‘Wammies’ and ‘Moolahs’

Filed under: Learn Forex Trading |

 

I would like to talk a little today about what Alex Nekritin and Walter Peters  (in their book ‘Naked Forex’) call ‘wammies’ and ‘moolahs’. These are both essentially the same trade setup, but wammies refers to a trade with this setup on the long side, and moolahs refer to a short trade.

 

Figure 1.

Figure 1.

Figure 1 shows a good example of a wammie trade. This the daily chart for the USD/CHF forex currency pair (the pair for the US dollar and the Swiss franc). What you can see is that price formed a bottom in the market, and then retrace back towards that bottom. However, a bullish engulfing pattern then formed, creating a second bottom. What makes this a wammie trade is that the second bottom is higher than the first, and markets tend to rise with higher lows. An engulfing pattern is merely a confirmation signal, and this could also be a pin bar, or any other bullish price action signal. This trade could have been entered at the close of the engulfing pattern, or at a 50% retracement of the bullish candle, for a very nice risk-reward scenario.

 

Figure 2.

Figure 2.

Figure 2 shows a similar kind of setup – but this time it is a short trade. This is what is called a moolah. This is the daily chart for the EUR/USD pair (the pair for the euro and US dollar). This time, the market makes a high, and then another high that is slightly lower than the first. A nice inside bar formed at this level, and we could have entered this to the short side at the break of the low of the mother candle for another very nice risk-reward scenario. Both of these setups seem to work quite well and are as some value in our trading arsenal, so it is well worth remember both of these trade setups.

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