fbpx

Sterling Digest: April 3, 2012

US Dollars
Today was all about the greenback baby

The $FED completely changed the game. While Bernanke had been on the circuit implying more QE was on deck, the minutes revealed a much more hawkish Federal Reserve. And as a result, the USD rallied across the board. Now the question going forward is whether the USD is really gaining strength or are traders being given a USD-selling opportunity?

Image credit

Sterling Digest: April 2, 2012

NASA PICTURE OF UK
The United Kingdom/Britain/England/UK

Sterling was very mixed bag in Monday trading despite stronger-than-expected manufacturing numbers out of the UK. GBP was able to push higher against the euro and greenback but lost a lot of ground versus the aussie, kiwi, and loonie. Traders are really looking ahead to the Bank of England later this week on Friday. While the BoE is expected to hold on monetary policy, poor economic data released in March has some market participants speculating that the BoE needs to increase QE now rather than later. However, trickle of positive news in the last few days may be enough justification the BoE needs to stay put for now.

Image credit

Sterling Digest: March 30, 2012


If central banks allow gold to become money, how would they enact QE??

A choppy week has given away to sterling strength with $GBPUSD breaking above the major psychological level at 1.60. Traders say month end flows are to blame for sterling strength when its fundamentals hold a more ominous outlook for the currency. BoE next week will continue these breakouts and trigger some profit-taking as most pairs sit GBP bullish at key levels into the weekend …despite the headlines.

Image credit

Sterling Digest: March 29, 2012

World markets as sheep falling off a cliff
UK is right on the edge

There are very mixed reactions to the UK economy. While it certainly appears that the UK is suffering from a double-dip recession, the government is in denial. The BoE is not confident that the economy will grow again at pre-crisis levels. And economists are dubbing this economy worse than the Great Depression. While it doesn’t seem that sterling can rally on such outlooks, it has and remains resilient in today’s trading. However, how long can that remain the case? Remember, the market can remain irrational as long as it pleases.

Image credit

Sterling Digest: March 28, 2012

Kal's Cartoon on The Economist
All eyes on oil

Sterling manages to stage a decent correction in today’s trading session. Yet, it is the AUD taking it on the chin today as it suffers from a double whammy of commodities weakness and USD strength. It was the only currency pair that sterling rallied higher against without much pullback. The timing with now confirmed Chinese softness (causing the commodities weakness) gives the $GBPAUD legs to run higher.

Image credit

Timing Is The Only Thing

Too many people say “I was too early on that one” to reassure themselves that they were right after all. The bottom line, though, is: if you didn’t make money, you weren’t right. So stop lying to yourself and work on your timing!

Great read over at Richard Todd’s blog on timing. Timing is something I strive to improve upon every time I’m in the market. I realized early in my trading that the entry of a trade is just as important as the exit. I personally feel it is more important. Todd’s post got me thinking about what it is I do to improve the timing in my trading.

  1. Use tighter stops. This is a recent change I made about a year ago. I know it is very counterintuitive and even ill-advised. But tight stops don’t allow you to be lazy when entering markets. There can’t be any “Oh I’ll just get in right here.” There must be a reason for every trade and that reason is your price. A trade is triggered because price has reacted a certain way at a specific chart level. It is at that level where we would love to get in at. It is the level that will maximize our profitability. An early entry is too impatient. Impatience is never a good way to trade. A late entry is a missed entry. Missed trades simply don’t pay which can be okay but refer to the above quote.
  2. Use limit orders. Trading live in the market can be exhilarating and boring. Both environments have positives and negatives but they have one thing in common. They both affect timing. In a volatile market, some traders get an itchy finger pulling triggers as fast as the market can oscillate. In a slow market, impatience rears as a trader enters a trade just to trade. Using orders allows me to time my entries to a certain extent as I let the market come to me. If the market never comes to me, then it’s time for a new setup and a new trade. With capital preserved, I can go into that next trade with a clear head.
  3. Using profit targets. There is aplethora of literature out there about using stops. Far less is dedicated to using limit orders to set profit targets. Many traders will place a stop but never set a profit target. Without a hard profit target set, the trader may be away from the screens when the market finally does move in her direction. Or worse, the trader hesitates, or simply refuses, to take profits off the table. Use hard (tight) stops. And use hard targets.

Todd says timing is everything. I agree, and take it further. Timing is the only thing.

Source: Timing Is Everything (blog.richardtodd.name)

Sterling Digest: March 27, 2012

Britain's budget for global business
Weak economy, strong sterling. Go figure.

Sterling refuses to weaken even as economic data slips and members of the BoE still look to add more QE. The $GBPUSD continues to make higher highs at 1.5999 though still remains capped by the major 1.60 level. Even the almighty commodity dollars (AUD, NZD, and CAD) are weak against the GBP. Are we seeing the beginnings of a bear trend reversal in sterling?

Image credit

 

 

Sterling Digest: March 23, 2012

Beautiful golf course
Enjoy the weekend - my friend and fellow trader has the right idea here

Being wrong early in cable kept me on the sidelines for the rest of the day. A good day to be out as the $EURGBP, $GBPUSD, and $GBPJPY saw whippy sideways actions to end the week. The $GBPCAD, $GBPAUD, and $GBPNZD came off their breakout highs as commodities firmed up a bit today after vicious selloffs all week. The question for the new week is whether sterling continues to consolidate or will the bull trend resume? Until that time. Enjoy the weekend.

Image credit

Get Your Mind Right

I had the privilege of meeting @DeniseKShull 2 years ago at the StockTwits Meetup during the NYC Trader Expo. I attended her session the next day and was blown away by her assertion to actually use your emotions in your trading. I followed her on Twitter. She started writing her book not too long after that conference. The rest, as they say, is history. If you haven’t read the book, this interview is a beautiful and illuminating preview. Absolutely blown away by the brilliant insights Matt and Denise discuss. LISTEN TO THIS INTERVIEW. Read the book. Get your mind right. Happy trades.

Market Mind Games with Denise Shull @denisekshull and Matt Davio @misstrade, A Radical Psychology of Investing, Trading, & Risk

Sterling Digest: March 22, 2012

UK - London: Oxford Street - Marks & Spencer
Most iconic chain store in the UK yet retail sales drop

Poor UK retail sales weakened sterling across the board. However, it remains to be seen if this weakness will be sustained or if it merely provides buying opportunities for bulls.

Image credit