FXstreet.com Live Sessions Archives: Live Forex Forum Swing Trading

Date: October 5, 2005 14:00GMT 10:00EST

Expert: Carley Garner, Currency Strategist of Alaron Las Vegas Division

Topics:
- Why Swing Trade?
- Technical based trading method
- Be prepared to use loose stops on entry.

Who is Carley Garner?
Carley Garner is a Magna Cum Laude graduate of the University of Las Vegas Nevada, from which she earned a B.S. in Finance & Accounting. At UNLV she was a Dean’s List scholar and was elected to the Golden Key International Honor Society. In 2003 she was one of only 1200 collegians nationwide named to the National Society of Collegiate Scholars. Long fascinated by money and the markets, she previously worked for a stock brokerage, honing her skills at technical analysis. Although relatively new to the industry, Carley has been featured in several national publications including Futures Magazine, Active Trader and Stocks and Commodities.

Speech Material:

Important Note: Take into account that
the PowerPoint that will open by clicking
the link is a large file and you may
experience some difficulties when trying
to open it.

Why Swing Trade

- Quick Entry and Exit

- Known and limited loss

- Ability to make money in directionless markets

Technical based trading

- 3 and 7 day Moving Average

- Confirm MA crossover with trend indicator such as MACD

Be prepared to use loose stops on entry

- After entry, stops should be trailed with every favorable price bar

- Stops should be tightened according to open profit

Session Transcript:

FXstreet Moderator (Oct 5, 2005 10:08:06 AM)
Thank you for joining today’s Live Q&A Session. We will begin with the pre-registered users’ Questions in approximately 5 minutes. Meanwhile please read the text speech that you will find on the left of this chat window

Carley (Oct 5, 2005 10:15:14 AM)
Hello Everybody, I would like to thank you for joining us. Hopefully we will all walk away as better traders!!!

FXstreet Moderator (Oct 5, 2005 10:16:44 AM)
Thank you very much for that, Carley Lets begin with pre reg questions.

Carley (Oct 5, 2005 10:17:23 AM)
Ok, great. First question: Q1:Is it possible to trade a rising ADX >15, or should one wait for >20? Does a rising ADX crossing the DIs have any significance apart from the level of the ADX?

Carley (Oct 5, 2005 10:18:19 AM)
The DMI, and the ADX were developed to visualize te stregth of the trend, but not necessarily meant to produce entry and exit signals.

Carley (Oct 5, 2005 10:19:00 AM)
However, both indicators are useful in guiding traders to a trend following mehtod or a countertredn method for any particular market.

Carley (Oct 5, 2005 10:20:01 AM)
The ADX is actually produced by taking the average of the difference between the D+ and the D- line of the DMI and provides a smoother indication of a current trend.

Carley (Oct 5, 2005 10:20:58 AM)
Thus a crossover of a D line by the ADX signals a very strong trend. However, I caution you that these are lagging indicators.

Carley (Oct 5, 2005 10:21:12 AM)
Once a strong trend is confirmed, it might be too late.

Carley (Oct 5, 2005 10:22:03 AM)
To specifically answer your question. I recommend not trading based on the ADX, rather using it for guidance.

Carley (Oct 5, 2005 10:23:15 AM)
Similarly, an adx above 20 should be confirmation of entry based on an alternate signal.

Carley (Oct 5, 2005 10:23:50 AM)
Keep in mind, these are my opinions...you might be comfortable with other indicators and that is ok.

Carley (Oct 5, 2005 10:24:12 AM)
Next question: Q2:which is the best way to improve technical analysis?

Carley (Oct 5, 2005 10:24:19 AM)
This is a great question.

Carley (Oct 5, 2005 10:24:59 AM)
I spent my entire college career in finance classes in which text books and professors claim that technical analysis is a waste of time.

Carley (Oct 5, 2005 10:25:24 AM)
In fact they believe that the markets are efficient, meaning that they cannot be beat.

Carley (Oct 5, 2005 10:25:45 AM)
I have spent much of my post college years trying to prove them wrong.

Carley (Oct 5, 2005 10:26:05 AM)
The fact is technical analysis can, and does, work when combined with other aspects.

Carley (Oct 5, 2005 10:27:09 AM)
While it is important to have knowledge and opinions about the fundamental climate of the market, keep in mind that all available information is already reflected in the current market price. Thus, trading on fundamentals alone will guarantee losses.

Carley (Oct 5, 2005 10:28:24 AM)
I like to base my trades on 70% technical analysis, 5% fundamentals (believe it or not fundamentals don't always matter) and 25% seasonal tendency.

Carley (Oct 5, 2005 10:28:51 AM)
By using all three factors, you can increase your probability of success.

Carley (Oct 5, 2005 10:29:19 AM)
Next question: how to know the right way of entering the market?

Carley (Oct 5, 2005 10:30:13 AM)
This is the age old question, and unfortunatly you will probably be dissappointed with my answer.

Carley (Oct 5, 2005 10:30:28 AM)
The answer is....it depends.

Carley (Oct 5, 2005 10:31:00 AM)
It depends on your risk tolerance, your trading philosophy, your available capital, etc.

Carley (Oct 5, 2005 10:31:36 AM)
If there was a sure fire way to guarantee profits and a good entry point, I would have retired by now.

Carley (Oct 5, 2005 10:32:20 AM)
Thus the important thing about entering a trade is having a plan in advance and being emotionally confident in your decision and your trading tools. If not, you don't stand a chance.

Carley (Oct 5, 2005 10:33:07 AM)
Similarly, there is not 1 indicator that is better than the rest, but there is probably 1 indicator that works best for you.

Carley (Oct 5, 2005 10:35:53 AM)
In other words, only you can answer this question.

Carley (Oct 5, 2005 10:37:21 AM)
If you would like to attend some of our live trading seminars over the internet we will show you how we get in. To sign up for free classes visit www.commoditytradingschool.com

Carley (Oct 5, 2005 10:37:46 AM)
That concludes the preregistered questions.

FXstreet Moderator (Oct 5, 2005 10:38:24 AM)
Thank you very much for that, Carley

FXstreet Moderator (Oct 5, 2005 10:38:34 AM)
Please post your questions now and Carley will attempt to answer as many as possible.

dd (Oct 5, 2005 10:39:53 AM)
you mentioned that ADX is a lagging indicator. But are not all trend indicators lagging? How do you confirm a trend I.e false from good MA crossovers?

Carley (Oct 5, 2005 10:40:28 AM)
Yes, this is true. All trend indicators are lagging, after all if they didn't then how could they possibly identify a trend.

Carley (Oct 5, 2005 10:41:04 AM)
But traders must be aware that different indicators have different lag times.

Carley (Oct 5, 2005 10:41:58 AM)
My personal favorite trend indicator is the MACD. However, I speed up the exponential MA's to make it a little quicker.

Carley (Oct 5, 2005 10:42:55 AM)
Each indicator can be adjusted according to your preferences. Find what works for you and go with it!!

SteveSchafer (Oct 5, 2005 10:43:29 AM)
What is the best time frame(chart) to determine entry/exit signals in forex ?

Carley (Oct 5, 2005 10:44:51 AM)
Due to the leverage in FX, short term time frames are preferential.

Carley (Oct 5, 2005 10:46:42 AM)
My partner, Paul Brittain, likes to use a triple tier strategy. He buys one based on a signal on a five minute chart, adds on if he gets the same signal on a 10 minute chart, then again on the 15 minute.....this might be a little aggressive for many traders by the logic is good.

Carley (Oct 5, 2005 10:48:12 AM)
I like to trade off of a 20 - 30 minute chart. Obviously my trading style differs from Paul's, but that is what I am comfortable and it works for me....and that is all that matters.

Christopher (Oct 5, 2005 10:50:07 AM)
Do you prefer swing trading to trend trading? Which of the two do you use most in your every day trades -Thanks

Carley (Oct 5, 2005 10:50:20 AM)
I am a swing trader by heart.

Carley (Oct 5, 2005 10:51:31 AM)
Especially in the market conditions seen over the past few months. Trend trading methods have been suffering, while systems with quicker entry and exit signals are prevailing.

Carley (Oct 5, 2005 10:51:41 AM)
However, markets go through cycles.

Carley (Oct 5, 2005 10:51:48 AM)
Next year might be the complete opposite.

Carley (Oct 5, 2005 10:52:22 AM)
However, in my opinion a swing trading method can adapt to a wider range of market conditions relative to a trend trading strategy.

0mar (Oct 5, 2005 10:52:57 AM)
aside from your 3-7mav crossover, what indicator do you use to confirm that a trend is about to unfold?

Carley (Oct 5, 2005 10:53:48 AM)
My favorite trend reversal signal is the Bollinger Band.

Carley (Oct 5, 2005 10:54:31 AM)
Bollinger Bands are used to calculate the markets trading envelope. They represent an interval around a moving average.

Carley (Oct 5, 2005 10:55:11 AM)
Penetration of either the upper or lower band signals overbought and oversold and can be a great indication of a trend reversal.

katz (Oct 5, 2005 10:56:01 AM)
Regarding slide presentation using ma crossovers of 3 and 7 on the 15 min. chart: a) do you time the trade on just the 15 min. chart, b) how do you filter your entry, i.e. first ma crossover, MACD crossing mid line, Stoch crossover?...pull trigger? Similarly, how do you then time your exit? wait for ma to cross over? MACD reversal? Please elaborate. Thank you.

Carley (Oct 5, 2005 10:56:40 AM)
Good question.

Carley (Oct 5, 2005 10:57:04 AM)
As mentioned the MA crossover alone does not represent a signal.

Carley (Oct 5, 2005 10:57:19 AM)
It is simply a "get ready" alert.

Carley (Oct 5, 2005 10:58:04 AM)
Once the MA signal occurs, look to the MACD for confirmation.

Carley (Oct 5, 2005 11:00:30 AM)
You can use either a histogram or line MACD. What you are looking for is not necessarily a crossover signal by the MACD (although it could be). You are simply looking for the MACD to be signaling that the overall trend is in the same direction of the MA crossover.

Carley (Oct 5, 2005 11:01:47 AM)
I personally do not use stochastics as an entry signal, but do look to it for guidance.

flyswatter77 (Oct 5, 2005 11:02:20 AM)
Carley, would you take us through what you consider to be a high probability intra-day setup for a trade, and include each indicator, etc. you might use?

Carley (Oct 5, 2005 11:05:59 AM)
The best example I can give for a high probability trade is one in which the market penetrates the upper or lower bollinger band using a 60 minute chart.

Carley (Oct 5, 2005 11:07:57 AM)
While this is the best probability trade, it might or might not be the biggest profit potential trade depending on the situation.

Carley (Oct 5, 2005 11:08:25 AM)
This type of trade is always good for a knee jerk reaction in the opposite direction of the trend. It could be considered a scalp.

FXstreet Moderator (Oct 5, 2005 11:09:16 AM)
LAST QUESTION

miggy (Oct 5, 2005 11:10:45 AM)
Bollinger bands, which MA period and Standard deviation do you recommend

Carley (Oct 5, 2005 11:11:13 AM)
In the case of Bollinger Bands, I actually use the default settings. After several attempts to improve the indicator, I decided that in this case the addage "If it is not broke don't fix it" applies.

Carley (Oct 5, 2005 11:11:54 AM)
Mr. Bollinger was a very smart man!!!

FXstreet Moderator (Oct 5, 2005 11:13:29 AM)
Thank you very much for that, Carley

FXstreet Moderator (Oct 5, 2005 11:13:51 AM)
If your question was not answered during the course of this chat, please contact Carley Email: Carley.Garner@alaron.com

Carley (Oct 5, 2005 11:14:06 AM)
Once again, thank you for your attendance. We hope to chat again soon. If you are interested in our free trading classes, visit www.commoditytradingschool.com and www.fxtradingschool.com.

FXstreet Moderator (Oct 5, 2005 11:14:27 AM)
FEEDBACK: I cannot stress how important feedback is for the continued success of our Live Q&A sessions. In the past month, and the coming month watch out for new speakers as well as the regular and ever popular speakers. In order for us to continue providing informative and educational Q&A Sessions, feedback is vital. Please feel free to post feedback about today's session, topic ideas, & suggestions. We would appreciate this very much. I will be logged on for a while. claire@fxstreet.com

Carley (Oct 5, 2005 11:14:38 AM)
If you are interested in reading our daily FX commentary, email me at cgarner@alaron.com.

FXstreet Moderator (Oct 5, 2005 11:14:45 AM)
Special FXstreet Showroom Oct 7th at 14:00GMT 10:00EST our very own CEO Francesc Riverola of Fxstreet.com will introduce fxstreet’s premier premium service On Friday we will enlighten all our visitors to the new exciting features of the premium zone and the benefits here with. Also we will review the past week so feedback will be of the utmost essence. For those with log in and password to the beta version you have the unique opportunity to enjoy one more week of the premium zone.

Carley (Oct 5, 2005 11:14:50 AM)
Don't forget.....We offer managed FX accounts!!!!!!

FXstreet Moderator (Oct 5, 2005 11:15:12 AM)
• Transcript request: • Link: http://www.fxstreet.com/chat/transcriptrequest.asp • Password: Garner170170 • Once inside the transcript request page, follow the instructions.

FXstreet Moderator (Oct 5, 2005 11:15:35 AM)
As of November 1st transcript will only be available for premium members.

FXstreet Moderator (Oct 5, 2005 11:15:54 AM)
Join the showroom now! Support us here at FXstreet.com We are trying to let your our visitors know about new brand industry products and services, via chat. Today’s Showroom is one where we are looking for you ideas to make the product better.

FXstreet Moderator (Oct 5, 2005 11:16:49 AM)
Sign in now: http://www.fxstreet.com/chat/chatsigned.asp?tipus=showroom

FXstreet Moderator (Oct 5, 2005 11:17:28 AM)
Erik Long Fractal Finance Cubed for novice and beginner traders

FXstreet Moderator (Oct 5, 2005 11:26:39 AM)
http://www.fxstreet.com/chat/chatmaster.asp?tipus=showroom

FXstreet Moderator (Oct 5, 2005 11:26:48 AM)
please join us in the showrrom now

FXstreet Moderator (Oct 5, 2005 11:27:13 AM)
Erik long president of Tetratex will be available for live discussion

FXstreet Moderator (Oct 5, 2005 11:31:16 AM)
Sign in now: http://www.fxstreet.com/chat/chatsigned.asp?tipus=showroom

FXstreet Moderator (Oct 5, 2005 11:31:34 AM)
please join us in the showroom just click above link

FXstreet Moderator (Oct 5, 2005 11:33:51 AM)
Please join us in the showroom now

FXstreet Moderator (Oct 5, 2005 11:34:07 AM)
Good morning, good afternoon, and good evening to all of you joining us today from different parts of the world. Welcome to today's FOREX SHOWROOM.

Showroom Moderator (Oct 5, 2005 11:44:15 AM)
Please read the material on the left hand side.