Thursday, January 21, 2010
Wednesday, January 20, 2010
Tuesday, January 5, 2010
A look back and ahead
Another year has come and gone, hard to believe isn't it! Thought I'd share my look back at the markets for the year and use it as a start at getting back to some regular posts on here.
Although I didn't do near as much trading this year as I would have liked to of done, the first four months did do better than the last three. This was really all the trading I was able to get in do the project I was committed to in Alaska. I don't feel I missed much (other than income:)) since the ranges really narrowed for the last half of the year.
At the beginning of 2009 a respected trader (actually several) wrote that the combination of both the spike in the VIX (market volatility) at the end of 2008 and the Federal stimulus that WOULD get passed, should head to a giant rally and be a very positive thing for the markets. Well, I wasn't totally convinced back then, In fact I called BS on that idea...OK, so I was wrong (it does happen). While I did see the relationship to the VIX index I wasn't in agreement with the stimulus part. I think mainly because of my political and capitalist beliefs...it clouded my market thinking. Whatever the reason for the turn around in the market let's hope we don't see another 2008 crash.
So, for what seemed to be doom and gloom to many for 2009 the markets seem to have done just fine. The S&P is up almost 24% ($SPX) and the NASDAQ is up over 50% ($NDX). Check out the Dow Jones Industrial Average ($INDU), up over 61% from the March low (hmmm, wasn't this about the time the stimulus bill passed...like it or not) and 20% for the year. We know that the stock market predicts recessions and growth 6 to 12 months out. So, did anyone here predict the GDP growth by the third and fourth quarters...something to think about.
Remember the effect the banking crisis had on Forex? It was virtually untradeable the last few months of 2008 with HUGE spreads and daily ranges double that of the normal daily range. I remember spreads on the EUR/$ and GBP/$ of more than 30 pips at times. With normal spreads being 1 to 3 pips then jumping to over 30 pips and average daily ranges double that of normal, who in their right mind is going to trade that? I certainly wasn't.
Although the ranges for the first half of the year seemed to be back to normal, the ranges for the second half of the year got a bit narrow; a reflection of the US Dollar Index (DX A0), something I find very important to watch. An interesting study (since you have nothing better to do) is the range of movement in the Dollar index in relation to the trading opportunity of the Forex market. I'm expecting 2010 to bring lots of opportunity to the Forex trader. I'm in the camp that believes that dollar will start to strengthen. Some of the predictions I've read and the technicals are looking at the 85.00 range by year end (that's the conservative level).
Overall it seemed to me that the best trading was in the first six months of the year. The last three months of the year counted for most of my losses. I did however like the EUR/$, NZS/$, and AUD/$ the best to wrap up the year. 30% of my trades stopped out completely for a loss with most of that in the last three months of the year when the market was narrowest. 70% were profit takers. Of the winners 20% hit there first target and continued on for bigger profits. 50% stopped somewhere between the first target and my initial stop. With my stop at around 25 to 30 pips and my first target being around 45 to 55 pips I can be pretty happy with these results. Not the best year but still good. It's still very possible to win 70% of your trades (or more) and lose money if stops aren't used properly and profits aren't booked along the way (trade management). The 70% may seem like a lot to some (not so much to others) but a lot of these trades where small winners or almost break even. If the pieces of my set up fall apart and other indicators present themselves I may get out after a short period or at the very least tighten my stops.
2010 is going to be a great year for Forex trading and I will be spending a lot more time at the charts this year. And because I'm a technical trader, I try not to let the economy get in my way of trading. Unless of course the world goes to a one world currency like some are recommending, ug:(! That being said, I'm certainly cautious elsewhere. Anyone remember the housing bubble? Ouch!!! Hurts I know. How 'bout the Oil bubble (QM #F)? Went from 147 to 35 in five months! WOW, look at gold (YG #F). Should I buy or should I sell??? Lots of folks still buying. Compare the two charts and all the volume... looks an awful lot like a bubble don't it. I'm just saying. And speaking of bubbles...check out the U.S. Treasuries. Anyone care to guess what will happen once interest rates start to go up? That could be a good thing, like maybe help drive the Dollar up. And of course the unemployment numbers, ugly! With so many people out of work and lenders not lending, something has to give. Is the fix for the cycle to print more money and hand it over to big corporations and the unemployed? We're going to find our, aren't we. Oh and then there's our wonderful new healthcare system, Most don't seem to like it and I don't think anyone understands it including the clowns that passed it. So since I don't have the crystal ball and I certainly don't believe what our so called experts in government are telling us, I think I'll stick to technical trading. It's what's been working for me when things are good and bad, and that's great. Those bone heads in Washington only seem to really want to make us happy when it's time for us to vote anyway.
Hmmm, sorry if I offended anyone (kinda). I would though, like to keep this all positive, not politicize and keep the doom and gloom in a deep hole somewhere (maybe Gitmo, I here there's vacancy). I do believe that better times are just ahead of us. I don't think we're going to see another 2008 but I don't think 2010 is going to be a record setter the other way either. I'm in the camp (going camping seems like a good thing) that believes we're going to start seeing a very slow recovery; but a recovery none the less. The dollar will start to go up and the unemployed will start heading back to work (those that want to work). We can't fix everyone's problems but we can have hope for everyone.
Happy trading and God Bless to everyone.
Although I didn't do near as much trading this year as I would have liked to of done, the first four months did do better than the last three. This was really all the trading I was able to get in do the project I was committed to in Alaska. I don't feel I missed much (other than income:)) since the ranges really narrowed for the last half of the year.
At the beginning of 2009 a respected trader (actually several) wrote that the combination of both the spike in the VIX (market volatility) at the end of 2008 and the Federal stimulus that WOULD get passed, should head to a giant rally and be a very positive thing for the markets. Well, I wasn't totally convinced back then, In fact I called BS on that idea...OK, so I was wrong (it does happen). While I did see the relationship to the VIX index I wasn't in agreement with the stimulus part. I think mainly because of my political and capitalist beliefs...it clouded my market thinking. Whatever the reason for the turn around in the market let's hope we don't see another 2008 crash.
So, for what seemed to be doom and gloom to many for 2009 the markets seem to have done just fine. The S&P is up almost 24% ($SPX) and the NASDAQ is up over 50% ($NDX). Check out the Dow Jones Industrial Average ($INDU), up over 61% from the March low (hmmm, wasn't this about the time the stimulus bill passed...like it or not) and 20% for the year. We know that the stock market predicts recessions and growth 6 to 12 months out. So, did anyone here predict the GDP growth by the third and fourth quarters...something to think about.
Remember the effect the banking crisis had on Forex? It was virtually untradeable the last few months of 2008 with HUGE spreads and daily ranges double that of the normal daily range. I remember spreads on the EUR/$ and GBP/$ of more than 30 pips at times. With normal spreads being 1 to 3 pips then jumping to over 30 pips and average daily ranges double that of normal, who in their right mind is going to trade that? I certainly wasn't.
Although the ranges for the first half of the year seemed to be back to normal, the ranges for the second half of the year got a bit narrow; a reflection of the US Dollar Index (DX A0), something I find very important to watch. An interesting study (since you have nothing better to do) is the range of movement in the Dollar index in relation to the trading opportunity of the Forex market. I'm expecting 2010 to bring lots of opportunity to the Forex trader. I'm in the camp that believes that dollar will start to strengthen. Some of the predictions I've read and the technicals are looking at the 85.00 range by year end (that's the conservative level).
Overall it seemed to me that the best trading was in the first six months of the year. The last three months of the year counted for most of my losses. I did however like the EUR/$, NZS/$, and AUD/$ the best to wrap up the year. 30% of my trades stopped out completely for a loss with most of that in the last three months of the year when the market was narrowest. 70% were profit takers. Of the winners 20% hit there first target and continued on for bigger profits. 50% stopped somewhere between the first target and my initial stop. With my stop at around 25 to 30 pips and my first target being around 45 to 55 pips I can be pretty happy with these results. Not the best year but still good. It's still very possible to win 70% of your trades (or more) and lose money if stops aren't used properly and profits aren't booked along the way (trade management). The 70% may seem like a lot to some (not so much to others) but a lot of these trades where small winners or almost break even. If the pieces of my set up fall apart and other indicators present themselves I may get out after a short period or at the very least tighten my stops.
2010 is going to be a great year for Forex trading and I will be spending a lot more time at the charts this year. And because I'm a technical trader, I try not to let the economy get in my way of trading. Unless of course the world goes to a one world currency like some are recommending, ug:(! That being said, I'm certainly cautious elsewhere. Anyone remember the housing bubble? Ouch!!! Hurts I know. How 'bout the Oil bubble (QM #F)? Went from 147 to 35 in five months! WOW, look at gold (YG #F). Should I buy or should I sell??? Lots of folks still buying. Compare the two charts and all the volume... looks an awful lot like a bubble don't it. I'm just saying. And speaking of bubbles...check out the U.S. Treasuries. Anyone care to guess what will happen once interest rates start to go up? That could be a good thing, like maybe help drive the Dollar up. And of course the unemployment numbers, ugly! With so many people out of work and lenders not lending, something has to give. Is the fix for the cycle to print more money and hand it over to big corporations and the unemployed? We're going to find our, aren't we. Oh and then there's our wonderful new healthcare system, Most don't seem to like it and I don't think anyone understands it including the clowns that passed it. So since I don't have the crystal ball and I certainly don't believe what our so called experts in government are telling us, I think I'll stick to technical trading. It's what's been working for me when things are good and bad, and that's great. Those bone heads in Washington only seem to really want to make us happy when it's time for us to vote anyway.
Hmmm, sorry if I offended anyone (kinda). I would though, like to keep this all positive, not politicize and keep the doom and gloom in a deep hole somewhere (maybe Gitmo, I here there's vacancy). I do believe that better times are just ahead of us. I don't think we're going to see another 2008 but I don't think 2010 is going to be a record setter the other way either. I'm in the camp (going camping seems like a good thing) that believes we're going to start seeing a very slow recovery; but a recovery none the less. The dollar will start to go up and the unemployed will start heading back to work (those that want to work). We can't fix everyone's problems but we can have hope for everyone.
Happy trading and God Bless to everyone.
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