Good Morning Journal!
Well, it’s so nice to visit you on a Sat. morning, finally. I’ve been wanting to. But for whatever reasons, it just doesn’t work out. But today, success. I woke up to the alarm, 3am. (It’s always set, & on, for that time)
Pretty much jumped right out of bed. I couldn’t believe it. I’m finally happy with myself, cause I can finally take advantage of a full weekend of productive time. Sat am, & Sun am.
So…coffee is hot…got my figures tallied already…and now I’m ready to type. So. Let’s get the good news out of the way first, then we’ll get back to the ‘system’.
How’d your week turn out Mike?
Well Journal, it turned out good. Was a bit of a roller coaster ride. But boy, I tell ya, thank God I believe in a ‘weeks time frame’. My account was just shooting higher and higher, then somewhere around mid week, it drops pretty low. Lower than what I’ve seen in a while. Then back on up at the end of the week. I’ll show you the details.
So, yesterday, I worked only a half a day (at my day job), which means I was able to check in the market before my broker closed it. I took this pic pretty close to 5pm. Here are all my trades open. Their in chronological order of when I placed them. Man, I’m sorry you can’t see there an actual date they were taken. But, I do have that data on a mind map. So, the last 2 trades there were taken on the 14th. This past Monday night. Well, I wanted to up the position sizing. And I did. But, they didn’t really take yet. Price has pulled away from it, but came back now. I don’t know how this is going to turn out yet. Hopefully this wasn’t a mistake with these 2 pairs. I’ll show you. It’s the bottom row, first and second ones from the left. (AUD, NZD)
Man, that Aussie has been a tough one (bottom left). You can see my dotted lines where I’m in at. This 3rd position has definitely been a hairy one.
So, let’s back it up a little. Check out all my trades. It is a wonderful thing to see the pips. Look at the ‘Lot P/L’ column. I’m playing in the hundreds of pips. Yes. It is an awesome thing. But then you look at the ‘Net P/L’ column, which is the dollar amount I’m making per trade. And…well, it’s not all that, to write home about. But…then again…that’s when you got to see what the percentage of the account is. This month, up to this point, I’m up 34.4 %. And to me, that’s a whole lot.
Look Journal, all I’m doing here is showing you, in slow motion, what I’m looking at, when I look at the account. All that. But, then, the next thing that goes through my mind is this. (I’ve already have stated this, but I’m going to say it again, cause I need to) **This is not my money yet ! ** My trades are not closed out. The Yen is still churning. And the strategy is not yet completed. I haven’t even navigated my exit strategy yet. I need a reason for my exits, and up to this point, I haven’t encountered them. But…Journal…I’m starting to wonder, now. Cause I see something. And we have to talk about this. Now.
These are my reasons.
The biggest thing that made me ponder jumping is the USD/JPY. Just look at the latest price action.
Daily chart, extending back to the beginning of the year. You can see where I got in at. Dotted line. Actually I have 2 positions there, separated by only 3 pips. Yeah, that’s pretty impressive, I think. But what’s eating at me now is the latest price action here at the bottom. A long candle wick. Also, this is what they call a double bottom. But, that of course, is assuming there’s going to be a bounce from here, on up. We have now a second doji looking candle, and it is scaring me. I mean…do I really think that price can break down below this area? If it does, it will pretty much be in the lows for the year. Ok. So, let me give a possible scenario for that. This can possibly be the time when the US stock markets make the much awaited crash. Which will mean, in the currency market here, that money will flow to the safe haven Yen.
Ok Journal. Sorry. I’m back now. Got more coffee. And done a little research. Let’s take a look at this.
Red is the S&P, blue is the USD/JPY. This is the weekly time frame, extending back to the global depression era. My question is whether they correlate to each other or not. Should I consider this in my thinking?
I’ve always thought that when the equity markets dive, the money flows into safe haven currencies. Well, it’s probably true, but not always. Ok, so, let’s talk about this screen shot.
The stock market…in red…left of the screen…takes the dive heading into 2008. Yep, 2008 was a real bad year, globally. As we all know. Then the climb begins shortly after into 2009. And it’s been nothing but up since then. But look at the USD/JPY. At the start of the whole ordeal, it was at a top. The USD was boss. King Dollar. Yen trash. But, when all hell broke loose, the tables turned. It was an influx into the Yen, and a selling of the Dollar. You cannot deny that. In fact, look closely, that pair was crashing before the market was. I wonder if the pair was a precursor to the event. Is this the leading indicator? Anyway. In plain jargon, the Dollar was being sold, and the Yen being bought, from that time all the way up to the year 2012. Meanwhile the market was marching higher and higher for 3 years already. Look, another thing just hit me. We have to realize what was happening also through this time. We started into the quantitative easing era. The governments made money for businesses to use, oh, and bail outs also. So, yeah, I’m sure that’s why the market was able to rise up again. Ok. So, the Dollar came back to life approaching into 2013. And I was trying to remember what was going on then. I remember (cause that’s when I started into this business). That’s when the Yen did their massive quantitative, devaluing of their currency. Between their new central banker and emperor (or whoever), they just let it loose. I didn’t realize it a whole lot then, but apparently that was easy money to be made. I wish I was aware of what was happening back then. Cause it was definitely big news. Man…I bet you our FX men here made a lot of money back then, selling the Yen. I can’t imagine. That was probably good times for those traders. I was in diapers and learning how to breath back then. Oh well. Ok. So. Where we at again. The Dollar made another top, that’s at the same height of when the depression began. Interesting. Middle of 2015. The stock market took a couple big hits during that year. And here comes the Yen. They got much stronger when the market faltered. So, we see the change occurring now, 2015 leading into 2016. Then Yen gets strong, the Dollar gets weak. And I’m trying to remember when the US first started the easing cycle. Well, I do remember the first interest rate hike. It was in Dec of 2015. Maybe that explains the drop in Dollar through 2016. Then I remember another hike in Dec. of 2016. Well, I think so. Look, I’m not an economist. There’s so many factors that can be mentioned. But I just don’t know which ones take precedence. Let’s look at the chart technically speaking. We have a top for the USD/JPY in '15. The next swing high comes just before '17. This is a lower high. And since then it’s on the down slope. So, the way I see it is, there’s room for it to fall. And what about the stock market? Well, you don’t have to be a genius to see their due for a real correction. But, it seems to me that the currency pair is preceding the market. It kind of looks like what happened back at the beginning. Huh? That’s what I see anyway. So…where we at again? I said up there a little bit ago that it looks like a bottom can be occurring. But now I made the case that it can be the opposite. Maybe price wants to break on down through? So…how am I going to play it? With my trading?
Good question. I can take my profits off the table now, and see what happens. You know…I need to remember something here. I’m trading off of the daily time frame. But we’ve been looking at the weekly time frame. There’s no doubt there’s possibly more time for price to range, or even rise up before a fall. So, I’m thinking maybe I should take my profits now. And if price falls below this present level, then just get back in.
I know Journal…I can here you say…Mike, stick to your trading plan. Ok. So that would be staying in the trade until it’s not trending anymore. Presently, that would be at the yellow line, which is at 110.35 . That’s 115 pips above where we’re at now. So, do I sacrifice around $10. or so, for the sake of following the plan? Or do I follow some intuition and count on price action. This would be considered navigating an exit. Cause if price action turns out to be a truth, then price will most likely rise on up to my exit. I’m thinking I should take the profit on this one. I mean, unless North Korea and Trump exchange words before Sunday night, I should exit my 2 positions and start afresh.
Now…what about my other trades? Well, see, my question is, does the USD/JPY set the stage for the entire field? One one hand, if the Yen is most dominant currency, then of course it will. If their strong, then they will be strong across the board. If their weak, likewise the other. But what about the Comms? If the Dollar is weak, that can definitely make a strong commodity currency. But I will have to know who’s stronger then, the Yen or the Comms.
Ok Journal…I’m done. What you have there is a lot of thinking going on. Out loud. Plus, I got a lot of typing in. Yay! (Man, I love typing)
Well, the weekend is young, and I got a lot more to talk about.
Be back soon.