Money Flow Trading Method along with Risk Management

Good day fellow traders on Forex Factory. I have been trading Forex for over 10 years now and with the incredible movements on a monthly basis which has been caused by the intervention efforts of the world's central banks trading today is much different trading before 2008. Thus RISK MANAGEMENT must be a priority for any serious forex currency trader. You should never RISK more than 5% of your trading capital on any one trade plan. I also strongly suggest that you never trade more than 20% of your total trading capital at anytime. Example - If you are trading $50,000 in US Funds NEVER have more than 20% or $10,000 US Dollars on your various trade plans always using the 5% rule for risk on each trade plan being used.

The Money Flow Trading Method is based each trading day on Risk On or Risk Off which means are the markets heading down or heading up. I use the DOW to determine this each day. When the markets head down and we have Risk Off the money flows into US Dollars first and then the money is parked usually into US Bonds so the bonds go up and the yield goes down. Money also flows to USD/JPY. I will give more explanations when the forex markets reopen on Sunday. If you have any comments or questions please post them on this thread. Tomorrow we have two important events the most important being the referendum in Italy.

The results will move the markets whichever result we see. This is a Fundamental Fact and that combined with Technical Indicators as to Support and Resistance along with investor perception of the meaning of the results short term will lead the direction of the market. I will be thinking of going short on USD/JPY depending on the results of course and Risk being off.

http://www.zerohedge.com/news/2016-1...ops+to+zero%29

Snippet:
The main concern in the markets - which has manifested itself in both the European currency, its vol structure, as well as Italian bond yields - is that a strong “No” vote will cause Prime Minister Renzi to resign, leading to political instability in Italy. Furthermore, a "No" vote is expected to kill a long-running attempt to rescue Italy's third largest and oldest bank, Monte dei Paschi, which has been desperate for a private sector bailout ever since it failed this summer's ECB stress test to avoid broader banking sector contagion; a failure of Monte Paschi will likely spark a fresh eurozone banking crisis, and prompt the ECB to get involved again (as it warned it would do), in a redux of what happened after the Brexit vote.
Also on Sunday, there is also a presidential election in Austria. A victory by the right-wing candidate, Norbert Hofer, would raise concerns about EU fragmentation because his party has advocated a referendum on EU membership. His victory would also raise concerns about a similar outcome in the French elections in May, and many other upcoming European elections as shown in the calendar at the bottom of this page:
However, while the Austrian vote will again be down to the wire - and since this time there won't be any Brussels-endorsed "widespread voting fraud", Norbert Hofer is assured to win - the key event will be the Italian vote. Here is what to expect in terms of timing:

1. Provisional turnout results from 7pm GMT (2pm ET)
2. Exit polls then expected around 10pm GMT on Sunday night (5pm ET)
3. First projections by Italian pollsters based on counted votes at around 10.45pm GMT (5:45pm ET)
4. Final result will come in around 2am on Monday (9:00pm ET)

In the highly improbably event the "Yes" vote wins, Deutsche Bank analysts write that a rebound in the Italian equity market should be largely restricted to financial stocks. Although the FTSE MIB is trading at a 15% discount relative to its 10-year average vs. Europe, valuations look substantially less attractive once banks are excluded from the index. The relative P/E of the FTSE MIB ex banks is trading in line with its long-term average vs. Europe ex banks. Several Italian sectors are even trading at a premium vs. their European peers, showing no signs yet of a spillover of banking sector risks.
That may change in just a few hours.
The biggest question from tomorrow's vote, is what happens to Italian PM Renzi should he lose the vote, and as France 24 reports, if voters reject Renzi's plan to streamline parliament, the centre-left leader has said he will step down.

USD/JPY has had a great run up and if the Dow reverses then USD/JPY will reverse for safe haven. This is now one of my Trade Plans once executed.

Great Visual Resource that I use.

http://finviz.com/forex_charts.ashx?p=d1&t=USDJPY

Good Morning Fellow Traders which includes men and women. This morning I will talk about GOLD which is also a currency and the safest store of value in the world and has been for 5000 years. It is no person's debt and it is a store of value. However in many ways SILVER is the better store of value since there is a shortage of silver in the world and as an investment using the ratio during 1980 when Gold was over $800 US and Silver was at $50 US for a ratio of 16 to 1.

When money flows into US Bonds and US Dollars and other currencies it also flows into hard assets such as copper and zinc however Gold and Silver are also currencies. If anyone would like to discuss this further please register with Forex Factory so we can communicate if you are not a member at present time. Have a great Sunday and by 5 PM EST we should have the exit poll results on the Italian Referendum.

Edit to add a good resource site concerning Gold. https://www.bullionstar.com/blogs/koos-jansen/

Very Topical Subject and one all currency traders at all levels should read and try to understand. I will extract a few SNIPPETS

http://www.zerohedge.com/news/2016-12-04/eurodollar-market-it-all-starts-here?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+
for+everyone+drops+to+zero%29

Snippet:

Bonds, Not Currency
Where the rubber meets the road is where this is tradable. Otherwise all we're doing is engaging in intellectual masturbation which while it's fun doesn't change our income statement or balance sheet and that's the objective here after all.

Ok, so we've just run through an admittedly extremely abbreviated discussion of the eurodollar financing market but one which hopefully provides you with some grasp of how it functions and it's importance. As complex as the eurodollar financing market is, understand that the eurodollar futures market is a market which ultimately prices risk, and it is, I believe, the best pricing of risk we can look at in the global market.

Eurodollar futures are NOT currency futures.

Let me explain. Take Aussie dollar currency futures. These are plain vanilla currency futures. Ditto any other currency.

Eurodollar futures, on the other hand, are nothing like this as they are in fact cash settled futures contracts whose price moves in response to the interest rate offered on those dollar time deposits held in offshore (non-US) banks.

They are therefore interest rate products not currency futures and this is why I just said that this market is the best market in the world to understand global risk.
These loans or time deposits between banks are reflected in an average rate of interest charged. This is the London Interbank Offered Rate (LIBOR).
LIBOR

The rate at which banks are borrowing from and lending to each other is therefore a derivative of the eurodollar market.

The essence of the eurodollar market is that it provides us a window into where the crowd thinks LIBOR will be at a point in the future. So eurodollars are all about expectations of the future.

LIBOR, which indicates the pricing of risk in the eurodollar market, IS the market. Take a look at the chart above. Right now it's telling us we'll get a rate hike in December. Don't believe me? Why don't we wait and see, shall we?

In order to properly demonstrate my Money Flow and Risk Management Method that has operated successfully for the last 10 years I just opened up a $50,000 US Dollars Demo Account with FXCM UK.

See Below !!!

Statement Period:from Dec 4, 2016 1:20:03 PM through Dec 4, 2016 1:24:39 PM
User Name:Benjamin Is Currency
FXCMUK

Benjamin Is Currency
Costa Rica
Trade account #: 02706903Created at: Dec 4, 2016 1:20:03 PMStatus: ActiveBase currency: USD

Before I do any FX currency trade I always develop a Trade Plan as previously explained. So my Trade Plan will be to SHORT (Sell) 3 $100,000 US Dollar contracts of USD/JPY in 3 stages. My first trade will be my base trade and my MAXIMUM LOSS would be 100 PIPS or $1000 US Dollars. My second position when opened would also have a ENTERED STOP LOSS of $1000 US Dollars and so would my third and LAST position. With this strategy my MAXIMUM loss is $3000 US Dollars or 3% of my trading capital. After I enter the 3 positions I will print out a updated statement in Real Time so we all can follow along.

Again if you are a member of Forex Factory all feedback or questions are welcome and appreciated. If you are not registered as a member please register so that you can participate in this thread and other threads of course. Thank You !!!

Opening Balance in US Funds !!!

Time PostedCodeDescriptionAccount #Ticket #AmountBalance

12/4/16 1:20 PMDeposDeposit02706903 50,000.0050,000.00

Total:50,000.00
ACCOUNT SUMMARY

Beginning Balance0.00
CommTrading Commission0.00
RolloverRollover Fee0.00
PnLProfit/Loss of Trade0.00
DeposDeposit50,000.00

WithdWithdrawal0.00
OptionOptions Payout0.00
CommOptions Commission0.00
AdminFeeAdministrative Fee0.00
MngFeeManagement Fee0.00
PerfFeePerformance Fee0.00
VoidDeposit Rollback0.00
ASPCommASP Commission0.00
MargInterestInterest on Usable Margin0.00
SubscriptionFeeSubscription Fee0.00
RRebRollover Rebate0.00
Div_AdjDividend adjastment0.00

Ending Balance 50,000.00
Floating P/L0.00
Equity50,000.00
Necessary Margin0.00
Usable Margin50,000.00

Notes:
"THIS IS A DEMO ACCOUNT WHICH IS TRADED WITH VIRTUAL FUNDS. NO REAL MONEY IS USED IN TRADING THIS ACCOUNT. Demo accounts are used primarily for education purposes, testing of strategies, and familiarizing traders with market movement and the FX Trading Station. There are inherent risks associated with online trading that may arise due to downtime, currency fluctuation and other risks associated with currency speculation. Only risk capital should be used when trading a real account."


ACCOUNT SUMMARY
Beginning Balance0.00
CommTrading Commission-4.00
RolloverRollover Fee0.00
PnLProfit/Loss of Trade0.00
DeposDeposit50,000.00
WithdWithdrawal0.00
OptionOptions Payout0.00
CommOptions Commission0.00
AdminFeeAdministrative Fee0.00
MngFeeManagement Fee0.00
PerfFeePerformance Fee0.00
VoidDeposit Rollback0.00
ASPCommASP Commission0.00
MargInterestInterest on Usable Margin0.00
SubscriptionFeeSubscription Fee0.00
RRebRollover Rebate0.00
Div_AdjDividend adjastment0.00
Ending Balance49,996.00
Floating P/L-147.44
Equity49,848.56
Necessary Margin1,000.00
Usable Margin48,848.56


Notes:
"THIS IS A DEMO ACCOUNT WHICH IS TRADED WITH VIRTUAL FUNDS. NO REAL MONEY IS USED IN TRADING THIS ACCOUNT. Demo accounts are used primarily for education purposes, testing of strategies, and familiarizing traders with market movement and the FX Trading Station. There are inherent risks associated with online trading that may arise due to downtime, currency fluctuation and other risks associated with currency speculation. Only risk capital should be used when trading a real account."

The results are in and it appears that Renzi has lost and will address the nation of Italy by 6:30 PM EST or 11 GMT.

I put on 1 trade and here it is...

113911851USD/JPY100,00012/4/16 5:16 PM113.099 -147.44-4.000.000.00-151.44Mktd102717113001
12/4/16 5:23 PM 113.266
Total:-147.44-4.000.000.00-151.44


Posted at statement period of time:-4.000.000.00
ACCOUNT ACTIVITY

Time PostedCodeDescriptionAccount #Ticket #AmountBalance
12/4/16 1:20 PMDeposDeposit02706903 50,000.0050,000.00
12/4/16 5:16 PMCommTrading Commission02706903113911851-4.0049,996.00
Total:49,996.00

After the speech by the Prime Minister , I will most likely put on my second position in advance of Japan opening afterwards. I will hold off on my third position until I put on my second position. The position is based on Risk Off which I expect will happen once the North America markets open at 9:30 AM EST !!!

The Prime Minister has stated that he will hand in his resignation tomorrow. We have Major Risk Off for the next 24 hours around the world. This is a MAJOR event after Brexit and Trump and maybe the final nail in the coffin of the Eurozone.

I put on my second position.

OPEN/FLOATING POSITIONS
Ticket #SymbolVolumeDateSoldBoughtFloating P/LCommDividendsRolloverNet P/LConditionCreated By
113911851USD/JPY100,00012/4/16 5:16 PM113.099 11.50-4.000.000.007.50Mktd102717113001
12/4/16 6:33 PM 113.086

113914969USD/JPY100,00012/4/16 6:23 PM113.076 -8.84-4.000.000.00-12.84Mktd102717113001
12/4/16 6:33 PM 113.086
Total:2.66-8.000.000.00-5.34

Posted at statement period of time:-8.000.000.00
ACCOUNT ACTIVITY
Time PostedCodeDescriptionAccount #Ticket #AmountBalance
12/4/16 1:20 PMDeposDeposit02706903 50,000.0050,000.00
12/4/16 5:16 PMCommTrading Commission02706903113911851-4.0049,996.00
12/4/16 6:23 PMCommTrading Commission02706903113914969-4.0049,992.00
Total:49,992.00

ACCOUNT SUMMARY
Beginning Balance0.00
CommTrading Commission-8.00
RolloverRollover Fee0.00
PnLProfit/Loss of Trade0.00
DeposDeposit50,000.00
WithdWithdrawal0.00
OptionOptions Payout0.00
CommOptions Commission0.00
AdminFeeAdministrative Fee0.00
MngFeeManagement Fee0.00
PerfFeePerformance Fee0.00
VoidDeposit Rollback0.00
ASPCommASP Commission0.00
MargInterestInterest on Usable Margin0.00
SubscriptionFeeSubscription Fee0.00
RRebRollover Rebate0.00
Div_AdjDividend adjastment0.00
Ending Balance49,992.00

Floating P/L2.66
Equity49,994.66
Necessary Margin2,000.00
Usable Margin47,994.66

Notes:
"THIS IS A DEMO ACCOUNT WHICH IS TRADED WITH VIRTUAL FUNDS. NO REAL MONEY IS USED IN TRADING THIS ACCOUNT. Demo accounts are used primarily for education purposes, testing of strategies, and familiarizing traders with market movement and the FX Trading Station. There are inherent risks associated with online trading that may arise due to downtime, currency fluctuation and other risks associated with currency speculation. Only risk capital should be used when trading a real account."

I decided to open a second trade plan because of short covering in EUR/USD and I just shorted my first position of $100,000 US of EUR/USD at 105.40 and I will see where things stand at the Frankfurt open tomorrow morning. My total margin used is now at $3200 US Dollars for my three open positions. If I have on all 6 positions the capital used will total $6600.00 and my Net Possible loss will be $6000 US however I expect to close all positions at a profit most likely over the next 24 hours. You can never lose taking a good profit trading forex.

Good Evening !!!

Just for the record I normally only trade from 2:00 AM EST at the Frankfurt open until 5:00 PM EST when the North American markets are closed. There is just not enough volume and my Money Flow Method works when all the Equities are trading so we start with the DAX , FTSE and CAC. By 6:00 AM when North America comes on board and the MSM gives their two cents worth. By 9:30 AM to 11:30 AM when Europe goes home and most major news comes out between 8:30 AM and 10:00 AM and daily Options on currencies close out for some of them at 10:00 we have plenty of material to work with. I do use technical indicators to determine entry and exit. We are in interesting times for the rest of December with the Electoral college declaring on December 19, 2016 and on December 31, 2016 we shall see the Shanghai
Gold Exchange become very important because for the FIRST TIME Muslims can trade Gold and associated products as Comex which is effectively a paper market becomes less relevant. 2017 will be an extraordinary FX trading year.

$3000 of your $50000 demo account is 6% not 3%? Maths is KEY!

http://www.zerohedge.com/news/2016-1...ctor-contagion

Snippet:

As we noted last night, when we previewed the virtually assured "No" vote, we said that "a strong “No” vote will cause Prime Minister Renzi to resign, leading to political instability in Italy. Furthermore, a "No" vote is expected to kill a long-running attempt to rescue Italy's third largest and oldest bank, Monte dei Paschi, which has been desperate for a private sector bailout ever since it failed this summer's ECB stress test to avoid broader banking sector contagion; a failure of Monte Paschi will likely spark a fresh eurozone banking crisis, and prompt the ECB to get involved again (as it warned it would do), in a redux of what happened after the Brexit vote."


Sure enough, as the WSJ wrote moments ago, "when markets open Monday morning, all eyes will be on Banca Monte dei Paschi di Siena, Italy's troubled No. 3 lender, which is considered particularly vulnerable to fallout from a 'no' vote, which could complicate its plans to raise capital. Investors will be watching closely for any signs of a run on the bank, a situation that could force the government to move quickly with emergency measures."




For those who have not been following the seeming endless bailout saga, and growing crisis, at Italy's third largest - and most insolvent - bank, here is the quick rundown:

1. 2007: Monte dei Paschi buys Banca Antonveneta for EUR9.3 Billion
2. 2011: European stress test finds the bank has a capital hole of EUR3.3 billion
3. 2012: MPS's chairman and top management are replaced
4. 2013: The lender borrows EUR4 billion from the government to stay afloat
5. June 2014: MPS raises EUR5 billion in fresh capital and pays back EUR3 billion of the government loan
6. Nov. 2014: New stress tests find the bank the worst capitalized lender in Europe. The ECB takes over as its supervisor. The bank is officially declared up for sale
7. 2015: MPS raises EUR3 billion in fresh capital and pays back the rest of the government loan
8. 2016: Announces plan to raise EUR5 billion and sell EUR28 billion in bad loans

Thanks :-) You are correct it is 6% and since that post I have added a second trade plan and am now short $200,000 EUR/USD and short $200,000 USD/JPY

The reason that I do NOT put on my third position on either of my trade plan is it is because it is usually my third position that is the most profitable as I scale in my positions rather than buy them all at the same time. The next 24 hours will most likely see many movements in the currencies and keep in mind that since the Trump rally is way overdone we may see a MAJOR reversal in Risk Off and money will flow to Gold and USD/JPY and with the weakness in EUR/USD it will be interesting to see how the US Bond market and the other Bond markets react.

Edit to Add FINVIZ link - 10 Year US Bonds. http://www.finviz.com/futures_charts.ashx?t=ZN&p=d1

You can see money FLOWING into the 10 Year US Bond for safety and look at the gap on the 5 Minute chart. MONEYFLOW is my KEY to successful forex trading. http://www.finviz.com/futures_charts.ashx?t=ZN&p=m5

From Mish

Cameron - UK -Gone Sarkozy - France -Gone Hollande - France -Gone Hillary - US -Gone Merkel - Germany -Pending Rutte - Netherlands -Pending

First Brexit then Trump then Renzi and the PEOPLE stop being Sheep and the EUROZONE will break up and 2017 will be a fascinating year.

http://wolfstreet.com/2016/12/04/ita...for-taxpayers/



Snippet:



The most urgent case is Italy’s third largest bank, Monte dei Paschi. It has already raised new capital twice in recent years, only to re-collapse. The third time is not going to be the charm, investors have decided. They’ve lost their appetite for losing even more money on this morass.
Now, according to the Italian daily Corriere della Sera, reported by Reuters, Italy is in secret discussions with the European Commission to allow a taxpayer bailout of the bank as early as next week. According to the current calculus, the bank needs another €5 billion to stay afloat, or else it might be “resolved” by regulators, which would likely entail some big losses for junior bondholders, which in Italy, are mostly retail investors who’d been suckered into buying these bonds.
This kind of bailout would require that Italy can issue bonds a low interest rates. But yields on its government bonds have been rocketing higher, making these bailout bonds much more expensive.

https://www.armstrongeconomics.com/i...rend-votes-no/

This is a GREAT Resource to use and it is a free resource.

We are witnessing what a Private Wave is all about. The Italian Referendum came in on point with the NO vote at 59.4% against 40.6%. Our model is now four for four with BREXIT, Trump, Hollande in France exiting the election, and now Italy. We will see the same defeat for Merkel.

What politicians do not grasp is that they have destroyed the world economy with taxes and regulation. Enough is enough. In Europe, the single currency has totally failed because it required a single debt. The refusal to consolidate the debts has been the death of the Euro.

This is all playing out into a major dollar rally for like a game of musical chairs, it’s the last place to park money.

Good Morning Everyone

My subject this morning is PERCEPTION and REALITY. The results of the Italian referendum last night are a perfect example of that. In normal times which means free markets where we have proper price discovery, it is easier to make speculative decisions on market trades. Today we all live in a financial world where the truth is always distorted by those in control. The control for the moment rests with the Central Banks of the world led by The Federal Reserve and followed by the ECB and the BOJ and the BOE.

After the financial meltdown of 2008 involving Lehman Brothers and TARP, which originally was voted down in the USA and then approved, the financial world entered into uncharted waters never ever seen before. It started with QE in the USA and it continued with Draghi in Europe saying he would do whatever had to be done. We also see the failed monetary policies of the last ten years in Japan by the BOJ.

So now we live in a world of NIRP and the attempt all over the world especially recently in India removing the 500 Rupee and 1000 Rupee as legal tender. Because of the Money Printing and Helicopter Drops clearly stated by Bernake in his role as Fed Chairman, there has been so much electronic cash created that now the Central Banks of the World must remove actual cash from the World before the Public figures out that the real cash does not exist and if everyone realized the truth that all monies would be removed from the banks of the world and our financial systems would immediately collapse.

So with the first two paragraphs as background is it any wonder that at times the ability to understand day to day movements in the various currencies is impossible. The fact that EUR/USD has gone up and the markets are ignoring the REALITY and looking as the market psychology of the PERCEPTION then it follows that the MARKET is always right until it is not. Another excellent example with real life consequences is the behavior of the US Stock Markets and the World Bond Markets since November 8, 2016 and the election of Donald J Trump.

Based only on hope and surely, NOT REALITY the wrong assumptions of stimulus in the USA with the NEW Trump Presidency has lead to over Two Trillion Dollars of loss in the World Bond Markets and new highs in the Dow and SP500. There is no possibility that everything will NOT reverse, when REALITY TRUMPS PERCEPTION and that is the whole point. It is in knowledge of reality and the timing of the reality taking effect.

It would be most appreciated to have some feedback so intelligent discussions can be entertained. This week might be the week for REALITY when we hear from the ECB on Thursday and of course next week the FED meets on December 13, 2016 and comes out with their Rate Decision on December 14, 2016. This could be the principle of buy the rumor and sell the news which is what seems to have happened with Italy and the referendum results. When the FED raises rates for the first time in one year even though last December when they raised there was strong indication by them of 4 more raises during 2016. We live in interesting times.

Dear Benj. hi. I am afraid I don't understand the " ...it required a single debt. The refusal to consolidate the debts has been the death of Euro. " Could you pls elaborate...?
kind regards
F.G.