Welcome

Thanks for downloading the ArcisFX G7 Swing Trading System ebook.

This could be one of the best steps you will make in your trading career
and, together with our live trading room, I hope this will go a long way to
helping you become a profitable market trader!

This book is straight to the point. Although I will offer new traders some
vital assistance and advice in the opening chapters of the book, the rest
of the book focuses on the G7 Swing Trading System, and its
application, in a detailed and careful description of exactly how the
system works and how to apply it in real-time in the financial markets.

If you have any questions or queries, please email me at

[email protected], visit my website at www.arcistrading.com, or visit
and follow me on X and YouTube,

I hope that you enjoy reading these notes as much as I have enjoyed
preparing them for you!

Getting started in trading

If you are new to online trading, there are several key pieces of
information you need to know:

● How and where to open a trading account, want a more detailed

approach check HERE
● Demo trading and when to go “live”.
● Essential reading material for your growth as a trader
● Money management and leverage, stop losses and targets.
● How to read a candlestick chart.
How and where to open a trading account
This depends a lot on how much capital you have to start with your
trading. I highly recommend that all new traders “demo” trade for at least
1-3 months before committing real money to the account. There are now
literally 100’s of brokers available to the retail trader, but I must warn you
that not all of them are “above board” I have had experience with several
brokers and can recommend the following: (Please note that my
recommendation does not in any way endorse these brokers, only that I
have had a good experience with them in the past).

www.blackbull.com – Our favorite broker find out why HERE, available

with TradingView, wants a more detailed TradingView set-up watch
THIS. And is one of the largest brokers and allows mini lots. And allows
trades with smaller accounts to trade extremely small lot sizes thereby
minimizing the risk of losses for beginners. Sign up HERE.

Pepperstone - offers seamless compatibility with TradingView, a powerful

charting tool that enhances your trading analysis and decision-making
process. The integration ensures a smooth, efficient experience for
traders who rely on advanced charting to strategize their trades, as one
of the largest and most trusted brokers worldwide, Pepperstone has
established a reputation for reliability and transparency in the trading
community. Pepperstone supports mini and micro lots, making it an
excellent choice for traders with smaller accounts who wish to manage
their risk by trading in smaller lot sizes, with the option to trade extremely
small positions, new traders can practice and gain confidence while
minimizing potential losses. Ready to see why it’s one of our preferred
brokers. Sign up HERE.
Demo trading and when to go “live”
The brokers above both offer unlimited period demo accounts. These are
trading accounts that look and feel exactly like real money accounts,
except that the money is not real. Using a demo account will allow you to
get the feel for the trading platform, the feel for how the market moves,
and a feel for how the G7 Swing Trading System works in real time. I
highly recommend trading on a demo account for at least 1 month, but
probably even longer (3-6 months). Many traders who graduate to a real
money account, too soon lose money. This is because the demands of
real money trading are so much greater in terms of stress and emotions,
and if you have not mastered demo trading before that, the combination
of new experiences can be overwhelming.

Essential reading material for your growth as a

trader
There are several books that I feel are essential for your growth and
learning as a trader. Start with the first two books and get the other ones
when you can a little later on HERE.

Money Management and leverage, stop

losses and targets
This is one of the most important and most overlooked parts of trading.
Many traders take large risks with their capital in the hope that they will
“get rich quickly” or recover previous losses with one good trade. I would
like to suggest some simple guidelines for managing your trading
account with our G7 Swing Trading System, which will help you to
reduce risk and maximize returns.

1. Never leverage more than 3:1.

● This means that for every dollar in your account, you should not trade
more than 3 dollars per trade position. For example, if your account
size is $5000, you should trade no more than $15000 per position.
This is 1.5 mini lots (a mini lot is worth $10,000) . I prefer to leverage
even less than 3:1 with 1:1 – 2:1 being optimal.

2. Never risk more than 2% of your account on one trade.

● This is easily calculated. If the trade you want to enter requires a 30

pip stop loss, for example, the risk to your account if stopped out is 30
pips x leverage/100%. In this case, if your leverage is 3:1 then the risk
would be 90 pips = 0.9%. If the stop loss is higher, the leverage would
have to be reduced.

3. Always aim for a 2:1 reward/risk ratio in your trades.

● If you are prepared to risk, say 40 pips on a trade, ensure that the
potential target of the trade is at least 80 pips. If you are prepared to
risk 50 pips, make sure you have a possible target of 100 pips, and so
on. Try to always aim for twice as much as you risk.

If you stick to these simple rules, you should be able to survive and
weather the storms, to have a long-lasting and relatively stress-free
trading career!

How to read candlestick charts.

This section is a brief introduction to Japanese candlestick charting

methods. If you are a new trader, please read through these carefully,
and try to spot the patterns on your live Forex charts. If you are familiar
with candlestick charting, skip this section and go ahead to the G7 Swing
Trading System.

Interpretation of candlestick charts is based on patterns. Traders use

primarily the relationship between the highs and lows of the candlesticks
over a given time period. However, some patterns can be identified to
anticipate price movements. There are two types of candles: the bullish
pattern candle, and the bearish pattern candle.

Bullish Candlestick Formations

Piercing line - This is a bullish pattern. The first
candle is a long bear candle followed by a long bull
candle. The bull candle opens with more than the
bear’s lows but closes more than halfway above the
middle of the bear candle’s body.

Hammer - The hammer is a bullish pattern if it

occurs after a significant downtrend. If the line occurs
after a significant uptrend, it is called a hanging man.
A small body and a long wick identify a hammer. The
body can be clear or filled in.

Morning star - This is a bullish pattern signifying a

potential bottom. The star indicates a possible
reversal and the bullish (blue) candle confirms this.
The star can be a bullish (blue) or a bearish (red)
candle.

Bullish engulfing lines - This pattern is strongly

bullish if it occurs after a significant downtrend (it
may serve as a reversal pattern). It occurs when a
small bearish (red) candle is engulfed by a large
bullish (blue) candle
Bullish doji star - This star indicates a reversal and
a doji indicates indecision. Thus, this pattern usually
indicates a reversal following an indecisive period.
You should wait for confirmation before trading a doji
star.

Bearish Formations

Long bearish candle - A long bearish candle occurs

when prices open near the high and close near the
low.

Dark cloud cover - This is a bearish pattern. The

pattern is more significant if the second candle’s
body is below the center of the previous candle’s
body

Bearish engulfing lines - This pattern is strongly

bearish if it occurs after a significant uptrend (it may
serve as a reversal pattern). It occurs when a small
bullish (blue) candle is engulfed by a large bearish
(red) candle.
Hanging man - This pattern is bearish if it occurs
after a significant uptrend. If this pattern occurs after
a significant downtrend, it is called a hammer. A
hanging man is identified by small candle bodies and
a long wick below the bodies (can be either blue or
red).

Evening star - This is a bearish pattern signifying a

potential top. The star indicates a possible reversal
and the bearish (red) candle confirms this. The star
can be a bullish (blue) candle or a bearish (red)
candle.

Doji star - This star indicates a reversal and a doji

indicates indecision. Thus, this pattern usually
indicates a reversal following an indecisive period.
One should wait for a confirmation (like an evening
star) before trading a doji star

Neutral Candlestick Formations

Shooting star - This pattern suggests a minor
reversal when it appears after a rally. The star’s body
must appear near the low price, and the candle
should have a long upper wick.

Spinning tops - This is a neutral pattern that occurs

when the distance between the high and low, and the
distance between the open and close, are relatively
small.

Doji - This candle implies indecision. The open and

close are the same.

Double doji - This candle (two adjacent doji candles)

implies that a forceful move will follow a breakout
from the current indecision.
Harami - This pattern indicates a decrease in
momentum. It occurs when a candle with a small
body falls within the area of a larger body. In this
example, a bullish (blue) candle with a large body is
followed by a small bearish (red) candle. This implies
a decrease in the bullish momentum.

Long-legged doji - This candle often signifies a

turning point. It occurs when the open and close are
the same, and the range between the high and the
low is relatively large.

Dragonfly doji - This candle also signifies a turning

point. It occurs when the open and close are the
same, and the low is significantly loIr than the open,
high and closing prices.
 Gravestone doji - This candle also signifies a
turning point. It occurs when the open, close, and low
prices are the same, and the high is significantly
higher than the open, close, and low prices.

Stars - Stars indicate reversals. A star is a candle

with a small real body that occurs after a candle with
a much larger real body, where the real bodies do
not overlap (the wicks may overlap).

While the G7 Swing Trading System provides a solid foundation for trading,
there’s more to uncover if you’re ready to take your trading to the next level.
The Swing Trading Blueprint, offers in-depth training on techniques that go
beyond the basics.

Check out my FREE Video on CandleStick Trading HERE.

The G7 Swing Trading System.

Now I will try to take you through the system as clearly as possible,
detailing everything from the chart set-up to the trade entry signals.
Although we trade a variety of Forex pairs, stock indices and
commodities, we will focus on the major Forex pairs in this short Ebook.
Currencies traded
There are a large number of currency pairs available for trading on most
retail Forex trading platforms, most offering between 12-24 different pairs
for trading. Of those pairs, the course focuses on 4 pairs, “The Majors”
namely the EUR/USD, the GBP/USD, the USD/JPY, and the USD/CHF.

Due to their nature, the majors tend to experience much greater volumes
than the other pairs and are therefore more technical in nature and they
tend to trend more than other pairs. Trending behavior is required for
more consistent profits with the G7 Swing Trading System’s model, and
therefore I only recommend trading the majors. Other pairs can be
traded with this system, and experienced traders may want to apply the
system to other pairs.

I also recommend trading 1-2 currencies from the three most of the time,
choosing the best 1-2 from the 3 by selecting the clearest G7 Swing
Trading System trade setups.

As a rule of thumb, I prefer to trade Euro, Pound, and then Yen in that
order, and if there is any doubt, I will go for the first two in preference to
the Yen.

Although the majors are the primary focus, advanced traders may apply
the system to other currency pairs. However, it’s advised to start by
mastering 1-2 pairs at a time.

Charts needed
A good charting package is essential. I have had experience with 2
charting services, all of which can provide the essential tools for the G7
Swing Trading System:

MetaTrader 4/5 (downloaded on your broker's site)

TradingView (a web-based version, on the go). Sign up HERE for free!
What is TradingView?
TradingView is a powerful charting platform and social community. It
boasts a modern user-friendly interface with a wide array of indicators
and screeners. Their charts support multiple asset classes such as
stocks, forex, cryptocurrencies and commodities. In addition to over 100
prebuilt indicators and charting tools, TradingView’s proprietary
programming language Pine Script allows users to create custom
indicators for specialized functionality.

TradingView also advertises social trading through an extensive network

of news and trade ideas from other traders. Users have the capability to
explore trading strategies others have posted and follow their accounts.
They can also join live chats and video streams to interact with groups of
traders with varying trading experience- from beginner to expert.

The subscription model includes both paid and free versions. Paid plans
are tiered by increasing capabilities such as number of indicators per
chart, active price alerts and additional data.

Key features
● Advanced charts and screeners
● 100+ popular indicators
● 50+ smart drawing tools
● An extensive trading community
● Paid and free version.

What is MetaTrader 4?
MetaTrader 4 is built for forex and has been a favorite of traders since its
inception in 2005. The platform's analytical capabilities and automated
trading systems provide fast and stable order execution. This speed and
reliability has allowed MT4 to retain its relevance even among newer
platforms like TradingView.

MetaTrader 4 also offers their code base for free which grants traders
access to create and share their own algorithms for automated trading.
These premade MetaTrader4 algorithms available to download or
purchase through their marketplace are referred to as Expert Advisors or
EAs. Because of the platform’s tenure as an industry favorite, this library
of programs is among the largest.

Key features
● Algorithmic trading with a library of trading bots
● 30 technical indicators
● 3 execution modes
● Thousands of signals and copy trading
● Free with additional EAs available to purchase

TradingView vs MetaTrader chart comparison

Both platforms grant direct access to financial markets through a forex
broker and provide advanced trading tools. TradingView is a powerful
charting platform and social network for traders. MetaTrader 4 has a
strong algorithmic trading focus with reliable execution. Below are other
key distinctions between the platforms.

TradingView MetaTrader4

Modern user-friendly interface Fast, stable execution

More time frames Free

More indicators Expert advisors

Social networking Built for Forex

Features other asset classes

Chart screen setup

The G7 system uses 2 time periods for each currency, namely weekly
(W) charts and hourly charts (1H). You should now set up your chart
screen to display 2 charts for each currency – hourly and Weekly,
making a total of 6 charts on the screen. The charts should be set to
display candlesticks rather than lines or bars. The following screenshot
shows our set-up with the EURUSD on the left, GBPUSD in the middle,
and USDJPY on the right. The hourly chart in each case is at the top of
the screen and the Weekly chart is at the bottom.

Chart indicator setup

The next step is to place the various indicators that the G7 Swing
Trading System uses on the charts. There are actually very few
indicators required as the system is not primarily indicator-driven.

Set up each hourly chart as below:

1. 100-hour Bollinger band

2. 200-hour Bollinger Band

3. 200 period SMA (simple moving average)

4. 14/7/3 Slow Stochastic.

Set up your hourly chart with the following indicators:

1. Setting Up Bollinger Bands

● 100-hour Bollinger Band

Open your TradingView platform.

● Right-click on the hourly chart (1H) for the currency pair you are
trading.

● From the context menu, click on Indicators List.

● Click the Insert tab on the top menu, then navigate to Indicators >
Trend > Bollinger Bands.

● In the Bollinger Bands settings window:

Set the Period to 100.

Set the Deviation to 2 (standard deviation setting).

Set the Shift to 0.

Choose your preferred colors for the upper and lower bands,

then click OK.

 2. 200-hour Bollinger Band

● Repeat the above steps for the Bollinger Bands indicator.

This time, set the Period to 200.

Leave the Deviation as 2 and the Shift as 0.

Set the color of this Bollinger Band to something different than the
100-hour one for better visibility.

Click OK.

3. Adding the 200-period Simple Moving Average (SMA) On the

weekly(W) chart add:

● Click Insert in the top menu.

● Navigate to Indicators > Trend > Moving Average.

● In the Moving Average settings window:

Set the Period to 200.

Set the MA method to Simple (this is the SMA).

Set the Apply to field to Close (this will calculate based on closing
prices).

Set the color and style of the line (for example, red for the SMA).

Click OK.

3. Adding the 14/7/3 Slow Stochastic

● Click Insert in the top menu.

● Navigate to Indicators > Oscillators > Stochastic Oscillator.

● In the Stochastic Oscillator settings window:

 Set the K period to 14.

Set the D period to 7.

Set the Slowing to 3.

Set the Price Field to Low/High.

Leave the MA method as Simple.

Set the Levels at 20 and 80 to identify oversold and overbought

conditions.

Click OK.

Although these are very standard indicators, if you have any doubt about
what these indicators are or how to place them on your charts, please
browse through the information presented at some of the sites I
mentioned above in the “getting started” and “charts needed”
paragraphs. Most of the information can be obtained HERE or on my
Youtube Channel for FREE with more HERE.

More details can be found in the recommended books. Your hourly

charts should all look something like the example in the chart below.
Next, set up each Weekly chart as below:

1. A 10-Iek SMA (simple moving average)

No other indicators are required on the Weekly charts. Your Weekly chart
should look something like the example in the picture below:

Once you have all the charts set up correctly and on display on the
screen as above, you are ready to begin analysis for your first trades
using the G7 trading system. Remember, all charts should display price
movement in candlesticks and there should be 6 charts on your screen –
one hourly and one Weekly chart for each currency pair.

The G7 Swing Trading Logic

This process is the heart of the G7 system. It is a logical series of steps
designed to assist you to get into and out of a trade with optimal
probability of winning. Remember that there is no sure thing in trading
and I never really know which way the market will move next. That is
why money management is absolutely vital – always prepare for the
possibility of a losing trade, no matter how confident you are about
winning!

What I can determine, hoOver, is a level of probability for a move in one

direction or another from a certain position or price level. I are only trying
to win a certain percentage of our trades (anything above 60% is good)
and I are trying to make sure that when I lose a trade, the loss is smaller
than the gains I make with winning trades. This is very important and is
covered in more detail in the early paragraphs of this book (money
management)

The series of logical steps I must always follow is:

● Determine the trading direction for the weekly. I always view the
market in weekly chunks of time, and I also try to make certain weekly
goals in terms of profits. The trading direction for the weekly will
remain unchanged unless the price moves outside the boundaries
(reversal levels) I determine for that week.
● Determine the boundaries where I will change our mind on the weekly
direction – the reversal level.
● Once the direction and reversal levels are established, I need to
determine where I want to enter the market. If I am bullish, I will only
 buy on retracements (dips) and if I are bearish I will only sell on
retracements (rallies).
● Once I have determined where I am willing to enter the market, I need
to establish what will give us the “buy” or “sell” signal.
● When I have entered a trade, I need to know when to get out of the
trade – either for a profit in case the market goes in our direction, or
for a loss if the market goes against our direction.

If I can follow this series of steps each time, then take a trade, and have
confidence that the G7 Swing Trading System gives you a good
probability of winning, you are on your way to a winning trading career!

In the G7 Swing Trading system, you will learn how to use Bollinger
Bands and stochastic oscillators to identify entry points. But what if you
could increase your precision even further? In the Swing Trading
Blueprint, I introduce multi-timeframe analysis—a technique used by
professional traders to confirm entry signals across different timeframes
(e.g., daily and hourly charts). This advanced method helps you fine-tune
your entries and increase the likelihood of success.

Determining direction on a weekly (W) basis

Often the toughest part of trading is to determine the direction that the
market might move in for the day or the week you are considering. The
G7 Swing Trading System makes this step relatively easy.

I use the weekly charts to decide on the direction for the weekly, and
where the reversal levels are. The weekly candle will be completed on
Friday when the markets close, and can be made any time after that,
over the weekend.
The retail brokers open on a Sunday around 2-5 PM Eastern time (US)
and each weekend before the markets open the direction and reversal
point for the coming week can be determined from the previous week’s
candle. There are several very simple rules for doing this:

I compare the Iek which has just finished to the previous Iek and
determine whether I have a bullish scenario or a bearish scenario.

A bullish scenario can be assumed when:

1. The weekly candle has a higher high and/or a higher low compared to
the week before

2. The candle has formed a “spike low” after a long period of declines (4
to 8 weeks).

Let’s examine each one of these points and break them down into clear
and simple rules:

Bullish Scenario 1 - The weekly candle has a

higher high and/ or a higher low compared to
the week before.

This one is easy. If this Week's candle has a higher high and a higher
low than the previous Iek, I have a bullish scenario. This means I want to
buy or trade long on the currency going into the new Iek from Sunday
afternoon.

A higher-high - means that the candle’s highest point for the week is
higher than the previous Week's highest level shown on the candle.
The same for a higher low – meaning the loWEst point of this Week's
candle is higher than the loWEst point of the previous Week's candle.
The chart in the next picture shows a candle with a higher high and a
higher low than the previous Iek.

Bullish Scenario 2 – A higher high, but not a higher

low.

Sometimes, a candle can have a higher high, without having a higher

low, or the other way around. An example can be seen in the next chart.
The candle pointed out has a higher high than the previous week, but
also a lower low.

However, this is also considered a bullish scenario, and I would consider

buying into the new week.
Bullish Scenario 3 - The candle has formed a “spike
low” after a long period of declines (4-8 weeks).
This is slightly more difficult to spot, however, with practice, you will
begin to spot these patterns with ease. Please read up on candlestick
charting in the notes in the early part of the book.

The candles labeled “doji’s” “hammers” “dragonfly doji”, “Long-legged

Doji” and “Hanging Man” are all examples of “spike low” patterns that
occur at reversal points after a long trend downwards.

The simple rules for spotting these are to look for 6-12 Iek periods where
the price movement has been predominantly downwards, followed by
one of the “spike low” reversal candles mentioned. These can also be
regarded as a bullish scenario, even though I may not have a higher high
or higher low.

As I said, these become much easier to spot with a little practice! 3 good
examples are shown in the chart below.
A bearish scenario can be assumed when
1. The candle has a lower high and/or a lower low compared to the week
before

2. The candle has formed a “spike high” after a long period of rallying (4
8 weeks)

Let’s examine each one of these points and break them down into clear
and simple rules:

Bearish Scenario 1 - The candle has a loIr high and/ or a

loIr low compared to the Iek before.
This one is easy. If this Week's candle has a lower high and a low lower
than the previous week, it is in a bearish scenario. This means I want to
sell or trade short on the currency going into the new week from Sunday
afternoon. A lower high means that the candle’s highest point for the
Week is loIr than the previous Week's highest level shown on the candle.
The same for a lower low – meaning the lowest point of this Week's
candle is lower than the lowest point of the previous week's candle. The
chart in the next picture shows candles with lower highs and lower lows
than the previous weeks.
Bearish Scenario 2 - Sometimes, a candle can have a lower
low, but not a lower high, or the other way around.
An example can be seen in the next chart. The candle pointed out has a
lower low than the previous week, but also a higher high. However, this
is also considered a bearish scenario, and I would consider selling in the
new weeks.
Bearish Scenario 3 - The candle has formed a “spike high”
after a long period of rallying (6-12 Weeks)
This is slightly more difficult to spot, however, with practice, you will
begin to spot them with ease. Please read up on candlestick charting in
the notes in the early part of the book.

The candles labeled “Doji’s” “Hammers” “Dragonfly Doji”, “Long-legged

Doji” and “Shooting Star” are all examples of “spike high” patterns that
occur at reversal points after a long trend upwards.

The simple rules for spotting these are to look for 6-12 Iek periods where
the price movement has been predominantly upwards, followed by one
of the weekly “spike high” reversal candles mentioned. These can also
be regarded as a bearish scenario, even though I may not have a lower
high or lower low.

As I said, these become much easier to spot with a little practice! Three
good examples are shown in the chart below
While candlestick formations play a key role in the G7 Swing Trading System,
the Swing Trading Blueprint teaches advanced patterns like Head and
Shoulders, Idges, and Triangles that signal high-probability trend reversals.
These chart patterns, when used alongside other indicators, offer more robust
setups for your trades.

Learn to master these advanced patterns in the full Swing Trading Blueprint
course HERE.

Determining when direction may be wrong-

weekly reversals

Recap compare the past week's candle to the previous weekly candles,
and determine if I have a bullish or bearish scenario. Look out for
reversal candles (spikes) at the end of trends. I have now determined the
direction for the week.

The next thing I need to do is to determine at what price the weekly

direction is likely to be going and where I must change the view of the
direction.

Once again, this is a simple determination. I simply place our reversal

level beyond the extremity of the closed weeks candlestick.

For example, if I am bullish, the reversal level is 10 pips below the lowest
point of the closed weekly candlestick. If I am bearish, the reversal level
is 10 pips above the highest point of the closed weeklys candlestick. The
chart shows an example:
Determining entry points Recap:
I have determined the direction in which I want to trade for the weekly. I
have also determined the price level at which I assume that direction
was wrong. I also know that if our direction is bullish (long) I want to wait
for dips (declines) to buy into, and if our direction is bearish (short) I want
to wait for rallies to sell into.

Now to determine where those entry points are!

There are 6 rules that should be used to determine entry points, and the
conditions for each rule must be in place before a trade can be initiated:

I need to go to the hourly chart for the rules.

Entry point rule # 1

Wait for an hourly close.

No trade positions should be considered until the hour rollover. You will
notice that about 5-10 minutes before the “top of the hour” or hour
rollover (8 AM, 9 AM, 10 AM, etc) there is a lot of activity in the market
and the price action becomes much more volatile. This is due to traders
watching the hour rollover for clues about the next move and traders
jostling for advantage before the hourly close to try and sway market
sentiment. The same thing happens on both shorter and longer
timeframes. For example you may notice the same thing at the end of
each 4 hour period or each 15 minute period.

Traders must wait for the hour to close before taking the trade.
This allows the market to close the hour and for the hourly candlestick to
complete which will give good information to traders using the system
about whether a top or bottom may/may not be formed. This is so
important, as I use the shape of the hourly candlestick to give us signals
to enter the trade, once all the other rule conditions have been met.

In the hourly chart below, each candle represents one hour of price
movement. Wait for the candle to “close” before taking any trade
position. When the candle closes, it will “rollover” to the next candle on
the hour. As soon as this has occurred, a decision can be made to either
enter the trade or to wait another hour. If you decide to wait, the next
trade decision may only be made one hour later at the next rollover.

Entry point rule # 2

The 14/ 7/ 3 stochastic must be oversold if buying, or overbought if

selling.

This is extremely important. I already know the direction in which I want

to trade, and now this tool is used to help us pick entry points.

The rule of thumb is:

If I want to buy, I only do it on dips (after the price has dropped
somewhat), and when the hourly chart is oversold.

If I want to sell, I only do it on rallies (after the price has risen somewhat),
and when the hourly chart is overbought.

This rule helps to swing the probabilities in our favor and to increase the
winning percentage considerably
I use the stochastic to determine the overbought or oversold status of
the charts.

If the stochastic is above 80, then I consider the hourly chart to be

overbought.

If the stochastic is below 20, then I consider the hourly chart to be

oversold.

Simply put – do not even consider a trade unless the stochastic is either
above 80 (for selling) or below 20 (for buying)

The chart below shows occasions where the stochastic is overbought

(blue arrows) and where it is oversold (green arrows) Depending on the
direction I have decided to trade in for the Iek, I would consider entering
the market in the vicinity of the arrows, provided that all the rules have
been met.

Entry point rule # 3

The market generally works within bands of statistical probability. Our

research has shown that:

a) In an up-trending market, the price tends to range between the

200-hour moving average and the top 200-hour Bollinger band,
b) In a down-trending market, the price tends to range betWEen the
200-hour moving average and the loIr 200-hour Bollinger band,

c) In a ranging market, the price tends to range betWEen the upper and
loIr 200-hour Bollinger bands.

Furthermore, the 100-hour Bollinger bands tend to create an additional,

tighter trading band for the price action in a strongly trending market.

What does this mean and how can I apply it to real trading?

Rule number three says: I don’t enter the market unless

a) the price is touching or beyond the 100-hour Bollinger, or

b) touching or very close to the 200-hour Moving average, or

c) touching or beyond the 200-hour Bollinger band.

This gives us three “zones of probability” where a trade may be taken.

Outside these zones is “no-man's land” and trades may not be taken.
This may sound a little bit complicated, but the chart below will probably
clear it up for you right away:

The chart is labeled to show the top and bottom Bollinger bands and the
200-hour simple moving average (SMA) The green arrows show places
where a trade may be taken from either the top or bottom 200-hour
Bollinger. The blue arrows show places where a trade may be taken from
the top or bottom 100-hour Bollinger, and the red arrows show places
where a trade may be taken from the 200-hour SMA.

Remember, these are places where trades MAY be taken, but only in the
Likely direction and only if all 6 of the rules in this chapter are met.
Notice on this chart how the Stochastic oversold and overbought
condition often coincides with the candles touching or piercing the
Bollinger bands.
Rule 3 might seem complicated at first, but I can summarize it into the
following:

Only consider a trade if and when the price is touching or beyond either
the 100 or 200-hour Bollinger bands or touching or near the 200-hour
SMA. Any other position on the chart is considered “no man’s land” and
the probabilities are not suited to trading.

I will be putting all of the rules together in several examples at the end of
this section, so don’t worry if you feel a little lost at this time.

Entry point rule # 4

This rule relates to Fibonacci retracements, trend lines and horizontal

support and resistance lines. I want to keep this as simple as possible,
and not focus too much on the details.

Essentially rule number 4 says try to look for areas where the market
might logically retrace to, such as Fibs, Trend lines or support/ resistance
lines (SR lines)
Remember, I have decided on a direction (for example UP) At this stage
I know that the following conditions must be met before considering a
trade:

1. I need to wait for the price to retrace downwards

2. I know that I need to wait for the hour rollover

3. I know that the Stochastic must be oversold (below 20)

4. I know that the price must be touching or below either the loIr 100 or
loIr 200-hour Bollinger band or the 200 SMA.

And now, I also know that I should look for logical points that the price
will drop down to help us with the timing of the trade. For example, the
price may have dropped to a trend line, a horizontal support line, or a
previous horizontal resistance line, or a Fibonacci retracement level (I
work with 38.2%, 50%, 61.8%, and 78.6%)

Rule 4 is simply there to help with timing the entry and to add confidence
to the other rules of the G7 system If you are not familiar with basic
technicals such as trend lines, SR lines, and Fibonacci retracements,
you should read up on them in the books I recommended early in the
book. This is important! HoIver, it is not essential to be an expert, and the
other rules will carry you through the system by themselves.

Entry point rule # 5

OK let's go through a hypothetical scenario step by step to guide us up

to rule # 5.

1. Let's imagine that I have studied the weekly direction using the Iekly
candlesticks and have decided to trade long (buy, bullish).
2. I know that I need to wait for retracements downwards, or dips before I
consider buying.

3. I know that the dips need to create an oversold Stochastic, below 20

4. I know that the dips must touch the 200-hour SMA (or come close to
it) or touch or pierce through the either loIr 100 or 200 period Bollinger
band, or both

5. I have seen some logical levels where the price might retrace towards
(for example) a simple trend line and the Fibonacci retracements.

6. The price has moved loIr to meet all of the above conditions.

7. The hour has just rolled over at (for example) 9.00 AM

An example of just this sort of setup is shown in the chart below. As you
can see, the Stochastic is oversold, the price has pierced the 100-hour
and just touched the 200-hour Bollinger band (they happen to be close to
each other in this example, but it is not required to pierce or touch both
together – one will do):
So what next?

Should I enter the trade? What’s the trigger? If I enter, where should I
place the stop loss? What target am I aiming for? All of these questions
should be ansIred in rules 5 and 6!

If all of the conditions for the G7 system setup are in place, I need a
trigger (or a green traffic light) to tell us that I can hit the button.

Rule number 5 simply says: Given that all the other conditions are in
place, I can enter the trade if I get an hourly reversal candle.

Simple as that!

I have briefly studied candlesticks early on in this book, and I will

summarize the 5 key patterns shortly. HoIver, I highly recommend that all
traders get a copy of the Steve Nison book on candlestick trading. This
book will assist you in all of your trading, and not only for the G7 system.

A reversal candle is a candle which, after the hourly close, has a certain
shape indicating that the market is trying to change direction. In general
these candles are spikes (Doji’s, hanging man, hammer), engulfing
candles, and tIezer formations. There are many other more complex
patterns, but they are not important for a basic grasp of the system and
can be studied later.

OK, let's go back to our chart setup from the chart above. The next chart
(below) shows the same setup as the previous chart, only one hour later.
As you can see, I now have a bullish engulfing candle formation, which is
the trigger to enter the trade – given that all the other rules are in place
Then the next chart (below) shows the result. Notice how there was
another chance to enter the same trade about 22 hours later with an
almost identical setup!
In order to assist you with identifying the reversal candles on the hourly
chart, the next 6 charts show setups with triggers from the reversal
candle patterns. Once again, if you are worried about “getting the hang”
of reversal candle patterns, don’t worry. Will provide plenty of examples
in the following pages, plus I will send you plenty of assistance through
our G7 Club. By the end of that time you will be accomplished at spotting
these basic patterns! Remember, after your free Club trial, you can also
continue receiving our daily G7 Club service for as long as you want to, if
you decide to stay on as a member of the Club.

Spike high through both top Bollinger’s

Spike low through both loIr Bollinger's

Bullish engulfing candles off the loIr Bollinger’s

Spike low off the 200 SMA

Bearish engulfing candle off the top 200-hour Bollinger

Numerous reversal candles in the same area at the loIr Bollinger's

Entry point rule number 6

a) Always place the trade stop loss 5-10 pips below the reversal candle
pattern which you used as the trigger for the trade.

b) The stop loss should never be less than 20 pips and never be more
than 60 pips.

c) The profit target should always be at least double the size of the stop
loss.

Let's look at an example.

In the chart below, I can see a trade entered at the hour candle pointed
out by the arrow. The trade was only entered when the hour closed,
which was at the level of the blue line.

The stop loss should be 5-10 pips below the trigger candle, which is at.
Remember that for long trades (buying) you must add your broker’s
spread to the stop loss. Assuming a spread of 4 pips, the stop should be
5-10 pips above 1.2908.

Before deciding on a stop, glancing to the left of the chart, you will see
another “spike low” with a high. Logically, I should place the stop beyond
the reach of this low as Ill, plus the 4 pip spread. I add the 5-10 pips for
the G7 stop loss rule. This would give us a potential loss of 32-37 pips.
In this example, I placed the stop at (bottom red line) which gave us a
potential loss of 32 pips – Ill within the 20-60 pip rule.

The profit target should be at least double the stop loss, which would be
32x2 = 64 pips. In this case, I set the target at 100 pips and took profit at
the green line.
So those are the 6 entry point rules of the G7 Forex trading system!
Putting it all together – full-example
1. Determine direction from the Weekly chart

The chart below shows the closed Iekly candle for the Week ending. As
can be seen, the candle is bearish (loIr high and loIr low) and therefore I
set the direction for the next Iek to be short.

2. Determine the Weekly reversal level

The high for the candle is 1.8887. If I add 10 pips to that price I get
1.8897, which becomes our Weekly reversal level. Any moves above
here will change our bearish view and force us to stop trading in the
short direction

Now I move into the 6 entry point rules and switch to the hourly chart.
The chart below shows the next Iek with Monday seeing a price rise up
toward the upper Bollinger band
The arrow shows where the first entry conditions Ire reached. The price
formed several reversal candles in the vicinity of the top 100-hour
Bollinger. Let’s go through the 6 rules: Rule 1. Wait for an hourly close
before entering – there Are several hours when I could have entered the
short trade. Rule 2. The Stochastic became overbought just about when
the price touched the top Bollinger Rule 3. Top 100-hour Bollinger was
pierced, but not the 200-hour Bollinger. This is good enough. Rule 4. The
price had rallied to just above the 61.8% Fibonacci level of the move
down (see next chart below)

Rule 5. Several opportunities to trade occurred. The first arrow in the

next chart shows the bearish engulfing candle and the second green
arrow points to a group of small spike-high and tweezer candles. Entry
would be on the hourly close of any one of them.
Rule 6. Stops above the high at (40-50 pips depending on where you
entered) and the target would be 80-100 pips based on the stop. The top
chart shows that this was easily achieved about 20 hours later!
Depending on your goals, and your experience, some trades can be left
to run for longer than 100 pips or so, and the use of a trailing stop loss
can be employed to incrementally lock in profits.

I suggest that only experienced traders use this system.

I hope that example gave you an idea of how simple the system is. As
you practice and follow our G7 system, it will eventually become second
nature.
Here are some additional hints that might
be useful:
What happens if the Weekly reversal level is reached before or after
a trade has been stopped out?

The Weekly reversal levels are there to act as a sort of medium term
stop loss. If the market is bullish, for example, long trades can continue
to be placed, even after being stopped out one or more times, as long as
the price level does not drop below the Weekly low reversal level. Once
that occurs, trading in the long direction must stop for the Iek until more
clarity is seen either during the Iek, if the price again trades higher, or the
following Iek, when a new assessment should be made, starting with a
completely new analysis using the system.

What about the only indicator

on the Weekly chart – the 10 Week moving average. You have not
mentioned that yet? The 10 Week moving average acts as a good
medium term guide to market direction. More experienced traders can
use it to assist with longer term decisions. It is not required for the G7
system, except that often Weekly spike high and low reversals take
place near the 10 Iek average.

How many currencies to enter at the same time?

It will happen that of the three currencies traded, 2 or even 3 will give a
trade signal at the same time. There are several ways that this can be
treated: Either the trader could enter one or 2 currencies only and hold
back on the other 1-2 or he could enter every currency every time there
is a trade signal. I recommend trading 1-2 currencies most of the time,
and keeping another in reserve in case the initial trades are stopped out.
Rather be too cautious than bullish!

What time of day should the system be traded?

The system can be traded at any time during the 24 hour Forex trading
market. HoIver, I recommend that trading and analysis is done during the
European and/or NY markets only. The best 12 hour period is the time
from about 6AM GMT to 6PM GMT, which covers both the European and
NY market opening periods – when most of the volume and price
movement occurs. The Asian market session can also be traded, but
market volume tends to be thinner and price movement more random,
making trading more difficult.