FT has been trading full time from home for two years, with nothing but four kids and a beach to distract him .
He fills his spare time with weight training and rugby, though more coaching than playing these days.
FT mostly trades the forex markets and although he plays FTSE on occasions his bread and butter market is £$.
He likes to think that his technique is evolving but still hasn’t the temperament or money to back the big calls. He prefers to trade between 1 and 3 times a day, aiming to take regular small gains, but feels part of the evolution is in not dealing if the conditions don’t feel right.
What A Difference A Day Makes
So, yesterday I was just mildly peeved at my refusal to lock in some profits on my FTSE short. Today my short position is bigger, I’m wrong and sitting here with a face as long as Peter Crouch’s legs.
This morning I suffered from that old trader problem, thinking I knew best. Rather than considering closing out my short, I was only interested in how long I could hold off before selling again. I was pretty sure that the squeeze in equities was connected to this morning’s option expiry. I’ve seen it happen so many times; as the market pushes in one direction, more option positions are threatened with being hit. So traders will ‘hedge’ by trading with the market to protect their positions, thus helping the market to over-extend the original move.
As the FTSE continued to rise, stopping out yesterday’s short, I placed new short bets at 6277 and 6323, the latter bet was in £3 just when I thought the market had peaked ahead of option expiry. Boy was I wrong today!!
I don’t know what sparked today’s rally; it might well have been the break above the recent high of around 6280. Equally it might have been the move back above the hourly trend line I mentioned the other day.
Certainly, there’s been a few snips of good news this morning. Japanese economic growth was much stronger than expected, banging out a 0.8% figure for the first quarter. This gave a year on year rise of 3.3%, which looks pretty good against most of the western economies.
Closer to home further bid interest boosted British Energy, ICAP and London Stock Exchange, British Airways shares were flying after a promise to start paying a dividend again and Compass benefited from broker upgrades.
Even the normally reliable US housing numbers came out much better than expected.
It’s not all been good news though; the US University of Michigan Consumer Confidence number was the lowest since June 1980. At the same time the 1-year inflation expectation leapt to 5.2%. Lower growth combined with higher inflation is about as bad a mix as Amy Winehouse with Pete Doherty. There’s no easy solution to stagflation, as it’s known. The solution to low growth is to cut interest rates, the solution to higher inflation is to raise them. Both at the same time, hmm Houston we have a problem. If you’re a newbie and wondering what the hell stagflation is I’ve just written a piece called Doctor Who Meets The Stagflation Monster.
After a quieter week, oil has reached its customary record high and gold has recovered to challenge the $900 level again.
I’m off now to place a bet that I really hope loses me money. I’m going to place an emotional bet on Wasps beating Bath on Sunday, hoping that I’ll lose and Bath will get through to the final against Gloucester.
Finally, to get you in the weekend mood I’ve just come across Michael O’Leary’s latest Ryanair promotion. It’s in French, but frankly, who cares……
Enjoy the weekend
May 16th, 2008 at 8:08 pm
Hi FT,
As I was moaning about the other day, the positive spin put on the financial headlines to sucker everyone in. The following is an extract from an article on minyanville actually bothering to delve in to the real facts:-
3. Inside Housing Starts
Speaking of housing, while everyone is busy congratulating themselves on the better-than-expected housing starts, we’ll look at the actual data in the release instead of the headlines and note the following:
While the total housing starts came in at an annualized rate of 1,032,000, 8.2% above March’s revised 954,000 figure, this was 30.6% below the April 2007 rate.
Well, one might object, all bottoms have to begin somewhere.
Yes, and for housing it will begin with increases in single-family units, the most important datapoint in the release.
But looking at this data, single-family housing unit starts in April were actually LOWER than March, 692,000 units versus 704,000.
So how did the headline show strength?
Multi-family units came in at 340,000 versus 250,000 in March.
There is nothing about this report that can be construed as positive for real estate and housing.
But at the moment every piece of news, good or bad, is having a positive effect on the markets. One day the dawn will come and people will realise that things are a trifle worse than they’re being reported.
GP