Yesterday was a decent day for us. It was not our best, but we did manage to increase the value of our portfolio by over 3.5%. Which is respectable for the day. Incidentally in the 1st week of the month, we have a total gain of over 41%, which is double our monthly target, so I am happy for that as I always say results should be the first line of talking. However unfortunately for the community, many let them down yesterday and let them down hard.
I wanted to address why so many so traders did poorly yesterday. It is very simple. They failed to plan. I have had several debates with people on boards this weeks, in which I told them their 90% contribution to buys against the USD is foolish given the fact that several voting FED members have said a rate hike is still a possibility and that putting their eggs in one basket was a disaster waiting to happen to their copiers. These people all told me that I was wrong and it definitely would not happen and “we would see”. Well we did see!. This brings up a few scenarios. Either:
1.) They arrogantly thought they know better about US monetary policy than the Federal Reserve Bank of America and the Federal Open Market Committee. Very foolish if they do.
2.) These guys don’t care about their copiers and didn’t think they should risk diversify.
3.) Maybe they just have zero money management, Eggs… Baskets…..
4.) They had no idea what they are doing.
5.) Maybe they just had bad luck.
I am sure to each person a different above reason applied but in the end for whatever reason, many lost and lost hard. They can call it draw down, but until recovered, that counts as a loss in my book.If you want your money tomorrow, you can’t tell Etoro, listen I want my 10,000 back, the full amount not 4,000 because the 6,0000 draw down is not lost etc…
I’m sure excuses are flying such as blaming the “big boys” and saying all is under control etc, but the fact of the matter is these people have their copiers trapped. If they exit now, they lose most of their equity and so they are tied to these people most of whom enticed them with lies. I feel sorry for these guys but at the same time their is a lesson to be learned in all of this. If people don’t respect you enough to be straight with you and give you the truth, then you deserve to learn the hard way when you invest in them.
Please do not make it too expensive a lesson,
P.S. Watch out for my next post. It will be a real eye opener in explaining to you the primary factor behind what determines FX rates.