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FXX

Experienced member
1,140 195
The problem currently is that news associated with Brexit negotiations is the main driver behind cable price movements not prospective rate hike. The worst part is that there is no news release schedule on politician making Brexit statement. The next round of negotiations is Nov. 9 - 10.
I think its a tug of war between the fundamentals and Brexit sentiment. There is a schedule, i found one, but it isn't free which is a pain.

https://uk.practicallaw.thomsonreuters.com/w-008-3213?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1


I am out all positions first thing this morning for negligible profit. I am going to revisit the BOE situation but there is some positive chatter about continuous negotiations although i doubt the EU will support this.
 

FXX

Experienced member
1,140 195
Currently looking for a pullback opportunity on NZDJPY. The basis of looking at this pair is positive risk sentiment softening the Yen while NZD strength off the back of positive Q3 employment.
 

Brumby

Established member
593 137
I am out all positions first thing this morning for negligible profit.
The BOC statement turned out to be a nothing burger. I waited for about 20 mins after the statement came out and closed my position for a minor gain when it became obvious that the market did not consider that statement to contain any new news.

Currently looking for a pullback opportunity on NZDJPY. The basis of looking at this pair is positive risk sentiment softening the Yen while NZD strength off the back of positive Q3 employment.
I agree that there are opportunities currently in yen pairs. All the best on NZDJPY.
 

FXX

Experienced member
1,140 195
looking at the 1 min and 5 min charts during the NY session. In my experience when trading this type of trend, the price structure is obvious at the 1/5 min TF
Thanks for this tip. Been looking at trading sentiment off the smaller time frames to get the technical structures to base entries off.
 
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Nowler

Established member
905 74
FXX/Brumby: Did either of you expect the NZD/USD to respond as it did to the NZ release @ 22:45 Gmt last night?

How could I have predicted the better than expected outcome for unemployment?

I got eaten alive for that release :)
It wasn't fun at the time but it's funny now :)
 

FXX

Experienced member
1,140 195
FXX/Brumby: Did either of you expect the NZD/USD to respond as it did to the NZ release @ 22:45 Gmt last night?

How could I have predicted the better than expected outcome for unemployment?

I got eaten alive for that release :)
It wasn't fun at the time but it's funny now :)

You can't predict employment numbers. I don't think i have ever seen a correct expectation in this area being forecast. Some data points have a higher degree of accuracy in forecasts than others. There are various ways to trade these events and some of these include:

- trading into the event (closing out before the release trading on expectations)
- trading through the event (sentiment needs to be significant for this and that is generally central bank or fiscal driven)
- trading out of an event (enter post release in line with sentiment)
- trading on the event (scalping the spike)

Brumby can probably give a better response as i am still on the learning curve like you.
 

Nowler

Established member
905 74
You can't predict employment numbers. I don't think i have ever seen a correct expectation in this area being forecast. Some data points have a higher degree of accuracy in forecasts than others. There are various ways to trade these events and some of these include:

- trading into the event (closing out before the release trading on expectations)
- trading through the event (sentiment needs to be significant for this and that is generally central bank or fiscal driven)
- trading out of an event (enter post release in line with sentiment)
- trading on the event (scalping the spike)

Brumby can probably give a better response as i am still on the learning curve like you.
Cheers mate

I knew that if I was to trade the NZD/USD on that release that it would be very little better than a gamble but I didn't expect such a move against me. The point of this live mini account is to learn these things I guess. People can tell us not to do something but it's only when I experience it for myself that I truly understand.

The NZD had a neutral status according to DailyFx, so that's probably my first mistake. I was reading about uncertainty/instability within the NZ government and considering the USD was bullish I took the trade to the downside.

My second mistake was expecting the spike to stop and return back to initial levels and once I got stopped out my rookie instinct screamed "sell the retracement". I know this was beyond stupid but in the moment that's how I reacted. When I sold into the spike I forgot about the widening spread and got raped! When the spread narrowed back to normal I sold into it again. That position was closed later on for a loss. In all, I cost myself about 6% for those moments of stupidity.

The silver lining is, though this was fraught with rookie moves, I observed much improvement in my behaviour since the last time I made a big mistake. My risk management meant I got away with this mistake far cheaper than the 15% it cost me last time I messed up big time.

Anyway, I just thought I'd ask you two gentlemen about how I could have known it was going to go this way before hand. I am aware that recent figures of other releases can indicate such things at times...
 

Brumby

Established member
593 137
I will give a detailed reply on the NZDUSD pair later (busy this morning) as I actually traded the employment report in both direction.

In terms of BOE rate statement later today, an interesting summary in my view of the situation on cable from Forextlive

"The OIS market is pricing in a 90.1% chance of a rate hike. That's near a contract high as the market increasingly believes Carney is going to raise rates. That means it's not the decision to hike that's going to drive markets, it will be signals going forward.
On that front, a second hike in December is only a 9% probability. However that rises to 35% in February and above 50% by March.
So if the Bank of England hikes but Carney indicates that it's a one-off, it could be a very bad day for the pound."
 
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Brumby

Established member
593 137
I knew that if I was to trade the NZD/USD on that release that it would be very little better than a gamble but I didn't expect such a move against me.
Trade lesson number one is anything can happen and why we have "protective stop". Lesson number two is if the trade is a little better than a gamble, why is your risk initially set at 2 %? If your main reason is to engage and learn than the objective is to learn at minimal risk.

I have had previously pointed out to you that you are taking on too much risk per trade which you have pushed back.

The NZD had a neutral status according to DailyFx, so that's probably my first mistake. I was reading about uncertainty/instability within the NZ government and considering the USD was bullish I took the trade to the downside.
As previously pointed out, all sentiments have a shelf life. Sentiments must be reflected in the price action regardless of what you think or what others say. If the do not reconcile then something else is going on.

I was trading the NZDUSD in the past several sessions, and it was obvious two way trading was coming in. This means the negative sentiment was dissipating and the negative news were beginning to be priced in at those levels. It would need fresh news to move valuation one way or the other.

The most basic question you need to address is what was your overall trade plan and the trade rationale behind that trade plan?

I also traded the NZDUSD prior to the release of the employment data. My thought process and trade rationale was the following.
1)Valuation is at equilibrium because prices were ranging with supply and demand coming in at those ranges
2)Is the market looking for a reason to buy or to sell?
3)The employment data would be a reason for such a catalyst.
4)Although prices are ranging, I was still leaning to a 60/40 that the market was looking for a reason to sell.
So on that basis, I opened a short position prior to the employment data. Obviously I was wrong and was immediately stopped out on the news release

There were 4 or 5 employment data points on that day and I had a hard time figuring out why the market reacted so positively. As it turned out, the unemployment print was 4.5 % vs 4.6%. However that is not immediately important. A trading rule is not the news but how the market reacts to the news that is important. In other words the market was looking for a reason to buy. The price spike could be a combination of positive data or short covering but the important determinant is what happens after the initial spike.

M second mistake was expecting the spike to stop and return back to initial levels and once I got stopped out my rookie instinct screamed "sell the retracement". I know this was beyond stupid but in the moment that's how I reacted. When I sold into the spike I forgot about the widening spread and got raped! When the spread narrowed back to normal I sold into it again. That position was closed later on for a loss. In all, I cost myself about 6% for those moments of stupidity.
That is the reason why I emphasize to you previously you need to focus on developing your trade process. A trade process means you need to have a trade plan and a trade rationale. What was the rationale to expect the spike to stop and return to initial levels? A trade plan forces you to stop spontaneous trade actions and to think through the whole trade rationale. I previously shared that there are three things to justify a trade (taken from Forexlive) :
1)Is it broken?
2)Has something happened?; or
3)Has something changed?

Clearly the employment data has changed the trade dynamics. Why are you still focussed on business as usual?

After the employment data, my main focus was on how prices were trading to determine if the data was short covering or actually had some legs to it. After 30 mins, the price action suggested to me that demand was coming in and a long trade opportunity became available to scalp some pips before the sentiment dissipates. My thought at that time is that the fundamentals have not changed with the advent of a labour government and its policies. The slight deviation in unemployment is not a game changer and so a long window has limited shelf life.
However I was not prepared to short because the ongoing price action did not suggest that was the direction to take.

The silver lining is, though this was fraught with rookie moves, I observed much improvement in my behaviour since the last time I made a big mistake. My risk management meant I got away with this mistake far cheaper than the 15% it cost me last time I messed up big time.
There are two problems that are missing in your comments.
(1)I think there is an emotional component in your 2nd and 3rd trade. Typically the reasons are non acceptance of what the market just handed out and/or revenge trading. The end result is that you just add on mistake after mistake. This is actually a common problem that you need to address if you want to have a lasting trading career. It is not simply about not wanting to repeat the mistake, It requires a mechanism that you must put in place to prevent your emotional behaviour overriding sound judgment.
(2)A reason why you want to keep risk per trade at 1 % or lower is to guard yourself against irrational behaviour under moments of stress in trading. If your risk per trade was kept at 1 %, then your collective loss would be 3 % and not 6 %. I guarantee you that there will be other frustrating and stressful moments where you will act outside your normal boundaries. The safety nets are built to protect your account during abnormal moments and they will present themselves as night follows day.

Anyway, I just thought I'd ask you two gentlemen about how I could have known it was going to go this way before hand. I am aware that recent figures of other releases can indicate such things at times...
I don't believe the main issue is whether one can predict the outcome of data releases or is it necessary.
 
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FXX

Experienced member
1,140 195
I will be watching the vote spread. If it's a more split than expected I will be selling the pound. It's going to be a stretch for the BOE to be hawkish on forward guidance. If the statement is dovish I will also be a seller if I am not in a position already on the vote spread.
 

Brumby

Established member
593 137
I will be watching the vote spread. If it's a more split than expected I will be selling the pound. It's going to be a stretch for the BOE to be hawkish on forward guidance. If the statement is dovish I will also be a seller if I am not in a position already on the vote spread.
Which pairs are you targeting?

My trade plan, if dovish sell GBPUSD/GBPCAD and if hawkish buy GBPJPY. My base is
7/2 or 6/3 and 5/4 will be dovish. The problem will be forward guidance and language.
 

FXX

Experienced member
1,140 195
Which pairs are you targeting?

My trade plan, if dovish sell GBPUSD/GBPCAD and if hawkish buy GBPJPY. My base is
7/2 or 6/3 and 5/4 will be dovish. The problem will be forward guidance and language.
GBPUSD or GBPAUD (ausie off continued sentiment from today's trade and building approval data). I am a bit cautious over the softer $ on fed chair sentiment + tomorrow's wage growth data that might put traders in wait and see mindset.

Hawkish also looking at GBPJPY although I think this is the least probable outcome.
 

FXX

Experienced member
1,140 195
BOE removed forward guidance that rates need to rise more than market expects. Ransquawk are reporting the 7\2 as more dovish than the expected 6\3 but this to me is to a lesser extent dovish than the forward guidance which to me is a sell signal as it makes it official that this is nothing more than a dovish hike.
 

Brumby

Established member
593 137
BOE removed forward guidance that rates need to rise more than market expects. Ransquawk are reporting the 7\2 as more dovish than the expected 6\3 but this to me is to a lesser extent dovish than the forward guidance which to me is a sell signal as it makes it official that this is nothing more than a dovish hike.
The initial spike was due to the 7/2 decision. The forward guidance (which took a bit more time to digest) suggest a tougher road ahead in terms of inflation and growth that caused the sell off.

GBPUSD is currently trading at $1.31290. The price action suggest to me that the urgency to sell has tapered off. I am now out of my positions on GBP.
 

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