The massive upward move seen in USD here overnight, and now this morning has put a reasonable dent in some of my medium term trade plans not to mention my ego.
Surprisingly a couple of trades entered days ago are “only now” a couple hairs underwater – and for the most part are of little concern. Both AUD as well NZD are still basing and are at more or less the same levels as back on June 28th, and USD /CAD has only popped an additional 40 pips
I don’t trade EUR /USD.
One of the biggest “rookie mistakes” I can point out – is that of looking to evaluate “dollar strength or weakness” as it pertains to only EUR/USD. This currency pair will flip and flop out of “default” as being the two most widely held currencies on the planet, and serves very little purpose in evaluating risk appetite or aversion.
I’ll get hammered here today by newbies suggesting I “go buy those habaneros” and get working on the video this weekend….but wait – I’ll bet you’re looking at EUR/USD and think you know a thing or two about forex.
Otherwise – I will give this a day or two to play out – as the move “is” still quite surprising to me. USD made a “lower low” back in mid June, and has now rallied the entire way back ( on daily charts ) to create a new “higher high”! In all my years of trading I can honestly say I’ve never seen a “wash out” like that – on this relatively large a time scale.
I am suspect of the move – but that’s my nature anyway.
If you enjoy the content at iBankCoin, please follow us on Twitter
Haha hey good morning, Kong.
I for one am completely fine with the USDCAD action today. I expected ugly and didn’t really get it. I am actually just about to put my real order in now. Getting back to profitability now won’t be hard.
I trade the EURUSD once in awhile but only on technical short term trades. I for one have found the euro a little puzzling at times. Sometimes outright euro bearish news comes out but the market likes the pump so the euro increases. Makes it a tricky trade. When I first started I admittedly did trade it more than I do now.
Thanks for the posts man. How is the sun today? Probably a little toasty I am sure. It is finely getting nice in Kelowna….finally.
How or where did I miss that you are in Kelowna??
I’ve got an old friend living there – the guy parties like a rock star.
Ya this USD move is like nothing I’ve ever seen – and highly suspect. I know I’ve been saying that for what might sound like “forever” but this is a wopper. A complete wash out both sides long n short over the past two months – like someone takin an eraser to the chalkboard and WIIIIIPE!
Short is the only direction for me….but the turn is a real grind.
Sun is beaming down here this a.m – a beautiful day here.
Ya man I was born here then moved away to Vancouver for about 10 yrs. Then, came back to Kelowna several years ago. Kelowna can certainly be fun. If you ever feel like shooting me your friends name to see if there is any six degrees of separation feel free to message me at [email protected]
Ya, I’m alright with today’s action. My ES puts went back in black. My gold contract pulled back to close to breakeven. I am interested to see what happens with gold in the next few session as there is potential for the dollar down gold up relationship to come back.
Enjoy the sun. I love that part of the world.
Kong..Took Wed off, that is why I wasn’t around. Today I can’t wait to see the market without its POMO buying in it…
Sort of don’t understand why looking at the Euro or even trading the Euro is a rookie mistake. Considering the Euro is weighted about 58% in the Dollar index, there will be spillover effects into other dollar crosses.
The risk off and risk on mentality seems to have faded. Over the last 4 years, the fx market has been driven by this mentality due to the rate differentials between risk currencies. This dollar ramp up from the start of the year with the S&P500, AUD is the worse performing currency. It is even worse than JPY. Risk was bought, but AUD and NZD were dumped. The market seems to be driven by rate differentials more than anything else. The RBA is loosening monetary policy along with BOE and ECB. At the same time, the Fed is being perceived as tightening policy. Also, it is the first time in years the US is seeing positive real rates.
Hux.
Great stuff – and yes as you’ve outlined above, any of the usual “risk on/off” correlations have gone out with the bath water as of late – making things even more so difficult for the newbie.
I should have been more clear. My feelings about EUR ( specifically the EUR/USD pair) is that this pair is widely marketed to new comers as “trade the pair with the most liquidity ” trade the pair with the lowest pip spreads” open an account with 500 and trade EUR / USD with near “0” spread etc….
Im hit up daily by newbie traders with high flying ideas about the global economy and the “plight” or “rise” of USD / the planet etc – based soley on movement in the pair.
As well – I’m not sure if you actively trade smaller time frames but EUR/USD notoriously bangs stops/ flips technical patterns / as being so widely traded by retailers.
Perhaps it’s more a personal thing – but I generally leave it well alone.
Yea that is understandable. I know traders who have an absolute disdain for that pair as well. They much rather trade Usd/Chf, but that pair was at one point so correlated to Eur/Usd due to the CHF peg at 1.2 against the Euro.
Yea definitely do not trade any time frame below 4h. There is no reason compete with HFTs’ b/c you will lose.
The run stop on this pair can create long wicked tails due to the retail order flow like you were saying. The run stops do create great opportunities though, if you know where the technical stops are held.
someone talk and media also sometimes report that ‘risk on/risk off” no longer apply. I get nuts whats really mean. I think RORO big picture always exist all time in currency market. And there s only three global condition on most grander scale a.k.a risk- off ( market seek safety/liquidity as utmost priority and forget yield completely ), then risk-on (market start seeking yield as main priority) and the last is mixed condition where both side are uncertain and indecision. Any idea Kong, what its mean risk off risk on is ‘dead ? I m not believe it
Carry trade?
Any quick reference site to know the cost of carry (interest rate) for each currency?
http://www.fxstreet.com/economic-calendar/interest-rates-table/#
Let me know but I think that’s got it.
Thanks!
I bookmarked it!
Always is great to read your blog and learn so much.
What are your thoughts on “expert advisors” and trading bots?
Is it worth looking into them to find a good system to put on autopilot or learning programming to learn to make one?
They sound great in theory but I know things in theory don’t always work out in reality.
I use the metatrader platform for some of my charting yes, as well have my own proprietary indicator developed as part of my short term tech yes.
I don’t believe “tradebots” actually exist, and have never ever actually spoken to a real person who actually has their trading automated.
I do believe there are lots of “signals” / “alerts” that can be developed to save a trader time sitting at the computer for sure, and their are lots of talented programmers out there to help you.
Call me whatever you like and yes I know about China and potential rate cuts but I’m looking at AUDUSD for a potential long now
I already am long!
Alrighty then! Didnt know AUDUSD was in there too. How was the weekend, Kong?
The entire town shut down for elections the entire weekend so…..very slow and quiet here.
They shut down all the beer/alcohol sales for the entire 2 days as well….not a single little store / nothin with hopes that people will “get out and vote”.
I’ve suggested they just open a bar at the polling stations and kill two birds with one stone!
No word back on that yet.