How to tune back into the markets after a holiday

First of all I would like to wish you a happy new year for 2015 and update you on my routine over the holiday period.

My plans are similar each year and I make a very conscious effort to completely switch off from everything work related for the period leading up to Christmas and just after New Year.

This year my last trading day was on December 19 and I return on January 5. I also take a similar break during the traditional summer holidays in August, for the same reason.

As a trader my job is to constantly be tuned into the markets and understand what is going on and how to make a profit from it every single day. This is a simple case of remaining within the flow of information, but this process also becomes very tiring and mentally exhausting over time.

Taking this time to remove my mind from this flow allows relaxation and recovery for my mind, which re-energises me for the months ahead. For me sleeping and exercise are the main priorities during this time, and this year has been no exception.

With the break now over I am eager to return to my desk and start making pips again, and ofcourse get back into that flow of information which allows me to do this effectively.

This post is designed to explain exactly how I tune back into the market so that I am fully prepared for trading, and to ensure that I am not missing anything that may have changed during my time off.

I thought it would be a very good time to write such an article as I have literally done that re-tuning recently and will also share my own personal research articles for you to follow along with me, and be fully prepared for the trading weeks ahead!

So how do I tune back into the markets after a holiday and how can you follow in my footsteps and do the same?

Research

The key is ofcourse research and reading all of the news sources with the goal of making sure you understand fully what has been going on and what the current tone of the market is.

To do this I follow a very simple plan, which I have laid out below:

When returning to my desk I load up my saved book marks of financial news sites and spend time reading through all of the material uploaded.

So the first step is to open up your news sources and start reading.

My favourite sites are below for your reference, and I strongly recommend that you book mark each one for future reference. (I have only listed the free sites that I use. The premium sites that I also use include Ransquawk, MNI, and Reuters Eikon)

These are the sites that I read every day, as part of my normal trading routine.

http://www.forexlive.com/

http://www.centralbanknews.info/

http://www.bloomberg.com/news/currencies/

http://www.efxnews.com/series/central_banks_insider

http://www.forexfactory.com/calendar.php

So what are the steps I take when trying to catch up with what has been going on?

Step one

The first step is to read the main feeds of each site for all of the highlights that stand out.

For example, all of these sites offer a fantastic ‘front page’ where you can check out all of the recent activity and news.

The best part is that that they also offer analysis and opinions about each event so you can start to build a picture in your mind of what seems to be going on across the market, rather than trying to figure out if one article is more important than another.

We are looking for a general theme that ‘everyone’ seems to be talking about.

Step two

Once you have read through the headlines you will then click and read each article in full so that you can get a real flavour of what is being said and how it has been moving the markets.

This allows you to determine what is important and what is to be ignored.

Step three

You will now have several currencies that stand out to you and that you can focus on heading into the first trading day back.

The final step is to make sure that you read any new articles or news points that are released in between now and your first trade to make sure that the themes are intact and that you tuned in correctly.

My Articles

Here is a list of articles that I myself have been reading over the past day or two to re-tune my brain and prepare for Monday’s trading.

Please feel free to read through these and then at the end of this post I have also shared my personal views and what themes have stood out to me.

These are the themes that I will be using to trade into the coming week, and hopefully you can make some pips from them too:

Fantastic round up of events after 2015′s first day of trading

Complete round up of all central bank activity after 2015′s first day of trading

Draghi edging closer to QE

Interesting look at the weeks upcoming highlights

Data that gives concern on the GBP

Could Greece be exiting the Euro?

Germans seem to be accepting Greek exit

Greece leaving the EU is safer because other nations have recovered

Elections on Jan 25 will decide Greek fate

Central Banks dumping Euros into the new year

One good reason to use Euros!

‘Safe Assets’ at zero yield, indicating severe risks

Why deflation is so bad

Slightly weaker data gives market excuse to sell GBP

Keep an eye on BoJ who could add more stimulus in 2015

Market sees a fed hike in June 2015

Could the BoJ give cash directly to ordinary citizens?

More negative talk from the ECB, leading to QE

After reading through all of the articles in the news, it stands out to me that we are looking at a very bearish few weeks ahead for the Euro currency. Things are deteriorating in the Euro zone, with deflation getting closer and Greece possibly exiting. The ECB also seem much more willing to implement QE which will include Sovereign bonds.

One of my main trades will be to look for selling opportunities on the Euro across the board but especially against the stronger currencies. When QE comes we could see parity for EUR/USD over the next 12 months.

We have the key meeting of the ECB on the 22 January which could be a platform from which the bank launch its QE programme. The market certainly thinks that this is a possibility and we expect the Euro to keep selling as that event gets closer.

Another theme seems to be the strength in USD and the Feds view that low inflation is of no concern. My personal view is that they will raise rates at some point in April – June 2015, with the risk being that it will come a little later in September.

This is very positive for the USD and I will be looking to buy the currency against most others in the first few weeks of the New Year, unless something changes.

The Japanese Yen seems under threat as the BoJ is far away from its inflation target and the economy is still deteriorating further. This can only mean one thing after Kuroda stated that the bank is still fully committed …. More QE.

Although this will weaken JPY further, be mindful of the fact that 2015 could be influenced heavily by uncertainty in the markets. (German bonds hit 0% for the first time ever, which indicates that safety is in such demand that investors will actually sacrifice yield just to hold) Uncertainty causes safe haven flows and the JPY is the biggest safe haven currency of them all, so while buying the JPY based pairs is a safe bet in the long run, short term flows can make it a wild ride if you are not fully prepared or understanding what is going on.

Finally, we have the GBP. This is the second strongest currency, simply because it should be the next bank to hike after the Fed. We have a major election in May which will likely cause the GBP to sell off, and also concerns that the recovery is not as robust as the BoE hope. These are risks that could see the first half of the year bearish for the GBP (mostly against the USD) but as long as the data remains on track the bank will still likely hike at some point near the end of the year, providing support as this talk starts to come back onto the scene.

These are my highlights of 2015 as we stand, but remember that news changes constantly so if you wish to stay tuned in simply watch my free weekly ‘risk events video’ where I update and share my views on the best currencies to be trading and the reasons why.

Conclusion

As you can see the process of tuning back in is relatively simple, and although I do spend significant money on premium feeds there is a lot of information out there for free.

I simply pay for the speed of delivery rather than the content itself.

By replicating this process you will be fully prepared and ready to make many more pips than relying on technical alone!

The post How to tune back into the markets after a holiday appeared first on Jarratt Davis.

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