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WINNING TRADING
STRATEGY

THE ONE TRADING STRATEGY


YOU WISH YOU KNEW BEFORE
TRADING
INTRODUCTION

I want to thank you and congratulate you for downloading the


book, Winning Trading Strategy.

Trading is a constant battle where you have to learn the best


tools and tricks to have an edge in the market and to make
money. Learn this one trading strategy, and your trading is
really not going to be that difficult.

In this book you will learn important rules on trading success


and the one strategy that can hеlр you master your trading
success and gо оn tо become a millionaire trader. Here is a
preview of what you will learn:

• The importance of a trading plan.


• Why you should track your trades.
• The importance of knowing yourself and your mind.
• The one trading strategy.
• And much more!

Thanks again for downloading this book, I really hope you


enjoy it!

Best Trading,
Johan Nordstrom
http://www.TradingWalk.com

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© Copyright 2015 by Johan Nordstrom. All rights reserved.
This document is geared towards providing exact and reliable
information in regards to the topic and issue covered. This
information is for your personal use only. You cannot
distribute, copy, reproduce, or otherwise sell this product or
information in any form whatsoever, including but not limited
to: electronic, or mechanical, including photocopying,
recording, or by any informational storage or retrieval system
without expressed written, dated and signed permission from
the publisher. All copyrights are reserved.

The information herein is offered for informational purposes


solely, and is universal as so. The presentation of the
information is without contract or any type of guarantee
assurance, and should not be considered specific investment
advice. Examples are provided for illustrative purposes only.
Past performance is not necessarily indicative of future results.
Trading is associated with risk and capital may decrease in
value. If advice is necessary, legal or professional, a practiced
individual in the profession should be ordered.

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TRADING PLAN

One of the biggest mistakes most new traders make, is to


trade on emotions, tips and whatever catch their attention, it
can work for some time, but not in the long run. To be a
consistently profitable trader, you need have to have some
rules on how to act in the market. Have you ever experienced
something like the example in the chart below?

If you have a trading plan, you will always know how to act in
the market and where you are going to place your trades and
take your wins and losses. Your trading plan primarily consists
of a set of rules you should follow to profit in trading. You will
take out much of the anxiety being in a large losing position

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when you, for example, have stated in your trading plan; you
only risk one percent per trade.

Having a trading plan makes trading easy and enjoyable, it


takes the fear, anxiety and complexity out of it. If you are in
the market for the thrill, then you are not in it for the money,
so if you are in it for the money; have a trading plan.

It is difficult to follow a trading plan since it is in our nature to


bend and break rules. You need to have the discipline in order
to act consistently according to your rules. Done right and you
will profit for the rest of your life, and become a successful
trader.

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TRACK YOUR TRADES

I know many traders that cannot figure out why they do not
have the returns they know is possible for them to have. I
have tried to explain to them that they need to track what
they are doing to identify bad habits. Without a trading
journal, it is hard to remember exactly what made you act in a
certain way at the time.

The most important answer to why you should track your


trades is because it enables you to learn from your mistakes
and thereby advance as a trader so you can make more
money. You may think you follow your trading plan when you
are not, and if you do not have a system of tracking your

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trades there is no feedback for you to fall back on when you
make mistakes and do not follow your plan.

Tracking your trading does not have to be complicated. Use a


simple Excel document or pen and paper where you write
down the security, date, price, your stop price, setup and your
thoughts. When you close your position you write down the
date, price, if you followed your rules, gain/loss and your
thoughts. Simple as that!

Tracking will tremendously help you spot your mistakes when


reviewing, I have had times when I closed a position, realized
it was not according to my plan to close when writing my
tracking, reopened the position, and made a profit instead of a
loss.

I recommend you track your trade after each action you take
or before you leave the computer for the day. Tracking the
next day often make you forget much valuable information.

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MONITOR YOUR MIND

Have you ever experienced a loss becoming a larger and larger


loss but you “feel” that it is going to turn since there are so
many reasons that support your trade so it has to, but it does
not and you have to sell with a gigantic loss?

First, how much risk you take in every trade, should be stated
in the risk/money management section in your trading plan.

Second, your mind has a tendency to play tricks on you.


Example; when you are in a long trade the mind gets a long
bias and, therefore, focuses mainly on positive signals and
rejects negative signals. You should, therefore, take particular
notice on how you think and what you focus on, a good way to
help you from this "mind problem" is to plan your trades,
(again Rule #1) so you'll know how to act before you enter a
trade.

One of the reasons you have a before and after thoughts


section in your tracking is so you can analyze how your mind
play tricks on you.

To get your mind under control, I recommend you do some


mental exercise before you trade, it can be as simple as
repeated the five fundamental Truths of trading and from
Trading in The Zone by Mark Douglas. Read my blog post on
the “Top 5 Trading Books Every Trader Should Have Read”

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Read more here: tradingwalk.com/top-5-trading-books-every-
trader-should-have-read/

THE WINNING TRADING STRATEGY

In this chapter, I will reveal the winning trading strategy. I


look for these setups every day because they are so powerful.
You can use it trading futures, forex and stocks. It is so
powerful it works on any security in any time frame.

The Strategy
This is mainly a reversal strategy of the micro trend in the
direction of the macro trend. An example can be a micro
downtrend in 1h chart but the daily chart, macro trend, is in
an uptrend. The strategy can be traded both long and short
and as a day trading strategy or swing trading strategy on
your favorite time frame, we mainly trade this on daily, 4h and
1h time frame. It is a ABC setup, but we will get to that.

To keep it simple, we use two charts to define the micro and


macro trend. We define trend by looking at higher highs and
higher lows and the candlesticks body range, if red candles are
bigger than the green the trend/momentum is down. You can
certainly use your favorite moving average to define trend. We
keep it simple, no need indicators. Candlesticks are our price
action and what we will use to give us the entry and exit price.

We will use a current 1h chart (date 2015-12-15) of the


currency pair GBPJPY to illustrate the setup.

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Setup
We can see that we have a downtrend, 1) the price action start
in the upper left corner and is now in lower right, lower lows
and lower highs 2) the red candle bodies are bigger than the
green ones (the daily is also in a downtrend). Therefore, we
look at a short trades. Now to the setup, to have a short setup
we want:

• A break to new lows.


• A rally against the trend (A move).
• A move to the downside (B move).
• A Break of the rally high (A point) creating a new high (C
move).
• We try to enter as high as possible on the C move before
it reverses back down with anticipation of breaking new
lows.

Trading Tip!
Round numbers often act as support and resistance, therefore,
place orders at these levels or just low/above round number
levels.

Trading Tip!
Symmetry is importaint, therefore, measure the A move and
anticipate that the C move might be similar. With symmetry
you increase the probability of a win.

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Entry
To find the area where the C move might end. We draw a Fib
extension between the low and high of the A move to get our
short area between the 1.279 and 1.618 extension. When we
have the area, we look left for a green small candle body and
place the entry at the open of that candle, close to 184.100.

Target
Exit the position at 182.500 closest round number to the open
of the red candle at the low point of the A move, giving us a
positive risk reward (reward is greater than our risk).

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Stop loss
Place a stop loss order a above the short areas closest round
number (above Fib 1.618 extension [184.575], closest round
number [184.600]) 182.620.

The outcome
Like many other times, we traded this strategy and produced a
winning trade.

Click here to learn more winning strategies and tips to become


a better trader.
Read more here: tradingwalk.com/learn

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RISK MANAGEMENT STRATEGY

What is risk management? It is the process where you decide


the risk (potential loss) in a trade and then take the
appropriate action given your risk tolerance.

How to decide how many contracts you should buy or sell


when you have a setup? It depends on how much you are
willing to risk.

How much should you risk? We recommend that you never


risk more than two percent on trades, one percent is optimal,
but only you can decide how much you should risk. Higher risk
gives you a higher reward when you have winning trades but
also larger drawdowns when you have losing trades. Keep your
risk low, in general, just think what a 50 % drawdown would
do to your account. You may think that a 50 % win is going to
take you back to break even, no, take a look at the example
below.

Example
Your initial account capital is $100.000. You invest everything
and suffer a 50 % loss, account decrease to $50.000
(=$100.000*0,5). You invest everything again and get a 50 %
gain, account capital increase to $75.000 (=$50.000*1,5), but
that is $25.000 short of what you initially had. You need a 100
% gain after a 50 % loss to come back to break even. Have a
risk management strategy so you do not end up in a deep
drawdown impossible to recover from.

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The Risk Management Strategy
I hope you understood the need to have a risk management
strategy. It is time to calculate how many contracts you should
trade with depending on how much of your account in percent
you are willing to risk per trade, say you only want to risk one
percent. You can then calculate your risk per trade in $. With
your $1.000.000 account:

One percent (0,01) * $1.000.000 = $10.000 risk per trade

Your risk for one trade is $10.000. Now you calculate the risk
for each contract depending on where your entry and stop-loss
is. For this example, you want to buy and placed a limit order
at $40 and your stop-loss at $37. The risk per contract is then:

$40 – $37 = $3 risk per contract

Now that you have risk per trade and risk per contract, you
can precisely calculate the number of contracts you can buy
for the security, taking your risk per trade divided by your risk
per contract, you will get the number of contracts you should
buy.

$10.000 / $3 = 3.333 contracts

You can now enter your trade with 3.333 contracts and if your
stop loss is hit you will know that you only lost one percent of
your account and you will live to trade another day!

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This is a simple risk management strategy, it is an essential
strategy you understand and apply to your trading if you want
to achieve trading success. Avoid blowing up your account, like
so many traders do every day.

Click here to read my blog post “Do Not Dig Yourself Into A
Hole”
Read more here: tradingwalk.com/trading-rules-do-not-dig-
yourself-into-a-hole/

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TAKE ACTION

Yоu nееd to ѕеt the whееlѕ оf сhаngе to become the best


trader you can be in motion аt thе earliest орроrtunitу.
Identify аn асtiоn which уоu can tаkе to get thingѕ gоing аnd
tаkе thаt action аѕ ѕооn as роѕѕiblе so you get started.

Action is defined as "the act or process of doing something,


typically to achieve an aim”. There is absolutely nothing more
important than taking action, because without actually getting
started, you will literally make zero progress. It does not
matter how much planning you have done, if you do not get
started you will still be sitting at square one wondering why
everyone else is making progress and you still are not.

"The secret to getting ahead is getting started"

Read the statement above three times aloud. Now think of a


time where you really wanted to do something, but you never
got it done because you never got started. It is not a pleasant
experience to reminisce about, is it? You can make up all sorts
of excuses, alibis, etc. However, the only reason why you did
not accomplish what you desired to do was because you never
even began what you wanted to do!

Perhaps you put it off until tomorrow, and tomorrow never


came. Perhaps you were just really busy and neither had the
time nor the energy to work on that side project, or finish that
book, or learn how to trade. The thing is, we as humans are

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exceptional at making excuses, especially since it is an easy
way to make ourselves feel better about not taking action.

There are plenty of excellent excuses out there for not doing
what you said you were going to do - but in the end they are
all just excuses. Are excuses going to execute that trade for
you? Are excuses going to make you a better trader? Make
you more money? I highly doubt that an excuse is going to
magically manifest itself in a physical form and take care of
what you did not.

Procrastination might be one tough adversary to beat, but we


have a simple formula to winning virtually every one of the
battles you will fight:

Motivation + Getting Started = Progress

For the sake of simplicity, let us assume that you were so


driven by the progress you made, that you continued to put
more and more effort (compounding effort) into whatever it is
you were doing. Assume that this would give us another
equation:

Progress + Time = Success

There is one truth about success that I have heard echoed


over and over again by almost every successful person I have
met: they got where they are now by getting started.

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You have motivation, and that is great, so now it is time you
get started today! I am sure you had enough time to read this
ebook, so why not set aside 15 minutes to begin working on
becoming a better trader?

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CONCLUSION

Thank you again for downloading this book!

The next step is to take action, practice and trade this strategy
so you learn it by heart. I belive in you!

One more thing: if you liked this book, would you be kind
enough to leave a review and feedback on this, email me at
johan@tradingwalk.com

Thank you and I wish you good luck!


Johan Nordstrom
http://www.TradingWalk.com

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