currency trading

Fundamentals And Forex Direction – A Must Know

Forex Kong 15 Comments

I’m often surprised when I get talking with new ( and usually short-term ) traders – how little they really know or understand of the fundamentals, or of some of the “general under currents” running through currency markets.

At times I really do shake my head, wondering “How on Earth could one expect to have any success at this without spending the time, and making the effort to better understand what’s “really behind” a given currency move? and “what role that currency plays” in the grand scheme of things.

Seeing these low volume / large price moves in a number of currencies over the past 24 hours “should” push a trader to really test his/her skills and knowledge – in learning to differentiate what’s moving, in which direction – and “why”?

A simple example. The Australian Dollar. A strong currency or a weak currency? And then – why the hell would it be moving higher in the current investment environment? Ask yourself these questions BEFORE you consider entering a trade.

Hmmm let’s see..how bout the Reserve Bank of Australia outright stating they WANT a lower Aussie? Further “rate cuts” expected in Q1 2014? How bout some weaker than expected numbers ( not to mention some pretty serious debt/banking concerns ) out of China? Let alone the “old standard” carry trade coming off “should” risk aversion appear ( yes people “risk aversion” remember that? – the opposite of “risk appetite”?), the normal market dynamic where things go “down for a while” instead of “up all the time”?

Point being…..there are no “strong currencies” as the race for the bottom is still very much in play, and will continue to remain the market driver in months to come. You’ll need to see reports of strong economic growth “globally” and countries “raising interest” rates to even consider a time to be looking for “strong currencies” – and I can assure you THAT won’t be happening any time soon.

I continue to marvel as people “see what they want to see”, but the newsflash here, is that we are moving towards a period of “slowing and contraction” not “growth and expansion” so…..I guess you can read your headlines….and I’ll “write” mine.

Trading Nightmare – I'm Awake And In Profit

Forex Kong 6 Comments

One of my computers called me about an hour and a half ago.

Plucked from the grasp of yet another “unsettling dream” ( for what ever reason I am continually plagued by dreams of having my teeth pulled / ripped / removed / taken in ever increasingly “bizarre fashion” ) I welcomed the alert, and eagerly leapt from the bed to silence the soft repeating tone.

Several trades had been picked up, and to my surprise – the U.S Dollar taking a relatively huge hit as the London sessions moved into their first couple hours trading. My surprise? Of course not – you know that. Everything moving accordingly to plan with the added bonus of still having every single tooth intact! How wonderful!

And with so many caught in nightmares of their own, gobbling up useless news stories of tapering and the assumed effect of a “much stronger dollar”.

EUR and GBP are obviously the biggest winners here as per trades in the comment section some hours ago as well a quick tweet.

The “tooth removal” dreams are extremely unpleasant, and it’s really no wonder I don’t sleep a whole lot. Thankfully I was “saved by the bell” here this evening, and rewarded with some fantastic trade entries.

In celebration I plan to eat 3 lbs of chocolate, a full tub of ice cream and as many stale candy canes as I can wrestle from the kids across the street.

UPDATE:

I can fully understand that this must be moving way to fast for some of you as…..only hours later (in fact less ) I’ve already banked just under 400 pips across the board in 6 pairs total, and will now be looking for pull back on smaller time frames – and of course re entry.

When some of this goes down in the “dead of night” I don’t imagine there is much some of you can do about it , not having the alerts / computers chiming, the lifestyle ( never sleeping, no kids , no other job, likely insanity ) let alone the interest / dedication / commitment.

We’ll have to find a solution moving forward.

Be Thankful You Trade – Merry Ho Ho Ho!

Forex Kong 32 Comments

It’s funny – how completely “obvious” so much of this appears when you’re looking in the rear view mirror. In retrospect you can pull up any number of charts, asset classes etc….then “layer in” the seasonal aspects (with Christmas now in full swing) add a sprinkle of “news” and a dash of some “good data” and there you have it.

Uncanny.Complete and total bliss.Right on cue.

Literally. Right down to the second on a lazy Friday morning, days before Santa comes to town – the news is good, the data is good, the stock market is higher – and you’re feeling pretty damn good about everything.

And so you should.

Considering the amount of poverty and hardship in the world today ( considering the things “I see” everyday ) we should all be so lucky, as to have what we have…..however temporary.

  • We’ve got the Nikkei double top at 16,000.
  • We’ve got “gold double bottom” at 1179.00/1199.00
  • We’ve got U.S equities at all time highs.
  • We’ve got the last remaining days of 2013.

We’ve got USD rolling over and “back in the red”. Huh? – Kong…..again do you know something we don’t?

As if it was almost choreographed to the second, a number of these correlations and levels appear absolutely “blatant” – when looking backwards. Why didn’t I wait for the retest in gold? Now I see Nikkei double top area as resistance…..Damn I forgot about seasonality….etc…etc…

In any case…..it always looks easy when we’re looking in the rear view mirror.

I wish all of you the very best this Christmas season, and encourage you to take advantage of every single minute with family and friends.

Despite the up’s n downs of financial markets we can’t lose sight of the fact that – “it’s a game…..that we the fortunate – have the privilege of playing”.

Be thankful.

 

 

Trade Questions Answered – Where To Now?

Forex Kong 27 Comments

I guess it makes sense to quickly pull this apart, break it down and get squared on where I’m heading next, as the Fed’s tapering announcement yesterday has certainly raised some questions.

It’s obviously still a bit early to be making any “rash decisions” (as a single day of market movement is that and only that) but it is interesting to take a quick look at how a number of asset classes have “initially reacted” to the news.

Gold has been crushed, moving lower a full 30 bucks.

  • But wouldn’t “tapering” be viewed as “less stimulus for markets”? Shouldn’t gold have shot for the moon on the news?

U.S stocks shoot higher, as Dow gains 300 points.

  • But isn’t the idea of “tapering” going to lead to higher interest rates? Shouldn’t stocks be falling as the Fed pulls back on its POMO and market liquidity injections?

The U.S Dollar has moved higher, but is still well under strong areas of resistance. The U.S Dollar has stalled already.

  • But shouldn’t the U.S Dollar “break out” on news of “tapering”? Isn’t the idea of “tapering” supposed to be good for the currency?

Bonds as seen via TLT haven’t even budged. U.S Bonds are still very much under pressure as selling continues.

The media spin is clear – that the U.S is indeed “rebounding” and that the recovery is well under way. This now “confirmed” via the Fed’s decision to taper. The Fed was doing the right thing while adding stimulus, and now will be perceived as doing the right thing in pulling back right?

The puppet show continues, as for the most part “none” of the above “initial reactions” made any immediate sense. It’s unfortunate having things pushed back a day or two but as it stands……everything is “still” very much on track.

I’m expecting to see the U.S Dollar roll over here quickly – (early next week) and will continue with the same framework I’ve been working within these past several months. The Nikkei hit my 16,000 mark for a second last night as well so…..that too will provide some valuable information moving forward.

Sitting out yesterday in near 100% cash was one of the single best trade decisions I’ve made in the past few months, now allowing me to deploy “big guns” at an instance – when “real opportunity” presents itself.

You where warned. You may have gambled. You likely lost.

 

Trade The Risk Event – Sitting On Hands

Forex Kong 26 Comments

As much as I hate reminding you, the Fed meeting runs through today – with announcements expected tomorrow so…….you know what means.

Risk event ahead – as the statement will be released Wednesday at 2 p.m.

Obviously these Fed announcements are what the market’s hinges on these days, as the possibility always exists ( as the Fed has proven in the past ) that they “might” say or do something shocking. Tomorrow’s announcements may provide clearer language on “tapering” – but I doubt it. I’m going to assume they move forward with the continued stance that “tapering will remain data driven”.

The debate is pointless, but what is important is how you choose to position yourself prior too, and then of course “after” the news is out.

From a technical perspective “risk” could easily make one more “little jump higher”, as equities still look “alive” all be it exhausted, the U.S Dollar still appears to be trapped in its downward spiral.

I would look to “sell” any possible “uptick” USD takes tomorrow ( if any at all ) PENDING they don’t announce a tapering, as this should just keep USD steadily on its way to the basement.

“If” by some wild stroke of insanity – they “do announce tapering”, it will require more than just a couple of hours tomorrow, to get an idea of what markets will do with that, and I would suggest to anyone looking to trade it……..let things settle out / calm down BIG TIME before even thinking about entering.

I’m back from a short ( but wonderful ) holiday and ready to go here again. I’ve got a few tiny irons still in the fire, but am for the most part – sitting in cash. As much as one would love to “get in there” and take advantage of “whatever pans out tomorrow” the responsible thing to do is to wait.

Wait I shall.

I Tweet Most Trades – Are You Following?

Forex Kong 33 Comments

I can’t keep posting my yearly gains at the website as I’m pretty sure by this time….it’s getting a little hard to believe.

This tweet from yesterday:

The combined “pips earned” across the board as of this morning (where I booked profits and reloaded 100% the exact same trades immediately) is now encroaching on 750 – 800 pips.

Not a bad day’s work to say the least…but again – after many, many , many hours planning as well placing smaller orders over time. It would be difficult to imagine someone executing a similar trade plan while keeping a fulltime job – away from markets and their trade desk.

The Australian Dollar being responsible for the largest part of it but “coupled” with continued EUR strength.

When you are fortunate enough to choose a given currency pair where movements in “both” currencies contribute to the move (as opposed to just one strength / weakness in one) wow! You can really see some serious action. This takes considerable fundamentals knowledge, not to mention timing, but when you get it right…….you can really “get it right”.

I do my best to Tweet as much of the “larger moves” as I can, but considering the number of trades and the “frequency of trades” when things are moving – it’s near impossible to catch every last wiggle. If you don’t get the tweets then most often conversation picks up IN THE COMMENTS SECTION AT THE BLOG.

I hope some of you have also managed to catch a “pip er two”.

U.S Budget Talks – I Can't Listen Anymore

Forex Kong 46 Comments

I’m done.

I can’t do this anymore…….It’s over.

I’m finished……We’re through….Good-bye……No more… “Se acabo”.

Let today mark the last day I will comment on the subject, short of the possibility of small intermittent outburst throughout the coming years – as the need arises.

Have I completely lost my mind in quickly interpreting todays ” budget deal ” as being a complete and total waste of paper / time / energy ?

All I can make of it is that the “debt ceiling will be increased forever” and they’re just going to kick the can for an additional 10 years! Averting shutdown in Jan / Fed MUST mean debt ceiling raised no? ( And we can see that “markets” likely view this the same as Kong no? )

( There is no such thing as “the debt ceiling” by the way….but that’s another story)

Forgive me please but…….can an American citizen please explain to me how they can suggest that “a significant change to the pensions of federal government workers and the military will save $12 billion over 10 years, $6 billion each from civilians and the military, and much more over time”.

When 85 BILLION “PER MONTH” IS BEING PRINTED OUT OF THIN AIR!

Get this:

There was just a little over $800 billion of base money in existence before the crisis in 2008… that’s 200 years worth of currency creation equaling 0.8 trillion

Now the Fed creates ONE TRILLION EVERY YEAR…meaning they are creating more than 200 years worth of currency……………… every single year!

Perceived “savings” stretched over “ridiculous periods of time” while 1 TRILLION DOLLARS ARE BEING PRINTED EVERY YEAR!

That’s it…..seriously….last post on it ( maybe not ) but……..common really?

Fantastic profits today in combination with trades initiated late last week…USD “continues” ( now 8 days in a row since posting ) to lose ground, Commods bounce and now reverse, EUR and GBP strength abound…and …..(wait for it…….wait for it……) JPY making the turn???

Habanero chasers for my fine tequilla tonight peeps….apparently …..I better practice up.

Market Update – Trades Closed – Profits Taken

Forex Kong 18 Comments

I’ve finally sold both EUR/USD as well GBP/USD, blowing out the EUR/AUD and NZD for the piddly gain of 2% on trades entered last Thursday.

I can’t say I’m particularly thrilled with either the performance “or” the current price action as a bounce in the commodity currencies took a couple of trades off track.

There is no fundamental driver for the smaller move up in both AUD and NZD, so I will be keeping my eye on near term resistance spots, to fade.

Considering that the US Dollar “has” continued to slide as suggested – picking your trades and your pairs hasn’t been as straight forward as one would imagine, with pairs like USD/CAD just “hanging” for days on end. The European currencies the obvious winners with the big moves vs EUR, GBP and CHF.

I’m more or less back in cash now as I would rather sit “outside the market” til at least a couple of things get straight. In general it looks like this will likely stretch out til the end of the year with equities making “one more last higher high” before rolling over into a mid-term decline.

The relationship of USD falling and gold catching a bid “is” coming along, but as suggested – no swinging for the fences down here please.

Oooops….I just reloaded both EUR/USD as well GBP/USD for additional shot at further upside, and  will just lettem do their thing.

 

Learn To Trade Forex – It's All In Your Head

Forex Kong 20 Comments

I’ll do this “once” as to provide a touch more insight into how I trade.

Let’s look at AUD/JPY for example.

You can see in the chart below, that the pair has been trading sideways for near an entire month within a very tight “100 pip” range. To put that in perspective in “real terms” the difference in value of the Australian Dollar and the Japanese Yen has fluctuated “a single penny” over the past 30 days. Actually no wait….over the past 2 months! A single penny in exchange rate.

AUD_JPY_RANGE_2013-12-06_Forex_Kong

AUD_JPY_RANGE_2013-12-06_Forex_Kong

Let’s stop right there.

Can you imagine that with “all the news” and “all the hype” and “all the bullshit” you are inundated with every single days as to “The Taper!”, ” China Slowing!”,  “Death Of The Dollar!” , “Stocks At All Time Highs!” “Market Crash Coming!” Blah blah blah….that the fluctuation between one of the highest yielding currencies, and that of the lowest yielding currency has moved…………a single penny?

And you’re completely underwater, can’t believe you’ve taken trade advice from a total stranger on the Internet, and sitting under your desk praying to god that “things will turn in your favor”.

A “single penny” in real world terms – and you’re already about to pull your hair out.

So…………..

This is where you just step back a moment. You recognize you’ve got absolutely no business trading as large as your trading – and that frankly, you’ve got “no friggin idea at all” how currency markets / trading works.

Good. This is an important step as……hopefully now…..you’ll go back – start reading from the beginning, and get yourself caught up. It’s all here, and I’m always available to answer your questions.

I can’t tell you “how to trade”, but I can tell if “a single penny” on “a single day of trading” has you slamming your head into your desk – I’d best keep my positions small.

Very small.

U.S GDP Data – Totally Bogus

Forex Kong 16 Comments

You can get in here and argue your case til the cows come home! – and I honestly hope that you do, as perhaps you’ve some insight / information that can better help me understand.

The U.S data released this morning is absolutely hilarious. Not just “kind of funny” but so absolutely outside the realm of believable that I’m literally “on the floor laughing”.

Let’s see what the markets make of both this “ridiculous GDP number” and the “magical drop” in unemployment.

I’ve only added to USD shorts as well watching Japan continue to slide with long JPY’s starting to take shape.

Short and sweet this morning, as I want to get “back to the circus” as soon as possible.

I’ve not had this much fun in a while!

USD will continue to be sold here.