I started off this week writing that we could be held captive with a “Will they – Won’t they” feel, vis-à-vis the Ukraine crisis. I set up my mindset this way and so it was. I would call last week a bit of a lost week. Having said that, it was a difficult market to operate within on the basis that FX was very twitchy all of the week. On a positive note, I got many opportunities to look at charts....
In addition to the Ukraine news, FED speak continued at a pace that frankly has reached the place where I can see Jim Bullard and Loretta Mester talking but I can’t hear them anymore.... it’s all blah, blah, blah and yada, yada, yada. Jerome Powell, please make them stop. Once is really enough, twice is for the slow people on Wall Street, but three times repeating the same thing, isn’t that what Twitter’s for?
Jim Bullard wants to front load rates, Loretta Mester wants to back load.... last Friday we had Charles Evans, Christopher Waller, John Williams, and Lael Brainard all adding their thoughts... It’s obvious to me that the FED does NOT understand the inflation path, there are sides, being drawn on the subject.
Look I get it all the FED Presidents have a voice, thank God they all don’t have a vote at the FOMC.
On again, nevertheless, slow week or not I added a few pips.
At the end of last week, THE WEEKLY FX PREMIUM 2022 current position was as follows: -
FEBRUARY 2022 to date:
Total net pips = +315 pips
YEAR TO DATE 2022:
Total net pips = +2,171 pips
2022 pip objective = +14,920 pips
(14.55% 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:
SOMETIMES DOING NOTHING IS THE RIGHT APPROACH
Doing nothing for a valid reason is taking a position in the market despite what you may read or hear to the contrary. There are times not trading is being savvy and we all need to be savvy traders.
As Forex traders we are like deer caught in the headlights. FX is trapped; like it or not as long as the EUR/USD remains in a range and the JPY is twitchy on geopolitical headlines, the savvy thing to do is step back, reduce RISK, observe and wait for clarity and real news before adding to existing positions or adding new trades. Headline driven news weeks in the market are notoriously difficult and last week currencies gave no direction, easier to watch paint dry.
The gamblers out there and there are many of them, take the view it's a coin toss, 50/50 whether I am right or wrong, what the hell let’s go.
We saw last week with news of shells being fired in Eastern Ukraine the immediacy of the FX reaction. The EUR/USD sank 70 pips on the news. If you overtrade, do NOT manage RISK and POSITION SIZE accordingly these flash moves can break accounts, especially if you have two or three trades that reverse quickly.
As soon as we understand that trading is basically boring as it is full of repetition, then and only then can we grasp the required disciplines to trade in the varying types of markets that present themselves.
Now, I am NOT saying that you cannot make money in every type of market, but I am saying you need to be a specific type of trader to trade effectively in certain types of markets. For example, in my opinion, high intensity scalper traders would love what went on at most times last week. Swing to Position traders like myself, we probably hated almost every single minute.
We need, in my opinion, to play the long game when trading. It is a long-term life changing opportunity to give you an abundant lifestyle with endless possibilities. A 100% totally portable business work from anywhere even with just a phone or tablet.
Once you establish a longer-term mindset and attitude to trading missing the odd days trading here and there is not a concern at all.
I always end my blogs with the following statements: -
“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”.
It is a battle with your conscious and sub-conscious mind for new traders about whether or not you should be trading.
As long as you have a TRADE PLAN with clear rules, all should be OK. Certain markets will tell you almost immediately that your trade entry rules are just not in play.
Capital preservation is critical. Feeding brokers with your hard earned $$$ should not be an option that you should be considering. Take time out, explore new strategies, or just take a break.
2: THE EDGE
(This section of the blog is exclusive for WEEKLY FX PREMIUM subscribers. It is combination of Charts, News, Central Bank oddities, Clarification points and general issues we face as FX Traders).
2.1: INTEREST RATE HIKES – THE BANK OF ENGLAND (BOE):
2.2: INTEREST RATE HIKES – THE BANK OF CANADA (BOC):
2.3: INTEREST RATE HIKES – RESERVE BANK OF NEW ZEALAND (RBNZ):
2.4: INTEREST RATE HIKES – THE RESERVE BANK OF AUSTRALIA (RBA):
2.5: INTEREST RATE HIKES – THE FEDERAL RESERVE (FED):
2.6: INTEREST RATE HIKES – EUROPEAN CENTRAL BANK (ECB):
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)
Geopolitically, hanging over “everything markets” at the moment like the “Sword of Damocles” is the “Will they – Won’t they” invade scenario of Russia over the Ukraine.
In the currency world, RISK sensitive currencies like EUR, JPY and CHF are very, very twitchy on any headlines vis-à-vis troop numbers and troop movements close to the Russia / Ukraine border.
Financially, we are in a huge period of uncertainty once again as both the Markets and Central Banks come to terms with what’s next.
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.
We recently saw the opinions from the Reserve Bank of Australia (RBA), The Bank of England (BOE) and the European Central Bank (ECB), confuse rather than provide clarity. The result is... more uncertainty and increasing speculation, which frankly is NOT what we want.
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 maybe naively 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 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.
I think at this point, it would make sense to post here what I consider to be the KEY DRIVERS in 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: HEAD and RISK MANAGEMENT:
Over the past few months (September thru December 2021), I looked solely at HEAD MANAGEMENT (TRADING PSYCHOLOGY) as an area of trading that is often left behind by many traders.
From my experience and perspective this is an area of trading that needs constant work and understanding in the ways to improve you as a trader and improve your trading consistency.
Over the coming weeks, I want to add, not just my thoughts, but also those from traders I respect as to why HEAD and RISK MANAGEMENT go hand in glove for serious FX Traders.
Why do these aspects of trading combined drive consistency?
Please forgive any repetition from what was written last year, at times it is impossible not to repeat gems that have stuck with me and today resonate as strongly as they did when I first came across these gold nuggets of success that have stuck with me throughout the past 10 years or so.
As in previous sections of this area of the blog, the pieces added each week will be quite short but over time they will build up into several pages of useful information that should add value to your trading.
C: HOW TO CONTROL YOUR EMOTIONS:
I know that I write about this constantly. The key fundamental aspect of Forex Trading Psychology involves managing and controlling your emotions.
So, how do you beat your emotions in trading?
Within Forex Trading Psychology, the first step is understanding your emotions. Once you understand them, you will be more capable of recognizing unhealthy psychological patterns and states of mind and then react in a way that can protect yourself.
These psychological biases are relevant to Trading Psychology in Forex and in any market. They are NOT specific biases that are important only in the psychology of trading Forex, the psychology of trading stocks or the psychology of day trading. A trader who is aware of them will be better protected while trading in any market.
Lesson #1 on gaining an edge in Forex trading psychology is to watch out for trading euphoria. We as humans are naturally self-focused. Our egos want to be validated by proving that we know what we are doing, and that we are better than the average person. Any hint that confirms these thoughts only reinforces our self-image by a distinct feeling of self-love.
In trading psychology in Forex, the problem is that this is where traders are most likely to succumb to OVERCONFIDENCE BIAS. It is NOT uncommon for traders to complete a winning trading streak and then simply believe that they cannot put a foot wrong moving forward.
To believe this is, of course, unwise, and is only going to end in failure. Make sure you always analyze your trading sessions and look at your wins and losses in detail. Keeping and MAINTAINING a trade journal in an honest way is a key aspect of beating your emotions in Forex psychology.
This is the only way that you can stay on top of your trading. Allow yourself to make mistakes from time to time, and in the same vein, don't make the mistake of being scared to prove yourself wrong. In the long run you will be in a much better position as a trader.
Although difficult, a good habit to maintain for your Forex Trading Psychology is learning to be comfortable with accepting that mistakes are inevitable, especially in the early stages.
It is all part of the learning curve and your development of your trading psychology in Forex.
The next bias is about mental comfort zones that are created by traders when performing market analysis, by ultimately thinking that the future will be the same as the present, purely based on the reason that the present appears to be like the past.
ANCHORING is a tendency to rely on what is already known to a trader for decision making in the future, instead of considering new situations and the changes that they can bring. At times, ANCHORING tends to cause traders to rely on obsolete and irrelevant information, which of course won’t help them trade successfully.
The following is the big point here, which as a POSITION TRADER one can see straight away, that is, that in practical terms, this aspect of trading psychology in Forex manifests itself in traders holding losing positions open for too long, simply because they fail to consider the options that are outside of their comfort zone.
In developing your psychology of Forex trading, you must NOT be afraid of trying new things when trading Forex, be willing to try new strategies, and go against what you know. By ANCHORING yourself to outdated strategies and knowledge, you’re only increasing the probability of bigger losses.
Next week, I will go deeper in this area with two more biases.
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 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
Twitter: @thepipaccumulator (Open feed)
BLOG VERSION: #444 FREE NEWSLETTER
DATE: 20th February 2022