trade strategies

The Holy Grail – It's Right In Front Of You

Forex Kong 2 Comments

With over 400 pips banked long JPY in only a few short hours – the short USD trade has still not made its move.

We’ve seen rejection at the downward sloping trend line as well a solid reversal on the daily chart, but in all many USD related pairs have shown very little “actual movement” considering these factors.

I hate sideways, and I mean I REALLY HATE SIDEWAYS but unfortunately accept it as a part of trading. You can time an entry to perfection ( if that’s your thing ) and STILL end up seeing the same level bounced around for days and days on end. This is a fundamental element of currency trading as big players often need days and days / weeks and weeks to slowly scale into positions. There is no such thing as “perfect entry” – lending credence to my “scaled entry” ( smaller orders over time ) as means to compensate.

USD/CAD has more or less traded in a range as small as 30 pips for days now! Does this mean an entry “three days prior” was in error? Of course not. It generally means that newbies have no freakin idea what they are doing – expecting some kind of “holy grail” email alert, then “all in”, then fortune and fame.

This will never happen in Forex.

The holy grail “IS” patience.

Further USD weakness expected here at Forex Kong in case you’ve grown frustrated, thrown in the towel, dumped your trades in fear, never took one in the first place. All things considered – you haven’t missed a thing.

Except in JPY. But of course……….you didn’t have the patience for that trade either.

Fed Buys 5.1 Billion And Market Tanks

Forex Kong Got something to say?

Seriously.

The U.S Federal Reserve just made 5.1 BILLION DOLLARS in treasury/bond purchases today alone…….5.1 BILLION DOLLARS worth of straight up “funny money” injected into the system today alone.

Markets tank.

Short and sweet here this morning.

If you’re buying this I’ve got some primo swamp land in Florida I’d love you to take a look at!

I’m up 4% on “risk off” here.

How you stock bulls makin out?

Getting smashed….and don’t let’em tell you otherwise.

Central Banks Love Wars – Syria No Different

Forex Kong 4 Comments

If there was ever a way for Central Banks to “rake in the dollars” it’s assisting / financing governments in going to war. Central Banks love war.

History shows us that “The Rothschild’s” of London where very much involved with financing “both sides” of the civil war in America, not to mention ( some dare say ) “creating” the war itself as means to divide this “prosperous” new economy.

I’m no historian but you can google it to your little heart’s content – I’m not making this stuff up.

What better way to “bring in the bacon” than finance a war don’t you think? You’ve got the people rallied behind you, you’ve got the “bad guys” up against a wall – and you’ve got all the military backing to really make a show! Only thing is……..you’re flat busted!!

How on Earth can one even phathom the costs to the U.S “above and beyond” the ridiculous “balloon of debt” currently hanging overhead? Oh and by the way “we forgot to mention” – we are now going to war.

Who’s chipping in the gas money?

This has gone past ridiculous, as the “ultimate excuse” for continued printing has now reared it’s ugly head.

Lets go to war.

Unreal.

Currencies In Perspective – Risk And AUD

Forex Kong 13 Comments

The value of the U.S dollar (USD) is currently at the exact same exchange rate with the Japanese Yen (JPY) as it was back in April.

So, in case you hadn’t been back n fourth to Japan several times over the past 5 months – you wouldn’t have a clue as to the fluctuation in these two currencies value ( in relation to one another ) in that,  absolutely nothing has changed.

Broad stroke….a person holding USD “hit’s the currency exchange window” at the airport, lands in Tokyo and buys a chocolate bar for the exact same price as last time – 5 months earlier.

Now if your business partner was Australian, he wouldn’t have had it quite so easy. Back in April the “Aussie” could be exchanged for 1.05 Yen ( JPY)  and those chocolate bars at the airport appeared “cheap”  – where as today ( only a short 5 months later ) that Australian dollar only yields .89 Yen (JPY). That is a pretty massive change in such a short time don’t you think??

Let’s stop and think about this for a moment.

Japan has embarked on the largest “Quantitative Easing Program” known to mankind in efforts to “devalue” Yen (JPY) and lower the prices of its export goods ( if Yen goes down in value then “you” with your Canadian or U.S dollars would be “incentivized” to buy Japanese goods as they appear more affordable) yet EVEN AT THAT – THE AUSTRALIAN DOLLAR HAS LOST CONSIDERABLY MORE VALUE!?!

That is some serious , SERIOUS , business in the land of currencies where at “one time” the Aussie dollar was considered the “go to currency in times of risk appetite”.

Some “major players” have been sneaking out the back door here over the past 6 months selling AUD aggressively, and this stuff just doesn’t exist in a vacuum.

…………..more over the weekend.

 

A Day A Trend – Does Not Make

Forex Kong 9 Comments

Getting away from your computer and the markets for a day or two, can provide much-needed perspective and a fresh outlook on return. It’s easy to get caught up in every little squiggle the market makes, not to mention the never-ending stream of “massive headlines” – threatening to take you out at a moments notice.

As well ( and very much like fly fishing ) you need to be able to read the current conditions and evaluate where “and when” to cast your line, as we wouldn’t all rush down to the river in the middle of a rainstorm right?

Forex_Kong_Fishing_And_Trading

Forex_Kong_Fishing_And_Trading

Markets are no different. I don’t try to wade across rapid flowing water well up over my knees, just as I don’t go “all in” on some silly headline during the last couple weeks of summer. Years and years of experience, and countless hours of practice have it that I may not go fishing as often – but I most certainly catch more fish.

Leading into the Fed Minutes here around 2 o’clock – I see that very little has changed here in the short-term, and will likely let the dust settle then “re-enter / add” to a few existing positions – still centered on further USD weakness.

If by some absolute “bizarre shift in the universe” Bernanke actually “says taper” or actually “says” what the plan will be moving forward (as opposed to just sticking to the same ol puppet show) I will most certainly re-evaluate.

I see little to “no chance” of this happening.

A Country At Your Fingertips – Via ETF's

Forex Kong 6 Comments

The symbol “EWJ” is the Ishares  Japanese Index Fund tracking the movement of a handful of Japan’s most popular stocks including Toyota, Honda, Hitachi and a host of others. The ticker itself acts as a reasonable “surrogate” for trading the Japanese stock index the “Nikkei” much like the symbol “SPY” closely tracks the U.S SP 500.

I don’t trade these ETF’s but understand that for those of you who don’t trade forex directly – a list of these types of “equity products” could prove valuable,  as a number of my trade ideas/concepts can be mirrored through these “surrogates”.

The Ishares “family” of these “country related” ETF’s include a wide range including:

  • EWA for Australia
  • EWZ for Brazil
  • EWC for Canada
  • EWP for Spain
  • EWU for United Kingdom

These ticker symbols track a handful of the “top companies” in each countries stock index – not the currency!

Often ( but certainly not always ) the correlation between a particular countries currency and its “stock values” exists as an “inverse correlation” as the value of a given countries currency moves lower for example – the “price” of its stocks inversely reflect “higher prices” and move upward.

For a real time example – you may see that I am looking to “get long” JPY , where a corresponding/inverse trade would be to “short the Nikkei” via the ETF “EWJ” ( which trades at just $11.52 )

Keeping a watchlist of these “country related” ETF’s is a great way to get in touch with some “big picture” movement, while still being able to place an affordable trade through your average day-to-day brokerage.

SHORT TERM TRADE TIP:

I am still looking at further weakness in USD and see opportunities to enter “short” via several currency pairs here again today ( if you’re not already in the trade).

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As well I see the recent “drop” in Yen as providing several low risk entries “long JPY” if indeed risk comes off here.

Trading Monday's Open – Be Patient

Forex Kong 4 Comments

Forex markets get started late afternoon on Sundays (as Australia and the Asian sessions get rolling) so I always like to get a head start on things – considering it “back to work time” Sunday around 4:00 p.m

The trade volume on Sunday leading into Monday is always very light, and many charts will often see “gaps” in price action. These “gaps” can provide for some interesting trade opportunities, as for the most part price action will almost always move to “fill the gap” before the larger volume trades kick in during London’s session as well the U.S come Monday morning.

In general I “usually” don’t initiate trades on Sunday night but will most certainly look to follow price action into the early morning on Monday – and even put on a couple “probes” if I see something that works.

This morning in particular I see that several USD pairs have made reasonable moves “counter trend” and with the continued framework of “further USD weakness” still very much in place, I do see some excellent entry points. BUT…..

Knowing the market as I do, it’s almost ALWAYS A BETTER BET TO WAIT A FULL HOUR AFTER THE OPEN ON MONDAY as  over excited “newbie traders” rush through the doors bright and early – only to be met by our dear friends on Wall Street and their usual “host of surprises”.

Trust me – you will not miss a single things as far as “timing your perfect entry” if you can just hang on an extra hour or two to let the “Monday morning fleecing” run it’s course – then take another look and see where the dust has settled.

Patience is a huge part of Forex trading, as time and time again I find myself doing a lot more “waiting” (with my money safe in hand) than I do actually “trading” with a pack of hungry wolves on a Monday morning open.

Personally I see the tiny “pop higher” in USD here this morning as a great re-entry “short” via several pairs.

Looking long AUD/USD as well NZD/USD as well (gulp) EUR/USD as well short USD/CHF and USD/CAD.

Same Ol Story – I'm Looking Short

Forex Kong 8 Comments

It’s no secret.

I can’t imagine anyone being too surprised. I’m looking to get short USD here yet again.

I’ve initiated starter positions long NZD/USD as well AUD/USD, short USD/CAD as well USD/CHF.

The Yen strength can’t be overlooked here either, as any trade “long JPY” is also in the cards.

Over night the Nikkei has yet again pumped into its overhead DOWNWARD SLOPING  trend line , as well the SP 500 is “still” hanging around this 1700 level.

I sound like a broken record I know – but this is the trade I’ve been working towards for some time, looking for the fundamentals to continue paving the way.

 

U.S Non Farm Employment Release – 15 Mins

Forex Kong 8 Comments

Once again we will likely see U.S dollar as well U.S equities movement focused on the U.S Non Farm Employment report coming up in the next 15 minutes.

A better than expected number would be good for stock prices, and as we’ve seen the U.S dollar trading along side – one would expect a “beat” to also fuel further U.S dollar gains.

In the current “all is well have no worries” environment currently being sold – I’d be hard pressed to see this number disappoint as the expectations are so ridiculously low.

We can expect a large number of new bartenders and waitresses to be hitting the streets in the U.S soon.

It should do wonders for economic growth.

**** Quick Addition****

I had suggested yesterday that I was “already looking” to get short USD again – and boom! The weakness in U.S jobs numbers has actually put a dint in the “never ending bliss” of the U.S data as of late – and the USD has reacted considerably.

We are currently seeing U.S Dollar AND U.S Equities trading in tandem so……perhaps “now” we finally get the pullback / trend change in stocks, as USD rolls over here AGAIN – and heads for the basement.

I will loo at today’s action very closely – and will not be afraid to start putting on positions AGAIN SHORT USD.

Interpreting The Fed – Good Luck

Forex Kong 6 Comments

We’ve all got our own take on what’s happening these days. Each of us taking the information we receive – and interpreting it the best we can. Ideally we get “some” of it right, and in turn are able to put some money in the bank.

Here’s my take – bare bones.. take it for what it’s worth.

  • The business cycle has topped or is still in the “process of topping” as equities continue to grind across the top. The actual “level” of the SP 500 ( I track /ES futures ) is STILL at the exact same level ( give or take a point ) as the peak back in May so…..if you’d been nimble enough to “sell at the top” in May….then “buy the dip” late June (and taken advantage of these last few weeks) – all power to you. You are a star.
  • The suggestion of “slowing” in China coupled with the problems brewing in their credit markets ( now looking to be of much larger concern than I originally had thought) suggest WITHOUT QUESTION that China will experience a slow down moving forward.
  • As seen through the complete “destruction” of the Australian dollar ( which usually serves as a good indication of global risk) there is no question that slowing in China will have considerable global reach.
  • Gold and commodities in general have taken their beating and look to have bottomed.
  • The Federal Reserve will continue on it’s quest to destroy the US Dollar (which correlates well with the idea that commodities and the “cost of things” should be on the rise).
  • U.S equities will continue to grind across the top and lower, then lower and yet lower as we are now entering a period of “rising interest rates” which ultimately hurts corporate borrowing, and in turn corporate profits.

I’ve suggested for some time now that ” we are on the other side of the mountain”. These things always take longer than most anyone can imagine, but the bigger building blocks are most certainly sliding into place.

Can the U.S survive an environment where interest rates are rising, and global growth is falling?