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Reminiscences of A Forex Speculator

  • #61
  • May 16, 2011 3:18pm May 16, 2011 3:18pm
Quoting seagreen
I think you overanalyze the Euro situation a little. Euro has shown some weakness on less hawkish Trichet comments last week but since then EURUSD downfall is dominated by dollar strengh. Now this dollar strengh came as a retrace after prolonged dollar weakness and I think the trigger was the burst of commodity bubble caused by exchanges margin raise.
Heya seagreen,

While I do agree with you in saying that US strength is a factor in the EUR/USD downfall, I can't help but maintain that the market's focus is on Greece right now, and that the uncertainty faced is creating strong movements in the pair. When the Die Spiegel article came out, this thing dropped down so sharply that I thought it was jealous of XAG and was looking to compete! I just get the feeling that sentiment is presently quite Euro-bearish.

Quote
I see what you mean but I think you're wrong here, bug. Flash news traders who could really move the market were well aware about the previous releases so they were expecting better numbers (better than 0.6%). Maybe the numbers came out not as good as they expected (0.9% or more)after sovereign GDP releases. Anyway, the move down has little to do with EUR, it's more of USD strength. But that's only my opinion.

I think what bug and I were getting at is that provided one was aware of the fact that France's and Germany's GDP's came out much better than expected, then seeing as they are the economic powerhouses of the EuroZone, it would be sensible to posit that the EZ GDP would beat previous expectations.

The average trader who looks at his newsfeed and sees that the EZ GDP beat expectations would then be tempted to jump in and long the pair, while proficient traders who were already expecting this, and were long in anticipation of it, will have their expectations fulfilled, and simply close out their positions. Average trader now blames the market as irrational and says it responds randomly to news, as his stop-loss is liquidated into by traders closing their positions. If only he knew...

Regards,
xXTrizzleXx
  • #62
  • May 16, 2011 3:31pm May 16, 2011 3:31pm
I initiated a short position in both EUR/CHF and EUR/USD, just before the market close on Friday due to impatience, and to discipline me, I had to pay weekend swap rates!

The CHF trade is based on the inkling I had of investors wanting to have a safe haven if violence related to the Middle East and more recently as a repercussion of Bin Laden's death ramped up. Coupled with the soverign debt issues, this seemed like a high probability trade to the downside, and it's now a break even trade.

The USD trade was based on what I, like seagreen perceived to be USD strength, but my impatience got the better of me.

Quoting bug
Next week is going to be very busy with a lot happening judging by the looks of the FF calendar. The US debt ceiling hasn't gotten a lot of air-time due to European sovereign debt issues but I would expect to see a bit more on that front come next week.
It was something I had taken note of a few weeks ago, but failed to acknowledge it due to the above. Consequently, the US weakness which prevailed created a break even trade on the EUR/USD trade.

An optimal scenario would have been to trade USD/CHF to take advantage of today's USD weakness and to trade my prior CHF convictions. But this is in hindsight, and that doesn't make you pips.

My focus on AUD/USD, USD/JPY and of course GBP/USD remains more or less unchanged. I'm planning on dedicating the month of June to just trading, as I'll be off school, and this should provide me enough time to parse these pairs and also get some reading done.

I didn't take a snapshot of the trades when they were filled, but I have attached the EUR/CHF one.

As these trades develop, I'm looking to the wires to follow these events as they develop. I also have intentions of shorting EUR/USD again when the debt ceiling mess clears up, until then I'm getting a progressively better price to get in as the pair moves up.

Hmmm, isn't it ironic how the IMF chief gets caught misbehaving before such a serious event? Life is quite funny at times.
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  • #63
  • May 16, 2011 4:19pm May 16, 2011 4:19pm
Quoting xXTrizzleXx
As these trades develop, I'm looking to the wires to follow these events as they develop. I also have intentions of shorting EUR/USD again when the debt ceiling mess clears up, until then I'm getting a progressively better price to get in as the pair moves up.
You could be in for a long wait. According to latest news the US has already hit its debt ceiling and to avoid default, the Treasury is tapping into pension funds. By withholding investments into the pension funds they could potentially hold out until August 2nd. This gives Washington plenty of time to procrastinate and play the blame game. You have to remember that politicians have an infinite capacity to disappoint.

So in short I we should keep our eyes open and most important of all, always use a disaster stop loss. I know people sometimes trade without an SL for various reasons that I'm not going to go into right now, but in times like this when we have the Greek drama and the US debt drama it makes sense to AT LEAST use a disaster stop loss that takes you out of harm's way in case things go bad.

BBC - The US has reached its debt limit of $14.3 trillion (£8.6tn) and is taking measures to cut spending to avoid breaching it. Treasury Secretary Timothy Geithner has said that he will suspend investing into two large government pension funds. This delays any breaching of the limit to 2 August. Congress is currently negotiating an increase to the limit, without which the US risks defaulting on its debt. (LINK)
If you don't risk, you don't ever have to lose.
  • #64
  • May 16, 2011 4:44pm May 16, 2011 4:44pm
Quoting bug
You could be in for a long wait. According to latest news the US has already hit its debt ceiling and to avoid default, the Treasury is tapping into pension funds. By withholding investments into the pension funds they could potentially hold out until August 2nd. This gives Washington plenty of time to procrastinate and play the blame game. You have to remember that politicians have an infinite capacity to disappoint.
As of late I've been seeing what they can do, and you have to admit they are pretty amazing creatures. I have a feeling however that it will be brushed aside as other things take center focus, my thoughts being on QE2 and how the markets will react. In July moving into August is when I'll be keen to capitalize from this if the issue is still around.

Quote
So in short I we should keep our eyes open and most important of all, always use a disaster stop loss. I know people sometimes trade without an SL for various reasons that I'm not going to go into right now, but in times like this when we have the Greek drama and the US debt drama it makes sense to AT LEAST use a disaster stop loss that takes you out of harm's way in case things go bad.

Ah I think you read me wrong - I do trade with a SL, and my previous EUR/USD trade was stopped at break even. I'm waiting for the debt ceiling issues to pass over before riding it back down again with another entry (and stop-loss of course) is what I meant to say.

Regards,
xXTrizzleXx
  • #65
  • May 16, 2011 7:12pm May 16, 2011 7:12pm
Quoting xXTrizzleXx
Heya seagreen,

The average trader who looks at his newsfeed and sees that the EZ GDP beat expectations would then be tempted to jump in and long the pair, while proficient traders who were already expecting this, and were long in anticipation of it, will have their expectations fulfilled, and simply close out their positions. Average trader now blames the market as irrational and says it responds randomly to news, as his stop-loss is liquidated into by traders closing their positions. If only he knew...

Regards,
xXTrizzleXx
Yeah I got that part, Trizzle. Actually fading good news in negative environment (or bad news in positive) is a good strategy. And this is why shorting EURUSD after the aggregate GDP would be a good idea; but only because EURUSD was already in a downtrend, not because some stupid speculators didn't pay attention to previous releases.
  • #66
  • May 16, 2011 7:22pm May 16, 2011 7:22pm
Quoting bug

BBC - The US has reached its debt limit of $14.3 trillion (£8.6tn) and is taking measures to cut spending to avoid breaching it. Treasury Secretary Timothy Geithner has said that he will suspend investing into two large government pension funds. This delays any breaching of the limit to 2 August. Congress is currently negotiating an increase to the limit, without which the US risks defaulting on its debt. (LINK)
Yes, this was probably the cause of USD weakness today. Thanks for the link, bug.
  • #67
  • Edited 9:14pm May 16, 2011 9:02pm | Edited 9:14pm
The minutes of the RBA Meeting came out somewhat dovish, and against the market's expectations for a very near term rate hike. Coupled with commodities slipping as of late, I can only look to US weakness to create a mispricing for my limit sell to be hit. I anticipate this as a high probability trade to the downside; with 1.5000 being a market target of interest. I know the pair has run away from my limit orders before, and came back with a vengeneance, so this time I will only politely ask the market to please come back up slightly to fill my orders. I'm pleased that I'm exercising patience and waiting for a good price instead of impatiently jumping into the middle of the fray though.

Let's see how London and NY respond to the news. Perhaps they may be able to cook something up.

Regards,
xXTrizzleXx
  • #68
  • May 17, 2011 1:40am May 17, 2011 1:40am
Quoting xXTrizzleXx
Ah I think you read me wrong - I do trade with a SL, and my previous EUR/USD trade was stopped at break even. I'm waiting for the debt ceiling issues to pass over before riding it back down again with another entry (and stop-loss of course) is what I meant to say.
Actually the stop loss comment was meant for rookies lurking around (I know you're in here browsing the thread). I'm not at all worried about you, but it's good to know you're using protection.
If you don't risk, you don't ever have to lose.
  • #69
  • May 17, 2011 10:12pm May 17, 2011 10:12pm
My next successful trade follows off the heels of some large recently announced takeovers of Swiss Companies by Japanese entities. Coupled with the fact that will has be a rebalancing of a large equity index, MSCI, favouring Swiss entities while scrapping Japanese ones should make CHF/JPY a high probability upside trade.

My AUD/USD trade has been stopped out for +0.5R, and I have had to learn the hard way that swap really eats when you decide to short a cash cow such as the Aussie!

Still holding the EUR/CHF trade, and also trying to take a closer examination of the market's reaction to the possibility of a 'soft restructuring', especially since there is a possibility that legal means may be employed to prevent it from being regarded as a credit event for CDS holders.

Going to keep it brief tonight since I have some work to do.

Good luck
xXTrizzleXx
  • #70
  • May 18, 2011 8:51am May 18, 2011 8:51am
Trizzle great fundies thread you have here.
I also take on fundies while trading the larger tf (In a situation like yours - Day job ). Though my trading style is BWILC ie not so focused on entries - rather trade management. At first it helped me in keeping clear of analysis paralysis due to focusing on - too much news + entry point

Slowly it started to pissed me off - entering random trades hurt my end profits. So,I have been looking to take bargain entries to alleviate those profits. How do you decide on your entries?
  • #71
  • May 19, 2011 6:03pm May 19, 2011 6:03pm
Been a while since I've had an update, due to being tied up with school and whatnot - only 2 more weeks to go before I dedicate the entire month of June to pure trading.

As of late, my EUR/CHF trade was stopped out at Break Even. I was supposed to lock in some profit this morning, but did not have proper access to News/Charting in class..ah well!

I initiated a long position in CHF/JPY a few days ago, and I am anticipating buying any dips as they become available. This is because I established a bullish bias in the near-term due to rebalancing of the MSCI equity index, indicating a favouring of CHF and outflow from JPY equities. Additionally, I have received wind of some large M&A slated to be taking place in wish JPY companies are purchasing CHF to the tune of billions in currencies.

My bullish view was further positively compounded when I read that there was healthy demand for 1 month USD/JPY calls. Having known the knowledge of the flows prior, and know seeing anticipation of such JPY weakness in 1 month - just after the end of quarter rebalancing, is leaving me feeling quite confident in the outcome of this trade.

On the EUR/USD, I'm bullish for a short-term trade, and will return to my bearish views next week, since the market is still responding to the EuroZone troubles. Will update if my limit buy is hit. I also have some pending sell limits in EUR/CHF which I will post provided they get hit. It's all down to patience now as the market makes her moves.

Hope this covers all bases for now,
xXTrizzleXx
  • #72
  • May 19, 2011 6:11pm May 19, 2011 6:11pm
Quoting vicky_ag
Slowly it started to pissed me off - entering random trades hurt my end profits. So,I have been looking to take bargain entries to alleviate those profits. How do you decide on your entries?
Welcome vicky_ag,

Essentially when I figure I have a read on what's affecting a pair, I look for a price, which in relation to current price, and my intended outcome looks like a great bargain, and simply place my limits there. Sure I may miss the move, but at the times I do, I can have a fair degree of certainty that I've scooped up a safe price. Additionally, it's no surprise that exercising patience allows you to enter at places where most others would be exiting

Good luck,
xXTrizzleXx
  • #73
  • May 19, 2011 7:10pm May 19, 2011 7:10pm
I just came here to say your CHF/JPY trade idea absolutely pwns.
Cautiously optimistic. . .
  • #74
  • May 19, 2011 7:35pm May 19, 2011 7:35pm
Quoting Tact1cal
I just came here to say your CHF/JPY trade idea absolutely pwns.
Thanks man! Let's hope it will let us milk it for some good pips! It just needs to be a nice CHF/JPY and let me hit it on dips!

Are you playing it too? I also realized I never did get a chart up so although it's late, here it is.

xXTrizzleXx
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  • #75
  • May 19, 2011 8:54pm May 19, 2011 8:54pm
Quoting xXTrizzleXx
1. Sovereign Debt Crisis

  1. Germany, France and ECB are gridlocked regarding the future direction of Greece's finances.
  2. Germany argues that a debt restructuring would sting now but sting less in the future, while France and the ECB maintain that the effects of the restructuring would be detrimental to the vulnerable banking sector....

It would appear that the stakes of the game have been raised. The lastest move comes from the anti-re-p(s)r(t)o(r)f(u)i(c)l(t)i(u)n(r)g(i)(n)(g) camp, where the ECB has now threatened to cut off liquidity to the Greek banks, as well as other EuroZone banks by rejecting Greek bonds as collateral form short term loans and refinancing! Naturally this comes as no surprise seeing as if Greece were allowed to restructure/reprofile its debt, the ECB, who has massive exposure to it, would be left holding the toxic paper.

Essentially, the ECB has threatened to shut down the financial sector of the Greek economy, if they indeed go through with the restructuring. Well played ECB - I have a feeling that there's not much wiggle room left now that they have echoed their stance. It will be interesting to see what arrangement Germany and the EcoFin Ministers come up with to steer through this crisis. It essentially makes reprofiling pointless, as it would incur more damage than it set out to avoid!

The plot thickens!

Regards,
xXTrizzleXx
  • #76
  • May 20, 2011 12:40am May 20, 2011 12:40am
After watching CHF/JPY flirt with my second limit buy by 2.4 pips, I decided I had to shift my attention elsewhere, and needed to sit down and do some thinking. I've come up with a few more possible scenarios which I wanted to pen down.

 

  1. I'm anticipating some reactions from the reprofiling camp regarding the ECB's recent threats; an attempt to +1 them will be quite bearish for the Euro, which could provide me with an opportunity to bank a few pips.

  1. This weekend there will be some elections in Spain, and with the recent conditions of unemployment, austerity and deficit issues, the ruling Socialists are facing considerable risks of losing seats in key municipalities, according to prevailing sentiment and surveys. If they lose a significant portion of the seats, it is feared that those who fill them will begin inquests and audits into regional accounts, to possibly uncover more debts which have been unaccounted for, as this occurred recently in a region called Catalonia (I wish I had the link to the article). This would increase Spain's troubles on the money markets, and drive up their costs of financing even further, adding to the EuroZone pressures. I'm thus thinking of putting in a low-risk short before the weekend, and looking to move it to break-even as quickly as possible, to take advantage of what may be a gap-down.

  1. The Fed's Quantitative Easing program ends in June. Even if interest rates are not raised, that does not prevent them from selling their accumulated bonds (their exit strategy), which will have the effect of increasing US yields. Eventually these yields will become as attractive to comparatively riskier investments, and thus it is quite likely that we will see some good flows into the dollar. I'll be long yield sensitive pairs like USD/JPY and USD/CHF when concrete details are released about the exit strategy.

  1. I'm also anticipating that this will be disrupted by the US Debt Ceiling issues, which I'm thinking will loom into the market's view in July->August, if not earlier. In any event, whenever it does come about, it would provide a wonderful opportunity to capitalize on the mispricing it would create, as I anticipate positive US flows to resume afterwards, since there is a very low probability that the US will not raise the debt ceiling - it's almost a routine process, and been done countless times in the past!

Should be it for now,
xXTrizzleXx

  • #77
  • May 20, 2011 1:20am May 20, 2011 1:20am
Looks like no dice on the CHF/JPY for now and I'll have to be consoled with 1 position for now.

The EUR strength has triggered one of my sell limits in EUR/CHF though. Hoping it can move to allow half the trade to be taken off at R/R 1:1.

Regards,
xXTrizzleXx
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  • #78
  • Edited 9:10am May 20, 2011 8:11am | Edited 9:10am
Woke up to a pip-plosion!

The first trade that was present was a EUR/USD buy limit which triggered at 1.4240, but it took too much time in the red, so I closed it for -2 pips when I got the chance.

In CHF/JPY, my second buylimit was triggered after price literally flirted with it by mere pips! This trade has had 1/2 of it taken off at R/R 1:1. Similarly, a buy limit in USD/JPY was also hit, which I'm waiting to hit 82 before I make it a risk-free trade in a similar manner. Finally the same EUR/CHF trade from last night has moved very nicely, and half of it's trade has been taken off at R/R 1:1. It turns out I missed the top by 4 pips! :O

Have to figure out where I'd like to enter next on these pairs. Will update if these limits are hit as well.

Regards,
xXTrizzleXx
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  • #79
  • May 20, 2011 9:04am May 20, 2011 9:04am
UPDATE 1-Hungary banks expect below-market FX loan deal Tues

BUDAPEST, May 20 (Reuters) - Hungary's government has agreed with banks to fix a below-market repayment rate on Swiss franc denominated mortgages, and a final deal is expected next week on measures to help borrowers, a bank spokesman said on Friday.
When converting monthly instalments to forints from Swiss francs, banks will use a fixed rate of 180 forints per franc, far below the current market rate of 214.50 CHFHUF=. LINK


‘Learn to Live’ With a Strong Swissie, Says Country’s Economy Minister

The Swiss seem to have given up their fight against the strong franc and are embracing a harsher economic reality—with success. LINK

At the Swiss Economic Forum in Interlaken, Swiss Economy Minister Johann Schneider-Ammann urged the country’s business elite to “learn to live” with the strong franc, in an apparent sign that the Swiss government is unlikely to step up measures to assist the country’s companies in their struggle with the strong currency.

I surmise these were the causes of such large-scale moves in the CHF today. Looks like impatience of market participants is what helped my order get in before the move..it's not unlikely that mine was near the region where they had theirs located.

Regards,
xXTrizzleXx
  • #80
  • Edited 10:27am May 20, 2011 9:35am | Edited 10:27am
Quoting xXTrizzleXx
In my anticipation of EUR bearishness, and CHF strength, I see a high probability trade to the downside. Additionally, it is purported that there is great interest below the 1.24 level, which will be a likely target for EUR/CHF bears. I'm anticipating being one of them. A trade on EUR/USD is of course, also possible.
I'm now eagerly anticipating EUR/CHF to break 1.2400; there's a likelihood we may see a price cascade.

EDIT: Seems that there are some barriers lurking at the level, so it's possible a bounce may be in play instead. May have saved myself from doing something silly.

Regards,
xXTrizzleXx
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