No brainer fundamental trades | Forex Factory

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No brainer fundamental trades

  • #1
  • First Post: Apr 13, 2015 4:59am Apr 13, 2015 4:59am
In the past few years there have been a few no brainer trades. The kind of trades where the fundamental reasons for making the trade was so strong that you almost didn't need a chart to make the trade. Here are a few examples.

The AUD/USD carry trade.
Shorting AUD/USD when Australia began cutting interest rates and the fed began tapering their stimulus.
Shorting the euro when it was announced that the ECB will create 1 trillion new euros.
Selling JPY when abenomics was announced

Are there more that I have forgotten? Are you aware of any current no brainer trades?
If slaughterhouses had glass walls, everyone would be a vegetarian!
  • #2
  • Apr 13, 2015 12:31pm Apr 13, 2015 12:31pm
Beginning of last year when Draghi said there was no way he would let EU go above 1.40. Price was around 1.39 ish.
  • #3
  • Apr 14, 2015 6:37am Apr 14, 2015 6:37am
I think you forgot the SNB disaster
  • #4
  • Apr 14, 2015 11:47am Apr 14, 2015 11:47am
Quoting savingpig
I think you forgot the SNB disaster
I don't count opportunities where the entire move happens in just an hour. Most people don't sit glued to their screens the whole day.
If slaughterhouses had glass walls, everyone would be a vegetarian!
  • #5
  • Apr 14, 2015 1:56pm Apr 14, 2015 1:56pm
Quoting Gambler180
{quote} I don't count opportunities where the entire move happens in just an hour. Most people don't sit glued to their screens the whole day.
Selling the CHF in the weeks following Jan 15, which left it unacceptably overvalued (from the SNB's viewpoint ). Arguable whether this counts as a 'no brainer', but I imagine that some smart traders made good coin from it.
  • #6
  • Apr 14, 2015 2:02pm Apr 14, 2015 2:02pm
You've mentioned the major ones, although I didn't get in on CHF and still don't trade it today, looking back it was probably pretty obvious. ECB wanting to print money, EURCHF capped at 1.20, would cost a fortune for them to keep it up through ECB, so selling all those Euro's is no surprise the EURCHF would plummet...
  • #7
  • Apr 15, 2015 4:51am Apr 15, 2015 4:51am
Not in the currency space, but neverthless No Brainer has been the rise in the DAX and other European Equity Index numbers as a result of ECB QE?
I mention because many retail Fxbrokers now offer Index CFDs.
  • #8
  • Apr 15, 2015 12:45pm Apr 15, 2015 12:45pm
Quoting cliffedwards
Not in the currency space, but neverthless No Brainer has been the rise in the DAX and other European Equity Index numbers as a result of ECB QE? I mention because many retail Fxbrokers now offer Index CFDs.
@cliffedwards Another obvious one yes, totally agree!!
  • #9
  • Apr 15, 2015 5:09pm Apr 15, 2015 5:09pm
Nailed it on the head so far. This type of sentiment can obviously move the markets, and it's imperative to be aware of monetary policies within worldly government. Good one Gambler180!
  • #10
  • Apr 20, 2015 2:23am Apr 20, 2015 2:23am
Buying stocks in american companies would also have been a no brainer trade during the fed's stimulus. The same with the japanese stock market during abenomics.
If slaughterhouses had glass walls, everyone would be a vegetarian!
  • #11
  • Edited 8:41pm Apr 28, 2015 8:18pm | Edited 8:41pm
Quoting Gambler180
Are you aware of any current no brainer trades?
OK, I'll stick my neck out.

I've just sold AUDUSD at 0.8001, ahead of both tomorrow's FOMC and next Tuesday's RBA. Maybe not a no-brainer, but I see it as a potentially high reward-to-risk trade, over the coming few weeks. Reasons:

 I see AUDUSD as both overbought technically, and overvalued fundamentally.
 AUDUSD is currently in a supply zone on my H1 charts upward.
 0.80 is obviously a key psychological level.
 RBA's long(ish) term price target for AUDUSD is 0.75
 There are talks of a possible AUD rate cut to 2.0% on Tuesday. As price has been rising aggressively toward 0.80 in recent days, I don't believe that this has been priced in. Hence if the cut eventuates, AUD should have plenty of room to sell off. If the cut doesn't happen, I don't see any overriding fundamental reasons as to why AUD should continue to appreciate, especially if talk of a possible cut continues over the coming weeks.
 I've read commentaries that suggest that the FOMC must hike rates at some point, probably before the end of the year. The FOMC have stated that a hike is data dependent, and I can't see reasons for their being more dovish tomorrow (e.g. postulating a rate cut) than previously. Recent data has been bad, and USD has sold off to the point that I suspect that this has been priced in. Hence I see the likely outcome as being neutral to positive.

Sure, it's decidedly risky to attempt to pick a top against a strong trend, and ahead of these two important announcements, but I nonetheless see it as a potentially high reward-to-risk trade, for the reasons that I gave.

Now let's wait and watch the ax fall. LOL
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  • #12
  • Apr 28, 2015 8:49pm Apr 28, 2015 8:49pm
Quoting hanover
{quote} OK, I'll stick my neck out. I've just sold AUDUSD at 0.8001, ahead of both tomorrow's FOMC and next Tuesday's RBA. Maybe not a no-brainer, but I see it as a potentially high reward-to-risk trade, over the coming few weeks. Reasons:  I see AUDUSD as both overbought technically, and overvalued fundamentally.  AUDUSD is currently in a supply zone on my H1 charts upward.  0.80 is obviously a key psychological level.  RBA's long(ish) term price target for AUDUSD is 0.75  There are talks of a possible AUD...
Holy CRAP!

The legendary coder Hanover is trading!!!

Man that makes me feel good. I hope you win out.
If you are good at something, never do it for free--Joker
  • #13
  • Edited 4:10am Apr 29, 2015 3:59am | Edited 4:10am
Quoting hanover
{quote} OK, I'll stick my neck out. I've just sold AUDUSD at 0.8001.......
It may not be a no-brainer but fundamentally that's a solid trade on that time horizon. Regardless of what's been said and done of late, if you weigh up the major economic indicators on both sides ..... economic growth, unemployment, business & consumer confidence etc..... the things that kinda, sorta, sometimes indicate where a currencies future fair value may lie - things are still pointing down for the aussie and up for USD.

I've been watching this pullback with interest, I'm just not as confident with the timing as yourself. (Too many times I've been burned by being right at the wrong time, timing is by far the hardest part of fundamental analysis IMO). So each day I'm placing sell orders at the bottom of the previous days range, to be triggered when price breaks its series of higher lows and starts flying south for the winter.
si hoc legere scis nimium eruditionis habes
  • #14
  • Apr 29, 2015 4:08am Apr 29, 2015 4:08am
I am with hanover on this one..selling aud..target 0.76
  • #15
  • Apr 29, 2015 5:30am Apr 29, 2015 5:30am
I suggest oil E&P companies. You can play this as long oil CFD if you wish, or any other instrument.
I am getting into some E&P stocks and it pains me to think that the bottom may have been March some time.
However I still await the oil shake-out due to oversupply and all the other factors, particularly Iran being allowed 'back in'.

Quoting cliffedwards
Not in the currency space, but neverthless No Brainer has been the rise in the DAX and other European Equity Index numbers as a result of ECB QE? I mention because many retail Fxbrokers now offer Index CFDs.
I am already in some European focused funds as a result of Draghi introducing QE and as a direct result of the effects of FED QE on the SP500 etc.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #16
  • Apr 29, 2015 8:13am Apr 29, 2015 8:13am
Quoting Exodus
I suggest oil E&P companies. You can play this as long oil CFD if you wish, or any other instrument. I am getting into some E&P stocks and it pains me to think that the bottom may have been March some time. However I still await the oil shake-out due to oversupply and all the other factors, particularly Iran being allowed 'back in'. {quote} I am already in some European focused funds as a result of Draghi introducing QE and as a direct result of the effects of FED QE on the SP500 etc.

The interest charges on oil CFDs is enormous. To hold a CFD position on one year with Oanda, using no leverage, would cost you 41% of your account in interest and rollover payments alone.

So it isn't really a viable way to go long oil, unless there are other companies which offer it more cheaply?

I have looked long and hard and the best way I can see is to own shares in good companies.
  • #17
  • Apr 29, 2015 8:30am Apr 29, 2015 8:30am
Quoting verv
{quote} The interest charges on oil CFDs is enormous. To hold a CFD position on one year with Oanda, using no leverage, would cost you 41% of your account in interest and rollover payments alone. So it isn't really a viable way to go long oil, unless there are other companies which offer it more cheaply? I have looked long and hard and the best way I can see is to own shares in good companies.
41% !!

That is robbery.....

I am buying shares. Also considering an iShares holding in EUE (ticker symbol). ...but also waiting for a good entry price on two E&P companies.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #18
  • Apr 29, 2015 9:04am Apr 29, 2015 9:04am
I'm buying USD/JPY ahead of FOMC @ 119. Abenomics and the eventual rise in rates in the US are the reason why. Small risk, as a floor seems established. Gonna shoot for 124.
  • #19
  • Edited 9:42am May 4, 2015 9:31am | Edited 9:42am
With apologies to Gambler180 thread starter..
May I make a suggestion..

Given the premise of this thread..
ie.. That certain fundamental events many of which I note have involved changes in monetary policy by different CBs , have made major movements in certain instruments inevitable (ie No Brainer) And that to which (at least in retrospect) we've been able here to identify causal links?..


How about applying what wever shared here, in looking FOREWARD??
and examining the POTENTIAL of currently threatened/possible fundamental developments... eg Fed Rates/Grexit/, ECB/BoJ/QE tapering, Bond market moves.. etc etc
AND SHOULD THEY HAPPEN, which instruments each would have significant No Brainer consequences for specific instruments?.

So how about from here.. we put new life in this thread, by sharing some thoughts on a couple of upcoming high probability fundamental scenarios..
and what NB opportunities might result? in other words, lets try to apply lessons from the "Rear-View Mirror view.. to the Windscreen?)

OK Let me kickoff with this idea... and question the effect on Gold Price if the much touted Fed rate increase becomes imminent?
On this, my thoughts suggest a heavy sell-off. Anyone agree? No?
OK.. What have I missed? Whats the case for contrary?, and what other instrument do YOU think might make a better NB call?

Further.. what OTHER major scenarios threatened from Fed/ECB/BoJ/BoE reaction to current global economic developments, or arising from the bond market or Grexit does anyone think might create a new NB Trade?
  • #20
  • May 4, 2015 10:00am May 4, 2015 10:00am
Hi Cliff, I did try to look forwards in my posts above - as I mentioned I am buying EZ stocks on the effects of EZQE. Maybe you think that is not a NB?

I agree with your expectation for gold price when the FED starts raising rates.

Two other NB scenarios on the horizon:
- any minute is the possibility that Junker or Djieselbloem will make a press statement that Greece has agreed to more reforms and been given €10bn.
- less imminent but just as unpredictable, talks with Iran founder and they are back on the Black list.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
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