Tagged: psychology of trading

Fourth Time’s A Charm – The Market Decides

Obviously you can’t win if you don’t buy a ticket, and at times….these tickets can cost you a pretty penny may it be psychologically, financially or both.

So when things are trading sideways ( as with the example of EUR/USD for example ) how long does a trader choose to hang on before considering the trade a wash / scratch or even a loss?

It’s always up to the individual, as no two traders have the same “threshold for pain”, each with their own set of rules / factors influencing their decision-making but ideally…the decision is made “sooner than later” – as there will always be another opportunity.

One particular “dynamic of price action” I like to use ( in order to help with this decision-making process ) is what I call the “fourth time’s a charm”.

When any asset price has tested an area of support or resistance for a fourth consecutive time over a span of perhaps a few days – it’s time to take note – as the next move is likely going to be the one that counts.

Breakout or breakdown, one can usually “make it or break it” on the fourth time an area of support or resistance is tested, suggesting that the asset has “done all it can” to either push through the area of resistance overhead or succumb to the pressure, finally falling through support below.

And so we find ourselves in the case of the U.S Dollar vs a number of currencies, currently testing the “fourth time’s a charm”-  not to mention both our patience and our discipline.

Which way does she go from here?

The fourth time’s a charm so…….we’ll just have to let mother market decide.

 

The Countdown Begins – Greed Finds Its End

Well this is it people – the countdown begins.

You can count yourself as lucky – no…..”very lucky” as to have some idea where / when the merry-go-round stops spinning – this being the “final turn” before the party ends.

We’re down to a matter of weeks now – if not days.

I don’t generally speculate on such short-term movements, but with respect to “this one” having such significance to the longer term / larger trend – I feel it’s reasonable to put something out there.

Let’s give it a full two weeks, 14 days ( give or take a day here and there )  before anyone “greedy enough” to still find themselves “hanging around” – finds themselves wishing they’d taken note.

This will mark the “final surge” in global appetite for risk, and the final push towards the highs, before the historical repetition of the typical “boom and bust cycle” takes effect once again.

The Fed meeting at Jackson Hole ( scheduled for Aug 21st ) will undoubtedly be the trigger, as Yellen suggests “for the very first time” that indeed it’s time for “risk takers” to exercise caution, or to be blunt – get the hell outta the way as fast as they possibly can.

In a matter of weeks “nay-sayers” will be left holding the bag, giving each and every one of you ample time to act accordingly – if you do so choose.

Currency markets have already made the transition ( with commodity related currencies smashed as of late ) as they will always lead, with safe havens catching the bid – suggesting the turn is already well underway.

You don’t want to be the last one out the door, and their will be ample trading opportunities on the “other side of the mountain” if you can just manage to discipline yourself to “get out of this while you can” and not get caught holding.

The countdown has begun.

Best of luck to all of you.

 

 

Navigating The Turn – 2 Years Without Returns?

Considering that markets have more or less “skyrocketed higher” for such an extended period of time that the majority of investors / traders are likely convinced that this is just the “new normal” ( I can’t stand that expression by the way – as it reeks of complacency and “idleness”) and that dips should be bought, on and on, no worries, The Fed has your back etc etc…

It’s easy to understand, as even heightened geopolitical concerns continue to take the back seat, along side lowered global GDP forecasts, poor data out of Japan etc..It could easily appear to the casual observer that “nothing” can get in the way of markets just moving higher, and even higher.

But what happens when the turn is made? I mean…..we all have to appreciate that “nothing goes up forever” right? Historically speaking we can see the typical “boom and bust cycle” usually manifests in a “5 year up and 2 year down” type scenario – and we’re well past the 5 year up mark.

As investors / traders it would completely foolish to “simply ignore” these longer term patterns as I can imagine most of you…..have likely been caught doing that a time or two before right?

Tech / boom / crash 2000 maybe? Credit / housing / crash of 2007 perhaps?

I find it highly unlikely that many of you successfully navigated these “significant turns” to continue generating profits during the 2 year period following these incredible crashes in risk.

Take a look:

Market_Tops_Forex_Kong

Market_Tops_Forex_Kong

Market tops can be seen almost “to the letter” on a 7 year cycle with 5 years up….and 2 years down, with us sitting “right at the max” of this “extended 5 year move higher” based solely in the “money printing efforts” made by Central Banks.

The idea of going through this again ( as why would this time be any different? ) can’t possibly be appealing. Considering where you are in life, and the prospects of a “full 2 years” with your portfolio drawndown considerably – not to mention the mental and psychological end of things – who needs the grief?

You’ve come this far with your investing / trading decisions while the “good times have been good” so…..why not extend the same effort when ” the good times are bad”?

Suggestions to follow….

 

U.S Interests In Ukraine – A Brilliant Synopsis

Cut and past from a fellow named Mike Whitney ( thank you very much Mike ) who can be reached at: fergiewhitney@msn.com as I could not have possibly explained it better myself.

In Ukraine, the US is using a divide and conquer strategy to pit the EU against trading partner Moscow.

The State Department and CIA helped to topple Ukraine’s elected President Viktor Yanukovych and install a US stooge in Kiev who was ordered to cut off the flow of Russian gas to the EU and lure Putin into a protracted guerilla war in Ukraine.

The bigwigs in Washington figured that, with some provocation, Putin would react the same way he did when Georgia invaded South Ossetia in 2006. But, so far, Putin has resisted the temptation to get involved which is why new puppet president Petro Poroshenko has gone all “Jackie Chan” and stepped up the provocations by pummeling east Ukraine mercilessly. It’s just a way of goading Putin into sending in the tanks.

But here’s the odd part: Washington doesn’t have a back-up plan. It’s obvious by the way Poroshenko keeps doing the same thing over and over again expecting a different result. That demonstrates that there’s no Plan B. Either Poroshenko lures Putin across the border and into the conflict, or the neocon plan falls apart, which it will if they can’t demonize Putin as a “dangerous aggressor” who can’t be trusted as a business partner.

So all Putin has to do is sit-tight and he wins, mainly because the EU needs Moscow’s gas. If energy supplies are terminated or drastically reduced, prices will rise, the EU will slide back into recession, and Washington will take the blame. So Washington has a very small window to draw Putin into the fray, which is why we should expect another false flag incident on a much larger scale than the fire in Odessa. Washington is going to have to do something really big and make it look like it was Moscow’s doing. Otherwise, their pivot plan is going to hit a brick wall.

“Ukraine’s Parliament adopted .. a bill under which up to 49% of the country’s gas pipeline network could be sold to foreign investors. This could pave the way for US or EU companies, which have eyed Ukrainian gas transportation system over the last months.

Boy, you got to hand it to the Obama throng. They really know how to pick their coup-leaders, don’t they? These puppets have only been in office for a couple months and they’re already giving away the farm.

And, such a deal! US corporations will be able to buy up nearly half of a pipeline that moves 60 percent of the gas that flows from Russia to Europe. That’s what you call a tollbooth, my friend; and US companies will be in just the right spot to gouge Moscow for every drop of natural gas that transits those pipelines. And gouge they will too, you can bet on it.

Is that why the State Department cooked up this loony putsch, so their fatcat, freeloading friends could rake in more dough?

This also explains why the Obama crowd is trying to torpedo Russia’s other big pipeline project called Southstream. Southstream is a good deal for Europe and Russia.

On the one hand, it would greatly enhance the EU’s energy security, and on the other, it will provide needed revenues for Russia so they can continue to modernize, upgrade their dilapidated infrastructure, and improve standards of living. But “the proposed pipeline (which) would snake about 2,400 kilometers, or roughly 1,500 miles, from southern Russia via the Black Sea to Bulgaria, Serbia, Hungary and ultimately Austria. (and) could handle about 60 billion cubic meters of natural gas a year, enough to allow Russian exports to Europe to largely bypass Ukraine” (New York Times) The proposed pipeline further undermines Washington’s pivot strategy, so Obama, the State Department and powerful US senators (Ron Johnson, John McCain, and Chris Murphy) are doing everything in their power to torpedo the project.

“What gives Vladimir Putin his power and control is his oil and gas reserves and West and Eastern Europe’s dependence on them,” Senator Johnson said in an interview. “We need to break up his stranglehold on energy supplies. We need to bust up that monopoly.” (New York Times)

What a bunch of baloney. Putin doesn’t have a monopoly on gas. Russia only provides 30 percent of the gas the EU uses every year. And Putin isn’t blackmailing anyone either. Countries in the EU can either buy Russian gas or not buy it. It’s up to them. No one has a gun to their heads. And Gazprom’s prices are competitive too, sometimes well-below market rates which has been the case for Ukraine for years, until crackpot politicians started sticking their thumb in Putin’s eye at every opportunity; until they decided that that they didn’t have to pay their bills anymore because, well, because Washington told them not to pay their bills. That’s why.

Ukraine is in the mess it’s in today for one reason, because they decided to follow Washington’s advice and shoot themselves in both feet. Their leaders thought that was a good idea. So now the country is broken, penniless and riven by social unrest. Regrettably, there’s no cure for stupidity.

The neocon geniuses apparently believe that if they sabotage Southstream and nail down 49 percent ownership of Ukraine’s pipeline infrastructure, then the vast majority of Russian gas will have to flow through Ukrainian pipelines. They think that this will give them greater control over Moscow. But there’s a glitch to this plan which analyst Jeffrey Mankoff pointed out in an article titled “Can Ukraine Use Its Gas Pipelines to Threaten Russia?”. Here’s what he said:

“The biggest problem with this approach is a cut in gas supplies creates real risks for the European economy… In fact, Kyiv’s efforts to siphon off Russian gas destined to Europe to offset the impact of a Russian cutoff in January 2009 provide a window onto why manipulating gas supplies is a risky strategy for Ukraine. Moscow responded to the siphoning by halting all gas sales through Ukraine for a couple of weeks, leaving much of eastern and southern Europe literally out in the cold. European leaders reacted angrily, blaming both Moscow and Kyiv for the disruption and demanding that they sort out their problems. While the EU response would likely be somewhat more sympathetic to Ukraine today, Kyiv’s very vulnerability and need for outside financial support makes incurring European anger by manipulating gas supplies very risky.

The funny thing about gas is that, when you stop paying the bills, they turn the heat off. Is that hard to understand?

So, yes, the State Department crystal-gazers and their corporate-racketeer friends might think they have Putin by the shorthairs by buying up Ukraine’s pipelines, but the guy who owns the gas (Gazprom) is still in the drivers seat. And he’s going to do what’s in the best interests of himself and his shareholders. Someone should explain to John Kerry that that’s just how capitalism works.

Washington’s policy in Ukraine is such a mess, it really makes one wonder about the competence of the people who come up with these wacko ideas. Did the brainiacs who concocted this plan really think they’d be able to set up camp between two major trading partners, turn off the gas, reduce a vital transit country into an Iraq-type basketcase, and start calling the shots for everyone in the region?

It’s crazy.

Europe and Russia are a perfect fit. Europe needs gas to heat its homes and run its machinery. Russia has gas to sell and needs the money to strengthen its economy. It’s a win-win situation. What Europe and Russia don’t need is the United States. In fact, the US is the problem. As long as US meddling persists, there’s going to be social unrest, division, and war. It’s that simple. So the goal should be to undermine Washington’s ability to conduct these destabilizing operations and force US policymakers to mind their own freaking business. That means there should be a concerted effort to abandon the dollar, ditch US Treasuries, jettison the petrodollar system, and force the US to become a responsible citizen that complies with International law.

This in an absolutely “perfect synopsis” of events currently unfolding in Ukraine….and you’ll have to appreciate the irony with respect to the “false flag” and the mysterious “Malaysian Jetliner now “downed” in Eastern Ukraine”…….a coincidence? A chance event?

I hardly think so.

Go Obama go – you moron!

Second Quarter GDP – Reality Check Anyone?

The “advanced estimates” for U.S GDP ( gross domestic product ) are to be released on July 30th, and promise to bring with them a “flurry of market activity”, with traders, economists, analysts and speculators alike clambering to find an edge, and get positioned for the news.

I pose a simple question.

With first quarter GDP coming in with  a devastating contraction of  – 2.9% growth ( consider for a moment that is the worst quarterly GDP report in 5 years….those last 5 years with the Fed printing billions per month ) what on Earth could possibly have occurred in the past 3 months ( the second quarter of 2014 ) to not only make up for the massive loss, but to suggest anything close to “positive growth”?

You’d need to see a headline like ” Second Quarter Growth Sky Rockets! ” a whopping 4% to even consider the United States is “not” heading straight back into recession ( never left actually ).

Impossible.

What “magical changes” could possibly have taken place in the past 90 days to produce a second quarter GDP number that “doesn’t signify recession”?

Answer: None.

With “consumer spending” accounting for more than two-thirds of economic output, how can people making $7.25 per hour ( minimum wage ) or just under 1200.00 per month pre tax  be expected to buy anything other than beans / rice and “hopefully” keep a roof over their heads?

The false sense of wealth created by The Fed and its ponzi / racket in U.S Equities has done absolutely nothing to bolster further growth of the American economy, and soon…..yes soon……..chickens will be coming home to roost.

2nd Quarter GDP disappoints, and “maybe” it’s reality check time.

 

 

 

Negative U.S GDP – Just How Negative?

All eyes on U.S GDP numbers this morning to “once again see” if this market “finally” looks to recognize the deteriorating fundamental picture.

This is the third “revision” of first quarter GDP ( I have no idea how/why it’s the 3rd time this number is estimated but… ) it’s expected to come in around -1.8% Yes…..that’s “negative growth” for the first quarter of 2014 folks.

What’s interesting with our trading is that…..we’ve effectively “gone long USD” to a certain degree in taking profits across GBP/USD, EUR/USD as well USD/CHF now holding long USD vs NZD, AUD and CAD with the long JPY trades still in play.

I hope that members come to recognize how “fluid” this trading can be as……the fundamental landscape may change “underneath” while we move with the “swings” and keep ourselves nimble.

This can obviously go two ways here this morning….so please be very alert / numble / ready to act. Yesterday’s bizarre “late day reversal” seemed quite telling to me, as we’ve already seen the weakness in Nikkei, the commods ( AUD and NZD ) as well a pretty brutal day for U.S equity bulls so…..

A big day today or not? We should get some solid clarification on USD future movement as a decent move higher here would be quite exciting, possibly putting to rest our “concerns” for USD movement “lower” over the medium term.

Man the battle stations everyone! Today could be a whopper!

Swing High – On The Old Nikkei

Most of you know that I follow Japan as a leading indicator right?

It’s not at all uncommon to pull prophecy from “Krystal Kong Balls” seeing what happens in Japan overnight spill into U.S equities the following morning.

Would I have told any day trader in U.E Equities that “today” would open lower? Absolutely.

Would I suggest that 15,000 in Nikkei and it’s clear rejection at that level will usher in the coming correction? Absolutely.

Will you take any interest in this, and possibly “learn something” or perhaps consider this in your trading / investing moving forward?

Absolutely not. I highly HIGHLY doubt, that the ramblings of some gorilla as to the peaks and valley’s in “some stock market” far,far away will have any impact on you and your trading what so ever.

Why?

Because you won’t open yourself to change. You “can’t believe” anything like this is relevant, let alone “possible” as you continue to view the world via CNBC and the hordes of “financial bloggers” regurgitating the same nonsense and “predictions” day after day.

I’m buying a bunch of EURO here today and am selling a whole bunch of USD too but I’m sure “that” makes no sense to you either right?

Here’s the symbol for The Nikkei should you crawl decide to crawl outside your hole: $nikk

 

 

 

Daily Forex Strategy – May 23, 2014

” A snippet from the Members Site”.

We’ve stayed away from making any “big decisions” with regards to the U.S Dollar and for very good reason. Getting short the commodity currencies vs USD has been fine ( as these currencies have been falling against most ) but with respect to the EU related currencies – no trade has been “the best trade” over the past few days, as USD continues to “grind away” with little discernible direction.

As of tonight / this morning USD will have worked its way up to the 200 Day Moving Average ( on a daily time frame ) and looks poised to finally show us its “cruel intentions”.

The Japanese Yen is also “flirting” with its 200 Day as U.S equities continue to stretch / challenge the “near term highs” seen only days ago.

Talk about an inflection point.

As much as I understand that so many of you have “grown a custom” to seeing the various scenarios “outlined” in charts and “speculative commentary” across the various financial blogs – hunches are hunches and “speculation” has never really done much for my trading.

At this point it seems fairly obvious to me that the Japanese Yen has indeed fueled the majority of this “last leg up in risk” and NOT AS MUCH USD in that….we know the money printing in the U.S has provided dollars for a mirad of reasons / uses to support the current ponzi scheme – but no one can say for certain “where” the money has gone or “how” its been utilized by the Fed and major players.

As “ass backwards” as it may sound, it makes some sense to me that we see USD fall “along side” U.S Equities for the next leg down, as money flows back into JPY FIRST.

USD to fall, as commodity currencies fall “harder” with JPY the primary beneficary and the EU currencies also “rising” as risk comes off is scenario #1.  Nuts eh?

On the completely other end of the spectrum, can one imagine a scenario here where “risk on prevails” and we see USD rise along with Equities, as JPY gets pounded again with the EU related currencies dropping like stones? It seem’s far less likely to me but again…..you can see why “speculation” generally doesn’t do much for my trading.

Bottom line is – you can “think” about these things but “trading off them” is a fools game, and the “heart and soul” of the many bloggers and analysts out there searching for eyeballs in a sea of speculation. I continue to trade “what’s in front of me” and move in one direction “with conviction” until proven otherwise, with the worst case scenario being “I’m totally wrong” and just switch directions a trade later. No foul. No loss. Allowing markets to “do what they will do” then quietly following along.

This is no time for speculation. This is no time for “big bets”. All will be revealed in very short order, so we learn to exercise patience and continue to trade with caution. All the “arrows in the world” won’t change which direction things move tomorrow, as it’s pointless to even consider these “projections” as having any edge in todays “more than manipulated markets”.

Armchair analysts and financial bloggers can kindly take their “bags full of arrows” and shove them where the sun……( you know what  mean ) as it “all amounts to nothing” if you’re not trading it properly.

So today we wait.

Speculation is speculation. Trading is trading.

You want to be a speculator or a trader?

I’ve never really heard of anyone “making any money” contemplating the future, where as “trading the present” has worked out pretty well thus far.

More at www.forexkong.net

Remember To Laugh – It’s Only A Trade

I catch myself once in a while too so….you are not alone.

Considering that 95% of traders fail, its difficult at times to keep a positive attitude. I understand that better than anyone.

Having already gone through the “trials and tribulations” of learning how this all fits together, I know “full well” that it’s hard….not just hard, but damn near impossible when you are just starting out.

Don’t lose sight of yourself as….it’s only a trade. You have to remember to laugh.

I remember a time back when I was trading options, struggling with a relationship with a “wicked and evil girl” and incarcerated in Colombia!

Days later I came home to a “world full of hurt” as markets tanked, my stitches didn’t take, and my heart lay smashed on the cold tile floor. I’d lost more than I care to remember, but still managed to pull myself together and live to to trade another day.

How?

I laughed ( I cried too ).

I learned.

Then I laughed a little more.

You can’t let this get the best of you, and you can’t lose sight of the fact that it’s only a trade. You’ve really no control over it no matter what happens so….all you can really do is protect yourself, and do “everything else you can” to  remain positive. Laugh once in a while! Go see a movie! Go pet a dog!

There are a million and one reasons to laugh these days as the world “outside of trading” is more comical than ever! Trading is trading but it’s certainly not “everything”.

Remember to laugh, and do what you can to put this all in perspective. It’s only a trade. You “should” live so….you might as well have a smile on your face.

P.S – I just burnt the shit out of a roast in the oven while writing this so……..what do you think I’m gonna do about it??

I’m laughing my ass off!

Pushing people to absolute extremes here, markets continue to pull you apart. Buyers are losers, sellers are losers, and the entire thing feels like it’s just one big joke!

Laugh about it people! Your’e gonne feel alot better!

Check us out in “real time” over at the Members site: www.forexkong.net . Lots of laughter going on over there.

 

 

 

Japan Is Broken – Soon You Will Be Too

We’ve been waiting for this for a considerable amount of time, and our patience will now be rewarded.

The Japanese Stock Market Index “The Nikkei” has now breached our “waterfall zone” dropping an additional -200 points here overnight in a surprising ( only in that it’s happened on Sunday ) move lower, this early in the week.

The flow of news headlines won’t make a single difference in the world ( depending on what they look to as the cause ) in that, this has been slowly developing over such an extended period…it was only a matter of time before she cracked.

It takes the big players “weeks and months” to move such large amounts of money “in or out”  of position, and the past few weeks have had “distribution” written all over them. Distribution is a market dynamic where over time, large players continue to “quietly sell” to retail as they prepare to “hit the exits” with profits in hand. You certainly don’t want to be the last one holding the bag looking to “buy the dip” once the big boys make the move.

You doubt me? Consider the entire past 5 months as purely “distribution” and now watch how quickly these “gains” are wiped from your portfolio. Weeks and even months of trading “evaporate” in a matter of days.

You can lead a horse to water but you can’t make him drink well…..again I am absolutely stunned that so-called “traders” continue to push the “green button” in the face of something so incredibly obvious.

I guess you need to lose 30-40% of your gains to finally get it.

Best of luck with everything “bullish” here this week and in the months to come. Gorillas are already nearly 100% in position and already in profit pretty much across the board – still just waiting on the final nail ( USD ) to make up its freakin mind so we can jump on that train too.

Long JPY is the way to go, with the commods continued weakness right on cue. SPY and QQQ shorts from “days” ago still performing well and a miriad of trades lining up in USD. More at the members site: www.forexkong.net