K's Trading System

To people who may interest in using this trading system as a perspective to look at the Forex market in order to begin their journey in the field of
speculation.

I have confidence that you will surpass me in the near future. Remember, always use your own judgements, follow your system strictly, revise your
system continuously for deeper insight as the market is never 100% predictable, at least in my opinion. The road ahead of you is hard, extremely
hard, I spent two years of my life developing this trading system, based on the Jesse L. Livermore Market Key system. It was the darkest two-year
period of my life, but things turn out to be OK.

Dont expect yourself to understand the market within a month or even a year, as the market is counter-intuitive and it does not follow your common
sense, it follows its common sense. Be patient, give yourself enough time to study it, and you will understand it in due time.

Best wishes to you and your journey ahead,

K
Introduction on the system
In this system, there are 6 possible trading scenarios depended entirely on the below factors
Overall Trend
Interaction with support & resistance
Interaction at the new High or new Low

Scenarios of price movement are classified as below:

1a: New Low
1b: New High
2a: Continuous Low
2b: Continuous High
3a: Reversal Low
3b: Reversal High

Phases of the scenario are described in number:

1: First act
2: Second act
3: R-nip
4: Initial wave
5: 2nd wave
6: 3rd wave

4+n: nth wave

For the wave, there will be two terms to indicate when to trade (beginning of the wave) and when to get out (end of the wave)
(exe) - executing phase: The beginning of the wave, execution of trade will follow the Execution Strategy in the later section
(end) - closing phase: The end of the wave, open positions will be closed immediately.

Examples of my way of recording the market information on the price movement:

2a - 5 (exe) : The currency pair is in the scenario of Continuous Low. The 2nd wave is on the move, and execution phase is activated.
2b - 3 : The currency pair is in the scenario of Continuous High. The R-nip is on the move.
3a - 4 (end) : The currency pair is in the scenario of Reversal High. The initial wave is ending and the open positions must be closed.
Trading Tools
For my daily practice, I have with me the following tools:

Data Platform:

Candle chart (1D and 4-hr) in real-time, I use charts from tradingview.com
1D chart will be used for market analysis
4-hr chart will be used for trade execution

Account:

Normal Account with leverage of 1:300, I use Fxpro.com as my broker, you can use whichever brokers and leverage which suit you best.

Trading Platform:

Metatrader 4 Web

Record:

1 book is used for daily record of market movement

1 book is used for keeping log on my practice
1 books is used as ledger for my trading result
Overall Trend

When you trade, always trade with the overall trend, dont go against it. I might be wrong, but I think going against the overall trend is like going
against the current of the river, you dont really want to do it, as the outcomes are really uncertain. You might win occasionally, but it is hard to trade
against the whole market expecting you will suffer no loss.

Take an example from the movie The Big Short, the fund manager played by Christian Bale bets against the whole market on the default rate of
housing mortgage. What happens to him? Although Hollywood might stretch it a bit, I think the image of him desperately writing his loss on the board
every day is a very essential lesson to take in. He is right eventually, but his suffer during the development of the market is so destructive that I do not
think anyone wants to go through that in their trading career. Therefore, in order to minimise those unnecessary mental damages, I think it is best for
a trader to learn the market timing.

My way of identifying trend is really simple. The first step you need to do is to identify where is the last low or high of the currency pair. After that, you
can use the scenario 3a or 3b respectively in order to know whether the market is in its reversal scenario or it is still in its current Down and Up Trend.
If there isnt any phase of 3a applies to the movement from the reference point (which is the Low of the pair), the currency pair is still in its Down
Trend. In case 3a applies, follow scenario 3a. The same applies for the 3b and High of the pair.
Candle stick pattern
No. of Candles Bullish Bearish

1 candle 1. Hammer 1. Shooting Star

2. Inverted Hammer (only green) 2. Hanging Man (only red)

2 candles Bullish Engulfing Bearish Engulfing

3 candles Morning Doji Star Evening Doji Star

The candle stick pattern is applied commonly in this system. Therefore it is suggested that the reader of this system memorise those patterns.

The application is really straight forward, bullish patterns signal that the Down movement is ended and replaced by the Up movement. On contrary,
bearish patterns signal that the Up movement is ended and replaced by the Down movement.

I do not like to make my system as clear as crystal, as I want people to really think about what they are reading. Therefore, in the scenarios, you
should try to figure out which of the two type pattern I am talking about whenever I refer to them in the coming text.
Scenario 1: New Low/High
Phase Scenario 1a - New Low Scenario 1b - New High

1 Pass the past Low Pass the past High

2 Creating a new Low with the candle stick pattern indicating the Creating a new High with the candle stick pattern indicating the end of
end of the wave the wave
3 Have a rally to a certain level Have a reaction to a certain level

End: having a candle stick pattern indicating the end. End: having a candle stick pattern indicating the end.

4 - onward 4 (exe): right at the end of phase 3, executing phase of phase 4 is 4 (exe): right at the end of phase 3, executing phase of phase 4 is
activated. activated.
4 (end): after the wave shows the candle stick pattern indicating 4 (end): after the wave shows the candle stick pattern indicating the
the end of the wave. end of the wave.

5: phase 5 is activated at the end of phase 4, which is essentially 5: phase 5 is activated at the end of phase 4, which is essentially a
a rally from the end of phase 4. rally from the end of phase 4.
5 (exe): after the rally, the executing phase is activated by a 5 (exe): after the rally, the executing phase is activated by a candle
candle stick pattern. stick pattern.
5(end): after the wave shows the candle stick pattern indicating 5(end): after the wave shows the candle stick pattern indicating the end
the end of the wave. of the wave.

Notes: Theoretically, there can be infinite quantities of wave in one Notes: Theoretically, there can be infinite quantities of wave in one
scenario, their beginning, execution and ending is always the scenario, their beginning, execution and ending is always the same as
same as stated in phase 5. stated in phase 5.

Fin The end of this scenario comes when after phase 4, the trend The end of this scenario comes when after phase 4, the trend cannot
cannot carry the price pass the Low of phase 1. carry the price pass the High of phase 1.
Scenario 2: Continuous Low/High
Phase Scenario 2a - Continuous Low Scenario 2b - Continuous High

1 Create a new low but cannot follow the scenario 1a through, Create a new high but cannot follow the scenario 1b through, which
which means the wave cannot carry itself pass the new low with means the wave cannot carry itself pass the new high with the new
the new wave formed at 1a-4. wave formed at 1b-4.

End: Rally back to the previous level but cannot pass it with the End: React back to the previous level but cannot pass it with the candle
candle stick pattern - Formation of Resistance. The Resistance stick pattern - Formation of Support. The Support can be horizontal or
can be horizontal or diagonal. diagonal.

Notes: if it pass the previous level, the 1st phase continue with the Notes: if it pass the previous level, the 1st phase continue with the new
new rally level as the reference point. reaction level as the reference point.
2 The Resistance is confirmed by another cycle of following the The Support is confirmed by another cycle of following the overall down
overall down trend and rally back to the same level of Resistance. trend and rally back to the same level of Resistance.

End: Cannot pass the Resistance with the candle stick pattern End: Cannot pass the Support with the candle stick pattern

Notes: the best scenario is for the candle to close near the Notes: the best scenario is for the candle to close near the Support. If it
Resistance. If it cannot and only have the High of the candle cannot and only have the Low of the candle touch the Support, be
touch the Resistance, be really careful, it can be a false end. In really careful, it can be a false end. In such scenario, if another candle
such scenario, if another candle close higher than the previous close higher than the previous one, such candle is consider to be the
one, such candle is consider to be the new end of phase 2. This new end of phase 2. This cycle can repeat itself many time.
cycle can repeat itself many time.

Notes: if a candle closed beyond the resistance level, the scenario Notes: if a candle closed beyond the support level, the scenario go
go back to phase 1. back to phase 1.

3 Another cycle of following the down trend and rally back to the Another cycle of following the down trend and rally back to the same
same level of Resistance (usually a short and not-so-significant level of Support (usually a short and not-so-significant one in
one in comparison with phase 1 and 2). I usually call this R-nip or comparison with phase 1 and 2). I usually call this R-nip or reversal
reversal nipple, just a habit from the early day of establishing the nipple, just a habit from the early day of establishing the rule.
rule.

End: Cannot pass the Resistance with the Candle stick pattern End: Cannot pass the Support with the Candle stick pattern
Phase Scenario 2a - Continuous Low Scenario 2b - Continuous High

4 - onward 4 (exe): right at the end of phase 3, executing phase of phase 4 is 4 (exe): right at the end of phase 3, executing phase of phase 4 is
activated. activated.
4 (end): after the wave shows the candle stick pattern indicating 4 (end): after the wave shows the candle stick pattern indicating the
the end of the wave. end of the wave.

5: phase 5 is activated at the end of phase 4, which is essentially 5: phase 5 is activated at the end of phase 4, which is essentially a rally
a rally from the end of phase 4. from the end of phase 4.
5 (exe): after the rally, the executing phase is activated by a 5 (exe): after the rally, the executing phase is activated by a candle
candle stick pattern. stick pattern.
5(end): after the wave shows the candle stick pattern indicating 5(end): after the wave shows the candle stick pattern indicating the end
the end of the wave. of the wave.

Notes: Theoretically, there can be infinite quantities of wave in Notes: Theoretically, there can be infinite quantities of wave in one
one scenario, their beginning, execution and ending is always the scenario, their beginning, execution and ending is always the same as
same as stated in phase 5. stated in phase 5.
Fin The end of this scenario comes when it cannot pass the previous The end of this scenario comes when it cannot pass the previous high,
low, either the one created in phase 1 or the one create in any either the one created in phase 1 or the one create in any phase after
phase after the 4th. the 4th.

It is really clear that scenarios 1a and 1b are included in scenarios 2a and 2b in form of a wave. For the matter of fact, I barely use 1a and 1b in my
daily trading as their developments were not really based on solid observations at first. However, it is still a good reference for the question on the
action of the market if phases in scenario 2a and 2b carries the price pass the Past Low/High.
Scenario 3: Reversal Low/High
Phase Scenario 3a - Reversal Low Scenario 3b - Reversal High

1 Create a new Low but cannot follow the scenario 1a or 2a Create a new High but cannot follow the scenario 1b or 2b through,
through, which means the wave cannot carry itself pass the new which means the wave cannot carry itself pass the new high with the
high with the new wave formed at 1a - 4 or 2a - 4+n. new wave formed at 1b - 4 or 2b - 4+n.

End: Go back to the previous low level but cannot pass it with the End: Go back to the previous low level but cannot pass it with the
candle stick pattern - Formation of Support. candle stick pattern - Formation of Resistance.

Notes: if it pass the previous low level, scenario 1a applies. Notes: if it pass the previous low level, scenario 1a applies.
2 The Support is confirmed by another cycle of rally and following The Resistance is confirmed by another cycle of reaction and following
the overall trend. the overall trend.

End: Cannot pass the Support with the candle stick pattern End: Cannot pass the Resistance with the candle stick pattern

Notes: the best scenario is for the candle to close near the Notes: the best scenario is for the candle to close near the Resistance.
Support. If it cannot and only have the Low of the candle touch If it cannot and only have the High of the candle touch the Resistance,
the Support, be really careful, it can be a false end. In such be really careful, it can be a false end. In such scenario, if another
scenario, if another candle close higher than the previous one, candle close higher than the previous one, such candle is consider to
such candle is consider to be the new end of phase 2. This cycle be the new end of phase 2. This cycle can repeat itself many time.
can repeat itself many time.

Notes: if a candle closed beyond the support level, the scenario Notes: if a candle closed beyond the support level, the scenario go back
go back to phase 1. to phase 1.

3 Another cycle of rally and following the down trend. Another cycle of reaction and following the down trend.

End: Cannot pass the Support with the Candle stick pattern End: Cannot pass the Resistance with the Candle stick pattern
Phase Scenario 3a - Reversal Low Scenario 3b - Reversal High

4 - onward 4 (exe): right at the end of phase 3, executing phase of phase 4 is 4 (exe): right at the end of phase 3, executing phase of phase 4 is
activated. activated.
4 (end): after the wave shows the candle stick pattern indicating 4 (end): after the wave shows the candle stick pattern indicating the end
the end of the wave. of the wave.

5: phase 5 is activated at the end of phase 4, which is essentially 5: phase 5 is activated at the end of phase 4, which is essentially a rally
a rally from the end of phase 4. from the end of phase 4.
5 (exe): after the rally, the executing phase is activated by a 5 (exe): after the rally, the executing phase is activated by a candle stick
candle stick pattern. pattern.
5(end): after the wave shows the candle stick pattern indicating 5(end): after the wave shows the candle stick pattern indicating the end
the end of the wave. of the wave.

Notes: Theoretically, there can be infinite quantities of wave in one Notes: Theoretically, there can be infinite quantities of wave in one
scenario, their beginning, execution and ending is always the scenario, their beginning, execution and ending is always the same as
same as stated in phase 5. stated in phase 5.
Fin The end of this scenario comes when the phase 4+n cannot The end of this scenario comes when the phase 4+n cannot carries it
carries it pass the high of the phase 4+(n-1) with n > 0 pass the low of the phase 4+(n-1) with n > 0
Execution Strategy - (exe)

Remember to use the 4hr-chart for this one.

After the executing phase is activated in any case, the initial trade will be executed on the 1st increment of volume which must have the candle stick
patterns reflecting the continuation of the wave.

The 2nd trade is executed after one-hour period if the end of that hour reflect profit on the initial trade.

The 3rd trade is executed in the same manner as 2nd trade after one-hour period.