Press review - page 539

[Sergey Golubev]

Weekly Fundamental Forecast for AUD/USD (based on the article)

AUD/USD - "The latest set of RBA policy meeting minutes was released last week, before Debelle spoke. It saw markets wondering whether the OCR might just be going up a little sooner than they thought. Talk of a 3.5% neutral rate seemed to some to imply that so loose an OCR could not last much longer. However, the RBA seems very keen to disabuse them."

[Sergey Golubev]

Weekly Fundamental Forecast for NZD/USD (based on the article)

NZD/USD - "The NZD got a fresh shot in the arm Friday after Finance Minister Steven Joyce said that he was concerned about the strength of the Kiwi and that it highlights the strength of the New Zealand economy and the country’s robust export markets. Speaking to Bloomberg, Joyce said that he did not have an opinion on the NZD in contrast to comments from RBA deputy governor Guy Debelle who talked down any notion of a rate hike in Australia. A combination of renewed buying in the Kiwi and a weak USD saw the pair trade at a high of 0.74504 within a whisker of the September 5, 2016 high of 0.74857. The Kiwi has rallied nearly by over 8% against the USD since early May as the NZ economy continues to grow, driven by tourism, construction and immigration."

[Sergey Golubev]

Weekly Fundamental Forecast for USD/CAD (based on the article)

USD/CAD - "The headline inflation rate fell to 1.0% year/year in June from 1.3% in May – dropping further away from the BoC’s 2% target – but two of Canada’s three measures of core inflation were higher and May retail sales jumped by 0.6% month/month rather than the 0.3% expected by analysts. This helped reinforce the Canadian currency’s bullish momentum and inevitably brought the 1.25 level into focus for USDCAD, even though the pair is now technically oversold."

[Sergey Golubev]

Weekly Fundamental Forecast for Chinese Yuan (based on the article)

Chinese Yuan - "A rising Yuan could also help to slow capital outflows from China. The spokeswoman commented on Fed’s monetary policy: Fed has increased interest rates for four times since 2015; however, the support that these hikes bring to the Dollar has been diminishing. She continued to say that amid eased external pressure, the risk of large amounts of capital flowing out of China has been largely reduced. China’s foreign reserves, highly affected by cross-border capital flows, dropped below $3 trillionin January, a psychological-important level, after the Yuan set a record-low against the Dollar in last December."

[Sergey Golubev]

Weekly Fundamental Forecast for GOLD (based on the article)

XAU/USD - "Gold prices rebounded for a second consecutive week with the precious metal surging 2.06% to trade at 1253 ahead of the New York close on Friday. The advance marks the largest weekly gain since May and has been supported by continued weakness in the greenback with the DXY down more than 1.3%. Looking ahead to next week, price action looks poised for another push higher with key U.S. event risk on tap."

[Sergey Golubev]

Weekly Fundamental Forecast for Nikkei (based on the article)

Nikkei - "Last week, the Bank of Japan met and did as expected – nothing. As a result, we saw no volatility out of the Japanese benchmark. Looking ahead to next week the only ‘high’ impact data event on the radar is CPI on Thursday. Keep an eye on U.S. markets and how they react to the FOMC on Wednesday."

[Sergey Golubev]

Google shares - daily bullish reversal; 975 is the key (based on the article)

Price on the daily chart broke Ichimoku cloud together with Senkou Span line to above for the reversal from the ranging to the primary bullish market condition. Price is breaking 975.73 resistance level to above for the daily bullish trend to be continuing

• "Wall Street expects Google to report $8.25 per share on revenues of $25.6 billion for the June quarter. Current Street consensus is for earnings of $8.45 per share on revenues of $26.7 billion for the current quarter ending in September"
• "Google shares are up 7.5% in the three months or so since the the day after the company reported results for its first quarter in 2017, on April 27, 2017. Google's shares are only slightly ahead of the QQQ's which are up 6.2% in that same period and the Nasdaq which is up 5.6% since then."

[Sergey Golubev]

NZD/USD - daily bullish breakout; 0.7457 is the key (based on the article)

Daily price is above Ichimoku cloud in the bullish area of the chart. The price is testing 0.7457 resistance level together with ascending triabngle pattern to above for the bullish trend to be continuing.

• "Last week, NZDUSD easily blasted on through resistance in the zone surrounding 7350. The trend is clearly higher along with its sibling currency pair, AUDUSD, and as such the path of least resistance upward won’t be easily reversed in either. The preferred way to enter is via a pullback, and most ideally at a level or zone of support. Kiwi has sound horizontal support in the 7350-vicinity along with a trend-line rising up from May; these align with the one-standard deviation one-week projected low of 7339. If the recent leg up is only the beginning of another sizable run higher like the one seen in May/June, then we might not see a pullback develop into support. But if it does, it could be a good low-risk, high-reward entry for longs. Overall, barring a major turn of events it looks unlikely we will see NZDUSD drop below noted support."
• "Looking higher, the one-week projected range-high is above the September high and well below major levels of resistance carved out in 2015 just over 7700. This means there may be room to run, and should the projected high be overcome then the options market may be proven in the short-term to have underestimated kiwi strength."
• "Heads up: On Wednesday, the FOMC will release its decision on interest rates and with the Fed expected to hold pat on rates, focus will be on the policy statement and hints as to what the central bank will do at the meeting in September."

[Sergey Golubev]

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2014.04.25 06:49

Why Traders Lose Money (based on dailyfx article)

• There is a large chasm between trading and analysis.
• Analysis can assist with winning percentages, but this doesn’t always equate to profitability.
• Traders need to learn to manage risk if they ever hope to be consistently profitable.

While the title of this article can have broad implications with numerous explanations, we’re going to do our best to reduce the answer to this query to the most logical and basic explanation.

When a trader first gets started, it might be hard to imagine how getting control of losses can seem an impossible task. It may even feel like the cards are stacked against you… situations in which you’re right in your analysis, yet you still lose on the trade and watch capital disappear from your trading account.

So, a natural question is why some traders consistently make money while others lose, even when they’re right. That is what we will be investigating in this article.

The Difference between Trading and Analysis

Many new traders come to the market with a bias or point-of-view. Perhaps this is built from a background in economics, or finance, or maybe just a keen interest in politics. But one of the biggest mistakes a trader can make is harboring the expectation that ‘the market is wrong and prices have to come back.’

But let’s face it: Markets are unpredictable, and it doesn’t matter what type of analysis you use. As new information comes into the market, traders and market makers price it accordingly; because these folks don’t want to lose money just as much as you don’t want to lose money.

Is this to say that analysis is worthless? Absolutely not: It merely means that analysis is only a part of the equation of being a successful trader. Analysis is a way to potentially get the probabilities on the trader’s side, even if just a by a little bit; a way to maybe get a 51% or 52% chance of success as opposed to a straight-up coin flip.

Good analysis, whether it be fundamentally-driven or technically-driven, can be right a majority of the time. But no form of analysis will ever be right all of the time. And this is the reason that there is such a large chasm between analysis and trading.

In analysis, it doesn’t matter how wrong you are when you aren’t right. In trading, this matters quite a bit. Because even if you’re winning on 70% of your trades, if you’re losing $3 for every trade in which you’re wrong but only making $1 every time that you’re right, you’re still losing. It might feel good, because 70% of the time you’re walking away from your positions with the feeling of success; and as human beings this is something we generally strive for (to feel good).

The example below shows how bad risk management can destroy even a strong winning percentage of 70% success.

But logically, it doesn’t make sense to embark on this type of endeavor because the goal of trading is to make money; not necessarily to just ‘be right’ more than 50% of the time.

How to actually trade analysis

First thing first, traders need to crystallize what their actual goal is in trading in markets; and point-blank, that goal should be to make money.

After that, traders need to expect that they will, at times, be wrong.

So given these two facts, the next logical assumption is that without being able to control the damage from those instances in which we’re wrong, the prospect of profitability is a distant one.

So risk management isn’t just a preference or a style of trading: It’s a necessity for long-term profitability. Because even if you’re winning 90% of the time, the losses on the other 10% can far outstrip the gains that are made on the 90%.
I fully realize this isn’t necessarily exciting information. When I teach risk management, rarely do a see a student-trader ready to burst out of their seats to go and manage some risk. Most people want to hear about entry strategies, and analytical methods to try to get those odds of success tilted even higher in their favors.

But until a trader learns to manage their risk, much of this additional work is a moot point. Because as long as the risk exists that one bad position can and will wipe away the gain from many other ‘good’ positions; that trader is going to struggle to find profitability.

So, to properly trade analysis one needs to first observe proper risk management. Because trading isn’t just ‘guessing’ and ‘hoping’ that we get it right. Profitable trading is implementing analysis while properly managing risk factors; implementing a defensive approach so that when one is wrong, the losses can be mitigated and when one is right, profits can be maximized.

How can one begin to use ‘proper’ risk management?

We’ve already encountered one of the biggest mistakes of risk management, and that’s controlling the size of the losses relative to the size of the gains.

The solution is simple; implementing it not as much. As human beings, we often follow our gut instincts or our ‘feelings.’ But in trading, we have to keep the bigger picture in mind. When we place a trade, we often try to win on that one trade. This can keep traders holding on to losers for far too long, and closing out winners way too quickly.

[Sergey Golubev]

EUR/USD Intra-day - bullish ranging with narrow s/r levels; 1.1684 is the key (based on the article)

EUR/USD H4 price is above Ichimoku cloud in the bullish area of the chart: the price is on ranging with narrow support/resistance levels with symmetric triangle pattern to be testing for the secondary correction to be started or for the bullish trend to be resumed. The key support level for the correction is 1.1625, and the bullish trend will be continuing if the price breaks 1.1684 resistance level.

• "EURUSD: Retail trader data shows 24.6% of traders are net-long with the ratio of traders short to long at 3.06 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.06665; price has moved 9.2% higher since then. The number of traders net-long is 12.6% higher than yesterday and 0.3% lower from last week, while the number of traders net-short is 3.3% higher than yesterday and 7.9% higher from last week."