Learn Forex Fundamentals from the Pros Kathy Lien and Boris Schlossberg

Transcription

1 Learn Forex Fundamentals from the Pros Kathy Lien and Boris Schlossberg

2 Past performance is not indicative of future results. Trading forex 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 any such leveraged products 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 trading on margin, and seek advice from an independent financial advisor if you have any doubts. The information, including Commentary and Trade Ideas, provided on bkforex.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. BKForex LLC and bkforex.com are merely providing this information for your general information. The information and opinions presented do not take into account any particular individual s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. BKForex LLC will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on BKForex LLC. BKForex LLC do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

3 Do you ever feel like this? possibility exists that you could sustain a loss of some or all Source: of your initial captaincurrency.blogspot.com investment and therefore you should not invest money that you cannot afford to lose. B

4 Trading Well Means Having an Edge What s Your Edge?

5 BK Edge = Fundamentals But that s not it.

6 ü Fundamentals ü Technicals ü Sentiment ü Money Management

7 3Ms Macro Micro Monetary Policy

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9 Macro ü Political Conflict ü Economic Uncertainties ü Social or Environmental Factors

10 Key Micro Data ü Employment (Labour Data) ü ISM (Manufacturing and Services Data) ü Consumer Spending ü Growth ü Inflation

11 Monetary Policy ü Know the players ü Know the mandates ü Prepare properly

12 The Academic - Believes in transparency, Has only presided over rate cuts

13 The Newbie Price stability drives policy, Too inflexible?

14 Macro Mantra Sell First, Ask Questions Later B

15 WHY is Economic Data So Important?

16 Because NEWS MOVES CURRENCIES AND EQUITIES

17 Attempt to Predict Economic Data Better than Wall Street

18 MOST MARKET MOVING Economic Releases 1. Employment 2. Retail Sales 3. ISM / PMI Reports 4. Central Bank Meetings & Minutes 5. Inflation 6. GDP 7. Trade 8. Confidence

19 United States

20 Eurozone

21 United Kingdom

22 JPY & CHF Data Don t Really Matter, but these are the most important releases Japan Switzerland

23 Tricks of the Trade K

24 Employment **Employment Components of ISM / PMI**

25 Employment **Employment Components of ISM / PMI**

26 Employment **Employment Components of ISM / PMI**

27 German Unemployment Report Source:

28 Employment

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30 Leading Indicators for GDP German Unemployment Surprises to Downside! Source:

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32 Leading Indicators for GDP Non-Farm Payrolls Source:

33 Employment **Employment Components of ISM / PMI**

34 Non-Farm Payrolls Surprise to Downside! Source:

35

36 Retail Sales

37 Retail Sales USD = ICSC, Johnson Redbook Survey ( IT!) GBP = BRC Retail Sales (Any Forex Calendar) EUR = German Markit Retail PMI AUD = Sales Component of PMI CAD = Wholesale Sales (Any Forex Calendar) Also look at confidence and employment because they matter too!

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42 Inflation

43 Producer Prices USD = Import Prices Inflation GBP = PMI Reports EUR = German Wholesale Prices AUD = Quarterly Import & Export Prices CAD = IVEY PMI Price Component Also look how commodity prices have been moving! Producer Prices are a Leading Indicator for Consumer Prices

44 German PPI Calendar

45 German PPI Calendar

46 German PPI - Chart

47 UK Consumer Prices

48 UK Consumer Prices

49 UK Consumer Prices

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51 Trade

52 Australian Trade Balance

53 AU PMI Manufacturing

54 Australian Trade Balance

55 AU Trade Balance - Chart

56 RBA Rate Decision

57 BoC Rate Decision

58 Trading Plan B

59 My Views and Trading Plan

60 Our Process #1 What are the clues

61 #2 Establish Our View WHY?

62 #3 Check Technicals

63 ü Fundamentals ü Technicals ü Sentiment

64 4 Ways to Turn Economic Data into Trades

65 Why Are News Releases Important?

66 Isn t News Trading Dangerous?

67 How Can You Contain the Risk?

68 4 Ways to Trade News 1. Proactively 2. Reactively 2 variations 3. Catalyst for Trend Continuation

69 What is PROACTIVE TRADING all about?

70 Being ahead of the game. Benefits 1. Lower risk 2. Instant gratification 3. If you are wrong, you re out

71 Disadvantages: It s difficult!

72 The Key: Trade Pure Event Risk Tier 1 vs. Tier 2 Data

73 AVOID Non- farm payrolls Central bank rate decisions Anything without forecasts TRADE Retail sales CPI / PPI numbers Employment numbers for other countries

74 Avoid Data From: Japan & Switzerland

75 German Retail Sales 2:00 am ET / 6:00 GMT Expectations: 0.2% / 0.3% YoY Previous: 0.8% / 2.3% YoY Our Call: Weaker Retail Sales

76 What are the Clues? German Retail PMI

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78 German Retail Sales Expectations: 0.2% K

79 Rule #1 Enter a position no longer than 20 minutes before a major news release.

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81 Rule #2 Place stop at 30 pips. K

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83 German Retail Sales Actual: 0.6% Expectations: 0.2% K

84 Rule #3 Buy back ½ of the position when the currency sells off by the amount risked (30 pips), move stop on remaining position to break even. K

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86 Rule #4 Trail stop on remaining position by 2 bar high, 3X risk or 20 SMA. K

87 UK Manufacturing PMI Expectations: 49.7 Previous: 50.5 K

88 What are the Clues? CBI Total Trends Survey

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90 UK Manufacturing PMI Actual: 45.9 Expectations: 49.7 Previous: 50.5 K

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92 UK CPI (MoM) Expectations: -0.1% Previous: -0.1% K

93 What are the Clues? UK PPI

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95 UK CPI (MoM) Actual: -0.4% Expectations: -0.1% Previous: -0.1% K

96 Chart

97 What is REACTIVE TRADING all about? K

98 FX Market is Huge PRICES DO NOT ADJUST INSTANTLY If News is Important Enough, there will be Continuation

99 What makes reactive trading so compelling? 1. No guessing of data. 2. Limited exposure to market risk.

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101 Key to Reactive Trading PATIENCE CONSERVATIVE

102 2 Ways to Trade Reactively B

103 Reactive Trading Recipe for Potential Success

104 #1 Wait 5 Minutes #2 Straddle B

105 Reactive strategy requires swiftness.

106 Rule #1 Wait for technical confirmation on 5-minute chart.

107 Rule #2 20-point stop 20-point target

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111 *Variation* Straddle 20% Surprise

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113 What is Catalyst for Continuation all about?

114 July 3, :20 PM ET 20:20 GMT ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BK SWING - Long AUD/USD at market currently stop at target at We have strong reasons to believe that the AUD/USD will conynue to rally off of this evening s PMI services and retail sales data. We have seen a nice improvement in Australian data, enough so that the RBA upgraded its assessment of onshore acyvity slightly. The PMI Manufacturing index rose strongly in June which signals the possibility of a similar rise in PMI services. Retail sales also fell 0.2 percent in April and given RBA Stevens glass half full speech earlier last month and the central bank s overall opymism on domesyc acyvity, we expected stronger consumer spending numbers. Technically, AUD/USD is also in an uptrend which supports our trade

115 AUDUSD - Daily

116 AUDUSD AU Retail (5 Min)

117 June 27, :00 AM ET 6:00 GMT ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BK SWING - Short EURUSD at market currently stop at target at We are looking to sell the EUR/USD ahead of the German CPI report because we have strong reasons to believe that inflayonary pressures eased in the month of June. Commodity prices have been on the decline and other inflayonary indicators has already reported a drop in price pressure. Furthermore, given German Chancellor Merkel s opposiyon to sharing sovereign credit risk, we believe the EUR/USD will remain under pressure ahead of the EU Summit.

118 EURUSD - Daily

119 EURUSD CPI (10 Min)

120 July 11, :30 PM ET 20:30 GMT ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BK SWING - Long AUD/JPY at market currently stop at target at Fundamentally we have strong reasons to believe that Australian employment numbers will surprise to the upside because the employment component of service, manufacturing and construcyon sector increased, poinyng to stronger job growth. The RBA has also been relayvely upbeat about the domesyc economy and probably wouldn t have done so if June was a month of net job losses. Today s FOMC minutes were very posiyve for USD/JPY and we believe that this momentum will carry through into Asia. Technically AUD/JPY is also closing at its highs and at the cusp of entering the buy zone according to our Double Bollinger Bands. As a result, we have chose to express our posiyve outlook for Australian employment through AUD/JPY

121 AUDUSD - Daily

122 AUDUSD AU Employment (5 Min)

123 In Summary. 4 ways to trade news 1. Proactively 2. Reactively Wait or Straddle 3. Catalyst for Trend Continuation

124 2 Key Phrases #1 - High Beta Currencies #2 - Safe Haven Currencies B

125 What is a High Beta Currency? Beta = volatility of an asset compared to index High Beta = Extra Volatile High Beta Currency = Extra Volatile Currency Mkts Go Up = High Beta FX Performs Better Mkts Go Down = High Beta FX Performs Worse K

126 What is a Safe Haven Currency? Safe Haven = Place to Escape Unpleasant / Dangerous Things Safe Haven Currency = Currencies that investors park their $$ in during uncertain and dangerous times Mkts Go Up = Safe Haven Currencies Weaken Mkts Go Down = Safe Haven Currencies Strengthen K

127 Risk On - Investors are optimistic - Willing to Take on Risk - Money Shifts from Bonds to Stocks - High Beta FX Rally - Safe Haven Currencies Sell Off K

128 Risk Off - Investors are nervous, pessimistic - Shying away from ALL risky investments - Money Shifts from Stocks to Bonds - High Beta FX Sell Off - Safe Haven Currencies Rally K

129 Risk On EUR, GBP, AUD, NZD, CAD Risk Off USD, JPY, CHF K

130 What Determines Risk On / Risk Off? 3 Ms Macro Micro Monetary Policy K

131 If you only take ONE thing away.

132 Fundamentals

133 MATTER!!!

134 Resources Twitter DailyFX.com Real Time News

135 What we do at BKForex.com

136

137 POSITION TRADING DAY TRADING NEWS TRADING

138 POSITION TRADING #1 Short Term Swing Trades Trend & News Step 1 -- Establish a view on economic data Step 2 -- Check to see if view is consistent with the overall risk appetite & sentiment Step 3 -- Identify key levels for entry Step 4 -- Identify best time to enter the trade

139 POSITION TRADING #2 Medium Term Positional Trades -- Key Stories and Themes Do you have a view on whether: - Will the Fiscal Cliff Kill the U.S. Dollar? - European Sovereign Debt Crisis will Go Away? - A Return of Low Volatility Carry? - Will Pork Shortage Cripple Certain Economies? WE DO!

140 Day Trading - We Trade EUR Flow!

141 Day Trading - We Trade EUR Flow! #1 -- Day Trades that Enter at Market #2 -- Day Trades that Enter When Certain Key Levels are Triggered

142

143 #1 NEWS TRADING BATTLE PLAN (WEEKLY)

144 News Trade

145 #2 DETAILED ANALYSIS OF NEWS TRADE w/ CHART EXAMPLE: NZD/USD Will GDP Trigger an Upside Breakout?

146 Every Trading Signal Based on Fundamentals, Technicals & Sentiment

147 Every Trade Comes with 1. What we trade? 2. Why we trade? 3. Stops and Limits Updates along the way!

148 BK Trading Club

149 BK Trading Club

150 BK Trading Club

151 Top 5 Hot Ideas Every Day

152 BK Trading Club

153 JOIN BKFOREX AT FXCM EXPO & GET: Ø 1 MONTH FREE! Ø BK TRADING CLUB Ø BONUS DVD with Strategies Ø BONUS DVD with New Trading ebook *Ask About How to Join BK Trading Club for FREE

154 Want the Slides? Text "BKFX" to 42828

155 Past performance is not indicative of future results. Trading forex 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 any such leveraged products 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 trading on margin, and seek advice from an independent financial advisor if you have any doubts. The information, including Commentary and Trade Ideas, provided on bkforex.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. BKForex LLC and bkforex.com are merely providing this information for your general information. The information and opinions presented do not take into account any particular individual s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. BKForex LLC will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on BKForex LLC. BKForex LLC do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.