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
Singapur

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COASTLINE TRADING EXPLAINED

Gonçalo Moreira, CMT
Content Advisor FXStreet

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%, usually I have a bias and will increase exposure in one of the legs. In the Premium webinars I explain the technique in more details.

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.

SYLLABUS

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