Live Perspective Broadcast

Date: October 3, 2005 14:00GMT 10:00EST

Expert: Derek Frey, Head Trader of Odom & Frey Future

Topics:
Market reaction to news!
- This week's data and events
- Key support and resistance for major markets
- Derek's insight on the week inreview and the week to come

Who is Derek Frey?
Derek Frey has been a futures trader since 1989 and is Head Trader and partner at Odom & Frey Futures & Options, a firm that specializes in high probability, defined risk option spread trades for the futures markets. Derek is also co-author of O&F News & Views, a weekly newsletter that is published by several publications and over 20 financial websites including FXStreet.com.

Speech Material:

FX street.com is delighted to bring a new informative, analytical, review of the market week. We are delighted to have the Derek Frey an expert from Odom & Frey Futures & options on board weekly to bring you spontaneous updates on the goings-on in the Forex market, specialising on signals or measures that tell us how the economy is performing & economic indicators. Weekly meet with the the expert, listen to their thoughts and inside view on the market as they see it.

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TOPICS FOR TODAY'S SESSION: ***Refresh page ***

This week should be a big week for currencies. Either the Dollar is going to break out above 90.00 or it is going to fail. Either way it will send ripples through the rest of the currencies. Personally I am still a Dollar bear so I expect if to fail. But as always I am using stop and reverse orders so I am not “married” to my position.

Euro: The Euro continues to struggle. 1.2000 did not hold 1.1866 is the last line of support before we break to new lows for the year. I continue to get long the closer we get to 1.1900 with stop and reverse orders in around 1.1850.

US Dollar: The US Dollar continues to trade in a narrow range between 89 – 90. There is strong resistance at the 90.30 level and I would expect that to hold this week.

Swissy: Even in the face of a strong Dollar the Swissy has managed to nudge itself higher. I would not be surprised by a pullback this week before breaking out to new highs above 131.00.

Pound Sterling: So far support at 175.00 is holding. A test of support at the 173.00 level is possible and I expect that if that is tested it will hold. Getting long down here with stops below 173.00 should do well.

Yen: The Yen looks like it is trying to break out above 114.00. I was short and have now been stopped and reversed my position to long from 114.06 with a new stop at 113.40.

Session Transcript:

FXstreet Moderator (Oct 3, 2005 10:06:59 AM)
Thank you for joining today’s Live Perspective Broadcast We will begin with our expert Derek Frey Head trader from Odom & Frey Futures and Options summarising his views and thoughts on the coming week.

FXstreet Moderator (Oct 3, 2005 10:07:09 AM)
Meanwhile please prepare any questions you may have.

FXstreet Moderator (Oct 3, 2005 10:07:19 AM)
Remember Today its open floor any questions you have playing on your mind or just queries in general please prepare and get ready to post them.

FXstreet Moderator (Oct 3, 2005 10:07:32 AM)
Thank you for your participation.

FXstreet Moderator (Oct 3, 2005 10:07:44 AM)
For those who are unfamiliar with the new Live Perspective Broadcast like this, please feel free to ask questions at anytime to the moderator.

FXstreet Moderator (Oct 3, 2005 10:08:52 AM)
Please welcome back Derek Frey Of Odom & Frey Futurees & Options.

Derek (Oct 3, 2005 10:09:33 AM)
Good morning afternoon or evening depending on where you are. As always I want to send a big thank you to all the great people at FxStreet for hosting this. I also want to thank all of you for your participation in this chat. Remember this is an open forum about trading so feel free to ask anything market related and I will answer as best I can.

FXstreet Moderator (Oct 3, 2005 10:11:29 AM)
Lets begin with prereg questions:

Derek (Oct 3, 2005 10:11:49 AM)
Q: We have seen several weeks side way chop with large candles with USD/CHF and EUR/USD . Which direction do you see these currencies going when they break out of current ranges When would you think a direction will take place

Derek (Oct 3, 2005 10:12:31 AM)
As I said in my opening comments this week is critical...

Derek (Oct 3, 2005 10:13:05 AM)
Either the Dollar will breakout or not this week and I am betting not.

Derek (Oct 3, 2005 10:13:38 AM)
Q: On 30 September the markets were very volatile. In particular GBP/USD went up by 100 pips and down again by 100 pips in the course of a couple of hours. This volatility was predicted in advance by some as being caused by the Homeland Investment Act and the "London fix". Why would these two factors cause such volatility and how can we profit from this in future

Derek (Oct 3, 2005 10:15:40 AM)
A: Trading events like that can be very frustrating. While some may have correctly predicted that I doubt many were able to profit from it. A move that strong followed by that fast of a reversal can leave even the best traders left wondering what is going on…

Derek (Oct 3, 2005 10:16:41 AM)
I personally do not like “event trading” to hard to predict consistently, I prefer trend trading to event trading.

Derek (Oct 3, 2005 10:17:11 AM)
Q: In your Sep 26 session you said you would be buying euro nearer 1.1900 with stops below 1.1850. During the Japanese session euro touched a low of 1.1928 and is currently at 1.1950 (lunch hour - Japanese session). Is this a fake break out Will you still be buying euro at these levels

Derek (Oct 3, 2005 10:18:15 AM)
A: I am sticking to my original plan and am accumulating longs at the current level

FXstreet Moderator (Oct 3, 2005 10:18:49 AM)
Please post your questions now:

JSB (Oct 3, 2005 10:19:37 AM)
Natural Gas inventories are up so why are prices about double what they were last year? What are futures traders seeing that makes them so bullish on Natural Gas?

Derek (Oct 3, 2005 10:23:36 AM)
A: Natural gas is very hard to transport and currently cannot be imported from other countries. Inventories are “just in time” and any disruption at all will cause large price spikes as you have clearly seen recently…

Derek (Oct 3, 2005 10:25:04 AM)
A: They are up but they have not met the projected builds fow the winter. Primarily because of the heat wave this summer through the midwest and western parts of the US. But also because of the recent storms the floating Liquified Natural Gas operastions have been majorly hindered. Last weeks data showed a 58 BCF build while projections were for a build over 61 BCF

FX (Oct 3, 2005 10:26:44 AM)
do you think that the market prices in economic data before the fact. ie. today we had good pmi in europe which would explain friday staying above 1.20 handle. But today the market had fell on tankan disapointment but the us ism has come out above expected and the market cant move much more do yuo follow the rule of buy the rumour sell thefact?

Derek (Oct 3, 2005 10:27:50 AM)
Markets are always trying to anticipate new/events. Yes I do subscribe to the buy the rumor sell the fact idea.

B_happy (Oct 3, 2005 10:30:03 AM)
how can we spote the correction signal in such trend? GBP, EUR any reversal points??

Derek (Oct 3, 2005 10:32:41 AM)
Depends on what time frame you are trading but for me I just trade the major daily trend and reversal points are always prior support or resistance levels

Barry (Oct 3, 2005 10:33:15 AM)
many brokers are now starting to recommend gold and gold shares how will gold effect currencies?

Derek (Oct 3, 2005 10:34:15 AM)
Many currencies are back at least partially by Gold. The Euro for instance is backed by 10% gold. So Strength in Gold should support those currencies.

Derek (Oct 3, 2005 10:35:47 AM)
We have seen evidence of this recently…while the dollar has been strong so has gold which is not normal, but because of that the Euro and in particular the Swissy have not gotten beaten down as much as they would have if gold had been weak

wallache (Oct 3, 2005 10:36:12 AM)
Derek, with regards to Capital Management, what sort of risk to reward ratio do you like to look for before placing a trade? Also how much of your account do you look to expose on a trade? Thx

Derek (Oct 3, 2005 10:36:32 AM)
Very good question...

Derek (Oct 3, 2005 10:37:00 AM)
I always try to do trades that have arisk to reward ratio of at least 3 : 1

Derek (Oct 3, 2005 10:38:17 AM)
Any risk reward ratio that is great than 10:1 is suspect to me though. Risk reward ratios great than that usually have a very low probability of working out.

Derek (Oct 3, 2005 10:39:31 AM)
Also never put more than 10% of your account into any one trade. Preferably less than 5% if that is realistic for your account size

Guest (Oct 3, 2005 10:40:38 AM)
would you say that most traders lose money because they think a chart and technical indicator is the key to trading. what % out of 100 do you derive trading decions from charts?

Derek (Oct 3, 2005 10:41:37 AM)
Q: would you say that most traders lose money because they think a chart and technical indicator is the key to trading. what % out of 100 do you derive trading decions from charts?

Derek (Oct 3, 2005 10:42:47 AM)
In a word yes…I have been a technical analyst for many many years now and I have formed my ow opinions about charts and here they are…C

Derek (Oct 3, 2005 10:44:48 AM)
Charts are not a chart of price at all in fact the numbers them selves are meaningless.

Derek (Oct 3, 2005 10:45:02 AM)
Any chart is not a chart of price or numbers but rather it is like an EKG, it is really a chart of human emotion

Derek (Oct 3, 2005 10:45:19 AM)
That is why chart patterns repeat themselves, it is not the charts that repeat themselves but rather the traders.

Derek (Oct 3, 2005 10:45:48 AM)
People tend to forget that traders make the numbers not the other way around.

Derek (Oct 3, 2005 10:46:28 AM)
However I do base at least 75% of all my trading decisions on technical factors

FXstreet Moderator (Oct 3, 2005 10:48:05 AM)
Last question:

Matthew (Oct 3, 2005 10:48:11 AM)
if ur confident in your position there's no reason why you shouldn't put more than 10% in

Derek (Oct 3, 2005 10:49:17 AM)
I would disagree…No one can ever predict the future every trade is just a best guess unless you are trading inside information…

Derek (Oct 3, 2005 10:49:55 AM)
Overconfidence is the fastest guaranteed path to ruin in trading…trust I know from experience.

Derek (Oct 3, 2005 10:50:45 AM)
Money / risk management is the most important part of being a successful long term trader.

FXstreet Moderator (Oct 3, 2005 10:51:33 AM)
Thank you Derek

FXstreet Moderator (Oct 3, 2005 10:51:43 AM)
We also hope you liked this new Q&A look & feel and format and that, above all, you found it useful. If your questions was not answered please email Derek

FXstreet Moderator (Oct 3, 2005 10:51:53 AM)
You can contact: Derek

FXstreet Moderator (Oct 3, 2005 10:52:16 AM)
FEEDBACK: Please feel free to post feedback about today's session. We would appreciate this very much. I will be logged on for a while. claire@fxstreet.com

Derek (Oct 3, 2005 10:52:32 AM)
Well looks like we have run out of time…thank you all again for your great questions and as usual if I did not get to your question or you have one that you would like personally answered just email me directly after this at derek@odomandfrey.com

FXstreet Moderator (Oct 3, 2005 10:53:37 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.

FXstreet Moderator (Oct 3, 2005 10:54:24 AM)
Link: http://www.fxstreet.com/chat/transcriptrequest.asp Password: Frey168168

FXstreet Moderator (Oct 3, 2005 10:54:56 AM)
As of November 1st the transcript will only be available for those who are premium users.

FXstreet Moderator (Oct 3, 2005 10:55:47 AM)
Join us tomorrow for ADX strategies with Adrain Aquaro at 10:00EST 14:00GMT

FXstreet Moderator (Oct 3, 2005 10:55:58 AM)
Thank you all and Thank you Derek.