Something Interesting in Financial Video February 2015 - page 4

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Forum on trading, automated trading systems and testing trading strategies

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newdigital, 2015.02.11 05:38

Video: Looking for More Stable, Technical-Centric Pairs Like AUDUSD (based on dailyfx article)

  • Tumultuous fundamental themes and volatility-inducing event risk makes for lower probability trades
  • With 'risk' churning, the Greece standoff intensifying and a BoE report ahead; Yen, EUR and GBP are risky
  • In avoiding areas of the market with the greatest threats, more stable options can be found

The EURUSD, EURJPY and EURGBP face considerable risk for extreme volatility while enjoying limited capacity for projecting a consistent direction through the turmoil. Many traders seek out the high-volatility scenarios to provide trade setups. However, volatility with little clarity on the 'trigger', the potential for consistent direction and the extent of follow through can represent more risk than reward. Sometimes, the better path is to reduce our exposure to open-ended fundamental threats to focus on more straightforward catalysts or technicals. In today's Strategy Video, we discuss why EUR, GBP and JPY pairs may be better to avoid now while AUD, NZD, CAD and even USD could offer more acceptable opportunities.



 

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newdigital, 2015.02.14 17:37

Nikkei forecast for the week of February 16, 2015, Technical Analysis

The Nikkei initially gapped higher at the open of the week, and then fell to fill the gap during that time. The resulting candle was a hammer, which shows that there is significant underlying bullish pressure. The market looks as if it is going to try to break out above the 18,000 level, which would have us buying for the long-term, and aiming for the 20,000 level next. We think it will eventually do that, and that pullbacks offer value that we are going to pick up without hesitation.



 

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newdigital, 2015.02.14 17:41

S&P 500 forecast for the week of February 16, 2015, Technical Analysis

The S&P 500 broke higher during the course of the week, as we are testing the 2100 level now. If we get above there, this market should continue to go much higher and as a result we would be very bullish and hanging onto any long positions. If we pullback from here, we think that there should be plenty of support all the way down to the 2000 handle, where there should be plenty of support and as a result we are willing to go long on both of those scenarios.



 

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newdigital, 2015.02.14 17:44

Gold forecast for the week of February 16, 2015, Technical Analysis

The gold markets as you can see went back and forth during the course of the week, testing the $1220 level for support, and the $1250 level for resistance. Ultimately, it looks as if the market is trying to find its footing, and should go higher. If we can get above the top of the range for the week, we believe that the market should then head towards the $1500 level. On entering, we break down below the lows for the week, we will more than likely test the $1200 level next.



 

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newdigital, 2015.02.14 17:48

USD/JPY forecast for the week of February 16, 2015, Technical Analysis

 The USD/JPY pair tried to break down during the course of the week, but struggled at the 120 handle. Ultimately, we ended up forming a shooting star, and it looks as if we are going to drop from here. However, we feel that the market is most certainly in an uptrend, and as a result we are actually going to wait for a supportive candle below in order to start buying. On the other hand, if we break above the top of the shooting star, we are buyers there as well.



 

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newdigital, 2015.02.14 17:51

GBP/USD forecast for the week of February 16, 2015, Technical Analysis

The GBP/USD pair broke higher during the course of the week, and as a result the market looks as if it’s reaching for the 1.55 handle. That is an area that has a significant amount of resistance, and as a result we are actually looking for a selling opportunity in that general vicinity. In fact, we can’t buy this market until we get above the 1.58 level, which is something that we do not anticipate seeing anytime soon. With that, we are bearish and ignoring the bullish pressure that we’ve seen recently.



 

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newdigital, 2015.02.14 17:53

EUR/USD forecast for the week of February 16, 2015, Technical Analysis

The EUR/USD pair went back and forth during the course of the week, ultimately settling on a slightly positive candle. We are still below the 1.15 level however, and that of course shows that we are still very soft in general. The Euro continues to be a currency that people shun, as the US dollar is without a doubt one of the most favored currencies in the world. We don’t really have any resistive candles to start selling, and believe that this is more or less going to be a short-term trader’s type of market.



 

Value Investing: An Introduction

Value Investing operates from the principle that the prices of financial assets are mean reverting. In other words, when price is too low, it is time to buy; and when it is too high, it is time to sell.

Specifically, the metrics that are expected to mean revert are valuation ratios. These ratios typically look to compare the price of a company's shares relative to its earnings potential or the value of its assets. If an investor can purchase a company that is generating profits, and can do so at a price that is relatively low compared to what investors typically pay for future earnings, this might be a company worth buying. Conversely, the time to sell is when the the price for future earnings is too high. In this way, the cycle of mean-reverting valuation ratios mirrors the cycle of investor sentiment: just as the time to buy from a sentiment or psychology perspective is when the market as a whole has crashed and investors have engaged in panic selling, the time to buy for value investors is when the market has crashed and is discounting the price of future earnings too much.

Value investors typically (but not always) hold stocks for 3-5 years, if not longer. This is often how long it takes for big shifts in valuation ratios to occur. Moreover, statistically speaking, the biggest moves in the market occur on just a few days -- and so it is vital to be in the market when those days occur. Committing to holding positions can help ensure value investors are in the market when the moves they are anticipating occur.


 
Linda Bradford Raschke Webinar: Quantitative backtesting, Mechanical vs Discretionary and more
Two hour webinar

Linda Bradford Raschke covers:
- Combining Taylor's philosophy with a 2-period ROC and pattern recognition
- Finding ideal trade location
- Determining trading range vs trending environment
- Conditions that lead to extended runs or persistency of trend
- Two different rule sets depending on which trading environment
- Quantitative backtesting to support a statistically significant edge
- Mechanical vs Discretionary - pros and cons of each
- Linda uses this approach personally in her own trading every day

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