‘The Fade Away’

A NativeForex Strategy
http://www.nativeforex.com

*First and foremost remember to practice practice practice this method before using it live, if you
decide to do so. There are many brokers that offer free practice accounts. Those accounts will
allows you to learn and practice this method Its important to perfect the fundamentals of forex,
including the techniques in these strategies before doing any kind of trading. Below I explain this
method and how I personally use it effectively. This is for educational purposes only *

The trading philosophy I have followed successfully throughout my Trading career is to

"Keep it Simple". I would contend that much of the failure that traders experience in
trading the Forex is due to the fact that they complicate things too much for themselves.
Its a FALSE statement to say that the only way to make money is to learn how to analyze
complex graphs, etc. Its simply NOT TRUE

I have been successful as a trader and when someone mentions fibonacci numbers or
oscillating graphs or some other fancy term,,, I HAVE NO CLUE what they are talking
about!!! I have structured the way I trade WITHOUT all that complexity :)

My 'Fade Away' strategy is truly one of my favorite. It can be done all through out the
trading week, usually dozens of times a day, on just about any currency pair, and the
BEST PART IS IT DOESNT EVEN REQUIRE THE USE OF ANY GRAPHS!!! Thats
Right!!! This strategy can be played simply by watching the numbers on your broker's
trading station. By using this strategy routinely you can bring in anywhere from 10 to 75
pips a day!!!

As with all my strategies, my explanation will be short and to the point. The whole
Philosophy behind my trading strategies is to KEEP IT SIMPLE. Of course do not forget
that with the 'Fade Away' you get a lifetime membership to my website where youll get
lifetime support on this strategy. If something doesn’t make sense, just drop me a line and
we’ll get it squared away . Now on with the Strategy  (NOTE* If you feel like you
understand Support and Resistance and how to use a limit order, please skip to steps 3 &
4)

1) To get started we need to discuss one concept/aspect of forex trading that is

ABOSOLUTELY ESSENTIAL to any successful trader and the KEY to this strategy.
That is, SUPPORT AND RESISTANCE. . .

Imagine walking into an office building and taking the elevator to the 3rd level. As you
step into the lobby you look up and down and notice that what contains you in the room
are its four walls AND the FLOOR and the CEILING. The Floor keeps you from falling
through down to the level below (2nd level), it is your SUPPORT. The ceiling on the other
hand keeps you from being jolted up to the next level up (the 4th level), it is your
RESISTANCE.
Now, imagine getting back on the elevator and going up to the 4th level. Once again you
step into the lobby and you notice the FLOOR and the CEILING (A new SUPPORT and
a new RESISTANCE). Now, think about what happened as you went from the 3rd level to
the 4th level…. What was your Ceiling on the 3rd level (Resistance) became your new
floor on the 4th level (Support) Does that make sense? If not read these previous
paragraphs several times, you’ll get it  You can also read more about Support and
Resistance at http://www.babypips.com/forex-school/support-and-resistance.html
(BabyPips is THE GREATEST WAY TO LEARN IF YOU ARE NEW TO FOREX)

These floors and ceilings (support and resistance) exist with in the forex market. The
explanation as to why they exist is long and complicated but the main thing to know is
that DO INDEED EXIST and you need to consider them when making a trade. These
Support and Resistance areas are not as solid and permanent as real floors and ceilings
are (hopefully your floor and ceiling are permanent  ) and YES forex support and
resistance CAN be broken. But often we can see very strong Support and Resistance
which currencies pair don’t break past for long periods of times (hours, days, months or
even years!!!)

For example lets say you are trading the USD/CAD and you know that 1.1250 is a major
area of resistance for the USD/CAD and that 1.1200 is a major area of support for the
USD/CAD. Well, when considering these support and resistance areas it might be a bad
trade if you were, lets say to make a trade going long when the currency pair is currently
at 1.1247 or equally as bad to make a trade going short when the pair is at 1.1203. WHY?
Well because your trade will BOUNCE off of your support and resistance areas and
unless there is LOTS OF VOLATILITY, it will most likely not break through those areas
right away leaving you with no pips to gain and possibly many pips to lose as sometimes
when bouncing off or strong support and resistance (S&R) it retraces slowly back and
forth for hours or days before breaking through the S&R or may completely just turn
around and go the opposite direction.

2) Before giving you the secret to the fade away there is one other thing you need to
know, that is ‘how to use a LIMIT order’. A limit order is often used when choosing a
take profit target on an active trade. (For ex. Lets say you have a trade going long which
you entered at 1.1220, you might set a limit order on that trade to SELL at 1.1228, if your
trade reaches 1.1228, the order will trigger and sell you out for a gain of +8 pips) In that
sense, you probably already know what a Limit order is.

THERE IS another important way that you can use limit order which is less understood
but still very powerful. . . Lets say you see the market for the USD/CAD at 1.1320
moving slightly upward (bullish trend) to 1.1321, 1.1322 ,etc. and based on some sort of
chart analysis you suspect that soon this trend will go as high as 1.1326 and then reverse
and go the opposite way. YOU COULD use a LIMIT ORDER here to tell your broker to
ENTER YOU INTO the market going SHORT when the market rises to 1.1326. So by
setting this order you are speculating that the market will reach 1.1326 and then go down
from there. So if your limit order sell triggered when the market went up to 1.1326 and
then it dropped to 1.1305, you would have gained 21 pips!!!! Get it? If not please email
me and ill try to explain it more  or you may contact your broker and ask them how
limit orders work. Good brokers have good customer support that will be more than glad
to explain 

3) OK, now for the ‘Fade Away’. . . Support and Resistance exists at different times for
different currency pairs, sometimes for no apparent reason. If you were to look at a chart
you would see different areas of Support and Resistance for just about any currency pair
on just about any day. Because Support and Resistance changes sometimes within hours
it is said to be IMPOSSIBLE to determine a currency pair’s S&R without charts… Well
that’s where the Fade Away comes in.

There is an area of S&R THAT EVERY SINGLE CURRENCY PAIR has in common and
that is 00, double zero. When I say double zero Im referring to the last two digits of the
pair’s rate. So for example on the USD/CAD 1.1200 or 1.1300 are a double zeros, or on a
pair like the USD/JPY 115.00 or 113.00 are double zeros. These DOUBLE ZEROS are
known as major PSYCOLOGICAL SUPPORT AND RESISTANCE. And though
explaining why double zeros always act as S&R can be long and complicated lets just say
that the market makers for the forex market like to keep the market balanced and when a
pair’s rate reaches near a double zero there is hesitance to allow the pair to break through
the double zero S&R. YOU DON’T NEED A CHART TO TELL YOU WHEN A
CURRENCY PAIR IS NEAR DOUBLE ZERO S&R

ITS NOT TO SAY THAT IT WILL NEVER BREAK THROUGH, its just that currency
pairs seem to bounce off of double zero S&R for quite awhile before breaking through.

It is this tendency, that is for currency pairs to bounce off of double zero S&R points, on
which the Fade Away is based.

Depending on which currency pair you are looking at, when a currency nears an area of
double zero S&R, it can BOUNCE off that Double Zero anywhere from 3 to 10 pips.
So For example, This past Tuesday Night (August 1st, 2006) the EUR/USD found itself at
a DOUBLE ZERO SUPPORT AT 1.2800. From about 10pm August 1st until 5am August
2nd it bounced off that double zero over 5 times, bouncing up to 1.2808, 1.2803, 1.2809,
and even once to 1.2811 and then finally at about 10am August 2nd it broke through that
support and stayed under 1.2800 for the rest August 2nd.

4) The KEY then behind the FADE AWAY is to utilize the power of the LIMIT ORDER
along with the BOUNCING that occurs off of DOUBLE ZERO S&R. You very simply
watch the numbers on your Broker’s Trading Station and when you see a pair nearing
DOUBLE ZERO S&R put a limit order to go the opposite way when the pair hits that
double zero number. SO if you see a pair at 1.5597 going UP toward 1.5600, you would
put in a limit order to SELL the pair when it hits that 1.5600. The expectation is that it
will not break to far beyond 1.5600, but will bounce back to a number under 1.5600,
(probably several times) before breaking up through 1.5600. So if your limit order to sell
triggers in at 1.5600 and bounces back to 1.5593, you can get out of the trade for a gain
of +7 pips.

So the same would work if you see a pair at 1.5506 going DOWN towards 1.5500. You
would put in a LIMIT ORDER to BUY if the pair does hit 1.5500. The expectation is that
it will not break to far below 1.5500 but will bounce up to a number above 1.5500 before
breaking down through 1.5500. So if your limit order to buy triggers in at 1.5500 and
bounces up to 1.5509, you can get out of the trade for a gain of +9 pips.

That’s why I call it the FADE AWAY. You are gained pips as it bounces or fades away
from major DOUBLE ZERO S&R 

*This paragraph added today August 2nd, 2006* Just last night I was able to productively
use this strategy. I was live trading that EUR/USD example from August 1st and 2nd I
mentioned above. At around 10:30 the EUR/USD sat at 1.2804. I knew based on that
number that the pair was nearing that DOUBLE ZERO SUPPORT coming at 1.2800. SO,
I put in a limit order to BUY when the pair hit 1.2800. It did in fact hit 1.2800 and it
bounced up to 1.2804 and so I got out of the trade for a gain of +4 pips. BUT THAT
WASN’T IT! Quite Often, like the EUR/USD often does, it bounced several times off of
that 1.2800 double zero S&R. So once more, an hour later or so, I placed another Limit
Order to Buy when it hit 1.2800. This time it triggered in at 1.2800 and went slightly
below to 1.2798, then, as I thought it would, it bounced up to 1.2811. I got out of the
trade for a gain of +11 pips!!! AND THEN I WENT TO BED  Gaining 15 pips in one
hour by just watching numbers on the trading station is pretty good I would say.

4) That’s pretty much the Fade Away  The best part of it is it can be used pretty much
any time of the day. With over 256 active tradable currency pairs and with 20 or so major
pairs, it is quite easy to find a currency pair near a DOUBLE ZERO S&R. OF course this
kind of super active strategy needs some practice before you use it live. When you
practice this strategy be mindful of a couple of things. . . 1) Consider the spread of a
currency pair when trying this strategy. Even though some bounces can go as much as 20
pips, its average is between 3 and 10 pips. With that said, using the Fade Away on a
currency pair like the NZD/USD with an average spread of 7 would be hard. I would
consider then using this kind of strategy on Currency pairs with low average spreads
(Like the EUR/USD with an average spread of 1) That way you maximize your gain
rather than waste the FADE AWAY on just covering the spread.

Something else to be aware of, especially when you are basing your play just on the
numbers and not using charts is to be sure that you are looking at the numbers on the
right side of the trade. What I mean is you might see for example the EUR/USD at
1.2797 and think that 1.2800 is DOUBLE ZERO RESISTANCE. So you might be
considering a to put a limit order to SELL at 1.2800 HOWEVER it is possible that in fact
1.2800 is actually DOUBLE ZERO SUPPORT and it just stuck its head below down to
1.2797 before bouncing above 1.2800 up to 1.2811, etc. The key to avoiding this error,
especially if you are not using charts, is to be sure to watch the currency pair for at least
15 minutes before considering the trade. That way you will know for sure which side of
the DOUBLE ZERO you are on.

REMEMBER THAT THOUGH DOUBLE ZERO S&R is extremely strong it doesn’t

mean that it wont go a few pips below the double zero number before bouncing up again.

This is also important to consider when FADING the correct way. You might think that if
it goes 1 or 2 pips in the wrong direction that the FADE didn’t work. BUT it might be just
doing what traders call a ‘head fake’ before doing a true bounce. The Key to avoiding
getting out of the trade too early is to have proper money management. I personally use a
1/1.5 win/loss ratio. So when doing the FADE AWAY I usually look for at least 6 pips, so
I risk about 4 pips in the opposite direction when I do trade.

The last thing to be mindful of when using the FADE AWAY is NEWS!!! NEWS breaks
can be highly volatile and quite often when a pair is near DOUBLE ZERO S&R it might
break right through the S&R without bouncing if the news break causes highly volatile
movement . The key to avoiding this pitfall is to be aware of when news will be released.
You can find the news at http://www.forexfactory.com/

After practice with this method, youll find your success rate way above 60%. When you
choose the right pairs (with low spread), and are aware of news breaks, etc. you can use
this strategy effectively positive close to 100%. I use the strategy probably once a week
when I see perfect conditions for it….. In the last year I have only lost on 2 or 3 trades,
with 30 or 40 positive trades!!!

I hope this strategy will work well with you. PLEASE KNOW THAT THIS OVERVIEW
IS ONLY THE BEGINNING OF LEARNING THE STRATEGY. PLEASE FEEL FREE
TO CONACT ME FOR SUPPORT 

SUPPORT FOR THE FADE AWAY

I always try to keep my strategies short and simple. Its FALLACY to assume that forex strategies
need to be complicated to work. That simply is NOT true. However if you have questions feel
free to contact me. You have a lifetime of support with this technique. Good Luck with your
trading. REMEMBER THAT THIS IS JUST THE BEGINNING OF LEARNING THIS
STRATEGY. PLEASE FEEL FREE TO CONTACT ME ANY TIME FOR SUPPORT  IM
HERE FOR YOU 

REMEMBER! KEEP IT SIMPLE, STAY CONSISTENT, AND BUILD YOUR WEALTH!!

*Disclaimer* Forex Trading involves a high risk of loss. The strategies and analysis shared here do not
guarantee results. Each person who uses these kinds of strategies may have varying This Strategy or Chart
Analysis is NOT TRADING ADVICE.EACH TRADE IS YOUR OWN DECISION It is simply an review
of the back-testing that has been done during personal trading sessions. . Any analysis or strategies posted
are personal opinions based on personal experience. Unique experiences and past performances do not
guarantee future results. This strategy or chart analysis is for educational purposes only and exist to help
other forex traders to come to a better understanding of charts and forex software. No buy. sell, or hold
recommendations will be given on through NativeForex. This Strategy is being offered as information only.
There is no guarantee of success. The author/publisher specifically disclaims any personal liability, loss, or
risk incurred, as a consequence of acting on any information presented in this document.
THE FADE AWAY IS INTELLECTUAL PROPERTY OF NATIVEFOREX AND MAY
NOT BE REPRODUCED TO PUBLISH.