Zek's Thoughts / Trades / Market Analysis

Hello everyone, i'm back, not that anybody cares really...
My plan is to educate all of you on the subject of forex related news. What moved the market, why it moved the market, and how it could have been traded.
I'm not the best tech trader around, so i will try to avoid tech commentary.
I hope you enjoy and learn something new...
For the WIN!!!!!!!

So anyway, first releases for today are the Cad retail sale + Interest Statement.

Retail sales expected at 0.4% m/m, which is a healthy number, considering how bad UK and US did during the same period. Both countries having had a negative month. This leads me to expect a weaker number out of Canada but of course that's just a speculation. Any reading below 0 would be significant IMHO, and could send the USD/CAD flying. One has to remember that the Interest Rate statement will be following shortly after the release and a lot of market participant will be making bets based on the Retail Sales number.
A bad number would increase the chances for a 0.5% cut, which would be very nice to see, as that would definitely provide some decent volatility.
BOC did surprise most people last month by cutting rates, hopefully they have will try to get "ahead of the curve" again.

I'll update the post after the dust settles...

Whew, what a rollercoster!

Here i was, preparing for the Cad trades, setting up my limit orders (which takes up most of my screen space) and BAM, just 10 minutes before a scheduled release time, my speakers crackle and it happens: "US cutting rates 0.75%" in a very loud and confused tone.

Sadly i'm not a robot and it took me some time to take everything in, as my bad luck would have it i had my orders set up as GTC limits, my initial buy on GU got filled at 1.9570ish but rest of my attempts kept showing up as idle. It took me a while to realise that i didn't have market orders enabled, to change my orders, and to click again, at which point i got the worst price (of the first minute after the release)

My thinking was that such a shocking move would sand dollar into a tumble and equities through the roof. The following 1hr was not a happy time for me. I managed to squeeze in a EUR/USD postion on a first retracement, but my GU losses were adding up so fast that i just had to sit there and watch in horror.

My profits on EU were very soon outweighted by losses on GU, i actually opened yet another position on EUR/USD but at a certain point had to close it for a small loss due to dangerously low margin levels appoaching. Needless to say, in the next 20 minutes my EU position would be in a handsome profit.

GU position was looking rather BAD, by i decided to stick to my guns and hold through the madness. Betting a large chunck of my account along the way. Thankfully i was right and after about 2hrs i was in a decent profit on GU as well. It did cost me a few years off my life expectancy though.

I guess this time greed got the best of me, if i waited for a retracement i could have made some serious profit... very serious profit, but what's done is done, and i'm glad i held to my conviction and walked away with some nice pips.

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So, where does this leave us in the long run?

At the moment of the announcement, i didn't have much to think and EU wasn't even loaded on my platform, but Eur/USD was clearly a smarter option. With ECB members constantly talking about "speculation of a cut not based on reality", "must provide price stability" "inlfation is high" etc etc EUR seems to have a biggest potential to the upside in the next few weeks. You also have to remember that the Fed will most likely cut again during the meeting next week which will increase the rate defferantial even further.
I will personally be buying EU, slowly averaging in if i get a chance, any price below 1.4550 being quite a bargain. The latest development make 1.5 level a virtual certainty...
You just have to pray for a good entry price.
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sorry for such a long post, but boy oh boy did i have a lot boiled up inside of me.

Best of luck,

zek132

The reversal pattern of e/u looks very much like the pattern of August 17th.

Another day, another dollar... hopefully!

One thing i just noticed looking at the charts, Dollar weakened strongly (about 100 pips on eur/usd) on a day of both surprise cuts... somebody must have had insider info, oh how i envy them You might say, no no, but there were rumors of a rate cut, sure, but don't forget that the same rumors were going around for a whole of last week...

So what do we have today, firstly, there is a rumor yet again, this time of an ECB emergency meeting/cut. I personally don't buy it, but hey, you never know...

Secondly, there is a UK GDP release, coming out alongside with BOE Minutes, which is not ideal, both reports provide great opportunities when traded sepparately, a conflict could be a big problem, so i won't be trading the spike on this, only the aftermath. 5:4 vote and a lower than expected GDP (0.1% defiation is usually significant) would be great.

Expect a follow up post later on in a day.

Best of luck,

zek132

Hello reader, sorry for such a late post, i was so busy trading yesterday, i didn't even have time to eat, let alone post a lengthy discourse.

First things first, UK GDP, it came out higher and as you can see from the charts, initial spike was about 40 pips to the upside. The vote count came out 8:1, which matched FF calendar expectations, but my news source talked about 7:2 or even 6:3 expectation, so the vote count was rather bullish for the Pound as well, however the statement released at the same time was rather dovish, so a mixed bag...

I managed to enter at 1.9588 on an initial pullback, and at some point i was about 14 pips in profit, however i decided to hold, in hope of some more upside, but in the end, ended up with just a few pips, close to b/e.

There was another opportunity to enter, which was near the pre-release price of 9565 ish, which is ofter a good level after news announcements. I however got distacted, hesitated, and missed the entry as a result.There was about a 20-30 pip upside potential with limited risk, which would have been great.

Pre-release level often works not just minutes, but even hours or days after the report. As a rule of thumb, the news must have a major impact for this to hold though... US Interest rate surprise is a perfect example

I mentioned going long on EU at 1.4550 and below, well as you can see it dropped to 1.4515 (more or less) which was a great buying opportunity, we have already seen 100 pips to the upside after that. The pre-release was 1.45, as shown by a red line.

I decided to trade GU, not really sure why, but at the moment it seemed like after a dramatic fall that we have seen recently in GU (2.11 - 1.93) it has more upside. I've entered at 1.95 (pre-release) and 1.9480 (a reaction low from yesterday) Will be interesting to see how this plays out. S/L is about 200 pips, below the low. No particular target, but i'm not taking any profits before 1.97...

The rest of the day was pretty uneventful, in terms of news, however, volatility was beautiful. I was trading GY on breakouts and made some serious pippage. Very short term trading is definitely for me, as in it fits in with my personality, hopefully this wasn't just a lucky run and i will be able to make some consistent profits tech trading, after about 1year of fruitless persuit.

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One thing i'd like to share with you guys. Educational forex story...

I was sitting in my new trading group's chat room, calling out my trades (although i don't think anyone was taking notice) but it's good for accountability, makes me feel more responsible for the trades is take, anyway, this guy joins the room. Says hi, and we start talking. First thing that raised a warning sing was when he started to talk about how he makes 7.7% a day on average. Than it turns out that he has been making that in the past 5 days or something. I obviously thought that he was mad, and tried to talk some sense into him, at the same time i was suspisious that he was about to start selling something. As it turns out he bought some dvd course on candlesticks bu this GURU, and it was "worth its weight in gold". As he said, this guy brought candlesticks into the western world... OkOk, but 7%?!?! Are we talking about trading or an ATM? At that point he started to get offended.

So it turns out that he is:
1) Risking 10% of his capital per trade
2) Has only been trading this system for 3 weeks
3) Planning to turn 1000 usd into 1million over the coming year
4) Has been trading for 20 years.

I just could not believe what i was hearing. This guy was delusional with his dream, blinded by a lucky streak. I tried telling him that a few bad trades would destroy his account, that candle sticks are no magic bullet, no matter who wrote the book, but he would not listen.

The guy even called out a few trades. One on USD/CAD, s/l 40pips and he took profits after just 18 pips, Risking 10% to make less than 4.5% profit. And than it began.

GU trade started to go against him (he was short and at the time the Equity markets in the US started to rally) I was kind of making fun of his perfect system not working (he said that he only had 1 loosing trade) Than it came: "OK I'm doubling up" So now he was potentially risking 30%?!?!?!
I tried to tell him, you are risking too much, the reply was : "No, it means i'm just 10 pips to break even" In the end he told me he closed out at -4 pips, after which GU really started to rally...

I was trading long on GY, making pips... His reply was, don't you think it will pull back (remember, DJI is making news highs for the day)

So, how does the story end, i close out my last trade for the day in profit, there is a little retrace (both GU and GY) and the fella says, I'm taking a Short on GU, just for you zek, watch and learn...

After that, GU went up about 50 pips against him, for some reason he was not responding to my questions any longer... another victim of a forex dream.

So what can we learn from this? This guy was seriously blinded by his ambition, greed, hope, emotions. His reality was so warped, he could not see the elephant right in front of him. Sadly, this can happen to all of us, to a certain extent. I have to remind myself constantly, that i basically know nothing about the market, that i can loose most of my funds in a day if i don't restrain myself.

Be humble, or the market will humble you they say...

I hope someone will learn from this and won't make the same mistakes.

Best of luck,

zek
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