Looking Ahead: Week of July 30 through August 3

First Friday is back and that means a highlight is the employment situation. But there will be earlier news on the wavering consumer sector, including personal income, consumer confidence, the ADP private employment report, and motor vehicle sales. Manufacturing also has been wavering and key updates will come from Markit PMI and ISM manufacturing. But at mid-week, competing for the week’s highlight will be the Fed’s FOMC statement and whether there is any new policy initiative.

How many currency pairs to trade or monitor per day/week?

Is it better to focus just on one currency pair? Or is it better to focus on as many instruments as possible? I don’t think there is a simple answer to these questions, it all depends on each trader, but there are certain guidelines that you can take in consideration to help you feel more comfortable with your system, which will help you trade with more discipline and at the very end, get consistent results. Monitoring only one or two currency pairs/instruments For newbie traders, this is definitely the way to go. As you start looking at charts, you could feel overwhelmed by the amount of information you could get by monitoring many currency pairs, sometimes it is even difficult for veteran traders (go figure), so you need to be careful if you are a beginner trader. So as you start getting acquainted with charts, the Forex market, etc. Probably the best thing to do is to focus only on one, two or three currency pairs. This way you will get to know each currency pair better (each one has its own personality), trading ranges, spread, etc. There is just one slight problem that I think could make a big difference on your results as a trader. What happens if the chosen currency pairs aren’t in a clear market condition? What if you don’t know what the market is likely to do on the following hours/days? You are right, you will force yourself to take trades on those currency pairs, and that, and it’s not good for your trading results. For instance, many (many many) traders only monitor the EURUSD, and you know something, it’s been months and months since I haven’t placed a trade on the EURUSD!!!, why? Because I see no clear condition, I had no idea of what the market could do on the following hours/days (although the market conditions on the EURUSD might change in the following days/week, it’s about to break a clear support level). Anyway, why would I trade a currency pair that I have no idea of its future movements? When there are other currency pairs that are trading in a clear condition… Which one would you choose? I go for the one that has clear market condition. Monitoring many currency pairs/instruments I’m not talking about trading many currency pairs at the same time, I’m talking about monitoring many currency pairs or instruments so that you can determine which ones have the clearest market conditions, which ones are more likely to move up or down, so that you can focus on those currency pairs, and get rid from the ones that have an erratic behavior, or have no clear market conditions. That’s exactly what I do, at the beginning of every trading day, I do analyze the long term charts (daily and 4H charts), and with this analysis I trade to conclude the following: Which currency pairs I’ll trade any particular day On which currency pairs I’ll look for long opportunities and on which ones short opportunities Possible entry levels for each currency pair So, its not like I’m trading all currency pairs at once, instead, I decide which currency pairs I’m trading each day. Some days I end up looking for trade opportunities on 5 currency pairs, sometimes 8, some others 2 or 3, etc. At the end of this analysis, I end up with a trading plan, which helps me trade with more discipline. So the idea is to trade the currency pairs that have a clear market conditions, not just trade a currency pair because you decided to trade it regardless of its market condition. What am I suggesting here? As a beginner trader, it would be best to focus on just a few currency pairs, get to know them: average trading range, volatility, personality, etc. But as you get more experienced, you need to add more possibilities to your arsenal, and of course, only trade the ones that have clear market conditions. What do you think?

Looking Ahead: Week of July 23 through 27

For the big event on Friday, investors nerves will be tested as they await to see if Q2 GDP tops or falls short of the Q1 sluggish pace. But earlier there will be updates on manufacturing and housing. Whether manufacturing has softened will be updated with the Markit flash PMI, Richmond Fed, durables orders, and Kansas City reports. Housing news includes FHFA house price index, new home sales, and pending existing home sales.

Looking Ahead: Week of July 16 through 20

The bottom line
The recovery continues with modest forward momentum. International trade is expanding but at a slower pace than some months ago. The consumer sector is still positive but also less robust than earlier in the recovery. Inflation is not a threat except at the dinner table. The Fed still has plenty of room to maneuver but many on the FOMC are skeptical, doubting that additional policy moves would do much good and, in the worst case, would create inflation risks down the road.
Looking Ahead
Week of July 16 through 20 Investors will be on heightened alert given the many market movers slated to hit the wires. The updates include consumer, housing and production data including retail sales, housing starts and existing home sales. Regional manufacturing data from the Empire State and Philadelphia Fed plus national industrial output data will update the manufacturing outlook. Additional hints—or not—on QE3 could come via the Fed’s Beige Book on Wednesday.

Looking Ahead: Week of July 9 through 13

The bottom line Clearly, stronger jobs growth is needed to bolster to the recovery and the economy’s rate of growth. Nonetheless, there has been some improvement recently in housing and manufacturing may not be as sluggish as feared. Consumers are still spending (at least those with jobs). So, the economy is muddling along at a modest growth rate and could pick up strength—especially if the fiscal cliff issue is addressed. However, that issue likely will not be resolved until the last minute. Looking Ahead: Week of July 9 through 13 After Friday’s soft employment report, this week’s highlight may be the Fed’s FOMC minutes (Wednesday) as traders look for any inclination of QE3. Earlier that morning, the trade deficit will add detail to foreign and domestic demand. Lower oil prices may show up in import prices (Thursday) and in the PPI (Friday). Friday’s consumer sentiment reading will indicate whether lower gasoline prices are offsetting weak job growth.

Looking Ahead: Week of July 2 through 6

The bottom line The latest indicators were mixed with the biggest positives coming from housing. The consumer sector was very sluggish—mostly tied to modest employment growth and special factors on spending. And consumer sentiment slipped. Manufacturing is mixed to net positive but is not seeing the strength it did many months ago. Overall, the recovery is improving but at a low trajectory and slower than hoped. Should this past week’s progress in Europe turn out to be real, that likely will boost global confidence and growth. But as a caveat, we’ve been there before. Looking Ahead: Week of July 2 through 6 Other than Independence Day at mid-week, the highlight is Friday’s employment report which needs to show improvement after the near flat increase in payrolls last month. Consumer spending slowed in May, giving motor vehicle sales (Tuesday) increased importance. After recently mixed regional Fed surveys, traders will look for a stronger ISM manufacturing number (Monday).

Trading Psychology and Discipline

Here is a great video on Psychology and Discipline.