HAT ISSUE FAMOUS TRADER’S ADVICE STOCKS AND FUTURES

SEE HOW THE HAT HAS BEEN FAMOUS TRADERS WHO HAVE STOCKS AND FUTURES FEEDS
PERFORMING AND HOW TO GET WISDOM TO SHARE WITH YOU! ARE ON THEIR WAY! DETAILS
INVOLVED! INSIDE!

FXGROUNDWORKSMAG
FXGroundworks.com | ISSUE 1

HAT
HAT
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EXPANDS
Fibonacci FOR MORE
TRADERS!
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PATTERN
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DIRECTION
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HOW TO TRADE PRICE PATTERNS

The basic principals on trading fibonacci
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198.2
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SONAR – Utilizing Sound!
Sound Vibrations of the Forex Market

RVR B
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Technical Patterns
The book that started it all!

HOW TO DRAW TRENDLINES

RISK CORRECTLY

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FOCUS How to Trade Fibonacci Price Patterns!

 FXGROUNDWORKSMAG

contents
EDITOR’S LETTER

3 A Message from FXGW

Hear from our educators at FXGround-
works.com and mentors students who
Got Your HAT? 05
.
are wanting to profit from trading price
patterns.

3 New Pattern Sites

Do you trade Stocks or Futures and not
just the FOREX?

13 Trading and Poker

One basic concept, true across both
poker and the financial markets

13 QUOTES FROM
FAMOUS TRADERS
Ever heard these words of advice
spoken by one of the greatest traders
of all time?

FEATURES Under Water Trading 04

4 SONAR - Utilizing
Sound Waves in the
Financial Markets
The market makes sounds, and if you’re
not listening you could be in trouble!

5 Trading with the “HAT”

After many years of development, trad-
ing price patterns automatically is now
possible!

7 TECHNICAL
Trading
13
A foundation to trading fibonacci price
patterns in any market.
Poker & Trading
8 Trend lines in Price
Pattern Trading!
It’s a scary thought, but 90+% are not
drawing trendlines correctly!
FXGROUNDWORKSMAG • ISSUE 1

10 Linear vs non-Linear
Markets
How you view the markets is more
important than your next trade!

02
YOUR MENTOR

A Message From FXGW FXGROUNDWORKSMAG

FXGroundworks as a newly estab-

lished site took the financial mar- The Future of Trading
FXGROUNDWORKS.COM:
kets by storm in 2010. As many Fibonacci Price Patterns
Mentoring in price patterns in
new members joined and started
the FOREX. We scan, alert and
profiting and benefiting from We’ll be kicking off our own release
also provide you charts of fibo-
price patterns with ease, FXGW season with the launch of the abil-
nacci patterns across the FOREX
changed the way people traded ity to scan for stocks and futures!
markets.
by educating them on how to
trade price patterns and showing The fxgroundworks website (www.
We provide some of the most
them the ropes on how to trade. FXGroundworks.com) will scan for
advanced drawing tools as well
patterns across the around 160 of
for some of the most popular
the most liquid stocks and include
trading platforms.
First Issue! the SP500.

Feel free to contact us to find out

I never thought that a magazine The futures scanning will get the
more details if you’re interested.
would be in the works for FXGround- majority of the commodities and
works. Although when the oppo- will be launched after the stocks
tunity presented itself I had given it get added to the site.
some thought and decided it was
time to publish a lot of the findings As always, it’s great to find the pat-
and research that FXGroundworks terns and identify them, but under-
does with these patterns. standing and educating yourself on
how to trade them profitably is a key
The information you will find in these foundation in building your career as
articles is gathered from research a trader.
through our websites and our mem-
bers. Enjoy the patterns, education and
community!
This is a collective way of sharing
new found info as well as ways we Cheers!
can communicate to the pattern Your Mentor
community and make our own
contribution.

50%
OF
F
GRAB
FXGROUNDWORKSMAG • ISSUE 1

Your
You
FXGroundworks
F XG
Sub
Subscription
Today !!
LIMITED TIME OFFER: FXGroundworks.com 3
 LEARNING KEY CONCEPTS

How To Trade Price Patterns?

Taking Fibonacci Patterns and Making It Simple!
trade
Far to many traders glimps

“ over the Fibonacci method

claiming its too much and
hard to understand all the
Sounds simple right? Not so. These two main secret in-
grediance to success are missing from almost all trading
methods.

numbers and ratios. They miss Finding Fibonacci Price Patterns

the huge benefits of trading
profitably. In order to identify Fibonacci patterns we need to know
the basic’s on how these patterns are labled and what
we will call them. This is really the nuts of bolts of pat-
THe team at FXGroundworks tern trading when it comes to pattern identification.
knows how to take very
detailed concepts and make Once you know the pattern points, you will know where to
take the trade and where to get out of the trade for every
them very easy to understand. pattern identified.
- A. Trott, CANADA
Understand that all the patterns are made up of the same
basic movements in human emotions that will create dif-
Hello fellow traders! It’s your mentor here over at FX- ferent waves and lengths of each segment of the pattern.
Groundworks and I want to take the time to explain to
you fibonacci patterns if you never even heard of the To start trading the Fibonacci method we need to find a Fi-
trading method before in your life. bonacci pattern. FXGroundworks goes out and sniffs out
fib patterns throughout the forex, stocks and futures. This
Look, most traders when introduced to the forex use indi- makes things extremely easy for traders to get alerted and
cators that their brokers supplies them with in their client know where and when the next trade will come.
software. Some of the poular ones people start with are
moving averages, macd, cci and stocastics etc.. However without having the software point out the patterns
for you, this is where we have to follow a few guidelines.
In an article later on called Linear vs Non-Linear (which i
highly suggest you read) we speak of why these com- See the guide to your right. So just to recap, our pattern
mon methods fail and how trying to trade with them is points would be X (the starting point), then A B C D to
difficult at best. But right now we are going to discuss label each point of the trade.
price patterns and the core principals of trading them so
you walk way after this article understanding the basics Each different type of pattern will have their own retrace-
of trading fibonacci trading. ment values that price must adhear too. If it doesn’t, then
FXGROUNDWORKSMAG • ISSUE 1

there is no pattern and there is no trade.

In a good trading plan, one must have certain things be
true: What makes our price patterns so powerful is the align-
ment of all these fib ratios which gives us the probability
• The trade must have the potential to pay you at east of around 70% at being correct. We do not trade “within”
twice as much money than your risking the pattern as it forms because 90% of the time a pattern
• The trade should have consistant rules for entering a will NOT form and you will spend so much time searching
trade, managing a trade and closing out any particular for patterns that do work out.
4
 FXGroundworks.com - Leaders in Price Pattern Trading in the FOREX , STOCKS, and FUTURES

1) The first thing you want to do

when looking at a chart is look for
any major reversal point. A big
move in one direction, followed by
a sharp move in the oposite direc-
tion. This will create our “X” point
or the first point which we start to
identify if a pattern is present.

2) We then want to make sure we

see continued direction of that
reversal we just spoted in Step 1. At
the end of this move, this is labled
as our “A” point.

3) Our B point would then be a

retracement of the XA leg. So we
would need to use our fib tools to
messure the retracement of the XA
leg. The point in which we retrace
down too is our “B” point.

4) We then need to see price at-

tempt at making a run to exceed
our “A” point but failing. This would
then be our C point.
FXGROUNDWORKSMAG • ISSUE 1

5
 FXGROUNDWORKS SONAR WAVES

“SONAR” Utilizing Sound!

Sound Vibrations of the Financial Markets

S
onar (sound navigation and ranging) is a military time it takes to return). With this system you can detect
term and technique that FXGW has adapted to whales, submarines and other large waterborne objects.
help traders determine the potential direction of With submarines, one country is able to tell which other
a currency pair. country has despatched the craft because the subma-
rine will give off the same frequency as its country of
Understanding sonar activity helps origin.
The line in the

“
us to apply the principle to our
charts.
chart below Passive Sonar

Although I have had no involve- projects the future The other type is passive sonar, such as
ment with the military forces, I price calculated by listening and you can liken that to hear-
have researched this principle for using the passive ing a sound with your ears.
years with a Sonar technical opera-
tor from the Armed Forces.
sonar techniques. With the Forex market, we don’t know
what’s ahead and we can’t send out a
Through the use of sonar equip- Not very many ‘ping’ to look for a bounce back. So we
ment anything within the ocean use passive sonar; a ‘listening’ system to
indicators produce
can be identified; shipwrecks, hear the market’s movement.
animals, ships, submarines and the future price waves,
like. Along with detecting objects Especially non- There are many things sonar needs in
under water, it is also used for linear ones. order to make it work. We need a way,
measuring water depth by emit- an array of signals, to process the feed-
ting sound pulses to detect or back from Sonar. We need to detect sig-
measure their return after being nals from our Sonar indicator; a way to
reflected. process the data that allows us to draw our frequency
line onto our charts.
There are two types of sonar systems. One is active
sonar, meaning it is similar to an echo where sound Once we have all things in place, that is the passive Sonar
returns (you send a ‘ping’ to measure the length of algorithms, we place them into an indicator to look at the
FXGROUNDWORKSMAG • ISSUE 1

6
 FXGroundworks.com - Leaders in Price Pattern Trading in the FOREX , STOCKS, and FUTURES

Sonar ‘hums along’ listening to the frequency patterns and rule is that you want to see the frequency line showing a
this is why the Sonar indicator slows your charts down. Its projected move in the direction the fibonacci pattern is
powerful presence will affect the speed of the charts, de- indicating.
pending on how many you have open at any given time.
We do not use Sonar to enter trades. We use it to help us
What you see on your chart is a ‘forecast’ of frequency weight our trades – i.e. how much leverage to use. The
waves based on the hum of the patterns it’s listening to. trade will be determined on the strength of the pattern and
the risk versus reward but should not be based on Sonar.
In Conclusion Sonar is a filter, not a signal to enter a trade.

Finally and something to take note of; we need to recog- DOWNLOAD: You can download SONAR as a member of
nise that price will not follow the Sonar frequency line. the FXGroundworks community. To Join, please visit: http://
The Forex market is not linear. However the deviation www.FXGroundworks.com by
FXGroundworks
from the frequency line has given us an edge. The general Research and Development

“Trading with the HAT”

Come Celebrate With Us!

T
he acronym of HAT suits this meet before presenting the limit or- position is available and the trader
inventive automated trading der to the currency trader. Once the can choose to run with the one op-
tool from FXGroundworks. order is opened for the trader, HAT portunity or to place further orders
com. You put it on and take it off presents a stop placement that pro- on the pair.
to suit your mood or your trading tects the trader from being exposed
style. to high risk should an unexpected The stop placement can be adjust-
turn of events push the currency in ed or disabled should people find
HAT Is Launched the wrong direction. that feature unnecessary.

H
AT is the brainchild of a
group of developers and It alerts the trader to the fact that a
FXGW management and
is the first tool of its kind to be
developed specifically to automat-
ically trade currencies using the
fibonacci patterns method.

Fibonacci Pattern Trading is a

technique that boasts a 70%
probable success rate within the
FXGROUNDWORKSMAG • ISSUE 1

Foreign Exchange Currency Mar-

ket. Its statistical measured way of
trading gives the trader an ‘edge’
that is lacking in certain other
trading styles.

HAT finds opportunities based on

predetermined criteria that it must 7
FXGroundworks.com - Leaders in Fibonacci Pattern Trading in the FOREX , STOCKS, and FUTURES

T I
he HAT’s distinct features give the trader the n Conclusion:
ability to enter the market by design although it
won’t manage profit taking as this part of trad- So take off your coat and line up for your HAT....it
ing is idiosyncratic to individual traders. Traders should be gives you unlimited profit-making potential.....
left to take profit using their own individual style and to by
FXGroundworks
make their own pip balance grow. Research and Development

Another of its invaluable behaviours is that HAT will move

the trade to break even once the trade has passed a
certain risk tolerance and the trade becomes ‘risk free’.... It
notifies the trader that the trade has taken place so the
trader can observe and manage the pair.

Technical Price Patterns

The Foundation to Auto Trading Patterns

F
orex trading has its chal- Patterns are formed via the move- The Pattern points are used as exit
lenges and its success ment of currency based on human points for profit taking, with specific
stories. Some people try emotion and on the theory that targets in place for people who
several methods before they find people repeat their actions over have difficulty in knowing when to
something that suits their personal- and over again. There are varying exit a trade.
ity and their vision for the future. strengths of patterns, with some
Fibonacci Pattern Trading is a patterns more notorious for success The Fibonacci Pattern trading
method that is different to method, once dominated by
what most people are used Fibonacci Pattern trading is a technique male traders is slowly being
to. Based on Fibonacci infiltrated by lady traders
measurements, it is one of that boasts a 70% probable success rate who are drawn to it either
the more probable ways of from its reputation of being
trading the forex. within the Foreign Exchange Currency in touch with the world at
large or its attractive pattern
Market. Its statistical measured way of
presentation.
Patterns such as those trading gives the trader an ‘edge’ that is
discovered by traders in Either way, it’s a nice way to
the 30’s are becoming lacking in certain other trading styles. trade.
more popular thanks to the
educational site FXGround-
works.com. FXGW have an attitude than others but all based on the
FXGROUNDWORKSMAG • ISSUE 1
BUSINESSMAG • ISSUE JULY 2011

of low to no risk when and where Fibonacci levels of measurement. by

FXGroundworks
possible. Research and Development
The reversal area is an area where

T
heir approach to currency price action stalls at or near various
trading is based on reversal Fibonacci points and then reverses.
points within the reversal It is at these reversal points that
area. savvy traders who use this method,
benefit.
8 8
 TECHNICAL TALK

Trend lines in
Fibonacci Pattern Trading!
Unless traders draw correct trend not tell you where to exit a trade.
lines, these markings on charts can Gartley patterns are best suited They will merely give an overview
be as meaningless to a trader as a to channels, while other fibonacci of where price may be likely to
spider crawling across a screen. patterns are more often found in ricochet.
ranges.
Fibonacci Pattern

“
Without being drawn in properly,
they can tell us nothing about where How To Draw Trendlines Trading has
price might be expected to move.
proven to be
The best way to draw trend lines
Traders use trend lines to establish is to identify where most of the one of the most
points, much like train tracks, that candlesticks touch your drawn-in probable methods
20111
FXGROUNDWORKSMAG • ISSUE 1

• ISSUE

house a step-stair arrangement line. They are not drawn at the of netting pips
• ISSUE JULY

of price movement, often called a point of wicks; they are drawn in

when trading the
FXGROUNDWORKSMAG

channel or a range. Price will some- on the edge of the ‘real body’ of the
times bounce in between these candlesticks. Forex, or when
BUSINESSMAG

train tracks and they can be useful trading stocks or

when gauging where to place stops Using Fibonacci Pattern Trading,
futures. The history
or to get a general feel of where trend lines will not tell you where or
price may turn. when to enter the market. They will also has a long
9 9
track record.”
 FXGroundworks.com - Leaders in Fibonacci Pattern Trading in the FOREX , STOCKS, and FUTURES

Trend Lines in a Non-Linear Market

You will need to understand the reason we draw trend

lines the way we do. This all goes back to the fact that
the market is not linear. A non-linear market cannot
have straight lines because the market is not linear.

We have to draw our lines through the area most candle

sticks touch because support and resistance of a trend
or range is exactly this... an area. It’s not a specific price
point but a cluster or range of prices.

If we were able to draw non-linear fractal lines, then

maybe we could be more specific. This is one of the
major reasons why most new traders fail; they believe
that a trend line is drawn in stone and that a pip here or
there can mean a validation or invalidation of a trend.
Next time don’t be so quick to judge as you can see in the
examples of the pictures on the page.

Images Can Tell A Thousand Words!

Figure on page 8 can show us a good example of how

trend lines should be drawn. Remember, you’re looking
at where most of the candle sticks are meeting our drawn
in line (yellow), marking the rising channel trend line.

The Figure on page 9 is a little more complex. It shows us

T
the rising channel (purple lines) and the ranging yellow ake Action: Join us for more lessons, real-time,
lines. Again, where most of the real bodies of the candles online at www.FXGroundworks.com during
touch the channel/trend/range lines. the week with your morning coffee! Get your
membership today and be apart of a community that
Fibonaccci Trading in General will help you grow!

Fibonacci Pattern Trading has proven to be one of the

most probable methods of netting pips when trading
the Forex, or when trading stocks or futures. The prin-
ciples for using price patterns to trade all of these types
of commodities remain the same.

Once you learn the method, it can be applied to any or all

FXGROUNDWORKSMAG • ISSUE 1

of these categories.
BUSINESSMAG • ISSUE JULY 2011

Keep your eye on the educational site FXGroundworks.

com who will soon be providing Fibonacci Pattern alerts
to stocks and futures as well as their current offering of
Forex trading alerts.

10 10
 KEY CONCEPTS

What is Linear?
The Forex Market, that
writhing, moving sea of
Linear VS
emotional money driven
by human fear and greed
is often thought to have a
Non-Linear Markets
mind of its own and a life
The Biggest Mistake Of A Trader Is to think that the markets
of its own.
are linear. What does this mean? It means that you believe that
• Is it (the Forex Market) lines mean something and that certain equations can be built
linear or non-linear? with expected results. Not true, let me open your eyes to the
• Are Moving averages
linear tools or non-linear
non-linear world.
tools?
• Can the two be co-
mingled?

So how does one make

sense of this problem –
how to distinguish the
environment and the tools
to trade it? Let’s work it
through.
The answer to the first
question is simple. The
Forex Market is not linear.

In other words, one cannot

predict that price will run
along in a straight line until
the year 2020 or beyond.
The answer to the second
question?

Moving averages and

similar calculating tools are
linear; they are based on Figure 1-1
maths. Take a look at the
code within the moving av- Non-Linear Markets Fibonacci Pattern Trading such as that
erage. If this code contains used by FXGroundworks.com is based on
FXGROUNDWORKSMAG • ISSUE 1

20111
• ISSUE

the symbols ‘+’ or ‘/’; ‘*’ or Many indicators at play on traders’ charts non-linear data. This marries with the
BUSINESSMAG • ISSUE JULY

‘-‘it proves the point of the today are based on linear models. These Forex Market.
FXGROUNDWORKSMAG

tool being linear. indicators take a ‘look back’ at where price

has been. Yes, they do that mathemati- Therefore how do we expect linear MA’s
cally – with linear data. Then traders are (Moving Averages) to work with these
theoretically to observe where these linear patterns? We don’t. It’s not all that hard
tools cross and facilitate their trade accord- to work it out - don’t use linear tools with
ing to this data. Fibonacci Pattern Trading.
11 11
 FXGroundworks.com - Leaders in Fibonacci Pattern Trading in the FOREX , STOCKS, and FUTURES

In this volatile environment, how can addi- are a pattern trader.

About 99% of tions of hours, days or weeks of past data

“ what is in your
PLATFORM is
linear based.
predict where price will go in the future?
It can’t.

As weather forecasters can’t accurately

predict the weather more than a few days
It‘s kind of sad to watch traders use Lin-
ear tools (MA’s) with the Forex Market. It
would be almost funny if it wasn’t affect-
ing peoples’ trading results and therefore
their lives.
This is why I
down the track, traders can’t predict where
personally do price will go at all. FXGroundworks has developed and uses
not use any of some great non-linear tools.
the tools inside We are subject to a range of emotions
by
(based on fear and greed) from ourselves FXGroundworks
the platforms Research and Development
and other traders.
as they do
not fit the Currency is affected by news events and
environment other influences such as natural phenom-
ena.
that YOU’RE
TRADING..” The market is also at the mercy of robotic
programs that are set to enter markets at
a predetermined point in a currency pair –
when price action reaches a given point.
FXGROUNDWORKSMAG • ISSUE 1
BUSINESSMAG • ISSUE JULY 2011

Therefore it’s easy to answer the third

question on co-mingling. No, don’t co-
mingle the Forex non-linear Market and
linear tools. All you could end up doing
is to interfere with an otherwise decent
trade opportunity whether or not you
12 12
 THINK OUTSIDE THE BOX

Trading Is Like Poker...

I
nvesting is like poker. You should when they are small before they turn If you stick with this method, you will
only play the good hands, and drop into huge losses. The majority of not need a high win percentage and
out of the poor hands, forfeiting peoples’ statements probably have the need and feeling of having a high
the ante. just a few trades that went wrong win percentage will be a thing of the
and ended up blowing up their ac- past.

O
ne of the most underrated counts.

R
metrics people fail to look at emember the quote the next
on their statements is their Your avg winner should be twice that time you put your own ante
Avg Winner vs Avg Loser. Using of your avg loser. So if you typically on the table, and remember to
the quote above can really help us risk 30 pips, your avg winner should play your cards so that your rewards
understand why it’s important to be be around 60 pips. exceed your risk.
good at losing and to take our losses by
FXGroundworks
Research and Development

Quotes from A Famous Trader

thirst for information and knowledge. Because I think
there are certain situations where you can absolutely
understand what motivates every buyer and seller and
have a pretty good picture of what’s going to happen.
And it just requires an enormous amount of grunt work
and dedication to finding all possible bits of informa-
tion.

You pick an instrument and there’s a whole variety of

benchmarks, things that you look at when trading a
particular instrument whether it’s a stock or a com-
modity or a bond. There’s a fundamental information
set that you acquire with regard to each particular
asset class and then you overlay a whole host of techni-
cal indicators and that’s how you make a decision. It
“I believe the very best “You adapt, evolve, com- doesn’t make any difference whether it’s pork bellies or
money is made at the pete or die.” Yahoo.
market turns. Everyone - Paul Tudor Jones
says you get killed trying At the end of the day, it’s all the same. You need to un-
to pick tops and bottoms “I’m always thinking derstand what factors you need to have at your dispos-
and you make all your about losing money as al to develop a core competency to make a legitimate
money by playing the opposed to making mon- investment decision in that particular asset class. And
trend in the middle. Well ey. Don’t focus on making then at the end of the day, the most important thing is
FXGROUNDWORKSMAG • ISSUE 1

for twelve years I have money, focus on protect- how good are you at risk control. Ninety-percent of any
been missing the meat ing what you have” great trader is going to be the risk control. -Paul Tudor
in the middle but I have - Paul Tudor Jones Jones
made a lot of money at
tops and bottoms.” The secret to being suc-
- Paul Tudor Jones cessful from a trading
perspective is to have a
indefatigable and an un-
dying and unquenchable 13