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This interview features Jarratt Davis on the Desire To Trade podcast, digging into how a fundamentals-led approach can power real-world FX performance. Jarratt’s a professional money manager who moved from retail beginnings to launching a hedge fund, and he’s candid about what it takes—both on the charts and behind the scenes—to trade like a pro.
In this piece, you’ll learn how Jarratt structures an 80/20 mix of fundamentals and technicals, spots catalysts in real time with professional newsflow, and uses levels and price behavior to manage entries and exits. You’ll also see how he thinks about risk, handling drawdowns, and—crucially—what changes when you manage other people’s money (regulation, audits, AUM thresholds, client fit). If you’ve ever felt stuck chasing indicators, this is a clean blueprint for turning market news into a repeatable edge and building a trading business that can actually scale.
Jarratt Davis Playbook & Strategy: How He Actually Trades
Core philosophy: fundamentals first, technicals to execute
Jarratt Davis builds his edge on real economic drivers, then uses price action to line up entries. Think of it as “why first, where second.” The goal is to ride money flow created by policy shifts, data surprises, and risk sentiment—then let the chart tell you when to press or stand down.
- Trade currencies where the central bank path is clearly diverging (hawkish vs. dovish) rather than “interesting” charts.
- Keep an 80/20 split: 80% effort on the fundamental story, 20% on execution mechanics.
- If you can’t explain the catalyst in two sentences, skip the trade.
- Only trade pairs where the fundamental bias is long one currency and short the other (no “flat vs. flat” themes).
Finding trades: turn catalysts into pair picks.
The hunt starts with catalysts that move expectations—policy changes, data beats/misses, or clear risk-on/off shifts. Once there’s a driver, match it with the right pair so the strong currency is paired against a weak one.
- Rank G10 currencies daily from most supportive to least based on growth, inflation, and central bank stance.
- Build an A-list (tradeable themes) and a B-list (watchlist), and only pull risk from the A-list.
- Prefer “clean” expressions: if the USD theme is messy, express a EUR or GBP view against a clearer counterpart (e.g., EUR/AUD).
- When the catalyst is single-country (e.g., UK CPI beat), prioritize crosses that isolate that country’s move (e.g., GBP/JPY or EUR/GBP).
Building the bias: a repeatable macro checklist
Bias isn’t a feeling—it’s a scored checklist. Run through policy, data, and positioning to decide long/short/neutral before opening any chart.
- Policy path: hiking, pausing, or cutting—assign +1/0/−1 per currency.
- Data momentum: last 3–5 key releases vs. expectations—score +1/0/−1.
- Inflation trend: moving toward/away from target—score +1/0/−1.
- Risk regime: risk-on favors high beta (AUD, NZD); risk-off favors JPY, USD, CHF—adjust scores accordingly.
- Only trade when net bias ≥ +2 (long) or ≤ −2 (short); otherwise, pass.
Timing & execution: translate stories into precise entries
The story sets direction; the tape sets timing. Use levels and session structure to enter when liquidity is best and risk is smallest.
- Enter during London or early NY when spreads are tight and follow-through is likeliest.
- Let price pull back to prior day’s high/low, a session VWAP, or a clean swing level—never chase.
- Use a “two-touch” rule: if the price respects your level twice with shrinking wicks, take the third touch with reduced stop distance.
- If the spread widens or liquidity thins around news, set a stop-limit entry above/below the level to avoid slippage.
Risk sizing: volatility-based and theme-aware
Position size flexes with volatility and conviction. Keep losses small in pips and smaller still in dollars when the tape is wild.
- Risk a fixed fraction of equity per idea (e.g., 0.25%–0.5% for single-ticket trades).
- Size by ATR: position_size = (risk_per_trade) ÷ (ATR_stop_distance × pip_value).
- Halve the risk when trading into major scheduled data within 24 hours.
- Cap total theme risk: if three GBP trades express the same BoE view, their combined risk ≤ 1× your per-trade risk cap.
Stop placement: outside the noise, inside the thesis
Stops live beyond the invalidation level, not at round numbers. If your story is right, the price shouldn’t need to go there.
- For level-based entries, place stops a few pips beyond the opposite side of the structure plus 0.25× ATR.
- For breakout retests, put stops back inside the range by at least 0.5× ATR to avoid whipsaws.
- Move to break-even only after a clear market-structure shift (HH/HL for longs, LH/LL for shorts), not after an arbitrary pip count.
- If the fundamental driver flips (policy guidance changes), exit regardless of technicals.
Trade management: scale with confirmation, cut on invalidation
Winners should get more rope when the driver persists; losers get no second chances without new information.
- Partial take-profit at 1R; trail remainder behind higher lows/lower highs on the 1H/4H.
- Add on fresh catalysts in the same direction only after a clean pullback resets risk.
- If price closes through your invalidation level (not intrabar), close the trade—no “hope” extensions.
- Reduce exposure by 50% ahead of top-tier data if open profit < 1R.
Correlation control: avoid doubling the same bet
Many FX trades are the same theme in disguise. Treat correlated positions as one risk unit, so a single headline can’t sink you.
- Treat USD, EUR, GBP, JPY baskets as clusters; limit simultaneous trades within one cluster.
- If two trades have >0.7 correlation over 20 days, split risk 60/40 or drop the weaker setup.
- Hedge theme risk with a small counter-theme micro position only if the correlation is imperfect and the hedge has its own edge.
Playbook around the calendar: plan the week, not the day
The calendar drives flows. You’ll plan around central bank meetings, PMIs, CPI, jobs data, and major risk events so surprises help you, not hurt you.
- Build a weekly “no-trade window” around black-swan-prone releases (e.g., first 5 minutes after top-tier data).
- Trade lighter the day before a central bank decision; increase risk only after guidance confirms your bias.
- If a print massively contradicts your theme, flip to neutral and wait for the next confirming data—don’t revenge trade.
Session tactics: London open, NY follow-through
FX flows cluster by session. Use session structure to catch genuine moves, not the overnight noise.
- Focus 30 minutes before to 90 minutes after London opens for initial range breaks.
- Use NY open to add or exit as US data and equities shift global risk tone.
- Avoid initiating during late NY/Asia drift unless a surprise headline hits and liquidity is still decent.
Newsflow handling: be fast, but be filtered
You don’t need every headline—only the ones that change policy paths or risk appetite. Build filters so you act only when it matters.
- Define “actionable” news: central bank guidance changes, inflation shocks, jobs shocks, fiscal surprises, and major geopolitics.
- Create a one-liner decision tree: “Does this change the policy path?” If yes, reassess bias immediately; if no, ignore.
- After a shock, let the first 5–15 minutes print structure; trade the pullback, not the spike.
Play selection: choose the cleanest expression
The same macro view can be expressed in multiple ways. Pick the pair where your strong currency meets the weakest counterpart to maximize edge.
- For pro-risk themes, express via AUD/JPY or NZD/JPY; for de-risking, consider USD/JPY or CHF crosses.
- If USD is noisy, pivot to crosses (e.g., EUR/AUD, GBP/JPY) to isolate the pure relative story.
- Avoid pairs with conflicting drivers (e.g., both currencies strong or both weak).
Record-keeping: journals that actually improve P&L
Process beats memory. Keep a tight loop of planning, execution, and review to refine your edge.
- Pre-trade: write the catalyst, bias score, entry level, stop, size, and what would invalidate the idea.
- Post-trade: tag outcome by error type (analysis, execution, or randomness) and note if rules were followed.
- Weekly: update currency scores, audit theme concentration, and retire rules that don’t move the needle.
Scaling and professionalism: from retail to managing money
Treat trading like a business from day one—risk, reporting, and client-friendly volatility. Jarratt’s approach adapts well to higher capital because it’s built on liquid themes and controlled drawdowns.
- Target smooth equity curves: limit monthly drawdown (e.g., 3%–5%) and reduce risk by 50% after two consecutive losing weeks.
- Diversify by theme and time horizon: mix swing positions (multi-day) with event-driven intraday add-ons.
- Standardize reporting: weekly NAV, open risk, theme exposure, and worst-case drawdown under stress assumptions.
Mindset: process over prediction
Conviction comes from rules, not ego. You’re not forecasting a number; you’re aligning with flows created by changing expectations.
- Never hold a view without an active catalyst—bias expires unless refreshed by new data.
- Embrace “missed is neutral”: if you miss the move, don’t chase; wait for the next pullback or the next catalyst.
- Tie confidence to checklist scores and rule adherence, not to recent wins.
Build bias from fundamentals, execute with simple price action levels.
Jarratt Davis starts with the “why” before touching a chart. He builds a directional bias from central bank paths, data momentum, and risk sentiment, so he’s trading the flow of capital rather than guessing tops and bottoms. Once he has that bias, he narrows to the cleanest pair where one currency is clearly stronger than the other, keeping the story simple and repeatable.
With the “why” locked, Jarratt uses plain levels to execute—prior day high and low, obvious swing points, and session opens. He waits for price to pull back into those levels, looks for tight rejection, and sets a stop beyond structure so noise can’t shake him out. The entry is patient, the stop is logical, and the target is set where the story would naturally carry price. If the fundamental driver flips, he’s out—no debate, no hope, just back to the checklist.
Size positions by volatility; cap theme exposure across correlated pairs
Jarratt Davis sizes every trade by what the market is actually doing, not what he hopes it will do. He ties risk per idea to a small fixed fraction of equity and lets ATR or recent range decide the stop distance. Wider volatility means smaller size; calmer tape allows a bit more size for the same dollar risk. This keeps losses consistent and prevents one wild candle from wrecking the week. He also scales down ahead of major data to keep event risk from skewing outcomes.
Jarratt Davis treats correlated pairs as one big bet, not separate trades. If two positions share the same macro driver, their combined risk stays within its single-idea limit. He splits exposure across the cleanest expression rather than doubling up on the same theme in disguise. When correlations spike or the theme gets crowded, he trims back to the strongest setup and shelves the rest.
Trade only clear catalysts; skip choppy narratives and conflicting drivers
Jarratt Davis insists that every trade begins with an obvious catalyst that shifts expectations—central bank guidance, CPI shocks, jobs surprises, or a decisive risk-on/off turn. If the narrative can’t be explained in two plain sentences, he bins it and saves risk for a better setup. He wants one currency clearly strengthening and the other clearly weakening, not a mushy “maybe” on both sides. When headlines conflict, he freezes the trigger and waits for the market to vote on direction. Patience here prevents entries that die in noise rather than travel on genuine flow.
Jarratt Davis also filters for catalysts that persist beyond the first spike, favoring themes with follow-through over single-print blips. He looks for reaffirmation—subsequent data, speeches, or price structure that respects the story—before adding or holding size. If fresh information negates the driver, he abandons the theme immediately and hunts for the next clean one. Clarity of catalyst equals clarity of risk; without it, he treats “no trade” as the winning decision.
Plan around the calendar; tighten risk before top-tier data.
Jarratt Davis treats the macro calendar like a roadmap, not a surprise generator. He builds the week around central bank meetings, CPI, jobs data, and PMI, so he knows exactly when flows may change character. That planning creates deliberate “no-trade windows” where impulse decisions are replaced by pre-set rules. The goal is simple: be positioned when information confirms the bias, and be small or flat when randomness spikes.
Ahead of top-tier releases, Jarratt Davis tightens risk so a single print can’t define the week. He cuts position size, trims open profit, and replaces market orders with stop-limit entries to avoid slippage on whippy first moves. If open trades sit under 1R, he lightens exposure; if they’re well in profit, he locks a portion and lets the remainder ride only if structure agrees. He won’t chase the initial spike—instead, he lets 5–15 minutes print structure, then trades the pullback in line with the thesis. If the data flips the story, he stands down immediately and rewrites the plan before a single new order goes in.
Manage winners actively; cut losers fast on thesis invalidation.n
Jarratt Davis believes winners should expand only when the market proves the story, not when emotion spikes. He takes a first scale at around 1R to bank momentum, then trails the balance behind higher lows or lower highs on the 1H/4H, so price action pays the risk bill. When fresh confirmation arrives—like follow-through after a catalyst—he adds on a clean pullback rather than chasing the breakout candle. This approach compounds strength while keeping the trade structure-led and low-drama.
On the flip side, Jarratt Davis cuts quickly the moment the thesis breaks, even if the chart still looks tempting. Invalidation isn’t a gut feel: it’s a close through the key level that defined the setup, or new information that kills the fundamental driver. He uses time stops to boot trades that go nowhere, freeing risk for clearer opportunities. No averaging down, no hoping—just exit, review the rule you broke (if any), and redeploy on the next clean setup.
Jarratt Davis leaves you with a simple but powerful playbook: let fundamentals set the destination and let price action handle the driving. Across the interview, he hammers the 80/20 split—most of your energy goes into understanding central bank paths, data momentum, and risk sentiment, then you use clean levels and session structure to execute. He’s ruthless about catalysts that actually change expectations, patient about waiting for pullbacks instead of chasing spikes, and quick to exit the moment the thesis breaks. The lesson isn’t about predicting numbers; it’s about riding flows created by changing probabilities.
Equally important, Jarratt Davis treats trading like a professional business. He sizes by volatility, caps correlated exposure, and plans around the macro calendar so randomness doesn’t define his month. He journals decisions, recognizes early signs of drawdown psychology, and steps back before damage compounds. Whether you’re retail or moving toward managing outside capital, his blueprint scales: build a checklist-driven bias, express it through the cleanest pair, and defend your equity curve with process discipline. If you follow those rules, you’ll trade fewer opinions and more edges—the way Jarratt does.
