currency trading

My AUD Move Explained – No Big Thing

Forex Kong 15 Comments

With the dollar “finally falling out of bed” I’ve scratched a couple trades for a 2% loss.

USD has given us more than enough chances to “ditch” and in all honest I hung in there with a couple smaller “much longer” than I should have, suggesting some days ago that “I’m not interested in catching a falling knife” not having much conviction in hanging around “long USD”.

And so it goes.

Otherwise, I’m highly suspect of the “sudden surge” in commodity related currencies hence initiating some “short AUD” ideas over the past 48 hours.

It’s not often you’ll “ever” see a currency trade sideways a full month, then drop “lower” and out of the range…..then come screaming back to highs, near or even above the range highs.

A full “rinsing” if you will – and unlikely a sustainable move.

AUD_JPY_200_Forex_Kong_Trading_March

 

As much as the short term action would have one thinking that “AUD is on fire” – it’s really only now bumped into well recognized areas of overhead resistance in a number of pairs.

Seeing something like this “scream 300 pips higher” in a matter of a few short days, generally has it retrace a large portion of the move, coupled with ideas from my previous posts ( suggesting that “short AUD” essentially works as a play on China as well ) I’ll have no trouble holding / adding to these positions as things develop.

I Am Short AUD – No Matter What

Forex Kong 11 Comments

It’s simple.

I’m short the Australian Dollar as a simple “fundamental play” on the looming troubles ahead ( not just for China but…) for global growth in general.

China slow down = Australian blues. This trade has no holes in it…..there is no “what if you’re wrong Kong”. It’s not a hunch. It’s a trade based in a simple and solid understanding of how “one” currency is likely to perform in the face of its largest trade partner slowing down, and buying less stuff.

Consider losing one of your biggest clients, or perhaps that regular customer at your burger joint has now turned vegetarian. Buying less stuff means your business will suffer.

I “could” get into all the small details, charts and graphs, facts and figures, dollars and cents, etc.. but you know me better than that. That stuff is “flat-out boring” and frankly…of no real consequence here.

I don’t need to be an economist ( god help me ) to understand how this sets up. No….I only need to manage my money correctly and let this do exactly what “I know” it’s going to do.

The trade will pay out well – I can assure you of that.

When? I don’t care.

I’ve been building a considerable position short AUD over the past month, and have continued to add at every instance the currency shows strength. These longer term trade ideas take time, patience, conviction as well solid money management as….I will continue to add “no matter what” as the trade continues forward with the ultimate “payout” likely being more than worth the effort.

If markets are just sitting still and grinding you in the short term….see what you can do about formulating some “medium/longer term plans”. Putting these in motion “today” makes for great returns down the road.

 

Day Trading Blues – Look To The Fundamentals

Forex Kong 7 Comments

With all the data flying around each day – it’s near impossible to put everything in neat little compartments, all organized and understood. We see markets rise on “bad news” and sell off with the good, then do the complete opposite only a week later. We’ve got the “fear of war” one day, then the “celebration of peace” the next. The market is a meat grinder, and unfortunately – you are the beef.

So when the short-term / intraday day action isn’t providing much opportunity – what’s a trader to do?

How can you feel that you’re “moving forward” when the day-to-day grind is doing nothing but frustrating you, and possibly grinding your account to dust?

Step back. Re focus, and look for the things that “you can make sense of” – and start working out from there.

A simple example of what “I’m doing” while I sit idle in a number of trades that are essentially “going nowhere fast”. I ask myself…..Kong….what “do” you know? Where can you focus your energy as to keep this thing moving in the right direction.

I immediately turn to the fundamentals.

Do you agree with me ( after everything you may have read / researched as well ) that China is set to slow in the following year / years?

I can’t be bothered to go over this again but encourage you to read this simple breakdown, then get back here.

We’ll outline some trade ideas next.

5 Ways China Slowdown Will Ripple Across Globe.

Central Banks Salivating – Is It War Time Yet?

Forex Kong 10 Comments

Well….It didn’t take long for one of those “black swans” to swim by, as not only has Russia “invaded” Ukraine ( yes, yes I know only Crimea where the population is primarily Russian anyway ) but Ukraine has also order “full military mobilization” in response.

With Forex Markets opening in just a few short hours it will be interesting to see if there’s any reaction to the news, as “the threat of war” would generally have investors looking for safety.

Obviously it’s far too soon to tell…but purely for interests sake, I myself am very curious to see if “even this” could possibly slow the advance of U.S Equities but again….far too soon to tell.

I’ll keep a close watch on the Japanese Yen (JPY) obviously as the first signs of “fear” will be seen with JPY rising.

Keep in mind that Central Banks absolutely “loooooove” wars, as they present governments with the need to borrow “even more money” than the copious already “being borrowed”.

Again….all that borrowing from the privately owned Fed…..”with interest”.

Is it war time yet?

Forex Markets – A Disturbance In The Force

Forex Kong 33 Comments

Something is going on, and I don’t like it.

With the Nikkei down “another” -360 points here as of this morning, the Yen has barely budged, while the U.S Dollar has gotten absolutely hammered overnight as well!

What happened to the safe haven flows seen yesterday? Is this your “garden variety routing” where nearly everything you “expect to happen” doesn’t happen ( a very normal part of trading ) or perhaps indication of something larger?

The ECB has been “talking down” the EURO overnight, yet here again – the EUR as well GBP and even The Swiss Franc (CHF) have all surged higher in the face of a beaten down U.S Dollar!

I wish I could simply just look at it as a “ripple” or a normal day-to-day type thing, but I’ve been at this far too long. Something doesn’t look right – and I don’t like it. I don’t like it one bit.

An extra “zig” or and extra “zag” in our charts ( as well the every changing fundamental back drop ) can be expected in these times of unprecedented Central Bank intervention but when I see something “blatantly” out-of-place, a move “so contrary” to what I believe “should” be happening – I immediately switch up my thinking.

If I don’t know what’s going on, there’s only one place I choose to be ( at what ever costs ) – and that’s in cash, happily sitting on the sidelines, looking for a time when I “do” know.

Today being Thursday we can generally look for “a move” in markets, as the U.S Data hits the street here around 8:30 a.m.

I will be watching like a hawk. Or a dove, no wait…..a hawk….no dove.

No no no…..all gorilla here.

Stay tuned for an intra day update.

 

Reversal Across The Board – USD And JPY Back In Demand

Forex Kong 40 Comments

It’s a funny thing really.

You can make light of a particular currency pair’s price level (such as AUD/JPY yesterday afternoon), as well point out its general connection / relationship / correlation with “risk appetite”, and BAM!

Perhaps it’s a touch too early to say, but I’m seeing reversal’s in just about every single pair I track with respect to a reversal in “risk appetite” – with both USD as well JPY showing strength here overnight.

Did I need to wake up and check SP futures? or perhaps tune into my local financial news this morning to get an idea of where U.S stocks may be headed here today? Nope.

Obviously I’m short AUD/JPY from yesterday, and will be adding a couple more long JPY ideas here today. The long USD’s I’ve got will be added to as well.

I can’t imagine another “triple digit gain” here in the U.S today, as this counter trend rally peters out.

Forex_Kong_Face_Book

Forex_Kong_Face_Book

Hold Or Fold – U.S Job Data To Disapoint

Forex Kong 15 Comments

I was going to wait until “after” the jobs report here this morning, to see if we get a better idea of direction moving forward. Why bother.

The number will be a disappointment as I expected, with the media suggesting that the poor employment numbers are largely due to “poor weather” (I don’t think I’ve ever heard “that one” before).

Markets continue to question “if indeed” Yellen will stick to the plan of tapering, or even as soon as next week – make suggestion otherwise. I’ve been hearing that The Fed feels they need to see “a little more data” before considering flipping the switch and “tapering the tapering”, so mid March still looks like a reasonable time frame to expect “something big”.

We’ve bounced a little bit here this week, with AUD also moving up with “risk appetite” as the ol standard correlation goes, but all in all, it still only looks like a “bit of a counter trend move” in a fairly well-defined down trend.

I’ll be off to Belize here this morning, currently holding several pairs and frankly not that thrilled about it. The entire week trading flat ( and I mean really flat ) generally puts me on edge, as I hate holding anything for too long. I’ll let the jobs data hit, then re-evaluate holding,or possibly dumping a number of positions before I head out on holidays.

Forex_Kong_Face_Book

Forex_Kong_Face_Book

 

Forex Chart Survival – Short Term

Forex Kong 8 Comments

Short term trading in forex.

You all want to learn how to do it. You all like the action, the excitement, and maybe even (as I do) the challenge. It’s most likely that most  of you continue “trying this” in attempt to make fast money, leveraged to the hilt and looking for that “big trade”. Well….you won’t find it trading short-term smaller time frames, let me tell you that.

The big trades are found on the long-term charts when a move is caught on weekly and monthly turns. Trouble is, you get stopped out on a 50 -100 pip move against you trying to “nail it on a 15 minute chart” – before you’ve even given the trade a chance.

In my view, if your account/trade can’t absorb a loss of an “entire candle” on the time frame “above” the one you are trading ( so a measure of ATR which is the “average true range” to get an idea ) you’ve really got no business trading it.

So for example….you see on a 4 H chart where an average candle might be 160 pips, and you’re trying to trade with a -25 pip stop? No chance. You will be ground to a pulp time and time again.

Everyone has to do this math on their own as everyone’s account size is different, but it cannot be overlooked. You need to trade significantly smaller with much wider stops to even survive the daily noise on 15 minute charts and lower. That’s just to stay in the game over a 24 hour period!

I can go on and on about this, and “do plan to” at a later date ( possibly through a series of videos I’m working on) but as it stands…and considering the volatility these days – the best possible advice I can give today is:

Trade smaller and trade wider. You might just survive.

Forex Market Madness – U.S Labor Force Declines

Forex Kong 5 Comments

Well if trading through yesterday (with hopes of seeing much for profits) wasn’t “pain in the ass enough” – we’ve now got the “every so significant” U.S data out at 8:30 here Thursday morning.

Sure we saw the U.S Dollar “finally pop” late last night as expected, and yes the trades in EUR,GBP, as well CHF and even NZD all came away fine,but depending on exactly “when” you entered and what kind of position size you had in each – a little strength in AUD and you’d likely of just  broken even.

I jumped around like a mad man well into the night, grabbing a piddly 2% and frankly – am not impressed. The forex market is an absolute mess at the moment, with charts looking more like “abstract works of art” – from a classroom full of pre schoolers.

It’s an absolute mess out there, and I can’t really imagine this mornings ” artificial employment data” helping much. We get to hear “once again” some ridiculous number reflecting “improvement”…he.he..he… have you seen what’s happened to the participation rate? Now hovering around the lowest levels since 1978?

Have a look:

Labor Force Participation Rate_1

Labor Force Participation Rate_1

“Real employment” – sadly on a steady decline, as more and more people are simply “giving up” and not even bothering to “look” for a new job.

Labor Force Participation_0

Labor Force Participation_0

How is “this data” being incorporated into the weekly “employment figures” that are supposedly showing an improvement?

News flash – it’s not.

I’ve held a couple, and taken profits on a couple. I’ve re entered a couple and I’m in the red on a couple. The US Dollar most certainly “moved higher” so I hope you all caught some of that, with the biggest gains seen vs the Euro, Pound and Suisse, but in all – the cross winds across multiple currency pairs has chopped / flopped me around pretty good. I’ll see what comes of today, and will likely consider “closing up shop” early as…..staring at this for more that 18 hours in a row can be very hazardous to both your health, and you account!

Forex Market Weather Report – Chance Of Rain

Forex Kong 7 Comments

Well the weekend has come and gone, and so far I don’t see that the sky has fallen.

With a cold front only now developing in China, and investor complacency “still” at all time highs, we can likely look forward to a day of overcast conditions, with an equal likelihood of scattered showers and even a bit of sun. Conditions are mixed – obviously.

A few dark clouds looming over gold, with USD “just starting” to poke its head out, coupled with high pressure conditions – soon forcing USD higher.

Large storms developing off both the Atlantic “and” Pacific coasts of North America, with continued hurricanes, tornadoes, and possible earthquakes down through Brasil and Argentina.

Investors and traders are cautioned to stay indoors today, and not look to make any large trips / moves – until conditions clear.

I’m still eyeing the usual as USD has “almost” ( within a penny ) swung low on the daily, suggesting a short-term bottoming – and further turn higher. JPY has also pulled back so…safe havens take a breather. I wouldn’t be doing anything today as a bull or bear – other than continuing to raise cash / stay indoors and trade safe.