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I recently received this letter, and thought you might like to see how another currency trader approaches the markets.

"I approach the markets as a game of probabilities. As far as I'm concerned, that's the only way to naviga

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

te the currency markets.

"What I mean by a game of probabilities is this: I do as much as I can when figuring my fundamental and technical analysis. I read and study all I can. And I do this with discipline, focus, and consis

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

tency. I do this to try to gain an edge.

"But I know there is never such thing as 100% certainty. You can never have enough brain power or computing power to harness the mind of the market. It's not because the computing powe

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

r isn't available - it is. It's because the players in the market do not make "rational" decisions all the time.

"When push comes to shove, the big moves in the market are driven by good old fear and greed, the base human emo

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

tions. The fear and greed and irrationality of millions of players can't be modeled with much degree of certainty. That's a problem for economists and experts who believe they can create some type of Holy Grail model to foreca

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

st price action. They simply don't have the mathematics available yet to get their arms around irrationality in a modeling scenario. And there is no reason to think they'll be able to factor in human emotions anytime soon.

"'

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

If you are going to use probability to model a financial market, you had better use the right kind of probability. Real markets are wild. Their price fluctuations can be hair-raising - far greater and more damaging than the mi

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ld variations of orthodox finance,'" writes Benoit Mandelbrot, The Misbehavior of Markets. Note: Benoit Mandelbrot is the person who created fractal mathematics. He is a brilliant man, to say the least. And he has been shunn

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

ed to a degree because he has never bought into financial orthodoxy that starts out with 'the rational man.'

"Bingo! 'Real markets are wild.' The massive volatility we've already witnessed in the currency market, after only t

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

he days of trading this year, prove Mandelbrot right once again.

"So, does this mean we should be defeatist and believe we can never win? Absolutely not! But it does mean you need to develop a reliable system to help you rec

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

ognize when it makes sense to trade. Or in other words, you need a system that pushes the probability of success in your favor. Here's what I do to help make currency trading decisions.

"My methodology is a three-step approac

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

h:

"1) I watch the key macro themes around the world. I continually ask: where is the money flowing around the globe? What countries or regions are hot? What assets are investments flowing into? Is it stocks or bonds or commo

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

dities, or some combination of these? Why are assets flowing in those particular investments? Is it interest rates or economic growth, or geopolitics? These are the type of questions you need to ask in order to develop an unde

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

rstanding of the macro themes.

"2) I look at the technical pictures-charts! First I look at the weekly trends, then daily, then intraday (if it is a very short-term trade). Keep in mind, the tighter the timeframe you analyze

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

on a chart, the more random the movements may be. In other words, these short-term movements you see could be just noise, so you can't always try to match your broad macro themes to the daily charts. Use your weekly charts to

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

confirm your macro view. Charts are especially helpful when you're looking at intermarket relationships. For example, you can see if there's a clear relationship between gold and the U.S. dollar. Often those two move almost as

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

a mirror image of one another. When gold goes up, the dollar goes down, and visa versa. I continuously compare commodities, bonds, and equities against the move of the dollar to see if there is a relationship. Noticing these

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

relationships can definitely give you an edge in the markets.

"3) I try to judge what the sentiment is in the markets. I ask myself, are too many players doing the same thing? This is extremely important, because you don't wa

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

nt to be late to the party when investing. When everyone has bought, there is no one left to support prices, and they can fall of their own weight. I also look at surveys, open interest, and volume to gauge sentiment.

"Yes, i

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

t's a lot of work. But this is my system that has evolved over the years and suits me well. I'm confident that if I do my homework and apply my system consistently, I'll win over time. And the same system can work for you too.

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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