Tips & Trading Strategies for the Currency Market. Kathy Lien Chief Strategist

Transcription

1 Tips & Trading Strategies for the Currency Market Kathy Lien Chief 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 K

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

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? K

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 K

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 K

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

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? K

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

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 to Trading to Specific Time of Day Cutting Losses Earlier K

14 : Establish realistic goals Top money managers risk no more than 5% 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 Momentum Burst Long Trade: Look for currency pair to be trading below the 20-period EMA and MACD to be negative Wait for price to cross above the 20-period EMA, make sure that MACD is either in the process of crossing from negative to positive ive or have crossed into positive territory no longer than 5 bars ago Go long 10 pips above the 20-period EMA For aggressive trade, place stop at swing low on 5 minute chart. For conservative trade, place stop 20 pips below 20-period EMA Sell half of position at entry plus amount risked, move stop on second half to breakeven Trail stop by higher of breakeven or 20-period EMA minus 15 pips B

25 Tick Indicator Trade pips = Stop = = T1 = = (Hit 30 min later) T2 = 20 EMA 15 Pips (Hit at ) Total Profit 71.5 pips

26 Trade Stop = 20-EMA plus 20 Pips = T1 = Entry plus amount risked = (Hit 2hr) Tick Indicator T2 = 20 EMA + 15 Pips (Hit at ) Total Profit 29.5 pips

27 Trade Stop = pips = T1 = amount risked = Missed T1 Stopped out for 22 pip loss Tick Indicator

28 Our Motto: Combining Technical With Fundamentals B

29 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 K

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

31 Where to Find Trading Recommendations? B

32 Intelligent Tools From DailyFX.com

33 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 Up 2400 Pips Since May!

34 Picking Tops and Bottoms

35 Picking Tops and Bottoms

36 Dynamic Carry Trade Index Why Trade the Carry? Most Successful Strategy Over Last 3 Years Generates Positive Interest Every Day Up 593 Pips Last Week

37 Dynamic Carry Trade Index

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39 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

40 Trading the News

41 Trading the News

42 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

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

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47 BKForex Advisor As a BKForex Advisor Subscriber, you will get: 1) Between 2 and 3 Clear Cut Trade Ideas Each Week 2) The Current Technical Trends in the Currency Market Our Personal Trading Bias on the Key Economic News Releases of the Week 3) Weekly Fundamental and Technical Webcast - Chart and Data Analysis 4) Educational Screen casts of Some our Favorite Technical Setups 5) Bi-Weekly Q and A Chat Sessions with Boris and Kathy to Discuss Trading Ideas and Markets 6) Live Trading with Boris Using High Frequency Strategies for Effective Short Term Trading 7) Free Copy of our Book - High Probability Trading for the Currency Market - $89 Value Subscribe for $99 / Month Cancel Anytime!

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49 12 Keys to Trading Success Rob Roland Chuck

50 Lesson 1 If the News Is Good But The Stock Plummets Buy the Crash Dana Allen

51 Lesson 1 Citibank (NYSE:C) October 15, 2007 Market Expects 44 cents Earnings 47 cents 1000 Shares = $1000 in 2 hours

52 Lesson 2 Know Yourself Know Your Trade Rob Booker

53 Lesson 2 I am a 50- to 100-pip-a-week trader. Meaning I have pretty much decided that that s about the limits of my human capacity and over 50 to 100, I start getting a little bit crazy. I become a little less disciplined and a little bit more euphoric to put it mildly. So, I have not generally done a lot to increase that pip target over time, even though systems that I build might produce bigger gains.

54 Lesson 3 Revenge is NEVER Sweet Chuck Hays

55 Lesson 3 Revenge trades are the most costly trades. If you have a bad trade and you try to make it all back at one time, you re going to lose more money. I think I learned from experience that the best thing to do is to try and get back and get even a little bit at a time

56 Lesson 4 Triple Your Demo Twice Before Trading for Real Hoosain Harneker

57 Lesson 4 Nobody can master a professional skill right away. Doctors practice on cadavers, lawyers spend countless hours in moot court, and mechanics toil for months in classroom garages. Practice does not guarantee success but lack of practice almost always ensures failure.

58 Lesson 5 Don t Lose Your Cool Always Use a Stop Franki Law

59 Lesson 5

60 Lesson 6 Protect Your Capital Protect Yourself Indi Jones

61 Lesson 6 Clint Eastwood would be a great commodity trader because he told the Million Dollar Baby that rule number one in boxing is to protect yourself. And I think the same is true in trading. If you want to trade, your capital is everything. So, if you want to be a great trader, you have got to protect that capital. failure.

62 Lesson 7 Averaging DOWN Is for Losers, but Averaging IN Can Be the Difference Between Success and Failure Roland Campbell

63 Lesson 7

64 Lesson 8 Tops or Bottoms Are Only Evident in Hindsight Tyrone Ball

65 Lesson 8

66 Lesson 9 Turn Happens Only Once But Trend Is Continuous Ashkan Balour

67 Lesson 9

68 Lesson 10 The Last 25 Percent of the Position Can Make A Disproportionate Contribution to Your Overall Profit Paul Willette

69 Lesson 10 5 Contracts point profit 5 Contracts point profit 5 Contracts point profit 15 Contracts=30 points 3 contracts point profit 2 Contracts point profit 5 Contracts=29 points Last 25% makes nearly half the profit

70 Lesson 11 Make Your Money Work for You Marcelino Livian

71 Lesson 11 Much like the largest money center banks and the savviest hedge funds in the world, Marcelino always looks to get paid while holding a position.

72 Lesson 12 Beat Computers at Their Own Game By Using Probative Orders Steve Ickow

73 Lesson 12 Whether you are a machine or a human being, when it comes to financial markets ultimately you are either a buyer or a seller. By constantly probing the logic of the machines, Steve Ickow is able to figure out their true intentions and turn that information into profitable trades.

74 It ain t about how hard you hit, it s about how hard you can get hit and keep moving forward. That s how winning is done! Rocky Balboa

75 Thank You, Good Luck And Good Trading