Where in the cycle are the major currencies?

tomorton

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#31
Cheers mate!
Funnily enough when I opened that video, it started at 5 mins something... Evidently I had already come across it couldn't quite follow or just couldn't engage with it. The video that FXX provided here has actually been quite helpful. It gives me a clearer understanding of the cogs in the machine and the overall result of human behaviour/policy. So when I watch that again, i'll watch that Kicklighter video again. I was quite perplexed at why the USD reacted the way it did to what I thought was going to provoke a bullish outcome...im sure the video will make more sense to me soon :)

Even if you're a short-term trader these sorts of fundamentals are dangerous to ignore. That said, if central bank activities, news info, national GDP etc. etc. don't generate some movement in the range of USD charts or EUR charts or GBP charts etc., then how useful are they for trading? After all, we're not any of us looking for a site somewhere on the planet to locate a new TV factory or ship-yard.
 

Nowler

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#32
The next stage is the recovery phase which is where the majors are synchronously forming (this is where growth and leading happens).
Do you mean lending?
Not trying to correct you...if it's not a typo then I don't understand.
 

Nowler

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#35
If high interest rates negatively affect lending and therefore overall spending, ergo deflating an economy through restriction of credit...then why is an economy increasing rates seen as a bullish thing? If it's essentially putting a deflationary pressure on the economy...restricting the freedom of the cogs if you will
 
Last edited:
Aug 21, 2004
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#36
If high interest rates negatively affect lending and therefore overall spending, ergo deflating an economy through restriction of credit...then why is an economy increasing rates seen as a bullish thing? If it's essentially putting a deflationary pressure on the economy...restricting the freedom of the cogs if you will
Lag, takes time for the effects to kick in. There is still tons of free and easy money swilling around, this is why we have rampant inflation (true inflation) not the made up nonsense that govt puts out.
 

Brumby

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May 25, 2012
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#37
It is unfortunate that some of the conversations in this thread has degenerated into meaningless snipes on a subject out of ignorance. Those who do not use fundamentals to trade is clueless on how economic data are used for trading and very often associate it to a conversation of economic theory.

I use fundamentals to trade just as FXX. We have been taught by different people but our approach is similar simply because it is how institutional traders trade and likewise how we are taught in terms of approach. In simple terms, we are taught how to understand sentiment flows because it drives order flows which obviously drive price movements. Sentiments can last a single session or multi sessions depending on the nature of the economic event. It is about "why" in taking a position rather than simply "how" as in technical analysis. The two approaches can be complimentary and provide a more complete picture of the environment in which a trade is taken.
 

Nowler

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#38
Lag, takes time for the effects to kick in. There is still tons of free and easy money swilling around, this is why we have rampant inflation (true inflation) not the made up nonsense that govt puts out.
Could you elaborate please?
I was under the impression that hiking rates stimulated the market and then the chart goes up
 

Brumby

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#39
In reply to the original post to this thread in term of economic cycle, I don't know and I don't care. Does knowing where it is helps me in making my trade decisions when using fundamentals to trade - NO. This is illustrative of why one can go off tangent when attempting to understand how to fuse fundamental data to trade opportunities.

As FXX mentioned, FOMC is up on Wednesday. It is potentially a tradeable risk event. Will it be - I don't know. What do I need to do? I will refresh my notes from the Dec 13 FOMC meeting minutes and any analyst preview. There are 3 prospective hikes signaled for 2018 with the earliest expected in March 2018. The complication is that at the beginning of the year, there are some rotation of voting members. Key statement to watch will be reference to a March hike. Currently Fed watch is pricing in above even.
 

Nowler

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#40
In reply to the original post to this thread in term of economic cycle, I don't know and I don't care. Does knowing where it is helps me in making my trade decisions when using fundamentals to trade - NO. This is illustrative of why one can go off tangent when attempting to understand how to fuse fundamental data to trade opportunities.

As FXX mentioned, FOMC is up on Wednesday. It is potentially a tradeable risk event. Will it be - I don't know. What do I need to do? I will refresh my notes from the Dec 13 FOMC meeting minutes and any analyst preview. There are 3 prospective hikes signaled for 2018 with the earliest expected in March 2018. The complication is that at the beginning of the year, there are some rotation of voting members. Key statement to watch will be reference to a March hike. Currently Fed watch is pricing in above even.
Surely knowing when an economy is stretched to almost breaking point can bring big potential to make money (going short)?

Or knowing that an economy has already been through a successful recessive period after living beyond means and debt catching up with them. Surely locating an economy in this situation which has low interest rates and GDP picking up might present opportunities for going long? Therefore, knowing the stage within cycles should, in my head, present opportunities...?

Before anyone says it, yes, I know one is not merely buying or selling 1 particular currency. It's against another currency.
 

tomorton

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#41
If high interest rates negatively affect lending and therefore overall spending, ergo deflating an economy through restriction of credit...then why is an economy increasing rates seen as a bullish thing? If it's essentially putting a deflationary pressure on the economy...restricting the freedom of the cogs if you will

An economy's strength is not the same as a currency's strength.
 

tomorton

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#43
Doesn't an economies health determine the worth of their currency?

On a macro-scale and eventually, but this is not tradable in practical terms. the currency pair fluctuations that we see and trade over minutes, hours and days are not directly correlated with fluctuating strength/weakness, growth/contraction of any national economy. Its more to do with expectations based on the most economic recent data, inflation rates, etc. moderated by interest rate settings and change expectations, related to similar views relating to other countries.

Remember, we're engaged in speculation, not scientific proofs.
 

FXX

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Oct 12, 2017
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#44
Surely knowing when an economy is stretched to almost breaking point can bring big potential to make money (going short)?

Or knowing that an economy has already been through a successful recessive period after living beyond means and debt catching up with them. Surely locating an economy in this situation which has low interest rates and GDP picking up might present opportunities for going long? Therefore, knowing the stage within cycles should, in my head, present opportunities...?

Before anyone says it, yes, I know one is not merely buying or selling 1 particular currency. It's against another currency.
I approach this in two ways:

1) The highest quality trades comes from those data points that align to the bigger picture. These tend to be strong moves and sentiment can last several sessions depending on the importance of the data.

2) Data points that go against the bigger picture still offer opportunity but needs to be significant in the deviation to drive short term sentiment.

In both cases, I pair the respective currency with sentiment on other pairs so that i am always matching strongest with weakest. Sometimes fresh sentiment isn't available and in this case there is an option to use the most recent but this isn't the highest quality opportunity.
 

Nowler

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#45
On a macro-scale and eventually, but this is not tradable in practical terms.

The currency pair fluctuations that we see...are not directly correlated with fluctuating strength/weakness, growth/contraction of any national economy. Its more to do with expectations based on the most economic recent data, inflation rates, etc. moderated by interest rate settings and change expectations, related to similar views relating to other countries.
Yes, I was talking in a macro sense. While it may not be enough on its own to execute a trade, it does give an indication which can better inform trade decisions. No?

I am just trying to understand how global economies work, on their own and in relation to each other. I wasn't messing when I said that prior to starting to trade 7 months ago, I knew next to nothing about business and economies.

The way I see it, if I was to ignore the "Macro-scale" stuff and just focus on the shorter, more recent-term stuff, then in a sense it would be the same as me trading with TA, not knowing a single thing about how fundamentals work. Which is dangerous.

Perhaps I am making naive assumptions, or drawing naive conclusions. Forgive me.
I am just trying to develop a solid understanding of the overall machine in the hopes that it helps me better understand the moving parts