Welcome back, Zulu-fans.Since Zulutrade provider Coolie 1997 appeared on our blog, we have had a great response from our readers and Coolie-san has been very generous in responses to questions from our readers.
Coolie-san has provided the graph above which shows relative currency movements on the majors on a year-to-date basis.
Our first take-away is that AUD, NZD and CAD are up for the year and GBP, EUR, CHF, JPY and under water. Leading the swan-dive down is USD.
There's no shortage of fundamental reasons for USD's weakness and the US government is almost encouraging that with near-zero interest rates. USD based multi-nationals (KO, MSFT etc) get an earnings boost from a weak USD providing further incentive for a weak USD.
So how does the above graph help us make money?
Coolie-san and most Zulu-providers are essentially day-traders. So long positions in the weak currencies face significant headwinds and are fighting the trend. Coolie-san's tact has been taking long positions in AUD and NZD versus the weaker currencies and this is helping his performance versus Euro-zone based traders.
That said, keep in mind that currency trading is a 3-party affair. The 3 parties are Asia, Europe and Americas. And whatever fundamental move is made in one market tends to get reversed (at least short-term) in the next market upon which the sun shines.
So beware of any breakout, particularly news related. I learned something important from Zulutrade provider Bigwin. That is that he fades (goes against) almost every significant currency move and usually turns a profit within an 8 to 16-hour period.
The point is that any signifcant move will be reversed (short term) by another set of traders who are influenced by another set of fundamental (and earth-based) factors within a 24-hour period. If the move does not get reversed (as expected) then you have the makings of a trend and its time to stop fading the trend and get on board.
Let us know what you think of that. Cheers and thanks for reading.
Hi,
ReplyDeleteI've got a lot of drowdowns as is always the same.
I hope GBP will go downwards.
Here is the explanation to make the RCM graph on the top.
(1)Choose any currencies as you like.
Let's say USD, EUR, JPY and GBP.
Decide one currency as a base, which is USD in this explanation.
(2)Record rates in "Time A" between each currency and the base.
Suppose EUR/USD:1.48, JPY/USD:0.011, GBP/USD:1.62
(The base should be on the right side of pairs.)
(3)In "Time B" do the same way.
EUR/USD:1.47, JPY/USD:0.01, GBP/USD:1.62
(4)Divide each value of "Time B" by "Time A".
EUR:1.47/1.48=0.9932...
JPY:0.011/0.01=1.1
GBP:1.62/1.62=1
USD:1 as a Base
(5)Multiple all four values.
0.9932...*1.1*1*1=1.092...
Calculate the forth powered root. (Is this English OK?)
It means 1.092...^(1/4)=1.022...
4 in (1/4) is the number of currencies.
(6)Divide each currency value of (4) by (5).
EUR:0.9932.../1.022...=0.9715...
JPY:1.1/1.022...=1.0759...
GBP:1/1.022...=0.9781...
USD:1/1.022...=0.9781...
Those are relative values of four currencies in "Time B".
Coolie-san-
ReplyDeleteI understand the math you are doing, but don't quite grasp you need steps #5 and #6. It seems like you would get a meaningful comparison of the relative movements with the results from step #4 alone.
Anyway, i'm a bit math-challenged, so don't spend a lot of effort trying to explain.
Anyway, let's hope the GBP weakens so we can get these 2 trades into the green.
Thanks again,
Tcxmon
I'm not sure I understand at all, but interesting none the less.
ReplyDeleteOn another note I suppose in all methods and tactics to make gains in the market, it can suddenly be voided in effectiveness, as today has shown us. My practice signal provider account got hammered today, as everything seemed to do the unexpected. Not a good day today.
JT-
ReplyDeleteI feel your pain. More on the weekend blog entry - once i've had some time to recover.
Tcxmon
TCXMON-san,
ReplyDeleteI feel reluctant to come here.
It is tough to talk users to whom my signal caused damage.
Not to feel so, in the forex community of SNS in Japan I ask the members not to be my real users. (It is true.)
Anyway, I will try to withdraw my deposit from 'forex market' bank.
The last comment is for JT-san who wrote "I am interested in knowing more about how you set up your 'correlation'".
Maybe my understanding is wrong. I will not explain math matter so much.
If you remove #5 and #6, the value of USD(base currency) is always 1. If it is OK, it's OK.
Regards,
coolie1997
As I wrote before, Zulu is not my real trade. My real position aims profit of swap-point in a long run.
ReplyDeleteThe current position component is as follows:
Long AUD:98%, NZD:2%
Short JPY:69%, USD:31%
The oldest pair is AUD/JPY opened in 2002. Accumulated swap-point is 2,940 pips.
It is easier for me to predict which currency becomes higher after a year, rather than after one day.
That is the reason I am not confident on myself for a short-period trade (that I wrote this too) and I may not be a good signal provider.
The purpose of this comment is to tell the readers the fact. Of course I will try to make profits in ZuluTrade as much as possible as I did in the past.
Regards,
coolie1997
Hey Tcxmon, I was hoping that I could send you a video I did of the Zulutrade Interface for my trading group. I read your blog consistently and value your writings..If I attach my email address, could you send me an email and I could please send the video link to you to go over. Just to see if I am on the right track on Zulu. Thanks mate...
ReplyDeleteOops, my email is brilesmedia@gmail.com sorry...LOL
ReplyDeleteJimmy-
ReplyDeleteMy e-mail is on the way to your inbox. Thanks,
Tcxmon (Chris)