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Forex System Development Workshop

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Day Trading with Steve Lucas

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Welcome

G’day, Howdy, Guten Tag, Ni Hao, Вітаю, Hallo, Konnichiwa, Chào and welcome to session #6 of the Forex System Development Workshop.

Live and Interactive

Don’t be a Shy Sally or a Bashful Barry, ask questions,

take your time.

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Forex System Development Workshop

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Day Trading with Steve Lucas

About Steve Lucas

“Tell us a little bit about your background and trading career. How did you get started? What have you done?

Etc.”

About Steve Lucas

• Started trading in 1979• Moved to Australia to run a Swiss book • Spent some time in LA• Took over an AUDUSD book • Ran CBA New York office • Then prop trading in Sydney and London • Moved to DRKW in 2001 in a research and technical

analysis team of four• Encouraged by clients to start own firm in 2004 – 3C

Analysis

Trading Style

“Describe your general approach to trading and how you structure your trades.”

Trading Style

• My strength is short-term• I like to catch the first European move from 7am open to 9am • Analysis continues during the day• Asian moves are usually wrong • Not swayed by news releases or events • Let the charts, price action, volume and open interest speak• Use statistical data and correlations • Have a view out to three months but for the most part focus

on day trades

Technical Set-up Conditions

“What technical set-up conditions do you look at before you enter a trade?”

Technical Set-up Conditions

• Have favourite set-ups but look to make a call on the open for each market covered

• For the FX Renew signal, I select my favourite of the day and Sam confirms it

• Favourite candlestick pattern is a Spring Hammer/Shooting Star

• Medium term looking for a trend (higher lows or lower highs)

• Long-term is a combination of Head and Shoulders. Evening/Morning Star and DMI (a statistical tool)

Fundamental Set-up Conditions

“What fundamental set-up conditions do you look at before you enter a trade?”

Fundamental Set-up Conditions

I try to ignore fundamentals but will take into account when opening and closing positions, so I always know what is released and when, and what I think the potential implications of a miss will be.

Timing Your Entry

“What do you use as your entry point?”

Timing Your Entry

• Use the 7am open for FX• Not ideal but forces me to be proactive • Clients will often enhance entries and exits levels

with their own analysis

Stop-loss and Trailing Stops

“Where do you place your stop-loss and how do you trail your stop?”

Stop-loss and Trailing Stops

• The most important thing in any trade is to have a stop

• I use cut-off times for trades • My favourite stop is Fibonacci based, as is the trailing

stop • Constantly watching for a turn and will exit on a sell

signal

Exits

“What is your exit strategy?”

Exits

• Not text book • Take 1/3 of fairly quickly • As the trade reaches break even, raise the stop • The second 1/3 at the main target around 2:1 RR• Let the final 1/3 run

Trade Management

“When would you scale-in or out of a trade?”

Trade Management

• Totally depends on the market • A couple of years ago I would rarely scale-in but

always scale out • Today I nearly always scale-in and out

News Events

“How do you manage your positions around news events?”

News Events

• Don’t have much going into news events • Look to get square at 1pm on daily trades • Keep position size small if a European release that is

going to drive the market

Position Sizing

“How do you determine your position size?”

Position Sizing

• I use a percentage of capital at risk • I always view the trade in thirds. • Therefore we like to deal in threes

Risk Management

“What other risk management rules do you use?”

Risk Management

• Use daily, weekly, monthly drawdowns • Analyse trend success • After losses don’t trade or keep positions small until

have a handle again • Which days we make or lose money

The Three Most Important Things

“What are, in your opinion, the three most important things to successful trading?”

The Three Most Important Things

• Discipline • Composure • Use a limited number of trusted inputs (3Ca being

one) • Keep healthy and sleep well

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Trade Examples

Trade Example: Dark Cloud/ Bearish Piercing

Trade Example: Morning Star

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Trade Example: Spring Hammer

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Trade Example: Bullish Engulfing

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Trade Example: Bullish Engulfing

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Trade Example: Bearish Engulfing

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Trade Example: Bullish Hammer

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Trade Example: Bullish Piercing

Trade Example: Bullish Piercing

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Trade Example: Evening Star

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Trade Example: Morning Star

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Trade Example: Dark Cloud Cover

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Trade Example: Imperfect Evening Star

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Trade Example: Inverted Hammer

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Trade Example: Bullish Morning Star

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Trade Example: Shooting Star

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Trade Example: Weekly S&P

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Trade Example: Yearly AUDUSD

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Trade Example: Monthly Dax

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Trade Example: Weekly Dax

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Questions

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Questions, Queries, Feedback