Brief about Scott Ramsey (Age 53) Scott Ramsey is the founder of Denali Asset Management (1994), trades

the highly liquid futures and foreign exchange mar ets! Although the ma"ority of #ommodity $rading Ad%isors (#$As) use a systematic a&&roach, Ramsey is strictly a discretionary trader! 'e also differs from most #$As (y incor&orating fundamentals into his decision)ma ing &rocess! Ramsey (egins (y esta(lishing a (road fundamental macro %ie* that determines his directional (ias in each mar et! +nce the (ias is esta(lished, he *ill see to go short the *ea est mar et in a sector if he is (earish or long the strongest mar et if he is (ullish, using technical analysis to time trade entry and &osition ad"ustments! Summary of the Interview An im&ortant lesson Ramsey &ro%ides is that e%en technically oriented traders ) as Ramsey himself *as in the early years of his career ) can (enefit greatly (y incor&orating a fundamental &ers&ecti%e! ,t is not a matter of &erforming any com&lex fundamental analysis to deri%e &rice &ro"ections, (ut rather a question of trying to understand the ey fundamental dri%ers that are li ely to determine direction of the mar et! -or exam&le, (y understanding that fundamentals *ere as negati%e as they could (e for (onds at the start of .///, Ramsey correctly assumed that (onds had %ery limited sco&e on the do*nside and that any *ea ening in the strong economy or the &re%ailing s&eculati%e fer%or could set in motion a ma"or (ull mar et! As another exam&le, Ramsey ex&ected the end of 01 . to lead to a re%ersal from dollar *ea ness to dollar strength! +nce he has esta(lished a firm fundamental o&inion, Ramsey utili2es technical analysis to confirm his antici&ated scenario! #om(ining his technical methodology for entering and exiting trades *ith strong fundamental directional (ias &ro%ides Ramsey *ith a more effecti%e trading a&&roach than *ould (e &ossi(le using technical analysis alone! $he idea is to identify the (ig &icture fundamental factors that are li ely to dri%e the mar et in one direction and then to use technical analysis to trade in that direction!

-undamentals can also (e useful as a contrarian indicator! Ramsey *ill loo for situations *here there a&&ears to (e a &redominant mar et &erce&tion that is (eing contradicted (y mar et action! Ramsey cites exam&le of a (ond mar et *here there *as a lot of concern a(out go%ernment (orro*ing cro*ding out &ri%ate (orro*ing, (ut interest rates failed to rise! ,n this context, a (earish fundamental factor had (ullish &rice im&lications (ecause of its failure to im&act &rices! Ramsey *ill al*ays (uy the strongest mar et in a sector for long &ositions and sell the *ea est mar et in a sector for short &ositions! Many no%ice traders ma e error of doing exact o&&osite! $hey *ill (uy the laggards in a sector on the ty&ically mista en assum&tion that those mar ets ha%en3t made their mo%e and therefore &ro%ide more &otential and less ris ! 4hen Ramsey is loo ing for a re%ersal in a sector, he *ill focus on esta(lishing a &osition in the mar et that lagged most on the &rior &rice mo%e! -or exam&le, *hen Ramsey antici&ated the dollar *ould re%erse to the u&side at the end of 01., he sought to sell currencies, such as the $ur ish lira, that had (een *ea des&ite &rior dollar *ea ness! Ramsey &ays lot of attention to &rice mo%ement in related mar ets! $he failure of a mar et to res&ond as ex&ected to a &rice mo%e in a correlated mar et can re%eal inherent strength or *ea ness! -or exam&le, after years of mo%ing together, in early Se&tem(er ./11, equity &rices rallied (ut commodity &rices *ea ened! Ramsey read the failure of commodity &rices to res&ond to equity mar et strength as a signal of im&ending *ea ness! During the second half of Se&tem(er, commodity &rices and commodity currencies (eg Australian, 56 and #anadian dollars) &lunged! 7erha&s the hallmar of Ramsey3s trading a&&roach is his rigorous control of ris ! Ramsey *ill ty&ically ris a mere /!18 on each trade from &oint of entry! +nce he is ahead on a trade, he *ill allo* for more ris latitude! $his a&&roach all (ut assures that losses on ne* trades are li ely to (e quite moderate! $he only time Ramsey is %ulnera(le to a significant monthly loss is *hen there are large o&en &rofits from *inning trades! Although the use of a /!18 sto& &oint from entry &oint is &ro(a(ly too extreme (or &erha&s e%en inad%isa(le) for most traders to ado&t, the general conce&t of using a relati%ely close sto& on ne* trades and allo*ing a *ider sto& after a &rofit margin has (een created is an effecti%e ris management a&&roach that could *or *ell for many traders! Success in trading requires dedication! Ramsey continues to trade and monitor his &ositions e%en *hen he is on %acation! 'e also a*a ens himself multi&le times each night to chec on his &ositions! $his ty&e of all)encom&assing commitment to trading is not necessarily recommended as a lifestyle, (ut rather is offered as an o(ser%ation of one of the characteristics of trading success! -or Ramsey, ho*e%er, , sus&ect such commitment is not a (urden, as trading is a &assion, not a chore!