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1st Place Live Trading

December 08 Challenge

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Name - Obiliza Manan
Position 1st Place
Percentage Gained 927.91% in Dec 08
Age 38
Country Malaysia
Occupation Electrical Chargeman
Bio Obiliza works fulltime as an Electrical Chargeman. He trades and studies
the Forex market after work. He hopes to become a fulltime trader soon.

The D8L1 System

Overview

Markets Traded Forex, only the GBP/USD

Charts 4 Hour, 15 Minute, 5 Minute and 1 Minute
Charting Software Charts supplied by FXCM.COM Trading station
Indicators
SMA set at 21
EMA also set at 21
Stochastic set at 9, 3, 3
MACD 12,26,9
Bollinger Bands set at 20 with standard deviation of 2
Trendlines
Support and resistance

Description

Obiliza trades any timeframe but concentrates on the 4 Hour, 15 Minute, 5

Minute and 1 Minute charts. He looks for the same set up on each time frame. In
other words, he uses the same rules to trade all time frames. He scans the chart
to look for his set up on his favorite time frames and then trades that time frame.
Further discussion on Obilizas trading method will be in the
Traders Secret Library Forum.
Important

It should be noted that Obilizas method is discretionary. As with all discretionary

methods, it is to a degree, subjective, in other words, gut feel.

With a discretionary method its important to have a feel for the market. You will
often encounter a situation where the moving average has not quite crossed or
crossed a few bars ago and the trendline has broken or is just about to break.

The point is that this method is not mechanical. Obiliza uses all his indicators as
guides to help him make a decision. All of the indicators may not line up exactly
on the exact bar of the signal. They may happen a few bars before or after.

Setup

The first thing to do is setup your charts. First Obiliza adds a 21 period Simple
Moving Average and a 21 period Exponential Moving Average. He then adds the
Stochastic Indicator set to 9, 3, 3. Next he adds the MACD indicator with default
setting of 12, 26, 9 and finally he adds Bollinger Bands set at 20 with a standard
deviation of 2. Obiliza uses charts supplied by FXCM.COM, also his broker.

Obiliza uses support, resistance, trendlines and pivot points (his own)
extensively. The whole method is based on taking action around these areas.

Obiliza likes to trade within a range. The range is defined by Obiliza as the price
action in a given period. For example, if you look at the chart 1.0 below, the
highest and lowest points that can be seen in a normal view is what Obiliza uses
as his range. This applies to all time frames. He is looking for the highest and
lowest point in the last few trading days.

First he marks the lowest and highest (points) support and resistance levels that
he can see. Its a little hard to see on this chart but the resistance level is 1.4977
and the support level is 1.4474.
 Chart 1.0

This means the range is 1.4977 1.4474 = 0.0503 pips. This gives us a range of
0.0503 pips. To get his pivot point, he divides the range into two, basically
drawing a line in the middle of the support and resistance levels.

Half of the range 0.0503 is 0.0251 (rounded). Take 0.0251 from the resistance
level. 1.4977 0.0 251 = 1.4726

You can see the Pivot Level in chart 1.1, which is half way between the
resistance and support.
 Chart 1.1

Next he wants to define a zone of support and resistance and he gets this by
using the technique I describe here http://www.tradeology.com/tzc.html

To get the zone, first change the chart to a line chart and draw in the support and
resistance as in chart 1.3. You can see the new lines marked in red.
Chart 1.2 (Without Bollinger Bands)
This is the same chart with the Bollinger Bands and candlesticks back on.

Chart 1.3

Next he adds his trendlines as in chart 1.4

 Chart 1.4

Next he adds a further two lines which are calculated by halving the distance
from the pivot point to the first resistance line and halving the distance from the
pivot point to the first support line.

Resistance 2 is calculated by taking the first resistance point of 1.4997 and

subtracting the pivot point of 1.4726, which equals 0.0271 pips. Divide 0.0271 by
two to get 0.0135. Now subtract 0.0135 from 1.4997 and you get 1.4862.
To get support 2, take the pivot point of 1.4726 and subtract the support of
1.4474, which gives you 0.0252. Now divide 0.0252 by two to get 0.0126. Now
take 0.0126 from 1.4726 to get 1.4600. See chart 1.6

Chart 1.5

SYSTEM RULES

Short Trades

1. Look for a cross of the moving averages near one of our resistance lines
(point 1 on chart 2.0).
2. The stochastic should have crossed down (point 2 on chart 2.0)
3. MACD should have crossed down or already be in sell (point 3 on chart
2.0).
4. Entry is 5 pips below the support line or the trend line
5. Stop loss is 15 pips above the nearest resistance or trendline.
6. Target is the nearest support line.

A perfect trade would be when the market hits resistance and price is near the
top Bollinger band as the two moving averages cross. At the same time, the
stochastic and MACD cross and you get a break of the trendline. Its like a
confluence of things happening at the same time.
See example in chart 2.0

Chart 2.0

Long Trades

1. Look for a cross of the moving averages near one of our resistance lines.
2. The stochastic should have crossed up.
3. MACD should have crossed up or already be in buy.
4. Entry is 5 pips above support line or trend line
5. Stop loss is 15 pips below the nearest resistance or trendline.
6. Target is the nearest resistance line.

A perfect trade would be when the market hits support and price is near the lower
Bollinger band as the two moving averages cross. At the same time, the
stochastic and MACD cross and you get a break of the trendline. Its like a
confluence of things happening at the same time.

********************************************************************************************
Please Note that Obiliza has the Parabolic SAR indicator shown on some charts
but he does not use this indicator to make any decisions when trading.
********************************************************************************************

Lets look at a few examples:

The following example is a perfect Sell setup (Obilizas charts). Have a look at
the dashed dark blue line on the following chart at Point 1. The Blue 21 SMA
crosses below the White 21 EMA. Just prior to that, the Blue SSD line has
crossed below the Orange SSD line at Point 2.

At Point 3 the Red MACD line crosses below the Blue MACD line. Next, I placed
my entry order 5 pips below the blue resistance line and set my target level 40
pips below the entry level. The target of 40 pips was easily achieved.
15 Minute GBP/USD Chart 2.1

Have a look at the following example:

 15 Min Chart GBP/USD Chart 2.2

Weve taken the highest and lowest points that can be seen in a normal view as
the range and then divided it to get the Pivot line.

Our sell or buy point will be either 5 pips above or below the Pivot line.

Price first moved below the Pivot line giving us a signal to Sell. The Blue SSD
line has crossed below the Orange SSD line and the Red MACD line crossed
below the Blue MACD line which confirmed the Sell signal.

I then placed my entry order 5 pips below the Pivot line. I placed my stop loss 15
pips above the upper trendline and my Target Limit at the nearest Support line.
As you can see, the target was easily achieved and not long after there was a
Buy signal when price moved back over the Pivot line.
More Examples

The Blue SSD line crossed above the Orange SSD line and the Red MACD line
crossed above the Blue MACD line which confirmed the Buy signal, so I placed
an entry order 5 pips above the Pivot line.

I placed my stop loss 15 pips below the lower trendline and my Target Limit at
the nearest Resistance line. The Target Limit was reached not long after that.

5 Minute GBP/USD Chart 2.3

Lets look at one last example, this time on a 15 Minute chart. Have a look at the
following chart:

15 Minute GBP/USD Chart 2.4

Again weve taken the highest and lowest points that can be seen in a normal
view as the range (the Blue dashed horizontal lines) and then divided it to get the
Pivot line which is the White horizontal line.

We had the White 21 EMA cross above the Blue 21 SMA. On the Stochastic
indicator the Blue SSD line crossed above the Orange SSD line suggesting we
Buy.

Then the Blue MACD line crossed above the Red MACD line which confirmed
the Buy signal, so I placed an entry order 5 pips above the Pivot line. I then
placed my stop loss 15 pips above the lower Support line and my Target Limit at
15 pips above the nearest Resistance line. Notice how the market reversed at
the Profit Target? At that point you should be looking to the other indicators for
confirmation before considering entering a Sell order.
The next two charts are of the same trade. The first chart (only shows the
stochastic indicator) is just to demonstrate how he waits for price to reach his
support level and then looks for evidence from his other indicators for a trade.

Chart 2.5
Chart 2.6
Examples of Two Short Trades
Trade One Chart 2.7

Trade Two Chart 2.8

Examples of Two Long trades
Trade One Chart 2.9

Trade Two Chart 2.10

For further discussion on Obilizas method post a question in the Traders Secret
Library Forum.