Strategic Trading and Currency Forecast

Dr. S. Sivaraman,   www.i-knowindices.com

The international currencies – the Majors (EURO, GBP, CHF, JPY, AUD) exhibit intra-day volatility, swift in trading zone, consolidation, extended correction or rise, directionless condition, surprise swing and trend reversal, while traded against USD. The risk management during trading will be a major task for day traders, position traders, Banks, Treasuries and large financial institutions. Many statistical analysts use different algorithms and statistical models to project the future expected trends and directions- forecast. Since such analyses use past performance records, the trend reversals become a surprise to them, as the past performance doesn’t guarantee the future. The trend reversal during intra-day and long term is the major component to be understood to be a successful trader.

The traders as buy or sell level, will view the same level differently. Trading is an art.

The market maker/facilitator/operator use different strategies, news and rumors, political developments etc to their advantage to bring in swing in the market. They create a bullish mood to sell and bearish mood to buy. They never do hat tricks. The shift in trading zone causes confusion and surprise to the trader. He fails to act smart and result in misunderstanding of the direction of the market and losses in the game.

Understanding the intension of the operator and trade accordingly will give promising results. But how to understand when they bring in changes in the value so quickly, faster than the thinking speed of human.

The X-Factor
In this process of understanding, many analysts refer the unknown governing factor influencing the operators to determine the moves as ‘X- Factor’. Besides, the Combination of Intrinsic Factors and parameters affecting financial markets such as economic condition, political factor, international events, financial crisis, trade mismatch, the rumors, news, operator sentiments and investors heard mentality, the celestial bodies also influence and determine the volatility.

A bit of Astro-physics in simple form:
The stars and the planets either emit or reflect the energy/electro magnetic impulses. Their intensity varies depending upon the angle of incidence, distance, timings etc. We as human in the process of thinking and decision making also emit similar magnetic impulses (recorded as EEG). So the interaction between the magnetic plexus determines the action – either positive or negative. So the traders and the operators are under the umbrella of such forces.

Our ancient philosophers:
The Egyptian and Indian philosophers and astronomers determined the calendar and the numerals based on the spinning moves of such celestial bodies and their influence on earth.

We know the quantified values of the numbers. But the synergic impact of the magnetic plexus and the qualitative values of the numbers are used as input in our forecast algorithm - Correlated Number Theory™.

It is hierarchical cluster and principal component analyses model. The basic function of the model is to provide the set properties of numerals in their combinations as odd and even numbers. The qualitative and derived factors of such components are comparably constants. Such constants are used in the sequential combinations of the earth days, weeks, months and years to derive the directions and trends of the market moves.

The algorithm gives accurate forecast of the financial market moves including currency and stock markets as weighted moving average values (WMA) of currency pairs, stocks and indices. Such expected transactions based on human interactions, are given as the specific forecasts.

Our Prediction model developed based on Correlated Number Theory™ - accurately provide the forecasts of the market direction, timing, levels and intra-day and long-term trend reversals.

 Strategic Trading Techniques a few samples:
No experienced trader has made a statement that he was successful in trading out of his experience. At the end of day every day trader comes with an excuse that due to some unexpected folly he lost the trade by cutting the position out of panic. As long as you tend to believe rumors and news, you continue to become panic, and in the absence of unbiased judgment, take wrong decisions and cut loss.

Hedging strategies:
It is a two-way participation in market as the market can either move up or down.

1.You can take two pairs like EURO and GBP or EURO and CHF for hedging. Take EURO long and GBP short at a given time. Put 25 pips stops in each. Once the direction of the market is known then the unfavorable will trigger the stop and favorable will allow the profit to run and you can book 50-60 pips profit. Similarly EURO long CHF long and do the same.

2.You can take the hedging in another platform in the same currency. EURO long in one and the stop level short in another platform. Your loss is one is compensated in another. Either you can cut the long 10 pip below the short level or wait for the market to recover. The market will move in one direction maximum of 100 pips in a given time and then it retraces 50% immediately. So if the market moves down then the stop in another platform is triggered and book profit with 60 pips profit. And then take a long there and once 50% recovery comes book profit around the initial buy level and cut the original long with minimal loss or profit. This you have to do within a session. (8 Hrs)

3.Hedging with double- you can take long in one pair and double short in the same in another platform at stop level. This will make you to book profit in 2 hrs time with in session. Once the direction become clear after taking the position you can cut the unfavorable and allow the other to run and once you cover the double short -one out of that will compensate the loss in stop trigger in the unfavorable and the other will be the profit.

4) We have introduced in association with GCI, New York a hedging trading platform. Where in you can take long in euro say at 0.9123 and hedge without extra margin (i.e., for the same $ 1000 margin) a short at 0.9119 levels. Put limit for both with 15 pip and both will execute in a given session.

Regarding stops - there are many ways to view stops.
1.To avoid unexpected loss -put stop above 50-60 pips, the loss is limited and don’t do further trade once the stop is triggered. Always avoid moving stops along the direction of market.

2.Using stop in trading strategy -when you feel the market will rise from a correction level you buy and put stop with 10 pip below the days low. This can be even double stop (double the quantity of long). This helps to restrict the loss once the trading zone is shifted. Double stop will make you short with one lot and once you cover the short with equal or more of the initial loss levels then you come out with no loss or with profit.

3.Stop can be a hedging - when you have a long in one currency like euro, then the corresponding currency either in GBP you can take short at the same time or long in CHF at the same time. So if the market is unfavorable in one pair then it is favorable in another pair -once 35 pips loss is seen in one cut that position and allow the other profit to run to make more than 35
pips profits in a given day. This strategy you can adopt in any given time -preferably beginning of a session -01:00,09:00 and 17:00 GMT hrs. You can follow any stop strategy depending on the condition and based on our recommendations in the pop up window or dealer recommendations.

Profit booking: Operators change the trading zone with 40-60 pips spread. So it is advisable to book profit at every level and reenter again. During correction - don’t always re-enter at the same level.

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