Forex trader Christopher Weaver talks about his new book ?4 Keys to Profitable Forex Trend Trading? with Trading Diary.
1. Who are you?
I have been around the trading scene for a while. Having never really worked for any large financial institutions, the majority of my trading has been private accounts. I spent a few years writing and delivering trading courses in London for a company that teaches and trains private retails clients how to trade the financial markets. I actually really enjoyed that experience although I haven?t done it for over a year now. I spend a lot of my time now in front of the trading screens and writing books with Harriman House which I really enjoy.
2. What is your new book ?4 Keys to Profitable Forex Trend Trading? about?
It?s about learning how to identify solid trends and then trade them profitably. It?s a very practical book and it has over 200 images of charts in it. I felt that it was important to have almost an overload of charts simply because technical analysis is a very ?visual? experience. This book helps train the readers mind to instantly identify trading opportunities. It helps the trader develop an instinct for trend trading.
3. Why did you write this book?
I wanted to write a book that had definite and clear trading strategies laid out for the reader. I find a lot of books on Forex trading seem to shy away from doing this and it doesn?t make sense to me. People who read books on trading are normally looking for practical tools that they can apply and implement immediately. In this book ?The 4 Keys to Profitable Forex Trend Trading? there are 8 different trend trading strategies that define the entry and exits specifically.
4. Who is your book aimed at?
The book is aimed at individuals who have a basic understanding of trading, for instance they know how to place a trade and understand the basics of a chart, and who want to focus their trading very specifically on trading with the trend and increase their profitability.
5. What in particular interests you about forex rather than other derivatives?
I have always loved the idea that the forex market is a market that is ?made of money?. Plus, it is very liquid, and as far as I am concerned, liquidity is always a good thing. I also believe that the forex market provides opportunity for so many different types of trader. It doesn?t matter if you have a short, medium or long term trading style, there is normally something for you to trade.
6. Do you just use technical analysis for your forex trading or do you look at the fundamentals as well?
I believe that it is possible to trade successfully by using only technical analysis. I also believe that by introducing a small amount of fundamental analysis the trader can improve his results dramatically. The non-farm payroll figure that is released monthly in the U.S. is for me, a key fundamental piece of information that I focus on. If the figure is consistent with the current trend of the time frame that I am trading, I see that as an opportunity to potentially enter the market. If it is inconsistent with the trend of the chart that I am analyzing I tend to stay out of the market completely.
7. I often find that by the time I start trading on a trend, the trend is nearly over and reverses. What can I do to identify the trend earlier?
Yes, this is key. Traders, like to ?see the trend? before they ?trade the trend?. As you say however, by this time it may be too late as the price action is likely to be overextended and ready for a pullback. A basic way that I define a trend is by looking at the relationship of the 50 EMA to the 200 EMA. If the 50 EMA is above the 200 EMA, the trend is up, and if the 50 EMA is below the 200 EMA, the trend is down. The only problem with this is that once the cross of the moving averages takes place there is normally a pull back against the trend which happens. So, if the 50 EMA crosses down through the 200 EMA, I will wait for the price action to come back and test the 50 EMA before I start shorting and vice versa. This is just a general rule. In my book, there are a number of other techniques which I talk about that assist on determining the trend and also the timing of the entry.
8. You have spent extensive time trading forex. Do you have any particularly memorable trades (either good or bad!)?
It?s funny but the first thing that comes to mind is actually a trade that never happened. I got up early one morning at about 5am, which is little bit earlier than normal, because I wanted to see how the USD/CHF had traded overnight. I had been watching this pair closely as it was trending rather strongly and I didn?t want to miss any opportunities. As soon, as I opened my screens up I saw the setup I had been looking for, which was a bounce off of the intraday pivot level. So, I set a sell limit order directly at the price of the pivot. If the price action traded up to the pivot I would be triggered into a short position automatically. I was very excited about this trade as my target was four times that of my risk and so I was hoping this would work out as planned. After I placed my order I turned off my computer and started to get ready for a meeting that I had in London. 2 hours later on the train to London, I checked the price of the USD/CHF and it had already hit my target! The only problem was that the price action never made it up to my entry price ? it missed it by one pip! I was therefore never filled on the trade and missed a perfect 4:1 reward to risk trade by just 1 pip. I was certainly disappointed to say the least.