psychology of trading

Bagholders – Buyers And Sellers Alike

Forex Kong 10 Comments

We’ll see a pullback in USD here as,  on a purely technical level ( looking at smaller time frames such as the 4H and 1H ) she’s extremely overbought.

Considering the over all volatility this “counter trend move” may also prove to be quite dramatic / powerful as “yet again” late comers ( as I see it  – pretty much the entire financial blogosphere ) chase a train that’s already left the station.

It’s “buy the dip time” in USD.

Commodities got smoked here as suggested,  but in all – gold itself has held up “reasonably well”.

I knew this move was going to be powerful ( although the general “silence” here at the blog “trade wise” has me thinking that most of you didn’t buy that ) and now find myself booking huge profits – looking for re-entry.

I hate to say it but……Thursday is a long way off, and I have a sneaking suspicion we’re not going to see much “tradable action” early in the week.

With some decent numbers out of China over the weekend I expect a little “bouncy bouncy” in AUD and perhaps risk in general as USD pulls back a touch before making the next leg higher.

You’ve really got to be nimble these days to bank profits, and get set for the next short-term move,  as “buy n hold” or “sell n hold” for that matter just might have you “holding a bag”.

Stay safe people…and trade within your means.

Kong On CNN – A Window Into America

Forex Kong 14 Comments

I’ve taken a massive jump and just updated my local cable / T.V options to now include “english CNN”.

That’s right…..for the first time in the last 10 years I’m planning to “tune in” to America’s #1 news channel ( is it? ) on my on free will.

I just can’t sit this one out as…….from a global perspective the current “news” out of The United States and “how it may affect me” is certainly worth a couple extra pesos. Currently I’m watching Obama reading from a teleprompter/ cue cards on the latest reductions in the “food stamp program” now squeezing MILLIONS of Americans already struggling to keep food on the table.

I understand the “upper class” being what…..2% of the population? Then the middle,  and of course the lower.

How long will it be,  before the scales are tipped to reflect a 99 to 1 percent ratio, where there is no middle class??

You’ll have Uncle Ben, Obama and the Wall Steet clowns – and a nation of slaves no?

I’ll do my best to keep my observations / comments “respectful and objective” but……it’s been an hour and a half and………

I’ve got to get out of here.

I’m going for a walk.

P.S – I just got back from the local grocery store where I bought enough food for myself and the “future Mrs Kong” to last a week.

35 buck by my math.

Calling All Americans – Help Me Understand

Forex Kong 23 Comments

So that’s gone “exactly” as suggested yesterday, as the U.S Dollar blast higher against the EUR , GBP and CHF. Gold gets completely wacked ( 24 dollars down as of this moment ) and U.S equities “almost” look like they are finally gonna run out of gas.

I am knee deep in profits across the board.

This move should have some legs ( as noted yesterday – the US Dollar should really take a ride here coming out of such a significant bottom ) and it “almost” looks like the old school correlation of USD up = U.S equities down / risk off and a flight to safety may be in play.

Can you believe that the largest contributing factor ( in my view ) is fallout of public sentiment on Obama and this absolute catastrophe called Obama Care?

I dug into it last night to get a better understanding of what exactly the implications are….and it could very well be Obama’s “final undoing” considering what Americans are now faced with respect to their health care planning.

I really can’t see any kind of short-term fix, as the website is one thing fine…..but the fact that thousands of Americans “current and existing health plans” are now being cancelled as per the new laws?? By law??

I thought the idea of drones flying in American skies was starting to look a little “dictatorial”, and now this??

I need to hear from Americans currently living IN AMERICA……I have to know….what do you guys think?

What can be done?

Seriously, I’d encourage anyone there in America to comment as it’s difficult for me to really get my head wrapped around this. How is this affecting you and your families?

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.

 

 

 

Sentiment Change – Fear And Greed

Forex Kong 4 Comments

As I sit here sipping the finest tequilla, minding a couple of fillet mignon and working on some veggies – I contemplate what the boys in Washington are doing at this moment.

Obama most likely has his head in his hands or perhaps has “retired” to a private area – digesting the current fiasco playing out with respect to the “Obama Care” roll out, and good ol Uncle Ben can’t be too thrilled about the rise in USD.

Me? – I just cracked another cold one.

Could it be any worse for these guys?

People now realizing the incredible increase in payments, the difficulties in qualification,  and the out right “lies” put forth over the past years in selling this thing to the masses.

I don’t know all the details, and likely never will  – but what I do understand is “sentiment”.

When “investor sentiment” changes ie…people become enraged/ scared/fed up/rebellious etc…it always reflects in financial markets. If only a mirror of human behavior, as it pertains to both greed and fear – financial markets provide an incredible field of study.

I can’t imagine it could get much worse for poor ol Barak here, as people are pissed – really pissed.

Sentiment is on the verge of change/ rolling over – and we don’t want to be on the wrong side of that.

The Fed – Do As I Say Not As I Do

Forex Kong 13 Comments

What “is” wrong with me?

Have I become so crotchy and skeptical as to actually consider next weeks FOMC meeting as yet another “wonderful opportunity” for the Fed to “yet again” pull a fast one the unsuspecting and “all too trusting” American investor?

They said they where going to taper “last time” ( as the Fed “should” be trusted to give guidance on its plans moving forward ) with every analyst and talking muppet on T.V talking it up as if it was an absolute “given”. Then “blasted” anyone and everyone who may have been “preparing” by “not tapering”. The Fed lost what little credibility it still had, and many lost “mucho”.

Am I insane? Have I lost my mind?

Would I be completely out to lunch considering that there is just as likely a chance “this time” that the Fed ( in the current scenario with the massive blow over the debt ceiling, government shut down and still terrible employment data) has everyone assuming “it’s impossible to taper” ( which in theory it is) and “once again” finds opportunity to screw the lot of you?

“Fed announces small 10 billion tapering of bond purchasing program” and the markets go crazy….(Only to then INCREASE QE a month later and catch everyone again)

Or even better……”Fed announces INCREASED QE” Straight Up! Boom! Bet you didn’t see that one coming!

You can see where I’m going with this. It’s long past ridiculous, and “non of the above” would surprise me “any more” than the other.

The Fed’s involvement ( or lack of ) in today’s markets is unpresedented, and weilds such influence that getting it wrong could prove disasterous.

I KNOW what the Fed is going to do , but week to week, minute to minute –  NO ONE KNOWS what these weasels are going to “say” they are going to “do”.

My gut has me thinking that “no matter what the outcome” to the FOMC meeting here wrapping up Tuesday, the market is gonna “pop” on news….and sell like hotcakes. I’d have every confidence that we are “lower” looking a week out. I’ll get these trades lined up as they come.

Fundamentals – Out The Window

Forex Kong 3 Comments

I couldn’t help myself as well  – can’t possibly outline it any better.

Please….I encourage you to click the link below and ACTUALLY read it! In particular the 3rd chart where we see US Macro Fundamentals are diverging…

THE GREEN LINE IS THE SP 500.

http://www.zerohedge.com/news/2013-10-22/spot-odd-one-out

TAKE THE TIME TO ACTUALLY LOOK AT EACH INDIVIDUAL CHART AND ASK YOURSELF……..

” What the hell is going on? ”

Just keep buying the dip right?

 

 

 

 

 

A Lesson In Trading – Patience And Risk

Forex Kong 9 Comments

New traders / technical traders tend to move too quickly in looking to take advantage of short-term price action.

Looking at this morning’s “risk event” and the markets “completely insane near term reaction to it” would most certainly have any short-term “short time frame” trader ( anything under a 1 H time frame ) up to his/her elbows in sadness – scrambling to find a life line.

https://forexkong.com/2012/12/11/how-to-trade-a-risk-event-or-not/

Then, with little knowledge of the fundamentals and a heart beating out of your chest you come to understand that: “I’m way too leveraged”, “My position is too huge” , “I’ve gambled here” , “What have I done??” – and you’re wiped from the planet.

We all make mistakes granted – and I’m the first to tell you – I can’t stand watching this “continue pushing higher” against every fundamental known to man but…..the key point being – “I’m watching”.

Trading within your means, and exercising “sick” levels of patience are extremely difficult psychological hurdles to overcome……….yet essential for long-term success.

“Patience young grass hoppa……..patience!”

Change Is Coming – Start Making Plans

Forex Kong 28 Comments

I’ve been pretty quiet here these past few days…….and there’s reason for that.

I’ve been busy planning.

Aside from the fact that I can’t bear further discussion of the current (or future) state of America, I’ve been very busy planning. Planning for the “next big move”, for the “next big win”, for the “big enchilada” , the “piece de resistance”, the “creme del la creme”, the trade plan / concept for the following year….no scratch that – the following “years”.

Wether you believe it or not – we are indeed on the cusp of a major turning point.

I don’t mean a simple turning point in the short-term direction of markets no ( we’ve got tools to navigate that )…..I’m talking about a major turning point with respect to how you currently live your life ( depending on your age ) , and certainly how you “view” your life with respect to your ability to “accept change”.

I can’t comment on your own timeline. I don’t know if you are 65 or only 16 years old. Point being….regardless of where you’re at – you’ll have to open to the idea that things are going to change…….and likely change far more than you’d ever anticipated.

My dad used to read comic books as a kid – filled with wild ideas of “humans in outer space” and the “discovery of other worlds”. Boom – there we are a few short years later “walking on the moon”.

I “heard” about this thing called “The Internet”, lied to my local bank about starting a “house painting business” , got a loan for 2500.00 and blew the entire thing on a P.C computer. Boom – I’ve travelled the world and life’s a beach.

Changes come fast, some of them good, and some “not so good”.

Change is coming…….and you’ll need to start making plans.