My FX Journal - 80% Fundamental 20% Technical

[FXX]

I've been looking into sentiment a bit lately.
Been using the net long/short of the broker IG which is available on the DailyFX site mainly but I was thinking that maybe I should combine the net long/short from the 2-3 biggest retail brokers in the world and then funnel it all through something and into 1 combined indication of global retail trader sentiment. Using a contrarian strategy to capitalize.

Don't waste your time on those. As you know most retail traders lose so you won't get a credible direction from their aggregate positions. Unfortunately we retail traders don't have the luxury of a research team so we have to do the work of 2 people. Start with the central banks, their monetary policy and speeches. You should get their forecasts, expectations and concerns, and what they are watching. Together with tier 1 economic data, you will get an idea of which are strong or weak and where they are in the economic cycle.
Next step is to create a list of strong to weak as a general guide of what pairs to trade. The final piece, this is sentiment, you get it from a news feed and most recent tier 1 economic releases. What you are looking for is an alignment of sentiment with the analysis you did previously. So let's say UK is strong and Canada is weak though your research. Yesterday (or today) UK Gdp beat expectations. Later in the day Canadian data comes out weak. Now you have sentiment that aligns with the bigger picture. If oil is also dropping then you have a very good opportunity to buy sterling against Canadian dollars. Now you just apply your chosen technical setup or if it is strong just enter at market. Targets should be reasonable (I target between 15 and 100 pips depending on the strength of sentiment).

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[Brumby]

Hey Brumby, been a while are you keeping well?

I noticed that but not giving it any serious thought. The fed are highly focused on wage growth and inflation and both have been soft. I just can't see them raising by more than expected especially when the speeches have all reiterated that slow and steady hikes and data dependent and the fed are not in the business of surprising.

Well the market did sell the fact on FOMC. I slept through it though. Noticed that you did picked up some pips on the news. Congrats.

 

[Nowler]

Don't waste your time on those. As you know most retail traders lose so you won't get a credible direction from their aggregate positions. Unfortunately we retail traders don't have the luxury of a research team so we have to do the work of 2 people. Start with the central banks, their monetary policy and speeches. You should get their forecasts, expectations and concerns, and what they are watching. Together with tier 1 economic data, you will get an idea of which are strong or weak and where they are in the economic cycle.
Next step is to create a list of strong to weak as a general guide of what pairs to trade. The final piece, this is sentiment, you get it from a news feed and most recent tier 1 economic releases. What you are looking for is an alignment of sentiment with the analysis you did previously. So let's say UK is strong and Canada is weak though your research. Yesterday (or today) UK Gdp beat expectations. Later in the day Canadian data comes out weak. Now you have sentiment that aligns with the bigger picture. If oil is also dropping then you have a very good opportunity to buy sterling against Canadian dollars. Now you just apply your chosen technical setup or if it is strong just enter at market. Targets should be reasonable (I target between 15 and 100 pips depending on the strength of sentiment).

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But surely the fact that most retail traders are wrong, me taking up the opposite positions to them puts me on the side of right, crudely speaking.
I was reading that one should look for at least retail traders to be 2 or 3/1 net one way or the other...then I should be looking for entries to enter to the other side...


Thanks for the explanation too, very helpful process to drum home!

 

[mpups]

Quick update for the week. The only trade so far has been tonight with the fed where i took 28 pips long GBPUSD. Looking ahead to ausi employment, UK policy tomorrow followed by USA core sales. if nothing comes up then ill be shutting down trading until Jan.

hows it going FXX ? ... no updates this year

 

[FXX]

hows it going FXX ? ... no updates this year

Going good thanks, how about yourself?

I have been meaning to update the thread but have too much going on which includes trading and very little time for forums. Much of my time is spent keeping my skills relevant in my industry. I will be happy to see the back of working for a boss and turn to my own interests. One thing i want to do is program my trading methodology into a real time processing engine that trades for me. Ray Dalio did it and he is a macro trader and it outperforms them now. I know how to work the tech that can do this but don't have the time to do it.

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[mpups]

Going good thanks, how about yourself?
I have been meaning to update the thread but have too much going on which includes trading and very little time for forums. Much of my time is spent keeping my skills relevant in my industry. I will be happy to see the back of working for a boss and turn to my own interests. One thing i want to do is program my trading methodology into a real time processing engine that trades for me. Ray Dalio did it and he is a macro trader and it outperforms them now. I know how to work the tech that can do this but don't have the time to do it.

good to hear it not too bad thanks

Its rare for someone to give their fundamental analysis like you do so I hope you get back into it one day

 

[FXX]

I will be back, not sure when but definitely. Hope your trading is going well

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[FXX]

So has anyone been following the [ libor \ funds rate] spread?

Something massive is stirring in a fragile debt pile. You want to see how big that pile is?

http://demonocracy.info/infographics/usa/us_debt/us_debt.html

Oh and this is a year old, its even bigger now!

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[Brumby]

So has anyone been following the [ libor \ funds rate] spread?

I don't. What is going on with the spread?

Did you trade the BOE event last night? I did and got caught on the wrong side initially. Reversed position and came out fine.

 

[FXX]

sorry i had a typo, i meant OIS and not funds rate versus Libor. The spread has been widening and is at levels last seen when we had the EU banking crisis in 2011. With costs for banks borrowing increasing and other factors at play like the governments debt (21 Trillion). It is hard to visualize that number so here is a nice visual of how much money it is stacked in 100 dollar bills

http://demonocracy.info/infographics/usa/us_debt/us_debt.html

To add fuel to the fire, I read an article on FT about banks in the USA suffering 20% loss on credit card losses. The credit card debt is 1 trillion dollars so 20% is a sizeable chunk. I read another article that over due payments have hit about 11.9 billion dollars.

Then the elephant in the room with raising rates and the bond market with what is widely believed to be in a bubble along with equities. Something is cooking in the kitchen and when the lights go out, the governments wont be in a position to repeat 2008.

 

[FXX]

Going to get this thread rolling again in the coming weeks as I will have some more time to add content. Hope everyone is doing well.

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[Nowler]

Going to get this thread rolling again in the coming weeks as I will have some more time to ass content. Hope everyone is doing well.

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Good stuff!
Hopefully it will coincide with me getting back into trading

Busy, busy, busy at the moment but the break away was exactly what I needed.

How you're well mate :clap:

 

[FXX]

right to kick off the tread again I have a trade i just closed on GBPUSD (short) for 35 pips. There was some fake news that came out about UK staying in the customs union beyond Brexit and this caused a quick reaction in the pair to the upside. Shortly afterwards it was make clear that this was a rumor without any evidence and the government made a statement that basically confirmed it was nonsense. Sold close to the highs of the reaction and given that there will be more Brexit news out today there is a cloud of uncertainty in the air making this a very well timed trade working the news.


Personally i think it was started by the snowflake remoaners who will never give up their eu d...ck sucking love.

Stay tuned for some analysis - not sure when but it's coming. This Journal is going to be shifted from a trade journal to an information gateway to all you TA based traders out there to hopefully see that it isn't bad and actually very lucrative. The content will be analysis and will outline trades i have or planning to take. I will also go into details of the process i follow so as to provide some grounding for anyone wishing to add fundamental analysis to their toolbox. While i do use paid services i will endeavor to provide alternatives both cheaper and free.

note that i am not a full-time trader yet so work this all around my job which i think will be applicable to many of you. The journey to full-time is underway and i can't wait to cast up my work suits for good and replace them with a comfy home office and a better quality of life.


good day to all

 

[swissy]

right to kick off the tread again I have a trade i just closed on GBPUSD (short) for 35 pips. There was some fake news that came out about UK staying in the customs union beyond Brexit and this caused a quick reaction in the pair to the upside. Shortly afterwards it was make clear that this was a rumor without any evidence and the government made a statement that basically confirmed it was nonsense. Sold close to the highs of the reaction and given that there will be more Brexit news out today there is a cloud of uncertainty in the air making this a very well timed trade working the news.


Personally i think it was started by the snowflake remoaners who will never give up their eu d...ck sucking love.

Stay tuned for some analysis - not sure when but it's coming. This Journal is going to be shifted from a trade journal to an information gateway to all you TA based traders out there to hopefully see that it isn't bad and actually very lucrative. The content will be analysis and will outline trades i have or planning to take. I will also go into details of the process i follow so as to provide some grounding for anyone wishing to add fundamental analysis to their toolbox. While i do use paid services i will endeavor to provide alternatives both cheaper and free.

note that i am not a full-time trader yet so work this all around my job which i think will be applicable to many of you. The journey to full-time is underway and i can't wait to cast up my work suits for good and replace them with a comfy home office and a better quality of life.


good day to all

Looking forward to it.... fundamental analysis is an area I need to improve in. Apart from a decent news feed and watching how markets react, could you recommend a decent primer on the subject?

Kind regards.

 

[FXX]

Looking forward to it.... fundamental analysis is an area I need to improve in. Apart from a decent news feed and watching how markets react, could you recommend a decent primer on the subject?

Kind regards.

Hey Swissy

An excellent primer i can suggest is this book (£2.50)

https://www.amazon.co.uk/Forex-Fundamental-Analysis-Techniques-Strategies-ebook/dp/B01CSKD9AW


He dives into all the necessary points needed as well as the tools he uses including free resources. Its an excellent read and you can get through it in an afternoon.

 

[swissy]

Hey Swissy

An excellent primer i can suggest is this book (£2.50)

https://www.amazon.co.uk/Forex-Fundamental-Analysis-Techniques-Strategies-ebook/dp/B01CSKD9AW


He dives into all the necessary points needed as well as the tools he uses including free resources. Its an excellent read and you can get through it in an afternoon.

Many thanks....I'll keep an eye out for the book.

 

[swissy]

Many thanks....I'll keep an eye out for the book.

E-book... very reasonably priced plus he has a useful website.

 

[FXX]

The data across the EU has been showing progress has been slowing of late. This is where USA was some time back and now it has been trickling into the EU. The latest data prints today show PMI softening in France and Germany (nice deviations) with official EU figures further confirming a broad slowdown with deviations. The data offered a nice short term opportunity to sell the euro against a commodity based currency which tend to do well in risk on environments which is the current theme in the market. I chose the kiwi because it has been slaughtered over the last several months due to fundamental factors so the risk was tilted to the upside in kiwi off the back of soft EU data today. Didn't hold the trade for long and took 24 pips.

Next on the agenda will be fomc minutes tonight but they will likely be uneventful. Ransquawk do a good job of positing a comparison of the previous with the current which allows you to quickly assess the tone. This service has more than paid for itself with these sort of nuggets and i highly recommend it.

 

[FXX]

just a quick note on the type of trading i do. I don't see it as news trading i view it as actioning new information where the market is just about guaranteed to react. It is the catalyst that you cannot get with technical trading in isolation. Sure there are times when the technicals exhibit structure that could be seen as predictive but that's just coincidence because nobody could possibly know what the points are going to be before release.

The outcome when comparing technical first strategies with fundamental first strategies is the quality of trades. With technical first you have to take every setup defined by your strategy with the knowledge that any given setup may or may not succeed. With a fundamental first strategy, you are able to filter out those dud trades that would otherwise bleed your account. The main differences between these approaches to trading in my opinion are :

1) The catalyst ( A news event that triggers a market reaction ). Impossible to incorporate into a technical only strategy

2) Pairing strong with weak - technical strategies don't normally account for this and if they do it will be based on technical information which will not provide adequate pairing. You basically have to take each setup you see as you have no way of knowing which will succeed and this means you are less inclined to pick setups that are in line with pairing strongest with weakest.


good day to all

 

[FXX]

Another quick note for all you working full-time jobs. You can't spend all day looking at charts and your employer wont be happy about it either. Trading news is very favourable as you make your journey to full-time. The benefits are you have for most of your trading a defined schedule for the week ahead long before any trades take place (I am referring to the economic calendar). You can be in a position where you are alerted 10 minutes before the news to give you some time to catchup on data and assess the situation and prep for a trade. The trades can last anything from a few mins to a few hours depending on the scope of opportunity available. Yes there are other news drivers that are not scheduled and are trading opportunities but you don't need to worry about these if you are restricted due to work.

If you want to trade while working then this approach is by far the best way of doing it.