how to trade forex

Seeing Any Cracks People? – Copper Demolished

Forex Kong 3 Comments

For as many years as I’ve been trading and analyzing markets I’ve been told time and time again….watch copper.

If you want to get a good bead on global growth / demand just make the simple connection between “that” and the obvious need for copper.

You can’t build a building without it, you can’t build a car without it, and you can´t produce anything “electronic” without it so…..I guess that about covers it.

It’s been widely correlated with “China’s growth” as a general bellweather for continued expansion and development.

Nice chart below. I guess the default of China’s Chaori Solar Energy may have caught a couple of peoples attention. Smart people anyway.

Copper_Forex_Kong_March_2014

Copper_Forex_Kong_March_2014

The Aussie Dollar ( my synthetic “short China” play from a few days ago ) getting hammered as we speak.

And who’s saying that saying a keen eye on the fundamentals doesn’t do much for their trading?

Not me.

China Tanks – But No Trouble In U.S?

Forex Kong 13 Comments

The biggest story in the financial markets this morning is the weakness in Chinese assets.

The Chinese Yuan sold off aggressively, experiencing one of the largest one-day declines since December.

Chinese stocks were hit hard with the Shanghai Composite dropping more than 2.8%. Although a significantly weaker trade balance triggered the selling, China’s central bank has been actively allowing the Chinese Yuan to weaken.

Chaori Solar Energy was allowed to default on its corporate bonds ( as suggested some days ago ) and is currently in the process of “selling its solar farms” in order to pay up.

Markets “appear” calm here this morning in a general sense but don’t get too comfortable as this has got some pretty far-reaching implications.

Emerging Markets “EEM” continues its downward trajectory, as the Japanese Yen looks to steady / make a move higher.

Shakey ground here “globally”……but of course – no trouble in U.S Equities.

How’s “short AUD” looking now suckas??

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.

Forex Trade Indecision- Doji After Doji

Forex Kong 11 Comments

Considering the number of days we’ve sat “patiently waiting” for markets to make a reasonable move in either direction, as well the amount of time that’s passed since “I’ve made a decent move” I thought it might be of interest to give you a visual representation of what “sideways” looks like to me.

I’ve chosen a chart of GBP/JPY ( Great British Pound vs The Japanese Yen ) as the example.

If you’ve been brushing up on your Japanese Candle Sticks ( which I certainly hope you have ) I’m sure you already know our friend “The Doji”.

Doji – Doji are important candlesticks that provide information on their own and as components of in a number of important patterns. Doji form when a security’s open and close are virtually equal. The length of the upper and lower shadows can vary and the resulting candlestick looks like a cross, inverted cross or plus sign.

GBP_JPY_Doji_Forex_Kong

GBP_JPY_Doji_Forex_Kong

You can’t trade this. It’s impossible and not even worth considering as…..there “is” no clear sense of direction. Each day has the capacity to wipe out traders on “both sides” with wild swings up and down, only to have price settle back to where it began.

What it also suggests is that markets are clearly at a point of “indecision” as neither bulls or bears are able to run to far with the ball.

Hopefully this may put the “entire month of February” in perspective for you as I’ve been “considerably less active” than usual.

Knowing what you know now……can you blame me?

I know when to put on the brakes, and when to step on the gas……

Do you?

 

 

G20 Says Yes – Just Print More

Forex Kong 8 Comments

Sydney-Australia (Feb 23)   The world’s biggest economies vowed Sunday to boost global growth by more than $2 trillion over five years, shifting their focus away from austerity as a fragile recovery takes hold.

Finance ministers and central bank governors from the Group of 20, which accounts for 85 per cent of the world economy, also agreed to pursue greater transparency about monetary policy after rifts about the US taper.

They expressed “deep regret” that reforms to the International Monetary Fund have stalled, because the United States Congress has yet to ratify them.

After their meeting in Sydney, the G20 ministers issued what host Australia called “an unprecedented” and unusually brief two-page statement to drive “a return to strong, sustainable and balanced growth in the global economy”.

“We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than two per cent above the trajectory implied by current policies over the coming five years.”

In other words……the “powers that be” have more or less thrown the towel in on any kind of “real growth” and have pretty much opened the “global door” wide enough to accommodate any number (or size) of printing presses.

We’ll see how markets react but perhaps the can will just get kicked “around the globe” a little while longer……an obviously “bullish signal”.

I’m looking for whatever additional USD strength we see this week to bank profits , and then prepare for further desecration. On the back of this news it looks “relatively obvious” that those with printing presses have been given the global green light so…..if you can’t beat em you might as well just keep making money.

 

Forex Entries – What Are You Looking At Kong?

Forex Kong 17 Comments

Keep in mind everyone – this is a blog that requires “eyeballs” in order to be of any use to anyone so…..please forgive the occasional shameless plug. It’s a dog eat dog world out here in the “financial blogosphere” where “catchy headlines and the promise of riches” go head to head with good ol straight up “honest advice” on a daily basis.

Snake oil salesmen run rampid through these jungles, though few of them wearing the proper footwear.

So…..what are you looking at Kong? What makes the difference from one day to the next, that has you enter a trade or not? How do you know “when” to push the button? And how is it that ( more often than not ) you appear to enter markets at almost the “exact” right time?

Truth is……aside from my custom technology “The Kongdicator” which essentially tracks pure price action ( providing signals when a very specific set of criteria has been met ) the largest contributing factor is really just straight up old fashion patience, coupled with a solid grasp on “each currencies role” in the grand scheme of things.

The one thing the Kongdicator “can’t do” is rule out the amount of time that a particular asset will trade sideways / flat. This is where conviction and knowledge come into play as….you’ve got the level ( or around about the right level/price ) but can’t really know “how long” price may remain there.

Take this week for example where many forex pairs have literally – “barely budged”. Does this mean your trade entry was wrong? Not at all! Only that the amount of “sideways / churn” was near impossible to account for.

This also lends credence to the idea of ” trading in smaller orders around the horn” as…..you tie up less capital on your initial entry, you’ve resigned yourself to the fact that it “may not be perfect”, you’ve kept plenty of gasoline in the tank and you’re able to sleep through days and days of the dreaded “sideways” – without really getting to worked up about it.

You then plan to “add” to your position as things move in your favor, and have far less concern if things “don’t” – as your original position is relatively small.

Fine tuned entries as best you can – sure…….but “small entries over time” is equally a fantastic addition to your trade arsenal, keeping you in the game longer, allowing the market to “do its thing” and hopefully allowing you to sleep at night.

Hope it helps.

All entires looking good here as of this early morning so…unless something “incredible” changes here this afternoon – these trades will again be “added to” as they move further into my favor.

Forex Trade Ideas – Wednesday, February 19

Forex Kong 13 Comments

Sitting through an additional 4 or 5 full days holding a couple of small “long USD” trades, I’ve made the move here in the early morning to not only add to these – but pick up a few more.

Currently I’m holding:

long USD/CAD, as well short NZD/USD and AUD/USD

I’ve also added a small “face ripper position” in long EUR/NZD ( however bizarre you may think that is) at 164.83

I’m holding tight for the EU type currencies ( EUR; GBP and CHF ) as I’d like to see a more “convincing” move but both GBP and EUR are starting to show signs of exhaustion.

As well nearly ALL the JPY pairs are currently sitting at levels where a decent short position “could” be initiated but I’m still going to “tread lightly here” as these trades would suggest a further “risk off move”……and we know how that goes here as of late. The U.S Dollar looks painfully close to making a turn, but again we’ve got “Thursday” ahead – so in all honesty, not looking for too much action here today.

I’ve had little to say as of late, as I’ve not been actively trading but (as it’s my mandate) I must continue to push for profits as I go through alot of bamboo chutes, and of course don’t mind a good cold beer on the beach once in a while.

Fed Pulls USD Strings – Puppet Show Goes On

Forex Kong 4 Comments

How long have I been going on about “tapering impossible”, U.S recovery a sham, QE to continue, Fed to destroy the Dollar, blah, blah, blah, you’ve heard it all before, a thousand times again, over n’ over n’ over, yes Kong we get it , by all means why not tell us how you “really feel” – right?

Ok.

So we’ve seen Bernanke make his exit, and now we’ve got Yellen at the helm.

Keep in mind, the position of “Chairman of the U.S Federal Reserve” is likely one of the most, if not “the most” economically and financially influential positions on planet Earth, akin to “god” – or at least to you humans so……changes in U.S Monetary Policy effect each and every country on this planet – in some way or another.

With two straight months of “-10 billion dollars” in supposed “tapering” – why aren’t stocks falling? Why aren´t bond yields ripping higher? Why hasn’t the US Dollar shot to the moon on safe haven flows?

Because it’s never gonna happen that’s why! And to my absolute shock and surprise…the market already knows it!

Taking the bait, and again “trading what’s in front of me” sure…I’ve spent a good 3 or 4 days looking at “long dollar strategies” ( as much as it’s pained me ) then BAM!

We pretty much saw the USD fall out of bed over the past two days, crossing significant areas of support and signalling / suggesting “considerable downside” ahead. Can you believe it? Already?

It looks pretty plain to me that markets have absolutely “no faith or belief” that the Fed will stick to its guns and continue with tapering, and that if anything “yes indeed” more QE and money printing await – just around the bend.

That being said, it’s quite likely the U.S Dollar will take a bounce here sure, but – I will now “reframe” this as a “bounce” and NOT a fundamental change – reflecting “any change” in my long-term views being that the U.S Dollar is toast, and that the Federal Reserve will continue to print / devalue until the absolute end.

I’ll likely use any strength in USD next week to “gracefully exit” a couple of positions, so if it gets another “zig before the zag” I see the good ol 200 Day Moving Average up around 80.80 as good a place as any.

We’ll need to take another day or two to see what it means for stocks and “risk in general” but as it stands…and as hard as it is to believe well…..ya you know.

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.

 

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