Economic Data Calls for May 10, 2019

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (May 10, 2019) — Good Luck Trading!

1. GE Trade & Current Account Balance (02:00 ET) Bullish EUR -- Stronger Industrial Production & PMI Signals Better Trade Balance

2. UK Q1 GDP (04:30 ET) Bullish USD -- Potential upside surprise given better retail sales & trade balance

3. CAD Employment (08:30 ET) Bearish CAD -- Potential downside surprise given lower employment component of IVEY PMI

4. US CPI (08:30 ET) No Trade -- Tough call as higher gas prices offset by weaker PPI. Its not clear whether inflation increased or decreased

Economic Data Calls for April 10, 2019

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (April 10, 2019) — Good Luck Trading!

1. UK Trade Balance & Industrial Production (04:30 ET) Bullish GBP -- Potential upside surprise given rise in manufacturing activity

2. ECB Rate Decision (07:45 ET) No Trade -- ECB likely to maintain cautious outlook but rate decisions best traded reactively

3. US CPI (08:30 ET) Bullish USD -- Potential upside surprise given rise in oil and gas prices

4. FOMC Rate Decision (14:00 ET) No Trade -- Fed minutes will be dovish but best traded reactively

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.

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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.

In FX 10 is the Magic Number

Boris Schlossberg

Over the past few weeks, I must have made more than 1000 short term trades. Some were on demos. Most were live accounts. Some trades were done on raw spread, others used a full spread broker. Here is what I discovered.

It doesn’t matter what strategy you use. It doesn’t matter if you trade chop. It doesn’t matter if you trade trend. It doesn’t matter if your spread is 0.2 wide or 1.4 wide. It doesn’t matter if your target is just 3 pips or even 1.5 or 5 or 6 or even 7 -- you can’t make money in FX day trading unless you target is 10 pips.

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The reason is -- to paraphrase Bob Dylan is that you got to pay somebody. It may be the Devil or it may be the Lord, but you’ve got to pay somebody. Regardless of how you make your trade your average cost per trade is 1.5 pips (either spread or 1 pip commission + raw spread). That translates to about 15% cost of doing business.

When you factor in the vagaries of the market, the risk/reward payoffs, the various news bombs that blow up your trades, that frankly is about as much cost as you can absorb. If you go down the 5 pip level, the transaction cost becomes too large at 30%. Basically, you give up a third of your gross profit right off the bat and few businesses can survive that math over the long haul.

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10 pips is also a very reasonable distance for a day-trade. The average true range for a major pair is about 100 pips (yes, yes I know that’s wishful thinking in these low volatility times -- but it is still a decent rule of thumb). That means that a 10 pip trade is about 10% of the daily move which is very achievable 2-3 times each day. Like a perfect bowl of porridge, 10 pips is not too cool, not too hot. For those of us who like to day trade -- 10 pips is juuuuuuust right:)

As to all the snarky position traders who constantly berate day traders for just churning our accounts -- feel free to ridicule all you want, but some traders in my chat room have been trading for years with drawdown profiles of less than 10% -- and that’s basically what? -- a bad week in your world :).

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GBP/USD – 10 Days Without a Rally

GBP/USD – 10 Days Without a Rally

Chart Of The Day

GBP/USD – 10 Days Without a Rally

Ten trading days have past without a rally for GBP/USD. This is the longest stretch of weakness for the pair since September. U.K. data has been weak and while the trade deficit narrowed in November, the improvement was less than the market anticipated with falling exports reflecting weaker demand from Europe and China. The Bank of England meets next week and given the recent trend of U.K. data and market volatility, they will be less inclined to raise interest rates in the near future, which could accelerate losses for the British pound.

Technically such a long and exhaustive move begs for a relief rally and that may happen near 1.45, the next psychologically significant support level for GBP/USD. However if 1.45 does not hold then there is no major support for the pair until the May 2010 low of 1.4230. Should GBP/USD rebound, it will find resistance at 1.4650 and 1.4800.