Understanding the most concise course in the trading TA and Elliot/ Masterforex-V 1st reference point permits us to look in a different way at the trading systems developed by the Forex classics and at the literature on trading written by them, due to the introduction of clear criteria of successful professional trading systems and their difference from fakes and amateur ones.
Before taking a close look at the mistakes made by the Forex classics in their trading systems and the ways of their improvement for conscious moneymaking, let's dwell on the following questions:
· What is a Forex TS?
· What's the difference between the “TS” and “TA” notions?
· Why is the only the term “trading system” applied to the trading strategies developed by B. Williams and A. Elder (e.g., the “trading system” by B. Williams)?
· Both the terms – “the new technical analysis by Masterforex-V” and “the trading system by Masterforex-V” – are applicable to trading strategies by Masterforex-V.
Correlation between TA and TS notions.
According to Masterforex-V, Technical analysis of Forex(TA) consists in calculations of the FX market movements within the framework of the reference used in this analysis (waves, sub-waves, trends, flats, reversal and continuation patterns, pivots, trend channels, etc.).
A trading system (TS) is a set of rules, which prescribe the ways of opening and closing deals. These rules are elaborated on the basis of the technical-, wave- and fundamental analysis. Making use of these rules, traders indicate the algorithms of opening/ closing deals as well as stops/ locks.
Thus, a TS is a derivative of TA.
Consequently:
· TA (including WA) makes it possible to see the logic of the currency pair movement at Forex.
· Trading systems transform the knowledge of TA into trading signals for opening/ closing deals.
Pic1. Correlation between the trading TA and the TS by Masterforex-V
Conclusions:
· If you don't know the TA algorithms that the trading system is built upon, don't buy “a pig in a poke” – you'll lose your money.
· If you don't know what problems of TA are still unsolved in this trading system, don't buy it - you'll lose your money.
Indeed, a doctor who cannot diagnose doesn't understand what he is curing. Analogously, a trader, who doesn't see the strong and weak points of his trading system, cannot trade successfully.
Examples of the correlation between technical analysis and a trading system
· TA (with the wave analysis by Elliot as its component) indicates the 5-wave impulse of a trend.
· TA (Chartism) indicates the “Head-and-shoulders” pattern as a reversal pattern.
· A trading system transforms the knowledge into trading signals for gaining profit (the signals are generated according to the trading system by Masterforex-V).
Masterforex-V is the first in the world to give this definition of the correlation between a TS and TA.
Read once again the lines written above.
If you understand this correlation, you'll see the clear criteria of the successful professional trading systems, cutting off 99% of cheating on the Net.
Advantages of trading systems over the unstructured approach to trading at Forex
I hope that all traders understand the following:
A Forex TS is a set of clear rules of opening and closing deals, which permits trading at the stock exchange.
· The trader must clearly realize when and why he/ she opens/ closes deals.
· The trading must be carried on without emotions, fear and other psychological factors, which hamper in gaining profit.
· The ideal trading implies the use of technical indicators and automatic trading expert advisors (EA) – the latter are emotionless in contrast to human traders.
The absence of a trading system is the trader's direct way to the loss of the deposit.
Is it so simple?
If you agree, then you see why 99% of “successful trading systems” are nothing but internet scams.
How to faultlessly select 2 successful TSs among 1000 ones, cutting off 998 scams.
These days you can find on the net dozens of thousands of so-called “successful” trading systems. According to advertisements, such systems let you gain “1000% annually”, “800 pips per month”, “40 pips of profit with 15 pips of stop”, etc. – right up to a unique advertisement: “Summer (New Year) discounts! Buy our expert advisor at a 50% discount (just $795) and… take a vacation. The advisor will be working – you will be spending the money earned by it”.
As moderators from our Academy joke, the number of “successful” trading systems just in Russia has exceeded the number of successful traders all over the world since the moment of the stock exchange foundation.
It's really very difficult to choose a reliable, profitable trading system. For example, you see a 1000 advertised goods. All of them have similarity in appearance and go under the same name (like trading systems at Forex). It is necessary for you to learn to faultlessly find 1-2 unique trading systems and to cut off all other 998 counterfeits.
Pic. Find the only 2 working TSs among 1000 ones.
Are you sure that you can find the successful trading system?
To be confident, one must be a pro in one's occupation:
· One clearly knows the criteria of telling the unique from the fake.
· One knows the technique of developing fakes in a given branch of the human activities.
· One has already gained experience, which generates intuition. That is, one can see the inner contradictions even if experts consider the fake to be the original.
The difference between amateurishness and professionalism
The given algorithm makes it possible to detect a fraud and cheating at Forex as well as in real life.
The formula of amateurishness: Everything unknown seems to be grand (Cornelius Tacit). Therefore, it's taken for granted, and there is no desire to look into the essence of it. As a result, scammers always offer amateurs the things the latter want to believe in and to get (starting from a canvas by Rembrandt and up to a “profitable” Forex TS).
The formula of professionalism: Professionalism is the ability to notice the algorithm of something important and to learn how to use it in daily practice.
Let's see how to apply Masterforex-V formulae on the example of the trading systems at the present-day FX market.
Advertising “successful” trading systems: the forms of scams
Any professional trading system differs from an amateur one in its form and substance.
The majority of people become aware of the professional form with intuition due to the acquired experience. For instance:
When visiting a dentist, a lawyer, an accountant, a technologist, an engineer, you feel their professionalism intuitively (you never ask a lawyer to repair your teeth).
If you are a football fan with years of experience you should watch at least one match accompanied by a professional coach's full-length comments. Then you'll see that you are just an amateur (I don't mean to hurt your feelings, you should look through a manual for football coaches, and you'll understand what amateurs the majority of fans and sports commentators are).
The difference between Forex and other kinds of human activities (dentistry, football, etc.) is that a novice trader (an amateur) confuses the notion “to get a service” with becoming a pro by himself.
· Going to a football match, we want to get a service – to watch a match but not to master the profession of the coach.
· Going to a dentist, we also want to get a service - to repair teeth but not to become a doctor. A dentist can tell you a lot about your teeth, you can buy a complete set of the dental equipment… but you will not become a dentist yourself – even if you'll sacrifice all your teeth to know the “secrets” of this specialty.
· By analogy, a lawyer's pieces of advice will not make you a lawyer yourself. Bringing your car to a repair shop cannot make you a professional repairman.
· The world of trading is a topsy-turvy world (everything is upside down). A novice trader believes that at Forex such substitution of notions is possible, and he can join the 3% of the best traders just… by buying something.
Hence, it's quite logical that the demand (novices' desire to become millionaires at the Forex market) generates scam supply. The entire scam industry of selling so-called “successful” trading systems is formed in the Internet. Indeed, amateurishness is a perfect ground for the flourishing of Forex scams.
Scam tools used in the advertising of “successful Forex trading systems”.
As a rule, in order to convince a novice to buy a “marvelous trading system”, they use the following tricks:
· Pseudo-statements (the account history) – as a matter of fact, it is possible to forge any statement.
· The invest password to trading accounts (collusion between a “successful” trader and a Dealing Center): a novice is welcomed to enter the trading account of the supposedly “successful” trader and see the trader's account history, which shows that the deposit has been increased by 100 times within a year. Actually, this account history is made by the Dealing Center technical support for the hidden selling of the “unique trading system”.
· Pseudo-successful indicators. The programmers chose the suitable period of time and tune the indicator basing on the historical data.
· Buying sites (opened 3-7 years ago) to publish post factum the forecasts based on the quotation history.
· Testimonials of the traders who (supposedly) were lucky to buy and profit with this trading system.
· Manipulating human emotions and instincts instead of letting traders logically and consciously choose a tool of their whole future occupation. There is a psychological attack going on. They promise you the 1000% annual income under the condition of the world crisis. “Buy our expert advisor now and get a discount. The number of EAs is limited. Give us a call now. What educational institution (to start from Moscow University and up to Harvard) advertises itself in this way, where the number of vacancies is really limited?
Recognizing a fraud and trickery by the form of presenting the material in the advertisement: the examples
· Reread the advertisement:
“Buy our expert advisor at a 50% discount (just $795) and… take a vacation. The advisor will be working – you will be spending the money earned by it”.
Recall the dentists and teeth, professionals and services for amateurs. Instead of buying the “marvelous trading system”, you should just smile at seeing another internet scam.
If you are unable to detect a scam, if you believe that this trading system will make you a professional trader and will let you “gain profit” at Forex till the end of your life… If you expect that it to make a fortune bigger than Soros has (without any advantage of your trading system over his techniques of work)… It's too early for you to open a real account at Forex.
The 2nd distinctive feature of truly-successful trading systems is more complicated. It is based on professional trading algorithms.
Checking trading systems: professional criteria developed by the trading classics
The trading classics introduced the only professional criterion of detecting fake trading systems: not to buy a “black box” trading system. It means that you mustn't buy a trading system if you don't know the tools that serve as a basis of the indicators generating trading signals for opening/ closing deals.
This criterion is correct.
· Above we have just considered the algorithm by Masterforex-V that explains WHY one shouldn't buy a “black box” TS - it's impossible to apply the technical analysis to analyze the TS.
· An example of checking a TS: if a trading system created by some “successful” trader is an optimization of B. Williams' Alligator (EMA 7 replaced with EMA 5), you should check the technique of dealing with unsolved problems of the technical analysis by B. Williams himself – read the article “When and why B. Williams' Alligator certainly deceive traders” .
If the creator of the TS has no idea about these problems of the technical analysis in B. Williams' trading system, how are you going to earn money with the worthless TS?
Conclusion: if the tools that generate the signals in the “successful” trading system are unknown, then you are sure to face a scam, and it doesn't matter how many fake statements of accounts are made by Dealing Centers for Metatrader 4 (MT4) or other trading terminals.
Why did the Forex classics limit themselves just to the only professional criterion of the trading system check?
· Either they don't see other criteria.
· Or they don't want such criteria to be applied to their own trading systems – thus, their systems could be seen and estimated from another point of view (this will be done in the next chapters of this book).
Let the reader decide by himself/herself which of the 2 suppositions is true.
Below Masterforex-V gives his own criteria of checking TSs.
Professional criteria of checking trading system by Masterforex-V
1. You should check whether the trading system is original by means of the technical analysis. What the author discovered, how he improved the trading classics for generating new trading signals.
This is the way of realizing the algorithm of how a certain trading system operates, with further use of its strong points. For this purpose it's necessary to find out the following:
a) What new discovery the author of the trading system made in comparison with the classic FX trading strategies (in other words, what specific advantage a trader gets due to this trading system).
b) How exactly the given discovery optimizes the classic's TS, corrects the mistakes and solves the unsolved problems - thus presenting more precise and correct results.
A standard scam technique: One poses a classical trading system as one's own discovery. There result is predetermined – 99% of traders lose their deposits when they follow the rules of this trading system. The same number of traders (or even more) loses their money when they work according to the “optimized” trading systems if the original algorithm of mistakes made by the classics of trading is not corrected.
For instance, a course instructor from the “Broco” DC, has published in a journal (!!) a “scientific” (??) article, dedicated to his own (??) trading system. It is an absolute copy of a work by another author, officially edited 5 years ago. When this came to light the “scientist” was caught in plagiarism, but he didn't apologize. He claimed that he and his son were co-authors of the book by Grebenstchikov called “Forex and us”. That is why 2(or 3?) individuals compiled identical texts (even commas are placed in the identical parts of the sentences) with a 5-year difference in publication.
The checking algorithm developed by Masterforex-V gives answers to the following questions:
· Why it's necessary to find and correct the mistakes made by Elliot, D. Williams, A. Elder, T. Demark, E. Neiman, etc. – because 97% of traders all over the world lose their deposits when working according to the trading systems developed by the classics of internet trading.
· Why after training courses with Dealing Centers 100% of the graduates lose their deposits. The reason is that at such courses only several ideas by the trading classics are repeated – as well as all the mistakes made by them.
· After such training courses the traders will face many problems. In particular, the book by Grebenstchikov contains a large number of unsolved problems – “Grebenstchikov's trading system and correction of its mistakes with the help of Masterforex-V TS” (see the special course at the Higher School of Masterforex-V Academy).
When a trader reaches such level of analyzing the trading systems made by the classics, he will easily find out the aspects that the author tries to hide and substitute.
The trader should understand that the problems, unsolved by Elliot, D. Williams, A. Elder, T. Demark, E. Neiman, Nili etc. cannot just disappear. The trader will definitely face them in real trading.
That is why Masterforex-V Academy was the first in the world to publish the trading systems (from the scientific viewpoint) in the “Market leader” internet magazine in order to offer free help to traders who need it. The following aspects are paid attention to:
· The classic trading systems (those by Elliot, D. Williams, A. Elder, T. Demark, E. Neiman, Nili, etc.)
· The problems UNSOLVED by the classics
· The solution to these problems within the framework of Masterforex-V TS (and the Departments of our Academy).
2. Checking the trading system at any timeframe from the tick chart or m1/ m2 and to h4, h8, d1, w1.
At Forex the algorithm of movement of all currency pairs is identical on all timeframes - from the tic chart and m1 to d 1, w1, MN.
· It's the only way for the FX Founder's software to operate. The computer is incapable of improvising.
· When you understand the algorithm of the tick chart and m1, you understand each movement of each currency pair on all timeframes (h4, h8 , w1, w2 and MN included).
· That is why all trading systems, which “fit only for senior timeframes” do not work at the modern controllable Forex market (including the scam market).
· Due to this criterion, introduced by Masterforex-V, one is capable of distinguishing a successful trading system from a scam one in 5-10 minutes – even if one isn't a professional.
· If the author of a pseudo-successful trading system tells you that his trading system is suitable only for senior timeframes, you face a loser or a scammer (or both at the same time). This individual instead of checking the trading system reliability on m1 will suggest that you should read traders' testimonials and have a look at the statements (surely, made up by the same Dealing Center). In addition, this shady individual will provide you with the invest password to a demo account, specially made by the dealing center technical support. Earlier in the chapter we dwelt on other scam elements of pseudo-trading systems.
The pictures depicting the on-line calculations of trading process on various timeframes on the basis of Masterforex-V TS are performed by our novice traders after several months of training at the Academy. Each step of the currency pair movement is calculated in real time with 1-point accuracy. You should study the following materials:
Masterforex-V TS: theory and practice.
How the students of Masterforex-V Academy work at Forex – statements, facts and comments: studying the work of various Dealing Centers, banks and foreign brokers.
3. The clear criteria of the trend-to-flat/flat-to-trend transitions of the currency pair
The typical form of deception is the following: if the trading system cannot provide clear criteria of the transition from a trend to a flat and back then it is a fake.
· The classics of trading haven't solved the problem of trend-to-flat/flat-to-trend transitions
· Trend-to-flat/flat-to-trend transitions are always thoroughly disguised by the Boss of the Forex Game
· 70% of time currency pairs stay in the flat.
You should ask the author of a pseudo-successful trading system just a simple question: does his trading system operate in the flat or in the trend. Further, what criteria his trading system follows while switching from a flat to a trend and back. After this everything becomes clear.
Masterforex-V was the first to introduce the distinct criteria of real-time defining the trend-to-flat/flat-to-trend transitions in the new technical analysis.
A tip for traders: the trend-to-flat transition (the correction) at the senior timeframe - the wave pattern of the senior timeframe (under Masterforex-V).
You should think over why both the waves are called “the waves of the senior TF by MF”, due to which a new count begins (including a trend impulse turning into a flat and vice versa). Without this wave the trend is going on at the same wave level.
4. Understanding each movement of the currency pair in the trend and flat.
· You should determine the flat/ trend wave level (m1, …m10, …h1,…h4,… h8, etc.).
· You should calculate the waves and sub-waves.
The 2nd tip from Masterforex-V TS: the beginning of the flat starts with the cancelation of impulse waves.
Examples of the real-time trading practice of Masterforex-V Academy students:
Take a closer look at this picture above and find the waves that COULD HAVE BECOME impulse waves but for the breakout of MF pivot points. Find the EXACT SPOTS where the impulses were cancelled and turned into a flat.
Then ask the following question to the author of any “marvelous” trading system:
How his indicator (or his expert advisor) can detect such waves on the senior timeframe that can be considered as the starting point for a new counting of impulse waves… or for flat if the pullback on m1/ m2 exceeds the permissible “norm” of correction.
How the author managed to adjust the EA settings basing on the criteria of flats, which no classic had managed to discover.
When you ask these questions, any sensible seller of automatic expert advisors will stop offering you this “miracle” for $795 or $1950. He will understand that you can see the fraud and will not buy it.
No scam seller of trading systems (as well as a range of Dealing Centers) is interested in wasting his/her time trying to sell the fake to a professional while there are still so many amateurs on the internet looking for the Holy Grail.
5. Application of the trading system to trading with any Forex currency pair.
· If a trading system is suitable for trading with only one specified currency pair and is not applicable to other ones, then the individual, who offers it, is nothing but a scam.
· For instance, calculate the distance in points that the EUR/USD price usually passes during a pullback at a strong LONG-term trend in order to automatically open positions.
· When the trend changes the marvelous automatic expert adviser will lose everything.
6. The forex trading strategies on-line
If the only thing that a trading system can do is to explain the history of the currency pair movement, then it is a scam.
7. The results of VARIOUS traders' work with the help of the trading system in VARIOUS Forex Dealing Centers and Broker Companies.
Then the possibility of collusion between the trader and the broker is reduced to a minimum – see the list of dozens of winners of the trading contest and compare the results achieved by traders from various Dealing Centers and those achieved by the students of Masterforex-V Academy.
A standard scam technique is given below:
The lay open to public the invest password to the “real” account opened with some DC or BC. As a matter of fact, at the week end any Dealing Center can correct any account history for its “successful” trader, who founds an investment fund to collect money for the benefit of this Dealing Center and lose it. The managers of the DC/BC will sympathize with you… they will even provide you with the scam trader's passport data. You won't be able to find him anyway.
MF-V's tip: Before opening a real account, both the trader and investor should look through the sites of the broken investment funds. Thus you can see what Dealing Centers of Russia and other foreign broker companies the accounts were opened with. You will find out a lot of interesting and new things.
8. Auxiliary use of mechanical trading systems and advisers.
· Any mechanical trading system (MTS) in the form of a “black box” is a fraud (that is, if the adjustment algorithm of the system settings is not explained).
· Any MTS that cannot single out SPECIFIC sections of its applicability or detect the trend-to-flat transition and trend reversal is a fraud. This will inevitably result in the loss of the deposit.
The Department of atomization of MF TS and other trading systems was founded under Masterforex-V Academy to develop new forex indicators. It's clearly explained which algorithms are used in which SPECIFIC sections of the currency pair movement – as well as the algorithm contribution to the FX trading. Some new indicators are laid open to public at the open Academy forum.
9. Making use of the money management
A separate chapter of the book is dedicated to the problem.
10. The long-term use of a Forex TS – time testing
The essence:
The longer the trading system makes a stable/permanent profit, the more seriously the settings are adjusted for generating the trading signals. In addition, there are the aspects that cannot be changed anyway.
At the controlled FX market any drawback is an integral component and continuation of the advantages – see the chapter of Book 1 called “The correlation between the strong and weak points in the structure of any organization. Masterforex-V's theory of searching for advantages at the controlled Forex market”.
11. Any successful Forex TS shouldn't be shared with millions of traders otherwise it will be taken into account by the Forex market.
The quote (Kipriot; October, 14, 2009 (15:45))
Dear Viacheslav Vasilievich, it is written in your book that if B. Williams hadn't shared his knowledge with millioms, it would still be working. In this connection, aren't you afraid that your trading system can follow Williams' TS?
Millions of traders have to master a successful trading system in order for it to be taken into account by the market.
· The closed part of the Academy forum is founded for this very purpose. In contrast to B. Williams, the goal doesn't consist in revealing the points of the faultless gaining of profit and in demonstrating and explaining the new technical analysis developed by Masterforex-V.
· The ratio of 3% of successful traders to 97% of losers will remain anyway. That is, nobody is going to train these 3% of several millions of traders at the closed forum – in contrast to books by B. Williams known to the majority of traders, who try to put the author's ideas into practice.
MF's brief conclusions about FX trading systems make it possible to take the 1st step to correcting the mistakes made by A. Elder, L. Williams, etc.
When you understand the algorithm of creating a trading system and its functioning process you can make the corresponding conclusions by yourself (making use of the discoveries in technical, fundamental and wave analysis).
· How to avoid mistakes in choosing a trading system? (See the abovementioned scam techniques).
· How to check a trading system in 5 minutes.
Now we can proceed to correcting the mistakes made by Elliot, Fibonacci, B. Williams, A. Elder, L. Williams, T. Demark etc. realizing at the same time that it's the only way to discover our trading advantages at the controlled FX market.
You can discuss the chapter with the Academy members who study the SBP techniques created by Masterforex-V by following the link
Part I - Delusions of Forex Market (typical error 97% losers traders: how and what to change on the way to success in Forex) >>
Read more
Chapter 6 - Technical levels of support and resistance in Masterforex-V Trading System. >>
Chapter 7 - Moving averages: The basic Forex indicator. >>
Chapter 9 - Trading on news. Features of trader's work on Friday at American session. >>
Part 3. Forex investment funds >>
Book 2. Technical analysis of Forex in the Masterforex-V Trading System >>
Book 3. Masterforex-V “Points of opening and closing of positions at the Forex market (basic course)" >>
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