Clemmo's Trading Odyssey

Here's another possibility - that the 7 day cycle did assert itself but only on one side, and the 13 and 7 day cycles failed to manifest either up or down (semi-transparent triangles). Note that this doesn't change the forecast (magenta line) or the estimated future position of upcoming cycles (dashed line triangles) at all, really.

A lot of excitement today. Price finally hit my 1.926 target, although it missed my 1 week horizon by ~1 day, which is perfectly acceptable (to me).

However, it was CPI day for NZ and it allowed a huge spike to occur (13 day cycle asserting itself at the end, finally) shortly after that (reaching exactly the outer PJ band limit). It helps to have a good broker who lets you in and out of such trades without too much damage.

That's 5/6 correct calls so far if you're keeping score, or 83%, but hey, it's still early days and this could all be good luck only.

Some notes for myself - it's a good idea to see if we can pin cycle starts, peaks/troughs and terminuses (termini?) with major red news announcements.

Is it still worth trading this remarkably tight range with GBPNZD? Nothing has really changed with the technical picture I drew on Monday. There should still be a big drop associated with the end of the 13 day cycle, and end of a (so far under-performing) weekly cycle. However these 'dead zones' are often a type of 'reset' for cycle periodicities and so I'm going to remain a spectator and watch out of experimental interest, for now. Maybe something entirely different is going on, something I don't really understand.

Also it's not that stimulating (though it is profitable) to wait for days for these H1 trades to finish. Maybe I'll consider a wider range of instruments and see if the PJ method can work on the "chaos" of an M15 chart.

M15 but taking place over a few days.

I'll try making some shorter-term calls later.

Looking for 1.947 before any sincere decline. ~5hrs.

Target reached. Pending short at 1.9474.

Trade triggered, first target 1.9442 in ~3-6hrs.

https://pepperstone.com/en/forex-new...kly-23-04-2019

An interesting article (most FX pundits are rubbish but I respect Kathy Lien) about low volatility in FX overall which may be one reason things have been in such a tight range lately. For anyone worried that high vol will not return, be careful what you wish for. It will come back and with a terrible vengeance.

Personally I love low volatility markets like this, predictable and boring, consistently profitable.

A wilder ride than I expected but target was reached.
Second target is 1.9394 ~end of day Wednesday and if we have difficulty meeting it I'll have to reconsider my bearish stance. Here's what that might look like although I don't like the bands as much.



Not that anyone's counting but that's 7/8 correct calls. 87.5% accurate.

Should I go back to gold again? Maybe good old Fibre/Cable or USDJPY? Any requests?

And there we go - in retrospect trading in front of the CPI is never a good idea so we'll abandon any remaining shorts and focus on a long narrative.
7/9 then to keep us honest.

I'm going to work up another chart and let's follow this AUD/NZD weakness for the rest of the week.

M15 target 1.9543 within ~9hrs

Target reached. Looking at CAD.

GBPNZD comes back down to its ranging level once again and is now at a long-term crossroads. Maybe my bearish view wasn't flawed after all. If so I need a way to tune my bands so that they can account for more robust fluctuations.

Bearish view reconfirmed and as you can see from this daily chart, more downside could be in store with the 5 week cycle. It's entirely positioned and contained within the band so it could possibly last the full 5 weeks, rivalling or exceeding the Dec. low. However price is rising up from the bottom band edge so that's a moderating factor.

Short-term (Tuesday) target 1.932

Gold is also ready to trend up so I must have a chart ready for next week.

Not going to get my level and I have trouble explaining what's happening using the normal method. Plus it's time-consuming to update and track so - back to the drawing board.

This turned out to be fairly accurate after all didn't it? I just need to make allowance for market trickses.

Today this happened (second time in a month), hahaha. Brokers are terrified of traders who can actually trade.

Very dangerous time for me as all my accounts are green, everything is working and I can't seem to lose no matter what I do. Of course I wish it could remain like this forever but eventually the luck will run out (won't it?) and I need to stay sharp.

I'm having trouble focusing on the ONE KICK that I should practice 10,000x to master it to a new depth of understanding. My knowledge is broad but not deep. I need to become a specialist but I'm not sure which is the surest path.

I have nearly two books worth of notes and snippets of whole thoughts, and I've considered actually writing a book but then a video series would probably be more didactically helpful. The book would take time away from trading though, and while the sun is shining I figure I better make hay as fast as I can. I've bought a microphone though and if I can summon the nerve to hook it up and learn how to stream ...YouTube? ...Twitch?? I might start with some basics. The trading world does not have a surfeit of solid foundational material for new traders; it's a very cruel maze filled with minotaurs and sirens. To mix this metaphor even more - only a few baby sea turtles make it to the ocean. I'm not sure if that's good for the traders who make it to the other side or just bad for the industry in general? Maybe both?

I had someone message me about offering signals and managing an account. That would be a new experience for me, but until I've codified my methods, and reached a position where my family will be secure I don't think I can risk the psychological baggage of trading OPM. I am interested; heck I'd love to start a fund. However there are still many technical aspects of this game that I feel I should know better. At least half a dozen years before I can see myself being ready to say I've seen it all, the market has no more tricks to hurt me.

On top of that I really want to learn more about coding in C+ (MQL) and understanding more about modern quant methods like neural nets and AI; even though, I suspect those methods have underwhelmed their early adaptors so far. Otherwise we'd have a new Mark Zuckerberg/Carl Icahn stting atop the Forbes list and proclaiming a new age in the markets. I'm taking courses and trying to force this old brain to learn some new tricks. You have to keep exercising that grey matter or it will decay!

Broker Swaps

Let's talk about SWAPS shall we?

It's odd to me that they don't get talked about more often considering how devilishly important they are to trading success (and failure) and that they (potentially) give us a lot of information about how broker/dealers see the market. This is info that is usually not voluntarily shared, but since they're making money off YOU with it, they're forced to tip their hands (somewhat).

The very fact that they are not really scrutinized to any extent (compared to say, the esoteric mysteries of 'market structure' or the 'liquidity zones' of 'price action' or whatever voodoo is popular at the moment) tells me that they are of abundant importance. There seems to be an inverse relationship between the popularity of a tool/thread/notion on internet forums and its actual profitability. I would be delighted to see an econometric analysis of this hypothesis though its probably impossible to do. We might be able to say the same thing about the apparent cleverness/complexity of a quant solution and its profitability but it's too early in my journey to make a definite pronouncement on that score.

Ok, what's special about swap rates?
You see, broker swaps, far from being the actual ratio of interest rates between two halves of a currency pair are actually a complex 'special blend' of whatever the broker's regulatory body (if any) says they must hack off their Croesian profits and relegate to your account based on actual central bank lending rates and the rate that the broker believes will minimize the damage to their liquidity providers if the lucky retail trader happens to pick the correct price direction for a while. Conversely, for pairs where the future trend is fairly 'known' Attachment g the broker will enrich the 'sucker' side of the gambit so as to entice position/carry traders into a Faustian pact.

The result is that by examining swap rates and maybe more importantly, the delta in swap rates over time we can get a fairly accurate picture of the bullish/bearish stance of the brokers, who, by and large, see the market monolithically. If we also assume that brokers have better access to info, fundamental analysis and (maaaybe) technical analysis, this should give us something like an edge? Let's find out.

How do we do that?
On MT4/MT5 it's easy - just go to your Market Watch panel, and select 'specification' to expand the window that opens and dig into the table that's presented. Buried near the bottom is the rate, usually in points, that your broker awards or charges for holding a position in that security.

Here, EU has -11.2 points when long and 6.12 when short. Note that there is always at least one negative value per security since if both were positive your broker would be offering free money. Sometimes though (often) both values are negative. This usually means the odds between the security rising or falling are close enough and the interest rate differential is small enough that the broker would prefer to ding you either way.

Now hang on, I hear you saying. Here, Fiber is giving us a positive swap when we're short, and it's been declining for 16 months. An ideal carry trade! Surely the liquidity providers don't believe that the Euro is going to go up? Especially not after Draghi's recent comments?

Well, the answer isn't clear cut.

Look at this chart.

These are swap rates for various securities from a group of selected brokers. I've selected some majors and some commonly traded representative securities of other types. Note that each broker comes up with their own calculated value for what swap rates should be but basically (with some interesting exceptions) they agree on everything (monolithic).
Mostly the rates and the resultant price direction are what we would expect. However there are several exceptions (highlighted in red) and they all have one thing in common - the US Dollar. If you'd gone long the US dollar lo these many months, ignoring Trumpophobia and the non-economic news in the USA, you'd be laughing all the way to the bank, with trades that were profitable AND swap rates that paid you to hold these trades. Is this unexpected?

Maybe not. Not if you expected the US dollar to come crashing down for some reason, and maybe have been expecting it for several months. Now why would you expect that? Let's look at the news.

 

1. Trump reportedly wanted to demote Jay Powell
   The Fed concludes its latest policy meeting this afternoon, and President Trump reportedly wanted to remove him from the post, and apparently hasn’t ruled out the idea.
2. Trump asked White House lawyers about how to demote Mr. Powell in February, The president has openly complained about Mr. Powell, and has repeatedly demanded that the central bank lower interest rates so that he can fight his trade war.
3. Trump didn’t deny the report. When asked about it yesterday, the president said, “Let’s see what he does” when the Fed makes its announcements later today.

https://ci6.googleusercontent.com/pr...ticleLarge.png

1. Trump says Europe bolsters its economy at America’s expense
   President Trump accused the European Central Bank yesterday of trying to prop up Europe’s economy and weaken its currency to gain a competitive edge over the U.S.

I still think shorting the Euro is a really cool trade because even when it retraces you can hold and get paid to wait before the downtrend resumes. The only question is, does someone else have different plans? I guess all we can do is wait and see, and keep tabs on how (and if) those swap rates, adjusted daily on live accounts, foretells the actual price path.

Gold likely to break through 1450 this year. However it could drop back to 1350, at least, before it does. Wild times.