Analysis and considerations on Eur-Usd
14 January 2022
Analysis of a soybean oil spread
21 January 2022
I am a trader dealing specifically with currencies and commodities; I do not trade any other market. If you aspire to become a successful trader in these markets, there is a fundamental aspect of trading that you cannot ignore and that I always repeat like a mantra. In the medium to long-term, it is the fundamentals that move a currency or a commodity, but in the short-term, it is speculation that does it.
If you do not understand this concept, you will not get very far. Your analysis may be the best ever made, but always remember that hedge funds will always have advantages over you. Advantages that translate into an immense amount of money at their disposal and knowing what the small traders are doing, where they place their orders, stops, targets, and consequently, they move the markets.
However, their liquidity is not infinite and there are forces, such as central banks and the interests of the Commercials, which after a few days or weeks, outweigh the manipulations. This is also the reason why my trading is medium-term. Because even though initially my operation is pushed in the opposite direction by some fund, it does not create me any problem because the trade has been studied in order to remain latent also for some months and, consequently also stop-loss and dimension of the position are adapted to the type of the operation.
I show you a couple of examples of analysis made and published on the site. The first one regards the spread HGU21-HGZ21 (A calendar spread for the summer). Below is the chart at the end of its listing.
Highlighted in yellow is the movement of the spread following my analysis. In this case, there was first a strong upward thrust that went well above the entry-level and then the spread reached the target area.
Being summer and not liking to work in a period with a drop in volumes, I opened only one contract. The short entry was at 0.10 and the stop-loss at 0.20 was triggered shortly afterward with a loss of $250. I re-entered at 0.40 and closed the trade at -0.10 for a gain of $1,250. The trade closed with a total gain of $1,000, which was more than if I had kept the first position open and with much less risk.
The intraday spread went well above my second entry-level, completing the strong bullish momentum. Then what has happened is visible in the chart, demonstrating that my analysis was valid but initially suffered the strong speculation of the copper.
The second analysis is on Aud-Nzd (Aud-Nzd, my bullish view). Below is today's chart.
Shortly after my analysis, the currency pair broke the important level at 1.04200 area going to test the next area at 1.02800/1.03200. However, even in this case, after the initial contrary movement, and despite the fact that the initial conditions have changed slightly in the meantime, Aud-Nzd today reached the first of the two target levels at 1.06900.
With these two examples I wanted to show you that even if you make a correct analysis, you cannot exclude that initially, your operation may suffer. There are forces much bigger than you that know exactly what you are doing and could push the market against you. This is a very important aspect of currencies and commodities trading.
If you aspire to become a successful trader in the financial markets, there is a fundamental aspect of trading that you cannot ignore and that I always repeat like a mantra
I am a macroeconomic and financial analyst with over 30 years’ experience, including two years as a fund manager. I specialise in currencies and commodities, and I am the author of several successful books on trading, macroeconomics, and financial markets.
