FXstreet.com Live Sessions Archives

Forex Mentor - one to one

Expert:  Jay Lakhani, Professional trader author of The way to trade Forex 
Start:    February 28, 2006 - 15:00GMT 10EST 
End:     approx. 16:00GMT 11EST 

   
Topics that will be covered for above session are: 

• How to become a consistent Winner

Who is Jay Lakhani?

Jay Lakhani is a professional trader and has been involved with markets since his early twenties. He has extensive experience of both the US and UK stockmarkets - trading in derivatives, forex, index and stock futures, and commodities.
Jay uses Technical Analysis in his trading, and believes that successful trading is based on your strategies and techniques, psychology and having a disciplined money management.

A Fundamental look at the US’s twin deficits

Expert:  Peter Rosentreich, Author of 'Forex Revolution' 
Start:    February 27, 2006 - 16:30GMT 11:30EST 
End:      approx. 17:30GMT 12:30EST 

Topics that will be covered for above session are: 

• How to find clarity in the data
• Forecast potential effects on the USD on the global currencies markets

Who is Peter Rosentreich?

Peter Rosentreich is a principle and foreign exchange trader for Rose Stevons & Company, a boutique New York alternative investment firm specializing in providing retail clients with innovative, structured products. Mr. Rosenstreich has extensive experience in the retail Forex sector. He is licensed with a series 3, 7, and 63, and is registered with the NASD. Mr. Rosenstreich holds a BA in History from Clark University and an MBA from the City University of New York, Zicklin School of Business.

Speech Material:

The Twins

In the short period of twenty years the United States has moved from the position of creditor to the world to the world largest debtor nation in dramatic fashion. By all reports the US in 2004 ran up debts exceeded it assets by roughly $2.5 Trillion or 21% of GDP. It has been theorized that the main culprit are the enormous current account deficits which has been spurred on by the return of fiscal ill-responsibility driving the government’s budget deficit. 

It has been over twenty years since the “Twin Deficits” which is defined as the budget deficit and trade deficit, simultaneously reached record nominal levels but clearly they are back and this time with an added partner, the disappearance of US Personal Savings (an event has led to considerable speculation and dire forecasts). The naming of the two economic indicators are not haphazard since there is significant economic theory and empirical evidence that suggests a strong correlation*.

*no one says the “Twins” move in perfect tandem but only suggest that they are linked and due to unique events might diverge as seen in the 1990’s.

Basic Definitions

The current account balance - is the sum of trade  +  what the US earns from its international holdings.

The budget balance - is the difference between government tax revenues + total government spending.

Both emerged as negative in 2004 and 2005.

By the Numbers

In mid February 2006, the Bush administration projected that the budget deficit for the 2006 fiscal year would reach a nominal record of $423 Billion. This number well exceeds the 2005 number of $318 Billion. Now take out social security and in 2006 the US will be running as astronomical budget deficit of $602 Billion. Again in mid February, the US Commerce Department reported the 2005 trade deficit* reached a record $726 Billion, a $108 Billion increase over the 2004 numbers. For the fiscal 2005 the budget deficit was 2.6% of GDP and the trade deficit was 5.8% of GDP.

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Arguments why the Twin Deficits should not be a concern

1. Global Savings Rate – provides cheap capital as risk adverse investors look for stability over returns.

2. Not Twins – the two deficits are not related and therefore lack the thrust expert predict

3. Investment Boom – advances in the stock market will provide the assets need to attract new capital flows

4. Size of the Global Economy – because the current size of the over all global economy, the Twins are a minor issue.

5. China – China’s and other rapidly developing nations need USD.

What can occur?

Simply put if foreign investors, who are currently financing our deficits, decide not to purchase US denominated assets, the US will have a rapid rise in interest rates and falling dollar. How fast and how hard is open for debate.

As in the mid 1980’s when the “Twin” burst onto the economic scene the US came under sharp pressure to devalue and US interest rates were pushed higher. These adjustments are classic manifestations of return to balance and speculated to be at the core of the stock market crash of 1987. Two significant differences between then and now is the size of the deficits and the lack in private saving which provided a cushion to rising rates.

Derek Frey's FX Outlook

Expert:  Derek Frey, Head Trader of Odom & Frey Futures & Options 
Start:    February 27, 2006 - 15:00GMT 10EST 
End:      approx. 16:00GMT 11EST
   
Topics that will be covered for above session are: 

   Do not miss your opportunity to be updated in your trading needs this week.

• Derek Frey brings his view point of the forex market for coming week.
• Discuss market reaction to news.
• Enjoy his currency pairs predictions.
• Must have FXtrading information for a successful trading week

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:

EUR/USD: Moved my stops up to break even early in the week and then got stopped out there. So no harm no foul but I am a bit surprised by the resilience of the Dollar. With more and more traders beginning to expect the Fed to continue raising rates for the foreseeable future a strong Dollar could continue longer than we originally expected. I did however go long late today and will hold long over the weekend.

USD/CHF: Finally went short late today and will keep them over the weekend as well, stops working at 132.12

GBP/USD: Still long from late last week at 174 with current stops just below 173.50.

USD/JPY: What a week for the Yen! We went short at 119 and covered below 117 two days later! I now have a small short position on from 116.92 with a stop at 117.20. The range I mentioned last week was broken out of on the downside but so far has not really followed through. Look for momentum to pick up and I would not be surprised to see 116 hit early this coming week.

AUD/USD: Got stopped out at a small loss and am now standing aside. I have a slight bias to the bull side but will wait for a move back above 74.50 to confirm.

USD/CAD: Moved my stops up to my entry and got stopped out at breakeven. I did however go long at 114.93 over the weekend

FXCM's Live Weekly FX Analysis

Expert:  Boris Schlossberg, Currency Analyst of FXCM 
Start:    February 24, 2006 - 15:00GMT 10EST 
End:      approx. 16:00GMT 11EST
   
Topics that will be covered for above session are: 

• Do not miss your opportunity to be updated in your trading needs this week.
• Boris Schlossberg brings his view point of the forex market for coming week.
• Discuss market reaction to news.
• Enjoy his currency pairs predictions.
• Must have FXtrading information for a succesful trading week

Who is Boris Schlossberg?

Boris Schlossberg serves as Fundamental Analyst at Forex Capital Markets. He has been an independent trader since 2000. He is also a frequent contributor to SFO Magazine with articles focused on risk management.

Speech Material:

DailyFX Fundamentals
• Dollar Bulls Have Nothing But Jobless Claims
• British Pound Trades Higher On Waning Cut Suggestions
• Fukui Comments Spark Fly High Yen

US Dollar
Greenback weakness could be felt since the morning hours as the U.S. fell victim to better than expected economic data in the majors and a dearth of powerful reports on the day. The sole release that powered some retracements in the market was the weekly initial jobless claims report. Expected to rise 300,000, applications for first time claims actually dipped to 278,000, additionally below the 297,000 seen in the previous week. The positive report now sets the stage for the durable goods orders report set for release tomorrow. Should the report be released better than expected, it would be a continuance of the recent string of dollar positive data seen over the course of the quarter as it reflects healthy consumer spending in the world’s largest economy as the labor market tightens. Expected to decline overall on a plunge in the demand for commercial aircraft, the monthly figure is still expected to rise once again. Ultimately, with policy makers now looking for economic data in justifying further rate hikes, policy makers may very well be prompted once again.

Euro
Rising to a 14-year high, German business sentiment increased in the month as, simultaneously, consumer confidence in the region’s largest economy expanded to an 11-month high. According to the Ifo confidence index, the monthly survey rose to a reading of 103.3 from a lower 101.5 reading seen in January. Coupled with the better than expected rise in consumer confidence in Germany according to the GfK survey, the future looks brighter for the once downtrodden economy as it becomes clearer that the central bank will raise rates in March. This is somewhat contrary to figures that were seen over the previous week as overall growth prospects were looking thin in both France and Germany, both powerhouses for the member states. Orders, reflective of exports, additionally fell in the German economy. Nonetheless, with the broader spectrum of exports in the positive, stronger global foreign demand looks to compensate for losses domestically as the region continues to battle with record inflation and head into positive territory. Looking ahead, traders’ focus looks to turn to consumer prices in the German economy tomorrow in justifying the anticipated rate hike.

British Pound
Sterling got a lift against the greenback today as interest rate cut fears dissipated following yesterday’s optimistic Bank of England meeting minutes and a report that reflected healthy order activity in the economy. With a clear 8-1 victory on the side of a stay on rate cuts, market sentiment is now growing more confident that the upticks seen in the housing sector and manufacturing are offsetting considerable weakness in the retail sector. As a result, in light of last night’s disappointing total business investment report, traders are now looking optimistically ahead to tomorrow’s gross domestic product report. Expected to rise in line with the previous reading of 1.7 percent annually, the monthly climb is looking rather upbeat. Rising 0.4 percent in the previous reading, growth in the fourth quarter is expected to rise 0.6 percent, reflective of the recent string of manufacturing upticks as production is revitalized. Should the figure rise against the consensus, looking ahead, more emphasis may be placed on the domestic consumption as it continues to remain a thorn in the queen’s side.

Japanese Yen
Yen bulls finally had their day on the session, driving the domestic currency higher across the board and the most against the dollar in almost two months after comments by Bank of Japan Governor Toshihiko Fukui suggested that interest rates may be ready to rise. Citing the end of seven year deflationary levels, the central banker noted that monetary authorities will reduce the amount of physical cash that is being flushed into the country’s financial system “immediately” upon indications that inflation is formally rising as growth continues in the world’s second largest economy. However, although certainly accepted as optimistic, market sentiment remains resoundingly convinced that rates will not realistically rise till the second half of the current calendar year at the earliest. Nonetheless, the announcement has sparked numerous sources of speculation that the carry trade notion may very well be on its way out as a result. Used mostly for its zero interest rate yield, the Japanese yen denomination will become a foregone source of low rates compared to higher yielding currencies as a shift seems likely as a result of the potential near term hike. Separately, merchandise trade balance figures were disappointing to say the least as the economy has now shifted to a deficit, the first time in five years .

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Capturing volatility in Today's Currency Market

Expert:  John F. Carter, President of Trade the Markets, Inc.
Start:  February 23, 2006 - 15:00GMT 10EST
End:  approx. 16:00GMT 11EST

Topics that will be covered for above session are:

•    Psychology a traders business plan to build a foundation
•    Best set-up for FX traders

Who is John F. Carter?

John F. Carter, CTA, is president of Trade the Markets, Inc., and principal of the money management firm Razor Trading. Carter speaks often at Trader's Expo and other trading industry events, and is a regular contributor to SFO magazine, award-winning website tradethemarkets.com, and Chicago Board of Trade publications.
John has written numerous articles and has been a featured speaker at a number of major investment conferences over the last 4 years. In addition to trading, he consults with various brokerages, money managers and exchange.   

Speech Material:

EMOTIONS ARE FINE AT WEDDINGS AND FUNERALS
Trading is the most deceptive profession in the world. Do you know anyone who has recently walked into an airport, jumped into the cockpit of a jumbo jet loaded with passengers, and taken off down the runway without any prior training? Yet people will routinely open an account and start trading without any guidance whatsoever. And that is equally insane. Little do they know that their emotions and the natural functions of their brain are against them right from the opening bell.

Just as a chatty masseur is the enemy of a relaxing spa treatment, emotion is the enemy of successful trading. Remember, the markets are set up to naturally take advantage of and prey upon human nature, moving sharply only when enough people get trapped on the wrong side of a trade. This sweeps a burst of fear, frustration, and rage into the markets—and creates fabulous trading opportunities for the prepared trader. To head into this adventure called trading without having a firm grasp of how human emotions move markets, and how human emotions sabotage your own trading, is like trying to hail a taxi in Manhattan during a thunder shower.  In other words, the overwhelming odds are against you. 
The whole idea of this chapter is to lay the groundwork for the setups we discuss later in the book. With this foundation, traders will be able to understand how to control their “inner demon” with respect to trading. This is the creature that mentally blocks traders from following the parameters of a particular setup once they are in the trade. This is very similar to the brain freeze that occurred during the river rafting incident discussed in the introduction. It is also important to remember that every trader has different dominate personality traits that they use to absorb information and relate to the world around them.  Some traders are more visual, others more auditory, and still others are more kinesthetic—they related to the world based on how events make them feel on the inside.  These three traits can have a big impact on a person’s trading.  For someone who is dominantly kinesthetic, they are doomed from the outset—until they realize that is how they relate to the world and what impact that has on their trading.  Near the end of the book there is a chapter on tips for when trading “isn’t working for you.”  In this chapter there is a personality test that helps to determine what type of personality you are and the pros and cons for each personality trait.  The cons will work against a trader without their even knowing it—until they learn about it and realize what’s going on.

In addition, the trader will realize the importance of utilizing a specific methodology for each setup, because each setup takes advantage of a different aspect of human emotions. A trader cannot apply the same trading rules to all setups across the board. This is one of the biggest mistakes I see newer traders make. A two-point stop in the emini <Au: word ok? On their website, www.cme.com, it is listed as E-mini S&P but I’ve seen in both ways in magazines, etc.> S&Ps can work well with one setup but cause nearly every trade to get stopped out in another. Trading five lots can work well with one setup but be devastating with another. By understanding the psychology behind the trade, the individual will also then understand the right parameters and the right allocation to use for each setup. Each setup really is unique, and it has to be treated that way. 

The end result of this chapter is for you to develop what I call a professional trading mindset. Although we discuss setups for most of this book, traders have got to have the trading psychology nailed down or their trading experience will be short-lived and painful. 

SHOW ME A GUY WITH A SYSTEM, AND I’LL SHOW YOU A GUY WHO IS WELCOME IN MY CASINO
This is an old Las Vegas saying that applies equally well to the financial markets. Having a system gives people a sense of security—nothing can go wrong. Every time I walk into Mandalay Bay or Bellagio in Las Vegas, I am reminded that all these fabulous structures were paid for by people who thought they could beat the black jack tables. The owners of the Luxor borrowed $550 million over 20 years to build their place. They were able to pay it off in less than three. Tell them at the front desk that you have a strategy, and you’ll most likely get a presidential suite and a private table. 

Why don’t the strategies work in Vegas?  The reason for this is twofold: The house has an edge with percentages, and as soon as the system falters a couple of times, the human mind gets to work trying to tweak it to make it perfect. This eventually screws up the entire process. In the casinos, as in trading, it takes only one stupid bet to blow the whole wad. Casino owners know this, and this is why they sell the strategy books right there on the property, prominently displayed in their own gift shops. This elevates the concept of the fox guarding the hen house to a whole new level.

It’s the same process with the markets. The odds are against the trader surviving because the market has an edge: it doesn’t have any emotions. Like the river making its way to the ocean, the markets ebb and flow with total disregard for the objectives of the people hanging on for the ride. Humans have a tendency to try to imprint their will on the markets. This is like trying to get a tornado to shift course by yelling at it. 

Visual Support:

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Using Linear Regression

Expert:  Igor Belitsky, Currency Analyst of Fx Currency dealer.com 
Start:  February 22, 2006 - 15:00GMT 10EST 
End:  approx. 16:00GMT 11EST 

   
Topics that will be covered for above session are: 

•    General trading rules
•    Linear Regression and Elliot Waves
•    Linear Regression and technical indicators

Who is Igor Belitsky?

Igor Belitsky is a specialist in applied mathematics and trading systems development. Since 1996 he has been working as a forex market analyst in a Moscow based financial company.

Speech Material:

1. General trading rules

Linear Regression line is standard trend-line on the chart calculated using minimal squares method. This method calculates Y=a+b*X trend-line by minimizing the sum of squares of vertical deviations between Close value and Price value of the trend-line during given time interval. Technical analysis software calculates (a, b) values and draw Linear Regression line for any time interval.

Price tends to move up and down just around linear regression line. If we draw parallel lines through local picks above and below linear regression line the rest of price action often take place inside of that channel.

Below is EUR/USD weekly chart with linear regression (LR) channel example. First LR channel was based on linear regression line drawn from Jul 2001 to Dec 2004. We can see that euro rally from 0.8300 to 1.3660 was well inside rising linear regression channel. Current down-trend is also inside descending LR channel.

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2. Linear Regression with Elliot Waves & Technical studies

Linear regression line is best working with Elliot Wave analysis. If we have Wave3 is in progress we can draw Basic linear regression line from the start of Wave1 to the end of Wave3. After that we can draw first parallel line through the end of Wave2. Wave4 is expected to end around this first line.

We can also extend Basic LR line. This new extended line will mark the end of Wave5. Quite often Wave5 might be very strong and can exceed the length of Wave3. In this case we can draw second parallel line through the end of Wave3, and Wave5 is expected to hit second parallel line. The idea of these parallel lines is similar to using classic Elliot Wave Channels.

Below is GBP/USD 4 hours chart with Linear Regression line and Ichimoku & MACD technical studies. After the price hit 1.7325 at 08-Nov-2005 we draw Basic linear regression line from from the start of Wave1 at 27-Oct to the end of Wave3 at 08-Nov. First red parallel line help us to identify the end of Wave4 and the start of Wave5. Additional trading rules can be applied using technical indicators: The start of Wave5 should be near Ichimoku clouds area; MACD should be near zero line.

Extended red line is drawn from the end of Basic linear regression line. We can see that price hit this extended red line just near the end of Wave5. Additional trading rule can be applied using technical indicators: MACD should stay above its Signal line.

We can see that Linear Regression line helps us to predict both the start and the end of Wave5 and so far can be used as effective tool in Elliot Wave analysis.

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Trading with Bands and Channels

Expert:  Robert Firestone, Analyst & CTA of Alaron's Las Vegas division
Start:  February 21, 2006 - 15:00GMT 10EST
End:  approx. 17GMT

Topics that will be covered for above session are:

•    Trading with Bands and Channels
•    To identifying day trading opportunities by combining
•    Moving Average Channels
•    Bollinger Bands
•    Moving Average Crossovers
•    Trend Lines

Who is Robert Firestone?

Robert Firestone is a CTA, CPO, Analyst and a broker with Alaron Trading. As a broker he has spent the last four years working with individual traders to improve their trading skills and strategies. Currently Robert teaches several classes a week for fxtradingschool.com covering topics from FOREX basics to technical analysis and system trading. He is also launching several new managed account programs in both the futures and FOREX markets.

Speech Material:

Traded markets and water have a very similar characteristic. Both spend all their time looking for the path of least resistance. Successful trading means identifying the path of least resistance.

Finding that path is easier said than done. Nothing will work all the time, but I have found a combination of indicators that for me help identify a likely path for the market.

Using a combination of a moving average channel, three moving averages and Bollinger bands on a 15-minute chart.

Click image to enlarge:

Moving Average Channel – 28-period exponential average based on high and low.
If the market is trading within the channel the market lacks a clear direction and should not be traded.

62 Exponential Moving Average – above only trade long, below only trade short. Trade with the trend identified by the relationship to the average.

5 & 13 Exponential Moving Averages – Look for crosses around breakouts of MA Channel.

Bollinger Bands – based on 20 periods & 2 standard deviations. Used to identify directional volatility and prime opportunities to roll up stops.

Controlling your trade

Expert:    James Balacco, Private trader and researcher of Syslinx
Start:  February 21, 2006 - 7:30GMT
End:  approx. 8:30GMT

Topics that will be covered for above session are:

•    Knowing how much of your total allocation to spend on each trade
•    Defining the Limits
•    Understanding when to risk more or less

Who is James Balacco?

James Balacco has been a private trader and researcher for the past 15 Years. He hs spent many years studying Full time with Joe Rondinone the last living Student of W.D. Gann.

Speech Material:

A student was talking about trading being like horse racing. Instantly, I queried the comment and asked why he would think like that – his puzzled look told me all. My response to him was that the difference is control, using the following analogy to illustrate my point: My understanding is that if you place a bet on a horse race - lets say $10,000 on horse number 3 (for whatever reason) - and if the horse falls over, or if the horse comes last, or finishes other than first, you have lost your “investment”.

Trading is different. If I place the $10,000 with the “bookie” on horse number 3 and at the first 5 meters the horse falls, I immediately go to the bookie, sell my current position on that horse, taking back $9000 and the bookie keeps his $1000. I now see horse number 5 moving forward so I place my bet of $9000 on it. Then half way through the race, number 5 hits the front and I decide to cash in my position on this horse (at a reduced rate of winnings). None, the less, I have made 25%. I now have $11,250 and I place a bet on Horse number 8 as it looks to be gaining momentum. The race finishes and number 8 comes first, returning a 40% profit.

Minus some commission, the $15,750 I have made might be say, $15,000 even. The fact is, I had control at all stages. I could move around and select my targets and if I was losing I could swap and move to another selection. While this would be a gamblers dream or a bookies nightmare, you can’t do this on the track. However, you can do this in the market. My point is that it is vital to have the ability to keep control, to keep emotion and opinion out of the decision making. Rely only on fact and measurable evidence to support the position you are taking.

Nevertheless, over the past 15 years I have met many a “market player” who has the same attitude towards trading as they do to betting on horses. Once a trader applies control it can be further refined. In the above analogy you may have noticed that 100% of the capital was used on every “bet /trade”. In the long–term, this is a flawed approach and requires much greater thought and study to fully define the true value of each trade and the best allocation of your capital resources.

Knowing when to place a maximum or a reduced amount to each trade is very important, not only because of the risk, but because it should include the amount of supportive evidence to back up your decision to enter the trade.

Defining the intensity of your trade gives the trader a high degree of control and knowledge as to when to risk more or less within their limit. I may have $100,000 to trade, so I break down my risk in my portfolio to 10 stocks ( in laymen’s terms this enables the system to minimise the effect of placing “all your eggs in one basket” so to speak). Now each stock is allocated $10,000. However, placing $10,000 for each stock is not placing sufficient control on managing your trade.

The use of a “rating” technique becomes vital, as every entry is rarely the perfect setup. (A back-test is vital and necessary but it is often misunderstood, as the principle of finding a profitable system is not just your core concern.)

A simple way is to rate your entries – I use triple AAA, AA and A trades.

Effectively a “AAA” has multiple layers of mathematical levels supporting the entry position. AAA trades may only occur three times a month, but has never netted you an overall loss and has provided a high reward for the effort.   Traders develop their own system to categorise their opportunities, whereas in the analogy above, I am not receiving tips (does that sound familiar?), or like the name of the horse or even like a particular number to determine my position.

“AA” trades are similar but do not have as many supportive rules and hence the trade is allocated a reduced amount of capital. “AA” trades occur more often and may provide an entry every week.

The “A” trade is a common trade with fewer mathematical arguments but still requires enough support rules to warrant the risk for the reward. “A” trades may occur every two to three days.

Effectively, the intensity of the entry is defined by the “rating”.   Placing everything on each entry can be very costly, but by applying defined mechanical rules the trade can be controlled so that the trader knows the risk and the possible effect if it goes against them.

Even in an “AAA” trade the maximum - in this case $10,000 - is not allocated in full. Why? It is an often overlooked addition to trading – you may need to pyramid or add to your position and therefore a percentage is left to do this. This applies to futures and stocks.

Some groups of people apply a style in which they have a natural tendency to be conservative, while others have a more aggressive stance. Some people might ask, “Why not just trade the “AAA”?” While this is acceptable, you can then face issues of funds not working for you all the time with less frequent entries, so missing one would be painful. Increasing the portfolio size to 50 or 100 stocks would accommodate this. However, the “AA” and ” A” are profitable too, and some markets provide larger profits using the “AA” & “A” combined. You must prove your system’s capability, know it, and apply it.

One of the mathematical layers used to determine the rating system must be risk, with an “ AAA” trade having a lower risk than the “AA” and “A” trades.

Now that you have the principle in place, how do you apply this? The following is a basic example:

- “AAA” trade has only a 1 -2% risk on the trade entry and a reward of 50% or higher. You have three or more indicators that all indicate the same entry within the same range.

- “AA” trade has a risk of 3% - 5 % with a reward of 30% to 50% return, and you have two or more indicators indicating the same entry.

- “A” trades may have a 6% risk to a limit of 20% and provide a reward of better than 15% and at least one indicator.

Please note, the accuracy of the system is still 30% or better. As a general rule in trading, 30 % accuracy provides us with an acceptable profitability. Capital preservation is paramount and therefore control of each trade must be implemented.)

The accuracy for an “A” trade is still better than the “trade all entries” In the back test every trade is taken, however, when you apply the control, some of these trades will not match the criteria and won’t be included in your final trading plan. These are the trades that you stay away from. Remember, there are three positions - LONG, SHORT and STAND ASIDE.

To summarise, let’s look at a table of a Strategy, Rating, Money Management and Portfolio Management system. These four components are the basis of any trading system platform.

A $100,000 split to A AA AAA
1 stock1 4,000 6,500 8,500
2 stock2 4,000 6,500 8,500
3 stock3 4,000 6,500 8,500
4 stock4 4,000 6,500 8,500
5 stock5 4,000 6,500 8,500
6 stock 6 4,000 6,500 8,500
7 stock7 4,000 6,500 8,500
8 stock8 4,000 6,500 8,500
9 stock9 4,000 6,500 8,500
10 stock10 4,000 6,500 8,500

This gives you an idea of what a portfolio and allocation may look like. An entry which qualifies as an “A” trade would allow you to place $4000 into that trade, “AA” $6,500 and so on. Depending on their rating, stocks would be given different amounts from the fund allocation.

It is possible to advance the techniques by making the allocations dynamic so that funds are constantly in use, or add a secondary system to the rating system. By defining the control of each trade your performance should improve and your capital is preserved. Hope this has been helpful.

“Knowledge is the advance to success, but you cannot have knowledge unless there is understanding”.

James Balacco All Rights Reserved.

James has been a Private Trader and Researcher for the past 15 years. He has spent many years studying with Joe Rondinone, the last living student of W.D. Gann.

He can be contacted on jbalacco@syslinx.com.au -(08) 83038104

The Limit of the USD

Expert:  Adrián Gutiérrez, Financial Analyst, Nexum Capital
Start:  February 20, 2006 - 16:30GMT 11:30EST
End:  approx. 17:30GMT

Topics that will be covered for above session are:

•    USD loosing strength against Euro
•    Interest Rate Rise end of cycle
•    Effect of energetics price on USD for the next months
•    Risks of Fed with Bernanke
•    As a plus, 'when not to trade'

Who is Adrián Gutiérrez?

Adrian Gutierrez is Industrial Engineer with master on International finances and global economy. Actually he is the Operation Manager of Nexum Capital in Mexico. Last years track record, 75% profit. Finance and Industrial Consulter. Also, He offers courses and training to e-trader.

Speech Material:

The USD has been weakening during this month against the EURO, being above 1.200 and trying to go below 1.9000. As long as this year what has been determining the exchange rate is basically the energetic prices and the interest rate on both sides. Many investors still do not know the pair’s next move. American production is on the rise, this will cause a higher elevation, as well as an increase on the rates. Oil disputes in Iran is still unstable and is well know that for this year US forces will be entering the country in “in search of nuclear facilities”. By the other hand EURO has been gaining strength, due to the economic and political stability and for the incomes that are coming because of next World Cup, where tourism incomes will overpass any expectations. Bernanke is on the chair and is well know that will do anything possible and impossible to keep USD competitive even when no reasons exist.

Derek Frey's FX Outlook

Expert:  Derek Frey, Head Trader of Odom & Frey futures & Options 
Start:  February 20, 2006 - 15:00GMT 10EST 
End:  approx. 16:00GMT 11EST 

Topics that will be covered for above session are: 

• Derek Frey brings his view point of the forex market for coming week
• Discuss market reaction to news
• Enjoy his currency pairs predictions
• Must have FXtrading information for a successful trading week

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:

EUR/USD: The Euro continued to trend lower most of the week but it looks like Thursday’s low was a turning point. I would like to see a move back above 120 before I get too excited about the long side again, but for now I am long with stops below Thursday’s low.

USD/CHF: So far I am still on the side lines here but I continue to be looking for a short entry point. I do not think we will see a move above 132 near term so I will be getting short next week with stops just above 132.

GBP/USD: Went long late in the week at about 174 with current stops just below 173.50

USD/JPY: The yen seems unsure of itself right now. I have a slight bias to the upside but for now I am buying near 117 and selling near 119 as this has been the range now for all of this month.

AUD/USD: The Ausi seems to have found a bottom and I will be going long here next week with stops below todays low.

USD/CAD: Still long from 115 with stops working at 114.88.