Beirut 2010 Todd Gordon Senior Technical

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

What We Will Cover ØPart 1 – Introduction and services we provide ØPart 2 – The 3 dimensions of trading Forex trading involves significant risk of loss and is not suitable for all investors.

Part 1 Introduction Forex trading involves significant risk of loss and is not suitable for all investors.

Buying Breakouts Forex trading involves significant risk of loss and is not suitable for all investors.

Trading and Ski Racing? Forex trading involves significant risk of loss and is not suitable for all investors.

Forex trading involves significant risk of loss and is not suitable for all investors.

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. ** Forex trading involves significant risk of loss and is not suitable for all investors.

Strategy Of The Day Results Forex trading involves significant risk of loss and is not suitable for all investors.

Twitter 5213 followers www. twitter. com/Todd. Gordon. Forex • General market commentary • Trading, position, SOTD updates • Occasional attempts at humor 989 followers www. twitter. com/Todd. Gordon. Trade • Trading, position, SOTD updates • Ideal for SMS text alerts Forex trading involves significant risk of loss and is not suitable for all investors.

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 $70 M under management Forex trading involves significant risk of loss and is not suitable for all investors.

Part 2 The 3 Dimensions of Trading Forex trading involves significant risk of loss and is not suitable for all investors.

3 Dimensions of Trading Ø # 1 – Intermarket analysis • • Identifying individual currency movement Identifying leading/lagging asset classes Ø# 2 – Identifying trading opportunities • • Disciplined pattern recognition Precise, pre-planned trading strategies Ø# 3 – Account management • • Appropriate deployment of trading capital Understand, acknowledging capital at risk Forex trading involves significant risk of loss and is not suitable for all investors.

3 Dimensions of Trading #1 - Intermarket analysis Forex trading involves significant risk of loss and is not suitable for all investors.

Identifying Currency Leadership EUR / USD / JPY Forex trading involves significant risk of loss and is not suitable for all investors.

Identifying Currency Leadership EUR / JPY Forex trading involves significant risk of loss and is not suitable for all investors.

Which Currency To Trade? EUR/JPY USD/JPY EUR/USD Forex trading involves significant risk of loss and is not suitable for all investors.

Indentifying Leadership Forex trading involves significant risk of loss and is not suitable for all investors.

Inter-Market Analysis “Market trends anticipate economic trends. ” -John Murphy Forex trading involves significant risk of loss and is not suitable for all investors.

AUD/JPY & Dow Overlay Forex trading involves significant risk of loss and is not suitable for all investors.

USD/JPY & US 10 -yr Yield Forex trading involves significant risk of loss and is not suitable for all investors.

EUR/USD NOW Trades With Equities Forex trading involves significant risk of loss and is not suitable for all investors.

USD/CAD & Crude Oil Forex trading involves significant risk of loss and is not suitable for all investors.

AUD/USD & High Grade Copper Forex trading involves significant risk of loss and is not suitable for all investors.

3 Dimensions of Trading #2 - Identifying trading opportunities With Elliott Wave and Fibonacci Forex trading involves significant risk of loss and is not suitable for all investors.

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. Forex trading involves significant risk of loss and is not suitable for all investors.

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

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

BASIC 5 -WAVE PATTERN Wave 3 5 Wave - Strong, deliberate, and extended price action Wave 1 - Investors extremely optimistic - Fundamentals increasingly betterbut often - Fundamentals. Wave return, poor -Fundamentals 4 - -Fundamentals fully, greatly peak, then pullback Investor confidence bearishimproved - Investors temporarily not to W. 3 levels - -5 Often shallow, yetlows extended Price momentum less than W. 3 expecting new prolonged consolidation - subdivisions -Heavy short selling - 5 wave subdivision Wave 3 1 Wave 2 2 5 3 Wave 5 Wave 4 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 Forex trading involves significant risk of loss and is not suitable for all investors.

TREND WAVES MOTIVE WAVES 5 • Subdivides into waves of 5 . v. iii 3 . v . b . iii. iv 1 . v. iii . iv. ii • . c 4 . b . iv . i . a • • . a. c 2 • 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 is often the longest, never the shortest. Forex trading involves significant risk of loss and is not suitable for all investors.

Corrective Waves • 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. Forex trading carries a high level of risk and is not suitable for all investors. Forex trading involves significant risk of loss and is not suitable for all investors.

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

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

Fibonacci Ratio Analysis The map legend of Elliott Wave Principle… Forex trading involves significant risk of loss and is not suitable for all investors.

FIBONACCI RATIOS 0. 382 0. 618 squared 0. 500 2 nd N / 3 rd N 0. 618 Inverse of Golden Ratio 0. 707 Square root of 2 0. 786 Square root of 0. 618 1. 000 1. 618 x 0. 618 1. 272 Square root of 1. 618 Golden Ratio (Phi) 2. 000 1 st N x 2 nd N 2. 618 1. 618 squared Forex trading involves significant risk of loss and is not suitable for all investors.

FIBONACCI ANALYSIS Retracements Extensions Projections Forex trading involves significant risk of loss and is not suitable for all investors.

Fibonacci Retracements Used to analyze CORRECTIVE WAVES 1 . 5 5 . 3 5 B 3 4 2 1 2 A C. 4 B 3 1 4 1 . 1 5 3 2 A C. 2 Forex trading involves significant risk of loss and is not suitable for all investors. 4

Fibonacci Retracements Used to analyze CORRECTIVE WAVES 1 . 5 5 . 3 5 4 1 . 1 5 B 3 …. by measuring impulse waves 3 1 2 A C. 4 B 38. 2% 3 1 4 2 2 A 61. 8% C. 2 100% Forex trading involves significant risk of loss and is not suitable for all investors. 4

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…” Forex trading involves significant risk of loss and is not suitable for all investors.

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. ” Forex trading involves significant risk of loss and is not suitable for all investors.

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. ” Forex trading involves significant risk of loss and is not suitable for all investors.

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. Forex trading involves significant risk of loss and is not suitable for all investors.

3 Dimensions of Trading #3 - Account management Forex trading involves significant risk of loss and is not suitable for all investors.

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

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.

Planning Trades ØCreate a trade journal to develop discipline ØDisciplined trade planning prevents an unplanned, emotional entry into the market Ø Should include: Pending trades and orders Entry prices Open positions Stop loss price Closed positions 1 st take profit price Date entered, exit Position size Forex trading involves significant risk of loss and is not suitable for all investors.

Pending Orders Position Tracker January 2010 Open Positions Closed Positions Date Position Size Entry Price Closing Price Stop Loss / Take Profit Forex trading involves significant risk of loss and is not suitable for all investors.

Strategy of the Day Recommend Reading Elliott Wave Principle By Frost and Prechter Dynamic Trading By Robert Miner Intermarket Analysis By John Murphy Forex trading involves significant risk of loss and is not suitable for all investors.

QUESTIONS? tgordon@gaincapital. com Tel: (877) 367 -3946 www. forex. com Both #6314 Forex trading involves significant risk of loss and is not suitable for all investors.