What a crazy last week to finish off the month. What was a rather boring start to proceedings, being patient, waiting for trades to come to me, escalated in the final week to an FX Tsunami, with rampant volatility, especially in the Asian session, which already has poor liquidity so adding the two factors together brought many aspects of my trading plans together quite nicely.
I can only imagine that there are a bunch of retail traders sitting at home looking at their portfolios wondering about the big rises followed by the big falls. I used to think almost everyone did this until I realized more than 80% of Americans don't really follow financial news. For those who do, the tech sell off must be a worry.
In FX, the story is all about the DXY, which has been rising nicely on the back of rising bond yields worldwide. Wouldn’t you love to be a fly on the wall this Sunday morning as the likes of POWELL and LAGARDE, pour the milk on their cornflakes reading the Financial Press? Would there be any FFS moments?
February 2021, was an all-round good performance for the FX PREMIUM.
I do however end the month holding a number of positions over into March 2021. I basically have 6 x Position Trades (Core Positions) and 2 x Radar Trade positions. In total, counting individual trades there are 28 of them, which, is about the normal quantity for me. I am comfortable managing 6 total positions, the rest falls into place quite easily now.
THE WEEKLY FX PREMIUM:
FEBRUARY 2021: + 2,668 net pips generated.
2021 OBJECTIVE = 15,480 pips
25.29% of target now achieved
More about this later in this blog
However, the DRIVE THRU and SUNDAY MORNING ZOOMS will contain much more information about the February performance, and they will also be looking ahead into March 2021.
1. THE SOAPBOX:
SHAKIN’ ALL OVER
Trading FX never ceases to amaze me. Just as I think that all the conflict issues with my fundamentals in the market have ended, all of a sudden, a whole bunch of new issues, that I had not imagined appear and my views on normality are postponed.
I think it was a degree of naivety on my part that I did just not expect the turn in sentiment to be driven initially by the Bond Market. Basically, bonds being sold off are what has been called a part of and the result of the reflation trade. Recently there has been a huge shift in trading volumes as institutions, in particular, have been rotating their investments to get ready to protect themselves against a change in RISK.
Over the past two weeks or so there has been a rising sentiment change in my opinion with the views of institutional leaders of the larger market players. SHAKIN’ ALL OVER may be overstating the perception that I am reading into market commentaries whether verbal or written, BUT... there is a shift in tone. Just remember if one of these guys presses SELL, believing that the top is 100% in and off we go, the domino effect is in play.
SELL HIGH then BUY BACK LOWER, it is a market washout of longs that is often needed to rebalance matters and test market fundamentals. The FED will be locked in individual padded cells along with many other Central Bank figures on a major sell-of.
There is huge conviction in the markets that the success of vaccines will see life returning to normal much sooner than originally thought. As a result, we are seeing pressure on the Central Banks, which have pledged to keep interest rates low to ensure that a 100% economic recovery is not hindered.
Last week, U.S. yields rocketed higher as investors basically ignored the FED assurances that there will be NO tapering anytime soon. The FX market in response gave us volatility with USD strength that had not seen for quite some time. Looking back, I think that the last time we saw those types of moves was March 2020 around the initial pandemic moves.
The way that I look at it, is that maybe we are at the beginning of the end of the good times for the markets. Nevertheless, with all the volatility last week, the FED continued to flood the market with liquidity.
As I have said in the past couple of months, on several occasions, through the blogs listed below, I believe that we are heading for a BLACK SWAN trading event, or similar: -
- ON SLIP... (AND DOWN THE HOLE WE FALL) – February 14th, 2021
- WHEN THE WORLD ENDS – January 31st, 2021
- GOLD – January 24th, 2021
- AMERICAN DREAM: PLAN B – January 10th, 2021
I still hold those beliefs. Nothing has tilted or pivoted my view. It will be a domino effect when it happens, and it will be sudden.
Just think of this event being like a game of chicken. At some point someone will press the sell button and the rest will follow.
What I will say at this point though in summary of the past few days is this: As mentioned, it all started as being a rotation trade that became a re-balancing trade at the start of the month that resulted in bond yields rising creating FEAR of inflation and FED interest rate hikes, even though POWELL had only just said that the FED was going to do nothing on interest rates until 2024.
Hmmm, the FED and YELLEN are in lock step, which may be good in the bad times, BUT, with perceived good times on the horizon, maybe NOT as good combination. I have often written about Janet Yellen stating, “once a dove always a dove”.
The markets will lead the FED and the BIDEN administration here, it will be a case of the tail wagging the dog unless eyes are opened and instead of swotting down the difficult questions with bland answers, maybe a difficult more honest approach is required.
I still maintain the market is over “BUBBLY”.
What one needs to see as a warning that the BLACK SWAN event is not just on the way but actually in process is: -
- DOW JONES OFF 25%-30%
- NASDAQ OFF 30%-40%
- S&P OFF 20-25%
- MARKET FEAR
- FOMO LEADING TO PANIC
- SHAKIN’ ALL OVER LEADING TO CAPITULATION
- WTF and WTF was that all about moments
Not forgetting of course, the true litmus test of any severe market event is CNBC adding “MARKETS IN TURMOIL” to their schedule, that is the true tipping point!
2. WEEKLY FX PREMIUM: FEBRUARY 2021 PERFORMANCE:
The complete set of spreadsheets can be found on my homepage at https://www.weeklyfxdrivethru.com under the “History / Performance” tab, sub section “This Year’s Performance”.
2.1: FEBRUARY 2021 OVERVIEW:
2.2: MONTHLY PERFORMANCE SUMMARY:
2.3: YEAR TO DATE PERFORMANCE SUMMARIES:
2.4: MY THOUGHTS ON THE MONTH and YEAR TO DATE:
2.4.1: THE NUMBERS:
At the end, February was a bloody good month for me via the FX PREMIUM. Many of the set ups placed triggered and came good to give a bumper monthly performance.
In 2020, February produced a slam dunk performance of + 2,288 pips on the back of +2,612 pips in January totaling +4,900 pips for the first two months of 2020.
WEEKLY FX PREMIUM pips this year so far total, +1,247 pips in January plus a beat over February 2020 of + 2,668 pips this year versus +2,612 in February 2020 only leaves me 985 pips behind the record-breaking year of 2020.
So, as usual let me list out in bullet point format the high points and then the low points from the month: -
- I took a positive 2,668 pips.
- My pips per completed trade = 51.31 pips against an objective of 40.00 pips per completed trade.
- Ratio of Winning to Losing trades was 83% / 17% against an objective of 80% / 20%.
From a year-to-date perspective: -
- Year to date total = +3,915 pips which equates to 25.29% of my annual objective of +15,480 pips.
- Pips per completed trade are at 45.52 as an average from 86 trades completed this year thus far. This is ahead of my annual objective of 40 pips per completed trade.
- The ratio of winning / losing trades now sits at 81% / 19%, which is ahead of my objective of 80%/20%.
Basically, in every area of measurement I am ahead of my objective. Obviously, I am extremely grateful and delighted. Overall, after the first two months I am very happy. There was a lot of pressure on my performance given that 2020 was a storming performance.
2.4.2: THE TRADES:
I am often asked, if I have favourite pairs to trade? This answer is yes, but when I look at February most of my trades that performed well were not my “Go To” pairs!
I suffered with this category of trade style. As already mentioned, February was a slow starter.
Only placed 6 “At Market” trades, 3 were positive and 3 returned a losing trade. All of the trades were placed with tight STOPS and tight LIMITS so at the end of the day a positive +35 pips is about right. It could have easily been a -35 pips.
The return represents what I got from a very choppy market with noise at the lower time framed, smaller time horizon trades.
A slightly better performance with this trade style, primarily due to the fact that my time horizons were wider for each trade, my position sizes a little smaller and my stops a little wider to allow for me NOT to be caught up in the noise of a choppy FX market.
Primarily, GBP related trades this month. I mentioned on several occasions that I was and I still do remain bullish the GBP. As you can see from the table below, GBP/AUD, GBP/NZD and GBP/CAD feature heavily vis-à-vis my winning trades. I had tried on a few occasions to enter long with GBP/JPY, but sadly I never got a pullback that met with my entry level.
The bigger losing trades were EUR/NZD and EUR/CAD, with both trades my thoughts that support levels would hold were wrong and I paid the price!
No surprises considering what I have just written for Radar trades, the most pips from my completed Position trades emanated from GBP related trades. GBP/USD, GBP/CHF and EUR/GBP trades provided +1,190 pips, which equates to 62% of the monthly total.
As I have been repeatedly saying these trades have wider stops based upon at a maximum 150% of the monthly ATR in extreme conditions. They are smaller position sizes and yes, there are risks BUT... my choice of pair based upon my Fundamental / Macro views are usually spot on or thereabouts most of the time. Therefore, it is all about patience and trade management.
My TRADE PLAN with particular trade style is currency pair specific based upon my RISK TOLERANCE for the currency pair in question. This gives me total flexibility with the trades. The bigger issue I have had with these trades is taking them off the table too soon. I am working on my exit strategies to give subscribers more notice BUT, I can only work with what “cards” the market gives me and for this I have no control over the influences presented.
3. MY FREE CONTENT SUMMARY:
3.1: DRIVE THRU BLOG “FREE NEWSLETTER & DRIVE THRU ZOOM:
If you already subscribe to this DRIVE THRU blog NEWSLETTER, you will also receive into your inbox each weekend my video DRIVE THRU ZOOM and both are 100% FREE. Both are delivered usually before noon New York time every Sunday that I complete a DRIVE THRU blog.
For those of you who pick up the COFFEE SHOP / CHIRINGUITO version of this blog, if you want THE DRIVE THRU ZOOM, you will need to subscribe to this blog. Obviously, I would prefer if you subscribed to the FX PREMIUM and came on board for the FX journey of 2021 in its entirety. FX PREMIUM subscribers get so much more by way of content and do NOT forget they also get the opportunity to take profit winning trades as well.
Why do I provide FREE content?
Very simply, I hope that what I provide FREE will tempt you to look at upgrading to a FEE-PAYING subscription to my subscription service THE WEEKLY FX PREMIUM. Details about subscription costs can be found on my website https://www.weeklyfxdrivethru.com under the TAB on my landing page titled SUBSCRIBE.
3.2: MY FREE E BOOK & FREE video ZOOM:
In addition to the above content NEWSLETTER subscribers will also have access to my E BOOK called, “Forex Trading My Way... It Could Also Work For You”, which looks at FX Trading Goals and Objectives for THE WEEKLY FX PREMIUM through 2021.
To partner my E BOOK I have also completed a short overview ZOOM video presentation, links to connect to both are below: -
FOREX TRADING... MY WAY – IT COULD ALSO WORK FOR YOU
THE WEEKLY FX PREMIUM...
TRADING GOALS & OBJECTIVES 2021
E BOOK 2021 LINK:
ZOOM VIDEO LINK:
4. WEEKLY FX PREMIUM SUBSCRIPTION INFORMATION:
Basically, my website landing page has all the information that you would need to make a qualified decision about whether or not the WEEKLY FX PREMIUM would be a good fit for you or not. Lots of information about the way I do things, plus, previous reports about my trades, my trade styles and my trade projections for the year are located on my home page by selecting the appropriate tab located at the top of my home page.
Basically, there are 4 options for subscribing: -
- Monthly revolving subscription following a 10 day for $10 trial then a monthly CAD$250.00 per month.
- 10 weeks (c.3 months) = CAD$600.00
- 20 weeks (c.6 months) = CAD$1,000.00
- 40 weeks (c.12 months) = CAD$1,500.00
Further information about how to subscribe to the WEEKLY FX PREMIUM is also located at the top of my welcome page at https://www.weeklyfxdrivethru.com under the “SUBSCRIBE” tab.
5. WEEKLY FX PREMIUM SUBSCRIBERS:
5.1: TRADING REVIEW FEBRUARY 2021:
5.2: LOOKING AHEAD:
5.3: COMING UP IN THE SUNDAY MORNING ZOOM:
5.4: POSITION TRADES (CORE POSITIONS) – SUMMARY:
6. MY FINAL THOUGHTS:
Firstly, before finally...
My “YouTube” channel THE WEEKLY FX DRIVE THRU now has a library of the older DRIVE THRU ZOOM presentations. Check it out and maybe subscribe. My intention is to post other “ZOOMS” there from time to time related to FX Trading.
Why not get positioned at the front of the line!
Always remember longevity in Forex trading can only be achieved through trading with good RISK, TRADE and HEAD MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility. Trade with a TRADE PLAN, basically, plan your trades and Trade your Plan.
Mental toughness is key, and this is all about emotional control. Your mind can do amazing things, but only when it wants to, threat and alert will get your mind’s attention.
“Everyone has ability. It always comes down to mind games. Whoever is more mentally strong, wins” – Mohammed Ali.
Finally, be GRATEFUL for your wins and COUNT THEM. Keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
The Pip Accumulator
BLOG VERSION: #403 FREE NEWSLETTER
DATE: 28th February 2021