Just when a lot of conversations were starting to sound a little complacent, a BEAR market BITES BACK...
- U.S. earnings starting to look shaky
- Equity traders (always) last to the party crap the bed
- All U.S. markets take a beating, especially the NASDAQ
- The rotation trade falls flat... where now the only place for yield is equities?
- Crypto currencies get whacked
- FED speak pre-FOMC blackout, remained consistently HAWKISH
“BUY THE DIP” has NOT been working. Many traders on Wall Street know nothing else than “BUY THE DIP” because the belief is that the FED will always have their backs. If the FED screws up the pathway to normalisation, they will have the equivalent of a mutiny on their hands and should “Main Street” see 401k values crater the Democrats will be fucked over at the mid-terms, if they are not already at that precipice already. President MANCHIN, apologies President BIDEN already a “LAME DUCK” in the Oval Office?
Jesus, Mary, and Joseph, I read last week that the FED will not want to make a policy mistake. FFS, with inflation at 7% and in the past inflation being described as TRANSITORY being nothing but rhetoric used to pacify the markets, the policy mistake has already happened.
Yes, maybe not time to put out the bunting across the office and roll up one’s trousers and place one’s feet in buckets of sand. That type of celebration definitely not on the cards.
From an FX perspective, FX woke up and many pairs are at extremes verifying the limits of trading ranges... will the ranges hold? Well, the jury is out, simply because traders will have one eye on the FOMC meeting this coming Wednesday 26th January 2022, and they will NOT want to be too aggressively positioned despite the current factors in play.
I continue to bank pips via THE WEEKLY FX PREMIUM; however, I am amassing a little more RISK given the market uncertainty about the FED. I still find it mental that we are listening to tightening talk 24 x7, yet we are STILL in an accommodative phase of FED Monetary Policy.
At the end of last week, THE WEEKLY FX PREMIUM 2022 current position was as follows: -
JANUARY 2022 to date:
Total net pips = +1,231 pips
YEAR TO DATE 2022:
Total net pips = +1,231 pips
2022 pip objective = +14,920 pips
(8.25% 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
1: THE SOAPBOX
“THE ASSASSIN OF HOPE” – THE BOE WILL HIKE IN FEBRUARY
Despite a mix of good and bad data vis-à-vis INFLATION, JOBS and RETAIL SALES, I expect that Andrew Baily (The unreliable boyfriend 2.0), Governor of The Bank of England will announce a hike in UK interest rates of 0.25% on February 3rd, 2022.
The story of the UK economy and the pressures that are coming down the road on domestic finances in Q1 and Q2 cannot be under-estimated. These will be crippling for most households, and I have no doubt that the Government will act to help BUT, in the interim, the BOE has NO ALTERNATIVE but to act and try to contain the onslaught of higher inflation risks that are on the way to the UK in April.
Let me step back and briefly build up the picture I have...
Headline inflation announced last week was at 5.4% in December. No real reason to pinpoint why, but it looks like a combination of higher import prices and producer cost inflation are the main culprits.
The big month ahead for the UK is of course April when the energy gap on prices is set to be removed and energy prices will rise by about 50%, and could add a whopping average of £600.00 per month to household bills, resulting in an April inflation print of c.6.5%. Even if the government was to exempt VAT on energy, which is being muted, the standard rate is 20%, it would still leave a chunk of an increase.
Economists predict UK inflation to “plunge” in 2023, BUT that is a long way off right now. I believe the BOE will act based on what they have to deal with today NOT what “could be” at some potential date in the future.
When I look at the macro numbers, it does appear that the UK JOBS picture is back at the pre-pandemic levels.
The latest UNEMPLOYMENT RATE was 4.1%. The Omicron effect was not a significant impact. Wage growth looks to have slowed, but it is hard to cut through the data because of Covid-19 distortions but reading the CBI data they talk of skill shortages in certain areas. They also highlight that immigration changes maybe the reason why. The CBI especially focusses on Transport and Logistics, truck driver shortages.
UK employment is always robust, and there is still a rebound, maybe more modest than initially expected as Covid moves to the rear-view mirror, therefore expect some employment growth. I see it that the UK jobs market is strong enough for rate increases this year as well as the BOE starting “Quantitative Tightening” in tandem.
If the BOE wants an end 2022 interest target of c.1.0%, there is nothing in the jobs area to hold back 3 or 4 rate increases this year.
UK RETAIL SALES:
Retail Sales in December fell by almost 4% compared to November 2021. Similar to the U.S. Christmas shopping was completed earlier this year because of the warnings over Supply Chains issues.
Analysts are also claiming that October sales though Black Friday sales distorted the numbers in Q4 2021.
It is expected that Retail Sales data in 2002 will be under significant pressure based upon what is seen from Q2 onwards as a significant drop in disposable household spending power.
This data should NOT stop the BOE from hiking in 2022.
The UK certainly has uncertainty ahead, but then so do ALL the G7-G10 countries as we move to monetary policy economic tightening across the globe.
INFLATION is the “ASSASSIN OF HOPE” and as such, Central Bank’s want a little inflation c.2% but much beyond it has a tendency to stick and start creating a roll-up of inflationary pressures from all areas of the economy that ultimately becomes hard to cut out, never mind try to contain and control.
With a greater inflationary burden looking to be on the cards, the BOE will, in my opinion, commence its policy shift sooner rather than later in an attempt to control the issue and the narrative. The BOE will NOT want to be criticized about being behind the curve and look like idiots like the FED.
This is the main reason I see the BOE acting next month.
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: NORGES BANK HOLDS STEADY AT 0.50% BUT MARCH HIKE IS ON:
2.2: THE ECB AND TRANSITORY:
2.3: FRANCE ELECTIONS – APRIL 2022:
2.4: ITALY ELECTION DATE – 24th JANUARY 2022:
2.5: CENTRAL BANK MEETINGS THIS COMING WEEK:
2.5.1: THE BANK OF CANADA (BOC):
2.5.2: THE FOMC (U.S. FEDERAL RESERVE):
2.6: PLATINUM SUBSCRIBER BENEFITS:
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.
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:
Divergence (The Central Bank Divergence Trade)
- INFLATION / DEBT ISSUES / CREDIT DEFAULTS:
Inflation is a game changer versus the past
Emergence of new Variants
Market Reaction re RISK ON / RISK OFF
Learning how to live with the Pandemic.
- SUPPLY CHAIN ISSUES:
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.
SOME TIPS TO KNOW
Continuing with some tips you should have for Forex trading. The previous, what I call crucial, key, fundamental basics that you need to always have at the front of your brain are listed below.
- DON’T TRADE WITH MONEY THAT YOU CANNOT AFFORD TO LOSE:
- AVERAGE GAINS ARE WHAT MATTERS:
- TAKE A BREAK IF YOU ARE HAVING A RUN OF POOR TRADES:
- DON’T SHARE THE MARKET’S SENTIMENT:
- REMEMBER... THE MARKETS ARE RANDOM:
To close this series on TRADING PSYCHOLOGY, I am going to list and answer a few of the FAQ’s that consistently come up from traders that approach me.
Talking about TRADING PSYCHOLOGY I have always found that some FX traders are into it and understand it being a key attribute to success and longevity. Others, frankly, believe it to be nothing more than hogwash.
Those who I have connected with who believe this subject to be hogwash are in most cases no longer trading. Those who are still active as FX traders, I suspect have deep pockets.
It’s very hard when discussing TRADING PSYCHOLOGY not to be in abstract. To a large extent it is the nature of the beast, when dealing with emotions and irrationality.
However, no knowledge, no matter how abstract, is worth diddly-squat unless it can be broken down into actionable tips.
6. TRADING PSYCHOLOGY – FAQ’s:
6.1: HOW DO I STAY CALM WHEN TRADING?
Over the past 10 years or so of my trading history and without doubt since I started by subscription service in 2014, I have lost count of the numbers of times I have used the words and phrases; Be Patient, Patience is required, I am just sitting and waiting, and I am just twiddling my thumbs. It has to be well, well into triple digits.
To stay calm, you need a “Rock-Solid” framework that you can rely on.
This means that you have to develop a strategy and continually tweak it as needed until you feel confident that it can achieve solid and consistent profits.
Basically, have a PLAN and TRADE YOUR PLAN.
6.2: WHAT PRERCENTAGE OF DAY TRADERS FAIL?
I am asked this even today, and I am a long-term POSITION TRADER!
My subscription service is a broad church and it will cater for all types and styles of traders.
All I can add here is what I hear and note from a broad range of contacts that I have built up with over the 10 years. I know from my Trading Groups directly what their numbers have been and from my “Peer Group” and their subscribers where applicable.
I have asked my brokers but they are reluctant to give away such information.
My call here is that 80% of Day Traders last between 18 months and 2 years. Recently many of the “gamblers” have moved to crypto currencies. No surprises there then!
6.3: DO I FIND TRADING STRESSFUL?
I suppose at the core FX trading is inherently stressful, however with a good grasp of TRADING PSYCHOLOGY and MARKET PSYCHOLOGY a huge chunk of that edge can be removed.
6.4: HOW DO I OVERCOME FEAR WHEN TRADING?
This is simple and straightforward. Do NOT trade with money that you cannot afford to lose and always, always, always have a TRADE PLAN and TRADE YOUR PLAN.
Having a strategy is crucial and a key success factor.
6.5: HOW DO I CONTROL GREED WHEN TRADING?
Over the years I decided that you NEVER lose money if you are banking profits. Even if your exit is perhaps a little early.
I set large limits but 75% of the time because of my approach I am exiting trades with anything between 50 and 150 pips profit. Having multi-layered trades my approach can be flexible.
Trading with LIMIT ORDERS is also a great tool and discipline to have as it makes you enter your trades with greater accuracy.
A little from a lot is a phrase I often use to my FX PREMIUM subscribers.
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.
The Pip Accumulator
BLOG VERSION: #440 – FREE NEWSLETTER
DATE: 23rd January 2022