How to say it... I am electrified. It's beautiful linked information. I'm sitting on a book of notes already from this thread. The moment I started reading it I knew it's money! Especially your call on the EJ trade and SGs options around 16 Nov. That was hot. The floating p/l mindset is an unbeaten core account management. I'm sold You gotta tell me how do you spot liquidity zones on the fly like that?
EURO TRADE EurUsd: We are looking to TP all the positions below 1.0650 before the ECB decision due this PM Gmt.
EURO TRADE EurUsd: We locked lower positions at 1.0565 for all the positions below 1.058 . We may adjust the lock dynamically on M15 We are looking to TP all the positions below 1.0650 before the ECB decision due this PM Gmt. The barrier at 1.0550 has just been taken out, this is an example showing how imprecise is a retail trader platform, the last low on Thomson / EBS was 1.0552. Be careful the ECB decision could leak anytime.
EURO TRADE EurUsd: Lock hit, TP hit Tons of pips. This is huge, the FT tweeted in the minutes prior to the release that ECB is maintaning the rates unchanged (look at 5mn chart), this generates a huge gap North hitting our lock then in the minute before the release the FT deleted the tweet generated a huge pull back hitting our TP for the higher positions. Our Dec3 scenario unfolded as expected and we see now the price returning north as we stated in the quote below. Quote On a shorter term big players need to liquidate their heavy shorts and they know that the price formation is entering the buy the rumor sell the fact scenario. The price will return North after the ECB decision, but not too North because the event is followed by others high impact drivers like NFP and Yellen / Draghi speeches, not to mention the world wide awaited FOMC decision on rates. Now we must let the market digest the news before re positioning for the upcoming FED decision. Be careful this week is crazy.
EURO TRADE EurJpy: We closed at 130.025 before the ECB statement making 302 pips. Why 130.025 and not 130.000 as planned? Actually our target was hit during the knee Jerk prior to the release but because our lower positions were near the price in the minutes ahead of a huge event we move the TP at 130.025. As a rule of thumb the companions must be secured when the target (here the price area and the event date) are reached on the main pair. Avoid locking before big catalysts because the fast price movements generates slippage (a lock becoming a stop order when triggered) mainly if your platform is from a retail broker. We are now flat and will stay so on the pair. We have no companion anymore for the Euro trade. The EurAud is now linked to our AUD trade. We will probably re-position higher if the NFP numbers are above expectations. EurUsd: We closed all the positions below 1.0940 with a gain of 84 pips but way lower than planned. It’s the worst Exit we have ever made; Before the ECB decision, probably the most important monetary policy event of the year, we used a lock when we saw our target out of reach (it was hit later). A lock being a stop order we suffered a huge slippage of 10 pips due to the pace of the price formation and the bucket-shop platform. 10 pips on a position of 850K is just too much you. The second mistake was to think that when the price pulled back from 1.0740 after taking the stops waiting there, it was going to settle down below 1.07. It’s what it did for 15mn, we locked here at 1.0705 thinking that it’s going to quietly return around 1.0650 until Friday’s NFP ahead of wich we intended to close all. But, no, it just pushed higher like if the ECB decision just hit the wire, with a tick data accelerating on all the Euro crosses. Our lock was hit, surprisingly with no slippage this time. This 3rd December on EurUsd we made +$3.7K when few hours before we were around +$12K floating . This is a very weak exit management and it’s very frustrating since we are trading this rare catalyst for weeks now and we were right on timing and price level. The best and only exit option would have been to deleverage around 90% of our exposure a couple hours after the London opening, because our average position was not really far from the trading price and a lock is not suitable for fast market. The price formation surrounding the release was epic and it’s very important to try to understand it. We are let’s say 15 mn before the release. First we had at 1.0550 a well documented KO barrier, that was still in place (on some retail platforms you may see it as taken out, but on Thomson/Ebs the low was at 1.0502). This means that the barrier players will use the thin market to take out the barrier and likely will trigger the sell stops below it pushing the price lower, but not too low because of the 1.0500 level 50 pips lower. The 1.0500 level has a huge barrier (well protected) and is a historical level where the massive liquidity gathers all the bidders and buy stops, therefore no chance to get there before the release but the 1.0550 is an easy play. From this liquidity distribution we decided to TP at 1.0535 (see the earlier posts). When the 1.0550 barrier was hit we saw the stops being tripped but slowly taking us around 1.0540 (5 pips above our TP). There we decided to lock half of the positions higher in case our TP is not touched. THIS IS AT THIS VERY MOMENT WE MADE THE MISTAKE TO LOCK AHEAD OF A RARE EVENT RATHER THAN CLOSING, THINKING THAT OUR TP WOULD BE FILLED DURING THE USUAL KNEE JERK FEW SECONDS BEFORE THE RELEASE AND OUR LOCK WILL THEN BE CANCELLED. AND A BETTER OPTION WOULD HAVE BEEN TO TP AT 1.0555 (5 pips before the barrier). Then we had something very very rare, a misleading leak on twitter from the FT (FT is just the most reliable source), saying the ECB is maintaining its rate. It’s a shock pushing the price 150 pips higher (liquidity desert) hitting our lock with big slippage. Because many of the participants were still waiting for the ECB , the FT push retraced a bit around 1.06 after clearing the 150 pips range both sides drying up liquidity even more. Few minutes later the FT deleted its tweet, (this means that they were wrong), triggering a sell off that hits our TP for the remaining lower positions. Few orders were needed to generate the gap because there were no orders available on the other side beside some crazy techs. Just imagine the mess among the bots and operators, buying back on the FT leak than operators resetting after the selling on the deleted tweet, than buying back again after the release with many waiting for direction from their analysts trying to decipher the ECB statement. Analysts waiting for Draghi’s press conference to really understand what lies behind the decision. After all this the price calms down around 1.0740 and starts to steadily push back near 1.0650 during Draghi’s presser. Here we locked above 1.07 all the remaining positions (not the 2 highest) in case Draghi launches some bombs during the presser but thinking that the feared massive short squeeze was behind us. At the end of the presser, market was facing the fact that one leg of what made the Euro vs Usd a sell is broken. The ECB decision has hugely narrowed the anticipated differential in terms of monetary policy drivers between the Euro and the Dollar . With a crucial NFP announcement 24 hours later that will weigh on the other leg, that is FOMC decision on rates, real money starts covering hitting our lock at 1.0705 and triggering the feared big squeeze pushing the price 450 pips higher in less than few hours. And now what? It will Just take more time to see the Euro below 1.0500. What is important for us is to reassess our view so we can decide on a timing and a valuation level. On our professional platform we were in a better place. Our average exposure is around 1.1150 because we are selling from the 1.14 area. More generally we cannot be exposed near the price (200-250 pips distance) during the last hour before such a release because of possible leaks and rumors in a thin market. After the release, the exit in very fast market of some or all of the remaining position if needed, is done with one click on price board while monitoring the DOM to ensure a good execution. The pace of the tick data and the size of the order flow of your broker book (no DOM and no tick data on global FX unless you have a credit line on the Interbank) give some though imprecise indications on how serious is the current move. Twitter is probably the best source of information. you just need to follow a good list . Here is a link to one of the numerous articles about the FT tweet (worth reading): http://www.smh.com.au/business/mark...zy-ahead-of-ecb-decision-20151203-glf7qi.html
I I was so certain you would close everything at 1.0550 and under, pre ecb This trade from the beginning to the build up to the end was a great journey. The floating p/l was orgasmic even though it wasn't my position.
Made a break to go sailing, refreshing. Let's get stuck in again. AUD TRADE Our main incentive here was the view that Australian economy is less impacted by its mining sector directly linked to Chinese economy. Nevertheless the slump in commodities has badly hurt the Aussie across the board. We closed all our exposures though keeping some versus GBP and pending long vs JPY. AudJpy: Our lock at 89.77 was hit making 244 pips. We are now pending 2x50K around 88.000 Even though the Aussie is suffering from commodities global slump and China landing we don't see it going too low vs the Yen. A more conservative approach would be to enter long a bit lower, around 87.550. GbpAud: Still holding -250K wit a significant drawdown currently on the pair. This is tricky because during Yesterday's commodity sell off the rise in GBPAUD wasn't attenuated by the fall in GBP vs other currencies. We will wait for the Employement change data due on Thursday. until then we will probably see the pair moving lower. We can handle that seeing how profitable we are, don't trade this pair if not covered. This pair belongs to the GBP trade we will talk more precisely about it on the GBP post. EurAud: Our Lock at 1.4650 was hit making +1399 pips, we keep our initial position of -0.25K at 1.5212. It was a nice run that largely compensate our messy exit on EurUsd. The gains are impressive though the pips don't all have the same value. By not locking the upper position before ECB we let +560 pips to the market. We keep them because our view changed significantly but not completely. We are seeing the Euro returning south before the FED rates lift off. We would have added here if we were not holding a significant drawdown on GBPAUD. AUD TRADE CONCLUSION We will take sometime to reassess our view on this one. The upcoming data on the employment front will give more clues on what coming next. We woul like to see also some improving numbers from China. Note: Even though I don't answer questions on the Journal, you can PM me and I'll try to do my best to answer but it can take sometime.
FOREX EXPERIENCE Our Account has now tripled with a balance at $30436 making +300% within several weeks. I received a PM asking me if I always make the same gains on Forex. No! Here we had a very rare opportunity with a 90% consensus on FED/ECB monetary policy divergence. We didn't hesitate to be heavily loaded knowing that the whole market was with us and any volatility gonna be short lived. This Experience is near to its end and for the next one we will probably have to trade more tactically and be more focused on catalysts and market shorter term sentiment to take positions.
GBP TRADE GbpUsd: We still have -350K above the price and -200K below. Will not add. Econ data from the UK are reinforcing the dovish view of Carney (head of BOE). The main incentives of the GBP trade is based on the next MPC meeting. If the split among voters will widen or tighten (more or less dovish voters). We think for now that the doves will be more numerous next meeting, implying a rate hike way later than anticipated. Another longer term incentive is the Brexit gaining momentum . We don't like the current Oil selloff and how it generates volatility in Forex and stocks. Be careful. AudGbp: See the previous post.
FOREX EOD TECHNICIANS PLAYING PINGPONG We think that after the ECB disappointment real money left the Deck in a hurry. But now we can hear analysts saying that Oil can overflow on inflation central banks projections. This is not good in terms of consensus stability. Central banks main focus being price stability (Inflation) are quickly going to reevaluate the projections on which they base their monetary policy. A lower and lower Oil price will impact even more strongly the price of goods on the downside reigniting deflation fears among the hawkish central bankers not to mention the dovish members. This means that some market participants can now seriously start thinking that the Fed is not going to hike in December or they will do it at a slower pace and lighter than expected . We think that December hike is not yet questioned unless the OIl falls another 3%; but we don't like that consensus is destabilized by the Oil slump. On the other hand the Oil impact is also going to push the ECB and the BOE to be even more dovish and this is consistent with our view, but, nevertheless, uncertainty spreading to the stock market is amplifying volatility on Forex. Hence, this uncertainty to which you can add the traditional end of the year fly to safety, we do think that real money has left the deck and the market is in the hands of End of Day Techs playing swings. We don't see any risk-on mood until the FOMC meeting. GBP TRADE GbpUsd: We closed all at 1.5035 making 666 pips but only $1320. Yesterday we warned about Oil : "We don't like the current Oil selloff and how it generates volatility in Forex and stocks. Be careful." We closed all this morning when techs playing swings brought the price back above 1.5025 (Grey Area on the chart quoted). If we had closed at our initial target level (white area) we would've made like $6k or something.But we made way less because our losers were heavy. Actually we never stick to the plan because our plan is dynamic and permanently adapting to the prevailing view. Oil was unexpected and this kind of things happen very often, we just need to be covered when holding during market reassessment. GbpAud: We closed all at 2.080 making 49 pips. As a rule of thumb we don't keep companion positions if we cant switch it to another trade. We closed GBPAUD when it returned inside the grey area for the second time. Here also we gave back many pips to the market. But again we have a high tolerance to risk when it comes to our floating P&L, this allowed us to triple our account at no risk and we are now heavily armed to handle our next trades. Why Exiting: We are not interested in Techs ping pong even if we are good at it. One of the foundation needed to build the appropriate mindset to handle Forex is the ability to stay on the sidelines when consensus is waning (different from reassessing) even if your P&L is huge. But also the ability to frontrun the consensus when it's about to start building even when your P&L is tight (remember our scarce 0.25k positions).