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KISS Trading - Keeping it Simple...and Safe.... Print
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Sunday, 05 May 2019 08:17

Dear Trader and Clickevents reader

I guess we all have a natural naivety built into our DNA. We like to believe what we are told, particularly if we respect the source of the telling. It's also a herd thing. If lots of people are told the same thing, they tend to start agreeing with each other. After all, it must true if everyone believes it.

Far too frequently our beliefs turn out to be the opposite of reality. Central Bankers, politicians and economic gurus' words, statements and policies frequently prove to be the opposite of what actually happens.

As with many things, personal naivety has a spectrum. Ranging from 'I believe everything and everyone', through to the opposite, totally sceptical view, of believing nothing unless seen and experienced first hand.

Way back, in my youth, I had a spell in the car trade that taught me everything I needed to know about supply and demand, pricing and presentation. I rapidly realised I could never believe anyone's description of how wonderful was the condition of their trade in car!

I soon learned to believe 0% of what I heard and no more than 50% of what I could see. A useful policy for anyone trading the markets.

Two Stories

Last month I talked about the interest rate differential and reasons why the US Dollar will remain strong, in the short term at least. Read the blog post here.

Defying those US$ bears, last month the USDJPY gave us this 98 pip wave (profit $980 per lot). This was a classic TMEST/Harmonic Wave trade and it's just done it again.

chart1

 

The interest rate differential between the US and Japan is 2.6% and that tells us to keep buying the USDJPY whenever it dips. That's the fundamental story but it's the chart waves and indicators that tell us when to get in and when get out.

chart2

 

Price action shows our key indicators turning bullish together at the first vertical red line, our buy signal. The previous down move ran for five clear waves, so we knew we were ready for a run.

Staying with the KISS approach of Keeping it Safe and Simple. Our stop loss kept us safe, moving to the no loss level within a few hours. Then, the first red bar on the Activity Index and price action, gave the signal to take part profits.

Market trends run in a natural rhythm of zig and zags. Power impulse waves (zigs) form the trend that are followed by the zags correcting and pausing before the next power surge.

By sticking to a few simple rules we can see the waves rolling and the indicators show us where to step on and then off!

The charts are from the Twenty Minute Extreme Swing and Harmonic Wave Trader programmes, both available now at a special price.

 

 

From the blog

Australian Banks - Oh boy!

It's gradually dawning on the Reserve Bank of Australia that they have a problem.

The big four Aussie banks are holding around 85% percent of all Aussie home mortages.

As worldwide interest rates were creeping up throughout 2018, repayment costs have increased at the same time as housing prices are falling back. No great problem for those who bought property a decade and more ago.

The problem is for those who invested in the last few years. Very soon a good many mortgages will be in negative equity. If, or when, mortgage defaults increase, bank capitalisations will tumble and it could become a spiral, starting slowly and then accelerating across the real estate, mortgage and banking sectors with the predictable effect on the Australian dollar.

 For a full assesment of the bind Ausralian banks are in, click and listen to this video from Chris at Casey Resaearch and Martin North of Digital Finance Analytics.

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