Month: October 2013

Pre Default – You Are 100% Gambling

Forex Kong 7 Comments

I like to take a good punt “once in a while” just like the next guy.

When you’ve got your potential losses accounted for ( with a stop in place ) or if you’ve got that “little extra” in a secret trade account somewhere fine. You know what you’re doing. It’s fun. It keeps this from being entirely about “strategy and math” – and for many it also provides a “lil adrenaline” where possibly a “lil adrenaline” is needed.

You know you are gambling. No two ways about it. It’s a 100% complete gamble with such a macro “risk event” on the horizon.

Have fun with it. If you can afford to.

Now the question of the potential outcome “should” the U.S Government ( with absolutely no one else on the planet to blame other than themselves) actually push this “past” the deadline of Oct 17th ( which actually isn’t a deadline at all – but works for the purpose of this completely “self engineered stunt”) and actually default?

Even better question – what if they wait til the last-minute and then “don’t” make complete jack asses of themselves (only to do it a couple of weeks later), save the day, only to dig themselves a couple trillion deeper into the hole?

Either way – it’s a no win. Ooops…I digress – the post was about gambling.

It’s a joke. It’s an embarrassment. It’s 100% completely ridiculous ON TOP of ridiculous as…….potencial “global war” couldn’t do it……but single handedly the U.S Government will essentially “take itself” down. Unreal. And “not at all by design” eh? Gimme a break.

Oooops….

Regardless……if you think you’ve got a handle on markets these days ( which I seriously doubt) and have a couple extra dollars burning a hole in your pocket – go for it. Gamble away.

Question is  – What’s your angle then? You buying or selling on the news?

 

Forex Positions Update – USD Weak

Forex Kong 2 Comments

Short USD Trades – October 14 – 17th?

As per my posted “trade ideas” Friday, a couple of the “short USD” ideas have taken shape. In fact nearly everything is moving in said direction short of the pesky NZD. This damn currency has been bobbing around / consolidating for nearly a month and has proven to be a real stubborn pain in the ass.

https://forexkong.com/2013/10/11/my-trade-ideas-october-11-14-2013/

For the most part USD weakness “again” appears to be the move , although at this point nearly every single chart ( looking at nearly any time frame) could almost / just as easily go the other way.

The U.S Dollar is undoubtedly the “tough nut to crack” here, and “with it goes” the rest of it so…..

Here we sit. On the fence again.Kinda.

With risk events such as the U.S Gov Debacle only days away, it makes perfect sense that currency markets aren’t moving too much, as it also remains to be seen where equities, bonds and gold will find their direction.

I like where I’m positioned here but again, am trading with 1/2 to 2/3  smaller position size than when “out on the highway” so we keep things small while we come around the corners.

The Big Story Last Week – You Missed It

Forex Kong 9 Comments

Unlikely to have been mentioned on your local T.V last week, the “real big deal”  had little to do with the “circus in Washington” as, quietly behind the scenes The European Central Bank (ECB) and The Peoples Bank Of China (PBC) signed China’s second largest “currency swap agreement” for a wopping 350 billion Chinese Yuan.

In an unpresedented move The European Central Bank said: “The swap arrangement has been established in the context of rapidly growing bilateral trade and investment between the euro area and China, as well as the need to ensure the stability of financial markets.”

In doing so, the parties involved avoid swings in exchange rates. They can also be considerably less reliant on the U.S Dollar for bilateral trade and business deals.

China’s central bank has now signed currency swap deals amounting to some 2.2 trillion yuan with 22 countries and regions, with its continued efforts to internationalize the Yuan and rival the U.S Dollar as the world’s reserve currency.

What do “I” think this deal suggests with respect to the long-term future sustainability of USD, now with Janet Yellen a “shoe in” for continued money printing? Continued money printing???

What do “you think” I think?

Wow. Now EU Zone looking for options moving forward.

Trading The Swiss Franc – What To Know

Forex Kong 6 Comments

Switzerland’s currency, “the franc” plays an important role in the international capital markets.

Due to Switzerland’s history of political neutrality and reputation for stable and discrete banking, the Swiss franc is generally looked upon as a safe haven in international capital markets.

During times of international turmoil investors often flee to the safety of the Swiss franc. For that reason, when volatility rises in the financial markets  ( have you checked volatility as of late? ) , investors often bid up the Swiss franc at the expense of other currencies.

I rarely trade CHF as the Swiss National Bank is notorious for “forex market intervention” and have “on numerous occasions” entered forex markets with massive sales / purchases in order to keep the currency under control.

We are living in desperate times and in turn, desperate actions “may be required”  – in order to survive. I strongly encourage all of you to do a bit of research, in order to better understand the Swiss Franc and it’s role in global currency trade.

To make a long story short The SNB has scared the bejesus out of speculators so many times in the past ( as to keep the currency from rapidly rising ) that it’s become the “two-headed step child” of the currency market for years. Massive interventions ( as the SNB has close to as much money as god ) have allowed the Franc to stay at a manageable level but…….as we are living in desperate times…..get an eye on it. 

Trades “short commods” and “long CHF” would also make sense moving forward ( however dangerous to the novice ).

My Trade Ideas – October 11- 14, 2013

Forex Kong 7 Comments

Forex Trade Ideas – October 11 – 14, 2013

The US Dollar has now made a “swing high” here,  at a very important and critical junction.

As usual ( these days ) the implications are considerable, depending on which camp you’re in.

Off the top of my head, further ( and continued ) downside here would see USD trading “lower” in tandem with “risk” (also trading lower) – which in itself is troubling, as we would “usually” consider “risk off” activity to be good for USD.

In a situation where both USD as well U.S Equities where to fall in tandem ( as we have seen on several occasions over the past year  ) it is also very plausible that we see both NZD as well AUD fall “even more”.

There would be absolutely no question that JPY ( The Japanese Yen ) would rise.

Trade ideas “would include” some pretty bizarre set ups – in that I would consider things like:

  • short: NZD/USD as well AUD/USD ( where USD falls…..but gulp – commods fall even more).
  • long: GBP/USD as well EUR/USD ( where USD falls, and these two take in flows straight up).
  • short: USD/CHF ( where USD falls and the Swisse France takes safety trade ).
  • long: JPY vs nearly anything under the sun, but especially AUD and NZD.

It’s far to early to tell, and the outline above is highly speculative but…..should further evidence of this unfolding be seen – I WILL IMPLEMENT TRADES IN NO LESS THAN 12 PAIRS IN A HEARTBEAT.

You’ve got to “at least” have a trade idea / plan in mind, then allow it to either play out or fail, as opposed to just turning on your television. Getting this one right could generate some serious, serious profits but again……………you’ve got to have an idea, a plan – before heading out on the field.

 

 

Bulls And Bears Make Money – Gorillas Make More

Forex Kong 3 Comments

People say to me……. ” Ya ya Kong… you with all your “macro mumbo jumbo” ( yada, yada, yada ).

Damn it Kong! Just gimme a break, and tell me how to make some money today! I want to get rich today Kong! Today!

Well…..

Short term traders need to learn a little more patience, while long-term investors need to get “a little more involved” with the day-to-day action no? The age-old sayings “you can’t have everything” or perhaps “the grass is always greener” certainly come to mind.

The entire concept / principals of “trading like a gorilla” wedges us “in between”, taking advantage of “all opportunities” regardless of what markets do cuz……(guess what??) MARKETS ARE GOING TO DO WHAT THEY ARE GOING TO DO NO MATTER WHAT!

We certainly can’t control that.

So let’s take a quick look at today…..and consider that U.S equities rallied I dunno…..like “to the moon” in a single afternoon! To the moon Kong! The moon you ass! Everything is going up ! Up! Up! Damn you Kong! I just want to get rich and go live on a beach! What the hell is going on down there? I need to get rich! Now!

He he he……Everyone needs to just calm down, take a deep breath, understand that it’s just another day and take it for what it is.

Start looking “ahead” as opposed to “dealing with the present” and things will get a lot easier.

For some it might be interesting to note – I sold out this morning well early and in advance of this “massive run up in risk assets” missing what some might imagine as “an incredible opportunity to make money” though oddly…….every single thing I track / monitor suggests that I didn’t miss a thing.

If you where fortunate enough to “pick a stock” and take advantage of this short covering rally I commend you although – we all know what really happened today.

Bulls and bears both got taken to the cleaners.

Trade Plans – Moving Faster Than Can Be

Forex Kong 3 Comments

I’ve taken profits “again” here this morning on anything and everything related to the U.S dollar as well “risk” in general. It’s been a touch frustrating spending this last week “toiling away” under the daily barrage of headlines coming out of Washington, and as the days wind down to the “ultimate stand-off” on raising the debt ceiling limit – the likelihood of resolution increases.

These buffoons can’t possibly be so stupid as to actually risk default, and yet another damaging ( if not killer ) blow to American credibility on the world stage. I’m not sure I’ve ever seen anything more embarrassing for a country’s government, as daily news “across the entire planet” has this “top of the list” of blunders – LET ALONE THAT IT’S 100% COMPLETELY SELF IMPOSED!

It won’t be war, and it won’t be terrorism oh no…no natural disaster or alien invasion will do it nope. The American government can just step right up and get the job done itself. Absolutely unreal.

Trade wise….there is no doubt the media / Wall Street will “rejoice” a resolution, and rejoice in the knowledge that the ponzi scheme is safe and sound for another couple of months.

Commodity related currencies have traded flat as pancakes, GBP has pulled back,  and for the most part its been a complete “ghost town” out there leading up to this trainwreck completing.

I’m up 3% and back on the sidelines – waiting a day or two to see how things shake out, looking to take a shot at the “pop” on resolution. Then “back with the bears” into the new year.

Gold Priced In USD – Invest Don't Trade

Forex Kong 5 Comments

It remains to be seen as to what kind of “legs” this USD rally may have, and it’s implications with respect to the price of gold.

We’ve been over the “theory” as to why the Fed would prefer a lower price in gold as the US Dollar devaluation continues, but of course that’s all it’s been – theory. I fully understand the “short selling” in the paper market by Ben’s friends on the street, but to consider some kind of “global conspiracy” to keep the price “in line” with a sliding US Dollar would be a stretch for sure.

Looking at recent price movement we are “once again” in a position where both the U.S Dollar as well as gold have been falling together ( more or less ) where as just today, a decent “inverse” move with the dollar up and gold down another 17 bucks.

The analogy of “turning around a big cruise ship” as opposed to a motor boat comes to mind in that….these things play out day-to-day but are really moving on a much larger scale over a much longer period of time – and it does take time to turn that ship around. More time than most traders can bear.

It’s my view that anyone “building positions” in the precious metals around this area of price and time ( and lower ) shouldn’t really get into “to much trouble” looking longer term. It’s certainly not a trade, and it’s a big, big boat to turn so….weather or not you can take/manage the drawdown and slug it out is always a matter of ones personal trading / account / exposure / leverage etc…

Looking at specific “price levels” in an attempt to “nail it” on an asset worth 1300.00 bucks is a fools game, as fluxuation’s of 50 bucks here and there would apear normal ( % wise ) when trading “anything” of lesser value.

Hang in there is about all you can do.

2014 – You Will Never Trade It

Forex Kong 6 Comments

Ironically ( and in light of yesterday’s post “seen here first” ) overnight, both China and Japan have now publicly warned that the U.S better get its act together pronto.

As well (and again, I’ve got no crystal ball down here….only Mayan Shamans) The IMF (The International Monetary Fund) has now released the following:

“World growth will be slower than expected this year and next, and will take another big hit if the U.S. fails to resolve its debt drama, the International Monetary Fund warned Tuesday”.

“The IMF cut its 2013 global growth forecast by 0.3% to 2.9%.”

In other news ( not like you’ll see it on your local T.V ) China’s growth forecasts “specifically” have also been reduced.

Getting the message anyone????

Are you getting the message?

Zoom out and take a look at the next couple years, pull out your tin foil hats and get your shopping carts tuned up. 5 years worth of incessant money printing / stimulus, stocks “inflated beyond belief” and NO RECOVERY!

The normal business cycle ( which has been the same for generations ) has been stretched ,pulled , manipulated , extended “past” what we’d normally call “normal” and it’s time my friends……it’s time to get real.

I’m open to discussion as to “what the hell” to do about it, but the bottom line is – silver clouds / hope / faith / positivity / good attitude doesn’t pay the bills.

Start thinking “seriously” as to where you can look to tighten.

For your reading pleasure: https://forexkong.com/2013/01/31/2013-you-will-never-trade-it/

Safe Haven Trade – USD Or Gold?

Forex Kong 5 Comments

Something important came up in the comments area last night, and I thought it worth pointing out.

When we consider the impact of a “flight to safety” ie…….a move in markets where “true fear” pushes investors to dump risky assets ( and to literally….seek safety ) it’s impossible not to consider the U.S Dollar as being “top of the list” as the place to run and hide.

Now, this may seem “counter – intuitive” considering the recent ( and ongoing ) blunders within the Unites States but – that’s not even the point. Take a look at the chart below and note the total % of global currency trading for the top 10 most widely traded currencies in 2013.

Trade_Currencies_Global_Forex_Kong

Trade_Currencies_Global_Forex_Kong

That’s 87% of transactions to include the U.S Dollar, compared to a piddly 33.4% for Euro and only 23% in JPY rounding out the top 3.

As a simple matter of “default” when risk comes off and investors get scared – there is absolutely no question that USD will take massive in flows, as risk is unwound and risky assets and investments in emerging markets are converted “back” to USD.

Now, we’ve still not seen a “true flight to safety” as global markets have so embraced the never-ending flow of “free money” coming out of both the U.S as well Japan – with the general investment climate being one of accommodation. This can’t last forever.

You’ll recall I had envisioned a time where “all things U.S would be sold” and to a certain degree I see that this has already happened. Starting with bonds ( as suggested ) then the currency, and lastly ( alllllways lastly ) stocks now starting to show their “true value”.

I’m not concerned with much further “downside” in USD at this point, as one has to keep a couple other “macro” things in mind.

How long do you think the Chinese and Japanese holders of American debt are looking to stand around and watch their U.S denominated assets decrease in value? How far do you “really” think that Ben and the printing presses can push before somebody “really” pushes back?

Food for thought no?