Deep

Forex Trading System

ULTRA BLUE - Bonus methods

By Russ Horn
Forex Masonry
 Disclaimer
High Risk Investment
TRADING FOREIGN EXCHANGE ON MARGIN CARRIES A HIGH LEVEL OF
RISK, AND MAY NOT BE SUITABLE FOR ALL INVESTORS.
Before deciding to trade foreign exchange, you should carefully consider your
investment objectives, level of experience, and risk appetite. The possibility
exists that you could sustain a loss of some, or all, of your initial investment,
and therefore you should not invest money that you cannot afford to lose. You
should be aware of all the risks associated with foreign exchange trading, and
seek advice from an independent financial adviser if you have any doubts.

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 Introduction
A simple trading system is excellent. As traders, we succeed more often when
we keep things as simple as possible. The foundation of the Deep Blue system
is called Light Blue. Light Blue is the manual that comes before this one, and if
you haven't read the Light Blue manual, I suggest you do. It lays the
groundwork and introduces you to the system itself.

This is Deep Blue, the advancement of Light Blue.

What we will be doing is taking all the concepts introduced to us through Light
Blue and adding to it. This is Light Blue on steroids.

The additional strategies discussed here offer us more trading opportunities,

and provide us with additional filters to keep us out of bad trades. We want to
trade more often while taking fewer losing trades, and that is where Deep Blue
shines.

Advanced Features OF Deep Blue:

1. RSI Trades
2. Higher Timeframe Filter
3. Range-Bound Market Filter
4. Trendline Trades
5. Engulfing trades
6. Inside Day Trades
7. Break-Even
8. Trade Management
9. Letting A Trade Run
The Deep Blue system is going to complete your trading approach.
After you learn the features of Deep Blue, you will have a incredible edge over
the market.

UltraBlueForex.com 4 © Forex Masonry 2020

 Deep Blue

DEEP BLUE
Deep Blue is the evolution of the Light Blue trading system. It builds upon the
basic concepts of Light Blue's already great system, giving you way more
options for your trading.

With Deep Blue, we will get earlier entry signals, ways to filter out trades, a
method of jumping into a missed trend, reducing the risk on each trade,
jumping to a break-even trade quickly, allowing a trade to run, and more.

These all compliment the Light Blue system in a very simple, exciting, and
profitable way.

If you have ever struggled to profit in the markets, this will help change that.

Enjoy the bonuses that are Deep Blue, everything you need to know about
trading profitably is here at your finger tips.

DEEP
BLUE
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Bonus Section 1

Section #1
TRADE FILTERS
The market is open 24 hours a day, 5 days a week. Because it's open around
the clock does not mean that all times are good times to trade.
There will be periods of time that the market juts isn't worth trading.
We want to take the trades that will give us the best chances of success, and
this means knowing when we should trade and when we should leave the
trades alone.
We will use a series of "filters" to limit the trades we take to the most suited for
trading.
We will look at 2 different ways to filter our trades.
The Higher Timeframe
Range-bound Markets
Taking both of these into consideration will limit the trade we take to the ones
that will give us the highest potential of winning.

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 HTF Filter
Higher Timeframe
A timeframe is simply how long it takes for a candle to open and then close. A
5 minute timeframe means the candles take 5 minutes from when they begin to
when they finish forming. A 1 hour timeframe means each candle you see on
the chart took 1 hour to form.

We trade a timeframe like the 5 minute, the 15 minute, the hour and so on. The
timeframe we trade is the "current timeframe". When it comes to a higher
timeframe (HTF), we want to look at a timeframe that is roughly 4 times bigger
than the timeframe we are trading. For example, if we trade the 15 minute
timeframe, we would use the 1 hour as the higher timeframe.

Current Timeframes and their

Higher Timeframe counterparts:
1 Minute 5 Minute
5 Minute 15 Minute
15 Minute 1 Hour
30 Minute 1 Hour
Current 1 Hour 4 Hour
Higher
Timeframe Timeframe
4 Hour Daily
Daily Weekly
Weekly Monthly
Monthly -

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 HTF Filter
Higher Timeframe
When we are about to take a trade, we want to confirm with the higher
timeframe. The higher timeframe carries more weight than the timeframe we
trade, so ideally, we want the current timeframe and the higher timeframe to be
in agreement.

The rules for this are very simple. We are looking for the same market
conditions on the higher timeframe as we see on the current timeframe.

What We Are Looking For

In a short trade, we want both timeframes (the current timeframe the higher
timeframe) to have the trend down (13 EMA below the 34 EMA) and the RSI
under the 50 level.

In a long trade, we want both timeframes (the current timeframe the higher
timeframe) to have the trend up (13 EMA above the 34 EMA) and the RSI
above the 50 level.

If the current timeframe does not match the higher timeframe in its direction,
then we do not take the trade. The higher timeframe often carries more
momentum and that's the direction we want to trade.

When both timeframes are headed in the same direction, the trade is
considered a much safer and higher probability trade to take and has the
potential to move farther.

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 HTF Filter
Higher Timeframe
Short Example
Starting by looking at the setup on the current timeframe (CTF), we follow up
by looking to the higher timeframe (HTF) to confirm that it is telling us the same
story. *The grey vertical line shows the same place on both timeframes.

Current Timeframe
We found the setup:
- Price is under the 13 EMA.
- 13 EMA is under the 34
EMA.
- RSI is under the 50 level. CTF
- Price has moved up to touch
the 13 EMA.

Higher Timeframe
We confirm the direction:
- Price is under the 13 EMA.
- 13 EMA is under the 34
EMA.
- RSI is under the 50 level. HTF

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 HTF Filter
Higher Timeframe
Long Example
Starting by looking at the setup on the current timeframe (CTF), we follow up
by looking to the higher timeframe (HTF) to confirm that it is telling us the same
story. *The grey vertical line shows the same place on both timeframes.

Current Timeframe
We found the setup: CTF
- Price is above the 13 EMA.
- 13 EMA is above the 34
EMA.
- RSI is above the 50 level.
- Price has moved down to
touch the 13 EMA.

Higher Timeframe
We confirm the direction: HTF
- Price is above the 13 EMA.
- 13 EMA is above the 34
EMA.
- RSI is above the 50 level.

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 Ranging Filter
Ranging Markets
Just because we sit down in front of our charts and are ready to trade, doesn't
always mean the the markets are ready to be traded.

We are looking to trade favorable conditions, we want only the best

opportunities to trade. In a sense, we are cherry-picking the highest probability
setups, and in doing so, we will be leaving some setups alone.

We do NOT want to trade in ranging markets.

We want to identify what a ranging market is so we can avoid them.
Too many traders have several successful trades only to give their gains back
to the markets because they don't know when to stay out.

A ranging market is one that is moving sideways with very minimal up and
down. We can only make money in a trade if the market moves one way or the
other, and a ranging market isn't moving well in either direction.

Range-Bound

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 Ranging Filter
Ranging Markets
First, let's look at a market that is NOT range-bound.
It moves up or down, there are gaps between the moving averages, the price
is above or below the 13 EMA, the RSI remains on one side of the 50 level.

Bullish market
- Market is generally moving Nice for buy trades
upwards.
- Price is above the 13 EMA.
- 13 EMA is above the 34
EMA with notable separation.
- RSI remains above the 50
level for more than just a few
candles.

Bearish market
- Market is generally moving
downwards.
- Price is generally below the
13 EMA.
- 13 EMA is below the 34
EMA with notable separation. Nice for sell trades
- RSI remains below the 50
level for more than just a few
candles.

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 Ranging Filter
Ranging Markets
Now that we understand a little bit about what a decent market looks like, we
will take the exact opposite and that becomes a range-bound market.

1. The market will not have a general direction to it, it will move more sideways
than up or down. Of course it will have small up and down movements, but
overall, it will be moving sideways not making any progress in either direction.

2. The candles will be mainly intermingled with the moving averages, the
market won't be clearly on one side or the other.

3. The EMAs will be very close together and even switching sides. There won't
be any clear separation between them, they do what's referred to as a "DNA
spiral".

4. The RSI will hug the 50 level and frequently move above and below it.

1 Sideways market
2 Intermingling candles
3 Tight EMAs 4 RSI hugging 50 level

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Bonus Section 2

Section #2
Additional Trades
The Ultra Blue trade type is a very good trade type, but suing the indicators we
have we can add more trade types.
These trade types are bonuses that we can plug into the existing system we
don't need to make any modifications to the indicators or the system itself.
These will give you a LOT of additional trading opportunities.
The ones we will look at are:
RSI Trade
Trendline Trade
Engulfing Trade
Inside Day Trade
The Light Blue features such as the stop loss and the targets can be used with
these additional trade types, these are a kind of plug-and-play.
One of these trade types might strike you in a way that the others won't. You
will find one of these to be the style that fits you the best, and having these
options will allow for you to refine and specialize in the perfect method for you.

UltraBlueForex.com 14 © Forex Masonry 2020

 RSI TRADE
Trend-Oriented RSI Trade
The RSI Trade gives us a trade signal using the RSI indicator. An important
feature of this trade is the direction of the trend. We want to only be trading
the RSI trade in the direction the moving averages are telling us to.

As we already understand the trend is determined by the moving averages.

- When the 13 EMA is above the 34 EMA, the trend is up.
- When the 13 EMA is below the 34 EMA, the trend is down.

We are looking for the RSI to move across the 50 level in the opposite
direction of the trend and then back across the 50 level into the trending
direction. The trade signal will be at the close of the candle that has made
the RSI cross the 50 level in the trending direction.

Ideally, the candle the closes to trigger a trade is also beyond the 13
EMA. In a buy trade, it would close above the 13 EMA while a short
trade it would close below the 13 EMA. This is not a necessity, but it
does increase the odds of a successful trade.

Important Note
The RSI trades signal will be given at the CLOSE of the candle.

In the Light Blue trades, all we need is for the candle to move beyond support or
resistance by a pip, but with the RSI trade, we want the candle to CLOSE to give
us a signal.

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 RSI TRADE
Step By Step
BUY TRADE
Step 1: The trend must be up
The 13 EMA is above the 34 EMA.

Step 2: The RSI must move below the 50 level

The RSI will move below the 50 level as part of the setup.

Step 3: The RSI moves above the 50 level

The market will move back into the direction of the trend and the RSI moves
back above the 50 level.

Step 4: The trade is placed at the close of the candle

The signal to buy is when the candle that moves the RSI above the 50 level
closes.

Stop Loss and Target (refer to Light Blue Manual)

As with any other Blue buy trade, the stop loss will go just below the most recent
swing low.

The target can be:

- 1:1 ratio, meaning the target is the same number of pips as the initial stop loss
(you can also use different ratios such as 1.5:1, 2:1 and so on)
- the most recent level of resistance.

UltraBlueForex.com 16 © Forex Masonry 2020

 RSI TRADE
Buy Trade Example
1. The trend must be up, the 13 EMA above the 34 EMA.
2. The RSI must move below the 50 level.
3. The RSI moves back above the 50 level.
4. The candle must close to trigger a buy trade.

1 Trend Is up
and remains up
4 Candle Close

3 RSI moves back

above 50 Level

2 RSI drops
below 50 Level

Note:
The signal candle closes above the 13 EMA which is preferable to a close below it.

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 RSI TRADE
Step By Step
SELL TRADE
Step 1: The trend must be down
The 13 EMA is below the 34 EMA.

Step 2: The RSI must move above the 50 level

The RSI will move above the 50 level as part of the setup.

Step 3: The RSI moves below the 50 level

The market will move back into the direction of the trend and the RSI moves
back below the 50 level.

Step 4: The trade is placed at the close of the candle

The signal to sell happens when the candle that moves the RSI below the 50
level closes.

Stop Loss and Target (refer to Light Blue Manual)

As with any other Blue sell trade, the stop loss will go just above the most recent
swing high.

The target can be:

- 1:1 ratio, meaning the target is the same number of pips as the initial stop loss
(you can also use different ratios such as 1.5:1, 2:1 and so on)
- the most recent level of support.

UltraBlueForex.com 18 © Forex Masonry 2020

 RSI TRADE
SELL Trade Example
1. The trend must be down, the 13 EMA below the 34 EMA.
2. The RSI must move above the 50 level.
3. The RSI moves back below the 50 level.
4. The candle must close to trigger a sell trade.

1 Trend Is Down
and remains down

4 Candle Close

2 RSI moves
Above 50 Level
3 RSI moves back
Below 50 Level

Note:
The signal candle closes below the 13 EMA which is preferable to a close above it.

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 Trendlines
Trendlines In A Trend
Trendlines are a great way to get into a trade earlier than if we were to use
general support and resistance levels. A trendline trade won't always be
present, but when they are, we can make good use of them.

CONNECT
BULLISH TRENDLINE LOWER HIGHS
With the trend being upwards
(13 EMA above the 34 EMA),
BREAKOUT
we look for the price to make a (BUY)
lower high. We connect the
highs to form a downward
sloping trendline. When price
closes above the trendline
(breakout), we can buy.

BEARISH TRENDLINE
With the trend being
downwards (13 EMA below
the 34 EMA), we look for the
price to make a higher low.
We connect the lows to form
an upward sloping trendline.
When price closes below the CONNECT BREAKOUT
trendline (breakout), we can
HIGHER LOWS (SELL)
sell.

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 Trendlines
Step By Step
BUY TRADE
Step 1: The trend must be up
The price is above the 13 EMA, the 13 EMA is above the 34 EMA.

Step 2: The price makes a lower high

As price makes a lower high, a downward sloping trendline can be drawn
above the price connecting the progressively lower highs.

Step 3: RSI must be above the 50 level

Price moves down to touch the 13 EMA, the RSI remains above the 50 level.

Step 4: The price closes above the trendline

The signal to buy is when a candle closes above the trendline.

Stop Loss and Target (refer to Light Blue Manual)

As with any other Blue buy trade, the stop loss will go just below the most recent
swing low.

The target can be:

- 1:1 ratio, meaning the target is the same number of pips as the initial stop loss
(you can also use different ratios such as 1.5:1, 2:1 and so on)
- the most recent level of resistance.

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 Trendlines
BUY Trade Example
1. The trend must be up, the 13 EMA above the 34 EMA.
2. The price must make a lower high.
3. The RSI must be above the 50 level.
4. Price must close above the trendline.

2 Lower High
4 Close Above Trendline

1 Trend Is Up

3 RSI Above 50 Level

*Note
The RSI does not have to be above the
50 level the entire time, as long as it's
above the 50 level at the point of the
final touch of the price to the 13 EMA.
before the close above the trendline.

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 Trendlines
Step By Step
SELL TRADE
Step 1: The trend must be down
The price is below the 13 EMA, the 13 EMA is below the 34 EMA.

Step 2: The price makes a higher low

As price makes a higher low, an upward sloping trendline can be drawn under
the price connecting the progressively higher lows.

Step 3: RSI must be below the 50 level

Price moves up to touch the 13 EMA, the RSI must remain below the 50 level.

Step 4: The price closes below the trendline

The signal to sell is when a candle closes below the trendline.

Stop Loss and Target (refer to Light Blue Manual)

As with any other Blue sell trade, the stop loss will go just above the most recent
swing high.

The target can be:

- 1:1 ratio, meaning the target is the same number of pips as the initial stop loss
(you can also use different ratios such as 1.5:1, 2:1 and so on)
- the most recent level of support.

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 Trendlines
SELL Trade Example
1. The trend must be down, the 13 EMA below the 34 EMA.
2. The price must make a higher low.
3. The RSI must be below the 50 level.
4. Price must close below the trendline.

1 Trend Is Down

4 Close Below
Trendline

2 Higher Low

3 RSI Below 50 Level *Note

The RSI does not have to be below the
50 level the entire time, as long as it's
under the 50 level at the point of the
final touch of the price to the 13 EMA.
before the close below the trendline.

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Engulfing Trade
ENGULFING Bar
This trade is triggered by a pattern called the Engulfing Bar. It's a 2 candle
pattern where the signal candle's body is the opposite color and completely
engulfs the previous candle's body. We aren't too concerned about the
candle wicks, only that the second candle's body is larger and "engulfs" the
body of the previous candle.

It's a pattern many traders look for, but like most candles patterns, it needs
some kind of reason to work. We want there to be a kind of "structure"
present, and for us, the structure we are looking for is a pullback to the 13
EMA.

Once price has pulled back to the 13 EMA, the market is likely to resume the
trend if it forms an engulfing candle. This show the market momentum has
picked up in the trending direction and the trade is a fairly safe trade to take.

bullish engulfing bearISH engulfing

Bar 2 Bar 1
"engulfs"
bar 1

Bar 2
"engulfs"
Bar 1 bar 1

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Engulfing Trade
Step By Step
BUY TRADE
Step 1: The trend must be up
The price is above the 13 EMA, the 13 EMA is above the 34 EMA, the RSI is
above the 50 level.

Step 2: The price pulls back to the 13 EMA (or below)

The market makes its pullback to the 13 EMA, it's ok if the price moves below it.

Step 3: A Bullish Engulfing candle forms

We look for a Bullish Engulfing candle to form, the body of this candle will be
bigger and completely envelope the body of the previous candle.

Step 4: The trade is placed at the close of the candle

Once the Bullish Engulfing candle closes, we can place a buy trade.

Stop Loss and Target (refer to Light Blue Manual)

As with any other Blue buy trade, the stop loss will go just below the most recent
swing low.

The target can be:

- 1:1 ratio, meaning the target is the same number of pips as the initial stop loss
(you can also use different ratios such as 1.5:1, 2:1 and so on)
- the most recent level of resistance.

UltraBlueForex.com 26 © Forex Masonry 2020

Engulfing Trade
BUY Trade Example
1. The trend must be up: The price must be above the 13 EMA, the 13 EMA
above the 34 EMA, and the RSI is above the 50 level.
2. The price pulls back to the 13 EMA (or below it).
3. The market makes a Bullish Engulfing candle.
4. The candle must close to trigger a buy trade.

1 Trend Is Up
4 buy at
Candle Close

2 Price pulls back

to 13 EMA 3 Bullish Engulfing

Note:
The candle closes above the 13 EMA which is preferable to a close below it.

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Engulfing Trade
Step By Step
SELL TRADE
Step 1: The trend must be down
The price is below the 13 EMA, the 13 EMA is below the 34 EMA, the RSI is
below the 50 level.

Step 2: The price pulls back to the 13 EMA (or above)

The market makes its pullback to the 13 EMA, it's ok if the price moves above it.

Step 3: A Bearish Engulfing candle forms

We look for a Bearish Engulfing candle to form, the body of this candle will be
bigger and completely envelope the body of the previous candle.

Step 4: The trade is placed at the close of the candle

Once the Bearish Engulfing candle closes, we can place a sell trade.

Stop Loss and Target (refer to Light Blue Manual)

As with any other Blue sell trade, the stop loss will go just above the most recent
swing high.

The target can be:

- 1:1 ratio, meaning the target is the same number of pips as the initial stop loss
(you can also use different ratios such as 1.5:1, 2:1 and so on)
- the most recent level of support.

UltraBlueForex.com 28 © Forex Masonry 2020

Engulfing Trade
SELL Trade Example
1. The trend must be down: The price below the 13 EMA, the 13 EMA below
the 34 EMA, and the RSI is below the 50 level.
2. The price pulls back to the 13 EMA (or above it).
3. The market makes a Bearish Engulfing candle.
4. The candle must close to trigger a sell trade.

1 Trend Is Down
3 Bearish Engulfing

Second
opportuity
follows

2 4
Price pulls back Sell at
to 13 EMA Candle Close

Note:
The candle closes below the 13 EMA which is preferable to a close above it.

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 Inside Day
Inside Day Trade
The Inside Day is a candle formation that many traders overlook. The Inside
Day is a simple setup and has a high percent win rate, but because of it's
simplicity, traders seem to dismiss it. Once you learn how it works, you will
see successful trade setups all over the place!

The setup is called Inside Day, and this goes back to the time when trading
the daily timeframe was the only option there was. The Inside Day is a
formation that works on whatever timeframe you like to trade, but I do prefer
the higher timeframes (1 hour and above) using this pattern.

The Inside Day is a 2 candle formation and happens when a candle forms
entirely inside the previous candle's high and low. The Inside Day candle can
be the same, or opposite, color of the previous candle. As long as the candle
forms inside of the previous candle's range, we have a potential trade.

BULLISH INSIDE DAY BEARISH INSIDE DAY

1 2 3 4

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 Inside Day
Inside Day Trade
The Inside Day candle formation is one we are looking to trade in the direction
of the trend, we are still trading with the overall market movement. The moving
averages must be in order and the RSI will be on the correct side of the
50 level.

The trend direction is how we determine if we are buying or selling.

We buy in an uptrend and we sell in a downtrend.

BUYS

SELLS

Up / Down Trend
An uptrend is then the 13 EMA is above the 34 EMA and the RSI is above the
50 level.

A downtrend is when the 13 EMA is below the 34 EMA and the RSI is below the
50 level.

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 Inside Day
Step By Step
BUY TRADE
Step 1: The trend must be up
The 13 EMA is above the 34 EMA and the RSI must be above the 50 level.

Step 2: The first candle must be bullish

In an uptrend, the first candle of the Inside Day formation must be a bullish
candle.

Step 3: A candle forms inside the range of the previous candle

The Inside Day signal candle can be bullish or bearish. The candle's high must
be lower than the previous candle's high, and the low must be higher that the
previous candle's low.

Step 4: The trade is triggered above the high of the Inside Day
candle
An entry order to buy can be placed 1 pip above the high of the Inside Day
candle. This can be placed manually as a market order, or set as a buy-stop
order.

UltraBlueForex.com 32 © Forex Masonry 2020

 Inside Day
BUY Trade Example
1. The trend must be up, the 13 EMA above the 34 EMA and the RSI above
the 50 level.
2. The first candle of the formation must be bullish.
3. A candle forms inside the range of the previous candle.
4. The trade is triggered above the high of the Inside day candle.

4 Enter Above High

2 Bullish Candle

1 Trend Is Up

3 Inside Day

Stop Loss
Stop loss can go below the low of the Inside Day candle or below the previous
candle's low.

UltraBlueForex.com 33 © Forex Masonry 2020

 Inside Day
BUY Trade Graphic
Bullish first candle
With the trend up, (the 13 above the 34 and the
RSI above 50) the first candle of the formation
is a bullish candle. We might see several of
these before we get the second candle of the
formation.

An Inside Day candle prints

The candle has a lower high than the previous
candle.
The candle has a higher low than the previous
candle.

A Buy Stop order is placed

An order to buy is placed just above the high of
the Inside Day candle. This can be placed
manually or you can use a buy stop order.

A Stop Loss is placed

The stop loss can be placed below the previous
candle's low (conservative), or below the low of
the Inside Day (aggressive).

UltraBlueForex.com 34 © Forex Masonry 2020

 Inside Day
Step By Step
SELL TRADE
Step 1: The trend must be down
The 13 EMA is below the 34 EMA and the RSI must be below the 50 level.

Step 2: The first candle must be bearish

In a downtrend, the first candle of the Inside Day formation must be a bearish
candle.

Step 3: A candle forms inside the range of the previous candle

The Inside Day signal candle can be bullish or bearish. The candle's high must
be lower than the previous candle's high, and the low must be higher that the
previous candles low.

Step 4: The trade is triggered below the low of the Inside Day
candle
An entry order to sell can be placed 1 pip below the low of the Inside Day
candle. This can be placed manually as a market order, or set as a sell-stop
order.

UltraBlueForex.com 35 © Forex Masonry 2020

 Inside Day
SELL Trade Example
1. The trend must be down, the 13 EMA below the 34 EMA, and the RSI below
the 50 level.
2. The first candle of the formation must be bearish.
3. A candle forms inside the range of the previous candle.
4. The trade is triggered below the low of the Inside Day candle.

1 Trend Is Down
2 Bearish Candle

3 Inside Day

4 Enter Below Low

Stop Loss
Stop loss can go above the high of the Inside Day candle or above the previous
candle's high.

UltraBlueForex.com 36 © Forex Masonry 2020

 Inside Day
SELL Trade Graphic
Bearish first candle
With the Trend down, (the 13 under the 34 and
the RSI under 50) the first candle of the
formation is a bearish candle. We might see
several off these before we get the second
candle to the formation.

An Inside Day candle prints

The candle has a lower high than the previous
candle.
The candle has a higher low than the previous
candle.

A Sell Stop order is placed

An order to sell is placed just below the low of
the Inside Day candle. This can be placed
manually or you can use a sell stop order.

A Stop Loss is placed

The stop loss can be placed above the
previous candle's high (conservative), or above
the high of the Inside Day (aggressive).

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Bonus Section 3

Section #3
Break-Even
One of the more important parts to trading successfully is keeping our money.
When we make a profit, we don't want to give it back if we don't have to. Of
course we will have to risk the money for each trade we take and the chance
we lose the trade is always there.
If, on the other hand, we can find a way to prevent a loss from ever happening,
we put the odds of making money much more into our favor. The less we can
give back, the better it is for us.
There is a saying:

It's not how much you make,

it's how much you don't spend.
A terrific way to not give money back is to move the stop loss to our entry
price. Once we get a chance to do that, there is no longer a risk on the trade.
We will either make money or not, but we won't lose money.

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 Break-Even
Break-Even Stop Loss
To be successful at trading, we want to have an edge over the market. We are
looking to implement procedures that will allow us to essentially "cheat". Moving
our stop loss to break-even is one of those "hacks" that would be seemingly
unfair to the market. If we were in a casino, it would be like placing our bet, and
then taking our money off the table, but still have the chance to win.

Moving our stop loss to break-even means we will move the stop loss to the
entry price of the trade. When the stop loss is at the entry price, if we get
stopped out, we will get stopped out where we got in, resulting in no money
lost.

The only time we get an opportunity to move our stop loss to break-even is
when we are in profit. The market needs to move in our favor some distance.
We can't move to break-even until we get that room.

There are a couple methods to move the stop loss to break-even.

1. Move to break-even when the price gets to 1:1

This means that if your initial stop loss is 25 pips, we move the stop loss to the
entry price when the market moves us 25 pips into profit.

2. Isolated candle
I discovered this when I was looking for a unique and ultra-fast way to get my
trade to safety. It's an aggressive way to move your stop loss to break-even,
but I like this method very much. We will have a level drawn at the entry price,
and when a candle forms in its entirety beyond that level, we move the stop to
break-even.

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 Break-Even
1:1 Ratio
If you have been trading for any length of time, you will likely be familiar with
this kind of break-even maneuver. We use the distance of our initial stop loss
to determine when we move the stop to break-even.

In this example, we are using a 1 to 1 ratio, but it can easily be any ratio you
prefer.

With the 1:1 ratio, if the initial stop loss is 50 pips away from the entry, we will
move our stop loss to break-even when the trade gets to 50 pips in profit.

Below is a buy example. All the criteria is met for a long trade and the stop loss
is 50 pips. When the price reaches up into profit by 50 pips, the stop loss is
moved to the entry level.

1 Trend Is up.
RSI is up.
2 Entry
level
Price hits 50
4
Market touches 13
EMA. pips, stop is
moved to BE

3 is 50 pips
Stop loss

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 Break-Even
1:1 Ratio
Below is a short example of the 1:1 break-even.

When the market drops by the same number of pips the initial stop loss is
placed, the stop loss is moved to the entry price.

The candle does not have to close before the stop loss is moved, the market
simply has to reach a certain number of pips. In the example below, the initial
stop loss is placed 30 pips away form the entry. The instant the trade reaches
30 pips into profit, the stop is moved to break-even.

3 Stop is 30
pips

1 Trend Is down.
RSI is down.
Market touches 13
EMA. 2 Entry
level

4 Price hits 30 pips,

stop moves to BE

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 Break-Even
Isolation Candle
This is perhaps a little more aggressive break-even approach, but this is one
that I like quite a bit.

What we are looking for is a candle to form in its entirety above or below the
entry level (depending if it's a buy or sell trade).

The entry level will be the price that the trade was taken. We want to wait for a
candle to form completely outside of the level. As the first few candles of a
trade develop, they will often move above and below the entry level as they
form, so we won't get the chance to move to break-even immediately.

This method will work the same if we are using the market swing highs or lows
as the entry level in the basic trade type, or if we are using the candle closes
as in the trendline or the RSI trade types.

In a buy trade:
We want a bullish candle to form with its low above the entry level.

In a sell trade:
We want a bearish candle to form with it's high below the entry level.

Isolation Candle Color

It's important that we wait for the appropriate candle color to form. An isolation
candle in a buy trade should be bullish and in a sell trade it should be bearish.
If the candle is the opposite color, it is likely to bring the current price too close
to the entry and not allow for enough "clearance" between the entry and the
price. We could get stopped out prematurely.

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 Break-Even
Isolation Candle
We will look at an example of an isolation candle and the move to break-even
in a buy trade using resistance as the entry signal.

Bullish market
- We will have entered the
market, the stop loss below
Entry level
the most recent swing low.
- Move to break-even when
the first bullish candle closes
and the low of that candle is
Isolation
Candle
higher than the entry level.

1 Entry
level 2 Isolation
Candle Low is higher
than entry
level

Stop loss under Stop loss is moved

recent low to entry level

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 Break-Even
Isolation Candle
We will look at an example of an isolation candle and the move to break-even
in a sell trade using support as the entry signal.

Bearish market
- We will have entered the Isolation
market, the stop loss above Candle
the most recent swing high.
- Move to break-even when
the first bearish candle
closes and the high of that
candle is lower than the entry Entry level
level.

Stop loss above

1 recent high
2 Stop loss is moved
to entry level

High is
Entry level lower than
Isolation entry level
Candle

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Bonus Section 4

Section #4
Trade Management
Limiting the risk on as many trades as we can is one of the greatest secrets to
success in trading.
I am not a huge fan of something dubbed as "set it and forget it". This means
we place our trade including stop and target, and one or the other gets hit. The
loss on these trades are the biggest loss we can have, but we would prefer to
have a loss that is smaller than the total loss.
Managing the trade is the way we limit the loss.
We may not get the opportunity to move the stop loss to break-even, but on
almost every trade, we can move the stop loss marginally closer to the entry
level. Through trade management, we can reduce the loss from potentially 100
pips, to 80, or 50, or to 25... and so on.

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 Management
Managing A Trade
One of the important factors to being successful at trading is to have an edge
over the market, and trade management is one of the tools we can use to
"cheat" the market.

Our stop loss is a very powerful tool that can make us a lot of money if we use
it correctly. We have previously discussed methods to move the stop loss to
break-even, and in this chapter, we will look at how we can reduce the risk on
our trade and even GUARANTEE ourselves some profit by moving our stop
loss ahead of the entry level.

1. Reduce the risk on the trade

By managing the trade, we can start with moving the stop loss towards the
entry level. Our initial risk on the trade might be 2% of our account, and by
managing the trade, we can reduce that risk to 1.5%, 1%, or even less.

2. Locking in profit
We can use our stop loss to prevent any loss on the trade at all. We will be
looking to manage the trade in such a way that we eventually move the stop
loss ahead of the entry level. This will lock in profit guaranteeing money will be
made on the trade no matter what happens.

Not Every Time

Managing a trade to reduce the risk is something we will be able to do on most
of our trades, but there will be times where our initial stop loss is hit.
Moving our stop loss into profit is more likely to happen if we are allowing our
trades to run, or if we are aiming for greater than a 1:1 profit target.

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 Management
Light Blue Buy Trade - 13 EMA
Using the Light Blue buy trade in this example, we use the swing high to enter
a trade and the entry candle has not closed. The initial stop is placed below the
swing low, and when the entry candle closes, we move the stop loss to just
below the 13 EMA of the new candle. The stop is then moved to the new
position of the 13 EMA for each newly opened candle until the trade is closed.

First Move First new candle after

- When entry candle closes entry candle
and new candle opens, move
stop to 13 EMA of the new
candle.
- The stop loss, in this case,
is reduced by half with the Stop is moved to
one simple move. 13 EMA
Initial Stop

Trailing
- As each new candle opens,
move the stop loss to just
below the 13 EMA under the
new candle.
- This process continues until
the trade is closed by the Stop is moved
stop loss, the target, or a along 13 EMA
manual closure of the trade.

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 Management
Light Blue Sell Trade - 13 EMA
With the Light Blue sell trade, we use the swing low to enter a trade and the
entry candle has not closed. The initial stop is placed above the swing high,
and when the entry candle closes, we move the stop loss to just above the 13
EMA of the new candle. The stop is then moved to the new position of the 13
EMA for each newly opened candle until the trade is closed.

First Move Initial Stop Stop is moved to

- When entry candle closes 13 EMA
and new candle opens, move
stop to 13 EMA of the new Entry
candle.
- The stop loss is reduced by
half with the one simple
move.
First new candle
after entry candle

Trailing Stop is moved

- As each new candle opens, along 13 EMA
move the stop loss to just
above the 13 EMA above the
new candle.
- This process continues until
the trade is closed by the
stop loss, the target, or a
manual closure of the trade.

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 Management
Entry At Candle Close - 13 EMA
Trade management when the entry is at the close of a candle is very similar to
the entries we take mid-candle with the basic support/resistance type entries.
The one difference is when we move the initial stop loss to the new position
along the 13 EMA. When we enter at the close, we are technically entering at
the open of the next candle. We want to wait for that candle to close, and when
the candle after that opens, we get the go-ahead to move the stop loss.

Buy Trade Entry is at

- When candle closes, we get
close/open of
the entry signal, this is also candle
the open of the new candle.
- Wait until the open candle
closes, then the next candle Next open, move
opens and we move the stop stop to 13 EMA
loss to the 13 EMA of the
new candle.
- The process repeats for
each new candle after that
until trade is closed.

Sell Trade Next open, move

- When candle closes, we get stop to 13 EMA
the entry signal, this is also
the open of the new candle.
- Wait until the opened
candle closes, then the next Entry is at
candle opens and we move close/open of
the stop loss to the 13 EMA candle
of the new candle.
- The process repeats for
each new candle after that
until trade is closed.

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Bonus Section 5

Section #5
Letting A Trade run
There are times when we want to get as much from a trade as we possibly
can.
The markets do have a tendency to trend, or move in one direction for a
relatively long period of time.
There is a way to catch quite a lot of that market movement while at the same
time limiting the loss on the trade.
We will be using the stop loss to secure profits as the trade runs, but we want
to be sure that the stop loss isn't too close to the market when we do make the
adjustment.
We will not use the 13 EMA as we would in trade management, but instead,
we will be using the market itself to show us where to position the stop loss.

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 Running Trade
Letting A Trade Run
When a trend takes hold, the market can go for a long way. The trouble is that
if we manage the trade using the trade management tools we have (the 13
EMA), the trade will get stopped out before we can get the bulk of the trade.

We need a better way to let the trade run. we want to give the market the room
it needs to make the pullbacks along the way without stopping us out. The way
we do this is to use the market itself. we will use the market swings to tell us
how to place out stop loss.

We Can Capture most

of this movement

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 Running Trade
Letting A Sell Trade Run
We start the trade as usual, however we decide to get into the trade. For this
example, we will use the light blue entry past support.

1. The initial stop loss is placed above the swing high.

The initial stop loss is placed above the most recent high before the entry.

2. Identify the next swing low.

In this case the entry level will have been a previous swing low. Whether using
support / resistance, a trendline, or a candle formation to enter the trade, there
will be a recent swing low just before it. Once price moves beyond that low, it
will bounce back up creating a new swing low.

3. Stop loss is moved when price drops below the next swing
low to the most recent swing high.
Once the market has moved lower than the recent swing low, it will have
created a new lower swing high. The Initial stop loss is moved from its original
position to just above the new lower swing high.

4. The process repeats.

As the market moves lower than the most recent swing low, the stop loss is
moved to the newer, lower swing high. This process will happen over and over
until the stoploss is eventually hit and the trade is closed.

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 Running Trade
Letting A Sell Trade Run
1. The initial stop loss is placed above the recent swing high.
2. Identify the next swing low.
3. The sop loss is moved when price drops below the next swing low to the
most recent swing high.
4. The process repeats until the trade is closed.

1 Initial Stop Loss

Entry
First Swing Low

3 Stop moves to
next swing high
Price moves lower
than swing low

2 Next Swing Low

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 Running Trade
Letting A Sell Trade Run
Original Trade could have been
closed in 2 ways: Stopped out as price moves above
13 EMA (trailing Stop)
1. 1:1 target was hit gaining 55 pips.
2. Trailing stop closed trade at 15
pips.

Letting the trade run allowed the

trade to move farther than it would
normally go. The stop loss
eventually stopped us out at 170 1:1 target
pips.

Trade won 170 pips

Stopped out

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 Running Trade
Letting A Buy Trade Run
This is the same, but for a buy
trade. The original trade could have 1:1 target
been closed in 2 ways:

1. 1:1 target was hit gaining 40 pips.

2. Trailing stop closed trade at -2
pips.

Letting the trade run allowed the

trade to move farther than it would
normally go. The stop loss Trailing Stop
eventually stopped us out at 95
pips.

Trade won 95 pips

Stopped out

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 Conclusion
Wrapping It Up
You are now fully equipped to make all the money you want to from the
market. The Deep Blue additions build upon the Light Blue system and
template, so if you haven't read the Light Blue manual, please do so... Deep
Blue will make more sense afterwards.

With the Deep Blue additions, you have learned:

1. Trendline Trades
2. Trend-Oriented RSI Trades
3. Inside Day Trades
4. Higher Timeframe Filter
5. Range-Bound Market Filter
6. Break-Even
7. Trade Management

The features of Deep Blue give you a distinct edge over the market, there
should be no reason why, if you stay focused and disciplined, you won't
become a profitable trader.

Stay consistent, stay focused, and stay disciplined. You will be amazed what
you can do as a trader. These methods are time and battle-tested, every wildly
profitable trader uses these methods in one variation or another. The simplicity
of Deep Blue will have you making money before you know it.

Best wishes to you and your trading!

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