By CountingPips.com
Today, we are pleased to bring you a new forex interview with forex trader, author and currency analyst Jamie Saettele. Jamie is an active trader, senior technical strategist at Forex Capital Markets LLC in New York, and author of “Sentiment in the Forex Market”. His technical strategy focuses on sentiment indicators and Elliott wave and is published daily at 
DailyFX.com. He has also contributed to Technical Analysis of Stocks and Commodities magazine, SFO magazine, Futures magazine, and Investopedia.com.
How did you become involved in the forex world? Was there something particularly attractive to you about the forex market?
I was attracted to the big picture macro nature of FX. Also, the size of the FX market hinders manipulation. It is a pure market in my opinion.
How did you get your “forex” education? Did you learn by demo trading, did you have a mentor?
Reading as much as I could and trading. You’ve got to get your feet wet. Demo trading is worthless because trading success or failure is primarily a function of psychology – in other words, how the trader responds to making and losing his or her own money. Money has to be at stake in order for emotions to materialize. The only way to learn how to trade is to risk your own money and trade.
How often do you trade, are you a full-time trader? Do you trade longer or shorter times?
I’m fairly active. Sometimes I’ll be in and out of the market 20 times a day.
Do you have any preference on the currency pairs you trade?
I prefer the majors due to the tighter spreads but I tend to trade whatever is showing the clearest patterns. The clearest patterns tend to be the pairs that are most volatile. Right now, the AUDUSD and EURUSD have the highest daily ranges, at about 1.35% a day. This can change of course. For a long time, the GBPUSD was especially active but now it moves less than 1% a day.
Do you use more technical analysis or fundamental analysis, both? Do you take sentiment analysis into your decision making?
I am technical in nature. Timing is clearly important in trading and I don’t see one can time the market with fundamentals. I monitor sentiment with measures such as COT data, risk reversal rates (options) and volatility. You’ll find that a lot (if not all) of these measures move with rate of change, which is a function of price – which underscores that price pattern is the most important consideration. It is when sentiment measures or rate of change diverge from price that a useful signal is derived. I also scan the WSJ and Bloomberg for headlines that may indicate market extremes.
Do you have any favorite economic indicators or favorite technical indicators that you feel are most reliable?
I like RSI and certain bar/candle patterns but my entries are based mostly on the opening ranges of Asia, Europe, and the US combined with support/resistance and price patterns.
What markets, outside of currencies, do you keep an eye on?
Equity markets, especially the S&P. Gold, silver, copper, crude, and bonds.
Going into 2011, what do you see as the major themes for the forex markets? What should traders be watching?
I am keeping a close eye on the Australian and New Zealand dollars. These currencies are trading at levels that I don’t think are warranted. I see the potential for a housing crisis in Australia. The housing market there looks similar to the pre crises US housing market. Also, a setback in China (a question of when not if) would have a negative impact.
In conclusion, do you have any advice to anyone starting out in forex trading? Is there anything in particular that you wish you had learned when you started out?
Don’t use too much leverage. Don’t use too much leverage. And finally, don’t use too much leverage.
Thank you to Jaime for taking the time for our forex interview and to read Jaime’s latest currency analysis and trading strategies you can visit DailyFx.com.
