From the December 01, 2008 issue of Futures Magazine • Subscribe!

Ariel Gelman: Forex architect

Ariel Gelman has a master’s degree in landscape architecture, but these days he makes his living cultivating the currency markets. He worked as an architect since moving to the U.S. from Argentina in 1991, and in 2006, he started trading basically from scratch. “I didn’t know what a long or a short meant,” he says. But he was a quick study and began building and backtesting systems and now trades currencies full time.

Gelman attended a Traders Expo in Las Vegas and learned different trading strategies. He was intrigued by the individuality and the freedom that trading allowed. “I don’t have to deal with clients [to trade]. It’s all about me,” he says. And with trading, “whether you’re in a recession or not, there’s still opportunities.”

Gelman’s trading philosophy involves understanding that this is a slow process. “You will not become rich overnight, but if you are consistent and disciplined, you will be successful,” he says, adding, “You need to train [yourself] by reading or talking to [experts].”

He follows a countertrend trading method. “Many times when you go against a trend, there are very good trades to take,” he says. He uses moving averages, support and resistance levels and pivots in his trades, but he keeps his trades flexible due to the current volatility in the markets. “Some of the strategies I used six months ago aren’t there today because the [markets are] so volatile.”

He has shortened his time frames and is quicker to take profits in the volatile environment. “On the kiwi-dollar, I’ve been short since last May, but on the pound-yen, there’s no way you can do that, the pound-yen will give you 300 pips and then will retrace 500,” he says.

He also uses the 800-period Simple Moving Average (SMA) in his strategies. The 800-period SMA is seen as home base. He looks at how far a currency pair has traveled away from the 800-period SMA, using statistical models he determine how far a particular currency pair typically moves away from this benchmark before it moves back towards that average. When it gets further than that point, he implements a reversion to the mean strategy.

Some of his best results have come from using a breakout strategy called “Squeeze Box.” The pound-Swiss is the best pair on the one-hour chart to do this strategy, he says.

He recommends studying each currency pair and to trade only two pairs at a time. “You can make a living trading just one pair,” he says. “Each pair has different personalities. Once you get to know the difference between the pound-yen and the euro-pound, it’s very obvious that those pairs behave completely differently.”

He says that the pound-yen can move hundreds of pips a day, while the euro-pound and the kiwi-dollar move much slower. “In [today’s] markets, the pound-yen won’t give you time to think if you don’t have a clear plan of that particular trade. The kiwi-dollar will let you plan, take a break, and think about it because it moves at a much slower pace. You have to have a strategy that is flexible enough so that you can adapt not only to different pairs but also to different market conditions,” he says.

Advice from other traders has also been a key part of Gelman’s success. He holds weekly meetings at his office in Colorado with a group who trades together, talks about books on trading and sets up their own strategies. “[Trading] can be a very frustrating experience, so having peopled to share with is extremely valuable,” he says.

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