First things first. You’ve gotta get a grip on the current “fundamental forces” that are driving a particular currency either up, or down relative to others. For example, if you were told that the U.S FED has plans to continue printing USD to effectively “manage” their current debt crisis – to a degree that will eventually drive the price of “things” to infinity. Would you consider this to be a good thing for the currency? Or (fundamentally) a negative?
Ok, now you find out that Australia’s (or Canada’s for that matter) economy is currently pounding on all cylinders…with job creation, and increased housing starts, growing exports of commodities etc – and even talk of “raising” interests rates rattling around the net. Same question – good or bad for the currency “fundamentally”?
I think you’ve just framed your first trade – solely based on fundamentals! Now these factors change rapidly, and at times can be 100% completely reversed ( for example when investors are scared – they run back to the “safe havens” – regardless of the poor fundamentals). You wanna know why?
If the world ended tomorrow, or if suddenly we were faced with global panic / fear or whatever……which currency would you rather have in your pocket? I don’t think you’d have much luck “buyin guns” with a bag full of Swedish Krona.
I look back on last night’s post and frankly……bust a gut. A touch “brash” fair enough – but……when there’s nothing else to say….well – there’s nothing else to say. Obviously the foresight gained through study of currency markets ( opening Sunday afternoon) held true, and I live to blog another day “sans” consumption of crow. A massive upturn across markets, as Uncle Ben’s QE money finds its mark. How’d I know? – Common – I told you a couple of days ago!
Regardless…some interesting observations here “blog wise” – as traffic literally falls off the map, with huge gains abound, green candles everywhere, happy smiley investors, and tranquil “bliss” scattered ‘cross the net like tortilla’s in a hurricane. Apparently…..Kong no longer needed.
Tranquillo amigos. I booked my profits today at the NYSE close.
We go higher from here sure ….but “I” go higher with 4% more gas in the tank than this morning so……take it for what it’s worth…most guys are lucky to bank that….yearly.
Don’t be an ass if you see profits in this environment – take em. We’ve seen some fear here in recent days – with everyone scrambling for info…..scrambling for some ” sense of it all” – and now with one big “up day” you think you’ve got this thing solved?
Please……..is that greed talking?
I’ve got nothing else……there is nothing else.
Get long………seriously…..or get bent.
The pack fo dogs that had taken up residence across the street appears to have moved on. It’s much cooler here now, and the majority of Mexican families enjoying the last of their summer vacations, are also leaving – in exchange for the steady stream of “sun seeking retirees” now seen dotting the beach. There are fewer children now…their playful laughter will be missed.
My mother tells me that I need to find balance, and not spend my life staring at this confounded computer…she always knows best. Over the years I’ve come to recognize the importance of this – despite having incredible difficulty putting it into practice..I do try.I do try to find “balance”.
Often trading can become “all-consuming” for those of us who so enjoy the challenge. Day after day the constant battle, the math, the pressure, the flood of emotion accompanying every success or failure. The joy – the pain. So the importance of “getting away from it all” and clearing ones head – cannot be understated.
The sea turtles are waiting. Their calming presence – a gift.
Find the time to get away from the screen – as we all know – come Monday…….the wolves will be waiting.
The euro is the second largest international reserve currency as well as the second most traded currency in the world after the United States dollar.Regardless of the poor fundamentals and ongoing crisis in Europe, these two important facts cannot be denied – and one has to consider that by way of “default” – any suggestion of “dollar weakness” must also consider the opposite – EUR strength.
For many this doesn’t make much sense.In that the majority of us, see the EU Zone crisis as being much worse than that of the U.S – and that if anything the Euro should be plummeting and the dollar rising. It doesn’t work that way. By simple way of “who’s printing press runs faster” – in the current environment of massive central bank intervention – it stands to reason that (in attempt to bring down the cost of their debt) the U.S will continue to devalue the dollar at all costs – resulting in a higher Euro.
Take it for what it is, and hopefully find a way to profit from it. Come to terms with the fact that “these days” a whole lot of things don’t make sense.
At risk of alienating the entire viewing audience here at Forex Kong…… I’ve spent at least a full second (possibly two) considering the implications/ramifications of me just “letting it rip” and letting you really have it.
When people find themselves in losing positions, emotions run high – and with nowhere else to turn, it’s not uncommon for those of us with a “comment button” to bare the brunt of it. Trust me….I received several “nasty rants” today from people who don’t even frequent the blog! – complete strangers!
Well…………I will have none of it.
For those of you who can’t take responsibility for you own decisions, or trade with absolutely ridiculous leverage, or have no actual idea what you are doing (short of taking advice from some “snake oil salesman” and some bogus trade strategy), or for whatever reason think that this is gonna be easy…..please.
There’s nothing for you here. You act smart…..but you trade stupid.
Kong……long risk ( even moreso now ) holding gold and silver til they rip the shares (options) from my hands.
Considering the overall weakness in U.S equities today, and the blistering panic spread ‘cross the financial blogosphere – my currency trades / accounts have barely budged an inch. As cranky pensioners and smart alec newbies race for the exits, screaming, “pleading for answers” as to why their “all-in” equity trades are in the red, falling like dominos to the wall street fatcats gobbling up their shares…all is calm with Kong.
The EUR even picked up a full 100 pips against the dollar, as U.S equities get taken to the cleaners (and I mean that quite literally), as the last of the weak hands are rinsed of their shares. This may continue ( but I doubt it).
The U.S equities market is the “number one largest measure of risk” I currently track in my pocket full of charts and graphs. At every crossroad, at every turn – no matter how sure you are of a particular trade – you will be tested. It is so painfully obvious, through observation of currency movement – that this is the final stage of “shake out in weak hands” as the big boys are buying shares hand over fist.
How do I know?
- How about complete reversals in several currency pairs suggesting “risk on” taking hold.
- Only modest pullbacks in pairs that have already reversed (I will be adding to these..not selling).
- The EUR gaining 100 pips against USD, as well JPY and even moving on CAD!
The currency markets are not at all in step with the sell off in U.S equites, and most certainly paint a clearer picture of the road ahead. You can trade it, or you can watch from the sidelines – but you can’t win if you don’t buy a ticket.
The Japanese Yen is considered a safe haven currency primarily because the majority of Japan’s debt is held locally, by japanese citizens. Unlike in the Unites States where , in case of default – many countries would be at risk of loss – Japan’s debt is mostly held locally and therefore represents a higher degree of safety.
A weaker yen translates into increased competitiveness for Japanese companies overseas, since they can provide products and services their cheaper and still reap a healthy profit in yen when they repatriate their profits from abroad.
When currency traders start to see money flowing “out” of the yen – this is often a sign of “risk on” behavior, as the money is seen exiting the safe haven protection of the Yen – and likely filtering into higher risk currencies and assets.
Overnight, we’ve seen a considerable wave of Yen selling as many other currencies have made considerable ground (USD some 80 pips as well CHF for 100 pips, as well AUD , NZD and even the EUR) So keeping a close eye on the Yen can prove to be valuable indication, that a turn is near.
I am currently long USD/JPY, AUD/JPY, NZD/JPY as well long EUR/JPY – AUD/USD, NZD/USD and short USD/CAD.
I wasn’t really planning on getting deep into this – this soon but as the name suggests – I do trade currencies, and I do trade currencies well. You can’t just pick a currency pair, pull up a chart and plan to trade it – as if it was a common equity. The volatility inherent to currency markets, coupled with the massive leverage offered by brokers is a sure-fire recipe for account liquidation – and the lack of good, solid “tradable” information available on the net ( in my view) is slim to none.
The currency market is designed (like no other if you ask me) to very quickly part the newcomer from his hard-earned dollars – with the promise of massive gains, and very little start-up capital. This could not be further from the truth. Anyone even considering opening a currency trading account with the piddly “get started now with 2K and a free 50k trading account!” – will be left with zero – likely before close of their first day trading. It takes extremely disciplined trading, and razor-sharp money management rules to successfully navigate the currency world.That, paired with extensive fundamental knowledge of the underlying, and a current bead on daily news flows globally – minimum.
Each individual currency pair exhibits it own unique characteristics that cannot be discounted or disrespected.Volatility in currency trading can wreak havoc on an account, and the leverage offered is so tempting to newcomers that in combination – accounts are likely wiped out daily. I wonder if the brokerages expect anyone to even make it through the first week – building their business models solely on the “minimum required deposit” to open the account – and in turn striping you of it.
In any case…we will certainly peel the onion here over the coming weeks – but as it stands my suggestion to you would be: Do Not Trade Currency – Until You Know How To Trade Currency.
A question….would you climb into a formula one race car, and hit the track against an armada of seasoned veterans – without first considering where the gas pedals and brakes are?…..I didn’t think so.
I live with ants.
Going back now…..some 12 or so years – the ants have become my friends….my confidants……my unspoken and loyal followers…… my pals. Happily going about their business…..as I’ve done mine – a mutual respect if you will.Then I got involved with this “trading thing”……and the ants and I needed make room for “a new animal” – oddly…..enter….”the wolves”.
Hardly indigenous to central or south america…these “wolves” kept poppin up….. via my computer screen! As my ants continued over and across….morning after morning, we where now faced with these confounded wolves. Wolves I tell you! Wolves in my computer!
He he….again…..I digress.
Point being…….each and every day you enter the markets – be prepared. You will encounter wolves.Their teeth are sharp, they travel in packs, are highly organized and will gladly tear you to shreds at a moments notice.
I’ve got nothing to add “market wise” as things are going exactly as planned. But there will be much more on wolves, ants, rats, snakes, bulls, bears, roaches, hawks, doves – and the rest of the characters we trade with everyday.