The below publication by the Bank for International Settlements is an interesting read. Enjoy!
First Bank (FBNH Plc) is looking like a good buy to me right now.
From the above chart we see clear divergence. Price is making lower lows, but our oscillators are finding support which may mean that selling pressure is waning and buyers may soon take over, this week, probably.
Buy now with a view to exiting in at least 3 months time. Unlike my day trading in the global markets, I see the Nigeria stock market as a value investment vehicle where you buy and hold stocks for a very long time.
Another stock that is looking cheap and good to buy and hold, IMO, is FCMB, see chart below:
Other stocks that I am watching patiently to buy later this month or next are Transcorp, Presco, NB, GTB and IntBrew.
I want to own these stocks long term, because they are fundamentally viable, IMHO, but I feel that right now they are expensive and should still slide further, so I will wait awhile for them to sell off some more before recommending them as a good buy at much cheaper levels.
As always, this trade outlook is purely for educational purposes.
Please seek the professional advice of your financial advisor before taking any investment decision.
I am looking to buy EURAUD at 1.5200 levels or better if AUDUSD and AUDJPY find weekly resistance without breaking higher, stalls and heads lower or if EURJPY and EURUSD continue their bull run of last week.
Alternatively, I will sell EURAUD at 1.5350 or better if the short term Euro bull run seen in EURUSD and EURJPY stalls and heads lower, and then AUDUSD and AUDJPY break their weekly resistance to climb higher.
I will be extra confident of my trade if GBPAUD follows suit. This is because GBPAUD and EURAUD are strongly positively correlated.
This is a snapshot of a strategy I am currently forward testing for the EURO, Pound and Aussie.
I was talking with a friend of mine yesterday. He trades futures for a hedge fund in the UK. As we talked he kept asking me what my trading edge is. This led me to realise that as a trader, if you cannot define your trade edge, then you wont last long in the trading business. By an edge, I mean, what market phenomenon do you wish to exploit whenever you trade? Why are you buying now? And why are you selling now? There are many types of trading edges. I will define a few as I have come to identify them.
1. Market Structure: This has to do basically with mechanics of the market you trade. How are transactions done? Who are the major players? When does the market open? When does the market close? Who are the major players in the market? Whenever they are selling, what are they buying with proceeds? When do you have the major volumes? How do the trades settle? Is there a pattern of price associated with the above? You will need to stare at the charts for a long long time and see if you can observe repeatable patterns around these factors. If you can then you may be able to build an edge around it.
Here are a few random examples.
In the paper Gold/USD markets, does price consolidate close to the time of the morning fixing and afternoon fixing? Can an edge be built around it?
Or, does the Dax consolidate just before the US equity markets open? And can it be used to hint to traders what the S&P500 or the Dow Jones Index will do, since it is also an equity index and opens a few hours before the US markets? Can an edge be built around it?
For me, one of the ways I am trying to apply Market Structure in my trading is in the area of Correlation. INTRAmarket correlations between various currencies in the forex markets as well as INTERmarket correlations between the Bonds markets, global equity markets, commodity markets and currencies markets. The above trade is a snapshot of how I use INTRAmarket correlation in my trading from time to time.
Trading for me is still quite challenging, as the dynamic nature of the markets can affect one’s psychology. So the more edges I can identify and exploit, the more confident and disciplined I will be in my execution.
Remember, your wealth is directly proportional to your wisdom. In all your getting, get wisdom!
Olufukeji Adegbeye CWM