Background
John Hardy writes Saxo Bank’s Forex Market Update – which covers daily news, comments and charts on the major G10 currencies. He also generates Trading Strategies that look to profit on swings in the market on a 1 to 3 day time horizon. A native of Texas and graduate of the University of Texas at Austin, John has been with Saxo Bank since 2002.
Analysis style
John’s daily comments try to “tell the story” of the market – weighing the importance of incoming economic data and news items and discerning both the day-to-day and broader themes that are moving currencies. The analysis style attempts to combine basic fundamental analysis with market positioning/psychology around event risks (economic data releases, etc.) and technical analysis to create a compelling view of what may happen next. As part of fundamental analysis, John considers inter-market correlations as paramount for understanding the genesis of moves in the FX space. So his analysis draws on a number of models based on other markets, including interest rates, credit, equity and commodity markets, and their correlation with the G10 currencies.
Generating Trading Signals
John generates trading ideas from the combination of analysis inputs described above. The first step is determining which currencies are in focus and are likely to generate the volatility that will make risk-taking worthwhile. Most often, a fundamental/market positioning story is the “interest” trigger, and the technical trigger is “confirmation” trigger. In other words, the technical setup is examined to see whether the price action is confirming the evidence from other inputs. Occasionally, however, a technical development by itself may be compelling enough to become the primary trigger for a trade, with other evidence gathered to support what the price action dictates.
Technical Analysis Style
The technical tools John relies on most include price breakouts combined with moving averages with a secondary interest in momentum indicators. Alternatively, John employs pattern recognition techniques for trading reversals. Generally, John buys on strength and sells on weakness.
Trade Leverage and Trade Horizon
John trading leverage is based on a unit size equal to the approximate account size. John often trades half a unit if the distance to the initial stop is large or if the risk of excess volatility around an event risk appears excessive. The trades are generally intended for a one to three day horizon, with initial targets set aggressively to allow for large profits in the event everything goes in the trades favor. As the clock ticks and the price moves, John will move the stop closer to the price if the trade continues to move into profit and may take. Ad hoc event risks, or non-confirming market action elsewhere may materialize that negates the rationale for the trade, in which case John may be take off the trade ahead of the stop or target.
Products
John’s focus shifts depending on the market environment, but all trades are comprise of the G10 currencies, with most trades focusing on the major crosses within the G7 currencies (permutations of USD, EUR, JPY, GBP, CHF, AUD and CAD). John also trades NZD, NOK and SEK on occasion.
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