A SIMPLE INTRODUCTION

Hello fellow traders – and welcome to the Black Dog Trading System.

Hopefully you will soon become a Black Dog Trader reaping the regular gains that we, the BD team and other BD owners, are starting to take for granted! I congratulate you on your wise investment and I hope that the Black Dog serves you well for many years to come, forming part of your trading arsenal in the constant battle with the forex market.  The Black Dog Trading System (or BD from here on in) is the only strategy that I personally use, but it does no harm to have other big guns on your side enabling you to change tack and attack those markets from a new angle. I am all in favour of extracting profits no matter what it takes. It sure beats losing! But, like I say, the BD is all I need to make a comfortable living, so I’ll stay with it.

You have made a very wise decision in your investment. The strategy is currently performing very well and profits are made consistently. There is no reason to suppose that this will not continue indefinitely.

Please take the time to study the training material. The Black Dog team trades the strategy on a daily basis very successfully, this is achieved by following the rules of the system rigidly. It cannot be overstressed that diverging from the rules will probably result in failed trades. The rules are not difficult to follow, and there are only a few of them. They will protect you. The system works.

Should you have any problems at all please do not think twice of contacting the Black Dog team. You have shown your confidence in our system by making the purchase, we will be there for you to get you up and running  as soon as is possible, and at any time in the future. This website is dedicated to the Black Dog and we hope that you will frequent these pages often, free downloads of strategies and forex information are available to Black Dog owners to use as they see fit, with more to come. 

Please be aware that no member of the team is a computer wizard, we are traders. But we will try to solve any problem you may have with the system and its application. We cannot offer trading advice or tax advice. This must be your responsibility.

All the contact information that you will require is included and, personally, I hope that you make use of it. Keep in touch. The Black Dog family continues to grow, and we are in this together. All of us want to make money, agreed.

I wish you all the good fortune in your trading endeavours and long may it last.

There are days, I’m sure you will agree, when things get a little boring. Trading is not the most exciting pastime there is. And it’s that boredom that led me to thinking of starting a website, trading together with some local guys (no females as yet!), and ultimately offering the BD to anyone who would care to use its simplicity in making some cash. Hence this document.

Let me start as I mean to go on; we Yorkshiremen tend to get straight to the point so I won’t linger on this intro. I am not a writer, I am not a salesman, nor am I a philosopher. I am, believe it or not, a full time trader, a trader who has developed a successful strategy to extract cash from the greatest bank in the world without too much hassle.  So why sell it?

What would you do? C’mon, let’s be honest!

Answer: to generate extra income to place into a trading account which would enable playing for higher lots. Simple. Don’t ever listen to all the bull about: ‘the markets are big enough for all of us....’; ‘I like to help less experienced traders just starting on their careers....’; ‘many traders using this strategy won’t affect the market....’; ‘by making this affordable to new traders, blah blah blah’. Honesty please. Money makes the world go round, so I‘ll not labour the point.

Talking about honesty, the reason this page is staring at you is because you want to make money, and lots of it. True? With this system you WILL be profitable, if - you - follow - the - rules. This is very important and I suppose its the same with any system but more so with the BD. The information in the following pages presents a very simple and uncomplicated means of trading the forex markets so please follow the rules. Simplicity is the key, a key I found after almost eleven years of trading. Simplicity. I’ve traded ‘complicated’, and I’ve traded ‘very complicated’, but it’s the simple ways of trading that produced the consistent gains. Bear that in mind. Simplicity. Wins every time. 

The well-known acronym used in trading is KISS … Keep It Simple Sir.

I agree with that statement 100%, and its what you’ll find here. Will there be regular, high-probability trades? Well, that all depends on your choice of time frame and what your goals are. I trade the 15 minute TF but my profit targets are not too large, so almost every day there are quite a few. It’s managing them that poses the problem. I can cope with four open trades, not more. But that’s me, you may be a very capable trade manager, so..... go for it!

Please read the chapters, links are at the top of the page, in their numerical order to obtain the full benefit. Its easy to jump back and forth to fully understand the gist of a particular point, any problems then e-mail or skype me straightaway. Don't hang about and let's get earning together!

What is a pip? What do brokers do? What are probabilities? What are fundamentals? Well, you’re going to have to find out elsewhere because explaining these is not my job. You won’t find the answers on these pages. There’s no fluff here, no padding on page after page to justify the often very high cost of an e-book. What you will get is some of my (experienced?) thoughts along the way as they relate to the subject in hand using a blue font. Once or twice, I may rant on for a little so I apologise in advance. Don’t take everything I say at face value, check it out for yourself. These pages tell the story of how I trade, and of how I trade this system. Plus there will be a few words on how I developed the system. I am now profitable after a long forex journey.

Let me shorten that journey for you.

The Black Dog Team

North Yorkshire

May 2008

Abbreviations used in this document:

THE BEGINNING

1. In the Beginning, Darkness.

Over the years and looking back (I refer to my trading years), after the initial costly ‘settling in’ period that most new traders go through, my discipline became ok, my timing was ok, in fact most things related to my trading were not bad at all, eventually I made money, good money. I have primarily bought and used systems developed by other people, studied them, applied them, and made money. Not so at first, the ‘settling in’ period of maybe 18-24 months were disastrous, but later. So what’s the problem?

Well, none really. But bear with me; let me carry on for just a little while. I have the same background as the majority of traders. By traders, I mean trading for oneself, not as a job of work, but for personal gain. Yes, I have blown accounts in the past worth x000’s of pounds and this was painful, very much so. This was in the early years of course, whereby I did have the presence of mind to stop trading, take stock of what I was doing, analyse my mistakes, and then study, study, study. So you could say that those lessons had been well and truly paid for the hard way. But nevertheless, well and truly learnt.

In those early days, I had a scant trading plan which I rarely followed anyway, discipline was lax, fear and greed were part of my trading, I often went fishing for tops and bottoms, money management was zero, I was playing a host of different markets, and to top it all off, overtrading. A recipe for disaster, and that is exactly what followed. If the market was topping out and starting to turn, I would enter long and get stopped out in no time at all. The same story at the bottoms.

But, in spite of those early disasters, I could see that there were ample opportunities for making excellent returns on ones investment if only I could find that elusive plan, scheme, method, call it what you will. I'm pretty sure that millions of traders have gone through the same procedure. Well, I was determined.

So, to cut a long story short, and after many days, nights and weeks of study, searching the web for good systems, then working on my ‘inner game’ …. my head, I came to the point where I eventually became moderately successful at this game of trading the currency markets.

Never the one to be satisfied I then asked myself the question, “where next?”

Although I had traded another persons’ system(s) for quite some time, and good though it was, I was never fully satisfied and was hankering after my own, one that suited me. It would be nice to be successful with my own system, a system that was all my own work. But what was I looking for? What characteristics should it have? What qualities? What features did I want my own system to possess? I had some idea of what I wanted it to do.

Basically, it should eliminate all of the minuses mentioned above and hopefully keep me on the straight and narrow. Like everyone else I bought all the usual books, courses, systems, T-shirts etc., and ended up using one of the first methods I had come across. No progress was being made.

This was no good, I was back to square one. So, I spent a great deal of time just thinking about what my system should incorporate before attempting anything. The usual tenets sprung to mind, ‘the trend is your friend’, ‘let your profits run….’ etc.

Ok, the market moves in waves, this is an indisputable fact; you only have to look at any chart of any time frame to see this. Now I’m not saying let’s use some form of Elliot wave system, that's all been done and anyway I am not an advocate of Elliot wave theory, but the waves are there for all to see nonetheless. What I decided and wanted to do was to ride those waves. I then made a list of how I hopefully would achieve it. Let’s do the same.

These are the points that I came up with that I wanted my new system to address, but above all, to find answers for. It should enable me to trade in a much less riskier fashion, and importantly, to trade with the trend. After all, that’s what everyone says, is it not? So, here’s my list:

a.     Must trade with the trend

b.    A chart set-up which is good for all currency pairs

c.     A chart set-up good for all timeframes

d.    A chart set-up which is simple, simple, simple

e.    An audio alarm

f.       Must stop me from overtrading (very important)

g.     Must stop me from fishing for tops and bottoms (also very important)

h.     Must get me into the big moves of the day

i.        Must keep losses to a minimum

j.        Must tell me when to exit

k.      Must be user-friendly

l.        Must enable decision-making at a glance

m.    Multi time-frame trading

n.     Must give unambiguous entry signals

Wow, that’s a lot to ask. Did you say that you wanted to keep it simple?

I did.

The darkness was beginning to lift, now I had something to work with. I knew what I wanted and roughly how to achieve it. Only through days and weeks of testing and analysing could I hope to arrive at the final result. You would not believe how many hours went into the development of the Black Dog System, but that is a very long story and you have paid for the end result, you will not be disappointed when you see your account beginning to grow.

I believe that it has all been worth it because of the benefits I now reap. As a Black Dog user you will now also reap those benefits. Before we go any further, I’m going to assume every one can read a chart and has a basic understanding of technical analysis, if not then call or e-mail me, I'm pretty sure we can get you sorted out regarding this; details at the end. In fact, any problems or questions whatsoever regarding the system and you’ll find that I’m available, usually most of the time. I do have another life so please be patient.

There’s going to be no fluff on how the markets work, or what makes a good broker. Not my problem. It’s my task to present to you what I think is a very good system (my words) that will lead you to some very good profits (ditto). In the last three weeks of trading (as I write), this system has generated almost seven hundred pips! Not bad at all. As with every system there will be losses, but here, we keep them to a minimum and take them in our stride.

So what’s the story so far?

I was a newbie trader who lost big time. Fact.

I stopped trading to study, study, then study some more. Fact.

I used systems purchased from the web and did ok-ish. Fact.

I still hadn’t made a fortune. Fact.

I decided to build my own system from the list. Fact.

After many months, the BD had definitely arrived. Fact.

And finally, my earlier losses have returned to their rightful owner! Glorious fact.

The BD team trades this system every day, and we do very well. As an owner you are invited to the forthcoming website as a member with full member benefits, you are invited to contact us at any time (UK trading times please), and to receive any updates to the system. In fact, you are entitled to everything that we at BD Trading enjoy. Please join us.

Ok, Let’s press on.

 METATRADER

2. MetaTrader

First and foremost, this chart set-up was devised on the MetaTrader charting package, and is the one we use. The beauty of this is because it is free real-time charting which is available from many brokers eg, Interbank, Alpari, etc. Totally free. Just register and then download. You do not need to hold an account with a MetaTrader broker, only register for a demo account. You may use the charts, but trade with your own broker if you wish. You can open a demo account first to get to grips with this system and then when you feel comfortable enough to ‘go for it’ you can open an account with real money or 'go live'. My brokers, Alpari UK, have a minimum amount of $200 to open an account. You can also trade microlots with them making the learning process less painful if you should suffer a few losses during your learning curve.

If I may just repeat myself here: until you are fully conversant with all the rules, machinations, and workings of the BD system then please, please restrict yourself to trading very small lots. i.e., DON'T RISK THE FAMILY JEWELS!!

In most documents you will find that it is at the end where it is recommended that you demo trade the system for a few weeks or so until you are up to scratch. I'm going to go against the flow and mention this at the beginning! It is my view that demo trading, or paper trading, holds no value to the prospective system user apart from learning how to click certain buttons on the trading platform and becoming proficient in its use. 'No bad thing there', I hear you say. I agree, but I feel that demo trading can lull you into a false sense of 'hey, this system's not bad', when in fact trading with cash is another totally different beast. Pray, use microlots to begin with and forget demo trading. At least you will have some interest if there is cash on the line, albeit pennies.

This is not the place to go into the finer workings and instructions for the use of the MetaTrader charting package. My PC skills are very limited, but if I can learn the refinements of it in a relatively short space of time, anyone can! That being said, it’s good to be up and running in the shortest time possible, so should you have any problems whatsoever setting up your charts feel free to contact any of the BD team immediately. We would be only too pleased to assist you. If you are not familiar with MetaTrader I'm afraid that you will have to do as I did over a period of time, and that is to just play around with it until it becomes embedded into the old brainbox. Don't try to rush things along as it may prove expensive, the markets will be around for a long time to come. We are always here to help.

I have no idea if the BD set-up can be arranged on any other charting package. I haven’t tried. The settings are nothing special, just my attempt to address the problems on our famous list. I think it is a successful attempt.

Currency trading can be expensive and (if you do not know what you are doing) an excellent method of reducing the contents of your wallet. Now there is an understatement. So it makes sense to utilise the facilities provided by MetaTrader considering that some charting packages with a live data feed can cost anything up to $150 per month. Maybe more. We are only on chapter 2 and making/saving money already! MetaTrader maybe lacks some of the more complicated algorithms and indicators that the "successful" traders employ, but it has far more than we are likely to need so why pay for things that are not required? Remember simplicity?

In the next chapter we'll look at some charts and start laying the foundations for the Black Dog system, but for now I think it's probably best not to go into the setting up of our charts until we come to the particular indicator in question. So,  I'll draw this chapter to a close. In the meantime, feel free to play around with your MetaTrader charts.

People have already contacted me regarding the use of Fibonacci retracements and extension levels and how they can maybe assist with entries and exits. I have no problem with this but I cannot give any advice. I think of myself as not an unintelligent person with a flair for maths, English, history, geography, and the sciences, etc. but for the life of me I cannot see how those idiotic numbers can in any way be remotely connected to the currency markets, or any other market for that matter, numeric or brick. Choose your own numbers and they will work just as well, and in most cases better.

I personally do not use Elliot Wave or Gann for similar reasons. Just the word 'fibonacci makes me shiver. If it works for you then use it. This, I think, is the best advice. Personally, I think it's the first step in complicating matters that shouldn't be complicated. Just a thought.

TIME FRAMES AND INTRA-DAY

3. Time Frames (TF)

Well, this is a difficult one. What time frame (TF) should you trade? It all depends on your circumstances, your lifestyle, your job, your family. In fact any number of possibilities can influence your trading time frame. It's just something that you need to work out for yourself, unfortunately we at BD cannot assist you in this decision. If you work full time then the Daily charts are probably the best TF to trade, or maybe the four hour charts (H4). 

Me? I have a patience problem. I cannot trade anything higher than a 15 minute TF. This is not to say that there are no trading opportunities on the higher TFs, there are many as we will see shortly. But I must explain to you why I trade the 15m TF as most of the charts shown will be 15m. Now, I usually trade the 15 minute timeframe simply because I can find three or four decent trades in the morning (usually on different currency pairs) and forget about trading for the rest of the day. Who wants to be in front of a computer all day? So I’ll use 15m charts in my explanations, but all timeframes can be traded using this method, it’s pretty flexible as we'll see. I must also add that I am pretty impatient when it comes to taking profits. A throwback to my old 'losing' days I think. We'll have more to say on this aspect of my trading later and how I've turned it to my advantage. Anyway, here's the trading TFs that you may wish to consider:

5m = five minute TF                                   H1 = the one hour TF  

15m = 15 minute TF                                  H4 = the four hour TF

30m = 30 minute TF                                  D1 = daily TF

Let’s have a naked chart and a first look at MetaTrader. Here’s the CADJPY 15 m. It is showing about two days worth of price action, this is why the chart is not very clear. It is showing a lot of information. The vertical dotted lines represent midnight GMT.

CHART #1

There are some really good moves here that could have generated lots of pips for the savvy trader. My job here is to get you into those moves with minimal risk and the maximum profit. I look for up to four moves, like those above, per day. They don’t happen every day regardless, there are flat days. It’s not just the CADJPY that presents moves like this almost on a daily basis, most pairs show similar movement. The GBPCHF on the next chart also exhibits some great intra-day moves.

CHART #2

If I hadn’t told you that both the charts above are of the 15m TF, could you have guessed what time frame they were just by looking at them? Probably not, they both appear to be very different.

Do this with some of your own charts on different time frames; try them all from 1 minute up to 1 month. Use a naked chart. Even the 1 minute chart resembles the 1 month in the majority of places.

The point I’m trying to make here is that this method works very well on the 15m time frame, so why not on any other?

I confess to not having the patience to trade the daily time frame (TF), or even the H4 or H1. I do, however, spend all my trading and study time on the 15m TF. You may have a full time job, in which case the 15m TF is not much use to you, the daily charts (D1) would therefore be more suitable or perhaps even the H4.

It’s really horses for courses. Whatever TF suits you. Consider the chart below of the GBPCHF again but this time its the Daily TF. In appearance, there really isn't much difference between all three charts. This statement bodes well should we wish to trade any time frame that suits.

CHART #3

Intra-day Trading Times

To avoid confusion I shall quote all times as GMT. Although in the UK we are at present on BST (British Summer Time) we’ll stick with GMT.

If we are going to trade intra-day on a TF like the 15m chart then we really need the market to be moving somewhat in order for us to gain our quick profits, we also need to stay out of the market at those times when hardly any movement occurs at all; a trading range. Trading-ranges can be very expensive. Where you live will dictate the times when you are able to trade, obviously, but living in the UK, I find that the best times are from the London open to the New York close. I don’t place any new trades after 18:00 GMT but I would be happy to let open trades run beyond this time if they showed promise.

I close all trades before finishing for the day, no matter what time although I have been known to stop up all night nursing a trade to completion. But it must be worthwhile and it’s not very often.

Trading the daily charts, and possibly including the higher time frames, does not have this problem of picking and choosing your trading times. The H1 (1 hour) chart also sees some good moves crossing different sessions so the time constraints do not apply.

So, why these particular times for trading? Well, you only have to study any 15m chart to see that activity falls off after about 18:00GMT until the next day at around 07:00GMT. This doesn't happen every day of course, nothing is for certain in forex. What we are looking for are the flat areas to avoid in general. Becoming stuck with an open trade in an intra-day trading range will more than likely result in a losing trade. Look at Chart # 1 & 2 above and notice how level the price bars become around the vertical dotted line areas.