Walker Capital Insights

Following the Royal Commission into the banking sector, investors are looking for transparency and responsibility when choosing where to put their money – with Managed Discretionary Accounts (MDAs) emerging as an increasingly preferred option.

‘‘People are now much more well informed with investments and want to know what’s going on with their money,’’ says Michael Walker, principal of Sydney-based investment management firm Walker Capital.

‘‘Investors are moving away from traditional and less transparent funds into MDA structures because they want to maintain ownership of their investments. They want transparency and real-time access to their accounts.’’

The Institute of Managed Account Professionals reports that in 2018 MDAs experienced year-on-year growth of 31 per cent, representing $14.85 billion, thereby increasing funds under management in MDAs in Australia to $62.43 billion.

When setting up Walker Capital three years ago, Walker says he aimed to create an investment company that is ‘‘transparent and secure’’ while simplifying the sign-up process with ‘‘digital onboarding’’ to streamline applications.

There is growing demand for investments into alternative asset classes as investors seek to diversify and de-risk their portfolios, he says.

‘‘In alternative assets like Forex and CFDs [contracts for difference], investors need to understand the MDA investment and what the risks are,’’ Walker says. ‘‘There is leverage in many of these investments and investors need to understand these risks against the potential rewards.’’

With a mix of retail and wholesale clients and a team of veteran traders, analysts and investment managers, Walker Capital aims to ‘‘balance the risks’’ and give its customers a healthy net return on their money, he says.

The MDA structure allows each client to have a separate investment account.

‘‘Our investments are not correlated to the market,’’ says Walker. ‘‘We use a mix of fundamental and technical analysis to target positive return in a rising and falling market.’’

‘‘Using derivatives in Forex and CFDs allows us to take advantage of that opportunity.’’

 Walker says the team provides a professional product in an alternative space with transparency and accountability.

Following the Royal Commission into the banking sector, investors are looking for transparency and responsibility when choosing where to put their money – with Managed Discretionary Accounts (MDAs) emerging as an increasingly preferred option.

‘‘People are now much more well informed with investments and want to know what’s going on with their money,’’ says Michael Walker, principal of Sydney-based investment management firm Walker Capital.

‘‘Investors are moving away from traditional and less transparent funds into MDA structures because they want to maintain ownership of their investments. They want transparency and real-time access to their accounts.’’

The Institute of Managed Account Professionals reports that in 2018 MDAs experienced year-on-year growth of 31 per cent, representing $14.85 billion, thereby increasing funds under management in MDAs in Australia to $62.43 billion.

When setting up Walker Capital three years ago, Walker says he aimed to create an investment company that is ‘‘transparent and secure’’ while simplifying the sign-up process with ‘‘digital onboarding’’ to streamline applications.

There is growing demand for investments into alternative asset classes as investors seek to diversify and de-risk their portfolios, he says.

‘‘In alternative assets like Forex and CFDs [contracts for difference], investors need to understand the MDA investment and what the risks are,’’ Walker says. ‘‘There is leverage in many of these investments and investors need to understand these risks against the potential rewards.’’

With a mix of retail and wholesale clients and a team of veteran traders, analysts and investment managers, Walker Capital aims to ‘‘balance the risks’’ and give its customers a healthy net return on their money, he says.

The MDA structure allows each client to have a separate investment account.

‘‘Our investments are not correlated to the market,’’ says Walker. ‘‘We use a mix of fundamental and technical analysis to target positive return in a rising and falling market.’’

‘‘Using derivatives in Forex and CFDs allows us to take advantage of that opportunity.’’

 Walker says the team provides a professional product in an alternative space with transparency and accountability.

A Fibonacci retracement is a technical analysis tool used by traders to understand when to place and close trades or when to place stops and limits. Fibonacci retracements depend on the mathematical principles of the Golden ratio14, and they are used to find areas of resistance and support in the primary movements of assets.

To calculate Fibonacci retracement levels, traders draw six lines across the asset’s price chart: one line would be at the highest point; one would be at the lowest point, one at the midpoint and three at 61.8%, 38.2% and 23.6%. According to the golden ratio rule, these points should be the ones at which significant levels of support and resistance should be detected.

How to Use Fibonacci Retracements in Trading

Here are the steps involved in making use of Fibonacci retracements for forex and CFD trading:

1. When applying the Fibonacci tool to a downtrend, use it to the start of the move to the end (the tool is always used from the left to the right), like so:

2. With an upward moving trend, the tool should be applied at the bottom and end at the top. Once again, it is applied from the left to the right, as follows:

 

3. The Fibonacci retracement levels will automatically appear once you have used the tool. They appear in the form of percentages of the total move.

 

4. You can use the prices at 50%, 61.8% or 32.8% as your potential long entry levels.

 

5. To choose the correct level to enter based on your strategy, you need to:

• Aggressively enter as the price reaches each level and place a stop loss at the other side of the Fibonacci level;

• Wait until the price finds support or resistance₁₅ at these levels and then enter.

Fibonacci Mistakes that need to be avoided

Here are some common mistakes that even very technical traders make at times. You need to avoid these at all costs as they can mess your position and timing up:

• Do not mix your Fibonacci reference points. Keep them consistent and you should not go from a candle’s wick to a candle’s body16 as this can create a misanalysis.

• Do not ignore any long-term trends. The major mistake that new traders do is that they look at significant moves which have occurred in the short term, and this can lead to a lot of misanalyses. By looking at the long term trends, one can use the Fibonacci retracements in the right direction of momentum.

• Do not rely on Fibonacci alone as there is harm in doing this. Make use of additional analytical tools as this will increase your chances of making a good trade. You need the confirmation to allow you to move ahead.

• Do not make use of Fibonacci retracement levels over short intervals. Applying it over short intervals is quite ineffective, and it will make it difficult for the trader to decide what levels can be traded.

Read the full article and more download our FREE Insiders Guide to Forex and CFDs. That’ll Help to Improve Your Forex & CFD Trading Skills and Assist You to Make Consistent returns!

Fundamental analysis is another technique used to trade. Fundamental analysis is a technique that is used to determine the value of an asset by focusing on underlying factors that affect the company’s future aspects and its actual business. With this technique,
you need to analyze the economic well-being of a financial entity as opposed to its price movements alone.

Fundamental analysis is used to identify those assets which are under-valued in the market, which means that they are selling at a lower price than the asset’s intrinsic value. This analysis assumes that buyers would be attracted by the low prices, and this would make them buy the asset in a sufficient enough amount to increase its price.

The Objectives of Fundamental Analysis

The objectives of this analysis technique include the following:

• To conduct an asset valuation and predict where its price will go;

• To make a projection on its business performance;

• To evaluate the management of the property and make internal financial decisions;

• To calculate credit risk of the asset;

• To find the intrinsic value of the property.

  The Mechanics of Fundamental Analysis

  To conduct this analysis, you need to complete an in-depth and all-around study of the asset and its underlying factors. This would help you determine future prices and market developments. A combination of data is used to establish the actual current value of assets, whether they are overvalued or undervalued and the future value of the assets.

• The market discounts everything, which means that an asset’s price reflects everything that has or could affect the company and thus there is no need to consider these factors separately;
• Price moves in trends, which means that any future price movement is more likely to be in the same direction as the trend;
• History has a tendency of repeating itself, which means that a consistent reaction is given to similar market stimuli over time.

10 Rules of Technical Trading

To perfect the art of trading using technical analysis, here are some crucial rules that you must keep in mind:

1. Map the trends by studying long-term charts. Start a chart analysis with weekly and even monthly charts that span over several years as a large scale map of the market provides the trader with a greater amount of visibility and a better perspective on the long-term market. Short-term market views can be deceptive.

2. Spot the trend and follow it. Market trends come in many sizes (short, intermediate and long-term), and you should determine which one you’re going trade and then trade in the direction of the trend. Also, make sure that the charts you use are by the trend.

3. Find the support and resistance levels, as the best place to buy is near support levels and the best place to sell is near the resistance levels. This rule functions on the concept that the old highs become the new lows.