TRADE EXAMPLE
The  first  example  took  place  in  the Euro currency-dollar  (EUR/USD)  currency pair during the fourth week of June 2002.

First,  compare  the  hourly  and  10 minute EUR/USD charts. Look for a time when price is above the 200-period moving averages on both charts. On the hourly chart (Figure 1), the fact that price is almost exclusively

above  the  200-hour  moving  average indicates a persistent uptrend. On the 10-minute chart (Figure 2), price moves (and remains above) the moving
average in the last third of the chart. The next step is to pinpoint the entry zone — when the market is within 20 points of the moving  average  on  the  10-minute chart and the stochastic lines cross.

The range between 1 p.m. and midnight on June 27 meets these requirements.  The  entry  point occurs when the fast stochastic crosses above the slow stochastic when the indicator is below 20. A long position is entered at .9883 around 8 p.m., with an accompanying  stop-loss  at  .9858  (10 points below the 200-bar moving average value of .9868). The stop is  then  trailed  upward  as  the market makes new peaks. The EUR/USD tops out at .9992, so the  stop  scaled  up  to  .9967, where the position was closed for an 84-point ($840) gain.

Figures 3 and 4 illustrate a similar example in the dollar-yen rate  (USD/JPY).  The  hourly chart  (Figure  3) shows  price  was  trading  well below the 200-bar moving average after June 21. On the 10 minute chart (Figure 4), price fell below the moving average after 10 a.m. on June 27, indicating a sell opportunity. Also, price was within 20 points of the moving average at this point.  A short trade  was  opened  around  5  p.m.  at 119.57  when  the  fast  stochastic  line crossed below the slow stochastic line when the indicator was above 80.

The trade was protected with a stop-loss order at 119.86. In this case, the stop remained intact until the following day, when USD/JPY began to decline. After trailing the stop down as the market continued to decline, profits were taken at 118.58 (25 points off the 118.33 low), for a gain of 99 points.

SEARCH AND EXPLOIT
This  short-term  trading  method works well in the Forex market, but it is also applicable to others. Each step of the system helps identify areas where effective trades can be made. If at any point one of the  criteria  is  not  met,  you’ll instantly  know  not  to  make  a trade. This model also gives you
the freedom to experiment with different  chart  intervals.  When you’re equipped  with  a  system that can help you catch the trend early, you can wait for the rest of the market to follow.

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