Author: Forex Kong

Trading Against The Grain – AUD And Risk

Forex Kong Got something to say?

With every single headline, and every single website singing high praise to the “economic recovery” in the U.S , with disasters averted left and right, and an equities market seemingly “constructed out of pure titanium” – it’s difficult entertaining ideas that “anything” could go wrong.

One always has to keep in mind that when “too many people” are leaning hard in one direction, markets have a tendency to “correct that” – often with incredible efficiency.

Even if you’re of the mindset that “nothing is going to stop this train” you’ve still got to consider the normal market dynamic known as “profit taking” – where traders / investors simply decide to “take a little bit off the table”.

The recent moves upward in both U.S equities as well the Australian Dollar are highly correlated here, as the two both represent “risk on” market sentiment. It’s difficult to comment on the “never-ending rise” of U.S equities in light of recent events, however what I can tell you is that the Australian Dollar (AUD) is as “overbought” as it’s been for months , “if not” over the last entire year – on continued decline in volume.

If for no other reason than purely “technical trading” ( let alone with combined fundamentals ) short AUD is setting up for an extremely low risk / high profit opportunity here.

An opportunity I intend to take considerable advantage of.

Trade ideas include: long GBP/AUD as well EUR/AUD, as well short AUD/USD, AUD/CHF and AUD/JPY just to name a few.

Stock traders can have a look at the ETF: FXA

I’ll plan to “tweet” entries / ideas in real-time moving through the week. Should the correlation stand, I’d also be looking for downside action in equities.

Change Is Coming – Start Making Plans

Forex Kong 28 Comments

I’ve been pretty quiet here these past few days…….and there’s reason for that.

I’ve been busy planning.

Aside from the fact that I can’t bear further discussion of the current (or future) state of America, I’ve been very busy planning. Planning for the “next big move”, for the “next big win”, for the “big enchilada” , the “piece de resistance”, the “creme del la creme”, the trade plan / concept for the following year….no scratch that – the following “years”.

Wether you believe it or not – we are indeed on the cusp of a major turning point.

I don’t mean a simple turning point in the short-term direction of markets no ( we’ve got tools to navigate that )…..I’m talking about a major turning point with respect to how you currently live your life ( depending on your age ) , and certainly how you “view” your life with respect to your ability to “accept change”.

I can’t comment on your own timeline. I don’t know if you are 65 or only 16 years old. Point being….regardless of where you’re at – you’ll have to open to the idea that things are going to change…….and likely change far more than you’d ever anticipated.

My dad used to read comic books as a kid – filled with wild ideas of “humans in outer space” and the “discovery of other worlds”. Boom – there we are a few short years later “walking on the moon”.

I “heard” about this thing called “The Internet”, lied to my local bank about starting a “house painting business” , got a loan for 2500.00 and blew the entire thing on a P.C computer. Boom – I’ve travelled the world and life’s a beach.

Changes come fast, some of them good, and some “not so good”.

Change is coming…….and you’ll need to start making plans.

 

U.S Debt Downgraded By Chinese

Forex Kong 19 Comments

Finally we get a solid move on the fundamentals, as last nights downgrade of U.S debt from Chinese ratings agency “Dagong” sent the U.S Dollar spiralling down.

Now Dagong is no “Moody’s or Fitch” ( currently rating on “negative watch” ) but this in itself brings about a very interesting point.

A Chinese ratings agency having such a significant impact on the dollar? Wow.

You might expect this kind of move given that a “reputable” agency in the U.S gave the “thumbs down” on the debt ceiling debacle sure…but a Chinese ratings agency?

As the largest holder of U.S Debt / Treasury Securities on the planet it is now painfully clear how much influence China truly has. The agency suggested that, while a default has been averted by a last-minute agreement in Congress, the fundamental situation of debt growth outpacing fiscal income and GDP remains unchanged. “Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future”.

Kicking the can a couple of months further down the road makes little difference when the U.S will just be back in the news then…..still unable to pay its bills.

The short USD trades obviously made big moves here overnight, but not exactly as expected. Great gains in EUR, GBP as well CHF but oddly the “commodity currencies” have shot higher. An interesting dynamic and certainly one to keep an eye on as NZD as well AUD approach overbought levels.

Gold up a wopping 34 bucks here this morning, so perhaps we’ve got the “risk off” flows on the move.

Looking For Guidance – All The Wrong Places

Forex Kong 8 Comments

So you are looking for guidance (long pause)……………Completely understandable.

You’ve got the entire planets combined libraries / resources at your fingertips and nothing but time on your hands ( sitting in some cubicle somewhere surfing on “company time” ) yet….the markets still keep you guessing.

I can assure you – you are not alone.

If one truly “chooses to succeed” at any given discipline, you’d have to imagine the amount of time and effort required to do so no?

Take an Olympic athlete for example, spending literally “years and years” training if only to be given “the opportunity” to strut their stuff on the world stage, then “thrashed” in the qualifiers and “sent packing” before the games really even start. Talk about a disappointment.

Where they looking for an “easy ride”? Did they expect “someone else” to do the work?

Killer is……the athletes “did the work” and “still” got their asses kicked before the show even started.

I’ve seen supposed “gold gurus” lose everything ( as well as their entire subscriber base), as well as “NY stock picking legends ” get their clocks cleaned ( and even more so coming soon ) clinging to a single / pathetic trade plan based solely in the continued obliteration of the U.S Dollar so…….

If you are looking for guidance…fair – I can help you with that (to a certain degree). If you are looking for a “free ride” you’ve really got to ask yourself….

YOU ARE SURFING THE INTERNET TAKING ADVICE FROM 16 YEAR OLD BOYS POSTING FROM THEIR PARENTS BASEMENT SUITE IN MINNESOTA!

Start taking control of this “for yourselves”.

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.