Under normal conditions inflation tends to be a big issue for market participants. Recently, however, it has been so small, that it all but disappeared from people’s check list. These days deflation is on everybody’s mind, which creates its own problems. It was discussed here few times before. Well, in a recent data released for Eurozone, Eurostat reported annual inflation rate for July to be at negative 0.7%- a deflation. Analysts don’t expect it to last. Inflation is projected to return into positive, but very low, numbers soon. Some are already talking about European Union coming out of recession by the end of September. This would certainly make job of ECB much easier, which bases its monetary policies on targeting inflation below but close to 2%. Currently the are in an unfamiliar territory and uncertain about what to do next.
Situation is similar across most developed nations. Inflationary numbers are very low and not projected to be a real problem soon. There are, however, countries where things are out of sync with general world trends. In Venezuela, for example, inflation is in double digits. That country’s central bank is expecting inflation to “slow down” to 26% by the end of the year. Which means it is higher now. What a contrast. But then again, Mr. Chavez likes to be different and even to show it off. I’d like to know if he is proud of this particular “achievement”. Probably not, since he started to talk about some stimulus measures, maybe in September, maybe not. Long on rhetoric but short on details, like most of his speeches.
Yesterday I was too busy to post anything, so now it’s time to update the short term trade from Sunday night. Intended action was to buy EUR-JPY using a set up on 5M charts, time frame I rarely discuss here, although use often during busy trading hour. This time it made sense to bring it up, with increased activity in Yen pairs, after Japanese election. On a related note, I often post trades taken on OANDA platform. On Sunday afternoon, they had such a ridiculous spike in few of JPY crosses, that it triggered probably all the limit orders in the system. It must have been really complicated, because my accounts have been brought to order just few minutes ago, and usually they are very good at solving this kind of problems. Life in the world of Forex trading.
I probably should have readjusted this trade a little lower, but left it as posted, so long entry was 132.77. Breakout was nice and fairly clear, trade was positive from the start, never dipping into red. Target of 45 pips was reached relatively fast. Good trade. I’m sure Yen will come up on these pages more often in coming days and weeks. For now, though, I’ll look at something else.
Pound is gathering momentum, at least for the time being. Hourly chart of GBP-AUD suggests reversal, with bottom largely formed already. Just minutes ago price poked above 1.9500 and is retreating slightly. I want to get in IF it moves there again. Buy order is placed at 1.9520 and trade is targeting 180-200 pips. This pair does not lend itself to tight stops, so one should give it plenty of “breathing room”. I also consider additional entry if it drops to 1.9370, but it is not in stone yet. Pound-Aussie can move very fast, and it can also turn on a dime.
Mike K.
So, you posted a short term trade in about real time, which worked as advertised. Remarkebly so, as a matter of fact. Does it mean we can expect more posts like that? I’m sure more people would appreciate it.
This was clinical work. Very impressive. Do you do it all day long? I agree with Heather, would be nice I you could make updates through the trading day. I know, it would be taxing, but perhaps a paid service? At any rate, great trade.
While I take trades during trading day, not all of them work out as good as that one. Nobody should be naive enough to think that me, or any one else, makes money all the time. I only wish it was that easy.
Man, the beast is ready to fall hard. I don’t know what still holds it up. The magic of 150 line?
Nothing magical about it, just round number where orders tend to bunch up.
BigFX, for what its worth. After spending months of watching trades here on FX Madness, I think the beast is seting up a short term buy signal, to 151.50-152.00. If this happens, we want to review longer charts and see what is up there.
I still think this is only a bounce and down trend will resume before getting as high as you suggest. Mike, what is your take on it?
My take? Oh, no. I’m not getting myself into this. It is good for both of you to express opinion in public, small as it is, takes courage. I’m going to place a limit trade for the night and publish it in next update, but no disclosure before. You two will have to manage those trades on your own. The only way to learn. Just don’t risk too much money. In about 11-12 hours we’ll see outcomes.
Weird day. ISM and home sales were set ups for the bull. Covered some shorts in DB and the Brazil and Mexican etf’s, when the futs started climbing around 8am. Someone somewhere said Cerberus was selling. That might be wishful thinking, but it did seems like somebody was selling positions all day. We might never know who, in these transparent markets. Thank goodness for dark liquidity pools. aud is rescuing me some from the weird weakness on the nzd. aud/nzd was weakest of all aud crosses yesterday. If the forced selling is over, it might be good to buy a few yen crosses again. aud is looking strongest on the gdp number, though gbp is always on the launch pad, looking for a flame.
Mike, one more thing. While I would be deliriously happy to have 60% of my trades win, this percentage is a bad joke for the geniuses at Goldman. Two losing days at their prop desk last quarter. Now, that’s trading. You would think these guys would be at least a little kind and cure cancer and malaria and aging, with that kind of brainpower.
Only 2 loosing day? That’s unbelievable. Does it include market making or only trading?
That’s from their prop trading desk by itself!
First few months of this year I had only few loosing days, but there was a stretch of 2-3 weeks when I had like 2 loosing trades. Not sustainable. To do it as an organization, with many more trades it is really difficult, even with built in advantage as they have. Would be interesting to know what the ROI or ROE was, but even more how much of it comes from having access to the order books and other sources not available to people like us. Ragardless, it is freaking impressive.