currency trading

Waterfalls In Australia – AUD Going Down

Forex Kong 21 Comments

I’m not going to get into all the details here at the moment as……I imagine the majority of you could really care less.

“Just give us the trades Kong – what’s the trade Kong??”

The Australian Dollar is in real trouble here.

Considering that the RBA is opening “talking down” AUD as the currency is considered “overvalued” (and in turn hurting Australia’s economy), coupled with the fact that “it’s been a nice run” on the back of massive expansion and development of China – it could very well be time for some serious downward action.

AUD has already come down considerably but…..I might see a “waterfall” coming – in the not so distant future.

Trades short in AUD/JPY would likely make the biggest move, as well for stock traders short “FXA”.

Risk Appetite – You'll Get It "Eventually"

Forex Kong 14 Comments

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.

Small Trades Initiated – Smaller Expectations

Forex Kong 6 Comments

I’ve stepped into the market with a handful of trades, keeping positions very small – with relatively tight “mental stops”.

Seeing the commodity currencies stall early yesterday, I’ve got to keep pushing in order to continually pull money out of this “labyrinth” we currently call a market.

Not having the “larger time frame stars aligned ” in situations like these,  often what I will do is jump down to the smaller time frame charts “regardless” and apply the same technical know how / skill – only with far smaller expectations, far smaller position size ( if that’s even possible these days ) and with a set % of risk, all-knowing I’m not in the “absolutely best place to place a trade”.

Often these “feelers” turn into fantastic starter positions as I generally “buy around the horn” but….one has to keep an open mind – considering the current market conditions.

That being – nothing is for certain.

USD continues lower, but fairly “unconvincingly” as JPY has shown the “tiniest bit of strength” although again – with little conviction. The commodity currencies are weak, but still hanging in there, creating an overall trading environment fraught with indecision.

I’ve entered long GBP/AUD as well GBP/USD , as well a couple “shots” at commods vs yen.

Global QE – Currency Wars 2.0

Forex Kong 19 Comments

The Japanese stock market has ripped higher the past two consecutive days – pushing through overhead resistance and seemingly broken out, on the back of Janet Yellen’s last two days testimony ( I’m not holding my breath but very often these “inital moves” are the “fake out” only to be reversed days later ).

As the new chairman of the Federal Reserve, Mrs Yellen made it “all too clear” that she is indeed the “dove” everyone was expecting – and that further monetary stimulus was most certainly her “tool of choice” in the ongoing battle to right the U.S economy.

I am even more confident now that the Fed will “increase” its QE programs in the new year, and that further destruction of the U.S Dollar is all but a given. Simply put “those of us in the biz” know pretty much for fact that Japan is planning to increase its stimulus come April, and it now looks like “only a matter of time” before the European Central Bank throws their hat in the ring as well.

Given these circumstances, and the continued unemployment numbers and poor data coming out of the U.S – any idea of tapering is ridiculous, as “if anything” the Fed will need to “step it up” in order to remain competitive with the currency wars now headed for the next level.

With such an “unprecedented scenario” playing out over the coming months / year it’s pretty fair to say we’re going to see more of the same – this being the most hated “risk rally” in history. A difficult situation for “fundamental traders” as clearly the fundamentals play no role with the continued “pump of liquidity” so……..we take it day by day – rely on our technical no how , patience and experience to navigate the waves and continue to profit.

Having my longer term views yes…I could care less which way this thing goes short-term as…..which ever direction the money goes – I’ll be going there too.

I’m sticking to my guns here through the weekend and into next week, still looking at this as an excellent area to start looking “short”. The Naz short still in play, the weak USD considerations still in play, and the “inevitable turn” in JPY has only gotten juicier here as….when it does make it’s turn – its’ gonna be a whopper.

 

Trade Safe – Sometimes You Get Lucky

Forex Kong 2 Comments

A visual lesson in trading safe.

This guy ( and this truck ) went off the road up in the far right corner of the photo – where the people are standing around.Travelling from left to right he flipped “end over end” across the culvert, then up onto the other side – where you see the truck now.

Let’s apply this to a “newbie” trader moving too fast with blatant disregard for his surroundings – oblivious to the potential dangers.

Forex_Kong_Trade_Safe_1

Some times you just get lucky.

Now have a peak at the picture below.

Forex_Kong_Trade_Safe_2

Trade safe as…..you really don’t know how lucky you might be.

Enough said.

Fantastic entries here this morning some 40 – 50 pips into profit at the push of a button . Playing safe on some smaller short USD’s with nice moves in GBP. If you miss some of the real time stuff – I generally post via twitter.

China Leaders Meet – Huge Reforms Expected

Forex Kong 7 Comments

President Xi Jinping is expected to unveil a new economic framework for the country after the “The Third Plenum” (simply the third time that Xi Jinping will meet with his top brass in his role as the party chairman) wrapping up on the 12th.

Traditionally reforms are expected at the Third Plenum, with new leaders  having had time to consolidate power. A senior Chinese official has already promised “unprecedented” reforms.

Xi Jinping is under tremendous pressure from many parts of Chinese society to unveil radical changes so  – alot rides on the outcome.

We all know how significant a role China currently plays on the world stage with respect to it’s economic importance and influence on the U.S.A. Large reforms in the banking sector or increased suggestion of “tightening” can and “will” have significant impact on global markets so…..whatever you “think” you hear next week on CNN don’t be fooled.

China will move the markets, as continued coverage of “locker room bullying” takes a back seat.

Shoot me now,  as I’m not sure if I can hang on another day. CNN has the “battle of the burgers” and “locker room bullying” rounding out the top stories of the day.

6% And I'm Out – Holiday Time

Forex Kong 2 Comments

I’ve used this mornings jump in USD to exit every single trade I’ve had open for 6% on the week.

I’m also having computer trouble here so the timing couldn’t be better. It’s Friday and it looks like another beautiful day here so…..I’m planning to just get outside and leave this rats nest to the rest of you.

At least for a couple hours here this morning.

Learn How To Trade – Zoom Out

Forex Kong 25 Comments

I wonder if the blog would have become more popular “faster” if maybe I’d named it “Central Bank Insider” or maybe “The Guy Inside” as I’m sure by now, the odd one of you must be wondering….”How the hell did he know the dollar was gonna do that”?

Perdoname pero, on occasion I’ve got to do a bit of “shameless promotion” here as the financial blogosphere is a cut throat world full of “snake oil salesman” and “wanna be gurus”. If you want to stand out, you’ve really got to make a name for yourself – and credibility is everything.

The “long USD” trades have been absolutely unbelievable – as seen through the monster moves against EUR, GBP and CHF. Gold has again “cratered” in its wake, and we “still” see equities hanging in near the highs.

I caught literally THE ENTIRE MOVE – as I was well in position “several days” prior to lift off.

How did I know?

One of the best pieces of advice I can offer traders / investors looking to find these “magical entries” is to zoom out and start looking at longer term charts. Identify areas of support and resistance, and PLAN AHEAD as to what you might do “if and when” price comes to you meet you.

If we take another look at the “weekly” chart of $Dxy ( just as an example ) it’s painfully clear that the area “around” 79.00 ( remember – I draw my horizontal lines of support with a crayola crayon NOT A LASER POINTER ) held some significance.

Lining up your “longer term technicals” with short term news/events as well fundamentals/monetary policy changes etc creates a powerful combination and a solid method for “seeing the future”.

The further you zoom out – the more powerful / legit / stronger the lines of support and resistance become!

Long term planning and “mucha paciencia”(much patience) makes some of this almost seem easy as – you are already “ready and waiting” when price comes to you.

Trade Alert! – 15 Minutes To The Fed

Forex Kong 3 Comments

Considering that I nearly always sit these kind of risk events out, on occasion I WILL deploy strategies in order to take advantage of the expected near term volatility.

In this case I’ve got a long USD bias regardless of the announcement with a few smaller orders already in play including plays short GBP/USD as well long USD/CHF, but am also “waiting in the wings” with several other pairs – locked and loaded.

What I like to do in situations like this is place several smaller orders “above or below” a given pairs current price “prior to the announcement in line with my bias so…..with GBP/USD for example, and order 20 pips under the current price , as well 30 pips , as well 50 pips!

All said and done “if” the market moves in my direction I’m in “deep” on the momentum.

If not….fine. I watch the action rocket in the opposite direction with little or no skin in the game at all.

Take it or leave it – this strategy really works well on short-term “momentum plays”.

Lets see how it plays out and envision these “traps” set in 10 additional pairs.

 

 

 

Day Of The Dead – One Year Blog Anniversary

Forex Kong 18 Comments

Well – what can be said?

It looks as though I’ll have no trouble “celebtrating in style” here today and through the “Day of the Dead” celebrations set to kick off here in Playa over the coming days  – as we nailed the upside turn on USD literally to the minute. That, coupled with the incredible moves in AUD overnight ( I sent out the tweet, and even put a post together as fast as I could!) has me up an additional 3% and “holding” here as of this morning.

As well the “offical” 1 year anniversary at Forex Kong!

Day of the Dead (Spanish: Día de Muertos) is a Mexican holiday celebrated throughout Mexico and around the world in other cultures. The holiday focuses on gatherings of family and friends to pray for and remember friends and family members who have died. It is particularly celebrated in Mexico.

Day_Of_The_Dead

Day_Of_The_Dead

It’s Halloween on an entirely different level, lasting nearly 3 full days (and even gets an official bank holiday). The costumes, art work and cultural festivities are second to none. I encourage all of you to Google it / have a look online.

So, that’s about it for this morning short of keeping our eyes on reaction across other asset classes as the USD digs in here, and looks to wipe out a serious number of players “still” sitting on the other side.