Rules

Rules for trading theTradersEdgeOnline.com Trading System

Purpose of the System

Join established trends at points of price weakness
Join established trends breaking to new highs
Trade breakouts using rally dips and rebounds
Trade downtrend rallies as rallies rather than trend breaks
Recognize tend breaks as they develop

Advantages

Enables effective analysis of the trend environment
Improves selection of the appropriate trading tactics
Better understanding of trend strength
Effective evaluation of unusual price movements, such as dips and spikes
Effective understanding of trading activity and behavior
Degree and nature of separation between the two groups of moving averages (long term ma’s are colored purple and white, the white line will be referred to as the backbone, short term ma’s are colored red and yellow) define the character of the trend
Compression shows agreement on price and value
Compression of both groups (long term and short term Ma’s) at the same time indicate major re-evaluation of price and potential for a trend change

Description of the Chart

Red and Blue candles are Heikin Ashi smoothed candles
Red lines are weighted moving averages, representing short-term traders
Yellow lines are weighted moving averages, representing short-term traders
Purple lines are weighted moving averages, representing long-term traders
The white line is a weighted moving average and will be referred to as the backbone
The light blue line is a weighted moving average and marks the separation between long and short-term traders
The dark blue line is a pivot, the green dotted line visible above it, is the R1 above the pivot
The first green solid is the price movement

Rules for trading the system

Long Term Trades
Thirty minute or one hour charts

To go short, the following must take place:

The Heiken Ashi candles must be red and preferably have recently turned from blue to red. The price action (green line) and the red Ma’s must be below the Yellow MA’s , Blue MA, and the backbone (white MA).
The entry should be shortly after the red lines break through the yellow lines and preferably after a red sell arrow signal.

To exit the trade, do one of the following:

Exit when the red candles turn to blue
Exit when the red MA’s break back through the yellow line to the upside (this is the safest and fastest exit point, you may however leave some pips on the table)
Exit when the red MA’s break through the blue line (the 48 MA)
You absolutely must exit when the price and the red MA’s break through the backbone and have a clear break of one candle above the backbone

To go long the same rules apply in the opposite direction

Short Term Trades
Five minute chart

To go short, the following must take place:

The Heiken Ashi candles must be red and preferably have recently turned from blue to red; the price action (green line) and the red MA’s must be below the yellow MA’s, blue MA, and the backbone (white MA)
The entry should be shortly after the red lines break through the yellow MA’s and preferably after a red shell arrows signal
The one minute chart should be in agreement with the price action and the red MA’s clearly pointing down with a strong angle

To exit the trade, do one of the following:

Exit when the MA’s break back through the yellow line to the upside (this is the safest and fastest exit point, you may however leave some pips on the table)
Exit when the red Heiken Ashi candles turn to blue
Exit when the red MA’s break through the blue line (MA); this will keep you in the trade longer you may want to scale out and take some profit at initial entry point (break of yellow MA’s)
You absolutely must exit when the price and the red MA’s break through the backbone and have a clear break of one candle above the backbone

To go long the same rules apply in the opposite direction

For conservative, safer trades the 15 minute chart should be in agreement with the 5 minute chart in relation to the rules for trading. For example, The Heiken Ashi candles must be red and preferably have recently turned from blue to red. The price action (green line) and the red MA’s must be below the yellow, blue, and the backbone (white line).

Scalping Trades

The same rules apply for scalping as for the short term trades on the 5 minute chart. Scalping Trades are executed on the one minute chart . Make sure the 5 minute chart is in agreement with the one minute chart for safer trades. The same exit rules apply.

Money Management

As is the case with all systems, money management is a critical component of successful trading. Here are some suggestions.

Do not over leverage your account. Trade at 100:1 leverage or less.
Never risk more than 5% of your over all account balance on any trade. This is actually aggressive 2% is even better. In simple, absolute terms never trade more than one mini per $1000 in your account.
Please read the 25 point discipline for trading below.

The TradersEdgeOnline System

25 Point Discipline for Trading

THE MARKET PAYS YOU TO BE DISCIPLINED.
BE DISCIPLINED EVERY DAY, IN EVERY TRADE, AND THE MARKET WILL REWARD YOU. DO NOT CLAIM TO BE DISCIPLINED IF YOU ARE NOT 100% OF THE TIME.
ALWAYS LOWER TRADE SIZE WHEN YOU’RE TRADING POORLY.
NEVER TURN A WINNER INTO A LOSER.
YOUR BIGGEST LOSER CANNOT EXCEED YOUR BIGGEST WINNER
DEVELOP A METHODOLOGY AND STICK WITH IT. DON’T CHANGE METHODOLOGIES FROM DAY TO DAY.
BE YOURSELF. DON’T TRY TO BE SOMEONE ELSE.
YOU ALWAYS WANT TO BE ABLE TO COME BACK TRADE THE NEXT DAY.
EARN THE RIGHT TO TRADE BIGGER.
GET OUT OF YOUR LOSERS EARLY.
THE FIRST LOSS IS THE BEST LOSS.
DON’T HOPE AND PRAY. IF YOU DO, YOU WILL NOT WIN.
DON’T WORRY ABOUT NEWS. IT’S HISTORY.
DON’T SPECULATE. IF YOU DO, YOU WILL NOT WIN.
LEARN IT IS OK TO LOSE MONEY.
IF YOUR TRADE NOT GOING ANYWHERE IN A GIVEN TIMEFRAME, EXIT.
NEVER TAKE A BIG LOSS ONLY A BIG LOSS CAN HURT YOU.
MAKE A LITTLE BIT EVERY DAY.DIG YOUR DITCHES. DON’T FILL THEM IN.
HIT SINGLES NOT HOME RUNS.
CONSISTENCY BUILDS CONFIDENCE AND CONTROL.
LEARN TO SCALE OUT OF YOUR WINNERS.
MAKE THE SAME TYPE OF TRADES OVER AND OVER-BE A BRICKLAYER
DON’T OVERANALYZE. DON’T PROCRASTINATE. YOU WILL NOT WIN.
ALL TRADERS ARE CREATED EQUAL IN THE EYES OF THE MARKET.
IT’S THE MARKET ITSELF THAT WIELDS THE ULTIMATE SCALE OF JUSTICE.