honest, it’s tough trading through any draw down for any trader, especially aspiring traders. A 5% draw down takes on average with the CV2 roughly a month and that is a mentally tough period to be trading through.  A week of no to little gains is tough for newbie traders nevertheless a real dry period of up to two months. The markets continually goes through periods of expansion and consolidation and when using a trend following system you have to be prepared to withstand and trade through the sideway and counter trend periods.

A Solution to Recover from Draw Downs on the CV2 Quicker

I know from my experience that the expected draw down is 10%. Those who have been trading the Conquer V2 will remember this, I believe it was in 2009 and we were going through a draw down that was close to the max level, it was roughly close to 9%, and it took only three days to recover fully back to new account highs! How is it possible it could take four to six weeks or longer to have such a draw down and recover in just three days? Our risk to reward ratios. They range from 1 to 3 on the 1st order, to 1 to 6 on the second order, and then 1 to 13 on the 3rd order. The risk to reward ratio is actually greater since we lock in gains at 1/2 atr, and then after the 1st and 2nd take profit levels are reached.

I have come up with a way to recover quicker. This is not for everyone, until you have the confidence in the system you can trade it as it is. This is for traders who have the confidence in the system that comes from having traded it through all market conditions in the past. When the system goes into a 4.5% draw down I am doubling the position sizes.

Now I expect from past performance, and knowing performance is not indicative of future results, that once I have a 5% draw down I can double my position size to recover quicker and if I obtain the an additional 5% draw down brining me to the expected draw down of 10% (which is an additional 10% now since the position size is x2), that I still will maintain the acceptable 15% account draw down from highs. In other words -5% + an additional -5%x2 (-10%) = -15%.

Wrap up: when the account reaches 5% draw dow, the position size is doubled.

When would I go back to normal position size? I don’t know. We will see how the market is behaving.

Weekend Links

With the EUR being so in play recently this review of the Week in FX Europe Jan 15-20 is a good read. By the way, even with the counter trend rally this week the EUR Shorts Hit New Record. Good news for US Traders, even though there has been a huge drop in traders there has been a increase in profitability. Would you believe the highest percentage of profitable traders trade with Oanda? You heard it hear first!

I follow several rss feeds which together posts hundreds of news stories daily and I select the most relevant articles that I enjoy and post them in blog posts and on Twitter. If you use Twitter let me do the sorting through all of these forex news stories for you by following me @jordanclindsey on Twitter. When you do follow me make sure to send me a tweet so that I know to follow you back.

Conquer V2 EA

Working Conquer EA? YES! Works 100%, exactly as it should, perfect. This weekend, if I am able I plan on writing up some details for release and releasing it on Monday. My thinking is to offer it at first to existing members for $180 so it can be traded on their own computers and then to only make it available for others to be traded through a trade copier for $30 monthly taking the EA off of the market.

Experienced traders know to stay away from the market the last two weeks of the year and return after the first. The market since we returned has been a whole lot of oh hum. The most difficult type to trade. You spend all week showing good discipline which means every signal period placing your orders and sticking to your system. And the reward at the end of the week? What reward you might ask? How do you call losing 1% of my account a reward?

It’s called trader toughness. You have to be able to handle the grind. The times when we are placing orders and receiving take profits almost with ease do not make traders. Anybody could do that. Feel the excitement and do again. Yay! As soon as a sideways, choppy, or non-moving market comes that trader is toast. Out of the game. That trader will become emotional and take trades outside of the system and will loss. They will loss their account quickly. One week, two week, you have to have the mental toughness to withstand two months if need be.

At the beginning of the year I know that during the course of the year I am going to experience at least two draw downs throughout the year. Now, a draw down is not -1% or -3% or even -5%. A draw down is along the lines of -10% from an account high. If you traded this week, took all signals and came away with a slight loss you just gained yourself a golden week of trading because you beat the market. You beat the market mentally. You will be there next week and the week after now and you will be there for that exact moment the market opens up and you will be there to profit from it.

Greece Makes a Deal?

Now let’s take a look at what we have going on today. By the way, I am hearing a lot of talk about Greece coming close to a deal with its bondholders. This news has been dripped all week, insider propaganda style. The manner in which you know its scripted. I expect it could be announced tomorrow or over the weekend. How this will move the market? I do not know. I’d rather not have an expectation and be there to trade what is happening instead.

GBP/USD Forecast: So far all week we have seen a corrective rally against the recent USD strength. The question remains does it continue or not. I am looking to get long from the 1.5332 area.

EUR/USD Forecast: This pair is approaching a critical level which could trigger many stops of those holding short. I am ready to get short again if price lets me around the 1.2882 area.

Conquer V2

My who tirade above was about our Conquer V2 trading. You can tell by our open positions which normally are several instead of two and hundreds of pips into profit instead of a hundred.

Weekend Reading

Tomorrow I will be writing up an adjustment for the current pairs we are trading as well as discuss some money management with those who have been trading the Conquer V2 for a while. Be on the look at, this is going to be an update not to miss. For all of those who receive these posts as a daily summary by email I am scheduling it so that it arrives on Saturday giving you plenty of time over the weekend to take a look and make any nescesary adjustments for Monday.

If you are not yet receiving these updates by email now is a good time to set yourself up.

Euro fears could spur new wave of market volatility and some insist the demand is strong for EU bonds and that the EU will not break up. I am not so sure about that. People are now talking about it and they were not a few months ago.

Today the euro rises against dollar but gains could fade quickly.

Will The Federal Reserve Devalue Dollar by 40% as Ben Bernanke Promised in 2002?

Expect gold prices to turn bullish in 2012: but is silver better than gold?

BoJ unlikely to intervene in EUR/JPY – UBS on FXStreet