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GBP/USD – Predicting the Big Short (And Cashing Out Big Profits on it!)

Last week, the Pound suffered its steepest daily fall of 2017 after a shock election result denied any party a majority in parliament days before Brexit negotiations begin.

Source: The Telegraph

Thankfully, our Synapse Network came fully prepared to profit from this move! 😀

Here is a highlight of the early prediction given by Spencer several days before the sharp plunge:

While waiting to short Gold, we took a short-term long trade to make some quick bucks on the side.

Cashing out on some Gold profits to start the week. 💰 Taking only safe trades with low risk and high returns. #realtrades #realresults

A post shared by Spencer Li 🇸🇬 Synapse Trading (@iamrecneps) on

And when we finally saw the glaring signal (yes, it was so obvious from the charts!), we jumped in to short GBP/USD, just one day before the sharp plunge! Ka-ching! 😀

 

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How Will Brexit Affect the Various Markets?

Last week, there was much turmoil and excitement in the market. Fortunes were made and lost. And many markets spiked strongly, hitting record new highs or lows.

The pound has crashed more than 12%.

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Gold rose more than 5% in a day:

xa

 

And Oil has started to tip under the 20-EMA (daily chart):

oil

 

The ASOS site crashed as too many shoppers started to buy on the cheap pound.a

Fox news network wrongly reports that the UK has left the United Nations:

fox_news_brexit.jpg_1611819713

 

It seems that almost anything that deals in pounds or derives revenues from the UK is at risk of being dumped. For example, Comfortdelgro runs bus and taxi services in the UK, deriving more than 20% of its operating profit there.

The STI has rolled over on the daily chart, and is convincingly under the 20-EMA.
sti

But on the multi-year chart, if we zoom out a lot we see it has quite a bit of room to move down before it can be considered a bargain buy. I’ve talked about it in my previous workshops, when I showcase my 30-year forecasting chart for long-term investors.

stii

 

There’s a lot of talk about the Brexit being a financial snowball that will end in financial mayhem. There are also people on the internet talking about a huge correction in real estate prices in Singapore:

asd

Overall, I’m glad I stayed out of the Brexit and closed all my positions prior to the Brexit (last wednesday!). Having announced it on my private “live” chat to my program graduates, I sat back and calmly watched the world burn. Just kidding! 😀

fb

What’s clear to me is that although the charts look a little ugly at the moment, the STI is still not undervalued.

For example, China Aviation still remains sky high, after having taken profit on a 5.83 R/R trade (meaning I made 5.8 times of what I risked for the trade):

Here’s the screengrab of when I took the trade,

chinaaa

 

And where it ended up last Friday. Looks like a really nice bounce setup but that’s for another time.

china

 

For now, since most charts are kind of messy and prices and in the middle of the spike range, I will be focusing more in intraday scalping trades to have consistent income even during such volatile times.

This is a defensive play, so instead of going for big wins, I am going for many small wins instead. Good luck!

 

Sources:
http://www.telesurtv.net/english/analysis/Trump-and-4-Other-Crazy-Things-That-Happened-over-Brexit-20160624-0026.html
http://sbr.com.sg/residential-property/in-focus/here%E2%80%99s-why-brexit-bad-news-singapore-property

The Brexit Debate – What are the Possible Outcomes?

The ongoing Brexit Debate has been keeping markets around the world jittery for the past few days, especially the Pound (GBP), which has been declining sharply for the past 2 weeks.

The date that everyone is looking out for is 23 June, where the referendum will take place, with the big question, “Should the United Kingdom remain a member of the European Union or leave the European Union?”

Prime Minister David Cameron wants Britain to stay in the EU. US president Barack Obama also wants Britain to remain in the EU, as do other EU nations such as France and Germany. But according to polls, the British public seems pretty evenly split on the issue.

brexit

From what I see, the Brexit (Britain + Exit) is a unique situation that could develop into one of three paths.

PATH 1: TOTAL INDEPENDENCE (UNITED STATES MODEL)

One possible arrangement is for Britain to be completely independent of the EU. This would make Britain as “separate” as the United States. Among the chief concerns would be the hefty protectionist taxes levied on U.S exports. It is widely-known that American cars are more expensive in Europe than those sold in America. Some dooms-day economists claim that this could lead to disaster for Britain’s already negative trade balance.

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Source: tradingeconomics.com

If you follow this line of reasoning you might expect the pound to become like the current depreciated USD. A country cannot have sustained deficits without experiencing a sharp fall in its currency value in the long run.

PATH 2: PARTIAL INDEPENDENCE (NORWEGIAN MODEL)

Another possibility is for Britain to leave the EU but remain in the EEA (European Economic Area). David Cameron seems to be very pessimistic about the Brexit, citing concerns of pensions, the healthcare budget, and the defense budget; which he feels would all be adversely affected. This option is a compromise between the two extremes, and it is called the Norwegian model.

In return for access to the EEA, Britain will then have to comply with the EU’s law relating to the internal market. However, Britain will not have a say on the rules that are made in the EU.

PATH 3: NEGOTIATE A TRADE DEAL (HIGHLY UNLIKELY)

Britain can negotiate for a trade deal that would allow certain goods to be exported freely to the EU. However, this is highly unlikely to happen as the EU would also demand for the labor market to be opened up (to immigrants and asylum seekers), which is clearly something the Brit voters do not want.

 

gbpusdDaily Chart of GBP/USD

HOW TO TACKLE THE MARKET?

As with most unique news events, the markets will start trending based on anticipated outcomes, and remain inactive as traders start to close out their positions to stay on the sidelines. Many brokers have increased the margin requirements in anticipation of a huge move.

For me, I personally do not like to trade on such news, as there will be huge spreads and slippage when the market is moving too fast. Hence, I will likely scale out of my existing positions and take profits off the table as we get nearer to 23 June.

If I were to take a gamble, I would go long on the Pound (GBP), firstly because it has already dropped quite a lot to “discount” the possibility of a Brexit, and secondly because I think that Britain is more likely to stay in the EU. These are just my random musings. 😀

Good luck!

 

Sources:
http://www.bbc.com/news/uk-politics-32810887
http://www.bbc.com/news/uk-politics-eu-referendum-36511598

Christmas Season – Shopping my Pips Away :D

Today, after my weekly massage session, I decided to spend the day shopping for my Christmas party supplies and gifts.

I also chanced upon the filming of a commercial/show by a local celebrity, and noticed that there were many street buskers plying their trade along the busy street.

When I reached home, I realised that my orders for EUR/USD and GBP/USD had been triggered, with profits of 102 and 84 pips respectively.

A big thanks to these 2 trades, for sponsoring my festive splurging. 😀

Good luck for the remaining few trading days, and don’t forget to splurge a little!

Here's the damage for today :D

Here’s the damage for today 😀

Guess who I saw literally picking up girls at Orchard :P

Guess who I saw literally picking up girls at Orchard 😛

Acrobatic kids from China busking

Acrobatic kids from China busking

HFT Forex Trading | EUR/USD - 102 pips profit!

HFT Forex Trading | EUR/USD – 102 pips profit!

HFT Forex Trading | GBP/USD - 84 pips profit!

HFT Forex Trading | GBP/USD – 84 pips profit!

 

HFT Forex Trading | GBP/USD – A Simple US$1851 Trade

Last week, I took a simple short trade on the GBP/USD and made a quick US$1851 using the HFT (Hands-Free Trading) strategy.

I’ll be looking at NZD/USD and XAU/USD for my next trade this month, and I will post the results when it is time.

Stay tuned! 😀

gbpusd 300914

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