FX FX MANAGERS
JW What are the market conditions
that you consider ideal, and which ones are the most challenging, for the performance of your strategy?
FB Most challenging: trending low
volatility. Most favorable: volatile and range trading.
JW Can you give us an example of a
memorable winning trading decision?
FB The decisions
are systematic. The qualitative overlay pertains to the way we enter into the position. It ranges between 50% to 100% of total allocation. This will make the difference on where we will place the stop loss since we will always risk UP TO 50 basis points of the portfolio per position. All the signals are contrarian with regards to the immediate short term trend so the best trades are the ones entered at 100% on the signal that turn around and reach our
take profit target
relatively quickly. There are plenty of those when the volatility is high. November 2011 is a perfect example where we were down for 28 days in a one way market until we made it all back in the last 3 days of the month.
56 FX TRADER MAGAZINE January - March 2012
JW Do you use Emerging Markets
currencies? And do you think individual traders should use them, considering they don’t have to worry so much about liquidity issues?
FB No we do not currently apply our
algorithm to emerging markets. We have tried to do so when the volatility was relatively low in the majors however, we have not found anything worth keeping.
you could lose money with it. Remember something very important in the FX market: “ All the positions you have ever taken in FX were good. You just need to find the right risk reward and position size that suits you and the trade” Easier said than done however the proof is in the risk management pudding.
JW Do you think that every strategy loses
its accuracy sooner or later, or do you believe in long lasting market rules?
FB I believe in long
lasting system with adjustments. In fact nobody can make money in the long run without a system. Even the most discretionary traders have a system. Tey may not be able to explain it or systemize it however they do have a system. Our system is applied to a multitude of currency pairs and on a multitude of different
Te liquidity issues are quite important and real especially when you are trying to get out of a position.
JW When developing a strategy, do
you give a higher priority to building entry signals,
exit
management rules? FB
Te key is the money management. We can give you our entry system and
signals or money
FB By definition every model ever made
used optimization and curve fitting at the beginning. Te key is to stick with the same system quickly and adapt the
timeframes. Some work better than others at times however the important thing is that they work well together as a whole.
JW Do you use any form of optimization?
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