EDUCATION MATTERS

CONFLUENCE TECHNIQUE: BE A TRADER

 ZULKIFLI ABDUL RAZAK

• FULL TIME TRADER

• MORE THAN 10 YEARS EXPERIENCE IN FX TRADING

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HOW BELIEFS SHAPE YOUR
TRADING

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 HOW BELIEFS SHAPE YOUR
TRADING
• BELIEFS FILTER YOUR ACTION
- DECISION MAKING

• QUESTION IS WHETHER YOU HAVE THE OPTIMIZED

SET OF TRADING BELIEF?
- RECOGNITION
- KNOWLEDGE

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 HOW BELIEFS SHAPE YOUR
TRADING

• OPTIMIZING YOUR BELIEFS

• COMPARE TO THOSE WHO MADE IT

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 BELIEF OF TOP TRADERS
• EMOTIONAL INTELLIGENCE (EQ) VS
INTELLIGENCE QUOTIENT (IQ)

• EQ: ABILITY TO IDENTIFY, ASSESS &

CONTROL EMOTIONS

• IQ: SCORE OF INTELLIGENCE

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 BELIEF OF TOP TRADERS

• HIGHER EQ = BETTER TRADING

RESULTS

• CONFIDENCE BREEDS DISCIPLINE

- LEARN TO TRUST YOURSELF

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TRADING PSYCHOLOGY

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BELIEF OF TOP TRADERS

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BELIEF OF TOP TRADERS

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BELIEF OF TOP TRADERS

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BELIEF OF TOP TRADERS

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BELIEF OF TOP TRADERS

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 WORKING ON BELIEFS

• COMPARE YOUR LIST TO THE TRAITS

OF SUCCESSFUL TRADER

• OPTIMIZE YOUR BELIEFS

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OBJECTIVES SETTING

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 DEFINING OBJECTIVES

• ACHIEVING FINANCIAL FREEDOM

THROUGH TRADING

- FOREX TRADING SYSTEM

- MARKET TYPE ANALYSIS

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 TRADING PROCESS

• A TRADING ROUTINE:
1. KNOWLEDGE PHASE
2. ANALYSIS PHASE
3. EXECUTION PHASE
4. REVIEW PHASE

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KNOWLEDGE PHASE

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 FINANCIAL MARKET
• FINANCIAL SECURITIES, COMMODITIES
AND OTHER ITEMS OF VALUE ARE
TRADED

• PRICE REFLECTS SUPPLY AND DEMAND

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 BOND MARKET
• DEBT MARKET: ISSUANCE AND TRADING
OF DEBT SECURITIES

• MORE THAN 44% ARE IN THE UNITED

STATES

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 BOND MARKET
• BIGGEST BOND MARKET:
- UNITED STATES (TREASURIES)
- JAPAN (JGB)
- BRITAIN (GILT)
- GERMANY (BUND)

•QUANTITATIVE EASING
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 EQUITY MARKET
• STOCK MARKET: MEETING POINT FOR BUYERS
AND SELLERS OF STOCKS WHICH REPRESENT
OWNERSHIP CLAIMS ON BUSINESSES

• FUNDING & MARKET SENTIMENT

• JAPANESE YEN IS THE BIGGEST FUNDING
CURRENCY

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 COMMODITY MARKET
• BUYING, SELLING AND TRADING RAW OR PRIMARY PRODUCTS

• MAJOR EXCHANGES IN UNITED STATES (NYBOT, NYMEX, CBOT,

CME)

• MAJOR CONSUMERS: CHINA, JAPAN, EUROZONE AND UNITED

STATES

• MAJOR PRODUCERS: AUSTRALIA, CANADA AND NEW ZEALAND

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 COMMODITY MARKET
• ASIAN SESSION

- CHINA, JAPAN, EMERGING MARKETS

- BASIC INDUSTRIES, CONSTRUCTION
- COKING COAL, IRON ORE
- DALIAN COMMODITY EXCHANGE
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 COMMODITY MARKET
• EUROPEAN & US SESSION

- EUROZONE, UNITED STATES

- ADVANCE INDUSTRIES
- COPPER
- LONDON METAL EXCHANGE, COMEX
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 DERIVATIVES MARKET

• DERIVATIVES: SECURITIES THAT

DERIVED THEIR VALUE FROM ONE OR
MORE UNDERLYING ASSETS

• HEDGING AND SPECULATION

FUNCTIONS

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 FOREX MARKET

• NEED TO EXCHANGE CURRENCY

• DECENTRALIZED MARKET
• OVER THE COUNTER
• SPECULATIVE ORDER VS COMMERCIAL ORDER
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 FOREX MARKET

• DIFFERENT COMPONENTS OF FOREX MARKET

EXCHANGERS

1. FUTURES
2. OPTIONS
3. EXCHANGE TRADED FUND (ETF)

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 FOREX MARKET

• DIFFERENT COMPONENTS OF FOREX MARKET

DEALERS

1. SPOT
2. FORWARDS
3. SWAP

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FOREX MARKET

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 HOW FOREX IS TRADED?
• INTERBANK MARKET
- ALMOST 70% TOTAL TRANSACTIONS

• COMMERCIALS
- EXCHANGERS & DEALERS

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SPOT FOREX SESSION

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ANALYSIS PHASE

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 TRADING AS A SET OF SKILL

• THE FOUR PILLARS

1. FUNDAMENTAL ANALYSIS
2. TECHNICAL ANALYSIS
3. RISK MANAGEMENT
4. TRADING PSYCHOLOGY
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 TYPE OF ANALYSIS
• FUNDAMENTAL ANALYSIS: INTRINSIC VALUE

• SENTIMENT ANALYSIS: MARKET’S FEELING

• TECHNICAL ANALYSIS: PRICE AND RISK

• INTERMARKET ANALYSIS: THE FLOW

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WHAT IS FOREX SPOT
TRADING?

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 UNDERSTANDING PRICE

• LOOKING FOR REASONS BEHIND A

MOVE

- MARKET DATA, POLITIC, SOCIAL &

EXPECTATION

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FUNDAMENTAL ANALYSIS

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WHAT IS MONEY?

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 FUNDAMENTAL ANALYSIS

• ANALYSIS OF ECONOMIC, POLITICAL AND

SOCIAL FACTORS

• INTRINSIC VALUE

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 FUNDAMENTAL ANALYSIS

• ECONOMIC POLICY
- STRUCTURAL POLICY: REALLOCATION OF
PRODUCTIVE RESOURCES
- FISCAL POLICY: GOVERNMENT’S POLICY ON
THE ECONOMY
- MONETARY POLICY: CENTRAL BANK’S
CONTROL OF MONEY SUPPLY

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FOREX MARKET

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 CENTRAL BANKS

• UNITED STATES: FEDERAL RESERVE

• CANADA: BANK OF CANADA
• UNITED KINGDOM: BANK OF ENGLAND
• EUROZONE: EUROPEAN CENTRAL BANK

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 CENTRAL BANKS

• SWITZERLAND: SWISS NATIONAL BANK

• JAPAN: BANK OF JAPAN
• AUSTRALIA: RESERVE BANK OF
AUSTRALIA
• NEW ZEALAND: RESERVE BANK OF NEW
ZEALAND

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 MONETARY POLICY

• CENTRAL BANK’S POLICY TO CONTROL

MONEY SUPPLY

• MARKET’S EXPECTATION OF CENTRAL

BANK’S ACTION

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 MONETARY POLICY

• CENTRAL BANK LOOKS AT ECONOMIC

INDICATORS
- IMPLEMENT CERTAIN TOOLS TO
OPTIMIZE THOSE INDICATORS
- KEEP EVERYTHING STABLE IN LINE
WITH ITS MANDATE

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 MONETARY POLICY

• ECONOMIC INDICATORS
1. INFLATION
2. EMPLOYMENT
3. GROWTH
4. PRODUCTION
5. MAJOR EVENT (ELECTION, WAR, NATURAL DISASTER)

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MONETARY POLICY

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 MONETARY POLICY

• EXPANSIONARY POLICY: ALSO KNOWN AS

EASING WHERE MONEY SUPPLY IS INCREASED

- INJECT CAPITAL INTO THE MARKET

- BOOST GROWTH, EMPLOYMENT &
INFLATION

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 MONETARY POLICY

• CONTRACTIONARY POLICY: ALSO KNOWN

AS TIGHTENING WHERE MONEY SUPPLY IS
DECREASED

- TAKE CAPITAL OUT FROM THE MARKET

- CONTROL GROWTH & INFLATION

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 MONETARY POLICY
TOOLS EASING TIGHTENING

INTEREST RATE CUT HIKE

OPEN MARKET OPERATION PURCHASE SECURITIES SELL SECURITIES

RESERVE REQUIREMENT DECREASE INCREASE

QUANTITATIVE EASING INCREASE TAPERING

LANGUAGE DOVISH HAWKISH

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 PROJECTION DATA

• FED: PROJECTION MATERIALS

- MARCH, JUNE, SEPTEMBER & DECEMBER

• BOE: INFLATION REPORT

- FEBRUARY, MAY, AUGUST & NOVEMBER

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 PROJECTION DATA

• ECB: MACROECONOMIC PROJECTIONS

- MARCH, JUNE, SEPTEMBER & DECEMBER

• BOJ: OUTLOOK FOR ECONOMIC ACTIVITY &

PRICES
- JANUARY, APRIL, JULY & OCTOBER

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 PROJECTION DATA

• SNB: QUARTERLY BULLETIN

- MARCH, JUNE, SEPTEMBER & DECEMBER

• RBNZ: MONETARY POLICY STATEMENT

- FEBRUARY, MAY, AUGUST & NOVEMBER

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 PROJECTION DATA

• BOC: MONETARY POLICY REPORT

- JANUARY, APRIL, JULY & OCTOBER

• RBA: STATEMENT ON MONETARY POLICY

- FEBRUARY, MAY, AUGUST & NOVEMBER

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FEDERAL RESERVE

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BANK OF CANADA

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EUROPEAN CENTRAL BANK

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RESERVE BANK OF AUSTRALIA

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BANK OF ENGLAND

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RESERVE BANK OF NEW
ZEALAND

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BANK OF JAPAN

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SWISS NATIONAL BANK

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SENTIMENT ANALYSIS

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 ANALYSIS PHASE
• INVESTOR’S FLOW CORRELATION: LONG
TERM TREND

• SPECULATIVE FLOW CORRELATION:

SHORT/MID TERM TREND

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INVESTOR FLOW CORRELATION

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 ECONOMIC DATA
• EASING POLICY

↓ PROJECTION DATA = POLICY CONTINUATION,

ADDITION
IMPROVED DATA = POLICY CHANGE

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 ECONOMIC DATA
• TIGHTENING POLICY

↓ PROJECTION DATA = HOLDING, POSSIBLE

POLICY REVERSAL

IMPROVED DATA = POLICY CHANGE

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ECONOMIC DATA

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ECONOMIC DATA

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ECONOMIC DATA

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ECONOMIC DATA

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ECONOMIC DATA

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ECONOMIC DATA

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ECONOMIC DATA

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ECONOMIC DATA

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PROJECTION DATA & POLICY

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DATA & TRADING BIAS

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DATA & TRADING BIAS

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 SPECULATIVE FLOW
CORRELATION

• SENTIMENT: MARKET’S FEELING

• SHORT TO MEDIUM TERM

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SPECULATIVE FLOW
CORRELATION

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SPECULATIVE FLOW
CORRELATION

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SPECULATIVE FLOW
CORRELATION

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 THE QUESTION

• BASED ON CURRENT INFORMATION, WHAT WILL

THE CENTRAL BANK DO IN ITS NEXT MEETING?

• HOW DOES THE INFORMATION CHANGE

SUPPLY AND DEMAND IN THE ECONOMY?

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 ANALYSIS PHASE
• FORM A MENTAL PICTURE OF THE MARKET

- WHAT IS GOING ON?

- WHY YOU SHORT A CURRENCY?
- WHY YOU LONG A CURRENCY?
- WHY YOU STAY ON THE SIDE?

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 ANALYSIS PHASE
• TECHNICAL ANALYSIS

- SIGNIFICANT PRICE LEVELS

- EXITS POINTS (STOP LOSS, TAKE
PROFIT)
- TRADE MANAGEMENT (SCALE IN/OUT)

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 TECHNICAL ANALYSIS
• MEASURING MOVEMENT OF PRICE FROM THE
PAST & PRICE PATTERN

• IDENTIFY MARKET SIGNIFICANT LEVELS

• IDENTIFY EXITS (STOP LOSS AND TAKE PROFIT)

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 TYPE OF CHARTS
• LINE CHART

• OHLC CHARTS
- BAR CHART, CANDLESTICK CHARTS

• PRICE ACTION CHART

- POINT & FIGURE, RENKO, KAGI & LINE BREAK

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 MARKET TYPE

• 6 MARKET TYPES

1. BULL NORMAL
2. BULL VOLATILE
3. BEAR NORMAL
4. BEAR VOLATILE
5. SIDEWAYS QUIET
6. SIDEWAYS NORMAL

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 MARKET TYPE

• BOLLINGER BAND
- DEFAULT SETTING
PERIOD 20
DEVIATIONS 2
CLOSE PRICE
SHIFT 0

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 MARKET TYPE
MARKET TYPE ENTRY STRATEGY
Bull Normal • Buy • Trend Following Strategy
• Wait for pullback

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 MARKET TYPE
MARKET TYPE ENTRY STRATEGY
Bull Volatile • Buy with • Short term Entry
profit target • Sentiment based Entry

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 MARKET TYPE
MARKET TYPE ENTRY STRATEGY
Bear Normal • Sell • Trend Following Strategy
• Wait for bounce

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 MARKET TYPE
MARKET TYPE ENTRY STRATEGY
Bear Volatile • Sell with • Short term Entry
profit target • Sentiment based Entry

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 MARKET TYPE
MARKET TYPE ENTRY STRATEGY
Sideway Normal • Range Trading • Short term on lower TF
• Follow current sentiment

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 MARKET TYPE
MARKET TYPE ENTRY STRATEGY
Sideway Quiet • No entry • Wait for Breakout and Price
retest (SBR, RBS)

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 TRADITIONAL PIVOTS
• LEADING INDICATOR OF PRICE
DETERMINATION

• DAILY PIVOT: MOST POPULAR

• WEEKLY PIVOT

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TRADITIONAL PIVOTS

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TRADITIONAL PIVOTS

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TRADITIONAL PIVOTS

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 TECHNIQUE SELECTION
SWING: CONTRARIAN WHEN SENTIMENT
CORRECTION NOT CHANGING
FUNDAMENTAL

INTRADAY: SENTIMENT WITH STRONG

BREAKOUT

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 STOP LOSS
• FIX STOP
- EQUITY STOP

• VARIABLE STOP
- CHART STOP
- VOLATILITY STOP
- MARGIN STOP
- TIME STOP

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 TAKE PROFIT
• FIX PROFIT
- EQUITY PROFIT

• VARIABLE STOP
- CHART PROFIT
- VOLATILITY PROFIT
- TIME PROFIT

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INTERMARKET ANALYSIS

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 INTERMARKET FILTER

• CONTRARIAN & MOMENTUM

CONFIRMATION

• INTERMARKET PRICE LEVELS

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 USD

• FED FUND FUTURES

• USD INDEX

• US 10 YEAR TREASURIES YIELD

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USD

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 CAD

• WEST TEXAS INTERMEDIATE (WTi) PRICE

• US MARKET EQUITY INDEX

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CAD

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 GBP

• UK 10 YEAR GOVERNMENT BOND YIELD

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GBP

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 AUD

• COMMODITY MARKET (COPPER, IRON ORE,

GOLD)

• CHINA’S GROWTH DATA

• EQUITY INDEX
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AUD

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 NZD

• AUD REGIONAL FACTOR

• DRYMILK FUTURES

• EQUITY INDEX
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NZD

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 JPY

• US 10 YEAR TREASURIES YIELD

• JGB 10 YEAR YIELD
• COMMODITY MARKET
• EQUITY INDEX
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JPY

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 EURO

• GERMAN & FRANCE 10 YEAR GOVERNMENT

BOND YIELD

• EQUITY INDEX

• COMMODITY MARKET
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EURO

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 CHF

• EURO REGIONAL FACTOR

• EQUITY INDEX

• SNB INTERVENTION LEVEL (www.snbchf.com)

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CHF

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 MARKET SCANNING
1. PRIMARY CHART SCANNING: OPEN ALL
PAIR
2. DETERMINE REASON BEHIND MOVE
- FUNDAMENTAL CHANGE: REVERSAL
- SENTIMENT REVERSAL: CORRECTION
3. CHOOSE STRONG VS WEAK
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 TECHNIQUE SELECTION
SWING: CONTRARIAN WHEN SENTIMENT
CORRECTION NOT CHANGING
FUNDAMENTAL

INTRADAY: SENTIMENT WITH STRONG

BREAKOUT

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DATA & TRADING BIAS

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DATA & TRADING BIAS

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SPECULATIVE FLOW
CORRELATION

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SPECULATIVE FLOW
CORRELATION

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SPECULATIVE FLOW
CORRELATION

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RISK MANAGEMENT

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 RISK MANAGEMENT

• RISK OF RUIN

• TRADE MANAGEMENT

• COMPOUNDING
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RISK OF RUIN

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 RISK OF RUIN

• FREE DOWNLOAD

http://bettersystemtrader.com/riskofruin/

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TRADE MANAGEMENT

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SIMPLE ENTRY, COMPLEX EXITS

• FOCUS ON MANAGING THE ENTRIES,

INSTEAD OF ENTRY POINT

• RISK REWARD RATIO

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 TRADE MANAGEMENT
• OVERALL MARKET CONDITION
- END OF THE MONTH, OPTION EXPIRY,
MARKET SENTIMENT

• WHEN TO HOLD, WHEN TO EXIT

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 COMPOUNDING
• LESS IS MORE

• TECHNICAL TOOLS

• SENTIMENT SCANNING

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WRITE A TRADE PLAN

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EXECUTION PHASE

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 MARKET MONITORING

• PRICE MONITORING

- IDENTIFYING SCALE OUT LEVEL

- USAGE OF FIBONACCI RETRACEMENT OR
PIVOT

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 MARKET MONITORING

• PRICE MONITORING

- IDENTIFYING SCALE IN LEVEL

- USAGE OF LINEAR REGRESSION OR
FIBONACCI OR PIVOT

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 MARKET MONITORING

• NEWS FEED

- USAGE OF TWITTER, AUDIO SQUAWK

- MONITOR REASON BEHIND ENTRY

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EXAMPLES OF FOREX
TRADING SYSTEM

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CONTRARIAN FOREX
TRADING SYSTEM

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 ENGULFING REVERSAL IN
BOLLINGER BAND
RULE 1: LOOKOUT FOR ENGULFING CRS WITH THE 2ND
CANDLE TOUCHING UPPER/LOWER BB
RULE 2: ENTRY ON THE BREAK OF LOW/HIGH 2ND CANDLE
RULE 3: SET STOP LOSS ABOVE/BELOW 2ND CANDLE
RULE 4: ENTRY ONLY IF THE DISTANCE OF LOWER/UPPER
BB GIVES 1:3 RISK REWARD
RULE 5: EXIT ENTRY IF PRICE REVERSES ABOVE/BELOW
MID BB

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SHORT TERM MOMENTUM
FOREX TRADING SYSTEM

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 INTRADAY MOMENTUM
TRADING
RULE 1: STALKING THE MARKET. SCAN FOR VOLATILE MARKET TYPE
FROM HIGHER TO LOWER TF
RULE 2: IDENTIFY THE CAUSE OF BREAKOUT WHETHER IT IS
FUNDAMENTAL CHANGING SENTIMENT OR SENTIMENT (USE
MARKET SCREENER)
RULE 3: MOMENTUM TECHNIQUE (RBS/SBR)
RULE 4: SET STOP LOSS AT THE WICK (BELOW FOR BULL, ABOVE FOR
BEAR) PLUS/MINUS SPREAD
RULE 6: SET TAKE PROFIT AT THE NEXT SNR
RULE 7: MOVE STOP WITH PRICE (EVERY 10 PIPS) IF SCALPING
RULE 8: KEEP RISK REWARD RATIO AT LEAST 1:1

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MEDIUM TERM MOMENTUM
FOREX TRADING SYSTEM

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NEW YORK CLOSE BREAKOUT

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 NEW YORK CLOSE BREAKOUT
RULE 1: WAIT FOR BOLLINGER BAND WIDTH INDICATOR TO FALL BELOW 0.025

RULE 2: WAIT FOR PRICE TO CLOSE OVER THE BOLLINGER BAND IN THE DIRECTION OF THE TRADE

RULE 3: SET STOP LOSS AT A DISTANCE 0.5-2.0% AWAY

RULE 4: SET TARGET ON THE CLOSEST HIGHER TIME FRAME SNR

RULE 5: PLACE A HARD-TRAILING STOP ON THE SUPERTREND INDICATOR (SETTINGS FACTOR 2 AND
PERIODS 7)

RULE 6: USE DISCRETION TO MANAGE YUR TRADE AS IT GOES IN YOUR FAVOUR (E.G. FUNDAMENTAL
FACTOR CHANGE)

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TRADING PSYCHOLOGY

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A TRADER’S FIRST LOSE IN HIS MIND
BEFORE LOSING IN THE MARKET

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 TRADING IN THE ZONE

• DEVELOP OWN TRADING PROCESS

- EACH TRADER IS UNIQUE
- KNOWLEDGE FACTOR

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 TRADING IN THE ZONE
• VERSATILITY & DISCIPLINE

- TRADE PLAN
- CLEAR PLAN B: REACTING TO MARKET
- INITIAL ANALYSIS: HOPE & REGRET

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 TRADING IN THE ZONE

• UNDERSTAND EXECUTION STRATEGY

- CLEAR & CONCISE ACTION PLAN

- TRADE REVIEW

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REVIEW PHASE

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 KEEP A TRADE REVIEW

• UNDERSTAND YOUR STRENGTH

- REPEAT YOUR SUCCESSES

- IDENTIFY YOUR WEAKNESSES

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 KEEP A TRADE REVIEW

• LOOK INSIDE, NOT OUTSIDE

- WORK ON PROCESS
- CONSISTENCY & DISCIPLINE

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Q&A SESSION

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zulle6716@gmail.com

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SESSION BREAK