High Risk Investment Disclaimer Trading foreign exchange on margin carries a high 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 trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Any opinions, news, research, analysis, prices, or other information contained is provided as general market commentary, and does not constitute investment advice. ThinkForex Capital Markets Limited will not accept liability for any losses or damages, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. This content is provided for the sole purpose of assisting traders to make independent investment decisions. ThinkForex has taken reasonable measures to ensure the accuracy of this information, however, does not guarantee its accuracy, and will not accept liability for any loss or damage which may arise directly or indirectly from this content. This content is not intended for distribution, or use by, any person in any country where such distribution or use would be contrary to local law or regulation. None of the services or investments referred to are available to persons residing in any country where the provision of such services or investments would be contrary to local law or regulation. It is the responsibility of the recipient to ascertain the terms of and comply with any local law or regulation to which they are subject. Justin Butler Justin Butler Institutional Sales Manager, ThinkForex Years of Experience 7+ Years Specialization Institutional Forex Services Retail Trading Strategy EDUCATION DRIVES SUCCESS Strategies of a Professional FX Trader Justin Butler – ThinkForex.com April 26th, 2012 Agenda • Review of Trading Strategies • Key Elements of Successful Trading Strategies • Trend Identification • Defined Entry & Exit Signals • Strict Money Management Examples of Some Basic Strategies • Trend Following • Moving Averages Cross • Channel Breakout • Short-Term Range Breakouts Example Trading Strategies – Trend Following Moving Average Cross 34 / 100 Daily EMA Example Entry Rules • Buy when 34 EMA crosses above 100 EMA • Sell when 34 EMA crosses Below 100 EMA • Close trade when 34 EMA crosses 100 EMA in opposite direction of entry Style - Slow • Long view traders • Generates a small amount of trades and few false signals Exit Trading Strategies – Channel Breakout Short-Term Range Breakout– Various Forms – 15 min Chart Rules • Identify trading ranges • Buy / Sell on breakout • Close - Depends on custom target Sell Signal Sell Signal Style – Moderate Speed • Mid to short-term traders • Generates numerous trades • Greater chance of false signals False Buy Signal Buy Signal False Sell Signal Elements of Successful Trading Strategies Trend Identification Complete Strategy Defined Entry & Exit Signals Strict Money Management Trend Identification - How to Filter Global Information News & Events move the markets more than ever! ? EURUSD GBPUSD USDJPY USDCHF USDCAD AUDUSD NZDUSD EURJPY GBPJPY CHFJPY AUDJPY CADJPY XAUUSD XAGUSD Dollar Inx ? ? ? ? Where is money flowing to or from and why? Reserve or secondary currency? Impact Perception? Last 1.31148 1.60204 81.24 0.91625 0.99103 1.03617 0.81673 106.55 130.144 88.644 84.178 81.943 1640.11 31.417 79.58 R2 1.32103 1.60249 81.286 0.92085 1.00708 1.04816 0.82805 106.923 129.818 88.975 84.979 82.8 1668.06 32.172 79.94 R1 1.3168 1.59737 81.059 0.91797 0.99858 1.04351 0.8245 106.512 129.26 88.639 84.478 82.206 1658.68 31.923 79.75 Pivot 1.31289 1.59175 80.694 0.91524 0.99251 1.03695 0.8197 105.893 128.402 88.106 83.671 81.259 1647.22 31.623 79.57 S1 1.30866 1.58663 80.467 0.91236 0.98401 1.0323 0.81615 105.482 127.844 87.77 83.17 80.665 1637.84 31.374 79.38 S2 1.30475 1.58101 80.102 0.90963 0.97794 1.02574 0.81135 104.863 126.986 87.237 82.363 79.718 1626.38 31.074 79.2 Performance % -0.08% 0.62% 0.50% 0.13% 0.10% -0.26% -0.51% 0.42% 1.12% 0.39% 0.24% 0.40% -0.56% -0.81% 0.03% Trend Identification - Trade with the Trend Signals in the direction of the trend have a higher probability of success 200 Daily EMA • When price crosses below the 200 EMA the trend is down • When price crosses below the 200 EMA the trend is Up Defined Entry & Exit Signals - Remove Emotion • Conflicting Signals – 3 EMA Combination Cross signals Buy, RSI signals sell – No Trade Keep it Simple • Limit entry / exit signals to trigger on a specific indicator or combination of 2 indicators – Avoid false signals • Remove the emotion of the decision process • Never trade on a non-signal Strict Money Management – Control Risk Every Time! Successful traders are not right they are consistent. • Most traders are wrong a large % of the time • Successful trader limit loss • You can be wrong and still be profitable • Use a Risk/Reward ratio of 1: 2 or greater Strategies of a Professional FX Trader - Recap Successful traders use a systematic process that include: • Trend Identification • Defined Entry & Exit Signals • Strict Money Management EDUCATION DRIVES SUCCESS Email me directly for a copy of the presentation. Jbutler@ThinkForex.com EDUCATION DRIVES SUCCESS Strategies of a Professional FX Trader Justin Butler – ThinkForex.com April 26th, 2012