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Raising Investment Standards. TRADING SEMINAR. Raising Investment Standards. - PowerPoint PPT PresentationTRANSCRIPT
TRADING SEMINAR
Raising Investment Standards
DISCLAIMER Raising Investment Standards
Leveraged foreign exchange and options trading carries a significant 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 invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite.
You should be aware of all the risks associated with foreign exchange and option trading, and seek advice from an independent financial advisor if you have any doubts.
The contents provided in this seminar are subject to change at any time without notice.
There is no guarantee that the systems, trading techniques, trading methods, indicators or other information presented at this seminar will result in profits or not result in losses. The content is provided for informational purposes only and is not intended as a trading recommendation.
I. The Basics
II. Trading Tools
III. Money Management
FX TRADING
What is FX?
Characteristics High Volume: USD 4 trillion/day
- 80% speculation High Liquidity: Tight Fixed Spread High Leverage: 1:100 Trading Hours: 24/6 Accessible Purely Electronic Short Selling without any rule Fits Technical Analysis Studies
FX Market
FX as an Asset Class
Major CurrenciesUSD,EUR,CHF,GBP,CAD,JPY,AUD,NZD
Traded in Pairs: EUR/USD, AUD/USD…
More Combinations EUR/GBP….
FX Market
Tick Size
0.1 Pip : the smallest price increment in FX trading
Pip Value : depends upon the pair being traded and its price
FX Market
FX Market
Leverage
Loss and Recovery SimulationInitial Capital: $ 10.000
Loss 1:1 1:51% $9,900.00 $9,500.001% $9,801.00 $9,050.001% $9,702.99 $8,604.501% $9,605.96 $8,162.95
Recovery 4% 22%
FX Movers
Global Macro
Key Economic Indicators
Interest Rates Differentials
Risk Appetite V/S Risk Aversion
M&A Activity
Auction Results
Advantages Of AKSYS Trading Platform
Most competitive fixed spread Commission-free trading Swap free trading No slippage Minimum of 10,000 trading unit Streamlined dealing on real-time prices Place orders inside the spread Hedging capabilities No debit balance Built in back-office Round the clock help desk :
Technical analysis Macro views Execution
AKSYS Trading Platform
Order types :
Market Orders
Order Types :
Pending Orders
Understanding The Terminal
Money Management & Trading Strategies
Trading Frequency
Trading Size
Trader Behavior
The Fallacy Of Winning Streak
Trading Frequency
High:
Always in the market
Hit & Run
Between 10 to 30 trades per day
Cut all accumulated losses when breaking a trading range
Trading Frequency
Low :
Opportunistic
Swing Positioning
Between 2 to 3 trades per week Trailing Stop Loss
Trading Size
On a fixed USD stop loss value basis
Consistency
Check your risk level
AMOUNT OF EQUITY LOST
RETURN REQUIRED TO RESTORE
INITIAL VALUE
25 % 33 %50 % 100 %75 % 400 %90 % 1000 %
Trader Behavior
Trend
Buy / Sell continuous patterns
Counter Trend
Sell Resistance
Buy Support
The Fallacy Of Winning Streak
The trader has a 75% winning tradesbut ends up losing money.
Trade P&L pips1 + 30 pips2 + 25 pips3 + 35 pips4 - 110 pips
Total - 20 pips
The Fallacy Of Winning Streak
Trade P&L pips1 - 30 pips2 + 50 pips3 - 35 pips4 + 60 pips
Total + 45 pips
The trader has a 50% winning tradesand ends up winning money.
Adding To A Winning Position
EUR/USD:
Position Risk Risk Vs Position
size
Market move
Short 20k at 1.5020
200 $ 1 %
Adjust stop on entry for 20k
and add 20k at 1.4970
200 $ 0.5 % - 50 pips
Adjust stop on entry for 40k
and add 20k at 1.4920
200 $ 0.33 % - 50 pips
Technical Analysis
What is Technical Analysis
Technical analysis is defined as the art of forecasting the market trend direction through analyzing the current and historical price action and projecting it into the future by using different tools.
Historical Glance
Homma Munehisa(1724-1803) Charles Henry Dow (1851-1902) Ralph Nelson Elliott (1871- 1948) William Delbert Gann 1878-1955)
The Use Of Technical Analysis
It provides:
The time to enter the market
Decision: Long, Short, or Not to enter
The Stop Loss Level (invalidation of the scenario or bias)
The Time Frame Of The Trend
The Profit Taking Level (Trade Objective)
All these factors are exploited in product structuring in order to estimate the product maturity (duration of the trend) and the bias of the product (direction of the trend) barrier level (support resistance).
Technical Analysis Tools Explained
The Three Major Factors For Technical Analysis are:
Time
Pattern
Price
TIME
Time is divided into five categories:
Dynamic Projections/Retracements/Alternations form tops and bottoms
Fixed Time Cycles
Seasonal Cycles
Astrologic Cycles
Gann Squares and Fibonacci Numbers
Examples
Swings relation based of the Fibonacci ratios to achieve a time cluster for a top
Fixed CycleGBP/USD daily chart: Every 12 trading days a bottom is marked even though is adown or an uptrend.
Seasonal Cycles Known as “anniversary dates”: you choose a specific date or period for a specific chart and check it historically to know the behavior of the market at this period.
Application of the Fibonacci series number and ratios between bottom and tops on time analysis
PATTERNS
Patterns are divided into three categories:
Classical
One to Three Bars
Elliott Waves
Classical Patterns These patterns are discovered by observing and studying the historical charts data Their names often reflect the shape of the formation such as the Double Top, Double Bottom,
Head and Shoulders Top, Flags and so on. Example:
An inverted head & shoulder that reverse this daily bearish trend.
A continuation wedge in a daily Bearish trend A continuation wedge in a daily Bearish trend
One to Three Bar Patterns
These reversal bars are telling you that the trend for that time frame has run out of gas and that no new buyers or sellers are coming into the market.
Outside Key Reversal
Key Reversal
Reversal Bar
Snap-Back Reversal
Signal Bar
Gap Signal
Reversal Confirmation
Example: An hourly up trend with a reversal bar pattern at each bottom.
Reversal Bar Pattern at each top on the Euro Hourly Chart .
Elliott Waves
There are five waves in the direction of the main trend followed by three corrective waves (a "5-3" move)
An impulsive wave (1, 3, 5), which goes with the main trend, always shows five waves in its pattern
Corrective waves within a five wave sequence are waves two and four.
Once a five wave pattern completes, the entire sequence should becorrected by a pattern of either three waves (ABC )
PRICE
Wave patterns of a similar degree are related to each other by
Fibonacci ratios.
Fibonacci numbers provide the mathematical foundation for the
Elliott Wave Theory.
The challenging part of Elliott Wave Theory is figuring out the
relativity of the wave structure.
Important price levels will be found when a narrow price zone is
projected from several different ratios and from several different
degrees.
Here is a squaring between time and price based on Fibonacci ratios that confirm the count of Elliott wave
Minor Factors
Oscillators:
Moving Average Convergence Divergence “MACD”
Relative Strength Index: RSI
The Oscillators are used to indicate:
Overbought and Oversold Areas
Divergences
Moving Averages:
The Moving Averages are used to indicate:
The direction of the trend
Dynamic Supports and Resistances
Putting all together:
Here (EUR chart above) is a combination of all technical tools described before:
Time: Fixed Cycle Bottom vs. Top that indicates a time zone for a top.
Patterns:Elliott Wave count for four degree (lesser degree confirm the
higher ones)One bar reversal at each bottom to confirm the new up move.
Price: Price relations Elliott Wave Theory using Fibonacci Ratios to marker
objectives: 100% 161% form WI, 38.2% from WI-III, 100% from last swing projected from the bottom of WIV.
EMA: Exponential moving averages (50,66,252) acting as dynamic
supports and resistance.
RSI and MACD: Reaching a repeated historically level that confirm the reversal bar
at each bottom.
After:
Since 13 June 2007 the EUR is trending upward forming a 5 waves cycle (blue degree) confirmed by the lesser ones (green & red). Forming on the highs, a potential double top accompanied by a clear divergences on both MACD (39.19.9)& RSI (14) on daily and weekly charts & a confirmed Head & Shoulder at the right top.
Over a year this upward rally was sustained by the 133 EMA (green dotted line) and the Red trend line that are breached 2 times.
The sideways range since 23 April 2008 has overbalanced in Price and Time the similar formation that started 23Nov 2007 ended 7 Feb 2008.
All these technical indications suggest that the EUR is suffering at these levels to test bearish first support 1.5285 (neckline of double top + W4) that will squeeze the market on its break at least 750 pips gradually 1.4968, 1.4652, 1.4311
What invalid the bearish bias is the break of 1.6038 otherwise every upward rally is considered as a selling opportunity.
GBP/USD hourly chart shows a market rhythm (equality between the impulsive down moves and the corrective up ounces)
CONCLUSION
Technical analysis is a tactical method that generates substantial profits. The selection of the trade is done by the combination of the different
technical methods and dimensions.
Besides, technical analysis is a decision tool for asset allocators, product structures, hedge fund managers for its high probability of accuracy in market timing and opportunity spotting.
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Raising Investment Standards