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  • #21
  • Edited 5:17pm Feb 22, 2017 4:55pm | Edited 5:17pm
Thought I would put fingers to keyboard to describe how I day trade major economic releases

Here is an example:

At the moment the Fed are going to hike interest rates. So leading up to a major event like the FOMC minutes is obviously important
Firstly, I read what the banks are thinking
https://www.efxnews.com/story/35416/...10-major-banks
So we can see that the main banks - Goldman, BofA Merrill, Morgan Stanley are fairly bullish

So going into the event there should be dollar strength- which we can see
Quite often in these events its a case of buy the rumour sell the fact- so after the minutes had been released the does the opposite. (hence the sell off)

We had a similar event last week on employment figures for the Aussie.

GL
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  • #22
  • Mar 8, 2017 8:18pm Mar 8, 2017 8:18pm
Thought I would write some stuff on fundamentals- as there does not seem to be that much information around.
The thing about trading fundamentals is that we don't need to trade that often. We want to trade the flows of money - when it is demand

There are different types:

Geopolitical Events
Ie: A head of state speech will definitely attract the attention of traders. It can move the market for months. Look at Trumps speech when he was inaugurated and the effect it had on the UJ. This caused billions of dollars to flow from bonds into equities- hence demand for the dollar.
It is so very very important to know what heads of state are likley to say - particularly if it is a major speech. Also the run up to and the night of election results are great times to trade.

Trading Sentiment: Trading sentiment is where we trade into an event- and the one where the banks and everyone knows what it is. It really depends on what the even is. But will start at least a day or more before the event. This is a great trade - just look at the EURUSD this week. Its been down for the last 4 days as everyone waits for what Draghi will do.

Month End Flows: There are various flows but the one I like is theEURGBP- it takes place about 3 days before the last day of the month. Its a great trade and one of the easiest. The pound drops and the Euro rallies. Obviously this will be amplified as we approach the end of March.

Indicators
Indicators that central banks are looking to determine rates will move price especially if it is away from the estimate. NFP and wage inflation will be under serious examination by traders this week. This is because Yellen made reference to up and coming figures being important in her speech on last Friday.
The best way to trade it - is if we have a large beat or miss against expected. Then I jump in on the first pullback. Remember this is a highly volatile period so I always take it easy. Also there may be a number of releases at the same time - so be careful the market can whipsaw

Central banks
There is no question it can move price. Especially when they change their bias. Look at Wheeler's speech a couple of weeks ago on the Kiwi. The Kiwi is off significantly. A change of bias can last for weeks. Poloz said was bearish on the Canadian economy - and look where it is now. When you link in oil - you build up a picture of the main things driving the price of a currency (US pumping too much oil, Russia not doing enough in respect of cuts to Crude oil production- now won't agree to further cuts)

News stories; relevant stories will have an effect for about a day or so or it can even be just that session. When the story breaks it will have the most effect. Sometimes traders will jump on to the back of it during the next session. So wait for a pullback and then get on. For instance Trump said a about 3 weeks ago that he wanted a lower dollar. This had an immediate effect for a couple of days.

Risk-off Events: A risk off event is something what has happened that can effect future economic/political circumstances of a country (elections, terrorist attack, resignation by a head of state, banking crisis in 2008). This is where we have flights to safe havens typically Gold, JPY and CHF. There is a chap on FF called Benjamis who specialises in this trade.

Commodities: Some currencies are linked to commodities
Aussie- Iron ore- and influenced by what happens in China
Loonie (CAD)- Oil
NZD- Dairy
The Yen is inversely related to the price of oil - so if the price of oil comes off the Yen moves up.
This is because Japan imports nearly all of its oil

We had this today- Crude Oil Inventories were +7m over expected.
So as above this would have been a very easy trade to take

Good Luck all

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  • #23
  • Mar 8, 2017 10:45pm Mar 8, 2017 10:45pm
Quoting Fader123
Thought I would write some stuff on fundamentals- as there does not seem to be that much information around. The thing about trading fundamentals is that we don't need to trade that often. We want to trade the flows of money - when it is demand There are different types: Geopolitical Events Ie: A head of state speech will definitely attract the attention of traders. It can move the market for months. Look at Trumps speech when he was inaugurated and the effect it had on the UJ. This caused billions of dollars to flow from bonds into equities- hence...
Thanks Fader123 for shedding light on out of the box topic. Will be following keenly...
  • #24
  • Mar 11, 2017 1:01pm Mar 11, 2017 1:01pm
Quoting Fader123
Thought I would write some stuff on fundamentals- as there does not seem to be that much information around. The thing about trading fundamentals is that we don't need to trade that often. We want to trade the flows of money - when it is demand There are different types: Geopolitical Events Ie: A head of state speech will definitely attract the attention of traders. It can move the market for months. Look at Trumps speech when he was inaugurated and the effect it had on the UJ. This caused billions of dollars to flow from bonds into equities- hence...
Read this stuff again... this is a comprehensive list of great practical systems of trading the fundamentals. I am bookmarking this.

I have some questions:

1. Going into events, what is your preferred move? Buy the rumor? or sell the fact?
2. Do you trade interest rate differentials/divergence i.e higher rate currency vs lower rate currency? If yes how do you do it? and over what timeframe.
3. How do you choose which event to trade?

Thanks fader.
  • #25
  • Edited 5:20pm Mar 11, 2017 2:47pm | Edited 5:20pm
Quoting 4rXal-ghul
{quote} Read this stuff again... this is a comprehensive list of great practical systems of trading the fundamentals. I am bookmarking this. I have some questions: 1. Going into events, what is your preferred move? Buy the rumor? or sell the fact? 2. Do you trade interest rate differentials/divergence i.e higher rate currency vs lower rate currency? If yes how do you do it? and over what timeframe. 3. How do you choose which event to trade? Thanks fader.
In answer to your questions:

1) Overall I think buy the rumour - there is less chance of something going wrong, less volatility.
Fading economic releases can be tricky. First of all there is the volatility from the event. My ideal fade set up is strong momentum into the event a match on expected. After the event there is usually a re-test of the high or low and then it starts to pull back. Fading speeches is probably easier- last week I faded Yellen's speech on a week ago when she confirmed that there will be a hike in rates at the next meeting. It was only 50 pips but I was certain what traders were doing (getting out of their longs before Friday's close) - Who wants to be long on the dollar going into the weekend with Trump on Twitter.

2) I don't do carry trades but I would take these trades: ie one CB is looking to hike, the other looking to cut
Say USDJPY. Assuming that there is no risk-off sentiment- then I would look to buy the dollar on dips at daily support
Really you need to know the bias of each central bank before doing this. I should have included this in the list above.

3) Which events - this is tricky. Really its the indicators that CBs are looking at, broadly all CPI ones- except Japan, bank monetary statements, PMI services (UK), employment figures in Aus (if time permits), live speeches from central bankers and heads of state, Opec meetings, oil reports are a great trade - as they can last a number of days.
These can be very volatile during the events- so trade the sentiment into them (if there is any).

GL
  • #26
  • Mar 13, 2017 3:43am Mar 13, 2017 3:43am
Thanks fader123 for the response and great explanation!

"1) Overall I think buy the rumour - there is less chance of something going wrong, less volatility."

This makes a whole lot of sense. Trading into events is the most important part of trading sentiment that I want to master.

Pls can you give us live examples of this type of trading as they come
  • #27
  • Mar 13, 2017 3:59am Mar 13, 2017 3:59am
Interesting thread here.. Am happy to learn from you guys..
  • #28
  • Mar 13, 2017 1:22pm Mar 13, 2017 1:22pm
Quoting 4rXal-ghul
Thanks fader123 for the response and great explanation! "1) Overall I think buy the rumour - there is less chance of something going wrong, less volatility." This makes a whole lot of sense. Trading into events is the most important part of trading sentiment that I want to master. Pls can you give us live examples of this type of trading as they come
Like the phrase "that I want to master"

A few points I would like to make though:

A) 95% of retail traders lose
B) I don't want you or anyone else here in that category
C) The name of this game is to make money - forget about anything else.
That being the case, and as this game is one of probabilities, initially, I would look for a trader to trade for you. One that has a low draw-down and makes circa 10-15% per month to manage your account. MLQ5 or simple trader have traders with good track records.
D) Once you have mastered sentiment and practiced on a demo account for months successfully, then you are more likley to succeed on a live account.

To trade with sentiment - it boils down to research

Here is a breakdown on a 4 hr chart on UJ when the Fed previously hiked rates back in December and the current view of the market
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  • #29
  • Mar 14, 2017 11:42am Mar 14, 2017 11:42am
Quoting Fader123
{quote} Like the phrase "that I want to master" A few points I would like to make though: A) 95% of retail traders lose B) I don't want you or anyone else here in that category C) The name of this game is to make money - forget about anything else. That being the case, and as this game is one of probabilities, initially, I would look for a trader to trade for you. One that has a low draw-down and makes circa 10-15% per month to manage your account. MLQ5 or simple trader have traders with good track records. D) Once you have mastered sentiment and...
Thanks fader.
Great examples with the UJ charts! Makes it clearer for me.

The research part I'm willing to do.. but I need to know what I should look for and where to look. The flood of information that comes by daily can make this seem like such an impossible task. But this is especially why I'm happy to be in a community like this thread.
  • #30
  • Edited Mar 15, 2017 5:36am Mar 14, 2017 6:37pm | Edited Mar 15, 2017 5:36am
Sentiment is based on news releases from the likes of Bloomberg, Reuters, CNBC, plus what the banks think.
A few days before a major event - these news companies and banks will produce information regarding the up coming event.
If they are all broadly positive - this can create positive sentiment, going into the event.
If you really follow a particular currency - you will be able to preempt a lot of this by knowing what they will say -and so get in at a better price.
Sentiment can also be created from an event.
Look at Trump's speech when he was inaugurated, or Poloz's view on the Canadian economy following the cash rate meeting

Focus on the home runs - where you make 800+ pips and have a r:r of at least 3:1.
This is where the big money comes in. Smaller trades are ok- but you have to be certain.
Soros made his money on major geopolitical events- this is where the big money is to be made
  • #31
  • Mar 17, 2017 5:14pm Mar 17, 2017 5:14pm
Thought I would put up a checklist of things to look through before I'm ready to trade.

What levels are we at:

Support/resistance (daily)
Re-testing/extensions (daily)
Clearing congestion
Pivots (daily, weekly)
00 levels
What are the fixes
Draw trend lines

What is the overall state of an economy/currency in relation to:

Geopolitical
Central Bank bias
Major indicators
What do the banks think

What is happening now

What is the current sentiment (bearish, bullish, risk on risk off)
What day of the week are we Flow wise (Friday) or end of month flows
What month are we Flow wise
What is the ADR
How do traders in that session feel- how have they reacted in the past
What times of the day does price typically change direction

What is coming up

Geopolitical events- what has been said previously (critical)
Central Bank meetings- what has been said previously (critical)
Key economic indicators

Prepare for tomorrows trades today

Go down to the 15 minute time frames - spend all day looking at the charts - then trade

Also I thought I would put up my most recent trades- there are a few I screwed up
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  • #32
  • Mar 17, 2017 8:24pm Mar 17, 2017 8:24pm
Quoting Fader123
Thought I would put up a checklist of things to look through before I'm ready to trade. What levels are we at: Support/resistance (daily) Re-testing/extensions (daily) Clearing congestion Pivots (daily, weekly) 00 levels What are the fixes Draw trend lines What is the overall state of an economy/currency in relation to: Geopolitical Central Bank bias Major indicators What do the banks think What is happening now What is the current sentiment (bearish, bullish, risk on risk off) What day of the week are we Flow wise (Friday) or end of month flows...
Fader123,

Thanks for giving us the structure to work with.
  • #33
  • Edited 12:01pm Mar 18, 2017 9:52am | Edited 12:01pm
Thoughts for next week.

Monday
USD has taken a bit of a beating over the last couple of days (following on from the FOMC) Trump is due to speak - perhaps not the best place but could provide some strength to the dollar. Not sure though if market is getting a bit bored of Trumps speeches. Anyway lets see what he says.

EURO Weidmann from ECB due to talk- made reference to rate hike last week. Euro still recovering from meeting between Merkel and Trump. EJ was off big time on Friday. All in all not good at all. Also neeed to check any polls over the weekend. Just wondering if this sentiment will carry over to Monday morning. Usually it doesnt but think the weekend papers will be full of it in Germany. Might provide a decent pullback for Weidmanns speech.
Later, when Trump speaks - anything about hating the EU and thoughts of trade barriers and the Euro is in trouble. Obviously things did not go well between Merkel and Trump. So will be listening.

Tuesday
POUND; CPI figures due to be released. Estimate seems a bit high. If we get a miss the pound is in for a bit of a dip.
If we get a beat the pound will rally further.
If Trump gives a decent speech on Monday. The pound could be under further pressure. It all depends on what Trump says. At the moment the pound is up due to the BOE statement and Mays speech. Definitely something to keep an eye on.
Could be a nice trade here

Wednesday
KIWI: Any further strengthening in the Kiwi will only annoy Wheeler due to dollar weakness.
Dairy off, GDP off and now Yellen turns back to dovish-feels like it. Will need to review recent MP statements to gauge potential for a cut.

Plus there is a G20 meeting going on

GL
  • #34
  • Mar 18, 2017 12:16pm Mar 18, 2017 12:16pm
Quoting Fader123
Thoughts for next week. Monday USD has taken a bit of a beating over the last couple of days (following on from the FOMC) Trump is due to speak - perhaps not the best place but could provide some strength to the dollar. Not sure though if market is getting a bit bored of Trumps speeches. Anyway lets see what he says. EURO Weidmann from ECB due to talk- made reference to rate hike last week. Euro still recovering from meeting between Merkel and Trump. EJ was off big time on Friday. All in all not good at all. Also neeed to check any polls over the...
good post

If anything I like to add RBNZ is more likely to raise then cut.
Reserve Bank sees risks equally balanced


Aussie party should start declining from this point on.
In trading, you have to be defensive and aggressive at the same time
  • #35
  • Mar 18, 2017 12:29pm Mar 18, 2017 12:29pm
Quoting Davit
{quote} good post If anything I like to add RBNZ is more likely to raise then cut. Reserve Bank sees risks equally balanced Aussie party should start declining from this point on.
nice review, I agree, on aussie, though this is fundies thread, I'd wait for the RS in gold to complete before shorting. )))
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  • #36
  • Apr 10, 2017 3:59am Apr 10, 2017 3:59am
Quoting Fader123
...Really its the indicators that CBs are looking at, broadly all CPI ones- except Japan, bank monetary statements, PMI services (UK), employment figures in Aus (if time permits), live speeches from central bankers and heads of state, Opec meetings, oil reports are a great trade - as they can last a number of days. These can be very volatile during the events- so trade the sentiment into them (if there is any). GL
Pure gem!

Wish I've had this understanding earlier.

Thanks Fader123.
  • #37
  • Apr 10, 2017 5:27am Apr 10, 2017 5:27am
Hi - you are welcome
I should really try and keep this thread going- but its just getting the time.
In respect of sentiment- it can change.
So at the moment - everything is about Trump and Russia and the potential for war.
This will override anything particularly if it escalates- I cannot see it.
We have been here before with China - and now Trump and the Chinese Premier are best of friends.
Major geopolitical events/action are really important and can drive sentiment.
Obviously, things can change.
Price action needs to be factored into everything.
Just because we might have a story - that indicates price should fall- if its not confirmed on the charts -it can be because we have we can missed something.
It could be sentiment has not changed, traders (in that session) regard that story as not important, the newspapers for that session have picked up something else.

The best trades are where there is a change in bias from central banks- without doubt - they are the most reliable. There can be no misinterpretation
Look at the dollar recently - when it went from potentially 4 hikes this year to 3 at the most. It got dumped.
About 6 weeks ago Wheeler changed his view on the long term position of the Kiwi (from hike into two years to neutral)
So pay real close attention to central bank policy statements and speeches.
Don't trade all the time. Wait for the opportunities to present themselves. Its ok to be neutral.
Good luck
F
  • #38
  • Apr 10, 2017 7:24am Apr 10, 2017 7:24am
Quoting Fader123
Hi - you are welcome I should really try and keep this thread going- but its just getting the time. In respect of sentiment- it can change. So at the moment - everything is about Trump and Russia and the potential for war. This will override anything particularly if it escalates- I cannot see it. We have been here before with China - and now Trump and the Chinese Premier are best of friends. Major geopolitical events/action are really important and can drive sentiment. Obviously, things can change. Price action needs to be factored into everything....
Fader it's there a site where they update the central banks view? some sort of summary?btw thx for posting it helps me
  • #39
  • Apr 10, 2017 9:02am Apr 10, 2017 9:02am
Quoting vladutz112
{quote} Fader it's there a site where they update the central banks view? some sort of summary?btw thx for posting it helps me
Hi vladutz112

None that I have come across that I like.

There is centralbank news. http://www.centralbanknews.info/

Also there are various central bank watchers -some of the better ones are (imho):
www.zerohedge.com
https://dianeswonk.com (Fed - now charges)
https://twitter.com/david_milliken (BOE watcher)
https://twitter.com/fwred (Euro watcher)
https://www.efxnews.com (banks)

They might will provide some guidance on what is coming up

Again its more reading - you might as well just go to the source.
After a few months you will build up a bank of knowledge about the attitude of the governors towards their respective currencies and what they consider important
All this puts you ahead of most retail traders out there

If 8 currencies is too much just cut it down to a few.
  • #40
  • Apr 10, 2017 9:14am Apr 10, 2017 9:14am
Quoting Fader123
{quote} Hi vladutz112 None that I have come across that I like. There is centralbank news. http://www.centralbanknews.info/ Also there are various central bank watchers -some of the better ones are (imho): www.zerohedge.com https://dianeswonk.com (Fed - now charges) https://twitter.com/david_milliken (BOE watcher) https://twitter.com/fwred (Euro watcher) https://www.efxnews.com (banks) They might will provide some guidance on what is coming up Again its...
thx i do read all i find about fundamental but i still don't get my head around them i guess i have to keep reading btw do u think that today CAD strength was because the housing starts beated expectations?
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