There is obviously some significant option protection ahead of 1.20 in cable and this needs to be respected. With quite a bit of space on the topside before strong technical resistance reemerges (1.24 is the next very strong level), we could easily see the market move towards there especially if the no-deal Brexit headlines take a breather.

GBP continues to look awful on the crosses against both the JPY and the EUR. Both look like clear cases of ‘sell-the-GBP-rally’ but exactly where that rally is will depend on the headlines and the volatility at the time.

So for now I am happy to trade the 1.20-1.24 cable range but lets put it this way, I’m more comfortable with bigger short GBP positions than bigger long ones!

I have just been analysing 1 very clever strategy which has been taking advantage of these moves on quite a short-term basis. I have permission to give some broad details as the IP lies in the finer points particularly around position sizing and pair selection.

The strategy waits for a minimum 1.4% breakout move before placing a counter-trend position and then trying to estimate the 50-70 pip consolidation range. Position sizes increase during the consolidation timeframe and the system then sets itself for the next breakout move.

The logic being that we don’t know which way the market is going to move but when it does move, we can make an educated guess as to how it will behave. Simple is often best.

• Around 1:880 retail traders is worth considering. Not an overly impressive number but really not surprising when you think that the vast majority of retail traders have had no formal training in the financial markets and are trading part-time at best.
• Former interbank traders don’t transition well to the retail space. The really good ones can make millions for themselves and aren’t interested in managing other peoples money. The rest probably relied heavily on corporate flows to make their money at the bank and can’t do it when on their own.
• Always insist that data analysis is carried out on equity performance and not on closed-trade performance. The latter can hide a lot of poor trader behaviour.
• Just because a trader can make money consistently on a $10k account does not mean that they will make money on a $1million account. The psychological aspect is huge and we find that most traders with potential will founder and change behaviour to their detriment once AUM increases. The exceptions are the ones whose focus and performance actually improves once the AUM goes up; these are the diamonds that we are constantly seeking.
• Avoid Martingale traders at all costs. These are very prevalent in the retail space. They continuously book small profits thereby making themselves look good but once they are out-of-the-money on a trade they start doubling up and running bigger positions over risk events. There is a 100% mathematical certainty that these types of traders will eventually blow your account up but probably after they have already been paid a few months commissions during times when they got away with it.
•  Get to know the trader. Find out their background and where they have traded. Ask for references. If there are multiple excuses re the lack of a track record and/or references, then look elsewhere for your trading talent.
• “Lies, damned lies, and statistics”. Don’t always trust the numbers! Get to know the trader.
• Set firm rules in terms of your own personal drawdown policy. Remain in control, don’t let the trader tell you what the limits should be.
• Start with a small allocation. If the stats and the background are confirmed by the small allocation, then you can consider some incremental increases.
• Don’t be overly concerned by managed losses; every trader will have ups and downs. Be very concerned by bad trading behaviour and cut the trader’s allocation immediately.
• Find an honest broker. The counterparty risk is probably just as big as the trader risk so do your homework and try to find a broker who wants long-term business not the churn-and-burn variety. If this means settling for much lower leverage and increased oversight then so be it.
• Finally, this is a space for sophisticated investors who understand exactly what they are doing and are looking to take on some additional portfolio risk. Don’t listen to all the hype. If you don’t understand the risk, the trading strategy, the trading conditions etc, then look for something else more suitable to your personal situation.

In the developing trader space, we tend to see a large number of smaller investors and traders diversified across every possible strategy. What does seem to be a recurring theme is that investors typically like to see at least a partly systematic strategy. This gives them more peace of mind it seems. Can’t say that I agree with them that a machine is safer than a trustworthy and competent person, but that’s the world we live in. I think the main reason is that the investment decision-maker can more easily justify their decisions if backing a system rather than a person.

My advice is that if you are planning a career as a professional trader then you should look to systematise at least the risk management part of your trading processes. This will give investors some reassurance that you are less likely to go ‘rogue’.

(If you need some guidance on how to go about systematising your processes, especially if you’re on MT4 or MT5, drop me a note and I’ll show you where to start).

Is the trader in a normal cycle that is catered for in the overall strategy? Has the trader tried something new and it’s not working? Does the trader intend to reduce risk and if not, at what market levels will a risk reduction take place? If the trader just had a big win or loss, what’s the next step?

In this day and age of social media, staying quiet is not an option. It’s very easy to keep your investors abreast of what’s going on with your trading. We are not talking about the finer details here, just general information will suffice.

If you are already on social media, one sure way to ensure that you lose investors is to keep screaming loudly about all the wonderful trades you’ve made in the past and are making now, yet your investor is seeing a red number in the p&l column! Transparency and honesty create trust, which is the single most necessary ingredient when forming an investor-trader relationship.

1. Open up the charting software by right-clicking on the blank part of the screen and selecting ‘Chart’

2. Select the relevant instrument by putting the RIC in the top search bar, followed by the ‘equals’ sign eg EUR=, GBPNZD=, SEKNOK= etc

3. Fully expand the chart by clicking on the small ‘+’ icon in the top right-hand corner

4. Press and hold down the space bar on your computer, this will display all of the available indicators, tools, timeframes etc.

I don’t like wasting my time. It is the most valuable commodity I have and I like to use it wisely.

I don’t want to have to endlessly search through 3rd party websites to find information, which is usually ‘coloured’ with someone else’s opinion.

I want a credible source of news and data, and I want to be able to display this news and data in the format which I like.

I want to be able to sit in front of my two screens and formulate my trades without being distracted.

Take the time to customise FXWW Connect to suit your own personality and needs. It will be time very well spent.

1. Right-click on a blank part of the screen and select the ‘watch list’ option;

2. Left-click on the small down arrow immediately beside the words Watch List in the top left-hand corner, and choose the ‘manage templates’ option;

3. From ‘Select or create a template’ choose ‘New’ on the right-hand side of section 1 and give this template a name;

4. Move down through the list in Section 2, selecting those parameters which you would like to have as part of your watch list, and click ‘add selected field’ for each currency pair or instrument;

5. Click ‘close’ and this will save the template, which can then be accessed by clicking on the template drop-down box;

6. Open your saved template and start adding instruments by putting the relevant RIC beside the magnifying glass in the search bar;

7. You can directly link your watch list to charts for instance, by clicking on the small ‘broadcast wave’ icon on the top right-hand corner and selecting ‘broadcast to all channels.

1. Open a new Workspace and select the ‘Desktop’ option.

2. Right-click on the screen and select the ‘Watch List’ option from the drop-down menu.

3. Click on the small down arrow beside Watch List and select the ‘Manage Templates’ option down the bottom.

4. This allows you to create your own look and feel to your watch list. Personally I like to see the bid, offer, %age change, highs and lows, trend etc but you can choose your own.

5. Add currency symbols that you wish to have on your watch list, always adding an equals sign, eg EURJPY=

6. On the top of the watch-list box, you will see a small signal that looks like waves being emitted. Click on this and select ‘Broadcast to all Channels’.

This completes the creation of a new watch list. Now we will link a chart to the individual symbols.

7. Right-click on the empty part of the screen and select ‘Chart’.

8. Click on the small wave signal and select ‘Receive from all Channels’. This means that each currency you highlight in your watch-list will automatically fill this chart.

9. Expand the chart by clicking on the small ‘+’ in the top right hand corner. Now hold down the ‘space’ bar on your PC. This will allow you to change the chart type, timeframes, indicators etc to suit your analytical needs.

10. Left-click and hold the top of the chart, allowing you to move it into your preferred position on the page. Left-click and hold the bottom right hand corner of the chart widget to adjust size.

Finally I think it’s a good idea to add a News widget.

11. Right click on the empty part of the screen and select ‘News’.

12. If you have a JPY currency page, you can put the word ‘Japan’ into the keyword section and this will filter the news for you.

13. Move the widgets around and re-size to suit.

For more extensive help, you can download the PDF file  for FXWW Connect Help from here.