Strategies of a Professional FX Trader

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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.
[email protected]
EDUCATION DRIVES SUCCESS
Strategies of a Professional FX Trader
Justin Butler – ThinkForex.com
April 26th, 2012
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