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Disclaimer
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, FX PowerCourse, 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.
FX A Growing Market
FX: Average Daily Volume of $1.9 trillion Volume Surged 57% Over Past 3 Years NYSE Volume of $50 Billion At Least 4 to 5 Times the Size of the US Futures Market Volume Expected to Exceed $3 Trln in 2007
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Mechanics Of Trading
1. Interest Rates
Global Capital Markets Seek Yield First and Foremost All Currencies Carry a Yield The Spread in Yield in Combination with Leverage Creates the #1 Macro Trade in the World the CARRY TRADE
What Drives Long Term Trends in FX? #2 Economic Growth GDP- Strong Growth Attracts Capital to the Country Employment Critical to GDP Growth and Consumer Spending Inflation Can be Very Harmful to Currency Values (Extreme Case Post WWI DEM = 1 Trillion)
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Fundamental Factors Case Study- CPI Gages Canada vs. Japan 2005
What Drives Long Term Trends in FX? #3 Political Environment Elections FX Markets Generally Prefer Free Market Proponents (Fiscal Prudence Most Important) Referendum Can Have Significant Impact on Public Policy and Long Term Economic Ramifications Scandals Markets Dislike Politcal Instability (Capital Flight)
Political Factors Case Study Canadian Government Survives No Confidence Vote 2005
Trade Flows vs. Capital Flows Case Study 2 NZD Trade Deficit Grows to 9% GDP
Finally Always Monitor Central Bank Speak And Consider Carefully What Monetary Authorities Say. They Move Markets.
Hedging Radar
What is Hedging? - Buying and Selling the Same Currency Pair at the Same Time Why Hedge? Continuous Position in the Market 2 Positions but 1 Margin
Hedging Radar
1. The Lower the ATR, the Less Risky the Currency is for Hedging** 2. Entry Zone = Profit Targets: Go both long and short at the market, if the price is within the Entry Zone. Target for the long order is the top of the entry zone. Target for the short order is the bottom of the entry zone. 3. Stop Levels are Key Support and Resistance Points: Use discretion with these levels. Place the actual stops a few pips above the higher level and a few pips below the lower level. The break of these levels signals that the ranges have been broken and the hedging strategy should no longer be implemented.
Hedging Radar
Hedging Radar
Hedging Radar
What happened? Price went up and reversed (profit on the long side taken at 2.4211 ) Price came back down (profit on the short side at 2.3975 )
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12 /31 /1 4/3 999 0/ 2 8/3 000 1/ 12 200 /31 0 /20 00 4/3 0/ 20 8/3 0 1/ 1 2 12 0 /31 01 /2 4/3 001 0/ 2 8/3 002 1/ 12 200 /31 2 /2 4/3 002 0/ 2 8/3 003 1 12 / 200 /31 3 /20 4/3 0 0/ 3 20 04 8/3 1/ 2 12 0 /31 04 /20 4/3 0 0/ 4 20 8/3 05 1 12 / 200 /31 5 /20 05 4/3 0/ 20 8/3 06 1 12 / 200 /31 6 /20 06
60 pips in 12 hours