trade strategy

Markets Trade Sideways – You Know What To Do

Forex Kong 4 Comments

I thought I’d wait until after the close today – hoping that “perhaps” there might be something a little more interesting or exciting to chat about. Low and behold…..not.

Today being the 15th trading day with the SP 500 still flopping back n fourth – in range.

Gold putting in some “constructive” moves but certainly nothing to write home about, and the US Dollar’s upward move has “for now” run a little low on steam.

Japan’s Nikkei has also continued to trade in range, unable to get back over that magical 16,000.

What’s changed? What’s new? Absolutely nothing as price action continues to trade sideways day in and day out. There is absolutely nothing you can do about it, just accept it and do your best to remain calm, focused, and don’t get lulled to sleep.

Markets have a tendency to “jump up and punch you in the face” at the most “inopportune time” so…..keep those eyes peeled and maybe “just maybe” we’ll see some fireworks here soon.

Ramblings On USD – Still The World Reserve

Forex Kong 8 Comments

This from the comments section, and some great points / questions raised by valued reader “Rob”.

Hi Rob.

Great trading man…I’m glad to hear you’ve been doing well.

You bet USD is most certainly the “current” world’s reserve currency, and yes “obviously” takes flows as other assets denominated in USD are sold (an incredible privilege for the U.S  – but unfortunately one that is currently being “so abused”).

We don’t see it in a day-to-day sense but….the fact is – the rest of the planet has had enough of the U.S abuse of it’s reserve status, and is making considerable effort to “insulate itself” from further devaluation. USD will rise but ( in my view ) only as a product of these market mechanics and NOT because anyone in their right mind is outright “buying USD”.

With some 85% of global forex transaction “still” involving USD ( as being the worlds reserve we have to appreciate how many countries “must” hold USD as a means to buy commods ) the ship can’t turn on a dime. It’s a cruise liner – not a speedboat.

Don’t be fooled. The macro vision has USD going to zero…while the shorter term zigs n zags may very well suggest USD strength.

In my view IT’S BY DEFAULT – in that USD is “still” the reserve, and as risk comes off – assets denominated in USD are sold and cash is raised.

Nothing more.

EU is a disaster, China looking to slow moving forward, and a complete and total joke of recovery in the U.S. No one “wants” to buy U.S dollars. It’s “relative strength” is a mere by-product of simple market mechanics.

As I see it anyway…..

Great stuff Rob….you’ve obviously got your head screwed on right. You can take my crap with a grain of salt, and even better with a nice shot of Tequila.

Safe Havens Misunderstood – Don't Be Fooled

Forex Kong 17 Comments

To refer to the U.S Dollar as a “safe haven” makes little sense, even to the  newbie trader/investor who I’m sure by now has at least read / heard something “somewhere” – with respect to USD’s continued depreciation/devaluation and “ever diminishing” buying power.

I don’t have the stat off the top of my head, but remember reading that the U.S Dollar has lost some 93% of its value / buying power over the past….75 – 100 years? As well that the number of “new dollars” created “every year” now surpasses the number of dollars “in existence” over the previous 800 years. That’s what I call devaluation no?

In the current investing environment any “perceived dollar strength” cannot be misunderstood as “actual strength” as…….USD rises when assets priced in USD are sold. Period. End of story.

As stocks (which are priced in U.S Dollars) are sold (by the simple mechanics of markets) a “cash” position is then raised. Investors “seeking safety” aren’t rushing out to “buy dollars”, they are simply selling stocks / assets “priced in dollars” with attempt to “get out-of-the-way” should further downside risk ensue. Do not mistake this ( as the U.S media would have you ) as “dollar strength” or even worse as a “good thing” in that……a move towards USD suggest investors are moving to “cash”.

The general spin in the media these days would have you thinking “hey the Fed is going to continue tapering, stocks haven’t fallen and hey! – Look at the U.S Dollar gaining strength too! Things must really be going well!

This couldn’t be further from the truth.

I had questioned in a previous post – which “safe haven would take the lions share” during the impending correction ( already underway ) and have now seen that indeed “all assets suggested” have begun the slow turn upward. USD as well the Japanese Yen, Gold and even U.S Bonds – all moving higher over the past couple of weeks.

Do you think it’s just by chance?

 

 

Trading The Pin Bar – A Candle To Watch

Forex Kong 10 Comments

Aside from my short-term technical indicator and longer term fundamental analysis, I am also a student of Japanese Candle Sticks. The formations created and the understanding of “what they suggest” (with respect to pure price movement) can be an extremely valuable tool for traders of any asset class.

Price is price no matter what you are trading, so learning to recognize and understand the “shapes and patterns” of a given candle or “series” of candles is a skill that you’ll eventually want to come as second nature.

The “Pin Bar” is a fantastic candle to keep your eyes open for as it usually suggests that price has been soundly rejected at a certain level and has moved quite dramatically during the duration of the candle. Lets have a look, as I had suggested “looking out for these” in both NZD/USD as well AUD/USD earlier in the week in the comments section.

Forex_Kong_Pin_Bar

Forex_Kong_Pin_Bar

You can see that price “originally” was as high as the “upper wick” of the candle extends, but as the week progressed continued lower, and lower to finish / close the candle at the absolute opposite end / lowest portion of the formation.

What does this simple “graphic representation of price action” tell you about the entire week’s activity? You’ve got it – in a single glance you’ve deduced that NZD/USD was literally “sold” right from the start of the week.

A simple strategy some traders look to employ – is to simply place a “sell order” under the low of the pin bar candle…and allow further movement in price to pick up them up as price continues to move lower.

Re entry in a number of pairs (obviously NZD/USD) is looking good however it appears that markets are stalling / sitting idle here. I’ve got several open trades but see the weekend coming and will look to re-evaluate before close here on Friday.

Spanish Speaking Traders – Bienvenidos!

Forex Kong 4 Comments

El idioma español es el segundo idioma más utilizado en los Estados States.

The Spanish language is the second most used language in the United States.There are more Spanish speakers in the United States than there are speakers of Chinese, French, German, Italian, Hawaiian, and the Native American languages combined.

According to the 2012 American Community Survey conducted by the U.S. Census Bureau, Spanish is the primary language spoken at home by 38.3 million people aged five or older, a figure more than double that of 1990.

Español es “el segundo idioma más popular” aprendida por hablantes nativos de Inglés Americano.

Spanish is “the most popular second language” learned by native speakers of American English.

I am very pleased to “kick off ” further promotion in several Latin American countries, and wish to extend a very warm welcome to those spanish speaking traders!

Estoy muy contento de “poner en marcha” una mayor promoción en varios países de América Latina, y el deseo de extender una cálida bienvenida a los comerciantes de habla Español!

Thursday Forex Trade Update – Re Load

Forex Kong 4 Comments

Once I get my signal for entry, and then begin to “actively trade” a given currency pair on the smaller time frames – things really start moving.

I’ve already taken profits on the entire group of trades entered Monday, then “re loaded” several pairs with smaller orders through yesterday and last night, with a couple of really big moves being seen – in particular the Australian Dollar ( didn’t I tell you that days ago?? ).

A quick update on activity here on Thursday as quite simply – I am sticking with the same pairs (more or less) and after a couple of days “chopping around” look to scale into re entries “across the board”.

Often what I’ll do in cases like this, when we’ve nailed the original entry so well – is take a “portion of profits” already taken – and treat the “re entries” as “bonuses”. Taking 6% in a matter of 48 hours, with next to no market exposure allows me to “mentally” approach the next trades a little differently.

I knock the Kongdicator down to the smaller time frames, and more or less just do the same thing over again as…..I’ve already got the confidence that we’ve nailed a change in trend / direction – now it’s really about “getting back in there” at the very best points that I can.

I hope you’ve been following along, and from what I understand from some of my regular readers…it sounds like several of you are making some money too!

USD has taken a little break, and several pairs present “decent shots” at re-entry here this morning. AUD has been punished hard, but I’m confident it still has further to fall as NZD also looks to be fading. JPY has certainly been stubborn but my feelings about it have not changed.

We are literally….soooooo close to a larger scale correction  – you can practically smell it.

Trading Greed – Take Profits Faster

Forex Kong 14 Comments

It’s very difficult trying to “teach” people not to be greedy.

Human nature ( or at least the human nature you “had” before becoming a trader ) pretty much has “greed” wound tightly ’round your genes, and for the most part – that makes sense. Man finds something that he wants / needs, then he wants more, he needs more, and if only driven by the human instinct to “survive” – he looks to “get more”.

What happens when you wake up the morning after your “discovery” and the “more” you where planning to go back for – has disappeared? Overnight – the watering hole has dried up.

Thankfully you took what you could the day before right? Running home to get that “bigger bucket” (to put all that water in) didn’t work out to well for you did it?

You have to learn to take profits when you see them…as in this crazy environment there is absolutely no guarantee they’ll still be there in the morning.

Kong on the scoreboard with 4% returns on trades initiated Monday – now looking at re entry . As well on the CNBC front I’ve actually been pleasantly surprised this week as…..the floating heads have shown considerable restraint ( as I would have expected them to just say  buy, buy , buy ).

Forex Kong On CNBC – All Next Week

Forex Kong 3 Comments

Unfortunately “no” I won’t be appearing on CNBC all of next week, as I really can’t see getting to far past “hair and make up” before going completely “apesh#t” swinging from various parts of the set, and likely “tearing to shreds” any number of “floating heads” found therein.

Did I just hear that brunette haired gal suggest “the Fed might need to consider pulling back on tapering??” BEFORE tapering has even started??

If they’ve got mind reading technology down there fine, but if they continue to simply read Forex Kong daily and “pepper my concepts / suggestions” in amongst the rest of their garbage look out!

He he he….but seriously. What I am going to do next week for the sheer “entertainment value” alone is…..I am going to follow / watch, and actively comment on CNBC for the entire week.

I am going to follow / watch, and actively comment on CNBC for the entire week.

Likely of more interest to American readers ( or perhaps not ) let’s look at next week as a unique opportunity to “really see” just what these people suggest during a time of obvious transition and increasing volatility. I will be watching closely.

So far today I heard another guy say “get long Japan and Europe” as well the brunette “hinting” that perhaps the Fed will need to “pull back on tapering”.

Next week promises to be a week full of fireworks, so we might as well enjoy it right?

I’m going to enjoy it alright. Let’s have some fun shall we?

Have a great weekend everyone.

 

U.S Traders Frozen – Yen Ripping Shorts

Forex Kong 9 Comments

It would appear that the cold weather system crossing the United States has frozen U.S traders dead in their tracks. Frankly I would have expected a bit bigger “welcome to 2014” type day here, as most traders “should be” back to work.

Stuck sitting in an airport then are we? Yuk. That’s no fun for anyone.

Well…..traders in Asia have certainly hit the ground running, as the good ol Nikkei tanks an additional -225 now down -550 in just the past few trading days. Not exactly the “best start” to 2014 there, as the 16,000 level continues to generate significant resistance. Inversely we are “finally” seeing constructive shorter term charts in JPY strengthening and possibly making the turn.

We all know what continued Yen strength suggests with respect to global appetite for risk right? I’ve been over it about a million times.

There’s really nothing you can do on days like these as this as the Kongdicator is a “hair away” from triggering “short risk ideas” but still not quite there. Knowing full well the Fed is still sitting across the table from us ( as well the Bank of Japan ) now is “still not the time” to jump into anything head first but…….the odds are increasingly in favor of correction.

We know BOJ is gonna print more in April so……in a broad / general sense it makes the most sense to me that “even the U.S Fed” could just as well “allow” markets to correct through the first quarter, all-knowing the printing presses will just crank back up late March.

Actually….it makes perfect sense to me. Get a well orchestrated “dip/correction” in now, with the obvious intention to just ” reinflate” right around the same time as the BOJ. Bring in new buyers on the dip, continue to pedal the “recovery story” and grab those last few stragglers that still have a couple bucks left in their accounts.

Yes yes you know it well….wash , rinse , repeat – wash , rinse repeat.

Very constructive moves in Yen, but still not enough to get me into the trade ( Kongdictor says we look at things in aprox 12 – 24 hours ). Watch for Tweets over the next day or two as I imagine we’ll get a trade signal initiated.

Otherwise…..zzzz…..zzzz….zzzz – wish there was more.