You know me. I’m a currency guy.
As each of us “eventually” find our specific area of interest, be it options or futures, equities or bonds, currency or commodities, you’d like to think that – over time…..we get better at it.
After countless hours and many, many sleepless nights – finally……finally things start to come together. If you stick with it long enough “eventually” trade ideas and entry signals “literally” – come “leaping out of the computer screen”.
I suggested the other day that I was seeing weakness in the commodity related currencies. Those being the AUD, NZD as well the CAD. I also initiated a trade “short tech” last week – that is now about a “millimeter” from being picked up. The weakness in commodity related currencies cannot be ignored as…these currencies represent risk. Would it just be coincidence if we where to see the “short tech trade” get picked up , and see equities pullback as well?
I think not.
The currency market is like ” a gazillion times larger” than a single countries equities market, and it’s always been my firm belief that “currencies lead”.
You don’t get a “sell off in AUD” for example – because equities markets are looking weak. Equities markets “become weak” as “risk appetite” wanes. Appetite for risk is seen via currency markets “long before” it’s reflected in a silly bunch of stocks.
Take it for what it’s worth as everyone has their own views but…..to ignore movements in the currency markets, in exchange for headlines on the T.V, or perhaps an analysts opinion sounds like a great way to lose a lot of money.
I’ve entered “several new positions” short the commods against a variety of other currencies as my original “feelers” are looking quite good. GBP has been a monster, and CAD and AUD in particular have been taking some decent hits.
Kong! Razor sharp insight as usual – currencies dwarf all else (and central bank policies guarantee that ‘ain’t gonna’ change). Watch ’em
Thanks Power…
Again hoping to pass on a lil “tip” here and there – for those just getting started.
Thanks for this post Kong. As an equities dude I’m still pretty new to this currency stuff. But I have to admit…
I keep coming back here everyday because your perspective is clearly defined and adds an entirely new dimension of value that underpins these “silly stocks.” Today’s conclusion about taking your cues from global markets vs. talking heads really affirmed that point!
I still have lots to learn to avoid giving back all my hard earned profits. But your analysis is helping me take little steps each day — exactly what the doctor ordered. Thanks!
Hey J.
There are some pretty big “general facets” of the currency world that can really help alot ie…..safe haven currencies vs risk related currencies and how these move. As well I group currencies “geographically” seeing EUR and GBP trading similar, as well AUD and NZD.
When I say “silly stocks” what I really mean to say is….
I can’t for the life of me “keep things interesting enough” – looking at quarterly earnings and balance sheets of companies that go bust overnight regardless. Or in the case of Twitter for example – don’t even make a dime!
Perhaps I’ve become a touch cynical and a little jaded seeing time and time again regular “home investors” taken to the cleaners on a “stock tip” or a bankruptcy, as well with the understanding of “how the stock market really works”.
It’s just not for me.
Thanks for elaborating – I really appreciate your perspective.
With regards how the stock market really works — did you see the Chicago Fed tweeted the possible need for increasing QE (with an implicit 2014 year-end S&P-500 target of 2200)
http://www.zerohedge.com/news/2013-11-19/chicago-fed-evans-unveils-2014-year-end-sp-500-target
Crazy stuff. (As you have been predicting for awhile).
Ya I wish I had a larger platform as……I’ve been all but “guaranteeing it!” for some time now.
Ahh well….as long as I keep taking care of myself / trading well – we’ll leave the “media spotlight” for ZH.
For now at least…..
Ya I’ve sat in the QE forever camp for awhile myself as you know. Once this act is started, unless you get real growth in incomes and taxes you are effed. As Kong knows well….that isn’t really happening. Its bubble until you bust ’round them parts now!
You’ve got it JSKogs.
The genie is waaaaaay outta the bottle now.
Yes Kong….wayyy out. Alright are we finally seeing some of the behaviour I like!. One great thing about a market that is extremely manipulated is that it should cause periods of intense volatility as the central wankers ease and contract ease and contract. So, there should be, if one can protect capital well enough and be patient, great selling and buying opps. I am thinking this one coming should be decent risk off opportunity. Good luck
Now that everyone is playing the “who’s got the cheapest currency game” I’m a little confused as to – then what? Maybe that’s a chat for later.
Kong, advice for a newbie. I pulled 1% ish today and here’s what’s pissed me off. I BLOODY KNEW TODAYS RISK OFF WAS COMING. Last night to be be precise. I knew the Commods were gonna be weak and I knew Gold was gonna drop. I had my trade plan in place and managed to F..k it up all the same. It’s inexperience I know. At what point in Kong’s trading timeline did things settle? I’m sure I’m not the only one interested in a little “Kong History”.
I learned to take whatever profits I take – and just get back out on the field.
I see “lost profits” so often that I’ve learned to just ignore it, concentrating on “taking what I can” – and getting back at it.
It’s not easy, as we all dream of the “big long runs” where you can just hang at the beach and come home to even greater profits. But that’s not now. Recognition of “where you are at” Macro wise, may help in that – these days….my profit expectations are quite low.
My positions are small and my expectations are low BECAUSE I feel I have an understanding of “where we are at”. I see home runs pass me by several times a week Andrew. You’ve got to just revel in the wins ( however small ) and envision that you are “indeed improving”.
My guess is ( and forgive me if I’m wrong ) you probably saw decent profits, and didnt want to risk losing them – sold your positions, only to see them continue in your planned direction of choice.
This used to happen to me too ( and still does to a certain extent so….. ) but its really just a part of trading.
Focus on “catching the straight bits” and not worrying so much about every pip. If you’ve made money today ( in a down market ) you are most certainly a considerable step ahead of most.
“Kong History” he he he…..
Well….that’s another story entirely.
Hey Andy and other Kong readers, if in fact you did “take the profits too early” only to see them rocket in your direction leaving you having batted a single instead of that home run or grand slam, here’s a tip that has helped me out a great deal. It should at least get you scoring doubles or triples, and who knows, maybe that occasional home run.
Let’s use GBP/AUD for an example. Say you’re feeling like Kong and liking this pair to the long side right now (based on technicals, fundamentals, and/or just plain gut feelings). If you enter at 1.71, would you consider selling at 1.7165? While 65 pips isn’t a bad return (though barely a blip with this pair), would you ever consider selling this pair at 1.7165 if you missed your long entry at 1.71? Probably not if you like this pair long. Well, by taking that profit, you are essentially just selling it at 1.7165. Thinking about it this way, I usually stay in for a longer ride.
With that said, adjust accordingly (these days 65 pips would be decent on something like USD/CAD for example; and by these days I mean take the profits during the grind in this ranging market). Hope that helps.
Thanks David, you’re a gent.