trade strategy

Currency Trading – Everything Is Relative

Forex Kong 2 Comments

When trading Forex one has to keep in mind – everything is relative.

Weakness in a particular currency is only “seen” when that currency is compared / traded against another “specific currency” where the “relative” difference / change in value can be compared.

Hence the reason why forex is always traded in “pairs”.

Often we see the pair EUR/USD ( the Euro compared to the US Dollar ) and generally assume “dollar weakness or strength” based on this pair – and this pair alone, yet the dollar’s performance vs AUD ( The Australian Dollar) for example “could” be an entirely different story depending on specifics affecting AUD.

To “generalize” or to “assume” a given currencies direction without viewing it “specifically” against each and every individual currency would be naive , lazy – and likely quite costly.

The US Dollar has taken a considerable down turn “again” this morning – or has it?

Against the EUR sure ( as these two will always “see – saw” being the two most widely held reserve currencies on the planet ) but in all……….USD has barely budged against a pile of others.

The one thing that has moved here this morning is volatility. Volatility is up , up , up and away.

Spend the time ( it might actually take 5 minutes a day ) to get familiar with currencies, oil , stocks , gold etc  in a “relative manner” and before long – you’ll be seeing things much more clearly.

Oh My…..Just A Couple Of Trades Paying Off

Forex Kong 8 Comments

Oh my……….

It would appear that the recent “tweaks” to the Kongdictator have been…….AWESOME!

EVERY SINGLE TRADE SUGGESTED / ENTERED VIA MY SHORT TERM TECH IS CURRENTLY “WELL” IN PROFIT.

These things can turn on a dime fine…..( although forex wise – not so much )…but that ‘s 8/8 as per the “real-time updates” at the beginning of last week.

Read ’em n weep sucka’s ( for those following from Forex Factory).

Tequila time for Kong!

 

Forex Strategies For Investors – Timing

Forex Kong 4 Comments

I can’t help but say….I’m a little choked.

We’ve been over a number of key points here, when considering “taking a trade”, and now turn our focus to “making an investment” as essentially – a completely separate topic.

Anyone care to hazard a guess,  at one of the most important factors affecting each?

Hey! You got it!

Timing! Timing! Timing!

You can have all the fundamental knowledge in the world, as well possess the “ultimate technical know how” yet, if your timing sucks……………….sorry to say – you are sh/#&t outta luck.

Anyone making an “investment decision” without (at least ) “some” understanding or awareness of the “possible downside or risk” might as well just sign their account over to the brokerage and wait for the call – letting you know your account has been reduced to zero!

Have you lost your mind? With absolutely “no plan” for the “downside” what you are essentially saying to me is ” I bought a stock, and expect it to go up, up , up , and continue going up forever”.

Or at least….that’s what your broker told you, and believe me – he won’t be calling you to let you know anything otherwise.

Again – have you lost your mind?

This “isn’t investing” as clearly – the landscape has changed. Your broker and your bank are your enemy, and will stop at nothing to see you and your hard-earned nest egg “parted” as readily as possible.

This is 2013 people! You have the entire planet’s libraries at the push of a button!

If you can’t make an investment decision based in your “own knowledge” of a given asset’s performance over time ( and in turn “some idea” of its peaks and valleys / areas of support and resistance) then WTF?

How can you see an area to take profits? How would you know an area to “cut your losses” should things go “that far” against you?

How can you honestly say you’ve got “any idea at all” as to what you’re even involved with – short of putting your entire “nest egg/investment dollars etc ” into the hands of an institution whose soul goal is to extract it from you?

GRRRRRRRRRRR………..

More on timing next…………

Forex Strategies For Investors – Not Traders

Forex Kong 10 Comments

I’ve spent the past week “out in the trenches”. Pulling back the curtain “just a bit” and hopefully providing short-term traders with a couple of ideas  – and the chance to make a quick buck.

For the most part this area of forex trading is extremely difficult, time-consuming , stressful , annoying and for those with little experience  – truly a fool’s game.

What I’d like to do now, is take a complete 180 degree turn and take a look at forex strategies and concepts geared more so for the investor.

Let me throw out a quick scenario.

What if I told you that your Canadian dollar exchange to Mexican Pesos is 12.79 ( simply consider a dollar being worth approx 1.27 here ) Not bad eh?

Ok…..so now what if I told you that the “base savings rate” at any of the excellent banks here in Mexico was 3.75% – You starting to get the message?

So what if you could go to the bank in Canada tomorrow and get a loan for 100k ( at near 0% ) Then take “said loan” and convert it to Pesos – and put it in a bank account at 3.75% – with absolutely no risk.

Boom! Forex as investment.

It’s what your local banks are doing hand over fist. It’s called the “Carry Trade”.

It’s not “new” it’s not “sketchy” – It’s a major , MAJOR driver of profit for banks across the planet.

More over the weekend……

 

written by F Kong

Risk Off In AUD – JPY Moved Higher

Forex Kong 4 Comments

As markets continue to “flirt” with a real move / turn – I’ve taken a couple additional trades over night.

Short AUD/JPY as well long GBP/AUD. Both well into profits with prior trades ( see previous post ) all moving even further into profit. ( The Insanity Trades are well…..insane.)

The Australian Dollar (AUD) is showing considerable weakness across the board, as our old friend the Japanese Yen (JPY) continues to move higher.

I’m pleased to report that fewer signals were offered last night, and that the latest tweaks to the Kongdicator has kept me out of sideways action in USD related pairs, while hitting home runs in others. This is the plan.

I won’t bore those who are here reading on macro market analysis / fundamentals much longer with this “technical stuff” a day longer – and appreciate those who have followed along so far.

Markets are “teetering” here – and it’s nuts out there. Trade safe, and we’ll get back to some “overview” during the weekend.

Anyone who isn’t already following on Twitter – I tend to post “real-time stuff” there, as opposed to putting out an additional blog post so….

 

Kongdicator Alert! – Free Trade Signal

Forex Kong 8 Comments

It’s really no suprise that “The Kongdicator” has now tripped, and will produce entry signals within the next 24 – 36 hours.

I’ve done some tweaking here over the past few weeks in that – I’ve been “a touch early” with the initiation of new trades recently, and want to get this dialed right in.

As the system is “forward looking” I plan to post / alert to the exact trades that the Kongdicator suggests in real time during the trading day tomorrow.

I will outline each specific pair, as well perhaps a couple of stocks / indexes ( as I run it on /ES SP 500 futures  as well) so that you can get a real look at some specific entry levels – and follow along with a couple of trades.

The Kongdicator always suggests / places trades “above / below” the signal as these trades are then picked up “if/when” momentum moves in their favor.

I hope to get some feedback on this ( hopefully constructive ) as we move closer to making the indicator available to all.

Across the board I have a number of currency pairs signalling a trade, but each with it’s specific time / price so……I’ll plan to tweet as well post several times if need be, so that we can get a look at this in real time.

Thanks everyone.

Kong.

The Seinfeld Post – All About Nothing

Forex Kong 3 Comments

Sitting here wracking my brain for a compelling headline ( an absolute “must” in financial blogging circles) suddenly it came to me! Seinfeld! The show about “nothing”.

Well……as the entire planet continues to sit watching “in awe” as the U.S Government stumbles around in the dark “yet again” , hoping to put a square peg in a round hole. What’s there to say?

Nothing.

At least with Seinfeld you got a good laugh out of it. This isn’t funny in the slightest.

Now hearing talk about “leaked information” seconds before the Fed’s announcement last week? Now that’s funny. Like the gang at Goldman and Ben’s “other buddies” had no clue they weren’t gonna taper!

I mean seriously….it came as an absolute “shock and surprise” to the big boys, and now  blamed on the media? Gimme a break.

Nothing to see here today that’s for sure.

Disgust. Revolt. Shame. Sickness. Loathing .Nausea.

Risk continues to sell off here “despite any kind of green arrows seen in U.S equities” today. The illusion continues to play out, as commodity currencies get wacked overnight, and the safe haven play for JPY makes considerable headway.

 

Forex Trading – Tuesday Morning Update

Forex Kong 4 Comments

I’ve “scooped” 3% overnight in a number of “long USD” trades, the largest of which being NZD/USD ( you were alerted to on Sunday night, then again via twitter last night ) as well long USD/CAD and short GBP/USD.

These pairs are still very much in play , only that these days when I see money on the table – I just flat-out take it. The short-term tech will kick in here soon, as we again can likely look to Thursday as the market pivot.

The Yen (JPY) has shown considerable strength in the past 24 hours, as every JPY related pair has seen reasonable moves ( a couple 100 pips even ) over the past few days. I still hold a couple trades ( still in the weeds ) long JPY.

The Insanity Trade is still holding as well, and in case any of you looked into following this pair (EUR/AUD) over the past week now – I hope you’ve seen “the light”. Dipping as much as 150 pips in a matter of hours, then back again etc….still hanging in profit but a wild ride if you’ve leveraged / are trading too large. Insanity Trade 2 has still yet to get picked up.

Otherwise…..another hum drum Tuesday on deck here today, as SP/ U.S Equities have certainly “come off” but nothing to write home about.

Gold continues to grind anyone silly enough to think they can actually “target an entry price” on an asset worth 1300.00. 30 dollar moves are nothing, and pointless to debate.

Good luck out there.

 

Emerging Markets – Effect Of QE

Forex Kong 2 Comments

In recent years, central banks of developed markets have used quantitative easing (QE) in an attempt to stimulate their economies, increase bank lending, and encourage spending.

To date, however, the greater availability of credit in developed markets has not been offset by demand – resulting in an abundance of excess liquidity. Much of this surplus capital has flowed into emerging markets, which has had adverse effects on their currency exchange rates, inflation levels, export competitiveness, and more.

As historical low rates gave investors cheap money and forced them to find higher rates overseas (and with the continued mess in Europe) – emerging markets were the natural place to go.

In general, financial firms that are now free to lend rush their investments into the emerging economies. This is because there is a higher rate of return on investments in emerging countries compared to highly developed countries like the United States. So, instead of a U.S. financial firm pouring money into U.S. investments, the firm piles  into India ( or Mexico ) since the investment will make more of an impact and give them a greater return.

The symbol “EEM” can be used as a broad look at emerging markets.

EEM_Emerging_Markets_Sept_2013

EEM_Emerging_Markets_Sept_2013

The effect of Fed tapering could prove disastrous for emerging markets as the flood of easy money dries up – and dollars are brought back home.

Putting this in perspective I hope gives you a better understanding of how much “rides” on the current global “injection of stimulus” as all these things are so interconnected.

I would have expected EEM to “blast for the moon” on the Feds’ shocker, but apparently not. This in itself is also suggestive of the fact that the “big boys” might just be pulling back a bit here – which would also equate to USD strength.

I like what I’m seeing as this trade appears to be taking shape, although I’m ready at a moments notice to dump and run. USD has swung low as equities have “swung high” so…..another head fake / whipsaw? Just as likely with the current conditions so……trade safe and be ready for anything.

Trade Ideas For NZD/USD – Overbought

Forex Kong 2 Comments

I’ve got my eye on the “Kiwi” regardless of which pair, for the pure reason that it looks severely overbought.

Overbought –  A situation in which the demand for a certain asset unjustifiably pushes the price of an underlying asset to levels that do not support the fundamentals.

Now, The Bank of New Zealand has recently made mention of a possible “hike” in interest rates (which has most certainly been the tail wind behind the latest advance) but the Kiwi still represents a “risk related currency” and is subject to large moves when appetite for risk wanes.

Have a look at the daily chart and see how “84.00” looks like a solid area of resistance.

NZD_USD_SEPT_2013_Forex_Kong

NZD_USD_SEPT_2013_Forex_Kong

Now, “86.00” doesn’t look completely out of the question, but with the usual “staggered mutli-order” approach, I’m seeing the risk vs reward looking pretty good for a short up here.

Another full day’s downward movement will likely trip the Kongdicator ( as I am free wheeling here on this one so far ) so we’ll keep our eyes peeled for that.

Kong….gone.