The Trading System Strategy Overview
Backlash Trading Plan was developed with the objective to create a trading system which is purely mechanical with trading rules that are not subjective. The Trading Plan also supports the ultimate ‘time and money freedom’ that the currency market has to offer, therefore market watching and involvement has been minimised and
regular profit protection strategies employed to capture as much profit of market movements as possible. This relaxed trading style requires the trader to glance at the chart on a daily basis to view the new daily bar created from the previous day to see if any changes is needed to be made, which is generally only the simple action to move up your Trailing Stop Loss (which is where the trade will naturally eventually exit). Most often changes only need to be made every few weeks. The system also supports sophisticated tools with simplicity in mind.
Note: The Forex Backlash can be used on most time frames, not just the daily chart, and can be used on any of the ‘majors’.



Position Sizing Rules

Maximum Risk on Account:
• A trader’s position size will be determined by the maximum risk allowable for their trading account. For example we suggest that traders never risk more than 2-5% of their trading capital on any single trade.
• If a trader’s total trading capital were $50,000, then their maximum risk per trade would be $2,500. $50,000 x 5% = $2,500

Total Trade Risk:
The trader then needs to work out the risk of the trade they are looking to take. This is worked out by subtracting the stop loss from the opening price.

Entry – Stop Loss = Risk
1.1361 - 1.1289 = 0.0072 pips

Standard Account
0.0072 pips x $10 per pip = $720 risk
The trader then divides the Maximum Risk on Account by the Trade Risk
$2,500 / $720 = 3.47
This figure is then rounded down to a whole number and multiplied by the minimum lot of currency units.
3 x 100,000 = 300,000
In summary this trader can enter into a maximum of 3 lots for a standard account.

Mini Account
0.0072 pips x $1 = $72 risk
$2,500 / $72 = 34.7
This figure is then rounded down to the nearest multiple of 10 and then multiplied by the minimum lot of currency units.
30 x 10,000 = 30,000
In summary this trader can enter into a maximum of 3 lots for a mini account.


Entry Rules (Long & Short) Settings:

Indicators:
1. Daily Bar Chart.
2. Gann Swing Chart.
3. Moving Average.
4. Count Back Entry Line.
5. Count Back Stop Loss Line.

Bar Chart Settings:
• Daily view.
The first indicator to view is the daily Bar Chart. This will show you the historical data for the currency pair on a daily basis – high, low, open and close for each day preceding.

Moving Average Settings:
• 21 days.
• Close.
• Simple Moving Average.
Next place the Moving Average on the bar chart.

Gann Swing Chart Settings:
• 3 Day.
• Use Outside Bar.
• Ignore Inside Bar.
• Up Bars = Green (if colour option available).
• Down Bars = Red (if colour option available).
There may be other options available like ‘show unconfirmed’ or ‘show 50% level’ however these are not necessary like the settings mentioned above.