A professional approach to trading on the FOREX market

Eyb Kofnas is president of an educational Web site for traders forex market - Learn4x.com. The Iraqi war has shown us the need to consider the methods used tempered trader, Paul Chiara, which are intended to protect the position with high variability.

Paul Chiara is a veteran with 17 years of experience in trade for the leading banks and a recognized expert in the development of trading models for foreign exchange markets. Successfully trading in the "Merrill Lynch" and "BNP New York" Paul Chiara came to "Credit Suisse New York". There, he developed a technical analysis and strategy for the financial department of the bank for positioning in the market of forex, metals and government securities for the bank and "Credis Fund of Switzerland".

In recent years, he has advised hedge funds, "Citigroup New York" and "Barclay's Bank New York" to model the currency markets. An area of specialization is the creation of trade models that reduce the risk below the generally accepted levels when trading currencies.

Currently, he creates a fund management business offering the same returns with managed risk, it provides for the institutions through their own methods. Paul Chiara is also a member of the technical market analysts.

Eyb Kofnas: What are the biggest misconceptions are novice traders on the forex market?

Paul Chnara: What they are able to determine intra-day direction and use the familiar stop-order, and that they must sell each day.

Kofnas: Why do not you agree with these views?

Chnara: Within-day line is actually a result of large forces, which require extensive analysis and a lot more than the observation of 15-minute charts. In terms of managing money, the attempt to reconcile the loss with a close intra-day stop order is unlikely to be successful. The market trades almost always a way to remove near stop-order and, unless there is movement, which is the result of a greater force, he always moves back and duplicate the movement to gather close to the stop-order.

Kofnas: What is this?

Chnara: Within-day movements are essentially the result of active market-makers. When the game has no greater force (technical or fundamental reasons for the large players to take a position and maintain market) dealers can create volatility - the impression direction, but actually it's not there and the market is duplicated ago. Therefore, the assumption that there are good opportunities to low-risk, all the time is counter-productive.

Kofnas: Which approach or tools, as you might think, in this case are the most effective, based on your years of experience and understanding the pitfalls of trade on the forex market?

Chnara: Tools that have not kept pace with market movements and give you sustained levels to accommodate the stop order. Trading on moving averages, if not aligned properly with the phases, never gives you a steady level to exit in case you find wrong. Oscillators are also bleak for the timing of exit from the market.

Kofnas: What is it then that works?

Chnara: Applicable properly recognize patterns, especially in the graphics "tic-tac-toe; regression analysis and Fibonacci, for example, gives you the levels of deployment of stop-orders, which are stable because they do not lag behind the market. This may seem simplistic, but today's sophisticated analysis based on fractal mathematics, shows the increasing effectiveness of less algorithmic approaches like this.

Kofnas: You could not demonstrate what you mean, on a real example?

Chnara: Okay, let's look at the situation with the war in Iraq. If we proceed from the big picture, watching the long-term Fibonacci levels, it is nothing really out of did not happen. However, due to the high variability in this period would be much harder to implement intra-day trade. Take a look at the following schedule, here we see the USDCHF, starting from 1995. We have a fan-Fibonacci lines, built from the rising trend since 1995 to the top of 1.83 in 2000. Using the regression of this trend in combination with the fan lines clearly shows where the trend is over, and how to use the subsequent descending trend.

Forex Magazine
based on www.futuresmag.com