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First Green Day Trade Setup

Basic setup — First Green Day

The setup is normally two days, BUT SOMETIMES can take three.

The example is of GBPUSD. We have a Monday that is a small, narrow-range day. Tuesday then pushes through the Monday high before "dumping" later in the New York session. This is our "DUMP DAY."

Wednesday opens where Tuesday closed and throughout the day has a smaller daily range. The CLOSE is ABOVE the OPEN. That's the key — we need the market to CLOSE ABOVE the OPEN.

A great FGD setup will have a well-defined high-low consolidation heading into the close of the day.

The market has traded above the consolidation since Wednesday, and then engulfs the low bear candles.

You don't have to have this, but this confirms strength in the market, and gives us an LOD entry for a LONG TRADE.

This example is a three session setup: New York (high), Asia (inside), then a buy inside our 20 EMA at the London open, for an explosive long trade.

This is our trade entry on the 5 minute chart.

I've added the 20 EMA exponential moving average to the 5 minute chart to eliminate indecision for traders confirming their entry. Once we have our setup and it begins to take shape, the close inside our 20 EMA gives us our entry candle.

This trade exploded vertically and had a 15 pip stop loss. A measured move of the high-low rectangle put our profit target at 100 pips. The target was hit and we were taken out of the market.

We executed our entry, stop loss, and profit target. Our profit target was hit.

Three Day Setup — Formal structure

  1. 01Day 1 → Dump Day
  2. 02Day 2 → First Green Day
  3. 03Day 3 → Consolidation and BUY SETUP — Low of Day, or Low of Session (Low Hanging Fruit — LHF)
  4. 04Measure 50-75 pips down (currencies) or 100-150 pips (oil, gold, indexes) from the HOD for a potential strike zone level. (Three levels of fall. If the market exceeds that, redraw the LOD and strike zone area.)

First Green Day identification checklist

  1. 0115 minute charts for daily scanning in your process
  2. 02MUST HAVE A DUMP DAY
  3. 03MUST HAVE A DAY AFTER THE DUMP DAY THAT CLOSES ABOVE THE OPEN
  4. 04Mark the CONSOLIDATION AREA high-low forming a rectangle into the close.
  5. 05Use the 5 minute charts on trade day with a 20 EMA exponential moving average on the chart.
  6. 06Only take trades that confirm during your 3-hour trading window (Asia / London / New York).
  7. 07The BEST TRADES will confirm right at the 3-hour timing windows.
  8. 08ENTRY is on the BULLISH close back inside the 20 EMA.
  9. 09Our stop loss will be placed below the 5 minute peak formation low. For most currency majors my stop loss is 15 pips. Oil, Gold, Indexes can be 25.
  10. 10My MAX STOP LOSS usually never exceeds 20 pips on currencies, 25 on Oil, Gold and Indexes.
  11. 11PROFIT TARGET is preset to 50 PIPS. (There will be bigger and more profitable trades in excess of 100 pips — measured moves.)

Master Taking 50 pips Out of The Market

In the beginning I would suggest mastering the process and execution of the FRD trade setups and locking in the 50 pips. Over time as you gain your confidence and consistency with all of your trades, you will begin to identify which trades you can hold onto for more profit, scale some profits out and potentially leave a trailing position in the market to capture any further profits that are growing on the trade.

Important to understand