NZD/USD (Pending Short)

The Reserve Bank of New Zealand will announced its rate decision on Wednesday. I expect the rate cut to be at least 75 basis points matching the interest rate of Australia. There is perhaps more than 50% chance that it might be 100 basis points or more. NZD/USD will unlikely rally given the impending rate cut. Looking at the hourly chart from this week, I believe that it will at least continue to range bound between 0.53 and 0.52. The pair closed the week above 0.53 and if it remains at this level when market opens next week, I will attempt to short it.








Update 1
I decide to hold back the short today because both gold and oil are rallying. Best to stay on the sidelines and watch first.

Update 2
Looks like the previous support of ~0.53 levels has now turned into a resistance with the impending rate cut. I will place a sell limit order at 0.533. It may or may not hit this level even. I will act accordingly if the order triggers. We will see a lot of action on Wednesday in the FOMC press release

Update 3
Decide to withdrawn the position. Just did not feel right about with the FOMC meeting so close.

Note: I incorrectly state that both the RBNZ and FOMC press release is on Thursday but they are both on Wednesday. I since correctly it.

Fighting the urge to trade

Yes... you heard me right. It is sometimes very tempting to enter into any position recklessly when staring at my dashboard. Sometimes I tell myself, I am just going to pocket 20 pips. Surely that is not so difficult right? But more often than not, going to war without a plan is simply planning to fail. In my last one year of trading, I had hits and I had misses. The hits, I mean the good ones are often the ones which I followed events meticulously, laying out an ambitious but attainable target and following through by adjusting my stops along the way.

I end this week positively. The market is still very volatile and that just means that there will be plenty of opportunities to go in again. We just need to plan. Here is an interesting read from dailyfx for the weekend if you are really keen to try out FX trading.

Why does the average forex strategy lose money

It all boils down to risk

As mentioned in an earlier entry, risk sentiment is now a major determinant for the direction of the markets. It appears that the markets, whether the stock markets or the currency markets are plagued by fear. Despite the inauguration of the new U.S. president, DJI fell more than 300 points last night. In Obama's speech last night, he spoke of hope and fear. Indeed, if we strip down the markets to its bare minimum, its merely a play between people's hope and fear.

The Chinese says 新官上任，三把火 , meaning that when a new leader takes over the reins, he will often begin implementing policies and changes in earnest. Similarly, I will expect Obama to swiftly lay out plans to address the U.S. economy, his current most pressing issue at hand. If he succeeds in convincing us, the market may rally and risk sentiment might again shift into reverse gear.

London bridge is falling down...

“I would urge you to sell any sterling you might have,” said Jim Rogers, chairman of Singapore-based Rogers Holdings, in an interview with Bloomberg Television. “It’s finished. I hate to say it, but I would not put any money in the U.K.”

The CABLE recovered shortly after my exit in the last position climbing back close to 1.5 again before crashing down to almost 1.4. A whooping 1000 pips. If only I had held the position.

I wonder how will the markets react to Obama's speech during the inauguration ceremony.

USD/CAD (Long)

This morning there was a glitch in the system of POEMS. Shortly after lunch, they resolved it and I got into half position at 1.2399. I have a stop loss at 1.2289 and a profit target of 1.265. With some luck, I may see the pair zoom up and I will adjust my profit target further to 1.3. Let's hope the first long position of this blog will make as much as my previous GBP/USD position.

Update 1
The pair dipped a little after my entry in the afternoon but soon regained momentum following news of more bailout for English banks. The pair is trading at a comfortable level of 1.256. I adjusted a little to bring the stop to levels after my entry so I do not suffer unexpected losses. Let see if I can squeeze more pips outta this trade.

Update 2
The Bank of Canada announced a rate cut of 50 basis points which was in-line with what we had expected. I took my profit at the original intended level of 1.265 and made a neat profit of 250 pips this time. Not bad at all for 2 days of work. I be following NZD/USD for the rest of the week because the Reserve Bank of New Zealand will also be carrying interest rates cut.