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Interview with Boris Schlossberg: “Risk control is EVERYTHING” Posted: 23 Dec 2010 04:43 AM PST Today, we bring you an interview with Boris Schlossberg, director of currency research at GFT Forex, co-founder of BK Forex Advisors, and co-contributor to FX360. He is also a weekly contributor to CNBC’s Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted and appears in numerous newspapers worldwide. He is the author of Technical Analysis of the Currency Market (2006) and Millionaire Traders (2007). Below, Mr. Schlossberg shares his thoughts on risk management, leverage, currency wars, and other assorted topics.
Forex Blog: Can you briefly explain your approach to analyzing the forex markets. Do you prefer technical or fundamental analysis, or a combination of both?
Forex Blog: How is your experiment to ignore real-time P&L going? Have you found that it has confirmed your belief in the Heisenberg principle and led to increased success in trading?
Forex Blog: I was intrigued by your assertion that over the long-term, the tortoise may beat the hare in forex trading. What are the practical implications of this notion? Do you think it supports using fundamental analysis and adopting a more long-term approach to trading?
Forex Blog: When the Euro rallied in the beginning of the summer, a number of forex commentators (myself included) declared a paradigm shift, whereby investors would stop worrying about risk and instead focus on the fundamentals. Ultimately, this shift never materialized, and the Euro appears to have resumed its decline. What is your assessment of the Euro's recent performance, and what can we expect for the immediate future?
Forex Blog: You blogged recently about an encounter with an aspiring forex trader, in which you advised him to “There is only one way [to succeed in forex trading]. You open an account and just trade.” That being said, are there any practical tips that you can offer to novice forex traders?
Forex Blog: It has been said that the Fed is caught in a lose-lose situation, whereby its QE2 will fail and the US economy will drift back into recession or it will succeed in invigorating the economy and stoking inflation. Do you share this interpretation?
Forex Blog: I agree with your assessment that high levels of dangerous leverage (~50:1) are a recipe for disaster. Do you support the recent regulatory changes that effectively cap the maximum amount of leverage on forex trades? Is there a general level of leverage that you think is acceptable, or is it specific to each trade?
Forex Blog: As you pointed out, “The Psychology of Round Numbers” is a phenomenon that is observable on all aspects of life in which numbers are involved. As far as forex is concerned, have you observed that round numbers are almost always a source of either support or resistance? How can traders predict whether a currency pair will stop at a given (round number) level or surge through?
Forex Blog: A discussion of the major themes in forex markets wouldn't be complete without mentioning the ongoing currency wars. First of all, do you think that the label "currency war" is fair? Do you think that most countries' Central Banks will continue to intervene on behalf of their respective currencies, and do you think they will succeed in preventing them from rising further?
Forex Blog: What is your advice for (forex) investors that want to beat the market during these uncertain times?
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