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Reminiscences of A Forex Speculator

  • #41
  • May 10, 2011 9:46pm May 10, 2011 9:46pm
Quoting xXTrizzleXx
Temporarily sure it may well make for a good few pips, especially if you found a nice low risk-place to enter. However my psyche won't let me take it becasue I still have waning reservations about possible repercussions from Bin Laden's death, as well as the on-going tensions in the Middle East. I also see the possibility of favourable job growth from the U.S, especially if the consensus is below 200K this time around again. Admittedly though these are not on the market's radar currently. Perhaps when Oil prices escalate further?

I'd like to see...
To be honest I don't really comprehend the fundamental forces moving CHF and that's why I asked you. I'm thinking about a small trade from some technical level with bids, probably 87. But this would be more of a test than a real trade.
  • #42
  • May 10, 2011 9:58pm May 10, 2011 9:58pm
Quoting seagreen
To be honest I don't really comprehend the fundamental forces moving CHF and that's why I asked you. I'm thinking about a small trade from some technical level with bids, probably 87. But this would be more of a test than a real trade.
It's a relatively small economy, so the basic fundamentals like inflation, interest rates etc. will generally apply. However, it also has the added twist of the SNB intervening from time-to-time, and it shines as the safe haven of safe havens in today's climate. You can also play US related forces on it as well. I haven't looked into it much further than that, but perhaps it is something to put on my to-do-list. Although at the end of the day, if there is anything major affecting CHF that's potentially market-moving, you'll hear about it on the wires which may give you time to play it.

Regards,
xXTrizzleXx
  • #43
  • May 11, 2011 12:11am May 11, 2011 12:11am
By the look of things pre-London, the market is shaping up to favour a risk-on environment. If it would comply with my humble request to hit my Aussie order before taking off then the world would be a much better place. A portion of all profits will go to assisting Greek with its debt issues! :-P EUR/USD position sits 15 pips away from my TP target.

Also of note is that there was a recent margin hike in Crude Oil (yesterday I believe), and it is likely to be followed up, in manner similar to the margin hikes in silver. Although there is less scope for a shake-out, since retail traders account for a smaller portion of the larger Oil market, it may have the potential to produce some interesting effects in the coming 2 weeks. And we all know that interesting things happening in Oil, causes interesting things to happen in related markets.

Interesting.

Regards,
xXTrizzleXx
  • #44
  • May 11, 2011 4:33am May 11, 2011 4:33am
Quoting xXTrizzleXx
Did you get any positions in?
That's what did me in. I trade a 5 minute chart using technicals. When economic news are about to hit the wire then I give them more weight as a general rule but looking to enter/exit at important levels. When a news piece such as a bailout or any other type of important, but unscheduled news, hits the wires I usually give it quite a bit of weight as it can move the market very dramatically (short squeeze). So when the Greeks denied the bailout I was looking for the fiber to return to where it came from (down) but it just danced around (zig-zag). Later came report of a possible bailout, then news of reviewing the current rate of interest, both premature as politicians are still only in the stage or reviewing Greece's 'progress' which automatically makes talk of changing the old deal premature. It was a very frustrating session with both bad and good news hitting the wires mostly due to babbling Greek politicians and newspapers. This gossipy type of approach to a matter as serious as this one tells me that the Greeks just don't care about anything. Unfortunately they're still part of the EZ and have the option of causing more panic on the markets in the future.
If you don't risk, you don't ever have to lose.
  • #45
  • May 11, 2011 4:47am May 11, 2011 4:47am
The recent inflation report from BoE is looking to provide GBP/USD bulls with renewed anticipations of tighter monetary policy from BoE going forward. Hope that some of you were at least able to catch some of the momentum the report generated.

On the EUR/USD front, luckily my TP target was indeed hit, and with today having the potential to shape up to be a risk-on day, bar any obstructive comments regarding the Greek debt situation, I also placed a limit buy at my TP target. Compelling momentum safely brought my trade to a zone of R/R 1:1, where half the trade was taken off, making for a Break Even Trade at best. The position seems to be slightly under pressure, but my stop is a safe distance from the market to prevent too much worry.

AUD/USD and USD/JPY both seem to be running away from me. Is it something I said? Do I offend? I beg them to give me another chance!

Should be all for now,
xXTrizzleXx
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  • #46
  • May 11, 2011 4:54am May 11, 2011 4:54am
Quoting bug
That's what did me in. I trade a 5 minute chart using technicals. When economic news are about to hit the wire then I give them more weight as a general rule but looking to enter/exit at important levels. When a news piece such as a bailout or any other type of important, but unscheduled news, hits the wires I usually give it quite a bit of weight as it can move the market very dramatically (short squeeze). So when the Greeks denied the bailout I was looking for the fiber to return to where it came from (down) but it just danced around (zig-zag)....
The fact that when Greece tends to feverently deny something, followed by it coming to fruition soon after doesn't make well for their case at all either! What a day that must have been for you..judging my your new Profile Picture I guess those Greek officials don't mesh too well with you! Hopefully today will be cleaner with less market ping-pong being played.

Good luck,
xXTrizzleXx
  • #47
  • May 11, 2011 6:42am May 11, 2011 6:42am
Quoting xXTrizzleXx
What a day that must have been for you..judging my your new Profile Picture I guess those Greek officials don't mesh too well with you!
You can be sure of that. The thing that disgusts me is that they're still so callous about it all. Last year a guy in my uni class told me he'd spoken to a couple of Greeks studying in Estonia and they told me that even though their country is bankrupt they still have more money in their pocket that we (Estonians) do. But that money is all illusory, it's borrowed money and they have to pay it back (great example is pensions in Greece running at around 120% of salary and a nominal sum higher than what you would get in Germany AND earlier retirement). The fact is that we'd all be much more wealthier here too if we didn't pay our taxes (tax evasion is a national pastime in Greece) and lived merrily off fat cat benefits financed with borrowed money. The Greek officials have the same kind of attitude in fact justifying the evasion of taxes and living on borrowed money. I just don't get it and it drives me mad. I've traded bailout talks before but not like we had yesterday with so many conflicting reports coming out.

Greece is like a futures trader who has pyramided his position all the way to the top and is facing margin calls day in day out. Instead of cutting their losses short they are demanding bailouts never realizing it cannot end well. Ever heard about AIG Financial Products? Eerily similar to Greece if you ask me. They pyramided their CDS sales with profits from previous CDS sales.

I'll take a couple of days to cool off and see if the wires do the same. If not then I'll have to find a new currency to trade perhaps (currently only doing fiber and yuppie).
If you don't risk, you don't ever have to lose.
  • #48
  • May 12, 2011 7:34am May 12, 2011 7:34am
Quoting xXTrizzleXx
Also of note is that there was a recent margin hike in Crude Oil (yesterday I believe), and it is likely to be followed up, in manner similar to the margin hikes in silver. Although there is less scope for a shake-out, since retail traders account for a smaller portion of the larger Oil market, it may have the potential to produce some interesting effects in the coming 2 weeks. And we all know that interesting things happening in Oil, causes interesting things to happen in related markets.
Well that didn't take very long to have a noticeable effect on the market now did it? Oil - the King of commodities, is undergoing quite a correction, falling $10/barrel in the past 2 days, as the margin hike alters liquidity conditions on NYMEX. This is also having a depressatory effect on the latest commodity bull runs, as can be seen in the sub $1500 Gold as well as the freshly printed lows in Silver. Consequently, there is a great risk-off environment, which will affect risk pairs and commodity currencies, and generally boost the value of the USD across the board.

Quoting xXTrizzleXx
On the EUR/USD front, luckily my TP target was indeed hit, and with today having the potential to shape up to be a risk-on day, bar any obstructive comments regarding the Greek debt situation, I also placed a limit buy at my TP target. Compelling momentum safely brought my trade to a zone of R/R 1:1, where half the trade was taken off, making for a Break Even Trade at best.
Nope, periphery debt issues are still at the front, and what looked like a risk-on day quickly transpired into a hefty risk-off one. The pairing is dropping sharply, taking my trade out for BE. The move is already underway, and it would be unwise to enter stark in the middle, so my intentions are:

 

  1. Short the pair if something major/unexpected occurs; like the terms of a bail-out cannot be agreed to or a Debt Restructuring
  2. Long the pair when all of this negativity surrounding the perihery is sorted out; most probably by early next week, and get in at these bargain prices in anticipation of hawkish rhetoric at the ECB's next conference.

Something tells me that 1.4150 is a critical level, and anything that spooks the market further ie. below it, will cause quite a drop in the pair. Until the issues get sorted out, I'm expecting a range around these levels.

Quote
AUD/USD and USD/JPY both seem to be running away from me. Is it something I said? Do I offend? I beg them to give me another chance!

Remind me guys to be very careful what I wish for! AUD/USD apparently heard my comments and seeked to punish me for my insolence, as commodities followed by poor employment put great downward pressure on the pairing. I'm looking for a rebound in Oil and other commodities before attempting to take up long positions, in anticipation of hawkish rhetoric by the RBA.

USD/JPY continues its ascent with the driver being USD strength as opposed to JPY funded weakness, as this environment is definitely not conducive to carry trades. Guess the BoJ has its work cut out for it...for now...

USD/CHF also appears to be following suit, and the worst than expected inflation data is also fuelling the move upwards. It will take another considerable risk event before I consider shorting the pair.

GBP/USD..clueless as usual.

As the next FOMC meeting approaches, I will also be paying attention to the market's reaction to Fed Speakers to gauge how much importance the market is attributing to them, and plan my trades accordingly. The end of QE2 may alter the dynamics of the financial markets, particularly in the unwinding of USD-funded carry trades, as the attractive JPY will again take the spotlight.

Should be all for now..on the sidelines waiting for the dust to settle before pouncing.

Regards,
xXTrizzleXx
  • #49
  • May 12, 2011 7:57am May 12, 2011 7:57am
Quoting bug
You can be sure of that. The thing that disgusts me is that they're...
Wow - I didn't know the Greek situation was so bad! Everyone suffers from poor fiscal policy and this is just a case in point. I just hope for the Euro's sake that things don't take a drastic turn for the worst, as they already seem to be totterring closer and closer to a precipitous drop.

Taking a break sounds like a good plan to me - I'm on the sidelines too until things clear up and I can get my market bearings. Remember having no position is also a position.

Good luck,
xXTrizzleXx
  • #50
  • May 12, 2011 11:01am May 12, 2011 11:01am
Quoting xXTrizzleXx
Wow - I didn't know the Greek situation was so bad!
It's actually much, much worse than that, but I'm not going to turn this into a PIGS thread. It's not only Greece, though, there are similarities between Greece and Portugal that make you puke. For example, Portugal and Greece have 14 pension payments a year as opposed to sensible states that have 12 (there are only 12 months are year, duh!). What a way to drive your country into a ditch.

It seems that the wires have only gotten hotter over the last few days and there's no end sight, especially with German politicians denying the existence of the problem. There are numerous reports of Greeks avoiding levies, fees and taxes even more than they used to. I don't get it - they like and want public goods but are not willing to pay for them. Who else is going to pay for it? I mean, it's not really rocket science - if you want it then pay for it. Oh, well. It's gonna be a tough spring/summer here in Europe.

Quote
As the next FOMC meeting approaches, I will also be paying attention to the market's reaction to Fed Speakers to gauge how much importance the market is attributing to them, and plan my trades accordingly. The end of QE2 may alter the dynamics of the financial markets, particularly in the unwinding of USD-funded carry trades, as the attractive JPY will again take the spotlight.
It's funny how fundamentals and technicals work together to bring about big movements in financial markets. I'm a big fan of Adam Hamilton's work and he published an article titled US Dollar Bear Rallies 2 that suggested an imminent US bull a short while ago. It is an absolutely must read. I've been following his for some time and I can vouch for him. Some examples include nailing the euro bottom last year and nailing the silver bull last August.
If you don't risk, you don't ever have to lose.
  • #51
  • May 13, 2011 5:33am May 13, 2011 5:33am
Quote
Flash estimate for the first quarter of 2011
Euro area GDP and EU27 up by 0.8%
+2.5% respectively compared with the first quarter of 2010
Now this is news that I know how to trade - there's no second guessing here. Truth be told I didn't actually trade this news release, but the German, French and Italian GDP releases as they came and hour or two before the aggregate release. Good news from Spain as well, as their economy beat expectations by growing at 0.3% as opposed to 0.2% expected. Greece posted a 0.8% increase in their GDP, but I'm very skeptical of that considering the way Greeks have massaged their data previously.

My home country posted a whopping 2.1% growth Q on Q, 8% year on year. We're still a very small economy, but it is increasingly obvious that fiscal restraint and borrowing money to finance investments only is paying off. Inflation is high here but that's a common trait among emerging economies with high growth. Our neighbors in the North posted a 5.2% year on year growth with Germany at 4.8% year on year (both countries have their fiscal houses in order).

Snip from Eurostat news release available here.
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If you don't risk, you don't ever have to lose.
  • #52
  • May 13, 2011 12:19pm May 13, 2011 12:19pm
have read all your journal and have to say that you are a good trader,and have a lot of experience in entering trades and managing your positions,would you be able to write more about techniques you use on entering trades,as i see most of the time you manage to get into trades with very little risk and tight SL.
  • #53
  • Edited 4:08pm May 13, 2011 2:40pm | Edited 4:08pm
Today was a typical risk-off Friday, in keeping with the ominous sentiment of Friday the 13th - perhaps that was the real reason why traders shyed away from taking any risk trades!

On the Euro Front we had some interesting action today, and I went through and analyzed as many events as I could - something I encourage everyone to try, although it is tedious, but definitely worth it. It exemplified some of the dominant themes in EUR/USD, which I'd like to note down here. I've also tried to gauge them in order of importance:

1. Sovereign Debt Crisis

  1. Germany, France and ECB are gridlocked regarding the future direction of Greece's finances.
  2. Germany argues that a debt restructuring would sting now but sting less in the future, while France and the ECB maintain that the effects of the restructuring would be detrimental to the vulnerable banking sector.
  3. Greece constantly reiterates that its debt is sustainable according to the IMF if they apply increasing austerity measures, and that media is painting a gloomy picture. Hints of political motivations present here.
  4. Concerns have been raised Greece may not meet targets unless further austerity measures imposed, such as reduced public spending.

Obviously this is a good solution on paper, but it is too 'economical' without considering the human aspect behind it. Can further austerity measures really be effectively implemented with the Greek economy in the shape it is in today - where violent protests against said fiscal measures are a daily occurrence? Sure it may be able to meet conditions to help bring about the next tranche of it's bailout to satisfy it's near term obligations, but not only will reduced public spending stifle future growth, it will make ends harder to meet in an already tight economy. If Greece further continues to impose such draconian measures on its economy, the severity of the uprisings could become seriously magnified.

 

  1. There is great uncertainty in the Euro, and no clear-cut amicable solution.

2. Interest Rates

 

  1. Market has been responding to commentary regarding interest rates from key speakers.
  2. Inflation horizon has been recently shifted to the medium term by Trichet, dampening expectations for hawkish rhetoric from Trichet at the next meeting.

3. Oil (and to a lesser extent other commodities)

  1. Price of Oil has also contributed to price movements in Euro, in a loosell correlated manner.

As of today, my stance on EUR in light of the above information is bearish.

A couple of days ago, I also had reservations about repercussions from the death of Osama bin Laden by US Forces, in what was interpreted by Pakistan as a seriously violation of their sovereignity. Today was the first in what was threatened to be a series of terror attacks in revenge of the events. In times like these I like to reach for the safe haven of safe havens, the CHF. In my anticipation of EUR bearishness, and CHF strength, I see a high probability trade to the downside. Additionally, it is purported that there is great interest below the 1.24 level, which will be a likely target for EUR/CHF bears. I'm anticipating being one of them. A trade on EUR/USD is of course, also possible.

On the USD/JPY front, I'm still waiting for a breach of intervention levels and will being to initiate longs around ~79.50, when the market starts responding to the threat of the BoJ.

GBP/USD..clueless as usual.

AUD/USD..nothing on my radar, except I see the possibility of improving US data hindering commodities from their bull-run, which is likely to put downwards pressure on the AUD/USD. However, I also have anticipations of rate hikes in the near term which may provide the pairing with an upwards boost. Timing of this trade will be essential. Ideally I'd want commodities to return to a sense of normalcy before I initiate a long position. It's very possible that the highs of 1.10 will be retested.

Hope I've covered all bases for now,
xXTrizzleXx

  • #54
  • May 13, 2011 2:44pm May 13, 2011 2:44pm
Quoting bug
For example, Portugal and Greece have 14 pension payments a year as opposed to sensible states that have 12 (there are only 12 months are year, duh!). What a way to drive your country into a ditch.
14 pension payments a year!? My gracious!

Quote
It seems that the wires have only gotten hotter over the last few days and there's no end sight, especially with German politicians denying the existence of the problem. There are numerous reports of Greeks avoiding levies, fees and taxes even more than they used to. I don't get...
And an unco-operative economy is certainly not going to help them achieve the fundamental targets necessary to achieve refinancing or further packages. What a mess!

Quote
It's funny how fundamentals and technicals work together to bring about big movements in financial markets. I'm a big fan of Adam Hamilton's work and he published an article titled US Dollar Bear Rallies 2 that suggested an imminent US bull a short while ago. It is an absolutely must read. I've been following his for some time and I can vouch for him. Some examples include nailing the euro bottom...
Interesting stuff..I'm taking a read through it right now..always good to see things from different perspectives.

Regards,
xXTrizzleXx
  • #55
  • May 13, 2011 2:54pm May 13, 2011 2:54pm
Quoting pinkiaiii
have read all your journal and have to say that you are a good trader,and have a lot of experience in entering trades and managing your positions,would you be able to write more about techniques you use on entering trades,as i see most of the time you manage to get into trades with very little risk and tight SL.
Hey pinkaiii, good to see you around and thanks for the encouragement! Regarding the techniques I use to enter trades, they are firmly rooted in an understanding of orders and market structure. In a very simplified sense, I look for situations that the market responds to. Then I simply assess where bargain prices are, and place my orders there. Of course it requires the acknowledgement that you will miss out on some large moves in the market, even though your analysis was correct, but there will always be other trades. On these trades your patience and discipline will be rewarded by low-risk, sometimes drawdown free entries.

Hope this helps,
xXTrizzleXx
  • #56
  • May 13, 2011 3:07pm May 13, 2011 3:07pm
Quoting bug
Now this is news that I know how to trade - there's no second guessing here. Truth be told I didn't actually trade this news release, but the German, French and Italian GDP releases as they came and hour or two before the aggregate release. Good news from Spain as well, as their economy beat expectations by growing at 0.3% as opposed to 0.2% expected.
I actually noted this day in my little notepad, as an example of how the market reacts to events in a way that can be mercilessly capitalized upon. I'm actually beginning to enjoy the market's perverse kind of logic. It reminds me of Chess in that you are much better served by thinking a few moves ahead. Germany and France coming out much stronger than expected would have no doubt gave the market hope of a much stronger than expected Eurozone GDP number. When these expectations materialized, the market barely rallied because since the expectations were fulfilled, it's likely that the participants simply closed their positions.

Quote
Greece posted a 0.8% increase in their GDP, but I'm very skeptical of that considering the way Greeks have massaged their data previously.

My sentiments exactly - I wouldn't be surprised to see this downwardly revised

Quote
My home country posted a whopping 2.1% growth Q on Q, 8% year on year.

Good on Estonia! I'm also charging you with the task of staging massive protests if your government ever decides to adopt a Greek approach to fiscal policy!

Regards,
xXTrizzleXx
  • #57
  • May 13, 2011 3:43pm May 13, 2011 3:43pm
I think you overanalyze the Euro situation a little. Euro has shown some weakness on less hawkish Trichet comments last week but since then EURUSD downfall is dominated by dollar strengh. Now this dollar strengh came as a retrace after prolonged dollar weakness and I think the trigger was the burst of commodity bubble caused by exchanges margin raise.
  • #58
  • May 13, 2011 5:20pm May 13, 2011 5:20pm
Quoting xXTrizzleXx
Germany and France coming out much stronger than expected would have no doubt gave the market hope of a much stronger than expected Eurozone GDP number. When these expectations materialized, the market barely rallied because since the expectations were fulfilled, it's likely that the participants simply closed their positions.
Yes, that's exactly how the market operates. :nerd:I knew something like this would happen because I noticed the GDP releases of several big countries were scheduled only a short time before the aggregate Eurostat release. Any significant deviations from what analysts had expected would pass through to the aggregate figure. Once good numbers came out traders quickly drove up prices only to unload them onto unsuspecting traders who had an eye out for the aggregate figure but did not pay attention to the national figures released a few hours prior. I actually like it this was because if the national figures are very good or very bad they provide a perfect entry point with the Eurostat aggregate figure release time being the perfect spot for covering.

Quoting xXTrizzleXx
Good on Estonia! I'm also charging you with the task of staging massive protests if your government ever decides to adopt a Greek approach to fiscal policy!
Doubt that's ever going to happen. Sent you a PM with more on that one.

Your post number 53 looks very neat. I've been thinking of doing something similar for myself for a long time now. Perhaps I should get on with it.
If you don't risk, you don't ever have to lose.
  • #59
  • May 13, 2011 10:14pm May 13, 2011 10:14pm
Quoting bug
Yes, that's exactly how the market operates. :nerd:I knew something like this would happen because I noticed the GDP releases of several big countries were scheduled only a short time before the aggregate Eurostat release. Any significant deviations from what analysts had expected would pass through to the aggregate figure. Once good numbers came out traders quickly drove up prices only to unload them onto unsuspecting traders who had an eye out for the aggregate figure but did not pay attention to the national figures released a few hours prior....
I see what you mean but I think you're wrong here, bug. Flash news traders who could really move the market were well aware about the previous releases so they were expecting better numbers (better than 0.6%). Maybe the numbers came out not as good as they expected (0.9% or more)after sovereign GDP releases. Anyway, the move down has little to do with EUR, it's more of USD strength. But that's only my opinion.
  • #60
  • May 14, 2011 2:12pm May 14, 2011 2:12pm
Quoting bug
Greece posted a 0.8% increase in their GDP, but I'm very skeptical of that considering the way Greeks have massaged their data previously.
Confirmed. This comes from an economics professor in Athens:

Did you hear the latest? Greece’s economy grew by 0.8% in the first quarter of 2011. This is, surely, good news. Except that, in fact, the Greek economy shrank by 4.6% in the first quarter of 2011.
Confused? You should not be. “Lies, damned lies and statistics” was a phrase invented long before Greek statistics rose to prominence. It refers to the simple fact that if one looks at the data partially, the data will give one a partial, utterly misleading, picture.
In this particular case, what happened was that December of 2010 was a month when Athens was paralysed by strikes. The city centre and major shopping areas were closed for half the month, yielding a drop in commercial activity of more than 60%. Thus, compared with that abysmal fourth quarter of 2010, the first quarter of 2011 was marginally better. Which means, it was perfectly catastrophic!
Indeed, the official data shows that, compared to the first quarter of 2010, the Greek economy shrank by 4.6%. By the standards of any modern economy, this is a shattering datum. That the European Union should clutch at this straw as ‘evidence’ of improvement, as a ray of light, is testimony to the combination of desperation and disingenuousness which typifies Europe.

Quoting seagreen
I see what you mean but I think you're wrong here, bug. Flash news traders who could really move the market were well aware about the previous releases so they were expecting better numbers (better than 0.6%). Maybe the numbers came out not as good as they expected (0.9% or more)after sovereign GDP releases. Anyway, the move down has little to do with EUR, it's more of USD strength. But that's only my opinion.
Well, maybe. We could argue about the details but the end result was still the same - if I covered my dollar longs near the EU/EZ GDP release due to my logic and you did so based on your logic we both would've ended up profiting.

-----
Next week is going to be very busy with a lot happening judging by the looks of the FF calendar. The US debt ceiling hasn't gotten a lot of air-time due to European sovereign debt issues but I would expect to see a bit more on that front come next week.
If you don't risk, you don't ever have to lose.
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