My penultimate DRIVE THRU of 2019; it is not a time to get sentimental but to be grateful that I still have my health and that I am still trading and still generating pips, with what looks like to be a record pip gathering year.
Sadly, not profit breaking in $$$. As regular readers will be aware and FX PREMIUM subscribers already know, the market conditions regarding Forex Trading have resulted in smaller position sizes and taking profits earlier than expected as moves with most currency pairs have very little follow through.
As part of my preparation for 2020, I have been doing a huge amount of background reading from Central Banks and many analysts.
- It would be true to say my first take on all this knowledge and understanding from all this reading is that my forecasts are as good as anyone else’s.
- I have listened to at least 10 trading webinars a week for the past 3/4 weeks. Traders I have huge respect for are clutching at straws on trades. I am not saying that they are forcing trades but if you took their ideas you would be well under water by now.
- The reason for these trading failures in my opinion is that we are in a FUNDAMENTAL MARKET. Every now and then you will hear TECHNICAL TRADERS shouting from the rooftops vis-à-vis technical set up that has worked... but has it? Revisit these trades; there is NO FOLLOW THROUGH.
- As I have stated for the past two months. Go back through my recent DRIVE THRU blogs, we are now TRADING IN THE NEW NORMAL. FUNDAMENTALS rule!
All that to one side, I am looking forward to 2020, but first there are two big issues that need to be resolved this year: -
- BREXIT – The UK election is this coming Thursday 12th
- THE CHINA / U.S. Trade Deal – Will it occur this year, or, after the 2020 Presidential Elections in the U.S.?
Are we heading for the longest ever FUNDAMENTAL news item in recent times?
The next issue will be what happens on December 15th when more tariffs on CHINA goods were scheduled to be levied by TRUMP
BREXIT and the U.S. / CHINA trade deal, “Hobson’s Choice” with regards what to focus on.
This week; I have to highlight TRUMP once again...
Last week at the NATO 70-year Alliance meeting, the “circus” that is TRUMP continued to roll on. I am now just getting a little tired of the lies and the TRUMP SPIN. What makes matters worse is that the U.S. media are just as bad. They all have a political bias, an agenda that promotes “FAKE NEWS”. Whether you watch CNBC, BLOOMBERG or FOX BUSINESS the bias is obvious and the feeling that we as traders are playing a part in a reality TV show increases with intensity every time TRUMP SPINS! It seems to be nothing more than MICKEY MOUSE POLITICS.
Getting hard facts is difficult. This is one major reason I switched late last year to POSITION TRADING taking greater heed from the Central Banks and trying to ignore the noise from politicians.
My blog, my thoughts...
Let me elaborate; I could be way off here, but the frustrations have been building of late and I hope that I can get them written down in such a way that they make sense and follow a logical train of thought.
U.S. citizens and many on the outside view the U.S. as follows: -
- The greatest country of all in the world
- The greatest innovators
- Self-proclaimed masters of the FREE world
- A place where equality for ALL rules
- A place where Dreams can come true
Advert out of the way....
In my opinion, most of the above bullet points are complete and utter bollocks. The U.S. is fragile. It is built on a lie, the entire U.S. system is built on a “HOUSE OF CARDS”.
Here is a different view...
For the records I am NOT a lefty. This entire piece in my blog is a view to try and understand a profitable way forward. The politics of the situation are not the question. I am looking at a distance and from above, trying to get a trading edge.
A while ago, I watched a documentary on YouTube made by Tony Benn, a Labour Socialist Politician from the UK. It was about 20-30 years old. His thoughts and commentaries all those years ago about the U.S. ring as true today.
Some of my best buddies are American. Some get this view, some do not.
- The American population are basically led by fear. This fear keeps them in a herd mentality, where it is difficult to step out of it. This was really in full flow from the time of the COLD WAR with the USSR.
TRUMP has prayed on this aspect of the American culture.
- TRUMP has galvanized this collective fear and wrapped it up in such a way that his “CORE” that were previously ignored, unfranchised, in Games of Thrones terms the “Unwashed / Unsullied” see him as some sort of savior to represent them. He has politicized the unfranchised, the forgotten and tried to unite them. This is part of political populism!
- TRUMP has zero intention of representing anyone other than TRUMP. But he will use attacks on himself politically, as an attack on his “CORE”. He will twist and SPIN the attack. TRUMP is virtually Teflon coated.
- TRUMP wages war with the Media about non-TRUMP propaganda being “FAKE NEWS”. He needs to always control the narrative.
- TRUMP uses social media directly to his “CORE” to by-pass the biased U.S. media. There is no such thing as impartiality in the U.S. when it comes to TV and the media. They all have an agenda.
It is all a very TOXIC ATMOSPHERE.
- TRUMP will SPIN the news he wants to deliver. “Accuracy and Honesty” are NOT important, they are irrelevant.
- He has surrounded himself with “YES MEN and WOMEN”, who will SPIN what he wants them to SPIN.
- He measures himself by the S&P index. As long as its going up he believes he is doing a fantastic job. When in the UK last week at the NATO 70-year anniversary he was challenged over the U.S. stock market as it was under pressure regarding the CHINA trade deal. He answered questions stating he was NOT interested in the stock market only jobs. Below is a tweet from last week, from October 1st to November 27th showing over a dozen tweets about how wonderful the S&P is and what a great job he is doing.
For him to state the S&P is not on his agenda.... bullshit. Take a look at these tweets from my twitter last week.
I could ramble on more here, but hopefully you get the backdrop.
I question what TRUMP has actually achieved in his 4 years.
- No CHINA deal.
- No NORTH KOREAN deal
- No Infrastructure programme.
- Tariff increases on imported goods
- Pulled out of TPP, then signed a deal with JAPAN.
- Scrapped NAFTA. The replacement USMCA not yet in place.
- No wall between Mexico and U.S. paid for by Mexico.
It’s all bluster. The phrase often used in the UK is “Fur Coat No Knickers”
Am I being fair...?
He did push through lower personal and corporate tax rates, although business in the main just manipulated their stock prices through the tax savings with a policy of aggressive share buybacks, especially as the FED were pushed to lower interest rates. Pure heaven for business “FREE MONEY” to proceed with share buyback programs.
The Personal tax cuts have more than been eaten up via Healthcare and tariff increases.
Moving on, there are his personalized attacks on the FED and FED chair Jerome Powell in particular....
TRUMP still wants lower interest rates and he will achieve this through a NO TRADE DEAL with CHINA. The FED will be forced to step in with more added stimulus in Q1 and Q2 2020 and keep pumping liquidity into the markets via the repo (The bank short-term lending market), cash injections to keep the banks flush!
The FED is already providing stimulus on the quiet through an under the radar program of Quantitative Easing through purchasing bonds again, but the FED is NOT calling it QE and did not announce this policy with a fanfare like previous QE programs.
Since September, the FED’S balance sheet has expanded by $175 billion to $4.07 trillion, which is about a 4.5% increase since the repo facilities (Bank liquidity facilities) started. There is a huge amount of liquidity being pumped into the U.S. economy.
All of the above is being done under the backdrop of the TRUMP SPIN of this being the “Best Ever” U.S. economy ever!
It just doesn’t add up.
Having TRUMP and his puppets, POMPEO, KUDLOW, ROSS, MNUCHIN and LIGHTHIZER all SPINNING the same web at the same time is bad enough but then I look at what one would hope would be the voice of some reason; the TV MEDIA.
No help I’m afraid. American society is twisted and to lie to win one’s point appears to be the normal. One would expect the media to challenge, to fact check and continually give investors a balanced opinion. Not in the U.S. It is all biased to promote their own agendas.
Around the time of the GFC (Great Financial Crash) in 2008-9, I recall writing my blogs stating amazement that not one analyst being interviewed on CNBC admitted to losing money in the GFC. Apparently they all saw it coming, they never lost a penny. Someone and some institutions lost money... but not one was ever brought onto CNBC.
The same is happening again; watching BLOOMBERG last week, reacting to the news at that time that the CHINA trade deal was off. Three analysts were guests around the table, one female analyst from RBC in particular stated that their policy had been that they did not think that a deal was going to be done and that they had already sorted out their clients regarding this. The other two analysts on the programme also confirmed they had a no deal CHINA policy in place prior to TRUMP’s announcement.
My point here is that what analysts say on TV is NEVER EVER checked.
Analysts are NEVER held accountable.
It’s all part of the MICKEY MOUSE POLITICS.
Tell the people what they think they would like to hear. DO NOT under any circumstances tell the truth. Manage them as an entity not as individuals.
All the guests on U.S. Financial TV must be BULLISH equities at ALL times. Dips are buying opportunities, regardless of FUNDAMENTAL market conditions. The Ma and Pa investor are being totally misled from every side.
It is crazy; I have often said that CHINA data should be read with and believed with a pinch of salt. What we are told by the U.S. is NOT far behind. With TRUMP as POTUS he lives in a reality TV show 100% of the time and this fuels the media frenzy around him.
How do we react?
How do we as retail FX traders operate in this environment. What can we do?
I want to share with you, given all the above, what have I done, how have I changed my trading and how have I reacted and adapted.
- I changed my trading strategy in late 2018, to remove the noise of market moving tweets.
- I use FUNDAMENTALS more than TECHNICALS now. I still use technical levels to enter from BUT directional trading based more on Central Bank policy is uppermost in my mind when researching trades.
- I trade smaller position sizes with wider stops to allow for the volatility of market moving tweets not to take my stops.
- Look outside of the USD majors to trade. This is NOT always easy as this is where liquidity and alleged volatility lies. Of late, volatility has drained out of FX which has increased the difficulty of trading.
Cross-rate pairs often offer greater opportunities but even they have become range bound along with the majors.
Look to emerging market currencies BUT do your research first before leaping in to a trade.
- Have your RISK MANAGEMENT guidelines well documented and adhere to them.
- I now have 3 styles of trade for 2020. I have an overall TRADE PLAN and a separate TRADE PLAN for each trading style clearly defined by currency pair, entry position size etc.
Often said; PLAN YIOUR TRADES and TRADE YOUR PLAN.
Without procrastinating there is no substitution for preparation.
- Trade with discipline. If you cannot operate with a DISCIPLINE stop trading. It is just NOT for you.
- You have to remember with trading it is you versus the world.
- No-one if there to help you.
- If you are guessing... it’s called gambling STOP trading.
- The markets are designed to swallow up retail traders ands spit them out. FX loves to take out (eliminate) buyers and sellers in the same session if it can!
It’s NOT easy.
I do NOT want to pretend that it is now or will be moving forward.
I first said the following a few weeks ago and I re-iterated it again last week on my NOVEMBER month end review. If you were able to keep your head above water trading FX since the summer of 2019 you have done a great job. These last few months have been the worst ever markets to work with since I started trading 10 years ago.
The face of institutional FX has changed. There are less participants. Less staff that trade. The use of algorithmic trading has increased, and the new algorithms are sensitive to key words to trigger trades. This is fraught with danger considering the language used by TRUMP in his market moving controversial tweets.
Having written a very long piece to open up this week’s DRIVE THRU I am still excited about 2020 and I am looking forward to the fresh challenges that it brings me.
I have set aggressive targets and objectives for next year; I believe that I have an approach to win through all the obstacles that will be placed in front of me.
Finally, in this section...
My subscriber promotion “TAG ON” is now launched.
Subscribing now on an annual basis will have you set up through to the end of 2020. The remainder of this year can be used to get familiar with the system and have you ready to hit the ground running in 2020: -
- My goal this year on net new pips was +10,000.
- I have so far achieved +17,621 net positive pips.
- Next year there is an aggressive +15,200 pips target
Details are in section 5 of this blog and they can also be found on my home page at www.weeklyfxdrivethru.com
FX - FORWARDS, BACKWARDS & SIDEWAYS:
1: - THIS WEEK’S ECONOMIC DATA:
(Courtesy of Forex Factory)
2: - BIAS CHART - USD MAJORS SUPPORT and RESISTANCE:
3: - USD INDEX (DXY) OVERVIEW – MY THOUGHTS:
(The Daily DXY chart is below and my thoughts, ideas and comments regarding the DXY are contained on the chart)
4: - USD MAJORS - TRADING CHARTS and MY THOUGHTS:
For the past 2/3 weeks I have placed the attached weekly chart in my twitter feed for commentary and feedback (See Below).
The comments have all been from EUR BULLS claiming that 1.1400 or above is on the cards very soon.
I am bored of these statements, eventually the BULLS may be correct BUT FUNDAMENTALLY, we are, in my opinion, a long, long way away from 1.1400.
This pair struggles at 1.1120, never mind 1.1180.
I am still of the opinion we go lower first. I could be wrong, maybe we just continue to trade sideways. But we are struggling to maintain higher price levels.
The UK election is on Thursday 12th December this week.
The DAILY chart below shows a bullish break out above 1.3020, with resistance for now at 1.3170.
So, what are my thoughts vis-à-vis the election result?
Conservative Party Majority above +25 seats = 1.3350
Conservative Party Majority less than 25 seats = 1.3250
Hung Parliament = 1.2500- 1.2600
Labour Party Majority = 1.1800 -1.2000
14 DAY SMA = 1.2954
200 DAY SMA = 1.2696
The range “Roller Coaster” ride continues. Recent AUD data has been very mixed and moving forward despite a CHINA trade deal potentially on the cards, I do not see a huge move higher, and I am a seller of “RIPS”
The range is set in my opinion from 0.6670 to 0.6870 (Trend Line).
The 200 DAY SMA is at 0.6912.
The 14 DAY SMA is at 0.6801
I am sidelined on the AUD/USD at the moment.
The inverted Head and Shoulders pattern is in play, and the NZD/USD move higher is very powerful, the measured move is to 0.6690.
I am sidelined this pair waiting on the U.S. / CHINA trade deal outcome. I want to fade and sell the trade deal “RIP”.
At the moment I am long AUD/NZD and EUR/NZD with CORE POSITION trades which is NOT comfortable at the moment!
14 DAY SMA = 0.6476
200 DAY SMA = 0.6539
After finally moving lower, this pair was crushed last Friday on negative growth regarding CAD job numbers.
I still own this pair on the short side and have two small positions both under water at the moment. This pair has been frustrating to hold of late. I am looking for USMCA to be ratified which should bring in CAD strength allowing me to exit.
We are still in the range of 1.3014 to 1.3350.
For now, this pair is in a sideways range. I am interested on the long side but from much lower levels around 0.9650 thru 0.9720.
There is nothing to do with this pair at the moment.
I exited my CORE SHORT POSITION across this and all other JPY positions.
Longer-term, my bias is still lower, I feel like I was bullied out of my USD/JPY short position on the false SPIN of a trade deal resolution. For now, I am sidelined and would like to short from c.110.00. There are no guarantees that this level will be on the cards even if a Phase 1 trade deal was announced.
Patience is required at the moment.
5: - THE WEEKLY FX PREMIUM TRADING SUMMARY:
December 2019 so far: +380 net profitable pips.
2019 year to date: +17,621 net profitable pips.
2019 Annual pip target: +10,000 net profitable pips.
Performance: = 176%
The WEEKLY FX PREMIUM is my subscribed based FX support option, which offers, subscribers’ full access to my suggested trade set-ups and my market commentaries.
If you go to my website you will see more information about the WEEKLY FX PREMIUM, including the “SUBSCRIBE” tab at the top of my welcome page.
My website www.weeklyfxdrivethru.com has full details of my trade projection for 2020 along with reasons why you should consider joining my other subscribers at the WEEKLY FX PREMIUM. You will find this information under the “History and Performance “tab
Plus, my website also contains full details of the subscription options available. You will find this under the “Subscriptions” tab.
FINALLY: I have just recently launched CORE POSITION trades. These segregate my longer-term trades into a category that may appeal to part-time traders and those who cannot access their trading screens more than two or three times a day.
This year I am now operating within my TRADE PLAN three categories of longer-term position trades: -
- CORE POSITION TRADES*
- NON-BREXIT POSITION TRADES*
- BREXIT RELATED TRADES*
*All categories have specific goals and objectives and vary on position sizes, RISK and RISK TOLERANCE.
Next year in 2020, there will be a revision of my TRADE STYLES, but I will still be retaining my macro views as a longer-term POSITION STYLE trader.
My objective on “Net Profitable Pips” in 2020 = 15,200 pips.
6: - WEEKLY FX PREMIUM SUBSCRIBERS ONLY:
7: - 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.
Finally, Be GRATEFUL for your wins and COUNT THEM. Be positive, keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
The Pip Accumulator
BLOG VERSION: #347 FREE NEWSLETTER
DATE: 8th December 2019