Black Swan believes above all that trading is about doing right, not being right
Though we apply rational analysis, build a script, and develop varying degrees of conviction, we are willing to jettison all in favor of profiting in a trade for the wrong reasons.
Our methodology
We have learned over the years that winning in financial markets requires a suppression of the ego. Making money requires listening to the market and listening to what others are saying about the market in order to get a handle on expectations.
Trading in currency markets isn’t about forecasting real world events. It’s about understanding what the crowd is expecting, then watching how these expectations play out against real world events. Surprise has the biggest impact on prices.
Winning also requires trading with confidence. Yet, the best traders also maintain a visceral belief that every moment in the market is unique. The two appear contradictory, but they are not.
You don’t need to know, or try to forecast, in order to make money in currencies. You need to consistently apply a systematic approach grounded in human nature. And you need to make fewer conceptual errors than the other market players. That’s what winners do. That’s what we do. It is why we win. It represents our trading edge.
Our approach rests on three areas of analysis: fundamental, technical, and sentiment.
- We analyze a great deal of macro economic material to develop our underlying story, or script. Our objective is to determine the fundamental driving force(s) behind the movement of the major currencies.
- We use the following technical tools in our price analysis over various time-frames: pattern recognition, wave analysis, and oscillators
- We measure market sentiment using both quantitative and qualitative approaches. For example: Are the players talking or positioning? Does price action confirm then news?
Before recommending going into a trade, we always know where we want to get out. We know, through experience, that discipline — through protective stops and proper position sizing — is vital to long-term success
In short, we trade our edge with the best knowledge we have. We do our homework everyday in an effort to improve that knowledge and our performance. And we love what we are doing. That’s the essence of it.