So things are looking a little better, but make no mistake we are still FAR from a profitable month and still in the red as we write this, with a monthly unrealized loss of equity of approximately 5%. In short, I am not trying to cover up the fact that this month has been a disaster for us.
We managed to close the two USDJPY sells (one intentionally, one with a fat finger) in profit. And as of writing this regained half off the unrealized losses on the account so far. We also opened two new trades, both medium to longer term AUDNZD buy and GBPJPY buy. I have done this as I believe both pairs are currently undervalued. The JPY has enjoyed a show of strength recently due to haven bids and is over-rated in my opinion, while I feel that the GBP is currently undervalued. I did feel earlier that the Sterling would be dragged down further by the Euro as the ECB increased stimulus, but since they did not, my thoughts on the subject have changed. I would also like to point out that the GBPJPY has fallen now for 8 consecutive days and is long overdue a correction.
At the same time, I feel the NZD is overvalued at this time as the markets are still considering RBNZ governor Wheelers comments, without realizing that they are miles away from being anywhere close to his inflation targets. Another reason for picking these crosses was that as we go into a choppy FOMC meeting, I did not want to have excessive USD exposure and at the same time, I did not want to leave money unused. Its a fact that unused capital is effectively useless to us, so this gives us a lower risk way to use the capital while we attempt to get some gains.
With regards to the meeting, I think this will happen tonight:
1.) The fed will raise rates by 25bps.
2.) They will give a dovish outlook but NOT as Dovish as the market expects.
3.) They are highly likely to cite the headwind issues of a strong dollar.
4.) It will be very choppy.
We go in holding an exposed NZDUSD sell. I do not want to close this at this time, as I feel that their is a 60% change it will recover and hit a modest TP in the waves the Fed announcement causes. If it does not and it stops out, then so be it. We tried and sometimes things SL. It will be a loss, but not a catastrophic one.
Another issue today is that (many suspect) once again UK data has been leaked. This strange activity has been happening for months and it is highly disappointing that such activity continues, especially in a country like the UK which is supposed to have regulations preventing such activities. I guess (assuming that the many who suspect this at right) we have to accept that this trend will continue since it seems nothing is being done about it.
Regardless of what happens today, even if it turns badly, my attention for the rest of this week (other than keeping an eye on our trades when I have the change and looking for more opportunities) will be considering a plan of action for next year. As many of you know from January I am planning to place a significant deposit and not make any withdrawals for a period of two years, while I attempt to compound it and see what gains I may realize. I am as of yet undecided whether to do this on Etoro or elsewhere at this point, but will make my mind up before I go on holiday on the 23rd.
Good luck to everyone tonight,