Editor’s Note:The following is an interview done by Dave Goodboy.
Hi, I’m Dave Goodboy, Executive Producer of Real World Trading. Today, I am joined by professional Forex trader Andrew Spanton. Andrew is Managing Partner of GlobalFXllc, a proprietary Forex trading firm. The Forex market is exploding in popularity due to the low cost of entry, extreme leverage, 24 hour trading, and apparent smooth trending characteristics. Join us as we delve into the world of Forex with a true expert of the game.
Dave: Welcome to Real World Trading, Andrew.
Andrew: Thank you for having me, Dave
Dave: Let’s get started by going over the basics of Forex. Please tell me exactly what the Forex market is.
Andrew: The SPOT Currency market, or Forex market, is the exchange rate of one country’s currency against another. It is where the exchange rate is at that specific point in time. We trade that exchange rate.
Dave: OK, so the market is made up of currency pairs. The trader is buying one currency in the pair and selling the other all in one transaction. There seems to be many pairs available to trade. What are considered the major pairs?
Andrew: There are 4 majors all against the USD: EUR/USD, USD/JPY, GBP/USD and USD/CHF. Some other interesting pairs we trade are the USD/CAD, AUD/USD, NZD/USD, EUR/JPY and EUR/GBP
Dave: Is it the first currency or the 2nd currency in the pair that is sold?
Andrew: The primary currency is always the first in the pair and the counter currency is the second. When you trade a pair you are always long the primary if you buy and short if you sell. Important to note that you make and lose in the counter currency. So if you are long USD/JPY and make money you make in JPY.
Dave: An example of this is, should one buy or sell the EUR/USD pair if they are expecting a weaker dollar?
Andrew: One should buy the pair if they expect a weak dollar, sell the pair if the dollar strength is expected.
Dave: When you train the traders at your firm, do you teach them technical analysis?
Andrew: Of course. It is more than half, if not more, of how we trade.
Dave: Are there any technical patterns that seem to work better than others in Forex?
Andrew: We have found that channel trading is extremely effective. Other patterns we use are basic but very profitable. Double Bottoms, Wedge formations, flag patterns, Cup with handles to name a few.
Dave: How about technical indicators? Do you use any when making trading decisions and if so, which ones?
Andrew: We do use the 10 Exponential Moving Average with the 20 to identify a change in trend. The 5 minute, hourly and daily are the time periods we use.
Dave: Do fundamentals come into play? I know we would be talking about macro-fundamentals.