Updates

End of week update: 12th December 2015

Well unfortunately for a second consecutive week, results have been negative and we are now down 6% so far this month. Everyone keeps telling me not to be harsh on myself citing that a bad month was bound to come eventually. I know that the biggest certainty in trading, is that you wont win every month and that you can not be blamed for things out of your control, that is not what is annoying me. I did not want to end the year with a red month and it seems that everything is ensuring that it ends that way at this point. This is what is annoying me. Anyway let me continue:

The week did get off to a promising start and on Monday we had not only reversed all the losses of the month so far, but also held an overall gain of nearly 2% for the month, but that went wrong very shortly. I have given daily coverage of these events, so do not really feel like repeating them but in short this collapse in hydrocarbon and commodity prices has effectively hindered all of our trades this week.

There was some positive news this morning as Chinese Industrial Production is MUCH better than expected. 6.2% vs 5.6%, which will give the commodity markets some much needed relief as we go into next week.

So before I leave for the day just a few highlights:

  • I think oil will recover slightly early next week on the back on this news and some retracement. This will bode well for us.
  • I expect USD strength to return in the build up to the FOMC meeting.
  • I expect that hydrocarbon prices will effect the FOMC decision making and while as things stand, they will still raise (in my opinion) but they will include concern over it in a Dovish statement that accompanies the rate decision. (This could have a similar effect to what happened when the RBNZ raised rates earlier this week).
  • I will come out and honesty say that I do not expect us to meet our monthly target this month and will be happy with a small profit at this point.

As for our Etoro activities:

1.) I think our current open trades will give us some value early next week, assuming that oil does not crash further (Brent fell over 13% last week).

2.) I do not see myself opening any new trades until I am done handling the current ones.

 

There was one positive in trading this week. Our first week of options trades did very well as summarized below:

Monday:

11:50 PM PUT AUDJPY – Success

Tuesday:
12:30 AM PUT GBPAUD – could not be executed
9:30 AM PUT EURGBP or any Eur pair – Success
11:00 PM PUT AUDUSD – Success

Wednesday:
8:00 PM PUT NZDUSD – Failure

Thursday:
12:30 AM PUT AUDUSD – Success
1:30 PM CALL USDJPY – Success

Friday:
1:30 PM Call USDJPY – Success
3:00 PM Call USDJPY – Success

Giving us an overall win rate of 87.5%.

Those who used the 65% win 20% refund mode, and split the trades into equal amounts would have had a return of:

(7/8)*1.65 + (1/8)*.25 = 1.444 + 0.031 = 1.47 or 47% gain this week. Which is excellent in my opinion.

Anyway lets stay positive and hope for a better next week,

Mohammed

 

11 Comments

  1. Morning Mo

    As always thanks for a superb update. Honest, frank and simply reassuring. (I feel like I’m describing an Ale!)

    One other point you should be proud of is that your community grows from strength to strength.

    Looking forward to next week!
    Have a great and relaxing weekend.

    Thank you
    Jon

  2. How do you see the US stockmarket doing this week? Ive got a lot invested in US stockmarket ETF’s and dunno if I should close positions before the FOMC meeting.

    Also, regarding the options results, is that part of eToro too? I copy you there but Im not sure if the options are part of it, or its something separate.

    Thanks for trading and for sharing so many tips, it’s all been quite helpful.

    1. I think it will do initially poorly and then rally as the Fed deliver a dovish statement, but nothing is certain. Lets see what happens in the build up.
      Options is something the community trades together on the forum. Its independent of Etoro with is our main focus at the moment.
      Thanks for the kind words.

      1. Thanks Mohammad for the fast response.

        I’ll look into the options group once I’m able to exit my ETF positions without too much loss.

  3. Can’t resist to post my 2 cents.

    As Yellen said, the more we wait before lifting off, the harder it will be.
    I interpret this sentence like this :

    The Fed is already aware that the situation won’t heal by itself. They talk rate hike for 2 years now, and to effectively doing it they needed some important numbers to be good enough while reassuring investors at each public speech.

    They are now at a point where delaying further would greatly discredits them. If you look at a longer time frame the NFP numbers, they are worsening, not getting better. Hence Yellen stance, not really hawkish I believe : we do it now because we have no choice.
    Even the “stellar” number of November is (way better than the precedent) merely in line with a lot of recent other NFPs and far from the better.

    And the recent Euro rally support this. The FED sure don’t want a “too weak” Euro when they hike. That would be catastrophic for their exports. They need to hike and keep a Dollar that can output exportable goods. With a Euro at around 1.0950 – 1.10, they can afford to lift a bit and send it at 1.08

    That mean the risk (remember it is only an opinion on current events, not a certainty) IS NOT about the fed not hiking the rate. They will, no matter what. Despite oil falling toward new lows (Probably a direct “sanction” toward USA by the middle east producers, that don’t want to see the US slipping from being a big client to an independent producer with non conventional extractions and fuel generation).

    The RISK I think is the market reaction. Look at the NZD. Rate cut, 100 pips up. In January 2015 Switzerland cut rate in negative (below zero, taxing bank deposits instead of giving a little interest rate), the Swiss Franc jumped up overnight by 800 pips.
    Why? Shouldn’t it be the contrary? Maybe because the market saluted the commitment of both central banks in trying everything to support economy..

    So the point is, will they hike? Yes.
    Will it sent Dollar to new heights? Probably not much, and that is what the Fed need to hike further in 2016.
    That is if the rate hike meets market expectations of 0.375%, from 0.250% up +0.12%. If not, either the market is deluded by a lower than expected rate or the rate is too high and seen as non sustainable for a still convalescent economy.

    As I see it, the hope of the Fed is that it will simply boost confidence in the USD, and help America secure its recovery, amid major central banks continuous easing. Nothing more. Could be quite risky, but it is a right time for US to take the chance while the opposition is lagging.

    1. Nzd rose because wheeler said he thinks this is the last rate cut for a while. Chf rose because they cancelled the 1.2 limit to the euro. Neither of these events had anything to do with the rate increase.

      At this point i think the fed will still cut but then say they expect future rises to be very slow citing hydrocarbons, inflation and dollar strength as a head wind. In short after the chaos of last week, expect the dollar to initially decline before rallying again.

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