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Getting dirty with fundamentals (long term trades and intraday)

  • #1
  • First Post: Edited 4:43pm May 17, 2017 4:29pm | Edited 4:43pm
This thread is not going to be a diary and I am not looking for reputation or mud slinging. If you trade using pure technical analysis and want to slap opinion then go somewhere else because you wont get any joy here i assure you.

For the rest of you that are either struggling to make any progress with trading or currently make use of this type of trading then please feel free to collaborate your thoughts, analysis, or anything related.

Let me start by saying I do not do this full-time and it's not because I am unable to but rather by choice. As much as I am involved with trading I am also involved in other commercial interests. That being said I do withdraw profit from trading to supplement my lifestyle. My capacity in this market is both long term and intraday. The long term trades exploit the long term trend that is predicated by economic data and is underpinned by central bank policy. My intraday approach is working in the framework of sentiment and economic data releases. Both long term and short term have overlapping pillars but the pairing of strong with weak doesn't necessarily agree with long term. It is to maintain a separation of concerns and I use separate accounts and risk profiles for each approach.

Tools that I use:

1) eikon (my primary real-time news terminal)
2) tradingeconomics.com (historical and current overview of economic data)
3) forexlive (analyst commentary)
4) central bank websites
5) marketwatch.com/optionscenter/calendar (option expiry)




markets I track

1) currencies
2) bonds
3) equities (high level)
4) commodities

economies I track

1) UK
2) USA
3) EU + top 5 in euro area
4) JP
5) NZ
6) AU
7) CN
8) CAD


Daily schedule

morning

1) catch up news and Asia markets (1-2 hours)

2) - prep daily schedule (upcoming news for day and whats ahead for the week).

- Adjust any news feed filters to keep track of stories that can affect sentiment.

- Create list of strongest to weakest based on news and sentiment (goes side-by-side with long term list)

- Map list (trade list) with upcoming news and create new list of potential pairs to trade based on a strong or weak release


throughout day

1) monitor sentiment and adjust trade list where applicable


evening

1) catchup on notes (long term diary and any details i need to keep fresh)


weekend

1) research and update notes



You will not that there is a lot of time spent researching and taking notes. This is for good reason because i need to know where all the economies i trade are in their cycle, how sentiment is affecting the trend, and be prepared for the best opportunity. There is no point going into a data release and not knowing which currency i am going to pair this release with for the best opportunity for intraday trades. People that just blindly trade pairs without knowing why something is happening or the potential that opportunity presents (a few hours or a few days). Having this knowledge also increases the win rate and maximises the potential of each opportunity. How many times have you missed a move or exited to early or to late?

Intraday

These trade can last anything from a few hours to a few sessions. Stops and targets are derived off the average daily range and trades are taken when sentiment changes or data is released with an unexpected number that is outside or on the upper or lower expected threshold (you don't get this data from free news services only premium offers it)


long term

these trades can last weeks to months and the objective here is to have a payoff + swap in favour but this is not a deal breaker so long as the expected payoff and rollover differential doesn't diminish the opportunity. I like to catch changes in the cycle and take advantage of this on multiple trades that i peel off and re-enter until the cycle is completed or game changing data changes the long term trend



that's a very high level of what I do. Now feel free to share your process or discuss analysis and any ideas.
  • #2
  • May 17, 2017 5:27pm May 17, 2017 5:27pm
let say EURUSD.
Both side release good news.
or
Both side release bad news.
Which one you should take side? How?

Could you provide some case studies please? Thank you
This is not investment/trading advise. Will not hold accountable for loss
  • #3
  • May 17, 2017 6:16pm May 17, 2017 6:16pm
Quoting yousername
let say EURUSD. Both side release good news. or Both side release bad news. Which one you should take side? How? Could you provide some case studies please? Thank you
Trading a pair where both have good news released doesn't work. You need to be pairing that data with another economy to match strongest with weakest. I say economy because that's the level of understanding it takes to know where the opportunities are. If EU release good employment numbers and USA inflation, then pairing USD with another economy where central bank policy is hold or tighten will give far greater opportunity. This is especially true the current and previous weeks data has been supportive of weakness.

A trade in any would also depend on the strength of the release. On a good news platform that includes a calendar, you get smart range estimates comprised of economist polls. If the data comes in as expected or a little above then it isn't as strong as it would be if the number is at an extreme or unexpected.

I don't have any case examples of trading a pair where both have good news because I don't trade that way. I can offer a trade example if that's what you mean.
  • #4
  • May 17, 2017 6:19pm May 17, 2017 6:19pm
Quoting EcoTrader
{quote} Trading a pair where both have good news released doesn't work. You need to be pairing that data with another economy to match strongest with weakest. I say economy because that's the level of understanding it takes to know where the opportunities are. If EU release good employment numbers and USA inflation, then pairing USD with another economy where central bank policy is hold or tighten will give far greater opportunity. This is especially true the current and previous weeks data has been supportive of weakness. A trade in any would also...
Thank you for the reply. I appreciate it.
Yes sir by case study I mean few trade example.
This is not investment/trading advise. Will not hold accountable for loss
  • #5
  • May 17, 2017 6:50pm May 17, 2017 6:50pm
You might find finviz.com a good resource, as well. Go to Forex --> Performance and you'll get both a graph of relative performance based on 1 Day, Week, Month, etc., and a table showing the same but ordered by different pairs.

I've never gotten deep into Fundamental analysis because it doesn't seem to really matter if I'm right or wrong in my understanding of it - the price is going to move to where the majority of the money is moving it, regardless my opinion.
  • #6
  • May 17, 2017 7:03pm May 17, 2017 7:03pm
Quoting EcoTrader
This thread is not going to be a diary and I am not looking for reputation or mud slinging. If you trade using pure technical analysis and want to slap opinion then go somewhere else because you wont get any joy here i assure you. For the rest of you that are either struggling to make any progress with trading or currently make use of this type of trading then please feel free to collaborate your thoughts, analysis, or anything related. Let me start by saying I do not do this full-time and it's not because I am unable to but rather by choice. As...
Look forward to your threads. Obviously research takes time and effort, as does posting on FF.
Its good to see someone trade cycles here.
From my end, I like trading institutional flow and like to know how the banks are positioned in relation to each currency, as well as having an understanding of the current geopolitical scene and interest rate bias for all the major central banks.
A few years ago I used to be on the eikon chat group.

Anyway good luck
F
  • #7
  • May 17, 2017 10:37pm May 17, 2017 10:37pm
Hey,

Yes Fundamentals and economic data works if applied right. I really do not care about news, but I care about forecasting GDP and interest rate changes Quarter over Quarter. There are also other things... but these are the most important. It should also be combined with classical (non indicator or max. rsi) technical analysis on the monthly and weekly chart. You do not want to be the first or the last at the party.

To the author: Good Luck and you might also like efxnews and I really recommend you the non majors as well, as they are more volatile. "Forget" about the pip spread, it really is the same as in ex. eurusd if you take the volatility into consideration when you are on the weekly.

Best
Pat
  • #8
  • May 18, 2017 2:12am May 18, 2017 2:12am
Quoting yousername
{quote} Thank you for the reply. I appreciate it. Yes sir by case study I mean few trade example.
Trade from Tuesday

UK CPI greater than expected which is not good news as the central bank can't really afford to raise rates. Euro data has been improving for several months now (especially evident in the top 5 euro area economies) with QE tapering and rate hikes on horizon.
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  • #9
  • May 18, 2017 2:16am May 18, 2017 2:16am
Quoting EcoTrader
{quote} Trade from Tuesday UK CPI greater than expected which is not good news as the central bank can't really afford to raise rates. Euro data has been improving for several months now (especially evident in the top 5 euro area economies) with QE tapering and rate hikes on horizon. {image}
Cool idea, I think I get what you mean. First we look at the 10 week average daily range. If it's positive and news comes positive, then long is a must. Right?
This is not investment/trading advise. Will not hold accountable for loss
  • #10
  • May 18, 2017 2:40am May 18, 2017 2:40am
Quoting yousername
{quote} Cool idea, I think I get what you mean. First we look at the 10 week average daily range. If it's positive and news comes positive, then long is a must. Right?
The 10 week average range (ADR) is only there to generate realistic targets and define stops. It is also worth noting if the pair had already moved 40 pips from London open then realistically there is only a 30 pip potential and you might find better value trading GBP with another stronger economy. This work is done upfront so that going into the news release you have looked at several different pairings (where the other is in a stronger position) and evaluated the potential based on the underlying trend, sentiment, and ADR profit potential. Knowing if a specific data release is positive or negative can only be done in context to knowing where the economy is in the cycle, how the recent data releases are painting the ever changing outlook, and current sentiment. Maintaining knowledge is a continuous effort and note taking. I have a workbook (onenote is great for this) for each economy and it includes notes on the last 3 central bank minutes, key issues in the works, the current economic cycle, and other important notes.
  • #11
  • May 18, 2017 6:02am May 18, 2017 6:02am
what fundamental factors has driven eur-usd moving up from the start of 2017 year?
Trump will be president?
US will be down cycle of business?
US rate will not rise?
Fed ?

Or
Other factors?

what fundamental factors will drive eur-usd before 1/7/2017 and before Xmas?
  • #12
  • May 18, 2017 6:39am May 18, 2017 6:39am
Quoting Jack168
what fundamental factors has driven eur-usd moving up from the start of 2017 year? Trump will be president? US will be down cycle of business? US rate will not rise? Fed ? Or Other factors? what fundamental factors will drive eur-usd before 1/7/2017 and before Xmas?
None of the above

The major economies in the euro area have been posting clear signs of improvement (since q3 to q4 last year) with inflation picking up and recently core inflation picking up. What you are seeing is appreciation from anticipation of the eu tapering qe and raising rates.
  • #13
  • May 18, 2017 1:36pm May 18, 2017 1:36pm
This is why I keep news filters running for market moving events. 43 pips in less than 10 minutes thanks to news which is generally dismissed by technical traders leaving them scratching their heads as I found on the usdjpy thread where nobody knew what was going on.

Inserted Video
  • #14
  • May 20, 2017 6:30am May 20, 2017 6:30am
Quoting EcoTrader
{quote} Trade from Tuesday UK CPI greater than expected which is not good news as the central bank can't really afford to raise rates. Euro data has been improving for several months now (especially evident in the top 5 euro area economies) with QE tapering and rate hikes on horizon. {image}
Subscribed! Bro, hope you don't mind sharing the entry and exit price of this UK CPI trade. And also briefly elaborate how upon new release do you enter the long and how you determine the exit for this trade?

Thanks. Hope to see more sharing from you.
The only winner is the one who survive the longest...
  • #15
  • May 20, 2017 7:14am May 20, 2017 7:14am
Quoting EcoTrader
This is why I keep news filters running for market moving events. 43 pips in less than 10 minutes thanks to news which is generally dismissed by technical traders leaving them scratching their heads as I found on the usdjpy thread where nobody knew what was going on. https://youtu.be/o-dW59Fu1hg
I will watch this thread then untill I seem to know what is going on.
Trade
  • #16
  • May 20, 2017 7:54am May 20, 2017 7:54am
Quoting kinspk
{quote} Subscribed! Bro, hope you don't mind sharing the entry and exit price of this UK CPI trade. And also briefly elaborate how upon new release do you enter the long and how you determine the exit for this trade? Thanks. Hope to see more sharing from you.
No probs

Entry 0.8536
Exit 0.8596

Trade is a market order (always is with intraday news trading) with exit determined by a 10 week average daily range (60 pips for this pair).
  • #17
  • May 20, 2017 12:22pm May 20, 2017 12:22pm
Quoting EcoTrader
{quote} No probs Entry 0.8536 Exit 0.8596 Trade is a market order (always is with intraday news trading) with exit determined by a 10 week average daily range (60 pips for this pair).
Market order means.. you place the order after the news is released, right? What about the slippage? You talked about premium service on news data.. is it a bloomberg professional terminal? And do you recieve the news data... let's say a minute earlier? What's the USP here?

Thanks
Vin
  • #18
  • May 21, 2017 6:33am May 21, 2017 6:33am
Quoting vinforex7
{quote} Market order means.. you place the order after the news is released, right? What about the slippage? You talked about premium service on news data.. is it a bloomberg professional terminal? And do you recieve the news data... let's say a minute earlier? What's the USP here? Thanks Vin
While slippage does happen, it's rare and never an issue as the trades are selected on the basis of an event that needs to be priced in instead of probability of something happening. I have an eikon terminal. You never get economic data before the release time. There are strict rules governing releases due to corruption. The economic releases on a premium terminal are instant. It is faster than a squawk box and before the release you have access to estimates based on polls of economists. So unlike the forexfactory calendar where you just get an estimate, with eikon you get a range (low, average, high) based on the poll. This allows a trader to better determine if the release is a complete surprise or within the range. Either way you have more information that allows you to pre-map strong and weak currencies together.

The other significant difference is the ability to define desktops designed to get you the information you want fast. This includes being able to apply complex or simple filters and alerts to any news feed. So for example if sentiment is risk off due to a situation with Trump, you can setup new filtered feeds and capture anything with a key word or multiple words. If a hot topic (a news event that just hitting the wire where no story has yet been created) hits the wire then you can react before an official editorial release. Let's say trump said something about Russia. You get a flash message about what's just been said allowing you to quickly react before an official story is even out. When sentiment is affected due to a story, I setup dedicated feeds to track the people involved and anything that might be of interest. A portion of the trades I do fall under this type of trading.
  • #19
  • May 22, 2017 4:48pm May 22, 2017 4:48pm
$ weakness - where is it headed!

Putting aside the Trump trade for a moment as it is very unusual to have markets so closely watching an administration. The big issues as far as the fed goes is inflation and the balance sheet. Inflation tends to lag yet throughout this recovery it has been below the feds 2% target which has disappointed expectations in the market. I have been playing $ strength since the recovery became evident last year on a long term basis. I believe we are now at a point where the labour market slack has diminished and this is the sort of environment where wage growth will accelerate which will positively affect inflation. I think the pace of the labour market is going to lead to surprise inflation data and generate additional expectations of more hikes, more than what is expected. Here is data showing full-time employment increasing and wage growth.

edit: the brown line is the unemployment rate
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  • #20
  • May 22, 2017 7:03pm May 22, 2017 7:03pm
I was looking at the dollar and this month's statement

https://www.federalreserve.gov/monet...20170503a1.pdf

Employment figures have been strong and average earnings are improving m/m recently
But inflation has missed expected.
And PCE has been on a downward trajectory for the past 3 months

The question is will this cause Yellen to hold fire on hiking rates in June
Brainard speaks tomorrow and her views closely follow Yellen's
And the minutes are due this week- so this might give us further clues

The last time they hiked CPI was moving up nicely m/m as was PCE (which is not the case at present)
In any event we have some further release due over the next few weeks that might shed some further light.
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