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Forex Sailing – RULES for Online Forex Trading

Over the past week, I’ve been reviewing concepts for forex trading online that I call “Forex Sailing.” Today, I’m going to give you the EXACT RULES to follow to start looking for trading opportunities & go Forex Sailing!

For these rules, I’ll be referencing two pictures that I published in previous blog posts (make sure you read them to understand what I’m talking about).

In the post “Online Forex Trading Waves for Forex Sailing,” I introduced the concept of a single Fibonacci wave. Uptrending waves are called “forex candy-canes” and downtrending waves are called “forex umbrella-handles.”  Specifically, this picture is important:

In the picture above, you’ll notice that there’s a price movement up to a 100% level (from the low to the high of the price swing) and then the price retraces to 61.8% of that high. If the price moved up 100 pips from 0% to 100%, you will want to look for a retracement to a level thats 62 pips above the 0% (low) level.

Different Fibonacci Retracement Levels?

In the picture above I mention a specific 61.8% retracement level. Many people have asked me:

“Aren’t there different possible retracement levels?”

YES!!! There are different Fibonacci levels, but….

The rules below allow you to deal with those levels automatically. Although you’ll be looking at a 61.8% retracement to enter the trade, you’ll be looking at wave patterns to exit. Even if the numbers are different, you’ll still exit the trade properly Simply follow the rules and you’ll see how they adjust themselves to the trading circumstances dynamically.

Fibonacci Wave Zones & Forex Trading Online

In another post called “Fibonacci Wave Zones for Online Forex Trading,”  I introduced a picture that you can use to guide your online forex trading decisions:

If you haven’t MEMORIZED this picture yet, you should do so now!

Seriously, MEMORIZE IT NOW!!!

As you can see, there are two forex trading opportunities revealed in the image above. There’s a trade from III-IV, and a trade from V-VI. The rules for trading these waves are very similar, but slightly different, so I’ll cover the RULES separately below.

Rules for Trading the 2nd Forex Fibonacci Wave Online

When you arrive at point III on the picture below, you’re ready to sailing in the forex market.

Step ONE: Looking at the daily charts, determine the direction of the trend:

Once you determine the direction of the daily trend, ONLY look for Forex Sailing opportunities in the SAME direction as the DAILY TREND!

Step TWO: Looking at the 4-hour charts, determine these three prices:

I – the low price of the 1st fibonacci wave

II – the high price of the first fibonacci wave

III – the low price of the retracement of the fibonacci wave (close to current price)

Step THREE – Calculate the Following:

A: Find the DIFFERENCE between II & I – DO SUBTRACTION (II-I). If you get a negative number, just ignore the negative sign (remember the “absolute value” problems from junior high?). We’ll call this number D1 (D for difference).

B: Now we project a price target for IV by adding (or subtracting) D1 to III. For Forex Candy-Canes ADD D1+III to get IV. For Forex Umbrella-Handles SUBTRACT III-D1 to get IV.

Step FOUR – Looking at the 4-hour charts:

1. Wait for the daily trend retracement (from II-III) on the daily charts to reverse. This means that you’re looking for a reversal signal, then a new fibonacci wave pattern to emerge and get to IV on the 4-hour chart. NOTE: this is the 4-hour chart now, NOT THE DAILY CHART!!! This 4-hour wave is breaking the little retracement wave on the daily charts.
2. Once you get to a IV,V,VI or VII on the 4-hour charts in the direction of your trade, enter the trade as a MARKET order.
3. As soon as you enter the trade – Place a STOP order at the price of I (see picture above).
4. Exit the trade for a profit when you hit your projected price of IV (calculated in STEP THREE above).  -OR- exit the trade if a fibonacci wave develops AGAINST YOU (in the opposite direction of your trade) on the 4-hour charts. If a Fibonacci Wave moving in the opposite direction gets to a IV, get out for a profit or a loss – just GET OUT!

Rules for Trading the 3rd Forex Fibonacci Wave Online

The rules for trading the 3rd fibonacci wave (from V-VI) are ALMOST the same. They’re just slightly different…

Here’s the picture again:

Here’s a little fact that I haven’t shared before:

The 2nd wave (from III-IV) is usually the BIGGEST wave in the three wave pattern. The 3rd wave (from V-VI), will be a smaller move. Usually the third wave is the size of the 1st wave (from I-II).

When riding online forex trading opportunities involving the 3rd wave (V-VI), you’ll need this modified set of rules:

STEP ONE – same as above.

STEP TWO – same as above

STEP THREE -

A: Find the DIFFERENCE between II & I – DO SUBTRACTION (II-I). If you get a negative number, just ignore the negative sign (remember the “absolute value” problems from junior high?). We’ll call this number D1 (D for difference).

B: Find the DIFFERENCE between IV & V – DO SUBTRACTION (V-IV). If you get a negative number, just ignore the negative sign (remember the “absolute value” problems from junior high?). We’ll call this number D2 (D for difference).

C: Which is smaller, D1 or D2? Pick the smaller number (hint, this is the shorter price movement from the two waves). We’ll call this number D3.

D: Now we project a price target for IV by adding (or subtracting) D3 to V. For Forex Candy-Canes ADD D3+V to get VI. For Forex Umbrella-Handles SUBTRACT V-D3 to get VI.

NOTE: This is really the same process as before, but since we have had two fibonacci waves happen, we’re picking the smaller price movement as our “safer bet” for sailing this forex trading opportunity.

STEP FOUR – same as above.

Follow these Rules for Online Forex Trading

Now we have the rules for Forex Sailing officially written down. I recommend that you print them out and keep them by your side when you go sailing in your online forex trading.

Tons of Examples Coming Next

It’s great to have the rules, but you won’t fully understand Forex Sailing until you see how the rules are applied to forex trading online. I’ll be posting many examples on the blog (and videos that I’ll have for you soon). Once you see plenty of examples, you’ll see how easy online forex trading is with Forex Sailing!

Posted in Forex Sailing

Multiple Forex Trading Wave Patterns

In my previous post, you learned about the single price movement for online forex trading, fibonacci waves. This post is the continuation of my previous posts on the Forex Sailing trading method. Please go back to the Forex Sailing Introduction to begin learning how to use this style of forex trading.

On a small scale, forex trading prices move in a single fibonacci wave. If the price is going to continue in an uptrend, there will be several forex candy-canes moving up. For a downtrend, several forex umbrella-handles will link together to form the downtrend.

Double Forex Trading Price Waves

Online forex trading fibonacci waves happen in a few wave configurations. Although single wave patterns are common, the double wave pattern is the most common of the multiple wave patterns. The double fibonacci wave is simply two fibonacci waves in a row:

Triple Forex Trading Price Waves

Triple fibonacci waves are also common in online forex trading. Instead of two waves combining to form an uptrend or downtrend, three waves combine to form a fibonacci wave pattern:

Multiple Forex Trading Waves

Occasionally more than 3 fibonacci waves will combine into a 4 or 5 wave pattern. For our purposes, we’ll consider multiple wave patterns too rare for online forex trading. Since these wave patterns are rare, we can’t expect more than 3 waves before the trend ends. When forex trading, get off after the third wave. It’s too risky to stay on after the third wave!

Trading Forex Sailing Waves

In the upcoming Forex Sailing video webinar, I’ll show you exactly how to use this concept for Forex Sailing. Before getting technical with numbers and rules, understand what we’re trying to do.

The SINGLE FACT of Forex Trading

So far, I’VE SHARED A VERY IMPORTANT FACT WITH YOU:

FACT: Forex prices move in 1, 2 or 3 wave patterns

This is the one simple fact that you’ll be using to become an expert at online forex trading. Everything else we do with forex trading is just an application of this FACT. Memorize this FACT because all you need to do is get good at this one FACT and you’ll become a skilled forex trading genius!

Beginning of a New Trend

A common question that I’ve had for years from forex traders is:

Question: How do you know when a trend is over and a new one has begun?

Answer: Wait for a single fibonacci wave to form AFTER:

• A trendline break
• A Japanese Candlestick Reversal Pattern – (see more candle reversal patterns here).
• A Double-bottom, Double-top or a head & shoulders pattern.
• A consolidation pattern such as a triangle or a channel (check out the free trial of this software).
• ANY technical indicator signals that you like to use (Moving Average Crossovers, MACD signals, Stochastics, etc…) You can also pick your favorite
• An automated forex trading robot (yes, they can be useful if you use them to provide trading signals, not to trade for you)

You can use ANY of the signals above (there are more that I haven’t covered).

Here’s how to use our FACT above:

AFTER a trend reversal signal (or consolidation breakout), wait for a fibonacci wave to form. You now have the beginning of a new trend that you can ride for a 2nd or a 3rd wave.

What To Do NOW

Open up your forex trading account & look at your forex charts:

• Use candlestick charts
• Look at several different currency pairs
• Look at several different timeframes
• Look for TWO & THREE Wave patterns (like in the images below)

Posted in Forex Sailing

Online Forex Trading Waves for Forex Sailing

Today you’re going to learn the basic price movement of the Forex market! Of all the lessons on the rapid forex trading blog, this is the MOST important yet!

If you haven’t read the previous posts on Forex Sailing, make sure you read “Timeframes for Trading Forex Sailing” and “Fundamental News for Forex Sailing” before reading this post.

Forex Candy-Canes & Umbrella-Handles

Ok, so now you’re thinking that I’ve gone insane. Hear me out on this, soon you’re going to love this terminology… I’ll explain what candy-canes and umbrella-handles have to do with online forex trading very soon

Forex Trading Happens in Waves

You may have heard that online forex trading happens in price waves. Although many people say this, few people understand what it means. Forex trading doesn’t happen in a straight line, the prices move up & down. To an untrained eye, this would look like an unpredictable mess!

Trading Forex Candy-Canes (aka Fibonacci Waves)

The most BASIC way that prices move in the forex market are in a wave pattern. The technical name for this pattern is a fibonacci-wave. I like to call them forex candy-canes because that’s what they actually look like.

Here’s how prices move in online forex trading:

Prices go up & then they come down. It’s a pretty simple image. BURN THIS CONCEPT INTO YOUR BRAIN!!! YOU WILL NEED TO SEE THIS IMAGE ON FOREX PRICE CHARTS!!!

What’s really cool about forex candy-canes (fibonacci waves) is that they usually obey certain price targets (see picture below):

Notice that you see the numbers 0%, 100% and 61.8%. These are the key numbers to remember. When forex prices move they start out at 0%, then rise to a level of 100% (new high), then they retrace to 61.8%. That’s the pattern. It repeats itself again & again & again…

I’ll come back to how to use this later, for now just understand this shape.

Background for Forex Sailing

In case you’re wondering, I didn’t invent this idea. Actually, this has been used in trading the financial markets for nearly the past 100 years. The Fibonacci ratio goes back to 12th century Italy & is found everywhere in nature. The Fibonacci sequence & trading forex online go together beautifully..

Ralph Nelson Elliot famously discovered that the financial markets (forex, stocks, commodities, real estate, etc…) moved in fibonacci wave patterns. I discuss the background of his theory in my “Elliot Wave Theory Introduction.”  I even wrote a book about elliot wave theory (now out of print) nearly a decade ago.

Complicated Forex Trading Stuff Made Simple

Both Elliot Wave theory & Fibonacci theory can get quite complicated. Although both theories can forecast the future direction of forex trading prices to a high degree of accuracy, it could take you years to understand them fully (Elliot Wave counts are tough to do).

Here’s the GIFT that I’m delighted to GIVE YOU!!!

You get all the benefits of this “magic crystal ball” without having to understand any complicated theory

These theories explain how the market moves. I’ve made the theory simple enough for a 5th grader, & you’ll get all of the super power of these amazing theories.

Why Do I call them Forex Candy-Canes?

When I draw a fibonacci wave it’s just 2 lines. On forex trading charts, the picture is actually more rounded and looks like a candy cane. See for yourself below:

Different Shapes & Sizes of Forex Candy-Canes (Fibonacci Waves)

Although I draw the fibonacci wave pattern in the same shape each time, on forex trading charts, they can look skinnier, fatter, shorter, taller.  After you understand the basic wave shape, you’ll want to spot waves that look a little distored (see below):

See how they kind of look like candy-canes in the image above?

I know it’s a strange name, but it will help you remember this shape

Forex Umbrella-Handles (aka Downtrending Fibonacci Waves)

Online forex trading doesn’t just move in an uptrend, prices also move down. When you flip a forex candy-cane upside down it looks more like an umbrella-handle (see below):

Just like candy-canes, downtrending fibonacci waves also get stretched out into different fat, skinny, tall, short and distorted shapes as well:

What’s the Point of Fibonacci Waves?

You may be wondering why I’m teaching you these shapes. After all, “what’s the connection with fibonacci waves, forex candy-canes, forex umbrella-handles, and online forex trading?”

The fibonacci waves happen in patterns. When you see how single waves fit together, you gain an incredible insight into the way the forex trading prices will unfold. You’ll actually feel like you have a magic crystal ball for trading forex online.

Forex Trading Homework for Today

Before moving forward, open up a forex price chart. Look for candy-canes & umbrella handles. When forex prices trend, you’ll see nice candy-canes and umbrella handles.

Fibonacci waves happen in all timeframes (except “tick” – too fuzzy).

Spend at least 15-30 minutes looking at your forex charts for these patterns. If you want to be a forex trading expert, you’ll need to look at charts regularly.

• Use candlestick charts
• Look at several different currency pairs
• Look at several different timeframes
• See how waves connect (i.e. more than one wave in a row)

Using Fibonacci Candy-Canes & Umbrella Handles for Forex Trading Online

In my next blog post, I’ll show you how fibonacci waves fit together to produce forex trading patterns. After you see how these waves fit together, I’ll share the rules for Forex Sailing with you

Posted in Forex Sailing