As it is often said to end a news programme or a TV debate of some sort, to sum up last week in the markets, I think it calls for a ... “AND THAT WAS THAT!”
We were up, we were down, we were swinging it all around, it was hard to keep up, I think a proposed CNBC Markets in Turmoil special broadcast was cancelled... I was so just NOT interested, it may have taken place after all, not sure, but on a huge reversal day, I found the above png file on Twitter which tickled my sense of humour.
So, trying to make sense of last week’s market moves, I will leave the detail to Tom Keene, Jonathan Ferro and Lisa Abramowicz.
Moving on....
I have to admit the frenzy over a Central Bank that has done NOTHING so far, that is STILL buying bonds at a rate of USD$30Billion per month (Ultra accommodative), is just crazy.
Every headline is “How many rate hikes in 2022?” 3, 4 or 5 moves higher... starting in March 2022 with 0.25% or 0.50%?
As usual the markets are so far ahead of themselves this is why we have seen so much volatility. FEAR and GREED temperaments are running high. Where do you rank yourself on the indicator below?
Moving on once again...
Are we going to war with Russia over Ukraine?
Troop build ups on the Ukrainian borders and diplomatic activity at fever pitch. Biden moving troops around Eastern Europe. It’s just like the boardgame RISK.
Has Putin backed himself into a corner over his NATO demands?
Biden cannot back down. For A President who has NO power at home in the USA, he cannot afford to fuck up his Foreign Policy.
It has often been asked, why does every American President interfere in politics of other countries around the world? The simple answer is they need to do something to show the domestic market that they are alive.
The pandemic has shown very plainly that the U.S. President has no authority over the individual states, the devolved power to the Governors sees to that. Just look at mask mandates, it was embarrassing to watch.
A U.S. President can take the country to war, press the RED button, move troops here there and everywhere under executive powers if needs be, BUT... he cannot insist that you wear a mask on public transport in the USA.
So, Biden is also in this Ukraine dispute up to his neck and as the rhetoric grows so does the political stock domestically and internationally of both Biden and Putin.
Just to make the issue more juicy:
Putin holds the GAS PIPELINE switch into Europe, which has already seen energy prices rocket 300%, 400% and as high as 500% in 2021.
Putin is clever, he is NOT under western media scrutiny, and if he was he couldn’t give a rats ass anyhow. It is Biden and the west who has the most to lose here, despite all the bravado about sanctions... yada, yada, yada.
Keep a BBC news feed open on your TweetDeck.
Getting back to trading....
From a trading perspective, I am a few pips up on last week’s total.
I booked losses of 620 pips but was able to bank pips from positive trades, so I am very grateful that I was able to do that.
At the end of last week, THE WEEKLY FX PREMIUM 2022 current position was as follows: -
JANUARY 2022 to date:
Total net pips = +1,316 pips
YEAR TO DATE 2022:
Total net pips = +1,316 pips
2022 pip objective = +14,920pips
(8.82% of 2022 objective achieved)
If you would like to see more information on how I trade etc., check out the link below that will connect you to my video presentation, which is on my YouTube channel: -
THE WEEKLY FX PREMIUM REVIEW OF 2021 & LOOK FORWARD INTO 2022
https://bit.ly/review2021look2022
Finally, in this section. My new subscriber promotion called DOUBLE UP ends this weekend at 23:59 January 30th New York Time. Full details of the offer can be found later in the blog in section 5.
1: THE SOAPBOX
2022 WILL BE A YEAR OF TWO HALVES...
So far 2022 has been a year of predictions, mainly centered in the financial world about how many interest rate hikes the FED is going to move forward with when they start normalizing Monetary Policy on March 16th 2022.
It appears to be all about one-upmanship as far as I can see.
The major U.S. Banks via their analysts are competing for air time on CNBC, BLOOMBERG and FX BUSINESS. The greater the number of hikes expected the greater the publicity and airtime. Mainstream media is complicit in creating as much blah, blah, blah and yada, yada, yada about the FED potential move, it’s all quite blurry now.
There is way too much talk about what the FED should and shouldn't do.
Now let me just say once again, but for the first time in this forum.
- The FED is still buying bonds via its Quantitative Easing (QE) program. There is still another USD$60billion of purchases left before this easing completes in March 2022 (USD$30billion per month).
- I am always a little perplexed when I read that the FX market is based upon future proofed market intentions... bullshit.
- When it comes to the FED, they have always 100% fell short of market expectations.
- Yet here we go again 7 x 0.25% rates this year in 2022 was the latest nonsense produced. Many congratulations to the economists at the Bank of America for this prediction... do NOT let these guys pick your lottery numbers.
If the rate hike predictions are not enough to switch you off... do NOT panic.
Only in America can you have the debate on the FED Balance Sheet reduction (Quantitative Tightening) when the Central Bank is still in Quantitative Easing (QE) mode. By the FED Chair Jerome Powell’s own words the FED will not even be looking at QT until H2 2022.
Look, the only report to read, the only voice to listen to about the FED’s intentions is FED Chair Jerome Powell’s. All the rest including regional FED speakers is just a pointless waste of time. If you like listening to well-intentioned total bollocks that will have NO SAY at the end of the day that is your choice, your decision.
So, moving on...
2022 WILL BE A YEAR OF TWO HALVES...
What do I mean with this statement?
Well, it looks obvious, but the halves are not equal. Q1 2022 is one half and Q2 & H2 is the other half.
The two biggest Central banks, the FED and the ECB remain centre stage.
We had the JEROME POWELL show last week and this week CHRISTINE LAGARDE takes over when the ECB meet with a Press Conference on Thursday February 3rd this coming week.
As I see it, until we hear the words from both Central Bank leaders to definitively tell the markets what the story is, we will continue with the market farce called “HOW MUCH, HOW MANY & WHEN”...
Powell has spoken and he is largely ignored as insignificant by the markets as they dream up what the FED should or shouldn’t do.
If that wasn’t bad enough, we have the ECB this coming Thursday, with the ultra-dove Christine Lagarde as leader of the ECB leading the markets through a 90-minute Press Conference about how and why the ECB will sit back and wait.
When you see these (see below) flying down your street you will know that both the ECB have turned HAWKISH with a definite no U-turn possible and news that Hell has in fact frozen over...
I have no doubt that given the HAWKISHNESS displayed throughout the G10 Central banks, there will be those inside the ECB looking for something similar but less dramatic than actually doing anything!
What can the ECB offer a bloodthirsty audience?
I think the ECB can talk positively about: -
- TAPERING: As long as inflation remains at headline / elevated levels and as the recovery from the pandemic Wave Four gains momentum, the arguments about maintaining asset purchases become weaker.
- ENDING NEGATIVE INTEREST RATES: Once Asset Purchases are ended, interest rates can be set to zero. This ends emergency measures, and the ECB will be seen as moving policy without doing anything too dramatic.
- HIKING INTEREST RATES: Moving rates above crisis levels.
... I just added that as a joke!
I do NOT see this in 2022.
INFLATION will be the key driver for the ECB governing council to consider. Remember the ECB represents 19 countries directly via those that use the EUR (the single currency). 19 countries with 1 cheque book has still to prove that it works in my opinion. The geographical and cultural differences make the role of the ECB to be effective in delivery of effective Monetary Policy virtually impossible.
Given the fact that in previous Press Conferences Lagarde has talked about patience, lets hope that she does NOT press the panic button believing that she has to do something NOW!
Look, it’s all about managing the market expectations. Forward guidance is as good as dead in my opinion, I do NOT believe a word that is uttered, it’s accuracy rate is close to 0%.
At the last ECB meeting INFLATION predictions were as followed: -
2021 2.6% (previous 2.4%)
2022 3.2% (previous 1.7%)
2023 1.8% (previous 1.5%)
2024 1.8%
Let’s see if Lagarde revisits these numbers to justify her actions at this meeting.
So, after this week, the FED next meets on March 16th , with the ECB on the 10th of March 2022.
Until March 31st (end of Q1) I expect the “HOW MUCH, HOW MANY & WHEN” circus to continue.
After these next meetings and as we enter Q2 2022, we should have a definitive pathway forward about the next 6 months plans from both Central Banks. I expect caveats to remain vis-à-vis the pandemic and supply chains BUT economics away from these areas should be clear to allow for a policy from Central Banks to give market stability.
I can hear the voices in my head... FFS two more months!
Financial media vomiting a continuous barrage of FED hiking 5, 6 or 7 times and the ECB is priced in for 0.10%, maybe 0.20% by the year-end. I my opinion, its switching audiences off, it’s all just nonsense and hype selling advertising.
I end with two questions: -
- Can you honestly believe that the FED will hike more than 4 times?
- Given their history, do you really expect the ECB to break from character?
The ECB will do their utmost to do NOTHING... NADA... NICHTS... RIEN... NIENTE.
If you want to go deeper to find what I am trading, you will need to subscribe to the WEEKLY FX PREMIUM. I give nothing away in this forum. https://wwww.weeklyfxdrivethru.com
2: THE EDGE
(This section of the blog is exclusive for WEEKLY FX PREMIUM subscribers)
2.1: LIVE TRADES – THE OVERVIEW:
2.2: PLATINUM SUBSCRIBER BENEFITS:
2.3: UNFINISHED BUSINESS – THE ITALIAN PRESIDENTIAL ELECTION:
2.4: WILL THE RESERVE BANK OF AUSTRALIA (RBA) END QE?
2.5: WILL THE RBNZ RAISE BY 0.50%?
2.6: EUROPEAN POLITICAL FALLOUT SCENARIOS:
2.7: HOW METALS PERFORMED IN 2021:
3: THE MACRO / FUNDAMENTAL VIEW:
(This short section of the blog looks forward. I share my macro / fundamental thoughts and views for the coming 3-6 months on factors to consider from my Macro, Fundamental and Geo-Political perspective)
Markets are in a severe RISK OFF mode now as they come to grips with a potential series of aggressive interest rate hikes.
G10 countries are looking to slow down, stop and now reduce the sizes of their Central Banks balance sheets through Quantitative Tightening (QT). If they haven’t started this process, they run the RISK of being behind the economic curve, which brings with it more uncertainty.
INFLATION, which almost every country wanted and fought to try and achieve is now here in what appears a stubborn level egged on by wage inflation, which is permanent.
The lesson here is: BE CAREFUL WHAT YOU WISH FOR...
We now have the ludicrous situation where Major Bank analysts, Hedge Fund managers, Pension Fund managers and other large Institutional analysts are caught in a frenzy of what is basically a lottery without a ticket, trying to second guess what Central Bank Governors, Presidents and similar should do to counter INFLATION.
In my opinion, we will have to deal with this nonsense throughout Q1 2022.
Do NOT lose sight of the bigger picture.
- We STILL have a Global Health Pandemic. It has NOT yet disappeared into the distance when looking through the rearview mirror.There will be more mutations, as we enter what the politicians call the home straight.
- There are STILL SUPPLY CHAIN issues and despite what Central Bank officials think they are, they have ZERO influence in connection with supply chains.In fact, their actions can create more INFLATION (The Assassin of Hope).
- The world DEBT burden is huge. We face RECCESSION conditions ahead as we are taxed to high heaven in an attempt to steady a very rocky ship.
There are other pieces in the BIG PICTURE jigsaw moving forward to slot into position. There will be plenty of trading opportunities this year as Politician’s dither and fumble their way forward aided by Central Bank leaders who frankly are trying to navigate unchartered waters, that most if not all would say, they did NOT sign up for.
and...
Do NOT forget what is going on near to and at the border of Ukraine and Russia.
Moving on...
I think at this point, it would make sense to post here what I consider to be the KEY DRIVERS in 2022. These feature on my ZOOM review of 2021 and look forward into 2022.
My KEY DRIVERS for 2022 are: -
- CENTRAL BANK POLICIES:
Monetary Policy
Divergence (The Central Bank Divergence Trade) - INFLATION / DEBT ISSUES / CREDIT DEFAULTS:
Inflation is a game changer versus the past
Debt Management
Bankruptcies - COVID-19:
Emergence of new Variants
Market Reaction re RISK ON / RISK OFF
Learning how to live with the Pandemic. - SUPPLY CHAIN ISSUES:
- COMMODITIES:
Copper
Oil
If you resonate with my long-term MACRO THOUGHTS and want to get into the trades with me as I develop positions, you will need to subscribe to the WEEKLY FX PREMIUM at https://www.weeklyfxdrivethru.com
4: TRADING PSYCHOLOGY:
For me, TRADING PSYCHOLOGY is a very important key aspect of trading that is often misunderstood or just ignored. How we use our conscious and unconscious minds when trading is crucial to our longer-term trading successes.
Over the coming weeks, it is my intention to cover areas and aspects of trading that may be new to many readers. Sometimes things can be right in front of us, and we cannot see it.
HEAD MANAGEMENT and HEAD MANAGEMENT strategies for consistent success in trading is crucial to long-term success.
TRADING MYTHS
Throughout social media you often see many interesting articles related to trading and specifically Forex Trading. Over the past few weeks there have been a few themes that have been a constant. One of which, I thought I would elaborate on in this section and it is to do with MYTHS about trading.
- TRADING IS EASY:
Trading gets easier once you have back tested a consistent strategy.
In addition there is NO substitution for screen time. - TRADING IS GAMBLING:
Trading only becomes gambling if you do NOT have a TRADE PLAN with a STRATEGY. - TRADING IS A GET RICH QUICK SCHEME:
It takes along, long time and effort to become a consistent and successful trader. - DO NOT USE A STOP LOSS AS IT WILL GET HUNTED DOWN:
Absolute bullshit. Retail traders are simply too small to have any effect on market positions held by large institutions. They are just NOT interested in hunting your stops.
You MUST always place STOPS on your trades.
Personally, I note my RISK in a trade before I place the trade. This is a great discipline to adhere to. - YOU NEED TO HAVE MORE THAN AN 80% PROFIT RATIO TO BE PROFITABLE WITH YOUR TRADING:
It’s all about RISK MANAGEMENT. Your mixture of trades determines your trading Profit / Loss ratio. I know traders who are profitable with their trading with a Profitable trade percentage being 55%. - RETAIL TRADING DOES NOT WORK.
YOU NEED TO TRADE ALONGSIDE THE BIG BANKS:
Look, if you “PLAN your TRADES and TRADE your PLAN” with a clear strategy that has been tested, it works.
The big financial institutions start the FX moves. We as retails get in on the move after its started and get out before the move completes. We take a little bit of the move. Consistency is the critical success factor. - IF I INCREASE THE RISK, I WILL MAKE MORE MONEY:
This has an element of truth BUT, in my experience your TRADE PLAN should dictate your goals and RISK TOLERANCE by currency pair, that allows you to have a good night’s sleep.
5: CLOSING THOUGHTS:
5.1: THE WEEKLY FX PREMIUM – SUBSCRIPTION INFORMATION:
If you like my approach to the market and are wondering what my trades are like from, a live perspective and what is the WEEKLY FX PREMIUM all about, check out my website https://wwww.weeklyfxdrivethru.com
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 via Twitter, TwitLonger and ZOOM.
5.2: THE WEEKLY FX PREMIUM - 2021 PERFORMANCE:
Below is the excel spreadsheet outlining the final numbers for 2021 based upon pips and $$$.
It shows you the potential that was available last year based upon single lot trades. I have used the single “Mini Lot” column to highlight the potential income possible. Obviously, you can use this as a base case to factor up your trading opportunity based upon the size of your broker account and your position sizing based upon your RISK TOLERANCE.
Below is an overview of the WEEKLY FX PREMIUM performance from 2014 to 2021.
5.3: THE WEEKLY FX PREMIUM – 2022 PIP & INCOME PROJECTION:
Below is the excel spreadsheet outlining my income and pip projection for 2022.
It shows you the potential available this year based upon single lot trades. I have used the single “Mini Lot” column to highlight the potential income possible. Obviously, you can use this as a base case to factor up your trading opportunity based upon the size of your broker account and your position sizing based upon your RISK TOLERANCE.
5.4: THE WEEKLY FX PREMIUM - NEW SUBSCRIBER PROMOTION:
To start off 2022 with a bang, I have launched a new subscriber promotion called “DOUBLE UP”. The details are below and can also be found on my website together with lots of other information about me and how I trade. If you want to trade with my thoughts and ideas for the entire year, this will be best the best opportunity to get your FX Trading all set for 2022.
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.
5.5: THE WEEKLY FX DRIVE THRU BLOG – DISTRIBUTION and TIMINGS:
Over the past few weeks the number of questions asked about timing and distribution of this blog have increased, so I thought it prudent to clarify.
DISTRIBUTION and TIMINGS:
- WEEKLY FX PREMIUM (Full Version) subscribers:
Saturday before 5PM New York Time - FREE NEWSLETTER (Restricted Version) subscribers:
Sunday before Noon PM New York Time - SOCIAL MEDIA and COFFEE SHOP
FREE NEWSLETTER (Restricted Versions):
Sunday before 3PM New York Time
Finally, putting this blog together prior to distribution takes many hours each week. There may be occasions that news jumps ahead of some of the content, so please excuse my commentary should that situation occur.
Below are the dates for the DRIVE THRU blog in 2022.
5.6: THE FINAL CUT:
Always remember longevity in Forex trading can only be achieved through trading with a good MINDSET, 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.
Finally, be GRATEFUL for your wins and COUNT THEM. Keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
Scott Pickering
The Pip Accumulator
Twitter: @pipaccumulator
https://weeklyfxdrivethru.com/disclaimer/
BLOG VERSION: #441 FREE NEWSLETTER
DATE: 30th January 2022
TRADING DISCIPLINES and ROUTINES
HEADS YOU WIN TALES YOU LOSE
ARE WE MARCHING INTO A GLOBAL RECESSION?
THE WEEKLY FX PREMIUM: REVIEW OF THE JANUARY 2022 PERFORMANCE… INCLUDING BE CAREFUL WHAT YOU WISH FOR…