Tips & Trading Strategies for the Currency Market. Boris Schlossberg Senior Strategist

Transcription

1 Tips & Trading Strategies for the Currency Market Boris Schlossberg Senior Strategist

2 Disclaimer Leveraged foreign exchange and options trading carries a significant level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You should be aware of all the risks associated with foreign exchange and option trading, and seek advice from an independent financial advisor if you have any doubts. The contents provided in this seminar are subject to change at any time without notice. There is no guarantee that the systems, trading techniques, FX PowerCourse, trading methods, indicators or other information presented at this seminar will result in profits or not result in losses. The content is provided for informational purposes only and is not intended as a trading recommendation. B

3 Learn the Discipline of Trading Pros B

4 Important Considerations 1) Define a Strategy 2) Money Management Rules 3) TEST, TEST, TEST 4) Understand Performance 5) Understand Drawdown 6) Improvement

5 1) Define a Strategy Part 1 Fundamental or Technical Range / Trend or Breakout Long Term, Medium Term or Short Term

6 1) Define a Strategy Part 2 What Currencies Will You Trade? Majors vs. Crosses What Time Frame Will You Trade? 15 Min, Hourly or Daily Charts? Will You Hold Positions After 5pm EST, Over the Weekend?

7 2) Money Management Rules Multiple Entry / Multiple Exits? How Low are You Willing to Buy? What Risk / Reward Parameters? When to Take Profits, Trail Stops, Close the Position

8 3) TEST, TEST, TEST Everything Needs to be Back Tested! Coding Easy Language Review the Charts, Look for at Least Examples > What Happened? Look at a More Granular Time Frame If it doesn t t make money on a demo account, it probably won t t make money trading a live account

9 4) Understand Performance What is the Percentage of Profitable Trades that you can Expect? What is the Profit Factor?

10 5) Understand Drawdown What is the average drawdown needed on the trade? What is the Biggest Drawdown? Is that on the Close of the Trade or Intraday?

11 The Table of Doom Amount of Equity Lost Amount of Return Necessary to Restore to Original Equity Value 25% 33% 50% 100% 75% 400% 90% 1000% Figure 1 - This table shows just how difficult it is to recover from a debilitating loss.

12 The Table of Doom No Leverage 2:1 Leverage 5:1 Leverage 10:1 Leverage Starting Value $10, $10, $10, $10, % Loss $9, $9, $9, $9, % Loss $9, $9, $9, $8, % Loss $9, $9, $8, $7, % Loss $9, $9, $8, $6, % Loss $9, $9, $7, $5, % To Recover $10,000 70% To Recover $10,000

13 6) Improvement What works and What doesn t When are the Losing Trades Usually Made? Avoid News Limit Trading to Specific Time of Day Cutting Losses Earlier

14 : Establish realistic goals Top money managers risk no more than 2-5% 2 of total account equity Professional money managers (try) to beat the S&P which averages around 8-12% 8 annually How much do I hope to make every day, month, and year?

15 Realistic Results

16 Barclay Currency Traders Index

17 Strategies

18 Setups, Setups, Setups! Seven Day Extension Fade Statistical Significance Trading Rules Look for 7 consecutive bars of weakness (where each bar s close is below the prior) Buy at the open of the next bar Place stop at the low of the seventh bar minus 10 pips First target is amount risked, move stop on remaining half to breakeven Second target is three times the amount risked **Reverse for Short B

19 Seven Day Extension Fade AUD/CAD

20 Seven Day Extension Fade NZD/USD B

21 Seven Day Extension Fade GBP/USD B

22 Seven Day Extension Fade GBP/USD Hourly B

23 Seven Day Extension Fade Failed Trade - 17 pips Stop at B

24 Strategy # 3 RSI Roller coaster

25 Rule 1 RSI Reading Must Be Above 70 Wait For Candle to Close With Reading < 70

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27 Rule 2 Go Short At Market on the Open of The Next Candle Place Stop +10 Pips Above Swing High

28 Place Stop 10 pips Above Swing High

29 Rule 3 Take Profit on ½ Position When Target Reaches ½ Risk Move Stop To Breakeven

30 Take Profits on ½ Position and Move Stop To Breakeven

31 Rule 4 Exit 2 nd Half After RSI Drops Below 30 On A Closing Basis

32 RSI Pips Profit on 2 nd Half

33 Does RSI RollerCoaster Work On Short Term Charts? Yes. But Differently

34 Rule 1 RSI Reading Must Be Above 70 Wait For Candle to Close With Reading < 70

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36 Rule 2 Go Short At Market on the Open of The Next Candle Place Stop +5 Pips Above Swing High

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38 Rule 3 Move Stop To Breakeven When Target Reaches ½ Risk

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40 Rule 4 Exit After RSI Drops Below 30 On A Closing Basis

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42 Why 1 Lot on Short Term Time Frames? Many More Misses

43 Strategy # 5 Inside Days

44 What are Inside Days?

45 Rule 1 Look for at least 2 Inside Days

46 Look for TWO Inside Days

47 Rule 2: Place 2 Orders: 1) Buy at the High of the Most Recent Inside Day 2) Sell at the Low of the Most Recent Inside Day

48 Go Long Above the High

49 Rule 3: Place Stop and Reverse Order at Least 10 Pips Below Low of Nearest Inside Day (Long Trade)

50 Go Long Above the High Place Stop 10 Pips Below this Low

51 Rule 4: Take Profit at 1x Risk, Trail Stop on Second Lot by 2 Bar High or Low

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57 Strategy 2 on Hourly Charts? No. - Stops are Too Tight - Subject to Sharp Volatility

58 Our Motto: Combining Technical With Fundamentals

59 Trading in Action = Anatomy of a Trade Short AUD/USD Fundamental Reasons Looking for a strong October non-farm payrolls Recent Jobless claims, ADP and Hudson Employment Reports were very strong Technical Reasons Statistical Significance Over Past 10 Yrs, AUD/USD saw a 7 day move 14 times, with only 3 of those 14 lasting for longer than 7 days

60 Went short AUD/USD at , stop, exited ½ at , ½ at = 58 pips in 24 hours. AUD/USD Chart B K

61 Intelligent Tools From DailyFX.com

62 The Pairs To Range Trade This Week 1. Uses Technical and Fundamental Filters 2. Technical's Include: S/R, Fib Analysis etc. 3. Fundamentals Include: Careful Analysis of Event Risk

63 The Pairs To Range Trade This Week

64 The Pairs To Range Trade This Week

65 Picking Tops and Bottoms 1. Picking Turn Trades Can be Dangerous and Frustrating 2. Simple Overbought and Oversold Measures are not Enough 3. Yet Taken Properly these Trades Can be Very Lucrative

66 Picking Tops and Bottoms

67 Picking Tops and Bottoms

68 Hedging Radar What is Hedging? - Buying and Selling the Same Currency Pair at the Same Time Why Hedge? Continuous Position in the Market 2 Positions but 1 Margin

69 Hedging Radar

70 Hedging Radar

71 Dynamic Carry Trade Index Why Trade the Carry? Most Successful Strategy Over Last 3 Years Generates Positive Interest Every Day

72 Dynamic Carry Trade Index

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74 Trading the News 1. Shows the Past Three Event and its Price Reaction 2. Uses Highly Disciplined Approach for Both Entry and Exit 3. Provides Possible Scenarios for both Upward and Downward Surprises

75 Trading the News

76 Trading the News

77 Trading the News Durable Goods -7.8%a vs. -3.0%e Ex trans -3.1% vs -0.2%e 60 pips in 12 hours

78 Why Wait? Get these Ideas on a DAILY Basis!

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82 Thank You, Good Luck And Good Trading