Vector Capital Group AG : News Candle

Summary

News Candles is a patient strategy that looks for highly specific patterns based on candlesticks across all timeframes. This is based on Supply and Demand zones, where there are orders waiting to be unloaded in the zones for either the sell or the buy side. Once the zone has been identified, the price levels will be marked. The strategy will then wait for the market to reach the price level and then execute accordingly at the price. The strategy also considers the approach it has to the price level, if it sees a slow steady and approach then it tends to ignore the setup, however, when we see a fast approach then the strategy tends to take the trade as this is a sign that we will see a reversal or a retrace, as the orders books will need to be balanced. Before the market reaches to the level, a calculation will be taken place of the stop loss, however, the take profit will not be known until the market creates it pattern of how it approaches the price, which is all based on candlestick patterns.
Trades are aimed to be held for a few hours depending on the setups, and it also does consider the economic data release and looks for patterns on the currency pairs that will be impacted. If the candlestick patterns are not visible then the strategy will ignore the currency pairs and the news event. A very low percentage of the trades can be held for a few days with a very low lot size, depending on the time frame the strategy has picked up the pattern form. The strategy will have multiple take profits zones, where it will rarely close 100% of the position at one price, unless there is no volatility in the market to help reduce the risk. It will use the same rules on all the FX pairs, commodities, and indices and only execute once all the defined rules have been ticked.

Investment Strategy

Strategy Highlights:
- Proprietary algorithmic technical indicator dashboard - Trades almost daily.
- Works very well during high impact news events
- Scales into trade using multiple entry levels within the defined zone for best price
- Discretionary macro oversight for setup selection based on experience of lead manager and research team.
- Intraday price action scalping strategy,
- Trades currencies, equity indices, commodities.

Risk Management

Risk Management: - No more than 1.5% equity is at risk on any one trade.
- Max risk is scaled into over a number of smaller trades taken at different prices within the defined zone. (E.g First trade will allow 0.6% risk, second trade if opened will allow 0.9% risk = total risk 1.5%)
- We use a global portfolio draw down limit of 10% at which point positions are closed out.
- Pre-defined stop loss orders and trailing stops used.
- Almost all risk is taken off on fridays.
- Size is scaled down at month end to protect profits.