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Dean Malone 4X Los Angeles Group - HotComm January 2007 Take it E.A.S.Y.! • Partner of Compass Foreign Exchange, LLC. • Co-Founder of Forex Signal Service.com. • Previous Senior National for 4X Made Easy & Wizetrade. • Prior co-founder of a Dallas telecommunications company. • 19 years of financial market experience. • 11 years of trading experience with stocks, options, futures, and foreign currency. Dean Malone © Dean Malone, 2007 www.compassfx.com Unique experiences and past performances do not guarantee future results. Trading stocks, options and spot currencies involves substantial risk; and there is always the potential for loss. Your trading results may vary. No representation is being made that any software or training will guarantee profits or not result in losses from trading. Disclaimer © Dean Malone, 2007 www.compassfx.com Table of Contents Description Slides Easy Trading Method 5 – 73 CompassFX (Trader Friendly Broker) 74 – 80 Forex Trade Oracle (Managed Account) 81 – 87 © Dean Malone, 2007 www.compassfx.com Dean Malone’s E.A.S.Y. Trading Method © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method EUR/USD 1-Hour Clear Entry at 1.2823 © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method EUR/USD 1-Hour Clear Exit at 1.2875 © Dean Malone, 2007 www.compassfx.com Mark Douglas, author of Trading in the Zone, states: “The best traders have developed an edge and more importantly, they trust their edge.” Why the E.A.S.Y. Method? © Dean Malone, 2007 www.compassfx.com My “trading edge” rules: 1. A high probability of success. 2. Enter and exit trades without conflict or stress. 3. Trade decisions dictated by price action, not by my preconceived beliefs and opinions. Why the E.A.S.Y. Method? © Dean Malone, 2007 www.compassfx.com E = Effective Provides me an effective edge in my trading. What is E.A.S.Y.? © Dean Malone, 2007 www.compassfx.com E = Effective A = Accurate Delivers a high degree of probability and predictability. What is E.A.S.Y.? © Dean Malone, 2007 www.compassfx.com E = Effective A = Accurate S = Simple Keeps my analysis simple in order to get a quick snapshot of the market, and make trading decisions with less stress and anxiety. What is E.A.S.Y.? © Dean Malone, 2007 www.compassfx.com E = Effective A = Accurate S = Simple Y = Yield Yields a higher ratio of winning trades versus losing traders. It’s a numbers game! What is E.A.S.Y.? © Dean Malone, 2007 www.compassfx.com 1. Price action 2. Momentum 3. Strength E.A.S.Y. Method There are 3 primary market conditions I look for in a potential trade: © Dean Malone, 2007 www.compassfx.com ¾ Average Price Bars ¾ Price Action Channel ¾ Traders Dynamic Index E.A.S.Y. Chart Setup © Dean Malone, 2007 www.compassfx.com Average Price Bars © Dean Malone, 2007 www.compassfx.com ¾ Provide a better depiction of current market. ¾ Reveal market strength & consolidation. ¾ Eliminate fluctuations of nominal price action. ¾ Remove the noise of price distortion of the underlying trend. Average Price Bars © Dean Malone, 2007 www.compassfx.com ¾ Use the Heiken Ashi method. ¾ Heiken = “Average” ¾ Ashi = “Bar” ¾ Heiken Ashi averaging technique – haClose = (Open + High + Low + Close) / 4 – haOpen = (haOpen(previous bar) + haClose(previous bar))/2 – haHigh = Maximum(High, haOpen) – haLow = Minimum(Low,haOpen) Average Price Bars © Dean Malone, 2007 www.compassfx.com Typical Candlesticks © Dean Malone, 2007 www.compassfx.com Typical Candlesticks False exit points! © Dean Malone, 2007 www.compassfx.com Average Price Bars © Dean Malone, 2007 www.compassfx.com Average Price Bars © Dean Malone, 2007 www.compassfx.com Average Price Bars Positive bars mean “BUY” Negative bars mean “SELL” © Dean Malone, 2007 www.compassfx.com Average Price Bars Positive bar with long upper wick means “Strong BUY” Negative bar with long lower wick means “Strong SELL” © Dean Malone, 2007 www.compassfx.com Average Price Bars A negative bar with upper wick means “Weak SELL” A positive bar with lower wick means “Weak BUY” © Dean Malone, 2007 www.compassfx.com Average Price Bars Shorter bar than previous bar is an “indication of Change” A very short bar means “Change of Trend” © Dean Malone, 2007 www.compassfx.com Price Action Channel © Dean Malone, 2007 www.compassfx.com Traditional Price Channel has two formats: 1. A pair of trend lines above and below price like the Linear Regression Channel. 2. An envelope of bands around price with set deviation limits such as Keltner Channel. Traditional Price Channel © Dean Malone, 2007 www.compassfx.com Used to determine upper and lower boundaries and signal potential reversal or breakout. Traditional price channels can cause “reactive” trading! Traditional Price Channel © Dean Malone, 2007 www.compassfx.com Price Action Channel Sets inside of price movement…instead of outside of price wait for the market. Used by institutional traders and sophisticated trading programs. Promotes “responsive” trading! © Dean Malone, 2007 www.compassfx.com ¾ Use Smoothed Moving Average ¾ Top of Channel = 5 period, High ¾ Bottom of Channel = 5 period, Low Alternatively, use an 8 period EMA, High & Low. Price Action Channel © Dean Malone, 2007 www.compassfx.com Price Action Channel 5 period Smoothed MA = High price. 5 period Smooth MA = Low price. © Dean Malone, 2007 www.compassfx.com Price Action Channel ¾ Provides overall trend direction. ¾ Reveals periods of consolidation. ¾ Used primarily as an Entry target. ¾ BUY Trend – Average Price Bars tend to run on top of channel. ¾ SELL Trend – Average Price Bars tend to run on bottom of channel. © Dean Malone, 2007 www.compassfx.com Price Action Channel Positive bars riding the top of the Price Action Channel “Good BUY (Long) Trend” Nice upward trend of the Price Action Channel. © Dean Malone, 2007 www.compassfx.com Price Action Channel Negative bars riding the bottom of the Price Action Channel “Good SELL (Short) Trend” Nice downward trend of the Price Action Channel. © Dean Malone, 2007 www.compassfx.com Price Action Channel “Range-Bound, No Trend” Price Action Channel is flat with no clear direction. © Dean Malone, 2007 www.compassfx.com Price Action Channel haClose > PAC High haClose < PAC Low “Entry Condition using PAC” © Dean Malone, 2007 www.compassfx.com Traders Dynamic Index © Dean Malone, 2007 www.compassfx.com A hybrid indicator developed to indicate market conditions related to trend direction, momentum, and market volatility. An “all-in-one” indicator! Traders Dynamic Index © Dean Malone, 2007 www.compassfx.com Traders Dynamic Index Step 1: RSI Price (Green) Line Rules: Trade Long when RSI PL > 50. Trade Short when RSI PL < 50. Consider exit when RSI PL is > 68 or < 32. © Dean Malone, 2007 www.compassfx.com RSI Price Line compared to Price Action Traders Dynamic Index © Dean Malone, 2007 www.compassfx.com Step 2: Trade Signal (Red) Line Rules: Trade Long when RSI PL > TSL. Trade Short when RSI PL < TSL. Exit trade when RSI PL & TSL crossover. Traders Dynamic Index © Dean Malone, 2007 www.compassfx.com Step 3: Market Base (Yellow) Line Rules: Market Base Line (MBL) is the Overall Trend. Trade Long when RSI PL is > MBL. Trade Short when RSI PL is < MBL. Traders Dynamic Index © Dean Malone, 2007 www.compassfx.com Market Base Line compared to Price Action Traders Dynamic Index © Dean Malone, 2007 www.compassfx.com Market Base Line forecasts Market Reversals Traders Dynamic Index © Dean Malone, 2007 www.compassfx.com Step 4: Volatility Band (Blue) Lines Rules: Possible to add to a Long when RSI PL is > VB. Possible to add to a Short when RSI PL is < VB. Consider exit when RSI PL crosses back over VB. © Dean Malone, 2007 www.compassfx.com Traders Dynamic Index Volatility Bands compared to Daily Price Action Traders Dynamic Index © Dean Malone, 2007 www.compassfx.com Volatility Bands compared to Intraday Price Action Traders Dynamic Index Tight Volatility Band Tight Price Range © Dean Malone, 2007 www.compassfx.com ¾ Average Price Bars - Heiken Ashi indicator ¾ Price Action Channel - 2 Smoothed Moving Averages - 5 period, High - 5 period, Low ¾ Traders Dynamic Index - RSI = 13 period, Close - Volatility Band = 34 period, Close - RSI Price Line = 2 period, Close, SMA - Trade Signal Line = 7 period, Close, SMA E.A.S.Y. Method Putting it all together! © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method Entry Rules © Dean Malone, 2007 www.compassfx.com Average Price Bars (APB) • Look for Positive or Negative bars trending. • Monitor the current haClose. • Long entry = haClose > PAC High Moving Average • Short entry = haClose < PAC Low Moving Average E.A.S.Y. Method All systems GO! © Dean Malone, 2007 www.compassfx.com Price Action Channel (PAC) • Monitor the direction of the Channel. • Monitor the High & Low Channel values in relation to the current haClose. • Long entry = haClose > PAC High & PAC uptrend • Short entry = haClose < PAC Low & PAC downtrend All systems GO! E.A.S.Y. Method © Dean Malone, 2007 www.compassfx.com Traders Dynamic Index (TDI) • Long entry = RSI PL > 50, TSL, and MBL. (Long entry = Green line > 50, Red line, & Yellow line) • Consider adding to Long if RSI PL > the upper Volatility Band and > 50, but < 68. • Avoid entering a Long when RSI PL > the upper Volatility Band, > 50, and > 68. E.A.S.Y. Method All systems GO! © Dean Malone, 2007 www.compassfx.com Traders Dynamic Index (TDI) • Short entry = RSI PL < 50, TSL, and MBL. (Short entry = Green line < 50, Red line, & Yellow line) • Consider adding to Short if RSI PL < the lower Volatility Band and < 50, but > 32. • Avoid entering a Short when RSI PL < the lower Volatility Band, < 50, and < 32. E.A.S.Y. Method All systems GO! © Dean Malone, 2007 www.compassfx.com Long Entry: (All conditions are satisfied.) 1. APB haClose > PAC High Moving Average. 2. PAC trending up. 3. TDI = RSI PL > 50, TSL, and MBL. Short Entry: (All conditions are satisfied.) 1. APB haClose < PAC Low Moving Average. 2. PAC trending down. 3. TDI = RSI PL < 50, TSL, and MBL. E.A.S.Y. Method Entry Setups © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method Exit Rules © Dean Malone, 2007 www.compassfx.com ¾APB Long exit Positive bar is much shorter than the previous bar or changes to a negative bar at close. ¾ PAC Long exit APB closes inside the channel. ¾ TDI Long exit = 1. RSI PL crosses back below the TSL to the downside. 2. RSI PL > 68. 3. RSI PL crosses back below the upper Volatility Band to the upside. E.A.S.Y. Method Time to Exit the money train! © Dean Malone, 2007 www.compassfx.com ¾ APB Short exit Negative bar is much shorter than the previous bar or changes to a positive bar at close. ¾ PAC Short exit APB closes inside the channel. ¾ TDI Short exit 1. RSI PL crosses back over the TSL to the upside. 2. RSI PL < 32. 3. RSI PL crosses back up over the lower Volatility Band. E.A.S.Y. Method Time to Exit the money train! © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Trades © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD 5-minute Entry at 1.8864 © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD 5-minute High at 1.8876 © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD 5-minute Traders Dynamic Index > 68. Possible exit at 1.8871 © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD 5-minute Exit at 1.8868 © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD Daily – 7/27 Entry at 1.8588. Set Stop Loss at 1.8403 at the Low PAC. © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD Daily – 7/28 Not much movement today. Stop Loss set at 1.8403 at the Low PAC. © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD Daily – 7/31 Trade at 1.8676. Move Stop Loss to 1.8474 at the Low PAC. © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD Daily – 8/1 Trade at 1.8763. Move Stop Loss to 1.8610 which is Low of the Day. © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD Daily – 8/2 Trade at 1.8767. Move Stop Loss to 1.8659 which is Low of the Day. © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD Daily – 8/3 Trade at 1.8877. Move Stop Loss to 1.8702 which is Low of the Day. © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD Daily – 8/4 Trade at 1.9082. Move Stop Loss to 1.8763 which is Low of the Day. © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD Daily – 8/7 Trade at 1.9066. Move Stop Loss to 1.8874 which is Low of the Day. © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD Daily – 8/8 Trade at 1.9048. Move Stop Loss to 1.8974 which is Low of the Day. © Dean Malone, 2007 www.compassfx.com E.A.S.Y. Method GBP/USD Daily – 8/9 Stopped out at 1.8974. 386 pip trade © Dean Malone, 2007 www.compassfx.com © Dean Malone, 2007 www.compassfx.com Kim Pingleton Experienced Forex IB & Fund Manager Dean Malone Experienced Trainer & Private Trader Scott Maddin Registered Futures Broker & Founder of Compass Financial Who is CompassFX? Including a Staff of Series 3 Brokers © Dean Malone, 2007 www.compassfx.com History of CompassFX 1991 – Compass Financial, NFA registered futures firm, started. 2003 – Compass Foreign Exchange LLC (CompassFX) founded. 2004 – CompassFX establishes IB relationship with IFX Markets and offers the ActForex platform with one-click multiple account trading designed for traders and fund managers. 2005 – CompassFX offers access to Forex Trade Oracle managed account program. 2006 – CompassFX establishes IB relationship with FXDD and offers the MetaTrader 4.0 platform to clients. © Dean Malone, 2007 www.compassfx.com Forex broker with a trader’s perspective • Access to ActForex & MetaTrader 4.0 trading platforms • Trade over 20 Currency Pairs • 2 pip spread - EUR/USD & USD/JPY • 3 pip spread - GBP/USD & USD/CHF • Leverage - 100:1 & 200:1 • Mini Lot Accounts • One-click trading for multiple accounts • Trailing Stops, Hedging and Scaling-out • $500 minimum deposit © Dean Malone, 2007 www.compassfx.com Forex broker with a trader’s perspective Free access to proprietary trading tools • FXTradeTrend™ forecast (Week, Day, Intraday) • Daily Support/Resistance • Daily Pivot Points • Trading Ratios • Weekly Analysis • Average Daily & Weekly Ranges • Trend Continuation / Reversal Analysis • Leverage & Stop-Loss Principles © Dean Malone, 2007 www.compassfx.com Forex broker with a trader’s perspective • Online educational videos • Basic & Advance trading strategies • Forex pivot point calculator • MetaTrader 4.0 Custom indicators © Dean Malone, 2007 www.compassfx.com Inside the Forex ¾ Money Management • Margin “Margin is only how much it costs you to place the trade.” • Leverage “Leverage is the equity in your account divided by the volume of the positions traded.” • Consistency “Stay in the game with Consistency, Discipline and Low Leverage.” © Dean Malone, 2007 www.compassfx.com Forex Managed Account © Dean Malone, 2007 www.compassfx.com Forex Trade Oracle www.forextradeoracle.com A Forex Managed Account program. Provides investors who seek above average returns the ability to participate in the largest financial market in the world and increase portfolio diversification. © Dean Malone, 2007 www.compassfx.com Managed account program: ¾ Uses low leverage. ¾ Trades market cycles. ¾ Follows a proprietary formula. ¾ No management fees. ¾ Only an incentive fee on new profits! Forex Trade Oracle www.forextradeoracle.com © Dean Malone, 2007 www.compassfx.com Trade Results ¾ CompassFX 50K account ¾ CompassFX 10K account Forex Trade Oracle www.forextradeoracle.com © Dean Malone, 2007 www.compassfx.com ¾ CompassFX 50K account Forex Trade Oracle www.forextradeoracle.com Month $ Value Monthly % YTD % August '06 $117,711 12.31% 135.42% July '06 $104,976 35.41% 109.95% June '06 $77,527 4.60% 55.05% May '06 $74,118 13.03% 48.24% April '06 $65,576 18.29% 31.15% March '06 $55,436 -9.41% 10.87% February '06 $61,192 -14.98% 22.38% January '06 $71,975 36.52% 43.95% December '05 $52,721 -18.56% 5.44% November '05 $64,733 9.00% 29.47% October '05 $59,388 13.44% 18.78% September '05 $52,354 4.71% 4.71% Monthly Average = 8.36% © Dean Malone, 2007 www.compassfx.com Forex Trade Oracle www.forextradeoracle.com CompassFX 50K Account* * Results as of December 2006 with no incentive fees taken out. * Account opened 9/01/2005. © Dean Malone, 2007 www.compassfx.com CompassFX 10K Account* Forex Trade Oracle www.forextradeoracle.com * Results as of December 2006 with incentive fees taken out. * Account opened 11/02/2005. © Dean Malone, 2007 www.compassfx.com Dean Malone 4X Los Angeles Group - HotComm January 2007 Thank you… 4X Los Angeles! http://www.compassfx.com/comp/MT4_4XLA_110506.htm © Dean Malone, 2007 www.compassfx.com
