Bunnygirl's

Forex Trading Approach

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Email:
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stockwet
[email protected]
Bunnygirl
November 9, 2005

Bunnygirl

1
Bunnygirl
Bunnygirl is a Forex day trader who frequents the MoneyTec.com and StrategyBuilderFX.com trading
forums. She was most active from about November 2003 to April 2005, though she still frequents to
forums on occassion. Her most remarkable accomplishment was starting the "wma cross" thread in April
2004. As of November, 2005, the thread has over 1100 replies, 147 pages, and 340,000 views, three
times the views of the next most popular strategy thread.
Bunnygirl proposed a straight-forward, easy-to-follow framework for trading. She explained to others, in
great detail, how she trades the three major market types: trending, ranging, and news breakouts. The
predominant aspect of her strategy incorporates a moving average crossing. Her suggestions and
recommendations should be properly termed a "framework" as she frequently interjected aspects of her
own trading style into the methodology and encouraged others to deviate from the framework where it
was necessary in order to fit within their own styles. Her approach was shown to be profitable as she
made live calls in the chatroom and, on one post, indicated that she had a 90% trading success rate and
a streak of 46 wins that had recently ended at the time of that posting.
Bunnygirl's influence on the Forex trader community is significant as she has a large number of
successful traders who started by using her system. Her original strategy thread has spun off numerous
related threads and has helped countless other traders formulate basic rules for MA crossing strategies.
This document will detail the "BunnyCross" or "BGX" methodology. Note that this document explains the
most recent strategy definitions for BGX, and may not include Bunnygirl's earlier thinking. For instance,
Bunnygirl originally used Bollinger Bands for exits, but moved away from them as she learned better exit
techniques.
There was one primary thread that Bunnygirl posted on, and another secondary one because it provides
updates to some of her trading strategies. References to specific posts, from each thread, are included in
this document.

Who's stockwet?
I'm stockwet. stockwet is my forum handle on the Moneytec and StrategyBuilderFX forums. I stumbled
onto the Bunnygirl thread several months ago. After a tedious week of reading through the entire post,
going back through the post with more answers, re-reading again and again, I decided to write down the
rules of her approach.
My goal is to provide myself and others with a comprehensive guide to Bunnygirl's trading style and
approach. Currently, I trade the BGX system exclusively, and use this document to refresh my
understanding of the rules and nuances.

Other Contributors
Others have contributed to Bunnygirl's threads. From davidwt's excellent Bunnygirl indicator to Beachie's
and Shimodax's intelligent and insightful posts, many have added significant value and understanding to
Bunnygirl's threads.

Forex Basics

2
The Forex Market
The Forex market is the largest, most liquid financial markets in the world. Conducting over $1.6 trillion in
transactions every day, the Forex market dwarfs the combined liquidity of both the US Equities and
Treasury markets. The Forex market is completely electronic, with transactions being handled between a
vast banking network. Individual investors, traders, and corporations work through brokers or Interbank
dealers to gain access to the market.
Following are some of the unique benefits of trading in the Forex markets.

24-hour market: Trading occurs primarily from 7PM EST Sundays to 4PM EST Fridays.
Trades between these times can be entered or exited at any time.

High liquidity: Over $1.3 trillion in transactions pass through the market every day.

Low Transaction Costs: Brokers typically charge a spread, versus a commission for each
trade. Spreads vary by the currency pair being traded. Spreads can be fixed or variable.
Ranges for major pairs range from 2 to 5 points.

Easy access: Individual traders gain access to the Forex market using brokers that offer
Internet access using their proprietary trading platforms.

Margin Trading: Forex trading is done with high degrees of leverage. This can result in rapid
gains, or rapid losses.

One of the best sites to learn the fundamentals of the Forex market is at
http://www.piptrader.com/forex_education/basic_forex_education/.

Currency Pairs
Forex traders trade currency pairs. The major currency pairs traded are:

EURUSD: Euro / Dollar

GBPUSD: British Pound / Dollar
USDCHF: Dollar / Swiss Franc
USDJPY: Dollar / Japanese Yen

The first currency is the base currency. The price of the pair is understood based on the base currency.
For instance, a quote of 1.1700 on the EURUSD is meant to be understood as "1 Euro buys 1.1700 US
Dollars". Or "it takes 1.1700 US Dollars to buy 1 Euro."
The BGX system is ideally suited to the EURUSD, GPBUSD, and USDCHF currency pairs. Other pairs
might be possible to trade, but these three are preferred.

Pips and Lots

Pips are the term used for a point movement in each pair. Differences in the last decimal place at the end
of the price quote are how pips are measured. For instance, if the EURUSD starts out at 1.1700 and
moves to 1.1750, it has moved 50 pips. USDJPY quotes are different they only contain two decimal
places whereas the other majors contain 4 decimals. Pip measurements are the same, though, as
changes in the final decimal place represent pip movements.
A "lot" is similar to a "share". You buy or sell currencies in lots. The value of a lot depends upon the
currency pair being traded. Each lot consists of 100,000 currency units. For most traders, buying or
selling currency lots on 1:1 leverage is improbable. Forex trading is highly leveragable. Your broker will
determine the degree of leverage you have available. However, as an example, if you have an account
with 100:1 leverage, you're able to buy a single lot of 100,000 currency units on a margin account of only
$1000 dollars. However, that's the margin amount. Each pip movement for most currency pairs is worth
$10, so, it would take a move of 100 pips against you for your margin to be reached. Traders can trade
multiple lots, depending on their account size.
Some brokers allow you to have a mini-account. A mini-account uses fractional lots where a pip
movement is worth $1, versus the normal $10 for a regular account. Some brokers allow as little as $300
be deposited in a mini-account.
(Note that the value of a pip depends on the pair being traded. For simplicity, these examples use $1 for
mini accounts and $10 for regular accounts.)

Jump in

3
Jump In
Getting started in the Forex market is easy. Here are the steps:
1.
2.
3.
4.
5.

Find a broker or bank

Sign up for a demo account
Download the brokerage platform
Get MetaTrader 4 as a secondary/charting platform
Get the BGX indicator for MetaTrader 4

Find a broker or bank

Forex traders have the option of gaining access to the market via brokers, banks, or interbank
exchanges. In each case, expect to pay either a spread or a commission. A commission is usually a
percentage fee of the transaction value. A spread is the difference between the ask and bid price of a pair
that the broker keeps. So, for example, if the EURUSD has a 3 pip spread, and you're trading a full lot,
your fee for the transaction is $30 (3 pips X $10 per pip).
Brokers have relationships with large Forex banks and provide individual traders with access to the
interbank market via. However, brokerage firms trade their own money. Some are believed to trade
against their individual trading customers as a way to pad further profits. Most brokers charge a spread
on each transaction.
Banks provide access to the Forex market for some high net worth traders. Commissions and spreads
are not always more favorable than with brokers. While banks can provide more direct access to traders,
their primary business model is to exchange their own funds. So, large banks are not necessarily the best
approach for new traders who might need a little more flexibility.
rd

Interbank exchanges claim to be 3 party exchanges providing direct access to the Interbank market.
They differentiate themselves from brokers by providing rock bottom, though often variable, spreads and
they do not trade for profit. Interbank exchanges are an appealing alternative to brokers.
The following list provides comparison information on Forex brokers: http://www.goforex.net/forex -brokercomparison.htm. Additionally, the same site provides ratings information on Forex brokers:
http://www.goforex.net/forex -broker-ratings.htm.

Get a demo account

The question of whether or not to open a demo account along with, or before, opening a live Forex
account should be indisputable. Most brokers allow users to open demo accounts before opening live
accounts.
Demo accounts should be used to learn systems and create regular trading habits. Traders that use a
demo account to jump from system to system, trying to find something that works, will, inevitably, be
wasting a lot of time. The most productive use of a demo account is to establish trading habits that are
successful and can be objectively applied in the same manner in a live environment.

Download a brokerage platform

New traders should test a broker's platform before committing to it, even though their demo system may
or may not reflect the performance of the live system. The trading platform will help someone learn how to
enter and exit orders, place stop losses, apply trailing stops, review account history and often include a
host of useful add on features. Become familiar with your broker's platform so that orders and entered
and exited correctly and effectively.

Get MetaTrader 4
Regardless of whether or not your broker offers a platform with integrated charts, new BGX traders
should download and install the MetaTrader 4 platform from MetaQuotes (www.metaquotes.net). This
platform is an independent Forex charting and analysis package. A large user community exists who
have created numerous indicators and system experts for the product. There is even a BGX indicator for
MetaTrader 4.
MetaTrader 4 can be downloaded at http://www.metaquotes.net/downloads/. You can open a demo
account after installing the product by right-clicking the Accounts icon in the Navigator and selecting
"Open an Account."

Get the BGX indicator for MetaTrader 4

Davidwt, a trader and programmer who frequents the StrategyBuilderFX forums
(www.strategybuilderfx.com) has been kind enough to create a very good indicator for the BGX system.
Following are instructions for downloading and installing a modified version of the original indicator:
1.
2.
3.
4.
5.

Download the indicator from the following site:

Extract the indicator files to your MetaTrader 4 indicators directory. (C:\Program
Files\MetaTrader 4\experts\indicators if you selected the default installation parameters.)
Launch (or close and re-launch) MetaTrader 4.
In the MetaTrader 4 Navigator window, expand the "Custom Indicators" icon and double click
the "BunnyGirl Cross " indicator.
The parameters screen will allow you to modify any of the settings. Following are descriptions
of the parameters.
PipsForBounce: Pip difference between
WMA 5 and WMA 20 which would cause a
"bounce" and reset the filter price.
TimeZoneOfData: Depends on your demo
provider, not your local time. If times are
aligned to GMT 00:00, set this to 0.
Ma_method: Allows you to change the
Moving Average method from WMA to
Exponential or simple. Keep it at 3 for WMA.
EUR_Spread: The filter amount for
EURUSD.
Other_Spread: The filter amount for all other
currency pairs.

Once you have the indicator installed and active on your screen, you'll see a chart with various solid and
dashed lines. Notice, however, that you will not have the WMA 5, WMA 20, or WMA 100 lines. These will
need to be added separately. Once you add these lines, along with the indicator, you can save the chart
as a template. Following is what the finished screen will look like.

Following is a key to the indicator and chart. Notice that the RSI 14 has also been added to the chart.

WMA 100: Orange line

WMA 20: Green curved line
WMA 5: Light blue curved line that hugs the candles
Daily Open: Purple dashed line
Last Cross: Gray dotted line
Sell Filter: Red lines with downward red arrows
Buy Filter: Blue lines with upward blue arrows

Analysis

4
BGX and Analysis
The BGX methodology relies heavily upon technical and fundamental analysis. Traders need to be
attuned to both types of analysis in order to succeed with the BGX. For instance, it is as important to
understand how to draw Fibonacci retracements on a graph as it is to understand how economic
announcements will affect price action.

Fundamental vs Technical Analysis

Fundamental analysis observes economic and news announcements in an effort to predict price action.
On the other hand, technical analysts look solely at price action of an underlying commodity, claiming that
news and economic events are already factored into the price action. A healthy debate rages between the
two groups regarding the appropriate approach.
BGX traders take a realistic view of both types of analysis. While the BGX relies heavily on technical
analysis, fundamental conditions play an important role in determining the validity and timing
appropriateness of a trade. For instance, it is unlikely that there will be a significant directional run just a
couple of hours before a major news of economic announcement, so price action needs to be discounted
based on that knowledge. On the other hand, trading directly against news and economic
announcements, with technical analysis, is perilous for intraday traders.
This document will not address fundamental analysis in detail. The BGX trader will need to be aware of
key economic and news reports when assessing the validity of trades. Announcements surrounding
inflation, job growth, interest rate changes, and the monthly US nonfarm payrolls reports are among the
most important reports to pay attention to. For more indepth information about fundamental analysis, see
http://www.piptrader.com/forex_education/forex_fundamental_analysis/.

Chart Types
Most Forex charting programs provide a variety of chart types. The most common chart types available
include:

Candlesticks
HLOC (High Low Open Close)
Line
Kagi
Point and Figure
3 Line Break

BGX traders will primarily use candlestick charts

for intraday trading, though HLOC charts can
also be used. A candlestick chart is made up of
candlesticks which, like HLOC charts,
represents the high, low, open, and close prices
for a given time period. The color of the body
indicates whether the bar closed higher or lower
than it opened.

The shape of candlesticks can be an important indication of whether the price will
continue or reverse. http://www.incrediblecharts.com/technical/candlesticks.htm
contains some common candlestick patterns. One of the most common candlestick
shapes used by BGX traders is what Bunnygirl refers to as an exhaustion bar, and
could indicate the end of a strong run and the start of a reversal. The exhaustion bar,
after the upward run, is easy to pick out in the adjacent screen shot.

Support and Resistance

BGX traders need to understand the basics of
technical analysis when trading the system. One of
the key aspects of technical analysis to understand is
support and resistance.
Price action typically stops and reverses at key
support and resistance levels. These levels may form
patterns and channels, or just represent thresholds
that make it difficult to pass through. Following are the
key support and resistance levels used in BGX
trading:

Daily open: This represents the open price

at 00:00 GMT.
WMA 100, WMA 20, WMA 5: These are
moving average lines that will be
Fibonacci Retracement Lines
discussed further. Specifically, these are
weighted moving averages with varying
(100, 20, 5) periods. (http://www.incrediblecharts.com/technical/moving_average.htm).
UK Open: Though not formally endorsed by Bunnygirl, stockwet has observed that the open
price at 08:00 GMT, the UK open, acts as a support and resistance point similar to the Daily
open.
Fibonacci retracements: Fibonacci numbers are a special series of naturally occurring
numbers. These numbers also contain certain percentages that, when measured against price
action, often act as support and resistance points.
(http://www.metaquotes.net/techanalysis/linestudies/fibonacci_retracement )
Highs and Low: Often, price action will reach significant highs and lows that later serve as
resistance and support levels.

Chart Patterns
Quite frequently, technical
analysts observe and leverage
chart patterns when
determining future price action.
Patterns can occur over short or
longer time frames. Some
patterns indicate reversals,
others indicate price
continuation, and still others
represent price neutrality.
Chart patterns can help
determine valid breakouts.

Head and Shoulders Reversal Pattern

BGX traders should be familiar with the common chart patterns that form. More information regarding
these patterns can be found at http://stockcharts.com/education/ChartAnalysis/index.html. Following are
some additional chart patterns that can occur:

Technical Indicators
Techinical indicators are statistical and other algorithms based on price action that are used to determine
price action, momentum, trend strength, and a host of other technical aspects of the underlying Forex
pair.
BGX traders will primarily use Welles Wilder's Relative Strength Index (RSI). (Please see
http://www.incrediblecharts.com/technical/relative_strength_index.htm for more information.) RSI
compares upward price movements against downward price movements over a selected time period. It is
helpful in determining the strength of price action.
RSI is used by BGX traders in two ways. First, a bull
entry should not be entered unless RSI is greater than
50. Similarly, a bear entry should not be entered
unless the RSI is less than 50.
Additionally, traders should learn to spot RSI
divergence. Divergence indicates an inverse
difference in price action as compared to RSI peaks
and valleys. For instance, assume that price action
results in a new near term high, but the RSI peaks
below the RSI peak for the previous high. This would
be an indication of divergence and a sign that the
move causing the new high does not have the
strength needed to continue, and a reversal is
pending.

Run Bunny,
Run!

5
Run Bunny, Run!
The Bunnygirl cross methodology is a simple approach to trading the Forex. In fact, the concept is based
on some of the oldest technical trading strategies used. For instance, one of the fundamental aspects of
the BGX system is a crossing of moving averages. Using moving average crosses to dictate buy and sell
signals is an old technique in technical trading. Traders may vary the type of moving average (simple,
weighted, exponential) or the periods use. Some traders use a two moving average cross, others use
three or more.
Bunnygirl has created a system based on simple, proven strategies. What makes BGX different is that the
system provides more information regarding the elimination of whipsaws (quick reversals following
moving average crosses), money management approaches, and risk management techniques.
This and the following chapters will articulate the BGX system. Traders, at this point, should have an
understanding of candlestick charts, support and resistance, chart patterns, drawing Fibonacci lines,
WMA lines, finding the daily open, and the RSI indicator.

Getting Setup for Trading

Following are the conditions and variables where the BGX approach works most effectively:
Suggested Currencies (a1,a53)

EUR/USD

GBP/USD

USD/CHF

EUR/JPY (a53,a158)
Bunnygirl originally recommended trading 4 currency pairs EURUSD, GBPUSD, USDCHF,
EURJPY. These pairs were considered to be the ones most likely to respond to her methodology,
based on her own back testing of BGX. However, as recently as April 2005, Bunnygirl had
temporarily discontinued trading the cable (b340), which had previously been her favorite. Since
then, she has picked the cable back up, indicating the flexibility of BGX to work with changing
market conditions.
Recommended Trading Sessions (a11, a158, a520)

European

US

Best Trading times from 06:00 GMT 16:00 GMT (7 AM UK 5:00 UK)
Bunnygirl maintained that the best times to trade were the European session and the open of the
US session. Specifically, she indicated that the best time for crosses was at the beginning of the
European session after a flat Asian session (a11, a99, a520). Additionally, she recommended
observing "no touch" days. These are days where the daily or 4-hour bar does not touch the
WMA5. She clarified that this was more relevant to the cable than the other pairs (b197).
Primary Charts

30m for crosses (a11)

5m for scalping and exiting (a11, a52)

Daily and 4h for longer term trends (a334)

Bunnygirl uses 30 minute charts to determine crosses and 5 minute charts for exiting and scalping
using the "Gimme Bar" method. She used daily and 4-hour charts to plot resistance points, fibs,
and to check for no-touch bars (addressed later).
Chart Setup

30 minute candlesticks

5, 20 and 100 Period Weighted Moving Average lines

RSI 14 indicator with 50 line

Preparation
1. Setup charts for targeted pairs.
2. On the daily and weekly charts, observe any significant patterns, support or resistance points,
and Fibonacci points.
3. Also add the WMA 5, WMA 20, and WMA 100 lines to the daily and weekly charts. Observe
the general trend and whether the price is near any of the WMA lines.
4. On the 30 minute charts, determine any near term highs and lows, chart patterns, or other
resistance points.

The Cross Signal

The BGX starts with a crossing signal. Crossing signals occur when the WMA 5 and WMA 20 lines cross
each other. Following are the appropriate signals and the ideal position of the WMA 100 line for each
signal:
Long Signal
WMA 5 Crosses above WMA 20
WMA 5 and WMA 20 above WMA 100

Short Signal
WMA 5 Crosses below WMA 20
WMA 5 and WMA 20 below WMA 100

The signal is not the entry point. Entering at this point may often result in a whipsaw a rapid reversal
immediately following a cross, frequently occurring in ranging markets.
Also, while these examples show the
WMA 100 either above the WMA 5 and
WMA 20 lines for a bear cross, or below
the WMA 5 and WMA 20 lines for a bull
cross, signals can occur when the WMA
100 is not in this preferred position. There
are, however, rules for trading "into" the
WMA 100 line, which will be discussed
later.

Ranging market with whipsaws

Bounce Signals
Bounces, like crosses, signal a potential entry. A "bounce" occurs when either the price, or one of the
WMA lines bounces off another WMA line or the daily open. Following are some examples:

WMA5 bounces off

WMA 20 and heads up

WMA5 bounces off

WMA 100 and heads
down

Price bounces off of

Daily open, then heads
up.

Prices bounces off of

WMA 100 then heads
sharply down.

Treat a WMA 5 bouncing off the WMA 20 as a cross that is, as an entry signal. The other bounces may
require you to develop your own techniques for trading them. Generally, though, a bounce will either
result in an entry signal itself, or an entirely new crossing.

Filters
A price filter, based on the currency pair, is measured from the point of the WMA 5 / WMA 20 cross.
EURUSD's filter ranges between 20 and 25 pips. Other recommended currency pairs (GBPUSD,
USDCHF, EURJPY) use a filter of about 30 pips.
Check the validity of your filter by looking at crossings over the last several days. If a number of crosses
occur where the price just hits the filter price and then reverses, increase the filter. Modify the filter as
market conditions warrant.
Example
Never include your spread cost into the filter. Calculate the filter first, and then apply the spread. Here's
an example.
Assume the following conditions:

EURUSD crossed up at 1.1700

Your trading platform quotes prices based on the bid (sell) price

You've determined that 20 pips is an adequate filter

You have a 3 pip spread on the EURUSD

Given these conditions, your buy entry point would be 1.1723 (20 pip filter + 3 pip spread). Conversely, if
the EURUSD had crossed down, not up, your filter price would be 1.1680 (20 pip filter, no spread as it is
quoted at the bid price.)
Bounce Filters
In practicality, the only bounce entries that are truly valid are when the WMA 5 bounces off the WMA 20
line. When this occurs, treat the bounce as you would a cross. Apply the required filter from the WMA 20
mark at the point of the bounce, and enter as usual. If the price bounces off the WMA 20 or WMA 100
lines, then an entry can be made below the last low/high, or using the 1-2-3 method, explained in the
"Entries" section.

Finding the filter

Filters for other currency pairs can be found by reviewing crosses and finding the general range where
the currency pair crosses, and then retreats. Remember, the purpose of the filter is to keep you out of
whipsaws and to put you into the strength of the trend.

Entries

6
Entering the trade
Once the filter price is found, place a buy stop or a sell stop order, depending on the direction of the
cross, at the filter price.
Following are additional entry rules:

Never enter in the last 5 minutes of the candle. Cancel your buy or sell stop order and wait
until the close of the candle. If, at the close of the candle, the filter price has not been hit,
place the buy or sell stop order again. If the filter price did end up getting hit, see the section
on "Late Entries" for more information about entering.
Never enter if the RSI did not rise above 50 for bull crosses, or fall below 50 for bear crosses.
The RSI should be above or below 50 at the time of entry, not at the time of the crossing.
Always enter in multiple lots, or mini-lots. This rule will become clear as we discuss exit
strategies.

Cross = 1.2013. Enter when bid/ask = 1.2033/1.2036

Late Entries and Re-Entries

Sometimes, you just miss an entry point. Maybe you hesitated, or you logged in late for the run, or the
kids started screaming. Whatever happened, you missed the entry of what you think will be a good run.
Remember that entries are critical to your trading success. A late entry, at the wrong time, could
dramatically alter your risk/reward ratio for the trade.
Following are some late entry scenarios and how to get back trading again at the best time possible.

Last 5 Minutes (a51)

Bunnygirl advised to never trade when the price reached the filter (entry) point within the last 5 minutes of
a bar. Following are the steps to enter if the filter price is hit in the last 5 minutes.
1. Wait for the 30m bar to close in which the filter point was reached. This is the entry bar.
2. If price retraces, wait for the original filter (entry) point to be hit again and place the trade.
3. If the price does not retrace, place the trade on the breakout from the entry bar. Assume 1-2
pips beyond the low or high of the entry bar, depending on the direction of the cross.
Missed Crossing (a159)
If a cross is missed, follow these steps to reenter:
1. Wait for the price to consolidate.
2. When the price or WMA 5 bounces off of WMA 20, reenter at the new filter price.
3. Don't trade the opposite direction of the original cross, unless another cross actually occurs. In
other words, trade with the cross until a cross in the opposite direction occurs. The exception
to this is if the market begins to range and you would like to scalp using the Gimme Bar
method.
Stopout after profit (a233)
This occurs when, after locking in an initial profit, the rest of the trade gets stopped out at breakeven (see
"Exit Options". Bunnygirl always took an initial profit of 10-20 pips, and then moved the rest of the stops to
breakeven.)

Note the recent low, if short cross, or recent high, if long cross.

Reenter 2 pips below the recent low, or 2 pips above the recent high, depending on the
direction of the original cross.
Stopout no profit (a806)
This occurs when the price retreats immediately after hitting the filter (entry) price and before profit is
locked in. Normal crossing rules apply, e.g., wait for another cross or another bounce. If it is bouncing,
enter when the price breaks (on the close) the WMA 20 line.
Recently missed cross (a410)
This scenario can occur if a cross, not related to news, occurs quickly, or while the trader is away.
Traders must make certain judgments as to whether or not to enter. Advice from Bunnygirl follows:
" If it's not too far away I wait for possible retracement back to the cross & then 2nd chance at
entry. If it's already well into the move I use Mr. Sheen."
Delayed Entry WMA 100 (a800)
This scenario occurs when a cross happens, but the proximity of the WMA 100 prevents an entry (see
section on "Caution")

Wait to see if price closes beyond the WMA 100.

If it closes 10 pips or more beyond WMA 100, wait for a pullback and use the WMA 100 as an
entry point as a bounce is likely. Use a 5 min chart for precise entering.

If a pullback occurs beyond the WMA 100, wait to see where the close is. If it closes on the
other side of the WMA 100, use the same rules as previously.

Early Entries
Sometimes, when the setup is right, you can enter a trade early. This entry technique is described as the
1-2-3 entry, and is based on the "Ross Hook" method (see the Joe Ross Manual at http://www.tradingnaked.com/Articles_and_Reprints.htm.)
Bunnygirl noted that there was one crossing situation where she would possibly enter early. This
occurrence is called a Bunnygirl 1-2-3. Following is a BG quote describing the early entry:

This is the only pattern I use to

pre-empt the cross & gain an
early entry. Once entered, I have
2 choices depending on how the
market feels. I can either exit
around the proper entry level if
I feel the market is stalling or I can add to the trade & then
take the normal exits as if I'd
entered using the filter.
This pattern is well worth
looking out for, but it has to be
exactly as shown in the charts.
If you have the patience to wait
for it, it has an added advantage
apart from making more
pips...because the entry will be very close to the wma20 the stop can be very
tight.
Don't forget one important factor...the rsi must be breaking the 50 line.
What I call the 1-2-3 is simply a 3 bar sequence:
1... is when the first bar closes beyond the wma20 making a cross
2... is when the second bar reverses & closes very near the wma20
3... is when the price reverses again in the original direction bouncing off
the wma20.

Best Entry Signals

There are some really excellent signals that indicate a good run is about to happen. Following is a
description of each:

Multiple Crosses: When multiple pairs cross and move toward the filter at about the same
time. This is a strong indication of a trend beginning. Often, Bunnygirl will take trades on all 3
pairs (EUR, GPB, CHF)

3 in-a-bed: This occurs when the WMA 5, WMA 20 and WMA 100 are all within close
proximity of each other. Watch for a very big run, but beware of bank stopouts (this happens
when the market movers run the price in the opposite direction of the impending trend just
before the trend occurs. The filter is designed to help eliminate some of this action.)

News and Economic Reports

Never use the BGX approach to trade major news and economic reports. While the system looks
reasonable, the sudden movement and reversals of such events make it difficult to establish a trend
direction.
Bunnygirl recommends using the "Mr. Sheen" method of trading during news events. Following is a "Mr.
Sheen" example (a256, a558 a574)

A. This is the close of the "news" bar.

B. This is the high point of the news bar.
C. This is the target.
1.
2.

Enter is at 1 pip above point A, the close of the "news" bar. Notice in this example that we're
observing a 5m chart.
Target is the high of the news bar.

Stop Bunny,
stop

7
Stop Bunny, stop!
You found the cross, applied the filter, setup your entry stop order and Wham!, the order goes through
and you're in the trade. Congratulations! Now what?
Bunnygirl provided comprehensive advice regarding trade management techniques. These techniques
can be modified or adapted to your own trading style, preferences, or risk profile. Managing the trade,
once you're in, is one of the best defined aspects of the BGX approach.

The Initial Stop Loss

When you initially enter the trade, it is important to also add an initial stop loss to the order. Originally,
Bunnygirl suggested that the initial stop loss be 5 pips beyond the crossing. So, if a bull cross occurred at
1.1700, and you entered at 1.1723, the initial stop loss would be 1.1695, 28 pips away. If you traded 4
lots and the price reversed right after hitting the filter, you would take a loss of $1120 (or $112 on a miniaccount.)
Price fails to cover the spread
In order to improve money management, Bunnygirl recently modified this rule. Now, if the price fails to
move beyond the spread of the currency pair, the stop loss should be placed 15 pips from the filter, or
entry, price.
In the previous scenario, this would mean that the initial stop loss would be 1.1708 (1.1723 15 pips), for
a maximum loss on 4 lots of $600, a little more than half what was required in the original rule.
Naturally, like most everything else with the BGX system, this can be modified based on your own
preferences. For instance, you might want
to have multiple levels of stops, where you
place a 2 lot stop loss 10 pips below the
entry price and a 2 lot stop loss 20 pips
below the entry price (still averaging a 15
pip stop loss.)
Stops near support and resistance
Stop losses can also be placed near
support and resistance lines particularly
the daily open and WMA 100 lines.
Always place stops 3-5 pips beyond these
lines to account for momentum pushes
through the line.

Exiting
First, entries should always be entered into with multiple lots. These can be standard lots, or mini lots. As
long as you have a way to "peel" out of your trade, one or two lots at a time, then that's all you need out of
your trading platform.

Bunnygirl suggests entering a trade with 4 lots, or multiples of 4. Following is the recommended process
for exiting trades:
1.
2.
3.
4.
5.
6.

st

st

Close the 1 lot (1 25% of the position) at 10-30 pips profit, depending on the speed of the
move.
Move a stop loss for the remaining lots to the breakeven point.
nd
nd
Close the 2 lot (2 25% of the position) at 30-50 pips.
Move a stop loss for the remaining lots to breakeven +10.
rd
rd
Close the 3 lot (3 25% of the position) at 50-100+ pips.
th
th
On the 4 lot (4 25% of the position), trail using the extreme of the previous bar, or the
halfway point of the previous bar if it's longer than the average bar.

Price fails to reach 10 pips

One thing to notice is that there is nothing to indicate how to handle a trade that moves greater than the
spread, but less than the first 10 pips of profit taking. Following are several suggested approaches, none
of which are yet endorsed by Bunnygirl:

Leave the stop loss at the original 15 pip configuration

Manually "trail" the stop loss (or a portion of the stop loss) from the original 15 points as the
pair moves toward the 10 pip profit target.
Take profit earlier and move to breakeven if the trade momentum feels like it is stalling. The
downside to this is that it is easy for the price to have a small retracement and stop you out at
breakeven.

Unfortunately, this issue has not yet been addressed and an optimal solution has not yet been presented.
Alternate Bunnygirl Exit Method
"Quite often I'll take half out at 10 - 30 pips and then trail with 3rd & 4th lot."
Alternate stockwet Exit Method
Trade 6 lots, or multiples of 6. Follow the original exit rules except take profit on 3 lots (50% of the
position) at the initial 10 pips, rather than 1 lot (25% of the position). This method would allow you to lock
in more profit up front and provide the flexibility of having looser stop loss movements. For instance,
instead of taking profit at 10 pips and moving the remaining stops to breakeven, you now have the option
of moving the remaining stops to less than breakeven, in case a retracement occurs resulting in a bounce
off the filter price (which does happen.)
What to do in a slow moving market
"The first time I move stop is usually to b/e. The exception to this is if the trade is taking a long time to
move and the market is flat. If I have entered and the market has not moved for some hours I will move
down to a 5 mins bar to take a quicker exit rather than let it hit the initial stop."

Exiting is one of the areas in which Bunnygirl struggled. BGX traders should find the best way to exit
positions which suits their trading style, preferences, and risk profile. Start out by using the recommended
exit approach until you develop your own. Just having a disciplined approach that requires you to be
patient enough to wait for a 100 point move makes it worth trying out the original exit strategy.

Slow Bunny,
slow

8
Slow Bunny, slow
The Forex market can be unpredictable and, in fact, quite brutal at times. However, while it may seem like
chaos, the market can, quite often, act in an organized, somewhat predictable manner.
Support and resistance concepts are pervasive in the Forex market. At times, it is uncanny how prices will
move right up to a resistance line, hit it, then bounce right back down. The same is true for Fibonacci
lines, the WMA 100, daily open lines, and, according to stockwet, the UK session open. Trading near
these support and resistance lines may warrant caution or even complete abandonment of a trade.
Following are some scenarios to discuss.

Crossing near WMA 100 and Daily Open (a806)

Definition
Sometimes a crossing may occur in which the price is heading into either the WMA 100 or the Daily open.
Extreme caution should be exercised in these circumstances. Following are the two scenarios that may
occur. These scenarios should be considered
when the filter price is within 10 pips of the WMA
100 or Daily Open lines.

Crossing with filter before WMA 100 or Daily

Open
In this scenario, the WMA 100 or Daily Open line
is 10 pips or less away from the price filter and
lies beyond both the cross and the filter. Do not
place a trade at the filter. Wait until the price
action moves through the line and reconsider
the position. Look at the late entry techniques for
possible reentry.

Best entry is two pips below the low of the bar that penetrated
the WMA 100. The new entry should be below the WMA 100.

Crossing with WMA 100 or Daily Open

between cross and filter
This scenario is OK to trade. In this example, the
WMA 100 or Daily open line lies between the
cross and the filter. A trade can be placed, but
exercise caution in this instance and be prepared
for a late bounce back towards the crossing. Use
the resistance line to set your initial stops.

These same rules apply when either the WMA 5 or WMA 20 are near the WMA 100 or Daily Open lines.
(a233, a374)

Last 5 Minutes

Do not place a trade when the filter price was reached within the last 5 minutes of the 30
minute bar.
Wait and look for reentry on the next bar or at a bounce. See "Late Entry" section.

Other Scenarios

Be careful when the price spikes past the WMA 20, but does not cause a WMA 5 crossing
(Baruch bar).
Observe other strong support/resistance.
Avoid trading when the chart looks like a squashed centipede (e.g. lots of ranging).
Avoid trading when multiple crosses for the day have already occurred.
Avoid trading away from the WMA 5 on days following a "no-touch" day.

No-Touch Day
A "No Touch Day" occurs when, on a daily chart (or others as well), a candle does not touch the WMA 5.
This seems to be either a significant trend reversal indicator or one that indicates a fast moving trend in
the same direction. The best explanation of this is given by Ilia (b191).
If a "No Touch Day" occurs, observe whether or not the touch was
caused by a large, fast moving bar preceding it. If so, the trend will
likely continue, but weaken. If not, the trend is likely primed to reverse
(b191).
On the day following a "no-touch day", be wary of crosses that occur
heading away from the WMA 5 (a334), but take all crosses heading
toward the daily WMA 5 (a1087).

Money
Management

9
Money Management
Money management is one of the most important, yet, overlooked aspect by new traders. The most
successful traders are often more interested in managing risk, then perfecting the entries and exits of a
system, though those goals are often intertwined.
Generally speaking, money management deals with 2 dominant issues risk/reward management and
position sizing.
Risk/Reward Management
The ratio between the potential gain and loss in a single trade represents the risk/reward for the trade.
For instance, assume you enter a buy trade at 1.1700. You expect that the price will rise to 1.1800, based
on sound analysis. You place a stop loss at 1.1650. Assuming 1 lot, you are looking at a 1:2 risk reward
ration. In other words, you expect twice as much reward against the amount of capital you are risking.
Risk/Reward management becomes more complex in "peel out" tactics. These tactics employ trading
multiple lots and taking profit along the way. Assume the previous example, except that you are trading 4
lots. You will take profit at 25, 50, 75, and 100 pips, with the stop loss still at 1.1650. You still expect the
price to rise to 1.1800, but your risk/reward ratio is now 1.25:1. You've increase the risk of the trade.
Here's how you figure it out:
Max Loss = [1.1700 1.1650 (or 50 pips)] * 4 lots = $2000
Max Gain = [(1.1725 1.1700) * 1 lot] + [(1.1750 1.1700) * 1 lot] + [(1.1775 1.1700) * 1 lot] + [(1.1800
1.1700) * 1 lot] = $2500
The typical risk/reward ratio of a BGX trade, using 15 pips as the stop loss and 4 lots, peeling out at 10,
30, 50, and 100 point would be 190:60 or 19:6. This is approximately a 3:1 risk/reward ratio.

Position Sizing
The amount of capital you put it at risk is highly variable in the Forex market due to the leverage and
margin options available. Many traders subjectively determine their position size. However, discipline in
this area is what distinguishes the best traders.
Bunnygirl's approach to position sizing provides a conservative framework for building your account
balance.
First, it is generally advisable to start out by risking no more than 2% of your account balance on a single
trade. This isn't necessary, just advisable. Let's assume you start with 4 mini lots on each trade.
Next, ensure you have enough capital to support two failed trades of 30 pips each. If you're trading with 4
mini lots, then you need enough initial capital to cover at least $240 (60 pips * 4 mini lots).
Finally, trade until you have gained enough to cover moving to your next trading level of 8 mini lots (60
pips * 8 mini lots) or $480. Continue this cycle, moving to your next defined level as you are comfortable.
Here's a summary from Bunnygirl:
I allowed myself a maximum drawdown of 60 pips - (2 bad trades @30 pips each).
I started at 4 per pip & took profit at 1 for 10 pips, 1 for 30 pips, 1 for

50 pips & 1 for 100 pips. If the first trade made 100 pips I would therefore
have won 190. If it only reached say 70 odd pips I would make 10, + 30, + 50,
+ 50 = 140. I stayed at this level until I had made enough money to be able to
cover the possible drawdown at 8 per per pip (8 x 60 = 480). After I had
made 480 at 4 (splitting into 4 x 1) I could then move onto 8 per pip
(splitting into 4 x 2). I now needed to make 720 at 8 per pip (12 x 60 =
720) before I allowed myself to move up to 12 per pip. At each new level I
would 'bank' the previous level. So each time I move up 4.
Never move up a level until you're totally comfortable at the previous level.
It's better to trade for longer at that level than to get into a panic. And
after a losing trade there's always the option of going back a level. I never
jump a level.

Hopefully, you've found this guide helpful. The BGX approach is a great method to help you get started in
Forex.
If you have any questions about or suggestions for this guide, don't hesitate to contact me
([email protected]) or visit the forum (www.strategybuilderfx.com).

Appendix

A
Bunnygirl Examples
Bunnygirl Example 1 (a808)

Bunnygirl Example 2 (a809)

Bunnygirl Example 3 (a734)

From Bunnygirl's post:

A - Low of the day 1.8624
B - Resistance seen at 1.8724 (100 pips exactly from
the bottom), but enough to give us 1st target at
1.8719
C - 2nd target hit 1.8739
D - 3rd target hit 1.8789 for 100 pips
E - high of the day 1.8825 (201 pips up from the
bottom - neat! )
Now we have the downside:
G - Cross down at 1.8752, entry short 1.8727, stop
loss 1.8756 + spread.
1st target 1.8697 for 30 pips
2nd target 1.8677 for 50 pips
3rd target 1.8627 for 100 pips

H - Entry level hit

I - Bounce down off the 50% line gives extra
confirmation
J - 1st target hit (on the ema100 line) 1.8697
K - 2nd target hit 1.8677
L - We have a bounce off this morning's cross up
level.

Bunnygirl Example 4 (a718)

Bunnygirl Example 5 (a719)

Bunnygirl's Forex Trading Approach

Bunnygirl Example 6 (a1001)

Bunnygirl Example 7 (a1073)

Bunnygirl's Forex Trading Approach

Bunnygirl Example 8 (a1074)

Bunnygirl Example 9 (a1075)

Bunnygirl's Forex Trading Approach

Bunnygirl Example 10 (a1076)

Bunnygirl Example 11 (a1087)

Bunnygirl's Forex Trading Approach

Appendix

B
Bunnygirl Posts
The following pages constitute Bunnygirl's posts at the StrategyBuilderFX forum site, up until 12/2005.
From WMA Cross thread (http://www.strategybuilderfx.com/forums/showthread.php?t=7916)
1 Main strategy definition, filter, MA's, stoploss, trailing stop, pairs, targets
7 30m chart, filter
11- 30m chart for entry, exits (5m close above wma20), targets, caution around crossing, best time, lots
12 time trading system,
23 performance
48 bounces
50 exit issues
51 cross entry, last 5 minutes, late entry,
52 exits
53 USDJPY unreliable. Look at eurjpy, gbpjpy
54 no news
56 staying in a trade
62 Beachie's chandelier exit
75 Beachie's links to GimmeBar docs
81 GimmeBar, filter importance
83 no news
84 filter importance
86 filters
92 does not like to autotrade, backtest period
93 lockins, exits, ignoring multiple crosses, ranging market signs
99 trade times, explanation of specific setup (See 94 5-10-04, EUR, near cross)
104 filter enhancing (steep wma5, flat wma20)
107 cross importance
122 Beachie's suggestion bgx is a "methodology", bounces, ignoring crosses
158 latest filters, latest pairs and why, time, Asia flat but seeing nice entries, options during news
159 re-entering a missed cross
160 trailing stop, backtesting
169 exits, bounce definition with example, trailing using extreme 30m, bid offer definition, engulfing
candle
170 her chart platform
171 multiple lots, exit,
187 no single exit strategy, multiple lots
189 performance
206 bounce, multiple bounces
st
233 not entering a trade, price going into wma100, etc., all pairs signal, reentry, 1 move stop, slow
moving market, recommended book
234 how to find the filter
235 wma vs ema, wma performance, favorite pair
236 adding spread to buy stop
238 examples
256 gimme bar, mr. sheen news, mr. sheen reentry
264 multiple lots
269 tighter stops with gbp and chf

Bunnygirl's Forex Trading Approach

280 latest exit strategy

291 gimmebar scalping
294 sto's
295 results of last exit strategy not so good
300 alerts, oco's
301 filter clarification
334 using a daily chart, daily open
374 no crosses near wma100, retrace after big move, trail cross
376 filter change on chf, gbp, mixed exits
378 terminology, bounce off open, 3 in a bed, Daily open definition,
395 Beachies filter suggestion (be flexible)
411 late entry possibilities
418 chart example, baruch bar
422 chart example
438 exhaustion bars
520 Times to trade
524 exits
558 Mr sheen example
559 Mr sheen result
560 Mr sheen result
574 Mr sheen explanation
585 how to confirm the method
600 3 in a bed explanation. Open day
623 Signals she doesn't give them.
640 Last post
715 Example EMA Cross
716 Example EMA Cross
718 Example EMA Cross
719 Example EMA Cross squashed centipede
733 Mechanical systems OK if they work
734 Example
736 Cable 100+ pip moves, gimme bar time period long term, 5 m intraday
758 Bunnygirl Presentation
766 Daily Open rules, why using EMA, WMA 100 rules
768 Example
773 Example
800 WMA v EMA
803 sticking to the rules
804 MA's set to close
806 When not to take trade, open, stop loss, no bb's for exits, wait for pullback if miss entry, what to
do if stopout
807 example
808 example
809 example
810 removing indicators.
812 S/R lines and trendlines for confirmation
813 fibs on all time frames
818 Keeps fib levels for 4h, daily, weekly, looking for any near each other. Keeps 30m and 5m fibs on
screen
819 Eliminating indicators
875 BG Cross and Ross hook, options for entering the BG Cross ("BG 1-2-3")
998 Example - especially highlighting 1-2-3, her "favorite" setup.
1001 Example
1006 Trading methods, trading at 00:00gmt, Bollingers, 1-2-3 explanation.
1008 Shimodax's graphical representation of the 1-2-3 setup.
1034 Which pair to trade, doesn't use stochastics anymore, which direction following daily open

Bunnygirl's Forex Trading Approach

1036
1053
1055
1056
1073
1080
1085
1087
1093
1094
1097

Asian session might be OK. It's up to us.

Best trades to take move straight from open or flat Asian session
Consolidations following big moves
4-hour price times, 1-2-3 setup references
1076 Examples
Best way to learn the system
Response to and analysis of post 1083
Using average range to estimate targets, fibs, Mr. Sheen, clarification on no-touch days.
Link to free training videos
Charting package and screen capture utility
Using Fibs

From Bunnygirl System Followers thread

(http://www.strategybuilderfx.com/forums/showthread.php?p=107464#post107464)
197 No touch day
340 Holding off on cable
342 wait for close after cross, sometimes, no stochastics, rsi14 for divergence and over 50
376 daily open and filter