Besides providing and consolidating robust fundamental analysis for retail traders to have on-hand, the A1 EdgeFinder can be especially helpful in the realm of sentiment analysis. By utilizing the software’s sentiment analysis features, traders can routinely keep up with how other traders, both institutional and retail, are allocating their capital. This matters a great deal because price action within financial markets is generated by supply and demand, which means that monitoring the aggregated demand of institutional or ‘smart money’ traders (who often have the most capital to work with) offers valuable insight into price action within these markets. With this context in mind, let's explore 3 top smart money securities as presented to us by the EdgeFinder’s Smart Money Tracker, which gathers and parses the latest Commitments of Traders (COT) data.
1) USOil – 82.47% Long, 17.53% Short
2) USD – 72.9% Long, 27.1% Short
3) Gold – 68.58% Long, 31.42% Short
One of the main reasons why the EdgeFinder, A1 Trading’s market scanner, is so helpful is because of its ability to convey nuance when presenting analysis. For example, one currency pair may have strong bullish fundamentals while institutional sentiment somehow remains quite bearish, and the EdgeFinder is able to present this data concomitantly. This makes it even more compelling when the market scanner issues ‘strong’ buy or sell signals, indicating that a significant combination of fundamental, sentiment, and technical analysis have aligned for a pair. As of today, two new minor pairs have earned ‘strong sell’ signals; they share the same quote currency, and this strong currency may surprise you. It is the Kiwi Dollar, which has only recently been gaining bullish steam in the forex market. Boasting hot labor markets, strong GDP growth, high inflation, and a relatively hawkish central bank to match, New Zealand’s economy makes NZD seem quite promising. Institutional traders are only just now beginning to affirm this, with over 10% more of them going long on NZD than in the previous week.
Two Potential Pairs to Sell
The following two pairs are rated extremely favorably for bears, and for those planning to go long on NZD. They are listed below with their respective EdgeFinder ratings, signals/biases, and corresponding charts.
1) AUD/NZD (Earns a -9, or ‘Strong Sell’ Signal)
2) GBP/NZD (Earns a -9, or ‘Strong Sell’ Signal)
On September 2nd, tomorrow morning, at 8:30 am Eastern Time, the Bureau of Labor Statistics is scheduled to release another crucial round of US labor market data for last month. The public will learn 1) how average hourly earnings, i.e., labor prices, have changed month-over-month, 2) how many non-farm payrolls (NFP) were added, and 3) what the new national unemployment rate is. These three bits of information will likely cause a great deal of volatility among major pairs.
How Is This Significant?
These metrics offer traders key insight into how hot the US labor market still is, which plays into overall inflation because of its reciprocal relationship with consumer demand. If these numbers beat market forecasts, then the Federal Reserve will be even more incentivized to hike the federal funds rate to slow the economy, which is bullish for USD. However, if the data fail to meet forecasts, this would be bearish for USD accordingly. Current expectations are: 1) average hourly earnings to increase by 0.4%, 2) 295,000 net new hires across non-farm industries, and 3) a static unemployment rate, remaining at 3.5%.
Possible Pairs to Trade
According to the EdgeFinder, A1 Trading’s market scanner that offers supplemental analysis for traders, the following are currently three of the most promising major pairs to trade for USD bulls. Whether you plan on entering a position before tomorrow’s big news, or wait until the data is revealed, these three pairs are worth watching.
1) EUR/USD (Earns a -7, or ‘Strong Sell’ Rating)
2) GBP/USD (Earns a -7, or ‘Strong Sell’ Rating)
3) USD/JPY (Earns a 4, or ‘Buy’ Rating)
News for USD/TRY
Today, Turkey’s citizens and the financial world received astonishing news: Turkey’s central bank, the Central Bank of the Republic of Turkey (CBRT), decided to lower interest rates amid an inflation rate just shy of 80% year-over-year. The CBRT cut rates by a full percentage point, down to 13% from the previous 14%. Most orthodox economists appear to be baffled by this act of stimulus as Turkey grapples with a years-long economic crisis that has burdened the country with stagflation and a rapidly depreciating lira. Thus, it is almost universally regarded as a complete monetary misstep, as reflected in USD/TRY currently soaring 0.62% intraday.
Erdoğan’s Economics
This dovish decision appears to be due to a concerted effort by Turkish President Recep Tayyip Erdoğan to influence the CBRT and deter them from their policymaking responsibilities. He has frequently tried to force their hand into preventing hawkishness, referring to interest rates as “the mother of all evil.” There are multiple factors contributing to this unique position of his, including esoteric views on the effects of interest rates (it is well documented that he believes interest rate hikes somehow cause inflation) and religious convictions. Given the ideological rationale behind these stances, as well as his increasingly authoritarian leadership, it is unlikely the CBRT will be able to pivot towards practical hawkishness anytime soon.
EdgeFinder Analysis
According to the EdgeFinder, A1 Trading’s helpful market scanner for those desiring supplemental analysis, USD/TRY remains the top-rated pair for bulls. Earning a score of 5, or a ‘buy’ signal, USD beats TRY in every listed category besides GDP growth and interest rate divergence. However, given Turkey’s rampant stagflation issues that have only been exacerbated by recent high energy costs, as well as ‘real’ interest rates in Turkey being estimated at -16%, USD/TRY appears to have buying potential for the foreseeable future.
While there are many currency pairs worth buying and selling in the foreign exchange markets, often pairs worth watching fly under the radar of retail traders. The EdgeFinder, an A1 Trading tool for traders aiming to holistically bolster their analysis skills, is helpful for identifying such opportunities for trade setups. As we wait for tomorrow afternoon’s big FOMC news, today we will look at a unique pair: USD/TRY, the US Dollar Turkish Lira pair. It is the only one that the EdgeFinder currently evaluates as being strongly worth buying, and we will discuss why. We will employ fundamental, technical, and sentiment analysis as we assess this 1 pair worth buying.
Fundamental Analysis
In terms of fundamental analysis, data is disproportionately bullish. Although Turkey has experienced recent GDP growth while US GDP has contracted, the Turkish lira has suffered a near-collapse in value, with year-over-year inflation currently at an unbearable 73.5%. Although the Central Bank of the Republic of Turkey (CBRT) currently has interest rates around 14%, this has not been enough to successfully mitigate economic suffering, as stagflation persists and unemployment hovers in the double digits. Tensions between Turkish President Recep Tayyip Erdoğan and the CBRT regarding monetary policy have not helped. Thus, in this unusual and tragic case, substantially higher interest rates than the US is not a bearish signal for this pair.
Technical & Sentiment Analysis
In terms of technical analysis, the pair has been trending upwards for years. 2021 saw a staggering breakout to the upside, reaching a high over 18, then selling off to below 11 before price action found support and resumed trending upwards. Price action is currently testing these previous resistance zones again, with weighted moving averages functioning as support while a breakout to the upside seems likely. In terms of sentiment analysis, according to the latest COT data, over 75% of institutional traders are long on USD, while such information is not available for TRY. Meanwhile, only 25% of retail traders are long on this pair, another bullish signal. In light of the economic pessimism in Turkey due to the lira’s instability, sentiment for the pair seems strongly bullish.
Potential Trade Setups
The Edgefinder gives USD/TRY a score of 6, earning it the software’s only ‘strong buy’ signal. However, I hope everyone will nonetheless be careful trading this pair, as it has often been extraordinarily volatile. Using small positions and careful stop losses would be particularly wise here. In terms of possible points of entry, conservative traders could wait for tomorrow’s FOMC news as a potential bullish fundamental catalyst.
Even if the news unexpectedly means a surprisingly bearish turn for USD, you could still potentially use the new selling pressure to wait for a retest of the 16.5 zone as support. Given the unfortunate economic circumstances influencing TRY, even bearish news for USD would likely not have the same long-term implications for this pair as for others.
Key Takeaways
The A1 Edgefinder is a fundamental trader's dream tool. This market scanner tool allows you to see a variety of metrics such as COT data and retail sentiment on 37 different currency pairs. This week, our team released some major updates on the A1 Edgefinder that you won't want to miss out on. Let's take a peak at the new look:
The market scanner now has a meter that measures each pairs strength or weakness, making it extremely easy for users to read. This new feature reads from -7 to +7 suggesting whether a pair is a strong sell or a strong buy according to the technical and fundamental metrics that are updated hourly. Right below the meter is a breakdown of all the scores to show which metric carries the most weight for either directional bias. Those scores are tallied up to reach an overall rating on the pair.
Our latest version of the Edgefinder now does commodities like gold and oil. This will allow traders to see what is happening in the commodities market including its strengths and weaknesses relative to the US dollar. These features use the same metrics that are used for currency pairs, which will cause the scanner to react accordingly.
The information you see on each metric is pulled from pools of data every hour to make sure you don't miss changes going on throughout the day. Some metrics are more prompt than others and require special attention like trend readings, retail sentiment and even economic events. Find out about about an interest rate hike, GDP growth, inflation rates, jobs numbers all within an hour of publication. And of course, you won't be needing to fetch all of these data yourself. The Edgefinder will track it and organize it for you 24 times a day.
The historical score chart is a very important addition to the scanner which allows for the user to see how price performed on any given day and the days after compared to its score.
This new feature is really helpful for tracking price action relative to the overall score of the pair. As you can see, once price moved from a +1 to a +2, the scanner indicated a potential buy here. Then, price shot back up to +3, and price moved up with it.
Now until Sunday, take 40% off the A1 Edgefinder when you use the code "READER" at checkout!
There are many traders out there that believe they have what it takes and the skill to be a successful trader, except for the fact that they do not have enough capital to trade big time. There are companies out there that offer to fund traders and take percentages out of their monthly gains. Today I will discuss the process of trading for a prop firm like FTMO or if you should altogether avoid it.
FTMO, you may have heard of it, you may have not. FTMO is essentially a prop firm that offers funding for traders to trade on the company's behalf and then keep a fair profit split at the end of every month.
So, how does the FTMO challenge work you may ask? It begins by you selecting how much you would like to be funded, all options at a refundable fee (more on that later), and beginning your challenge. Below is a screenshot of the options available directly from the FTMO website.
As you can see, FTMO offers a wide range of different funding for traders; you can get funded up to $100,000 by the company. Yes, you read that correctly, a real live account with 100,000 US Dollars and not one cent of that money is yours, and as you gradually grow that account, you get to keep a share of the profit.
How much may you ask? 70%! That means if you made 12% in one month on a 100K account, which is $12,000, you get to keep $8,400! You can choose to either withdraw it or use it to compound your account, making you more money in the long-run. Sounds great right?
As you see, there is a "challenge" you must complete; it is solely an evaluating process for FTMO to test if you have what it takes to be a successful long-term trader. Let's look at what they evaluate.
The FTMO Challenge begins with aiming for a +10% profit over a period of 30 days with a minimum of at least ten days to achieve this target profit. This is because FTMO knows trading is a long-term game and does not look out for short-term success.
You must also stay below the max -10% loss throughout the whole process with a maximum of -5% in one day. What this means is, if at the end of the challenge you've reached -10% loss, you've failed, or if in one day you lost over 5%, you've also failed.
That's about it, not too complicated, and the best part, if you successfully pass this challenge, you are refunded the amount you've paid to start the challenge, and then you continue to the verification stage.
During the verification stage, it is essentially the same thing except you have double the amount of time to reach your target profit, which is also halved.
To sum up, you have 30 days to achieve +10% during the challenge; once successful; you move on to the verification stage where you have 60 days to achieve +5%.
Whether you're an FTMO trader or not, you are able to contact a representative at FTMO at any time and ask any queries you may have. Alternatively, you can also email them or even phone up their office between the office hours.
If you are based in Prague, there's an office address available which is welcome for traders to set up an appointment and meet a representative in person. What great transparency from a prop firm!
They offer many tools to help you with your trading, they want you to succeed! The full list and explanations of each tool is available here however let's quickly list them all:
In summary, if you know that you have been consistently making a good profit per month, with minimal drawdown, and you're looking for the opportunity to trade for a reputable company to not only fund you and trade for them, FTMO is the company for you.
They have an excellent reputation in the industry, all the way from sticking to their word and paying out their clients, all the way to excellent customer service and functionality.
From my experience, I can easily say this isn't some miracle get rich quick scheme though; the challenge isn't as easy as it initially sounds. We all know trading is hard, and anyone who tells you otherwise is just trying to fool you.
If you are a serious trader, then definitely give it a shot! If not simply sign up and give the free trials a go and start working towards your $100,000 account.
