Neither Tech nor Macro

Discussion in 'Journals' started by fxintruder, Sep 12, 2012.

  1. Hi everyone,
    I am going to post here my trades with some comments. I am not willing to write pages about the way I trade but simply tell on what, in my view, the trade is based on. This thread is not a signal provider and those who use it as such do so at their own risk. Keep in mind that some risks are easy to take or to absolutely avoid depending on how you're capitalized.

    Me: I am a full time independent trader since 2006, mainly on FX, ES, oil and gold.

    The way I see it, it's more like a mindset then a strategy. I don't believe in strategies; anyway the broad idea is below:

    1: Every weekend and Mondays I adjust my mind on the broad picture after reading researches, articles and checking global macro data and forward positionning. From this I decide if I am bullish, bearish or neutral on risk or on any given instrument or currency (ccy).
    2: Weeky I spot where are the big tech levels, S/R, big fibs, 200DMA.
    3: Then I place my pending core orders. No stop, no target. or I cancel /close positions not in line with my forecast.

    1: Every trading day in the morning I make up my mind on the prevailing sentiment/ Risk on/off, wait and see, if it is going to change. And what the market is focusing on (be well informed).
    2: I spot intraday tech levels, liquidity distribution and stay informed on participants positioning (specs, real money ..).
    3: When I know if I am going to add to a core position, I decide on the timing by knowing what is on the path: possible catalysts, data releases,events, press conferences, meetings, fixing, opening/closing bells.
    4: Then I place my pending orders with a target (partial or full) and a stop all this based on liquidity distribution (stop clusters and orders flow dynamics), and catalysts (events). This to get quickly away from my position when triggered.
    5: I f it happens that some events can modify my core views, I cancel/close the concerned positions.

    That's it.
    Feel free to comment but please understand that I will keep it short and won't answer questions tho I will explain why I am taking this or that position and seeing the market that way.
  2. I don't have any core position running cos was off the 2 previous months and have closed everything before that break.
    I am slowly digesting what's going on and will have a clear idea about it by the end of this week. Plus the FOMC meeting and the German court decision are too important to enter the market ahead of them.

    But I do open a long position on #EurChf after Draghi's OMT for 3 reasons:
    1: OMT is going to eliminate the tail risk, namely EZ collapse, then likely reducing risk premium paid for safe havens built on the debt crisis.
    2: #eurchf was the symbol of that feared collapse. Real money flowing massively into Switzerland, and SNB buying all Euros it can to maintain a floor at 1.20 and taxing transactions.
    3: IT's a n easy trade at no risk since my stop below 1.20 is protected by the SNB.
    I don't know yet if this is going to become a core position, I doubt that #euro is going to reach previous highs, but I think that slowly but surely the pressure on "eurchf is easing.

    #eurchf :
    long @ 1.2035
    stop: provided by SNB floor
    target: none.

    on the downside:a systemic event permitting an attack on the floor triggering the stops gathering below and creating a huge liquidity distortion and pushing the price in the far south, tho unlikely.
    on the upside: Real money unwinding massive short positions since they were opened on run to safety purpose only.
  3. My tactical trades are not based on adding to core positions, though they can. I base these on news releases and market dynamics (news trading is part of the tactical trades). Although I don't often use Tactical trades since I need time to manage my core positions and stay informed, they allow me to trade counter-trend on any instrument I am informed about and are the funny part of this job. Some periods are very suitable to tactical trades like now in this pre-Fomc release where specs are using all they know to drive the market. I will explain the way I see these opportunities as they show up.
  4. I have a long pending on UJ @ 77.65
    1:I am trying to start a swing position on this pair from that level because every BOJ stealth intervention was followed by a nice leg mainly driven by its (boj) jawboning.
    2:I think in case of QE, BOJ will support a cheap Yen as usual. Other factors like ugly macro numbers and heavy political pressure are already pushing the BOJ to intervene. The QE here is just the catalyst.
    3: QE or no QE, the knee-jerk and positioning post/during/after the release have chances to call the pending bidders at that big tech level that is 77.60.
    4: 77.60 is also known as the "No Crossing" line established by the BOJ. And we are not very far from that level. All the bears take profit orders are there, without sellers at that level to liquidate into, chances are the price pops up quickly from my entry level.
    5: the global market sentiment is less driven by the flight to safety since the "Draghi put" therefore the Yen holders could start to unwind their positions.

    Downside: QE and no BOJ intervention and level tested several times triggering stops drying up the bids thus pushing mechanically the price at very lower levels to find a counterpart.

    Upside: This level is a big liquidity provider on the bid side, price at the first test would have nowhere to go but north, giving time to analyze if the plan is going as expected.
  5. An example of my last tactical trade during pre-OMFC outcome posted yesterday on my twitter list:
    "#UsdCad way too short to sustain a QE , 0.9720 look like a nice place to reverse for liquidity near 0.9800 (target)#forex"
    I would have preferred to say :to sustain QE or to front run it, (140 characters). Look at USDCAD chart now.
  6. ES_F Pending long at @ 1421.50.

    1: I don't think we will have a QE tomorrow and since the market is front running a possible QE, probabilities are high that ES will get that low after the release.
    2: After digesting the no QE outcome, elements for further easing added to some bond buying program contained in the fomc statement will probably build new expectations for a possible QE next month, and I hope it will start to go north after reaching liquidity at 1421.50. Another liquidity cluster is at 1428.50 but this one is too near to the actual price and I don't want to be filled during some knee jerk.
    3: Addiction to QE in stock market is more and more clear, what ever happens, ES, like a junkie will start pricing in further easing. For that there's a need for liquidity in a misleaded and overestimated market (relative to fundamentals). This liquidity is where my order is pending.

    Why no QE? : Not easy for the fed to be seen as helping Obama openly during a presidential campaign. But who knows.

    No downside:QE announced, but not that risky, since I wouldn't be filled but I would've missed a nice opportunity. Same result if 28.50 liquidity spot is enough.
  7. USDJPY long @ 77.65Order triggered ahead of FOMCstaement. Let's see how it unfolds.
  8. Tactical trade: Target hit @ 0.9770
  9. Pre-Fomc game:

    Market has front run the German court outcome and the QE announcement, tho the latter not fully. Problem is, the market since yesterday PM GMT, is in need of liquidity to finance the anticipated rally. It's searching it south of risk by fading some levels with the help of techs who don't give a shit to the FOMC statement. The true hunt will probably start after US opening, with big guys trying to position themselves ahead of the announcement, this will be seen in risk not going the same way over the board, like ES going north and DX going north too . But the final positioning will probably start way after the release , heading south to find tech stops for bidding risk whatever is the outcome (addicted to QE market will start to build new expectation for next month FOMC helped by new dovish elements or programs). This down move can be attenuated or suppressed with structural shorts starting to cover. Both ways are OK for me, tho the latter can prevent me to be filled on ES_f.

    So far I am still pending long on ES_F at 1421.5 and already long USDJPY from 77.65. Those two trades where explained previously.
  10. Now against me at 77.48 and no significant buyers looming.
    Is this conflicting with my plan: not really, my level was taken from the previous low which was the last stealth intervention during NFP release (first june). The only concern is that it has been filled too early in the day, drying up liquidity in this wait and see sentiment hence pushing the price lower.
    So where is my stop? : no stop, since as i explained in the first post I am trying to build a core position and until something new change my mind I am holding it. Think about it like trading options, getting rid of local volatility by targeting a price level before a given date. My target here is when the big picture starts to be altered but for now I know that the current Yen price is too expensive for BOJ and stakes are high that they will not allow it for too long. More importantly; Specs know it.
    #10     Sep 13, 2012