Four Hour Trader

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Four Hour TraderAll Signals produced in MetaTrader (free) on your own screen. Original SaneFX Members Area Click here

It’s well known that over 90% of traders fail. There are many reasons for this but the main one (apart from ineptitude) is the common practice of trading from 30 minute, 15 minute and 5 minute charts. Some even think scalping from the 1 minute chart is sensible! The shorter the time frame the more meaningless chart movement becomes and the more you are simply trading noise.

The stubborn belief that repeating the same mistake year after year will eventually make us profitable traders means that very, very few ever succeed. The ones that do eventually realise that you have to trade off the 4 hour or daily charts. I developed my Rich Lazy Trader for the daily charts but Japan and the Middle East meant that long-term trends blew up according to the day’s news! So, we were forced to temporarily drop to the 4 hour charts with surprising success. Here is a system evolved from my successful SaneFX and The Oil Business systems over a period of several years specifically for that most perfect time frame – the four hour charts. All my systems are based on the same very simple principle –

We don’t place trades if the signal candle is exceptionally large because this means that something unusual has happened. Part of the discipline needed to be successful is knowing when not to trade. For that reason, the guide explains in depth how to recognise and avoid that trade killer – sideways movement. When the market is just drifting (less common on the four hour chart) it will often repeatedly trigger most indicators into a string of failed buy and sell signals.

Of course, it would be madness to trade even half of these – take life easy or stress will kill your trading career! I would even recommend not trading five days a week. All we need is a few hours a day in the vicinity of the computer to pick up maybe ten trades a week and we can expect an easy 1000+pips a month from this incredibly successful and relatively stress-free system. Trades are placed and forgotten with an average 100 pip take profit and a 70 pip stop loss. Just place the trades and walk away or trade as shown below for oil by closing half the contract at +100 pips and having a take profit of +200 pips for the other half – move the stop to break even when the +100 target is reached. We have a maximum signal candle size beyond which we refuse the trade. This is because extra large candles mean that something unusual is going on.

Four Hour Trader is a serious system for serious traders and requires a minimum of $2,000 trading capital trading the standard 0.1 contracts (it can be done with $1,000 if you only trade one instrument at a time) or $300 trading micro contracts (0.01 contracts). With $20,000 you can happily trade a full contract and have the potential to make over $10,000 a month. Unlike most systems, we publish actual results from every signal.

The first trade for March was on the 8th and we had 9 signals in total. Three were losing trades resulting in losses of -220 pips and six were winners giving us a cool +1,500 pips for an overall profit of +1,380 pips – for oil alone! The -20 pip trades were close by an opposing signal. Trading one contract (two times 0.5 contracts) that would be $6,900 which is not bad for one month. even trading the minimum 0.1 contracts would have given us $690 profit.

The beginning of March was chaos with the Middle East troubles but some poor signals we avoided because the signal candles exceeded our maximum allowed size. There were 8 trades with two losers costing us -280 pips and six winners bringing in 1,350 pips. The last trade was still open at the time of writing. You can see that oil and the Dow bring in some nice profits!

Off screen we had two trades. The first made 97 pips and retraced giving us a double -70 pip loss! The second gave us +100 pips and 0 pips. That’s 11 trades with 5 winners giving us +1,120 pips and 4 losers taking away 620 pips giving us a poor +500 for the month. the unusual +100, +20 trade was because the second half was closed by the next signal. Gold was very erratic during March because of the Middle East and Japan causing gold to fluctuate wildly on a daily basis.

Off screen we had a trade on the 1st with two times 60 pip loss (we use a -60 pip stop here) and one on the 2nd with a +100 win. The first two sell arrows above are actually just one trade because the take profit had not been hit by the second signal. You can see that the stop is rarely hit because an opposing signal usually closes the trade first (for as little as a 5 pip loss on two occasions above). March gave us 13 trades, 7 off which were wins but the losing 6 only accounted for -185 pips giving us a total profit of 515 pips for the month.

Of course, some months are worse and some better but the two examples above are typical. Trading experience will tell us which instruments to avoid trading because there are times when a particular chart is just not behaving reasonably! However, because of the way Four Hour Trader usually closes losing trades before the stop is… Read more…

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