psychology of trading

Work Hard – Stick To Your Roots

Forex Kong 1 Comment

It’s funny you know….the stories we’ve  heard from our parents.

The stories they told of  “how hard it was” and of the struggles they faced. Stories of  “the way it was” and the sacrifice needed…..if only just to survive.

As a child I likely didn’t listen much. Only now in this “attempt at adulthood” am I truly thankful to have learned many, many important things from my parents. Among other things, based in the fact that they never had it easy.

There was no family money. There was no house to inherit, no business to take on, no riches stashed away for the future purchase of additional “silver spoons”. My parents worked hard.

I work hard.

Without these “stories of struggle and sacrifice”, without these “tales of triumph”, these examples of “strength in the face of adversity” – who would I be? What would I have become?

Well…….I have my own stories now. And as my parents may grow “equally disinterested” as I may have been as a boy – I guess it all comes around full circle.

Trading is the most difficult challenge you will ever face – for reasons you are currently not aware.

Word hard……………………stick to your roots.

Fiat Currency – Paper Money Is Debt

Forex Kong 14 Comments

Fiat currency is money that derives its value from government regulation or law. The term fiat currency is used when the fiat money is used as the main currency of the country. The term derives from the Latin fiat (“let it be done”, “it shall be”).

The term fiat currency has been defined variously as:

  • any money declared by a government to be legal tender.
  • state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.
  • money without intrinsic value.

While gold or silver-backed representative money entails the legal requirement that the bank of issue redeem it in fixed weights of gold or silver, fiat money’s value is unrelated to the value of any physical quantity. Even a coin containing valuable metal may be considered fiat currency if its face value is higher than its market value as metal.

Another interesting point, when we consider how money functions” in our society as a “debt instrument”.  The Central Bank creates money out of thin air, then exchanges that “new money” for  “interest bearing instruments” such as Government Bonds.

You purchase the bonds with an expectation of making some kind of return on that bond (and where do you imagine that “extra few %’ points” come from over time?)

Your taxes go up – that’s where.

Round and round we go as governments keep spending – and you keep paying for it.

It’s been a slow week here and I apologize for the “lack of interesting copy”, but when I’ve not actively trading there usually isn’t a pile to say. I imagine things will pick up here again soon.

Forex Blog – This Is A Forex Blog No?

Forex Kong 3 Comments

This is a forex blog – isn’t it?

You know – I’m a little hurt. As hard as I try, it still appears that our beloved friends at Google still don’t seem to think this is a forex blog. I type “forex blog” and all I get are a number of websites looking to sell you some “forex trading system”, or a couple of videos showing me “what is forex”, or “how I can make money trading forex”….and poor, poor Kong  – still nowhere to be seen.

If this isn’t a forex blog – I’m not really sure what to do about it. Ideally – the gang at Google (who I’m sure “must” have an interest in forex) would be thrilled to have a look into the real life “trials and tribulations” of a real life forex trader…although seamingly – such is not the case.

Oh well..I will continue to do the best I can, and look forward to the day, blessed with a “front row seat” in the listings……….recognized as a  “forex blog”.

Scuze the plug you guys…..but I gotta swim with the sharks here – and every post can’t be a “doozy”.

 

 

 

Trade or Invest – Things To Think About

Forex Kong 12 Comments

It’s crazy out there.

Currencies are literally “all over the map” with several of the usual correlations giving traders/analysts a good run for their money. Eur up and stocks down, continued JPY strength in the face of risk aversion, and the British Pound (GBP) on a tear.

In equities the transports ($tran)  have taken it on the chin, with Fed EX pummelled over last several days, and the massive market leader APPL having  lost 200 billion in market cap. 200 billion! – Poof…gone.

Earnings will likely disappoint, we’ve got seasonal selling ahead (“sell in may?”), tensions in North Korea moving higher, terrible employment numbers (again) in the U.S , and of course –  and any number of “unforseen events” far more likely bad than good.

So…..Is it a dip or a turn?

Time to trade or invest?

I’ll have to leave it up to you decide the best course of action, as you’ve all seen my charts and read my views. Regardless of any short-term action ( as the possibility of another “pop higher” in risk  always remains ) seriously….

If a broker/trader  hasn’t picked a top, or the area to sell and book profits – what possibly likelihood would there be in timing a “scoop buy / dip” for a few more points?

For the most part – by the time retail is convinced the water’s are safe, the move has already passed – and you’re once again caught……buying the top.

Give In To Mother Market – She Always Wins

Forex Kong 5 Comments

To tell you the truth – I’m a little frustrated with you. Ya’ know…….

I’ve written the articles. I’ve posted the charts.  I’ve outlined the underlaying factors, and have even gone as far as to suggest effective methods of protection – should things go South.

But you don’t listen. You don’t care.

You’ve got it in your head that “everything’s gonna be fine” and “scoff” at suggestion to the contrary.

You refuse to consider the fact that you’re not in control, you don’t have the answers, it’s bigger than you, stronger than you, wider than you. You can’t accept the fact that if you don’t make a decision fast……this thing is gonna crush you like a bug.

Well……news for you my friend….welcome to the club!

You don’t think I feel the same? You don’t think I question the same?

Give in to mother market ma man….. cuz she always wins. ……….She always wins!

Best advice I could give…………get to cash.

Stop worrying about the “returns you’re getting”. Aleve the pressure and do some math. Consider 6 months to a year with no exposure to the market –  and the amount of money you’d of made…..or more importantly ……the amount of money you’d have lost. It’s just not worth it.

This is a top not a bottom. I can assure you – you won’t miss a thing.

Discipline – The Trade That Got Away

Forex Kong 4 Comments

I want to continue with my trades long JPY.

I want to place these trades (a few short pips underneath current price action) in currency pairs such as EUR/JPY and GBP/JPY. I want to get short NZD/JPY as well AUD/JPY not to mention CAD/JPY. I want to push a bunch of buttons. I want to enter a bunch of orders. I want to do it right this second! Right here! Right now! My god let’s do it! Do it! DO IT!

But no……….I can’t.

I’ve got patience. I’ve got trade rules. I’ve got plans.

I’ve got millions of trade opportunities in front of me, and a lifetime of trades –  lying in wait.

Most importantly of all. I’ve got discipline.

I’ll sit tight here a while longer and see how things shape up come London open. Frankly, I’m not satisfied with this correction in Nikkei and JPY and still feel there is further downside in risk. I still have reservations about taking positions of any reasonable size so will stick to my guns….and stay on the sidelines.

 

Going Short – A Difficult Trade

Forex Kong 9 Comments

I have been struggling with “going short” all week. Not in the conventional manner as in “selling a stock short” – but more so with consideration to “getting short” on risk.

For the most part “long trades” are considered bullish and are taken when traders feel that markets (and risk) are going to move higher – where as “short trades” are bearish and are taken when traders feel markets are making a turn to the downside. There are many ways to play it – through inverse or bearish ETF’s or possibly through the purchase of instruments that perform well in times of risk aversion (many feel that gold is a good play in this instance).

Via currencies I have chosen to “buy JPY” as it is considered a safe haven currency – and is generally bought during times of risk aversion. Any way you cut it, the idea being that investors would be seeking safety – and that “going short” would be the trade of choice.

This has not been easy.

Markets have traded within a very tight range (sideways) for nearly two full weeks! And regardless of some great intra day trades and profits (which I’ve had to work very hard at) it’s been near impossible to hold on to any position of size for more than a couple of hours or so – before it’s either back to break even, or worse – going against me.

My indicators ( and my gut ) keep me on the short side regardless. I will endure this mornings barrage of U.S based news and evaluate from there.

I’ve layered in to a couple of long JPY trades here over the past 24 hours that will either make me a great deal of money or (at the worst) cost me 2% of my account (not bad considering I’m up over 4% on the week anyway) so…..

Stay tuned for some fireworks.

Getting short…and “staying short” – is a very, very difficult trade.

Dear Future Forex Kong – Nice Work

Forex Kong 2 Comments

Dear “future” Forex Kong,

Obviously if you are reading this – the spaceship finally came together. You, your family and your “little Mayan friends” are all at safe distance, and you where smart enough to buy all the physical gold and silver  you could carry  – back in the Spring of 2013.

I can also assume that your hunch on China’s impact on the global economy and the currency markets came to fruition, that there is a stack of “renminbi” sitting on your dashboard, and that your Mandarin (官话) is now even better than your Spanish. Knowing you as I do – it’s unlikely you’ll have changed much with consideration to how you’ve lived your daily life these past 100 years or so………I expect that liver transplants have become the rage – and that your interests in Biotech, robotics and nano-technology have also served you well.

If you still aren’t married and have no kids ( as not to have found someone that could tolerate the constant counting/tapping/humming/drawing/writing/pacing) well……….I guess we saw that one coming.

You stuck to your guns, you didn’t give up – and before the Mexican authorities could grab you…..you finally got that damn thing off the rooftop.

Nice work.

Kong Hits 100% Cash Target

Forex Kong Got something to say?

I’ve done it.

Overnight I took a number of smaller trades looking to fill gaps in many of the JPY’s charts. A number of those paid off and I’ve also sold my remaining  “short USD”  trades for a small profit this morning as well. The point being – I have moved to 100% cash as per my trade plan, and am exactly where I want to be for the coming days.

To an active trader the feeling of being 100% cash is truly , TRULY remarkable….as you’ve “officially” extracted “x number of dollars” from that devil of a market, and are able to put your feet up a day or two and relax. I’m really not much for that  – but in this case, will certainly take a day to re-evaluate and not worry about open positions.

From a completely psychological perspective, the opportunity to step away from the market is a welcome gift. I would encourage anyone who is struggling or confused, or perhaps those who are  underwater in a position or two – to take the time to get away from it all…if only for a day or two.

In my case – a time for celebration, as to have survived yet another  – trading adventure.

Kong………..gone.

Xi Jinping – The President Of China

Forex Kong 2 Comments

Xi Jinping ( born 15 June 1953) is the General Secretary of the Communist Party of China and the Chairman of the Party Central Military Commission. He is also the President of the People’s Republic of China and the Chairman of the State Central Military Commission, and is the first-ranked member of the Politburo Standing Committee (PSC), China’s de facto top power organization. Xi is now the leader of the Communist Party of China’s fifth generation of leadership.

Xi is considered to be one of the most successful members of the Crown Prince Party, a quasi-clique of politicians who are descendants of early Chinese revolutionaries. Senior leaders consider Xi to be an emerging figure that is open to serious dialogue about deep-seated market economic reforms and even political reform, although Xi’s personal political views are relatively murky. He is generally popular with foreign dignitaries, who are intrigued by his openness and pragmatism.

He will rule over one fifth of the world’s population for the next ten years, if all goes to the Communist Party’s plan. 

His challenges are numerous: a strong but slowing economy with growing resentment over corruption, an urban-rural wealth gap, continued calls for wholesale political reform and countrywide worries stemming from countless environmental scandals.

I thought it might be worth getting to know this fellow a bit – considering he’ll be the man for the next 10 years. I was hoping to find some indication of his  plans moving forward and ironically – found “tackling corruption” sits at the top his……………”to do list”.