Over the past two weeks I was supposed to be taking a small step back from the day-to-day routine and complete a re-charge of my internal FX batteries. Instead of the re-charge, I found myself dealing with software issues that as most of you can probably relate to are time consuming and at times they can be mentally draining. Trying to make sense of back up email addresses set years ago, old passwords and two factor authorization codes can be very time consuming to say the least.
Now of course we have the new favourite; alerts mainly from Social Media advising you that a login to your account occurred from a new device. This happened with my mail distributor Constant Contact last week. FFS; I only use one of my desktops to access Constant Contact, no other devices. After six years of using the same machine two / three times a week one of those emails hit my inbox from them... obviously from a no-reply email.
Look, in a nutshell, individually not a bunch of high stress items to deal with just time-consuming crap to deal with that held me in front of my screens when I wanted a break. I suppose I could argue the point that as it happened when I was NOT trading with normally activity, it didn’t have the same impact as it normally would.
So, given that last week was a little course correction, it did mean I traded and looked at charts etc. more than I had planned.
Therefore, given that my start to this month should have been very timid from a trading point of view, I am delighted to have started April on the front foot from a pip perspective.... always count your wins no matter how they materialize.
APRIL 2021 SO FAR = +285 pips
YEAR TO DATE 2021 = +6,296 pips
1. THE SOAPBOX
A MOMENTARY LAPSE OF REASON
For the past two weeks I took a short break over the Easter holiday.
Once a trader in FX, always a trader in FX, so you know that I was never too far away from what was happening in the markets despite taking what I called a two-week re-charge of the batteries.
It would have been totally naïve to have expected huge changes in market activity and I did NOT expect my core longer-term fundamental views, thoughts and trading ideas to alter.
With that last point in mind, I was not disappointed. However, the bigger piece of news that was swotted away by the markets was that of Archegos Capital.
We saw Archegos Capital lose basically USD$20 Billion in two days. The fallout was minimal to virtually non-existent, having said that lenders to the Business have lost substantial amounts running into Billions of U.S. dollars. Nomura c.USD$2 Billion, Credit Suisse c.USD$4.7 Billion and Goldman Sachs sold off about c.USD$3-4 Billion of related stock, allegedly in a controlled move!
The mere fact this event did NOT dent the bull run is obviously noteworthy to those like me that believe the markets are toppy and that we are about the see a bubble burst in grand style. As long as the markets see the FED as a backstop... the lender of last resort, the markets are nothing more than GREED focused. FED chair Jerome Powell via FOMC minutes released last week basically re-iterated that they will NOT be reacting to increasing bond yields, they will allow the U.S. economy to run “hot” vis-à-vis inflation above 2% and they will not bat an eyelid until economic and employment goals are confirmed.
I get it and I understand BUT, at some point, all the debt, all the data that is just ignored has to count for something. As I have mentioned before the $64,000 question is simply.... when? So as always, the follow up $64,000 question is what to do in the interim period given that we have no knowledge of time frames?
Look, we are on what I would call “Orange Alert” in the markets. Almost on a daily basis I receive into my inbox at the Wall Street close, emails telling me that the S&P closed at a new high. The Dow hit highs and the Nasdaq hit highs. I am no longer surprised or stare with astonishment when I look at the numbers.
I am however asking who is buying at these elevated levels? Volumes have slowed down and that would be consistent with recent sentiment mumblings about being overstretched. I can only think that poorly informed retail clients who know little about the markets are just buying but, the vast majority of activity in buying at highs are companies themselves buying back their own stock using the low intertest rate opportunity to improve their balance sheet to keep institutions and major investors interested. This is tantamount to a Wall Street “Circle of Life” perpetuated by the FED. At some point the “House of Cards” will fall and there will be losses, victims and the usual sad stories of loss of life associated with this type of event.
Over the past few blogs, I have outlined my position vis-à-vis the markets and my belief that a BLACK SWAN event is on its way, so I do not want to bore the pants off you repeatedly going over the same ground. But, for obvious reasons, this blog would NOT remain authentic if I did NOT remain in the same general area of concern from my perspective but maybe from an amended viewpoint.
Remaining authentic is important for me. I may be right, or I may be wrong but what is important to me is that if I am wrong, I hold up my arms with grace and accept that and then course correct to move forward. The crucial factor is to trade with bias but at all times being aware of the other side of the trade and what traders with opinions are looking at from a different viewpoint.
Going sideways for a paragraph or two...
Every weekend in my FX PREMIUM subscriber SUNDAY MORNING ZOOM review I refer to a page taken from FX STREET, in which the FX brains from the major banks, the major independent institutions and well-known independent FX traders supply FX STREET with their USD major price predictions for the coming week, month and quarter. It is a great free document just to get a handle on what the brains of FX are thinking.
I say the same things to my subscribers each week when I show this fact sheet.
- Every contributor looks at the same charts as we do.
- Isn’t it just amazing based on Technical Analysis alone they have such divergent views based off the same data?
- Fundamental of Geo-political news is NOT really accounted for fully in the comments.
- There are elements of quoting prices to sell their own books or maybe to sell against their own books. Let’s stay in the real world.
- This document serves the purpose to let everyone FX related know that there will always be a two-way market but also that no-one really has a clue what the fuck is going to happen.
- I have been measuring this document for over a year. There are NO winners that get it right every time. On the flip side there are equally NO losers that get it consistently wrong. It’s all just opinion.
- You would be crazy to try and trade off this stuff. You need to “Go Deeper” to get more backup about the why? For most of us the USD$12k-18k fees for this are out of reach and in any case not one contributor is 100%.
FX is what can be referred to as a “Broad Church”.
There are many opinions, many ideas and lots of charts. As a FUNDAMENTAL / MACRO trader first I strongly believe this gives me an edge and frankly I am bewildered that people can trade only off charts in the TRUMP AGE and beyond without taking in a broader perspective.
I still listen to the webinars by my competitors. I hear on a daily basis panelists and FX stalwarts who do not listen to or are not aware of current news events never mind global influences, tell viewers trades have moved their way because of a technical set up. I find this at time laughable at times as the vast majority of moves that have taken place were on the back of a high-beta news event. I just sit back with a WTF moment and sip a coffee.
I have to go back to basics...
Trading FX is basically simple repetition... “YOU BUY DIPS and SELL RIPS”. That sounds so simple but that is it in a nutshell.
The key is when to BUY and when to SELL.
Being contrarian over the past months has required so much patience and discipline. I feel that many (like me) looking for a RISK OFF move would believe almost any conspiracy theory if the pieces fitted together a like a 5-year old’s
8-piece Thomas The Tank Engine jigsaw. After A MOMENTARY LAPSE OF REASON, I gathered my thoughts once again, went back to basics, back to the fundamentals and moved forward.
Last Friday we saw U.S. Producer Prices increasing, which will find its way eventually through to the consumer and prices will rise creating inflation which normally creates a tighter monetary policy from the Central Bank. The FED has basically raised an index finger said to the markets “swivel” and said so what, we are NOT going to react.
Over time, I expect the markets to test the will of the FED. I am however, just as interested in how the other G10 Central Banks react to a weakening USD. By virtue of the fact that when the USD weakens the secondary currency strengthens. The likes of the ECB, BOJ, BOE, RBA and BOC will have something to say. They are simply not just going to bend over the desk with trousers lowered. Whilst, the FED has the greatest money flows on the planet compared to the other Central Banks, they will NOT want to be screwed over, and they will take action. Just what they can do is difficult to strategize over a medium-term period.
Look, it is basic Economics that will as far as I am concerned WIN THE DAY.
When I first started trading FX, I used to watch and listen daily to a segment of an FX program presentation by commodities trader Alan Knuckman who would repeat over and over that the markets survival was “ALL ABOUT COMMODITIES”. I believe he was right the, and still is now, some 12 years later.
We are heading out of a pandemic at some point. There will be many bridges to cross to put pressure on commodity currencies in the short term in my opinion, but, longer-term, I see commodity currencies strengthening. For now, I have the view of supporting a commodity currency weakness move, but, in the medium term, I am looking for these moves to reverse and reverse very strongly.
There are so many uncertainties about supply & demand chains, unemployment levels, debt burdens & repayments, geo-political risks, a rising yield environment and hanging over all of us like The Sword of Damocles are both personal and business tax increases. Let’s face it, these uncertainties for now look like just words in a blog, but they are huge issues to overcome, resolve and schedule in the future.
The solutions are NOT clear.
Politicians and Central Bank leaders are facing something never faced before and they are at times very contradictory. For me, this is a huge negative. Are they equipped for uncertain times? The Fed appears to have a very determined and resilient approach to try and stop the markets doing what they are good at doing... that is forcing the issue to maximise FEAR and GREED.
I said before Economics will drive the markets at some point, but I am not so sure that a domino led BLACK SWAN event will be created by economics we need to see a major geo-political event to trip as well. CHINA, TAIWAN, HONG KONG, IRAN, RUSSIA-UKRAINE.... who knows, maybe something not yet on “my” to be considered list.
As FX traders what do we do...
If you are a day trader, keep on going, strut your stuff; that is not my style. What I do know is that trade selection is paramount, but it is challenging and patience to be able to sit in a losing position is key. This is what I call HEAD MANAGEMENT (Trading Psychology). Knowing when or if to add to existing positions is crucial.
The overriding factor is to enter knowing what your overall RISK TOLERANCE is and build your trades accordingly. At the same time, you have to let certain positions fail and take losses for the greater good of the overall position that you are holding. It is effectively like a game of chess. However, in this game of chess you have little control of your moves, you have to make choices and decisions based on a rigged / corrupt market.
What can I say apart from Good Luck?
2. THE WEEKLY FX PREMIUM: SUBSCRIBERS SECTION:
3. THE WEEKLY FX PREMIUM - PERFORMANCE:
3.1: THE WEEKLY FX PREMIUM: MONTHLY PERFORMANCE:
3.2: THE WEEKLY FX PREMIUM: SUBSCRIPTION INFORMATION:
The WEEKLY FX PREMIUM is my subscriber-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 https://www.weeklyfxdrivethru.com you will see more information about the WEEKLY FX PREMIUM.
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.
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.
4. CLOSING 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.
Stay safe and wear a mask.
The Pip Accumulator
BLOG VERSION: #408 FREE NEWSLETTER
DATE: 11th April 2021