ForexSpirit

It was nice to try out a forex product that was pretty much exactly what it was described as in the marketing speel. The Logical Forex method is purely focused on scalping, getting in and out for a few pips.

For your $78 a month you gain access to a group of indicators that only work in NinjaTrader. The indicators are designed to be used on a 1 range bar chart and the recommended pairs to trade are EUR/USD and EUR/JPY. You can see plenty of pictures of the indicators on the Logical Forex website but here’s an example that show cases most of them:

Indicators
Here’s my interpretation of what most of the indicators are:

The white line in the main panel is the tick price. The Flow indicator is the thin wavy lines either side of the white line. They are obviously some sort of moving average of price and remind me of the rainbow moving averages in the Cyrox scalping system.

All the colours used in the various indicators are nicely consistent: blue shows a rise, red is a fall and yellow is unchanged. If you follow one of the moving average lines it is blue while sloping up, red if moving down and yellow if it’s going sideways.

The light grey grid lines in the background are the Activity lines that are useful for determining how much activity has taken place within a given period of time. This can be used to gauge what the volatility is like and if it has been increasing or decreasing. I found this simple grid approach to be rather clever and quite useful.

The horizontal lines made up of red and blue coloured dots are called Magnet Lines. These seemed to be just the last two significant high or low prices.

The Phase indicator is in the second panel and seems to be a stochastic oscillator used to help determine if price is overbought or oversold.

The Watchdog indicator in the bottom panel is a culmination of all the other indicators and is mainly used to get a heads up that a potential trade setup is on the cards. More often than not I felt that the Watchdog was late to the party in helping me pick out potential setups so I tended not to rely too much on it.

There is also a News indicator used that highlights the chart when a news item is imminent.

When you plonk down your money you get access to a series of videos that goes through the rationale for each of the indicators. You do not get a detailed description of how the indicators are derived or too much information on how to use each one in isolation.

Patterns
Most of the upfront documentation takes a holistic approach and presents all the indicators as a unified package. You are supposed to spend a significant amount of screen time to just observe how the indicators unfold as price moves. With enough time the hope is that your brain’s subconscious pattern matching ability will pick out and identify to you those situations that are worth marking as high probability and thus worth placing a trade on.

This focus on educating the trader about pattern matching and making it a core focus on becoming a successful scalper is commendable but one of my biggest strikes against the Logical Forex method is that everything in this area is left as an exercise to the aspiring trader. If the company instead provided more educational material on what patterns should be looked for, how to spot tell-tale signs that a potential pattern is worth considering or not, exercises and most importantly a feedback look so that the aspiring trader can continually learn and know that they are headed in the right direction they might still be getting my money.

High Probability
If you read the bulk of the content that is freely available on their website, especially in the blog section, you’ll soon learn that one of the main high probability trades is when price interacts with a Magnet Line and the Flow lines are parallel or expanding slightly in the direction price is moving. You are then recommended to look at your broker’s price feed to get the ‘real’ price you’ll be trading from and thus decide if you want to enter a trade or not.

Let’s break that down a bit. When price is interacting or touching a Magnet line all that means is that price has reached a prior high or low. There are continual references on their website that Magnet Lines are more than just simple support and resistance. Maybe there is some secret sauce that I can’t fathom but in my simple eyes they are just recent high and low turning points. Support and resistance is traditionally made up of multiple highs or lows at around the same price point. These Magnet Lines are thus not support or resistance levels in the traditional sense but I never found one that I couldn’t track back to a high or low on a regular bar chart.

So if price has reached a Magnet Line the high probability setup is based on simple breakouts. Nothing revolutionary there at all (not that there needs to be of course), I just never figured out why it needed to be clouded by new terminology.

The parallel or expanding Flow lines are used to show that there is consistent or increasing momentum behind the current move. The more momentum behind a breakout the better.

You then switch your focus to your broker trading platform to see what the price available to you is (rather than what the price feed is being used in NinjaTrader). Do you buy the immediate breakout? Do you wait for a push through, a small pullback and get in on the continuation? All questions that are left to the aspiring trader to figure out and make their own conclusions on.

London
I was scalping EUR/USD at 6:00 EDT for an hour for many months prior to testing out the Logical Forex indicators. I tried using them during the same time period to start off with. After about a week of using them during this time frame I decided it might be better to try trading during the London open.

The 6:00 EDT hour is generally quiet and sees far fewer breakouts and strong moves compared to other hours of the day. So I decided to try and trading one of those more active hours: the London open at 3:00 EDT. This meant getting up in the middle of the night which was something I haven’t done in a long time.

I did this for about a week and a half before deciding that it just wasn’t going to be sustainable long term. After conditioning myself to get up early over the last six months I had no real trouble getting up at 3:00 EDT when my alarm clock sounded. The problem was getting back to sleep again. I would finish trading at 4:00 EDT (sometimes even earlier if I’d had a good trade or two and wanted to leave it at that) and head back to bed. I would lie awake, taking forever to get back to sleep. I think my mind was too pumped after having spent that short amount of time concentrating and being intently focused.

This meant I got less than my usual amount of sleep and after a couple of days I could feel it getting to me. While I felt tired it was more than just that. My mind felt off kilter and I couldn’t think straight. It was very weird and I’m sure there were some classic sleep deprivation symptoms on display.

After taking a break to get back to an even keel I reverted back to my 6:00 EDT time slot.

Premium
I did not purchase the mentoring course, the premium videos (which seems to be the mentoring course in a box), or the Doctor (where you can get feedback on a single trade you took). So I can provide zero feedback on them.

Conclusion
In the end I have decided not to continue my subscription to Logical Forex. The main factors that influenced my decision were:

• If you stick to looking for high probability trades that are based on breakouts you want to be able to trade the more active hours of the day. Since 6:00 EDT is my ideal time slot this was not a good mesh for me. There are the occasional breakouts but more often than not they are false breakouts.
• The way to identify the high probability breakouts was price interacting with a Magnet Line, the Flow lines parallel and the other indicators in line. While the Logical Forex indicators show this setup nicely I had to decide if they were worth $78 a month versus being able to see the same setup on a regular 30 second chart that I’m used to. I can still see when price is interacting with a recent high or low on my Oanda chart and if I’ve been paying attention I’ll know if the way price moved over the past minute or two has shown it moving with decent or increasing momentum.
• On top of that, when I’m looking at my Oanda chart I’m looking at my broker’s price feed. I don’t need to switch focus when watching the Ninja Trader chart and a setup has appeared.
• All the effort spent pattern matching the Logical Forex indicators can just as easily be spent pattern matching on a regular candle stick chart, or a bar chart, or a range chart, or whatever chart you are most confortable using.
• Support was very good and I had all my questions answered. I still think they’re missing out by not having any sort of process or educational roadmap on how to learn and hone the pattern matching aspects of scalping. Having a feedback mechanism would be invaluable. There is also no forum or other way to interact with other Logical Forex traders. You really are just paying $78 a month for the indicators. Making them work for you is up to the individual after that. At its core trading really is just all up to the individual. I recognise that but I still think the company could help provide short cuts and more roadmaps on how to get there.

The $28 for a two week trial is very reasonable and worth taking advantage of if you are curious.

I’m going to take a little break from journaling my trades for about the next week or so. I’m testing out the Logical Forex setup and as such any trades taken are more experimental in nature than anything else. I need to give it a few days to see what jives.

I’m still trading every morning and I might keep some notes along the way that I can put to use in a summary or even review of the Logical Forex stuff when I’ve given it a thorough evaluation.

There’s also going to be the minor distraction of Cliffs of Dover being released on Tuesday. I’ve been playing a decent amount of IL2 to shake off the rust and I’m prepared to enjoy CloD, warts and all (the development team are still working through a list of problems and known issues).

I tried to not overly concern myself about the market movements and structure leading up to when I started trading. Instead I wanted to see if I could just concentrate on what was unfolding and try and enter the flow.

I felt pretty good about how it turned out, especially with the way the second trade finished. I could feel the upward pressure building and I just entered when it felt right to me. After price popped 3 or 4 pips and then stalled I just exited.

In a search for guidance I googled ‘scalp forex for one hour’ over the weekend. In amoungst all the usual dross I found one site that caught my eye: logicalforex.com.

The site has a whiff of forex marketing wizard magic but there were enough nuggets of what I was looking for me to keep reading. I spent two days reading through all the information on the public part of the site, as well as looking for third party reviews. The only ones that I could find were some rather favourable reviews on Forex Peace Army.

I took the plunge today and splurged $28 to trial it for 8 days. I have NinjaTrader up and running with their chart template. I haven’t been big on indicators for a long time but I’m willing to have an open mind over the next few days as I get my head around their approach and style.

I see some similarities with the Cyrox method, such as with the use of multiple moving averages on the chart and focusing exclusively on the unrealized profit and loss amount when a trade is on. Except this method seems to have a lot more structure and a lot more detail.

Bias: short
Conviction: medium

Two trades today. A win and a loss which cancelled each other out exactly.

I started off looking for price to retest the high of the 5:00 EDT hour around 1.3960. When that happened and price broke the trend line of the move up I went short. I, of course, should have waited for a push back up after the trend line broke and ended up bailing at the worst possible moment.

The move back down did unfold and I waited until 1.3937 gave way decisively before going short and nabbing 10 pips.

The euro was under pressure again this morning with another straight slide since the London open. I decided to have a bit more conviction in trading some counter trend longs as compared to last Friday.

Bias: long
Conviction: medium

The first long was based on a false breakout below both the minor support level at 1.4120 and the low of the morning at 1.4117. I exited as soon as a new low was made.

My second trade was a short as price was back up testing the minor S/R level at 1.4120 as well as testing the downward trendline for all of the morning’s move. I exited this trade when price failed to make a successful push below the double bottom at 1.4112.

I was almost immediately long as the failure to stay below 1.4112 was both a false breakout and a triple bottom. I should have probably stuck with a 10:1 gearing for this trade since it was a false breakout, but I saw the triple bottom first and had my lot size set appropriately when I took the plunge.

I got out as price looked to be pushing below 1.4120 again. It was a weak exit. Instead price was actually bouncing back UP from 1.4120 and I missed out on the 10 pip move up the followed.

That was the big long move I was looking for as part of my counter trend bias. I saw it as the great missed opportunity of the morning and didn’t have the heart to really look for more trades, especially after price entered a consolidation zone for 20 minutes. That meant I was not really looking to trade as price broke out of the range and streaked south.