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Traders #4: Global Macro Currency Trading with Sam Eder

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Welcome

G’day, Howdy, Guten Tag, Ni Hao, Вітаю, Hallo, Konnichiwa, Chào and welcome to session #8 of the Forex System Development Workshop.

Live and Interactive

Don’t be a Shy Sally or a Bashful Barry, ask questions,

take your time.

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Global Macro Currency Trading with Sam Eder

Global Macro Currency Trading

My definition: Placing trades where there is a fundamental expectation of a move.

Note: I am still happy to trade on the price action alone.

The Implementation Needs to Match the Trade Idea

The approach is varied depending on the timeframe and the target.

“My philosophy is to float like a jelly fish and let the market push me where it wants to go” – Stuart Walton

Timeless Principles

I look for timeless principles that I can apply across markets and timeframes.

I Play Defense First

“To commit very little capital, take on very little risk, and still make a significant return consistently” –

Alphonse Fletcher Jr, discussing Bear Sterns philosophy

Trading Approach: 20 Rules

I use 20 rules that are modified for each timeframe and market. Each rule is associated with a set of actions.

Daily Global Macro Examples

In today’s session, I will go through the 20 rules with examples from my trading strategy that I use on daily

charts.

Rule #1: Manage My Trades Towards My Objectives

I have very clear objectives for my trading strategies and for each individual trade that is placed.

Action #1: Manage My Trades Towards My Objectives

• Build large positions to capture trends in Forex that occur on daily charts as defined by the Bollinger Bands.

• See objectives and risk management template.• Look for trades with at least a 10% move expected.

Learn more: FCST Lesson #6

Trend as Defined by the Bollinger Bands

Rule #2: Trade the Right Strategy for the Market Type

I assess the market type and apply a different approach depending on the current market type.

Action #2: Trade the Right Strategy for the Market Type

• Use the Bollinger Bands to determine the market type.

Learn more: FCST Lesson #8

Example: Market Types

Rule #3: Trade Only with a Macro View

I have both long-term and short-term fundamental views and only place trades where I have an

expectation of a trend.

Action #3: Trade Only with a Macro View

• Central bank and interest rate policy • Demographics • Economic performance • Geopolitical risks• Commodity prices • Stock markets• Bond markets

Learn more: FCST Lesson #4

Rule #4: Have a Damn Good Set-up

I have specific technical conditions that I look for before entering into a position.

Action #4: Have a Damn Good Set-up

• Trade on the correct side of the Bollinger bands and Ichimoku cloud

• Sideways quiet market types • Reversal patterns off key levels

Learn more: FCST Lesson #9

Example: Ichimoku Cloud and Bollinger Bands

Example: Major Weekly Support

Rule #5: Stalk a Low-risk Entry

Once I see a set-up that I like I will wait for an appropriate entry point.

Action #5: Stalk a Low-risk Entry

• “Busted” breakouts • Breakouts candles • Reversal patterns • Fundamental catalysts

Learn more: FCST Lesson #10

Example: Busted Breakout

Rule #6: Have a Hard-to-Hit Stop-loss

I look to place my stop well out of the way so that it will only be hit if I am wrong.

Action Rule #6: Have a Hard-to-Hit Stop-loss

• Targeting around 2-3% away.• Stop on opposite Bollinger Band.• 0.5% behind the key level.

Learn more: FCST Lesson #11

Rule #7: Create Asymmetrical Risk Scenarios

I look for scenarios where I can scale-in to the position so that my potential gain is far greater than my

potential loss.

Action Rule #7: Create Asymmetrical Risk Scenarios

• Scale-in up to 5 times on the position in the first 1/3 of the planned move.

• Add any free risk on the first scale-in point and then use the combined stop calculator.

Learn more: FCST Lesson #13

Example: Scaling-in on USDCHF

Rule #8: Build a Risk-free Position

I place a buy the dip order that, if triggered I will often take off again on a bounce (and then may

do the same again).

Action #8: Build a Risk-free Position

• Enter on a retracement for 50% off the position with target near the entry. Retracements can be to Marabuzo line, mid Bollinger Band, daily low or close (about half the distance to the stop).

Learn more: FCST Lesson #13

Example: Building a Risk-free Position on EURGBP

Rule #9: Trade Around the Position

• I will trade in an out of the position with a small balance. During the first part of the move, this will be used to add to the original position.

Action #9: Trade Around the Position

• Use 25% of the position. • During the first 1/3 of the planned move add any

additional profits to the core position. • In the next 1/3 of the move maintain the profits to

build a risk-free position. • In the final 1/3 of the move then trade the position

at the original 25% level.• Move to swing and day trading plans for entry and

exit rules.

Learn more: FCST Lesson #13

Rule #10: Protect Profits

I use a trailing stop to protect my gains.

Action #10: Protect Profits

• Close 25% on a candlestick double bottom/ top or in a sideways MT or off a key level(re-enter on new entry).

• Trail stop 0.25% behind the candle of 2 weeks ago.

Learn more: FCST Lesson #12

Rule #11: Trade What’s In Front of Me

I note the changes in the market type and certain price patterns and adapt my exits to fit.

Action #11: Trade What’s In Front of Me

• Close on weekly reversal pattern.• Trail stop on 75% of position behind 1 week candle

or even a 50% retracement of the week during fast market types.

Learn more: FCST Lesson #12

Rule #12: Size Positions According to Conviction Levels

I trade larger sizes and scale-in aggressively on certain trades if I assess there is the potential for a large move.

Action #12: Size Positions According to Conviction Levels

• Asses the correct position size within the allotted bounds of the risk management plan.

Learn more: FCST Lesson #18

Rule #13: I am a Risk Manager First

I have a carefully crafted risk management plan that takes into consideration, objectives, correlations,

leverage etc.

Action #13: I am a Risk Manager First

• Position size per risk management plan.• Maximum 4 positions at one time. • Max 2 correlated positions (unless using a basket). • Max 3 correlated positions if 2 are risk free.• Max position size on 1 trade is 1.5 times trading

capital.

Learn more: FCST Lesson #14

Rule #14: Trade the Right System Universe for the Strategy

I select the right markets for the strategy and focus on those, and I diversify across markets where possible.

Action #14: Trade the Right System Universe for the Strategy

• Forex Majors• Forex Crosses

Learn more: FCST Lesson #4

Rules #15: Manage News Event Risk

I have a plan for managing my position around news events.

Action #15: Manage News Event Risk

• Tighten stop on 25% of position to 0.25% behind the recent high/low.

• Take off the 25% used for trading around the position if it is on.

• Leave stop on 50% or buy out of the money options and remove stop-loss. Either close position when options expire or re-establish the stop. Leg the options so that 50% are close to market, and 50% are long-term. Close options after the event as required.

Learn more: FCST Lesson #13

Rule #16: Capture Windfall Profits

I am ready to capture windfall profits if the market makes them available.

Action #16: Capture Windfall Profits

• Extreme MT stop at 0.5R on 50% position. Re-enter on next re-entry.

Learn more: FCST Lesson #12

Example: Windfall Profits on AUDJPY

Learn more: FCST Lesson #12

Rule #17: Maximise Big Wins

If I am in a position with profit locked in and conditions arise to “go again”, I will take them.

Action #17: Maximise Big Wins

• Add additional positions on new entry signals when position is risk-free.

• Once up 30% for the year, go for big wins with aggressive scale-ins on high conviction trades.

Learn more: FCST Lesson #13

Example: Short Again on EURUSD

Rule #18: Cut Losses Short

If I get a reversal signal right after entry, then I will reduce my position size.

Action #18: Cut Losses Short

• Close 50% of position on reversal candle right after entry by placing a stop on the low of the candle.

Learn more: FCST Lesson #12

Example: Reversal after entry on USDCAD

Rule #19: Let Profits Run

I maintain a core position and let it run on a wide stop-loss to go for large R-multiple trades.

Action #19: Let Profits Run

• Exit core position on close over the opposite daily Bollinger Band by placing the stop 0.25% behind the candle.

Learn more: FCST Lesson #12

Rule #20: Don’t Play

I only take high quality trades. Less is more.

Action #20: Don’t Play

• Assess the quality of the trade out of 100 and only take trades that rate 85 or higher.

• If I am not sure if it is 85 or not, then don’t take the trade.

Risk Management Plan

• Considered holistically across my whole portfolio.• Trade size is not based on my account size. It’s based

on my total trading capital. • Targets for each strategy including, position size,

number of trading opportunities, risk/reward.• Reduce my position size if I am in a drawdown – I

reset each quarter.• Trade sizes are a lot smaller than what you think you

need.

Learn more: FCST Lessons #6, 7, 14

Lack of Organization Costs Me the Most

• Plan my trades in the weekend (crucial). • Review all the markets I follow each day. • Record my trades in trading view so I can review

later. • Sunday morning I also go over trades from the past

week. • Separate strategy/plan for each timeframe.

Learn more: FCST Lessons #19

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Trade Examples

Questions

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Questions, Queries, Feedback