Hedge Fund Rules

HEDGE FUND RULES;
1.Never use Technical analysis to determine direction of a trade. It should only be used in the gate
keeping process not analysis.
2.Do not look at support and resistance in Forex chart. But rather look at support and resistance on the
COT DATA chart; reason- COT represents real time data of hedge funds positions and that can be used to
know it prices will change or continue in the previous direction. The forex chart is just a representation
of worldwide transaction. “YOU CAN USE THE TRANSACTIONS TO PREDICT THE CHART BUT NOT THE
CHART TO PREDICT WORLDWIDE TRANSACTION”
3.Do not get trade ideas from the chart and use fundamentals to justify it; The mother comes before the
child not vice versa.
4. Do not go short on an asset you are Fundamentally bullish because technical are “bearish”
5.Do not go long on an asset you are Fundamentally bearish because technical are “bullish”
6.Do not look at candle sticks formation ( Doji, hammer, Shooting star etc) Reason; Due to broker
manipulation & difference in spreads candles do not match from one broker to another and the
commercial market chart and broker market chart, past price data cannot predict future direction, the
chart is just a representation of transactions and economic strengths
7. Fundamentally do not trade currencies with equal economic strength
8. Capital allocation 2-4% of equity per trade. Risk to reward 1:4 minimum
9.Do not trade pegged currencies; the lack volatility and are rigged
11. Technical analysis only look at Volume, trendline, chart pattern (double top/bottom, triple
top/bottom, inverse/Head and shoulder, bullish/bearish pennant), RSI. (TECHNICALS ARE NOT FOR
ANALYSIS BUT RATHER FOREX ANALYSIS FOR DIRECTION), simple moving average (6,24,72,288)
RSI
-IT MEASURES THE SPEED OF CHANGE OF PRICE MOVEMENTSBY OSCILLATING BETWEEN O AND 100.
MISINTERPRETATION;
*when an asset has an RSI above 70 it is “overbought” and when below 30 it is “oversold”
REALITY
Very strong price movement are associated with strong fundamentals /panic. The RSI argues that if
RSI reverses momentum is coming out of the move.
However an asset can go up quickly and continue further in the same direction but slower.
RSI Formula ; RSI=100-100/(1+RS)

Where RS=average of X days’ up closes/ Average of X days’ down closes.
Most commonly X= 14, However consider using x=24(reasons of how 24 is derived is below).
SIMPLE MOVING AVERAGE(SMA)
Avoid the internet hyped SMA (50,100,200).
This are a brain wash for retail traders and even given nice names (death cross & golden cross). To
make it look cooler and intelligent for the brainwash of retail traders.
WHICH SMA ARE ACTUALLY IMPORTANT AND STRONG REASONS WHY THEY ARE IMPORTANT;
IMPORTANT SMA; (6,24,72,288)
REASON;
THE FOREX MARKET OPENS IN NEW ZEALAND AT 5 PM EST SUNDAY AFTERNOON AND CLOSES AT 5
PM EST FRIDAY AFTERNOON.
In NZD time this is 10 am Monday morning to 10am Saturday morning-6 days
In JPY time this is 6 am Monday morning to 6 am Saturday morning-6 days
In AUD time this is 7 am Monday morning to 7 am Saturday morning-6days etc.
Conclusion;
Using a 5day moving average will be bias as even though the forex market is opened 120 hours in a
week (In theory that is 5 days). But in reality the world has different time zones. And so we use 6 days
to take into consideration all major trading zones as 50% of them trade for 6 days.
INTERPRETATION;
6 DAYS=1 WEEK
24 DAYS=1 MONTH- (INSTITUTIONAL OPTIONS HEDGING &EXPIRY, ASSET MANAGER & HEDGE FUND
REPORTING)
72 DAYS=3 MONTHS- (INSTITUTIONAL OPTIONS HEDGING &EXPIRY, ASSET MANAGER & HEDGE FUND
REPORTING)
288 DAYS =1 YEAR- (INSTITUTIONAL OPTIONS HEDGING &EXPIRY, ASSET MANAGER & HEDGE FUND
REPORTING)
*SO 6 TRADING DAYS ARE EQUAL TO ONE NORMAL WEEK ETC.

1.When a 6-day moving average cuts a 24-day moving average from above/below this signifies short
term trend
2.When a 24-day moving average cuts a 72-day moving average from above/below this signifies medium
term trend
3.When a 72-day moving average cuts a 288-day moving average from above/below this signifies long
term trend.
TECHNICAL ANALYSIS IS USED IN PROFESSIONAL

HEDGEFUND TRADING FOR GATE KEEPING
(GATE KEEPING IS THE EXERCISE OF PUTTING A BARRIER BETWEEN
YOUR FUNDAMENTAL TRADE IDEA AS A TRADFER AND YOUR REAL
CAPITAL).
REAL TRADERS LOSE MONEY BECAUSE THEY HAVE BEEN

BRAINWASHED TO USE TECHNICAL ANALYSIS FOR
GENERATING IDEAS; IT MIGHT WORK SOME TIMES IF
YOU GET LUCKY TO BE ON THE CORRECT
FUNDAMENTAL SIDE. BUT REMEMBER 30+ YEARS OF
DATA SHOWS 90% OF RETAIL TRADERS LOSE 90% OF
THERE MONEY IN THE FIRST 90 DAYS. SHOWING THE
LACK WILL EVENTUALLY RUN OUT. SO USING
TECHNICAL ANALYSIS TO GENERATE A TRADE IDEA OF
BUYING OR SELLING IS NOT TRADING BUT MAKING AN
“EDUCATED GAMBLE”.

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HEDGE FUND RULES;

7. Fundamentally do not trade currencies with equal economic strength

RSI Formula ; RSI=100-100/(1+RS)

SIMPLE MOVING AVERAGE(SMA)

Avoid the internet hyped SMA (50,100,200).

IMPORTANT SMA; (6,24,72,288)

In NZD time this is 10 am Monday morning to 10am Saturday morning-6 days

In JPY time this is 6 am Monday morning to 6 am Saturday morning-6 days

In AUD time this is 7 am Monday morning to 7 am Saturday morning-6days etc.

*SO 6 TRADING DAYS ARE EQUAL TO ONE NORMAL WEEK ETC.

TECHNICAL ANALYSIS IS USED IN PROFESSIONAL

REAL TRADERS LOSE MONEY BECAUSE THEY HAVE BEEN

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