Today’s Trading Plan 09.22. 17 – USDCAD, EURUSD

Swing

*Good morning/afternoon everyone!*

There are no U.S. economic reports scheduled for release today but the dollar continues to give back its gains as yields take another tumble this morning. Stronger than expected Eurozone PMIs and benign comments from ECB President Draghi helped EUR/USD hit 1.20 this morning. Although the pair has since lost some of its momentum, it could make another run for this level. Prime Minister May’s Brexit speech is today and sterling is steady ahead of the event. The Canadian dollar is also firm ahead of this morning’s Canadian retail sales and CPI reports. We’ll be live trading these 2 pieces of data at 8:15 NY / 12:15 (please join us). USD/JPY is trying to claw back but it is not clear whether it will be able to so keep an eye on U.S. yields. If the 10 year rate rebounds and is down less than 1.5bp, we could see a dollar bulls regain control.

*The MAIN THEMES I see today are*

+CAD
+EUR
+AUD
+NZD
+GBP

*Trading Biases*

+CAD, +EUR, +GBP
mildly -USD
mildly +AUD, +NZD
neutral JPY, CHF

*Today’s Ideas*

1. Buy EURUSD at 1.1969, Stop at 1.1939, Target 1.1989
2. Sell USDCAD at 1.2272, Stop at 1.2300, Target 1.2252

Cancel ALL pending orders by 3:30PM NY / 19:30 GMT / 5:30AM AEST
Close ALL open day trades by 4PM NY / 20 GMT / 6AM AEST

Why is All Trading Advice so Contradictory?

Boris Schlossberg


Trading is all about exits.
Nah -- trading is all about entries.
Trade with a minimum of 2:1 risk reward ratio
Nah -you’ll never make money if you don’t let your stops be bigger than your profits -- pigs get slaughtered.
If you want to make money trading follow your system rules.
Nah -- rules are meant to be broken -- they are just guidelines.

Spend an hour on the internet researching trading advice and you can easily conclude that this is a schizophrenic business and that no one has a clue as to what they are saying.

Trading advice may seem contradictory on the surface, but actually, it is not. It’s simply a matter of what trading model people choose to follow.

As I’ve noted many times before there are really only two ways to trade -- the lottery model and the insurance model. The lottery model is the traditional approach that looks for 2:1 or greater win ratio, has very few winners but makes sure that they are large enough to pay for the losers.
The insurance model, on the other hand, does the exact opposite, It tries to make almost every trade a winner and avoid losers as much as possible, but when it does get hit the loss is much larger than the wins. Just like the insurance business, it counts on winners (i.e. premium payments) to offset the rare losers.

Once you begin to view trading advice through the prism of these two models it makes much more sense. If you are following the lottery model and every potential trade could be a huge winner while the risk is generally small -- then, of course, you should follow the rules of your system and take every single trade. Discipline is paramount.

On the other hand, if you are trading the insurance way then passing up a single trade means almost nothing -- in fact, it may be hugely advantageous to do so, since you may miss a big loser which is the same thing as banking many winners. Discipline is actually idiotic and discretion is the key to success.

This also goes a long way to explaining why exiting early under the insurance model is actually very smart but under the lottery model can be ruinous. Under the insurance model, you are trying to avoid losses, your wins are practically guaranteed. So an early exit that avoids a major loss is the right move. On the other hand, an early exit from the lottery model can be devastating -- it’s the equivalent of losing your ticket before you can cash it.

The lottery/insurance duality also plays into trade selection. Lottery model traders should be very promiscuous with their entries (their risk is limited, but their payoff is large) but must be very disciplined with their exits (you need to bank massive wins to pay for a large number of losers.) Insurance model traders are just the opposite. They need to be extremely cautious with entries (the last thing you want to do is sell a life insurance policy to an overweight, chain smoking, motorcycle rider who doesn’t wear a helmet), but generally free to exit as they choose.

So when you hear two traders on the Internet yelling at each other, very often they are talking past each other.They are operating under completely different logic regimes. Therefore, before seeking anyone;’s advice or taking anyone’s criticism seriously understand your strategy and trade accordingly.

Today’s Trading Plan 09.14.2017 – NZDCAD, NZDCHF

Swing

*Good morning/afternoon everyone!*

We are live trading the Bank of England meeting this morning so that will be our main focus. Meanwhile the U.S. dollar is losing its momentum after having raced to fresh highs overnight. However the prospect of a stronger CPI report keeps us from selling the currency this morning. With that in mind, we could be near a top for a greenback as EUR/USD and USD/JPY hover near key technical levels. AUD is struggling to hold onto its post employment report gains while NZD is lagging behind. USD/CAD appears to be in the process of rolling over.

*The MAIN THEMES I see today are*

-NZD
+CAD
+EUR

*Trading Biases*

mildly -USD
+EUR, +CAD, +CHF
-NZD
mildly +AUD
neutral USD, JPY

*Today’s Ideas*

1. Sell NZDCAD at 0.8806, Stop at 0.8836, Target 0.8786
2. Sell NZDCHF at market now 0.6987, Stop at 0.7017, Target 0.6967

Cancel ALL pending orders by 3:30PM NY / 19:30 GMT / 5:30AM AEST
Close ALL open day trades by 4PM NY / 20 GMT / 6AM AEST

Kathy’s NY Trading Calls 08.29.2017 – USDJPY, GBPUSD, EURCHF

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading sharply lower this morning after North Korea fired a few missiles over Japan. The U.S. and Japan have called an emergency U.N. meeting to address the issue but we have not seen any fresh tweets from President Trump over the past 24 hours. But with South Korea responding by dropping test bombs near the DMZ, we can only imagine how much worse the situation can get. Nomura puts the odds of a North Korea war at 35%. Pressure and sanctions haven’t been working and the U.S.-South Korea’s decision to move forward with their annual games only further inflamed NK who showed a modicum of restraint earlier this month hoping for the same. This is the biggest story of the day and one that will dominate North American trade. The market is viewing this as a dollar issue and not a risk aversion issue but its really one in the same as NK poses a serious threat to Japan, South Korea, and the rest of the region. It may also be difficult for China to stay neutral with their close ties to NK. EUR/USD is above 1.20 and GBP has its eye on 1.30.

*The MAIN THEMES I see today are*

-USD
+EUR
+GBP
+AUD
+NZD

*Trading Biases*

-USD
+EUR, +CHF, +GBP, +AUD, +CHF, +JPY

*Today’s Ideas*

1. Sell EURCHF at market now 1.1365, Stop at 1.1405, Target 1.1345
2. Buy GBPUSD at market now 1.2954, Stop 1.2914, Target 1.2974
3. Sell USDJPY at 108.51, Stop 108.91, Target 108.31

Cancel ALL pending orders by 3:30PM NY / 19:30 GMT / 5:30AM AEST
Close ALL open day trades by 4PM NY / 20 GMT / 6AM AEST

Today’s Trading Plan 08.28.2017 – EURUSD, AUDUSD, AUDNZD

Swing

*Good morning/afternoon everyone!*

It may be a quiet morning in the foreign exchange market but the weakness we saw in the dollar last week carried over this morning as the greenback is trading lower against all of the major currencies this morning. The market is still disappointment with Yellen and pleased with Draghi. However with Donald Trump focused on dealing with Hurricane Harvey, the lack of a reaction to North Korea’s launch of 3 short range ballistic missiles into the Japanese sea helped USD/JPY avoid immediate losses at the Asia open. Harvey has caused significant damage in the region and while it is now a Tropical Storm, more rain could lead to more flooding in the coming days. While oil prices are lower this morning, gas prices hit 2 year highs. There should be some catch in oil today. The euro remains one of the best performing currencies although AUD is also seeing quite a bit of demand as oil and copper prices tick higher. After hitting a high of 1.2945, the reversal in GBP/USD reflects the pair’s overall weakness and suggests that we could see further GBP underperformance vs. EUR and possibly even the commodity currencies.

*The MAIN THEMES I see today are*

-USD
+EUR
+AUD
+CAD

*Trading Biases*

-USD
+EUR, +AUD, +CAD, +CHF, +JPY
mildly -GBP
neutral NZD

*Today’s Ideas*

1. Buy EURUSD at market now 1.1938, Stop at 1.1898, Target 1.1958
2. Buy AUDUSD at market now 0.7942, Stop at 0.7902, Target 0.7962
3. Buy AUDNZD at market now 1.0965, Stop at 1.0925, Target 1.0985

Cancel ALL pending orders by 3:30PM NY / 19:30 GMT / 5:30AM AEST
Close ALL open day trades by 4PM NY / 20 GMT / 6AM AEST

10 Truths About Trading That No One Tells You

Boris Schlossberg

1. You can get paid rebates every time you make a trade. Do 10 trades/day and you can make 5-10% per year without making a single pip of profit.

2. If you use anything greater than 10X leverage on your opening trade your chance of losing all your money is 100% (that’s my opinion, not fact, but it’s as good as fact because it’s based on cold hard experience of 30 years worth of trading)

3. News (both scheduled and unscheduled) is the single biggest driver of price movement. If you are making all your buy/sell decisions from a chart only -- you are like a blindfolded hiker walking off the edge of Grand Canyon.

4. Big breakouts almost always have continuity. Fading them is the ultimate rookie move

5. Stops are never optional. Trading without them is like driving Indianapolis 500 without a seat belt. You WILL die.

Screen Shot 2017-08-25 at 2.12.20 PM

6. If the news is good but price falls -- trust price.

7. Charts, asset class quotes, real time news, institutional-type squawk box, automatic trade journaling are all free or near free -- just ask me for resources.

8. There are three possible trade outcomes -- win, lose and scratch. The most profitable traders scratch 25% of their trades.

9. You can win frequently or you can win big -- but you can never do both.

10. There are only two strategies in all of trading -- trend and counter trend.

Today’s Trading Plan for 08.24.2017 – USDCHF, AUDUSD, EURAUD

Swing

*Good morning/afternoon everyone!*

As Federal Reserve officials and central bankers from around the world gather at Jackson Hole for their annual summit, the U.S. dollar is enjoying a firmer tone. We have a few pieces of U.S. data due for release today (jobless claims and existing home sales) but none of them are expected to have a significant impact on the greenback. Yellen and Draghi don’t speak until tomorrow so it could be a quiet day in the FX market with an upward bias for the buck. U.S. yields are slightly higher but politics are also driving the dollar’s recovery with Senate majority leader Mitch McConnell offering a conciliatory tone to President Trump. The best performing currency this morning is USDJPY but GBPUSD is also performing well as it bounces off 1.28. The commodity currencies are under pressure as the U.S. dollar recovers but CAD still manages to hold its gains, pressuring USD/CAD lower.

*The MAIN THEMES I see today are*

+USD
-AUD
-NZD
+CAD
-CHF

*Trading Biases*

+USD. +CAD
-AUD, -NZD, -CHF, -JPY
neutral GBP and EUR

*Today’s Ideas*

1. Sell AUDUSD at market now 0.7895, Stop 0.7935, Target 0.7875
2. Buy USDCHF at market now 0.9646, Stop at 0.9606, Target 0.9666
3. Buy EURAUD at market now 1.4943, Stop at 1.4903, Target 1.4963

Cancel ALL pending orders by 3:30PM NY / 19:30 GMT / 5:30AM AEST
Close ALL open day trades by 4PM NY / 20 GMT / 6AM AEST