System Development Workshop On-demand

View recordings and supplementary material for all 12 workshop lessons as they are released and build a high-performance Forex trading system that suits you.

Scroll down to access your recordings…  

Session #7: Trader 888 – Hedge Fund Maestro

Trader 888 has over 20 years of institutional FX trading experience with major banks and as the head trader and portfolio manager for an award winning hedge fund. He has never had a losing year and at one time he was the largest trader of a major currency pair in his part of the world. Trader 888 will take you through how he makes market decisions, along with detailed insight into how the market players operate, their objectives, motivations and psychology.

Chat Transcript

Sam Eder: Today’s session is with 888. Whom I’m sure most of you know by now. FXRenew888: Hello ladies and gentlemen – thanks for tuning in for the session Sam Eder: 888, if you can start by telling us a bit about your background and trading career FXRenew888: Sure Sam thanks… I’ll start by apologizing for the necessary ‘vagueness’ of my background, given my requirement to maintain my anonymity for the foreseeable future. The below is an accurate rundown with specific places I’ve worked at and timeframes omitted – neither of which should detract from the intended message. My interest in financial markets developed during the heady days of the mid to late ‘80s when equity markets were charging higher and eventually/inevitably crashed in ‘87. My personality and aptitude with numbers seemed like a good fit for the markets, so I took myself to university where I majored in macroeconomics and quantitative finance. Initially I assumed I would get into trading equity markets, but along the way I wrote a paper on the hedging of currency exposure with FX options- a field that was in its relative infancy in the early ‘90s -, which won an award from my county’s central bank. Upon completion of post grad work in options pricing I set out to pursue a career in FX trading. I was fortunate enough to land a position as a trainee FX trader on the spot desk of a well known bank where I learnt to trade from some traders who subsequently have gone on to be global heads/chief dealers at tier 1 banks and hedge funds. I stayed with this bank for 10 years as a market maker on the flow desks, working in each of the Asian, European and North American time zones, and holding positions such as senior JPY trader in Asia, and head of G4 trading NY. Not wanting to be ‘pigeon holed’ as a bank spot trader, and looking to diversify my skill set within the FX space, I moved on to run the FX Institutional Sales and Trading arm of a tier 1 institution in London. Here we serviced institutional clients, banks, hedge funds and UHNWIs. Beyond the running of the desk my role was to prop trade FX, and oversee the desks mandate to run significant sized risk – up to half a billion dollar sized open positions in aggregate. It was here that I had one of my career highlights – executing & speaking on a daily basis to one of the original market wizards – who shall remain anonymous, but it would be fair to say that he earned the title of the worlds greatest FX trader for a reason, and I can confirm first hand that he is exceptional. By the late ‘noughties’ it was becoming clear that the electronification of FX was the way forward, and would inevitably reduce the stranglehold that the banks had on the wholesale FX market – and lead to increasing dominance from the Buyside. After taking some time off to sit CFA exams I joined a US based hedge fund that specialized in discretionary FX trading with systematic inputs. Here we have had success after being named as the best HF globally in our space/AUM bracket, by a well recognised industry publication. Here I have had another career highlight – a one on one interview with Jack Schwager himself. Looking into the future, I plan to refocus once again – to an existence that sits better with a young family and a slightly less hectic lifestyle. I have a passion for leveling the playing field between the retail, semi professional and institutional FX spaces, and FXRenew is one of the avenues whereby I hope I can make a contribution and difference for the trading talent of tomorrow. Sam Eder: Thanks 888. Very interesting. The next question I have for you is about your approach to trading. If you can talk a bit about your general approach and how you structure your trades. FXRenew888: I spend a significant amount of time ensuring that I am at the cutting edge of news, data, sentiment, market positioning and flows. I have relationships with around 150 bank traders, salespeople, strategists and HF traders spanning each of the 3 major time zones. I speak with perhaps a core 20 of those on a daily basis – and call on those who are experts in the product/currency that is the theme driving the market. For example when the market is dominated by interest rate differentials I will speak with several rates traders at various banks to incorporate their view into my view for a currency pair. Or when the Global Dairy Trade numbers are due to be released, I will speak with traders/Ag economists at the NZ banks to get a feel for what they are thinking and what the futures prices have been doing for the last week etc. I trade over 3 general time frames. Intraday, Medium term/Swing, and Longer term. Generally, the longer the time horizon for the trade, the more it is based on a fundamental view that is supported by a technical view. Conversely, intraday trading tends to be based more on technicals, market information/flow and data releases. Longer term/bigger picture fundamentals are down the list. It’s important to match the inputs for your trading to the time horizon that you are trading, i.e. there is no point sitting down every day and taking a short term EURUSD short on the back of the ECB being in the middle of a QE program for instance. Short term / intraday trades: I first identify the regime that is ‘en vogue’ currently. ie is the market trading in risk on/risk off mode, which currency pairs are trading on interest rate differentials and what is going on in their respective bond markets – expectations and pricing. I look at what data is being released and assess different scenarios based on how far these numbers are from expectations. Is the market trending or trapped in a range – under what circumstances could the market flip from ranging to trending and vice versa. What are the key levels, what are the levels that the bank traders have orders at, what optionality is in the market that may cause a pair to trade around a strike level, or knock out options that will be defended – and how the gamma profile for that currency pair changes if they are knocked out. With all of this information noted I will then look to identify currencies with high probability upside bias and those with high probability downside bias – then turn to the charts to look for points where this pair breaks out of a pattern or trend. Typically I will trade the break with a large position size and look to trim it back to a regular position size fairly quickly – thereby improving my average entry rate so I’m less exposed to a false break. An example of this today was the 84.02 level in AUDJPY. The pair had based around 02-05 on several attempts lower – running up against the 61.8 fib of the sept 4th – 17th upmove, the base of what looks to be a sideways continuation pattern in a well defined short term downtrend. In addition equities have struggled somewhat to today in a mild risk off environment, and other AUD pairs were sitting at similar key short term levels (ie 7000 in AUDUSD, 1.5980 break of flag pattern in EURAUD, and 1.1130 lateral support in AUDNZD. I placed a large ‘stop entry’ order at 83.99 with a stop at 84.25, and scooped up 30% of the position at 83.85-90, chopped 20% of the position at even and have effectively got a regular sized AUDJPY short in the 84.teens.The first target is 83.35 lateral support off the 10 Sept lows. Which I notice is fairly close as we speak… On a slightly different note – I tend to trade intraday to medium term ideas with a portfolio approach rather than with a bunch of independent trades. For example with the AUDJPY short, I may at some stage determine that AUDJPY has reached a decent level of support, but that EURJPY has 100 more points downside. Instead of squaring the AUDJPY and opening a EURJPY short, I will sell EURAUD, which effectively cancels out the AUD component and leaves me with a short EURJPY synthetic position. Then I may subsequently decide to cover the EUR component on a dip, thus leaving me with a straight USDJPY short. If you are trading on a platform such as MT4 then obviously you are left with 3 outstanding positions, but with proprietary software and trading on more advanced platforms you are able to consolidate this into just one currency pair. Covered 20% AUDJPY at 35there. Uncanny timing! Med term trades: I follow the same general process when hunting for medium term setups – obviously with higher time frame charts, smaller position sizes, and wider stops. Before I enter a medium term trade, the first thing I will do is identify the point at which the idea is wrong. I tend to look for trades that are in clear trending mode on the 4hr and daily charts, and identify points of entry on retracements as determined by key fib levels or clear ‘lateral structure’. Position size is then determined by my degree of conviction in the trade – whereby I will allocate higher % at risk for higher conviction trades, and then calculate the difference between the entry and exit prices, which then determines the size of the position taken that in turn risks the allotted amount of capital. Long term trades: These are typically big picture macro views that result from a structural shift in the market inputs that will lead to a repricing of the given pair over an extended period of time. I’m talking major shifts in central bank stances, multiyear cyclical or structural inputs that are key drivers for that currency pair.. For example NZDUSD. From my conversations with strategists, and with a very firm view that the RBNZ had made a policy error by raising rates against a sea of global structural deflation – and with the double whammy of a bigger picture change in commodity market dynamics – it became almost a no brainer that the NZD had to depreciate markedly. I played this via a number of ways. Short spot NZD being the obvious expression, but also short NZDTWI, and buying low delta puts (which essentially are cheap ways to play a larger move given increase in value as spot trades lower, with no risk of being stopped out). As many of FXRs early clients may note – we tried to catch this move from the 75-77c level, but struggled to maintain a short with some unfortunate instances of being stopped on short term spikes. In hindsight, we were trading a medium term structure against a long term view. Once again – it’s important to match the way you structure a trade with the time horizon of your view. Sam Eder: Thanks 888. Great stuff. The next question I have is on what technical conditions you look at before you enter a trade FXRenew888: As I’ve mentioned above, I like to trade breaks of patterns and key levels in a trending market over short term horizons, and retracements in trending markets for medium term positions. For ST breaks I like to see a volatility expansion, such as hugging the widening bolly bands, in conjunction with breaks in some proprietary trend indicators. For MT retracements I like to use the standard fib levels, and the 50% retracement level (Note 50% is NOT a fib level!), in combination with waning momentum of the retrace and stalling at key lateral support/resistance…. generally the more that these factors align, the more confidence I will have in a trade, and hence the greater the % allocation of risk. Jacob: May I know the reason to use 50% instead of 61.8 or 38% fib level? FXRenew888: 50% is just a number that for whatever reason is watched quite closely by the market – and in itself becomes self fulfilling rather than it being of specific technical importance Sam Eder: The next question is also one you have covered somewhat. Is there anything further you would like to add on the fundamentals? FXRenew888: Sure just quickly… I like to identify divergence in fundamentals between countries, and make sure that the timeframe for those fundamentals to come to fruition matches the time horizon for which I take the trade. eg LT ECB QE vs Fed taper and pending rate rise. BOE about to hike vs RBNZ further cuts for GBPNZD views etc Short term – divergence in data points eg Solid European PMIs, vs weak China PMIs = EURAUD longs. Short terms shifts in key country inputs eg Iron ore / dairy futures ratio as a driver of AUDNZD etc. Sam Eder: Thanks 888, great points. The next question is how do you place your initial stop and then trail your stop? FXRenew888: Short term trades the stops tend to be quite tight. Anywhere from as little as 10 pips to 80 pips depending on the situation and currency pair. Medium term stops can be anywhere from 100-300 pips from entry, and generally position sizing will be determined again by the distance between entry and stop, and the level of conviction. Long term trades – I like to give plenty of leeway, as if your idea is valid it may still take the market a significant amount of time to arrive at the same view, especially if the factors behind the view are slow to turn in the direction of your view. In terms of actual placement of stops, they tend to be put at levels 5-25 pips (depending on the trades time horizon) beyond what i have predetermined as key levels, which negate the technical reasons for the trade. Trailing stops – I like to see the currency pair move into a new trading range in the direction of the position before I begin to trail – and then I will use an indicator similar to a gann hi-low activator + X pips depending on timeframe of the trade. Quentin: Sorry to interrupt… do you add to positions along the way? Or start large and then trim along the way? Or both… depending on the circumstances And if so what reasoning do you use– FXRenew888: My personal preference is to start large with shorter term trades and exit along the way… longer term trades I’m more happy to start small and add along the way.. there’s no right or wrong way – it just comes down to preference in my opinion Quentin: Thanks Sam Eder: Thanks 888. Can you talk a little about your exit strategy? FXRenew888: Short term, I like to trade larger positions with an initial close profit to improve the average, but beyond that it really comes down to information and experience as to how I exit ST trades – there is no one strategy that I follow. For med term and especially long term trades, I will sit down at the start of each day and assess whether the factors that have resulted in the trade are still relevant, and if I was to open the trade at current levels, would I still be comfortable in that view. If I would, then I would continue to hold onto the trade. But if at any stage the key factors for which I have taken the trade change then I would actively look to exit, either via squaring up then and there, or a tight trailing stop. I don’t follow any hard and fast rules in terms of exits… maybe something to work on! Sam Eder: Thank you. Is there anything else you would like to add about how you manage your trades? Also with regards to how you manage your positions around news events? Or anything else around scaling in-out of trades FXRenew888: Instead of calling it ‘scaling in and scaling out’ when running longer term positions, I view it more as running a core position, with an additional position to job over a shorter time horizon. I would do this around key shorter term levels, with the aim to improve the average on the core position during the day, and ending the day with the full core + additional position in the same intended direction. As I’ve mentioned earlier, this may not necessarily be the exact currency pair in which I have the core position. For example I may have a longer-term short EURUSD position, but identify a key region of support in EURJPY over a shorter time frame. In which case I may buy a smaller sized (than the open EURUSD) EURYEN intraday possie for 100 pip rally, and then sell the USDJPY leg of EURYEN, which effectively gives me a smaller EURUSD long to match against my overall short position. This approach probably isn’t best suited for inexperienced traders, as its quite easy for the wrong leg to rally – but when it works it can work v well. Re news events – LT and medium term trades I don’t generally need to manage unless they are close to the exit points. Depending on the perceived impact of the data point I may just square if they are close and look to re-establish. With ST/intraday positions I generally don’t like to go into the release with positions unless I have a very high conviction regarding the likely outcome. If there is one thing that is very difficult to control over big news releases, it’s the slippage from your stop – and I don’t like to trade positions where I don’t have absolute control over my exit at or near a particular level. peterbee: Pardon my interjection 888. I’m fascinated by your tactic to enter with a large position then scale back. I’m guessing that tactic works well if your ST trades move in your favour most of the time? Roughly what is your win rate? PaulG: Do you enter your stop loss orders in the market? Or do you have them defined but ready to enter if necessary? FXRenew888: ST trades have a fairly high win rate as I’m very selective with them – if I don’t see a decent setup then I don’t feel the need to trade…. PaulG – I always have stops placed in the market… infact I’ll place the stop often before I’ve placed the entry PaulG: Great thanks. Sam Eder: That’s interesting. Steve said the same thing about placing the stop first in his workshop. Next up, if you could please talk about your position sizing model and risk management approach. I also want to ask a bit more about sizing your positions in line with your conviction and if you scale back during losing periods etc FXRenew888: As mentioned above it’s a formula based on conviction and distance between a predetermined stop and the eventual entry point. I guess you need to first bear in mind that when you are managing other peoples’ money the %s at risk per trade are very different to what you would risk typically with your PA account So I’m talking a high conviction trade might risk say 0.5% where as low conviction 0.10-15% .. and these can vary depending on the correlations between already open pairs Pater: Thanks 888. Are these PA account percentages? What difference would there be between the two accounts? FXRenew888: If you drop 2-2.5% in a month your investors will be starting to ask questions… drop 4-5 and you will in most cases lose an institutional mandate. The PA accounts – ie personal accounts I was referring more to the % a typical retail trader may risk per trade – in contrast with what a professional money manager may risk. Pater: K, thanks . Quentin: What types of return do you aim for.. and I guess typically achieve given the low risk. FXRenew888: if you can consistently do low teens you are a superstar. [Sam: With regards to the returns he does mean annually, but with a draw down of no more than say 4% and perfectly never greater than 1-2% a month (as an example). The thing about investing in hedge funds is that they are used with notional funding. So an investor might put 5 million with the fund, but the fund would trade it like it’s 20 million (increasing returns and drawdowns by four times). So the important thing will the ratio of returns vs. drawdowns. That way the investors can scale the returns to fit their specific needs.] Sam Eder: The next question I have is what do you consider most important things to successful trading? FXRenew888: 1/ Having a plan for multiple scenarios before you enter the trade – this I think really embraces the whole risk management approach – and what your course of action is if it all goes pear shaped. 2/ Having the discipline to stick to the plan mentioned in 1/ …… a plan is no good, pointless in fact, if you can’t follow what you intended to do given a particular scenario Quentin: Any chance we could hear your war story of the SNB disaster… not necessarily now but at the end if there’s time FXRenew888: Sure Quentin… will speak about that towards the end — ask again in the open forum later FXRenew888: 3/ knowing your capabilities and limitations…. I’ve seen many traders over the years think they are bigger or better than they really are – or that they have more influence on the market than they do…. all bar one or two are no longer in the game. The market takes no prisoners… treat it with respect and trade within your limits Sam Eder: Great points thanks 888. Next 888 is going to talk a bit about the interbank market. How it works, who the players are, their motivations etc. We will just take a 2-3 minute break here. Afterwards we will go into questions. FXRenew888: Okay maybe the best approach is for anyone of you to ask questions… I guess along the lines of what Sam has mentioned above… In terms of the SNB question Quentin – I’ll give you a quick rundown… Sam Eder: I can start… who are the major players left in the market since the raft of changes that happened post 2008? FXRenew888: Ok will get back to that. SNB that is. Quentin: I’ve heard that banks are playing less of a role as market markers… thus contributing to increased volatility… is this true? If so, is it because it’s not generally profitable for banks FXRenew888: The major players have changed over the years- as Quentin correctly points out… When I first started in FX the space was dominated by the big banks….. hedge funds were far less influential, and there was no such thing as a retail trading platform… As I mentioned earlier, the electronification (is that a word?) of the market place and highly fragmented liquidity has seen the grip of the banks loosen Nowadays hedge funds can trade directly with other hedge funds or pension funds etc….(granted still via a prime broker agreement, but this is a different area completely from the banks trading desks)…. many non bank institutions have become price makers, servicing the clients that the banks once neglected, and upping their game into the higher quality client sets… Quentin: How do banks trade the market? I’ve heard horizontal support and resistance levels primarily… are you able to offer any insights here. How does one benefit from the big players’ tactics FXRenew888: Hedge funds have become price makers… many just as sophisticated as the banks themselves Quentin: Perhaps a better question is what role do banks and large players have in the market now… and how can retail traders best benefit from knowledge about how they trade FXRenew888: Well nowadays the banks are just the monkeys in the middle of big flows between the buyside clients…. much of the pricing is done via algos…. given the compression in any margin its become a game of attracting the most volume and the spot/flow traders at banks are usually too busy scrambling around trying to clear toxic flow from clients who would usually clear the trades via the platforms, but if the liquidity isn’t available – they go to the bank trader for a 2 way price in the amount, who is often bound by pre-agreed arrangements to show a price that doesn’t reflect the liquidity available to them Consequently the risk taken by bank traders is now miniscule compared to what it was 10 years ago. They have a very limited appetite for risk and most of the prop trading desk have now been regulated out of existence so there are far fewer ‘human’ players around to warehouse risk – ie take the position on board and hold it without going to the market to clear it instantly This and a deluge of algos all trying to out do each other has most likely been a major factor around the change in liquidity… Quentin: Thanks. PaulG: What is the future like for small traders just starting out – given the changes in the landscape? Quentin: On that… are there career pathways to being a prop trader… or is it make your own way as a retail trader FXRenew888: I think it’s as good as it has ever been – there are resources available for free or a small subscription price that are rapidly closing the information gap between what the banks and retail traders have…. the markets are moving, and liquidity, in terms of the trader being able to trade at the price they request, is plentiful… PaulG: Being a trend trader – has there been a time where trends have just dried up for long periods of time? Or is there always a trend to be found? FXRenew888: The retail space in aggregate is quickly becoming a force to be reckoned with in fx. vtechdir: What do you think about Renko bars and their suitability for programatic trading? FXRenew888:There have been plenty of times when trends have dried up and the naysayers have called the death of FX…. the most recent instance was most of the first half of 2014…inevitably low volatility leads to complacency and a sudden surge in volatility vtechdir – I don’t use Renko, so I’m probably not the best person to ask sorry. vtechdir: Thank you. Pater: What potential reward/risk must a trade have before you would put it on? What is your average win rate %? And roughly how many trades would you place per year? Lastly – how many times per year would you turn over your portfolio risk? (being your maximum allowed risk “bullet”)? FXRenew888: I’d say the further out we go along the trade time horizon, the greater the r/r… with short term trades I’m happy with 1:1 r/r if I’m managing it actively… but would in most instances target 2-3… PaulG: Do you do any self work (Van Tharp style) – like determine your beliefs about trading and then work out if they are useful etc? FXRenew888: Average win rate isn’t really something that’s quantified on say a bank flow desk.. as it isn’t just a case of taking on one possie and running with it – you’re a central point of net aggregation for all the risk that that bank generates globally in each currency…. in times of volatility there could be hundreds of trades running thru your books per second. Pater: Ah, OK, I see – thanks 888! FXRenew888: In terms of winning % I’d estimate mid to high 60s … but as we all know its what you do with the winner and how quickly you cut the losers that determines your performance Mick: You mentioned earlier that you are at cutting edge of fundamental information – news, flows, sentiment data etc – what are the most reliable/ best sources for this information that you can share with us? FXRenew888: In my sellside days there would literally be trillion traded per year… buyside at least in my experience with the strategy we have is much lower volume Mick – it comes and goes in terms of reliability … or at least who is on a roll and who isn’t… in markets like this it really isn’t a case of someone being consistently right day in day out I can guarantee you many of the banks and funds aren’t finding conditions particularly easy as of late For institutional level flow and research fxww.com have an excellent chatroom populated with many bank and hedge fund traders…. as a disclaimer I’m involved and don’t intend for this o be an advertisement… but it’s there and active especially during the London morning Quentin: What to you are the most valuable technical tools of the trade to you. Chart patterns, price action, moving averages, indicators, support and resistance levels. I know of lot of that is personal but… I’d be interested to hear what you value FXRenew888: But I would encourage people here to learn what works best for them, set out a plan and stick to it – rather than try to follow a bunch of institutions Well first and foremost the most valuable thing I have is experience – having seen everything that fx has to offer in terms of market conditions… I would have said the same thing last year, but now after the SNB debacle I’m pretty sure I’ve seen it all! And my relationship – sorry neither of those are particularly useful answers I like to keep it reasonably simple tbh – trying to combine too many indicators etc i think leads to analysis paralysis, and results in often finding too many reasons for too many trades not to be taken. Quentin: Agreed. FXRenew888: My best advice is to pick a handful at the most and learn them well. PaulG: Do you have anything to say about working on yourself – sorting out any potential psychological issues. FXRenew888: For me personally in terms of MAs I think you get the most bang for your buck by following the well recognised ones… 55, 100 and 200 across multiple time frames…. in terms of oscillators something simple along the lines of RSI or stochastics is useful for divergences… esp when combined with patterns such as double tops/bottoms etc Paul I think Sam is your man in that regard. Quentin: Thank you. FXRenew888: I do like to watch variations and combinations of indicators like supertrend or gann hi-lo activators… but that’s about as exotic as it gets. Sam Eder: Hi Paul – lessons 1,2, 15, 16, 17 of the course are on psychology. PaulG: Thanks Sam. Quentin: So 888 are there career paths out there for fx traders these days? Or make your own way… FXRenew888: I’d say the scope for joining the FX trading desk at a bank is very limited… once again a casualty of technology… when I first began my bank had 40-50 fx spot traders in Asia alone.. these days it would be single figures…. so you have very few openings, and ones that do arise are snapped up by the oversupply of ex bank traders looking to get back into a role, with 20 years of experience under their belt. They may take on juniors from time to time, but the role is usually different from a pure risk taking mandate… most likely a quant type monitoring execution and hedging algos. vtechdir: Should we assume that the largest % of trading volume is algo, rather than discretionary? FXRenew888: Getting into a large hedge fund is even more difficult given they tend to snap up the cream of the talent in the banks Quentin: Ok, thanks. Pater: Great, thanks 888! FXRenew888: I firmly believe the best way forward these days is to work out how to do the right numbers, establish an 18 month – 3 year track record and find an outfit that will back you or provide you with a turnkey solution for starting up your own business… FXRenew888: In due course Sam will introduce FXR member to people who are able to provide opportunities along these lines. Sam Eder: Yep there is a pretty clear path to getting seed funding and more. Quentin: Great, that’s good to know. FXRenew888: vtechdir – I’m not sure its taken over just yet – it depends on your definition of algo I guess … ie algos spitting out the actual trades, versus a discretionary trader using algo execution… but the time is near when this happens. vtechdir: Well, I define discretionary – pure eyeballing, whereas algo, includes Expert Systems, scanners and alerts as well. FXRenew888:Okay under that definition maybe not yet in FX.. I think it’s well and truly happened in the equity space. vtechdir: In a van Tharp book from late ’80, computerized trading was only 10%. Thank you. FXRenew888: I’d be surprised if it was even that high… I don’t think I got email until the early to mid 90s! vtechdir: Well, thank you very much for the session and wish you all the best, it seems that you are FXWW888 on fxww site:) FXRenew888: Correct vtechdir. FXSWANN: What a fantastic workshop, open, honest and straight to the point what more could you ask. I am so pleased that I eventually found mentors that know their stuff. Many thanks guys 888 -just great stuff learnt a great deal. Many thanks David Quentin: Yes thanks guys… Finally, So how did you and your HF fare in the SNB debacle? FXRenew888: Thanks for the feedback David Quentin – the best place to start re SNB is the introduction of the floor in Sept 2011… we had been running a long EURCHF position trying to catch the falling knife… From around the 1.08 level…. in the following days it had a v sharp spike down sub 1.01 if I recall correctly… fortunately positioning was relatively small and we managed to hold on to it…for a move up to 1.15…. we then bought the dip in the 1.10-11 window and had a stop entry from more up thru something like 1.1220 – only looking for a move to 1.1350-1.1400 Quentin: Wow. That was a pretty explosive reversal FXRenew888: I was having problems with my news provider that day and was in the process of resetting it when EURCHF took off to the topside…. I think not long after we’d got long on the stop entry – not seeing the news I saw it go from a 1.12 handle to 1.16 instantaneously, where I tried to sell half the position – the move was so quick that by the time I’d entered the order I got a fill 250 point higher than where I’d tried to sell it… My screens were lighting up with calls, and fortunately saw the 1.2000 headline so held the position… I’d say that in the following 3 years we would have been long for 95+% of the time that EURCHF was or dipped below 1.21 LJ: 888 and Sam – how do you identify when you’re on a “bad” trade – is it ever intuition and do you pull the pin before it hits your stop? Sam Eder: Hi LJ, will come back to the question in a tick. FXRenew888: On Jan 13-14th we had an investor shift funds which required that we square each position up completely across all investors, and then reallocate back to the existing positions…. I put on all of the trades we’d had previously, but for a reason I can’t explain I didn’t put the EURCHF back on…. 3 days later the floor was gone Quentin: wow!!!! FXRenew888: I’ll put it down to good luck rather than good management – but in that case I’ll take it. Quentin: That’s amazing!! Thanks again for the session. FXRenew888: Markets are very jump here… a lot of concern about downside equities… Sam Eder: @LJ personally it’s not so much intuition, but rather executing the plan with a dose of noticing what is going on. Mack: Thank you Sam and 888. All the best. FXRenew888: Welcome – hope there was something of value in there for most. Sam Eder: Yep cheers 888 was great. PaulG: 888 this might be a bit off topic but do you have a concern about the amount of debt to GDP that most of the governments have due to money printing? Sam Eder: Will wrap it up here folks, but please feel free to ask any questions and we can respond in time. Gordon: Thanks Sam & 888. Great evening, some real meaty ideas. FXRenew888: Paul – in a word, yes … it doesn’t look pretty. peterbee: Thanks 888 and Sam. Most enlightening. Sam Eder: Welcome:) PaulG: Thanks 888 you da man! PaulG: Thanks Sam – very good session. Sam Eder: Cheers Paul. Jacob: Thanks Sam & 888. Had a great session. Cheers. Sam Eder: Thanks Jacob. LJ: Very interesting session, thanks for your time 888 and Sam, much appreciated. Sam Eder: No worries LJ. RahanFX:Thanks for the insights, FXRenew888 – and thanks Sam for making this possible. Great session!