SPECIAL REPORT: Jack’s “Zero to a Million” Trading Strategy

Million Dollar Trading Strategy

SPECIAL REPORT: Jack’s “Zero to a Million” Trading Strategy

Next week I’ll start trading LIVE the “Million Dollar Forex Journey” account.  Right now I’m revealing what my trading strategy will be! If you want to see an additional strategy
you can try out our profitable double trend trap strategy.

All right, just to recap:

-We’re going to make a million dollars (or more) through forex trading.

-We’re going to do it in 18 months (or less).

-And we’re going to start with next to nothing – $50.

I’m going to give you the basics of my trading strategy today and then I’ll share more details about it in future follow up articles.

This strategy IS designed to consistently offer excellent risk/reward opportunities, and, executed with some modest amount of intelligence (lucky for me that’s all it requires), should consistently produce winning trades that far outnumber and outpace losing trades.

MY 15 MINUTE CHART STRATEGY

HERE IT IS, the deep, dark, mysterious, intricate, secret system, worked out by an ancient Chinese Taoist sorcerer, and kept closely guarded for centuries by inscrutable Zen currency traders:

Open a new chart, set the time period to 15 minutes.  Load 3 EMAs (exponential moving averages) – the 5, 10, and 50 EMA.  When price and the 5 and 10 EMA lines all cross above the 50 EMA line, buy (or, conversely, when they all cross below the 50 EMA line, sell).  I know, I know – the complexity of it is staggering, right?

You can also add the 21 and 35 moving averages – as well as the 100 and 200 SMAs (simple moving averages) just for higher time frame reference – but the 5,10, and 50 provide the basic trading strategy.  I use EMAs weighted to the close – but that’s just my personal preference.

I’ve adjusted things a bit to my own personal trading style, but the credit for this outstanding strategy goes to a friend and fellow trader, Clay Ferrell, who was nice enough to share it for free at the Forex Factory forum (you can read more there at “Trading Systems”à”CHOROS System”, but fair warning, there’s 500+ pages of discussion – and that’s not even the original discussion thread!).  The original rule is to enter on the first retrace touch to the 10 MA (after price and both MA’s have crossed over the 50 MA).  However, I often enter when price has crossed and made a 15 minute candle close past the 50 MA.  I do that because I’ve found that price itself is a better indicator than any moving average (and because patience is not one of my virtues).

The initial stop loss shouldn’t be more than 10 or 12 pips, at most, below (or above, in a sell trade) that 50 MA line, nor more than 10-12 pips away from your entry point.  One of the main strengths of this strategy is its low risk.  The theory behind this strategy is that once that 50 MA line is crossed by all three – price, the 5 MA, and the 10 MA – that 50 MA line should pretty much hold as support/resistance.  It works best when the 5 and 10 Mas are both rising at a fairly steep angle.  The 10 MA line should continue to rise (in a buy trade), and also act as initial support for price.  Eventually price will come back through the 5 and 10 MA lines and test either the 35 or 50 MA line.  The FIRST time this happens, the 50 MA will usually hold – that is, there probably won’t be a 15 minute candle close significantly (i.e., not more than 4-5 pips) to the other side of it, and often price will just touch the 50 MA line and immediately bounce off of it.  The game is often over the second time that the 50 MA is challenged – it’ll give way, and price and the shorter moving averages will all decisively cross back over it in the opposite direction.

This is a short term trading strategy and it’s important to move your stop aggressively once you have a profit of about 10 pips – better to get stopped out with just a small profit than to let a profit turn into a loss.  Many times I’ve been stopped out with a small profit and initially wished I was still in the trade and been tempted to jump right back in…but an hour later ended up thinking, “Boy, I was sure lucky to get out with a profit on that”.

Below is a screen shot of a 15 minute chart showing movement both above and below the 50 EMA line.  Note how once there’s a significant move above or below the 50, the 10 EMA tends to act as support/resistance.

Trading Strategy Example one

And here’s another – note the pin bar that precedes a cross up and over the 50 EMA, that could then have been ridden for a very nice profit.

 

Trading Strategy Example 2

I urge you to set up your  own charts with the three moving averages and watch the market action for yourself.

That’s my basic 15 minute trading strategy.  Of course it’s not quite that simple in actual trading and there’s a bit more to it than that, too much for me to cover in the space of one article.  I’ll provide more rules and trade filters for using the strategy in upcoming articles, so stay tuned.

Believe it or not, if we can simply average catching one good trade a day with this strategy,[tweetable alt=””] we will make it to our goal of a million dollars in 18 months or less.[/tweetable]

3 KEYS TO SUCCESS! (applicable to ANY trading strategy)

1 – Learning.  You have to become an expert in your business, and that’s certainly true if your business is currency trading.  You need to put in the time and effort to always be learning how to improve your trading.

2 – Patience.  Starting a business with less than $100, and making a million dollars in less than two years sounds fast.  And it is.  But it can seem oh so slow in the beginning.  When you’re only seeing $5 or $10 profits, it doesn’t feel like you’re getting anywhere.  You want to be already up there making the “big coin”.  But you simply have to steel yourself to being patient, to being content with gradually increasing your equity.  Just averaging small daily profits will make that million dollars a reality.  You might even try reminding yourself every day you make a small gain, “I’m doing it – I’m making a million dollars.”

3 – Diligent adherence to a good, solid trading strategy.  It’s amazing how many traders discard a basically sound strategy just because it has a few losing trades.  They forget all the times it worked wonderfully.  No trading strategy is going to work every time – nothing’s perfect.  But I’ve found that a number of times when I thought, “Oh, this strategy doesn’t work”, that I’d often lost money not because of the strategy but because I’d departed from the strategy.  For example, sometimes I’ve jumped the trade too early, getting in as soon as price moved across the 50 EMA line – I looked back later and saw that there was never a 15 minute candle CLOSE across the 50 EMA – I’d violated the rules of my own strategy.  The trading strategy wasn’t at fault – I was.

MUCH MORE TO COME:  I’ll be back next week with more information on my basic trading strategy (and on another one I’ll be using) and how you can follow the progress of the Million Dollar Forex Journey account, seeing each trade I make.  As always, I welcome comments, suggestions, prayers and gifts of chocolate and liquor.  J

“As you have freely received, freely give…” – (Matthew 10:8)

Jack Maverick

Jack Maverick is a writer and forex trader. Find him on Google+ at https://plus.google.com/u/0/103534926809963693894/?rel=author and check out his novel, the psychological thriller “A Cross of Hearts”, on Amazon at http://www.amazon.com/Cross-Hearts-J-B-Maverick-ebook/dp/B006GHJ0ZC/

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  • Tom

    Jack what ever happened with this?

  • Evelyn Seetha

    Hi Jack, how is the progress of a million dollar coming along?

  • Kevin Strydom

    Did you ever get some more details on this experiment?

    Please share if you did….

  • Kevin Strydom

    I would tweak the system a little, but that is just me!

    I would only have the 3 MA’s & one other indicator!
    That indicator would be vital to spot incorrect entries.

  • tomi

    whatever happen with this? Is it blogged else where?

  • DB – Next report should be out by tomorrow (Friday, the 21st). I’ll consider the Skype idea – thanks for the suggestion – but I’m a recluse by nature. Like Jesse Livermore, I tend to stay hidden away in my private trading office during market hours. Also, I’m a technological moron – My skill level doesn’t extend much beyond using Microsoft WORD to write these articles. But Casey and I have talked about setting up some sort of open forum in relation to this project – it’s largely a question of time – at the moment I’m trading all morning and scribbling all afternoon.

  • dbsquirt

    Hey Jack I think you have a lot of people waiting to see the next post here as am I. a great tool is skype to do a live trading group/hang out. love the idea waiting to hear from you.

  • ” during range bound market or when price moves in small ranges its hard to find any trade”
    Thanks for your comments, Ayaz, and yes, it is difficult to find a trade in range-bound markets when the moving averages are just pretty much flat-lined, but it’s very rare to see a trading session that doesn’t afford at least a couple of good opportunities.
    And yes, I’ll be addressing that and other issues in future reports here.

  • Tomi – Watch for the next report (later this week) for info on where you can follow this at MyFxbook. I trade primarily the NY morning session, but sometimes (often Mondays and Fridays) trade the London session. Occasionally I take a flyer in the Asian session, but only rarely.

  • Ayaz Salman

    Hi Jack,
    First of all thank you for clearing my anxiety that what kinda strategy you going to use and honestly I was hoping that you should use moving averages, and here you go moving average it is. Well I was trying recently or you can say comparing SMAs VS EMAs. but yet im still little confused. I hope moving along with you I will learning the applicable difference between sma and ema. Concept wise im clear.

    Getting back to your strategy I have done the basic system that you proposed. laid out all the EMAs and SMAs and im looking at the trades we are getting if we back track the strategy. well when price has moved more than the average or I should say significantly then trade is much better but during range bound market or when price moves in small ranges its hard to find any trade. So are you suggesting until and unless there is not a clear breakage we should not trade ?

    Like you said more details will follow so I guess you better hurry up 😀 cant wait for more details. By the way except your follow up articles on your journey of becoming millionaire are you putting up some page or going to use some resource where we can following you while trading live or anything like that or are you planning to give signals for market entry exit ?

    Just a suggestion if there is anything more interactive can be setup then I guess it will be very helpful for you and for us as well in terms of learning. Overall I am really looking forward to follow you on this journey and Most of all congrats on doubling your money in first day its amazing I must say. Good luck to you

  • tomi

    Where are the trades? Do you have fxjunction? Is there a page with chart entrys to prove this works? What sessions are you trading? How many hours are you sitting waiting for the 5 10 cross? Thx for the time and good luck Jack. You maybe my new here.

  • You have coffee??? My new best friend!
    Yeah, there’s just too much to fit into any one article, so I plan to do a weekly column here on this providing additional information. I’ll be examining trades I’ve made, and hopefully those examples will help you get a clearer idea as we go along of exactly how this strategy works.

  • IsItCoffeeYet

    Hi Jack, Totally awesome results already. I hope you’ll tell us how much of your account you risk and how you manage the trade. I’m ready to make my million!!

  • I was fortunate. Just one of those days where I nailed everything.
    Thanks for your good wishes.

  • Len D

    Good Job on doubling already Jack and good luck with this venture.Will be keenly watching this. Are you going to post screenshots for people to see or an ongoing commentary?

  • I’m glad the 13th didn’t fall on a Friday.
    Not that I’m superstitious or anything.
    Jack<— (rubbing lucky rabbit's foot)

  • …And the funny part is (well, one of many funny parts), I was trying out a new trading platform that I’m not really familiar with, and I kept entering orders wrongly and having to re-enter them.
    P.S. attached my morning trading face

  • Hmm…I hadn’t thought of that.
    Nahhh, I think I’ll just double down. 🙂

  • Jack now all you have to do is pull out that $50 you made and then this experiment is at least totally paid for.

  • I decided to test this out, so I put $50 in an account this morning…and two trades and about 4 or 5 hours later, I’d doubled it to $100.
    Now I’m stuck with, “Greaat, how do I pull that trick off again?” 🙂

  • Chris

    Awesome! I share your enthusiasm 🙂

  • Hi Chris! (waving) I love EMAs – I’ve always preferred them to SMAs, even though there’s probably not often a great deal of difference. Yes, getting good entry points where you can run tight stops is very important here.

  • Chris

    Hi Jack, thanks for the great article. Just wanted to say that I like your strategy because I also use EMA’s for mine 🙂 Totally agree that with the 15 min world, you want to be tight with the SL indeed. Thanks for sharing!