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Ross Beck and Jimmy Young are top-notch educators and veteran traders of the Forex market. Ross Beck has actively traded the capital markets for more than 10 years. Ross specializes in technical analysis with a focus on pattern recognition and Fibonacci ratio analysis.  Prior to joining FXTE, Ross Beck worked with some of the biggest derivatives brokerages in Canada and the US.  

Jimmy Young has been working in foreign exchange markets since 1979. He was a Bank FX trader for 20 years—filling the shoes of chief FX dealer, head of currency arbitrage, options trader, market maker, liquidity provider, proprietary trader, and emerging markets trader along the way. Jimmy has an uncanny ability to read between the lines and discover hidden value in currency trades.

These gentlemen are seasoned Forex traders and both had very valuable information to impart regarding the Forex market. Please enjoy the second part of our two-part interview.

Optionetics: What kind of advice would you give a person just beginning to trade the Forex market?

Ross: Despite all the dealers out there saying you can open an account with $300, don’t start with $300! I’ve seen many say,” I’ll start with $300 and I will trade bigger with all the profits I make.” This is a recipe for disaster. One of the most common mistakes for beginning Forex traders is to be undercapitalized and to ignore proper risk management out of the gate.  In addition, don’t think of trading Forex as gambling. Any market can be used to gamble.  However, if you apply a systematic approach and use proper money management, trading Forex would not be classified as gambling, but rather an investment in an alternative asset class.

Jimmy: Start with a good Forex education. Read at least 3 good articles on Forex trading everyday (there are thousands on the internet, start with the Central bank websites). Write a trading plan and make sure it includes your edge – why you should be able to make money trading Forex. Don’t start trading until you have a method for beating the market. Make sure your system takes tiny losses and lets profits accumulate; an unrealized profit on a running directional position is a goldmine; 10 points in and out is worthless. As they use to say in California, “There’s gold in them hills.”

Optionetics: How would you characterize your technical approach to the foreign exchange markets?

Ross: I use pattern recognition and Fibonacci ratio analysis exclusively, and more specifically the Gartley pattern. I believe that this pattern to a large extent can yield more consistence profits from the Forex market than other pattern based trading like Elliott Wave. 

Jimmy: I like to enter trades on news and simple moving average; technically I also like Fibonacci retracements and Gann bar chart formation techniques. Since I joined fxte I have become a big fan of Gartley as well. Most importantly, the big money is  made by getting on the tradable trend and riding to the last stop.s 

Optionetics: What are the things you like best about being a Forex trader?

Ross: I love the freedom that trading Forex affords.  And technology has made things even better now.  Instead of sitting in front of a screen, I can take the screen with me!  At home, I trade from my wireless Tablet PC and when I’m on the road, I can trade from my broadband PDA.  

Jimmy: Figuring out what will happen and why, placing the trade, and watching it happen just as I predicted. With news trading that happens quite a bit. With technicals I lose a lot more trades than I win but the winners I ride a lot longer than the losers so it works out well.

Optionetics: What are your favorite currency pairs to trade and why?

Ross: EUR/USD. Liquidity, volatility, predictability.

Jimmy: I like EUR/USD for technical trades and trading US economic releases and statements (tight spreads, low volatility, good medium and long term trends) and USD/CAD (great currency pair to news trade).

Optionetics: How did you first become interested in trading the Forex market and what attracted you the most to this market?                              

Ross: I became interested in the spot foreign exchange markets when I worked for a large futures firm in Canada. I was doing some spot Forex transactions for physical settlement, but never speculated in the spot market. To speculate, I would just trade the CME currency futures. Then, the firm launched an electronic platform to trade Forex. After considering how small the transaction costs were compared to exchange traded contracts on the CME, I thought “WOW, the little guy has a chance in this market!” Since then, I haven’t looked back.

Jimmy: Began my FOREX career as an FX broker in 1979 and immediately began betting lunch on where GBPUSD would be at 12pm Eastern Standard Time. In 1982 I got a job on a Bank FX trading desk as an assistant trader; taking a 50% cut in pay was tough at the time but I knew it would be worth it in the long run. I was right; within two months of joining the Bank I was promoted to currency trader and given my own currency to trade. For the next 20 years I traded currencies 10 hours a day at several different banks and enjoyed every minute of it. 

Optionetics: What types of analysis methodologies do you typically employ to find great Forex trading opportunities?

Ross: I use a software package from Australia called ProfitSource to automatically scan the foreign exchange markets for Gartley patterns.  I’ve been trading the Gartley pattern consistently for years now and it seems to work the best for me.

Jimmy: The big trades are in fundamentals like real interest rate differentials. The hedge funds and currency overlay funds are taking huge positions in this stuff and the currencies are reacting accordingly. If a country is increasing interest rates it’s usually because the economy is too strong – not a bad reason to buy a currency in itself.

To trade correctly a trader should start with a view on where he or she sees the currencies going from a technical point of view and an opinion on what he or she thinks is the current market sentiment. From there he or she should follow the key economic news releases and have an opinion of whether the market received them well or poorly. This should help with formulating technical trade strategy at a minimum.

There is money to be made trading currencies but a new trader needs to develop skills and never stop learning and adjusting as market conditions change and the focus of the market changes. To stay on top of things requires a commitment to both technical and fundamental details. 

Optionetics: Thanks, Ross and Jimmy, for providing us with your experiences and suggestions in regards to the Forex markets. 

For more information on how you can learn how to trade this exciting market, go to www.fxte.com and see just how their educational package can turn you into a well-armed and profitable Forex trader.

To read Part I of this interview, please click here.

Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
Visit Jeff’s Forum
Listen to Jeff at www.ProfitStrategiesRadio.com

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