My FX Journal - 80% Fundamental 20% Technical

[FXX]

Indeed.

May I ask what Ransquawk package you use and if you find it to be good value for money? Or perhaps you could tell me if I'm wasting my time/money purchasing the basic one.

The basic package has a 1 min delay on the audio and the text headlines.

I have the fx realtime package which costs £150 per month. I don't think those research pdfs are allocated to the delayed feed but I suggest you check and don't take my word on it. As for value for money, instead of having to spend time trawling content in a premium news terminal, they have a group of analysts sitting in front of Bloomberg and Reuters terminals doing the work for you. They squawk releases as they happen and provide analysis in a news feed that makes it very easy to tune into sentiment. It is a vital tool as far as I am concerned but if you are able and prepared to do the work you can get by without it. For me, it's well worth the cost. They have a research section that provides additional content like the doves and hawks cheat sheet.

I highly rate the Eikon terminal and as soon as I can extract profit from my account I definitely will be getting it again. For me it has a lot of power to custom search content and the data releases are instant. If you are serious about news trading I recommend ransquawk to make your life easier. If you just want to stay in tune with fundamentals then Eikon is good value. You can get a 2 week trial at ransquawk.

 

[Nowler]

I have the fx realtime package which costs £150 per month. I don't think those research pdfs are allocated to the delayed feed but I suggest you check and don't take my word on it. As for value for money, instead of having to spend time trawling content in a premium news terminal, they have a group of analysts sitting in front of Bloomberg and Reuters terminals doing the work for you. They squawk releases as they happen and provide analysis in a news feed that makes it very easy to tune into sentiment. It is a vital tool as far as I am concerned but if you are able and prepared to do the work you can get by without it. For me, it's well worth the cost. They have a research section that provides additional content like the doves and hawks cheat sheet.

I highly rate the Eikon terminal and as soon as I can extract profit from my account I definitely will be getting it again. For me it has a lot of power to custom search content and the data releases are instant. If you are serious about news trading I recommend ransquawk to make your life easier. If you just want to stay in tune with fundamentals then Eikon is good value. You can get a 2 week trial at ransquawk.

Yeah, I would imagine that if new releases was a big part of your game then one would really need the real time package.

I guess I'll have to make due with doing things the hard way for the time being but I'll definitely be looking to purchase that one when I am in a position to. The Eikon one was sounding more achievable but unfortunately when running the test to see if my laptop was able for it, I got this message "System Test has failed.
Your computer hardware, software, and connectivity environment do not meet the requirements to run Thomson Reuters Eikon."

It's early days yet
I plan to build my own trading system when I am ready to move beyond the trading student phase, so I'll make sure it has the capacity. The connectivity issue will be solved when I move into civilisation

Thanks for the info mate!
Good look with your plan!
I'll be reading

 

[FXX]

Yeah, I would imagine that if new releases was a big part of your game then one would really need the real time package.

I guess I'll have to make due with doing things the hard way for the time being but I'll definitely be looking to purchase that one when I am in a position to. The Eikon one was sounding more achievable but unfortunately when running the test to see if my laptop was able for it, I got this message "System Test has failed.
Your computer hardware, software, and connectivity environment do not meet the requirements to run Thomson Reuters Eikon."

It's early days yet
I plan to build my own trading system when I am ready to move beyond the trading student phase, so I'll make sure it has the capacity. The connectivity issue will be solved when I move into civilisation

Thanks for the info mate!
Good look with your plan!
I'll be reading [emoji106]

Eikon have a web terminal as well so you could look at it more seriously. What markets do you trade?

 

[Nowler]

Eikon have a web terminal as well so you could look at it more seriously. What markets do you trade?

Nice,
I couldn't find the pricing for it so I just exited after the test. I'll have a closer look later on or tomorrow.

I trade the forex majors and some of the exotics such as USD/SGD. Oil too

 

[FXX]

Nice,
I couldn't find the pricing for it so I just exited after the test. I'll have a closer look later on or tomorrow.

I trade the forex majors and some of the exotics such as USD/SGD. Oil too

Definitely sort out a news terminal. You would even benefit from a delayed squawk because you could enter post events especially if you derive strategy that employs pullback entries. The web terminal is just an alternative access method to the same terminal without the templates. If you get xenith you get access to the web terminal also. I even tried their mobile platform but it's lacking sufficient mobile friendly layout and in fact I think it's just a web wrapper.

 

[Nowler]

Definitely sort out a news terminal. You would even benefit from a delayed squawk because you could enter post events especially if you derive strategy that employs pullback entries. The web terminal is just an alternative access method to the same terminal without the templates. If you get xenith you get access to the web terminal also. I even tried their mobile platform but it's lacking sufficient mobile friendly layout and in fact I think it's just a web wrapper.

Thanks for the heads up.
I really need something like this so I will look through these closer during the week.

For the sake of £100 set up and 20 per month (240/yr)...Establishing an accurate mental representation of this side of trading alone is good value for money

 

[Brumby]

Thanks for the heads up.
I really need something like this so I will look through these closer during the week.

For the sake of £100 set up and 20 per month (240/yr)...Establishing an accurate mental representation of this side of trading alone is good value for money

Trading with fundamentals and/or technical are just that - they are tools of the trade. You can have the best tools in the business but if you don't know how to use them it is as good as useless.

I will use an analogous example. Say you have a plumbing problem and you call in the plumber and the problem is fixed within 5 mins and charges you for an hour (minimum) plus call out. You feel the charges are unreasonable given the time it actually took to fix the problem. What is generally missing from such a thought process is the years of experience, the expertise needed and the right tools to fix the problem. In other words, you are paying for the expertise to enable the problem to be fixed in 5 mins.

I would advise against spending money on Ransquawk even with the limited feed because currently you don't know how to use the information. In trading fundamentals you need to understand what drives the market. Not all news are alike or has the same impact. The news event itself can be significant e.g. the recent ECB but it is also important to understand how the market is interpreting the news. In other words, you trade deviation from expectations. Sentiments shifts all the time. It may drive several sessions or it may be limited to one session. The problem is most retail traders just want to buy on green signals and sell on red and have money flowing in like an ATM. It doesn't work like that. Did you watch that video I recommend you to watch on how to trade news? That video clearly demonstrates that the actual trading itself only involves secs to minutes but the preparation covers days if not weeks just like the plumber who can do the job in 5 mins.

If you want to trade fundamentals you need to commit to spend time reading tons of analyst reports. It is part of my standard daily market preparation. Do this daily for 6 months and we can have a intelligent conversation about trading fundamentals. I suggest you read Forexlive everyday. They have a wrap up of all sessions. In my case, my morning preparation is to read the US session wrap so that I know what sentiments will likely drive the Asian session. If I didn't trade the Asian session, I will definitely read the Asian wrap before preparing for the Euro session. During the Euro session. I will have my squawk on to be alerted to any breaking news while keeping an eye on news through Reuters. The whole premise though is to be able to filter news that is impactful from those that are not. It requires a sound knowledge base and experience which can only come with time.

In approaching how to trade market events, think in terms of how you might trade it like, trade into; trading out of; or trading in between.

 

[Nowler]

Trading with fundamentals and/or technical are just that - they are tools of the trade. You can have the best tools in the business but if you don't know how to use them it is as good as useless.

I will use an analogous example. Say you have a plumbing problem and you call in the plumber and the problem is fixed within 5 mins and charges you for an hour (minimum) plus call out. You feel the charges are unreasonable given the time it actually took to fix the problem. What is generally missing from such a thought process is the years of experience, the expertise needed and the right tools to fix the problem. In other words, you are paying for the expertise to enable the problem to be fixed in 5 mins.

I would advise against spending money on Ransquawk even with the limited feed because currently you don't know how to use the information. In trading fundamentals you need to understand what drives the market. Not all news are alike or has the same impact. The news event itself can be significant e.g. the recent ECB but it is also important to understand how the market is interpreting the news. In other words, you trade deviation from expectations. Sentiments shifts all the time. It may drive several sessions or it may be limited to one session. The problem is most retail traders just want to buy on green signals and sell on red and have money flowing in like an ATM. It doesn't work like that. Did you watch that video I recommend you to watch on how to trade news? That video clearly demonstrates that the actual trading itself only involves secs to minutes but the preparation covers days if not weeks just like the plumber who can do the job in 5 mins.

If you want to trade fundamentals you need to commit to spend time reading tons of analyst reports. It is part of my standard daily market preparation. Do this daily for 6 months and we can have a intelligent conversation about trading fundamentals. I suggest you read Forexlive everyday. They have a wrap up of all sessions. In my case, my morning preparation is to read the US session wrap so that I know what sentiments will likely drive the Asian session. If I didn't trade the Asian session, I will definitely read the Asian wrap before preparing for the Euro session. During the Euro session. I will have my squawk on to be alerted to any breaking news while keeping an eye on news through Reuters. The whole premise though is to be able to filter news that is impactful from those that are not. It requires a sound knowledge base and experience which can only come with time.

In approaching how to trade market events, think in terms of how you might trade it like, trade into; trading out of; or trading in between.

I'm conscious of hijacking this gentleman's thread so I'll keep this short.
Thanks for the useful pieces of information.
I don't know how to use the information because I don't know the information. That's why I wanted to get myself a good reliable news terminal. Only once I have the info can I know what to do with it.
I typically read the DailyFx website but i'll give ForexLive a go and see what it's like. Even that bit you said about reading up on the US before the Asian, the Asian before the EUR etc. sounds very useful. And makes logical sense.

 

[FXX]

I'm conscious of hijacking this gentleman's thread so I'll keep this short.
Thanks for the useful pieces of information.
I don't know how to use the information because I don't know the information. That's why I wanted to get myself a good reliable news terminal. Only once I have the info can I know what to do with it.
I typically read the DailyFx website but i'll give ForexLive a go and see what it's like. Even that bit you said about reading up on the US before the Asian, the Asian before the EUR etc. sounds very useful. And makes logical sense.
[emoji106]

I don't mind so long as it's related to fundamentals. While I am still learning myself,something that will probably be on going for the rest of my trading life. I have been lucky to have befriended professional traders that set me on the right path.

In a nutshell you have fundamentals and sentiment playing ping pong with each other. Sometimes they align and give tremendous opportunities. Fundamentals are driven by the economy and central banks. Always treat the central banks as a first class citizen. You need to understand their mandate, you need to understand their policy and what they are watching to drive their next policy adjustments. You should know all the members that vote and who are doves and who are hawks. This will form the basis of your fundamental analysis.

Moving on you need to understand economic cycles and where an economy is currently in that cycle. To do that you need to follow tier 1 data (inflation, employment, GDP, production , services, trade , current account, sales)

Tier 2 data provides anecdotal information which can be things like surveys.

Finally there is fiscal and political elements that you need to be aware of and understand their impact. A recent example is trump tax cuts and infrastructure project's as well as his inability to deliver on health reforms (political).

Once you have an understanding of these things you should have a grounding to pair economies (strongest with weakest).

Moving onto the bit that confuses many traders that dismiss fundamentals because it doesn't make any sense to them and this is sentiment. Sentiment is different to fundamentals and they are in constant battle. Sometimes sentiment lasts a session and other times multiple sessions and it can even last an hour or minutes until some other data comes out and changes things in a blink of an eye. Let's say for example USA data is coming out strong and the $ has rallied over several weeks. Housing or durable goods orders comes out and it breaks expectations to the downside. Now you have a situation where the $ has appreciated and a situation arises that halts that rally (at least until sentiment changes again). This is where you could pair the $ with sentiment for another currency that's bullish and take advantage of $ profit taking and strength in the other currency. It's a simplistic example but gives you an idea.

The process for me starts on Sundays by looking at what's ahead on the calendars for the next 2 weeks. If there is a central bank decision out I revise their latest policy and catch up on data since the last release.

Each weekday starts with catching up on the previous sessions sentiment and looking at other markets. I spend a great deal of time reading all the latest news and analyst articles. This includes forexlive, actionforex, Reuters News, and everything on ransquawk, finally I pull out the calendar and see what's up for the day. I also mark charts with any option expires greater than 500mln (if any). At this point I know what's moved the markets, what might prevent markets moving in a specific way, and start forming trade ideas if any opportunities arise. I then enable the squawk audio and keep a close ear and eye on new information coming into the markets.

I am still learning but have taken knowledge from professional traders and applying it myself. I have been doing this all without trading and recently threw myself into a real account trading 10pence a pip until I nail the process. I still face psychological challenges when I start pumping my account with more funding but that will only trigger once I have made £200 in profit which should take me a year I figure. My plan is to eventually go full-time as I absolutely love the process of trading and the freedom it can provide is just a benefit to be honest, not my primary driver.

Anyway I hope this provides some insight on what is required to make fundamentals work. I am sure Brumby can provide a far greater insight as it is clear there is a lot of experience there.

Brad

 

[Nowler]

I don't mind so long as it's related to fundamentals. While I am still learning myself,something that will probably be on going for the rest of my trading life. I have been lucky to have befriended professional traders that set me on the right path.

In a nutshell you have fundamentals and sentiment playing ping pong with each other. Sometimes they align and give tremendous opportunities. Fundamentals are driven by the economy and central banks. Always treat the central banks as a first class citizen. You need to understand their mandate, you need to understand their policy and what they are watching to drive their next policy adjustments. You should know all the members that vote and who are doves and who are hawks. This will form the basis of your fundamental analysis.

Moving on you need to understand economic cycles and where an economy is currently in that cycle. To do that you need to follow tier 1 data (inflation, employment, GDP, production , services, trade , current account, sales)

Tier 2 data provides anecdotal information which can be things like surveys.

Finally there is fiscal and political elements that you need to be aware of and understand their impact. A recent example is trump tax cuts and infrastructure project's as well as his inability to deliver on health reforms (political).

Once you have an understanding of these things you should have a grounding to pair economies (strongest with weakest).

Moving onto the bit that confuses many traders that dismiss fundamentals because it doesn't make any sense to them and this is sentiment. Sentiment is different to fundamentals and they are in constant battle. Sometimes sentiment lasts a session and other times multiple sessions and it can even last an hour or minutes until some other data comes out and changes things in a blink of an eye. Let's say for example USA data is coming out strong and the $ has rallied over several weeks. Housing or durable goods orders comes out and it breaks expectations to the downside. Now you have a situation where the $ has appreciated and a situation arises that halts that rally (at least until sentiment changes again). This is where you could pair the $ with sentiment for another currency that's bullish and take advantage of $ profit taking and strength in the other currency. It's a simplistic example but gives you an idea.

The process for me starts on Sundays by looking at what's ahead on the calendars for the next 2 weeks. If there is a central bank decision out I revise their latest policy and catch up on data since the last release.

Each weekday starts with catching up on the previous sessions sentiment and looking at other markets. I spend a great deal of time reading all the latest news and analyst articles. This includes forexlive, actionforex, Reuters News, and everything on ransquawk, finally I pull out the calendar and see what's up for the day. I also mark charts with any option expires greater than 500mln (if any). At this point I know what's moved the markets, what might prevent markets moving in a specific way, and start forming trade ideas if any opportunities arise. I then enable the squawk audio and keep a close ear and eye on new information coming into the markets.

I am still learning but have taken knowledge from professional traders and applying it myself. I have been doing this all without trading and recently threw myself into a real account trading 10pence a pip until I nail the process. I still face psychological challenges when I start pumping my account with more funding but that will only trigger once I have made £200 in profit which should take me a year I figure. My plan is to eventually go full-time as I absolutely love the process of trading and the freedom it can provide is just a benefit to be honest, not my primary driver.

Anyway I hope this provides some insight on what is required to make fundamentals work. I am sure Brumby can provide a far greater insight as it is clear there is a lot of experience there.

Brad

Very helpful post!
It's prompted a few thoughts, cheers

It's great to hear you thoroughly enjoy it. That's certainly one of the keys to longevity! Good luck with the journey!


I have been trying to understand the cycles of economies and once I have that understanding, I can then identify the stage of that cycle that they are in. I have already compiled a list of the interest rates of each of the currencies I trade and what they were previously. This should be giving me an indication as to the direction or intent. I have also identified the highest and lowest rates in history for this currencies but I've not yet began to look into why some were exceptionally high and why some have a strong history of keeping theirs negative. Once i've done this i'll move on and do the same with other key aspects, such as GDP, inflation, etc..

I've definitely dug in for the long haul

 

[FXX]

Very helpful post!
It's prompted a few thoughts, cheers [emoji106]

It's great to hear you thoroughly enjoy it. That's certainly one of the keys to longevity! Good luck with the journey!


I have been trying to understand the cycles of economies and once I have that understanding, I can then identify the stage of that cycle that they are in. I have already compiled a list of the interest rates of each of the currencies I trade and what they were previously. This should be giving me an indication as to the direction or intent. I have also identified the highest and lowest rates in history for this currencies but I've not yet began to look into why some were exceptionally high and why some have a strong history of keeping theirs negative. Once i've done this i'll move on and do the same with other key aspects, such as GDP, inflation, etc..

I've definitely dug in for the long haul

Don't bother with historical interest rates as an indication of future intent. Focus your attention on the central banks for direction. They will not only provide subtle clues as to their intentions to raise, drop , or be neutral. They will also state exactly what they are looking at to determine their next course of action. Read their statements and follow speeches.

 

[Nowler]

Don't bother with historical interest rates as an indication of future intent.

Of course.
I just want to know why rates would have been so. Curiosity

Focus your attention on the central banks for direction. They will not only provide subtle clues as to their intentions to raise, drop , or be neutral. They will also state exactly what they are looking at to determine their next course of action. Read their statements and follow speeches.

Will do

 

[Brumby]

Don't bother with historical interest rates as an indication of future intent. Focus your attention on the central banks for direction. They will not only provide subtle clues as to their intentions to raise, drop , or be neutral. They will also state exactly what they are looking at to determine their next course of action. Read their statements and follow speeches.

The BOE rate decision on Thursday will be an interesting proposition. Currently the probability of a hike is almost a given at 89 % (source :Bloomberg).

Several trade scenarios I can think of :
1)Buy into the event and then sell on the fact

2)A price pop and reverse (buy the rumor sell the fact). An opportunity to fade.

3)if forward guidance is dovish - clearly a sell

4)If BOE retains rate - Just sell and don't even wait for a pullback.

What is your current thinking in approaching the rate decision?

 

[FXX]

The BOE rate decision on Thursday will be an interesting proposition. Currently the probability of a hike is almost a given at 89 % (source :Bloomberg).

Several trade scenarios I can think of :
1)Buy into the event and then sell on the fact

2)A price pop and reverse (buy the rumor sell the fact). An opportunity to fade.

3)if forward guidance is dovish - clearly a sell

4)If BOE retains rate - Just sell and don't even wait for a pullback.

What is your current thinking in approaching the rate decision?

I am thinking of selling into the fact. Everything about sterling is dovish even this upcoming rate hike. Over the weekend there were some stories out about businesses begging the chancellor to not hike rates.

"Businesses have issued last-ditch appeals for the Bank of England not to raise interest rates this week, claiming a combination of weak growth and higher borrowing costs would tip struggling retailers into insolvency.

Mark Carney this weekend faced pressure from business lobbies to keep rates at historically low levels to support consumer spending and company investment. The Bank is widely expected to raise rates for the first time in a decade on Thursday.

The British Chambers of Commerce warned that a rate rise could be the “tipping point” that crashes business confidence and investment."


“It is pretty extraordinary, given that economic conditions are slowing, that we are talking about interest rate rises,” said Suren Thiru, a BCC economist.

 

[FXX]

notes on voters for BOE

 

[FXX]

“I’d prefer to go into the meeting” with a short position on sterling, said Steven Barrow, head of currency strategy in London at Standard Bank. “There is a reasonable enough chance they don’t raise rates, we’ll have to see what comes out from the statement the bank puts out.”

 

[Brumby]

notes on voters for BOE

Bloomberg is reporting that Ramsden and Cunliffe are clearly no. Tenreyro is leaning no and hence is looking like 6-3 at the moment.

 

[FXX]

Long EURGBP @ 0.88187

 

[FXX]

fyi for those interested.

FireFox (haven't tested other browsers) has an alerts feature that prompts when you access a site that offers this. I did this with the tradingeconomics website and have notices the data releases are near instant (faster than forex factory at least)

 

[Brumby]

Long EURGBP @ 0.88187

A report that came out in Bloomberg that got me thinking.

[/IMG]

There is currently a 100 basis spread between 2 year UK and German yields. A rate hike by BOE will further cause a repricing in cable in order to ensure that this spread doesn't drift too far apart. This is in my view a current disconnect to the market's 89 % probability pricing in of cable's rate hike. I think somewhere in the current valuation is a risk premium on cable due to Brexit which is muddling valuation.