BOOK REVIEW FX
without a deep knowledge of financial markets and foreign exchange trading. Do you think your method is suitable for beginners?
SJR Yes I do. Tis is one of the points I was desperate to get across in the book. Te methods you use to trade pale insignificance to the risk control strategies you employ. A strategy need not be complicated, it just needs to win a reasonable amount every so oſten. If you win a reasonable amount every so oſten, and lose very little amount all
“It end the other
times, you will be profitable.
On the other
hand, many b e g i n ne rs overlook risk management when they first start out.
entirely
FXTM What does a newbie need to know before starting to use this method, in your opinion?
SJR How to control their risk. Tat’s it.
FXTM Do you believe in strategies that work in the long run without needing to be adapted from time to time?
SJR Yes and no. I think a strategy comprises
by that? Have you been criticized by traders who developed and work with sophisticated trading systems?
SJR By a clean chart, I simply mean a chart without indicators. Sometimes I will use a 200-period or a 50-period moving average to help me judge a trend’s direction, but that’s it. I have been criticized, but only ever in jest. I think it is difficult to criticize someone if they are successful at what they do, however they go about it. Te real point I was trying to get across is that sophisticated systems are not an absolute necessity, not that they don’t work.
is up
a number of entry and exit rules, some of which will work in certain market conditions and some of which will not. I use the same patterns, but discretionarily depending on market conditions. Having said this, the only strategy that really works in the long term is making sure you lose as little money as possible.
FXTM In the book you mention that you use “clean charts”. What do you mean
often said losing sound
FXTM What is your view of fundamental analysis? Do you believe a strategy based on fundamentals can work on the forex?
SJR Yes absolutely. I would love to be a fundamental trader, and the approach I alluded to earlier that I am building for the grain markets reflects this. My difficulty with fundamental
trading money,
that 90% of but
what many risk management principles.”
don’t realise is this is the same in any industry. All it takes is a simple strategy and
in the currency markets is the huge amount of inputs that go into an exchange rate. For me at least, there are too many inputs to form a concrete bias. Tere are many traders
people however
that have been very successful on the
fundamental
side of things. If I have one piece of advice for newer traders who are looking to trade fundamentals, it would be trade just one pair at the beginning. Trying to trade three or four pairs fundamentally requires far too much knowledge of current events.
FXTM What do you think about algorithmic trading?
SJR Again, I think it can work, although as you mentioned in a previous question I think it can only work for so long. I have a discretional element to my
FX TRADER MAGAZINE April - June 2014 67
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