Forex Trading Log

Aussie Dollar Experiment (Update #2)

mpalmero — Sat, 30 Jun 2007 07:50:29 +0000

Our Experiment using this forex trading plan for trading the Aussie dollar has not yielded anything for two weeks. It actually yielded a loss of 87 pips. I’m actually stopping the experiment there after two and a bit weeks in operation. So what conclusions can we draw from this forex experiment? Well, I for one can say that a dumb and blind system like this one is not effective. The system relied solely on the 50/50 odds of a coin as well timing the markets. But hang on, what if I went the opposite side of each trade in the experiment - you could have actually made 87 pips trading forex - which is a modest income by anyone’s standards for two weeks worth of trading. Hey - at least your doing something consistent right? But on the other hand - the system lost 87 pips - which can be a substantial amount of anyone’s trading capital. when I’m feeling up for it, I’ll try out a more intelligent trading system (but simple) a little later on. It’s interesting to see that this system didn’t make much money - and didn’t take advantage of the volatile movements of the Aussie dollar over the past two weeks: hitting 85 cents then retracing back to 84 cents and below then coming back to test 85 cents yesterday night.
Economic data releases in Australia this week:

July 3 Retail trade (May); Building approvals (May); Reserve Bank Board meeting; International trade (May)

Economic data releases internationally this week:

July 2 US ISM manufacturing (June)
July 5 US ISM services (June)
July 6 US Non-farm payrolls (June)

No Yield Yet: Aussie Dollar Experiment (Update #1)

Forex Trader — Mon, 18 Jun 2007 00:24:05 +0000

There isn’t any yield yet from our experimental trading plan. So the Australian Dollar experiment got off to a bad start… is the coin just unlucky? The first two days was 100% unlucky. On Thursday, our trade opened LONG 83.94 cents at 8.50am Sydney time and closed at 83.75 cents: the trade ended with a 19 pip loss - remember, our trading plan is to exit if it hits 30 pips against our position or 60 pips if it goes towards our position. Last Friday, the coin was tails so we went short at 9am opening the position at 83.58 cents. 12 hours later we closed the trade at 83.62 cents - 4 pips loss. Unlucky? Well we’ll keep track with this progress for a while…

Meanwhile, the Aussie tracked lower on Friday when there was interest rate rumours in the US. So what’s there to watch, if you’re trading the Aussie dollar this week?

19 June: ABARE crop report; US Housing starts for May
20 June: Car sales for May; Dwelling starts for March quarter
21 June: RBA Bulletin; US leading indicators for May

Governor Glenn Stevens Speech

Forex Trader — Thu, 14 Jun 2007 06:51:17 +0000

So that Reserve Bank of Australia (RBA) Governor Glenn Stevens gave a speech this afternoon as mentioned in the update. He was giving a talk during lunch at the Queensland University of Technology Business Leaders’ forum. “There’s a sort of urban myth that is going around that it’s understood that we wouldn’t raise rates in the year of an election,” he said, “I object to that notion.” “Whatever has to be done has to be done.” “I think all the people concerned are aware of the state of the economy and the importance of long-term fiscal discipline,” Mr Stevens said. And so, what did the Aussie dollar do? He gave the speech around 1pm Sydney time, and it’s now 4.50pm Sydney time: the Aussie/US is trading at 0.8377 cents as I type - about 10 pips lower compared to this morning. Personally, after hearing a speech like that I would be bullish on the dollar, but perhaps the market needs a little more proof? Hey at least, the dollar didn’t go plummeting down as if there was no chance of an interest rate rise. BTW, did you manage to go short on the dollar by going short a few days ago when the dollar was ranging between 0.8410 and 0.8450? If so, Good on ya!

Aussie Dollar Experiment

Forex Trader — Wed, 13 Jun 2007 23:16:42 +0000

I present to you the Aussie Dollar Experiment! This is a Forex Trading experiment using the simplest of all trading systems. Professional traders always advise on trading with a system, and I would like to test if flipping a coin can be used in a successful forex system. I will be flipping a coin at around 9am Sydney time (+10GMT) every day. Heads would mean a long trading position, Tails would be a short trading position on the Aussie Dollar. This would be theoretical - no real money involved, but I will be tracking the number of pips that we would theoretically be making (or losing) with this super simple trading system. I will also be putting an arbitrary stop at 30 pips against any current position. The system will also automatically take profits at double the stop loss at 60 pips and each position will be closed 12 hours after it had been opened. I’ll be recording this daily in a spreadsheet, then reporting the progress of the system weekly.
The Aussie Dollar Experiment forex trading system summary:

Flip a coin: Heads = Long; Tails = Short
Initiate trade around 9am Sydney time (+10GMT)
Conditions to close a trade:

Stop Loss at 30 pips; or
Take profits at 60 pips; or
Close Trade 12 hours later at 9pm.

This is a totally blind forex trading system; it doesn’t take into consideration any technicals like support and resistance or any fundamentals such as important economic announcements like employment or GDP growth. My hypothesis for this Aussie Dollar Experiment is that a blind trading system can make money. I’m predicting a small amount of pips would be gained from this… I will be running this experiment for at least a quarter or three months, depending on the system’s success. Wish the system luck!

Aussie Dollar Update

Forex Trader — Mon, 11 Jun 2007 12:15:27 +0000

Wow. Boy does time fly. It’s the 11th June and the last entry on my forex trading blog was on the 3rd of March. Why? Call it a trading holiday - went to enjoy my time, see the world, experience the other side of life. Keep in mind, taking a breather is important. And now I’m back. Just when the Aussie dollar hits 17 year highs of over 84 cents per US dollar. The last time the Aussie was trading at this level was in August 1990. The dollar was launched to the stronger levels as a result of stronger than expected Gross Domestic Product (GDP) figures, rising 1.6 percent for the March quarter on quarter and 3.8 percent over the year to March 31 (Economists expected only 3.1 percent growth rate). And after three months of absence from trading the forex markets, its amazing to see that the Australian economy is still riding a strong metals cycle, with strong consumer demand, low unemployment, a level interest rate and strong business investment as a result of strong company profits.

It also sounds like interest rate talk is also helping the Aussie dollar up (just like before). There are rising expectations that interest rates would be hiked up later this year. Also, comments by US Federal Reserve chairman Ben Bernanke have also aided the Australian dollar as traders focused on the likelihood of a rate cut in the USA.

Last Wednesday, the Reserve Bank of Australia left official interest rates on hold at 6.25% following a monthly policy meeting on Tuesday. This didn’t really influence the Australian Dollar. “Recent data has been sufficiently strong to keep an RBA rate hike on the agenda for coming months,” said Tony Morriss, senior currency strategist at ANZ Bank. Mark this on your diaries: the RBA board is scheduled to meet up again next on July 3.

So what’s happening this week that may influence the Australian dollar?
June 12 Tues - NAB business Survey (May); US Retail sales (May)
June 13 Wed - Consumer confidence (June); US Beige Book
June 14 Thurs - Speech by Reserve Bank Governor “Economic Conditions & Prospects”; US Producer prices (May)
June 15 Fri - US Consumer prices (May) and US Industrial Production

Updated 14th June: at 10.30am (Sydney +10GMT) there is an inflation expectations announcement, at 12.55pm (Sydney +10GMT) RBA Governor Glenn Stevens will be giving a talk <– the market will be definitely watching what his speech would reveal. It’s also interesting to note that the AUD has broken through the 84 cent support last night and traded around the 0.8360’s.

Aussie at One-Week Highs

mpalmero — Sat, 10 Mar 2007 06:57:42 +0000

The Aussie touched one week highs on today’s Asian forex trade. The rally was a little stifled as a result of caution in the markets ahead of US employment data coming up overnight. This morning the Aussie was around 77.90 cents compared to 77.73 cents yesterday. Sue Trinh, currency strategist at RBC Capital, have noted that carry trades have gained renewed interest with investors encouraged by signs of consolidation in world share markets. Is the dollar set for recovery above 78 cents when just a week ago we were thinking about 80 cents? Hmm – something to ponder in the weekend.

Australian Dollar Stronger for Now

mpalmero — Thu, 08 Mar 2007 07:56:52 +0000

The Australian dollar closed the Asian forex trading day stronger today brought about by gains in local and regional stockmarkets as well as economic data released today. The Australian economy grew by 1.0 percent in the fourth quarter, lifting on year growth to 2.8 percent from 2.2 percent in the third quarter. Strong spending, construction and mining activity gave the economy a boost. Growth was expected by the market to be 0.6 percent. Assistant Reserve Bank of Australia (RBA) Governor Malcolm Edey told a business conference that the world economic outlook was strong with Europe and Asia ready to pick up the slack should the U.S. economy slow. Edey said the long-term prospects for growth in Asia were rich with both China and India set for decades of stellar expansion.

Australian Dollar Steady!

mpalmero — Wed, 07 Mar 2007 06:56:08 +0000

The Aussie dollar is steady for now. Australia’s monthly trade deficit in January has narrowed which encouraged the local currency somewhat. The deficit narrowed to A$876 million in January from a gap of A$1.379 billion in December. The Australian Bureau of Statistics (ABS) said that exports rose by 2 percent and imports fell by 1 percent in the month. The Reserve Bank of Australia (RBA) met earlier this morning but the market expects them to hold rates steady at 6.25 percent. The outcome of their meeting will be found out tomorrow. Watch out for fourth quarter economic growth data due 0030 GMT (11.30am Sydney time) also tomorrow which could influence forex markets.

It’s Those Carry Trades Again

mpalmero — Tue, 06 Mar 2007 05:53:26 +0000

Today was a nasty day for the Australian dollar. Those carry trades have forced investors to continue to sell down and unwind their carry trade exposures in their forex holdings due to the continued bearish market sentiment. It was interesting to note that government bonds continued to rally as nervousness across the region encouraged safe-haven buying. This morning the Australian dollar bought around 77.74 cents down from the 78.53 cents we saw last Friday. So, it was a correction of the markets? Don’t you just love it when the financial journos and the other market commentary people always pin it down to the correction the market needed? Anyway, the Australian dollar was clearly still being affected by the risk aversion procedures taken by the players in the market that started last week and it seems that it is affecting markets globally. Even Australian local economic reports didn’t even have any influence the markets at all: Aussie company profits rose 2.5 percent in the fourth quarter and inventories rose by 0.1 percent breaking the two quarter decline. On Wednesday the Australian Bureau of Statistics (ABS) will issue their fourth quarter national accounts data Wednesday at 0030 GMT or 1130 local Sydney time.

Australian Dollar Selling Pressure Easing

mpalmero — Sun, 04 Mar 2007 05:50:41 +0000

While the Australian dollar has drifted lower in forex trade today, selling pressures across worldwide markets have eased. Government bond prices have closed higher after the economic data out of US of a downgrade in US fourth quarter GDP (Gross Domestic Product). In local data there was an upbeat fourth quarter capital investment data where business investment lifted just 1.0 percent (seasonally-adjusted) in the fourth quarter from the third, the data included news of a sharp upward revision of expected mining sector investment through 2007-08. Miners expect investment will rise by 71% in 2007-08 over the previous year. You’ve got to remember there is still the uncertainty linked with the sharemarket which means that the Australian dollar will remain vulnerable. Watch out for Australian Retail Sales Data tomorrow.