As promised in the last post, I will explain the five ground rules for this trading system beginning with Rule No. 1.

RULE NO. 1: Confirm the overall trend of the market before you place a trade (1H or 4H Candles)

‘Trend’ is the most critical factor that can make or mar your life as a trader. What drives the market is the herd mentality, momentum or the fact that majority of the traders are going in one direction. The question is how far will they go before the momentum changes? To be successful you must learn to follow the general direction and make sure you disembark before a change of direction. To clearly understand the direction of the market, H1, H4 and daily charts are your guides. To illustrate this statement look at the EURUSD H1, H4 charts below. You can clear see direction of market from the charts. The simple message is if the trend is up go long of buy and if the trend is down, go short or sell. Forget about the indicators on the charts for now, they are not of any great importance for this trading system. I inserted them in my early days in forex trading, but rarely use them now as the direction of the market is obvious enough to the eye without any aid. They could however serve as a guide or confirmation of the trend.
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