Tag Archive for: Forex

Forex Ideas Peter Brandt

Forex Ideas

Forex Ideas

Below are some interesting Forex ideas I’ve been tracking.

GBP/AUD — the advance on Friday completed a 14-week Cup and Handle buy signal in this forex cross. I am interested in buying a slight retest of this pattern if given the opportunity, but I will not chase the advance.   I would limit my risk on this trade to 40 basis points.

 

forex ideas peter brandt factor gbp

 

New Zealand Dollar futures

The daily chart is forming a textbook symmetrical triangle top pattern. I typically do not like trading the symmetrical triangle pattern, but in this case the lower boundary is horizontal enough that I am interested in the short side.

 

forex ideas peter brandt factor nzd

 

Mexican Peso futures

The monthly graph displays a possible 2+ year H&S bottom – the right shoulder is forming an independent inverted H&S as seen on the weekly and daily graphs. Factor is flat. I will buy a breakout of the daily chart H&S and then explore extending long leverage should the weekly H&S bottom be completed.

 

forex ideas peter brandt factor peso2

 

 

 

 

Factor Membership

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Peter Brandt is a 40+ year veteran of trading. Through his Factor Service, members receive:

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View your Factor Member options here. You could consider your membership in the Factor Service as just one more trade. If the Factor Service is not of value to you, well, it is just one more trade that did not work. Through the Factor Service I endeavor to alert novice and aspiring traders to the many pitfalls you will face – and to offer advice on overcoming those pitfalls. My goal is to shoot straight on what trading is all about. For more information watch my 30 minute webinar where we cover the Factor service in depth.

I hope you will consider joining the Factor community.

Factor Trading - An Introduction

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Euro Dollar Forex Pair

Euro Dollar Forex Pair

Euro Dollar Forex Pair

It is time to take another look at the Euro Dollar Forex Pair from the 30,000 foot level. The quarterly graph displays two prominent features. First, the 6½-year descending triangle top completed in Mar 2015 has an unmet target at .8670. Second, the decline in Mar 2015 found strong support at the 45-year trendline.   Euro Dollar Forex Pair Read More
British-Pound-GBPUSD-Factor-Trading-Peter-Brandt

British Pound (GBP/USD)

British Pound (GBP/USD)

The dominant chart construction in Cable (British Pound – GBP/USD) is the completed 30- year rectangle on the quarterly graph with a target of 1.0345 — and .7790 as an outside possibility.

 

 

British Pound GBP/USD - Factor Trading - Peter Brandt

 

However, I will note that the Commitment of Traders data shows specs have an all-time record short position and commercials an all-time record long position in British Pound futures. This is not typically a profile consistent with a further downward trend.

I would not be surprised if GBP/USD retests major resistance in the 1.39 to 1.41 zone. Factor is flat. If the Cable does rally toward 1.40, I will be watching closely for a selling opportunity in the way of a small topping pattern on the daily chart. There is also a chance – supported by Friday’s reversal day – that the daily chart is forming a symmetrical triangle congestion.

 

British Pound GBP/USD- Factor Trading - Peter Brandt

 

 

Factor Membership

Factor Membership is available and you could consider your membership in the Factor Service as just one more trade. If the Factor Service is not of value to you, well, it is just one more trade that did not work.   Through the Factor Service I endeavor to alert novice and aspiring traders to the many pitfalls you will face – and to offer advice on overcoming those pitfalls. My goal is to shoot straight on what trading is all about.  For more information watch my 30 minute webinar where we cover the Factor service in depth.

I hope you will consider joining the Factor community.

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Trading Futures and Forex related ETF's is a foolish way to manage trading capital - Peter Brandt

Trading Futures and Forex related ETF’s is a foolish way to manage trading capital

 

Why trade an ETF when the underlying Futures or Forex contract can be traded.

Trading an ETF tied to an underlying Futures or Forex market requires far more capital with less profit potential at the exact same level of risk as directly trading the underlying futures or forex contract. Five examples are provided to make my point.

  • S&P futures vs. SPY
  • S&P futures vs. SH (inverted SPY)
  • British Pounds futures vs. FXB
  • Gold futures vs. GLD
  • Copper futures vs. JJC

Assumptions:

  • An ETF represents a specific futures or forex market
  • A loss of $10,000 is risked per trade – in both the futures/forex and ETF expressions of a trade. A risk of $1,000 would simply require dividing the key numbers by 10
  • The entry and exit for each trade (futures/forex vs. the ETF) are made simultaneously – same date and time
  • The corresponding charts for each trade set up are shown

Note: This post will no doubt create some level of controversy and disagreement. This is my intent. I will stand by my position that trading an ETF tied to an underlying futures or forex market is a very foolish way to manage trading capital. I have no idea why a trader would ever trade a futures or forex-related ETF if he or she can handle the risk of the futures and forex markets. Let the facts of this document speak for themselves.

 

S&P 500 – Shorting the H&S top in May 2012

 

Trading Futures and Forex related ETF's Trading Futures and Forex related ETF's

Trading_Futures_and_Forex_related_ETF's_T1

Summary: Trading SPY ties up eight times more capital in a trade with a near-identical risk to reward profile. FOOLISH!

S&P 500 – Shorting the S&P top in May 2012 with an inverse ETF

Trading Futures and Forex related ETF's 3 Trading Futures and Forex related ETF's 4 Trading_Futures_and_Forex_related_ETF's_T2

Summary: Trading an inverse S&P ETF (SH) ties up eight times more capital in a trade with a near-identical risk to reward profile. FOOLISH!

British Pound – Buying the descending triangle bottom in August

Trading Futures and Forex related ETF's 5 Trading Futures and Forex related ETF's 6 Trading_Futures_and_Forex_related_ETF's_T3

Summary: Trading a long British Pound ETF (FXB) ties up 24-times more capital in a trade with a near-identical risk to reward profile. FOOLISH! REALLY FOOLISH! JUST PLAIN STUPID!

 

Gold – Buying the symmetrical triangle in August 2012

Trading Futures and Forex related ETF's Trading Futures and Forex related ETF's Trading_Futures_and_Forex_related_ETF's_T4

Summary: Trading a long Gold ETF (GLD) ties up nine times more capital in a trade with a near-identical risk to reward profile. FOOLISH!

 

Copper – Buying the 3-month -compound fulcrum bottom in September 2012

Trading Futures and Forex related ETF's Trading Futures and Forex related ETF's Trading_Futures_and_Forex_related_ETF's_T4

Summary: Trading a long Copper ETF (JJC) offered 25% more profit potential, but tied up eight times more capital in a trade with a near-identical risk profile. FOOLISH!

 

Summary

I could go on and on with these examples — to interest rate markets, grains, energy, food and fiber, every conceivable forex pair.

No matter how you stack it, using ETFs when underlying futures or forex contracts are available is an absolutely foolish utilization of trading capital.

With the sole of exceptions of having an account with too little capital to trade futures or an IRA or Roth account unable to use futures, why a person would trade GLD or SLV or SPY or any number of futures/forex-related ETFs in beyond my comprehension?

For the same risk per trade (expressed in dollars or as a percent of a trading account), futures/forex provide the following advantages:

  • More liquidity
  • Fewer overnight gaps
  • 24-hour trading access (in most cases)
  • Ability to hold far more different trades at the same time
  • Great punch per dollar employed to hold a trade – in fact, capital in futures is about eight to 10 times more efficient at an equal-risk level
  • Shorts in futures cannot be called back (as is the case with a short ETF position)

If you are a properly capitalized trader (I would saying anything north of $100,000 of non-IRA trading assets) you need to seriously challenge your use of ETFs instead of the underlying futures contract or forex cross.

 

PLB

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