Diversified Forex Strategy
Lillian Nicola’s objective will be to obtain consistently high, risk-adjusted returns when compared to other managers in the currency space and other asset classes.
In parallel, LNAM will strive to protect investor capital against adverse market volatility. We intend to achieve this goal through the use of a discretionary, directional, off-exchange foreign currency investment strategy.
Strategy Overview
The LNAM Diversified Forex strategy is a directional trading methodology which enters and disposes of currency pairs within the over-the-counter cash (spot) forex market. It is our intent to capture price trends lasting anywhere from 2 weeks up to 6 months within these markets. We will utilize an approach to our trading based upon the tenets of chaos theory, Elliot Wave theory, fractal geometry and price momentum whenever we deem trades practical and prudent.
Products TradedLNAM will primarily trade the following currencies within the LNAM Diversified Forex strategy: |
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| Australian Dollar (AUD) | Swiss Franc (CHF) |
| U.S. Dollar (USD) | Japanese Yen (JPY) |
| Eurodollar (EUR) | Danish Krone (DKK) |
| British Pound (GBP) | Norwegian Krone (NOK) |
| New Zealand Dollar (NZD) | Swedish Krona (SEK) |
| Canadian Dollar (CAD) | |
These currencies may be traded in any combination, long or short against one another as currency pairs at LNAM’s discretion within the strategy. While LNAM reserves the right to trade within any set of currency pairs for your account, these pairs simply represent the products that will be most frequently traded.
Trade Selection
Lillian Nicola intends to construct its’ trades using the theories developed by R.N. Elliott and his Elliot Wave Theory. Elliott Wave essentially dictates that markets move in predictable impulse and corrective patterns. It is not our intention to pursue trading opportunities when price corrections occur, rather we will only focus on impending impulse or trend waves which tend to be larger in both distance and force. We make our determinations based on a review of daily, weekly and monthly price charts along with proprietary momentum indicators.
Once we determine that a tradable wave should begin in the near future, we utilize fractal mathematics and price momentum in order to discern exactly when and how a trade should be entered.
Risk Management/Trading
Positions taken for your account will be scaled into by using a reverse pyramiding technique we have developed internally. We have found that this method of entering positions may greatly reduce volatility risk as the most risk on any position exists before a trend has been established by price movement and time.
In an effort to monitor position correlation, it is our intent to continuously evaluate and avoid over-exposure based on internal risk parameters in any underlying base or quote currency. Monitoring correlation risk along with our method of entering and exiting positions is our most effective tool to manage portfolio volatility.
While LNAM does not use specific price targets to exit positions, we will use general Fibonacci extensions, pattern recognition and price momentum to determine when a trend may be nearing an end. Most, but not all, positions will be disposed of by scaling out of the position in a similar, but not exact fashion to the way it was entered.
LNAM will also use both initial and dynamic trailing stop loss orders in an effort to protect established positions from adverse moves. As disclosed previously, these types of stop loss orders will not guarantee your account won’t experience losses. We do, however, believe that stop losses in most trading situations will serve as a useful risk management tool.
