My trade criteria are. (subject to routine updating as the market and I change)(All blog times are PST.)(Double click on charts for larger view.)

I AM A “Bottom Support, Top Resistance Trend Trader” Meaning – I trade in the direction of the trend, before the breakout. I trade the major pairs. I trade up from the bottom support or up from the bottom trendline …. in uptrends. 

Vice versa… I trade down from the top resistance in downtrends. I want to enter long at the bottom of the range box with a small stop loss in uptrends. Otherwise I want to enter long as the pair touches the up trending trend line.

I also trade according to Early Bird entry indicators after 12 Midnight, and after 5:30 AM California time from the 5 minute chart.  I pay attention to the stock market open at 6:30 AM local time.  I also pay attention to my location on the daily and 4 hour charts.

#1. FIND A BREAKOUT CANDIDATE. 

Find the currency pair that has “hit a wall of resistance/support line or trendline”.  The best candidate is the most active pair with the strongest trend, favoring the EUR/USD because it is less spiky than the other pairs.

Look for a currency pair that has as many of the following qualities as possible.
A. Breaking near a major support/resistance area like  recent swing highs or lows.
B. The candidate is near the lower support in an uptrending market and vice versa in a downtrend.
C. Then currency pair has retraced to a trend line prior to resuming the trend.
D. It is 12 – 1:30 AM or 5:30 – 7 AM and we have a new Bird.
E. Resistance and support allow for decent stop loss and profit expectations.

#2 SET UP TO TRADE.

A. My prime trading time is between 12 Midnight – 9AM. PST ..DON’T TRADE BEFORE 11 PM except after 8 PM on Sunday night! There is not usually enough market momentum.

#3 PAY EXTREME ATTENTION TO MONEY MANAGEMENT.

A. My Max risk is 2% of my account. I set my trade size so I am comfortable to let the trade play out.
B. Always consider the risk/reward potential before trading and before setting my stops. Have at least a 1:1 risk reward ratio.
C. When trading off my prime hours, I trail the stop loss tightly behind the moving market.
D. My maximum stop loss is 30 pips.

E. Once the trade moves 10-20 PIPS into PROFIT I move my stop to break even and let it run, trailing the stop loss, moving it forward with swing lows / swing highs.


#4. LOCK IN PROFITS.

A. My profit strategy is to —TRAIL– moving the stop up behind each new swing low. (In an uptrend, opposite in a downtrend.)   If the trade is stalling and showing signs of reversal I take my profits.
B. My strategy will close out my trade when a 1 2 3 reversal occurs. ie lower highs and lower lows in an uptrend.     

C.  If the marekt is not trending then set take profit at the next support/resistance level.

D.  Remember it is easier to take several 30 pip profits than one 90 pip profit.  (Make your profits on consistant, smaller trades that add up to 5%/day George Smith.) 

#5. COMPOUNDING MY POSITION.

To compound my position each time the trade exceeds a previous high I can add to the position and move up the stop loss. In a strong uptrend you can make tremendous returns this way. In most markets you will get try to get out when the trend is playing out.

#6 PRECAUTIONS

A. WATCH OUT FOR U.S. REVERSAL BETWEEN 3-5 AM and LONDON REVERSAL 10-12:30 PM. Both markets often tend to move back to their previous close.
B. Pay attention to support and resistance, trend lines,  and 1,2,3 reversal patterns and big NEWS.
C. Do not trade outside of trading period, period, period, period. (Unless the market is extremely volatile.)

7. Miscellaneous

A. Do not get consumed by trading. Set aside — a certain time of day to trade. Only trade during this time frame. Set aside the rest of your day for other personal needs. –Your family, exercise, education, proper eating, and your other job if you are employed. Most important take time to ground and center yourself every day. You have to have a way to release stress quickly. For me, meditation and vigorous exercise are the best. In other words, be a trader with a balanced life. The market will always be there. Take care of yourself first.
B. Try to maintain a psychological view of the market. I like to view the markets as a large school of fish. They seem to randomly shift and turn without rhyme or reason. They chase their food as a greedy horde. Then unexpectedly the fish run from predators scattering with irrational fear. As you study the schools of fish you will begin to see patterns within their chaotic swimming. You become a better fisherman. You don’t need the whole school to feed your family so don’t get greedy. Trading is 90% psychological. Study that. (Read Trading in the Zone)
C. For longer term trades and better probability identify the big box breakouts on the daily chart and then enter on small box breakouts, ie 15M charts. see 9/27/08 blog.
D. 50% Is the main retracement target after a significant move and a great reversal potential entry within the bigger trend. 

Risk Disclaimer
Myforextradingcoach Blog is an educational blog intended to deliver forex currency trading training. The information presented with my blogs is for educational purposed only. This information is not a recommendation to purchase, sell or hold foreign currencies. Always paper trade until you have consistent profits.
Disclaimer
Trading foreign exchange (Forex) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.