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8/10/2019 Fx Cog Master

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PRESENTS

COG Master StrategyTrading Forex Using the Center Of Gravity Master Strategy

Wesley Govender

Copyright 2013 by Old Tree Publishing CC, KZN, ZA

Reproduction or translation of any part of this work by any means, electronic or mechanical, including photocopying, beyond that

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RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT

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TABLE OF CONTENTS

RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT................................. 2

I. Introduction .................................................................................................................. 4

II. Indicators ..................................................................................................................... 5

1. FxCOGMaster ....................................................................................................... 5

2. FxCOGMaster H .................................................................................................... 6

III. Buy Trade Rules......................................................................................................... 8

IV. Sell Trade Rules ........................................................................................................ 9

V. Example Trades ........................................................................................................ 10

1.

AUDUSD Sell Trade ............................................................................................ 10

2. EURJPY Buy Trade ............................................................................................. 12

3. EURUSD Short Trade ......................................................................................... 13

4. GBPUSD Short Trade ......................................................................................... 15

5. CHFJPY Short Trade........................................................................................... 17

VI. Important Notes ....................................................................................................... 19


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I. Introduction

Hi everyone and welcome to the Forex COG Master Strategy report!

In this report Im going to introduce you to a very unique and interesting trading

technique that is about as close as it gets to picking tops and bottoms. First well take a

look at the FxCOGMaster indicator, then well take a look at the ForexCOGMaster H

indicator, and well even throw in a nice filter too as our entry trigger.

So what is COG anyway and what does it mean?

To be precise, it stands for Center of Gravity, and the theory basically states that price

has a mean average or center of gravity that it always rotates around. Basically, as

price fluctuates up and down, it will come back to its average and return to an

appropriate value. When price gets too high, it will come back down and when it gets to

low, it will come back up. We can see price do this over and over on our charts and as

traders, we are constantly trying to figure out how to capture these swings.


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II. Indicators

1. FxCOGMaster

Lets take a look at our first indicator: the FxCOGMaster and this will become a bit

clearer. On the chart below, we can see the H4 chart of the EURUSD with the

FxCOGMaster. You can see that there is an upper green line that rotates over the top of

price and a lower green line that rotates underneath price. Theres also a blue line that

runs dead center in between. This is the center of gravity line.

As you can see, price rotates up and down inside of the upper and lower borders andoccasionally stalls in the middle, making the center of gravity line a great place to take

profits, while the upper and lower borders are great places to look for buy and sell

trades.


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When prices reach the upper border of the FxCOGMaster it can be said that the market

is overbought. On the other hand if price is at the lower border of the FxCOGMaster it

can be said that the market is oversold. In both cases, there is a very high likelihood

that price will return to its middle line or Center of Gravity.

2. FxCOGMaster H

The next indicator that well look at is the FxCOGMaster H. This is an oscillated

representation of price in relation to the FxCOGMaster on the price chart. It looks a lot

like the MACD actually but has completely different calculations. Ive also added a 9

period SMA as a signal line to it. This indicator is pretty cool! It adds an oversold and

overbought line automatically depending on the value of each currency pair you add it to

so it automatically calculates at what levels the indicator and price is overbought and

oversold.

When price is above the upper line, the market is overbought and will soon come down.

When the market is below the lower line, the market is oversold and will soon rise. The

histogram also has a zero line that represents the Center of Gravity line on the

FxCOGMaster price indicator. Whenever price is above the zero line, price is above the

COG line (middle line) on the FxCOGMaster on the price chart. The yellow line here is

the 9 period Simple Moving Average. This is a lot quicker to pick out the reversals and

doesnt lag behind price giving you a much better entry!


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So lets take a look at both indicators on the charts together. The similarities are pretty

clear but there are some subtle differences that we need to take note of. There will be

times when price doesnt quite get all the way to the outer lines of the FxCOGMaster on

the price chart but the histogram will show overbought or oversold conditions. This is

fine as long as the signal line on the histogram is in the overbought or oversold area wecan look for trades. Weve also added a 9 period Simple Moving Average set to typical

on the price chart which we will use to identify our entries.

So thats it, have fun just kidding! I think now is a great time to get our ground rulesdown so we know exactly what our plan of action is and know how and when to attack

the market. Once weve laid out the ground rules well take a look at a bunch of different

buy and sell examples.
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III. Buy Trade Rules

Follow the rules before for placing buy trades:

1. On the higher time frame (H4), wait for the FxCOGMaster H Histogram and

Yellow SMA line to close below the Oversold line.

2. On the higher timeframe (H4), confirm that price is at or near the lower Green

FxCOGMaster channel line.

3. If the above conditions are met, switch to the lower timeframe (H1).

4. On the lower timeframe (H1), wait for FxCOGMaster H Histogram to close above

the Yellow SMA Signal line.

5. On the lower timeframe (H1), wait for price to close above the 9 SMA on the

price chart.

6. If the above conditions are met, enter a Buy trade at the open of the next candle.

7. Set your Stop Loss below the most recent swing low on the lower timeframe

(H1).

8. Set your Take Profit the same distance away from the entry level as the stop loss

(1:1 risk/reward ratio) or exit the trade manually when price touches the Blue

middle FxCOGMaster line or the upper Green FxCOGMaster line.


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IV. Sell Trade Rules

Below are the rules for placing sell trades:

1. On the higher time frame (H4), wait for the FxCOGMaster H Histogram and

Yellow SMA signal line to close above the Overbought line.

2. On the higher timeframe (H4), confirm that price is at or near the upper Green

FxCOGMaster channel line.

3. If the above conditions are met, switch to the lower timeframe (H1).

4. On the lower timeframe (H1), wait for FxCOGMaster H Histogram to close below

the Yellow SMA Signal line.

5. On the lower timeframe (H1), wait for price to close below the 9 SMA on the price

chart.

6. If the above conditions are met, enter a Sell trade at the open of the next candle.

7. Set your Stop Loss above the most recent swing high on the lower timeframe

(H1).

8. Set your Take Profit the same distance away from the entry level as the stop loss

(1:1 risk/reward ratio) or exit the trade manually when price touches the Blue

middle FxCOGMaster line or the lower Green FxCOGMaster line.

That might seem like a lot of rules but after a few examples I think youll get the pictureof how this all works so lets take a look at some charts shall we?


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V. Example Trades

1. AUDUSD Sell Trade

Below we have a recent price chart of the AUDUSD on the H4 time frame which lines

up pretty well for a good sell trade. This is one of those occasions where things are

close and you will run into these quite often. Take a look at the Yellow vertical line. At

this point, notice how the FxCOGMaster H histogram is above the overbought line and

the signal line hasnt closed above it yet but it is very close. You will also notice that

price is near the upper FxCOGMaster channel line.

Now lets take a look at the H1 chart.


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Here weve got a great scenario where price is punching through the upper channel line,

the histogram is way overbought and so is the signal line. As you can see, two bars

later we get our drop below the 9 SMA trigger line.

Its interesting to note here that as price moved down and hit the bottom FxCOGMaster

channel line this happened to be the middle Blue FxCOGMaster line on the 4 hour

chart.


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2. EURJPY Buy Trade

In our next example, weve got a buy trade that worked out famously! Here on the

EURJPY H4 chart below, we can see that price is at the lower FxCOGMaster line and

the FxCOGMaster H histogram and the signal line have closed below the oversold line.This is the safest most powerful entry we have and really fires off some killer moves!

Next, well drop to the H1 chart and wait for price to close above the 9 SMA. By the time

we get our entry, the H4 chart is already in line and we get an extremely powerful moveupwards.


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3. EURUSD Short Trade

Here weve got another short trade on the EURUSD H4chart. This is a text book move

just like the previous example. Weve got the FxCOGMaster H histogram way

overbought and price closed outside the upper FxCOGMaster channel line. We can alsosee the FxCOGMaster H signal line has closed above the overbought line as well.


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On the H1 chart, we can see that price was drifting sideways. Once the FxCOGMaster

H histogram had touched the overbought line and fell below the signal line, the market

was picking up some steam and closed below the 9 SMA and eventually went all the

way to the opposite side of the H4 FxCOGMaster channel line.


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4. GBPUSD Short Trade

Heres another textbook short trade on the GBPUSD. The FxCOGMaster H histogram

was above the overbought line and so was the signal line on the H4 chart. Price was

also at the upper border of the FxCOGMaster channel line.

So now, were good to go to the H1 chart.


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Here on the H1 chart, we can see that price was in a range bound market and drifted a

bit. The cool thing about this trade was that the FxCOGMaster H histogram peaked at

the top of the market where it was waking up for the day. Once price had its coffee and

dropped below the 9 SMA on the price chart, the FxCOGMaster H histogram soon

followed and fell below the signal line firing off a very nice move downwards.

This one took a while but it certainly reached the FxCOGMaster center line on the H4

chart and even went beyond to hit the bottom of the FxCOGMaster channel line on the

H1 chart before it turned around.


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Now we drop to the H1 chart and we can see a much cleaner chart. Price dipped twice

below the lower FxCOGMaster channel line and the FxCOGMaster H histogram and

signal line have been below the oversold line for quite a while. At the close of the

candle, where the Yellow vertical line marker is, price closed above the 9 SMA and the

next candle caused the FxCOGMaster H histogram to move above the signal line. Thisgave us our entry and POW! What a move!


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VI. Important Notes

We didnt talk much about money management and stop placement, however, I want to

leave you with some personal thoughts regarding those things. As a rule of thumb, dontrisk more than 2-5% of your account on any one trade and only have 1 trade open at a

time.

This will reduce the number of losing trades that your account will incur at any one time.

Each trade is its own bird so to speak and needs your full attention. You wont end up

having an over-exposed account either.

Imagine having 4-5 open trades at a time with a 5% risk per trade and all of them going

bad. Thats a 20-25% loss on your account all at once.

On the flip side, if you only have 1 trade open at a max of 5% risk and it loses then

youve only lost 5%.

For the stop placement we need to put our stops just beyond the most recent swing low

or swing high with a target of 1:1 or better.

In the examples shown, the market moved substantially and it does often, but there aretimes when it does not so manage your trade properly and be aware that the big ones

are right around the corner!

Well, there you have it folks! That is the essence of the FxCOGMaster and the

FxCOGMaster H. As a side note, the FxCOGMaster H indicator is probably one of the

best overbought/oversold indicators that Ive seen and I am very happy to present it to

you for your trading pleasure, enjoy!

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