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Todd Gordon

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  1. Beirut 2010 Todd Gordon • Senior Technical Strategist • FX trader, Gain Capital Asset Management • Author, Strategy of the Day • Regular contributor to CNBC’s Fast Money • Popular Twitter contributor • FOREX.com booth # 6314 Forex trading involves significant risk of loss and is not suitable for all investors.

  2. What We Will Cover • Part 1 – Introduction and services we provide • Part 2 – The 3 dimensions of trading

  3. Part 1 Introduction

  4. Buying Breakouts

  5. Buying Breakouts

  6. Buying Breakouts

  7. Buying Breakouts

  8. Buying Breakouts

  9. Trading and Ski Racing?

  10. Strategy Of The Day ** **The following are my actual trades as recommended through SOTD. The following are successful examples, though unsuccessful trades can and will occur. Due to timing, S.O.T.D. recommendations and actual executions will vary slightly. Additionally, the spreads inherent in my performance are generally at more favorable rates than that available to the typical retail investor. As such, you may not be able to achieve similar results as illustrated in this presentation.**

  11. Strategy Of The DayResults

  12. Twitter 5213 followers • www.twitter.com/ToddGordonForex • General market commentary • Trading, position, SOTD updates • Occasional attempts at humor 989 followers • www.twitter.com/ToddGordonTrade • Trading, position, SOTD updates • Ideal for SMS text alerts

  13. GAIN Capital Asset Management • Money management firm established in 2000 • Clients are both institutional and individual investors • Focuses solely on spot trading in G-7 currencies USD, EUR, JPY, GBP, AUD, NZD, CAD • Approximately $70M under management

  14. Part 2 The 3 Dimensions of Trading

  15. 3 Dimensions of Trading • # 1 – Intermarket analysis • Identifying individual currency movement • Identifying leading/lagging asset classes • # 2 – Identifying trading opportunities • Disciplined pattern recognition • Precise, pre-planned trading strategies • # 3 – Account management • Appropriate deployment of trading capital • Understand, acknowledging capital at risk

  16. 3 Dimensions of Trading #1- Intermarket analysis

  17. Identifying Currency Leadership EUR / USD USD / JPY

  18. Identifying Currency Leadership EUR / USD USD / JPY

  19. Identifying Currency Leadership EUR / JPY

  20. EUR/JPY USD/JPY EUR/USD Which Currency To Trade?

  21. Indentifying Leadership

  22. Indentifying Leadership

  23. Inter-Market Analysis “Market trends anticipate economic trends.” -John Murphy

  24. AUD/JPY & Dow Overlay

  25. USD/JPY & US 10-yr Yield

  26. EUR/USD NOW Trades With Equities

  27. USD/CAD & Crude Oil

  28. AUD/USD & High Grade Copper

  29. 3 Dimensions of Trading #2 - Identifying trading opportunities With Elliott Wave and Fibonacci

  30. ELLIOTT WAVE A Disciplined Approach To Pattern Recognition and Risk Management *Paul Tudor Jones ..calls Prechter and Frost's standard text on Elliott "a classic," and one of "the four Bibles of the business" -- “...and The Elliott Wave Theorist both give very specific and systematic ways to approach developing great reward/risk ratios for entering into (trade)"[19] * http://en.wikipedia.org/wiki/Paul_Tudor_Jones Forex trading carries a high level of risk and is not suitable for all investors.

  31. Ralph Nelson Elliott (1871 - 1945) Forex trading carries a high level of risk and is not suitable for all investors.

  32. BASIC 5-WAVE PATTERN 5 3 Wave 5 Wave 4 Wave 3 1 4 Wave 2 Wave 1 2 Forex trading involves significant risk of loss and is not suitable for all investors. Forex trading carries a high level of risk and is not suitable for all investors.

  33. BASIC 5-WAVE PATTERN • Wave 3 • - Strong, deliberate, and extended price action • Fundamentals increasingly better • - Investor confidence greatly improved • 5 extended subdivisions 5 • Wave 5 • - Investors extremely optimistic • Fundamentals return, but often not to W.3 levels • Price momentum less than W.3 • Wave 1 • - Fundamentals poor • - Investors fully, bearish • expecting new lows • Heavy short selling • 5 wave subdivision • Wave 4 • Fundamentals temporarily peak, then pullback • Often shallow, yet prolonged consolidation 3 Wave 5 Wave 4 Wave 3 1 4 • Wave 2 • Investors fully bearish, certain of new lows • - Heavily retraces W.1 • - Fundamentals horrible, doom and gloom • Volumes light, as sellers dry up • 3 wave subdivision Wave 2 Wave 1 2 Forex trading involves significant risk of loss and is not suitable for all investors.

  34. TREND WAVES MOTIVE WAVES • Subdivides into waves of 5 • W.2 can’t go below the beginning of W.1 • W.4 always retraces less than 100% of W.3 • W.4 can’t go below the beginning of W.3 • W.3 is often the longest, never the shortest. 5 .v .iii 3 .v .iv .b .i .iii .ii .a .iv 1 .c .v .i 4 .b .iii .ii .i .a .iv .c 2 .ii

  35. Corrective- possesses a 3-wave structure that retraces percentage of a prior motive Waves 2,4 and B are corrective Subdivision are labelled with letters. Waves are corrective when trending in the opposite direction to the wave of 1 larger degree. Corrective Waves Forex trading carries a high level of risk and is not suitable for all investors.

  36. CORRECTIVE WAVES .5 .3 .B C A B .1 .4 .A B .C A C .2 Uptrend Downtrend Forex trading carries a high level of risk and is not suitable for all investors.

  37. Completed A-B-C Correction Forex trading carries a high level of risk and is not suitable for all investors.

  38. Fibonacci Ratio Analysis The map legend of Elliott Wave Principle…

  39. FIBONACCI RATIOS

  40. FIBONACCI ANALYSIS Retracements Projections Extensions

  41. Fibonacci Retracements Used to analyze CORRECTIVE WAVES 1 .5 5 .3 5 3 B 3 1 4 2 4 A 1 .1 C 5 .4 B 3 1 2 4 A C 2 .2

  42. Fibonacci Retracements Used to analyze CORRECTIVE WAVES 1 .5 5 .3 5 3 B 3 ….by measuring impulse waves 1 4 2 4 A 1 38.2% .1 C 5 .4 B 3 1 2 4 A 61.8% 100% C 2 .2 100%

  43. AUD/USD – 11/11/09 – 5:01 PM EST “…I will be bidding for 2 units of AUDUSD at 0.9220 with stops for now at 0.9142. If filled and Aussie shows favorable upside action, I will quick trail the stop up behind me…”

  44. AUD/USD – 11/12/09 – 4:49 PM EST “…Filled on our AUDUSD bids today as the risk trade was hammered today. EURUSD seemed to the downside …Oil inventories were released today and came in higher than expected. And when combined with high risk aversion on the session, we would expect to see crude breaking significant support levels…. but support held at $76.50…as did Australia's major export, Copper, hold support at around 297.30 .”

  45. AUD/USD – 11/13/09 – 1:51 PM EST “…Booking half of our profits on 0.9220 long AUDUSD at 0.9285 and trailing a stop on the balance to entry price. EURUSD is acting very heavy into the 1.4885 wave 4 resistance mentioned below…In light of fairly strong commodity markets, a positive equity close, and dollar overlap, I will remain long AUDUSD over the weekend with 0.9220 stops. ”

  46. AUD/USD – 11/16/09 – 2:05 PM EST “…We are still long the final piece of AUDUSD from 0.9220 and I am actively searching for a final exit spot. I have moved stops on the balance to 0.9320 locking in 100 pips on the final piece.” AUD/USD – 11/16/09 – 3:23 PM EST**POSITION UPDATE ** “…Target #1 0.9400 Met and Held. Closing last piece of AUDUSD long at 0.9375 for +155 pips.

  47. 3 Dimensions of Trading #3 - Account management

  48. Calculating Stop Losses Depending on your conviction in the trade • LOVE THE TRADE 6-8% of total capital at risk per trade • Strong Conviction 4-6% of total capital at risk per trade • Average Trade 2-4% of total capital at risk per trade • Marginal Setup 1-2% of total capital at risk per trade Forex trading involves significant risk of loss and is not suitable for all investors.

  49. Capital at Risk per Trade Available Capital x 5% -------------------------------- = Maximum Position Size Capital Exposure per Lot $50,000 x 5% = $2,500 ------------------------------------ = 52 pips x $10.00 /pip = $520.00 4.8 lots. 5 LOTS Forex trading involves significant risk of loss and is not suitable for all investors.