Strategies to Effectively Anticipate and React to Currency News

Kathy Lien Directors of Currency Research

Disclaimer
GFT refers to Global Futures & Forex, Ltd. and all of its divisions, branches and subsidiaries, including Global Forex Trading, GFT Futures, FX360, GFT Global Markets Asia Pte. Ltd. (Company Registration Number 200717665N), GFT Global Markets UK Limited regulated by the FSA, GFT Australia (ABRN 103 508 461, AFS License 226625),and GFT DMCC, Registered & Licensed as a FREEZONE Company under the Rules and Regulations of DMCCA, License Number DMCC31136 . For Australia, a PDS is available at www.gft.com.au. Please read before making any decision to deal in GFT products. The contents hereof is available or accessible for informational purposes only and is not to be regarded as an offer or a solicitation to deal in any investment product or to enter into any legal relations, nor an advice or a recommendation with respect to such investment product. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful. Trading of foreign exchange contracts, contracts for differences, derivatives and other investment products which are leveraged, can carry a high level of risk, and may not be suitable for all investors. It is possible to lose more than the initial investment. 2009 Global Futures & Forex, Ltd. All rights reserved. This presentation should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this for your general information. The views of this author are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. In addition, any projections or views of the market provided by this presenter may not prove to be accurate. Global Forex Trading, the currency research team and the presenter will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this presentation. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought. CD08A.014.102609

Agenda

Proactive vs. Reactive Trading

Learn How to Predict Economic Data

Proactive Trading

What is proactive trading all about?

Proactive Trading

Being ahead of the game.

Benefits 1. Lower Risk 2. Instant Gratification 3. If You Are Wrong, Youre Out

Proactive Trading

Disadvantages: Its difficult!

Proactive Trading

The Key: Trade Pure Event Risk

Tier 1 vs. Tier 2 Data

Tier 1 vs. Tier 2 Economic Data

AVOID
Non-farm Payrolls Central Bank Rate Decisions

Anything without Forecasts

TRADE
Retail Sales
CPI / PPI Numbers Employment Numbers for Other Countries

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

Tier 1 vs. Tier 2 Economic Data

Avoid Data From: Japan & Switzerland

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

How to Trade Proactively Rule #1

Rule #1

Enter a position no longer than 20 minutes before a major news release.

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

Trading AUD Retail Sales

29 September, 2009 Australian Retail Sales s.a. (MoM) Aug.

8:00 PM ET
Expectations: 0.5% Previous: 1.00% Our Call: Stronger Retail Sales numbers

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

Trading AUD Retail Sales

Source: DealBook 360

How to Trade Proactively Rule #2

Rule #2 Place stop at 30 pips.

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

Trading AUD Retail Sales

Source: DealBook 360

Trading AUD Retail Sales

Source: FX360.com

How to Trade Proactively Rule #3

Rule #3 Buy back of the position when the currency sells off by the amount risked (30 pips), move stop on remaining position to break even.
The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

Trading Australian Retail Sales

Source: DealBook 360

How to Trade Proactively Rule #4

Rule #4 Trail stop on remaining position by 2 bar high, 3X risk or 20 SMA.

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

Trading Australian Retail Sales

Source: DealBook 360

How to Trade Proactively

Tricks of the Trade

How to Trade Proactively

Source: Bloomberg

Trading Canadian GDP

Canadian GDP (July) 30 September, 2009

8:30 AM ET
0.5% Expected 0.1% Previous

Trading Canadian GDP

Our View:
Weaker Canadian GDP WHY?

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

Anticipating News

What are the clues?

Leading Indicators for GDP

Retail Sales and Trade

Source: FX360.com

Trading Canadian GDP

Source: FX360.com

Trading Canadian GDP

Source: DealBook 360

U.K. Employment Figures

16 September, 2009 5:00 AM ET (August Figures) U.K. Jobless Claim Change 25.0K Expected 24.9K Previous

ILO Unemployment Rate

8.00% Expected 7.80% Previous

U.K. Employment Figures

Our View: Stronger Labor Picture WHY?

U.K. Employment Figures

http://www.markiteconomics.com/MarkitFiles/Pages/PressCenter.aspx

Another Correlation
IVEY PMI = Canadian Employment

Source: Bloomberg

Trading Canadian Employment

Source: IVEY http://iveypmi.uwo.ca/English/Welcomeeng.htm

U.K. Employment Figures

Source: FX360.com

U.K. Employment Figures

Source: DealBook 360

Anticipating News
24 September, 2009

U.S. Existing Home Sales (August)

10:00 AM ET

Expectations: -2.70%
Previous: 7.20% Our Call: Weaker Existing Home Sales

Trading U.S. Existing Home Sales

Our View:
U.S. Existing Home Sales = WEAKER Risk Aversion Follows!!!

WHY?

Anticipating News
What are the clues?

Trading U.S. Existing Home Sales

Source: Bloomberg

Trading U.S. Existing Home Sales

Source: DealBook 360

Eurozone Data

German Trade and Current Account Balance (July) 8 September, 2009 2:00 AM ET

11.3B Trade / 10.0B CA 12.2B Trade / 13.3B CA

Expected Previous

Trading German Trade Data

Our View: Trade and CA data = STRONGER

WHY?

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

Anticipating News

What are the clues?

Trading German Trade

Leading Indicators for German Trade Manufacturing PMI Increased

Trading German Trade

Source:FX360.com

Trading German Trade

Stronger than Expected

Source: FX360.com

Trading German Trade

Source: DealBook 360

Reactive Trading

Reactive Trading

Reactive Trading

The FX Market is HUGE.

Prices do not adjust instantly.

Reactive Trading
AUD/USD
AUD Retail Sales - 29 September, 2009

Source: DealBook 360

Reactive Trading
AUD/JPY
AUD Retail Sales - 29 September, 2009

Source: DealBook 360

Reactive Trading
AUD/NZD
AUD Retail Sales - 29 September, 2009

Source: DealBook 360

Reactive Trading

What makes reactive trading so compelling?

1. No guessing of data. 2. Limited exposure to market risk.

Reactive Trading Reactive Trading Recipe for Potential Success

Reactive Trading
1. Understand the Calendar

Source: FX360.com

Reactive Trading
2. Know the Expectations

Source: FX360.com

Reactive Trading
3. Watch the Price Action

Source: DealBook 360

Reactive Trading

Money Management: The Final Component

Reactive Trading

A reactive strategy requires swiftness.

How to Trade Reactively Rule #1

Rule #1
Establish a bias from the data.

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

How to Trade Reactively Rule #2

Rule #2
Choose the currency pair to express the trade.

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

How to Trade Reactively Rule #3

Rule #3 Wait for technical confirmation on 5-minute chart.

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

Reactive Trading

30-point Stop
15-point T1 Target

Trail Rest by 20

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

Reactive Trading

30 September, 2009 8:30 AM EST

CAD Gross Domestic Product

0.0% vs. 0.10%

Reactive Trading

Trade Idea: Long USD/CAD

1. Risk aversion!

2. Disappointing Canadian growth.

Reactive Trading

Source: FX360.com and DealBook 360

Reactive Trading

Source: DealBook 360

Reactive Trading

Source: FX360.com and DealBook 360

Reactive Trading

16 September, 2009 4:30 AM EST

U.K. Jobless Claims Change

24.4K vs. 25.2K

Reactive Trading

Trade Idea: Long GBP/USD

1. Risk is ON!

2. U.K. Employment Looking Stronger

Reactive Trading

Source: FX360.com and DealBook 360

Reactive Trading

Source: FX360.com and DealBook 360

Proactive/Reactive Trading

Proactive/Reactive
Best of Both Worlds

Reactive Trading

1. Enter one lot 10 minutes before event.

2. If event confirms your thesis, add 2nd lot.

3. Move stop to B/E on the whole position.

4. Exit both when price reaches +15 in money on 2nd lot.

The views of the author are not necessarily those of GFT, its owners, officers, agents or employees. This presentation does not constitute a recommendation to follow a particular trading strategy. All trades should be considered carefully with your personal trading strategy, including risk tolerance. In addition, any projections or views of the market provided by the author may not prove to be accurate.

Proactive/Reactive Trading

Trade Idea: Long EUR/USD

Proactive/Reactive Trading
Proactive/Reactive Best of Both Worlds

Source: DealBook 360

Fast and Furious Trading

Fast and Furious Trading, Part 2

Agenda What qualifies as short-term trading?

Trend vs. Countertrend

How to Trail
Trading Strategies Improving Performance

Fast and Furious Trading

Short Term
10 pips a day 20-30 round turns Short attention span, low risk tolerance Quantity, not quality 5-15 minute charts

Long Term
100+ pips Wider target, larger risks Patience Quality, not quantity 60-minute charts or greater

Fast and Furious Trading

Trend vs. Countertrend

Trend moves tend to develop slowly and require patience
Countertrend moves are quick Countertrend moves require good timing

Countertrend moves must obey strict money management

Every trend has countertrend moves as early winners cash out