Seminaries / Worskhops / Real Time Trading / Serious Games
Singapore, 13 - 14 December 2018
- A serious strategy that infra leverages each trade
- A risk to reward ratio of 50 to 1 or worse
- A permanent draw down, sometimes higher than 40%
- No stop losses, No timing the market
- And be consistently profitable
COASTLINE TRADING EXPLAINED
Gonçalo Moreira, CMT
How is it possible to make money with a risk to reward ratio of 50:1 or worse?
Let me answer with another question: How many times did you get stopped out before the trade resumed in your initial direction? Stop orders are a source of liquidity and markets will move partly because of them.
In some cases, substantial moves can derive from stop clusters being devoured. This is one of the reasons I opt to close profits fast and let losers run.
How do you manage your trades without a stop loss order?
95% of the trades close in profit, so I have to manage the losses caused by 5% of the trades. These losing trades are not managed individually but as a whole. I do that by increasing and decreasing the exposure on the long and short legs.
Why do you sustain a permanent drawdown?
This is because I use a different definition of a drawdown. For me, it's not a series of losses which demand to be recovered. I see the drawdown as an implicit cost of the business, together with explicit costs such as swaps and spreads.
If you have made a 100% return on your balance, a 50% drawdown means your equity is up by 50%. In other words, if you close all trades at that moment, your ROI (return on investment) is still 50%.
I’d like to know more about your hedging strategy. How does it work?
The hedging is treated like a sub-strategy. It enables me to remain tail risk positive, safeguarding the account's performance in exceptional circumstances, like for instance during an election period. The hedging is never 100%,
Do you use leverage?
Yes, I make use of leverage but each individual trade is very small compared to the account's size. Keeping the position size small enables me to construct a larger position with many trades at different price levels. In exceptional circumstances I may increase the exposure in one direction, capitalizing on a directional market movement powered with higher leverage. But I keep always enough available margin to profit from what is called the "coastline" of exchange rate fluctuations.
The Coastline concept
- A different way to exploit volatility
- How to formulate an hypothesis for a trading model
- How to start validating a model with basic statistics
Particularities of the FX market
- Exchange rates do not behave like “prices”
- How to deal with waves and fractality
- Why small orders impact the market so much
- Profiting from risk events: stop cascades and contagions
The Mechanics of Risk Management
- How to keep a position like an institutional dealer
- How to manage losing trades and drawdowns
- Other costs some methodologies have to take into account
Trading the Coastline
- Why there is no need to rush into the big trade
- Using price frames instead of time frames
- Trade with inverse risk-reward rations and use no stops
- How to manage the balance and equity lines on your account
The Technical Tool Box
- How to draw trendlines and channels proactively
- How to recognise supply-demand imbalances
- Take home some backtested strategies
- How to take advantage of positioning data
- Using economic data releases to trade intraday
Macro Idea Generation
- Relevant macro themes and current asymmetric opportunities
- Exploit formations and unwinding of carry trades
- Learn to read capital flows
- Learn about market indicators few people are looking at
The Missing Indicator: Time
- Cycle nesting (or clustering) as opportunity windows
- Finding your personal cycles for better decision making
Road map to 2020
- How trading conditions might look like
- Trade ideas for the near future