CONTENTS

DEDICATION 3

ABOUT THE AUTHOR 4

THE
FX SYSTEM 7

THE 1-2-3 METHOD 10

EXERCISES E1-E2 13

SOLUTIONS E1-E2 15

THE HEIKIN-ASHI CANDLES 17

EXPONENTIAL MA CROSSOVER 18

THE EMA CROSSOVER SYSTEM
AND FX CRITERIA RULES 23

HOW AND WERE EXACTLY DO WE EXECUTE A TRADE 24

MONEY MANAGEMENT RULES 26

LONG POSITION AND
TRADE MANAGEMENT RULES 28

SHORT POSITION AND TRADE MANAGEMENT RULES 29

FX PC SCREEN SETUP & TRADING APPROACH 31
FX TRADING EXERCISES (WORKBOOK) 36-95

A TRADING ADVISOR, COACH OR MENTOR 96

A PERSONAL MESSAGE 98

NOTES 99-109

DEDICATION

I AM DEDICATING THIS BOOK TO MY WIFE, MY

SON, MY PARENTS, MY SISTER, MY FRIENDS, AND
TO ALL THE READERS FOR THEIR PASSION TO
ACHIEVE TRADING MASTERY.


ABOUT THE AUTHOR

Dear Reader!

My name is Nikos Mermigas. I was born and raised in Germany. I came to
Greece in 1993 when I was 21 years old. My job as a musician and music teacher
forced me to travel a lot and kept me frequently away from my home and family.

A good friend and I decided on a quest to find something that would untie our
hands a bit, something that would provide us with more time to spend with our
family and have extra money. So our search began! We searched for a way to be
our own bosses and a way to work from home using a computer. We searched
many months and were flooded with worthless information and ideas. We
couldnt find anything that we desired.

At that time I had some stocks which I was not trading on my own. From time to
time I would look to see how they were performing. After a conversation with a
stock broker we learned about the foreign exchange (forex) market. We had never
heard about the foreign exchange market before and were now curious. Finally we
found something we wanted to learn more about!

We learned that forex could indeed be a small, personal business that anybody
could manage from anywhere in the world with only a computer and an internet
connection. That sounded great and our hope intensified! We also learned
thousands of people are making money from their home sitting on their couch or
in their home office, and some of them had quit their full time jobs or were just
making an extra income from trading in the forex market.

For me personally, it was love at first sight!
I realized there was tremendous potential in the forex market and I started
trading forex with confidence. I opened a small account and started to buy and sell
currencies without knowing the basic rules of trading and without any knowledge
on this subject. In less than six months my friend and I lost almost all the money in
our account.

But why did we lose? Very simple! We did not trade at all. We were just gambling
like 90% of traders do.
At that point I needed a one month break to put my thoughts in order. I asked
myself a lot of questions. There were nights I couldnt sleep because of so many
questions and thoughts flying around in my mind! What did I do wrong? What
are successful traders doing differently than me? How can I improve? How can I
succeed on a long term basis and how can I handle my emotions like greed and
fear during my trading?

After a while I sat down and said to myself; every career, every job and every
business needs proper training. It is no different at all in trading the forex market
and why should it be?
I started reading lots of books (most of them did not help me at all to improve my
trading). I also went to trading psychology and technical analysis seminars. I took
all the useful information from these webinars and seminars to help me create my
own trading rules and my own trading system. It took me a while but when I
really started following my system rules, with patience and discipline, things
started to turn around in my favour. I believed in myself and my rules. When I
doubled my account I knew I had succeeded!

A person may not need a lot of coaching to become a real trader, but without the
right training I think most people are doomed to fail.

Looking back, I now see that trading is not hard to learn at all. It truly can be very
easy. We humans have the tendency to complicate things without having a real
reason to do so. That, in my opinion is why 90% of people loose in the forex
market.

The biggest advantage about the
FX ( FX) system is that you
can use it successfully in each and every market, not just the forex market. The chart
reflects every human emotion and so the signals are the same. In our case it does
not matter if we are talking about the forex market or any other financial market.

Today, I am a full time trader. My favourite market is still the fast moving forex
market. I love to do my chart analysis in the morning and then execute my trades
when I get the signal as per my system rules. Life as a trader gives me great
pleasure. I have goals, I have reasons to think positive, and I am always
confronted with new challenges and opportunities day after day and week after
week.

I have met a lot of traders and 80-90% of them have not made money consistently
over the long term. In fact they have lost it consistently. I thought this was really
interesting. Most of these guys were experienced traders with knowledge and
passion for trading. Their problem was not necessarily their trading system. They
just couldnt follow their rules because they did not believe in what they were
doing. Some had no discipline, some had too much fear, and some were unable to
pull the trigger. Their mental state was in bad condition and they looked for
excuses why things did not work out.

Later on I accidentally started to teach my system to an experienced but
unsuccessful trader through the internet. We took live trades together and I tried
to help him gain his confidence back. With a little work from both of us, he finally
made it!

It was exhilarating helping someone stand on his own two feet again. The feeling
was so great it is difficult to describe. That trader asked me if I would help some of
his friends with their trading. I started coaching those traders and one thing led
to another and hence forth I started with the
FX LIVE TRADING
courses.
FX was born!!!!

Trading took on new meaning for me. Now, not only do I enjoy trading but also
enjoy helping others overcome their obstacles and traps which are hindering them
from becoming successful in their trading.

I wish you
Health, happiness and success

Nikos Mermigas

HE

SYSTEM

I welcome you to the

have decided

FX team and I am happy that you

Before we start, I would like to make it clear that the

FX system
its trading philosophy are based on 100% technical analysis. As you might know
already, the computer and the internet is a must for the modern Trader. The
trader is able to manage his trades easily while watching the charts and indicators
on his screen. With a simple mouse click he/she is able to open and close positions
from any place in the world.

For you to use the
FX system correctly you only need a few simple
technical indicators.
The most important thing is that you should learn to read charts, see the setups
and take the action when required according to the
FX system.
You dont need to understand how exactly the indicator works to be successful in
your trading. The only thing you need to know is how to use them correctly to
make your daily pips.

Lets take an example of a TV. Most people dont even know what a TV looks like
on the inside or how it works but that does not mean that they cant watch their
favourite programs.
We only need to switch the right buttons to watch what we would like, right!?
In the same way we dont need to know how an indicator works but instead we
only need to know how to use them.
It sounds easy and I am not kidding when I say that it really is! In trading you
have to control your emotions and just follow the rules of your system, otherwise
you will be in trouble.

I wont go much through the trading-psychology here, because that is not the
point of this particular E-book.
It is important you always remind yourself to be disciplined and follow exactly the
rules of the
FX system to make it work.
If you do that then, I promise, you will have 70-80% winning trades over the
medium to long term.
Of course when it comes to money, controlling your emotion is not always that
easy but with practice, willpower and positive psychology you will achieve mastery
for sure.
Always remember that a real trader is open-minded and his focus is on his profits,
success and right money management and not on his losses.

The system is very easy to understand and after you have read this e-book I will
help you at your request and will show you for free many examples in a live-
trading session so that you can get more confident with my system.

On the following 100 pages I will guide you step by step through the
FX system. When I was learning about forex I spent countless hours in front of my
pc, fine tuning my system. I desperately wanted to make this work! I remember
having difficult and often torturous times before I made it, but I persisted and
therefore, I was rewarded.

The basic philosophy and goal of my system was and is, to cut my losses and let the
winners run. With the FX you will learn in a very pleasant way, how to use my
techniques and to trade successfully without going through all the trouble I
experienced in the past. You will find enough space in this book to make notes and
write down your thoughts.
Just keep it simple and you will succeed.

Have fun and enjoy!

THE 1-2-3 METHOD

THE 1-2-3 method has existed in technical analysis for quite some time, but
unfortunately many traders dont know how to use it the right way. The
system is based on this technique, but only in combination with 2
other indicators.
This combination is the key to getting outstanding results in trading. If you use it
correctly!
You will be able to pick up the bottoms and tops and ride the market trends on
any timeframe, if you will follow the rules of the system 100%.
So, what other indicators do we need to approach trading according to the FX
system?


A) HEIKIN ASHI CANDLES

B) EXPONENTIAL MOVING AVERAGE CROSSOVERS


After analysing our trades with these indicators, we look at a NEWS CALENDAR
to make sure that we dont execute a trade close to an important political or
economic announcement.

You must be thinking at this time that it is too simple to be true, but believe me it
really is! You just have to get used to it and practice it as often as you can until
this strategy becomes a habit.

After understanding the basics you must believe in yourself and always focus on
your success and nothing else.

I highly recommend that you first use a Demo-account and only start trading real
money after you perfectly understand the system and double the money on your
practice (demo) account.

Dont trade if you are tired or in bad psychological condition.

Before you turn on your PC you have to make sure that you are focused and your
mindset is on the right frequency for trading.

You should always know that small losses are part of the game, and that should
never interfere with your decisions when good signals come up.
Dont waste your thought on fear and greed. Just try to focus on the system rules.
Do that day by day and you will see how easy trading can be in the end.
Lets start with the basics

10

How do we indentify and use the 1-2-3 method the right way!
You surely have noticed that price never really moves in a straight line during a
trend.
Price will take a breather and retrace often before it reaches a top on an up trend
or a bottom on a down trend.
The first sign of a trend change appears when the market creates a lower low (2)
and a lower high (3), after a previous high (1) in an uptrend; or a higher high (2),
and a higher low (3), after a previous low (1) in a down trend.

N1

11

In the next example (N2) and with the help of the Trend lines you will see how
easily you can locate the 1-2-3 setups on the charts.
1. You have to find and connect the lowest points in an uptrend, searching for at
least 3 touches (red line). Price follows the trend line to the upside.

2. Now connect the lowest point (1) with the following high (2) and this again with
the next low (3).
There is your first and OBVIOUS 1-2-3 to the upside.
This was easy I guess.

Price continues its move to the upside creating another bullish 1-2-3 after a while.
This is a confirmation that the uptrend is still on.
A new high is following, but the price does not show us its intentions clearly.
As you can see now, the candles are failing to bounce on the uptrend line and that
means that the buyers are slowly loosing their power.

What is happening now?
For the first time and after the highest point (1), you can see a lower low (2) and a
lower high (3).
What else do you see?
The uptrend line has broken too. This bearish 1-2-3 after the uptrend is our first
sign and warning.
As you can see now, more bearish 1-2-3s are following and the trend has now
clearly changed to the downside (blue line).

N2

12

EXERCISE
E1 & E2

Please take a pencil and a ruler to draw the trend lines and the 123 setups on the
charts.
Further try to spot the trend changes on both examples.
Look for help from the previous chart example (N4).
If you like to take notes feel free to do so. You will find enough space on the next
page.

E1

13

E2



NOTES E1:










NOTES E 2:

14

SOLUTIONS FOR E1 & E2

E1S.

The bullish 1-2-3 at the left bottom on this chart is the first sign for a bullish trend.
Point 3 is higher than point 1, so the price has created a higher low.
Now connect all the higher lows and you will find you have drawn the uptrend line
(red line).
After that, higher highs and higher lows are following. You can easily spot the
following bullish 1-2-3s (blue lines).
The support is strong because as can you see, the price always bounces after a
touch with this trend line.
After seven bullish 1-2-3s the buyers start to loose their power and the market is
not able to create a new high 1.
The trend line is breaking for the first time. Now you can see a lower low 2 and a
lower high 3. The support line has become a resistance line now. The first sign for
a downtrend is given here.

15

E2S.

The bearish 1-2-3 at the left top on this chart is the first sign for a bearish trend.
Point 3 is lower than point 1, so the price has created a lower high.
Now connect all the lower highs you can find to draw the downtrend line (red
line).
After that, lower highs and lower lows are following. You can easily spot the
following bearish 1-2-3s (black lines).
The resistance is strong, because as can you see, the price always bounces off the
trend line.
After eight bearish 1-2-3s the sellers start to loose their power and the market is
not able to create a lower low (after point 1).
The trend line is breaking to the upside. Now, for the first time you can spot a
higher high 2 and a higher low 3. Now the resistance line has become a support
line. The first sign for an uptrend is given here.



ALWAYS REMEMBER:

WE NEED TO FIND AT LEAST 3 TOUCHES TO CREATE A TREND LINE

16

THE HEIKIN-ASHI CANDLES

We are using the Heikin-Ashi candles charts instead of regular candlesticks
charts. The Heikin-Ashi chart looks almost like the candlestick chart but the
method of calculating the candles on the Heikin-Ashi chart is different. You can
find Heikin Ashi candles on most of the trading software platforms.
With candlestick charts, each candlestick shows four different prices: Open,
Close, High and Low price. Each candlestick is independent and has no relation
with the previous candlestick. Heikin-Ashi candles are different. Here the candles
are calculated and plotted using information from the previous candle. The price
movement looks very smooth on the chart and the 1-2-3 setups are more easily
spotted. We will also be able to avoid bad trades and identify trend changes
faster using these candles the right way. Later on in this e-book, I will explain in
detail how we do that.

N3

17

EXPONENTIAL MOVING AVERAGE (EMA) CROSSOVER

Moving average (MA) is one of the most popular and easiest to use indicator for
the technical analyst. They smooth out price action and therefore it makes it easier
to spot a trend. This is very helpful in volatile and trending markets.
The market consists of huge crowds and the moving average identifies the
direction of mass Movement.

Of course all moving averages are lagging indicators and will always be behind
price. The moving average works great in trending markets and currencies trend
very well, so they fit great with trend following indicators.
When there is no trend the MA will give many false signals and that is the reason,
why we always need a combination of indicators to make the trading system work.

EMA gives greater weight to the latest data and responds to changes faster than a
simple MA. Moving averages will help us to trade and to stay in the direction of
the trend as long as possible.
This makes the EMA a very important tool to the
FX system.

The EMAs that we need and the reasons we use them are the following

EMA 200 on all timeframes, to locate and watch

market trends and for support and resistance levels.

EMA 633 for support and resistance levels on all time

frames.

EMA 12/EMA 36 crossover on all timeframes to

define trading entries/exits, to locate trends and to
manage trades at support/resistance levels.

18

N4

On the chart (N4) you can see the nice downtrend using Heikin-Ashi candles.
Now take a look at the EMAs.
All four are above the price. It looks like the EMA 36 is pushing the price to the
downside.
During a trend, the EMA 36 is our most important resistance/support level.
If the price breaks the EMA 36 and a 1-2-3 setup forms after that, then there is a
good possibility for a trend change.
Now that you understand the basics lets start with the EMA 200.

As a general rule we can say, if price moves under the EMA 200 we are looking for
shorts, and if it goes above the EMA 200 we are looking for long trades.
Knowing this of course is not enough but at least you get the direction of the trend
and know what to look for.
Many times you will get a signal not even close to the EMA 200. Keeping in mind
this general rule of 200 EMA will help, so you are able to make your decisions
much faster.
The following example (N5) should help you understand.
After you have studied the chart two more exercises (E3/E4) will follow.
Like before feel free to use a pencil and a ruler to draw your trend lines and 1-2-3
setups. Only after you finished drawing the trend lines and 1-2-3 setups then
check the solutions.

19

N5

The price is bouncing on the EMA 200. As you can see at the blue arrows long trades are in play. The support line is holding
at first so there is no sign for a short trade. After the trend line break and the break of the EMA 200 you can spot the bearish
1-2-3. The price is not able to pass the EMA 200 to the upside again. After the 1-2-3 setup, the 2 to 3 line breaks (blue circle)
and shorts are in play now.

20

Exercise E 3

21

Solution E3S.

22

THE EMA CROSSOVER SYSTEM

AND FX CRITERIA RULES

Now that you understand the use of the EMA 200, we can go on with the crossover
of EMA 12 and EMA 36.
The EMAs and the EMA crossover system will be used in combination with the
1-2-3 method.
With this, you will learn were to enter a trade and how to manage the trade when
the trend is changing its direction.
You can use this method on anytime frame and later on I will explain to you, how
to approach a trade, no matter if you want to scalp or swing the market.
It is very important that you always remember and follow the rules of the FX
system before you take any action.

Confirmation for a long entry

(BUY ORDER)

1. Do we have an EMA 12/36 crossover to the upside?

2. Do we have a support at the price level?

3. Do we have a break of resistance level(s)?

4. Do we have a point 2-3 break to the upside after the 1-2-3 setup?

Confirmation for a short entry

(SELL ORDER)

1. Do we have an EMA 12/36 crossover to the downside?

2. Do we have a resistance at the price level?

3. Do we have a break of support level(s)?

4. Do we have a point 2-3 break to the downside after the 1-2-3 setup?

Only if you answer yes on all four rules, you should take action and
execute the trade

23

HOW AND WHERE EXACTLY DO WE EXECUTE A TRADE?

On the following chart you can see the execution of a short trade (eur/usd) using
the one minute chart for an early entry.

N6

Let us analyze this short trade now!
Imagine you are sitting in front of this particular chart trying to spot a trade.
So how do you start?
First you have to focus and remind yourself of the four rules you have to follow,
before you take any action.
At the upper left side you can see that the price has stopped its move to the upside
(1). After the down crossover of the EMA 12/36 the candles break the EMA 200
support quite fast, creating a lower low on the chart (2).
Then the price was able to retrace back to the EMA 200 level again (3), were it
found resistance now, creating a nice 1-2-3 setup.
Please make sure that point 3 is always lower than point 1, when we are talking
about a bearish 1-2-3 setup and higher than point one, when we are talking about
a bullish 1-2-3 setup. After the down break of the 2-3 line (look at the red arrow)
you have to take action and execute your short trade.
It is important that you enter at the right level to get the best price possible,
especially when you are scalping the market.
Look at the 2-3 break again. Notice the first red candle after the break.
You can see a big candle body with a small lower shadow exactly on the EMA
200/36 and 12 (in the black rectangle). It is important that the body of this red
candle closes at least 50% under the EMA 12 (over the EMA 12 for longs) to alert
you. Then you wait for the price to move a couple of pips under the previous
candle and off you go. You enter the trade exactly at this level.

24

N7

At the lower left side you can see that the price has stopped its move to the
downside.
At first you can see that the price is able to break the resistance line on the chart.
After the cross up of EMA 12/36 (1) the candles break the EMA 200 resistance too,
creating a higher high (2) and a higher low(3) on the chart.
Then the price was able to find support at the EMA 200 level.
You should easily spot the 1-2-3 setup now.
Please make sure that point 3 is higher than point 1, when we are talking about a
bullish 1-2-3 setup. After the up break of the 2-3 line, (look at the blue arrow) you
have to take action and execute your long trade.
Again look at the 2-3 break. Notice the first green candle after the break.
You can see a nice candle body with a small upper shadow exactly on the EMA 12
(in the black rectangle). It is important that the body of this green candle closes at
least 50% over the EMA 12 to alert you. Then you wait for the price to move a
couple of pips higher than the previous candle and there you are again. You enter
the trade exactly at this level.

Please remember that patience is the key here. Many traders dont wait for a
retracement. It is very important to give the market time to breathe and execute
your positions at the right spot.
The first reason to do so is that you will have a low risk and high probability
trade.
Secondly, you normally get a much better entry price and the third reason is that
you will be able to place your stops at the best price.

25

 FX MONEY MANAGEMENT RULES

To make money in the forex market or in any other financial market, you have to
follow healthy money management rules.
If you think you can make money without these rules for the long term, I have to
disappoint you.
Even with the best system you are likely to loose your money if you dont know
how much to risk on each of your trades.
To protect your money you have to always place stops at the right place.
Many traders think that stop losses are their enemy and hate it when a stop gets
hit, but that is really wrong and the key to disaster.
The stop loss is there to protect you from loosing your money.
Yes, the stop loss is your ally and not your enemy. Start to believe this and trading
will be much easier for you in future.
A general FX rule says

We never risk more than 2% of our money on any trade!

The most important thing you have to think about even before you execute a trade
is, how much money can I allow myself to loose if the trade does not go my way
and, where exactly do I have to place my stop losses!?
The FX system has clear rules on this most important subject.
You should never even think about not placing a stop loss order after you have
executed a trade.
Try to remind yourself that the exit rules of any system are more important than
the entry rules and you will do just fine.
The following rule is there to help you improve your discipline

I WILL ALWAYS PROTECT MY MONEY BY PLACING A STOP LOSS ORDER
BEFORE OR IMMEDIATELY AFTER I HAVE ENTERED A TRADE.
THE STOP LOSS ORDER IS MY ALLY AND NOT MY ENEMY.

After we have placed a stop loss order, we wait patiently to see how the trade is
doing.
If is going your way you have to trail your stop to minimize your losses.
If the trade is not going your way then two things can happen.
1. You get stopped out or 2. You get a reversal signal and when this happens you
reverse your positions and close your trade even before the stop gets hit.
So remember: Having a stop loss order in the market does not mean that it has to
get hit.
A Reversal signal will give you the opportunity to enter a new reverse position and
to minimize your losses.
After a few pages I will explain and show you exactly how to do that.
Before that, please take a look at the following chart. Here you can see how
frustrating it can be to trade without strict rules and discipline.

26

N8

27

LONG POSITION AND

TRADE MANAGEMENT RULES

What should you do now?! First of all you should try to relax and go quickly
through all the system rules again.
Now you know that you have a high probability and a low risk trade in front of
you.
So, there is nothing to worry about.
You should be happy that you are able to spot this setup and take action
immediately. O.K., now you are executing a long position and

1. Cut your position into three parts (3 times 1 lot or 1 lot divided by 3),
depending on what is more convenient for you.
The target for your first lot should be at least 20- 30 pips, depending on how
fast or volatile the market moves at that current time. For the second lot you
should follow the EMA 12 and look for higher highs and higher lows.
Try to trail the trend to the upside and go for at least 40-60 pips here.
To take the last lot out, you should wait for a lower low and a lower high, and
a clear trend line break. If the trend is strong then the last lot can give you
much more than 100+ pips, depending again on the currency pair and the
movement.
You can trade any pair you like of course, but I personally prefer faster
moving pairs with nice and obvious 1-2-3 setups, like EUR/JPY or GBP/JPY
for example.

2. Place a protective stop loss order of 20-25 pips under the closest support level.
For example: Trend lines or EMA support levels.

3. Try to find the resistance or potential reversal levels during the uptrend, so
that you are prepared to take some of your profits out.
To do that, you have to switch to higher time frames like 15/30 min or 1/4
hour charts. Look again for trend lines and EMA 200/633/36/12 resistance.

4. If your first target gets hit, move your stop slowly with caution to the upside.
Make sure you place the stop order still 10-15 pips under a good support level.
You have to do the same with the remaining two lots, so that you can achieve
the best results in the long term.

5. It is not necessary to wait for your stops to get hit. If the signal changes, you
just close your position and wait for the next opportunity. So, lets assume
that you have entered a long trade, but soon after your entry, the price goes
against you. If the price goes below point 3 of your long 1-2-3 setup and closes
below you are out. There is no need to wait for bigger losses. The stop loss
order is there to protect you, but that does not mean that you have to wait
until it gets hit.

28

SHORT POSITION AND

TRADE MANAGEMENT RULES


Lets assume that all rules are respected and you have a clear short signal,
trading on a 5min chart for intraday.
Enter a short position, and remember..
1. You cut your position into three parts (3 times 1 lot or 1 lot divided by 3),
depending on what is more convenient for you.
The target for your first lot should be at least 20- 30 pips, depending on how fast
or volatile the market moves at that current time. For the second lot you should
follow the EMA 12 and look for lower highs and lower lows.
Try to trail the trend to the downside and go for at least 40-60 pips here.
To take the last lot out, you should wait for a higher high and a higher low and a
clear trend line break. If the trend is strong then the last lot can give you much
more than 100+ pips, depending again on the currency pair and the movement.

2. Place a protective stop loss order of 20-25 pips under the closest resistance
level. For example: Trend lines or EMA resistance levels.

3. Try to find the support or potential reversal levels during the uptrend, so that
you are prepared to take some of your profits out.
To do that, you have to switch to higher timeframes like 15/30 min or 1/4 hour
charts. Look again for trend lines and EMA 200/633/36/12 support.

4. If your first target gets hit, move your stop slowly with caution to the
downside. Make sure that you place the stop order still 10-15 pips above a good
resistance level. You have to do the same with the remaining two lots, so that you
can achieve the best results in the long term.

5. It is not necessary to wait for your stops to get hit. If the signal changes, you
just close your position and wait for the next opportunity. So, lets assume that
you have entered a short trade, but soon after your entry the price goes against
you. If the price goes above point 3 of your short 1-2-3 setup and closes above,
you are out. There is no need to wait for bigger loss. The stop loss order is there
to protect you, but that does not mean that you have to wait until it gets hit.

BY FOLLOWING THESE SIMPLE RULES I REALLY CUT MY LOSSES
AND LET MY WINNERS RUN

29

Now study the chart very carefully. Look at the entry/exit and stop levels. After this example (N9 eur/usd 5min) many
exercises will follow, so you can practice this simple but very effective trading strategy.

N9

30

 FX PC SCREEN SETUP
&
TRADING APPROACH


Before we start to practice with exercises in this book, lets first organize the charts
on your screen and take a look at how to approach trading the right way.

1. Open 4 charts with the same currency pair on your screen.
Choose the daily on the first, the 4 hour on the second, the 1 hour on the third and
the 5min on the fourth chart (N10).

2. Choose Heikin-Ashi candles instead of classic candle sticks on all four screens.

3. Choose different colors for your EMA (close) setup. I prefer blue for the 12, red
for the 36, black for the 200 and gold or brown for the 633 EMA.

After your 4 screen setup is ready, you have to do your top-down approach.
Make sure you are relaxed and able to focus.
First look at the daily/4h chart, to get the direction of the trend, if there is any of
course.
Look for trend line breaks and support/resistance levels on the EMAs.
Additionally look for double tops or double bottoms, so that you can get an idea in
which direction the market could move in future.
Lets say you have spotted an up trend on the daily and the four hour charts.
Now you switch to the 1h chart to take a closer look.
If you can spot a long 1-2-3 setup with no lower high in making and the price
remains over the 200/36 and 12 EMA then you are looking 100% for long trades.
Now switch to the 5 min chart and look for a good setup according to the
FX system.
If you are in the trade, making good pips and you have already taken some profits,
always remind yourself to switch to the higher timeframes again, and look for these
important support/resistance levels.
Bounces off the Ema 200 for example on the 1h or 4h chart can be really powerful.

Now, it is important that you organize your trading. Spend a few minutes every
day to analyze your charts and the fundamental news before you take any action.
Why fundamental news? You dont need to know about the announcement results
to take an action, but what you are looking for, is the releasing time of the really
important news.
As you may already know, important news can move the markets like crazy within
few seconds.

So after you have switched your pc on, choose one good website to find out if there
is any important news during the day.

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Important announcements are for example:

Non-farm payrolls, Fed, Trade balance, Ism or Cpi-Ppi news.
Make sure you dont enter a trade 30 or 15 min before important news comes out.
You have to wait until the news is out and only after the market has relaxed, then
look for a trading signal.
Lets assume you are already in a trade. In this case you have to make sure that
you are able to manage your open position(s) well.
Often many good signals appear right after an important fundamental news
announcement. So, after you have done your analysis you are free to enjoy your
trading with passion.

FUNDAMENTAL NEWS CALENDAR EXAMPLE

N10

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FX 4 SCREEN SETUP

N11

N12

33

N12

N13

34

N14

The screen on your pc should look like this. It can be very easy to spot a trade if you can watch all four timeframes at once.
All support and resistance levels are easy to spot like this.

35

 FX TRADING EXERCISES


Before you start with the exercises make sure that you have
understood the system rules.
If you are not sure of something, just take a look at that particular
subject again to remind yourself.
Also try to stay focused and relaxed when you are doing the
exercises.

Take breaks and dont get upset if you are not able to do it 100 %
right the first time.
It is normal that you have to get use to the system first, but after
a while, you will see how easy it really can be.

Use a ruler and colored pencils if you prefer to draw your trend
lines, 1-2-3- setups, targets, reasons, limits and stop orders.
This way you can make fast and easy corrections on the charts.

Later on I will show you how to manage a trade when it is not
going your way, and how to decide when it is best to stay aside
and avoid trading.

Lets start!

Take a look again at the following chart (T1) and study this
example well.
You can use it at any time as a guideline for the future exercises.

In the next 15 exercises I would like you to find the
support/resistance levels, the trend line breaks, the 1-2-3 setups,
the exact entry and exit points of all 3 positions, the stops and
trailing stops, the results and of course all the trading reasons
you can find.
Remember that you have to cut your position into 3 parts, so
every time you open a position you have to manage 3 lots.

Have fun!

36

WORKBOOK

FX EXERCISES
T1-T15
&
COMPARE YOUR RESULTS
T1-T15

37

T1

38

T1 fix

Look at the short trade. You had an EMA crossover to the downside, but there is still an EMA 200 support. This is a more
aggressive entry, but allows you to enter a position earlier. You dont have to take this short position if you prefer to trade
more carefully or conservatively.

39

T2

40

T3

41

T4

42

T5

43

T6

44

T7

45

T8

46

T9

47

T10

48

T11

49

T12

50

T13

51

T14

52

T15 FIND THE ENTRY ON THE 1 H CHART (LEFT) AND COMPARE WITH THE ENTRY ON THE 5MIN CHART (RIGHT)!
WHAT DO YOU NOTICE? JUST DO THE EXERCISE AND COMPARE THE TWO TIMEFRAMES.

53

T2-T15 SOLUTIONS

54

T2FIX

55

T3FIX

56

T4FIX

57

T5FIX

58

T6FIX

59

T7FIX

60

T8FIX

61

T9FIX

62

T10FIX

63

T11FIX

64

T12FIX

65

T13FIX

66

T14FIX

67

T15FIX

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IN THE FOLLOWING FIVE

EXERCISES YOU WILL LEARN HOW
TO MANAGE A TRADE WHEN IT IS
GOING AGAINST YOU.
AGAIN USE YOUR PENCILS/ RULER
AND MAKE YOUR NOTES.


L1 - L5
&
COMPARE TO YOUR RESULTS

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L1

70

L1FIX

71

L2

72

L3

73

L4

74

L5

75

L2FIX

76

L3FIX

77

L4 FIX

78

L5FIX

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I hope that most of the exercises have been helpful to you. With a bit of practice I
am convinced that anybody can learn to trade this simple but most powerful
system.
It is important that you write down your questions and repeat the exercises until
you really understand the concept.
Take a look at the following 4 charts. These examples are as important as the main
system itself because, here you will learn when it is best to take a break and stay
out of trading.
Try to remember the following examples in order to spot setups like this in your
future trading.

80

O1

81

O2

82

O3

83

O4

84

NOW TRY IT FOR YOURSELF

EXERCISES O6-O10
&
SOLUTIONS O6-O10

85

O6

86

O7

87

O8

88

O9

89

O10

90

O6FIX

91

O7FIX

92

O8FIX

93

O9FIX

94

O10FIX

95

A TRADING ADVISOR, COACH OR MENTOR

If you want to enjoy financial freedom through trading, you have to follow proven
strategies and systems.
The key to achieve this is in your head. You must start to change the way you
think.

You must have goals and targets, dreams and passion, discipline and patience.
Sometimes you even need to take two steps back to move one forward but if you
really love what you are doing, you will succeed in the end.
Here, a trading coach or mentor can make the difference between success and
failure.

A good Trading coach should be a person you can trust, who will guide you, who
will advise you, and who will take you through all the obstacles during your
training.
There is really no need to fail in trading if you have someone who is able to show
you the way to do it right.

Unfortunately only a few traders seek help from trading coaches, so it should not
surprise you that more than 90% of all investors are loosing their money.
Of course it is not easy to find someone you can really trust.
Looking at the quantity of forex related companies in the web, it is very difficult to
end up with someone worth the effort and the costs of the course.

Try to avoid mentors that are promising millions in only a few weeks without
effort.
Try to be reasonable and think logically. Every professional singer or artist or
athletic has a coach and a teacher.
To reach the top, you have to choose the best training you can get and with trading
it is no difference.
You have to get better at what you are doing every day and a good coach can
surely help you with that.

Your positive psychology is maybe the most important thing in trading. If you are
able to overcome your fears, your overdoses of greed, and your anger in trading,
all other aspects in your life will change too.
If you succeed in trading you truly will become a better person. I am convinced of
that.

96



Remember this; The best system in the world is worthless if you are not able to
take responsibility for yourself and learn from your mistakes.
Your trading mentor should be able to take you to higher levels step by step and
encourage you on your journey to the top.

The student-mentor relationship should be based on respect and focused on your
professional growth.
Your personal coach is paid for one thing only; To help you achieve your goals, so
you can live the life you have always dreamed about.

Dont hesitate to seek for a trading coach if you are not satisfied with your results.
It is truly worth it, trust me.

If you have any question, or if you are interested in joining our club by
participating in one of our FX mentoring courses, please feel free to
visit our site www.
.com.

97

A PERSONAL MESSAGE

Trading in the forex market can indeed be profitable if you know what you are
doing; however you have to keep in mind.

If you are not able to follow the rules of any good system, you are simple not
able to succeed.

You should trade first with a demo account and double the money on that
account before you consider trading with real money.

You have to become confident with the system before you risk even a cent of
your own money. Then you should start with small lots and increase your lot
size according to the system rules.

If you are not able to pay your monthly bills at home, or if you need every
cent of your money to survive, you should not even think about trading with
real money.

If you dont have any experience in trading, look for a mentor or coach to
assist you. This is very important, especially for new traders.

Many people dont mind losing a lot of dollars/Euros in the financial
markets, but they never consider participating in a good training program or
trading courses. This could save thousands in the long term.


I hope this E-Book was helpful to you.
I wish you health, success and happiness in your life and of course in your trading

Nikos Mermigas

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FX

ALL RIGHTS RESERVED 2008

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