May was good month overall for my trading. As usual I can be very self-critical of some trades through maybe exiting a little too early, however, I am reminded by a few FX quotes along the lines of “You will never go broke banking profits!”.
I will go deeper and beneath the numbers later in the blog, but for now the headline stats for THE WEEKLY FX PREMIUM 2021 is as follows: -
THE WEEKLY FX PREMIUM:
May 2021: +1,707 net pips generated
Year to Date: + 7,954 net pips generated
2021 Objective: = +15,480 pips
51.38% of annual target achieved
Following on from comments in this section last month, I am still reducing my RISK EXPOSURE as we head into the summer.
I am still a believer that despite some twitchy market moves last week, the FED will continue to take a tough stance on inflation policy movements despite the markets expecting a move now.
I am sticking with my prediction of a TAPER STYLE announcement at either the Jackson Hole Symposium in late August or maybe at the September FOMC meeting of September 22nd, 2021. I believe it will only be around these times at the earliest that any true indication for future FED policy can be updated as there will be a few of months of completed inflation data that can be used in the way that the FED initially stated that they wanted. As usual the markets are ahead of themselves.
Remember, JEROME POWELL from six weeks ago: -
“IF WE CAN’T SEE IT, WE DON’T BELIEVE IT”
or
in Powell’s own words regarding the U.S. economic recovery
“IT IS UNEVEN AND INCOMPLETE AND THERE IS A LONG WAY TO GO”
This is why I am predicting the summer doldrums are effectively starting now. I am NOT taking this position based upon my desire to have unlimited BBQ’s this summer on the deck! It is primarily due to the fact if the FED does NOT stick to its verbal commitments, no one will believe a damn thing out of FED chair, POWELL’S mouth moving forward, and this cannot be allowed from a management perspective.
1. WHAT CURRENCY PAIR HAS MY ATTENTION and WHY?
1.1: BACKGROUND TO MY TRADING STYLES:
Over the past few weeks I have received several emails etc. asking me what my process is for posting a trade. With this feedback in mind, over the coming weeks I am going to run through my process with a particular currency pair in mind, looking at all the stages I take into consideration.
Please bear in mind, I am a long-term trader with longer-term horizons so my process will be completely different to scalpers, range traders and some day traders.
Essentially, I am a “Swing Trader” looking for trades to develop. This style of trade for me I refer to as “Radar Trades”, with a time horizon of hopefully a few days or weeks, to a few months.
However, currently, I am looking deeper and looking to trade over a longer period of time. This type of trade style I call “(Core) Position Trades” and depending upon my conviction and market conditions, trades that I believe are longer-term over 9-12 months duration, these trades become a multi-positional (Core) Position trade.
1.2: THE TRADE AND WHY?
EUR/NZD: CENTRAL BANKS CONTROL THIS ONE....
We head into the summer with the news that the EUROZONE €750Billion pandemic rescue fund is now ready to be deployed.
Surprised at the timing given that the EUROZONE is now opening up after harsh lockdowns don’t be. We have known for years that EUROZONE cannot move fast.
Does this news in anyway affect my reasons for this trade? Not at all.
My trade bias is: SHORT.
1.3: FUNDAMENTALLY & THE MACRO CENTRAL BANK PERSPECTIVE:
The trade is similar to my reasons for my USD/CAD short trade posted on the 16th May via DRIVE THRU blog #412.
Both CENTRAL BANKS are in alignment for a directional trade to be successful.
The ECB is going to remain on a ZIRP (Zero Interest Rate Policy) for at least the remainder of 2021 and 2022 and probably until I have no breath left in my body and I am pushing up daises.
By contrast at the last RBNZ Monetary Policy Statement, May 26th, Adrian Orr the RBNZ Governor, was open about raising interest rates in mid 2022.
Basically, the interest rate differentials moving forward should move this pair lower without anything else in consideration. One should also consider the fact that with the New Zealand dollar being a “Commodity Currency” and with the demand for commodities going to be strong following the pandemic moving more and more into the rearview mirror, this should also be NZD supportive.
1.4: TECHNICALLY:
I do NOT suffer from FOMO at all with my trading, but I should have been in this a week or so ago. As you will see from my thoughts and commentaries on the charts below an entry at 1.7040, or thereabouts would have been preferred.
You can especially on the WEEKLY CHART that buyers ran out of steam c.1.7040, which is also just below the 200 DAYSMA at c.1.7080.
From the DAILY and WEEKLY charts we sit in a triangle with support at about 1.6750. We can dive well below this number given the right conditions.
Since March 2021, we have really been doing nothing more than tread water with this pair. We have been sideways in a range from 1.6675 thru 1.7040.
Looking at the Fibonacci levels on the DAILY CHART, from the 24th of February 2021 low thru the 21st of May high, we have yet to trace to the 23.6% level which lies at 1.6870.
With RISK OFF in the market obviously we could break higher thru the 1.7040 level and quickly move higher. This level is obviously important for placing stops on any short trade alongside the 200DAYSMA which lies just above.
1.5: THE CHARTS:
WEEKLY and DAILY CHARTS:
I have written my thoughts on the charts below.
1.6: SUMMARY:
One must always remember that although the USD is not part of this trade. The influence of the FED will always weigh on the EUR and to a lesser extent on the NZD.
It does like following two weak U.S. NON-FARM PAYROLL months, that FED policy will remain on hold through the summer as I have been quoting for some time. The first possible change in policy could be at the Jackson Hole Symposium in late August or my preference is at the September 22nd FOMC meeting with the subsequent Monetary Policy Statement and Press Conference.
What’s next?
Obviously it is lining up my trade parameters and obtaining the prices to enter that I am comfortable with, but....
Sorry everyone, but that is between my WEEKLY FX PREMIUM subscribers and me. If you want to know what and how I am proposing to trade this pair, I have left clues BUT to know the exact details you will need to subscribe and join.
2. FOLLOW UPS ON RECENT TRADE IDEAS FROM THIS BLOG:
2.1: CURRENCY PAIR - USD/CAD:
“DRIVE THRU” BLOG DATE: 16th May 2021
BLOG REFERENCE: #412 FREE NEWSLETTER VERSION
This has been a little frustrating to trade. I am longer-term a believer that we are heading lower. Currently, nothing has changed from last week. My open trade is flirting with a test of 1.2000 and the next day flirting with a possible run to test near term resistance (a short-term line in the sand) of 1.2150.
2.2: CURRENCY PAIR - GBP/USD:
“DRIVE THRU” BLOG DATE; 23rd May 2021
BLOG REFERENCE: #413 FREE NEWSLETTER VERSION
Not too much has happened of late. This break broke through 1.4200 to resistance at 1.4250 but then pulled back on demand for the USD and inflation risks.
I have had a CORE LONG POSITION in play since 5th January 2021, so far with 21 completed trades providing +1,451 pips for average pip return per trade of +69 pips.
I still see fair value well beyond the current price and, therefore, I am happy to hold. I remain BULLISH on the GBP as a whole and I am happy to continue to buy dips.
2.3: CURRENCY PAIR – AUD/USD:
“DRIVE THRU” BLOG DATE 30th May 2021
BLOG REFERENCE: #414 FREE NEWSLETTER VERSION
Nothing has happened at all with this pair from my trading perspective. I never got the move higher “SELLING THE RIP” to short from that I wanted. I was looking towards 0.7800-0.7820 and we just never had AUD strength to achieve those levels. We hit c.0.7770 but being greedy I wanted a little higher to short against the 0.7820 resistance.
To my frustration we tested the key support of 0.7675 last week broke through to new lows of 0.7659... argh!!
If I do NOT get a trade away this coming week, there will be little point me reporting on a non-event!
3. WEEKLY FX PREMIUM: MAY 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”.
3.1: MAY 2021 OVERVIEW:
3.2: MONTHLY PERFORMANCE SUMMARY:
3.3: YEAR TO DATE PERFORMANCE SUMMARIES:
3.4: MY THOUGHTS ON THE MONTH and YEAR TO DATE:
3.4.1: THE NUMBERS:
First off, I have to say I was delighted with the May 2021 performance. By nature, I am self-critical about my own performances vis-à-vis objectives, and I can always find fault with at least one aspect of my trading at any given time.
Right now, it is the classic taking trades off the table too early. Looking back through my journal, it is clear that this particular aspect of my trading gathered huge momentum when TRUMP was in office. The “Tweet” trade was killing me, and I adapted to avoid the noise. However, the “GRAB ‘N GO” style still obviously lingers. Talking with my peer group this past week, I was quickly reminded as I have already mentioned in this blog that “No-one goes broke banking pips and $$$”. Whilst this gives comfort, I know I could have been more focused and taken maybe 400-500 pips more from the month. In a year that’s c.5k in pips it's a lot to know that you have left on the table.
Look; we can all be very hyper-critical about our pip returns. At the end of the day and I close each blog with the same statement: -
“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”.
All that being said I am delighted and grateful for the positive month.
- Monthly pips of +1,707 pips.
- Year to Date now at +7,954 pips basically 51% of my annual objective, leave me on target.
- Pips per completed trade:
My objective monthly and year to date is 40 pips
May = 55.06 pips
Year to date = 41.86 pips - Ratio of Positive to Losing trades
My objectives monthly and year to date is 80% (positive) / 20% (negative)
May = 93% / 7%
Year to Date = 81% / 19%
3.4.2: THE TRADES:
FLASH TRADES:
3 x trades undertaken all positive.
It very difficult to outline a strategy with these trades. If I am at my desk and I see momentum and feel it's a move I could profit 20-50 pips from I will take it.
+92 pips of the +142 pips gained with this trade style emanated from USD/CAD short trades that do not form part of my CORE SHORT POSITION mentioned in section 2.1.
RADAR TRADES:
13 completed trades,12 of which had positive pip outcomes.
+105 pips from the +707 pips with this trade style emanated from USD/CAD short trades that do not form part of my CORE SHORT POSITION trade mentioned in section 2.1.
Most of the rest of the success in this area came from GBP cross-rate trades.
Several trades were closed too soon. I think over +300 additional pips were left on the table last month...argh!!
POSITION TRADES:
I added +858 pips from this trade style last month and pips were definitely left on the table.
My overall goal last month was reduced RISK, I am always operating with multiple positions open. My objective was to get these to about c.15 open trades, so maybe this mindset fueled my approach.
4. WEEKLY FX PREMIUM SUBSCRIPTION INFORMATION:
Information about how to subscribe to the WEEKLY FX PREMIUM is located on my website at the top of my welcome page at https://www.weeklyfxdrivethru.com under the “SUBSCRIBE” tab.
4.1: WEEKLY FX PREMIUM OVERALL PERFORMANCE:
5. MY FINAL THOUGHTS:
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.
Remember when you are trading you are on your own. It is you and you alone who presses the execute button.
“Coming second only means that you are first of those who lose” – Ayrton Senna
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.
Scott Pickering
The Pip Accumulator
Twitter: @pipaccumulator
https://weeklyfxdrivethru.com/disclaimer/
BLOG VERSION: #415 FREE NEWSLETTER
DATE: 6th June 2021
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