Welcome to another addition to my blog - I hope that many of you who trade are doing well and particularly those who also trade GBPUSD. In this segment I am going to talk about my last installment and also this enormous downturn that GBPUSD has seen over the past month or so. I'd also like to mention a couple of other things such as how I plan to continue my trading and finally, how annoying some people on Twitter are, constantly trying to sell me things. Enjoy!
First things first, as I just said and as many readers will know, the dollar has been benefitting from a nice raly the last few months (i.e. has been getting stronger) and the pound sterling has dwindled. This has seen the exchange rate between the two drop from a several month high of 1.633 down to a current (Friday close of) 1.553. Those of you who follow my twitter and read the last installment on here will know that I have been bullish on the pound sterling and thought that it was actually going to turn around at 1.58... Then at 1.57... Then at 1.56... I have unfortunately seen a margin call due to this anti-trend mentality and the idea that I am good enough to foresee the turn around in the market. Since this happened last week I have spoken to several people about and they have been very helpful - one in particular has reminded me of something I had completely lost sight of; the market does what it wants, is only temporarily affected by news and it is often best to trade with the trend (reminded me of something I read a long time ago that said "the trend is your friend"). I would like to thank him again here for re-opening my eyes! In my trading so far I had become too concerned with the news that was circling my head and convinced that forex was much more like stocks - always looking to the news for direction etc.
Anyway the point is that I understand where I went wrong, know what I need to do to sort the situation out and have a plan for a comeback. I am going to put more of my time that I used to use on monitoring news and numbers towards chart analysis and seeing what has happened in the past and how the might affect trading now and later. Of course I am not going to be deterred - like many of you, I really enjoy trading and a set back like the one I have suffered, while significant, will not spell the end of my trading experience. It is just another step on the way to doing this in a more serious, full time manner (hopefully).
Hopefully none of you have made the same mistake I have and instead you have enjoyed the ride down from 1.63 profitting all of the way! I know some of you will be thinking "This is what stop losses are for, why didn't you use them?!" - my answer is that I do wish I had used them in this instance but in the past when I have been trading based on the trend and not news (for example when I had my rampant success at the start of my trading) whenever I used stop losses, I lost money at a rate faster than any other time. I shall continue without them but if I can imrpove my market entries more and more, then I will eventually consider them. On this occassion, my downfall was a combination of my inexperience, my focus on news and determination that I could predict the trend change, a downturn larger than any I have experience before while trading against the trend and finally, plain stupidity. Don't worry, I am working on them all!
That's a couple of points out the way, I'd also like to say that since I experienced the margin call, I have opened up to those of you who are predicting that the market may yet drop to below 1.53. I feel now though that is is genuinely nearing a stop for this decline and will soon rebound - I am going to need to look at charts and things for quite a while now though before I have some idea again of where my head should be at. We'll see. I said at the start that I would rant about some people on twitter constantly trying to sell forex robots, trading systems and other stuff often nothing to do with trading - basically that rant is here: it's really annoying. Yeah I didn't want to stray too far from forex chatter.
Finally, I am approaching a thousand followers on Twitter, really enjoying the feedback that I get on things I tweet - everyone who has re-tweeted me, replied to me, tweeted at me offering advice and talking to me off of Twitter (one or two on LinkedIn and one by e-mail), thanks VERY much for your guidance and support, you are all very useful to have in my trading arsenal. Hope you all enjoyed this bit of my blog and if you are here for the first time, I urge you to go back to my first posts and read more about where I was a month or so ago. Thanks ever so much for taking the time to read this and I hope you will be back for more in the future! Remember you can follow me and contact me @fxamateurtrader or e-mail fxamateurtraderuk@hotmail.co.uk - feel free to get in contact, I will be happy to chat about anything trading related! Thank you!
Saturday 16 February 2013
Sunday 3 February 2013
A Sterling Bull In A Bearish Market
Finally an update to my blog after a few weeks of silence! I have kept tweeting and giving my predictions and opinions while I have not been adding to this though; as some who follow me and read my tweets will have gathered I remain very much bullish on $GBPUSD (I hold the opinion that the exchange rate will go up), but I have not made any additions to this blog. I predominantly like to write about my actual trading, the progress I am making, big or important trades (to me) or what I am excited and worried about happening in the future. Unfortunately for reasons I shall explain, there has been a very reduced amount of trading for me and I seem to be in a state of waiting with a dash of anticipation and anxiety thrown in.
As many of you who do follow the markets will know, and soon those of you who do not follow the markets habitually will know also, the dollar has had quite a nice rally in the past few weeks, swinging from a several month high of 1.63 just before Christmas, to a 6 month low (or there abouts) of 1.567. During this swing, while I was short and wanted the exchange rate to fall, I was happy and trading was good. Unfortunately I only forsaw a drop to 1.585 at most and so from about 1.59 downwards, I have been expecting it to go back up / been bullish. This has yet to happen...
I have been bullish for a couple of reasons, the first of which is that I am British and therefore innately want Sterling to do well in order for my own life in this country to be better though when I have said this to others they have always said "But why do you care which is doing better, sterling or the dollar, you can make money either way?". I struggle to come up with an answer because that is the truth, I SHOULD be able to make money which ever currency is doing better because that is the whole point of trading. Unfortunately when I opened long positions, the market just fell straight through the bottom of them and continued down towards where it hit the buffers a few days ago, 1.567. So that's one reason I want the exchange rate to go up, however silly and existential to the market it may sound.
The second reason I am so, is because I don't see that the US economy is in any condition to regain strength against the pound to make the exchange rate drop any further. Yes jobs are being added, the nonfarm payrolls are being revised up and up and consumer confidence may be increasing but it seems as though people are being too short sighted in my opinion as to what is due to happen when the defict ceiling is reached (despite being delayed it will be "hit" sooner or later) and the US will have to make a move. It is highly unlikely it will default but to pay back debts in the middle of a recession (no it is not over yet) will definitely not be an appealing course of action as I am sure many can imagine. I simply see the economic picture as one where the UK has a much higher potential to pull itself back onto the rails of economic recovery before the US and see the pound sterling soar.
These are the main two reasons that I have been bullish and not anticipated a fall quite this large in the exchange rate; I have had one Twitter member discussing with me the possibility of the rate hitting 1.55 due to a mix of indicators and chart history etc, while this may be entirely possible I simply do not see it happening despite it only being a short way off. Personally, 1.65 seems more possible to me as even the low of 1.567 seemed a one day wonder as it struggled to push down the last cent of it and immediately bounced two cents back from it. The short blip back down towards 1.57 on Friday was unfortunate as I tweeted the day before that the climb was going to continue. Alas, fate must have seen this and thought that it would be fun to make me look like a bad predictor in front of my followers.
[ Before I continue, I have tried no end to understand a phenomena that struck the businessinsider.com website a couple of weeks ago but have failed at every turn. That is the story of the "Trillion Dollar Coin" and how coining one is meant to bring the US out of all it's problems, akin to the tale of the $100,000 note. I understand the basic idea and how it might work but I would like to understand the details so if anyone knows a good website for it or even just the basic principle of how it is meant to work and could let me know, that would be much appreciated. Despite the idea now having been apparently canned.]
So to bring this most recent addition to a close I would like to first off, say that over the coming weeks and possibly through February I am inclined to offer the prediction that the pound sterling is going to strengthen and the dollar, which I feel is very much over valued at the moment, will drop (even slightly) and we shall see the exchange rate slowly climb back above the week high of 1.586 and continue to see 1.60 and eventually tipping 1.61. I will of course re-evaluate my position upon seeing evidence that this is extrememly unlikely or in the case that we do indeed see a sub-1.55 level, but hopefully neither will happen...
Secondly, I have tweeted and followed my way to 855 followers on twitter (today) and a few hundred views of this blog and would like to make it abundantly clear that your support in reading this, reading my tweets, even just following me, is really appreciated and spurs me to put more effort into my trading and writing all the time. I value all the re-tweets and replies that I get and try to reply to them as fast as I can while still trying to do a bit of homework on each so I have a clear idea of what the discussion is about. Thank you so much for taking the time to read this and I hope you have enjoyed it and found it interesting!
Feel free to DM me or tweet at me and follow me @fxamatertrader or e-mail me for any longer points or discussions at fxamateurtraderuk@hotmail.co.uk. I have recently also added to my twitter that I am available to connect on LinkedIn as I wish to expand my real network into the trading industry. You can connect with me as "other" or "friend" using my above hotmail - visit my profile at http://www.linkedin.com/pub/toby-golledge/5a/76a/24a?trk=shareFB
I look forward to hearing any opinions, predictions or topics that you wish to discuss with me - thanks for reading.
As many of you who do follow the markets will know, and soon those of you who do not follow the markets habitually will know also, the dollar has had quite a nice rally in the past few weeks, swinging from a several month high of 1.63 just before Christmas, to a 6 month low (or there abouts) of 1.567. During this swing, while I was short and wanted the exchange rate to fall, I was happy and trading was good. Unfortunately I only forsaw a drop to 1.585 at most and so from about 1.59 downwards, I have been expecting it to go back up / been bullish. This has yet to happen...
I have been bullish for a couple of reasons, the first of which is that I am British and therefore innately want Sterling to do well in order for my own life in this country to be better though when I have said this to others they have always said "But why do you care which is doing better, sterling or the dollar, you can make money either way?". I struggle to come up with an answer because that is the truth, I SHOULD be able to make money which ever currency is doing better because that is the whole point of trading. Unfortunately when I opened long positions, the market just fell straight through the bottom of them and continued down towards where it hit the buffers a few days ago, 1.567. So that's one reason I want the exchange rate to go up, however silly and existential to the market it may sound.
The second reason I am so, is because I don't see that the US economy is in any condition to regain strength against the pound to make the exchange rate drop any further. Yes jobs are being added, the nonfarm payrolls are being revised up and up and consumer confidence may be increasing but it seems as though people are being too short sighted in my opinion as to what is due to happen when the defict ceiling is reached (despite being delayed it will be "hit" sooner or later) and the US will have to make a move. It is highly unlikely it will default but to pay back debts in the middle of a recession (no it is not over yet) will definitely not be an appealing course of action as I am sure many can imagine. I simply see the economic picture as one where the UK has a much higher potential to pull itself back onto the rails of economic recovery before the US and see the pound sterling soar.
These are the main two reasons that I have been bullish and not anticipated a fall quite this large in the exchange rate; I have had one Twitter member discussing with me the possibility of the rate hitting 1.55 due to a mix of indicators and chart history etc, while this may be entirely possible I simply do not see it happening despite it only being a short way off. Personally, 1.65 seems more possible to me as even the low of 1.567 seemed a one day wonder as it struggled to push down the last cent of it and immediately bounced two cents back from it. The short blip back down towards 1.57 on Friday was unfortunate as I tweeted the day before that the climb was going to continue. Alas, fate must have seen this and thought that it would be fun to make me look like a bad predictor in front of my followers.
[ Before I continue, I have tried no end to understand a phenomena that struck the businessinsider.com website a couple of weeks ago but have failed at every turn. That is the story of the "Trillion Dollar Coin" and how coining one is meant to bring the US out of all it's problems, akin to the tale of the $100,000 note. I understand the basic idea and how it might work but I would like to understand the details so if anyone knows a good website for it or even just the basic principle of how it is meant to work and could let me know, that would be much appreciated. Despite the idea now having been apparently canned.]
So to bring this most recent addition to a close I would like to first off, say that over the coming weeks and possibly through February I am inclined to offer the prediction that the pound sterling is going to strengthen and the dollar, which I feel is very much over valued at the moment, will drop (even slightly) and we shall see the exchange rate slowly climb back above the week high of 1.586 and continue to see 1.60 and eventually tipping 1.61. I will of course re-evaluate my position upon seeing evidence that this is extrememly unlikely or in the case that we do indeed see a sub-1.55 level, but hopefully neither will happen...
Secondly, I have tweeted and followed my way to 855 followers on twitter (today) and a few hundred views of this blog and would like to make it abundantly clear that your support in reading this, reading my tweets, even just following me, is really appreciated and spurs me to put more effort into my trading and writing all the time. I value all the re-tweets and replies that I get and try to reply to them as fast as I can while still trying to do a bit of homework on each so I have a clear idea of what the discussion is about. Thank you so much for taking the time to read this and I hope you have enjoyed it and found it interesting!
Feel free to DM me or tweet at me and follow me @fxamatertrader or e-mail me for any longer points or discussions at fxamateurtraderuk@hotmail.co.uk. I have recently also added to my twitter that I am available to connect on LinkedIn as I wish to expand my real network into the trading industry. You can connect with me as "other" or "friend" using my above hotmail - visit my profile at http://www.linkedin.com/pub/toby-golledge/5a/76a/24a?trk=shareFB
I look forward to hearing any opinions, predictions or topics that you wish to discuss with me - thanks for reading.
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