Update: 29th February 2016

Today’s events:

This morning we all woke up to a small surprise. Despite the PBOC stating over the last few days that there was no need to devalue the yuan, they surprisingly fixed it lower. Normally when this happens, people feel concerned over Chinese growth and as such Chinese equities tank, commodities tank (since China is the worlds largest importer), Gold and the JPY do well (as people buy haven assets) and the AUD and NZD suffer (due to these countries trade relationships with China).

We decided to position ourselves after this surprise by selling AUDUSD and NZDUSD. Unfortunately both trades did not perform to expectations (all the other assets did perform as expected) and we closed these two trades at a loss. In hindsight a few hours later, they seem to have recovered significantly, but at the time the risk of keeping them open was not worth the reward, so we closed and moved on. Sure it was a mistake, but it was a mistake made with the best of intentions. Sorry about that.

Then in the afternoon, in line with our predictions, Eurozone inflation showed that it is declining. This resulted in the Euro coming under pressure and our EURO sells performed well, as did our USDCHF buy and our USDJPY buys and GBPUSD sells and we closed all these trades for a nice profit. Please note that this last inflation report thats the ECB’s current level of QE is unsufficient and all the benefits have been nullified. Expect them to conduct far more aggressive QE next month, which will make the EURO heavy and make European equities perform well. So keep an eye out for opportunities and bargains.

If you are wondering why we picked the dollar as our bid currency against those we expected to soften, the reason is that I believe the dollar will be supported as people begin to accept the reality that the FED has to start moving by June again, and even possibly by March.

Our HF trading today so far:

After closing all of our trades, we made a profit of 2.8% today. I am happy with that result but I feel we should have done much better had we been not so unlucky with the spreads. For example our NZDUSD sell had a TP that would have granted us $1000 profit had it hit. As the market approached it this morning, I watched live as the spread increased from 26 to 35 and then 48 as it got closer to our TP almost as if the market was teasing me saying we will not hit your TP unless we absolutely have to. Incidentally as well, the same thing happened to SL one of our USDJPY positions as well later to the very pip before returning to normal. Maybe I am just being paranoid since when watching things live, its always easy to think constant bad luck is targeting you, especially after this happened over 40 times in the last 2 days of last week. I guess I shall just have to continue to do our best and not let such bad luck frustrate or throw me off our game.

Our CFD and IQ Option ideas:

These seemed to work well and many people on twitter have messaged me saying that had success with these, so good work all around. Well done. If you are one of these people, please comment below (it will only take you a few minutes) and others can see how you did it and benefit from other ideas as we post them. It is only fair that everyone who is willing should be able to benefit so please spare some of your time to share your experiences below.

Tomorrow:

I suggest keeping an eye on the following currencies: AUD, CAD, JPY, NZD. It will be a volatile day tomorrow and will really be data dependant. Do not rely on technicals alone tomorrow or you will get hurt. Please trade carefully and consider data results when you do.

For the AUD: we have the RBA interest rate decision. They are likely to hold rates for the moment but given falls in employment, capital expenditure and business sentiment, they are likely to be Dovish in their statement afterwards.

The Chinese PMIs (Caixin not official which will not surprise) if soft will throw the market into panic. That will make JPY stronger and NZD and AUD weaker. It also happens early in the morning so will roughly set the tone for the day and determine whether there is any risk appetite tomorrow in the markets at all.

Canadian GDP: This is expected to be flat. And if anaemic as expect or even shows contraction, the CAD will become weaker as it will prompt expectations of further cuts from the RBC.

We had a good start to the week, already 3% up on day 1 and our account in green. Lets stay positive, not be intimidated by the market, support each other and do our best!

Mohammed

Update: 28th February 2016 – Outlook for week ahead

The next week will be very active in terms of fundamental data. There is virtually hundreds of different sets of data that are being released over the next week. However given the fact that we have limited time, I will only cover the following as I believe the following will be the most important:

The US employment data on Friday:

The highlight of this week of course will be the US non-farm payroll. Indeed one should pay attention not only to the change in payroll figures but in addition to any increases in hourly earnings which would imply that wage pressure is continuing to build. In our post over the weekend we addressed how inflation is now actually ahead of the Fed’s estimates and how it may actually encourage them to act sooner rather than later. While I do not remain convinced that the Fed is guaranteed to move on March, a solid payroll figure and decent wage increases will make March a strong possibility. In short do not be surprised if many of the people saying that the Fed would take no action in 2016 suddenly change their stance and start talking about rate rises happening in March or June.

With regards to the actual number I believe that we will see a solid report. I base this on the number of jobless claims each week staying consistently under 300,000 for 50 weeks in a row now which in my opinion is a clear demonstration of a firming labour market. In addition as a result of this firming in the labour market, I expect wages to increase as a reflection. I will be very surprised if weak data is posted on Friday.

Eurozone inflation on Monday:

This will be the straw that breaks the camel’s back and by camel I mean Euro. Inflation for February will virtually be non-existent in the euro zone given the relative strength that the euro has had in recent weeks (particularly against the US dollar and the pound) and the general softness in oil prices. Expect a virtually flat inflation reading which can be expected to weigh heavy on the euro as such a reading will prompt expectations from the market of further stimulus from the ECB. The hope of extra stimulus should also give European equity markets some much-needed support.

Chinese PMI’s:

We will see two different types of PMI is this week. The official government sanctioned PMIs and the Caixin sponsored PMIs. While I expect the government PMIs to be firm given all of the bravado by the PBOC in recent weeks, the non-official PMIs (which the markets love to react to) are expected to post results that show a contraction in manufacturing. While this should be no reason to panic given the fact that the Chinese economy is actively developing and therefore moving away from a manufacturing driven economy to a service orientated economy, it seems that these days the markets love to panic and they will not see the positives in this and just see it as another reason to be concerned over Chinese growth. Should the manufacturing PMI disappoint, expect the yen to strengthen as people look for haven assets and at the same time expect the New Zealand and Australian dollars to become significantly softer due to concerns over both countries trade relationships with China. In short if the PMI is a good solid number then sell the yen and buy one of these two currencies. If it is weak then buy the yen and sell one of those two currencies. A good choice to actually target in either situation would be the New Zealand dollar as the NZDUSD is currently trading just next to its 10 and 100 day moving average.

US ISM Manufacturing PMI:

This is the data that in the last two times it has been released has caused significant panic and growth concerns over the US economy. Now this week the general consensus of analysts is that they expect it to continue to be weak. Now I’m not going completely against them to say that I expected to show excellent growth but I do not think that it is going to be as bad as many think. If you scrutinize the non-farm payrolls carefully over the last two months, you will see that they added in excess of 30,000 jobs to the manufacturing sector and I’m sure that by now in the last two months these added jobs would have led to increased productivity. Therefore do not be surprised if the figure posted is actually better than expected.

RBA interest rate decision and statement:

The Central bank of Australia is expected to hold rates at 2%. However many analysts are predicting further rate cuts in 2016 and with comments from members of the Central bank recently saying that they feel that the Aussie dollar is overvalued, they may take advantage of the post decision conference to try to lower the price of the currency by indicating that they foresee the need to take action in the near future. Therefore even should they hold the rates at 2% which will initially result in a strengthening of the currency, do not fall into the trap of instantly buying. Wait to see what they have to say in the conference as you may be falling into a massive bull trap.

Canadian GDP:

Many expect Canadian GDP for the last quarter to be flat and show no growth. Now I don’t really have a call on this one as I do not have any accurate models for Canadian GDP that I would like to trust, since I find modelling hydrocarbon economies hard. However suffice it to say that even if there should be small growth, which the market would interpret as anemic or stagnant, there would be significant Canadian dollar weakness as people would expect further rate cuts from the bank of Canada. In addition should oil prices continue to be volatile next week, it could put downward pressure on the currency. Be very careful.

Australian GDP:

This is expected to show anemic growth at best and unless it completely defies estimates it is likely to be bearish for the Australian dollar.

Japanese Household Spending:

This will be very important as it will give a future indication on spending in the Japanese economy (consumer behavior) and how it will have a direct effect on inflation. A strongly negative number will result in yen weakening as it will increase expectations of further stimulus from the bank of Japan next month.

HF trade ideas:

Over the next week I believe that there will be softness to the euro, the Swiss franc, the pound and the New Zealand dollar and Australian dollar. However a lot of this is dependent on the data that will come out towards the start of the week. Therefore instead of jumping in and trusting it to luck, we shall assess the situation as data becomes available to us, deciding what we believe is the best course of action and then respond accordingly.

CFD trade ideas:

Should euro zone inflation prove to be flat as expected, go long on euro equities.
If US data is firm, sell GOLD or Silver.

IQ Option Trade ideas: Use short expiry times. Juleayr has had experience deciding the best times to take advantage of data releases and I am sure she will be more than happy to help should you ask her.

On Monday just before eurozone inflation data:
PUT EURUSD

Before Japanese House Hold spending
CALL USDJPY

On Friday before US NFP’s
PUT GBPUSD
PUT GOLD

Otherwise you can formulate your own plans around data releases. If you do, please share them with us all after and let us know how you did.

Anyoption trade ideas: Longer term trades (1 week or 1 month)

PUT AUDUSD
PUT NZDUSD
CALL USDCHF
PUT GOLD

Finally I would like to wish all of you the best of luck in the week ahead and I hope that after recovering from the entirety of our draw down last week that we can use this week to go straight for the green and try to achieve new highs together. Thanks for reading,

Mohammed

P.s. Sorry for the lack of charts my Bloomberg terminal expired. Will renew it on the 1st of March.

Update: 27th February 2016

Happy Saturday everyone. Hope you are all enjoying your weekend. I particularly want to wish a happy weekend to Juleayr and Scotland who have most likely been busy with the new additions to their family. Anyway a few things to cover today, so I will get to it.

The Market:

Well I had been warning for weeks that we are not in a recession and that saying the FED will not take any action in 2016 (only 6 weeks in 2016) is very foolish. The fact is that people love to read things on the internet, despite the source, and then jump on the bandwagon and say look….. Do not be surprised when these same sources reverse their calls very shortly, as they did last year every time they got it wrong and act as if they are experts once again. An analyst should have consistency and changing your long term fundamental views on a daily basis does not make one an analyst, it makes one a sheep or crowd follower. Here is the key point all of these “recession kids” missed, equities in the US fell because oil prices fell, they followed them. They did not fall due to a weak US economy, it is not weak. But they lack the experience or knowledge to realise this, so they think a fall in equities means a recession. They got lucky on 5 trades and think that made them experts with more knowledge than all the great trade houses or central banks and that is why all of them have already wiped out the lucky profits they had at the start of the year and will soon be blaming “the big boys” when they are left penniless, just like on their other blown accounts.

Now the data last week confirmed all of our fundamental beliefs it showed:

1.) Growth in the Eurozone has slowed and the ECB will have to add more stimulus.
2.) Japan is in a recession and the BOJ will need to do more.
3.) The US economy continues to grow and outperform expectations with a tightening labour market and inflation returning to desirable levels. It is not in trouble or in a recession. Countries in a recession do not grow 2.5% in a year and do not have unemployment rates of 4.9% and do not have increasing wages, consumption and spending. Please everyone, recognise this fact. If you believe the US is in a recession, you will fall into the same trap that wiped so many people out last year when they bet everything against the USD.

In short I reinforce my view that 2016 will bring with it the following: Multiple hikes from the FED, Stimulus from the ECB and Stimulus from the BOJ.

When? I believe the ECB and BOJ will act in March. With the FED, I am not so certain. Given another solid Employment report in early March, there is a decent chance they will tighten again then, but otherwise I expect June to be more likely. The fact of the matter is with inflation now approaching their targets . Remember core inflation is now 1.7%, this is ABOVE the Feds forecast of 1.6% at this point in time but still below its target of 2%. They were anticipating 4 hikes on the basis of that 1.6% forecast and these increases in income, spending and consumption are possibly the best signals on why the FED has to act in 2016. It can not keep rates at the present level.

Our trading on HF:

Well we had a terrible week on HF. I mean do not get me wrong, our results were acceptable. Despite the market going 4000 pips against us on 300X leverage, we managed to use money management and hedging to survive the hit, and reduce our 60% draw down to a net profit (although a small one). That in itself is a great victory and is the second time, we have managed to recover from large draw downs in a short time which I believe builds confidence in the account. The reason why I say a terrible week is because of the extraordinary bad luck that we all saw the last few days, when we made all the right trades and calls and yet all of them miraculously SL’d by widening spreads to the very pip with laser precision (and these are the 40 I saw, only Allah knows what happened that I did not watch or see). I sat down and crunched the numbers this morning. I was not pleased when I saw the following:

1.) Had none of these 40 incidents happened, we would have made $240,000 USD.
2.) Had only the first 10 happened, we would have made $190,000 USD.
3.) Had only the first 20 happened, we would have made $120,000 USD.”

Although these are not losses on our investment, they are loses on my time and thoughts and lost opportunities. I have never seen such bad luck in a span of a few days and many of you who read my rants on twitter every time it happened understand where I am coming from.

The only positive I guess we can take is that we have proven twice now that if need be, we can turn around a losing account in a very short period of time and this is at least good for everyone’s confidence and it shows that as long as we stay in this together and cover each other with our advice and updates we can survive anything (if we survived a 3000 pip movement against us with 300X leverage and turned it around, we can survive anything!). Something another group prevented us from doing by manual sabotage of my account.

Now that is something else I want to address. I want to know why, if any of you still do, do people keep balances with that group. Let us look at the facts, unlike some, my story does not change:

1.) First these people claim that I my account has not been blocked and I am lying. Fair enough, they can claim that if they want. I mean we were in a worse situation on HF at the same time, with less free capital and more leverage and more reds, yet did we claim we couldn’t log in? Nope, we logged in and turned it around.
2.) Then they slipped up and told a few people that they had stopped me from the trader and making new trades ”to protect users”. Well firstly, why the change in the story and secondly why take this action in any case? How does preventing me from changing trades and hedging protect users? If HF did that, we would have been cleaned there two faster than on Etoro. This is proven by the events that happened. One we could work with, the other we could not log into. Also when did they ever take other actions like this on other people. Did they do this to the Forex Posse or anyother traders? Was this a special occasion?
3.) They claim I am unreachable. Well we all know how much nonsense that is. All of you can reach me in 5 minutes but an entire support team can not? Why not tell the truth? You ignored my calls and only after people called you on you poor behaviour did u leave me a message on twitter saying please login and submit a ticket. How do I login and do that, when you banned me from logging in?
4.) Then they claimed to one person, a UK copier who asked me not to mention his name, that I wrote on my site that other people have been trading on my account. This is slander. Find me one place on twitter or this blog where I have accused people of hacking my account and I will close down this site 5 minutes later.
5.) Then they tell you they are closing trades for your safety and then when you all complain, they change their reason and say its for a margin call… I am sure there are many other falsehoods told which I have not heard.

So the question is why do you still keep money with these people? They lied to us, changed their story again to lie more but even if you do not believe that, there is the following key point. THEY ADMITTED BLOCKING MY ACCOUNT FROM THE TRADER AND OPENING NEW TRADES. That fact alone should be enough for anyone to realise on principle that they did interfere and sabotage us. Period. Therefore after they effectively strangled us, why should any of you even trust them with a penny.

Anyway Karma is a wonderful thing and I am glad to see that three weeks later, serious people are abandoning this site in droves and its mostly left with spammers, scammers and sit on balance traders. Its all over for them and they know it. However, I do want to make one further appeal to all of you that still have balances with these people to withdraw them. They cheated us once, lied about it, got caught, lied some more and have proven that they will throw you in front of a bus for their own interests. Do not give them a free pass on this one. If you have deposits with them. Withdraw them. Let these people know there is a consequence of cheating customers and they are not bigger or more important than their customers no matter how deluded they are on the matter. It is the right thing to do.

What happens next?

As usual tomorrow we will put up some trade ideas for HF, CFD’s, IQ Option and cover the outlook for the week ahead (I’m glad it worked for many of you this week). With IQ Option it appears that Juleayr has perfected a technique of using the trade ideas. She is very busy at the moment as a new mother but perhaps when she has time, she can share the method as her way of doing it seems to work better than most and it is a good way to earn extra spending money on the side.

Anyway have a great weekend everyone. Next week we come out hungry and looking for profit. Bad luck can not continue to deprive us!

Mohammed

P.s. If you have been trying the Options and CFD trade ideas these last 2 weeks, I would love to hear some feedback in the comments below (whether it worked or not). It will be of great help to me with my suggestions and to others as well.

P.s.s Special thanks to Mitchell to gave me some advice the other day that I needed to hear. Really appreciate it <3

I am taking the rest of the day off.

I am not in the best of moods today and its not because the day has gone badly. Its actually been a decent day if you look at the account: We reduced drawdown from 50% to 25%, putting the account in a far more healthy position. Some would actually say this is a good day. So this is not a “its falling apart, im going to melt down rant”. Its a “damn I can not believe my bad luck rant”.

All of the fundamentals this week came into perfect line with what we expected and we did 40 trades in the last 3 days that were all brilliant and would have yielded us 6 figure profits (No joke, check our history from the last 3 days to confirm) had all of them not miraculously been SL’s to laser precision by  widening spreads just before a trend shift.

Such trades include:

USDJPY buys at 111.60

USDJPY buys at 112.39

USDCHF buys at 0.9868

EURCHF buys at 1.088

GOLD sells at 1240

All of these trades had values of millions and combined would have given us profits of $280,000 USD at the very least. All in 3 days. It was a perfect move backed by perfect estimations of data and fundamentals, like one such call I did back in August when I made the community $300,000 (30% of 1 million) in a single week. And yet it all went to waste, solely on bad luck…..

In short, I am not upset with the account because we only reduced draw down today, I am upset with our bad luck that has prevented us from amazing gains. Bad luck that I have never seen on such a consistency.

Now you can understand why I had a little rant earlier. Its hard enough trying to make the big gains we go for, yet when everything goes right except luck and it happens 40 times in less hours, you can imagine why one gets so frustrated.

Am taking the rest of the day off,

Wish you all a great weekend,

Mohammed

Update: 26th February 2016

Oil is climbing today as the market gains some optimism after rumours of an OPEC meeting in March hoping to put a cap on production. In my opinion, such optimism may be misplaced as any curb in production will just be taken advantage of by the other producers trying to take market share. At the end of the day, even if we cap production at current levels, there is still an excess of 4 million barrels a day. The solution has to be to stop the over supply, not to keep it at constant levels. And for that, you need everyone to agree. A prospect that is very unlikely.

Japanese CPI was soft today, but did not show contraction as I expected. Regardless, being virtually flat, it is still far from the BOJ’s target levels and we expect stimulus from the BOJ in March.

US data remains on tap, including Q4 GDP revisions (expected downwards revision), PCE, Personal Income and Spending. This data will determine the manner in which the market closes today, so we should watch it with a close eye. It will give a good indication on whether perofrmance can match the FED’s intention to raise rates this year.

Thus far the market remains risk on, unfortunately, we have not been able to capitalise on it as bad luck for a third day in a row seems to be ensuring that spreads widen and change near our Sls and Tps to make sure their either get hit or they don’t trigger. With this happening over 40 times now in 3 days, during periods of no data releases and the widening happening to the perfect point to the exact pip, I am left wondering if all of us have been breaking mirrors for all of this week. We have literally lost over $200,000 in unrealised profits this week due to this bad luck.

No update today

I am not in the mood. Over the last 2 days have seen over $100k in potential profits evaporate due to spreads changing randomly near SL’s and its really wound me up. Today alone, it happened to us on USDJPY (twice), USDCHF, EURCHF, GOLD etc. And it really makes no sense to me how we can be cursed with such bad luck. I mean I understand spreads widening during announcements or market openings when there is volatility, but never just randomly and never so perfectly. I mean on each of these 35+ occasions in the last two days (I lost count hours ago), it has happened to our EXACT SL and not one point after as you would expect a few times if it was volatility. That is like laser precision. In all the years i’ve been trading, I have never seen someone have so much bad luck in 2 days.

Just going to have to be patient, clear my head and persevere through it. Going to stop typing now before I say something I regret. I guess I should be grateful that we are safe and have firepower to defend our position.

Mohammed

Update: 24th February 2016

As oil continued to tumble today, it took equities with it and the risk aversion started. I feel I should save this first sentence somewhere as I seem to be posting in a lot these days.

Anyway suffice it to say there was virtually zero risk appetite in the market today and went significantly against our positions. To protect the account, we bought haven assets such as gold to ride out the storm and were able to increase account balance while limiting the damage on equity, a very difficult situation when the market goes 3000 pips against you. However, we managed as best we could. I think the fact that had we not taken measures, we would have been wiped out 6 times over and instead managed to increase account balance by $30,000 while losing only $7k additional equity is a decent result especially given the headaches (will explain below). In short the fact that we survived today makes me confident that we can survive anything provided that we stay in this together. I am actually happy with the results today, despite accumulating some losses. Our repositioning also allowed us to increase our available margin and hence give us more firepower to take advantages of opportunities for the rest of the week.

We had two significant headaches today:

  1. We had to reposition due to some people withdrawing funds. As this decreases our margin, it puts us all in danger as HF is a 300X leverage, so people withdrawing amounts
  2. We seemed to have EXTREME bad luck over the course of the day. In terms of there were at least 20 occasions, maybe some people on twitter counted, where some of our hedges or positions would get SL’s due to the spreads randomly widening to many times their size. Some people are calling foul play and think the platform is SL hunting, due to the way these would always exactly hit the Sls to the very pip and then recoil. Anyway I spoke to my account manager who was very responsive and who said that spreads are automated and not fixed and we simply had bad luck. It was indeed badluck. Each time this happened it cost us losses of a few K and prevented us from potential gains of 10’s of thousands. I guess we just were very unlucky.

Anyway the account is currently net buy (slightly) with the buys Sl set firmly in the green as I believe GOLD will reverse due to a number of reasons:

  1. Technically: it is over bought. The daily RSI is at 70.
  2. There is a danger of an oil rebound. Its given up a lot of ground quickly. If it drags equities up with it then….
  3. Fundamentally: Weak Japanese CPI on Friday will prompt market speculation on

So while this keeps going against us, we will keep hedging to keep us in the game and healthy and when the market accepts that there will be tightening from the FED and stimulus from the ECB, we will be nicely in the green and in a good position to take advantage for the rest of the year as planned. I am actually happy with that plan.

P.s. Please all be careful tomorrow. The Asian session is going to be very JITTERY! Please avoid going long on high beta securities. If not already in the market, save your firepower for Friday when Japanese inflation will be soft and give opportunities.

Thanks for all the support today, all your encouragement made a big difference,

Mohammed

Update: 23rd February 2016

Yesterday, we went to sleep having closed all of our gold buys and some of our sells (decreasing draw down from 40% earlier in the day to 2%) and were feeling very optimistic. Especially with indices futures showing Asia and Europe poised to open green and take us into further profit.

Unfortunately, we woke up to the surprise that the PBOC had fixed the yuan at the weakest rate in 6 weeks, which made the market have kittens as “one again they were concerned over the growth of the world’s second largest economy.” This led to a bid of safe haven assets (Gold, silver, JPY, sovereign bonds) and left us with a draw down of 50%. So we acted and repositioned ourselves to go net long on Gold and sell audusd (thinking the AUD would suffer as it usually does when there are concerns in China,due to its trade partnership.) The AUD did not work and looked poised to go against us, so we closed it at a small loss (thankfully since over the course of the Europe session it just kept rising). However, our Gold positions worked like a dream and we annihiliated our drawdown. Then in a split second, for a reason I do not understand, Gold sank back to 1215.99 (hitting our SL by one pip) and then jumped back to 1224…. A potential 12,000 USD profit turned into a 5,000 USD loss. We bit our tongue over our bad luck and persevered but were left with 50% drawdown of deposits. More bad luck followed and many random spikes like the one above (I counted 8 such incidents today) but we did our best and managed to guard the account limiting drawdown to 32% of deposits. (From 88,000 in deposits, equity is currently 60,000).

Our HF Plan:

I am not too worried as I believe gold is currently valued so high due to the market saying “no action from the fed this year” and that stimulus from the ECB and BOJ will also drive down its value. I do not agree with Goldman and others who say Gold will fall back to 1000 in Q1 2016 (remember all their parity calls with EURUSD and OIL falling to 20 before December 2015 calls), but I do believe it can fall to 1100’s. As quickly as the thought of no action from the central banks made gold rise, action from them will make it fall and I feel the target of 1170 is realistic one for us.

I base this trade on my fundamental assumptions that:

  1. We will see the FED act at least twice this year.
  2. We will see the ECB ease in March.
  3. We will see the BOJ add stimulus in March.

In short my fundamentals are 90% of what I have, so if they fail and all my assumptions are wrong, then we are up the river without a paddle in any case. So I am going to go for it. With our current set up, unless Gold spikes up to 1500 next week, we should be very safe as I have plenty of firepower left to reposition our trades to protect us from the trend going against us (like we did with JPY two weeks ago) and and if we hit our target will have a profit of $120,000, taking our account equity of $200,000 effectively giving us the ability to trade for up to 900 lots ($90m USD) which will open a wealth of opportunities. So that is what I am going to aim towards. If we keep letting the market scare us, we will not get anywhere. We have to try.

Hope you all agree,

Mohammed

Update: 21st February 2016

Outlook for the week ahead:

The week ahead brings with it much in the way of important fundamental data. Other than many central banks speeches, we also have an array of results which will influence the market. In the US we have personal spending and income which are expected to show significant improvements and we also have durable goods orders which are also expected to show an increase. All of this should support the US dollar which has been outperforming the market recently. There is one possible point of weakness which is that the Q4 2015 GDP data from the United States is expected to be revised downwards from 0.7% growth to 0.4% growth, so this could put some downward pressure on the dollar which otherwise should benefit from positive data this week. In addition, after the weekend the market, would have had time to digestive the better-than-expected inflation data from the United States without having to instantly react to the crash in oil and equities that shortly followed its release and cancelled out the initial dollar rally. Therefore do not be surprised if when the market opens the bid sentiment is behind the US dollar. I believe that talk of rate hikes from the FED will start to re-emerge this week.

In the Eurozone not only do we have Eurozone PMIs due for release but in addition there is to be a revision of German GDP and Eurozone inflation is expected. In all honesty judging from the general consensus all of these results will show no more than anaemic growth and inflation will virtually be flat. This will not go well for the euro and I expect the euro to continue the declines that it had last week. The euro will only proceed with a strong rally should once again the markets tank.

With regards to the Swiss franc, it became significantly weaker last week (the USDCHF increasing 1.31% to close at a 0.9904) as the market expects further intervention from the SNB either as a direct intervention in currency markets or further monetary easing. With inflation on Thursday that is likely to show further contraction, I think it very likely that the Swiss franc may continue to weaken this week. In addition to this there is a speech by the central bank’s president on Tuesday and he is very likely to use the opportunity to indicate a willingness from the bank to weaken the currency further.

In Australia, we saw some gains last week due to a rally in gold and commodities. However given a rise in the unemployment rate to 6% and a general slowing of the economy it can be expected that this will turn around. Indeed even a member of the RBA (Edwards) suggested over the weekend that the Australian dollar should be the equivalent of $.65. With data that is expected to show a decrease in construction and capital expenditure next week, it is likely that the Australian dollar will come under pressure.

The New Zealand dollar is likely to decline at the end of this week when data is expected to show that exports have shrunk in January and the trade balance has become even more negative.

David Cameron has what he feels is an appropriate deal for the UK public to vote on staying in the European Union. However with that said as the results of many polls no doubt come in and out, the pound is likely to remain very volatile and this week we shall be avoiding it.

CFD ideas:

Given expectations for greater than expected personal spending and income and respectable durable goods orders, this week may be a decent time to go along in US equities. I wish to point out though that this is a very risky move as oil remains volatile and any crash in oil will take equities down with it. Therefore before making any such commitment to the markets, please take the risk and reward scenario into consideration. In short make sure that any risks you take are worth it.

Go long on Japanese equities before CPI data comes out. Negative inflation data from Japan will increase market expectations of further stimulus from the central bank and that will result in a rally of equities.

IQ Option ideas:

As usual purchase options of a short duration just before economic data is due for release. Selling the JPY just before the Japanese CPI and selling the EUR just before its CPI are sound ideas.

AnyOption ideas:

Over a one week period I would suggest the following:

Put AUDUSD

Put NZDUSD

Put EURJPY

Put EURGBP

Call USDCHF

Current HF situation:

We currently have an unrealised net loss of 19.8%. Of this 10% is due to an error we made in selling gold. We took these sell positions on the back that we believed that the better-than-expected inflation data from the United States on Friday would make the market realise that the Fed will be continuing their tightening of monetary policy this year. Our view was further reinforced by the technical charts which showed a bearish Harimi on the 1 week level:

Gold

Review of literature posted by Goldman Sachs also suggested that the rally in gold was overdone and that now is the appropriate time to go short on it. In addition, we consulted the median estimates of all of the research houses most of whom had forecasted gold to begin a retreat towards the 1100 level over the next month. Suffice it to say that unfortunately this position went against us but much like we hedged our way out of our young problem this time last week, we intend to do the same. We have changed our overall position with a buy to make us neutral and as we see the market determining which direction it wants to take we will adjust opposition with the intention of initially minimising losses and then hopefully finally merging with a gain. If we are unable to do this, we will simply close the positions and take the hit.

We are long 600,000 units on USDCHF with a target of 1.02. reaching this target will hopefully help us realise a net gain of $12,000. Presently the CHF sits between its 10 and 30 day moving average and I expect it to climb and break its 30 day average:

USDCHF

Please note I know we are very volatile on HF. In the last 2 weeks going from a 50% unrealised net loss back to break even, to a profit of 10%, back to break even, to a unrealised loss of nearly 20%. This is because we are taking chances (which we have to in order to get rewards) and the market is very volatile and went completely against us at the end of the week. Nobody is more frustrated about this poor performance than I am. It really cuts deep to see all your models for financial data live up to expectations and your positions to work, only to see them voided by an oil crash 10 minutes later. I just take the approach that as long as damage is limited, fire power preserved and we are patient, we can hedge our way out of bad situations and still make new profitable trades.
New positions which we will take:

We will look for opportunities to sell AUDUSD hopefully once it reaches closer to 0.72 levels with the aim of taking profit at 0.70.

AUDUSD

We will look to buy USDJPY before Japanese inflation data with the expectation that a flat (I believe it will be negative given JPY strength in January) CPI will prompt expectations of further stimulus from the central bank that will result in the weakening of the JPY. I will not take this position too early in the week as it is entirely possible that should risk aversion and panic grip the markets (as it seems to do at every chance in 2016), it is entirely possible that the pair will dive to even newer lows. I also wish to point out that Nomura and Goldman on Friday both re-affirmed their expectation for the YEN to weaken towards 130 towards the end of 2016.

Wish you all a good week and wish us all good luck,

Mohammed

Update: 19th February 2016

US inflation was in line with our estimates and was stronger than market expectations. Ideally given the strong employment and growth in the US, this increasing inflation would support the FED increasing rates. However, the market seems to not care about good news. All it wants to do is panic. For the second day in a row, despite excellent fundamental data, risk appetite vanishes and risk aversion takes hold. It makes zero sense and lacks all logic. Despite being correct in forecasting all the data, which should support out trades, the market goes the complete opposite way and there seems to be no method to it. Even the standard correlations are being ignored.

If this persists into next week, will cut all open trades and take a net loss of $10,000 and stay out of the market until some semblance of logic returns, because at the moment there is no benefit in trading in a market that is just full of noise. If people are panicking now, I want to see how they will react when the FED does raise rates a few times this year, which it will….