As oil continued to tumble today, it took equities with it and the risk aversion started. I feel I should save this first sentence somewhere as I seem to be posting in a lot these days.
Anyway suffice it to say there was virtually zero risk appetite in the market today and went significantly against our positions. To protect the account, we bought haven assets such as gold to ride out the storm and were able to increase account balance while limiting the damage on equity, a very difficult situation when the market goes 3000 pips against you. However, we managed as best we could. I think the fact that had we not taken measures, we would have been wiped out 6 times over and instead managed to increase account balance by $30,000 while losing only $7k additional equity is a decent result especially given the headaches (will explain below). In short the fact that we survived today makes me confident that we can survive anything provided that we stay in this together. I am actually happy with the results today, despite accumulating some losses. Our repositioning also allowed us to increase our available margin and hence give us more firepower to take advantages of opportunities for the rest of the week.
We had two significant headaches today:
- We had to reposition due to some people withdrawing funds. As this decreases our margin, it puts us all in danger as HF is a 300X leverage, so people withdrawing amounts
- We seemed to have EXTREME bad luck over the course of the day. In terms of there were at least 20 occasions, maybe some people on twitter counted, where some of our hedges or positions would get SL’s due to the spreads randomly widening to many times their size. Some people are calling foul play and think the platform is SL hunting, due to the way these would always exactly hit the Sls to the very pip and then recoil. Anyway I spoke to my account manager who was very responsive and who said that spreads are automated and not fixed and we simply had bad luck. It was indeed badluck. Each time this happened it cost us losses of a few K and prevented us from potential gains of 10’s of thousands. I guess we just were very unlucky.
Anyway the account is currently net buy (slightly) with the buys Sl set firmly in the green as I believe GOLD will reverse due to a number of reasons:
- Technically: it is over bought. The daily RSI is at 70.
- There is a danger of an oil rebound. Its given up a lot of ground quickly. If it drags equities up with it then….
- Fundamentally: Weak Japanese CPI on Friday will prompt market speculation on
So while this keeps going against us, we will keep hedging to keep us in the game and healthy and when the market accepts that there will be tightening from the FED and stimulus from the ECB, we will be nicely in the green and in a good position to take advantage for the rest of the year as planned. I am actually happy with that plan.
P.s. Please all be careful tomorrow. The Asian session is going to be very JITTERY! Please avoid going long on high beta securities. If not already in the market, save your firepower for Friday when Japanese inflation will be soft and give opportunities.
Thanks for all the support today, all your encouragement made a big difference,