The plan for the week starting Monday 14th December 2015

As those of you who have been following and copying for the last few months will know, my current strategy or “game plan” if you want to call it that revolved around my expectations that the FED would begin to normalize rates later this year. Compared to many others who said it was an impossibility and that it could not happen and bet against the USD, we took advantage to gain from USD strength and managed to outperform the general market during the last few months.

Entering December, I expected this to continue, but many things happened that we did not expect that hurt our trades:

1.) Risk aversion happened due to issues between Turkey and Russia.

2.) Commodities unexpectedly fell (we knew they would decline, but did not expect a crash!).

3.) Draghi and the ECB failed to live up to the hype they created and delivered less than the market expected.

4.) OPEC, despite signalling an intention to co-operate with the rest of the world, left quotas unchanged and even boosted production.

All of this has resulted in this month being a terrible one for us. However it changes my fundamental perception as follows:

I now believe that while the FED will raise rates, in line with market expectations, their conference afterwards will state one of more of the following:

A.) They see an overpowered dollar a problem.

B.)  They see future increases as being slower than initially expected.

C.) They are concerned over hydrocarbon prices.

I feel that all of this will actually serve to initially weaken the dollar post FOMC decision time and while it will recover towards the end of the year, presently, Wednesday will probably not be the best time to find yourself overly long on the dollar.

Part of successful trading is knowing when you have to let go, even if it means taking a loss, so this week we will try to close our current positions ahead of the FOMC meeting in as beneficial a position as possible and minimize our current losses for this month so that we are in a stronger position to trade when we have a clearer picture. At present, I do not believe that anything can be gained from stubbornly refusing to admit when the fundamental situation has changed. Therefore, if we must close at a loss, then so be it. It is better than effectively gambling with uncertainty  and while we have the spare capital to extend SL’s massively, I do not wish to lock people into trades, nor do I wish to tie up capital that can be used for trading and earning.

Some months we win, some months we lose and from the looks of it, thus far this month we are losing. The only thing left to do, is to minimize those losses and make sure that the account does not get damaged beyond a position where it no longer can be used for profit. Sorry that I can not give you better news, but unfortunately everything has just gone wrong for us this month despite our best efforts. I am not going to make excuses or blame other people because it was my decisions and miscalculations that causes us these losses this month. However it is not the end of the world. We lost more than this in July and were able to bounce back strong and recover, also the month is not over yet, so let us try to make the most out of this situation. Please know that every step I take will be in the interest of the community, as always.

Thanks for understanding,






    1. Nope I am still confident with that one. Its a longer term trade and is safe in my opinion. It also refunds us daily (which isnt really a bonus) but that is better than it costing to keep open.

  1. “At present, I do not believe that anything can be gained from stubbornly refusing to admit when the fundamental situation has changed.”

    That is a good news in itself. You give yourself (and us copiers) the possibility to win again, by adapting.
    Didn’t see much traders doing that.
    For the rest, I don’t think you did a mistake with the positions you’ve taken. At this point, it is just.. bad luck.

      1. Ho, thanks!
        Funnily enough, I cannot post just “Ho thanks” because it trigger an error for a comment being too short, so I have to write this.. =D

  2. Part of why we see so many traders on etoro go bust is because they do the opposite of what you plan to do this week. Instead of accepting the situation may have changed, they continue to load up on similar positions, exposing their entire account to this assumption. It’s never fun to take a loss, but I trust your judgment. If you are not 100% confident in your basic premise behind the trades, we shouldnt cling to hope and effectivly, gamble.

    Ineed the rate hike seems a certainty, so it wouldnt be unimagineable for me to see a scenario similar to RBNZ rate cut (though obviously the exact inverse reaction) with a spike in the expected direction (in this case, USD strength- to then drift down. Still, as you say risky to keep it open during the announcement, and plenty money to be made on pairs outside the USD.

    Here’s to a good week for us all!

  3. Great news you’re not extending the stop losses and tying up funds. Looking forward to next year already and thank you for 2015 learnt more and earnt more. Top Bloke

  4. Hi Mo!
    I’m not a specialist in trading, but I do und understand your thoughts and they are most reasonable!!! Thanks a lot for all your hard work!
    Let’s make the best out of this situation!!!

  5. Dear Mo, thanks for breaking down your intentions to us! It would indeed be wrong to think that anyone could always be on the right side of the market. That being said I do believe you have very high probabilities of being more rightly positioned than not, which is also why I’m copying you. One thing I’ve been meaning to ask you for some time is how would you advise to diversify the portfolio, I.e. other than dollar correlated pairs and commodities?

  6. Thank you for your honesty and for not sugar coating or putting the blame on sth/someone else. I’m here to learn, and while it’s obviously way more fun to learn in good times, it’s the bad times that also show the skill of a trader. So I will follow you dealing with the situation closely :). Overall I’m still very much in green thanks to you so I see this rather as a small bump in the road.
    All the best, Tania

  7. Keep it up Mo!
    We know how much effort you do just by giving us a feedback and summaries like these I read every morning.
    Most of ppl here (chat as well) are aware of the risk of trading (PnL) so don’t make any excuses and don’t blame yourself.
    Thank you so much for giving us this large picture of analysis that I am taking seriously in order to learn and see how the economy works globally and what are the links between them.

    Choukrane Mohammed !!
    Ali (Paris)
    PS : You should be very excited as you built a community from all over the world, so am I, ppl are very nice and motivated, I believe in this community and the power of compounding.
    Please let us know if you need any help, IT, Finance or so I think you have all the skills in the community.

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