ADDING S.E.X. LINES
In my eBook “Forex Sailing” (released simultaneously with this eBook) I talk
extensively about S.E.X. Lines, what they are and how to use them. I’m just
going to assume you’ve already read it, but if you haven’t then skip reading
this section and come back to this once you have read about S.E.X. in “Forex
Sailing”.
I’ve personally found that S.E.X. lines work GREAT for Scalping, and are
quite useful. On your one-minute candle chart set your S.E.X. lines to 15, 30
& 60.
Take a look at the following chart with the S.E.X. lines on it.
On the left of this chart you see a nice tight consolidation. The S.E.X. lines
are tightly “clumped”. S.E.X. lines usually clump together nicely in a
sideways moving market, and for scalping purposes I’ve found that they
display near perfect clumping which makes it easy to read breakouts from
such consolidations. When a break out begins to occur the lines quickly fan
out nicely supporting the likelihood of a starting trend (how big or small the
trend “who knows”, but as a scalper you can profit from petit trends so it
doesn’t matter how big the trend ends up being). Notice also the time when
the breakout occurred – 02:00 EST (at the open of the European market
overlapping the Asian market). Now notice the first two waves made 3 lows
(including the base of the first swing), which I drew a trendline on (hard to see
but look for the straight dotted line). The first two waves retraced to the “Mid
Yellow Zone”, which is good. Also notice how they bounced the 15 S.E.X.
pair. The market then moved strongly and the third wave made a very
shallow retracement into the “Shallow Green Zone”. It also bounced the 15
S.E.X. pair, but more interestingly the EMA crossed the SMA of the 15
S.E.X. pair on the last candle of the stagnation before the retracement
happened (always watch the pairs for crossovers as sometimes (but definitely
not always) it can give you important signals – usually best for stagnant
tops/bottoms vs. sharp reversals). The fourth wave was small (about 9 pips),
retraced into the “Mid Yellow Zone” an also bounced the 15 S.E.X.
pair. Now the fifth wave we see that it retraced to the “Deep Red Zone” and
penetrated the 15 S.E.X. pair, and the EMA crossed the SMA of the 30 S.E.X.
pair, all factors showing that the market appears to be loosing steam. The
sixth wave also was a deep “Deep Red” and it definitely hit the 30 S.E.X.
PAIR. It also gets close to our trend line. Also the EMA crossed the SMA of
the 60 S.E.X. pair. Often what you see happening when the price comes
close to a trendline is that it’ll bounce the trendline, or it’ll penetrate through
it. Also frequently during a trend the first time it penetrates the 30 S.E.X. line
it often does resume the trend, though it also means that our trend might soon
after be ending. Then the market had some caffeine because it moved up
strongly (seventh wave), which you would have entered in on. It peak into a
stagnation (15 S.E.X. lines crossed too), which you would have then exited
at. The market then slowly retraced into a stagnation, crossed the trendline,
and the 15 & 30 S.E.X. pairs clumped. Now you’re thinking “oh well, that
sure was a nice trend. Let’s see what happens next”. It started moving up
slowly (eighth wave) but you probably would not have traded. What is
interesting is that this wave (and a few following this wave) do a pretty neat
thing. Sometimes when the price breaks through a supporting trendline (a
trendline that provided support in an uptrend – flip what I say upside down for
downtrends) the trendline then acts as resistance as the trend continues in the
same direction, and here we see that phenomena. After a few waves you
would normally readjust your trendline to fit the new angle of the trend better,
but I didn’t re-draw it on the chart which I’m showing you as having two
trendlines drawn would be visually confusing. You likely would have entered
the ninth wave as it appeared to pick up steam (the last two waves were rather
stagnant which you now interpret as just a pause in the market) and your
S.E.X. pairs spread out again.
The next bunch of waves continued upwards, but I won’t give you the “play
by play” commentaries… I think you get the idea by now. What is really cool
is that EVERY wave made a higher low, so if you would have use trailing
stops as learned in “Forex Surfing” you simply wouldn’t have gotten
out! (Keep in mind that that certainly doesn’t happen in every trend, but for
this one we got lucky).
For your information, which you might like to know, on this chart the market
broke out of the consolidation at 02:00 EST at about 1.2165 moving upwards
all the way, and the chart shown above ended at 05:00 EST at about 1.2245
(about 80 pips – even trading just ONE regular lot you could have easily made
about $800 in that 3 hour period ($266 per hour per lot traded). Now compare
that to the hourly salary of a lawyer or doctor! ).
Folks, you’ve got to be aware that I am not cherry picking my examples from
the best trends that have happen over some past period. As you can see that
candle on the right is “real time”, and yes I’ve been following this trend live
while writing all this (for the past few hours). My charting software only
allows me to see one-minute candles for the past 24 hours, so I can’t go back
searching for months worth of data. What all this means to you is that if I can
find perfect examples for my book to show you everyday then you too should
be able to find great trading opportunities to scalp virtually everyday!
On the left of this chart you see a nice tight consolidation. The S.E.X. lines
are tightly “clumped”. S.E.X. lines usually clump together nicely in a
sideways moving market, and for scalping purposes I’ve found that they
display near perfect clumping which makes it easy to read breakouts from
such consolidations. When a break out begins to occur the lines quickly fan
out nicely supporting the likelihood of a starting trend (how big or small the
trend “who knows”, but as a scalper you can profit from petit trends so it
doesn’t matter how big the trend ends up being). Notice also the time when
the breakout occurred – 02:00 EST (at the open of the European market
overlapping the Asian market). Now notice the first two waves made 3 lows
(including the base of the first swing), which I drew a trendline on (hard to see
but look for the straight dotted line). The first two waves retraced to the “Mid
Yellow Zone”, which is good. Also notice how they bounced the 15 S.E.X.
pair. The market then moved strongly and the third wave made a very
shallow retracement into the “Shallow Green Zone”. It also bounced the 15
S.E.X. pair, but more interestingly the EMA crossed the SMA of the 15
S.E.X. pair on the last candle of the stagnation before the retracement
happened (always watch the pairs for crossovers as sometimes (but definitely
not always) it can give you important signals – usually best for stagnant
tops/bottoms vs. sharp reversals). The fourth wave was small (about 9 pips),
retraced into the “Mid Yellow Zone” an also bounced the 15 S.E.X.
pair. Now the fifth wave we see that it retraced to the “Deep Red Zone” and
penetrated the 15 S.E.X. pair, and the EMA crossed the SMA of the 30 S.E.X.
pair, all factors showing that the market appears to be loosing steam. The
sixth wave also was a deep “Deep Red” and it definitely hit the 30 S.E.X.
PAIR. It also gets close to our trend line. Also the EMA crossed the SMA of
the 60 S.E.X. pair. Often what you see happening when the price comes
close to a trendline is that it’ll bounce the trendline, or it’ll penetrate through
it. Also frequently during a trend the first time it penetrates the 30 S.E.X. line
it often does resume the trend, though it also means that our trend might soon
after be ending. Then the market had some caffeine because it moved up
strongly (seventh wave), which you would have entered in on. It peak into a
stagnation (15 S.E.X. lines crossed too), which you would have then exited
at. The market then slowly retraced into a stagnation, crossed the trendline,
and the 15 & 30 S.E.X. pairs clumped. Now you’re thinking “oh well, that
sure was a nice trend. Let’s see what happens next”. It started moving up
slowly (eighth wave) but you probably would not have traded. What is
interesting is that this wave (and a few following this wave) do a pretty neat
thing. Sometimes when the price breaks through a supporting trendline (a
trendline that provided support in an uptrend – flip what I say upside down for
downtrends) the trendline then acts as resistance as the trend continues in the
same direction, and here we see that phenomena. After a few waves you
would normally readjust your trendline to fit the new angle of the trend better,
but I didn’t re-draw it on the chart which I’m showing you as having two
trendlines drawn would be visually confusing. You likely would have entered
the ninth wave as it appeared to pick up steam (the last two waves were rather
stagnant which you now interpret as just a pause in the market) and your
S.E.X. pairs spread out again.
The next bunch of waves continued upwards, but I won’t give you the “play
by play” commentaries… I think you get the idea by now. What is really cool
is that EVERY wave made a higher low, so if you would have use trailing
stops as learned in “Forex Surfing” you simply wouldn’t have gotten
out! (Keep in mind that that certainly doesn’t happen in every trend, but for
this one we got lucky).
For your information, which you might like to know, on this chart the market
broke out of the consolidation at 02:00 EST at about 1.2165 moving upwards
all the way, and the chart shown above ended at 05:00 EST at about 1.2245
(about 80 pips – even trading just ONE regular lot you could have easily made
about $800 in that 3 hour period ($266 per hour per lot traded). Now compare
that to the hourly salary of a lawyer or doctor! ).
Folks, you’ve got to be aware that I am not cherry picking my examples from
the best trends that have happen over some past period. As you can see that
candle on the right is “real time”, and yes I’ve been following this trend live
while writing all this (for the past few hours). My charting software only
allows me to see one-minute candles for the past 24 hours, so I can’t go back
searching for months worth of data. What all this means to you is that if I can
find perfect examples for my book to show you everyday then you too should
be able to find great trading opportunities to scalp virtually everyday!
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