Monthly Archives

January 2017

Here is an example of a trade strategy that is logical but “outside the box”

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  1. At 09:30GMT there were 3 simultaneous “Tier 2” UK news releases and all three were worse than the consensus forecast
  2. GBPUSD had an uncharacteristically small range so far for usually volatile 09:00GMT to 10:00GMT hour
  3. The binasry option 17 pips out of the money for 10:00GMT expiration was only $6.50 to win $100.00 (so about 13 to 1 odds)
  4. I took it and it worked beautifully

Has the US Dollar already began what will be a major fall in 2017?

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I think so because the way I am reading it Trump and Mnuchin told me so.

  1. Trump wants the USD lower to
    a) help American exporters export more (goods become cheaper for foreign buyers if the USD is worth less)
    b) help make American based businesses more competitive by raising imported good prices (goods imported become more expensive if the dollars to buy them are worth less)
  2. Mnuchin wants to work with Trump to get the USD lower
    a) Mnuchin said in his testimony the USD is very high and explained why
    b) Then hedged by saying in the long run a strong USD is in the US national interest (it’s the period between now and the long run that currency traders should be focused on)

The price action since Thursday 15:00GMT when Mnuchin started speaking so far slightly favors a weaker USD (despite the media’s spin that Mnuchin favors a stronger USD).
The zerohedge article tells the full story and to me Mnuchin is setting the stage for a “USD markdown”

http://www.zerohedge.com/news/2017-01-19/what-steve-mnuchin-thinks-about-strong-dollar

SHORT USDAs a trade I like being short the USD right now versus the five major pairs where the currencies have the upper hand since pre-Mnuchin confirmation; all except USD as of Friday’s close.

If the USD gets rolling to the downside the pre Trump election win levels are the “lines in the sand”; below that the USD could free fall.
The reason I see the potential for a free fall is the “new trading environment” of 2017 where the risk being taken are extraordinary but neatly “boxed up” as hedges, tranches, and
lots of other names; the power of these time bombs only becomes clear when detonated. One cannot argue that the flash crashes are becoming more frequent and nobody really
understands them.

FLEXIBLE
As a trader I accept that my timing could easily be off. Or maybe it’s not off but the exchange rates say it is off (what comes to mind is the movie “The Big Short”; it was crystal clear that the “big guys” inflated the value of the trades they had wrong until it suited them to “let it go” (or perhaps it simply became unsustainable). What the movie cleared pointed out also is how NOT EXPERT the experts are. My point is as a trader I cannot fight the entire market because my resouses (trading account) is way too small. So here is what I do:

POSITION MANAGEMENT

Stay long the GBPUSD with a stop loss just below 1.2299
Stay long the EURUSD with a stop just below 1.0591
Stay long the AUDUSD with a stop loss just below 0.7534
Stay long the NZDUSD with a stop loss just below 0.7148
Stay short USDJPY with a stop just above 115.50 ( Most of my bet is here; if Japanese stocks go down will help a lot and I thinks stocks are headed lower)
USDCAD I leave alone because it’s above pre Mnuchin
If we get a USD bullish day all of these trades / levels might possibly get taken out.
My strategy will be to try and get back in when and only when the pre Mnuchin “lines” are once again violated.
Big picture view I sell the USD down 10-20% in 2017
NOTE: NONE OF THIS IS INVESTMENT ADVICE; ITS A PERSONAL OPINION FOR INFORMATIONAL PURPOSES ONLY

 

A Classic “Dollar Move” Underway

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Since President elect Donald Trump started speaking yesterday the US dollar has plummeted versus all the key currencies that most retail traders speculate in. The term for an across the board coordinated move in all the major pairs is a “USD move”. Similar “USD moves” oftentimes occur following US FOMC meeting statements and US non-farm payroll.

An Awesome Simple Fundamental Based GBPUSD Sell Trade

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Here is the setup: UK Prime Minister May scheduled to do a 2017 “look ahead” interview with Sky News.

A. If she does not soften her “non negotiable” position on immigration GBPUSD will go down, probably sharply
B. If she does soften her “non-negotiable” position on immigration GBPUSD will go up, possibly sharply

Trigger for trade is the outcome of her immigration position; she remains “non-negotiable”

A. GBPUSD declined sharply

Here is how I presented it in my weekly publication:

 

 

 

 

 

 

 

 

 

 

Here is the chart following the GBPUSD fundamentally bearish UK news

A Great Trade that Can Be Repeated

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The concurrent release of US and Canadian employment numbers offers a unique opportunity to do a trade that makes logical sense and oftentimes make a quick profit. Today was a great example. I suggested selling the USDCAD pair in my LIVE trading room two minutes after the US and CAD employment news release.

Here is why

A. The Canada employment numbers were much better than expected; argues for a lower USDCAD pair based upon CAD strength.

B. The US employment numbers were neutral (some parts slightly better and other parts slightly worse); argues for no clear movement in USDCAD pair.

C. Following the news releases the USDCAD pair initially spiked lower but then recovered on USD strength versus all the major pairs

The USD strength should not have impacted the CAD as much as it did and hence the trade opportunity

Sold USDCAD and bought it back 5 minutes later for a 30 pip profit!