Phase 5: The way to perfection

The way to perfection may not be quite the right qualification for the last phase, for it so happens that people just simply are not perfect. However by striving for perfection you could be able to gain the most optimal results. When it’s about this last phase of deepening the OFS Trading System, building up experience, deepening fundamental analysis, the market sentiment as well as correlations and finally optimally taking advantage of the information which you can derive from the SMA lines, will be strongly emphasized.

Training and perfectioning

If everything went well, by now you’ll have enough material as a result of the preceding articles to start working with the extensive version of the OFS Trading System. However grant yourself sufficient time to master everything the proper way. You’ll notice that the more you have built up your experience, the more you’ll be gaining a much better insight in the development of a trend and that you’ll even be able to take optimal advantage of this by means of the additional entry possibilities.

Now you’re using the extensive version of the OFS Trading System, you’ll notice that you’ll find sufficient trade setups to rapidly get the necessary experience to be able to perfect your trading. Don’t forget in this respect to regularly go through the series of articles “Online Forex Trading is simple” in order to keep you staying alert and to keep you maintaining the right mindset!

In the preceding articles I already indicated that the win ratio will be approximately between 50% and 80% and that your target in this phase is directed at accentuating your win ratio to such an extent that you will be situated at the top. In actual practice the difference often comes down to a bit of experience (provided that you will apply the things you have learned) and now that you have all means to your disposal, the time has come to start working on this.

Fundamental Analysis, Market sentiment and Correlations

I immediately would like to add that this part is not absolutely a necessity to be able to trade successfully with the OFS Trading System, provided that you will not be underestimating the impact of the market sentiment as well as important news publications and you also will take these conditions practically into account, as is being explained in the e-book of the OFS Trading System. However for the benefit of the people who are interested to keep on studying, there still is a possibility to take advantage of this when it’s about the win ratio as well as gaining more self-confidence!

If you really want to gain more in-depth knowledge, I recommend you to follow the Icarus course, composed by Chris Lee. Chris not only knows how to explain this matter in simple ABC language, as a result of which even beginners will understand this matter, but after finishing your study you’ll also really dispose of a sound foundation so you could even be able to integrate fundamental analysis, market sentiment and correlations into your trading method. There is a price tag involved to be able to follow this course, but I’ll promise you that it will be utmost worthwhile. Anyway I myself followed this course too and I didn’t have had a moment of regret!

Using the SMA lines as a guide line

As soon as you also master the extensive version of the OFS Trading System, you’ll notice that on a certain moment you’re going to apply the SMA lines more as a guideline. After all you’re completely accustomed to the development of a trend and you’re consequently being able to recognize patterns, experienced as you are.

An example of this is a possible reversal. If you’re closely watching the SMA lines combined with price action, then you’ll also observe that it’s frequently possible to also take advantage of a reversal in an early phase and that this reversal might be the beginning of a new trend.

An example to clarify this:

forex trend reversal

On the above shown chart you’ll be able to see a situation which quite frequently occurs. At first you’ll be able to observe that the price is rising and you’ll be able to distinguish quite clearly that up till point 1. higher highs are being reached. Then we’ll see a doji candlestick, after which a reversal is taking place towards the black line which shortly before this reversal already has been serving as support.

At point 2. you’ll see that a new high is not being reached, as a result of which the chance to get a reversal or a range is highly possible from now on. Then we see that the price is breaking through the support line with a lot of momentum and is bouncing off on the next support line.

At this very moment there are a number of factors which are clearly indicating a reversal. In the first place no new high has been reached. In the second place the top black support line has been broken through with a lot of momentum. In the third place the 50 SMA has been broken through. The 50 SMA often serves as a strong support or resistance level and in combination with the first two factors this consequently could be a clear indication.

What you’ll see frequently happening in case of a reversal is the fact that the price at first is still retracing before the reversal is definitely being launched. In this case the upper black former support line seems to be the most logical point because support often turns into resistance. Also significant for that kind of a situation is the fact that the price returns for a short while to one of the SMA lines. To which one of the SMA lines the price will be returning often depends on other important support and resistance levels, so you’ll have to reason this logically.

On the chart you’ll see that the price is indeed shortly touching the 50 SMA, but the same candlestick hardly has a body and exactly connects to the former support line, consequently now being a resistance line. An excellent moment for an entry if you want to prematurely take advantage of a reversal. A logical stop loss should be located above the 30 SMA line, as a result of which the trade will have enough space to move.

In case of such a setup I’ll personally move my stop loss downwards by stages and I’ll try to take a risk-free trade as soon as possible (don’t forget to provide enough space to move!). As the risk/reward ratio could be quite sizable in case of these kind of setups, I’ll try to choose a logical take profit level based on the zooming out principle and I’ll keep the whole position open till this level.

As you can see on the chart the risk/reward is quite sizable (the price is even going further down as being visible on the chart) and by being on the alert for such situations you’ll be consequently able to gain considerable advantages!

Anyway shortly after this setup also a classical setup occurred according to the basic version of the OFS Trading System.

Conclusion:

Possibly the last example right now might be still a bit too complicated, dependent on the phase you’re in, but it’s not that complicated for you to reach the stage in which you’ll be able to quickly recognize similar situations. However it’s rather important for you to seriously comply with the below mentioned step-by-step plan.

You can read all information in the free e-book of the OFS Trading System as well as in the several articles on this website. The only subject in case of which I’d like to refer you is related to the more extensive and detailed information about candlesticks and matching price action. However this subject is excellently being explained in the e-book “Candlesticks made easy” composed by Chris Lee.

The step-by-step plan to gain the optimal result practicing the OFS Trading System:

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