Massive move in gold coming.

xauusd

Annual momentum (price vs 3 year MA) shows a triangle formation – shown at the bottom.

A weekly close above this triangle (possibly happening now) will mean gold -0.15% begins a multi-year secular move to the upside.

Speculative interest is not overextended.

Momentum structures in DXY -0.06% also suggest that USD has begun a downtrend.

Get ready.

I had an epiphany today.

time-versus-money-weighted

I took a bit of a loss in my trading account today, a few thousand quid.

And it made me rethink my life a bit.

I’m actually glad I took the loss.

I’m glad I got greedy and over-traded and lost big.

 

It made me realise that I should just leave my trading to my robots.

Even if they make slightly less money than if I traded manually,

It would free up my time dramatically.

And since time is the most valuable asset we have,

That’s worth it.

 

It made me realise that time is more important than money.

That money doesn’t get happiness,

But rather, getting experiences and doing interesting things.

 

Which brings me to the robots.

They often trade more consistently than I do.

Because they follow my trading rules perfectly.

They don’t get greedy.

They don’t overtrade.

 

I worked out that I probably spend around 6 hours per day looking at charts.

If I just left it to my trading robots and alert systems, that would probably go down to 1 hour per day.

Which means I would save 5 hours every day.

 

If I did that for the next 3 years,

That would be 5 x 260 x 3 = 3900 hours.

Which is 160 days!

 

Ridiculous, I know.

I’m not sure what I’m going to do with all that free time 🙂

 

Image credit: blueleaf.com

Top trades for 2017

New Year Sand Beach New Year's Eve 2017

 

1. Long USD vs JPY, CAD, AUD, NZD, EUR

A structural dollar shortage, fiscal stimulus and a hawkish Fed should support the USD.

As US yields rise, long-term carry trades in AUD and NZD will begin to get squeezed.

A stronger USD will put pressure on commodities, especially crude oil as concerns about the OPEC cut may begin to surface. This will be bearish for the CAD and may force the BoC to cut rates.

A strong positive interest rate differential between the US and Japan means that a long USDJPY position should play a core part of our portfolio.

A short EURUSD position plays on the divergence between continued monetary easing and political uncertainty in Europe, versus a hawkish Fed and structural dollar illiquidity.

 

2. Short AUD versus USD, CAD, NZD

A weakening Australian economy, and risks of a stronger dollar strangling Chinese dollar-denominated debt, should continue to weaken the Aussie forcing the RBA to cut rates.

 

3. Short European equities (but long US equities on a significant retracement)

The FTSE needs to be shorted, as any appreciation in Sterling will result in massive bearish pressure.

The DAX looks overstretched near 11,500, and needs to be shorted as a play on rising European political tensions, risks of European bank defaults, and as a hedge on our short EURUSD position.

 

4. Long GBP vs EUR, AUD, JPY, (USD)

A neural BoE, rising inflation expectations, and strong economic performance should support Sterling against the weaker EUR, AUD and JPY.

A long GBP position against USD is the perfect way to hedge any long USD exposure.

Based on FX fundamentals and long term fair value, Sterling is significantly undervalued against all currencies.

 

 

5. Long gold vs USD

This is a hedge against long USD exposure, but more importantly, protects against a crisis created by dollar illiquidity.

Near 1,100, this is an excellent time to start building long positions – after most investors have been caught off-guard, squeezed and stopped out.

 

 

I just discovered how to hedge currencies…I think I’m in love

hedge

That’s a nice hedge

 

Honestly doe, I think I am in love

In currency trading, I used to hedge risk by trading multiple currency pairs – but I would only trade the majors.

The majors usually include USD.

And so I would usually end up with a massive net long or short USD position – and any small fluctuation in the dollar would present a big risk to my account.

 

Yesterday I had an awesome idea.

Why not hedge out the USD risk on these majors positions, by trading cross-pairs in the opposite direction to the other currency in the USD pair?

 

So, say I’m selling AUDUSD on the basis of monetary policy divergence between the RBA and the Fed.

To hedge it, I would buy AUDJPY.

This effectively eliminates AUD risk in this position.

Furthermore, it hedges out any dollar downside because if the dollar falls, it will be because Fed hike probability falls. Thus equities should rise, prompting a sell-off in JPY and a rally in AUDJPY.

And since we expect the RBA to remain on hold anyway, AUDJPY should appreciate. It gives us some nice carry too.

 

Another example: say I’m buying USDCAD because I think the Federal Funds Rate will rise in the near future.

To protect ourselves against this short CAD position, we can sell GBPCAD.

This is because Sterling faces the risk of Brexit and further rate cuts – CAD doesn’t face nearly as much risk, and it gives us a nice long CAD trade if oil decides to go up.

 

 

To put it mildly,

I’m frigging excited with joy about some stupid currencies.

Such is life

Discipline is the key to trading – I’m starting fresh.

discipline

So for the last 3 months I’ve followed my trading plan well – taking small risks, and making consistent profit.

 

 

I think the key to trading, and perhaps life, is discipline.

Discipline to do stuff you know you should do.

Discipline to not get greedy.

Discipline to exercise, eat well, sleep early – you know, all the stuff we should do.

 

The best traders are extremely disciplined.

I’m determined to be one of them.

So I’ve created a new account.

And I’ve made the results of it public.

 

I’m going to trade it, with discipline, following my trading plan meticulously, for a year.

And then I’ll review the results.

I’m tracking the progress here.

Staying strong when the going gets tough

difficult

So right now in my trading, I’m buying dollars.

However, this week, the dollar has gone down.

My trades have gone against me a LOT.

I’m losing a lot of money.

 

But I’m still holding on to my trades.

I believe in the fact that the dollar will go up.

I’ve done my analysis.

I know my charts.

More importantly, I know myself.

 

But it’s hard to stay strong, to believe in yourself, when the going gets a little tough.

It’s easy just to give up.

To say – oh no, this is getting a little hard now, time to quit while it’s easy to do so.

 

I could get out of my trades now, and the pain will go away.

Life will be easy again.

I won’t have the stress of a big loss becoming even bigger.

 

But this is the exactly point when the BIG wins occur.

If you’re able to get through the tough times,

To believe in yourself when your back is against the wall,

To find a way through and not just give up,

You’ll win.

 

And not just in trading, but in life too.

I’ve had moments where I thought –

Let’s not do this, this seems too hard. Might as well take the easy route.

But that’s never led to anything good.

 

It’s the times when I’ve stood strong,

When I took risks,

When I challenged myself to get through the difficult times,

That I’ve made real progress in my life.

 

That’s just some thoughts 🙂

I’m thinking of this time as an opportunity to do things other than trading.

Then a week or two later, I’ll come back to my trading, and take it from there.

But I won’t just quit.