PREMIUM SERVICE REVIEW OF 2017:
Without doubt 2017 was not an easy year for me from a trading perspective. I had a house move from Quebec to Atlantic Canada plus immediately following the house move a trip to Australia and New Zealand in connection with my wife’s business, on the back of which we added a vacation.
At the end of July 2017, the idea of achieving my 10,000-pip annual target looked to be a tall order.
PREMIUM SERVICE KEY RESULTS:
- 2017 PIP TOTAL = 12,220 pips
- 75% trades positive and 25% trades were loss making trades. This was in line with my objective.
- From single-lot trading, both MINI and STANDARD lot traders both saw excellent returns.
For more details on the 2017 PREMIUM SERVICE, please go to my website www.weeklyfxdrivethru.com landing page and check out the HISTORY tab.
There is also a very special promotion in place for new subscribers to the PREMIUM SERVICE in 2018 under the PROMOTIONS tab.
Please note, all new subscriptions paid for now will be given full access to the PREMIUM SERVICE however, the date of your subscription will not start until January 8th, 2018.
The rest of this blog was intended for PREMIUM SERVICE subscribers only, as it was based around intended changes to my longer-term trading via POSITION TRADES in 2018.
I decided that it may be of interest to other traders who are considering joining the PREMIUM SERVICE.
POSITION TRADES should account for about 20% of my overall trades next year. They are longer-term and may suit traders who cannot access their computers on a regular basis and prefer just to check on progress once or twice a day.
Combined with the current PREMIUM SERVICE subscriber PROMOTION, this may be an option worth considering for 2018.
POSITION TRADING 2018:
- MY MACRO (FUNDAMENTAL) THOUGHTS FOR 2018:
I am going to keep this brief and straightforward.
Those of you who have been following me for sometime know that I am old school in the sense that I believe that the biggest impact on the direction of any currency is its Central Bank.
It’s really obvious, but sometimes it is lost in the grand scheme of things. My macro thoughts moving into 2018 are very much based on Central bank monetary policy.
Initially, my thoughts were centered around Central Bank policy divergence, and whilst this is still a consideration, one should be mindful of the fact that there is a momentum amongst Central Bank governors to move to a more neutral / normalization route regarding monetary policy. With this shift, some of the forward guidance provided, in my opinion, can be treated with a pinch of salt, however, reading the statements in detail, which can be painful at times, gives the insight and direction intended, which in turn should give longer-term FX traders confidence.
I am comforted by the fact the Central Banks are like the super oil-tankers that you see on the oceans of the world that require a turning circle of 12 miles to change direction and about 3 miles to come to a complete stop. Central Banks tend to be similar, directions are not choppy. Markets demand uncertainty and direction. They require a consistency to ensure price stabilities and investment confidence from business.
With the above in mind, looking into 2018, I want to focus POSITION TRADING into just 4 currencies: - GBP, CAD, AUD and NZD.
I believe that the associated Central Banks will offer the best FX opportunities moving through 2018.
- REASONS FOR CHOOSING THESE CURRENCIES:
I am keeping these as straightforward and as basic as possible. I see no need to get into too much “nitty gritty” as it only increases the complexities, which I want to avoid.
When looking at these currencies, I have looked at the recent economic indicators like GDP, CPi, Confidence numbers etc. However, sometimes external geopolitical factors can influence policy just as much and so my reasons for selecting these currencies are a combination of factors.
Fundamentals are crucial in selection as one set of stats does NOT make a trend. I have looked at and viewed data over the previous 12 months and in addition, looked ahead using Central bank projections and guidance from press conferences and statement releases to give me the best overall picture possible.
BOC – CAD:
Stephen Poloz, BOC Governor, really pissed me off this year without showing balls by sticking to his principles. Probably for all the right reasons he tried to temper CAD strength but in reality, with the US being the border neighbour and the FED hell bent on raising interest rates come what may, it was only a matter of time before he had to get a little more bullish.
The BOC will have to maintain the status quo vis-à-vis interest rates to the FED. It is NOT an unwritten rule but historically it just happens.
Therefore, I can see 3 x interest rate hikes from the BOC in 2018, Q1, Q2 and Q4.
RBA – AUD:
I was in Sydney earlier this year and my wife and I had dinner with an ex. PREMIUM SERVICE subscriber and his girlfriend, who, by coincidence worked at the RBA. Whilst no secrets were given away it was obvious that as Glenn Stevens’s replacement Philip Lowe, RBA Governor was extremely highly thought of and very well respected.
This has stuck with me through 2017 and reading the RBA statements the theme is consistent and this has been reflected in the moves of the AUD currency.
Moving forward in 2018 this is the Central Bank, I believe could be the pick. I see the RBA having to keep pace with other Central banks to normalize, whilst they may be a little reluctant to join the party. The AUD economy is growing, it has strength and maybe in Q1 but definitely in Q2 I can see a policy change and a series of interest rates being factored in.
RNBZ – NZD:
To a strengthening Kiwi dollar Adrian Orr has been announced as Graeme Wheeler’s full-time replacement from March 2018, taking over from the temporary Grant Spencer as governor of the RBNZ.
He has a hell of job on his hands. A new Left Labour Government in place, with a whole host of ideas, and changes in the works with its coalition partner NZ first, a populist party.
Changes in RBNZ responsibilities are targeted despite the poo-pooing of all changes by Grant Spencer of late. It was blatantly obvious that he was old school, nothing to change here approach we are just fine as we are thank you very much!
It has been stated because of the political uncertainty and the desire to keep stability in the markets that the RBNZ would be on hold for an extended period of time. I can see and understand this, however, at some point the RBNZ will be forced somewhat to react to the RBA to keep the currency balance intact.
For this reason, I can see the RBNZ moving higher in the latter part of 2017, maybe Q3 but definitely Q4.
BOE - GBP:
Of the four currencies selected, this is without any fear the one with the greatest RISKS attached to it. If we were playing “It’s a Knock-out”, this would be my joker.
The UK is moving through the BREXIT process. We now see Theresa May move to phase two in Q1 2018, after basically giving the EU what they wanted in phase one and agreeing to kick the can down the road on borders (IRELAND / NORTHERN IRELAND and SPAIN / GIBRALTAR).
From a Forex perspective, the whole FX world is looking to capitalize on what is expected to be a strengthening move in cable back towards the pre-BREXIT vote levels. In principle, agree with this thought process, although, I do as you all know think that at any time the GBP currency is always moments away from a negative statement that could have a negative effect on the GBP.
In complete understanding of this fact, I still see the GBP longer-term a “BUY THE DIP” currency. As the BREXIT process moves forward, I see the positives more than out weighing the negatives, although it will be a bumpy road back in the GBP/USD towards the 1.4500 - 1.5000 levels, I do believe that is where we are eventually heading.
Timing will be everything with this trade.
The recent GDP data from the UK shows GDP at 1.7% y/y, although moving forward BREXIT headwinds show GDP in 2018 slowing down to 1.5%. This will be lagging the EUROZONE. However, the UK economy is not in the poor shape predicted by the “REMAINERS” during the referendum. The downside RISK just never materialized. It is holding up and performing regardless.
The big question in the UK from my perspective surrounds confidence. Should the UK economy continue to stabilize the UK economic outlook should get rosier as it realizes that there is life after BREXIT. This should in turn drive the BOE to move to normalize and over time talk about removing its QE (Quantitative Easing) support. All of this combined should boost the GBP.
Will the BOE raise rates in 2018? My brain says no, but, it cannot be ruled out towards the end of 2018 should the headline inflation rate NOT fall as predicted and the gap between inflation and wages not get smaller.
Nevertheless, I do have concerns.
Whilst I see the GBP strengthening in 2018. In March 2019 when the BREXIT deal is completed we enter a two-year transition. This is an uncertain period in my opinion. I envisage the political mud flying left and right as the reality of BREXIT hits home and the accusations will start flying as only politicians can do. The actual outcome WILL BE different from what everyone believed it would be. This is unavoidable.
So, my long GBP trade would not start until possibly Q2 2018 and reviewed prior to March 2019.
This currency pair does have greater RISK attached to it and it may not actually get off the line.
- THE PAIRS I HAVE SELECTED… SO FAR:
I have my list of pairs at hand and I have preliminary charts drawn with my preferred first choice entry levels. Obviously, I have my second and third choice entry levels as well.
The targets are known and my stop loss levels will in the main be in line with Monthly ATR levels at the extreme but NOT in all cases.
CAD PAIRS: - USD/CAD and CAD/JPY
AUD PAIRS: - AUD/USD and AUD/NZD.
NZD PAIRS: - NZD/USD.
GBP PAIRS: - GBP/USD, GBP/NZD, EUR/GBP and GBP/CHF.
Obviously, one can go mad adding more and more currency pair options, and, maybe as the year progresses I will see better opportunities lie elsewhere but for now my focus is on the above.
- TIMINGS and VOLUMES:
Basically, I see this as a process commencing in January / February 2018. Whilst, for obvious reasons I cannot give exact timings, I do see this process gathering momentum early into 2018.
Below are my initial thoughts on when POSITION TRADES are likely to be more intensive with the currencies chosen.
Q1: AUD and CAD
NOTE: - One must be flexible here with timing of the entries. Especially with the GBP, it’s not as much a question of being in trades but also its about when NOT to be in trades. The other currencies are not as “mental / volatile” with price movement as the cable and therefore some patience will be required waiting for trade set ups to trigger.
In 2017, I never really allowed POSITION TRADES to move forward, and being self-critical apart from the AUD/NZD, I allowed the shorter-term market influences to dictate. My goal next year will be based on less is more, with regards to allowing trades to move around inside the ATR limits.
This approach does appeal to part-time traders and those of you who do not have free access to check progress of trades on a regular basis.
Moving forward, instead of POSITION TRADES counting for close to 50% of trades this will be reduced closer to 20% of the overall volume moving forward.
- FINAL THOUGHTS:
Finally, I am really looking forward to 2018. I have no major travel plans or conferences scheduled so at the time of writing it should be a full-on trading year. The usual suspects of RISK, ACCOUNT and HEAD MANAGEMENT will be vital and working within my TRADE PLAN one of my critical success factors.
The target is once again 10,000 pips and as the 2017 PREMIUM SERVICE closed yesterday, December 22nd, the clock is now ticking on a new trading year.
All that remains is to wish you and your families and loved ones a very Happy Christmas and to you have a great trading year in 2018.
The Pip Accumulator
BLOG VERSION: FREE NEWSLETTER
BLOG REFERENCE NUMBER: #264
DATE: 23rd December 2017