Timothy J. Maxwell Principal at QP Capital LLC (tmaxwell@qpcapital.com)
Timothy J. Maxwell Principal at QP Capital LLC (tmaxwell@qpcapital.com)

Down to the cogs: getting to grips with trading methodologies in Managed FX

In today’s volatile world, Managed FX advisors utilize a variety of different approaches. However, the most successful methodologies seem to satisfy certain criteria. This article describes such criteria in detail and can serve as a good foundation in an investor’s search for an ideal advisor.

Fundamental vs. Technical Analysis In a well-designed program, both approaches can work equally well. In many cases, fundamental analysis uses global trends or news to determine the direction of the trade, while technical analysis is used to determine all the key levels (e.g. entry, stop-loss, and target). The key to fundamental analysis is being able to interpret global events and news properly and consistently. In a technical program, the trade’s direction and key levels are determined only by technical analysis. Most technical programs are based on a combination of signals generated by several indicators. Since there are hundreds of common and custom indicators, there are thousands of technical systems. The key weakness for many technical systems is performance sustainability. Often, inefficiencies are quickly exploited and the system stops producing results after several months of good performance. Program Styles Programs are typically classified by the average length and desired profit for...continued

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