How To Make Money By Sitting On Your Hands

Pssst....Want to know how to become a successful trader with a long career?

Simple: Know when to sit on your hands.

If your parents did a good job of raising you they taught you the value of hard work.  Put in your time each day and collect your paycheck.

Sadly, that sage advice takes on a different form in the trading world.  Sure, you will work your ass off doing analysis and monitoring the markets, but at the end of each day you may not have any dollars to show for it or worse may have fewer dollars!  Explain that to your significant other!

The fact is for many aspiring traders there is one fact that you have to come to terms with:

Traders do not trade every day; rather they plan each and every day for the next trade.

This reality means you must come to terms with the fact that not every day will show monetary progress, in fact, you may even have some weeks where there is no progress.  You will quickly realize that you might make 80% of your money 20% of the time.

Until traders really develop their own approach and feel for the markets, it will be a struggle.  For me, each and every day represents a new page or chapter in the ongoing thesis/narrative that I have laid out. The noise that is intra-day price action is merely a clue to the larger forecast playing out.

Sitting On Your Hands September 26, 2018 (the real deal) 

FX markets and markets, in general, are having a tough time getting any traction in either direction. Just when you think prices are about to sustain a move....they don't!

The Dollar Index (DXY) remains locked in a sideways chopfest and other than short-term trading it (not the panacea by the way) there is not much on offer. We are positioned for a weaker DXY and thus remain short USD/CHF and long CAD/JPY. The long in CAD/JPY is more of a play on the bullish view for the S&P's.

REMINDER: despite the chopfest in recent days, our forecasts/trades show a net gain for the month

• Sticking with that view, it is worth noting that NZD/USD had a very solid thrust higher overnight. Yes, some gains have been given back, but if prices hold the .6280'ish area, there may be an opportunity to re-establish longs.

• Meanwhile, EUR/GBP appears to be ready to move higher after a sustained move lower off the August 11th highs.

  • Other than the basic technical backdrop noted in the chart below, the options market - specifically 1-Month Risk Reversals, are trading at a level that points to a degree of mean reversion in terms of the spot price.

• And assuming that the S&P 500 gets past all this impeachment nonsense, prices are poised to move higher. That should allow CAD/JPY to thrust higher from the current bull flag and move higher towards 81.80-82.50