Author: Forex Kong

Take Profits – There Is Always A Trade

Forex Kong 9 Comments

If I didn’t take profits as often as I do – I seriously doubt I’d be this far ahead. There are few worse feelings than seeing a trade go well into profit, waking up the next morning to see – that not only has the profit evaporated, but the trade has actually gone against you. Volatility in forex trading  can be an absolute killer (not to mention greed) – so when profits are sitting on the table…..you’ve got to learn to take them.

Take the long JPY trades over the past 24 hours for example. I went short CAD/JPY (so…looking for JPY to gain strength against CAD) and caught a 100 pip move over a 4 hour period. That’s what I call a really nice trade.

Seeing the “waterfall” type selling pressure in the pair, I knew from experience that this type of market behavior doesn’t “last forever” and would likely be followed with a bounce in the opposite direction. I exited the trade with a full 100 pips profit with absolutely no concern as to “what I might miss” in further downside movement – if I’d remained in the trade.

Here we are a full 24 hours later – and the pair has 100% completely retraced the entire 100 pips from yesterday.

Take Profits Often When Trading Forex

Take Profits Often When Trading Forex

You can never go wrong taking profits – never. As well, by keeping yourself relatively nimble you are also equipped to take additional trades or (such as in this case) re-enter the same trade at even better levels.

Learning to distinguish “when/where” to do this does take practice, but if you keep in mind that you are continually growing your account balance as well as limiting your exposure in the markets – taking profits often (very often) should become a regular part of your daily trading.

I rarely leave money sitting on the table – as there is always another trade. Take the money – call it a trade ( a good trade ) and get back out there with a little more gas in the tank.

Japanese Stocks – JPY Correlation

Forex Kong 15 Comments

The typical correlation between the value of a given markets equities, and the value of its local currency is pretty well illustrated here. The Nikkei has come along way – and as I expect JPY to take a bounce, one can only assume it’s likely time for a correction in Japanese stocks as well.

The chart below is weekly – and the horizontal line of support and resistance should be drawn with a “crayola crayon” not a laser pointer. When viewing a weekly chart one has to keep in mind that a “turn” doesn’t happen overnight. Imagine even one or two more candles tucked up there around these price levels  – and you’re already looking out to mid April.

Nikkei Close To Correction

Nikkei Close To Correction

At times  – some of my trades take weeks to develop, and then even longer to pay off ( all be it… pay off well ). For those seeking “instant gratification” when trading foreign exchange – perhaps you’ll need to look elsewhere.

Finding the opportunities is one thing – being able to effectively trade them is another.

It’s been a real grind sideways in the majority of the JPY pairs over the past couple weeks, and the trade has tested me on several occasions. With volatility at extremes and a lack of clarity in market direction – JPY certainly hasn’t “taken off for the moon” on this expected move higher. As outlined in the chart above – the probability of a substancial move remains. 

Filter The News – Find What Matters

Forex Kong 6 Comments

You people have been reading here long enough to know – I am a fundamental trader at heart. My success – rooted in my general interests in the global economy (not some little piddly lil stock market) and my ability to discern “WTF is going on” at any given time. Filtering the news plays a big part.

Day in and day out, we are inundated with more headlines and news flashes than we know what to do with – not to mention the fact that much of this news is conflicting, bias, or outright nonsense. What’s a trader to do when faced with such a barrage of misleading and conflicting information? You need to find the story – “behind the story”.

Take Cyprus for example. Most of you likely hadn’t heard “jack squat” of this tiny little country until a few short days ago. It’s GDP is ant sized, and its influence on the global stage – a speck.

Did you consider it’s relationship with Russia? Did you consider the implications of an EU country being supported and even “bailed out” by a sovereign country outside the EU Zone? A country with considerable interests in the massive offshore gas reserves of Cyprus, a country with direct ties with not only China – but also Iran? – likely not.

The real story here, is the same ol story of “east vs west” – not of EU Zone meltdown (although this is currently in progress as well) – and as the news would have many racing to short EUR/USD – I’d be  more inclined to take the other side of that trade.

previous article: “Long EUR/USD At 1.3170 – Watch Me”

We’ll see how things unfold here this evening as the Cyprus deal hits its deadline. I’m certainly in no rush to touch EUR as I generally stay away from this POS all together. EUR/USD traders need to keep in mind – it’s a forex broker’s dream, with promise of low spreads, easy trending characteristics etc….as every newbie on the block takes a crack at it.

Dear Future Forex Kong – Nice Work

Forex Kong 2 Comments

Dear “future” Forex Kong,

Obviously if you are reading this – the spaceship finally came together. You, your family and your “little Mayan friends” are all at safe distance, and you where smart enough to buy all the physical gold and silver  you could carry  – back in the Spring of 2013.

I can also assume that your hunch on China’s impact on the global economy and the currency markets came to fruition, that there is a stack of “renminbi” sitting on your dashboard, and that your Mandarin (官话) is now even better than your Spanish. Knowing you as I do – it’s unlikely you’ll have changed much with consideration to how you’ve lived your daily life these past 100 years or so………I expect that liver transplants have become the rage – and that your interests in Biotech, robotics and nano-technology have also served you well.

If you still aren’t married and have no kids ( as not to have found someone that could tolerate the constant counting/tapping/humming/drawing/writing/pacing) well……….I guess we saw that one coming.

You stuck to your guns, you didn’t give up – and before the Mexican authorities could grab you…..you finally got that damn thing off the rooftop.

Nice work.

Forex Kong Got something to say?

I wanted to re post this article on “patience” as it comes to mind often in my trading. At times when you may be frustrated or confused about market direction – it’s often a good idea to just step back and consider “patience…..patience….patience”.

Have a good weekend everyone.

Inside The IMF – Cyprus Is Russia

Forex Kong 5 Comments

You are aware that as of Sept 6, 2012 Russia has agreed to sell as much oil to China as they care to purchase – outside the use of the “U.S dollar” right?

Some believe that both countries are also hoarding as much gold as they can as well  – in preparation for a new trade system outside the use of U.S dollars.

According to the World Gold Council, Russia has more than doubled its gold reserves in the past five years. Putin has taken advantage of the financial crisis to build the world’s fifth-biggest gold pile in a handful of years, and is buying about half a billion dollars’ worth every month. As the U.S FED continues to print, countries in the East are moving further and further away from use of USD in trade. Can you really blame them?

I mean think about it. Why on earth should a person in China need to exchange the money in his pocket to USD  – before purchasing a barrel of oil from his neighboring country Russia?

In any case – Russia is  deeply invested in Cyprus ( with considerable interests in its offshore gas supplies, and billions of dollars sitting in Cyprus banks) not to mention the largest supplier of oil to Western Europe.

If Cyprus gets bailed out or assisted solely by Russia – this will be a massive slap in the face to the IMF – and would have significant geopolitical implications.

I’m no investigative journalist – but the more I dig the clearer the picture becomes.

No wonder the IMF is involved.

Inside The IMF – U.S Pulls Strings

Forex Kong 6 Comments

The U.S. government has by far the largest share of votes in both the IMF and World Bank and, along with its closest allies, effectively controls their operations with 18% of the votes in the IMF and 15% in the World Bank.

Together, the United States, Germany, Japan, the U.K. and France control about 40% of the shares in both institutions.The rest of the shares spread among 175 other member governments, some holding just a tiny number of votes, so in a general sense – the United States is effectively in charge.

Currently Timothy F. Geithner is listed as the U.S Governor to the IMF – with our good friend Ben Bernanke listed as “alternate”.

The IMF makes sure that U.S. allies get the financial support they need to stay in power, abuses of human rights, labor, and the environment notwithstanding; that big banks get paid back, no matter how irresponsible their loans may have been; and that other governments continually reduce barriers to the operations of U.S. business in their countries, whether or not this conflicts with the economic needs of their own people.

The IMF lends money to governments. Because many governments, especially governments of poor countries, are often in dire need of loans and cannot readily obtain funds through financial markets, they turn to The IMF . And if the IMF will not loan to a country, international banks certainly won’t. As a result, the IMF wields great power, and is able to insist that governments adopt certain policies as a condition for receiving funds. As seen through the economic and environmental fall out after IMF intervention in Ecuador in 2001 – 2003 (more on this later).

In some way this could be perceived as “a loan of last resort/loan sharking” – considering that the country accepting the loan is now in scenario where the IMF can dictate repayment terms (at unrealistic interest rates) in order to impose even greater influence – ( In Argentina for example –  The Buenos Aires water system was sold for pennies to Enron, as was a pipeline going from Argentina to Chile) as corporate America swoops in and buys prime assets on the cheap.

Inside The IMF – The Darker Side

Forex Kong 5 Comments

I’m sure that most  of you have heard of the organization The IMF – but likely not in this light. I have been researching this for some time now, and over the next couple posts hope to share with you what I’ve learned.

The International Monetary Fund (IMF) is an international organization that was initiated in 1944 at the Bretton Woods Conference and formally created in 1945 by 29 member countries. The IMF’s stated goal was to stabilize exchange rates and assist the reconstruction of the world’s international payment system post-World War II.

Countries contribute money to a pool through a quota system from which countries with payment imbalances can borrow funds temporarily. Through this activity and others such as surveillance of its members’ economies and policies, the IMF works to improve the economies of its member countries.

The IMF describes itself as “an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” The organization’s stated objectives are to promote international economic cooperation, international trade, employment, and exchange rate stability, including by making financial resources available to member countries to meet balance of payments needs. Its headquarters are in Washington, D.C., United States.

Voting power in the IMF is based on a quota system. Each member has a number of “basic votes” (each member’s number of basic votes equals 5.502% of the total votes), plus one additional vote for each Special Drawing Right (SDR) of 100,000 of a member country’s quota. The Special Drawing Right is the unit of account of the IMF and represents a claim to currency. It is based on a basket of key international currencies.

Ok so we get it – an international financial group all pitching in to a communal “fund” where the more that your country contributes the greater the number of votes (and influence) is given.

I wonder if you’ve already got some idea as to where I’m going with this.

Any idea of which country is the largest contributor and in turn receives the most votes/influence?

Next in the series: Inside The IMF – U.S Pulls Strings

Trading JPY – When Short Turns Long

Forex Kong 24 Comments

If you’ve been trading the Japanese Yen (JPY) alongside me these past few months,  I’m sure that you agree….the currency has been a real friend. The steep and steady slide of JPY over the past few months has made for some excellent trade opportunities – for that I am thankful.

Once you’ve tracked and traded a currency this tight, for an extended period of time – you really start to get a feel for its movements. What time of the day holds action, when to sit out, when to step on the gas, or when to sit back and enjoy the ride. By now you’ve got 8 million horizontal lines of support and resistance drawn at levels you’ve now come to know in your sleep. You are now….one with Yen!

As we know nothing moves in a straight line, and no currency exists in a vacuum so….at some point the tides change and your “easy ride down” morphs into some “bumpy days sideways” until finally a correction “upward” is due.

Taking into consideration that JPY is still very much so considered a safe haven currency (as we’ve been over  – with Japan holding the majority of its debt domestically), coupled with current fundamentals shifting  “towards” risk off behavior I feel the time is coming very soon to flip this one upside down – and start looking LONG JPY.

For me this would manifest in taking “short positions” in AUD/JPY, NZD/JPY,CAD/JPY and possibly several others as markets continue across the top before making their move lower.

Bernanke is on deck for Wednesday with the FOMC minutes being released so…I imagine he’ll want to talk it up that QE is right on track and set to continue. This along with the current fluster of information out of the EU Zone makes for a pretty tricky couple days. I will be monitoring and watching all my previously drawn lines of S/R as they will all just get hit again on the upside.

In this case I am considering that buying JPY will align with “risk off coming into markets” for those of you looking to line up the fundamentals. JPY is a safe haven and is likely “bought” in times of risk aversion.

Kong Hits 100% Cash Target

Forex Kong Got something to say?

I’ve done it.

Overnight I took a number of smaller trades looking to fill gaps in many of the JPY’s charts. A number of those paid off and I’ve also sold my remaining  “short USD”  trades for a small profit this morning as well. The point being – I have moved to 100% cash as per my trade plan, and am exactly where I want to be for the coming days.

To an active trader the feeling of being 100% cash is truly , TRULY remarkable….as you’ve “officially” extracted “x number of dollars” from that devil of a market, and are able to put your feet up a day or two and relax. I’m really not much for that  – but in this case, will certainly take a day to re-evaluate and not worry about open positions.

From a completely psychological perspective, the opportunity to step away from the market is a welcome gift. I would encourage anyone who is struggling or confused, or perhaps those who are  underwater in a position or two – to take the time to get away from it all…if only for a day or two.

In my case – a time for celebration, as to have survived yet another  – trading adventure.

Kong………..gone.