I am glad that October is over and done with. I have been trading for over 10 years and personally found that the challenges in October were at times above and beyond what I would call FX trading. Correlations were skewed and that is putting it politely. To some extent, they still are.
I had planned changes for 2019. I always try to “change it up” after adapting to the way trading habits change, but this has become more significant.
I am sharing my changes later in section 3.2 in this blog with my WEEKLY FX PREMIUM subscribers. They will be fully in position for January 1st2019. However, between now and then tweaks here and there will be made.
Before moving into the first blog in November let me just take a paragraph or two to review the WEEKLY FX PREMIUM performance in October 2018.
- Week 1: My best week for a long time over 1,250 net pips gained.
- Week 2: Some poorly held and initially executed CAD related trades that I should have held a little longer. However, I took my pain and handed back over 50% of the week 1 gain.... argh!!
- Week 3: I consolidated my new net position and added back some pips.
- Week 4: Continued to add back, albeit at a reduced level because I spent a great deal of time not participating in the day to day market.
- Week 5: Basically, I remained sidelined.
End of month totals:
OCTOBER 2018 PERFORMANCE: 1,188 net pips gained
YEAR TO DATE TO 31.10.2018: 12,854 net pips gained
- My average pips gained per trade reduced dramatically to below 20 pips per trade at 19.48 pips as an average.
- 3 out of my 5 trade styles produced negative results in the month.
- 77% of my monthly completed trades were positive.
- 23% of my monthly completed trades were loss making trades.
- YTD the trade profit/loss ratio is 73% / 27%.
I am happy that I made money and added to my pips tally in 2018, BUT it was a “grab ‘n go” market vis-à-vis taking $$$ off the table when possible. I lost count of the number of market sentiment shifts in the month.
In fact, from Asia, to European to the North American sessions on some days the markets were running around like headless chickens in a farmyard. Absolutely no consistency or direction, just chop, chop and more chop. At times it was more like gambling than trading. To try and ascertain RISK ON or RISK OFF was a moving feast. I just stayed away for extended periods.
As I had mentioned on several occasions to my subscribers, these are traits of a news-driven market rather than one with a balance of economic data and Central Bank policy added into the mix.
Is this type of market here to stay?
I feel it may be as long as TRUMP remains President.
I cannot with all honesty think that after CHINA TRADE WARS / IRAN / MID-TERMS and TARIFFS are all fixed and sorted the markets will reset. TRUMP will just add new headlines to control the narrative.
This final point was the main reason behind my changes in my approach to my trading for 2019. As mentioned earlier these changes will “drip” in between now and the end of the year with a full announcement to non-WEEKLY FX PREMIUM subscribers in early December.
Watch this space.
ALL EYES ON THE MID-TERMS... BUT THERE’S MORE
This coming week will be all about the U.S. mid-term elections and how the Republican Party will fare at the ballot box. The word on the street is that despite the antics by TRUMP the House of Representatives will fall from Republican control to the Democrats, but the Republicans will retain control of the senate.
What does this mean for us as FX traders?
Uncertainty and probably a little bit of volatility. Equities may start to sell-off if the “House” changes to Democrat control.
We should see a sentiment shift with RISK OFF reappearing. Having said that for a couple of weeks or more, correlations between markets have been out of sync therefore we should take nothing for granted.
I expected the USD to rally in the event of a change in D.C.
The mid-terms are a game changer for TRUMP. If the house does fall, he will no longer have control and the power of his executive order will be diminished.
Will TRUMP become a lame duck President?
Possibly, without doubt the games in D.C. will intensify as the Democrats will now have some political power and clout to go after TRUMP. So, expect eye brow raising news headlines with the likes of CNN the centre of TRUMP’S fake media news attention going into overdrive on anti-TRUMP rhetoric.
How TRUMP reacts will be fascinating. TRUMP holds a lot of belief in the performance of the stock market reflecting his performance as President. I believe the stock market will not be as free or believe its as free should the “House” fall away from the GOP control.
One thing I can absolutely guarantee you is that should Wall Street fall back 20%-25%, TRUMP will blame the democrats. Well, whoever he blames it will have zero to do with himself.
To be extra cautious stay away from the USD until you see how the USD is reacting after the votes are tallied. Remember, the election night and the dive and rise of the USD/JPY it could be one of those nights again. The safest trade may be no trade.
But... there’s more...
Merkel calls it a day with regards to remaining leader of the CDU (after 13 years), but she feels more than able to remain the German Chancellor until 2021.
Trick or fecking treat... BREXIT rumbles on. The big notable effect though was the spike off 1.2700 support with the GBP/USD up to c.1.3040, just under 350 pips in a couple of days. Fake news about a post BREXIT financial services deal sparked the move, which was denied 4 times. I think the phrase here with soooo many denials is “No smoke without fire”.
Dominic Raab, Theresa May’s BREXIT puppy announced that a deal will be done by November 21st2018.... good for him...
The EU in conjunction with the Irish government have suggested a new backstop agreement which they knew was over a UK government RED LINE and it was met with the expected response. Political games are afoot....
Carney is at it again at the BOE. Rate hikes are once again being talked about on both a deal or a no deal .... tidy.
U.S. Non-Farm Payrolls provided a blowout set of data. 250,000 new jobs and wages in line. Very USD positive but the moves in the USD did not hold on to with conviction.
We are in a news-driven environment and we need to apply extra caution. There are a number of high-level economic data releases this week but of late these have not directed pricing much of late. It has been FUNDAMENTALS and headline news sound bytes that have been dominating the sentiment.
All I can say is be careful. Step aside if you have any doubts at all about taking a trade.
1. FX - FORWARDS, BACKWARDS & SIDEWAYS:
1.1. THIS WEEK’S ECONOMIC DATA:
NOTE: Only the items that interest me are listed here.
1.2. BIAS CHART - USD MAJORS SUPPORT and RESISTANCE:
1.3. USD INDEX (DXY) OVERVIEW – MY THOUGHTS:
As you can see from the daily chart below last week, we have what can be termed a false breakout above the recent trend highs of 97.00.
The DXY pulled back to trend line at 96.00 and then we ended the week following Non-Farm payrolls with a hammer candle.
I would NOT trade on candle patterns or styles at the moment. Over recent weeks there have been very few occasions when candle patterns or styles have played out.
Many participants are expecting a USD pullback if the GOP fails to retain a majority on the House of Representatives.
Taking a longer-term view, one could argue from the 200 DAY SMA at 93.16 through to 97.00 that we are in a consolidation range after the move higher off 89.00.
I still have a “good” gut feeling that we will see the 100.00 level breached soon. My longer-term thoughts regarding Central Bank divergence are hard to move.
1.4. USD MAJORS - TRADING CHARTS and MY THOUGHTS:
The monthly chart below shows that the EUR/USD is in a down sloping channel.
My overall opinions have not changed too much. I listen to and hear several FX traders say that they expect a EUR spike higher even up to as high as 1.1800.
The chart does NOT lie.
Long term and short term we are moving lower.
I just cannot see too much from the EUROZONE that has me dancing around all day or trading with my feet in a couple of buckets of sand.
ITALY, BREXIT and Central bank divergence are all weighing in on the EUR never mind the fact that the economic data is poor. Draghi has tried to put lipstick on it but at the end of the day if it's a pig it's a pig. So, I remain a “SELL THE RIPS” trader.
As you know, I am expecting quite a sizeable pullback with the cable.
1.2700 was a big level to hold last week.
The cable has fallen victim to sound bytes that are not accurate but there is NO SMOKE without FIRE and these sound bytes no matter how many times denied appear to have put a bottom in underneath this pair.
We have therefore seen a rally of circa 350 pips which after NFP pulled back to a 240-pip rally off the 1.2700 lows.
To get and remain above 1.3000 will be a tall order for the pair but this seems a good psychological target and objective in my mind.
I am trading GBP cross-rates at the moment, I am staying away from the cable itself with my BREXIT related trades.
Looking further ahead, some institutional traders have spoken about 1.1000. In my mind that would be a BLACK SWAN, ARMEGEDDON, CAPITULATION, GENERATIONAL move. Great if we get the bounce back across all GBP pairs, it would be awesome awesome, awesome.
Focusing longer-term on the upside, 1.3600 is a major Fibonacci confluence area, then 1.4200 and then 1.5000.
Between now and all that, we need to wait, watch and be ready. Above all be patient with the GBP/USD, it is liable to huge swings in price on headline news and is now simply a news driven pair.
We are still in a down sloping channel as shown on the daily chart below.
Is that a false breakout above the channel trend line resistance?
Looks like it to me. I will say though that this pair has been bullish of late, so I would wait for further confirmation before getting in too heavy believing a retracement is in place.
We have the RBA this week as well to add into the mix and therefore the path forward with this pair is not cut and clear
Lots of multi-year trend lines on the weekly chart below.
We saw a bullish move last week but not quite a test of the underside of the 2009 trend line on the weekly chart below.
The more I look at the NZD/USD I think range trade.
Lots of NZD news this week. The RBNZ Rate statement and Press Conference plus Employment Data. After these have been through the market, we should have trend and direction a little clearer. I want it to be lower, but I am just not so sure as I used to be.
Long term I am looking for this pair to fall lower. Selling “RIPS” would be my preferred trade, maybe back at 1.3160.
The BULL FLAG is still in play.
God love me I want to enter short the USD/JPY. So far, every entry area chosen has met with disaster as far as I can remember.
If I were to trade around the mid term elections Tuesday JPY pairs would be the obvious choices. I would just love to get two or three JPY trades of substance complete this year.
My brain keeps telling me to wait until a decent Fibonacci level or trend line hits before trading. I had the 61.8% Fibonacci retracement and trend line resistance in mind at 115.30, but I think that ship has sailed.
Patience is required with this pair.
2. THE WEEKLY FX PREMIUM TRADING SUMMARY:
2.1. SOMETHING TO CONSIDER:
You can get on board and join my FX PREMIUM subscribers and subscribe to the “10,000 pips a year” group from as little as CAD$10 for the first 10 days and then CAD$150.00 per month, currency conversions for CAD$150 are roughly as follows: -
GBP £90 per month
EUR €100 per month
USD $115 per month
JPY 12,500 per month
AUD $160 per month
NZD $170 per month
CHF 115 per month
Go to my website www.weeklyfxdrivethru.comfor more details of all the subscription options under the TAB– “SUBSCRIBE”.
2.2. WEEKLY FX PREMIUM PERFORMANCE:
Total October 2018: 1,188 net profitable pips.
November month so far: 225 net profitable pips
2018 to date: 13,079 net profitable pips.
2.3. WEEKLY FX PREMIUM PERFORMANCE SUMMARY:
(Incorporating the last 5 completed WEEKLY FX PREMIUM TRADES)
3. WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
3.1. TRADING REVIEW and MY THOUGHTS:
3.2. CHANGES TO THE WEEKLY FX PREMIUM:
3.3. OPEN TRADES and HOW WILL I TRADE THIS WEEK:
3.4. MYFUNDAMENTAL and MACRO THOUGHTS:
3.5. CURRENT TRADING EXPOSURE:
3.5.1. BREXIT RELATED TRADES:
3.5.2. LIVE TRADES:
3.5.3. LIMIT ORDER TRADES:
4. THE FINAL SHOT:
Nothing more to add here, I have said enough except,
Always remember longevity in Forex trading can only be achieved through trading with good RISK and MONEY MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility.
The Pip Accumulator
BLOG VERSION: #299 FREE NEWSLETTER
DATE: 4thNovember 2018