thread: USD/TRY

This is a calendar of Turkey's monetary policy meetings. They have a meeting scheduled for tomorrow 042414 and will launch a summary of that meeting on 043014. We can largely expect the markets to keep on dring in range until the results of tomorrow's meeting are released on the 30th. As I've said, 2.15 is a number that should contain any upward movement.

Analysts are on both sides of the fence in relation to what will happen with rates. I'm with those who expect them to stay unchanged or altered very insignificantly. If they were to sharply lower rates or when investors get the sense that Basci is contemplating doing this shortly then the trade will probably be all but dead. The Lira will be completely pummeled on the market and will keep its pre January 27th slide into the abyss--historic lows during that. Not a bad trade going another way if thats the way this plays out.

Moving from analysts into the market itself I think we are looking at a scenario where investors expect an unchanged rate and further Strength in the Lira. If this weren't true I believe we would see a lot more position covering (more powerful retracement off recent lows). Instead we see a large bear flag on the daily span and tight wedge patterns that are indiive of a construction trend.

Okay, slowly building a short USDTRY position. This will be a carry for me if all works out. I am putting a position collectively that will give the market a lot of room to do its it's thing. If the market reacts as I am expecting it will, I will add more to my place as the Lira reinforces. Right now we're at a vital point. For many of you fellow orderflow enthusiasts, there are probably giant stops above the 2.15 level. If price reaches up above that level we could observe a volatile spike which in my opinion will be absorbed by worth trader's large limit orders up around 2.150-2.16.

As I mentioned in my very first post, there's political risk to some short trade here. Either way there's a trade however. The Turkish PM, '' Erdogan, likes to flap his teeth, he is the source of the political risk. He's been calling for a rate cut which could happen, though I don't see the rate being cut by much if that were to happen.

Apart from the rate differential (which softens exchange rate risk), you will find other reasons to buy in to Turkey. Over the past year a lot of money flowed from Turkish difficult assets--pardon the expression. This has pushed stock prices down and depreciated the Lira. But is this great for us? Together with the Lira being so feeble, the USD has more purchasing power in Turkey. Combine this with cheap assets in Turkey and you're taking a look at a double excellent thing. Turkey is far from a dying country, they are just getting started. They're the Jewell of the Middle East, the average age of citizens there's less than 30. They've a lot of growing to do. Considering that the tumultuous atmosphere of the Arab world as we know it today, Turkey is a safe haven. There's a lot of value there. These factors combined with the rate differential is why I see money flowing into Turkey. This would be macro orderflow, BTW, using all the stop possibility I said being a micro example.

One thing you'll notice about the Dollar/Lira is that the spreads. They can range from 200 to under 10. As I construct my rankings I wait patiently for the rate and spreads to be ideal. When we are trading it's always comparative, but don't take yourself in the foot and enter this pair when the spread is high.

To complete up here I will say that my positions are those that I am prepared for the possibility of a spike at the rates if things don't go as planned. I feel that we have turned a corner in Turkish monetary policy and this will ultimately bring rates down.

Great trading all,

I am not too concerned with anything technical outside the round number I said in my first post. Investors have been ready to go long the Lira on account of the rate differential. That is a risky trade as a result of political strain in Turkey, however if the rates stay unchanged I see this getting a carry trade. Often times its not only single events in a market that determine value daily, but investor sentiment. If one has an adequate idea on sentiment and what investors need and these conditions are being met then orderfow could be called in general. If traders aren't getting what they need then they will leave a market independently or subject it.

The Lira was punished by the market due to the artificially low rates and unorthodox monetary policies. If Turkey reverts to this behaviour again I'll change the indiion of my trade and we'll watch the Lira trend the other way. However, for now I am thinking we'll see the Lira strengthen up until late July where the market will rebound before elections in August. Anything could happen between now and then, this is just my take on the situation right now.

technicals don't work on an irrational EM currency. Don't even bother.

And also need to thank you about the heads up that they do not function as well as they do to additional pairs...
cause I don't trade this pair ....

I'll check that out, thanks again

4x

quote Ok...I know what you are saying....that on these pairs they do not work as good.... But again it depends how you use them... that your pic shows consequences of indiors utilised in a really traditional way as an input method....yes like I concur....they are not too valuable, but they can be used in a million different other ways....exits only while you MM the transaction in a different way....in divergence with other info....in exits....the combinations are infinite....you just have to have the right methodology....and...

yeah definitely true

but you can adjust the egies as one pleases, only go on a currency pair and lt;BTSTgt; GO to look at basic tech egies click EDIT and you can create your own, and optimize with lt;BTgt; GO

or to get FX only, proceed lt;FXSWgt; GO to check all of the egies.

quote true, it comes from my expertise. However, EM isn't G10. My moment in an EM trading desk for high 5 EM bank leads to be fully believe what I say. Yes, technicals can operate, and work reasonably well on EURUSD, or AUDUSD or anything. But USDTRY/ZAR/THB/MYR or anything it does not work... All these are evaluations of fundamental egies... median unsuccessful, but if you increase the timeframe, they all become unsuccesful. Btw, this is with skewed risk reward ratios also. . Where I would target 5 pips risking 25 pips for instance, yet it fails on a backtest. picture...

Ok...I understand what you are saying....that on these pairs that they do not do the job as good....could be....
But then again it depends upon how you use them...
that your pic shows results of indiors utilised in a very traditional way as an input method....yes like that I concur....they aren't too valuable, but they might be used
in a thousand different other ways....exits only while you MM the trade in a different way....in divergence along with other information....in exits....the mixes are infinite....you just have to have the right methodology....and I will concur the more of this indis you use that you are showing the worst it's....
The magic is in the method of course(MM) not in the indi....but they certainly help....

4x

and applied to a medium term time frame for USDTRY

not excellent.

quote For you perhaps not but based on the results they do.... When you state technical s you will find a million ways which a tool can be analyzed on numerous time frames so just how can you say that? 25 years in ace trading first time that I hear this.... Even fundamental traders, even Soros worked in some manner with technicals...

authentic, it comes from my experience.

But EM is not G10. My moment on an EM trading desk for top 5 EM bank leads to be completely believe what I say.

Yes, technicals can work, and work pretty well on EURUSD, or AUDUSD or whatever.

But USDTRY/ZAR/THB/MYR or whatever it doesn't work...

All these are tests of basic egies... median ineffective, but if you raise the timeframe, they all become unsuccesful.

Btw, this can be with skewed risk reward ratios also. .

Where I'd target 5 pips risking 25 pips for instance, yet it fails on a backtest.

technicals do not work on an irrational EM currency. Don't even bother.

For you maybe not but based on my results they do....
And if you say technical s you will find a million ways that a tool can be examined on a lot of time frames
so how do you say that? 25 years in pro trading first time I hear this....
Even fundamental traders, even Soros functioned in some manner with technicals. . .and 99 percent of the traders I've worked with in banks utilize them....fundamentals. . .not too many....
I want to see a fundamental trader select a direction and see just how he besides to jump ship when things do not go in his favor. . .without that the technicals...
Technicals work on everthing and whatever....you just need to find out exactly how and when to apply them...

Technicals do not work on an EM currency. Don't even bother.