Trading news and sentiment

Not literally speaking...


This is a nice thread...

Closed off NZDUSD long for 42 pips. I think there is more available but i don't like chasing runners and sentiment can change in a blink of an eye. Anything >= 0.5% gain is a satisfactory outcome for any given trade (small slices all add up). This trade i took at least an hour after the news and post the beautify spike - so i missed the spike. When the news is a game changer for policy, you tend to get follow-through in the next session which is what i was looking for here. This type of news is also a good opportunity for those of you that prefer swing trading.

I'm back after suspension. Will be posting content later.

the big themes today have been brexit and oil with the Trumpster helping it fall more with his attacks on OPEC. Trump has also been on the attack on the EU regarding trade. The $ has been the beneficiary in all this and if you haven't made any trades you should look at the asymetrical skews formed as a result for new opportunities. The $ hikes are more or less priced in now so my focus in this context is to look at opportunities where general $ strength has created a skew. Given that oil is also feeling the heat i believe there is a swing trade opportunity with USDCAD. My reasoning is

- BOC have recently switched to hawkish mode and have said rates will continue to rise
- Data coming out of Canada has been picking up and reflected in the BOC hawkish stance
- Oil and CAD are correlated and with oil having its biggest losing streak in 34 years it is now priced at around 68 per barrel. OPEC have stated they will cut production so this should cap losses and we should see prices stabilise. Trump attacking OPEC has short term implications on sentiment. here is some interesting info about oil

Tom Kloza, co-founder of the Oil Price -
"The next six to seven weeks we're going to see demand for crude drop by about 1 to 1.5 million barrels a day. It's refinery maintenance season"
"This is the last chance for a number of refineries to perform some of the maintenance they need to do to get their units in business for the tail end of 2019 where there's a major shift in marine vessels needing to use a more diesel-like fuel," he said. "There's more maintenance than normal."
The International Maritime Organization's new emissions guidelines are set to go into effect in January 2020, putting the pressure on refineries to expand their plants' diesel operations.
"The world oil price we believe is going to be closer to $80 for the rest of the year and particularly in November and December for Brent"


So we have more maintenance than normal and temporary limited wavers on Iran oil export sanctions. I think we have an asymmetrical skew here with oil prices most likely in the seasonally adjusted range far faster than what would have happened if no political influences were affecting price. This to me puts a USDCAD short swing trade as a well seated opportunity.

Thank you Eco, very interesting

Tomorrow we have US cpi and its expected to be better than last reading. A deviation to the downside would throw some water on hike expectations especially since it has been moderate. If the data is a beat on expectations, in other words a faster pace of inflation that expected,, then we should see a pop in USD.

I am not looking at UK data tomorrow but will be potentially trading brexit news.

"The world oil price we believe is going to be closer to $80 for the rest of the year and particularly in November and December for Brent"

Interesting. I just saw that Crude Oil took a dump.

Like oil as it trends, but there are so many factors that affect it.

Would also like to see Powell change his bias for the time being.

Anyway I am going back to bonds....
All I have is 6 lines to look at to get a read on where things stand

CPI more or less inline besides the y\y stamp which is 0.1% softer than expected. The assumption of runaway inflation and overheated economy are somewhat in doubt. USDCAD following through its just a case of waiting it out.

UK cabinet meeting within the hour - could offer up a trading opportunity.

1.29 was a nice area to go long on the B6 (futures)

Have been out most of the day - I see it pulled back to 1.29 (low of day) - now 1.3070

50 pips bagged from brexit today

May on the wires shortly. Hoping for a trade opportunity. Also UsdCad has started shifting and in profit. I have some hefty initial targets but will likely close either tomorrow or next week if I get enough of the move.

I'm out of the cad trade. Account is half way to my 10% monthly goal

Will post a detailed update later tonight

I promised some more content and thought this might help you see it visually The bottom of the chart is news releases (either USA or EU). Notice the opportunities and the ones that aren't. The ones that are will have central bank level impact, these are data points they will be watching. Some of these events are central bank speakers like today we had Draghi. You can trade these events you just need to study central banks to understand what they are happy and concerned about and then keep an eye on indicators that relate to those respective areas.

I didn't trade Draghi as i was focused on brexit. There are so many opportunities that you don't need to chase them all so get used to missing some opportunities. Your biggest challenge will be finding the right ones to ignore and the ones that give the greatest opportunity. The good news is you will still make money so don't think that you have to be tuned into everything. I have found it much easier to find the main themes and stick with those.

Will post more later on how to derive opportunity through phasing in positions. It's a strategy that takes advantage of 80 percent ranging markets.

I am interested there is so few people who believe that the chart candles is just the foot print or lagging indicator itself.

Hi Satraderma

The biggest factor in failure with technical trading is narrative. I can give every person on forexfactory the same chart and I'll get as many unique narratives in return as there are people. Think about that for a moment because it should raise the question of how people make money if its subjective.

To make money you need to be looking at the same things market moving participants are looking at. So what are they looking at if everyone defines analysis differently. There are some technical strategies that seem to be more popular and therefore do work but with a caveat. You don't know which trade will work and which won't. This is the tribulation of trading probability and its ultimately why so many fail.

You will see traders removing indicators and trading naked charts using price action as their analysis. The probability problem doesn't go away and you still have to accept a number of losses as a function of doing business. All you get is less confusion by removing indicators. It becomes a program of risk management and those that can manage risk well are likely to survive while the rest end up in the traders graveyard.

It's this reason I don't even bother with charts for looking at entries. There is nothing a chart can show me that will provide a meaningful filter for opportunities. I don't trade probability period and this is the biggest difference in my approach and technical based approaches. To remove probability you need to go to the source of information that drives marker movers into placing trades. This information is economic and political and is released every week either scheduled or unscheduled.

So how does this remove probability. Well the market is constantly anticipating the next opportunity and you can't do that through charts. If for example inflation picks up faster than expected then expectations will be for the central bank to raise rates either sooner or faster or if they have been neutral, change policy to one that includes future hikes. Higher yeild attracts money and the currency will appreciate. While expectations are probability, the market reaction to changing expectations is not. It is this relationship between expectation and market reaction where you can take advantage of probability-free trading.

So what's the difference. With probability you are at the mercy of the market seeing what you see, and reacting as you hope it would. With probability you also get winning and losing streaks which brings its own problems to the mix like having to recover from a series of losses and how long the losses will continue. With probability you need to have separate strategies for different market conditions and be able to switch before your account bleeds.

When trading expectation shifts, you are not waiting for an unknown outcome but rather have an opportunity to participate in a period where the market is adjusting expectations through price changes. You still need money management because you have no way of knowing when the market is factored it in but depending on the data, there can be more or less scope for profit. I don't bother much with trying to predict the scope but rather take my lead from the market when managing trades.

If you are struggling to find your way technically then you either need to focus on becoming a master at managing risk or shift your attention to an entirely different approach. Have a go at probability-free trading and I guarantee you will turn your trading around but it isn't going to be an overnight success story. You need to undertake a lot of groundwork to understand and maintain through daily research.

If you or anyone is interested I am happy to share my process. You can look at my trade explorer to see the results.

Have been reading some of the other posts on FF.
Just unbelievable
Just glad I don't post anymore-
Anyway - best of luck EcoTrader