Update: 31st March 2016

Well I believed it would take one mistake to break us, but I was wrong, it took eight. After no less than eight accounts put in withdrawal requests over night, we were forced to close our buy hedge earlier this morning due to a margin limitations which left us at the mercy of the market. We have been able to hedge out of situations like this since on no less than four occasions in the past but doing it a fifth time was impossible due to declining free margins. Then unfortunately, as usual, UK data leaked early this afternoon and that spelled the end of it all. It seems UK data leaks will not stop. They have been happening for a year now and its likely to continue as nobody seems to care to investigate.

A few things to clear up:

  1. This was purely my own fault for firstly making the trades in the first place, assuming that nobody would withdraw and that I could hedge out of it as we always do when it goes wrong.
  2. The platform is NOT at fault and there has not been any major wrong doing on their behalf. We were prevented from hedging due to withdrawals of some of our users, not because of being denied access, like on another certain platform.
  3. I take hapniess in only one point of this failure and that is that the people who withdrew will get NOTHING. Frankly, I think their selfish actions warrant this.
  4. I know who the withdrawers were. I did not even have to look it up, but it was apparent when a few people who were complimenting just days earlier starting maliciously jeering when they found out withdrawals would not be processed at the amounts they tried to take. Their behavior says a lot about their character and integrity. With such people in the community, we would have failed eventually regardless of how far we got. When the cable retreats to 1.40ish levels, over the next few weeks as Brexit looms, the people who withdrew and left us in this situation will have more regrets than I do, when they realized they would have been sitting on top of $500k balance had this happened. After all their actions show they are more selfish and greedy than the rest of us.

That safely to say is the end of trading for me in a social setting. I have to accept after what happened that my style of high risk trading is not suitable for it since:

  1. I can not rely on everyone who says they are commited to be commited and it only takes a few people to ruin it for the vast majority.
  2. Although people are saying they know the risks and are happy to accept them, many people are trading with money they can not afford to lose.
  3. The influence and comments of others do effect my judgement, as much as I try to say I only factor in my opinion, it is simply not true.
  4. I have proven this time round to myself and everyone, entirely at my own fault that I am neither capable enough, skilled enough or disciplined enough to manage a group account.
  5. It would be irresponsible to cause anymore losses.

With that said I do wish to appologise to everyone for this failure. Afterall I was the captain when we hit the iceberg. I just wish a few people didnt scramble with all the lifeboats leaving the rest of us marooned.

I also wish to say that I immensly enjoyed talking to the vast majority of you and am grateful for all the support and kind wishes in both good times and bad. We had a heck of a ride together, making, losing and remaking hundreds of thousands of dollars together and most of you did stay there till the very end, knowing that we were in all likelihood doomed. I genuinely did try my hardest everyday, everyhour but in the end I could not fight the market and betrayal from small numbers of the PAMM copiers. I tried so hard but it just was not good enough. Thats my failure here.

I would also like to thank HF and my account manager there Bassel for all his help in solving our earlier issues and constant support. They are a good company and none of this is their fault. If you want to continue trading, I suggest you stay with them, I believe you are in good hands.

Whats next for me is that I will be taking some time off to clear my head and emotionally recover from what has happened and then trading again by myself. I just spent a massive amount (for me at this time) on a Bloomberg subscription a few days ago and I want to make use of it and try to at least recover some of my losses from this year. I will use a platform regulated somewhere trustworthy like the UK, North or West Europe as I feel a new start would be best for me. I will try to continue to update the blog a few times a week with what I am doing and what I think is going on, as its therapeutic for me and I actually enjoy communicating with most of you. I believe the good wishes and karma will help me succeed or at least encourage me to keep doing my best. Once again thanks to the vast majority for believing in me and sticking by me, words can not being to describe how terrible I feel about having let us all down.

Mohammed

Update: 30th March 2016

The question I’m asking myself right now is if there is a competition between the global central bank’s to see who can be the most inefficient and communication. How is it possible that no less than four central bankers state that the current flow of data means that the bank will have to act soon with possibly April being on the table, and then just a day later their governor Janet Yellen says the complete opposite.

I really don’t get what is going on with this central bank. They submitted their dot plot in December forecasting their inflation and growth estimates and their expectations to raise rates four times in 2016. Then in March, after all of their estimates have been outperformed by the data and inflation proves to be picking up months ahead of schedule, they cut their expectations to only two. This makes no sense to me. In addition it’s almost as if Janet Yellen is scared to increase rates again. She talks about her fears that inflation is not sustainable and there is no evidence of it continuing to rise, but it has been consistently rising for the last 15 months and unemployment has been decreasing which will put substantial pressure on wages and substantial upward pressure on inflation. If the Fed keeps delaying, it’s going to be left in a position where it is forced to raise rates and instead of a small increase of only 25 it might have to do a more significant increase catching the market completely by surprise and sending equities into oblivion. The Federal reserve has the market so confused at the moment that not even the Private payrolls employment figures that came out today and beat expectations could ensure any confidence in the dollar.

Our situation:

The situation is completely desperate at the moment and I am completely to blame for it. Nobody else and especially not the platform. The blame rests solely on my shoulders for behaving in a completely idiotic way. Being months ahead of schedule one would think that I would have been happy and satisfied and not taken risks, but being greedy I saw an opportunity for us to keep growing exponentially and I took it.

Firstly I acted on some bad technical advice which I believed gave us the perfect entry point given my fundamental outlook (without verifying it, since I am a complete fool) and that whittled away a significant part of our profits. In addition a few hours later Janet Yellen completely contradicted the other members of the Federal reserve sending the dollar to its lowest point since October 2015.

As many of you know usually I don’t see this as a setback as we have been able to headshot of the situations are no less than four previous occasions. Unfortunately this fifth time will be more difficult due to people withdrawing margins and leaving us with less firepower to react. This particularly cuts me deeply as I appeal to all of those who wanted to jump ship to do so last week. It seems that many of the people who insisted that they were completely committed decided to abandon us all when unity was the most important weapon in our arsenal.

Never mind. Sitting around and being miserable feeling sorry for myself won’t get us out of this situation. So we have one last plan which if executed without a single mistake will not only rectify this situation but also put us back into profit. We closed our USDCHF longs at a loss to free up margin giving us the ability to turn the account net neutral on the cable. At the end of the day sentiment in the market changes quickly and as more solid US data comes out and the UK referendum gets closer, I believe the cable will fall to new lows. So this plan is very simple and hopefully will work. We let our current cable buy turn even more green and set its SL in a safety Green zone and then wait for the cable to reverse its gains and ride it on the way down hopefully to profit. To summarise this is the last card (the weak ace in our sleeve). We quite simply have to catch the turn at the right time.

Regardless of whether this plan works or not ( if it works account deposits would be doubled by the time of the streets are closed), I will be calling it a day at the end of it. My foolish actions of the last 24 hours have shown that I’m not yet responsible enough to trade for other people and that as a group we are not mature enough to completely stick together. It seems that not everyone in this party understood that we all either have to swim together or drowned together. Every time things start to look at all bad, there are always a few who immediately scramble for the lifeboats leaving everyone else to drown. It’s this sort of selfish attitude that means we probably won’t be able to hatch out of this for a fifth time and will probably fail. Regardless of the odds being stacked massively against us, I will do my best. I owe everyone that stuck around that much for their support. Words can’t begin to describe how terrible I feel about letting everyone down. It was all going so well until 24 hours ago.

Mohammed

We will stop trading at the end of April

The target will be to have twice the amounts of deposits as equity at which point we will all withdraw and cease trading. This is now too much for me. I can not fight the market, the platform, worl and at the same time be fed false info by the community. This betrayal and false info today was the final straw. I deserve much better for my effort. 

Expect no more posts on twitter or here. I dont have the heart for it after todays nonsense.

Lesson learned

Never ever trust anyone elses analysis no matter if it matches your own general outlook. I should really know better but made this mistake today which cost us a small fortune from our profits.

I guess its human instinct that when we see these things, sometimes we act. To this event I have blocked all the people who post these unasked for “broken resistance” comments on my twitter. All they have done is filled me with doubt and burned my confidence at times and they have actually proven to be of no benefit to us most of the time. So we block the 5 of them, learn our lesson and move on. We wish them good luck with all their trading, but we do not care to hear about it any further.

Sorry guys. Should not have listened and should know better. Trust me, seeing 15k of hard work profits from this morning get wiped out by listening to these guys hurts me as much as it does all of you.

Update: 28th March 2016

While US personal spending and income held up, PCE deflator (Yellen’s favourite indicator of inflation) was 1.7%, softer than the 1.8% expected. A dollar sell off ensued, which found us caught out of position. Earlier in the day we had a healthy profit of 6,000 USD which I thought would go much higher. With equities performing well, Japanese data being dissapointing and Oil holding steady, there was no reason for JPY strength. Unfortunately even before this data was released, there was a mass dumping of dollars. Even with thin liquidity, the level was such that it could only be at the institutional level as all the MAJOR currencies moved significantly against the USD. I speculated on Twitter at the time that it reminded me of the massive dump that occurred prior to the FOMC announcement. To be honest, this stinks of insider info to me as even if PCE is slightly soft, at 1.7% it is still miles ahead of target (The Fed expected it to be 1.4% in December 2016!) and it is not totally unbelievable to consider that this situation could have been engineered beforehand. After all, who decided to dump BILLIONS of dollars for no reason?

Anyway I decided not to try to fight the market and close at a loss of 7,700 for the day. My logic being that we are still 2 months ahead of schedule and with suspicions of inside trading, thin liquidity there was no point in taking any risks just for the sake of being stubborn. Even with this loss, we are still massively ahead of our targets and its just not worth risking all our victories thus far just for the sake of saying “not going to let this trade go”. So for the first time in 10 days, our equity decreases, which I am ok with it. We are still insanely in profit for the month and its the overall result that matters. We may have lost this battle, but we are still winning the war. May consider getting back in shortly, but my risk appetite is not too for the rest of the day.

Mohammed

Update: 27th March 2016

Firstly, let me start by saying I hope you all had a good weekend.

Secondly, a warning, with Europe still on holiday tomorrow, liquidity is bound to be very tight until the US session (at the very least), if you are going to be trading, please becareful. Spreads are likely to be very wide and there may be many erratic movements.

Our account status on HF:

Not much to add. With markets closed over the weekend, we remain in the excellent situation we were in last week. Massive gains in equity, massive gains in balance and our only open trade being USDCHF longs.

Things to watch out for this week:

USD:

A lot of US data is due for release this week. The most important of these is no doubt the employment data due out on Friday. And judging from the weekly initial jobless claims, and the PMI’s, it is very likely that data should be firm this week but I believe that we will see in excess of 200,000 jobs added an unemployment possibly fall to 4.8%. This should put upward pressure on the US dollar and pressure on the Fed. In fairness, it seems that the Federal reserve is actively confusing the market the moment. While the FOMC was exceptionally dovish at the last meeting, last week we saw no fewer than four officials of the Federal reserve state that an increase in rates is just around the corner with many of them highlighting April as possibility.

In addition, on Monday you cannot afford to ignore the PCE which is expected to be even firmer than the 1.7% posted from January. Since the Fed had a target of 1.4% in December 2016 (i.e. it has picked up way faster than they ever could have anticipated), any increase will put exceptional pressure on Yellen and company. Expect the USD to be supported should data live up to its expectations this week. And if it should, expect the clear divergences in monetary policy between the US central bank that is expected to be tightening and the rest of the world which is easing to become even more apparent in the exchange rates. The last time we were at a point like this was in August 2015 when all of the naysayers were claiming that there was not a chance in hell that the Federal reserve could have increased rates and the next move would be to actually decrease. Where are these people now? Oh that’s right wiped out and on the 10th accounts.

JPY:

Last week Japan posted a soft PMI, falling to 49.1 with export orders falling to their lowest in more than 3 years at 45.9. This in addition with the deflation shown on Friday is likely to put downward pressure on the JPY (assuming that there is no risk aversion).

Industrial production is also expected to show contraction this week and will boost expectations of stimulus from the BOJ which in the presence of deflation, recession and falling exports and production has no choice but to act agressively and soon.

CHF:

As I stated previously in the week, the Swiss franc has been surprisingly resilient possibly due to backing its received as a hedge against the potential looming threat of Brexit. However a strong Swiss franc is an extreme danger to the Swiss economy and as Jordan (Chairman of the SNB) constantly reminds the market, the central bank will not hesitate to intervene in foreign exchange markets in order to control and limit the strength of their currency. Thus far they had stayed their hand due to Draghi strengthening the euro (albeit by accident) when he declared that he believed there was no further need to cut rates further. However, do not expect them to stand on the sidelines for long. It is my firm belief that the time for the SNB to intervene in the markets is fast approaching and it could be only days away.

One observation:

As we know, the Australian dollar has recently enjoyed an exceptional rally which has taken it from .67 all the way to the mid .76s and is currently treading water just north of .75. This was on the back of a rally in commodity prices and the world calming down over China. I do not expect this strength to persist. Fundamentally, it is uncertain how long this rally in commodities will continue (it is already showing signs of slowing down). In addition, we know from the RBA that they would be happier with the Aussie dollar closer to 0.65 as it helps Australian services and Australian exports. Furthermore the spread into year generic government bond yields between the United States and Australia indicates that the fair value and price of the AUDUSD should be closer to 0.72.

AUDUSD spreads

In addition, looking at the candles on a monthly basis shows that the 50 moving average has just performed a death cut on the Hundred moving average. This indicates that there are risks to the downside and the pair could fall very shortly. Fundamentally and technically, it could be worth trying a short on this position.

AUDUSD monthly deathcut

Update: 25th March 2016

First of all, please allow me to wish a happy Easter to all of you. I wish you a very festive time with your families and loved ones.

Todays events:

Due to being Good Friday, the markets have been very quiet and liquidity is ultra-tight. Therefore we traded very cautiously today. Nonetheless all of our trades were closed with a small profit and we managed to increase both the balance and the equity of the account and increase our profits although it was by only a modest amount.

In line with our expectations, Japanese CPI showed deflationary pressures on the Japanese economy and the yen softened somewhat on further expectations of intervention and easing from the bank of Japan. I hope some of you took our advice yesterday and went along in Japanese equities and short on the yen.

US data which just came out showed that for the second time this month US GDP was revised upwards. From its initial value of 0.7% it was increased to 1% and then to 1.4%. At the same time Q4 consumer spending was revised upwards from 2% to 2.4%. Corporate profits were weaker than expected but this is quite simply in my opinion due to the dollar being much stronger in Q4. Therefore all of these recession crybabies who were talking about how growth in the world is slowing down once again find themselves with egg on their faces and it is no surprise to me that all of them have blown their accounts (in many cases for the 10th time etc).

Please be aware of these guys who try to con you for easy money. They span left right and centre and post graphs about how the world is on the brink of recession without understanding even the first basic of economics. If you actually look at the graphs that they show, all they show a line is getting higher and higher. Of course what goes up will eventually come down however none of these people have actually identified a point. All that is happening in their charts is that new highs are being achieved every week and by betting against these markets all they have done is lose hundreds of thousands of dollars of other people’s money while losing maybe $10 of their own.

Newsflash people, in a recession GDP doesn’t grow it shrinks. Unemployment doesn’t decrease it increases. How difficult can this possibly be to understand? Do not let these people try to put you into fear mode because that is their intention. Theymake you feel everything is going to fall apart and use that as an opportunity to offer you a deal that is too good to be true because fear is a great motivator and these scammers capitalise on that. Don’t fall for it. It is actually surprising that a certain network that claims to care for people’s safety will ban a certain account from the trader for a week preventing them from hedging and protecting people’s equity and yet at the same time it will allow these scammers to create multiple accounts having blown many previous accounts and then promote them and invite them as guest speakers and advise people to invest in them. Surely by now you have understood that this certain site is nothing more than a disguised casino. Realise that and remember the old saying that the house always wins. How many more times must they ban people because they’re quite simply winning too much? How many more times must a pull down their platform at the most “ convenient” moments?

Our community:

With regards to our community I have created a new tab on the blog which will be updated regularly which will track on current performance and our targets. I feel that it will be inspirational in both good times and bad to show us all that despite our ambitious goals and despite how far we may be from them when we look at things in proportion to the timeline we are actually not as far away as we think and in many cases are sometimes even months ahead of schedule. Please do take the time to have a look when you get the chance. I think it will pleasantly surprise you as much as a pleasantly surprised me when I calculated the numbers earlier today.

In addition, I have temporarily suspended the forum. It has completely failed to be the centre of learning and sharing of knowledge and information that I hoped it would be and at this point in time I cannot bring myself to find the motivation to maintain it. In short it failed in its objectives and I feel that until I am able to do this full time, my efforts and time are best spent on concentrating on trading for us as a group, updating this blog with my fundamental analysis and outlooks and opinions and communicating with the community regularly via Twitter. Perhaps in future I’ll be in a position where I am able to put the forum back online and dedicate more time to managing it and contributing to it. Please rest assured that all data that was on this forum has not been deleted and has been backed up and can be restored at a moments notice when I feel the time to be suitable.

As promised, I’ve also taken the opportunity today to familiarise myself a bit more with the platform recommended to me by the Anonymous Economist. So far it is promising but I still need more convincing before I’m in a position to recommend it. Please do not think that I have forgotten. But also please be patient. As many of you know, having been burnt in the past by a certain site of gangsters, I can be forgiven somewhat for being overly cautious and overprotective of our community before I recommend anything.

Happy Easter everyone, wish you all a great weekend,

Mohammed

LOL – Never again

Guys, for real this time make me a promise. If you ever see me trying to trade EUR vs Commodity currencies ever again please do the following:

1.) Go the airport.

2.) Get on a plane to Dubai.

3.) Find me.

4.) Slap me.

5.) Close the trade.

6.) Go home.

Seems I trade these particular pairs as badly as Cliff trades cable and Erwin trades DAX.

Anyway, wish you all a Happy Easter. Will post a proper update later. But I did want to warn you all. Liquidity is terrible today and spreads are massive (e.g. USDCAD is 15 pips!). Please trade carefully,

Have a great day everyone.

Update: 24th March 2016

Solid performances continue and a milestone is reached:

Earlier today at 11:57 AM (GMT+4) for the first time our account balance exceeds $200,000 USD. We have hit this figure 2 months ahead of schedule. I consider this remarkable considering that we have been fighting against all odds this month and have had several painful episodes. I am proud to carrel our next target as $500,000 USD and wish us all the best of luck in achieving it and even more.

At present our HF situation is thus for the month:

On net deposits of $114,000 we have a current equity (as of the time of writing) of $173,000 and a balance of $202,000. This means our gains for this month have been:

Equity: $59,000 profit or a 52% gain this month.

Balance: $88,000 increase or a 77% gain this month.

This already completely shatters the yearly performance of 99.9999% of all funds and even eclipses our already ambitious target of 20% a month. I also wish to point out that this was achieved despite 4 central banks going against us, over 100 bad luck incidents with SL’s and even margins being withdrawn by certain copiers (sometimes at crucial times) and in addition at times when we could have profited vastly, we chose to close positions near breakeven on principle, refusing to profit from human tragedy.

Outlook for the immediate future:

While the bank of Japan refrained from taking any action under the logic that they were waiting a bit longer to see the long-term effects of negative rates, it is unreasonable for anyone to expect them to remain quiet for much longer. You all saw last week that there was a random 200 pips spike on just a rumour (later denied) of the bank of Japan intervening in the market. Quite frankly it is my belief that the BOJ was simply waiting to see what action the Federal Reserve would take. They could clearly gauge the medium term effects of negative rates by simply inspecting the results that it has had in Switzerland, Denmark and Norway just to name a few.

The fact of the matter is that the institutional investors know that the BOJ has to act and has to do more. Despite Kuroda’s deluded bravado that the Japanese economy is experiencing moderate growth, the data is proving otherwise. A 1.4% decline in GDP shows a shrinking economy and not moderate growth and negative inflation shows that there are extreme deflationary pressures in Japan. Temporarily in the last few hours (before writing this) the Japanese yen has been strengthened as oil has started to pare the gains of its rally and once again investors are flocking to a haven currency. I do not expect this to last. I expect that tomorrow inflation data from Japan will show further deflationary pressure on the economy and that the yen will weaken as speculators correctly expect and anticipate the BOJ to take action be it through cutting rates further or through further asset purchases or a combination of all. I will be looking to go short on the yen at an opportune moment and I advise people to put call options on USDJPY before tomorrow’s Japanese data.

Outlook for the medium term:

In the medium term we turn our attention towards the US Federal reserve. Other than completely shocking the markets by contradicting themselves and lowering their forecasts from December despite the data in between December and March being far stronger than they expected (to give you an example current PCE is 1.7% which is 12 months ahead of their expectations). In the last few days no fewer than four Fed officials have openly stated that April remains a time for the Fed to consider raising rates for the second time. This is very confusing as it contradicts the outcome of the FOMC meeting in which they all appeared dovish and now yet emerge as hawks less than a week later. If we take away from the fact that they are losing credibility (something that seems to be happening to a lot of central banks these days), one thing remains clear that there is pressure on them to move. They cannot allow inflation to keep growing faster than expected as doing so will actually be dangerous for the US economy. Those who think that they are not going to act in 2016 or that they will only act once are very mistaken. Don’t be one of those people.

I also want all of you to keep an eye on the Swiss franc. The Swiss franc has been benefiting recently from speculation bids as HSBC and Citi and a few other of the world’s largest financial institutions have been advising their clients to purchase the Swiss franc as a hedge against the threat of Brexit. This strength will not last quite simply because the SNB will intervene in the markets as they always do. I think that the time for them to intervene is fast approaching and I do not think that they will let the EURCHF fall too far below 1.08 before they aggressively take action and step into the markets. I want you all to keep an eye for this and be prepared to take advantage of the opportunity when it presents itself.

Advice regarding some responses:

Firstly let me thank many of you for the strong supporting messages yesterday, they are all appreciated. There was one point I wanted to address here as many people seem to ask which is what my thoughts were about people withdrawing profits. While there are two things to say to this. In the first place I feel that it kind of defeats the purpose of compounding growth. But in the second place there is a greater danger to you by doing this. As you withdraw and others do not, your participation ratio in the overall portfolio decreases (and very quickly) and therefore effectively your share of the profits decline as a result of this falling participation. It means that as the fund grows, your share of the profits and actual net profits will decrease eventually to a negligible amount. In my opinion this kind of defeats the purpose of a compounding nest egg. I stand by my plan of letting things continue the way they are going and not touching a single penny for two years and either emerging with a considerable profit that can actually change the situation of life quite a lot or losing it while doing my best knowing that given the opportunity to aim for something better I tried my best and put the beehive ahead of a quick teaspoon of honey. I hope my advice on the matter is clear now.

Our relationship with HF:

Our relationship with HF continues to strengthen and they continue to provide consistent support, a reliable platform and even friendship. I will be meeting with them on 6 April in Dubai and will be discussing with them some requirements for us as a community that I would like them to feature. Please if you have any suggestions then comment below and let me know. 200 heads are better than one. I feel that for our main nest-egg account that we are in good hands with them and I want to continue to grow this relationship.

A new auxiliary platform, perhaps I spoke to soon?

It is never good to put all our eggs in one basket and as you know many of us trade more than just currency pairs. Some of us trade fixed-income securities (bonds), use options etc. Another blogger from United Arab Emirates has recommended a company that they are using which allows the trading of options (binary and traditional) and bonds as well as 10,000 other types of security. Many people have also been recommending other programs to me however I always find that after scrutinising them there’s always at least one aspect of these me unsatisfied and I will never recommend anything that I do not feel comfortable with 100%. This is because quite frankly if a dodgy platform ends up cheating or letting people down, then I feel guilty for saying “Hey, give this a try.”. I may have jumped the ship earlier yesterday in promising everyone a brilliant new alternative platform quite simply because I got excited after a conversation with anonymouseconomist (whom I respect immensely for keeping it real) after hearing that this platform offered the opportunity to invest in bonds. I guess this is because my original background was in fixed income trading and I guess it reminded me of a few years ago. Like anyone, when they are reminded of when they were a little bit younger (only a little bit I’m not that old), I got caught up in a moment of euphoria and quickly tweeted “New additional platform coming soon, watch this space!”. I’m sorry if I gave you all false hopes and expectations for an excellent new alternative platform for trading that we could use in addition to our PAMM. After calming down, I have realised that I cannot in clear consciousness recommend something until after I have fully tried it and spoken to others who have been trying it for much longer and then had all of my questions answered. So I’m sorry there is no new alternative platform for the time being and if after trying it I find that it does not live up to expectations, and I will not recommend it. In future I will try to be more conservative and not promise things before I’m 100% confident delivery. Please forgive me for this.

As always hope you all are having a great day and hope all of you having successful trades. I’m off to enjoy the start of my weekend.

Mohammed