Welcome to the FXstreet Coastline trading strategy.

WARNING Do not try this strategy unless you fully understand how Coastline trading works. Learn more

Coastline Trader Gonçalo Moreira

The Strategy

THE TRADER, Gonçalo Moreira, CMT FXStreet
I've become a product of FXStreet. A profitable one

FXstreet analyst and professional trader Mr. Moreira has worked at FXStreet for 10 years, in which he has learned and been inspired by the best of our contributors.

LIVE FXSTREET TRADING

This Month: 980 PIPS

Last Week: 0 PIPS


KEY LEVELS

KEY DATES

PERFORMANCE STATISTICS (CORPORATE ACCOUNT)

Since inception - January 2017 (updated EOM):

Equity Growth: -2.7%

Balance Growth: 4.73%

Total pips: 5,905

Drawdown: -6.9%

Avg pips/day: 59

Trades/day: 3

Win rate: 92%

Avg win: 21 pips

Avg loss: 1.9 pips

Updated 5th Jul. 2017

PERFORMANCE STATISTICS (PERSONAL ACCOUNT)

Since inception - March 2015 (updated EOM):

Equity growth: 15%

Balance growth: 76,2%

Total pips: 21,406

Drawdown: -34%

Avg pips/day: 49

Trades/day: 2.1

Win rate: 94%

Avg win: 40 pips

Avg loss: 270 pips

Updated 5th Jul. 2017

THEMES AFECTING THE EUR/USD

These themes are taken from the Advisory Opinon Aggregator. At FXStreet, we read all the material published at our site and pick the key bearish and a bullish arguments expressed by our dedicated contributors on several asset classes.

I use these themes as a guide for my long-term positioning and control of exposure. I'm currently biased towards a bearish development in the EUR/USD based on the below arguments.

  • Poor wage growth
  • International backdrop of rising inflation and economic growth
  • Rise in USD liquidity through US Treasury easing in the money market
  • Trump's planned border adjustment tax in a country with current account deficit.
  • Declining yield spreads between US Treasuries and gov. bonds elsewhere
  • Due to regulatory changes in US money market, it may now be no longer advantageous to issue debt in U.S. dollars
  • Fixed income markets no longer exuberant about the prospect of US growth
  • No more reason for a strong dollar as in with the US’s past energy imports and domestic consumption
  • Shrinking the balance sheet instead of raising the policy rate might tend to weaken the dollar
  • China threats to sell U.S. Treasuries
  • Trump’s proposed fiscal stimulus failing to keep up with market expectations
  • Chinese government efforts to clamp down on avenues for capital outflow may affect the USD
  • China's threat of selling dollar reserves
  • Strengthening USD move tends to be up to and at the beginning of a hiking cycle
  • The USD is ready to begin its 15 year super cycle decline
  • Real interest rates, i.e. those after inflation, may not go up as the Fed is at risk of falling further behind the curve; at the same time, interest rates in part of the rest of the world may have reached their lows
  • If equities start to roll over, USD may strengthen
  • Pending 5th wave development towards 106 on the USD index
  • A viable and compelling alternative to the USD does not exist today as a main reserve asset
  • A tax reform and aggressive fiscal stimulus in the US
  • A risk-off mode is a USD positive environment
  • Verbal intervention by politicians into the currency market (talking the USD down) does not always go according to plan, and can even backfire
  • A border tax adjustment may spurr a significant dollar appreciation. The dollar would rise to offset the tax.
  • U.S. tax system is shifting to a territorial one. If so, it may remove the incentive for businesses to move their headquarters abroad
  • Artificial barriers to allocate capital are removed, allowing a more efficient allocation of capital
  • Divergence of monetary policy
  • The relative health of the US financial system
  • Capital outflows from the eurozone hit record highs in 2016
  • Perceived shortage of offshore dollar funding in the in the outside system -the Eurodollar maket (to be seen in the LIBOR market rising with US interest rates also rising)
  • Weaker inflation forecasts revived expectations that the ECB would delay the QE exit toward the end of 2017 the earliest
  • Possible early election in Italy creates political uncertainty
  • ECB extending its QE purchases beyond December 2017, by which time, the Fed's balance sheet would have likely begun shrinking and a couple more interest rate hikes will probably have been delivered
  • Wave 3 of III is now unfolding for weakness towards parity
  • The Target2 system is being used for chronic one-way capital outflows: investors sell their holdings of Italian or Portuguese sovereign debt to the ECB at a profit, and rotate the proceeds into mutual funds Germany or Luxembourg
  • Greece may not achieve the required target to qualify for a cash bailout
  • The OECD models see the euro undervalued to the USD
  • Investors responded positively to the electoral developments in Italy (June)
  • Perception of diminishing election risk in France and Germany
  • Eurozone data continues to look solid with first quarter GDP growth revised up
  • Ideas that the rising eurozone inflation and continued above-trend growth would prompt the ECB to begin preparing the market for an exit from QE
  • The euro has increasingly become a so-called funding currency. Because rates are so low, speculators are borrowing in euros to buy higher yielding assets. A risk-off event, e.g. a sharper decline in stocks, would force speculators might to reduce their bets and buy back the euro The euro may well start appreciating well before rates will actually go up again in the Eurozone (in anticipation as with the USD)
  • There are many different rates and some could be raised before the bond purchases are done.
  • Federal Reserve and ECB monetary policy should not diverge so noticeably based on economic prospects
  • Draghi reference that rates will remain low or lower has been modified to suggest less risk of a lower rates
  • The Eurozone is getting the same boost the US got from QE
  • Sentiment takes over fundamentals and traders may buy the euro if they think that a taper is due and needed
  • Corrective wave develpment may lift the EURUSD
  • At higher LIBOR rates, investors might decide to no longer seek a U.S. dollar loan, but instead a euro-denominated loan
  • Current account flows, valuation and positioning are supportive of the euro

The coastline trading method

The first version of our coastline trading methodology was presented in 2015 in a webinar at FXStreet.com. To be in a position to make an updated version of the methodology two years later is a sign of success. Two years is a long time in the Forex market, where the average life of a aspirant trader is only 6 months.

Because of its contrarian approach or invitation to go a less travelled road, the initiative was received with lots of excepticism.

  • Can you imagine making money with a strategy that infra leverages each trade?
  • Could you build a robust track record using a risk to reward ratio of 50 to 1 or worse?
  • Could you sustain a permanent draw down, sometimes of 40% or worse, and still make money?
  • Do you conceive beating the markets without using stop loss orders?
  • And why don't giving a damn about high probability trades?
  • And still we are going strong doing all these things.

Being a reference site in the Forex industry, we have the chance to talk to many traders. Most of them are smart people, knowledgeable about so many facets of financial markets and trading. And yet, so many are struggling and losing in the end.

If you ask me to summarize this coastline trading approach in a few words I would say:

This is more about money management that timing the market and finding the perfect trade.
It's a method which will keep you alive for much longer so you gain the necessary experience to take off. It's the perfect choice to trade currencies which behave different than other asset classes.

To learn more about the method, you can watch the below webinars: