How a Swing Trader Prepares for Trading

09/27/2012 4:17 pm EST


Andrei Knight

Senior Currency Strategist,

Andrei Knight talks about how he begins his trading day and what types of charts he monitors for money-making trades.

My guest today is Andrei Knight, and we’re talking about his trading methodology and how he approaches the markets.  So, Andrei, talk about a typical day for you.  What are you looking for and what’s your overall approach to the market?  Are you a day trader, a swing trader, what do you like to do?

I’m an intraday swing trader, I would say.  I start out by studying the fundamentals and the news that happened overnight before I came to my trading desk.  I fill myself in on the news and think about the ramifications and form a trade idea and then I turn to my charts in an attempt to verify or disprove that idea.  So at the start of every week, I’ll go to my weekly chart to kind of orientate myself within the big picture. 

I’ll start out every morning with the daily charts to figure out the key support resistance levels likely to be in play for that day and from there, I begin to zoom in.  The four-hour chart usually gives me my current direction and most of my trades, I actually find within those scenarios, then on the hourly chart but always in agreement with the four-hour direction.  So I start very big and I kind of chunk it down, and break it down into smaller and smaller pieces. 

Alright, what’s the percentage would you say?  Would you say technical decision making vs. fundamental decision making, and how it plays into each day?

Oh, it’s even.  It’s pretty even.  I think you need both.  I’m neither a technical nor a fundamental guy.  I believe that the fundamentals tell you what’s going to move and in which directions and then the technicals, you use to tell you how far, and like I said, to prove or disprove a trading idea.

Alright and what kind of technicals are you using?  Is it patterns, support and resistance, what is it?

I’m a big fan of Fibonacci.  I’m a big fan of moving averages, especially the 21 EMA, whether I’m North or South of it.  I don’t believe so much in any one particular indicator.  I believe in groups of indicators.  There are your momentum indicators, which are going to be really useful when you’re in a trend and then there’s going to be your oscillators, which are really useful in a range.  But which particular momentum indicator are you using or which particular oscillator, I found you can swap them out at will really.  It’s more about having the right tool for the job or the situation at hand. 

Alright and I find for a lot of Fibonacci traders, they’re looking for Fibonacci levels, either 618 or whatever it may be, to line up on multiple timeframes.  Is that important to you? 

I’ll take it where I see the zig zag.  Where I see a zig zag is where I’ll plot a Fib.  I find they are time frame independent.  I can find a Fib on a weekly or daily chart and end up trading it on an hourly; sometimes during a news report trading on a five minute trade.  If something tells you that 1500 is an important level, it’s going to be important when you hit it regardless of the timeframe. 

Alright and as a currency trader do you trade the spot market or futures or what do you trade?

I trade spot primarily.  I could never wrap my head around futures because it’s all inverted and I know the key levels and I know the historical levels kind of. 

Alright, and as a forex trader, what are you looking at for the remainder of 2012?  I mean kind of what macro themes are you looking at in terms of what’s important to you as a currency trader?

Greece is going to continue to be a big one.  Spain is going to be a big one after months of reassuring people they wouldn’t need one.  They said they will be asking for a bailout as soon as probably two months from now.  I think those are going to continue to play out with the US obviously the FOMC recently announcing that there is no limit to the bond buying.  I think the markets gave us their judgment on that. 

People have been asking me if it’s good or bad for the economy.  I think the markets pass their judgment.  I heard the Bank of Japan had to call some prominent banks in New York just to verify the exchange rate because they couldn’t believe what they were seeing on their own charts.  So those three factors are certainly what I’m going to continue to watch and on the US side, jobs, housing, and manufacturing.  It’s the classic three, and I think any recovery, it’s got to start with jobs more than anywhere.

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