I've been thinking about this for a while and while I can't say that I've read through every trading strategy here on FF, what I have found through my years of experience is that in order to make real and lasting profits, you need to attune yourself to the Major Fundamental Events (MFE's) that set the trends-and then get in when price is most advantageous.
When I refer to major fundamental events I'm not just referring to the monthly reports, although those can be used along the way. I'm talking about the major shifts, which I'll explain.
One thing before we start though-these MFE's may only happen a couple times per year. That's OK, because these trades are going to yield 1000's of pips. One trade may last for weeks or months.
Also, we're not at the start of an MFE now-we're in the middle of one (dollar weakness).
As you might have guessed, an MFE can be (and usually is) initiated by the Fed although certain earth-shaking events (the Lehman bankruptcy, China's concern about Treasuries)) can certainly do the job. Sometimes several MFE's can occur simultaneously which is great because those tend to build on each other, strengthening the trend.
The 2 keys for doing this successfully are as follows
1. You have to recognize when an MFE has occurred.
2. You have to understand how markets will be affected after the MFE has occurred and the correlations between the different asset classes (currencies, stocks, bonds and commodities).
The MFE we are in now began on March 15, the day of Bernanke's 60 Minutes interview in which he said the Fed was printing money. Go to this page: http://video.google.com/videosearch?...um=4&ct=title# and see the "The Chairman Part 1" video at about 8 minutes in.
Now, I'll tell you. Plenty of people were talking about the Fed printing money before the interview, but the Federal Reserve admitting it on national television is a whole different matter. The dollar bear market began in earnest from there, and you easily could have made 1000's of pips shorting the dollar against the euro, pound and A$ in a couple of weeks.
Now, I'll tell you something else. Plenty of people have been debating me that Bernanke didn't reveal anything new because everyone was well aware that the Fed had already expanded its balance sheet (quantitative or credit easing = money creation). None of the so-called experts picked up on this and it was basically ignored in the Financial press.
To be honest, most "experts" have very little clue about what they are doing when trading currency anyway and the one's who do are highly unlikely to say anything unless they are talking their own book. And don't forget, none of the so-called experts said anything about what would happen to the dollar after Lehman went bust either including such luminaries as Jim Rogers who's been a dollar bear forever (and who got crushed in the 2008 commodity collapse).
The facts bear my idea out. Bernanke going on 60 Minutes was definately an MFE because the dollar has gotten murdered since then. Why did Bernanke go on 60 Minutes? Because the Fed to that point had been totally unable to accomplish its goal of boosting stocks and creating some measure of inflation (making commodities more expensive) by weakening the dollar (to counter the far more dangerous deflationary effects of the financial crisis) with all of its previous balance sheet expansion. The S&P had made a fresh low just one week before. No question they were concerned that all of the actions taken to that time could potentially fail, sending the global economy deep into a depression.
I'll be writing plenty more about this and in the meantime-I welcome your comments.
When I refer to major fundamental events I'm not just referring to the monthly reports, although those can be used along the way. I'm talking about the major shifts, which I'll explain.
One thing before we start though-these MFE's may only happen a couple times per year. That's OK, because these trades are going to yield 1000's of pips. One trade may last for weeks or months.
Also, we're not at the start of an MFE now-we're in the middle of one (dollar weakness).
As you might have guessed, an MFE can be (and usually is) initiated by the Fed although certain earth-shaking events (the Lehman bankruptcy, China's concern about Treasuries)) can certainly do the job. Sometimes several MFE's can occur simultaneously which is great because those tend to build on each other, strengthening the trend.
The 2 keys for doing this successfully are as follows
1. You have to recognize when an MFE has occurred.
2. You have to understand how markets will be affected after the MFE has occurred and the correlations between the different asset classes (currencies, stocks, bonds and commodities).
The MFE we are in now began on March 15, the day of Bernanke's 60 Minutes interview in which he said the Fed was printing money. Go to this page: http://video.google.com/videosearch?...um=4&ct=title# and see the "The Chairman Part 1" video at about 8 minutes in.
Now, I'll tell you. Plenty of people were talking about the Fed printing money before the interview, but the Federal Reserve admitting it on national television is a whole different matter. The dollar bear market began in earnest from there, and you easily could have made 1000's of pips shorting the dollar against the euro, pound and A$ in a couple of weeks.
Now, I'll tell you something else. Plenty of people have been debating me that Bernanke didn't reveal anything new because everyone was well aware that the Fed had already expanded its balance sheet (quantitative or credit easing = money creation). None of the so-called experts picked up on this and it was basically ignored in the Financial press.
To be honest, most "experts" have very little clue about what they are doing when trading currency anyway and the one's who do are highly unlikely to say anything unless they are talking their own book. And don't forget, none of the so-called experts said anything about what would happen to the dollar after Lehman went bust either including such luminaries as Jim Rogers who's been a dollar bear forever (and who got crushed in the 2008 commodity collapse).
The facts bear my idea out. Bernanke going on 60 Minutes was definately an MFE because the dollar has gotten murdered since then. Why did Bernanke go on 60 Minutes? Because the Fed to that point had been totally unable to accomplish its goal of boosting stocks and creating some measure of inflation (making commodities more expensive) by weakening the dollar (to counter the far more dangerous deflationary effects of the financial crisis) with all of its previous balance sheet expansion. The S&P had made a fresh low just one week before. No question they were concerned that all of the actions taken to that time could potentially fail, sending the global economy deep into a depression.
I'll be writing plenty more about this and in the meantime-I welcome your comments.