FX FX TRADERS
to losses and inconsistency. Almost every retail trader that I have worked with started out by swapping technical systems and lost money in the process. In contrast
to this, no successful
institutional traders that I know of use technical analysis as the basis for their trading. Most use fundamental analysis exclusively and a very small percentage (including me) combine the two approaches. I prefer to focus on the fundamentals and sentiment driving the market price.
In fact, when I encounter a so called ‘guru’ in the retail space, the first thing I look for when deciding if they are genuinely successful is the focus they place on technical analysis!
FXTM: Why do you think that most retail traders do not apply fundamentals?
JD: Tis is a great question and one I have thought about a lot.
I think the main reason is that it simply isn’t taught all that much. If you search online for a ‘Forex training course’ the majority of what you will find is just one rehash aſter another of the same technical systems.
And I think the reason for this is that most of these course vendors are just failed retail traders. Tey couldn’t quite make a profit from trading, so they just sell information to new traders instead.
Leading on from this lack of
information, I also believe that many new and experienced retail
traders 30 FX TRADER MAGAZINE January - March 2014
FXTM: So what is your trading method?
JD: My method or technique to
trading the markets is actually pretty simple!
I just read the currency news each day and monitor what is moving the markets in a particular direction. I then look to place trades in that direction, using the technical skills I developed in my early years.
An example of a recent trade is the USD/JPY currency pair during 2013. It was announced at the start of last year that Japan would begin a process of quantitative easing, a process which devalues a currency. So it was pretty clear that the trade to take was to buy USD and sell JPY for as long as this policy was kept in place.
Each time the price of that pair dropped, I knew that it was simply profit taking or uncertainty within the market. I knew that sooner or later the market would resume its buying of the pair based on the strong fundamentals in play. In fact, the further it fell the better the opportunity was to get in a long position at a great price!
Te USD/JPY consistently hit new highs throughout 2013, while giving plenty of pullbacks and opportunities to get into new long positions. Tis was actually one of my most profitable
Tese types of opportunities occur every day and provide plenty of profit making chances across the major currencies.
FXTM: What is your biggest piece of advice for any retail traders reading this?
JD: Get away from the charts and start paying attention to what is actually driving the price fundamentally. Tere is always a reason for large moves on a currency pair. If you understand the reason, this will let you make informed decisions on whether to buy or sell.
Another point to highlight is that fundamentals are not as complicated as many people think. In fact, this approach is very simple. Te markets only focus on one or two fundamental factors at any given time, making it easy to identify and trade along with the focus of the market’s attention.
If you are interested in learning more about Jarratt’s trading techniques, he is offering all FX Trader Magazine subscribers a 50% discount on his ‘Learn To Trade’ programme fom this link. This is one of our recommended services for learning how professionals trade the FX markets.
have the misconception that trading fundamentals is complicated and hard to understand. But this isn’t the case at all.
pairs for last year and is looking good as we go into 2014.
Once you understand the forces driving the market, it is a very simple case of trading with those forces each time the market moves against the anticipated direction.
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