FT has been trading full time from home for four 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.
Not Much Industry In The Fatherland
Equities and the Euro pushed aside appalling industrial production numbers from Germany. The Dow returned above 7000 and gold made a shining comeback, adding $20 to its price.
Patience paid off today and I used set-backs in equities and the Euro to place my bets, though to be fair, not in mouthwatering size and not at the best levels.
Trading FTSE in particular is tricky as it requires a great leap of faith to back a rally given the condition of the world outside. Earlier this week I wrote that I thought we were due a rally in a bear market, but that we hadn’t bottomed yet (Have Equities Bottomed Out?). And this morning provided another ideal opportunity to get some stock on board, except that I was long and wrong in £2 from yesterday. I added a further £1 at 3655, when the market looked to be steadying, but it’s still that fine line between backing your judgement and adding to a losing position that gets me.
So now I’m long of FTSE and watching a rally back up to the 3700 level. What has been interesting to note today was the reaction to incredibly awful German industrial production numbers. Even the fatherland has stopped making things, to the tune of 15% less than a year ago. Shares were marked lower on the release, and on news that General Electric had lost its coveted AAA credit rating, but it didn’t last and now the Dow is within spitting distance of 7000 again.
The other horse I’ve been backing (against my better judgement) is the Euro. I’ve been running long of EURGBP, just in small amounts, and this morning’s set back allowed me to add to my position at £0.9250. Yep, I could have got a lot better, but I prefer to wait for signs that the fall is done and dusted rather than trying to guess the bottom. I don’t mind missing out on the best prices if it means putting on a higher probability trade.
Just like yesterday the Euro swept aside shocking economic numbers, preferring instead the bullish chart pattern. I part closed my EURGBP long at £0.9275, just in case the German data became the straw that broke the Euro-camel’s hump. It wasn’t and I closed further bets at £0.9312 and £0.9301. At the moment I’m flat in EURGBP, but looking to scale back in on a set-back. If the Bollinger band theory works I might be able to pick some Euros up at £0.9220, the level of the bottom band.
The market I’ve really missed out on is gold. It looks like a return of risk appetite and an OK Dollar is good for gold. I’m not knocking the rise in gold, just surprised (caught out) by the timing.
A combination of repatriation of assets ahead of the year-end, and a better than expected (-12%year on year) GDP number gave the Yen an overnight boost, though it lost some of those gains this afternoon. I’m not keen on playing the Yen bet in March; I’ve made a diary note to check it out at the end of the month when the year-end flows should be out the way.
If you’re wondering about the extra squiggly lines on today’s charts, they’re Bollinger bands and I wrote a piece on them today.
Happy Trading
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March 12th, 2009 at 11:09 pm
Hi FT,
I see from your posts that you mix technical analysis with fundamentals.I know this is very useful to help you get a feel for where a market is going but do you think that it will sometimes put you off trades that the charts alone say are good.
An example is the Euro lately, still rising with all the bad news.I just ask as a lot of TA books will tell you to ignore fundamentals and just trade what you see in front of you.
Whats your long term view on where eur/usd and cable are going, and do you run any trades longer than a week or two?
Thanks for the help and love the blog.
Are you going to the Ireland match at the weekend, should be a good one.One grand slam every 61 years is not too muck to ask for is it?
Baz.
March 13th, 2009 at 12:24 pm
Hi Baz,
sorry mate, treated myself to a decent gym session this morning. Hmm, the TA/fundamental blend. it’s true that I do it, and yes, it’s not necessarily right to do so. I agree that thoroughbred TA users purely trade what they see, and with the right strategy do very well out of it.
i’m caught in the crossfire a bit; as a fund manager I based my decisions on news flow, and with a couple of good brokers that worked very well for me. At that time (to my shame) I viewed TA is some sort of witchcraft, used to justify what had already happened. If I’d embraced the concept with more enthusiasm I’d have done even better as a fund manager.
so, i naturally form views from fundamentals and I reckon there’s room for a combination. for example, there have been reasonable trade set-ups that I’ve ignored because of something else that I knew. But you’re right; I’ve missed loads of good set-ups (usually equity rallies) because I let fundamentals get in the way. I certainly wouldn’t argue with anyone who traded puely from the charts.
check out almost any currency chart; even the really clever guys struggle to call long-term currency views correctly. They have to make a call coz that’s what they’re paid to do, but I don’t think many get the calls consistently right. Personally I think currencies, more than shares, are better traded from the charts.For example, I’ve been negative on the Euro for ages on the grounds that the place is a mess, the top guys haven’t smelt the coffee and there’s a serious risk of a break-up. But the Euro’s been storming ahead recently and it was better to swallow my pride and play the charts.
There’s always talk that the Dollar will weaken because of it’s colossal debt problem, yet we’ve seen it benefit from being the least worst option. If the equity recovery continues then I’d guess the euro and £ will improve vs the dollar. Certainly the Eur/$ chart is starting to look good (I’ll do some more work on that nxt week, once we’ve had weekly closes).
But that’s a really long-winded way of saying that I don’t really take a long-term view, and if I do, I’m happy to contradict it by trading what I see. No, I hardly ever hold currencies that long. Flash seems to have got it down to a fine art, but I don’t even really like holding currencies overnight-too much happens when I’m asleep.
Rugby, no, I confess to being on the other side of the pond (but don’t hold that against me). Reckon Ireland should do the business and set up a cliffhanger nxt week with Wales.Their only risk is the usual one of not turning up, but as they did that against England they should be primed for a good win. As for the grand slam, not imposible, but Wales at the Millenium, presumably with tom Jones, Katherine Jenkins and Max Boyce (is he stil alive) all putting in an appearance-that will be a tough one.