Updates

Update: 24th March 2016

Solid performances continue and a milestone is reached:

Earlier today at 11:57 AM (GMT+4) for the first time our account balance exceeds $200,000 USD. We have hit this figure 2 months ahead of schedule. I consider this remarkable considering that we have been fighting against all odds this month and have had several painful episodes. I am proud to carrel our next target as $500,000 USD and wish us all the best of luck in achieving it and even more.

At present our HF situation is thus for the month:

On net deposits of $114,000 we have a current equity (as of the time of writing) of $173,000 and a balance of $202,000. This means our gains for this month have been:

Equity: $59,000 profit or a 52% gain this month.

Balance: $88,000 increase or a 77% gain this month.

This already completely shatters the yearly performance of 99.9999% of all funds and even eclipses our already ambitious target of 20% a month. I also wish to point out that this was achieved despite 4 central banks going against us, over 100 bad luck incidents with SL’s and even margins being withdrawn by certain copiers (sometimes at crucial times) and in addition at times when we could have profited vastly, we chose to close positions near breakeven on principle, refusing to profit from human tragedy.

Outlook for the immediate future:

While the bank of Japan refrained from taking any action under the logic that they were waiting a bit longer to see the long-term effects of negative rates, it is unreasonable for anyone to expect them to remain quiet for much longer. You all saw last week that there was a random 200 pips spike on just a rumour (later denied) of the bank of Japan intervening in the market. Quite frankly it is my belief that the BOJ was simply waiting to see what action the Federal Reserve would take. They could clearly gauge the medium term effects of negative rates by simply inspecting the results that it has had in Switzerland, Denmark and Norway just to name a few.

The fact of the matter is that the institutional investors know that the BOJ has to act and has to do more. Despite Kuroda’s deluded bravado that the Japanese economy is experiencing moderate growth, the data is proving otherwise. A 1.4% decline in GDP shows a shrinking economy and not moderate growth and negative inflation shows that there are extreme deflationary pressures in Japan. Temporarily in the last few hours (before writing this) the Japanese yen has been strengthened as oil has started to pare the gains of its rally and once again investors are flocking to a haven currency. I do not expect this to last. I expect that tomorrow inflation data from Japan will show further deflationary pressure on the economy and that the yen will weaken as speculators correctly expect and anticipate the BOJ to take action be it through cutting rates further or through further asset purchases or a combination of all. I will be looking to go short on the yen at an opportune moment and I advise people to put call options on USDJPY before tomorrow’s Japanese data.

Outlook for the medium term:

In the medium term we turn our attention towards the US Federal reserve. Other than completely shocking the markets by contradicting themselves and lowering their forecasts from December despite the data in between December and March being far stronger than they expected (to give you an example current PCE is 1.7% which is 12 months ahead of their expectations). In the last few days no fewer than four Fed officials have openly stated that April remains a time for the Fed to consider raising rates for the second time. This is very confusing as it contradicts the outcome of the FOMC meeting in which they all appeared dovish and now yet emerge as hawks less than a week later. If we take away from the fact that they are losing credibility (something that seems to be happening to a lot of central banks these days), one thing remains clear that there is pressure on them to move. They cannot allow inflation to keep growing faster than expected as doing so will actually be dangerous for the US economy. Those who think that they are not going to act in 2016 or that they will only act once are very mistaken. Don’t be one of those people.

I also want all of you to keep an eye on the Swiss franc. The Swiss franc has been benefiting recently from speculation bids as HSBC and Citi and a few other of the world’s largest financial institutions have been advising their clients to purchase the Swiss franc as a hedge against the threat of Brexit. This strength will not last quite simply because the SNB will intervene in the markets as they always do. I think that the time for them to intervene is fast approaching and I do not think that they will let the EURCHF fall too far below 1.08 before they aggressively take action and step into the markets. I want you all to keep an eye for this and be prepared to take advantage of the opportunity when it presents itself.

Advice regarding some responses:

Firstly let me thank many of you for the strong supporting messages yesterday, they are all appreciated. There was one point I wanted to address here as many people seem to ask which is what my thoughts were about people withdrawing profits. While there are two things to say to this. In the first place I feel that it kind of defeats the purpose of compounding growth. But in the second place there is a greater danger to you by doing this. As you withdraw and others do not, your participation ratio in the overall portfolio decreases (and very quickly) and therefore effectively your share of the profits decline as a result of this falling participation. It means that as the fund grows, your share of the profits and actual net profits will decrease eventually to a negligible amount. In my opinion this kind of defeats the purpose of a compounding nest egg. I stand by my plan of letting things continue the way they are going and not touching a single penny for two years and either emerging with a considerable profit that can actually change the situation of life quite a lot or losing it while doing my best knowing that given the opportunity to aim for something better I tried my best and put the beehive ahead of a quick teaspoon of honey. I hope my advice on the matter is clear now.

Our relationship with HF:

Our relationship with HF continues to strengthen and they continue to provide consistent support, a reliable platform and even friendship. I will be meeting with them on 6 April in Dubai and will be discussing with them some requirements for us as a community that I would like them to feature. Please if you have any suggestions then comment below and let me know. 200 heads are better than one. I feel that for our main nest-egg account that we are in good hands with them and I want to continue to grow this relationship.

A new auxiliary platform, perhaps I spoke to soon?

It is never good to put all our eggs in one basket and as you know many of us trade more than just currency pairs. Some of us trade fixed-income securities (bonds), use options etc. Another blogger from United Arab Emirates has recommended a company that they are using which allows the trading of options (binary and traditional) and bonds as well as 10,000 other types of security. Many people have also been recommending other programs to me however I always find that after scrutinising them there’s always at least one aspect of these me unsatisfied and I will never recommend anything that I do not feel comfortable with 100%. This is because quite frankly if a dodgy platform ends up cheating or letting people down, then I feel guilty for saying “Hey, give this a try.”. I may have jumped the ship earlier yesterday in promising everyone a brilliant new alternative platform quite simply because I got excited after a conversation with anonymouseconomist (whom I respect immensely for keeping it real) after hearing that this platform offered the opportunity to invest in bonds. I guess this is because my original background was in fixed income trading and I guess it reminded me of a few years ago. Like anyone, when they are reminded of when they were a little bit younger (only a little bit I’m not that old), I got caught up in a moment of euphoria and quickly tweeted “New additional platform coming soon, watch this space!”. I’m sorry if I gave you all false hopes and expectations for an excellent new alternative platform for trading that we could use in addition to our PAMM. After calming down, I have realised that I cannot in clear consciousness recommend something until after I have fully tried it and spoken to others who have been trying it for much longer and then had all of my questions answered. So I’m sorry there is no new alternative platform for the time being and if after trying it I find that it does not live up to expectations, and I will not recommend it. In future I will try to be more conservative and not promise things before I’m 100% confident delivery. Please forgive me for this.

As always hope you all are having a great day and hope all of you having successful trades. I’m off to enjoy the start of my weekend.

Mohammed

14 Comments

  1. I told you Mohamed on monday that i feel this and the next week will be big green for you well done Mohamed 🙂
    Respect

  2. Hey Mo,

    thank you for the update and your great work – you really are talented at this.
    I understand your concerns regarding people withdrawing amounts from the PAMM account – however, I must admit that I am still a little bit worried that in case we reach a certain (hopefully high) amount in around two years, HotForex will not be able to pay for all the withdrawls. I have read about many people having problems with HF and the withdrawl system + the very bad reputation of the CySEC and associated brokers fuel that concern.

    I am just a beginner but therefore I assume that many people like me have similar worries. Maybe you can adress this when meeting them or let us know your thoughts on this. Anyways, keep it up – I have already learnt a lot and am keen to learn more.

    Best
    Lucas

  3. Thanks for the updates Mohamed.

    As for HF, I think it would be useful to be able to see open trades in real time. As an investor I can only see them when they have been closed or if they happen to be open at the rollover time which I think is 13:30 server time.

    It’s not a major issue, just a minor annoyance as I’m a little OCD and like to know what’s making the balance and equity go up and down.

    Other than that, many congratulations on the first milestone. Continue at this rate and we’ll have the first million by June and as they say, the first million is the hardest, the rest come more easily.

    Regards, Mike.

  4. Thanks again Mo. Only issue for me at the upcoming meeting is to try and secure fixed spreads as many others have mentioned. Depending on the outcome, will see about adding regular amounts to the PAMM. Having an easter break with the family which we are all excited about from tomorrow. Have a good weekend.

  5. Hey Mo,

    I’ve been repeatedly asking you about lowering the minimum deposit but haven’t heard anything back as of yet. Am I right in assuming that this is something you’ll bring up in the 6th of April meeting?

    I’ve been keeping my money on the side lines in anticipation of the amount being lowered; but without clarity I’m going to have to abandon you so as not to have my equity losing value by doing nothing. Hence I would love to have some form of an elaboration on the subject.

    1. Ive asked them about it repeatedly. Will have to wait to discuss it with them in person. The minumum in their settings is 500 but ive seen other accounts with smaller minimums. Hopefully they do lower it for us. If they do not, then sorry.

  6. Hi Mo,

    Great work. You keep coming back. If only Liverpool showed that mental strength 😉

    The whole debate on withdrawing the profits is all about the fear of losing the money we have deposited. Having my eBear (aka some broker) account blown, I also played with the idea of withdrawing the amount I lost and my HF deposit when my deposit quadrupled. Then I would be playing with nothing to lose. However, I now think differently.
    If anyone hasn’t read “Fooled by randomness” by Nassim Taleb, you should. Here’s a useful extract:
    http://www.curatedalpha.com/2011/nassim-taleb-on-the-difference-between-noise-and-information/
    It was super useful for me to rationalize my fears.
    What would help for the entire community is to have a different social platform that is oriented towards pocket money every month. Like anyoption or something. Well, perhaps that’s even riskier. I don’t know. What do you think?

    With regards to HF, I have a few requests.
    1) Suppose you continue these amazing efforts in the next two years (no pressure), then the 100k will be turned in roughly 8 million (assuming 20% per month). If you do better, it will be a crazy amount (btw, in that case I will go to Dubai and thank you in person). Will HF be able to withdraw that money at once?
    2) Is it possible for them to show open trades in real time. It often doesn’t make sense to me. The results statistics could also be better represented. Individual members should be able to see the evolution of their deposits.

    Perhaps we should make a thread on the forum with all ideas for HF. Then we structure everything!

    Again, thanks for everything! So grateful of being part of this community.

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