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.
Waiting On Trichet
Morning folks,
The past 24-hours have been messy; I’ve been more like the velociraptors in Jurassic Park, probing at the electric fence, looking for a weak spot. My strategy of selling the Dollar was ultimately right, but spoiled by using too tight a stop loss. My FTSE short looked bang on for a while last night, but was stopped out for a small gain this morning. And HBOS is managing to hold the 300p level.
I’m not going to open any new bets this morning; I want to listen to Trichet without being biased by an open position. Also there’s key data out from the States in the form of the ADP employment change at 1.15pm and the Non-manufacturing ISM at 3 o’clock.
But I’m really coming round to the idea of further Dollar weakness. Check out the EURUSD chart below:
The rate bounced off long-term support at around $1.44, though exactly where depends on different charting packages and the size of your nib. You can’t see the detail on this chart, but there was a pretty good ‘Hammer’ candlestick yesterday. Techies view this as a bullish reversal after a downtrend, and we’ve certainly had one of those. There’s also the making of a bullish divergence on the RSI. If I open a long bet I’ve decided I’ll use a smaller bet size and wider stop loss to allow me to stay in the game (It’s a real bummer to make a good call like GBPUSD yesterday only to get stopped out before the real action started).
Having said all that, just like Tuesday’s Aussie trade I’m not wedded to the view. If Monsieur Trichet proclaims that growth is now a bigger concern than the rising cost of croissants, then I’ll be happy to join the crowd cheering on Team Dollar.
I’m not sure if the big game in equities will be tomorrow afternoon, so I’ve no plans at the moment. If I think FTSE spikes too far above 5500 I’ll open a small sell bet, but this time I’ll trail a more active stop loss than last night when a £100 plus profit gave way to a £16 gain when the stop gave way. Anyone else turned outright bearish on equities yet?
Monsieur Trichet, bring it on!
Happy Trading
September 4th, 2008 at 12:10 pm
yep - I think there will be a retest for the lows for both the DOW and S&P500, but think there may then be a possibility of the good old year end rally, i think some US banks report mid september - so that could be the trigger we are looking for
also rekon the $ rally is over -
September 4th, 2008 at 12:12 pm
PS - I am doing the dollar/yen - trade started shorting it at around 109 seems a bit more predictabe than the CABLE one
September 4th, 2008 at 12:22 pm
Hi simon,
yep I guess short $Y is consistent with falling equities. I bgt a scrap of €$ Calls at the lows, just as a low risk way of playing ahead of Trichet. It’s pocket-money size so no problem if it goes south, but a token gesture that I think we could be due a rally. Agree that we need to be awake to y/e rally to boost valuations, but would feel more comfortable with that from a lower base than anywhere round here.
September 4th, 2008 at 2:09 pm
hi ft, hope you have seen how well my prediction went with the shorting of the ftse and the dollar, have made myself a happy man with some real profit hope it goes well for you too!
September 4th, 2008 at 2:18 pm
Hi Charles,
glad it’s going well mate. Yeah, things are Ok ta. Stopped out of my outright short in FTSE, but gaining through options (a little sideline of mine) and short HBOS which is doing OK today. Losing a bit on some options backing a long eurodollar position, but peanuts compared to what I’d have lost on the forex. Opened a scrappy short in eurodollar, but not feeling comfortable with it. looking for another rally to re-open FTSE short, but that will probably be after payrolls.
September 4th, 2008 at 2:56 pm
Well, FTSE obviously headed down but, unless and until 5300 gives way, this is just a retracement on the uptrend from the July low. So I’m not ready to go short but my longs have long since been stopped out.
BUT, the S&P going through 1260 means it is now in a downtrend. And the Dow bounced (for now) off the 11290 level, whose breach would have put it in a downtrend.
So it’s 2 still on the up and 1 on the way down — but how much longer can the 2 cling on? I think I’d take either of Dow sub 11290 or FTSE sub 5300 as a serious FTSE shorting signal.
September 4th, 2008 at 3:20 pm
Hi Ken,
tough call ahead of payrolls though (how many times have I regretted holding off because of important data, which had little/no impact on the underlying move?). I’ve had my squawk squawking, but not had a clear reason for the trigger. Somw asset-allocations but nothing financial/geopolitical. Look at cable go!
September 4th, 2008 at 3:31 pm
Dollar Yen’s looking good now Simon.
September 4th, 2008 at 3:52 pm
JPY is on a roll - I’m not doing USD/JPY, but short GBP/JPY and EUR/JPY getting very tasty indeed
September 4th, 2008 at 4:38 pm
Hi FT
yep made a few quid on that one - but closed it out before the big money move happened
may get back in if it moves back above the 108 mark
September 4th, 2008 at 9:22 pm
Unbelievable move in JPY. Can anyone enlighten me as to why? (not that I’m complaining…)
September 4th, 2008 at 10:45 pm
Hi Flash
all i can say is rock and rolla! well done - I reckon the $ is about to fall apart… i am not a currency expert but when these guys move - they only go one way - stay on it as longs as you dare
cheers
S
September 5th, 2008 at 8:01 am
closed out my EUR/JPY short at 3am (!!) for nearly £3k of profit. Put another tentative one one just afterwards from 15300 - sitting at £72 profit! Still short GBP/JPY (got in on that trade a bit later) with a margin of 600 pips or so, and also running short EUR/USD and short GBP/USD but have moved stops MUCH closer to the current level - if the data flow is horrible today (actually the US data hasn’t been THAT bad….) perhaps we will see a weakening of USD? It’s only the currency trades that have saved my bacon ‘cos half of my long equity positions (HBOS anyone?) are in tatters…So, my reading of this particular situation is that the non-farm payrolls look to be bad…cash coming out of the market, profit taking on a bear market rally, plus hedgies liquidating their positions in long commodities/resources stocks. Or something else that we don’t know?The flip side of disinflation? A huge car crash at Lehman? Have still got a couple of Dow longs in place but with very wide (350pt!!) stops. Prepared to gamble, being an eternal optimist, that if the data isn’t that bad we will see a fast and furious rally.
September 5th, 2008 at 8:15 am
Hey Flash,
you’ve had a great few weeks; if you were running a trading book in the City your reward would probably be someone reducing your trading book for a few weeks. Remembr, a team’s usually most vulnerable after they’ve just scored. Good luck with payrolls, the most interesting move could come if it’s a good figure-will traders use the rally to lighten their load?
September 5th, 2008 at 8:25 am
Pow! There goes the yen again…the recessionary train gathering speed, or the carry trade unwinding, or some very large long EUR positions being liquidated? Plus oil on the way down. Have increased my short position in gold.
September 5th, 2008 at 8:26 am
That’s my take on it. All the charts now showing the bear market downtrend has resumed. Any rally should be taken as an opportunity to establish short equity positions.
Now looking for a FTSE number beginning with a 4. And suppose I need to start fretting about all those Sep puts I wrote 3 or so weeks ago, with a shade over 4900 being the alarm.
September 5th, 2008 at 8:32 am
yes, point taken. Am trying to reduce risk/exposure, hence moving stops. Have cut some of the losing equity positions too. Out now for a few hours - a bit nervous about what might greet my return.
September 5th, 2008 at 8:36 am
I’m short of FTSE and HBOS; my first Puts come into play at 5050 in a scrap, but my short will cover that. Like you Ken, life gets interesting around 4900!
September 5th, 2008 at 4:13 pm
Hi ken
You may recall that we were discussing ‘thematics for the next decade’ a few weeks back.
Not to be outdone, (all the best ideas come from Paddypower!) I see the Chronic Investor is running a series of special articles, beginning today with surprise Cilla, water and one we neglected, security.
Well worth a read if you can get yourself a copy, as they have another 8 big thematics (Waste, Nuclear power, video on the web, global public infrastructure- I knew that Brazilian sewage company would get a look in! to name just a few.
Cheers
GG
September 5th, 2008 at 6:12 pm
Hi GG,
Thanks for the heads up. I’ve got a copy lying on the kitchen table but haven’t had a chance to look at it yet. Something for the weekend (now doesn’t that sound like I’ve got a couple of lively days ahead).