To say that what we witnessed over the past 7 days was a typical week in the life of a Forex trader would be rather misleading in my view. It was a challenge. A challenge from many aspects, and dare I say it, moving forward, probably a typical example of what we are going to have to deal with.
As a longer-term position trader at heart, I have struggled with this approach off and on since the financial crash of 2008-9. At the moment, I am adapting to the TRUMP approach. That statement covers a multitude of factors. Like many traders I was wrongly positioned with trades at the outset of 2017, and I have been working my exits. I believe it will take me a couple of months to re-position myself for moving forward and I have my plan formulated.
With trading, I always have a trading plan. People may not agree with it, but as long as I have my plan, I have something to trade with and I have my goals. Forex trading is long haul for me. If I have to sit back for a week or so… so be it. Forcing trades is NOT the answer.
We are trading in very difficult times; I know of three traders who ended trading Forex last week. It is hard, challenging and just to keep your head above water is a good result in my opinion at the moment. If like me, you are losing money, you are not alone. At least I will tell you how it is. I want to remain truthful to you on how I am doing. I have been here before and I got through it, and by the end of this year I will be back in black again pushing the 10,000 pips profit goal. But bear in mind many traders are being squeezed out and accounts are being nullified.
The larger institutions were trying to exit upside down positioning last month and this added to the volatile quite strange moves at times. As retail traders, we operate on their coat tails. If the market moves are directionally difficult to understand and we try to follow blindly, this is no better than gambling in my opinion. For this reason, I can understand many retail traders getting caught up in moves and many would have had the rug pulled from beneath them in the volatility.
You hear traders sometimes say they love volatility. This is basically on most occasions nothing more than pure bravado. I have a massive issue at times about supporting such statements. I trade to make money. I could not give a sh*t about volatility, I want direction. Volatility to me means winners and losers… that is gambler talk. There is a place for gamblers it’s called Las Vegas, off you go. Very simply “Direction = Money and Money = Profits”.
Last month, I recorded a loss of 793 pips. There may be slight losses again in February as I work out of older trades with my trade plan. But these losses should be slight as new trade profits will cover the old trade losses… at least that is my plan!!
Before TRUMP and after TRUMP thankfully, I have been trading nothing more than between 10% and at the most only 50% usual position sizes, This has helped, financial losses have been small and manageable but pip losses higher than usual as I work through my positions to exit.
I am therefore in transit mode for Q1 2017. I will write about this next week.
PREMIUM SERVICE subscribers know already that for the latter part of last week I was enduring computer work on my main machine, and it has been offline for the past 60 hours or so. What was deemed to be a software issue due to a bad upgrade which was mainly affecting “Office for Mac” and “MacMail” turning out to be an exacerbated issue as my fusion trade connection was malfunctioning. “Bloody Technology”, as someone commented to me last week… yes indeed. Since buying the most expensive machine possible from Apple, since the sierra ios upgrade, I have had 4 months of hell. It is now fixed? Not sure, I still have to complete the re-build. You forget that you have so much on your machines. Adding back stuff will be on-going for a while.
The bottom line was that yesterday; I did not think that I would have any sort of blog delivered. This week’s DRIVE THRU is short but I am happy to have gotten something out within the time constraints available.
I am going to use the week in the USA “TRUMPANTICS” as my “SOAPBOX” piece this week, as I did not have time to research and prepare an article. This would have normally been included here in this section.
The BOJ held policy and defended TRUMP finger pointing as currency manipulators.
The BREXIT was the other main issue last week. The BOE, and JCB driver extraordinaire BOE Governor Mark Carney issued his Inflation Report and Policy statement.
Very soon, Carney is going to appear wearing his kickers over his suit pants and a cape over his jacket. Jesus, Mary and Joseph… watching Carney at times it’s a case of “I love me who do you love?” Bring on the dry ice and play “Jesus Take The Wheel” on his entry to these meetings, they are times dramatic and delivered almost in a style as if he was on a Broadway or West End stage. What’s next pure theatrics.
The bottom line was that Theresa May with all the huff ‘n puff over a hard BREXIT (I still do not get this soft or hard BREXIT crap) was firmly put in its place by a dramatic reality check by Carney. The cable pulled back from the brink of a test of 1.2775 to now sitting just below 1.2500 at the close of the week.
Moving on… “LIVE Broadcasts – THE WEEKLY FX DRIVE THRU – LIVE”.
If I were critiquing my performance, I would say broadcast #2 was better than #1. Much less technical. #3 should see further improvements
#3 is on Monday 30th at 5:30PM will be a little easier.
- You need Google Chrome as a browser to attend.
- You cannot view on smart phones or tablets, only Laptops and Desktops.
The link is below: -
Finally, in this section…
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- THE FX MARKET PLACE – LOOKING FORWARD:
NOTE: This year, 2017, I am not going to look backwards in this section only forwards. News items / points of interest from the prior week will be covered in the introduction.
ECONOMIC DATA RELEASES:
MY THOUGHTS ON THE WEEK AHEAD:
It’s all Commodity currency related this week for me.
Several items catch my eye this week: -
- AUD - RBA: We have an interest rate decision; a rate statement a Monetary Policy statement and Governor Lowe also has a session in front of the gathering press.
Therefore; it's a busy week “down-under” so to speak.
I am not expecting any change in policy other than confirmation of a neutral position looking to keep rates unchanged this year.
- NZD - RBNZ: That charming man Graeme Wheeler will be in the drinks cabinet again pulling out a few bottles of Cloudy Bay for the gathering press ensemble to hear him drone on about how 80% of exchange rate control is out of his hands. I am not expecting any major changes at all.
We also have the dairy auction prices to look at as well prior to Wheeler’s soiree. But the bigger news should be the RBNZ for obvious reasons.
- CAD: We have Trade balance and Jobs data this week. These two pieces of data are key for me. TRUMP is dominating the CAD at the moment with pipeline executive orders and trade agreement bullying.
Yer man from the BOC, Governor Stephen Poloz will be an anxious on looker this week to see does his recent comment about interest rate cuts need to be moved up a notch or two.
If it weren’t for TRUMP and OIL, the CAD would be a great trade longer-term!
All in all, it will be a heavy week, with little sleep. However, even with all this data and information about to be directed our way, I am still not certain that we will have the clues we need moving forward into the medium term.
Nothing major on the docket vis-a-vis the US this week. However, I am certain THE DONALD will fill the void. In addition, do NOT rule out BREXIT and the EUROZONE. These three geopolitical heavyweights can turn markets on a dime.
Uncertainty and, to a large extent, confusion rules!
USD MAJORS – “IMMEDIATE” SUPPORT & RESISTANCE with TREND:
My trade charts for the USD majors are below. My thoughts, views and commentary is written on the charts.
You will find my charts, hopefully easy to follow. I only use Fibonacci levels, trend lines, confluence points and sometimes chart patterns to identify my high probability trades. If you have any difficulty understanding the points that I am trying to make, please do not hesitate to contact me.
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- SCOTT’S SOAPBOX:
Last week world news was once again being dominated by “TRUMPANTICS”. We are dealing with a child as a President. I admire the fact that for once someone in office is doing what they said they would do, however, like his policies or not, that is refreshing. It is the fact that he cannot conduct himself in a Presidential matter that takes a lot of getting used to and the TWEETS we just should adjust to.
We now have Federal Judges involved with the Executive Orders over the “travel ban”, this means more diversions, more uncertainties for the markets to absorb and react to.
Great jobs numbers all around in the USA last week. ADP and NFP blow out numbers. Wage growth was not a good number when it was released at the same time as NFP and the markets reacted poorly. It was too big of a negative reaction in my opinion. I expected with these numbers to see the DXY back at 101.00. We closed the week at 99.73.
My fear moving forward is the FED will remain on hold for most, if not all, of this year. This is a change in monetary policy for the USA and will suit the TRUMP plans to keep the USD weaker.
The FOMC held rates unchanged last week and Janet Yellen was quite dovish in her language used in the released monetary policy statement. This is at the root of a sea-change that I believe is starting to happen.
I can see confrontation ahead between TRUMP and the FED which will of course call into question the independence of the FED. TRUMP could not give a rat’s ass about that, he wants total control. This ripple of a change that we are witnessing at the moment could be a full-blown tsunami within days if TRUMP starts on the TWEETS with FED policies, Yellen and the FOMC.
FED monetary policy worries me; I am NOT convinced. I do NOT care what the clever people on BLOOMBERG and CNBC say. They all got TRUMP wrong and the effects of TRUMP wrong. The FED can change policy based on uncertain markets and domestic policy. They could re-assess inflation targets to 3.5-4% given the massive changes planned by the TRUMP administration. That means rates possibly on hold until 2019.
If Janet Yellen wants to keep her job she may have no choice.
Janet Yellen is a dove; she always will be. It’s easier to be a dove than a hawk. TRUMP wants a weak USD. Low rates forever gives him this. FED policy could be changing. Otherwise Janet Yellen…you’re fired!!
This is a biggie.
Take care and maybe re-evaluate your tactics. I am in the middle right now of looking at my trading plan moving forward reassessing my risks.
- CLOSING THOUGHTS:
Nothing more to add here, I have said enough except,
Always remember longevity in Forex trading can only be achieved through trading with good RISK and MONEY MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility.
Take care, have a great trading week.
The Pip Accumulator
BLOG VERSION: #230 FREE NEWSLETTER
DATE: 5th February 2017