BLACK SWAN CAPITAL MANAGED FOREX SERVICES
Trading Style & Methodology
President, Black Swan Capital, LLC
Jack has over 25 years of experience in the currency, equity, and futures arena. He has held key positions in brokerage, investment research, money management, and trading.
Jack is founder and president of Black Swan Capital LLC (a newsletter firm specializing in currency trading and global macro-economic analysis). He was also founder of Ross International Asset Management (a Registered Investment Advisory firm specializing in global stock, bond, and currency asset management for retail clients), General Manager of Plexus Trading (specializing in currency futures and commodities trading) and Black Swan Capital Management (a Commodities Trading Advisory firm specializing in foreign exchange trading).
Prior to entering the investment arena, Jack worked in various corporate finance positions. He has written extensively on the subject of global currencies and international economics. He holds a B.S. in finance/accounting and MBA in finance and Master’s degree in economics.
Core Market Beliefs and Methodology
Two primary core beliefs about the currency market:
· Know your risk: There will always be unforeseen events lingering in the market place beyond the scope of induction.
· Ground your approach in human nature: Price movement in currency markets is sentiment-driven by emotional (fearful and greedy) participants who sometimes approach rationality, but never quite get there.
· There is no such thing as market equilibrium
· Prices move in self-reinforcing trends within various time frames
· The greater the confusion, the more price-led players become
· Fundamentals influence prices and prices influence fundamentals
· Focus on risk first, return second, and predefine risk before taking a position.
· Currency analysis is analogous to being a judge at an ugly contest— the least ugly wins
· Trading is a probability bet and winning over time comes from applying your edge consistently
· Every moment in the market is unique
Black Swan Capital LLC was incorporated in April of 2004. Black Swan is a newsletter company established to help its subscribers profit through specific currency trading ideas in both spot foreign exchange and currency options.
Black Swan’s analysis is designed to exploit price trends in short-term, intermediate-term, and long-term time periods. The firm’s trading ideas are generated on the major dollar currency pairs, and key cross rates.
Global macro-economic analysis and Elliott Wave analysis are the primary decision tools Black Swan’s utilizes to develop trading ideas. Black Swan's President, Jack Crooks, has worked with Elliott Wave analysis for about 25 years. He has recently applied a modified version of Elliott Wave in his analysis that has proven helpful in the forex markets.
Black Swan’s Analytical Trading Framework is a fully integrated three-legged stool used to formulate trading recommendations; it includes:
· Primary: Elliott Wave and Pattern analysis
· Secondary: Macro fundamental analysis
· Supporting: Sentiment analysis
The application of these tools and how they fit together in a systematic way is depicted in the diagram below:
The objective of this analytical framework is to help identify higher probability trade setups. Elliott Wave analysis is the primary decision tool, especially when considering shorter term trading opportunities, i.e. those with an expected holding period ranging from three-five days. But as the expected time frame for holding a trade increases, so does the level of global macro fundamental and sentiment analysis which is integrated into the trading idea. The firm's trading style in all time frames is considered discretionary based on his interpretation of price patterns and economic fundamentals.
From a tactical perspective, Black Swan establishes both risk levels (maximum 5% of total capital on any single trading idea; normally 2-2 ½%) and profit targets on all trading ideas i.e. reward to risk ratios depending on time frame, no less than 2:1. Risk levels are determined before entering a trade and a hard stop is placed in the market accordingly. If the trade idea moves into profit territory as planned, the firm will often peel off profit along the way; i.e. close some positions at designated wave targets, but also attempt to ride a trend by keeping some “skin in the game,” as no one knows when a trend will end.
Risk Management Objectives
Black Swan attempts to define its risk on a consistent basis. By attempting to limit its risk the firm realizes remaining "in the game" and focusing on "the process" over time is key to success, as there can be a random distribution of profits and losses given market noise.
Black Swan appreciates that unpredictable and unforeseeable events of a significant magnitude (so-called “black swan” events or risks) cannot be identified by any analysis, regardless of the breadth, depth or sophistication of one's models. In light of the potential for black swan risk, the firm seeks to define the parameters of risk prior to entering into a trade. This risk level is defined explicitly through a hard stop-loss order placed at the time positions are entered.
Eligibility for a Black Swan Forex Managed Account
If you not a US citizen nor reside in the European Community, you are likely eligible for a Black Swan Forex Managed Account. Please contact us for further details or questions.