The Wisdom of Experiencefor example, if I am analyzing the Middle East situation, any infor-
mation that I read in the paper will probably not be as up to the
minute or as in-depth as the information that big banks or large
investors may have. Information can be bought, so I am sure that
there are people who know a lot more than I do. But if those peo-
ple do something, the market will move, so if I look at the charts,
I will see the activity. I may not know why they are moving the
market the specific way, but I do know that people are moving
it at the moment. This may give me enough information to enter
or exit the market vis-a-vis a breakout or breakdown or a bounce`
off the average. This is the most common technique that I use to
trade. I will also look at economic data such as upcoming interest
rate movements, whether the U.S. will raise or cut interest rates,
whether the U.K. did so overnight, etc. Interest rates are extremely
important in the FX markets. I will also look at charts and use both
of that information in combination.
A: The way I look at things is that on a normal day, a currency
probably moves 100 pips. If you capture 50 pips during the day,
that is already considered very good. If you capture 80 pips, I would
consider that A-cup. Fifty pips is C-cup, and this is a good way at
looking at it to determine when I should stop trading. C-cup is
pretty good, I am generally happy with it, B-cup is even better, A
is the best, but rare and is basically a long shot.
Q: Do you look at charts first, then economic data or economic
data first, and then charts?
A: I will look at charts first because if you do, you can see what
kind of trend is happening in the various currency pairs. This can
also be a neutral point that you work off of. As for economic data, I
use it on a much more short-term basis. For example, let’s say that
I got into the market and there is an important economic release
due out tonight, I will consider whether it will most likely hurt
or benefit my position. This is secondary, though. I think that the
trend and the direction of the trend are most important. I will only
look at data as to how it can impact my position.