- Pleased to report that position/risk sizing was spot on, thus enabling me to survive the pre-/post- Brexit huge range [98.90 - 99.27] day on 24Jun16 with long position intact.
- Managed to take profit on half of position at 99.24, and re-established at 99.13. So, still long 100% deep in the money.
- Triangle strategy is going well. Target 99.47, which is below current 3-mth Libor [0.6271 fix yesterday] ie triangle is seeing a Fed rate cut ahead ie much more drastic Brexit fallout to come.
- Closed the week at 98.99. Fresh upside break.
- Breakout point = 98.92.
- Triangle points = 98.61 and 99.16 ie objective 55 tics.
- Upside objective = 99.47. That's massive.
- Daily chart (not shown) at upper end of rectangular consolidation so this may not perform immediately. Unless we get unexpectedly bad news to drive a strong leg up. Must be patient.
- 75% loaded up on long ED risk.
- Been dabbling with this quietly on the side for the past few months.
- Pre-trade : managed to buy 1 risk unit at 98.705 last week, purely bottom picking on flimsy gut feel.
- Missed trade : Thereafter, was paying 98.72 after market had run up for a bit. Emotionally ruing my lack of conviction and aggression in chasing (73 low). Objectively, it was the correct decision (no strong grounds to increase risk).
- Real trade : Triangle continuation pattern apparent on chart now. Upside break point at 98.94. Mentally file aside the pre-trade with deep in the money stop. The real trade begins on break of 98.94 with 2 risk units. Shoot for 99.27 previous high as initial target.
- Catch up post. Trade done while I was away, GTC sell order filled on 12Aug15 in the midst of the China shock devaluation saga. [Actually was not that big a surprise to me given in the last year, EUR/USD has weakened from 1.40 to 1.10, and USD/JPY has gone from 100 to 125. How can China not be affected in the face of such massive strengthening in the RMB].
- Weekly : Waiting for support line around 98.57 to give way. Clear that prices above 98.70-ish unsustainable.
- Daily : Same conclusion as weekly. 98.575 break would be signal for bigger downside.
- Into 2nd round of short EDZ6 trades.
- Daily chart : Minor uptrend line broken. Sold the break of Friday's low of 98.62. Stop on first entry at 98.66 lowered.
- Weekly chart : Should see support in the low 50s. Plan is to exit shorts there and re-assess. Break of the weekly uptrend line would be very significant then.
- My baseline scenario : Sep rate hike. Vigilance and diligence in shorting called for or else too easy to miss big move. Expect that in retrospect, we will look back on China meltdown and Greece as heaven sent shorting opportunities.
- Since 98.715 short initiated, high traded has been 98.79 during the worst (?) of the recent China stock meltdown/ Grexit woes.
- Should see some support at current levels 98.61 (daily chart).
- Will only pyramid sell on the break of 98.50 (weekly support line).
- First trade in ages. Greek 'No" vote caused spike to 98.75 high. GTC sell order filled.
- GTC stop loss in place.
- Note changes in charts. From new SaxoTrader Go. Love it. These guys are constantly upgrading their products. Brilliant. (unlike MF Global system which could not even handle GTC orders. No surprise they are gone).
USD/CAD
GBP/USD
Copper
EDZ6
- Trade put on minutes just pre-NFP (+295k, 5.5%) release looking good, Jun hike back on the cards.
- Not much to support trade from monthly and weekly charts. Range trading.
- Daily has a double top, NL at 98-43.5. Intention here is to get on board the rate hike train early, and build on that because once it gets going it will be difficult to catch on.
- Net result for 2014 - down by pocket change magnitude. Trading was very conservative and sporadic due to various non-trading personal commitment. Operated under very difficult conditions as well in terms of capital (in)adequacy = risk appetite severely curtailed.
- Chart on RHS is perfect summary of my year. My view = rising US rates. Chose to express in ED futures given experience of my previous life. Unable to spread risk (eg diversify some in FX) as per my normal practice due to inadequate capital. Turned out FX trended strongly (no position) whilst I got whipped to death in Rates (foolishly actively involved).
- Performance summary in one word. Abysmal. This really should have been a huge year for me given the trending nature of a few of my key traded markets. Truly disappointed with myself. Lost soul.
- Explosive price action last night. [Op 98-25 Hi 98-67 Lo 98-21.5 Cl 98-43 (reckon at least 5-sigma event)] explained by Ebola fears, low US inflation data + weak economic data.
- Had been trying for past few months to short EDZ6. Latest attempts -98-14 stopped +98-15.5 and -98-22 stopped +98-26. Expected 98-20.5 to be top of trading range but obviously dead wrong. With rates already so low, going long was never in my thoughts. Thus, huge stroke of luck not to have been caught short in last night's crazy price action. [Lesson : Always place stops with the system!].
- No clue what to do now. Perhaps major bear capitulation is done. Going to stay out for a while, maybe till next year.
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| Jun 18 FOMC (1,12,3) |
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| Sep 17 FOMC (1,14,2) |
- Sacrificed much of last night's CL football to listen to Yellen's press conference. Bottom line : Timeline to rate hikes non-mechanical, data dependent. Which begs the question - why bother to leave the "considerable time" in? When markets were fragile, it made sense to provide comfort and reassurance but those days are since long over. After the usual initial knee jerk (eg EDZ6 97-91.5 high, TYZ4 124-20 high on seeing the "considerable time" left in the FOMC statement), rates markets collectively voted "hawkish" as indicated by the weak end of day closes.
- Weekly and daily charts now firmly in bearish mode (barring a strong reversal into the weekend). Might see some support at previous significant low at 97-73, but my expectation is that this will give way and lead to a test of 97-50 on the next NFP release (Exp. reversion to >+200k).
- Mighty glad not to have been shaken out of existing positions (-EDZ6, -TYZ4 and +USD/-CAD) last night. Purely due to strict discipline in NOT increasing positions earlier in the week. Must stick to that.
- Weekly line charts of TYc1 and EDZ6. Clean view of price action stripped of intra-week noise.
- TY (or ZN) : Fresh triangle breakout on downside, should be good for 4.5 big figures (from break point of appx 124-08), therefore targetting 119-24. Early days, plenty to go for. Short trade can be made with relatively tight stop on top given the freshness of the break.
- ED (or GE) : Chart not as negative as TY. EDZ6 still trapped within range but current downleg should take us to 97-70. Probably need a change in current Fed stance (eg removal of "considerable period") to trigger the break, which I do expect.
- Position : 1. Large short EDZ6 at 97-98 average 2. Medium sized short at 124-18 and 124-15. Probably wrong way round in weighting. Any increase in risk should be made in TY, unless 97-70 breaks too.
- Just back in Singapore today, was unable to update blog while away. Much trading done the past 2 weeks.
- 1. Profitable trade shorting Copper (initiated -HGZ4 @ 323.30), square now (so won't bother to make a blog post for this).
- 2. Stopped out tiny TYZ4 position @ 126-18 in the mid-Aug bear squeeze.
- 3. Managed to ride out the storm with the short EDZ6 position though and added to it on the way down. Balance of outstanding short position has average cost of 98-00. Risk level on this is the largest I have had for quite a while soon.
- Expect current down leg to make a test of 97-81 support line, but I am much more bearish than that and think the time is very near for a big bond bear market to begin soon, if not now. [proximity of completion of tapering, +250k NFPs, UR nearing break below 6.0%].
- Dismal P&L performance however. YTD = breakeven after trading costs.
- Price action yesterday (Obama Iraqi air strikes announcement) revealing [Op 97-99, Hi 98-06.5, Lo 97-95, Cl 97-95.5 = strong reversal] the area around 98-06 as strong resistance.
- Trades : Initial short EDZ6 at 97-95, added on at 98-04 and 97-98. Also short TYU4 at 125-22.
- At this stage, having been disappointed again and again on the bond bear trade, am not looking for much on this. A return to the lows of the daily chart trading range around 97-80 would be immensely satisfying already.
- Trade back > 98-06 would be :( Not expecting this though.
- Squeezed to death by previous rally to 98-20.5.
- Try again. Sold at 98-02 on 27Jun (while in Shanghai, much hassle to get round the great firewall to post update, so didn't).
- 50% and 62% Fibonacci levels for [98-20.5, 97-79] range = 97-99.75 and 98-04.65 respectively. High attained 98-04 where I had another sell order but was not filled. A pity. Order still in place.
- As always, fall in love with a trade idea and result = DIE first. Then after you are dead, trade works. And it does not ever work to think that you run just a small position to withstand the pain, because regardless of how small that position is, market will still squeeze you out first.
- Monthly weekly and daily charts all now look to have finally run out of steam to the upside and ready to reverse/already reversed.
- Sell rallies again.
- 13May : Stopped out 1RU short EDZ6 at 97.905
- Balance 1RU short. Market seems determined to squeeze shorts out.
- Unbroken string of losing trades since Mar when I cashed in after a good run. Death by a thousand cuts slowly but surely eroding away all my banked in profits. Frustrating.
- China firewall seems to get worse and worse with each visit. Driving me mad. Now my Box account is blocked. Really stupid.
- Sometimes I just talk nonsense eg here (ED range trading). This is exactly the kind of thinking that can kill an interest rate trader. FF at 0% for the 6th year running with nowhere to go but up, QE in the process of being unwound, "considerable period" being defined, etc. Wtf was I thinking, trying to go long EDZ6? Silly boy!
- Revert to my natural bearish stance. Make the assumption that current price action is the right shoulder (of SHS top) with RS highs already in place, and formulate new trade plan based on this.
- Back to selling rallies. Kill that range trade thought (cause one get royally fuxxed should it start trending instead). Pulled my buy orders (wonderful Saxo platform, can place/change orders anytime, even when markets are closed)
- Completely agree with these guys - Credit Agricole and Citi.
