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.
Gold Bounces As Traders Seek Safe Haven
Hi folks,
The global credit crisis has stepped up a couple of gears over the past week; concerns over individual banks going belly up have been replaced with fears that states, and even countries, could soon be bankrupt. Equities look increasingly nervous as the Dow teeters on the brink of sub-10,000 and gold and equities go their separate ways.
The weekend’s banking news was same-old, same old (in a ‘where’s my pension gone?’ sort of way), but there’s plenty of speculation over what Iceland’s plans are. Reports over the weekend suggested a complete nationalisation of the banking system, till it was pointed out that the move could tip the Country’s credit ratings over the edge.
And governor of California, Big Arnie, has warned ‘Hand-out Paulson that he’ll be back, asking for a $7 billion loan in the very near future. The Californian business model looks to come from the same book as Northern Rock, ‘It’s OK, we’ll borrow from the credit markets’. The trouble is, that with the exception of giants like the World Bank, the credit market’s computer says no.
There was a parting of the ways in the commodity markets this morning; gold returned to its original job description of ‘a safe haven for times of risk aversion’ and rose by over $30 to $862. By contrast, oil traders continued the theme of ‘if no-one’s going to produce anything then they won’t need much oil’ and sold crude down to below the $90 level.
So Friday night didn’t quite follow the script; Even I went into the vote with a begrudging small long in FTSE. Luckily, I chucked out £2 at 5021 while voting was going on and scrambled out of my final £3, as soon as the market started to retreat, for a small profit. Returning after tea, the market had completely flipped over. With the Dow threatening Monday’s lows I stuck on a £2 sell bet at 4890.
Despite having a head start I’ve found trading FTSE pretty tricky this morning; Sure, markets look extremely vulnerable to further falls, but they’re still open to sharp rallies. I’ve traded the short side profitably a few times this morning, but after my one good gain from the weekend short, I’ve made very little. At the time of writing I’m short of £2 and about 50 points offside!
For one reason why any rally might run out of puff, check out this chart for when this latest sell-off happened.
Most institutional fund managers this side of the Atlantic will have left their offices on Friday with a reasonable expectation that the Bailout bill would be passed. Even if they were overall bearish, they probably didn’t want to leave their funds too short over the weekend in case the Wall Street gave Congress a 500-point thank you.
So, a lot of these guys could be suffering Monday morning blues after being greeted by a market 2-300 points lower. In many ways these guys are just like you and I and might use the next half-decent rally to lighten up their portfolios.
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I had more joy in the forex markets this morning. I sold EURUSD in a tenner at $1.3591 and, after a hesitant start, saw the market move my way. I closed half my bet at $1.3555 and brought my stop down to $1.3581 to guarantee a £230 profit. And that’s what I ended up with as the currency turned around to stop me out.
This is a fairly lightweight week for economic numbers (check out what’s on and when with the Weekly Wrap), but there’s bags of potential for surprise’s as the politicians struggle to agree on how to deal with the crisis. The smart money’s now going for a UK cut in rates of 0.25-0.5% on Thursday, if not before!
Happy Trading
October 6th, 2008 at 1:35 pm
VIX at 49!
October 6th, 2008 at 1:57 pm
just sold EURUSD again at 1.3783.
October 6th, 2008 at 2:07 pm
Dow had a sniff below 10,000. Wow! Closed out part of my Euro trade at ‘73 and 53. Running £3 with stop at ‘73. Closed out FTSE short for a breather.
October 6th, 2008 at 2:41 pm
Hi Ken,
have you done any more of your Maths on 3sd numbers for this month?
October 6th, 2008 at 2:56 pm
Feels like capitulation time to me, down over 1,000 points on the Dow since the bail out was agreed on Friday. Don’t know when this will stop, but I’d expect a large rally when it does.
October 6th, 2008 at 3:00 pm
Placed a massive £1 BUY bet at 4600. With the market a bit higher I’ve yanked my shaky stop up to breakeven. Could be £200, could be nothing-but it shouldn’t be negative now.
October 6th, 2008 at 3:04 pm
Could be right EF, but I doubt you’ll right too many traders going for that yet. We might all look back and curse not buying it, but I reckon we’ll want some stability/ external catalyst to really set a spark. It seems all the politicians ahve done today is said that they’ll do whatever’s necessary, without really doing whatever’s necessary.
October 6th, 2008 at 3:17 pm
Hi FT,
I make 4770 the 3SD expiry-to-expiry point for FTSE this month. As I said, that’s a once in 30 year event. Although I read an IC article in the last week or two that advocated using a cubic power calculation, rather than normal distribution, for 3SD and that cuts it down to once in 6 years.
And those probabilities are for hitting 3SD either way, so you need to double up if you just consider the downside, ie a 3SD fall would be once in 60 years (normal distribution) or 12 years (cubic power).
Which is to say, we’re looking at a big f***ing fall since September option expiry.
October 6th, 2008 at 3:38 pm
Pah! Never did like going long. Rather than take my profits at ‘50 I brought my stop up to an inoffensive 4610 and backed the bigger move. Stopped out at 4610. Short of £2 at the moment and locked in stop at break-even.
Looks like we’re doing this bit more on our own. Not sure if this is the book-squaring malarky that goes on after the close, or justa fear of what the States will do when we’re all watching telly later.
Thanks for that Ken. Haven’t looked at all the numbers but we must have had our fair share of once every 30-year events. Didn’t one of those bring down LTCM, then we had the windy 1987 fall. Hmm
October 6th, 2008 at 3:49 pm
Yeah, the trouble with rare events is that they don’t happen often but they can happen soon. So, it’s unusual for San Fransisco to be wiped out by an earthquake but if you’re there and it happens and you’re getting wiped out then it’s little comfort that it hasn’t happened in the previous 100 years and probably won’t happen for the next 100.
Incidentally, as things stand currently, we’d be into 4SD territory, even knocking on the door of 5SD. Which happens about as often as the Pope has a Big Mac for Friday lunch.
I’m out of my shorts and I’m looking for opportunities to go long. But can’t see where they’re coming from at the moment.
October 6th, 2008 at 3:54 pm
Yep, I’m think of dusting off the ISAs and Sipp and seeing if it’s worth switching some of my fixed int into something equityish. That’s not about clever timing, that’s knowing that when the market does turn I’ll be too busy to think ISAs.
October 6th, 2008 at 8:00 pm
blimey, what a day. Closed out my short for a small profit (rather than the large profit half an hour ago).went long £1 at 4545 and running that over night. option positions got in the way of the big profits. Over and out.
October 6th, 2008 at 8:38 pm
Interesting times. Survival has to be the name of the game for trades but you have to feel there’s some real long term value appearing.
Know what you mean about the Sipp and ISAs. I mopped up the scraps of cash I still had in mine today. Bought the Lyxor FTSE ETF rather too soon but like the “survivor bias” that you get from an index. Also snapped up the SG DJ Eurostoxx 50 covered warrant as it slipped below 900. Had a go at getting the Utilico ZDPs but set my limit 0.5p too low — probably just being stingy here but leaves me a few pennies to play with tomorrow.
But haven’t gone as far as selling any fixed interest yet. But I’d rather be a buyer at today’s prices than those of a year ago.
October 6th, 2008 at 8:44 pm
Wow. What a day. Was out all day and so missed some opportunities. Amazingly I’ve got back home and found my P/L in better shape than it was this morning - most of the equity longs totally caned, gold shorts mostly stopped out, but I’ve more than made up for it with the stunning move in USD and EUR/JPY. Being very cautious though - no time for heroics.
October 6th, 2008 at 9:26 pm
I thought this might be capitulation day, but I think we would have needed the Dow to end at a session low. I can’t complain, I bought the Dow at 9600 on the way back up but was expecting it to drop again by the end of the day. Left half running overnight, but regret that now and wish I’d closed out today.
October 6th, 2008 at 10:30 pm
HI EF - I think you could be alright with that dow long…so long as you’ve got a stop in safely above 9600. Could be a good level to be trading from. A nice 400 point rally and a decent margin! Don’t think you should regret leaving it running at all - good to have it there.
Gold seems to be on the way back down, at least for now; I know there’s a flight to safety thing going on but I think ultimately gold has to come in line with the rest of the commodities. So I’m still running those shorts.
I”m wary - not putting any more long index positions in until there’s some concrete intervention/better news…
although there are an awful lot of equities out there at very very tempting prices…
October 7th, 2008 at 11:24 pm
Hi FT
I reckon these markets are on “crack” at the mo.. i am trying to find the rational to go long, but like everyone else i cannot find a genuine reason - its looks like upwards resistance now has to be around 1070 on the S&P - any idea’s on the downside - I asume it must be the post 9/11 low of around the 700 mark?
PS i lost a few hundred quid thinking the 1070 would hold - nasty!
October 7th, 2008 at 6:38 am
Not going long today. Will wait and see how things work out.
October 7th, 2008 at 6:39 am
Morning guys,
I’m afraid I sold my long earlier this morning. The prospect of £100+ from a long in these markets was too tempting. The bigger consideration is that, in these markets, I’m effectively long via my option positions. That doesn’t stop me from going long again, but I’d rather re-join higher up on some more concrete news.
Simon, hard to tell with levels when the market’s driven by blind panic. I thought traders would have had the decency to stop and have a drink at 10,000 in the Dow, but they just blew it away. I guess 1000 on S&P is the line in the sand, though better techies than me might claim the break of 1070, or 1050 was only intraday and therefore doesn’t count.
Today, I reckon I need my crew to tie me to the mast and stop me from going short too early- after a major fall I tend to re-open a short a couple of 100 higher, forgetting the magnitude of the previous fall and the scope for a proper bounce. Hey, p’raps I should go long!