trade strategy

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.

Trade Both Sides – Fear vs Greed

Forex Kong 17 Comments

I’ve never been able to understand this “bulls vs bears” thing , and the sentiment / psychology that goes along with it. I thought this was called “trading”! How an individual can cling to a specific side of the market and essentially “turn a blind eye” to the other is beyond me. Trading currency , and having no bias what so ever allows a trader to take advantage of “any and all” market conditions, as currencies are always fluctuating relative to one another.

As things slowly go “to hell in a hand basket” or inversely “rocket to the moon” having a specific bias / preference can only hurt a trader’s performance ,  and place considerable limits on the availability of trades.

I’ve been told that it’s very difficult to make money “on the down side” or that “getting short” is a fools game.

Absolutely ridiculous. In fact – I’ve consistently done much better during times of “fear” than during times of “greed”, as the emotions related to “fear” drive much larger moves in markets.

Keeping an open mind and harnessing the ability to trade both sides of a market can only help you in the long run. No one can expect things to just “go up forever” or in turn “dive to the bottom of the ocean” never to be seen again.

If you expect to survive the next 18 months I strongly suggest you look into trading both sides.

I’ve banked another 4% in the past 24 hours with my short USD trades as well several long JPY’s. The USD is currently getting creamed (as suggested) as it’s been trading “alongside” U.S equities for some time now. Japan has sold off (as suggested) hard here and U.S stocks look to follow suit.

I expect further weakness across the board.

 

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.

 

Timing The Trade – Timing Is Everything

Forex Kong Got something to say?

We can throw this around all day – as the disconnects in our current market place grow larger by the minute. Anyway you cut it – the bulls have their day, then the bears……then a gorilla squeezes off a trade or two, then back to the bulls then the bears . Round n round it goes.

We knew this was going to be the case. We knew months ago that this “scenario” (of massive Central Bank intervention and manipulation) was going to present some very difficult trading conditions. When you boil it all down – over the past few months everyone has been right………and everyone has been wrong.

Timing is everything.

If you don’t have the mindset to sit and watch your computer screen daily, or even “check in” on any number of indicators/news/charts daily ( even hourly ) you’ve really got no business being involved with this thing at all.

“Buy and hold” is some kind of “strategy from the middle ages” considering the volatility and manipulation in markets as of now. And for those without the experience / ability  – “active trading” has also proven to be a real account killer in the past few months.

Timing is everything.

If you’re not “aware” of specific price levels, certain areas of support and resistance, general intermarket dynamics, and maybe even a couple of standard “chart patterns”, let alone willing to physically “do the work” it’s highly HIGHLY unlikely you could have much expectation of making a buck.

Timing is everything.

Ask yourself this – If everything was “O.K” ( I mean seriously…..O.K ) why the hell is every single Central Bank on the planet looking to print money like it’s going out of style?

If you think you can “pick a direction” then just “put your cash on red” and go to sleep at night oh boy……this is exactly what you’re expected to do.

I’ll likely be called nuts but……..as per my own macro analysis and the fact that I monitor several markets and their relationships to one another. I’m inclined to think this “USD pop” has about run its course! In as little as two days!

I’m 100% cash and am “already leaning short USD” if you can imagine how fast / nimble one needs to be to keep pulling profits outta this thing. As per usual I will exercise patience, patience and even more patience – looking to redeploy funds sometime next week.

 

 

How Macro Can You Go? – Part 1

Forex Kong 8 Comments

In case you haven’t gathered by now – I’m a bit more “macro” than I am “micro”.

You may scoff at this while envisioning “yourself”  the ultimate  “macro thinker”  (as I’m sure that most people do – given the constraints / limitations of a given environment or specific set of circumstances) but one can’t rule out that until you’ve been pushed outside this “comfort zone” or this “area of acute knowledge” you really can’t say for certain that you’ve got a handle on things at all.

I’m pretty sure the aboriginal people of the Amazon equally assumed they “knew everything” until the first airplanes  were seen overhead. Can you imagine the wheels turning?

Point being – human nature “should” dictate that we all feel a certain sense of  “macro”  until of course –  something finally comes along to challenge it. Last I looked – this was called learning.

The question is – How Macro Can You Go?

How macro are you even “willing to go” ? as ideas outside your comfort zone generally bring about a sense of discomfort,  feelings of vulnerability, fear,  anxiety and stress. No one “wants” to consider things they “don’t know” and no one likes the feeling of “not knowing everything”. This is human. This is normal.

The question is – How Macro Can You Go?

As psychology and the phycology of trading is of much deeper interest to me than the day-to-day math, it’s quite likely this series of posts may run on for quite some time. The summer months are slow and my position / view of markets is widely known.

I may take the time to explore the “macro” via the U.S Dollar, monetary policy, commodities and some of the more “impactful” things happening in the news.

I appreciate your patience and invite your comments.

 

 

 

 

 

You Can't Day Trade Forex Without Conviction

Forex Kong 9 Comments

I try my best to strike a balance, and offer as much insight as I can to both longer term “investor types” as well those “short-term traders” looking for a little more action in their day-to-day.

I’m often confronted with “frustrated short-term traders” dissatisfied that suggestion of a “stronger Yen” or “weaker dollar” on any given day – did not provide the desired “instantaneous result” of  being made a millionaire overnight. Over leveraged and grossly under funded these short-term traders are quickly taken out, as the industry’s  own marketing strategies are fundamentally built upon this “promise” of instant riches.

You can’t day trade Forex.

No matter what you think, and no matter how many “bells and whistles” you’ve got on your charts, no matter how many “small wins” or perhaps even with a few “larger wins” the inherent volatility on smaller time frames will reduce your account to zero – long before you’ll ever  set up shop on the beautiful Caribbean ocean , bikini clad babes and tequilla in hand.

You must learn the fundamentals, as you’ve no conviction in your trading otherwise.

A quick “spike” here or “dip” there and you freak out / stop out with absolutely no conviction behind the trade – because in reality – you really have no idea at all as to “what the trade is even about” anyway. Without a fundamental reason for taking a trade you will never have conviction, and without conviction – you’re just a tiny fish getting smashed around in the surf.

I pop in and out of trades on smaller time frames all the time – only in that I’ve already got the larger time frames and the fundamentals “behind the trade” to begin with. This takes time and a considerable amount of learning but is absolutely key if one hopes to survive.

Market Recap – Looking Back In Time

Forex Kong Got something to say?

When trading longer term time frames ( weekly charts ) the information listed below pretty much says it all. You can have fun with the day to day stuff sure….but with no longer term vision / no “real idea” what’s going on (short of the recent headlines on the tube) – you’re essentially just rolling the dice.

2013 trading:

https://forexkong.com/2013/01/31/2013-you-will-never-trade-it/

U.S Housing Recovery:

https://forexkong.com/2013/05/21/u-s-housing-recovery-media-spin/

Canada / U.S Market Topped:

https://forexkong.com/2013/03/30/has-canada-topped-tsx-weak/

SPY At Major Point of Resistance:

https://forexkong.com/2013/04/20/intermarket-analysis-questions-answered/

It’s interesting that “eternal bulls” appear frustrated as hell here at the “relative highs” – with consistent “claims” of “knocking it outta the park” when in reality – they sit confounded, and likely struggling to figure out “huh! – why isn’t this working out?”

Bulls n bears both get slaughtered – Gorillas make the money.

Largest One Day Gains Of My Career

Forex Kong 21 Comments

I have been on and on about USD weakness broiling underneath the “gong show” of American monetary policy, as well the coordinated “media spin” aimed at liquidating your retirement accounts.

There will be no tapering. The Fed will increase it’s QE programs moving forward. Global growth is on the decline. The cycle has shown its “ugly face” – and Kong has enjoyed the absolute #1 most profitable day on record – booking a whopping 11% on combined trades ( built over time as per my entry strategy) based purely on the fundamentals and my short term tech doing its job.

I have little else to say this evening – only that patience and a keen eye on the “macro fundamentals” has proven a winning combination as of this moment.

Currency movement has again lead the way (with respect to forecasting future movements in markets)  and has rewarded those “patient enough” to slug it out in the trenches.

It’s time for celebration on this end. All too deserving if one chooses to put in the time.

I truly hope that you have done as well yourselves.

Today marks the largest single one day returns of my entire career.

I hope yours as well!

Kong…………strong!

 

 

 

The Ultimate Risk Off Trade – EUR / AUD

Forex Kong 5 Comments

Of all the currency pairs I track and trade – there is no more a beast than EUR/AUD ( The Euro vs The Australian Dollar).

This currency pair as well as it’s sister pair EUR/NZD makes some of the largest intraday moves of the entire currency world “if not” theeee largest moves, and hav the ability to devastate an account – literally within minutes.

Trading this pair takes acute knowledge of “fundamental under currents” in currency markets, as the pair functions as the “ultimate risk off / on trade”. Get it right, and you can see crazy profits practically overnight…get it wrong and watch your account go to zero. It’s truly a beast and commands the utmost respect. I would argue that this pair is the most volatile / high risk / strange / powerful / beautiful monster in the entire currency world. I love it. I fear it. I trade it.

NEVER TRADE THIS PAIR WITH A FULL POSITION AS THE DAILY VOLATILITY WILL WIPE YOU OUT IN A HEARTBEAT.

I am talking about several hundred pip moves ( up and down ) within a single days trading, and as much as “thousand point moves” weekly. Two hundred pip intraday action is totally normal, so for any of you “newbies” hoping to catch a quick buck – you can forget it. The stops needed to trade the pair are larger than your account balance.

Imagine EUR/AUD like a big red button you’ve been presented with, and asked if “you should push it or not” -the temptation is there, but equally the risk.

I am currently long both EUR /AUD as well EUR/NZD and suggesting that risk is – OFF.

 

Forex Trading In India – Rupee!

Forex Kong 6 Comments

India is about 1/3 the size of the United States, yet it is the second most populous country in the world, with a population of 1,166,079,217 – (wow that is packed). India is the largest democracy in the world.

The Indian Rupee has recently taken a considerable hit vs USD and looks to be setting up for a bit of a rebound.

I don’t trade it ( in fact my broker doesn’t offer the pair ) but I did find it interesting , to pull up a chart of USD/INR which does look very overbought.

There has been alot of talk that “forex trading” is actually illegal in India, but after doing some looking around I’ve come to learn that the actual “trading activity” isn’t illegal as such –  but that there are considerable restrictions on “how much” money can deposited and traded.

Apparently it “is” illegal to take Rupee out of India, but this is only loosely enforced.

For anyone out there that “does” have an opportunity to trade Rupee………Rupee!