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LMT Forex: Trick for Extra Profit on Trades

by Marc on July 14, 2009

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LMT Forex Formula Update & Trick to Make Extra Profit on  Low Risk Trades
(this works on non LMT trades as well).

One of you sent me a link last week to a site where the site owners post videos of  LMT forex formula (Low Maintenance Forex trading) trades that they are making and they have made hardly any money in over a month. Why?

Because they are only hoping to catch the big moves. They don’t take anything off at the 1st profit target and then go on to show on video how they get taken out every-time. Yet they are trying to make commission promoting the product!

In the current markets I find their trading tactics (and especially their marketing methods – “buy this, see how we lose all the time”) rather strange to say the least!

Personally I have a lot of success with the LMT because I split the trade in half and take the profit off the 1st lot and move the stop to entry on the second.

The only problem has been in the last week I have had quite a few trades that made the 1st target. Pulled  back and took out my stop on the 2nd and then reversed and  went back the way i wanted for 100+ pips.

There is a middle way to this that you might like to try when the markets are trending sideways and or are whip sawing, up and down quickly;

Split the trade in half as per my normal recommendation. When the price hits the 1st target (which is more often than not on a 4 hour fx trade) for example  25 pips profit. Move your stop to -25 pips of your entry.

For example. Short the gbp at 1.6200 with 1st target 25 pips at 1.6175. Once price has hit & taken your 1st profit, move the stop to 1.6225. This way you give the 2nd trade more room to breathe. You now have a better chance at a big move and even if you get taken out you lost nothing !

I used to do this all the time, but I really do not like opening trades to be taken out at break even. In the current markets though it is certainly worth considering.

If you want to use this method I would recommend that you only do it on trades that look most likely to go a long way.  Obviously for this you need some discretion.

Things to look for are fibonacci lines. Double tops or bottoms. Previous support and resistance lines etc. If you are new to forex and the LMT don’t worry about it. Trade it the way it comes out of the box. If you can keep picking up 20 pips here and 20 pips there it soon starts to add up.

If you want to learn more about these indicators check out the free lessons in the Free Fx Training Section here on the blog.

Advanced Rules Update

I have a few new rules to add to the advanced rules (if you don’t have a copy email me marc@forex-fxtrader.com). I will do this later in the week, but one that I have been recommending to my followers lately is to only take the trade if the trend is in the same same direction on both the 4 hour and daily fx charts.

If you want to be ultra conservative, you might go so far as to say only if the trends are the same same on both times and more than 1 platform.

How Good is The LMT Forex Formula

I posted this reply to Rich on the blog the other day just to show what I mean and how incredible the LMT is;

“Rich, re your question about lmts current performance in non trending markets. the fact that it is still making pips in the current markets is simply awesome.

I read the following on Bloomberg July 6 (Bloomberg) —

FX Concepts Inc., the world’s largest currency hedge fund, says it lost 5.4 percent in this year’s first five months. John W. Henry & Co.’s foreign-exchange fund told investors it lost 2 percent.

Both use computer models to spot currency trends and, along with other momentum chasers, are getting hammered by this year’s lack of clear direction as the markets are pulled in opposing directions”

I would strongly suggest to their shareholders that they buy a copy of the LMT forex formula (a few $million less than their “trend following computer models”)!

In the same period the LMT forex formula made 3000 pips on the gbp/$ alone! Take a look back on the daily charts on the gbp. Between March and late June it trended straight up 3000 pips ! (you would have been taken out & re-entered 3 times with deans rules).  If you would like to join the LMT and receive free support and advice click on the following, colourful banner;

gp_daily_trend_2009

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Want more of this? See these posts:

  • Awesome LMT Trades 1583 pips in 2 days
  • How to Trade the LMT Forex Formula
  • LMT Forex Formula Example
  • LMT Trade Plan Week 15th June & Results
  • L M T Forex Formula Review

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    • alx
      So we are back at the beginning. It was a nice breakout but got reversed completely. Despite European trades took the bad US GDP reading "classic" way by running to save-haven currencies, US folks decided to sell USD across the board and reversed everything.
      Again we'll start on Monday with a new blank page opened. Next week we have some more important news coming. Be sure you check the news calendar so you know when to stay away.
      But in general, my best advice is: stay away till the end of August.
      ALX
    • alx
      Hey, we have a nice break down from diagonal upward channel on EURUSD daily. Breakout from diagonal usually brings the price back to the origin. ~ 1.382 in this example. Some 190 pips still to go.
      Please keep in mind:
      1) On Daily charts. This means we can have a lot of opposite action before the price hits the target.
      2) It's is just estimation. Or projection. Whatever you call it, it's not granted.
      ALX
      ALX
    • andy
      Dan,
      you mentioned earlier that you were preparing a pre trade checklist for the LMT trades. Have you done it and would you be prepared to share it. I too am guilty of wanting to try and take every signal because, generally they all pass Dean's criteria, although it would be nice to be able to filter these further for the very best results,
      thanks
      Andy
    • alx
      Hi All,
      if you run more than one terminal for more H4 signals you may notice performance issues. This is due to the terminal memory usage and computations per chart. The more charts open, the slower the whole CPU.
      You can improve the performance by limiting data the terminal loads per chart:
      Go to Tools>Options, select Charts tab and set "Max bars in history" and "Max bars per chart" to 5000 (the leas value available). Restart the terminal to make it effect.
    • Dan
      Alx,

      I don't care what the chart shows me either!, Andy does though and I was just trying to highlight what the trend indicator is trying to show us and how it is constructed. After all its designed so that we don't need to know and as I mentioned I trust it also with good success.

      I only know the details as I work in the city and sit with professional traders and have successfully replicated the LMT set-up on my Bloomberg terminal at work (What professional traders use) so that I can keep an eye on my charts at each 4H window discreetly rather than downloading MT4 on my work computer (a big no no) or having to fire up my netbook every four hours in the loo!
    • alx
      Sorry Dan, my mistake.
      It's a bit hard to find out who is the sender and who is the receiver in the reply messages here.
      Interesting part about the Bloomberg terminal. Does it give you trade signals as the original LMT?
    • jack novak
      Are the stop loss changes to Forex US coming in the end of this month will affect LMT Forex Formula? Also will Dean Sanders come up with any new system in the near future?
    • alx
      HI Jack, ask Dean - he knows it the best.
    • andy parker
      Dan,
      I am already looking at the higher timeframe but sometimes the chart looks to be definitely trading in one direction when the shorter timeframe is saying (in words from the LMT analysis, not visually on the chart) the opposite.
      cheers

      Andy
    • alx
      Dan,
      I don't really care what the chart is showing to me when I see Trend Up and Buy signal. Guess why? Because out of 66 signals I got recently, only 13 failed. This is less than 20%. I don't argue with the system that is 80% right. I trade it. When it says Up, it's up. When Down - I'm going down.
      Besides, v1.8 has a separate trend indicator which works a bit different than just looking at upper frame. That's why it's able to catch countertrends and find trend reversals earlier than v1.6
    • Dan
      It cam be confusing I agree but as marc pointed out on more occassions than he can remember the direction has been called correctly by the software despite it looking questionable. It may be trending up but have a bearish candle pattern forming (doji, pin-bar or high test bars) which warn of a reversal. Plus, while the trigger has been made to look proprietary, it's just a macd histogram with clever colour coding to show rising (green bars) and falling (red bars). I.e at it's core this is a macd reversal style strategy so you can always look out for macd divergence versus the price to help explain apparant misleading trends. Best rule of all is that if (after all your pre-trade checks - candle size, formations, trigger line shape etc) if you are not 100% sure of the trade don't take it.

      I'm busy preparing my own LMT check list (pre and post trade) to ensure I'm only taking the highest probability set-ups to help my discipline as I'm sometimes guilty of trading all the signals. Would be happy to share if anyone interested but advise you do something similar to manage your trades

      Dan
    • sandra
      Hi Dan, I would like to see your check list if possible. Thanks, sandra
    • tom
      marc ... the advantage of your "middle way" over dean's rule is it decreases the chances of being stopped out prematurely .. ("room to breathe", as you call it) .. and hopefully going on to a nice long trend ... the disadvantage is a bigger loss if the price turns against you with potentially all the profit of the first lot being wiped out .. (but still a break-even for the entire trade, so not a complete disaster) .... what do you think about using a trailing stop in your method? ... seems like that would guarantee at least a little profit, even in a worse-case scenario
    • Hi Tom. The point is that in the current yo yo markets, price often pulls back before heading in the predicted direction. If you bank the 1st profit as I suggested, it is NOT a loss if you are taken out, its just a "no trade". Often traders on longer time frames do this all the time as they are hanging in for the BIG ONE. Personally I usually prefer to bank some profits. You cant feed your family the "profit" in an open trade !

      Re trailing stops, the current choppiness would see you being taken out at a loss at the moment, unless you were only attaching the trailing stop once you are in profit. Personally not keen on them unless I am well in front. Marc
    • Ryan
      After a short while with LMT, i noticed that even though my 1st target was hit alot, my second half would get stopped out lower than the first half way more often than not. So I made an adjustment.
      On my demo acct, I open 40k to begin with. At 1st target, instead of closing 20k, I've started closing 30k. Leaving 10k to still fight the good fight.
      I've noticed that this has left more pips in my acct for me. And when the last 10k catches a good trend, I'll still have a decent amount to add on. But when it doesn't, I'll still keep more from the 1st target several times to make up for it. At least in theory.
    • andy
      Marc,
      when you say to trade conservatively on the LMT it may be prudent to only take trades where the trend is the same for the 4 hour and daily charts, do you mean looking at what it says in words on the top left of the screen or what you actually see on the charts. I only ask this because there are times when the words (on the shorter timeframe chart) say, for example UP, but the actual chart you are viewing shows very clearly a DOWN trend. Even if you zoom right out the chart still may show a down trend but the words on the (shorter timeframe) chart say UP. Do you follow exactly what it says every time or do you leave alone if your eyes see the charts differently. I know you shouldn't mess and "tweak" but it sometimes seems totally illogical and, dare I say it, wrong.
    • alx
      Andy,
      the LMT is able to pick up short countertrends on H4. The main trend may be down, but there are pullbacks or corrections that produce short uptrends. The safest way of trading is to go with the main trend only. If you read Up on Daily and Up on H4 then you play with the trend.
    • Dan
      Plus, they trend indicator you see on any time frame, is actually determined from the next higher time frame. I.e. if the 4H trend says down it's actually telling you that the higher time frame (in this case daily), is down - i,e, the more established trend. For the daily trend it looks at the weekly time frame and so on.

      At first in can be confusing, but if you read the 4H chart and feel its starting to trend up, that may well be the case, but the trend indicator is still down its because the daily trend is down. This is to ensure that you are always trading with the longer, more established trend and to avoid counter-trending where possible.
      Dan
      If you look at the 1H chart, the indicator there will be taken from the 4H time frame so you can always drop to 1H to see what it says for 4H.
    • Rich
      Congratulations to the profiteers on the erujpy-I got stopped out. (The good news is that I am learning to take losses better than before.)

      In fairness to the link in question, I think these two guys are knowledgeable forex traders. I watched all of their webinars and found them very helpful. As Marc pointed out, they are ONLY going for big wins. I am actually surprised that they haven't altered their strategy at all, however. Don't know what they're thinking!

      Have to say that I have learned more here on this FREE blog! Thanks again, Marc. We should pass the plate, collect some pips and send them your way as a thank you!
    • Gally
      If you got stopped out on EURJPY, suggests you're using a GMT+0 signal, which was actually the third EURJPY signal yesterday. The two previous ones both went into profit. That last EURJPY was too late in the day to trade really, especially with the Goldman's news.
      What technique are you using on non-LMT trades if you don't mind me asking? And if you do, many apologies...
      And if you were getting consistent 100pip days constantly you're doing better than 99% of all, even the best, traders.
    • Nick
      I had 4h signals on EY and UY today from FXDD (same time as meta) 6am here in AZ took them both, took profits on both 90 minutes later. Interestingly Alpari UK gave my the same signals one hour later (different broker time) I did not take these but I see they would have been profitable. First trades with LMT, very impressed.
    • Ryan
      Hi marc

      After I signed up for twitter, you started following me. So i looked at your twitter, and decided to follow you too.
      I was skeptical about what you kept saying about LMT. It was weeks before I finally decided to give it a try.
      once I did, it gave me a couple of outstanding days. Some days, you would warn your followers that lmt wasn't doing well that day. Unfortunately, I read your comments after finding out the hard way already. lol
      Lucky for me, I'm still in the demo trading stage of my trading career. I hope to go live by the end of next week. Or the beginning of the week after.
      Anyway, the lmt formula has taken my trading to the next level. In two different ways. One expected, one not.
      The first way, was by giving such great sigs when a pair is actually trending. On tuesday of last week, I had 35 signals on two platforms. Cleared 311 pips!!! Though I use 40k lots, and split it in two on the 1st target, I was still estactic with the results!!!
      The other way lmt has moved me to the next level, was by changing my overall outlook on trading. I was conservative before lmt. I traded 2 pairs only. I would grab profits at 5-7 pips and run for the hills. I was using 20k lots on the demo to stay within the budget that I will trade live someday.
      I'd make about 100 pips a day, and think I was terrific. But LMT got me to thinking about more than just the eur/usd and the usd/jpy. And LMT got me to looking for more than just 5-7 pips per trade.
      On days when LMT is popping out pips like unpopped kernals in a bag of popped microwave popcorn, i will trade lmt sigs only.
      ON days when LMT needs a break, I've noticed that my former methods of trading are now bringing in easily triple what I used to bring in, cause I'm trading more than just 2 pairs. And I'm looking for 15-20 pips instead of 5-7. And I also now use 1st targets, and let half continue to run. just in case.
      Now, I'm working on combining the two. Trade lmt on the 4 hrs like normal, and in between candles, do my normal methods.
      If my results stay consistant for another 5 trading days, I am still on track to go live late next week.
      This letter got longer than i intended. I mainly wanted to thank you for becoming a follower on my twitter acct. You literally changed my life the day you did that.
      Thanks marc!!!!

      Sincerely,

      Ryan Smith (PvtPipper on twitter)

      FATE rarely calls upon us at a moment of our choosing.
    • Janet
      Hi
      I just took the EUR/JPY this morning on 4H chart for a down trend and got +55 pips. The trend is still going down but I am happy with the +55 pips. As a newbie, I played conservative and until I feel confident, I would buy more. I made a huge mistake before and I end up losing hundreds of pips. I took out too many trades at one time (because I had a lot of LMT signals that day) and I don't have enough margins and then instead of winning, I lose because the margin wasn't enough to keep it up and they had to close all my trades without even hitting my stop loss. Fortunately I am only on demo account. That was a very good lesson for me as a newbie.
      Good trading to you all =)
    • alx
      Hi leigh58, what you can see is a lot of indecision and nervous actions before and after big news events. The news were not as expected: neither good, neither bad enough. Now people have no idea what's next.
      Better stay away. We have more big news coming tomorrow and the day after tomorrow. The market is going to stay in choppy range till at least US morning newsbreak tomorrow.
    • leigh58
      What am I seeing here?
      Newby question: I am looking at the USDJPY on the US session and I am seeing many quite long shadows on candles.( shadows, wicks, picks, whatever one wishes to call them) . Also, there are quite a few long candles.
      Is this a usual and customary volatile summer day-- the expected pulling and pushing of bull/bear forces-- or are these long shadows a reflection of the market manipulation that is often mentioned? is this the stop hunting thing?

      thanks
    • Dan
      Just taken eur/jpy short and using split positions. First half hit target and second half is trailing slightly
    • Dan
      Just taken the eur/yen short from LMT signal at 2pm. The eur/usd short on 4H reverted to up trend shortly before the close so ignored that one. Entered with dual positions as Marc suggested and the first one hit the target in 1 minute! £50 odd quid and 32 pips in the bag. Second half (the one without the target limit) has reversed slightly so I can't tighten or move stop just yet. Lets hope it turns around shortly.

      Daxter
    • Dan, congratulations. Just to make it clear though. Once the 1st target has been reached you either a) move the stop to entry on the 2nd part or b) move stop to entry plus your profit as explained in detail on this page. eg euro yen short i had short at 129.91. stop 64 pips at 130.55. 1st target 129.59. When it hits target either move stop on 2nd to 129.91 or + 32 pips profit = 129.91 + .32 = stop to 130.23. marc
    • Dan
      Hi Marc this is what I understood and aimed to move my stop to entry plus the 30 or so pips from profit to allow the 2nd trade room to breath. Problem was it moved so quickly to profit target (under a minute) and then retraced to such a degree that it was not possible to do thi. And so I left the original stop in place as it was close to price. I know this means my net exposure is potentially negative and I can lose more on trade 2 than I made on trade 1 but ithink it will turn down again when I will look to tighten the stop so that my max loss would be no worse than my gain on trade 1. This also worked well yesterday on eur/gbp I think.

      P.s tempted by fap evolution but can't help thinking it's not worth investing that much (price plus min account size) for an automated system. I work in the city and know that something that promises that much would never be sold to public - goldman sachs system was stolen by an employee and they think it's worth billions of dollars
    • Bruce
      You should see week 8 - I had to laugh hard - their best trade to date was not in their live account, but in their demo (wait a minute - sounds like something I would do).
      No it does not give one much confidence to buy. So far the LMT system is not only the easiest but most consistently profitable systems. Stick to the rules and go conservative. I can hardly wait til September!!!
    • Rich
      Bruce, what is happening in September? The release of FAPTurbo Moneytree? Seriously, to what are you referring?
    • Bruce
      oh Marc made mention that summer is low volume and the markets do not trend as well as the Sept-midDec time of year. All I was saying is that I'm doing better with this system than any other I have tried. If it is good now, I expect for even greater returns when the market tends to trend. I'm still fairly new at this, with about a year of constant study and application. All with mixed results. I have learned one thing I hang onto, trade your rules to the letter. Don't try to make it "work". We have all sen the one that got away. We HAVE ALL seen the ones where we broke the rules and the bank.
    • alx
      Only yesterday I got couple of nice H4 signals. Not big profits, yet over 80 pips in total. It could be bigger but I got one loser amongst them.
      Even in summer you can a good entry. As far as I can see in my log, at least twice a week. Best signals occur during Asia lunch break about 02:00 GMT.
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