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Our primary investment strategy is based upon changes in market liquidity and the absence of any material economic or financial event. By measuring market sentiment of a currency and key support and resistance levels when liquidity is significantly increased, we seek to ride underlying trends as liquidity pushes new valuations, particularly around the early part of European trading (7am GMT - 12pm GMT). An important understanding of ValueArea is key to determining the optimum entry & exit positions. Without reservation, successful application of ValueArea is a fundamental succss criteria of a large proportion of successful proprietary & institutional forex traders.
Our secondary investment strategy identifies 'potholes' within volume distributions which whilst not frequent, present has high probability areas for strong support & resistance subject to an absence of any material economic or financial event. Key to this approach is understanding the trend of the market and using price action to enter the market at appropriate opportunities.
Our tertiary investment strategy is based upon economic and financial events releases - there are literally hundreds of economic and financial events occurring each day from all over the world. We identify and concentrate on a small number of those events that are likely to have a material impact on the markets and currency valuations.
| Event |
USD |
GBP |
CAD |
EUR |
NZD |
AUD |
CHF |
JPY |
| GDP |
X |
X |
X |
|
X |
X |
|
|
| CPI |
X |
X |
X |
|
X |
X |
|
|
| Interest Rate |
X |
X |
X |
X* |
X |
X |
X |
|
| PMI/ ISM Manufacturing |
X |
|
X* |
|
|
|
|
|
| PMI/ ISM Non-Manufacturing |
X |
X |
X* |
|
|
|
|
|
| Housing (New & Existing) Sales |
X |
|
|
|
|
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|
| Trade Balance |
|
|
|
|
|
|
|
|
| Retail Sales |
X |
X |
X |
|
X |
X |
|
|
| Central Bank Statement |
X |
X |
X |
X* |
X |
X |
X |
|
| PPI |
X |
|
|
|
|
|
|
|
| Employment/ NFP |
X |
|
X |
|
|
X |
|
|
* refer for specific guidance on country page
The consensus of market followers is best described by surveys done by organisations such as Bloomberg and Reuters, whom survey a small number of esteemed economists, and ask them what their expectation of an event will be. Once a consensus view is established for the event of interest, it is important to know what level of deviation (i.e. the difference between the actual release number and the consensus number) will likely cause the valuation of the market to shift. When events occur, sometimes a revision will occur of a previous release, usually the month before. It can impact the market if the revision is large, so can magnify the impact of the current release, neutralise it, or outweight it. Our secondary investment approach in a nutshell is that every major planned economic or financial event has a consensus expectation determined by economists ... if the actual release figure is different from the consensus by a minimum deviation, the market is surprised and will react to the release sometimes immediately, but in many cases over a period of time (15 mins to 2 hours). Based on historical data, we can predict that a particular deviation will trigger a minimum amount of valuation shift. We do not form an opinion before the event - we will wait for the event to come out, and then take a position.
And our quaternary investment strategy is based upon the principle that 00 levels (e.g. EURUSD 1.4500) are key areas of interest by market participants, often acting as a key area of support and resistance, and a magnet for underlying momentum. The strategy only works when momentum is present - if momentum is not present, a reversal or market indifference is a more probable outcome. The EURUSD is the only pair used on this strategy.
Always remember that trading foreign exchange on margin carries a HIGH LEVEL OF RISK, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
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