The Trading Strategy Material

The Trading
Strategy Course
Sachin Shah & Vishal Dattani
Contents
About Savi Trading ..................................................................................................................... 3
Who is Savi Trading? .............................................................................................................. 3
About the Authors .................................................................................................................. 4
Chapter 1 - Introduction ............................................................................................................ 3
What is a Financial Market? ................................................................................................... 3
How pricing works? ................................................................................................................ 3
Chapter 2 Different Asset Classes ........................................................................................... 5
Foreign Exchange ................................................................................................................... 5
Examples: ............................................................................................................................ 5
Key Characteristics: ............................................................................................................ 5
Pricing ................................................................................................................................. 5
Equities ................................................................................................................................... 6
Examples: ............................................................................................................................ 6
Characteristics: ................................................................................................................... 7
Fixed Income .......................................................................................................................... 7
Examples: ............................................................................................................................ 7
Commodities: ......................................................................................................................... 8
Examples: ............................................................................................................................ 8
Chapter 3 Data Releases ......................................................................................................... 9
Economic Indicators ............................................................................................................. 10
Definitions of Economic Data Releases and Events ......................................................... 10
Expected Moves in Asset prices ....................................................................................... 16
GDP and GNP .................................................................................................................... 17
Producer Prices Index ....................................................................................................... 17
Industrial Production ........................................................................................................ 18
Unemployment ................................................................................................................. 19
Retail Sales ........................................................................................................................ 20
Examples of Data Releases ................................................................................................... 21
S&P 500 and the Non-Farm Payrolls ................................................................................ 21

Crude Oil and Crude Oil Inventories ................................................................................. 22
AUD/USD and the Australian Interest Rate decision ....................................................... 24
Gold and the US GDP figure.............................................................................................. 25
Role of the Government ....................................................................................................... 27
Chapter 4 Introduction to Technical Analysis ....................................................................... 28
Different Charts .................................................................................................................... 28
Candlesticks ...................................................................................................................... 28
Bar Charts ......................................................................................................................... 30
Line Charts ........................................................................................................................ 30
Candlestick Patterns ............................................................................................................. 31
Doji .................................................................................................................................... 31
Bullish Engulfing Pattern .................................................................................................. 32
Bullish Harami ................................................................................................................... 32
Bullish Harami Cross ......................................................................................................... 33
Bullish Belt Hold ................................................................................................................ 33
Shooting Star .................................................................................................................... 34
Morning Star and Evening Star ......................................................................................... 35
Hammer ............................................................................................................................ 36
Kicker ................................................................................................................................ 36
Trend Reversal Patterns ....................................................................................................... 37
Head and Shoulders .......................................................................................................... 37
Double Top and Double Bottom ....................................................................................... 39
Triple Top and Triple Bottom ........................................................................................... 39
Rounded Top and Rounded Bottom ................................................................................. 40
Trend Continuation Patterns................................................................................................ 40
What are Trend Continuation Patterns? .......................................................................... 40
Rectangles......................................................................................................................... 42
Triangles............................................................................................................................ 43
Descending Triangles ........................................................................................................ 44
Wedge Formation ............................................................................................................. 45
Trends and Trading Patterns ................................................................................................ 46
Support and Resistance .................................................................................................... 46

Trend-lines as Support and Resistance ............................................................................ 47
Chapter 5 Moving Averages .................................................................................................. 51
What is a Moving Average?.................................................................................................. 51
Types of Moving Averages ................................................................................................... 51
What is a Simple Moving Average? ...................................................................................... 51
How do I use a Simple Moving Average? ......................................................................... 52
Problems with the Simple Moving Average ..................................................................... 53
How can I see a signal earlier and get in sooner to maximise profits for a move?.......... 54
What is an Exponential Moving Average (EMA)? ................................................................ 54
Problems with the Exponential Moving Average ............................................................. 56
False Signals ...................................................................................................................... 56
Using multiple moving averages .......................................................................................... 57
Using Moving Averages after an Economic Data release .................................................... 57
US GDP and Oil ................................................................................................................. 57
EUR/USD and the impact of the ECB Press Conference ................................................... 58
Missed the initial move? ...................................................................................................... 60
Chapter 6 Strategy 1 (Trending Markets) ............................................................................. 62
What is Multiple Time Frame Analysis? ............................................................................... 62
Getting stated with Multiple Time Frame Analysis .......................................................... 62
Step 1: Trend Direction ........................................................................................................ 63
Step 2: Confirmation ............................................................................................................ 63
Step 3: Entry and Exit ........................................................................................................... 64
Profits ................................................................................................................................... 65
Risk Management ............................................................................................................. 66
Chapter 7 Strategy 2 (Non-Trending Markets) ..................................................................... 68
What is a range-bound market? .......................................................................................... 68
Step 1: Determining whether you are in a range ................................................................. 69
Step 2: Once we are in a range.......................................................................................... 70
What is the Relative Strength Index (RSI)? ....................................................................... 70
Chapter 8 Risk Management................................................................................................. 72
What is Risk Management ................................................................................................... 72
Position Sizing....................................................................................................................... 72
Risk : Reward ratios .............................................................................................................. 73
What is Leverage? ................................................................................................................ 73
Using Leverage as a Hedging Tool .................................................................................... 74
Using the Risk Management Spreadsheet ........................................................................... 75
Trade Journal .................................................................................................................... 75
Risk Management Risk Parameters ............................................................................... 76
Risk Management Expected Returns ............................................................................. 77
Risk Management - Target ............................................................................................... 78
Risk Management - Trade Size Calculator ........................................................................ 79
Chapter 9 - Psychology............................................................................................................. 81
What is Psychology? ............................................................................................................. 81
Discipline .............................................................................................................................. 81
Applying discipline to trade setups .................................................................................. 82
Eight Points which should be followed when trading.......................................................... 87
Chapter 10 Key Terms and Definitions ................................................................................. 89
Chapter 11 MT4 Platform Orientation .................................................................................. 94
Navigation ............................................................................................................................ 94
Placing an Order ................................................................................................................... 95
Executing a Trade ................................................................................................................. 95
Closing or Modifying your position(s) .................................................................................. 96
Charts ................................................................................................................................... 97
Expert Advisors/Indicators ................................................................................................... 97
Chapter 12 Members Area Overview ................................................................................... 99
Courses ............................................................................................................................... 100
Webinars ............................................................................................................................ 100
Research ............................................................................................................................. 102
Daily Technical Cheat Sheet ........................................................................................... 102
Correlation Analysis ........................................................................................................ 103
Trend Analysis ................................................................................................................. 103
Parkers Strategy.............................................................................................................. 104
The Savi Trading Floor .................................................................................................... 105
Economic Calendar ......................................................................................................... 106

Additional Tools .............................................................................................................. 107
User Guides ........................................................................................................................ 108
Examination........................................................................................................................ 109
Demo and Live Accounts .................................................................................................... 109
Legal Disclaimer ..................................................................................................................... 115
The Trading Strategy Course
About Savi Trading

Who is Savi Trading?
Savi Trading is a proprietary trading company that was founded by Investment Bank and
Hedge Fund traders with combined experiences of over 60 years in the industry. Within
their previous trading roles, they were responsible for training and developing new
members of their teams. With this experience, coupled with their trading skills and
knowledge, Savi Trading was formed to provide unparalleled training and support to
individuals looking to develop a career in the trading industry.
Since inception, the company has grown significantly by continually adapting over time to
the requirements of the traders and the markets. From initially only focusing on recruiting
trainee traders, the company changed emphasis by placing greater importance on having a
balance of experienced and entry level candidates creating an environment in which traders
can develop their skillset and generate new ideas and strategies.
Savi Trading have successfully attracted talented and exceptional traders from across the
world who share the same idea of success as the company strong and consistent returns.
We underline this approach by the resources and the backing we provide our traders who
demonstrate and fulfill their potential.
The partners and the experienced traders all have extensive backgrounds within the
industry and have excellent contacts with the main players that ultimately move the
markets. We provide vast amounts of information similar to that available to the investment
bank and hedge fund communities. These range from detailed economic analysis, market
analysis and the ability to speak to other traders to share ideas and information.
The world markets are ever changing on a daily basis with breaking news and economic data
only ever a few minutes away. In times of such volatility, Savi Trading appreciate that it is
vitally important to support its traders with fast paced news, information and an
understanding of the markets when it matters. It places high priority to the speed of the
information flow to each trader to ensure they are able to react and make the best possible
decisions.
The founders thoroughly believe that investment in their traders will transform into
prosperity for the business as the company is only as good as its traders and they always
aim to provide them with the platform to excel.
Savi Trading 2014
Page 3

About the Authors
Sachin Shah Partner and Co-Founder

Sachin is a partner and mentor. He also lectures on behalf of Savi on trading the financial
markets at leading UK universities such as UCL as well as a number of other universities
globally. He began his career at Goldman Sachs. Prior to joining Savi, he was a Vice President
on the currency trading desk at Bank of America Merrill Lynch where he was responsible for
trading the Japanese Yen book, which was one of the largest currency books at the bank,
and he was seen as being one of the biggest players in the London currency market. He
studied at University College London where he has a degree in Statistics and Economics.
Sachin is regularly interviewed by CNBC for his views on the markets as well as other
broadcasts and publications.
Vishal Dattani Partner and Co-Founder

Vishal is a partner and mentor. He helps with the training and development of traders at
Savi Trading. He also lectures at various universities on behalf of Savi. He started his career
as a trader at a hedge fund where he used to trade the fixed income markets, before trading
equities at large proprietary firms in both London and New York. He concentrated mainly on
the Futures side and holds a EUREX qualification. He studied at University College London,
where he obtained a degree in Chemistry with Management. Vishal is also regularly
interviewed by CNBC for his views on the markets as well as other broadcasts and
publications.
Miles Eakers Head of Trading

Miles joined Savi Trading at the inception of the business after completing his degree in
Economics at the University of Cardiff. His primary focus since joining has been the FX
markets and has managed to trade the major currency pairs with great success. As Miles
experience of the FX markets has grown, he has demonstrated excellent market acumen,
and works closely with Savi`s traders to mentor them in how to use quantitative methods
and analysis to develop trading models and strategies for the company in both FX. He is also
a regular guest on CNBC, where he is considered an expert on all financial markets.
Savi Trading 2014
Page 4
Chapter 1 - Introduction
What is a Financial Market?
Place where buyers and sellers come together.
Price is determined by supply and demand (more supply the lower the price or more
demand the higher the price, all other things are being equal).
In equity markets, sellers are effectively selling their ownership interest in
companies in return for cash. In fixed income (debt) it is different as the buyer is
loaning the seller money in return for an interest payment.
In currencies, the buyer is purchasing a currency in return for another one. In
commodities, the buyer is purchasing a commodity in return for cash.
Efficient markets The price of a traded asset (equities, fixed income, currencies or
commodities) is constantly changing as the market analyses and incorporates new
information about that assets future prospects.
How pricing works?
The left hand side of the price is called the bid, the right hand side is called the offer/ask.
The bid is the price that a market maker is willing to buy and asset at, the offer being the
price a market maker is willing to sell at. In this case, if the trader wants to buy, they can do
so from the market maker who is willing to sell at 1.33195. The opposite is true at 1.33178.
Figure 1-1
Savi Trading 2014
Page 3
Figure 1-2 is an example of how the prices will be displayed on a trading platform. You will
also see the high traded for the day as well as the low.
Figure 1-2
Savi Trading 2014
Page 4
Chapter 2 Different Asset Classes

Foreign Exchange
Foreign exchange is the practice of buying and selling currencies. Currencies may be bought
and sold for various reasons, ranging from speculating on moves in the exchange rate to
businesses that need to buy a foreign currency for investment purposes.
Examples:
Figure 2-1
Key Characteristics:
Very lucrative market as it is very liquid. The daily turnover is around $4 trillion.
Largest traded financial market in the world
24 Hours a day, 5 days a week. The markets are always moving, offering great
opportunities to profit whenever the trader wishes.
Ability to use leverage to increase trading positions and also to hedge trading positions
Ability to trade from anywhere in the world
Pricing
The US Dollar is the most traded currency around the world, accounting for 86% of the daily
turnover. When a currency is quoted, it is always quoted against another currency. You can
see an example of this in Figure 2-2
Savi Trading 2014
Page 5

Quoted Currency
(USD)
Base Currency
(EUR)
EUR/USD
1.3210/12
Ask/Offer
(1.3212)
Bid
(1.3210)
Figure 2-2
In the above diagram, if we are buying EUR/USD, then we would be buying EUR and selling
USD. 1.32 is known as the big figure, and the 10 or 12 are known as the little figures.
Hence, if we are buying EUR 1m (i.e. paying the offer at 1.3212, so buying from the market
maker who is selling at 1.3012), we are buying EUR 1,000,000 and selling US$1,321,200.
Now, if the price goes up to 1.3222, and we decide to sell the EUR 1m that we just bought,
we will get US$1,322,200 in exchange (1,000,000 * 1.3222) and will have made a profit of
US$1,000 (1,322,200 1,321,200).
Equities
Equities represent a share in the ownership of a company. Indices represent groups of

companies and provide the opportunity to trade in the market as a whole rather than
individual company. Most indices are traded via Futures or CFDs.
Examples:
S&P 500 (US Equity Market)

DOW30 (US Equity Market)
FTSE 100 (UK Equity Market)
Savi Trading 2014
Page 6

Characteristics:
Very actively traded. Can be very volatile also, focusing of economic data to increase
movements in the prices
Costs are far lower to trade the index rather than the underlying individual equities
Ability to go long or short.
Equity Indices defines a statistical compilation of the share prices of a number of

representative stocks.
Fixed Income
Fixed Income markets are markets where participants can trade debt securities, usually in
the form of bonds. The purchaser of these instruments is expected to receive a fixed rate of
interest over the duration of the ownership. A lot of online trading is done via Futures or
CFDs.
Examples:
Government Bonds (i.e. US 10 year Treasury Bond)

Corporate Bonds (i.e. General Motors 5 Year Bond)
Characteristics:
There is high liquidity in the Fixed Income markets. The most traded fixed income
market is the US bond market which has an average daily volume of $822 billion.
Low commission costs when trading Futures compared to traditional bond trading
Ability to go long or short
Savi Trading 2014
Page 7

Commodities:
Commodity markets are markets where raw or primary products are exchanged. Anything
which can be touched is seen as a commodity. A lot of trading is done via Futures or CFDs
rather than the underlying cash market.
Examples:
Brent Oil
Gold
Natural Gas
Characteristics:
High liquidity in the commodities markets. The electronically traded contracts, such as
Brent, Gold etc. tend to be the most liquid.
Low commission costs
Ability to go long or short
Trading Futures do not carry costs such as storage costs etc., which you would pay if
you were trading the underlying cash position
Savi Trading 2014
Page 8
Chapter 3 Data Releases
Every day economic data is released from different countries
Some are more important than others. The economic calendar displays the importance.
The greater the importance, the larger the expected move in the markets will be, as
more traders will be focusing on it
Only unexpected data will move the market
Within the Savi Trading Members area, you will find an economic calendar which is updated
in real time as and when the data is released. Figure 3-1 shows you an example of what the
data page looks like on the website. It can be found within the research section under
Economic Calendar.
Figure 3-1
Savi Trading 2014
Page 9

Economic Indicators
Now consider the impact of economic indicators. These indicators give us information about
the state of the economy. This information ranges from employment, spending, growth etc.
This helps the financial markets to try to access the health of the economy. Generally the
better the economys situation, the higher the stock markets will be supported by higher
bond yields (lower bond prices) and stronger local currency.
Definitions of Economic Data Releases and Events
ADP Nonfarm Employment Change:

Estimates the number of new jobs created in the previous month. ADP, a leading
provider of employment solutions for businesses, releases this indicator two days
before the highly anticipated official Nonfarm Employment Change. ADP claims that
this indicator has predictive value in regard to official statistics.
Average Hourly Earnings:

Measures the monthly change in the hourly rate paid to the jobholders indicated in
nonfarm payrolls.
Building Permits:
Measures the number of new construction intentions. This data is a leading indicator
for the construction industry since the issuance of a building permit is one of the first
steps in the construction process.
BOE Meeting Minutes:

The Bank of England (BOE) Meeting Minutes are a verbatim record of the banks
meeting held about two weeks earlier. The minutes give traders insight into the
latest interest rate decision and policy shifts. Most central banks release such
minutes.
Consumer Confidence:
Measures the mood of consumers in regards to economic conditions. The reading is
derived from a monthly survey that asks respondents to evaluate the prospects for
the economy in the future. Higher readings point to higher consumer optimism.
When consumers are optimistic they tend to purchase more goods and services,
which stimulates the economy.
Savi Trading 2014
Page 10
Current Account:
Measures the difference in value between total imports and total exports of goods,
services, income, and current transfers. Its essentially a statement of the countrys
trade with other nations over a period of time.
Consumer Sentiment:
Measures consumer attitudes concerning both the present situation and future
expectations. Its derived from a monthly 500-person survey conducted by the
University of Michigan. Higher sentiment levels are a leading indicator of rising
consumer spending, which accounts for a third of the economy.
Core CPI:
This indicator is a derivative of the Consumer Price Index (CPI) that excludes the
eight most volatile items.
Durable Goods Orders:

Measures the monthly increase in new purchase orders placed with domestic
manufacturers for hard goods. The reading points to how busy manufacturers will be
in the months to come as they work to fill the orders.
EIA Crude Oil Inventories:

The Energy Information Administrations (EIA) Crude Oil Inventories measures the
weekly increase in barrels of commercial crude oil held in inventory by US firms. The
level of inventories influences the price of petroleum products, which can have an
impact on inflation and other economic forces.
ECB Interest Rate Statement:

The European Central Bank (ECB) Governing Council Interest Rate Statement is
released shortly after a meeting in which the ECB, headed by Mario Draghi, makes a
decision on where to set short-term interest rates (refinancing rate). The ECB
focuses heavily on inflation, as their stated mission is to achieve price stability. They
generally raise rates to fight rising inflation, and lower rates in the face of deflation
or economic slowdown.
Factory Orders:
Measures the monthly change in the value of manufacturers new orders for goods.
A rising trend indicates a growing economy. This report gives more in-depth
information than the durable goods report released about two weeks earlier.
Savi Trading 2014
Page 11
FOMC Meeting Minutes:

The Federal Open Market Committee (FOMC) Meeting Minutes are a verbatim
record of the committees meeting held about two weeks earlier. The minutes give
traders insight into the latest interest rate decision and policy shifts.
GDP:
GDP is the most comprehensive measure of economic output and provides key
insight as to the driving forces in the economy. Due to this reports lack of timeliness
and because data on GDP components are available beforehand, the actual GDP
figure is usually well anticipated. But given its overall significance GDP has the
tendency to move the market upon release, especially if it upsets expectations.
Household Spending:
Measures the annual change in the level of expenditure per household. Higher
readings are a positive sign for the economy.
Housing Starts:
Measures the number of new single-family homes or buildings constructed
throughout the previous month.
House Price Index:

Measures the monthly change in the average asking price of residential properties.
Rightmove, the UKs leading property website, publishes this indicator in the same
month the data is collected, making it a leading indicator of inflation in the housing
sector.
Ifo Business Climate Index:

The Information and Forschung (Ifo) Business Climate Index measures the mood of
firms in manufacturing, construction, wholesale and retail. The index is derived from
a monthly survey of over 7,000 firms where respondents are asked to give their
assessments of the current business situation and their expectations for the next six
months. The indicator reading is a transformed mean of the balances of the business
situations and the expectations, and can fluctuate between extreme values of -100
(i.e., all responding firms appraise their situation as poor or expect business to
become worse) and +100 (i.e., all responding firms assessed their situation as good
or expect an improvement in their business).
Industrial New Orders:

Measures the monthly change in value of future deliveries to be provided by a
producer to a third party. This leading indicator points to how busy producers will be
in following months as they work to fill the orders.
Savi Trading 2014
Page 12
Industrial Product Price Index:

The Industrial Product Price Index (IPPI) measures the prices that manufacturers are
paid as goods leave the plant gate. Unlike the CPI, the IPPI excludes indirect taxes
and all the costs that occur between the time a good leaves the plant and the time
the final user takes possession of it, including the transportation, wholesale, and
retail costs.
Industrial Production:
Measures the monthly change in total output of factories, mines, and utilities. A
rising trend generally indicates a strengthening economy.
Interest Rate Statement:

The Federal Open Market Committee (FOMC) Interest Rate Statement is released
shortly after a meeting in which the FOMC, headed by Janet Yellen, makes a decision
on where to set the federal funds target rate. The statement is released eight times
per year and contains the latest rate decision, along with commentary on the state
of the economy and how the FOMC intends to shift monetary policy in the future.
The FOMC focuses heavily on inflation, as their stated mission is to achieve price
stability. They generally raise rates to fight inflation, and lower rates in the face of
deflation or economic slowdown.
ISM Non-Manufacturing Prices:

The Institute of Supply Management (ISM) Non-Manufacturing Price Index measures
the monthly inflation experienced by non-manufacturing organizations when
purchasing materials and services. The ISM surveys 400 firms to produce this index.
Leading Index:
Measures overall economic activity by combining several indicators including
Average weekly hours, new orders, consumer expectations, housing permits, stock
prices, and interest rate spreads. Most of the components were previously reported
which minimises the indicators market impact. The Conference Board publishes this
indicator monthly.
Leading Indicators:
Measures overall economic activity by combining eight indicators including money
supply, building approvals, rural goods exports, sales to inventory ratios, gross
operating surplus, and two bond yield calculations. The Conference Board publishes
this indicator monthly.
Savi Trading 2014
Page 13
Manufacturing PMI:
The Manufacturing Purchasing Managers Index (PMI) is a measure of purchasing
manager sentiment throughout Japan. The report is released monthly by NTC
Research on behalf of Nomura. The PMI has earned a reputation for accurately
reflecting the true health of the Japanese manufacturing economy well ahead of
official data. A rise in PMI indicates that business conditions in the manufacturing
sector have improved.
Nonfarm Employment Change or Nonfarm Payrolls Change:

Measures the number of new jobs created in the previous month, excluding the
farming industry. Employment growth will generally strengthen a countrys currency,
as it is one of the most timely and important indicators of economic health.
PCE Deflator:
Personal Consumption Expenditures (PCE) Deflator measures the rate of inflation
experienced by consumers. Like CPI, it reflects price change in consumer goods and
services. PCE differs from CPI in that it only measures goods and services targeted
towards and consumed by individuals. PCE is one of the Federal Reserves favourite
inflation indicators and is watched closely by traders.
Personal Income:
Measures the monthly change in average personal income received from all sources.
Personal Spending:
Measures the total value of consumer purchases of goods and services over the past
month. Consumer spending makes up two thirds of GDP and therefore a rising trend
generally strengthens a countrys currency.
Philadelphia Fed Index:

Measures the mood of manufacturers in the Philadelphia Federal Reserve District.
The Philadelphia Fed conducts a monthly survey that asks respondents to rate their
business on an assortment of indicators, concerning both the present situation and
future expectations. The survey results are converted into a general index of
business and manufacturing conditions within the Philadelphia Federal Reserve
district.
Producer Price Index:

The Producer Price Index (PPI) measures the rate of inflation experienced by
manufacturers. The reading represents the monthly change in the average price of a
fixed basket of goods and services purchased by manufacturers. Higher inflation
Savi Trading 2014
Page 14

generally leads to higher interest rates, which tend to strengthen the countrys
currency.
Retail Price Index:

Retail Price Index measures changes in the prices of goods and services bought for
household consumption in the UK. The RPI takes a large sample of retail goods
including food, tobacco, household goods and services, transport fares, motoring
costs, clothing, and leisure goods and services. A higher number is generally
inflationary and a lower number is deflationary.
Retail Sales:
Measures the monthly change in total value of sales at the retail level. A rising trend
indicates higher consumer spending, which is an important driver of the economy.
Services PMI:
The Services Purchasing Managers Index (PMI) measures the health of the services
sector. Its derived from a monthly survey of purchasing managers where
respondents indicate whether their organizations activity is higher than, the same
as, or lower than the previous month for output, purchases, employment,
inventories, orders, and prices. An index reading above 50 indicates sector
expansion. PMI is believed to be a leading indicator because purchasing managers,
by virtue of their jobs, have early access to data about their companys performance.
TIC Report:
The Treasury International Capital (TIC) Report measures foreign demand for US
debt and assets. Strong demand tends to strengthen the dollar as foreigners convert
their money in order to purchase US securities.
Trade Balance:
Measures the difference in value between total imports and total exports of goods.
A positive reading means that more goods were exported than imported over the
previous month. The Trade Balance has a sizable impact on GDP and at extremes can
directly influence the countrys currency value.
UK CBI Monthly Industrial Trends:

A survey of senior manufacturing executives on trends in output, prices, exports, and
costs. The CBI Industrial Trends Survey collects data on topics like current business
confidence, capacity utilization, and investment intentions. The survey differs from
most other economic surveys in that it focuses on the opinions of executives rather
than quantitative data.
Savi Trading 2014
Page 15
Unemployment Claims:
Measures the number of individuals who filed for unemployment insurance for the
first time over the past week. A rising trend indicates a deteriorating labour market,
which can weigh on the economy.
Unemployment Rate:
Measures the percentage of the total work force that is unemployed and actively
seeking employment. Rising unemployment is a sign of a slowing economy.
ZEW Economic Sentiment:

Zentrum fr Europische Wirtschaftsforschung (ZEW) Economic Sentiment measures
institutional investor sentiment. The monthly indicator reflects the difference
between the share of investors that are optimistic and the share of analysts that are
pessimistic. For example, if 30% of participants expect the economic situation to
improve within the next six months, 30% expect no change and 40% expect the
economic situation to deteriorate, the ZEW Indicator of Economic Sentiment would
take a value of -10. Thus, a positive number means that the share of optimists
outweighs the share of pessimists.
Expected Moves in Asset prices
Figure 3-2
Savi Trading 2014
Page 16

In Figure 3-2, we see the expected relationship between various economic indicators and
the price of assets after the release.
We will go through some examples of the expected moves within the market:
GDP and GNP
Gross Domestic Product measures the total value of a countrys output (total of all
economic activity). The Gross National Product is the same as GDP but includes a countrys
net earnings from abroad. So to put it simply, the GNP is a measure of monies generated by
residents of the country in question, but is not limited to the domestic output as there is an
element of it generated abroad.
Market reaction to unexpected changes in GDP/GNP:
An important point to note is that GDP and GNP levels are predicted very easily by the
market due to the components that make up the figures. Hence, any large variation from
the expected figures will usually be the catalyst to move the markets.
Figure 3-3
Producer Prices Index
These are the prices that producers charge to the retail sector, hence a rise in these will lead
to a rise in the overall retail prices charged to the consumers. It is obvious then that
Producer Prices are a key indicator of inflationary pressure as there is such a direct link
Savi Trading 2014
Page 17

between retail prices and supplier prices. Analysts will keep a close eye on this figure as
market sensitivity to any unexpected changes is very high.
Any inflationary pressure will lead to the monetary authorities to increase interest rates,
and vice versa. The fixed income market sees large rises in inflation as cause for interest
rates to rise, hence a large rise in inflation should see bond prices drop (yields to rise).
Equity markets should see inflationary pressure as being negative as it decreases the
amount of disposable income people have, as well as higher interest rates increasing the
cost of credit.
Producer Prices Index are also impacted by commodity prices. Many commodities are
supplies (e.g. oil, agricultural raw materials, etc) and any changes in the prices will directly
impact the costs to the producers for their supplies which then follow through to the prices
paid by retailers. Commodity prices are also seasonal so this must be taken into
consideration.
Consumer Prices are the prices that are paid by the consumer on the street. This is obviously
directly linked to the Producer Prices and the markets should react in the same way as the
table for Producer Prices.
Figure 3-4
Industrial Production
This is a set of numbers that shows the monthly output of a countrys factories, mines,
utilities and so on. An increase in output in this area signals economic growth and a decline
indicates a contraction in growth. The fixed income market views an increase as inflationary,
Savi Trading 2014
Page 18

hence an expected increase should see a drop in bond prices. The equity markets should
rally, as an increase in output would mean that firms are more profitable.
Figure 3-5
Unemployment
This indicator is watched very closely by analysts and traders. High levels of unemployment
indicate lower growth prospects for a country as unemployment gives rise to the opinion of
poor job security in the wider economy. Individuals and households will have less disposable
income thus leading to lower spending in the economy and a drain on the resources of the
government. The government may use interest rates to try and curb unemployment by
stimulating spending through lowering the cost of borrowing.
Average earnings is another reliable indicator to provide an insight into disposable income
in the economy. A high average earnings number would suggest that there is greater buying
power and in turn this should impact equity markets in the same. Average earnings is
another reliable indicator to provide an insight into disposable income in the economy. A
high average earnings number would suggest that there is greater buying power and in turn
this should impact equity markets in the same way that an increase in employment would.
The opposite is true for a lower than expected average earnings figure. There is also a
positive correlation between earnings and inflation, with greater buying power comes
greater demand from consumers which would fuel increases in retail prices.
Savi Trading 2014
Page 19
Figure 3-6
Retail Sales
Retail sales calculates the amount of merchandise sold within the retail trade by taking a
sample of companies engaged in the business of selling end products to consumers. With a
high retail sales output, the economy is likely to be in a period of increased spending, which
should increase corporate profitability as well as job stability etc.
Figure 3-7
Savi Trading 2014
Page 20

Examples of Data Releases
S&P 500 and the Non-Farm Payrolls
Firstly, we will look at the effect of Non-farm Payrolls on the S&P500. Non-farm payrolls is
the most closely watched indicator in the Employment Situation, considered the most
comprehensive measure of job creation in the US. Such a distinction makes the NFP figure
highly significant, given the importance of labour to the US economy. On a whole if the
number beats expectations were looking to buy the market and alternatively if the reading
is worse were looking to sell.
The market expectations for this figure were 125k. On the Figure 3-8 is a chart of how S+P
was trading prior to the release of the number.
Figure 3-8
The number came out at 171k. What do you expect to happen?
Savi Trading 2014
Page 21
Figure 3-9
The market rallies after breaking resistance on the back of the number as demonstrated by
Figure 3-9.
Crude Oil and Crude Oil Inventories
Now we will look at the effect of Crude Oil Inventories on Crude Oil price. The COI report is
used to assess weekly US supply and demand for crude oil, gasoline, diesel, heating oil and
natural gas. The report outlines activity in the energy sector, includes weekly energy supply
and consumption rates. The energy markets tend to rise when inventories are falling, and
fall when inventories are rising and are above the market consensus estimate.
The market expectations for this figure were -500k. Figure 3-10 is a chart of how Crude Oil
was trading prior to the release of the number.
Savi Trading 2014
Page 22
Figure 3-10
The number came out at -257k, which means an increase in inventories by more than
expected hence an increase in supply, as displayed in Figure 3-11.
Figure 3-11
Savi Trading 2014
Page 23

In this example we can see Crude Oil Inventories came out at -257K vs -500K expected. This
read shows an increase in inventories (increase in supply) and as such we can see the price
of Crude falling from pre-data levels of 88.37, to lows of 87.45 after the data, a decrease of
$0.92.
AUD/USD and the Australian Interest Rate decision
Looking at the effect on the Reserve Bank of Australia Rate Decision on the Australian Dollar
vs. the US Dollar. Changes in rates affect interest rates in consumer loans, mortgages, and
bond rates. Since short term interest rates essentially reflect the return on holding a
currency, rate decisions usually affect the exchange rate of the Australian Dollar. An
increase in rates will see the Australian Dollar appreciate while rate decreases will cause the
currency to fall against its peers.
The market expectations for this figure were 3%. Figure 3-12 is a chart of how AUD/USD was
trading prior to the release of the number.
Figure 3-12
Savi Trading 2014
Page 24

The rate announcement came out shortly after and it was announced that rates were
increased to 3.25%. How would you trade it?
In this example we can see the RBA increase rates to 3.25% vs. 3.00% expected. This quarter
% increase causes the Australian Dollar to appreciate significantly against the US Dollar.
Trading from 1.0367 before the release to highs of 1.0434, an increase of 67pips. This is
shown in Figure 3-13.
Figure 3-13
Gold and the US GDP figure
Now we will look at gold, over the US GDP figure. It is important to note that gold is
considered a safe haven product, so if any economic data comes out worse than expected,
you would expect to see traders buy gold as a flight to safety mind frame enters the market.
A safe haven is a product that traders turn to when they think the economy is not
performing well.
The GDP was expected as 1.1% QonQ. Figure 3-14 is a chart showing how gold was trading
prior to the data release.
Savi Trading 2014
Page 25
Figure 3-14
The GDP came out as -0.1%. How would you expect the market to react?
Figure 3-15
Savi Trading 2014
Page 26

Figure 3-15 shows the market has rallied higher, which would be expected as the data came
out worse than expected, which would make traders feel the US economy is contracting.
Role of the Government

Let us look at the government and their role. Governments want to achieve sustainable
growth, which is basically growth without inflation. They go about this by controlling the
level of activity in the economy and measure this activity in terms of the level of nominal
GNP (gross national product). The financial markets pay close attention to this too, as there
is a well-established relationship between this and monetary aggregates, which is basically
the spending power in the economy.
A government will use interest rates to try and control growth and inflation. If there is low
growth, they will try and reduce interest rates in an attempt to decrease the cost of credit
and stimulate upward pressure on spending and economic activity. Some may argue this is
inflationary, but as spending in the economy is low, they are just simply increasing it to
normal levels. The opposite is true when there is high growth and interest rates are
increased to any inflationary pressures.
The government may also use fiscal policy, whereby they increase/decrease public spending
and taxation. This is a way of adjusting individuals and households disposable incomes as
well as the amount of money circulating in the economy.
Generally, when the economy is in a growth cycle, it is met with higher interest rates, higher
taxes, and lower public spending. When we are in a recessionary cycle, there are lower
interest rates, lower taxation and higher public spending. This should help to avoid volatile
economic cycles.
Savi Trading 2014
Page 27
Chapter 4 Introduction to Technical Analysis
Technical analysis is a method used to predict future price moves of an asset, looking at
past price movements.
These past price movements are graphically demonstrated using charts.
Technical analysis does not give an absolute prediction, but helps traders/investors to
predict what is likely to happen
When used along with Fundamental Analysis, it can be a very powerful tool
A major technical analysis indicator is a Moving Average which we will discuss in

chapter 5.
Different Charts
There are a few types of chart which traders like to use generally. Charts show historical
data that can be analyzed in a clear way. Being able to analyze patterns and indicators can
give traders an insight into what may happen next. It is important to realize that charts are
not definitive, but do represent possible things that you can take advantage of. We will go
over them now and outline the main points on each type of chart.
Candlesticks
Candlesticks originated from Japanese rice trading markets a few centuries ago. A
candlestick is a bar that shows the difference between the opening and closing prices, as
well as the high and low of a specific time period. A positive bar is green and a negative bar
is red. You can change the colors but we feel these colors are a good fit visually. Figure 4-1 is
what a basic candlestick represents.
Savi Trading 2014
Page 28
Figure 4-1
Candlesticks form a lot of patterns on charts which provide indications as to future price
directions. Figure 4-2 is an example of a candlesticks chart.
Figure 4-2
Savi Trading 2014
Page 29

Bar Charts
Each bar represents the trading over the period taking into account the high, low, open and
close. Time is factored into the price movements. Candlestick charts are very similar to bar
charts
Figure 4-3
Line Charts
Line charts take the closing price of a particular timeframe and plot it against time. By using
this method, the chart is a lot smoother and due to this can show a trend much better.
Savi Trading 2014
Page 30
Figure 4-4
Candlestick Patterns
Doji
A candlestick where the open and close are the same. When seen alone, dojis are normally
neutral patterns; it is when they are combined with other patterns that they become
important. These are displayed in Figure 4-5
Savi Trading 2014
Page 31
Figure 4-5
Bullish Engulfing Pattern
When a pattern like this develops, it suggests that the bulls have taken control of the
market. It occurs when a small down candlestick is followed by a large up candlestick that
totally engulfs the previous periods candlestick. It can normally be seen in a declining trend,
and suggests that a low or end to the declining trend has occurred.
A Bearish Engulfing Pattern is the opposite.
Figure 4-6
Bullish Harami
A pattern where a large down candlestick(s) is followed by a small up candlestick. The body
of the small up candlestick is within the range of the larger candlestick. It gives a sign of the
Savi Trading 2014
Page 32

reversal of the downward trend. The smaller the up candlestick, the higher the probability
of a reversal. A Bearish Harami would have an opposite formation to that shown below.
`
Figure 4-7
Bullish Harami Cross
A large down candlestick followed by a Doji. This often indicates that a trend is about to
reverse. The cross as opposed to the small candlestick on the bullish harami, gives a greater
indication that the market is likely to reverse. Again, a Bearish Harami Cross would be the
opposite of this.
Figure 4-8
Bullish Belt Hold
In a downtrend, after a series of bearish candlesticks, a bullish candlestick forms. The

opening price of this candlestick becomes the low of the day, and the body of the candle is
very big. There is a small upper shadow and no lower shadow. It is the start of a reversal of
Savi Trading 2014
Page 33

the down trend into an upward trend. A Bearish Belt Hold would be have an opposite
formation to this.
Figure 4-9
Shooting Star
When price at some point during a period has advanced well above the opening price but
closes below it. It needs to be formed during an upward trend. The price between the high
of the period and the opening price must be at least twice as large as the body of the
shooting star. Also, the price between the low and closing price must be very minimal.
Figure 4-10
Savi Trading 2014
Page 34

Morning Star and Evening Star
A Morning Star is a bullish formation that has 3 candles. The first one is a large down
candlestick in a downtrend. The second can be up or down but is a small candle that closes
below the first down bar. And the third is an up candle that opens up above the middle
candle and closes near the center of the first bars body. It gives a good indication that the
trend is about to reverse.
Figure 4-11
An Evening Star would be the opposite of a Morning Star, as follows:
Figure 4-12
Savi Trading 2014
Page 35

Hammer
When the price trades down significantly from its opening, but rallies later in the period to
close either above or very close to its opening price. It indicates that the bulls are
strengthening their hand and is a sign that the markets are looking for a bottom.
Figure 4-13
Kicker
Usually signifies a change in the fundamentals of the market. It is a two candle pattern
where there is a sharp reversal in price over the two candles. It shows traders whether the
bulls or bears are in control.
Figure 4-14
Savi Trading 2014
Page 36

This is a list of the most common candlestick patterns that you are likely to encounter whilst
trading, however this is not an exhaustive list as other rare patterns do exist.
Trend Reversal Patterns

Head and Shoulders
A head and shoulders pattern is a very useful tool in the world of technical analysis. See
Figure 4-15
Figure 4-15
There are two shoulders which are at close levels and a head which is above these levels
and is the center peak. There is a neckline which is the common line of support for all three
peaks. When the neckline breaks it usually confirms the start of a new downward trend.
This is not always the case, although if the neckline then holds as resistance after the break
it is usually a good sign that there is a new trend. Another factor to take into account is the
momentum. If the momentum during the formation of the left shoulder was higher than the
right shoulder, then it would indicate that buying pressure is decreasing and a reversal is,
indeed, taking place. The downward move will usually be at least the distance between the
head and the neckline.
An Inverse Head and Shoulders follows the same model, see Figure 4-16.
Savi Trading 2014
Page 37
Figure 4-16
On the below Head and Shoulders (Figure 4-17), the neckline doesnt break, but because of
this the right shoulder tests again, breaks, and then holds as support. After that we have a
move up to the head again.
Figure 4-17
Savi Trading 2014
Page 38

Double Top and Double Bottom
A double top is when a market rises and hits resistance and bounces down towards a
support level. The market will then come back up towards this level and again the level will
hold and therefore it becomes a double top. When the market then goes down again, if it
breaks the support level where it bounced from just earlier, then it starts a new downward
trend. A double bottom is the opposite, when a support forms rather than a resistance.
Figure 4-18
Triple Top and Triple Bottom
Same principle as double top, double bottom, just with an extra top or bottom. A Triple top
is stronger than a double top or bottom and almost a certain sign for a big reversal. If the
market does break through it then expect a big move the other way.
Savi Trading 2014
Page 39
Figure 4-19
Rounded Top and Rounded Bottom
This kind of top/bottom forms when the market slowly shifts from bearish to bullish. It is a
steady gradual shift. Once the shift has been made the trend has changed.
Trend Continuation Patterns

What are Trend Continuation Patterns?
Trend continuation patterns are patterns that will usually show the market direction slowing
down and tailing off, before the trend continues in the original direction.
Flags are marked by an almost horizontal entry into the market pattern. They are bound by
parallel lines of support and resistance. When a flag breaks it is often a very big fast break.
They tend to form at a slant opposite to the direction of the market trend at the time. The
break we spoke about is in the same direction as the market trend. Examples of what a bull
Savi Trading 2014
Page 40

flag (left) and bear flag (right) will look like. A flag can be seen as a consolidation before a
break to continue the trend.
Figure 4-20
Figure 4-21
Savi Trading 2014
Page 41

Rectangles
When trading a rectangle, you can trade the horizontal lines as support and resistance (as
discussed previously), but when it does break expect the break to be around the same as
the height of the rectangle.
Figure 4-22
Figure 4-23
Savi Trading 2014
Page 42

Triangles
Triangles are another form of a continuation patter and there are 3 types of recognized
triangles. The first is a symmetrical triangle. It is a period of consolidation during a trending
market. There is a line of support slanting upwards, and a line of resistance slanting
downwards.
Figure 4-24
When these lines converge, there is a breakout in the direction of the original trend. The
breakout can normally be expected to be at least the height of the triangle.
Figure 4-25
Savi Trading 2014
Page 43

Descending Triangles
Then there is a descending triangle, the opposite of an ascending triangle. There is a

slanting down line of resistance and a flat line of support. The same principles apply here as
an ascending triangle, just the opposite direction.
Figure 4-26
Figure 4-27
Savi Trading 2014
Page 44

Wedge Formation
Finally we have a wedge. It forms very similarly to a symmetrical triangle and if it breaks
out, you can expect a sharp break in the direction of the original trend. Like a flag though,
the wedge will normally form in the opposite direction of the trend.
Figure 4-28
Figure 4-29
Savi Trading 2014
Page 45

Trends and Trading Patterns
Support and Resistance
Support and Resistance is the most basic type of technical analysis.

Support occurs at a price low or price trough in the market. When a market is falling in value
it will usually encounter support at some point. It is the point at which the buyers come in
and overpower the sellers that have forced the market down to the point of support. The
price should bounce back up from a support point.
Resistance is the opposite. It occurs at a price high or price peak. When a market is rising, it
will be the point where sellers enter the market and overpower the buyers. The price should
bounce back down from a resistance point.
The next time the market then goes towards this point of support or resistance you would
expect a bounce again as there will now be more traders believing in the level due to the
previous bounce from it. These points can just be picked off a chart as can be seen on the
chart in Figure 4-30.
Figure 4-30
Savi Trading 2014
Page 46

After a certain amount of bounces, it is a good idea to expect a break through this level.
When a break occurs, an area of resistance will then turn into support, and vice versa. This is
because the level will still remain a level, but any level below the market is considered
support and any level above as resistance. On short-term timeframes (5min, 15min)
generally expect a good level to hold 3- 4 times. On longer-term timeframe levels (60min,
daily, weekly) expect a level to hold 4-5 times. An example of support becoming resistance
can be seen below. Also, if a level was a very strong level, when it breaks, expect a big
break, as stops get hit and more traders enter the market.
Figure 4-31
Trend-lines as Support and Resistance
Support and Resistance levels can also come in the form of trend lines and trend channels.
In these instances, the line will act as support or resistance. The main difference with these
types of support and resistance levels compared to what we previously discussed is that
these levels change as the line changes in time. The line is constantly moving as it is trending
upwards or downwards. A trend line can be drawn from as little as two points, and then
expecting there to be a level when the market touches the line again. Trend lines should
Savi Trading 2014
Page 47

always be drawn from left to right. The longer a trend goes on, the stronger it becomes, but
as we discussed before levels are there to be broken and will eventually break. The same
rule applies as discussed earlier. See Figure 4-32.
Figure 4-32
When trend lines do break it can give a good indication of the future direction of the
market. They can mean that a trend is broken and the market may change the
characteristics it has been displaying whilst in the trend. When looking for a trend line
break, an important indicator to monitor is volume. High volume on the break would
normally mean that the market is determined to break out strongly. Again, as stated before
when a resistance trend line breaks it usually will turn into support. See Figure 4-33.
Savi Trading 2014
Page 48
Figure 4-33
When you spot a trend line, it is a good idea to see if there is a parallel line running to it.
This is often the case. If there is, it is a good idea to draw it in and this then becomes known
as a channel or a trend channel. It will normally show that the market has been trading
between these two lines in the past. See Figure 4-34.
Savi Trading 2014
Page 49
Figure 4-34
If you feel a channel is going to hold then the idea is to buy at the bottom of the channel or
sell at the top of the channel. Then you would like to hold it to the other side of the channel
where you would look to exit the position for a winner. Sometimes the other line will be
very far away and it may not be possible to hold the trade all the way, but it is a good idea
to trail stops as the trade moves on side to bank some profit in case the market turns before
it reaches the other side of the channel. These trailing stops can be moved as discussed in
the trailing stop section earlier. When a channel breaks, it is normally a stronger break than
that of just a trend line.
Savi Trading 2014
Page 50
Chapter 5 Moving Averages

What is a Moving Average?
A moving average calculates the average price of a security over a specific period of
time and a specific period of units of time.
For example, if we take the closing prices of the last 10 trading days, we would add
them all together and divide the result by 10, to calculate the moving average.
Types of Moving Averages
There are different types of moving averages, the two main ones are:
Simple Moving Average (SMA)
Exponential Moving Average (EMA)
We will now look into the types of moving averages in more detail, their application and the
problems of using moving averages.
What is a Simple Moving Average?
A simple moving average is calculated by adding the closing price of a security for a number
of time periods and then dividing this total by the number of time periods. Figure 5-1 shows
the 1 hour 50 SMA:
Savi Trading 2014
Page 51
Figure 5-1
What does this show?
This shows the average price for a security over a set time, giving equal weighting to each
unit of time. So it gives you an idea of what price has done and as a result can be used to
give you an idea of where price is going without focusing too much on the noise.
How do I use a Simple Moving Average?
Figure 5-2 shows a simple application of a slow moving average and a fast moving average:
Figure 5-2
Savi Trading 2014
Page 52

The Slow moving average in this case is the blue line as it reacts to the market very slowly. In
this case it takes the average of the last 200 prices. The Fast moving average (red line) reacts
quickly to the market, in this case taking the average of the previous 50 prices.
Short term moving average crossing the longer term moving average..
Figure 5-2 showed the short term 50 SMA (blue line) crossing over the longer term
200 SMA on the topside indicating the end of a trend and the start of an uptrend.
Once the moving average had crossed over the short term moving average this then
offered good opportunities to enter into a short/long position. Trend followers use
this analysis to form a view on the trend and to trade it. For example, once the cross
occurs, a trend follower may look for areas to buy/sell EUR/USD. A simple strategy is
to buy it every time it trades at the fast moving average (red line), and aim to close
the position when the red and blue moving averages cross the other way. You can
also sell when the opposite occurs
Problems with the Simple Moving Average
The most notable problem with the SMA in particular is that because it gives equal
weighting to each unit of time this increases/decreases in price can often be lagging and you
can sometimes either miss the move or get into the move too late for a good risk reward
trade. Figure 5-3 shows the move down is almost finished before you get the signal.
Figure 5-3
Savi Trading 2014
Page 53

Although the signal is still a good signal and gives you an entry you could have made more
out of the move if you had got in earlier. Something that is important to realise is that it is
often not profitable and difficult to call the tops only after they have formed will you get
confirmation.
What is important is to be in for most of a move either on the upside or the downside.
How can I see a signal earlier and get in sooner to maximise profits for a move?
The use of an exponential moving average (EMA) will give a signal sooner than the simple
moving average. Traders look to be long when the short term EMA is above the longer term
EMA, and short when the opposite occurs.
Figure 5-4
What is an Exponential Moving Average (EMA)?
Exponential Moving Average is a study which gives greater weighting to more recent price
data. This is widely used by traders as it is viewed that recent data is more important than
data from a further back in time. This moving average also is more adaptive to recent events
which have caused price movements.
Savi Trading 2014
Page 54

To Calculate the EMA you need to use the following formula:
EMA = ( Price * K ) + EMA ( Y ) * ( 1 K )

Where Price is the current market price, EMA (Y) is the previous EMA, K is the (2/(Number
of periods + 1).
You must use a SMA to get started at the beginning; hence the first EMA is the SMA.
The good news is that you do not actually have to do these calculations in your head every
time, as the charting package you use should do this for you. Here is an example of an SMA
and an EMA together.
Figure 5-5
Savi Trading 2014
Page 55

Problems with the Exponential Moving Average
The EMA is also a lagging indicator and takes time for it to produce a signal but still
provides a quicker signal then the SMA.
The cross over can sometimes be a consolidation as well and may not provide a good
signal as the next page shows but as long as you manage your risk the negative effect of
this can be reduced.
False Signals
On Figure 5-6, you can see that if you sold on the moving average when it had crossed on
the other moving average this would not have provided a good opportunity to enter the
trade and this is why it is important that when you trade you wait for the best entry price to
avoid getting in too soon or at a price that does meet your risk reward ratio so as close to
the EMA as possible.
Figure 5-6
Savi Trading 2014
Page 56

Using multiple moving averages
Below you can see how using multiple moving averages can improve the signals and remove
some of the consolidation noise that occurs when price pulls back.
Figure 5-7
Using Moving Averages after an Economic Data release

US GDP and Oil
The US GDP number has just been announced which came in a lot better than expected.
This will cause a rise in the level of risk taking in the market. Therefore you expect equity
markets to rally, and safer haven assets such as Gold to fall in price.
Oil is a commodity which should see its price rally. The main reason is, an increase in global
growth should see an increase in the demand for commodities such as oil, used for
production etc.
When the number is released, you may not be able to get into the market initially. The
strategy should be to be patient and look for opportunities to buy. In this case, as we have
made a new high, we would look to buy on a dip to the fast moving average (red line),
placing a stop below the slow moving average. Figure 5-8 shows a chat on potential entries:
Savi Trading 2014
Page 57
Figure 5-8
EUR/USD and the impact of the ECB Press Conference
Now we will look at the effect of the Mario Draghi press conference on the price of EURUSD.
Going into the ECB rate decision consensus was for there to be no change in interest rates.
As expected rates were left unchanged at 0.75%. The main focus in the markets was the
press conference which was scheduled to start at 13:30pm.
Figure 5-9 shows a chart of EUR/USD before the press conference.
Savi Trading 2014
Page 58
Figure 5-9
During the conference, you hear negative comments about the Eurozone economy and
rates. What would you look to do?
In this example we can see a strong sell-off in the Euro. The main focus of the press
conference centred on comments that not all members of the ECB were in agreement with
keeping rates unchanged and that the ECB were talking about negative rates. This sent the
Euro tumbling against all other major currency pairs and as noted against the US Dollar. As
we can see EURUSD was trading around 1.3063 before the press conference. After Draghi's
comments we saw a break of the daily lows at 1.3041 with continued selling pressure down
through the 1.30 psychological level to 1.2976. This would have allowed for a potential
profit of 80+ pips, showing how market sentiment can be driven by the monetary stance of
central bank politicians.
Savi Trading 2014
Page 59

Once Draghi started to speak you saw an initial sharp drop in the value of EUR/USD. One of
the main skills to learn to be a good trader is to be patient and to pick your entry and exit
levels carefully. In this case here, after we have had the initial move, a good entry would be
when the market retraces to the fast moving average. You can sell and place the stop
behind the slow moving average. Figure 5-10 shows a chart of EUR/USD during the press
conference.
Figure 5-10
Missed the initial move?
The market always gives you a second chance to get in. Figure 5-11 is a chart of USD/JPY.
Some negative JPY comments came out where the BOJ spoke about the potential of
increasing QE. This leads you to having a positive view on USD/JPY, hence you are looking
for areas to buy.
The most important thing when trading is to build a view, then to trade it using technical
analysis. Here is an example of how to use technical analysis to trade the view.
Savi Trading 2014
Page 60
A strategy here will be to buy when the market hits the fast moving average and close the
position when we trade below the slow moving average:
Figure 5-11
Savi Trading 2014
Page 61
Chapter 6 Strategy 1 (Trending Markets)

In this section, we will look at a strategy which involves looking at 3 different time frames in
order to predict future price directions of the asset.
What is Multiple Time Frame Analysis?
Multiple time frame analysis is the process of monitoring the same asset over different
time periods.
You would usually use 3 time periods.
The first time period should be used for Direction, the second should be used for
Confirmation of direction, and the third one should be used to provide entry and exit
points.
Getting stated with Multiple Time Frame Analysis
The highest time frame (TF1) is used to generate the overriding trend. This is for
example the longer term chart
The middle time frame (TF2) is the most versatile time frame. The time period is picked
based on how long you want to hold onto a trade.
The smallest time frame (TF3) is used to gain an even more granular insight into the
trend
Note you should by now begin to understand the concept of trends within trends. E.g. the
main trend may be down, the second time frame may be flat and the smallest may be up. If
you have this case, you have confusing arguments to buy sell, hence you should not trade.
You should only look to trade when all 3 charts are pointing to the market moving in the
same direction.
Examples:
Longer term traders may choose weekly, daily and 4HR charts
Shorter term trades might choose 4HR, 1HR and 15min charts
Savi Trading 2014
Page 62

Step 1: Trend Direction
Looking at this should provide you with the direction. The market never moves in a straight
line, but rather with volatility. It is this volatility which you should use to profit from. We will
look at AUD/JPY to give you an example of this. Below (Figure 6-1) we have a daily chart for
AUD/JPY. The blue line is the 8 period Exponential moving average (fast), and the red line is
the 16 period EMA (slow):
Figure 6-1
The blue line above the red line tells us the market is trending upwards. We would therefore
need confirmation that we are moving higher. For this reason, we look now at the 4 hourly
chart for confirmation.
Step 2: Confirmation
As can be seen in Figure 6-2, we have the confirmation now, that on the 4-Hourly chart the
market is moving higher. If this was to be moving downwards, I would be patient and wait
for it to align with the higher time frame. This should provide you with a better level to
purchase AUD/JPY at.
Savi Trading 2014
Page 63
Figure 6-2
In this case we will be buying, so we go down a time period to get our entry and exit points:
Step 3: Entry and Exit
You now look at the shorter time frame (Hourly chart), to look for areas to buy: As it is an
hourly chart, it will provide us with multiple opportunities. Remember to use correct risk
management when you trade, and put multiple trades on. You need only half of the trades
right, and with the correct risk management, you will be profitable.
Figure 6-3 shows the 1 Hourly chart which you can see is in the same direction as step 1 and
step 2. Therefore we will look to buy.
Savi Trading 2014
Page 64
Figure 6-3
We will look to buy when the market trades at the blue line with the stop loss behind the
red line.
For you to buy at the blue line, you need a new high to have been made before it hits the
moving average. If a new high is not made, I would not recommend buying, as the chances
are the market may reverse the move. Also, a longer term move down will be reflected first
on the shorter term chart.
Profits
I would have looked have looked to buy at all the green boxes in Figure 6-4 as that is where
the market has hit the blue moving average line after making a new high. My stop loss
would be below the red line. After I calculate where this is (how many points away from the
entry), I can calculate the size I will look to trade and also calculate the take profit. In Figure
6-4, there have been 7 opportunities to buy in the past 3 days, out of which, you would have
taken profit on 6 of them (86%).
Savi Trading 2014
Page 65
Figure 6-4
Risk Management
Risk management in this strategy is key, and sticking to the rules. In this case, I want to risk a
maximum of 2% of my trading account on each trade. My balance is $50,000, hence I will
look to risk $1000 on each trade. This is important to note, as once I have calculated how
many pips I am risking on each trade, I can quickly work out how many lots I must trade so
the maximum loss is $1,000.
For example, if I am buying at a level and my stop loss is 20 pips lower, then for each pip, I
am risking $50.
For AUD/JPY, 1 pip move = $10.40 usd/lot. Hence if I am looking to risk $50, then I am
trading 4.8 lots. The way this is calculated is thus:
0.001 of any currency pair if trading 1 lot is worth 10, of the currency pair which is on the
right hand side. I.e. 1 lot of a 0.0001 move in EUR/USD is worth $10, whereas of USD/JPY, it
is worth 10 Yen. If USD/JPY moves 0.01, 1 lot is worth 1000 Yen. Hence as the USD/JPY rate
is 96.15, this equates to (1000/96.15) = $10.40
Savi Trading 2014
Page 66

Lets say that on every trade, however much I am risking, I try to make, my profits would be
as such:
As can be seen in Figure 6-5, using this simple strategy, I have made 10% profit on my
account.
This is a very active strategy, where you micromanage each trade individually. You can also
use a momentum strategy using moving averages.
Entry
Lots
Stop
distance
Stop
Take Profit
P/L
Trade 1
99.34
1.9
0.50
98.84
99.84
+$1,000
Trade 2
99.78
2.0
0.48
99.30
100.26
+$1,000
Trade 3
100.35
2.24
0.43
99.92
100.78
+$1,000
Trade 4
100.58
3.43
0.28
100.30
100.86
-$1,000
Trade 5
101.33
2.14
0.45
100.88
101.78
+$1,000
Trade 6
102.05
3.1
0.31
101.74
102.36
+$1,000
Trade 7
102.45
2.75
0.35
102.10
102.80
+$1,000
Total
+$5,000
Figure 6-5
Savi Trading 2014
Page 67
Chapter 7 Strategy 2 (Non-Trending Markets)

What is a range-bound market?
There are times when the market is not trending, but is in a range bound situation. In other
words the market has no direction. Profits can still be made in this scenario. In this section
we will show how, and also bring some of the concepts which you have learnt so far today
to establish and strengthen your strategy.
Range bound markets are markets which lack direction. Figure 7-1 shows an example of
these markets:
Figure 7-1
As can be seen the market is bouncing off the support levels and the resistance levels. Using
this strategy, you attempt to sell at the highs and buy and the lows rather than trading in
the same direction at all times.
Savi Trading 2014
Page 68

The strategy in this section has 2 main parts:
1. Determine whether you are in a range or not.
2. Once the range has been determined, pick areas to sell/buy
Step 1: Determining whether you are in a range
Firstly, we must determine if we are in a range. For this we use a higher time frame. In this
case we will use the Daily chart.
To do this, I use MACD (Moving Average Convergence/Divergence) line which is the
difference between the Fast and the slow moving average. The closer this number is to 0,
the more of a range the market is in. You can draw Levels in as well which makes it easier to
spot when we are in a range. As a rough rule of thumb, it should be 33% of the high MACD
line, and 33% of the low MACD line. Below (Figure 7-2) is an example:
Figure 7-2
In this case here, the high is 1.4137, hence the level drawn is 0.4665. The lower level is
-0.5280, as the low is -1.6. When the MACD is between these levels, that tells me we are in a
range. We then go down a time frame.
Savi Trading 2014
Page 69

Step 2: Once we are in a range
Once we have determined we are in a range, we go down one time frame to find areas to
sell and areas to buy. We used the daily chart to determine the range, so now we use the 4
hourly chart to find areas to buy/sell.
For us to determine areas to buy/sell, we use an oscillator called the Relative Strength Index
(RSI).
What is the Relative Strength Index (RSI)?
RSI is an oscillator which helps you to determine when an asset is overbought/oversold.

When the asset is overbought, it provides an opportunity to sell, and when the asset is
overbought you have an opportunity to buy. Figure 7-3 is an example of what the RSI looks
like. The standard setting is 14.
Figure 7-3
Generally, when the RSI is at or above 70, the market is overbought. When it is at or below
30, the market is oversold. So the higher time frame (Daily) has told us we are in a range.
The lower time frame (4 Hourly), which is displayed in Figure 7-4 tells us when to sell/buy.
Savi Trading 2014
Page 70
Figure 7-4
When the RSI trades at 70, we should sell as we know by looking at the longer term chart
that we are in a range. The stop-loss should be placed above the recent high, or it can be a
maximum loss per trade stop. At the same time, if the RSI trades at 30, we will buy, and
place the stop below the recent low or wherever the maximum loss per trade is.
Savi Trading 2014
Page 71
Chapter 8 Risk Management

What is Risk Management
Risk management is a key component in trading. It can be the difference between making
money and losing money.
The basic idea, despite what most people think is very simple. The purpose of good money
management is to ensure longevity and consistency in trading. At the end of the day,
successful trading is a marathon and not a sprint.
Position Sizing
This amount may be defined as a fixed monetary value or a % of your account.
Example:
In order to risk the same amount on each trade you must know where your stop is on the
trade before you enter.
Below is the simple formula to calculate the position size:
Position Size = (Monetary risk) / (Stop distance x CCY pip cost)
For Example, lets say I am risking $1000 per trade and I need a 20 pip stop loss on a
EURUSD trade ($1 per $10k of size).
Position size = $1000 / 20
Position size is $50 per pip
So $50 per pip X $10k means the position is $500,000 or 5 lots
Savi Trading 2014
Page 72

Risk : Reward ratios
So in order to ensure good money management I need to ensure a good risk reward of at
least 1:1 but preferably higher. Lets assume I keep a consistent risk reward of 1:3. This is to
say risk 1% to make 3%. If you trade 100 times a week and your account is $100,000. You
risk $1,000 to make $3,000. Lets look at the different success rates:
Success rate
Profitable trades
Losing trades
Profit/Loss
50%
50 x $3,000 = $150,000
50 x $1,000 = $50,000
+$100,000
70%
70 x $3,000 = $210,000
30 x $1,000 = $30,000
+$180,000
25%
25 x $3,000 = $75,000
75 x $1,000 = $75,000
Figure 8-1
We can see that with a Risk: Ratio of 1:3, even if we get a success rate of 25%, we will break
even, anything better than that will yield a profit.
What is Leverage?
Leverage is used to increase the amounts one can trade. This is provided to the trader
by the broker. Brokers can provide up to 400 times leverage, but typically most traders
use 100:1, meaning for every position they place, they have to put down 1% as margin.
For example, say I want to buy 100,000 GBP/USD, then if I have an account with 100
times leverage, I have to place 1000 GBP as margin. Now lets say GBP/USD moves from
1.5100 to 1.5200, the, I have made 1000 USD or 658 GBP. Hence I have made 66% of
my margin from one trade.
It must be noted that in the same way one can make 66%, they can also lose the same,
if GBP/USD was to move from 1.5100 to 1.5000.
Leverage should be used very carefully and strict trading parameters must be used to
avoid catastrophic losses.
Savi Trading 2014
Page 73

Using Leverage as a Hedging Tool
Leverage if used properly can also be used as a hedging tool. I will explain how this is the
case.
Lets say you have $20,000 in a trading account and have no leverage, so for example, you
can only place 1 trade where the value of the underlying instrument is $20,000. Now if the
trade goes in the right direction and you profit, that is great, but if in the wrong direction,
your losses may mount up. Traders sometimes hedge their trades, so if the original trade
does move in the wrong direction, then the trader can minimise their losses.
So, in this case, say the broker offers you 2 times leverage, you have twice as much buying
power as you did above, meaning you can places trades worth $40,000.
Using this case, we have a scenario where I am bullish on Company A shares, as I feel there
is value in the company. I am worried however that the technology sector may be
overvalued, and a correction will mean lowering of the price of Company A shares. In this
scenario, I may buy $20,000 worth of Company A shares and sell $20,000 worth of Company
B shares. The total value of my trades is $40,000. If the technology sector did drop then all
the shares will do, but in this case, as long as Company A shares drop by less as a percentage
than Company B shares do, I will still make money. If the market rallies, the expected move
would be that Company A rallies 10% whereas Company B will rally 5%. If the market falls,
Company A will drop 5%, whereas Company B will drop 10%.
Share
Net Position
(value of
shares)
Market Rallies
Market Falls
Company A
+$20,000
+$1,000
-$500
Company B
-$20,000
-$500
+$1,000
+$500
+$500
Net gain
Figure 8-2
As can be seen in Figure 8-2, if leverage is used correctly, it can be a very powerful tool.
Savi Trading 2014
Page 74
Using the Risk Management Spreadsheet
The Risk Management spreadsheet is a powerful tool which has been created by Savi
Trading to help calculate and control Risk within your trading account. The main aim of this
tool is to ensure you are trading within the parameters of your account, which will help with
profitability and the growth of your trading account.
You will find the Risk Management spreadsheet within the members area of
www.savitrading.com under the Research>Additional Resources area. Once downloaded the
following sheet will open up:
Figure 8-3
There are 2 major parts of the Risk Management Spreadsheet:
1. Trade Journal
2. Risk Management
Trade Journal
The Trade Journal is a very important part of Risk Management. This tool/sheet should be
used by documenting each trade you make. The sheet will automatically calculate the
percentage of trades in which you are successful. We will explain the importance of this
Savi Trading 2014
Page 75

success rate later in this section. It is also very important to keep a record of your trades, as
it will help you to identify mistakes which you are making leading to losses and will also
magnify great trades and strategies you are placing leading to profits.
You can find the Trade Journal sheet by clicking the Tab at the bottom of the screen. Figure
8-4 shows an example of what the Trade Journal is expected to look like once it is filled out:
Figure 8-4
This sheet can be used for any asset. The columns are:
Security: The Product you have traded, i.e. EURUSD

Direction: Whether you have bought (B) or sold (S) the product
Entry: Where you have entered the trade
Exit: Where you have exited
S/T: Whether you have Stopped out (S) or Taken Profit (T)
Notes: Any notes you have about the trade, such as things you would do differently
in the future etc.
On the right-hand side of the sheet, you can see the number of trades you have placed as
well as the success rate is automatically calculated. As time goes on, this success rate will
display a very accurate representation of your trading performance.
Risk Management Risk Parameters
Now we will look at the Risk Management sheet of the spreadsheet. This is where you can
enter your account details. It also aids you to project p/l as well providing targets you should
aim to hit.
Savi Trading 2014
Page 76

Figure 8-5 shows an example of inputs into the sheet.
You should enter your starting account balance. This
should be updated weekly with your profit/loss as the
Current Ac Balance is used to calculate risk
You should set a daily stop loss. If you are trading less
frequently, you can change this to a weekly stop loss.
This should be different according to the trader. The
greater the number, the more risk you are taking on. To
reduce risk, you simply lower the %. I feel 3% is a good
starting point
Here you can enter how many trades you place on
average. If you have calculated your risk on a per day
basis, then you should enter no. of trades per day. If the
risk is calculated on a weekly basis, then enter the
number of trades per week. The success rate should be
updated once a week. By clicking the Maroon button,
this enters your up to date success rate which is
calculated on the Trade Journal sheet, or you can enter it
manually
You enter a risk/reward ratio here. In this case we are
using 1.2, meaning for every 1 USD we risk, we are
aiming to gain 1.2 USD. The sheet also calculate how
much you should be risking on each trade based on the
success rates and daily/weekly stop losses. The amount
risked per trade is simply multiplied by the risk/reward
ratio to display what you should aim to make on the
trade. In this case on each trade, we are risking $1248 to
make $1498.
By entering how many days a month you are trading, the sheet calculates what your expected gain will be based on all
of the above data. If you are calculating risk on a weekly basis, then enter 4.33 where it says trading days/month as that
is how many weeks there are. The ROI (%) is showing you what your expected return on equity is based on what you
have entered. This is very important, and can be increased by changing the parameters above.
Figure 8-5
Risk Management Expected Returns
The sheet also calculates expected returns over the next 12 months based on the
parameters you have entered. It assumes that you keep trading in the same manner, and
keep profit and losses in your account. Therefore as your account balance grows, the risk
Savi Trading 2014
Page 77

per trade also grows automatically, as well as expected profits. Figure 8-6 shows an example
of the expected returns for this account
Figure 8-6
It can be seen that as long as the account grows by 12% per month, we can see a potential
gain of around 360% over the course of a year. When trading in this manner, you must keep
doing what the sheet is telling you to do, and not let human emotions get involved.
Risk Management - Target
You can enter a P/L target. Also, how many weeks

you are expected to trade over the year. This will
automatically calculate how much you should make
each week in a linear fashion.
Figure 8-7
Savi Trading 2014
Once you enter you Actual P/L into the sheet (Figure 88), this chart will be plotted. As long as you Actual bar is
higher than the Target, you should finish the year with a
higher P/L than your target if you keep trading the way
you are. If it is at the same, you will end the year hitting
the target. If below, then you will be below the target.
This is useful as if you are above, you can start increasing
risk by changing the daily/weekly stop loss, i.e. from 3%
to 3.5% etc. If below you should reduce the risk, and if
the same then your risk should be kept the same.
Page 78
Figure 8-8
In Figure 8-8, you can see how your Actual P/L can be entered. I would recommend picking a
time each week to enter this. Once entered, you should click Update Current Account as
well as Update Success rate from Trade Journal. You should do this once a week, and once
done, all of your risk parameters will be updated automatically. As your account size
increases, your risk per trade will automatically be increased also.
Risk Management - Trade Size Calculator
The Trade Size Calculator will automatically calculate the currency trade which you should
place based on all of your parameters. Figure 8-9 explains how to use this.
Currency Pair
you are trading.
Direction:
S=SELL,
B=BUY
Where you wish to

BUY/SELL the
currency pair
How far the stop loss is,

in points. In this case,
the stop loss is 100
points away `
Automatic calculation of
Lot Size, where to place
the stop and take profit.
Figure 8-9
In Figure 8-9, the trade to place is automatically calculated for you based on all of the
parameters within the sheet. So in this case, we are looking to SELL 1.25 lots of EURUSD at
1.3500, with a stop loss at 1.3600 and take profit at 1.3380. This is an OCO order once we
Savi Trading 2014
Page 79

are in the trade meaning once the stop is executed, the take profit is cancelled. On the flip
side, if the take profit is executed, then the stop loss is cancelled. Figure 8-10 shows an
example of placing this trade as a pending order, so once the market enters me into the sell
position, the OCO is placed. Now whatever happens, I know I would have traded exactly
within the parameters of the Risk Management Spreadsheet. Please note that this sheet can
only be used with the following Currencies; USD, GBP, EUR, CHF, JPY, AUD, CAD, and NZD.
You can edit the sheet to suit your requirements.
Figure 8-10
Please Chapter 11 for more information on how to use the MT4 Trading Platform.
Savi Trading 2014
Page 80
Chapter 9 - Psychology
What is Psychology?
Trading Psychology has become so widely discussed and promoted through books and
consultants that it has become a very convenient rationalization and excuse for losing.
Trading psychology is something that a trader creates from existing personality traits that
are not initially related to trading, but surface from trading without method understanding.
The outcome of course is fear, but wouldnt this be the case when doing anything that was
perceived as dangerous, and which was being done without the necessary understanding
and skills? Trading, with its inherent characteristic of accepting financial risk while
participating in unknown outcomes, is certainly dangerous, and thus more preparation and
understanding that is needed.
Discipline
There is one thing that is most important in our minds regarding whether you become a
successful trader or not and that is discipline. There are 2 types of discipline that will affect
you day to day, trade to trade. We refer to them as daily discipline and in-trade discipline.
Daily discipline is when you look at your trading day as a whole. It is important to remember
that when you are trading you are trying to form a career out of it and it is a longterm
thing. Not every trade will be a winner. It is important not to let frustration boil over and get
the better of you. This is especially important on days when your trading is not going as well
as you would have liked. You should have specific stop-loss parameters in place. These are
there to protect you and you should make sure you stick to them at all times. It is important
that when you hit your stop loss for the day you stop for the day in order to make sure a bad
day does not turn into a disaster. It is better to start fresh the next day than try and make it
back when your mind frame is not right. On the other hand, you should also have targets for
the day, and whilst you should try and always push on, these targets are there as a
safeguard. Once hit, you should change your risk/reward to make sure that further trades
being placed do not mean you will lose all the profits made
In-trade discipline is the discipline you show when you are in a trade. It is important that
when you enter a trade, to have a plan in mind. This plan starts with why you should enter
(economic data, level of Support/Resistance (SR), etc), where you should enter (level of SR,
trend line, etc), where your stop should be (behind level of SR, behind trend line, etc) and
Savi Trading 2014
Page 81

where your exit point should be (ahead of SR, ahead of trend line, etc). It is also important
to look at possible smaller SR levels, and using them as points to move your stop loss up in
order to at least bank something from a trade.
Applying discipline to trade setups
We carry out analysis on the market and find Support and Resistance (SR) levels at 121.20,
121.60, 122.60 and 122.90. The market is currently trading at 122.00. Our view is that the
market will go up through 122.90 to the resistance levels above; hence we are looking for
levels to buy it.
Resistance Level 2 (D)
122.90
Resistance Level 1 (C)
122.60
Current Price
122.00
Support Level 1 (B)
121.60
Support Level 2 (A)
121.20
Figure 9-1
Option 1:
Buy the market now at 122.00 (current price), and place your stop below 121.60 (B). Figure
9-2 shows the current chart:
Savi Trading 2014
Page 82
Figure 9-2
It is important to not get involved between levels as that is just bad trading. As you can see
in Figure 9-3, by buying at the current price, you have a 50% chance of going up or down.
In this case you would get stopped out. So you should be patient and wait for the key levels
to get in, placing your stops below other levels.
Figure 9-3
Savi Trading 2014
Page 83

Option 2:
Wait for the market to get down to 121.60 (B) to buy. In this case, I would place my stop
below the next support level, which is at 121.20 (A), and place my target in front of the next
resistance level at 122.60 (C). RISK:REWARD RATIO IS 1 : 2.5.
Figure 9-4
As can be seen, by using this strategy, you have the right risk/reward, and also, your stop is
in the correct place to give you the highest probability you will profit from the trade.
We have taken profit at 122.60 (C). Figure 9-5 shows the aftermath of the market after you
bought.
Savi Trading 2014
Page 84
Figure 9-5
Option 3
Wait for the market to break through 122.60 (C) to buy. The problem here is by using the
S/R levels, your stops, at 121.60 (B) would be too far in relation to your potential target at
122.90 (D). I would still buy here, but maybe use the moving average strategy, placing the
stop below the Blue moving average.
As I am waiting for a break of a S/R level with the correct risk reward, I would buy through
122.90 (D) with a stop through 122.60 (C). My target would be 123.65. Here I am using a
1:2.5 risk/reward.
Savi Trading 2014
Page 85
Figure 9-6
Figure 9-7
Savi Trading 2014
Page 86

As can be seen from Figure 9-7 , you will take profit here at 123.65.
Remember to always be patient. Pick the right levels and keep operating the correct
Risk/Reward ratios.
THE MARKET ALWAYS GIVES YOU A SECOND CHANCE!
Eight Points which should be followed when trading
Trading is time consuming and can be stressful, but provides opportunity for growth, both
financially and personally, not found in any other arena. It therefore makes sense to give
yourself every chance to be successful by incorporating the below in your strategy.
1. Discipline - Like most things in life, without it you wont succeed. Discipline is
sticking to your plan, including your stop losses and entry points. It is the
hardest rule to follow, but the most important rule of all.
2. Make sure to stick to your plan It is important to try and not second guess
each trade you put on. You may make minor adjustments throughout the
trading period, but dont let the ups and downs of the market affect your overall
game plan. Unless the market conditions that led you to place your trade change,
dont abandon your original objective. This is vital when trying to figure out
whether a strategy is working well or not. If following your plan explicitly and
you find you are losing trades, then it would suggest your strategy needs
tweaking.
3. There will be trades where you are wrong - Dont fall in love with a losing
position. If you get it wrong, admit it, get out at your stop loss, conserve your
equity and wait for another opportunity. Honour your stop. A common saying is
Do not get married to your trade, as then it becomes hard to get out even when
you know there is something wrong.
4. Accept that the market is always right - The market cannot be controlled by one
individual so it has to be accepted that it will move regardless of where you want
it to get to. Fear, greed and hope can cloud your vision of the market and can
cause emotional responses, which are detrimental to your trading. The market
will go where it wants to go. Sometimes it is only your timing that may be wrong.
5. Trade with goals in mind - Profits are generally made by those who make
decisions and act on them efficiently, not those who react and hesitate. Your
trading plan should not only focus on the best time to get in but also when to get
out. This involves setting a view for profit taking or loss minimisation (take profit
order or stop loss order)
Savi Trading 2014
Page 87

6. Walking before you run - Knowledge, understanding and practical experience in
the markets are the best teachers in the longer term. In the same way you would
not expect to sit behind the wheel of a car and drive without knowing how to, it
is important to learn the basics of trading before you start taking a punt on the
market.
7. Let your profits run until you have a reason to get out - Let profits run until you
are given a reason to cash in, whether that is a trading system signal, a
fundamental factor or your initial objective. The market will have many up and
down movements during the trading session, traders call this the noise. Do not
act on the noise, remember the reasons that you are in your trade and this
should make you able to stay in the trade.
8. Be careful where you place Stop Loss Orders - It is smart to use stops so that
losses can be limited if the market moves against you. Avoid setting them at fixed
amounts, too close to the current price, or on obvious support and resistance
levels. For instance it would be pretty obvious that there would be buyers close
to a big level in EURUSD, such as 1.3700, and one should not place a stop loss
order on a buy trade at 1.3702 (right in front of the level). The idea is to make
the market work to get you out, not fall right into its trap.
Savi Trading 2014
Page 88
Chapter 10 Key Terms and Definitions
Bid:
The price at which a market maker is willing to buy a certain security.
Ask/offer:
The price at which a market maker is willing to sell a certain security.
Bear:
A person who believes that a stock, index or market will decline in value. The
opposite is a Bull.
Benchmark:
The standard to measure, monitor, price or evaluate a security or derivative.
Breakeven Point:
The level whereby an investor achieves neither profits or losses. Often used in
options and other derivative trading.
Broker:
The person/party that acts as an agent for his/her customer. They are the middle
agents between traders (buyer and seller) and improve liquidity.
Cheap:
This term is used to compare various securities. When one says a security is cheap, it
is used in a relative sense.
CME:
The Chicago Mercantile Exchange.
Correlation:
The statistical relationship between 2 variables. A positive correlation means that
when one variable moves in a certain direction, so will the other. The opposite is a
negative correlation
Coupon:
The contractual rate of interest on a credit instrument
Savi Trading 2014
Page 89
Credit Crunch:
When credit availability is restricted, hence Crunch: normal economic or financial
activity is impacted.
Deflation:
This is where you have a decrease in prices in the economy. This may occur for
various reasons, i.e. reduced demand in the economy, a stronger currency meaning
imports are cheaper etc.
Derivative:
A financial product which derives its value from an underlying security. An example is
a future or an option.
Fair Value:
The indifference point from a modelling perspective, as to whether to buy or sell a
security. If the market value is greater than the fair value, then it can be suggested
that the security should be sold.
Fast Market:
Market where prices and volumes change very quickly
FED:
The Federal Reserve Bank
FOMC:
Federal Open Market Committee
Forward:
A cash market transaction in which delivery of the commodity is deferred until after
the contract has been made. Although the delivery is made in the future, the price is
determined on the initial trade date.
Future:
A Future is an obligation to buy or sell a certain underlying product at a certain
expiry date at an agreed price.
Hedge:
Savi Trading 2014
Page 90

Method used to protect a position. A long hedge is where a derivatives contract is
bought to protect the value of a short actual position. The short is where a derivative
is sold to protect against a long actual position.
IMF:
International Monetary Fund
Leverage:
The concept of increasing, multiplying or magnifying the market impact of an
investment.
Limit:
An order which is to be filled at the stated price or better.
Liquidation:
Act of buying/selling some or all positions to reduce or close out a portfolio.
Long:
Is a purchased position or a party who is bullish on the market. Hence they get into a
position, where they expect the price to rally, and will make money when it does so.
Margin:
Amount of capital which needs to be put up as collateral to open a new trading
position
Market if touched:
Is an order that becomes a market action when a price is hit.
Market on Close:
An order to buy or sell on the close of the market. You can also have buy on close or
sell on close.
Market on Open:
An order to buy or sell on the open of the market. You can also have buy on open or
sell on open.
Market by Value:
The value of an open position. Determined by multiplying the known or implied
prevailing price by the quantity
NYMEX:
Savi Trading 2014
Page 91

The New York Mercantile Exchange
Open Order:
An order which remains live until it is executed or cancelled
Range:
The difference between the high and low traded prices for a time series for a stated
period.
Round-trip:
The opening purchase or sale of a stock or Futures contract and the subsequent
opposite and closing transaction in the same contract. Transaction costs are usually
quoted on a round-trip basis.
Short:
The position opposite that of a long. Here the person hopes to capitalise when the
price of a certain security decreases.
Slippage:
Refers to a scenario where the market jumps prices.
Sovereign:
A debt security issued by the government other than the United States of America.
Spread:
The simultaneous purchase and sale of two related instruments. Strategy tries to
transform outright price risk into a basis or relationship risk position. Also viewed as
the difference between the bid and the offer or the profit margin.
Stagflation:
A situation where you have a relatively high rate of unemployment couples with a
relatively moderate to high rate of inflation.
Stop:
An order which gets executed when a level is hit or crossed. A sell stop order is used
for a long position, and will be placed below the market, to stop any further losses
from being taken on. A buy stop is the opposite.
Support:
Savi Trading 2014
Page 92

A price level where securities are expected to receive buy orders. It refers to the
boundary of some described trading range, and is usually at the bottom. The
opposite is Resistance, which is where the sale orders are expected.
Technical Analysis:
Study of market behaviour which tries to discern patterns which enhance position
taking. We will go into more detail later.
Yield:
The rate of return on an asset. Expressed as a percentage of the current market
price.
Yield curve:
A graphical or tabular representation of interest rates representation of interest
rates across different maturities.
Savi Trading 2014
Page 93
Chapter 11 MT4 Platform Orientation

The following information is designed to educate you about the essential functions of the
trading platform.
Please ensure you read it and do not hesitate to contact Savi Trading with any questions you
may have.
Navigation
Terminal Window Tabs: All your account information is viewable in the Terminal
Window. There are 6 tabs that contain different information about your trading and
the platform.
Trade: View open and pending orders.
Account History: View all trade history. The history can be exported and saved to
HTML or Excel so you can analyse you trading.
Alerts: Create existing alerts and view alerts you have already created.
Mailbox: Receive mail from One Financial Markets or contact the administrator by
right clicking and selecting Create.
Experts: If you have an Expert Advisor (EA) installed you can check if it has any errors
and if it has been installed correctly.
Journal: This is a full journal of all actions on your account including editing a trade,
applying an EA and closing a position.
Figure 11-1
Savi Trading 2014
Page 94

Placing an Order
Stop Loss (S/L) and Take Profit (T/P): You can set S/L and T/P when you first place your
trade or by right clicking your open position in the Terminal Window and selecting Modify
or Delete Order.
The S/L and T/P buttons are indicated in Figure 11-2 as A and B; click either one and it will
enter the price and you can edit this to the value you wish.
Figure 11-2
Executing a Trade
Right click the pair you want to trade in the Market Watch area (A in Figure 11-3) and
select New Order (B in Figure 11-3) to bring up the new order window. Colour indication
is for price movement; if prices are falling, the Bid and Ask will be red. If prices are rising
they will be blue (C in Figure 11-3). Alternatively, Click on the chart of the pair you want to
trade and press F9
Savi Trading 2014
Page 95
Figure 11-3
Closing or Modifying your position(s)
As you can see, all open trades and active orders will be under the Trade tab (A in Figure
11-4) of the Terminal Window. From here you can close or modify your positions or orders,
by right clicking and selecting the option you require (B in Figure 11-4).
Figure 11-4
Savi Trading 2014
Page 96

Charts
Chart Window: To pull up a chart for the pair you wish to trade, right click the pair in the
Market Watch area and select Chart Window (A in Figure 11-5).
Time Periods: To change the time period on your charts click on M1 (B in Figure 11-5) and
select the time period you require.
Chart Settings: To apply either Bar, Candle or lines to the chart, select the relevant tab (C
in Figure 11-5).
Figure 11-5
Expert Advisors/Indicators
Open the navigator window on the left (you can also open this by pressing Ctrl and N).
Select Indicators to see a number of default indicators already installed.
To apply an indicator to a chart:
1. Expand Indicators in the navigator window
2. Right click the indicator you require
3. Select attach to a chart or drag and drop on to the chart To attach an Expert
Advisor, carry out the same steps as above but select Expert Advisors.
Savi Trading 2014
Page 97

You can also download custom indicators and EAs from sources on the internet. For
example, you will find an entire catalogue at http://codebase.mql4.com/. Custom indicators
and EAs are installed in the following directories:
Indicators: C:\Program Files\[Broker]\experts\indicators.
Expert Advisors: C:\Program Files\[Broker]\experts
The drive will be dependent on where you originally installed MT4. Once you have installed
your indicator or EA you will need to restart MT4 for it to appear in the custom indicators
section.
Figure 11-6
Savi Trading 2014
Page 98
Chapter 12 Members Area Overview
You can update your personal

details such as passwords,
contact details etc.
Here you will find information

about the various courses Savi
Trading offer. You will also be
able to access the video based
training
You can view and register for

webinars for the upcoming
month. There will be at least 3
webinars presented per day
You can view user guides on the

different tools which are
available to you. These are
delivered via easy to understand
videos.
Within the research section, you

will find extensive news and
analytics to help you make
profitable trading decisions. You
will also find tools such as the
risk management spread sheet
as well as numerous resources
such as economic calendars and
analysis on major market events
You can access the Interactive

Trading Floor from here, where
you can speak directly to the
trading floor in London. This is a
great tool to help you develop as
a trader in real time as well as
providing analysis. This is only
available for live account holders
subject to terms and conditions.
Open a free demo account to trade the

real markets, but not with real money. This
is a good tool to practice and develop from
Savi Trading 2014
Open a live account with our

partner broker.
You can test your knowledge by

sitting a 30 minute examination.
Upon passing the exam, you will
receive an e-certificate. This is
very useful to identify any
knowledge gaps which you can
improve on
Page 99

Courses
Within the courses section, you will find information on the various courses which Savi
Trading provides. At Savi, we have extensive experience in training traders of all different
levels.
In addition, you will find the Online Introduction to Trading Course video series. These
videos have been created to help build a strong foundation to build from on your road to
trading successfully. You will understand how Fundamental and Technical Analysis is carried
out accompanied by Risk Management and Psychology. There are also numerous strategies
to get you started. All videos are interactive, where you will be asked questions, to test your
understanding to identify any knowledge gaps. Figure 12-1 shows examples of the Online
Trading Strategy Course.
Figure 12-1
Webinars
The Webinars section will provide you with a list of upcoming webinars over the next
month. These webinars are delivered live and viewers are encouraged to interact with the
presenter by asking questions which will be answered live. There are 3 different type of
webinars:
Savi Trading 2014
Page 100
Daily/Weekly Webinars: These webinars will provide you with daily/weekly market
updates, where major events and market views will be discussed.
Online Trading Strategy Course Webinars: These webinars will be presented to

enhance your knowledge and understanding of Trading around key economic events
as well as numerous Trading strategies and tools which you can implement. There
will also be Q&A sessions where you can ask the panel of traders any questions you
have about Trading or the markets.
Advanced Trading Strategy Course: These webinars are a lot more advanced and
offered only to live account holders subject to terms and conditions. The webinars
itself cover various topics focusing on Fundamental and Technical Analysis. There will
also be advanced Risk Management and Psychology webinars.
Figure 12-2
Savi Trading 2014
Page 101

Research
Within the Research Section, you will find numerous tools and analysis which can be used to
provide more market colour and aid in picking profitable trade ideas. These signals are used
by Savi Tradings Professional traders and provide an insight into what they are using to
base their decisions.
Daily Technical Cheat Sheet
This lets you determine the trends for the major currency pairs and support your
fundamental views. For example if you want to buy EUR, you can use technical cheat sheet
to identify other currencies you can buy it against to maximise your potential profits. It
shows various technical indicators for each currency and provides an insight into how the
currency is trending.
Figure 12-3
Savi Trading 2014
Page 102

Correlation Analysis
Assets correlate with each other positively and negatively. At times, an asset may be
cheap/expensive in relation to another asset with which a correlation exists. The Correlation
Analysis report is created daily where our algorithm analyses the correlations between the
markets and any discrepancies that exist where arbitrage is possible.
Figure 12-4
Trend Analysis
This report provides you with information of the longer term trend created using a matrix of
algorithms. Our traders use this analysis. The system aims to generate 1 trade signal a day.
The traders would typically use this by risking 100-200 pips on the trade and targeting 300600 pips (or more if they are happy to let the trades run). The success rate is around 60%. So
if you put 10 trades on a month with a risk management of 100:300 pips you would have 4
Savi Trading 2014
Page 103

losing trades equalling 400 pips and have 6 winning trades equalling 1800 pips which is a
1400 pip profit. If you want to trade 200:600 risk management (longer term) you would get
2800 pips profit. The way it works is when there is a signal in the "REVERSAL" column that is
the best time to get into the trade. As it is a longer term trade you still have a lot of time to
get on to the trend.
So in this example, the signal came in on 20th March at 0.79813 and traded up to 0.8295,
providing a potential profit of 300 pips. Our traders typically either place a take profit (i.e.
300 points higher), or they exit when they get an opposite signal. In this case, I would stay
long, until I get a Sell or a Stay Short signal. Again, this is how Savi Tradings traders use
these signals, and you should use it however it fits in with your trading style.
Figure 12-5
Parkers Strategy
We also have developed a strategy called the Parker's Strategy which provides medium and
long term signals based on numerous different technical indicators. Typically on the report
Savi Trading 2014
Page 104

you will have a medium term signal as well as a daily one. When both signals line up in the
same direction, the signal becomes a lot stronger.
Figure 12-6
Traders will typically place the Stop loss behind the 55 period EMA on the 4H chart. You can
edit this to suit your trading style. There are also webinars on how to use this strategy.
The Savi Trading Floor
We have a blog where the traders on the Savi Trading Floor in London place their trade
ideas, analysis and views. We also write articles on key economic data events as well as
providing links to recordings of the daily/weekly market update webinars.
Figure 12-7 shows a screenshot of the Savi trading Floor.
Savi Trading 2014
Page 105
Figure 12-7
Economic Calendar
Every day economic data is released which can potentially cause huge price movements
within global financial markets. Within the research section you will find the economic
calendar which is updated in real-time when data is released. You can check to see the
importance of different data, what time it is released as well as what is expected. This is a
very important tool. Figure 12-8 shows a screen shot of what the economic calendar looks
like. The IMP column provides you with insight into the most important Economic data
events of the day. If there is 3 bulls, the event is very important, with 1 bull being not
important.
Savi Trading 2014
Page 106
Figure 12-8
Additional Tools
In additional we offer additional tools such as a definition list, information on policy makers
etc. Within this section, you will also have access to a Risk Management spread sheet which
should be used to help calculate risk, providing you with data such as what your position
sizes should be, where orders should be placed as well as tools to help you to grow your
account.
Savi Trading 2014
Page 107
Figure 12-9
Please note we will be constantly adding more content/tools to the research section.
User Guides
We have produced numerous videos and guides which will help you to understand how to
use various tools which we are providing via the members area. We will be adding more
videos as and when we add more tools on the site.
Figure 12-10
Savi Trading 2014
Page 108

Examination
To test your understanding, we have created an examination which will test the concepts
which you have been learning. This will help identify any knowledge gaps and areas where
you need further education/information. At Savi Trading we are more than happy to help
close the knowledge gaps. You will receive a certificate upon successful completion of the
examination.
Figure 12-11
Demo and Live Accounts
Traders can open demo/live accounts with our partner brokers directly from the members
area. The free demo account is a great tool to practice strategies and trading techniques as
you are trading the real market, but not with real money.
Opening a Live account with our partner broker will also provide you with additional
resources and webinars.
Savi Trading 2014
Page 109
Figure 12-12
Savi Trading 2014
Page 110

Index
A
Account History, 94
ADP, 10
Alerts, 94
algorithm, 103
arbitrage, 103
ascending triangle, 44
ask, 3, 101
AUD, 24, 63, 66, 80
B
Bank of England, 10
Bar Charts, 30
Bear, 89
bear flag, 41
Bearish, 32, 33, 34
Bearish Engulfing Pattern, 32
bears, 36
Belt Hold, 33, 34
Benchmark, 89
bid, 3, 92
BOE, 10
bonds, 7
Breakeven Point, 89
Brent, 8
broker, 73, 74, 109
Broker, 89, 98
bull flag, 41
Bullish, 32, 33
Bullish Engulfing Pattern, 32
bulls, 32, 36, 106
buy, 3, 5, 21, 25, 50, 53, 57, 60, 61, 62, 64, 65, 68, 69,
70, 71, 73, 74, 82, 84, 85, 89, 90, 91, 92, 93, 102
buyers, 3, 46
C
CAD, 80
Candlestick Patterns, 31
Candlesticks, 28, 29
cash, 3, 8, 90
central banks, 10
CFD, 6, 7, 8
channel, 49, 50
Chart Window, 97
charts, 28, 29, 30, 62, 97
Cheap, 89
CHF, 80
Closing, 96
closing prices, 28, 51
CME, 89
Savi Trading 2014
COI, 22
commission, 7, 8
commodities, 3, 8, 18, 57
commodity, 3, 8, 18, 57, 90
confirmation, 54, 63
Consumer Price Index, 11
Corporate Bonds, 7
Correlation, 89, 103
Coupon, 89
CPI, 11, 13, 14
Credit Crunch, 90
cross over, 56
currencies, 3, 5, 102
currency, 4, 3, 5, 10, 14, 15, 24, 59, 66, 79, 90, 102
D
Daily Technical Cheat Sheet, 102
debt, 3, 7, 15, 92
deflation, 11, 13
Deflation, 90
demand, 3, 15, 19, 22, 57, 90
Demo, 109
Derivative, 90
Discipline, 81
Doji, 31, 33
Dollar, 5, 24, 25, 59
Double Bottom, 39
Double Top, 39
Draghi, 11, 58, 59, 60
E
ECB, 11, 58, 59
economic calendar, 9, 106
Economic Calendar, 9, 106
economic data, 3, 7, 9, 25, 105, 106
Economic Indicators, 10
economic slowdown, 11, 13
Efficient markets, 3
EMA, 51, 54, 55, 56, 63, 105
employment, 10, 15, 16, 19
Entry, 64, 67, 76
equities, 4, 3, 7
equity markets, 3, 19, 57
EUR, 6, 53, 58, 60, 66, 80, 102
Euro, 59
European Central Bank, 11
Eurozone, 59
Evening Star, 35
Executing a Trade, 95
Exit, 64, 76
expectations, 11, 12, 13, 14, 21, 22, 24
Page 111

Expert Advisors, 97, 98
Experts, 94
exports, 11, 13, 15
F
Fair Value, 90
Fast Market, 90
fast moving average, 52, 53, 57, 60, 61
FED, 90
Federal Open Market Committee, 12, 13, 90
fiscal policy, 27
fixed income, 4, 3, 7, 18
flag, 40, 45
FOMC, 12, 13, 90
Foreign Exchange, 5
Forward, 90
Futures, 4, 6, 7, 8, 92
G
GBP, 73, 80
GDP, 12, 14, 15, 17, 25, 26, 57
Gold, 8, 25, 57
Government Bonds, 7
Gross Domestic Product, 17
Gross National Product, 17
H
Hammer, 36
Head and Shoulders, 37, 38
hedge, 3, 4, 5, 7, 8, 74, 91
high, 3, 4, 7, 18, 19, 20, 27, 28, 30, 34, 46, 57, 65, 69, 71,
92
historical data, 28
I
Ifo, 12
IMF, 91
imports, 11, 15, 90
indicator, 10, 11, 12, 13, 15, 16, 17, 19, 21, 28, 48, 56,
97, 98
Indicators, 13, 97, 98
Indices, 6, 7
Industrial, 12, 13, 15, 18
inflation, 11, 12, 13, 14, 18, 19, 27, 92
inflationary pressures, 27
Information and Forschung, 12
Institute of Supply Management, 13
interest, 3, 7, 10, 11, 12, 13, 15, 18, 19, 24, 27, 58, 89, 93
interest payment, 3
Inventories, 11, 22, 24
ISM, 13
Savi Trading 2014
J
jobs, 10, 14, 15
Journal, 76, 94
JPY, 60, 63, 66, 80
K
Kicker, 36
L
leverage, 5, 7, 8, 73, 74
Leverage, 73, 74, 91
Limit, 91
Line Charts, 30
Liquidation, 91
Live, 109
long, 7, 8, 53, 54, 56, 62, 74, 78, 91, 92, 104
Long, 91
low, 4, 27, 28, 30, 32, 33, 34, 46, 69, 71, 92
M
MACD, 69
Mailbox, 94
Margin, 91
Market by Value, 91
Market if touched, 91
market maker, 3, 6, 89
Market on Close, 91
Market on Open, 91
Market Watch, 95, 97
momentum, 37, 67
monetary policy, 13
money management, 72, 73
Morning Star, 35
Moving Average, 28, 51, 52, 53, 54, 56, 69
MT4, 80, 94, 98
N
Natural Gas, 8
Nonfarm, 10, 14
NYMEX, 91
NZD, 80
O
OCO, 79
offer, 3, 6, 89, 92, 107
Oil, 8, 11, 22, 24, 57
Open Order, 92
Order, 95
overbought, 70
Page 112

oversold, 70
P
Parkers Strategy, 104
payrolls, 10, 21
pip, 66, 72, 104
Platform, 80, 94
PMI, 14, 15
Position Sizing, 72
Producer Prices Index, 17, 18
profits, 54, 67, 76, 78, 89, 102
Psychology, 81, 100, 101
public spending, 27
Purchasing Managers Index, 14, 15
R
Range, 68, 92
range-bound, 68
rate decision, 10, 12, 13, 58
RBA, 25
Rectangles, 42
Relative Strength Index, 70
Research, 14, 75, 102
Reserve Bank of Australia, 24
resistance, 22, 37, 39, 40, 42, 43, 44, 46, 47, 48, 68, 82,
84
Resistance, 46, 47, 82, 93
Retail Sales, 15, 20
Reward, 73, 87
risk, 53, 56, 57, 64, 66, 72, 73, 77, 79, 84, 85, 92, 103,
107
Risk, 66, 72, 73, 75, 76, 77, 78, 79, 80, 87, 100, 101, 107
Risk Management, 66, 72, 75, 76, 77, 78, 79, 80, 100,
101, 107
Rounded Bottom, 40
Rounded Top, 40
Round-trip, 92
RSI, 70, 71
S
S&P 500, 6, 21
safe haven, 25
Savi Trading Members area, 9
securities, 7, 15, 89, 93
sell, 3, 6, 21, 50, 53, 59, 60, 62, 68, 69, 70, 71, 74, 80, 89,
90, 91, 92
sellers, 3, 46
Shooting Star, 34
short, 7, 8, 11, 24, 47, 53, 54, 91
Short, 53, 92, 104
signal, 53, 54, 56, 103, 104, 105
Slippage, 92
Savi Trading 2014
Slow moving average, 53

SMA, 51, 53, 55, 56
Sovereign, 92
Spread, 92
Stagflation, 92
statistical, 7, 89
Stop, 67, 72, 92, 95, 105
stop loss, 65, 66, 72, 80
strategy, 53, 57, 61, 62, 66, 67, 68, 69, 84, 85, 87, 104,
105
success rate, 73, 76, 103
supply, 3, 13, 22, 23, 24
support, 3, 37, 38, 39, 40, 42, 43, 44, 46, 47, 48, 68, 84,
102
Support, 46, 47, 82, 92
sustainable growth, 27
T
taxation, 27
technical analysis, 28, 37, 46, 60
Technical Analysis, 28, 93, 100, 101
Terminal Window, 94, 95, 96
Terminal Window Tabs, 94
The Savi Trading Floor, 105
TIC, 15
time frames, 62
Time Periods, 97
Trade Journal, 75, 76, 79
Trade Size Calculator, 79
trading platform, 4, 94
trailing stop, 50
Treasury Bond, 7
Treasury International Capital, 15
trend, 11, 13, 14, 15, 16, 30, 32, 33, 34, 35, 37, 39, 40,
43, 45, 47, 48, 49, 50, 53, 62, 103
Trend Analysis, 103
Trend Continuation Patterns, 40
trend line, 47, 48, 49, 50
Trend Reversal Patterns, 37
Trending Markets, 62, 68
Triangles, 43, 44
Triple Bottom, 39
Triple Top, 39
U
Unemployment, 16, 19
unexpected data, 9
uptrend, 53
USD, 6, 24, 53, 58, 60, 66, 73, 80
User Guides, 108
Page 113

V
volatility, 3, 63
volume, 7, 48
W
Webinars, 100, 101
wedge, 45
Wedge Formation, 45
Savi Trading 2014
Y
Yield, 93
Z
Zentrum fr Europische Wirtschaftsforschung, 16
ZEW, 16
Page 114
Legal Disclaimer
The material presented in this book is for informational purposes. While care has been
taken to present the concepts in an accurate and updated fashion, the author makes no
expressed or implied warranty of any kind and assumes no responsibility for errors or
omissions. The purpose of this book is not to solicit, offer or facilitate a decision to buy or
sell any financial instrument. No liability is accepted by Savi Trading LLP for any error or
omission, nor for any loss of business, profits or any indirect, direct or incidental damages
arising from this book. Any unauthorised use or disclosure of this book is prohibited. Any
views are Savi Tradings own views and should not be deemed as investment advice.
Savi Trading 2014
Page 115

The Trading Strategy Material

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Trading Strategy Material

Uploaded by

Copyright:

Available Formats

The Trading

Sachin Shah & Vishal Dattani

S&P 500 and the Non-Farm Payrolls ................................................................................ 21

Support and Resistance .................................................................................................... 46

Economic Calendar ......................................................................................................... 106

The Trading Strategy Course

About Savi Trading

Savi Trading 2014

The Trading Strategy Course

Sachin Shah Partner and Co-Founder

Vishal Dattani Partner and Co-Founder

Miles Eakers Head of Trading

Savi Trading 2014

The Trading Strategy Course

Place where buyers and sellers come together.

How pricing works?

The Trading Strategy Course

Savi Trading 2014

The Trading Strategy Course

Chapter 2 Different Asset Classes

Largest traded financial market in the world

Ability to trade from anywhere in the world

Savi Trading 2014

The Trading Strategy Course

Equities represent a share in the ownership of a company. Indices represent groups of

S&P 500 (US Equity Market)

Savi Trading 2014

The Trading Strategy Course

Ability to go long or short.

Equity Indices defines a statistical compilation of the share prices of a number of

Government Bonds (i.e. US 10 year Treasury Bond)

Ability to go long or short

Savi Trading 2014

The Trading Strategy Course

Low commission costs

Ability to go long or short

Savi Trading 2014

The Trading Strategy Course

Chapter 3 Data Releases

Every day economic data is released from different countries

Only unexpected data will move the market

Savi Trading 2014

The Trading Strategy Course

Definitions of Economic Data Releases and Events

ADP Nonfarm Employment Change:

Average Hourly Earnings:

BOE Meeting Minutes:

Savi Trading 2014

The Trading Strategy Course

Durable Goods Orders:

EIA Crude Oil Inventories:

ECB Interest Rate Statement:

Savi Trading 2014

The Trading Strategy Course

FOMC Meeting Minutes:

House Price Index:

Ifo Business Climate Index:

Industrial New Orders:

Savi Trading 2014

The Trading Strategy Course

Industrial Product Price Index:

Interest Rate Statement:

ISM Non-Manufacturing Prices:

Savi Trading 2014