stevehopwoodforex.com

INTRODUCTION to 10.2

Hi, I'm Jem, let's keep this simple. Bob launched 10.2 and a test version of 10.2a recently which has rocked our worlds. You MUST become familiar with them before you delve into this thread:

10.2: viewtopic.php?f=38&t=562
10.2a: viewtopic.php?p=15769#p15769

10.2/a are highly effective, brilliantly smart and straightforward systems. They lets us know which currency pairs are ranging and which currency pairs are trending strongly. They are also superb at letting us know when to re-enter into a strong trend. Get to know these systems before you continue. They will help you as a trader and you will have a greater chance of understanding the brilliance that is about to go down.

BASKET TRADING

Basket trading is a trading style where a selection of pairs are traded as one. Instead of looking at each pair individually we now look at it as a single basket and when that basket reaches X amount of pips our TP or SL is hit.

We add long/short positions only on the pairs that are trending strongly. One of the beautiful things about the forex market is the correlation between pairs – if we time our entries correctly then we will see all of our basket trades going into profit together. Of course, if we get it wrong they will all go into a loss together.

Timing is absolutely essential with this. This is why you better wait for a retracement before we get in which will put the odds in your favour. Seriously, if you don't wait for a retracement you're going to cop a mouthful of A-grade DrawDown. You've been warned.

WHY BASKET TRADE?

As humble human beings we have emotions and they completely get in the way of our trading. For me, the ultimate in trading bliss is to trade a system that removes as much stress, fear and doubt as possible from the equation. How do I do this? By eliminating as many questions as possible and spending as little time as possible in front of the charts. I like to set my trades and then walk away. It may suit you better to TP when you feel it's right. Use your discretion.

With basket trading we don't have to worry about where to place our stops for each individual trade. We can set our risk:reward at 1:1 or better because we are choosing a set TP and SL for each basket. No worries about multiple correlated individual trades either, we are using them to our advantage here and no need to choose which correlated pair is going to be the one to move. We spread our risk over a bunch of pairs and use their pull and push effect to move in the proper direction and get big pips.

There will always be ways of adapting this to suit your style so my rules are merely suggestions. I bend them quite often when I see a good setup. Once you've spent enough time with the system you'll be able to bend the rules too. At the same time you'll want to keep consistent so I urge you to do all your messing around on a demo and get a few months of consistent profits before attempting to go live with this.

THE SETUP IN BRIEF

1. Choose the strongly trending pairs & add them to a watch basket.
2. Wait for price to to retrace on most of the chosen pairs
3. Wait for the triggers to start kicking in on most of the chosen pairs
4. Launch the basket!

This is a 'take your time and wait for the perfect setup' strategy. We will be trading H4 charts which means there will be plenty of days of no-trades. If the market is ranging sit on your hands or switch to a different strategy! Last week was a week of no trades while the pairs were changing direction. It's a sign of a good system when it tells you to stay out of the market. Go do something in real life like play with your kids or go skydiving, or rob a bank – whatever.

OK LET'S GET INTO IT!

1. The Watch Basket

When a pair meets the following requirement add the pair to your watch basket:

Open a screen for each of the chosen pairs using the attached watch basket template. Here is what my 27" screen setup looks like:

27inch.png

It's great to be able to watch all the pairs in your basket at the same time. Switch all of your charts to the H4 timeframe – it is the only timeframe you need to watch for this system so become familiar with the pace of it.

Note that we are using the D1 TMA Slope value for direction and strength. We are actually trading the H4 lower time frame which allows us to get back in on retracements from the bigger picture of the D1 trend.

Please not that the .8 is a recommendation for the best setups. if you see a pair fall between .4 to .8 it may still be tradable. Is up to you to work out if we are still trending or not by using your 10.2 brain

2. The Retracement Setup

Now that you have your chosen pairs for your basket it's time to watch and wait for a retracement.

Either RETRACE A or RETRACE B is ok.

SHORT PAIRS (below -.8 on daily)

LONG PAIRS (above .8 on daily)

NOTE: The Retracement Setup MUST happen on most of your chosen basket pairs before you continue to step 3. We want the markets to sync up and be working in tandem before we can move on. Remember if it hasn't retraced and you enter a basket you may get eaten alive by the -1000 pip DD monster and he's friends with Mr Margin Call. You are probably used to these guys paying you visits so try keep them at bay by following the rules.

3. The Trigger Setup

On the charts that you confirmed RETRACE A look for TRIGGER A. On charts that you confirmed RETRACE B look for TRIGGER B. These triggers are from 10.2 and 10.2a, if you don't understand them then it's time to hit the manuals again.

SHORT PAIRS (below -.8 on daily)

LONG PAIRS (above .8 on daily)

NOTE: The Trigger Setup MUST happen on most of your chosen basket pairs before you continue to step 4. Get them synced!

4. Launch The Basket

Your basket pairs have been chosen. The retracement conditions have been met on most of the pairs. You see them triggering one by one. when you see a trigger setup on most of your pairs enter a basket using ShelleyNow

After the basket is triggered sit back and watch in glory. You can choose to baby the trade after it's triggered or just let it run.

MONEY MANAGEMENT

From here the following is up to you:

1. Money Management including pips sl/tp, jumping stops and breakevens.
2. Closing your trades earlier by time (i.e.; just before next session open)
3. Closing trades if you see the pairs in profit and reaching supports/resistances and you don't think they will break through.
4. Closing trades if the little voice in your head tells you to.

EXTRA NOTES

In 10.2 Bob discusses the order of daily, weekly and monthly pivots to determine direction/trend. Read up on this as a great trade is at hand when the pivots are in the correct order and you get a retracement setup/trigger. If a pair is not in the correct order this doesn't mean it's not a good setup just be wary of the trade going against you.

I've noticed recently that the Asian session offers us The Retracement Setup. The London open offers us The Trigger Setup and then we go into profit until NY open reverses everything. It might be wise to close trades before the NY session to make sure that your profit doesn't go into a loss. But then again holding a trade for full TP or full SL is a 1:1 money management issue you might want to stick by.

Watch out for supports/resistances! Try not to long/short into a monthly/weekly resistance or support. Also, if you see a long setup that is hovering above a support, or a short setup that is hovering under a resistance, take it! Most importantly - wait for a retracement.

If a pair falls below the 'strongly trending' D1 TMA Slope then it's up to you if you'd like to remove it from your basket or not. Sometimes it is just retracing and setting up for a bigger move. However if you have a whole bunch of pairs in your basket and they all fall below .8 this could be the start of a reversal, watch out! But then again it could just be a beautiful retracement.

I like to have the H1 CurrencySlopeStrength up on my screen. When the H1 crosses over it can be a sign of a reversal coming up. I'm not adding rules to the system just yet on this but keep an eye on this as it's really good for spotting a reversal. Over here we can see an AUDUSD trade that went sour:

2012-06-22 01.49.45 am.png

I should have known to take profit at the WS1 because the H1 USD slope was above the AUD indicating USD strength and AUD weakness. Keep an eye on this with your trades, it's dynamite. I may add it in to the system, still getting a feel for it.

DOWNLOAD THESE GOODIES

10.2 x JemBasket v1.zip

TEMPLATE: 10.2 x JemBasket - Info // Use this on a seperate chart to monitor your basket.
TEMPLATE: 10.2 x JemBasket - Watch Pair // Use on each basket pair. This is where you trade from
EA: ShelleyNow // The EA to trigger your basket trades.

Please note that with DWMPivots you may need to adjust the true/false value for addSundayToMonday depending on your broker to get the pivots correct for your br0ker.

This pack includes assorted indicators/EAs built by the masters of 10.2. You can thank SteveHopwood, Baluda & NeoTrader for them. Of course thanks to Bob for 10.2, Shelley for her upside-down basket head and anyone else that's delving into 10.2 and attempting to crack the forex code. You guys rock.

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