Building the Forex Traders Foundation. Greg Michalowski Twitter: gregmikefx

Transcription

1 Building the Forex Traders Foundation Greg Michalowski Twitter: gregmikefx

2 Disclaimer Disclaimer High Risk Warning: All news, opinions, research, data, or other information contained within this presentation are provided as general market commentary and do not constitute investment advice. FXDD expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. ADVISORY WARNING: FXDD provides sources of economic and market information during this broadcast as an educational service to its clients and prospects. The opinions or recommendations expressed during the broadcast are not intended as investment advice and are based on data reasonably believed to be accurate at the time of publication. Clients and prospects are advised to carefully consider the opinions and analysis offered in the context of your individual analysis and decision making. None of the statements of opinions or recommendations are to be considered as constituting a track record. Past performance is no guarantee of futures results and FXDD specifically advises clients and prospects to carefully review all claims and representations made during the broadcast in light of your particular analysis, trading style and objectives. All news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FXDD expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.

3 Who am I Greg Michalowski 28 years of market experience 10 years with Citibank NY/London as an interest rate derivatives trader 5 years with Credit Suisse First Boston as a trader Been with FXDD since Day 1 (2001) Author: Attacking Currency Trends (4.7 stars on Amazon.com) Regular contributor on FXStreet Quoted in the WSJ, Bloomberg, Reuters, etc. > 14,000 followers on Twitter. [email protected] Commentary at

4 Building the FOUNDATION for Trade Entry

5 More Important? REWARD or RISK VS. I sold the EURUSD at I am TARGETING I sold the EURUSD at my STOP is at

6 Focusing on RISK is more important I sold the EURUSD at I am targeting I sold the EURUSD at my stop is at

7 Targeting Reward = Risk Unlimited LIMITED Traders who focus on TARGETING REWARD are saying RISK is potentially UNLIMITED.

8 Targeting Risk = Rewards Unlimited UNLIMITED Traders who focus on DEFINING and LIMITING RISK are saying REWARDS are UNLIMITED. UNLIMITED

9 Focusing on RISK > REWARD

10 QUESTION How is RISK Defined and Limited?

11 ANSWER By trading near key technical levels called BORDERLINES

12 REQUIREMENTS OF BORDERLINES Bullish Bearish FEAR Define Risk Tend to have Energy near the level Bullish above and Bearish below Seen and used by many Help define trends Reduce FEAR

13 TECHNICAL TOOLS for DEFINING BORDERLINES

14 MY TECHNICAL TOOLS FOR BORDERLINES 1. Moving Averages a. 100 bar SMA b. 200 bar SMA Defines Risk Tends to have Energy near the level Bullish above and Bearish below Seen and used by many Helps define trends Reduces FEAR 200 BAR MA (GREEN) 100 BAR MA (BLUE)

15 +111 REWARD +78 REWARD -20 RISK SELL -23 RISK SELL BUY -20 RISK LOSING -28 RISK TRADE BUY +71 REWARD +114 REWARD +138 REWARD

16 -24 RISK -24 SELL RISK SELL REWARD This is the same trade but just a little later. Define risk. Limit Risk. Reward is the unknown, but that is OK REWARD REWARD

17 +144 REWARD REWARD BUY -21 RISK

18 BUY -25 RISK STOPPED OUT Trading Account Loses (25) Pips What Happened? UK Inflation Report came out which sent the price down on initial headlines. STOPPED OUT. EVENT RISK INCREASED.

19 +156/+197 ORIGINAL TRADE 200 hour MA BUY here 100 hour MA (STOP LOSS LEVEL -24 pips) Failed BREAK What if BOUGHT here on the BREAK OF THE 200 bar MA on the 5 min. chart? STOP LOSS What if you waited and BOUGHT here AFTER THE EVENT RISK and Failed BREAK? Same STOP LOSS

20 Other Borderline MA levels in the GBPUSD into September

21 MY TECHNICAL TOOLS FOR BORDERLINES 1. Moving Averages a. 100 bar SMA b. 200 bar SMA Defines Risk Tends to have Energy near the level Bullish above and Bearish below Seen and used by many (Simple) Helps define trends Reduces FEAR 2. Trend Lines

22 MY TECHNICAL TOOLS FOR BORDERLINES 1. Moving Averages a. 100 bar SMA b. 200 bar SMA Defines Risk Tends to have Energy near the level Bullish above and Bearish below Seen and used by many (Simple) Helps define trends Reduces FEAR 2. Trend Lines a. Up Trends b. Down Trends c. Channels d. Ceilings/Floors

23 1 2 3 BUY #2 BUY /RISK #2-20 RISK

24 FOMC DAY Event Risk is HIGH Liquidity Risk is High Market Risk is High BUT Profit BUY RISK Trend Line AND 100 hour MA AND Low define and limit risk BEFORE the release.

25 MY TECHNICAL TOOLS FOR BORDERLINES 1. Moving Averages a. 100 bar SMA b. 200 bar SMA Defines Risk Tends to have Energy near the level Bullish above and Bearish below Seen and used by many (Simple) Helps define trends Reduces FEAR 2. Trend Lines 3. Fibonacci Retracements

26 KEY FIBONACCI RETRACEMENT LEVELS There are three main retracement levels % 2. 50% % The 38.2% and 50% = Correction Zone

27 Stay below the Correction Zone, keeps the sellers in charge Trend move Borderlines Correction

28 Price stays below the Correction Zone (Borderlines), and sellers reenter. Trend move Borderlines Trend move

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31 FOUNDATION SUMMARY 1. Focus on Risk. Reward may follow. 2. Trade near key technical levels (Borderlines). 3. Three technical tools, Moving Averages (100 and 200 SMA) Trend lines Fibonacci Retracements

32 Increasing the Odds of Success in your Forex Trading Greg Michalowski Twitter: gregmikefx

33 Disclaimer Disclaimer High Risk Warning: All news, opinions, research, data, or other information contained within this presentation are provided as general market commentary and do not constitute investment advice. FXDD expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. ADVISORY WARNING: FXDD provides sources of economic and market information during this broadcast as an educational service to its clients and prospects. The opinions or recommendations expressed during the broadcast are not intended as investment advice and are based on data reasonably believed to be accurate at the time of publication. Clients and prospects are advised to carefully consider the opinions and analysis offered in the context of your individual analysis and decision making. None of the statements of opinions or recommendations are to be considered as constituting a track record. Past performance is no guarantee of futures results and FXDD specifically advises clients and prospects to carefully review all claims and representations made during the broadcast in light of your particular analysis, trading style and objectives. All news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FXDD expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.

34 INCREASING THE ODDS OF SUCCESS

35 INCREASING THE ODDS OF SUCCESS Odds of success in your trading are more in your favor simply by trading near BORDERLINES, DEFINING RISK, LIMITING RISK and hoping the market agrees with the TOOLS YOU USE and WHAT YOU SEE

36 INCREASING THE ODDS OF SUCCESS If the market is active (i.e., not sitting in a narrow range), and you define your risk, you have the potential to: RISK A LITTLE (LOSE) OR MAKE MORE THAN A LITTLE (WIN)

37 Timing your Trade Entries

38 specifically

39 (E)nergy = (M)ass x C 2 C = Speed of Light (E)NERGY in trading is created by having (M)ultiple reasons to trade which moves the market away from the point of the trade.sometimes fast (like a JET PLANE).

40 More M = More E U R t N L E o E T A T R I P S R G Y O A L E N D S E

41 More Energy = Risk a Little Make More than a Little = Odds of Success in our Favor

42 You just need to get the DIRECTION RIGHT Some of the Times (40%-50%)

43 USDJPY

44 147 Pips 200 HOUR MA Days 100 HOUR MA CHART FACTS USDJPY 1 Hour Chart Current Price: Simple MA: Simple MA: Days 147 Pip Range PRIMARY TOOL TRADING FACTS 1. Current Price < 100 SMA 2. Current Price < 200 SMA 3. Topside Trend line held 4. Price < Bottom Trend line SECONDARY TRADING FACTS 1. 4 Day Range Narrow (147 Pips) 2. Current Day Range Narrow (89 pips) and 200 Hour MA flat * 4. Two Moving Averages Converging w/ the Price *

45 Non TRENDING TRANSITIONS TRENDING SECONDARY TRADING FACTS 1. 4 Day Range Narrow (147 Pips) 2. Current Day Range Narrow (89 pips) and 200 Hour MA flat * 4. Two Moving Averages Converging w/ the Price * Key Concept: Non Trending transitions to Trending MAs are going sideways or two MAs and Price are converged = Non Trending

46 147 Pips Days 100 HOUR MA -25 BUY or SELL? STOP SELL RISK? 200 HOUR MA

47 STOP SELL STOP SELL +82 Non Trend Transitions to Trend + Multiple Reasons to Trade = Odds in the Traders Favor (risk low)

48 GBPUSD

49 T R E N D M O V E CORRECTION ZONE CHART FACTS GBPUSD 1 Hour Chart Current Price: Simple MA: Simple MA: Not in Play In Correction Zone between 38.2% and 50% of a Trend move higher

50 BUY or SELL? RISK? -15 Risk is DEFINED RISK is LIMITED MULTIPLE REASONS ACCEPT RISK?

51 WHERE S THE ENERGY?

52 H Pips 170 Pips 100 H MA C-ZONE IT S WHERE S THE ENERGY? 1 2 COMING Markets are Non Trending

53 LOOK AT OTHER TIME FRAMES By looking at key technical level on other time period charts, traders can often get additional clues for trade bias I look at the : 5 Minute Hourly Daily and trade entries

54 LOOK AT OTHER TIME FRAMES By looking at key technical level on other time period charts, traders can often get additional clues for trade bias and trade entries 5 minute chart is a proxy for Intraday Traders 1 hour chart is a proxy for Swing Traders Daily chart is a proxy for LT Traders

55 What are the Longer Term Traders focused on?

56 CHART FACTS GBPUSD DAILY Chart Price is between the 100 and 200 day MAs but the 38.2% of year range is slowing the move. Also area of ENERGY from past. KEY BORDERLINE Time to Move

57 What are the Intraday Traders focused on?

58 Price is going above and below MAs FAILED BREAK TWICE RISK HERE SELL HERE? CHART FACTS GBPUSD 5 Minute Chart Price above and below 100 and 200 bar MA (sideways/converged) Price failed on BREAK higher. Need to BREAK below low. Range Narrow.

59 What are the 3 types of Trader s Trading Bias? BULLISH or BEARISH?

60 Hourly: Non-Trending below ceiling at Above 100 hour MA at BIAS: NEUTRAL, but LOOKING FOR A BREAK

61 Daily: Key resistance against 38.2% retracement at is holding. BIAS: BEARISH. Holding ceiling at

62 5 Minute: Falls below the converged 100 and 200 bar MA at BIAS: BEARISH below 100 and 200 bar MA and Correction ZONE

63 If different TYPES OF TRADERS (i.e., Short Term, Swing and Long Term) are in agreement to bias If risk can be DEFINED and LIMITED If there are MULTIPLE REASONS to trade TRADE

64 RISK SELL BREAK HOLD BREAK TRADE FACTS GBPUSD 1 HOUR Chart Price moved below 100 MA and stayed below Price tested 200 MA,100 MA (between Goal Posts) Broke 100 MA Price moves to channel trend line and stalls (+131) Accelerates trend through trend line (liquidation) Stops at before consolidating (+235) +131 BREAK +235

65 SUMMARY: PUTTING THE ODDS IN YOUR FAVOR 1. Trade near BORDERLINES 2. FIND Multiple Reasons to TRADE 3. RISK a LITTLE to MAKE MORE than a LITTLE (DEFINE and LIMIT RISK) 4. NON TRENDING TRENDING 5. AGREEMENT from MULTIPLE TIME PERIODS

66 TRADE FACTS GBPUSD DAILY Chart Price holds below 38.2%. Borderline to lean against Price BREAKS trend line at Price BREAKS below 100 day MA NOW WHAT? PUT in FIBONACCI FOR TARGETS. BREAK BREAK

67 TRADE FACTS GBPUSD DAILY Chart Price BREAKS 38.2% retracement. Trend continues. Price STOPS at 50% retracement target. Take profit at limit of Consolidation ZONE. BREAK BREAK KEY TARGET REACHED AT 50% FIBO.

68 Exiting your Forex Trades with a purpose Greg Michalowski [email protected] Twitter: gregmikefx

69 Disclaimer Disclaimer High Risk Warning: All news, opinions, research, data, or other information contained within this presentation are provided as general market commentary and do not constitute investment advice. FXDD expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. ADVISORY WARNING: FXDD provides sources of economic and market information during this broadcast as an educational service to its clients and prospects. The opinions or recommendations expressed during the broadcast are not intended as investment advice and are based on data reasonably believed to be accurate at the time of publication. Clients and prospects are advised to carefully consider the opinions and analysis offered in the context of your individual analysis and decision making. None of the statements of opinions or recommendations are to be considered as constituting a track record. Past performance is no guarantee of futures results and FXDD specifically advises clients and prospects to carefully review all claims and representations made during the broadcast in light of your particular analysis, trading style and objectives. All news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FXDD expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.

70 More Important? ENTRY or EXIT VS.

71 Most Traders focus on. VS.

72 What bothers me is.

73 What are YOUR Reasons to Exit? I made 20 pips. I have a profit. No one ever went broke taking a profit Bulls and bears make money. Pigs get slaughtered I am afraid the market will correct and my profit will disappear FEARING SUCCESS

74

75 Traders can look to ride winners especially in a trending market to get ahead in your trading.

76 After all, if we are going to work so hard in trying to increase the odds of success, why not take advantage of that work.., WITH CONFIDENCE

77 Mindset on a Trade Taken 1. Risk is Defined at the beginning of the trade. Either you lose or you win. DO NOT FEAR. LOSING IS PART OF TRADING

78 Mindset on a Trade Taken 1. Risk is Defined at the beginning of the trade. Either you lose or you win. DO NOT FEAR. LOSING IS PART OF TRADING. 2. If you win - and want take profit - look to take partial profit where Pips Gained = Risk Pips on Trade Entry. Optional: Move stop closer to Breakeven

79 Mindset on a Trade Taken 1. Risk is Defined at the beginning of the trade. Either you lose or you win. DO NOT FEAR. LOSING IS PART OF TRADING. 2. If you win - and want take profit - look to take partial profit where Pips Gained = Risk Pips on Trade Entry. Optional: Move stop closer to Breakeven 3. Define targets in the direction of the trade. When a target is reached, move stop.

80 What is a Target? Target = Defined Technical Borderline in the direction of the trade/trend

81 What is a Target? Targets can be entry levels for traders looking to get in on the trade

82 What is a Target? Targets get harder and harder to pass as a trend move continues. This leads to corrections.

83 Mindset on a Exiting 1. Risk is Defined at the beginning of the trade. Either you lose or you win. DO NOT FEAR. LOSING IS PART OF TRADING. 2. If you win - and want take profit - look to take partial profit where Pips Gained = Risk Pips on Trade Entry. Optional: Move stop closer to Breakeven 3. Look for targets in the direction of the trade. When a target is reached, move stop. 4. Trades will often have corrections. Traders invest profit during corrections. If a correction is too deep, look to exit (> 50% of the last trend leg). 5. If a Target level/area has a cluster of technical borderlines (multiple reasons to trade), consider exiting the trade or taking more profit.

84 Mindset on a Exiting 1. Risk is Defined at the beginning of the trade. Either you lose or you win. DO NOT FEAR. LOSING IS PART OF TRADING. 2. If you win - and want take profit - look to take partial profit where Pips Gained = Risk Pips on Trade Entry. Optional: Move stop closer to Breakeven 3. Look for targets in the direction of the trade. When a target is reached, move stop. 4. Trades will often have corrections. Traders invest profit during corrections. If a correction is too deep, look to exit (> 50% of the last trend leg). 5. If a Target level/area has a cluster of technical borderlines (multiple reasons to trade), consider exiting the trade or taking more profit.

85 EURUSD

86 More Important? Entry or Exit

87 TRADE FACTS.

88 ANOTHER EXAMPLE

89 ANOTHER EXAMPLE

90 All information on this site is provided for informational and educational purposes only, not intended for trading purposes or advice. As with all such advisory services, past results are not indicative of future results. In addition trading in foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals.