The Fade Away 6785

‘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.

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