C's Cave

Greetings all.
Short introduction:
Started my career in bottom up equity research, ran a STRIT/liquidity book and moved on to the longer end of the curve running a bond investment portfolio.
I also have a diploma equivalent in technicals.
During my career, chart reading has helped heaps in big broad portfolio timing.

However, trading currency is a different ballgame altogether, due to the differentials in timeframe and drivers of asset class.
Similarities, are that... markets are markets. It's a matter of retooling to know what variables drive price... and how to anticipate the behaviour of other market participants.

Why am I posting here?
I got tired of the stupid politics. Been running my own gig, of which trading is a part of.
More than a decade ago, I remember going through Peter Crown's sharing (the DIBS stuff). I studied it out thoroughly, applied it to my own style and it helped alot.
Now that I have more time (I told mgmt to GGF'd cause the politics started getting utterly stupid), I thought that perhaps I might post some stuff here.
Hopefully, it might help some folks in the way that Mr Crowns helped me.

And yes, nice platform to document my trading experiment as well. It's the current market-puzzle to solve.
.
Style:
I am a mid-to-long term swing trader.
My major TF is the 4hour.
IE: I'll hold from days to... if possible, months.

Why this style?
This took a fuck load of introspection TBH. Back in the bank, I often worked the 1hour to 2hour for timing.
When I transited out and into FX or even 10yr UST futures, for whatever reason, what worked for timing, couldn't work for trading.
Hard ass thing about markets is that the PnL just tells you every bloody thing you need to know.

And there's only one thing:
Are you making money?
I wasn't.
So though I had a whole buncha interesting and cool tools for timing, in real trading, I couldn't apply it.
Did the psychologically difficult thing to jettison tools I used for a decade+ during the institutional days for a simpler trading style.
The warning, was a friend... he's an engineer and built out some magic martingale (yes, GASP!) algo...15yrs ago. He's STILL working on the bloody thing to TRY to make it spit out $... (yea, good fucking grief right?! Cut yer losses and change tools/tactics quickly).

[That's worked pretty well thus far. Past 2mths has been a net 10%+... probably would have been +20%, but I missed some BEAUTIFUL entries into USD/JPY & GBP/JPY (on the way up) by 1 to 3 miserable pips.....]

Upon reflection, I realized its personality.
At the crux of it, I fucking hated staring at the bloody screen across multiple charts, several times a day.
I was clicking through the charts maybe 100 times a day, and did NOT like it.

Why? I'm wired as an investor. I make money by putting money to work. I don't like much activity.
I rather sit down and read an annual report and use my brain to figure shit out, then position.
So there we go, the way I like to work markets, is to try to figure out what's moving, hitch a ride and do the Livermore thing and "sit tight" (but first...think of where to sit)

this was from 19July'24:

from the charts, NZD looks weak across the board, as does CAD.
Am looking for levels to short NZD/JPY, CAD/JPY, and Long EURNZD, GBP/NZD.

GBP/CAD is a candidate as well, daily RSI6 is overbought and 4hour oversold.
Linearity for this pair is high.
Now if we just had some decent bullish candles...
https://www.forexfactory.com/thread/...2#post14937012
.
and this, yesterday:
Macro notes:
Generally risk-off. Nasdaq (NQ) is down, JPY is strengthening.
Amongst the pairs, the antipodes, AUD & NZD are displaying the highest weakness in classic risk off fashion.
They were perceived to be the highest-for-longest interest rate c/banks and the antipode/JPY carry was pretty much in nice force.

It's unwinding in a hurry.
Bull climbs stairs, bear jumps window.
Classic macro unwind... the "macro rubber band". The bigger and longer the upswing, the faster and sharper the decline.
.
I'm speaking as a mid-to-long swing timeframe trader. Weeks to months.

https://www.forexfactory.com/thread/...5#post14938985
short NZD/JPY (4hour)

23July'24:
NZD/JPY (NJ), Daily.
Nicely ITM, set T/P on the higher end of the support zone.
.
Price action is dropping like a brick. Looks like a risk-unwind trade.
Don't have the confidence in the move to sustain for a looong time.
So this NJ short, is a short-swing type of trade.

Would love to add on, but dont seem like there's much room?
.
Note: Took partial profit along the way, so the trade is BE.
Am considering whether to shift the rest to BE, or to give it more room to breathe.

Edit:
Gone to BE post London. Figured there's enough resistance defending my entry level.
Locking in some profit, while giving the trade a wide amount of room to run since I've locked in a net positive for the trade.

NQ 4hour. 23 July'2024

Dumb friend indicator went off yesterday:
Dumb: One had to manually cut loss on naked option selling... giving back several months of profit.
And Dumber: The other rolled more naked puts

If NQ cracks 19,500, I guesstimate about 400 points of downside to next support (and Dumb and Dumber will be in deep and deeper shit...)

Should also take risk-off deeper.
.
Maybe I should put my NJ T/P lower...

NJ 4hour. And we're out! =)
Edit: Daily chart for perspective

Expectations & Consistency

Expectations play a larger-than-expected role on one's ability to be successful in the market.
Too often, I've come across rookies, especially in retail / non-mentored expect to double their money every month, and run their $200 starting capital to $2million in a few years. Not seen it work out consistently. It looks great on spreadsheet. But real life never works out that way.

By pure dumb luck, I did come across this rich-twat during my college years who ran $1k to $100k in 1mth, by leveraging like crazy.
He then proceeded to run $100k down to $0.
.
So then what works?
To be consistent, one needs to have a consistent approach, and stick to ones guns, trusting that the method has worked and will continue to work.
So just STFU, run the method unemotionally and let it do it's job.

Mark Minervini is one of my market heros. He did nothing during the bear market and when the bull market picked up he goosed it.
Takes discipline to do nothing for a few years, but that is his method.

Expectations? You run the method, and take what the market gives to you.
You surf the wave and ride it as best as you can and enjoy the ride.
When you get off, then you tally your score.
.
When we reset the P&L annually, it always looked fucking ridiculous.
How did we make it year-on-year-on-year?
Little wins whenever we could, and once in awhile, a big win. Then back to little wins... and the opportunistic big win.
It was always the aggregate of a series of trades that made the budget (recall: I was running a bond portfolio. Not much sexy there, but lessons apply).
Yes, I've heard my fair share of super sexy masters of the universe type trades who make $1billion a day in 1 trade.
That's the shit for movies and headlines. Like the twat who ran $1k to $100k.

Personally, the drama and excitement is 100% counter productive when it comes to markets.
I've gotten to the point where both my trading and investing are fucking boring emotionally.
I love it that way. Low maintenance = There's energy for the rest of life.

Like one of my mentors mentioned, "the bazaaz, toys, entertainment/excitement and shiny things are for babies".

Chart says all I'm feelin' now. NJ 4hour now.

WELL, as we used to say, taking profit is the opposite of Pokemon: "Ya aint gonna catch em all"....
What can I say, it was a logical place to T/P.
.
The one thing I've learned, it to be real honest w myself.
Curse and swear and laugh, give it full vent, then forget about it and move on to the next trade.

Reflection on NJ trade:
Dipped another 2big figs+ from where I T/P'd.
Vertical moves can last alot longer than you think they can.
Don't try to second guess.

A policy of getting out via trailing stops is ideal.

In other words, you are baking into the cake: you're going to give up some profit at the end.
Trade Off = This gives you optionality to catch larger moves that you would have otherwise T/P'd on and missed.
.
Money is made by SITTING TIGHT.

29 July 2024
Risk seems to be catching a bid.

XXX/JPY pairs turning higher.
NZD weakness fading.

NQ put in a higher-low after plumbing through 19,000.

Nothing eye catching at the moment for my style.
Waiting for a breakout higher for Risk-On again to buy-the-dip, OR Breakout lower to sell-the-rally.

12 August 2024.

Nothing to do here. Markets in consolidation mode post risk-off.
For my style of mid-term swing, I'm be looking for a breakout above/below current consolidation levels.

NQ is forming a decent bottom. I'd like to see a breakout above 18,600 and for it to hold as support.
Rest of markets still digesting the recent technical damage and likely will take time to reset.

Not interested in 30pip, 50pip swings.
Thus far, the easiest money has been to wait for an established move, and to get onboard a pullback then wait.
.
Im influenced by my investing background: Look for the 1 foot hurdles to step over.
Whether money is easy or hard, it's all still the same $.
Thus, wait for the easy money.

Took me 20years to figure out how to: trade with the trend, buy the dip/sell the rally, cut losses, let profits run (still learning!!) and add to winners (WIP too!)
It's about temperament. You gotta WAIT for it.
Then you position, and then you WAIT somemore.

27 August 2024.

Finally some action.
Looking @ NU, GU & AU longs.

UC has setup as a nice short candidate as well, but wary of px action cause UC chops around alot.

Fed is "guaranteed" to cut rates, and market is now betting on "25bp or 50bp" based on coming data...
Opinion:
They wont cut 50bp. That would be telling the street, "ok guys we fucked it up and this is serious".
Gotta save face ya know?

If it's bad they'll cut 50bp the nx round...

3 Sept 2024.

USD weakness has fizzled. Was looking to sell USD, but it ain't hot no more.

JPY weakness is kicking back in.
Am looking for levels to get back on the short-JPY train.

AUD & NZD seem to be the best candidates given their interest rate situations at this point, with GBP the third candidate.
.
Rest of the risk space is incoherent.
Equities are shifting gears into the seasonally weakest period of the year, Sept/Oct.
Rates... going sideways in the short term. Longer term I expect rates to head lower with Fed cuts, BUT, right NOW, nothing tradable.
WTI is in this see-saw consolidation.

It is what it is. We play what's dealt.

4 September 2024.

Hello risk-off!
+USD, +JPY, +CHF. Why the hell are these still "safe haven" currencies? No idea. It's all fiat. But that's just how it still is.
-AUD, -NZD, -CAD.

BUT! Not all Septembers burn in hell...

10Sept'24.

Got filled overnight on some 5yr Note.
Have taken 1/2 off. Free trade.
Yields moving lower across the curve. Fed anticipated to cut.
Could be a big move!
Am using a wider trail for this.
Wanna catch a tiger, need a bigger cage.
.
Note:
Changed platform provider for execution. Better bet sizing. But charts look like crap.
Posting using MT4 for easier chart referencing.

10 Sept'24.

Also long some GBPAUD.
For whatever reason, AUD is offered across the spectrum.
Don't really care about "fundamental" reasons. It's probably some anticipated cuts by RBA, or something along those lines.

Back during interbank days, the boys always had some stupid theory / "whats your view??" / reason / excuse to justify their position.
Fucking stupid. Just some stupid excuse to justify their decisions.
Once, the head of rates was long USD IRS... to hedge ahead of NFP, he sold some EUR IRS...then when the spread tore against him he hedged again with the closest thing to EUR, which is GBP IRS. Like.. what kinda stupid logic is that? But then, you hear him justify it to his boss... and it sounds so nice and flowery.
Bottom Line: Lose $. <-- That's what really matters. And it was red, not black.

At the end of the day, you buy lower than you sell, or sell higher than you buy back.
That's what really matters.
So for me, I just follow the broad money flow.
.

Long here... a little bit more and I'm at breakeven (1/2 off).
Got stopped out once at the "X" on a news spike.

Personal rule, is that if the momentum is in tact and I get whipped out, I get ONE more try.
If I get stopped out twice in a row, then it ain't my trade. Curse and swear and vent, and move on.
There will be other fish to fry.

Scratched this.
The lack of follow through on -AUD, given the rest of the AUD pairs were selling, tells me that the momentum I was betting on was not present.
3 tests of 1.97 fig these 2 days, and the third sold down too hard.
TLDR = From the style I trade, the pair ain't supposed to be behaving this way. So I bailed while I could. Would be stupid to just hang on otherwise.

Good scratch. PHEW.

Momentum is showing nascent signs of shifting back to a full blown risk-on post CPI.

-AUD & -NZD momentum has waned.
AUD & NZD & JPY pairs showing decently sized reversal candles leaning towards risk-on, confirmed by NQ as well.

This is one of those points for me where it's smarter to stay out and wait for confirmation.
Never been great at catching turning points (they're difficult to catch).
Better to wait for the momentum and just hitch a ride.

Paul T Jones loves to try to catch them, but I dont have that kinda temperament to try 5x to catch the bottom and ride it to the top.
Trading for me = I am looking for easy money. And like investing, it's best to WAIT until it's obvious, then you position and just sit on it, and let the market do it's thing until you get trailed out.

.
CPI printed lower than expected y/y. Rest came in as expected.
Bonds traded LOWER on the LOWER CPI.
Kinda odd methinks.
Lower CPI = Rate cuts = Yields down = Bullish Bonds... No?
Unless the street was pricing an even bigger dip in CPI...

Liquidity known to be ultra thin ahead of key data.
Could just be the usual stop wash post a decently sized short-term up move in bonds. This created that giant red candle in the 4hour... which I'm kinda "???" about... so the above note is my GUESS...

5yr Note, 4hour chart:

Yield Curve, Weekly:

That said, the US yield curve has moved lower.
But all are at some sorta modest support levels.

We COULD see some sorta chop... and FOMC will surely introduce short term volatility.

I remain long the 5yr Note (bearish rates).
Am at breakeven and continue to trail it wide.
Hoping to catch a large move... stop is reasonably tiny at 0.22 of a bond point, so a large move will give me a phenomenal risk-reward.

That's what it's about isn't it?
Control bet size, de-risk, and cross fingers for a large move.
Do this again, and again, and again, and again....

To quote Peter Crowns, who has had a profound influence on my trading:

1. Each trade is handled separately. If I turn it into a "free trade" by dropping off half @ 1:1, I let each trade ride or get stopped out by the existing stop--OR THE TRAILING MECHANISM I AM USING FOR THAT MARKET, WHICHEVER GETS HIT FIRST! The trade has to stand on its own, or be stopped out!
2. Yes, my trailing stops ultimately define my profits.
3. Sometimes, but not very often.... I sometimes lighten up positions when I go on vacation, which doesn't happen often enough.

The thing you need to be thinking of, if you are interested in doing something like this-- is find some robust method for trailing your longer term positions, that you can live with for a very long time! Some use moving averages, some "turtle-type" stops, others use trendline stops on daily and weekly charts.

The key is you. You ultimately decide everything about your trading experience.

The way you think is what defines how profitable you will be.
You need to let the market pay you.
You shouldn't limit what it will give you.