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  • #401
  • Oct 20, 2017 1:38pm Oct 20, 2017 1:38pm
Quoting The Cheetah
One of the geopolitical market movers that has drawn attention this week is the seeming imminent pick of a FED chair by President Trump. What do you think the implications of Trumps' pick will be? I think if Trump picks Powell, Taylor, Warsh, or Cohn, this is going to have short-term positive impact on the USD. I think that the market will read this as a positive sign that Trump is going to role back the Obama regulations on banks. If he picks Taylor that might be the biggest market mover because Taylor favors more aggressive rate hikes. If he picks...
Very insightful post. Thanks
Great to have you here with us @ The Cheetah.

A political event such as this which directly affects monetary policy... I suspect the impact on the dollar will be much more sustained.


On the NZD front.. don't know if you've read it, but this article is a good read: http://www.marketwatch.com/story/her...der-2017-10-19

It is interesting to read the analysis on how the result of this NZ election could have a direct bearing on monetary policy and the exchange rate going forward.
  • #402
  • Oct 20, 2017 2:40pm Oct 20, 2017 2:40pm
Quoting The Cheetah
{quote} Congrats on this trade! It is a great example of how figuring out the implication of forming a governing coalition on the markets. Over the last few month's I have been concentrating on figuring out how to read the tea leaves as related to the impact of gdp, employment, and inflation on interest rate biases and expectations. That has brought me a long way. Often when I think about the geopolitical events, I tend to focus on the geopolitical surprise. However, your approach really helped me see that there are a number of geopolitical events...
Welcome to the thread...

My comments below as (Fader);

Congrats on this trade!

(Fader) Thank you

It is a great example of how figuring out the implication of forming a governing coalition on the markets. Over the last few month's I have been concentrating on figuring out how to read the tea leaves as related to the impact of gdp, employment, and inflation on interest rate biases and expectations. That has brought me a long way.

(Fader) Excellent. Its a great way of measuring the strength of an economy. They tend to go in waves. - Look at the CAD over over last 6 months.

Often when I think about the geopolitical events, I tend to focus on the geopolitical surprise. However, your approach really helped me see that there are a number of geopolitical events that we can plan for. Now I can see that in addition to thinking about central banks and monetary policy, I have focus on the potential impacts of geopolitical events on fiscal policy.

(Fader) You can also trade political sentiment. Look at the pound over the last couple of days. It has been driven by how well PM May is doing in her negotiations in Europe. Two days ago - there seemed to be no chance of a trade deal - pound dropped and today it seems back on.

Perhaps, as a U.S. citizen, my first step should be getting a better handle on parliamentary, coalition-style governments.

(Fader) Focus on what traders are looking at. They all have Reuters or Bloomberg terminals. These are the people that drive the currencies. You can get the same information for free off their websites.

Now that you are in the "Winston" trade, how are you managing it? What are your targets for exiting the trade? I should note that I got into the Winston trade a bit late. I sold NZDUSD @ .7028..

(Fader) In respect of the NZD trade, I need to review everything - on how the new government is going to proceed, before making a decision. My initial thoughts are its not looking good for the Kiwi. But you would expect some sort of statement from the government. There have been rumours of a change in heart over immigration.
  • #403
  • Edited 3:33pm Oct 20, 2017 3:11pm | Edited 3:33pm
Fader, as I contribute, I will probably have some questions for you.

ok.

In one of your posts you mentioned that you were trained by an institutional trainer.

(Fader) I went on the Jarratt Davis course. This really introduced me into what drives the markets.

How did that happen?

(Fader) Mainly because I thought who is the best fx trader I could learn from. He was ranked the 2nd best in the world over 8 years by Barclay Hedge. How could I not win. Candlesticks and pa alone were not doing it for me. I had no idea why price moved only that it did. And this bugged me more than anything else.

How did you develop that relationship?

(Fader) It didn't, I went on a course. But I was in their Facebook group for a while, but I was getting people asking me to train then on how to trade. Also there were a lot of new people there. In respect of Jarratt, he is very knowledgeable - and I really rate him as a trader. He really knows what he is talking about.
Trading really is an art- but research is everything. My background is examining legal documentation for financial institutions, so this type of trading suits me.

What was the most important lesson you learned from them?[/quote]

(Fader) Lots of things really;

The main one I had to figure it out myself really- its a change in interest rate bias from a central bank.
Also waiting for the macroeconomic picture to change from being positive to negative.
The inter-relationships between currencies and commodities.

Hope this helps

Fader123
  • #404
  • Edited 3:39pm Oct 20, 2017 3:28pm | Edited 3:39pm
Quoting The Cheetah
One of the geopolitical market movers that has drawn attention this week is the seeming imminent pick of a FED chair by President Trump. What do you think the implications of Trumps' pick will be? I think if Trump picks Powell, Taylor, Warsh, or Cohn, this is going to have short-term positive impact on the USD. I think that the market will read this as a positive sign that Trump is going to role back the Obama regulations on banks. If he picks Taylor that might be the biggest market mover because Taylor favors more aggressive rate hikes. If he picks...
Nice post -

Perhaps we need so research to see what the effect on the dollar was - when the previous Fed chairs were appointed.
What was the bias of the chair before nomination (hawkish, neutral,dove)
How long did the move last etc...

Then we will know if its something worthwhile trading.

However, with my thinking hat on I would still expect a decent move on this.

Subject to research, it will necessitate a full review of the candidates and their likely impact on the dollar

In respect of the timing of the decision - we could investigate which channel is most likely to be used and then be prepared

And....welcome to the thread.
  • #405
  • Oct 21, 2017 10:01am Oct 21, 2017 10:01am
Quoting 4rXal-ghul
{quote} On the NZD front.. don't know if you've read it, but this article is a good read: http://www.marketwatch.com/story/her...der-2017-10-19 It is interesting to read the analysis on how the result of this NZ election could have a direct bearing on monetary policy and the exchange rate going forward.
Thanks for the welcome! I am hoping to contribute to a rich, engaging discussion about fundamental trading.

I had not read that article, but I've read similar. Looks like I am going to be reading the NZ newspaper headlines this weekend.
  • #406
  • Oct 21, 2017 10:29am Oct 21, 2017 10:29am
Quoting Fader123
{quote}
(Fader) Focus on what traders are looking at. They all have Reuters or Bloomberg terminals. These are the people that drive the currencies. You can get the same information for free off their websites.
In 2010 and 2011, I spent a lot of time trying to crack this FX puzzle, then life happened.

6 months ago I haphazardly started reading through my FX notes for the first time since 2011. As I read, there was one idea that leapt off the pages: a trader with 20 years of experience said that the closest thing to the holy grail that he has seen in trading is trading changes in FED central bank biases based on the FOMC statement. In 2011, I really didn't grasp how profund that observation is. 6 months ago, reading that statement re-ignited my desire to figure this out.

The last few month's have really helped me understand why Forbes named Janet Yellin the 6th most powerful person in the world: https://www.forbes.com/beta/powerful...list?_k=2qaq5z
  • #407
  • Edited 2:25pm Oct 21, 2017 1:27pm | Edited 2:25pm
Great post.
I had felt that i was the only one in FF that talks about this.
I would say changes in interest rate bias affect not only the dollar.
Look what happened when Carol Wilkins from the BOC announced a tightening in monetary policy a few months ago. It's also helps if the economic position supports the new change in interest rate bias. It usually does but there have been some exceptions
Also i would say its is not just a change in bias but if a hike or cut forecast by the cb moves
For example BOE Carney had said that the next hike will be in 2 years. Recently he said that this will change to to coming months. The pound soared over the next two days. I did actually post on here saying that sentiment would continue, but no-one really responds. I think some poor GDP revisions and the Fed annoucing a cut back in QE caused things to reverse.
Only thing is that it entails a lot of reading.
Understanding sentiment and the strength of an economy can help one gaugue where a country stands in its economic cycle. I would also say that NFP is also really important.
  • #408
  • Oct 21, 2017 2:38pm Oct 21, 2017 2:38pm
Quoting Fader123
Game on from a hike in 2019/2020 to a hike in the coming months Think they have missed something here. Anyhow this will run for a bit
.
  • #409
  • Oct 21, 2017 3:33pm Oct 21, 2017 3:33pm
Quoting Fader123
Great post. I had felt that i was the only one in FF that talks about this. I would say changes in interest rate bias affect not only the dollar. Look what happened when Carol Wilkins from the BOC announced a tightening in monetary policy a few months ago. It's also helps if the economic position supports the new change in interest rate bias. It usually does but there have been some exceptions Also i would say its is not just a change in bias but if a hike or cut forecast by the cb moves For example BOE Carney had said that the next hike will be...
Thank you Fader123 for your contribution, my opinion is and I think you have mentioned it here that there is a difference between fundamentals and sentiments, while I think the former is for long term the latter is for day to week trading. However, I opine that sentiments can precede fundamentals at turning points. Sometimes they contradict but I opine the fundamentals will lead the way in the long term. What comes to mind is the US dollar, the dollar has been weakening since beginning of 2017 following the rally from 2011 despite decent numbers coming out, but the sentiment is that prices are getting to historic extremes and investors' are now cautious, that to me is sentiments, but lately we have seen USD strength on the back of the proposed tax cut and strong data.

My question to Fader123 and all the fundies guru, how can you better gauge sentiments, are there key indicators to look at or what can you advise based on your experience

Please feel free to to contribute

Thank you
D labour of a fool wearieth him cos he doesn't know how to enta d city
  • #410
  • Oct 21, 2017 5:22pm Oct 21, 2017 5:22pm
Quoting lordgbengs
{quote} Thank you Fader123 for your contribution, my opinion is and I think you have mentioned it here that there is a difference between fundamentals and sentiments, while I think the former is for long term the latter is for day to week trading. However, I opine that sentiments can precede fundamentals at turning points. Sometimes they contradict but I opine the fundamentals will lead the way in the long term. What comes to mind is the US dollar, the dollar has been weakening since beginning of 2017 following the rally from 2011 despite decent...
lordgbengs-sentiment is how traders feel about about an economy/events right now.
Really you need to read and do research about an economy and what is affecting it and obviously know how this will effect its currency.
Then you will get in sync with what traders are looking at and how they are likely to react to an event.

Right that's enough posts from me for a while.
  • #411
  • Edited Oct 22, 2017 12:41am Oct 21, 2017 6:30pm | Edited Oct 22, 2017 12:41am
Quoting lordgbengs
{quote}My question to Fader123 and all the fundies guru, how can you better gauge sentiments, are there key indicators to look at or what can you advise based on your experience Please feel free to to contribute Thank you
Sentiment is psychological...The economic indicators can contribute sometimes, but it really boils down to when everyone in the market strongly and overwhelmingly senses that it is time to be fearful or greedy based upon some impending decision, economic indicator, or central bank guidance.

Sentiment is really about the energy in the air. The thing to note is that sentiment will not always be strong and easy to gauge, and it will only be really strong a few times a month.

Anticipation is a major driver of markets. Sentiment is when there is a strong sense of anticipation in the market.
When there is a general consensus about an impending decision, economic indicator, or central bank policy, sentiment will be strong.

For example, one of the big drivers of sentiment next week will be the market's overwhelming belief that the ECB will end its quantitative easing purchases. If the ECB does not stop its purchases watch what happens to the euro.

The best way is to pay attention to what bloomberg, CNBC, reuters, and the other outlets start talking about days before it is going to happen. The commentators will be unanimous in their belief that the issue being discussed is very significant, and they usually have very similar expectations.

Here is something that has driven sentiment for short periods of time for the last few months: Trump talking about tax reform. Whenever he talks about it, or a development that makes it seem like the tax deal can get done, the market sentiment is that the US economy is going to boom, and the market's go up. Trump has repeatedly said that he wants 4% growth, and when the market believes that he is moving toward policies that might make it happen, the market gets greedy.
  • #412
  • Edited 7:55pm Oct 21, 2017 6:51pm | Edited 7:55pm
Quoting Fader123
Also i would say its is not just a change in bias but if a hike or cut forecast by the cb moves For example BOE Carney had said that the next hike will be in 2 years. Recently he said that this will change to to coming months. The pound soared over the next two days. I did actually post on here saying that sentiment would continue, but no-one really responds. I think some poor GDP revisions and the Fed annoucing a cut back in QE caused things to reverse. Only thing is that it entails a lot of reading.
You are absolutely right. When the central bank shifts its "forward guidance" the market will move.

I have come to believe that the central bank's have a mandate that we don't talk about much. Now all modern central banks have an inflation mandate, some have a full employment mandate, too.

Here is the mandate that helps us: Central banks have to maintain the stability of the financial system. That is very evident after the financial crisis. Because everyone's money is in the market because of how pension and retirement money have been turned over to hedge funds, we all have market exposure.

The last thing the central bank's want to do is scare market participants into running out of the markets. Hence, the banks try to provide market participants with as much information as possible to ensure that the big money folks stay in the markets. That means that the central banks are giving the big money huge clues about how to make money in the markets. The central banks are guiding them to the money making opportunities.

The great thing about this is that the central bank's forward guidance is available to us small retail traders, too. Our job is to try to figure out how to legally front run the big money.
  • #413
  • Edited Oct 22, 2017 1:12am Oct 21, 2017 7:10pm | Edited Oct 22, 2017 1:12am
I should also note that there are things that can shift sentiment instantly, usually it is fear that does it.

Fader refers to the way that "fresh news" can move markets

Two recent examples are when the tensions between the USA and North Korea first escalated, and when Catalonia voted for independence from Spain. Those two moved the markets because they caused fear.

Now their ability to move the markets has waned because they don't incite the same level of fear as they used to.
  • #414
  • Edited Oct 22, 2017 12:19am Oct 21, 2017 11:05pm | Edited Oct 22, 2017 12:19am
Brilliant posts Cheetah.
Lordbengs check out Efx news. This will provide some information on sentiment as it contains the current views of the banks. And as Cheetah says Bloomberg and Reuters.
I would also say that once fundamentals has changed in the immediate aftermath traders will mark up or down prices more heavily on economic releases.
I will also look at price action so if there are long wicks after a rally with no demand coming in,it can back up new sentiment.
Also knowing where orders are is critical. It helps you get a good price. Plus market structure is very important.
And knowing where are prices headed, what will price do when it gets there.
And what releases are coming up that may effect it.
  • #415
  • Edited 1:01am Oct 22, 2017 12:07am | Edited 1:01am
On forward guidance, agree this matters.
Think it does depend on if the market thinks it's important

I remeber Carney talking about wage inflation being very important. A release came it a week later which missedI and Cable did not really move much.

But Poloz's view that GDP is the critical component in his MP statement had traders focusing on this if I recall.

In Aus we all know how important employment figures are. I remenber Lowe saying that he would only cut interest rates if nemployment got out of hand
  • #416
  • Oct 22, 2017 1:07am Oct 22, 2017 1:07am
Quoting Fader123
Brilliant posts Cheetah. Lordbengs check out Efx news. This will provide some information on sentiment as it contains the current views of the banks. And as Cheetah says Bloomberg and Reuters. I would also say that once fundamentals has changed in the immediate aftermath traders will mark up or down prices more heavily on economic releases. I will also look at price action so if there are long wicks after a rally with no demand coming in,it can back up new sentiment. Also knowing where orders are is critical. It helps you get a good price. Plus...
Thank you Fader123 and Cheetah for your insightful post. I will check out efx news again, I subscribed in the past, didn't really get what I wanted. Also, I have access to Bloomberg, guess I have to utilize it properly. I liked what Cheetah said about anticipation, I will have to change my interpretation of these events.

Thank you once again.
D labour of a fool wearieth him cos he doesn't know how to enta d city
  • #417
  • Oct 22, 2017 1:11am Oct 22, 2017 1:11am
I would not subscribe just read this
https://www.efxnews.com/news-archives
  • #418
  • Oct 22, 2017 9:03am Oct 22, 2017 9:03am
Main event of the week will be ECB tapering.
This could be a decent trade.
Views anyone?
  • #419
  • Oct 22, 2017 9:46am Oct 22, 2017 9:46am
Quoting Fader123
Main event of the week will be ECB tapering. This could be a decent trade. Views anyone?
The ECB has been ripe for tapering for a couple of months but is struggling to do so in a way that doesnt cause the euro to become more bullish than it already has been. With the dollar sentiment changing for the better, this week might prove a better gamble for the ECB to give more hawkish remarks than in the previous months. I think the big concern for the ECB in doing this is the uncertainty about the Fed's December rate decision due to lack of inflation. Im sure they'd much prefer to see the US GDP figures a day before their announcement rather than a day after. Overall, I think their intention will be to do what need a to be done with tapering, while trying to sound as dovish as possible. ...I.e. "we are going to begin blah blah blah... BUT things are still difficult and will be challenging blah blah blah" in attempt to keep the euro suppressed
  • #420
  • Oct 22, 2017 9:50am Oct 22, 2017 9:50am
Quoting lordgbengs
{quote}I liked what Cheetah said about anticipation, I will have to change my interpretation of these events.
Here is the question we have to ask, why does anticipation move the market? Well, big money can't trade like retail traders. We can enter and exit when we want. However, when you are trying to move $10 billion dollars in or out of the market, you can't wait until the number is released. You have to ease into the market before, and after the number is released.

Have you heard the idea that something has "already been priced in?" Before you know how something got price in it is easy to think that big money has insider information. The big money isn't getting tipped off with information that we can't get, they use forward guidance, sentiment, and some research to anticipate where the market will move.

Fader has some great posts about "buying the rumor, and selling the fact" and how to use sentiment to use this big money strategy that is based on trading the sentiment leading into an event. For me, those posts opened up a new world.

I hope Fader posts more about his strategies for buying the rumor, and selling the fact.
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