Over the last week, I have hardly traded at all.
I have CORE POSITIONS all in the RED at the moment and I am building positions for what I believe will be retracement moves over the coming months. My main task over recent times, whilst adding positions was to ensure that my overall RISK, including the stop loss levels on my waiting LIMIT ORDERS were such that I did not break my trade plan guidelines. My CONTINGENT LIABILITY is a key measurement for me when there are so many potential trades that can go live.
In between playing with my CORE POSITIONS, I took the odd trade here and there and continued to bank some $$$ and pips along the way but as mentioned so may times of late, this FX market is getting harder. I cannot place my finger on the exact reason for this difficulty, but I have more than the obvious reason lurking in the grey matter, and this forms the basis of my opening SOAPBOX piece this week.
I wrote to my WEEKLY FX PREMIUM subscribers a few weeks ago advising them that in 2019 I would be making some directional changes to the paid subscription service.
The backdrop to these changes were that the FX market had changed substantially in my opinion in 2018. From 2014, when my PREMIUM subscription service started, each year I would adapt my trading style to fit the changing markets. I did the same in 2018 from 2017 and my new trade style of MOMENTUM trades failed miserably. Under test in 2017 I had no problems but in 2018 using the same parameters not a sausage! In fact, in the year the MOMENTUM trade style has lost both $$$ and pips.
MOMENTUM TRADES COMPLETED 2018: 88 trades = loss 99 pips
This performance is hardly a “Bell-ringing” testament to my overall trading performance. In the back ground my longer-term POSITION trades have continued to be the base of my positive performance.
POSITION TRADES COMPLETED 2018: 215 trades = profit 9,686 pips
Everything is relative in FX trading.
Anyway for 2019, FLASH, RADAR, MOMENTUM and FUNDAMENTAL trade styles are ALL being dropped. I am only going to focus on longer-term POSITION trades.
That is my headline change for 2019, there will be changes inside my subscriber area of my website as well and changes to the format of this blog as well.’
I am really looking forward to my renewed focus for next year.
If you want to be part of the new approach POSITION style trading go to my home page and select the SUBSCRIBE heading.
It will require less sitting over charts each day and it will free up my time for other projects,
What made me decide to make such a change in approach?
IS IT TRUMP OR THE ALGO’S?
For months I have bitched and complained about how fecked up the market was. I have used phrases such as; too hard to trade, not sure what to do and sentiment shifts changing like the wind, even in the same trading sessions etc.
I have stated many, many times in this blog and on twitter but mainly via my secure feed how TRUMP has really made this market headline news driven rather than economic. He interferes across all markets and institutions, examples being, the FED on an incorrect interest rate policy and, OIL prices through OPEC.
TRUMP likes to be the centre of attention and his approach of interference has changed my entire approach to trading. I even asked the question back on March 10th2018 in this blog: IS TRUMP THE 2018 VERSION OF ELLIOT CARVER? (Fictional James Bond character).
FX is moving more on political headline news than it does on economic data and Central Bank policies at the moment, although I still believe that Central Banks still hold the key, it is just at the moment several of them have huge headwinds and credibility issues facing them in the coming few months.
In addition to this backdrop, the following has been niggling away in my brain and until very recently I have not really been able to pinpoint the issue.
Candlestick patterns, breakout patterns and several other trade strategies that go to formulate my “HIGH PROBABILITY” trading strategies have all been stuttering or just failing.
Initially, I blamed TRUMP for the sentiment shifts but there was more to it. The “Noise” as I call it was killing my FLASH, RADAR and MOMENTUM trade style set ups and l trades.
Whilst I wanted out of shorter time framed trades, why continue to punish and frustrate myself?
Is it algorithmic trading that is also killing my shorter term trade styles?
Without doubt, break out moves very rarely complete and false breakouts are increasing. This could just be the range trading markets we are in, but there’s more to it in my opinion. Algo traders love range trading, they pick up on pivot points, Bollinger bands and other technical indicators to force a trade and they pull out and reverse just a quick, which creates sentiment changes on the drop of a hat and this would lead to an increasing number of false breakdown and breakouts.
There is no doubt in my mind that FX Trading has changed for the worse. I have never been interested in scalping trades here and there for 10 or 20 pips.
So, I am blaming a combination of both TRUMP and the ALGO’s for the recent issues that I as a longer-term trader has been having to address.
Hence my changes for 2019.
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:
The Daily DXY chart is below.
I have annotated on the chart my thoughts via-a-vis what I believe to be the current DXY trading range of 96.05 to 97.69.
My thoughts have not altered since last week.
Despite a more accommodative stance by FED Chair Jerome Powell during the week, I thought the market reaction was grossly overplayed and exaggerated given the fact from reading the transcript the big words I noticed were “NO PRESET POLICY PATH”. Whilst this was change it was NOT in my opinion 150 pips worth of change.
We are STILL range bound and it remains to be seen whether or not the TRUMP / XI meeting at the G20 over this weekend produces what is required to break the DXY out upwards or downwards from the range that is highlighted.
You will also see on the chart below that I have highlighted by BLUE trend lines an upward sloping channel.
Let’s see what the G20 brings. A FED rate increase this month is baked in.
1.4. USD MAJORS - TRADING CHARTS and MY THOUGHTS:
The monthly chart below shows that the EUR/USD is in a down sloping channel. However, as you can see, I have drawn an inverted Head and Shoulders pattern on the chart in BLUE. It does not trigger unless 1.1460 is triggered.
The single currency is being pulled from all sides at the moment.
- Poor EURZONE economic data is now the norm. At one point I was defending the data saying that there were green shoots of some positives even though we were bouncing along the bottom. Now my thoughts are different. German data is also weak.
- ITALY whether it be the 2019 budget discussions, or the poor shape of ITALIAN BANKS always features as something that is weighing heavily on the single currency.
- BREXIT is also having its effect. It is not all bad news on the UK, should the UK leave the EU without a deal.
- The USD strength and Central Bank divergence also weighs. This is exacerbated by the simple fact that even if the FED slows down, given the poor EZ data, the chance of the ECB bringing interest rates back into what I would call a normal range is further diminished. Therefore, the USD will strengthen further against the EUR.
For me, the recent low of 1.1216 is key. With that in mind I suspect a re-test of the recent lows could be on the cards. A break lower through 1.1216 opens up 1.1000 and below in my opinion.
I see 1.2670 as key, a fall through this level opens up much lower levels.
There are always deadlines, meetings and news flows about BREXIT. It is tough to trade. I am though very tempted to enter long sub 1.2700 should we get there, with two very small positions, one to hold and the other to take profits in.
As previously mentioned, it is UK politics and EU soundbytes that are now driving the price action with cable. Not economic data.
It all depends on the outcome of the G20 meeting as to which direction this pair will trade.
A U.S. / CHINA trade deal and the AUD will strengthen. Failure and it will head to recent lows.
Similar to the AUD, it all depends on the outcome of the G20 meeting as to which direction this pair will trade.
A U.S. / CHINA trade deal and the NZD will strengthen. Failure and it will head to recent lows.
I am still short this pair for now, I have been out of the money, in the money and then back out again. Longer term, I am happy to trade with CAD strength, but I have a feeling the loonie will live up to its name and patience will be required.
We are heading into parity once again. The one thing I have noticed is that CHF weakness is not matching the EUR weakness seen through recent moves with the EUR/USD.
I think that the main reason for this is the potential “FLIGHT TO SAFETY” move that always appears to be hanging over the market.
After we get the G20 out of the way we should have a better view of how this pair is going to trade into the year end.
Finally, I am short this pair, but once again currently just out of the money!It has been following the interest rate on U.S. 10 year note of late and ignoring stock market prices. Then last week for a couple of days it just did its own thing?
I am in a position that longer-term I feel OK with but for now entering into the weekend there is a RISK attached to my trade.
2. THE WEEKLY FX PREMIUM TRADING SUMMARY:
2.1. WEEKLY FX PREMIUM PERFORMANCE:
November 2018: 863 net profitable pips
2018 to date: 13,717 net profitable pips.
2.2. WEEKLY FX PREMIUM PERFORMANCE SUMMARY:
(Incorporating the last 5 completed WEEKLY FX PREMIUM TRADES)
2.3. SOME OF THE BENEFITS OF SUBSCRIBING:
2.4. WEEKLY FX PREMIUM SUBSCRIPTION COSTS:
SILVER: 3 months (10 weeks) = CAD350.00
GOLD: 6 months (20 weeks) = CAD$600.00
PLATINUM: 12 months (40 weeks) = CAD$900.00
(Platinum renewal = CAD$750.00)
There is currently a “PROMOTION” in place, to view the promotion you will find it on my home page under the HISTORY / PERFORMANCE TAB.
Go to my website www.weeklyfxdrivethru.comfor more details of all the subscription options under the “SUBSCRIBE TAB.
3. WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
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: #303 FREE NEWSLETTER
DATE: 2ndDecember 2018