You were an analyst at Admiral and at Platinum Investment for many years. What made you move over to currency trading?
Let me tell you about my background first. While I was doing the analysis I was also trading. When I start trading seriously I also felt obliged to help traders make money. I started doing that on Forex Factory ( the biggest forex site in the world ) on EURUSD thread. Doing the analysis without trading is just…not right. I did that on small account but as you already know, making 3 % on a 100 USD account is the same as making it on 1.000.000 USD account. The difference is the money. On 100 USD its 3 USD on 1m account it is 30000 USD. But when trading we are calculating in percentage. 3 % is always 3 %.
I have soon found out that 70-80% of my analysis is correct and I started trading.
How did you get the name ‘Tarantula?’
Tarantula is a spider. Spider makes swings. Up and Down, Down and Up. I don’t care whether the currency will rise or fall. I am there to set the trap ( as a spider ) and get the pips. Spider is waving her web up and down, just as I do. Taking the swings in both directions. And don’t forget, Tarantula is a spider King hahaha.
Your thread on Forex Factory (Spider’s Den) is among the most read and popular proprietary threads on the whole Forex Factor with 2,150,000 visits since you opened it 2 years ago. How did this thread become so popular so quickly?
Actually its more then 4.000.000 now probably as they removed the counter some time ago.
I think it is because quality is always perceived quickly. I made FREE calls, free setups and actually people were making money with it. Its very unique because it transparent. I always put Entries and Targets. Its like i am teaching traders to fish. All the analysis is backed up by charts, and PRE FACT analysis and charts. I never liked those POST FACT analysis. In that particular time people were bragging about the trades and analysis which was almost always AFTER THE FACT. I was one of the first traders who presented transparent and pre fact analysis as a must. All posts which I have been posting needed to show the logic behind it. That’s one of the many reasons why I trade Price Action and not some 97 USD pdf systems. I am the creator of CAMMACD ™ price action method and that is what I use for analysis, setups and Session Recaps with Admiral Markets- my favorite brokers.
Additional reason for a success is that I respect EVERY trader, no matter if she is a losing or profitable one. I am always there to comment, advise, suggest and admit even when I am wrong. If my trade is stopped out I am not afraid to say it and post it. On my front page (http://www.forexfactory.com/member.php?u=133347) you can see some comments from other traders.
One of the things you like to look out for as an entry opportunity is “breakout, pullback, continuation”. Would you agree that except for very short-term and small moves, you often have to wait a pretty long time in Forex for really good set-ups of this type to happen? What would convince you not to wait for the re-test?
Exactly. Some years ago, especially back in mid 2000s it was all about swings. Average ATR was huge compared to ATR as of now. So, BPC pattern was one of the very first breakout patterns I learnt. The times have changed. Its hard to get BPC except for short term trades, that why I apply 2 additional methods: Trigger Happy and Breakout-Retest ( without continuation ). BPC best works when pairs are having big movements in a zig zag ( trend ). Unfortunately conditions have changed , so we need to adapt.
You like to use shape patterns to judge breakouts. Do you think some currencies tend to print and respect these patterns more than others? For example we often seem to see them more these days in USDJPY and EURUSD, but not so much in other JPY crosses. Do you think price action in minor pairs is less valid as these prices are a “product” of their parent pairs?
Well to be honest the patterns are the “patterns”. Its about how you approach the trade.
The answer to your statement is obvious. USDJPY is most heavily influenced by BOJ statements about quantitative easing, which was caused by the country’s GDP declining by 7.1% in the second quarter of 2014. USD being strongest safe heaven is the exact opposite of JPY. When USD is gaining JPY is declining. This has led to double exposure as most investors were buying dollars ( especially due to strong fundamentals coming from US ) and selling JPY. On big trends patterns are definitely showing better then on small and weak trends.
All traders need to know that trading is heavily influenced by historical buyers/sellers and historically important levels. No indicator can tell you that, you need to spot those yourself.
Behavioral analysis has its place in psychology and trading is a psychology game
The answer you your other question is “yes” and “no”. For example, look at GBPJPY. Again we have GBP weakness last few months and USD strength. Translated to trading terms is that GBP is getting stronger against YEN but due to GBP weakness its not so exaggerated as opposed to USDJPY.
Currency trading is always watched through the prism of base and quote currency.
I trade 25 pairs. When you trade minors you should always pay attention to correlations table.
Do you modify what you are looking for in entries and exits between different currency pairs? For example, do you expect EUR/USD to pull back more than GBP/USD? Or do you just treat every pair the same and expect technical to tell the same stories?
I always place technical target and look for a momentum push. Once I am in a profit I tend to place trailing stop. Because I am trading intraday my stop is rarely higher then 30 pips. In this volatile market, it’s an absolute necessity to use trailing stop for intraday trades. I did a webinar – “how to turn scalps into scalps swings and scalp swings into intraday”. So that is the strategy I have been using, as I have personally created it. So once I place the trade, I put my SL. Then I use trailing stop. I usually go for 15-60 pips on each trade.
When I do trend trades I open the position when the price has lost its momentum ( aka retracement ). For trends, I always want to sell higher and buy lower. For that we need a loss of momentum, so called retracement.
Do you use any quantitative statistics in your trading?
What is the best way for technical traders to avoid the trap of seeing too much confluence on the chart, which might spook them into exiting a good trade too early?
I use POCs(points of confluence) strictly for ENTRIES. I personally don’t look confluence for exits. Early exit is absolutely justified if price momentum suddenly changes. We have been witnessing a lot manipulation from big banks so once the trade is in the profit you should protect it. Many times price has been spiked at “the fix” time ( 1.15 PM and 4 pm gmt ) only to hit SL and then proceed in the direction you wanted. Trailing the stop is protecting a trader from rumors, unexpected events, power outages, macro economical shakeouts, strong news. All intraday traders are prone to above mentioned. Technical traders should learn the METHOD,RISK and MONEY MANAGEMENT. Targets are not the problem as long as they “feel” the market and trust their own analysis. As you know , successful trading is based on a TRIPOD:
I always say “If one leg falls- all will fall”
Trader’s assignments should be:
- Primary – Not to lose money during any given timeframe period
- Secondary – Gradually growing the account
- Third – Make profits
Problem is that most traders switch the third for the first assignment.
Now if traders are suffering from undertrading symptom that is something else. They need to work on their psychology then. That is why I work on Psychology webinars with Admiral Markets. I want to educate traders to fully understand this profession. This is not a rocket science. But it’s still a science. I could talk and brainstorm it so much as there are always things which could be learnt and which most traders simply do not recognize. But it is also a thrill of this profession.