Boris and Kathy's FX Blog www.bktraderfx.com

A Longer Perspective

Ever since we started Bkforexadvisor we’ve had requests for longer term trade ideas. That’s very understandable given our intense, short term orientation towards the FX market. Many subscribers found it difficult to follow all our trade ideas since they are issued round the clock 5 days per week. Despite the fact that our trading style probably has the shortest exposure to market risk of any FX newsletter (since the majority of our trades last no more than 30 minutes), the need to be in front of the computer to trade each specific event risk can be difficult for subscribers situated across the globe.

Over the past few weeks we’ve made several improvements in terms of delivery of signals by initiating positions only 15 minutes before the event (thus minimizing the impact of negative drift) and posting everything in the chat room first allowing for much better reaction time to the news. For those of you still not familiar with the chat room please note that its is the black button on the front of the www.bkforexadvisor.com that says Instant Trade Alerts. The direct link is http://www.bkforexadvisor.com/members/tradealerts.aspx and we highly recommend that you check it out if you haven’t done so already.

In any event we’ve received overwhelmingly positive response from those of you who’ve adopted the new features, but these improvements all revolve around our short term event risk model and didn’t address your requests for more longer term, less intense trade ideas. Well you will be happy to know that we took your suggestions seriously and over the past several months Kathy and I have been busy beta testing a longer term trade model that we believe to satisfy these requests. The model is a proprietary combination of technical and fundamental variables that tries to exploit reversals as well continuations of trend.

As always we will try to be as transparent as possible in providing reasons for various trades. In fact the single greatest compliment we’ve recently received on our service came from a gentleman at Dallas expo who told us that unlike all the other investment advisory services he has ever tried, we were the only one who provided clear well thought and easy to understand arguments for our positions. This is our greatest strength. Instead of just telling you buy X here, sell X there we always provide context and reason for why we are doing something. Win, lose or draw you always know WHY we are trading. Our most ardent subscribers truly appreciate that fact as they can evaluate each trade on its merits rather than just being forced to blindly follow every signal.

As you can imagine the long term trades ideas will very different from short term signals and its very important for you to understand the difference.

1. Leverage.

We do not recommend any specific amount of leverage for our trades since each person’s risk tolerance is unique. However, it is important to note that the long term trade ideas will have much wider stops because we will looking for very different risk and reward parameters. In our present short term model we generally do not allow more than 40 points of risk, In the long term signals the stops will be between 100-200 points so please lower your leverage accordingly to make sure you are not assuming a disproportionate level of risk for you profile.

2. Size

In our short term model we trade with two units initially and exit the first half of our position at 1 times risk, then go to breakeven on the rest of the position and try to make 2-3 times risk on the second half. The long term model will use a very different money management approach. We will always enter the trade with 1 unit and may occasionally ADD to the position if our initial entry moves deep into profit territory. We will never scale down into a trade by adding to a loser, but may at times scale up by adding to a winner.

3. Timing

The alerts will be issued at 5 PM EST (22:00 GMT) after the close of the New York session and the trades will generally last between 2-10 days depending on the price action of the market

4. Frequency

The model typically generates 1 or 2 trade idea per week, but there are some weeks when price action may be so quiet that we may not do any long term trades at all. Our goal is to select the best possible ideas and sometimes that simply means that we will be sidelined

5. Demarcation

We will clearly label the long term trade ideas in our emails, so that you will be properly informed on the type of trade you are receiving and can make your own judgments as to the recommendation. We will also mark the long term trade ideas with an LT prefix in the all trades page and will keep a separate tabulation since this is a different model with different trading goals.

Finally for those of you preferring the short term approach with much tighter risk parameters rest assured that we will continue to send out event risk trading ideas. In fact we have a full slate for next week. However, by offering the longer time frame signals we hope to address the overwhelming demand for this type of trading and provide an even richer array of services for our subscribers.

Have a great week-end

B&K

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