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_NNForex > Podcast > Flashcards

Podcast Flashcards

1
Q

Leverage - What is the optimal leverage ratio?

A

20:1 - across Total Trading Capital

The higher the leverage the more margin you have to play with. High leverage lower the margin requirement - very risky.

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2
Q

Leverage - How do you handle Leverage across multiple brokerage accounts?

A

If you have - for example 2 brokerage accounts, and you’ve split your trading capital, then your leverage can be set to 40:1 on the account. Why - You are not changing the size of your trades, the risk on the trade remains the same, the risk on the overall trading capital remains the same.

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3
Q

What should you look for in a broker?

A
  1. Large / Capitalized / Insured
  2. Demo Trading Allowed
  3. Tools - MT4
  4. Customer Service
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4
Q

What should be captured in a Trading Journal?

A
  1. FX Pair
  2. Long / Short
  3. Pips Gained/Pips Lost - Net Pips if you scale in/out
  4. Actual Setup / Screen Shot
  5. Notes - What Have I Learned?
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5
Q

Why keep a Trading Journal?

A

Learn and Eliminate trading mistakes - Always improving.

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6
Q

Which three areas are of Focus in FX trading?

A
  1. Money Management
  2. Trading Psychology
  3. Trade Entries
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7
Q

Which three Characteristics / Character traits must Good FX traders have?

A
  1. Patience
  2. Initiative - go do things
  3. Discipline - constant improve/stick to system
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8
Q

Volatility - How does trading volatility affect your trading of a volatile pair?

A

Volatility - Moves more and faster –>ATR

Using Risk principles - you are using the amount per pip to control/manage your risk

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9
Q

Exotic FX Pairs - Trade them / Why?

A

Major Pairs - NOT Exotic
USD,EUR,JPY,GBP,CHF,CAD,AUD,NZD
Minor Pair - NOT Exotic - Any major pair excluding USD
Exotic Pairs - The rest.
(Might look into Singapore/Dollar)
Why not to trade them:
1.Extremely Volatile, moves without any indication.
2. News Calendar undefined
3. Government - Extremely sensitive regarding governments.

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10
Q

Backtesting - How should you back test a Confirmation Indicator

A
  1. Pick the FX pair
  2. Add the ATR onto chart
  3. Add the Confirmation Indicator onto the chart
  4. Start off with the Default Indicator settings
  5. Go back into history 36 months
  6. Now - On entry - what is ATR
  7. On Entry - did it gain the ATR value first, before it lost 1.5 times the ATR value? If so, then Yes its a win. E.g - ATR 80, did it gain 80 before losing 120? If you’ve lost 120 before hitting your win then it is a loss. What happened first - hit profit or hit loss?
  8. How many wins / losses / pips
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11
Q

What is a Confirmation Indicator?

A

A Confirmation Indicator tells you - We are in a Trend now, and a Good Place to Enter this trade is HERE.

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12
Q

When is the Optimal Time to Trade?

A

The optimal time to trade the daily chart is around 20 minutes before the daily candle closes, whenever that may be according to your broker. Just remember that.

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13
Q

Do you ADD onto Winning Trades?

A

No. Each trade is their own trade. To get a second indication from your Confirmation Indicator to enter the trade - that means the CI indicator should have indicated to get out of the trade first.

  • -When your CI indicator crosses/reverse it is definitely time to get out of the trade!
  • *This is different from having an Indicator that is a CONTINUATION INDICATOR
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14
Q

How do you know the difference between entering a trade during Reversal territory vs. Trend territory?

A

Your System / Testing!!
Example - If your CI is a two lines cross indicator.
Now - if the lines cross, indicating to go Long, but below the 0 line (crossing occurred below 0) - it means this direction can still be in Reversal territory. You have to wait until above zero to know it is now trending and not in Reversal territory any more. If the cross, already above the 0 line then you can go. If CROSS below zero - wait until line goes above 0

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15
Q

Keeping trades open over New Year?

A

Never a good idea. Back-test, but, in general
- Close out everything on the 31st, Wait for the first full daily candle after the 1st, then look for new trades on the 2nd of Jan.

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16
Q

What is a Flash Crash, and how do you deal with it.

A

A Flash Crash - that is when the markets drops or jumps, very fast and then Returns very fast on the same daily candle - only affecting High/Low - not so much the closing. (Shadows…)
This will affect the ATR or any indicator based on High/Lows over a number of days.
If for example you are using the ATR, over 14 days - then, for the next two weeks, use the static ATR what it was before the flash crash - until that flash is not affecting the ATR any more.

17
Q

What are GIANT Candles?

How do you deal with Giant Candles?

A

Giant candles - LONG Candles, open and close very far apart - moved a lot of pips in the day.

In you system, which indicator is on setting that uses the most amount of days, e.g., say it is EMA, and the moving average is set on 20 days - if that is the most amount of days, across all indicators, then you have to wait and leave that FX pair for 20 days until it is not affecting your system. Leave ALL FX pairs related to that currency - e.g., if the giant happened on GBP, then no GBP pairs for 20 days.

18
Q

Criteria for selecting indicators to test - describe the criteria

A

Skip / Exclude if:

  1. Price followers - indicator that just mirrors price. Not showing you anything you cannot see for yourself.
  2. Example provided - the example provided to prove it is working is not very clear.
  3. The indicator gives a ton of conflicting signals, e.g., buy then sell then buy then sell or in a small space of time.
  4. Any indicator that shows support/resistance
  5. Anything you cannot modify / own settings.
19
Q

Confirmation Indicators - do you go for quantity or quality - loads of entry signals of few

A

When looking for a CI indicator, you test for ROI - how many pips did it give you over the period.

20
Q

Currency Strength Indicator - What is it?

A

Currency Strength Meter - Heat-map. Measures which currencies are strong and which are weak at that point in time. Do not use…
Currency Strength Indicator - Attempt to indicate direction, but not really useful. Based on overbought / oversold and reversals.

21
Q

What is the One Candle Rule?

A

One Candle Rule:
1. Your Main Confirmation Indicator tells you to trade; but not all of the other indicators are telling you it is good to go.
2. E.g., volume indicator is a no go - but it is close…
3. Allow one candle to get the Good to Go Sign - only one.
4. So, if after 1 day/1 candle, after the Main confirmation indicator said it is a go - then the Volume indicator says it is a go,
AND Price hasn’t run away from you - only then can you still go
1 CANDLE AND Volume not run away from you

22
Q

How do you up your odds at winning in FX trading?

A
  1. A Structure, A System - Money Management - Risk Management Structure.
  2. Emotional Control - Control yourself / remove emotion.
  3. Daily Chart - Time Management / Sensitivity to news / Indicators work better on daily
  4. Entry System that is proven to work and always improving on it
  5. Eliminating things you cannot control - reduce losses / risk, e.g., News / elections
  6. Support System - Other forums / Discord
23
Q

What is more important than the best indicator that shows when to enter into the trade?

A

Indicators that shows Do Not Take The Trade

Indicators that keeps you from making Losses

24
Q

Back Testing an Entire System - How?

A

There are two levels - The Initial Level and the Full Back Testing Level when you ready.
!!!If possible - use FX Calendar that can go back in time / Also if any elections / Brexit etc. events happened - would you have been in the market.
1. Initial Level - Pick 5 currency pairs. Only go back 12 months. Paper trade with 50 000 account. At the end - calculate your ROI. Now you can tweak or test other system etc. Keep on refining with different settings etc.
EUR/USD,AUD/NZD,EUR/GBP,AUD/CAD,CHF/JPY
2. Full Back - this is more advanced, to ensure your primary System is correct - Go back 4 years, run through as many as possible FX pairs, calculate ROI per annum.

25
Q

Should you be trading the Singapore Dollar?

A

-Yes, once tested and volatility is understood, then add onto the 28 fx pairs you are trading.

26
Q

Which of the FX pairs should you trade

A

ALL of the 8 Major currencies - USD,EUR,JPY,GBP,CHF,CAD,AUD,NZD (their combinations)
NO Exotics - e.g., ZAR, too volatile
NB TEST and LOOK into Singapore Dollar

27
Q

How long should you Demo Trade?

A

As long as it takes to get 6% return for 6 months - i.e., 12% per year.

_NNForex (6 decks)

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