Currency prices move either up, down or side-ways over a period of time relative to other currencies.This is called a trend. Some people will speak about intra day'trends' - this is nonsense, there is no such thing. All you get intra day is movement, not trends. A sharp two hour move on the EURUSD is not a trend, it’s just a move. Trends are called trends only when they have been in existence for a certain minimum period of time. A day does not qualify as a minimum period of time.

 A simple system that maximises all possible advantages

Concentrating on one currency is a good way to do this. You stay focussed, keep matters simple, and maintain discipline.concentrate on one currency, to master it before moving on. In order to master a currency you have to understand its fundamentals, its relationship to other currencies, the various fixed interest rates, bonds and the gold market. You have to be able to put any news related to that currency into its proper perspective. Get to know your chosen currency. Become intimate with it. Later, when you become more proficient, you can trade several currencies but remember, no one currency is better, or easier, than another. In a certain sense there will always be one currency.

buying and selling, trading in both directions sounds nice in theory but in practice it is very difficult. You must take a position in this market. Have a bias, and back that bias. If you constantly switch allegiances, you end up, rather quickly, in a mess. You sell when it rises, you buy as it drops, you don’t have the advantage of backing your long term trend !. The one directional approach really has an influence reverberating through all aspects of the trading system. Our one currency is defined in terms of one fundamental trend. That is the one direction we trade in.

Price levels

I base my entry triggers on price levels. A price level is a price range of 20 - 40 pips within a quadrant within a price channel trend near support (trading up) or a lower extreme. Once I’ve entered the market, it’s irrelevant whether it then immediately goes up or down. I mean it’s nice if it goes up, but the point is that if it goes against me, it does not invalidate my decision. That is crucial to understand. What the market does immediately after I‘ve entered it is purely random, it is not predictable, and therefore I don’t sweat it. Unlike the universe that is continuously expanding, currency prices tend towards where they come from, i.e. the median. This is especially true of the long term. Just consider that the trades entered into below the median (trend up) will have more potential to mature into larger profits than those entered into above the median where you should be quicker in taking profits.

Multiple entries give flexibility. You have more options, take some profits now, allow others to mature. I consider multiple entries vital to trading success. They reduce your risk and allow you to accommodate the volatile nature of the FX market better. By adding multiple entries when the price "dips" you make use of a sound investment principle namely "cost averaging". This is the basis on which mutual fund investments work. By buying at regular intervals at different unit values you average the cost of the purchases and overcome the problem of timing, which bears higher risk!.

Most charting programs give about a month's data on 60 minute charts, and that is all you need. Zoom out till you see on your 60 minute chart at least three weeks to one month’s data. Identify the support and resistance levels at the top and bottom. Draw horizontal lines at those levels. In between these lines, somewhere roughly in the middle will be a concentration of price action spanning 20-40 points. This is the median to which the price reverts.

Don’t overcomplicate median trading. Keep it simple: the market moves in ranging areas of around 300 - 400 pips; it may gyrate a few times at the median and cover the whole area without breaking either the top resistance or the bottom support; if you have identified such a median range correctly you can trade comfortably within that range.

You should further subdivide your grid into quadrants, four levels (300 / 400 pips divided by 4 quadrants equals 75 / 100 pips per quadrant). The bottom two quadrants will be your prime buying areas (Q1 and Q2). You will also trade up and away from the median in Q3, just above the median, but by now you should know enough to show caution in Q4 (the top quadrant). There will be times when, for a number of reasons, the chances of a breakout increase and then I like to position myself to catch that breakout. These reasons may vary. There may have been repeated testing of resistance or some important fundamental factors are telling me that a breakout is more likely than a retracement. If you are wondering why I keep the median lines horizontal rather than the more often used channel lines and trend lines, the answer is simple: the markets are dynamic enough, there is an overload of movement. I want to introduce some static, fixed reference points against which I can evaluate the latest price.

A trade, for example away from the median at the top side of an up trend, is no sure bet. Often you have been trading it up from the bottom extreme or the median.You are taking a chance, gambling on a break-out north. The theory says that more often than not the price will revert again to the median, and go down. You need to be aware and sensitive to this. A better approach, should you want to buy on the up (in the direction of the fundamental trend), is to decrease you gearing (quantity) as the market goes up, or, if it is dipping to buy with low gearing, and if it dips further to buy again with higher gearing, broadening the base of the pyramid.

One needs an inner drive to beat the odds, beat the market, and beat yourself. It is not a simplistic exercise that can be mastered by learning a few tricks called 'technical analysis’or‘fundamental analysis’, or ‘trading psychology’. Nothing works in isolation in trading. Because the market is complex it requires a large view.

Proper risk-management is an edge that you must cultivate. It starts with your lowgearing, multiple entries, and one directional strategy. If you build pyramids have them pointing up with the broadest part of the base at the bottom. Don’t use stops to stop your profits. Quantify, beforehand, what your draw down maximum is, and plan, before you reach it, how to minimise your losses. This will cause less pain. Minimising your losses in line with your trading system. If you do this your handling of losses will mirror the way you handle your profits!.

                                                              Top 10 commandments...

1. Winners learn from their mistakes. Losers don't. They actually make them again and again.
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3. Winners don't blame anyone else for winning. Losers blame everyone else for losing.
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5. Winners take calculated risks. Losers just take risks.
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7. Winners learn to control their emotions. Losers have little or no control.
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9. Winners are always learning and improving. Losers 'Don't have the time.'
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11. Winners follow a set of rules - a plan. Losers don't have any rules to follow.
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13. Winners use their strengths and minimise their weaknesses. Losers don't address weaknesses.
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15. Winners develop a plan to succeed. Losers don't even have a plan to develop.
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17. Winners diversify their risk. Losers put all their eggs in one basket.
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19. Winners use risk and money management wisely. Losers are gamblers.