Rule 1: Practice the Strategy in Demo Mode First

Do not trade a live account until you have made 100 trades on a trading simulator, recorded the results and taken screenshots of each trade with risk amount, profit target and actual results achieved. This is to ensure you are comfortable with the strategy and have fine-tuned it to your personal risk tolerance and style.

Rule 2: Beware of the News - Be a Predator and Not the Prey

Do not trade at or near major news events unless you have a specific reason to do so. The big volume happens at the events, whipsaws the markets and catches stops. Be clever and wait. It really does pay to be patient. The trend often starts days after a big announcement such as the Bank of England or Federal Reserve announcement, but not always, so watch the charts, the charts don`t lie. 

Check the major news bulletins and stories connected to the markets you are interested in. We recommend you use a reliable economic calendar/news feed. We would recommend Financial Juice, Forex Factory and Bloomberg`s economic calendar. 

Rule 3: After Seeing High Volume Bars, Look for Low Volume Bars at the Same Price Level 

Pay particular attention in your analysis to any low or very low-volume bars at or near to the same price level as the ultra-high volume bars. This can cause price direction to change quickly so be aware of low volume bars as the market moves in your favor.

Bearish volume is increasing but not massive volume on down moves and low volume on temporary up moves.

Bullish volume is increasing but not massive volume on up moves and low volume on temporary down moves.

Remember: if the professionals are not active then you shouldn`t be either. 

Rule 4: Wait for the Distribution or Accumulation Phase to Complete

Wait if you are in the pre-rollover and top (if a Distribution Phase) or bottom (Accumulation Phase) of the market stages.

In a Distribution Phase: Why? Because the start of the Distribution Phase takes place in an uptrend and you’re looking to go short. You want to trade in harmony with the smart money. So this is a potential trade setup but is not yet ready to execute.

Then in the rollover phase check the following: 

• Is the market falling with no professional support? (You can clearly see no professional support when you have widespread down bars closing on or near the lows on average to high volume, with the next bar closing lower. If you see very high-volume narrow spread bars closing in the middle or high, this would indicate professional support coming in if the next bar closes higher).
• Are you in a downtrend? In other words, is the low of each bar lower than the previous bar? (You may allow 1 up bar for every 2 down bars for a downtrend)
• Is the market in trend alignment to the downside? (Consider the rule of 3:3 or more red dots in 3 or more time frames; you can allow for less dots in larger timeframes)
• Is there a similar trade setup in a smaller time frame?

In an Accumulation phase: Why? Because the market has not yet turned over. It may just be pausing before it continues an up move. If in a higher time frame, look for the rollover in smaller time frames and confirmed Signs of Weakness. Rising prices on falling volume on narrow spreads are signs of a weak market. Just wait for it to turn.

• Is the market rising with no professional support? (Is the market rising on an increase in volume on the up bars and decrease in volume on the pullback or down bars? If so, this defines a strong market. You do not want to see ultra-high volume on the up bars especially on narrow spreads).
• Is the high of each bar higher than the previous bar? (You may allow 1 down bar for every 2 up bars for an uptrend)
• Is the market in trend alignment to the upside? (Consider the rule of 3:3 or more green dots in 3 or more time frames; can allow for less dots in larger time frames)
• Do I see a similar trade setup in a smaller time frame?

Rule 5: Stop Losses

Use a stop loss and remember there is no guarantee that the stop loss you put in will get filled at all or at the level it was set especially during very volatile market conditions. Speak to your broker about this if you have any concerns.

The strategy does not suggest exact stop placement because of the many markets it is capable of analyzing and the wide variation in attitudes to risk amongst the traders that use it. 

Neither does the strategy focus on take profit or risk/reward ratios as these decisions are for individual traders, bearing in mind trading plans, account sizes and attitude to risk.