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IntesaTrade

and

PRESENT

Building Your E-mini Trading n.com re-collectio Strategy g-softwa www.tradin ii.gonch
kype: i mail.com, S iii.gonch@g

Prepared and Presented by Daniel Gramza

70+ DVDs FOR SALE & EXCHANGE


www.traders-software.com www.forex-warez.com www.trading-software-collection.com www.tradestation-download-free.com

Contacts andreybbrv@gmail.com andreybbrv@yandex.ru Skype: andreybbrv

ction.com tware-colle g-sof www.tradin : iii.gonch .com, Skype mail iii.gonch@g

Materials in this presentation are covered under current United States and international copyright laws. NO PORTION OF THIS PRESENTATION MAY BE REPRODUCED WITHOUT THE WRITTEN PERMISSION OF THE AUTHOR.

Daniel Gramza is currently completing two books: Trading in the Eye of the Storm The Handbook of Japanese Candle Trading Strategies

lection oftware-col g-s www.tradin .gonch , Skype: iii Daniel ail.com M. Gramza ii.gonch@gm i President
Gramza Capital Management, Inc. 2227 Forestview Road Evanston, Illinois 60201-2009 Tel. Fax e-mail (847) 475-4760 (847) 475-4780

You can be notified when these .com are available by contacting Daniel Gramza. books All Charts Created on Aspen Graphics Software Contact MIKE BRODROGI 1 800 359 1121
mbodrogi@aspenres.com

dmgramza@worldnet.att.net

CME, the globe logo and E-mini are trademarks of Chicago Mercantile Exchange, Inc. All other marks are the property of their respective owners.

Building Your E-mini Trading Strategy Identify market you're going to trade Determine your trading time frame Select trading approach
ftwar .trading-so www .gonch , Skype: iii ail.com h Establish trading strategy ii.gonc @gm i

Create trading tstrategy .com e-collec ion

parameters

Measure performance of trading strategy Implement new trading strategy

Gramza Capital Management, Inc.

Section 1: IDENTIFY MARKET YOU'RE GOING TO TRADE CME E-mini Futures OPTIONS on CME E-mini Futures CME eFX FUTURES
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

Gramza Capital Management, Inc.

1,000,000

100,000

200,000

300,000

400,000

600,000

700,000

800,000

900,000

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii 500,000 ail.com ii.gonch@gm i

Increasing Volume = Increasing Product Acceptance

CME E-mini S&P 500 Futures Average Daily Volume

N o v -9 7 F e b -9 8 M a y -9 8 A u g -9 8 N o v -9 8 F e b -9 9 M a y -9 9 A u g -9 9 N o v -9 9 F e b -0 0 M a y -0 0 A u g -0 0 N o v -0 0 F e b -0 1 M a y -0 1 A u g -0 1 N o v -0 1 F e b -0 2 M a y -0 2 A u g -0 2 N o v -0 2 F e b -0 3 M a y -0 3 A u g -0 3 N o v -0 3 F e b -0 4 M a y -0 4 A u g -0 4 N o v -0 4 F e b -0 5

50,000

100,000

150,000

250,000

300,000

350,000

400,000

0
Aug

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii 200,000 ail.com ii.gonch@gm i

CME E-mini NASDAQ-100 Futures Average Daily Volume Increasing Volume = Increasing Product Acceptance

- 99 Oc t 99 Dec -9 9 Fe b -0 0 A pr -00 Jun -00 Aug - 00 Oc t 00 Dec -0 0 Fe b -0 1 A pr -01 Jun -01 Aug - 01 Oc t 01 Dec -0 1 Fe b -0 2 A pr -02 Jun -02 Aug - 02 Oc t 02 Dec -0 2 Fe b -0 3 A pr -03 Jun -03 Aug - 03 Oc t 03 Dec -0 3 Fe b -0 4 A pr -04 Jun -04 Aug - 04 Oc t 04 Dec -0 4 Fe b -0 5 A pr -05

OPTIONS on CME E-mini S&P 500 Futures Average Daily Volume

Increasing Volume = Increasing Product Acceptance


14000 12000 10000

on.com www.tradin .gonch , Skype: iii @gmail.com ii.gonch6000 i


8000 -software-collecti g 4000 2000 0

Aug-03

Aug-04

Apr-03

Feb-03

Jun-03

Feb-04

Apr-04

Jun-04

Feb-05

Oct-03

Oct-04

4/30/2005
7

Dec-03

Dec-04

100000

120000

140000

160000

20000

40000

60000

0 Ja n -0 3 Fe b -0 3 M a r-0 3 Ap r-0 3 M a y-0 3 Ju n -0 3 Ju l-0 3 Au g -0 3 Se p -0 3 Oct-0 3 N o v-0 3 D e c-0 3 Ja n -0 4 Fe b -0 4 M a r-0 4 Ap r-0 4 M a y-0 4 Ju n -0 4 Ju l-0 4 Au g -0 4 Se p -0 4 Oct-0 4 N o v-0 4 D e c-0 4 Ja n -0 5 Fe b -0 5 3 /3 1 /2 0 0 5 4 /3 0 /2 0 0 5

n.com re-collectio g-softwa www.tradin .gonch 80000 , Skype: iii ail.com ii.gonch@gm i

Increasing Open Interest = Increasing Product Commitment

OPTIONS on CME E-mini S&P 500 Futures Month End Open Interest:

CME and Growth of Electronic Trading


Increasing Volume = Increasing Product Acceptance
Average Daily Volume by Year
1,500,000 1,400,000 1,300,000 1,200,000 1,100,000 1,000,000

n.com re-collectio g-softwa www.tradin 900,000 .gonch , Skype: iii ail.com 800,000 ii.gonch@gm i
700,000 600,000 500,000 400,000 300,000 200,000 100,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Why Trade CME E-mini Futures?


Easy access Virtually 24-hour trading One central marketplace
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii Tightlbid/ask spreads ai .com ii.gonch@gm i

Highly liquid

Leverage

No Margin Interest Charged No Inventory Required for Short Position No Short Position Interest Charged
Gramza Capital Management, Inc. 10

Why Trade CME E-mini Futures?


KEY BENCHMARK INDEXES CME E-mini S&P 500 futures Tracks large-capitalization U.S. stocks CME E-mini NASDAQ-100 futures Tracks technology, telecom and biotechnology issues n.com re-collectio oftwa CMEg-s www.tradin E-mini S&P MidCaponch futures .g 400 , Skype: iii ail.com ii.gonch@gm Tracks mid-size U.S. companies i CME E-mini Russell 2000 futures Tracks small-capitalization U.S. stocks CME E-mini Russell 1000 futures Tracks 1000 largest cap companies in the U.S. based on total market capitalization.
Gramza Capital Management, Inc. 11

CME E-mini FUTURES Contract Specifications


CME E-mini Ticker Symbol Contract Size* S&P 500 ES $50 x E-mini S&P 500 $55,000 .25 futures index points = $12.50

CME E-mini NASDAQ-100 NQ $20 x E-mini NASDAQ-100 $30,000 .50 futures index points = $10.00 Nearly 24 hours,

CME E-mini

CME E-mini

CME E-mini Russell 1000 RS1 $100 x E-mini Russell 1000 $64,000 .10 futures index points = $10.00

.gonc , Skype: iii m h@gmail.co with market ii.gonc* Contract value fluctuates daily= June i ** H = March M U = September

Minimum Price Fluctuation (Tick) Trading Hours Contract Months** Last Day of Trading n.com Performance re-collectio -softwa $4,000 $3,750 h Bond Margin*** ww.trading

Russell 2000 S&P MidCap 400 ER2 EMD $100 x E-mini $100 x E-mini Russell 2000 S&P MidCap 400 $56,000 $58,000 .10 futures index .10 futures index points = $10.00 points = $10.00 Sunday afternoon through Friday afternoon H, M, U, Z 8:30 a.m. third Friday of contract month $3,500 $3,500

$3,625

Z = December *** ALL PERFORMANCE BONDS SUBJECT TO CHANGE AND BROKERS MAY REQUIRE HIGHER MARGINS

Expiration Dates

March 18, 2005 June 17, 2005 September 16, 2005 December 16, 2005

Trading may occur up to 8:30 a.m. Chicago time on these dates.

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How are E-Mini S&P 500 profits and losses calculated?


The CME E-Mini S&P 500 futures contract is traded in .25 increments = a tick = $12.50 per contract or 1 full point = $50 1301.00 $12.50 1300.75 n.com re-collectio g-softwa ch www.tradin ype: iii.gon , Sk$12.50 ail.com ii.gonch@gm i 1300.50 $12.50 1300.25 $12.50 1300.00
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$50.00

13

How are CME E-Mini NASDAQ-100 profits and losses calculated?


The CME E-Mini NASDAQ-100 futures contract is traded in .50 increments = a tick = $10.00 per contract or 1 full point = $20

n.com re-collectio g-softwa $10.00i.gonch www.tradin kype: ii mail.com, S iii.gonch@g 1400.50

1401.00

$20.00

$10.00 1400.00

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E-mini FUTURES COMPARED TO SPDRS


VALUE OF INVESTMENT $55,000

(Assume S&P 500 Index value = 1100, CME E-mini S&P 500 multiplier value = $50 Value of 1 E-mini S&P 500 futures contract = 1100 X $50 = $55,000)

SPDRs Current Level $110 per share n.com re-collectio a ading-softw $55,000/$110h per share www.trQuantity pe: iii.gonc om, Sky ch@gmail.c iii.gon = 500 shares

CME E-mini S&P 500 1100.00 per contract

1 contract

Min. Tick Size $0.01 per share

$12.50 per contract

Tick Value

500 SHARES *.01= $5.00

$12.50 per contract

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E-mini FUTURES COMPARED TO SPDRS (Cont'd)


COST TO ACQUIRE $55,000 S&P INVESTMENT SPDRs Margin 50% = $27,500 CME E-mini S&P 500 7.3% = $4,000 0 0

om colle tion.c re-PluscMargin Interest g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

If Short

Plus Short Interest

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CME eFX Futures Average Daily Volume


Increasing Volume = Increasing Product Acceptance
300,000

250,000

A V E R A G E D A IL Y V O L U M E

n.com re-collectio ng-softwa www.tradi150,000 .gonch , Skype: iii ail.com ii.gonch@gm i


100,000

200,000

50,000

0
1 2 0 3 t- 0 1 t- 0 0 t- 0 3 4 t- 0 4 t- 0 2 1 2 3 4 1 5 n -0 0 3 l- 0 2 4 l- 0 n -0 l- 0 l- 0 n -0 n -0 n -0 r- 0 r- 0 r- 0 r- 0 l- 0 r- 0 r- 0
17

Oc

Ju

Oc

Oc

Oc

Ap

Oc

Ju

Ju

Ju

Ju

Ap

Ap

Ap

Ap

Ap

Ja

Ja

Ja

Ja

Ja

TRADING CME FX FUTURES


Easy access FX Futures offers portfolio diversification. Changes in exchange rates typically have low correlations to the
stock and interest rates markets.

Tight bid/ask spreads


n.com re-collectio g-softwa www.tradin Virtually 24-hourii.gonch kype: i trading mail.com, S iii.gonch@g

Highly liquid

One central marketplace

CME exchange environment, offers open and transparent FX pricing. CME is largest regulated FX market in the world Segregated accounts

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TRADING CME FX FUTURES


Most liquid financial market in the world, representing more than $1.88 trillion worth of transactions each day. Foreign Exchange = forex = FX = Currency Market = the exchange of
one countrys currency for another countries currency.

www.tradin .gonch , Skype: iii m h@gmail.co ii.goncCurrency trading is simultaneous purchase of a currency in terms of i

Currencies are traded in pairs, such as U.S. dollar/Japanese yen (USD/JPY) or Euro/U.S. dollar (EUR/USD), or via currency indexes, suchsastwarCME$INDEX(TM). the e-collection.com g- o f another currency.

EUR/USD = Value of 1 Euro expressed in US Dollar terms. EUR/USD = 1.3300 = 1 Euro = US$1.3300

Gramza Capital Management, Inc.

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How are Euro Currency profits and losses calculated?


The CME Euro Currency futures contract size is 125,000 Euro and is traded in .0001 increments = a tick = $12.50 per contract or 1 full point = $1,250.00 1.3400 $12.50 1.3399 n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i 1.3302 $12.50 1.3301 $12.50 1.3300
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$1,250.00

20

How are E-Mini Currency profits and losses calculated?


The CME E-Mini Euro Currency futures contract is 62,500 Euro and is traded in .0001 increments = a tick = $6.25 per contract or 1 full point = $625.00 1.3400 $6.25 1.3399 n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i 1.3302 $6.25 1.3301 $6.25 1.3300
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$625.00

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Section 2: DETERMINE YOUR TRADING TIME FRAME


Scalping Micro day trading Macro day trading Swing trading

Position-collection.com trading ng-software www.tradi .gonch , Skype: iii ail.com ii.gonch@gm i Your trading time frame creates demands on: Available Trading approach Trading technology to trade

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Section 3: SELECT TRADING APPROACH Fundamental


Fundamental traders trade on the that other traders will react to the fundamental information in the same way as the fundamental trader.
ftware-c .trading-so www .gonch Technical tradersitrade the , Skype: ii ail.com ii.gonch@gm i fundamentals.

Technical llection.com o

reaction to

Technical analysis categories:

Direct analysis of price movement Indirect analysis of price movement Combination of direct and indirect
analysis of price movement

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Section 4: CREATE YOUR TRADING STRATEGY


Identify the tools that will create the foundation of your trading strategy.

Trend Analysis Japanese Candle Charts


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TREND ANALYSIS

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TREND ANALYSIS

Higher Highs and Higher Lows = Uptrend

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TREND ANALYSIS

Lower Lows and Lower Highs = Downtrend

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

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TREND ANALYSIS

swing high

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TREND ANALYSIS

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

swing low

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TREND ANALYSIS

Close above previous swing high = continuation of trend = Uptrend

Close n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

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TREND ANALYSIS
Failed to Close above previous swing high = Potential Change in trend

Close

Buy
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i Buy

IF Close below previous swing low = Downtrend

swing low

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TREND ANALYSIS

n.com re-collectio -softwa ww.tlow = ng wswing radiDntrend .gonch , Skype: iii ail.com ii.gonch@gm i
Close below prev

Close

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TREND ANALYSIS

swing high

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i


swing low

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TREND ANALYSIS
Close below previous low = continuation of trend = Downtrend

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i


Close

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TREND ANALYSIS

swing high

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

Sell

Close above prev swing high = Uptrend

Sell

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TREND ANALYSIS

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

Close

Failed to Close below previous swing low = Potential Change in trend


Gramza Capital Management, Inc. 36

TREND ANALYSIS

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

Close above prev swing high = Uptrend

Close

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TREND ANALYSIS

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

Buy

swing low
Gramza Capital Management, Inc. 38

JAPANESE CANDLE CHARTS


Japanese Candle Foundation Shape
Close

High Buying Body

Open

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

Selling Body

Open

Low

Close

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Japanese Candle Construction


High Selling Shadow Close
n.com re-collectio Buying Body g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i Selling Body

Open

Open Buying Shadow Low

Close

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Japanese Candle Shadow Development


45 min Candle High Selling Shadow Close
n.com re-collectio g-softwa Buying Body h www.tradin pe: iii.gonc , Sky ail.com ii.gonch@gm i

Open Buying Shadow Low


Gramza Capital Management, Inc. 41

Japanese Candle Shadow Development (Contd)

45 min Candle

15 min Candle

High

Open Body

High

n.com re-collectio g-softwa Selling h www.tradin pe: iii.gonc , Sky ail.com ii.gonch@gm i

Last

Low

Last

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Japanese Candle Shadow Development (Contd)

45 min Candle High Open

15 min Candle High

n.com re-collectio g-softwa www.tradin Last .gonch , Skype: iii ail.com ii.gonch@gm i Buying

Selling Body Last Shadow Buying Body

Low

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Japanese Candle Shadow Development (Contd)

45 min Candle High Last Open

15 min Candle High Last Buying Body

Selling Body n.com re-collectio g-softwa www.tradin iii.gonch , Skype: Buying Shadow ail.com ii.gonch@gm i Low

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Japanese Candle Shadow Development (Contd)

45 min Candle Last High Open


n.com re-collectio Selling Body g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i Buying Shadow

15 min Candle Last

Buying Body

Low

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Japanese Candle Shadow Development (Contd)

45 min Candle Last High

15 min Candle Last

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

Open Selling Body Buying Shadow Low


Gramza Capital Management, Inc. 46

Buying Body

Japanese Candle Shadow Development (Contd)


45 min Candle High Selling Shadow Last & Close
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

15 min Candle Selling Body Last & Close

Open Selling Body Buying Shadow Low


Gramza Capital Management, Inc. 47

Buying Body

Candle Pattern Development The identification and analysis of the price relationships
that create a reversal pattern

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii 1. Lead m ail.coup ii.gonch@gm i

5. Confirmation 4. Follow Through 3. Trigger Price 2. Set Up

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Candle Characteristics

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii GREEN =__________ gmail.com ii.gonch@2) Body Color i RED =__________

1) Range

HIGH TO LOW = MEASURE OF__________

3) Body Size

___________________ ___________________

4) Shadow Location BOTTOM =_________


TOP =_________

5) Shadow Size

_________OF BUYING OR SELLING


Gramza Capital Management, Inc. 49

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

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Candle Global Environment


1. What is the current market condition?
Is it day basis? Is it magnitude? on a yearly, monthly, weekly, daily or intraover what period of time and what is it's

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

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Candle Global Environment (Cont'd)


2. Through the analysis of long-term charts what is of the current market?
At value, Undervalued

the

Overvalued,

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Candle Global Environment (Cont'd)


3. How does the market compare to:

Other sectors both domestically and internationally

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Candle Global Environment (Cont'd)


3. How does the market compare (Contd)

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

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Candle Global Environment (Cont'd)


4. What is the market ?

What is a relationship of the current market levels to ___________________________________candles?

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

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Candle Global Environment (Cont'd)


5. What is the
Are you trading Are you going
patterns?
Buy (not rec.)

of the trade?
the trend? current bearish or bullish candle
Sell (better) Buy (best option)

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

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Candle Global Environment (Cont'd)


6. What are price_________and price___________ at major highs and lows?

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Candle Global Environment (Cont'd)


7. What is the of major highs and lows?

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

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Candle Global Environment (Cont'd)


8. Is the trade clean?

Does it hit you between the eyes and scream at you to the trade? Does current information trade? the come to

n.com re-collectio ftwa g-soBe patient: and onchthe www.tradin .g let , Skype iii ail.com ii.gonch@gm you. i

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POTENTIAL OUTCOMES OF A TREND REVERSAL PATTERN

Be prepared for any outcome!

Could result in

or

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i


or or

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Essential Considerations When Combining Technical Trading Techniques


1. What are distinctive CHARACTERISTICS of each study? 2. What is the IDEAL market environment for each study? 3. What LEAD UP
each study? creates the most profitable signals for

www.trad iii.gonch , Skype: SIMILARITIES AND DIFFERENCES between 5. Whatm the ail.co are ii.gonch@gmstudies? i

4. What are cSTRENGTHS AND WEAKNESSES of each study? n.com re- ollectio ing-softwa

6. What does each study

ADD

to your trading decision? buy and sell signals?

7. Do studies trigger the SAME


IDEAL LEAD TIME ?

8. If one study leads another study, what is the

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Essential Considerations When Combining Technical Trading Techniques (Cont'd)


9. What is the impact of an individual study and the combined studies on the FREQUENCY of buying and selling signals? 10. What is the impact of an individual study and the combined studies on the MAGNITUDE of profits? n.com re-collectio g-softwa 11. www.tradin What is theeimpact of an individual study and the .gonch , Skyp : iii ail.com ii.gonch@gm combined studies on the MAGNITUDE of profits when i the mathematical study FAILS ? 12. What is the impact of an individual study and the combined studies on the NUMBER of time periods to complete a trading cycle from beginning to end? 13. What is the impact of an individual study and the combined studies on the HEAT INDEX for your trades?
Gramza Capital Management, Inc. 73

Section 5: ESTABLISH YOUR TRADING STRATEGY PARAMETERS


Trading strategy parameters are the identification and analysis of the price relationships that create a reversal pattern and it's profit potential and heat index characteristics
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii 1. Lead m ail.coup ii.gonch@gm i

5. Confirmation 4. Follow Through 3. Trigger Price 2. Set Up

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ESTABLISH YOUR TRADING STRATEGY PARAMETERS (Cont'd)


1. The LEAD UP phase is the candles and stochastic behavior making up the that proceeds the set up candle. What are the characteristics of the lead up n.com re-collectio phase for profitable trades? ftwa .trading-so

www .gonch , Skype: iii ail.com ii.gonch@gm i

of lead up magnitude (minimum to maximum) The of periods that create the lead up phase.

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ESTABLISH YOUR TRADING STRATEGY PARAMETERS (Cont'd)


2.
SETUP is the candle or candles and stochastic the reversal pattern. behavior that What are the characteristics of the set up candle and the stochastic signal?
(set up candle's body within / om lectio / below n.csurrounding previous candle's body oftware-col g-s www.tradin and or .gonch shadows etc. and stochastics is in a 0 , Skype: iii .com mail oversold or overbought condition.) iii.gonch@g (setup candle's body size and shadow location and size and stochastics signal lines have crossed over (magnitude of setup candle's high to low range) characteristics of setup candle
Gramza Capital Management, Inc. 76

ESTABLISH YOUR TRADING STRATEGY PARAMETERS (Cont'd)

3. to

The TRIGGER PRICE is the price level used the trade. For example:

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i Buy higher highs

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ESTABLISH YOUR TRADING STRATEGY PARAMETERS (Cont'd)


4. FOLLOW THROUGH is the type of price action that should occur after the trade is entered. should follow through occur? through?ection.com oll -software-c is typical magnitude of follow

g www.tradin .gonch , Skype: iii om 5. ail.c ii.gonch@gm CONFIRMATION is i

the price action that verifies the completion of most reversal patterns. should confirmation occur? is typical magnitude of confirmation?
Gramza Capital Management, Inc. 78

1. Trading Strategy Evaluation

Section 6: MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY


(The following Trading Strategy Evaluation techniques apply to all trading techniques. Japanese candles are being used for illustrative purposes.)

Trading Strategy being created and evaluated: A. Trade entry

n.com re-collectio candle Buygnew twa of Japanese -sof high ch www.tradin rejection .com, Skype: iii.gon pattern mail iii.gonch@g

B. Trade exit Sell first lower low greater than 2 ticks A. Buy higher highs

B. Sell 1st Lower Low greater than 2 ticks

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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd)


2. For each trade what is the MAGNITUDE RANGE of profits? The magnitude range is used to determine PROFIT EXPECTATIONS for the trade.

Sell 1214.00 llection.com ftware-co .trading-so www .gonch , Skype: iii ail.com ii.gonch@gm i

Buy 1206.00

Profit = 8.00

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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd)


2. For example: Lowest value to the highest value of profit is 4.25 to 10.00 What is the frequency Are there distribution ? of those profits?

4.25 IIIII

4.50 IIIII

4.75 IIIII

5.00 IIIII

5.25..10.00 IIIII I II I I II

on.com IIIII re-collecti IIIII IIIII IIIII III ftwa .trading-so www o ch IIIII , IIIII ype: iiiIIIII n Sk IIIII .g ail.com ii.gonch@gm i III IIIII IIIII II
IIIII II IIIII IIII

Possible trading strategy to PRESERVE PROFITS on a profitable trade is to Sell position at 4.00 points of profit and move stop to breakeven incl. brokerage.

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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd) 3. What is the heat index range? The heat index range is used to determine point of trading strategy ,magnitude of and placement of risk management ___ orders.
g-s www.tradin e: iii.gonch , Skypprofitable trade where the market does Type one is a ail.com ii.gonch@gm i

There are two ection.comtypes of profitable trades: different re-coll oftwa trade below the entry price.

Type two is a profitable trade where the market trade below the entry price.

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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Heat Index Range Cont'd)
Type One Trade Type Two Trade

Exit Trade = 1289.00 Profit = 5.00 Enter Trade = 12 84.00

Exit Trade = 1289.00 Profit = 5.00 Enter Trade = 12 84.00 Heat = 1.50 Heat Level = 1282.50

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

No Heat

Stop Loss = 2.00

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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Heat Index Range Cont'd)

Sell 1214.00

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i


Profit = 8.00 Buy 1206.00

Heat .50 Heat Level 1182.25

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Sell 1179.50

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

Profit = 7.25

Buy 1172.75

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Sell 1205.25

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

Profit = 4.25

Buy 1201.00

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Sell 1188.75

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i


Buy 1183.00 Profit = 8.00

Heat .50 Heat Level 1182.25

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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Heat Index Range Cont'd)
Type One Trade Type Two Trade

Exit Trade = 1289.00 Profit = 5.00 Enter Trade = 12 84.00

Exit Trade = 1289.00 Profit = 5.00 Enter Trade = 12 84.00 Heat = 1.50

Heat Level = 1282.50 n.com re-collectio g-softwa Stop Loss = 2.00 www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i For example: Lowest value to the highest value of heat is 0.25 to 1.75.

No Heat

What is the frequency Are there distribution .25 IIIII IIIII IIIII .50 IIIII IIIII IIIII IIIII Potential sell stop is 2.00 .75 IIIII IIIII IIIII 1.00 IIIII IIIII IIIII ?

of the heat values?

1.25 1.50 1.75 IIIII III I II

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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd) 4. What is the probability of the trade working? The probability of a profitable trade is used in the determination the of having a profitable trade and risk reward relationship of the trading strategy. Divideathe ollection.co trades by the total number of ftw re-c profitable .trading-so www trades = Skype: iii.gonch of a profitable trade. % probability .com,
mail iii.gonch@g m

Profitable Trades

Total Number of Trades

40 60

66% chance of a profitable trades

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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd)


5. How many periods between the beginning of a trade to the end of a trade? The number of periods is used to determine to allow the trade to work. It provides a guide to increase the trader's level of by allowing the trade enough time to mature. n.com re-collectio ing-softwa to let the trader www.tradIt can also be used ias onch .g a kyp , Sthe e: i i has not been productive in a timely ail when know, .com trade ii.gonch@gm i fashion and the trader may be overstaying his welcome in a trade. 6. What is the 7. Are the profits stable in of the trade? markets?

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Section 7: IMPLEMENT YOUR TRADING STRATEGY

The essential steps in the trading process Trading in the Eye of the Storm

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

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THE ESSENTIAL STEPS IN THE TRADING PROCESS. 1. 2. 3. 4.

Trade Trade Trade Trade

: iii.gon .com, Skype gmailMonitor above categories: iii.gonch@5.

Profit and Loss m n.co re-collectio -softwa ww.trading Yourself ch

Where am I the Where am I the 6. 7. What am I going to do to change this?

? ?

When and how will I implement those changes?

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Identify and Evaluate the Trade


What is your perspective?

What market information is candle analysis (Candle Characteristics, Pattern Development and Global Environment) providingtion.com long, intermediate, and -collec for the ng-software www.tradi shortkterm?.gonch iii om, S ype:
ail.c ii.gonch@gm i

Is the market imbalanced to the buy or sell side? What are major support and resistance areas?
Gramza Capital Management, Inc. 93

Identify and Evaluate the Trade (Cont'd)


What information is being revealed by mathematical studies? Does the current accumulated market information support or contradict new or existing marketom positions? llection.c to your trade?

ftware-co .trading-so www .gonch , Skype: iii ail.com ii.gonch@gm What are the challenges i

Is trade location favorable?

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Trade Execution and Management


Before the trade is entered and after the trade is executed, consider the following:

What is your mental state? Is this a full or partial position? positive or negative

m ol ection.co re-cislconsidered g-sofWhat twa ch www.tradin market pe: iii.gon , Sky activity? ail.com ii.gonch@gm i

How, when, and where will the trade be entered, added to, reduced and exited?

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Evaluate and Monitor the Trading Decision Process


What is the profit per trade production? Is this on target?
n.com re-collectio ng-softwa www.tradiWhat is the lossiii.gonch : per trade production? .com, Skype mail iii.gonch@g

Is this on target? What is your frequency of trades per day, week,


month?

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Evaluate and Monitor the Trading Decision Process (Contd)


Is this within expected parameters? Is there a time of day, week, month or year when
you trade your best?
n.com re-collectio g-softwa www.tradin iii.gonch , Skype: of day, week, month or year when Is ail.coma time gm there ii.gonch@you trade your worst? i

Are you trading to trade or are you patiently


selecting high quality trades?

Do you typically trade with or against the trend?


Gramza Capital Management, Inc. 97

Evaluate and Monitor the Trading Decision Process (Contd)


Do you review your profitable and unprofitable
trades at a minimum on a monthly basis?

Is one more profitable than the other?


n.com re-collectio g-softwa www.tradin .gonch , Skype: iii profitable and unprofitable Do youoreview your ail.c m ii.gonch@gm i

trades at a minimum on a monthly basis?

What have you learned from your unprofitable


trades?

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Evaluate and Monitor the Trading Decision Process (Contd)


Are there distinctive characteristics between
profitable and unprofitable trades? your trading?

If yes, how and when will you implement this into How do you feel during and after profitable or unn.com
ctio

ww

.gonch , Skype: iii ail.com h ii.gonc @gm your trading time frame match your ability to i Does

-colle profitableetrades? ng-softwar w.tradi

execute the trade?

Are you asking something from the market that the


market cannot give?

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Evaluate and Monitor the Trading Decision Process (Contd)


Does your trading strategy match the market and
your trading time frame? best trading?

What type of trade were you doing when you felt the
n.com What type -coltrade were you doing when you felt the re of lectio twa

ing-sof www.tradworst trading? ii.gonch kype: i mail.com, S iii.gonch@g

What aspect of trading do you enjoy the most? What aspect of trading do you enjoy the least? What aspect of trading concerns you the most?

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Evaluate and Monitor the Trading Decision Process (Contd)


What are you doing about these concerns? Have you done your homework before you execute
the trade?

Are you in good physical condition?


n.com re-collectio trading environment support ing-softwa www.tradDoes your physical.gonch iii youril.com, Skype: trading business or is it a distraction? ma iii.gonch@g

Would you give money to yourself to manage with


your trading approach?

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TRADING IN THE EYE OF THE STORM High performance trading occurs in the Eye of
the Storm.

What storm?
Storm = Markets
n.com re-collectio = g-softwa Trading www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i = Others

= Yourself A trader's objective is to stay in the eye of the storm, free from the distractions of the storm's movement
Gramza Capital Management, Inc. 102

How does a trader stay in the eye of storm?

www.tra .gonch , Skype: iii ail.com ii.gonch@gm i

The trader must recognize and accept that trading is a physical business that requires a synergy of thoughts and physical response intware-collection.com totally aware state. a relaxed, yet ding-sof

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THOUGHTS Create the traders reality Direct the body Basic elements of the thought process are:
g www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

Thought Choice m ollection.co re-cThought Energy -softwa

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THOUGHT CHOICE The thoughts the trader allows himself to have


are his thought choices.

A trader makes a thought choice, therefore, the


trader is responsible for that thought choice. to tradingcollection.com and life. re-

These thought choices determine how he reacts


g-softwa www.tradin .gonch , Skype: iii positive gmail.com ii.gonch@He can choose a i

thought or a negative one, but whichever the choice, it will impact the thoughts that follow.

What is the payoff for keeping and maintaining


a thought choice?
- Power - Weakness - Self-sabotage
Gramza Capital Management, Inc. 105

THOUGHT ENERGY The trader's thought choices have an impact on


his life.

The amount of impact is determined by the

amount of thought energy the trader gives each thought.

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

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IDENTIFYING YOUR NEGATIVE THOUGHT DEMONS

Thought Demons are negative thoughts that hold you back and prevent you from accomplishing your life and trading goals.

Whatware-your tion.com typical thoughts when faced are collec first or g-soft nwith challenges in your life? www.tradi e: iii.gonch
kyp mail.com, S iii.gonch@g

How you react to these challenges is usually how you will react to the challenges of trading.

In life or trading, do you choose and energize negative thoughts?


Gramza Capital Management, Inc. 107

IDENTIFYING YOUR NEGATIVE THOUGHT DEMONS

The Negative Thought Demons Journal will help you:

examine your thought choices identify your negative thought demons


n.com re-collectio g-softwa www.tradin increase your .gonch : iii awareness .com, Skype mail iii.gonch@g

of these thoughts

develop a specific target for your energy and efforts to make a change.

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NEGATIVE THOUGHT DEMONS JOURNAL


Identify your negative thought demons by answering the following questions:

When and what was happening before you had


negative thoughts?

g-s www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

were ollecti negative thoughts? Whattware-cthoseon.com of

What type of inward and/or outward reaction did


you have from these negative thoughts?

How did you feel when you had these negative


thoughts?

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NEGATIVE THOUGHT DEMONS JOURNAL (Contd) What are these negative thoughts taking away
from you?

www.t back? om, Skype: iii.gonch ail.c ii.gonch@gm i

o these ion.c How farere-collectnegative thoughts holding you wa rading-so t

What payoff did you get by keeping this


negative thought?

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NEGATIVE THOUGHT DEMONS JOURNAL (Contd) Do you accept that you created this negative
thought? If not, why not?

www.t following ype: iii.gonch om, Sk section are ch@gmail.c iii.gon

lectio management technique from the Which rthought n.co oftwa e-col rading-s

you going to use to help you de-energize this negative thought and reach your ideal thought reaction?

When are you going to implement this thought


reaction?

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THOUGHT MANAGEMENT TECHNIQUES


Thought management techniques are used to conquer
your thought demons.

n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i

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The Consultant Technique


When a problem arises, consultants are often
used to provide an objective approach to finding a solution.
Imagine that you are a consultant. You have been retained to provide consulting services to allection.cowith a situation exactly like person m re-co yours. a -softw ww.trading h

.gonc , Skype: iii gmail.com ii.gonch@The key to being a good consultant is asking the i

right questions, so objectively review the questions found in the Negative Thought Demons Journal as if you were questioning another person as a consultant. An objective review of the responses may provide just the point of view needed to implement positive solutions.

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The Consultant Technique (Contd)

Albert Einstein said

ww

.gonch , Skype: iii ail.com ii.gonch@gm i

You cannot solve a problem with n.com the asameiomind that created it. re-collect softw w.trading-

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Situation Control Recognition Technique


This technique allows you to control your negative
thoughts by recognizing those situations you control and those you do not.

You begin to have negative thoughts relating to a situation over which you have no control.
n.com re-collectio ng-softwa www.tradiYou consciously :recognize that you have done all you can, .gonch , Skype iii gmail.com ii.gonch@and it is now up to the situation to complete itself. i

You choose not to energize the negative thoughts or allow them to overwhelm you.

The situation is not under your control and you are not going to waste your energy on unproductive thoughts.
Gramza Capital Management, Inc. 115

Situation Control Recognition Technique (Cont'd)


For example: You have identified a trade, executed your order to enter the trade, and placed your risk management stop order n.co ec your m re-colltotio according strategy. ftwa .trading-so

www .gonch , Skype: iii gmail.com ii.gonch@You then allow yourself to become more and more i emotionally involved with each back-and-forth market movement.

The reality is that the market is in control, and you have no control over the market. Recognize this, relax, and let your trade work. You will either make money or lose money, and what you do control is how you react to the outcome.
Gramza Capital Management, Inc. 116

Remember,mit is always within n.co re-collectio g-softwa www.tradin your power to change. .gonch , Skype: iii l.com
mai iii.gonch@g

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PHYSICAL RESPONSE
Effortless action is confident physical response
without hesitation. trading.

The trader's goal is to achieve effortless action when When he trades with effortless action, he stands a
n.com re-collectio ng-softwa www.tradiExamples of pe: iii.gonchaction in your daily life: effortless .com, Sky mail iii.gonch@g

side and allows his trading strategy to work

tying your shoe combing your hair raising a fork, spoon or cup to your mouth and driving your car

When trading, executing a properly evaluated trade should feel the same way!

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PHYSICAL RESPONSE (Cont'd)


Effortless action is the result of: Taking time to "practice" a strategy through
properly conducted research.

ftware.trading-so www .gonch , Skype: iii ail.com ii.gonch@gm i

Having completeoconfidence in the strategy. om collecti n.c Total focus on implementing the trading strategy
when trading and not on issues that should have been resolved during non-trading hours.

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HOW TO BECOME AND STAY CALM AND FOCUSED Choose and energize thoughts that support your
trading objectives.

Create and maintain a relaxed state and stay in


the present moment through:
Propercollection.com - breathing ng-software www.tradi .gonch Relaxation: exercises , Skype iii ail.com ii.gonch@gm Visualization exercises. i

Develop and consistently apply a well


researched trading strategy.

Be prepared for all trading outcomes.

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IntesaTrade

and

PRESENT

Building Your E-mini Trading n.com re-collectio Strategy g-softwa www.tradin ii.gonch
kype: i mail.com, S iii.gonch@g

Prepared and Presented by Daniel Gramza

121

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