What kind of system do you provide: trending, counter
trending, breakout, trading range, hedging etc.?
Our Trading System is Trending or “Trend
Following”. Traders who subscribe to a trend following strategy do not aim to
forecast or predict specific price levels; they simply jump on the trend and
ride it.
Do you use channels or Fibonacci retracement, etc.?
Price:
One of the first rules of trend following is that price is the main concern and
price is our only indicator of direction.
We use two technical indicators:
- Exponential Moving Average (EMA), and
- Relative Strength Index (RSI).
Traders may use other
indicators showing where price may go next or what it should be but as a
general rule these should be disregarded. A trader need only be worried about
what the market is doing, not what the market might do. The
current price and only the price tell you what the market is doing.
When do you usually give signals?
The best times to broadcast our trading
signals are between 7:00 AM New York time and 2PM
New York time Monday thru Friday.
How
often do you give signals?
Trading signals are usually given 3 per day
for up to 15 pairs. We trade 18 pairs which results on average of 3 trades per
day.
What is the format of the signals? Signals are sent via email or SMS as follows:
- BUY xyz/abc Below (<) Price
Take
Profit (TP) Price
- SELL xyz/abc Above (>) Price
Take
Profit (TP) Price
What’s the probable risk (“downside”) of the system
and the signals, and what margin do you recommend be maintained?
The probable risk is always
being on the wrong side of the trend, and being on the wrong side of a trend
results in large draw downs on an account. Therefore, we recommend a 200% margin be maintained at all times
due to our aggressive nature of trading.
If you open positions with more than 1 lot, explain
the reason for that. Describe when you open positions with one lot, when with 2
lots and so on.
The reason we open a position with one lot
is the first lot opened establishes our entry and exit point for the commodity.
Our initial risk rule determines position size at time of entry. Exactly how
much to buy or sell is based on the size of the trading account and the
volatility of the issue. Changes in price may lead to a increase of the initial
trade. On the other hand, adverse price movements may lead to an exit for the
entire trade.
Do you usually open market orders or pending ones, or
both?
Rarely do we open “Pending Orders” simply
because we “follow” a trend. However, once the trend is established sometimes
we may open a pending order.
What methods do use while analyzing the market? How
do you use fundamental and technical analysis?
We analyze the market and would come up
with a preliminary strategy, such as (example):
Commodity:
EUR/USD
Trading
approach: long and short alternatively.
Entrance:
When the 1 day RSI = 30 (buy) or RSI =70 (sell). The RSI 70/30 suggests that
the trend has recently turned.
Exit:
Exit long or short position when price crosses the 1 day SMA. The crossover
suggests that the trend has turned.
Stop
loss: Set a stop loss based on maximum loss acceptable. For example if the
recent, say 1 day, Relative Strength Index (RSI) is 30, our stop loss could be
set at a 1 Day RSI 30.
How do
you react on the news? Do you work when important news comes out?
Short Answer is NO we do not react on the
news. Trend following by its very nature is a system that needs to be adhered
to. There is no point in adopting a trend following strategy and then, if you
think that the market may be beginning to move, changing the way that you
trade. But trend following is following, it is not a way of knowing what the
market will do.
What is
the average term of your trades?
The average term is 30 minutes to 2 hours.
What periods of time you use for analysis of the
market?
We use all periods of time to analyze
market price movements.
What tools and indicators do you use for analysis?
How do they help you?
We use Moving Averages (MA) for finding the
trends... and the complex use of Relative Strength Index (RSI) in order to find
the best entry and exit positions.
Moving averages smooth the price data to
form a trend following indicator. They do not predict price direction, but
rather define the current direction with a lag.
We consider RSI overbought above 70 and
oversold below 30
Due to what rules do you open positions? (How do you enter the market?)
The first things we need to do are look at
our largest time period and see if current prices are above or below a moving
average. This tells us if we maybe looking to buy or sell.
The second thing we need to do is drop down
to various other time periods to see if the current price is above or below
various moving averages to give us confirmation of direction, or trend.
We then move down to the lowest time period
(5 min) and we are looking to buy when, say, price crosses above or below a
moving average. For extra confirmation we may let prices break the last high on
the 5 min chart. This would mean that prices will be above or below their
moving average on various time periods.
What rules do you follow for closing positions?
Preservation of capital is always one of
our objectives; if we buy and prices get back to say, below the 5 min moving
average by 10 pips we may want to cut our losses short before a stop-loss. But
if we are trading longer term this may not be a big deal and we may use a RSI
30/70 as a stop loss or to close our position.
How do you determine the levels of Take-profit and
Stop-loss?
Targets:
Same again, depends if we are trading a long term trend but Take Profit and
Stop Loss can be support or resistance levels, and RSI 70/30 for any given time
period.
How do you do money management? What’s the risk of
every trade?
Money
management: A decisive factor of trend following is not the timing of the
trade or the indicator, but rather the decision of how much to trade over the
course of the trend. If the trend is newly established we tend to open the
trade with 1 lot and increase to 2 as the trend develops.
Risk
control: Cutting losses is our rule. This means that during periods of
higher market volatility, the trading size is reduced. During losing periods,
positions are reduced and trade lot size is cut back. The main objective is to
preserve capital until more positive price trends reappear. It is possible that
a majority of the trades may be unprofitable, but by “cutting the losses” and
“letting profits run”, the overall strategy may be profitable.
Do you change your strategy in some way due to the
moving of the market? If yes, what were the last changes?
Short Answer is NO; we do not change our
strategy. Time periods, moving averages, and currency strength or weakness is
the foundation of our system.
Who can use your signals and who cannot?
Anyone can use our signals either to trade
or to simply monitor the currency markets.
What should be also taken into consideration, while
working with your signals?
An important point is the broadness of the
currency pairs we trade. We follow short term trends and this limits the volume
of transactions for each currency pair. Therefore, we trade more currency pairs
to give us an adequate number of transaction overall. Our typical trades last
up to two (2) hours each and we generally Take Profit (TP) between 10-15 Pips
per trade.
The purpose of our method of Trend
Following is making small profits while exposing a trading account to a very
limited risk, which is due to a quick open/close trading mode.
What other advantages of your trading strategy can
you admit?
All markets and all currency pairs can be
traded with our trend following method. An important point is the broadness of
the currency pairs we trade. We follow short term trends and this limits the
volume of transactions for each currency pair.
Hence, we trade more pairs:
EUR/USD USD/CAD GBP/CHF
USD/JPY NZD/USD NZD/JPY
GBP/USD EUR/GBP AUD/JPY
USD/CHF EUR/JPY EUR/AUD
EUR/CHF GBP/JPY AUD/CAD
AUD/USD CHF/JPY CAD/JPY
