Oct 2012

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My lecture slides at London School of Business and Finance October 2012

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Oct 2012

  1. 1. Introduction to Trading & Technical Analysis & Proprietary Trading & Career Paths as a Trader Emily Tseng MBA MSTAoct_2012.indd 1 LSBF log in corner 27/10/2012 14:22
  2. 2. Emily Tseng GGSB MBA in Finance with Distinction MSTA & IFTA Qualified (Society of Technical Analysis UK & International Federation of TA) Prop Trader at Amplify Trading Presenter & Technical Analyst at Beta Financial Groupoct_2012.indd 2 27/10/2012 14:22
  3. 3. objectives Understand the basic of trading & technical analysis Career opportunitiesoct_2012.indd 3 27/10/2012 14:22
  4. 4. What is financial trading? Trading is exchange of securities - stocks, bonds, commodi- ties, currencies, derivatives and financial instruments (where with insitutions of exchange) for “cash profit”.oct_2012.indd 4 27/10/2012 14:22
  5. 5. “ The top 25 hedge fund managers combined appear to have earned more than all 500 of the S&P CEO’s combined. This trend accelerated. In 2007, top 5 hedge fund managers earned more than all 500 of the S&P CEO’s combined!! “ The Economist 22 September 2010oct_2012.indd 5 27/10/2012 14:22
  6. 6. oct_2012.indd 6 0 50 100 150 200 250 300 Portfolio Manager GBP 282,000 Investment Banking Analyst:GBP 99,000 Proprietary Trader GBP 85,000 Prop Trading Analyst GBP 71,000 Qualified Accountant GBP 45,000 Business Manager GBP 42,000 Average Gradates GBP 28,000 Data from Trovit Jobs and financial times27/10/2012 14:22
  7. 7. the basics of Trading Technical Analysis Fundamental Analysis Trading strategy Trading Psychologyoct_2012.indd 7 27/10/2012 14:22
  8. 8. “ Technical analysis is the “ study of past price action in order to predict future price action.oct_2012.indd 8 27/10/2012 14:22
  9. 9. Why Technical analysis can predict the futureuake fear Greed font: Because human behaviour does not change therefore history will repeat itself oct_2012.indd 9 27/10/2012 14:22
  10. 10. Over Overreaction confidence Loss From aversion sheep effect Fear & Greed... miscalculate Regret probabilitiesoct_2012.indd 10 27/10/2012 14:22
  11. 11. Analysing the best trades using technical analysisoct_2012.indd 11 27/10/2012 14:22
  12. 12. LINE CHART Types of Charts CANDLE STICKS O OX BAR CHART O OX OX OX O OX O OX OX O OXOX OX O OX OX O OX OXOX OX O XO X O X O O X O X X O X X O XO X O X O X O X O X X O X O XO O X O XOX X X X X O X OX O O O XO POINT & FIGURE O X X O X O X X Ooct_2012.indd 12 27/10/2012 14:22
  13. 13. basic features of charts • “Support” - a price level buyers come in. • “Resistance” - a price level sellers step in. Support & resistance Reflect buyers & sellersoct_2012.indd 13 27/10/2012 14:22
  14. 14. Trader’s job is to ride the trends until they are exhausted, when a trend is exhausted, the trader can position for a reversal. • Primary trend > 6 months • Secondary trend = 1-6 months • Minor trend= 1 min -1 month The trend is your friendoct_2012.indd 14 27/10/2012 14:22
  15. 15. target Double top – the “M pattern”oct_2012.indd 15 27/10/2012 14:22
  16. 16. target Double bottom - the W pattern”oct_2012.indd 16 27/10/2012 14:22
  17. 17. target Triple top – the 3 peaksoct_2012.indd 17 27/10/2012 14:22
  18. 18. target Triple bottom - the 3 lowsoct_2012.indd 18 27/10/2012 14:23
  19. 19. target Head & Shoulders- most reliable pattern of alloct_2012.indd 19 27/10/2012 14:23
  20. 20. target Ascending Triangle - the neutral pattern with a bullish bias.oct_2012.indd 20 27/10/2012 14:23
  21. 21. target Descending Triangle-the neutral pattern with a bearish bias.oct_2012.indd 21 27/10/2012 14:23
  22. 22. target Symmetrical Triangle-the neutral patternoct_2012.indd 22 27/10/2012 14:23
  23. 23. target Bull Pennant- after a very steep riseoct_2012.indd 23 27/10/2012 14:23
  24. 24. target Bear Pennant -after a very steep falloct_2012.indd 24 27/10/2012 14:23
  25. 25. target Bull Flag – after a very steep riseoct_2012.indd 25 27/10/2012 14:23
  26. 26. target Bear Flag– after a very steep falloct_2012.indd 26 27/10/2012 14:23
  27. 27. Moving Average smoothes the price action to define the trend direction with time lag because they are based on past prices Moving Averagesoct_2012.indd 27 27/10/2012 14:23
  28. 28. Moving average crossovers – give BUY & SELL signals. Andrew Hall took home $100 Million in 2008 from this trade. Moving Averages Golden Cross - BUYoct_2012.indd 28 27/10/2012 14:23
  29. 29. This SELL signal would have more than 5437% return on investment within18 months. Moving Averages Dead Cross - SELLoct_2012.indd 29 27/10/2012 14:23
  30. 30. RSI and price divergence give highly reliable trend reversal signal and therefore a very popular indicator by traders. RSI: Relative Strength Indexoct_2012.indd 30 27/10/2012 14:23
  31. 31. MACD was developed from moving averages to give buy and sell signals. MACD: Moving Average Convergence Divergenceoct_2012.indd 31 27/10/2012 14:23
  32. 32. Parabolic SAR is a trend indicator, while stochastic cross over gives buy and sell signals Parabolic SAR & Stochasticoct_2012.indd 32 27/10/2012 14:23
  33. 33. There are over 200 candlestick patterns of which the Bearish Engulfing is one of the most commonly used p Candlestick Patternsoct_2012.indd 33 27/10/2012 14:23
  34. 34. Royal Bank of Scotland weekly chart, in October 2007, point and figure already give a price target of below 20 pence when the share was traded at 550 pence, RBS hit 9.8 pence on 19th of January 2009 - what a great short! Point & Figureoct_2012.indd 34 27/10/2012 14:23
  35. 35. The Elliott Wave is used to forecast  trends by identifying extremes in investor psychology, highs and lows in prices, and other collective activities.  Elliott’s Waveoct_2012.indd 35 27/10/2012 14:23
  36. 36. Fundamental Analysis Macro Economics Corporate Earnings Economic Calendaroct_2012.indd 36 27/10/2012 14:23
  37. 37. German index (DAX) tends to have an inverse correlation with the German Government Bond (Bund). DAX vs BUNDoct_2012.indd 37 27/10/2012 14:23
  38. 38. BP’s stock fell by 52% in 50 days after the Deepwater Horizon Oil Spilloct_2012.indd 38 27/10/2012 14:23
  39. 39. economic calendaroct_2012.indd 39 27/10/2012 14:23
  40. 40. TRADE PLAN 02-02-2012 • 9:30am – UK PMI Construction: Watch for GBP/ USD and FTSE • 10:00am – European Monetary Union: Watch out for the EURO and DAX. • 13:30 – US Initial and Continuing Jobless claims: Watch for US indices and US Dollar Index • US market movements tend to affect markets worldwide. Economic Calendaroct_2012.indd 40 27/10/2012 14:23
  41. 41. Jobs After theoct_2012.indd 41 Credit Crunch..27/10/2012 14:23
  42. 42. oct_2012.indd 42 27/10/2012 14:23
  43. 43. You need experience!! YES YES No No No No No No No No No Nooct_2012.indd 43 27/10/2012 14:23
  44. 44. Financial Institutions Career Paths Trading part-time Trading fu ll-timeoct_2012.indd 44 27/10/2012 14:23
  45. 45. Woorking in a fiancia institution Working in Fiancial Institutions ber of Sma ll num aduates sful gr succes ce related nc rop in fina come P les s be course r Analyst ro o Trader ment Banks st in Inveoct_2012.indd 45 27/10/2012 14:23
  46. 46. 30% stay at Amplify part time traders Most part-time traders have full time jobs and using trading as a way to increase income.oct_2012.indd 46 27/10/2012 14:23
  47. 47. Full tim e traders of an 30% Less th rs can de the tra tly make tan consis nd they a money s desired a choose lifestyle & careeroct_2012.indd 47 27/10/2012 14:23
  48. 48. Thank you Emily Tseng inxni888@gmail.com Any questions? 07445 979997 www.emilytseng.com @inxni888oct_2012.indd 48 27/10/2012 14:23

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