21 May 2010
BEIRUT: Traders in the Middle East need to shift down a gear and better calculate risks when engaging in currency trade, popular Wall Street broker and online analyst Todd Gordon told an audience of trading enthusiasts who attended the Forex Trading Expo at Beirut’s Habtoor Hotel Thursday.
“You guys in the Middle East tend to be very aggressive traders,” said Gordon as he teased his audience and shared his tricks on ways to successfully close a deal. “Just calm down. Don’t trade like you have six months to live, and stay around for a while.”
Gordon is among the dozen of world-renowned trade and currency experts who are billed to share their techniques with local traders in a series of conferences organized as part of the two-day-long fair, which kicked off its sixth edition on Thursday.
The program of this year’s event is focused on the up and coming theme of online trading. While over the counter trade still captures the lion’s share of the total trading volume worldwide, the ever-expanding reach of the internet has recently seen the birth of the new virtual service through which smaller-scale investors gain access to the global trading market in the click of a mouse.
Gordon’s warning to adopt a more stringent approach to trade might have been tailored to his Middle East audience, but the stellar broker said it also applied to the many more amateurs who follow his online column “Strategy of the day.”
The daily analytical piece, which boasts a following of tens of thousands, sees the broker educate his readers by spelling out his trading rationale daily before “going live” on the markets and executing the plan to the letter.
“Think ahead of time about your trade plan,” said Gordon. “It prevents you from reacting to the market. When you start reacting emotionally is when you start taking bad decisions.”
Gordon’s antidote to contain a trader’s overeagerness and maintain his discipline? A three-pronged analytical recipe he says has come to be his own golden rule.
The first step, said Gordon, is to always engage in a thorough intermarket analysis that will shed light on the markets that indirectly impact those they are venturing into.
Correlations between markets unrelated on the surface are more common than most imagine, said Gordon. “These days with the credit crisis and with the euro crisis, you need to understand how well the currency markets are going, but unfortunately you also need to understand how stock markets are going, the bond markets, and the commodity market.
“If I want to involve US dollars, for instance, and I know there is a relationship between the S&P 500 and the US dollar, then I need to see the S&P moving higher.”
Only with this information in hand, said Gordon, is the trader set to take the next step and choose the currencies he will trade.
Finally, a last word of caution: restraint. “I’m begging you guys to trade less,” said Gordon, who urged his audience to manage their accounts regularly – calculating stop losses, structuring their account – and to invest with parsimony at a maximum of six to eight percent of one’s capital.
“If you don’t spend 20 minutes writing down your trade, then you’re not planning enough; you’re not ready to go into battle,” he concluded.
The Forex trading Expo continues to unfold all day Friday and is open to the general public free of charge. Scheduled talks are complemented by a fair grouping some 20 leading online trade companies.
Copyright The Daily Star 2010.
