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.


Closed trades: +14.603 PIPS

Floating trades: -6.561 PIPS





Updated 29th Sep. 2017


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.

  • Trump can reshape the Fed's policy, if he decides to bring more doves into the central bank
  • Weak labor market is creating uncertainty surrounding any potential moves by the Fed regarding another interest rate for the rest of 2017
  • Investors are hedging their bets on the Fed, just in case they back down from their rate-hiking cycle
  • Money flow heading out to the commodity-based countries and emerging markets in search for higher yields
  • Slow US economic growth coupled with a normalising policy, increases the risk of a recession
  • The US Treasury has significantly eased USD liquidity in the USD money market so USD has become cheaper due to this increased supply
  • Protectionist talk coming from the Trump administration
  • Regulatory changes in U.S. money market, it may now be no longer advantageous to issue debt in U.S. dollars
  • With fixed income markets no longer exuberant about the prospect of US growth the dollar has lost its primary catalyst for appreciation
  • USD overvalued according to OECD
  • Shrinking the balance sheet instead of raising the policy rate might tend to weaken the dollar
  • A depreciation of the dollar would reduce pressures on countries with fixed exchange rates and external debt.
  • The dollar is vulnerable to the idea of a trade wars
  • The dollar is vulnerable to the idea of China selling a big chunk of its dollar reserves
  • The dollar has started its 15 year super cycle decline
  • China will stop requiring financial institutions to set aside cash when buying dollars through currency forwards
  • The core of the FOMC expects another hike this year and three more in 2018
  • 2- and 10-year interest rate differentials begin trending back in the US favor
  • The US yield curve has steepened
  • The Fed's dot plot is expecting rates to rise to a touch over 2% by 2018
  • The roll back of the Dodd-Frank Wall Street Reform Act
  • If equities roll over the USD could rise back in a furious kind of way
  • The USD is still more than twice as large in its use as reserve assets, or turnover in the foreign exchange market
  • Trump's planned tax reform and aggressive fiscal stimulus
  • Verbal intervention by politicians into the currency market can backfire
  • The relative better health of the US financial system
  • Capital outflows from the eurozone in 2016 have been the biggest in 14 years
  • LIBOR is rising is because money is being taken out of that offshore funding market and being put onshore in the US
  • The world is USD dollar starved and there is a shortage of offshore dollar funding -the Eurodollar maket
  • Higher interest rates in the US makes it cheap to hedge European or Japanese exposure
  • ECB may delay the start of tapering until middle of next year on low inflation expectations
  • While much of Germany's industry is competitive at stronger euro levels, the cost structure of other economies is not as favorable
  • In Italy, each of the four main parties opposing the Democratic Party subscribe to the introduction of a parallel currency to rival the Euro
  • The market will be more sensitive to a cut in the inflation forecast than an increase in the growth forecast
  • French, Italian and Spanish benchmark yields have declined
  • Macron's standing in France is lower than Trump's in the US
  • Europe still has not found a consistent way to clean its dirty financial laundry
  • EUR has probably benefitted from unhedged equity inflow and is vulnerable to a correction in equities
  • The Target2 system, designed to adjust accounts automatically between the branches of the ECB's family of central banks, in reality, has become a cloak for chronic one-way capital outflows
  • Greece may not achieve the required target to qualify for a cash bailout
  • Draghi risks interest rates traveling much higher
  • The risk of deflation has disappeared
  • Flows out of the US and into Europe as a relative haven for US political uncertainty
  • Sentiment surveys shows EUR exchange rate was no impediment to economy
  • The capacity of Europe to build stronger economic and political relations with China, makes it appear as a relatively safe place to invest
  • Rising European yields are the latest shiny thing that traders can see
  • Many investment houses and journalists are talking up European equities and the euro as the counterpart to the unwind of the Trump trade
  • Diminishing election risk in Europe
  • The euro has increasingly become a funding currency (borrowing in euros to buy higher yielding assets)
  • The euro ist appreciating well before rates will actually go up again in the Eurozone
  • Eurozone is getting the same boost the US got from QE, just a few years later
  • With higher Libor clients may well decide to no longer seek a U.S. dollar loan, but instead a euro-denominated loan, or a loan denominated in their home country's currency
  • Current account flows, valuation and positioning were 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: