TradeVestment is a forex trading strategy for successful Forex Trading

How does TradeVestment Strategy work?

TradeVestment Strategy combines Trading activity and Investments objectives into one common strategy.

TradeVestment Strategy is unique by itself. As the name suggests, strategy is a combination of Trading and Investment objectives. If position is a winning, trading profit is booked at a target rate, otherwise depending upon the fundamental analysis position is treated like investment and averaging positions are opened in continuity of trading pattern. Key element in TradeVestment is planning of financial resources to conserve capital and maximize profit.

TradeVestment Strategy is a conservative strategy developed by Forex Metrics Inc. with the following objectives:

* Maximizing of profit
* Conservation of capital
* Optimizing utilization of financial resources

TradeVestment Strategy is based on following techniques:

* Fundamental Analysis
* Forex Metrics Currency Index
* Technical Analysis
* Statistical tools

These techniques are used to achieve the above mentioned objectives by balancing risk to reward ratio without any specified time frame.

TradeVestment Strategy is not dependent on a particular time frame or specific method like scalping etc., as the trading position could be long term, medium term, short term or less then a day. We believe that in today's modern era of globalization, forex trading has become more complex and the factors driving the market are contextual rather than conceptual, in the ever changing global dynamics.

Step1: Determining the level of Investment

Planning financial resources for forex trading is the key to successful long term trading.

Main Objective of financial planning is to determining the trade size within the available investment with reference to risk reward ratio.

TradeVestment Strategy trading ratio is 1:100
Trades lot size is 0.1 lot per trade on USD 10,000 capital.

Step 1: Fundamental Strategy Analysis:

TradeVestment Fundamental Strategy considers major fundamental indicators like interest rate, inflation rate, gross domestic product, monitory policy, Consumer price Index etc. of both the economies in a pair to determine term projection of currency pair.
Fundamental Analysis of a particular currency pair is established by determining fundamentals of both the economies of a currency pair and comparing the fundamental trend with our Forex Metrics Currency Index. Once the fundamental trend of both the economies are established, buy or sell action of a particular pair is established.

Interest Rate and Interest Rate Bias:
This is one of the major fundamental factor that determines the Strategy
Difference between Federal/Central bank interest rate between two currencies paired. One of the main factor that determines the currency rates of a pair is the Federal/Central bank interest rate Bias. Probability of interest rate going up makes the currency in the pair stronger.

Forex Metrics Currency Index determines fundamental strength or weakness of the pair. If Forex Metrics Currency Index of the first currency is greater than the Forex Metrics Currency Index of then second currency in a pair, Fundamental strategy may be positive depending on other factors.

Step 2: Forex Metrics Currency Index:

Forex Metrics Currency Index strategy is Global Currency Index created by ForexMetrics.com It is a unique index which determines the unit value of the Single Global currency.

Individual Index of each currency represents the strength of the currency, Index also explains economic cycle and strength of that currency.

Forex Metrics Currency Index Strategy is determined by measuring Forex Metrics Index of an individual currency against Forex Metrics Currency Index.
Forex Metrics Currency Index is for both the currencies in a pair.

If Forex Metrics Index of the first currency is greater than the Forex Metrics Index of the second currency in a pair, then the Strategy would be considered as Positive.

Step 3: Technical Analysis:

Although, we manage to establish fundamental trend, it is important to time the market. Trader cannot enter or exit any time based on fundamental trend. Once the fundamental of a currency pair is established, technical analysis will determine the entry point, exit point, averaging point of the position, hedging point of the trade or stop loss point.

Following three technical indicators are used to determine the trade.

Currency Pair Trend:
Trend is the best friend. Currency pair trends are different in different time frames. Depending upon the fundamental analysis, trend needs to be set; for long term trade, daily trend is a good option and for shorter trades 2 hour time frame is recommended and for scalping 10 minutes to 30 minutes is good. TradeVestment strategy applies trend time frame depending upon fundamental analysis.

Currency Pair Strength:
The Average Directional Movement Index's main purpose is to measure the strength of market trends on a 0-100 scale; the higher the ADX value, the stronger the trend. Values above 40 indicate strong trending while values below 20 indicate non-trending or weak market conditions. Again the time frame is important in determining the entry position.

Currency Pair Oscillator:
Three basic techniques are applied with Stochastic Oscillators to generate trading signals. ...Read more

Trading Strategy - Signals:

Trading Strategy is a combination of Fundamental Analysis and Forex metrics Currency Index.
Trading Strategy represents signals generated by our system. These signals generated do not necessarily mean opening a position in TradeVestment. Traders may or may not open a position on these signals. Their decision should be based on individual risk reward ratio, risk capital and trader's own strategy. Signals generated in our forex trading strategy are for reference purpose only and not an advice or recommendation to trade.

Forex Trading System generates three types of trading signals:

Fundamental Strategy:

Fundamental Strategy generates term signal based on Forex Metrics Currency Index, Interest rate bias, probability of interest rate, GDP and major Economic factors. These signal generated are usually for term positions determining the direction of trade, i.e., BUY or SELL.

Forex Metrics Currency Index Strategy:

Forex Metrics Currency Index is updated daily and signals are generated once a day. Usually these signals generated are term position determining BUY or SELL of that particular pair.

Trading Strategy:

Trading Strategy determines the direction of Trade of a Currency pair, whether to Buy or Sell a particular currency.

Buy Indicates:
Opening a Buy Position of a particular pair only based on Technical Analysis

Sell Indicates:
Opening a Sell Position of a particular pair only based on Technical Analysis

Neutral Indicates:
Position can be Bough or Sold, ut carries greater risk relatively. Position open in while in neutral will be for less pips and Risk reward ratio would be high

Technical Strategy:

Technical Strategy works in conjunction with fundamental strategy and Forex Metrics Currency Index Strategy.

Trading Strategy above determines the direction of term position in our forex trading system.

TradeVestment Forex Strategy is unique and conservative and following are the types of signal generated.

Technical Analysis is applied to time the market.

Entry Point:
Technical Analysis of the currency pair signals opening of a position. If the technical strategy signal is in the same direction as both other strategies, Long term position is opened.Technical Analysis is used to determine the entry point in that particular pair.

Target Rate: Exit point is decided based on Fundamental Analysis, but in case of uncertainty in economic scenario, Technical Analysis plays the key role.

Once the position is opened, it needs to be monitored and one of the following actions may be required depending upon the direction of movement of rates:

If Open position is Winning: Target rate is to be monitored.

If Open position is Losing: Following evaluation will be reconsidered;

• If it's due to market noises:
  Keep the position open and if rate falls at a level where averaging position makes financially viable, apply Statistical Technique to average the position
  
  
• If it's due to change in technical analysis:
  Position will be Averaged and profit will be booked at the new target rate.
  
  
• If it's due to uncertainty in Fundamental Trend:
  Position may be averaged and stop loss will be extended untill market stabilizes and fundamental trend is established.
  
  
• If it's due to change in Fundamental Trend:
  Fundaments of both economies are monitored and position will be Stopped out, if fundamental trend has changed for one or both the economies in trading pair. Reversal of position would be a possibility depending upon the fundamental and technical analysis.

Signal:
Signals generated are based on all three strategies and order is placed on signal received. See below example.

Positions / Actions Once position is opened based on signal, open positions are shown above as open trades (hypothetical) under our forex trading Strategy.