Today, we are pleased to bring you our latest forex interview with forex trader and technical trading strategist Joel Kruger. Joel covers the European and Asian markets for DailyFx.com using a blend of fundamental and technical analysis and has over 10 years of experience in the forex markets as well as a background in law. Joel was also recently featured as a guest commentator on ForexTV.
Q: How did you become involved in the forex world? Was there something particularly attractive to you about the forex market?
A: After graduating from Law School, I accepted a position to work in investment banking. It was there that I had my first exposure to the trading floor and foreign exchange desk. The idea of working in a fast paced trading floor environment was something that was very exciting for me and I was particularly attracted to the FX market due to the overwhelming size and volumes traded on a daily basis. This was after all the biggest market in the world. I was also very attracted to the macro aspect of FX and the exposure that would be gained to markets and economies all over the world.
Q: How did you get your 'forex' education? Did you learn by demo trading, did you have a mentor? etc.
A: Interestingly enough, while my background was completely fundamental when I entered the foreign exchange markets, I quickly gained fascination with technical analysis and began to learn and read as much as possible on the topic. I was indeed very fortunate to have a wonderful mentor who was young, exciting and brilliant, and also instrumental in helping to accelerate my career. I am a big believer in learning through actual experience so most of my learning was through reading real-time market reports and financial newspapers rather than academic materials. I also took on some trading so that I could better understand and feel the market.
Q: How often do you trade, are you a full-time trader? Do you trade longer or shorter times?
A: At present, while I do trade, I spend most of my time focused on strategy and producing the best possible trading opportunities for our clients. I am very serious about the trades that I recommend to clients and am very committed to providing real trading opportunities with clearly defined risk parameters. I also believe in transparency and even though I work as a strategist, I make it a point to publish my trading results to our clients on a daily basis so that they can track performance and gain confidence in my methodologies. As far as time frames are concerned, I would definitely classify my strategy as shorter-term. I look to take a trade every day.
Q: Do you have any preference on the currency pairs you trade?
A: Ultimately, I have no preference over which currencies I trade and will simply look for setups that are attractive. However, I do look at everything and am a big fan of trading the non-major currencies. More often than not, a setup in a major currency might not play out as well because so many market participants see the setup and inevitably this also brings too much attention to the setup which prevents it from playing out exactly the way it should. However, when trading through the minor currencies, crosses, or exotics, a setup will not get as much attention and therefore (in my opinion) have a greater chance of playing out the way it should.
Q: Do you use more technical analysis or fundamental analysis, both? Do you take sentiment analysis into your decision making?
A: I like to think of myself as a techno-fundamental analyst. I believe that technical analysis is the blueprint for the market and is the purest form of fundamental analysis. What I mean by this is that everything is discounted into the price and therefore any opinions or sentiments will be reflected in the charts. The charts should then provide an objective and clear indication of precisely which fundamental opinion is more relevant at a given time. As far as my methodology is concerned, I will look for trade setups purely on a technical basis and then help to better understand my technical view by assigning a fundamental reasoning or potential fundamental catalyst for the trade. A successful trader will often define his/her success by trading away from the herd and formulating his/her own opinions and strategies. As such, my strategies and methodologies are based on and gauged on just how far away I am from market sentiment. More often than not, the further away I am from where the sentiment is, the more successful my results.
Q: Do you have any favorite economic indicators or favorite technical indicators that you feel are most reliable?
A: I consider myself to be a classical technical analyst and my favorite indicators are some of the more simple and obvious ones. For my methodology, my favorite indicators are the Relative Strength Index (RSI) and Average True Range (ATR). Both are quite different and extremely helpful for my trading and strategy. I am a contrarian which means I will always be looking to fade overdone moves. If a market is rallying, then I will be looking to sell and if a market is dropping I will be looking to buy. As such, the RSI becomes very useful as the indicator lets you know when a market is overbought or oversold. ATR is probably my favorite indicator as it lets you know what the average range of a given currency pair (security) for the time frame you are analyzing. If you are looking at a daily chart, the ATR will then tell you the average range a day for that market. This is an amazing tool to have in your bag as it will often let you project where the market might stall out to the topside or downside on a given day.
Q: In conclusion, do you have any advice to anyone starting out in forex trading? Is there anything in particular that you wish you had learned when you started out?
A: I think the most important thing is to remember that trading isn't about getting rich quick. If you are serious about trading then you need to understand that it is a process just like anything else. My recommendation to someone starting out would therefore be to take just 1 year and trade on no leverage. This means that you should not focus on dollars and cents but rather on percentage returns. If you can take a $1,000 account and turn it into $1100 (ie looking to make a few dollars per trade throughout the year) at the end of the year through steady trading, then you will be a huge success and give yourself all of the confidence to make a more serious commitment in your second year of trading. In order to be successful you need to have a clear head. It is so important that when you trade you are able to put your head down on the pillow every night and sleep without worrying about any given position. If you find yourself unable to sleep, then you are too leveraged and will most probably not be successful over time. In the end, take it slow and make sure you can sleep at night.
Thank you Joel for taking the time to share your views and experiences in our latest of forex interviews. To read Joel's latest currency analysis and trading strategies please visit DailyFx.com.
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