Toil and Trouble

Dollar weakness continues to dominate the global currency markets, will the seasonal trend of global accumulation of the greenback pre-election change the course of the decline? The FED printing presses are at full tilt so who knows..?

Pulling back against the weakness

The weeks still continue to test my strategies and resolve as a trader. You either have already developed a mental toughness to survive or you need to. Dealing with the inner turmoil when things aren’t going to plan is where you need to be on high alert to making decisions on the spur of the moment. It is very easy to do and often (if you are lucky) a confirmation that you have made a good decision when in fact all you were was just lucky. If you make that call, get unlucky, then that is when you can spiral out of control.

As a discretionary trader I plan trades based on systematic entries and the statistics of past outcomes to provide a level of probability for the trade idea. The markets in 2020 will be remembered for testing every trading idea I have ever come across and executed.

Working through sustained and deep drawdowns despite all of the macro and fundamental data being in your favour defies the logic, the intelligence and eventually the endurance you have invested in the time putting it all together. Oh and it costs money!

I have been working my plan to pull back into the green and on every occasion of just about getting there the market draws away from me, literally within a few points…. So the evolution continues to play out with my trading plan and strategies are scrutinised as objectively as I can manage under the circumstances. Each time we should continue to chip away and the evidence of growth is beginning to show its tender shoots of promise.

As we move into Quarter 4 my intention is to eliminate direct USD exposure before the crazy lead up to the US Presidential elections and have positions in cross pairs which can be hedged out nearer the time. The investor value at risk for my Darwin WET has been much too high and I will attempt to bring that back down in the next 3 months.

With Covid, US Elections, futile FED and ECB battles of inflation management, potential regional unrest with Turkey(as well as a failed Lira which Europe has exposure) Brexit and more economic/political pressures for the Euro looming on the horizon we will have to be patient for trade ideas to play out long term and mature in our outlook when trading or investing in such an arena.

March Close

March 20 Result 10.37% Return

We entered March not fully comprehending the magnitude and global economic ( and soon to be political) shock of the Covid – 19 Pandemic.

With carrying a position into March our moderate February drawdown of -0.77% should have realised into a small but quick profit for early March. However as you can see it pulled us into significant drawdown of -9.52% on the 9th March when the market closed.

I entered into recovery mode which began to take effect after our ultimate zones had been established and the market slowly began to seek equilibrium. Institutions desperately trying to find balance and slashing interest rates across the board made for volatility never seen before. Part of my strategy encompasses intraday trading if conditions meet my requirements, which they certainly did during the last 2 weeks of the month. This helped contribute about 50% to the overall recovery and profits added to the month.

April is currently positioned well and I will be trading predominately EUR crosses but will be scaling back on some opportunities. This will probably reduce the April return but will provide a cushion to build on the March performance.

I will update the investor account in a later post to demonstrate how Darwinex pay performance fees and also what the plan looks like for April in more detail.

Take care out there.

Mad March Mid Month Update!

So it isn’t just the Hares that go mad in March… I don’t need to write an essay on Corona virus as we all know about the crisis each and everyone of us is living through, so onto trading…

I had positions both sides of Euro at the beginning of the month, the buy side cycled very quickly with volatility reaching record levels. Obviously fuelled by central government easing the currency on the run up to an expected rate cut to -0.5% and pricing this into the market way ahead to combat the inevitable sell off, massive volumes of carry trades were likely liquidated fuelled by the race of G7 nations to cut interest first.

My first cycle of sells is likely to conclude hopefully this week and I am very comfortable with my second cycle of positions to be held until the end of the month. If they come in sooner then great but I’m hoping to add more next week if price presents itself to my levels.

The anticipated drawdown due to this move has been managed comfortably.

The development of the crude oil price war did catch me out on a CAD trade, I have an initial position that I expect to hold now for a few weeks (unless we get more surprises from the US/Canada to defend their positions). Again, this is a first cycle trade so I have plenty of capacity to add into the position when the opportunities arise and it could build into a very healthy trade.

This month is about managing margin and trading the plan. I can take reassurance that during these wild market conditions and managing live trades directly involved in these volatile moves reaffirms that my current market approach is sound. Witnessing EUR taking out all of 2019 in a matter of days was a humbling experience and one I am grateful for to keep me grounded. Many traders have bitten the dust.

February Close

What a month this has been for trading… Corona virus has seemingly played havoc with all markets and the EURO has reacted with volatility at first plummeting and right on the last day of the month seemingly supported by the major institutions. A clear sign that the market makers does not know what to do!

2020 YTD

We had hedged positions in EUR earlier in the month and caught the big swings both ways.

Rather than sit on an indicated 3% profit for my Darwin WET for the month I traded on Friday entering positions knowing we would be pulled back into drawdown for month end.

Seeing value and opportunity is more important to my trading than looking good at month end.

Feb MTD

We had a high water mark at 3% for the month and continued to scale into positions that are likely to crystallise in March.

3 month rolling performance

The underlying performance has been solid for me this month returning 7.5% on closed trades which is above my target. The strategy is proving to be robust in times of excess volatility and the money management being key to future success.

Yes, we enter March with drawdown but I’m confidently placed to capitalise on the next EUR move. I’m really looking forward to some strong trades in March.

DEMO Investment Fund is performing steadily, I would like to see a move up from the current positioning. Let’s see what the market gives us:

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£10K demo investment fund YTD