Yearly Review

I think it's fair to say, from a fundamental perspective, 2025 was a very difficult year to be a trader. In 10 years of trading forex it was probably the hardest year I've known.

It didn't start out like that, the market initially cheered the appointment of president Trump. Rate cuts were coming and the 'soft landing' was very much in play.

But by inauguration day, the tide was turing as the President set out his stall, social media 'tweets' moved the market and in April we were treated to perhaps the Presidents biggest Bazooka, TARIFFS. The initial announcement caused a wave of 'risk off' and confusion followed as everyone tried to understand the implications tariffs would have on economies and inflation.

But it's unfair to solely place the uncertain environment on the president's shoulders. The BOJ played it's part, being very vague as to rate hike timings and abandoning bond yield ceilings. Causing institutions to pull back from the carry trade. Trading is an awful lot more straightforward, dare I say easier, when we can place short JPY trades in a 'risk on' environment. But the uncertainty surrounding the BOJ has caused sporadic breakdowns in the JPY / S&P correlation. And although I envision the JPY will consistently remain on the 'to short list', I expect the 'choppiness' to continue until the BOJ announce peak interest rate has been reached.

Alongside the JPY uncertainty, we've had times when 'catalysts' have been few and far between, particularly during the US government shutdown. We've had times when 'standard trades' have been few and far between, causing me to drop down to (oftentimes) 15min swings to look for my favoured 'cluster of swings' to place a stop loss behind. We've had plenty of geopolitical uncertainty, AI bubble concerns, the AUD didn't quite take advantage of the hawkish RBA and money flowed into Europe even as the ECB were cutting rates. Even the CHF shone amongst a backdrop of low inflation and low interest rates. And for the first time ever, I've considered closing trades early to avoid end of day choppiness.

Really, the uncertainty shouldn't be too much of a surprise as ultimately, the world is still grappling with the pandemic led repercussions of the rapid inflation rise and when, or if, inflation will ever get back to the 2% benchmark central banks aim for.

All in all, if 2025's word was 'uncertainty', I do think that throughout 2026, the narrative will 'slowly' revert back to the 'risk on soft landing' but it could be a very choppy journey.

Now that the shutdown is a distant memory and we are getting US data in real time again, I am hopeful we will get consistent and sustainable catalysts following US red flag data. Whereby a currency could be tradable on a short term basis following data, in either direction, even if it's against your underlying bias for that currency.

On a personal note, my bottom line was a 15% gain (risking 1% per trade). Which is a little disappointing but not too bad considering I do risk a little more than 2% each trade. But I do accept that I've placed a few trades I shouldn't have done, chasing moves that didn't have substance or trading pullbacks that weren't quite ready to reverse. And I resolve to be a little stricter with myself.

Feeling refreshed from an extended break, I'm looking forward to getting my teeth into the new year. I approach the new month content with two trades per week (for now).

I hope you've had a lovely Christmas and New year, let's make it a prosperous 2026.

Please feel free to email any thoughts or questions: johnelfedforexblog@gmail.com