Goodbye Egypt, hello California

All set to leave tomorrow evening. Looking forward to new faces. I will try to post an update on the model in the meantime, but things have been pretty busy. There have been very few opportunities to trade. It didn’t help that we took a short break in Sharm el Sheikh, but the diving was excellent (per the usual). I am hoping to have the workstation set up by June 1 — and to finally having reliable high speed internet.

It’s always tough to leave new friends behind. Hopefully I will have many opportunities to see them again in the future…in sha’Allah, as they say.

One chapter closes. Another opens.

Admin notes: Blog back on tonight

I’ve been unable to post for a few days — packing, saying goodbye to friends, last minute SNAFUs, etc. Trading has also been on hold, but I have been watching the signals and things look promising.

Losses are relatively small, the win rate is about half, and about one trade in six catches the full trend. I hesitate to publish the forward test results to date because, for one thing, I haven’t had enough time to dig in. I suspect I’ll have reliable data after a few hundred trades. This should take between four and five months. It is totally unrealistic to rely on backtest data for anything other than general impressions. And a thousand or more trades going forward is unrealistic. That’s too much time — and I think most people who throw this number out are pulling it out of their arses anyway.

But that’s beside the point. I thought I was ready to jump in two weeks ago, but there are a few quirks to the indicators I am using that require some retooling. Rather than trade on the fly, I would really like to have everything lined up before take-off.

Of course, the real test will be to trade this with a small live subaccount. In fact, I’m almost looking forward to the summer months, as they are usually more difficult to trade. If the model can pull profits out of this market, it can pull profits out of any market — I hope….

I’m shooting for June 1st.

TLT

New on the blogroll

AndrewUnknown showed me some link love and I checked out the blog. This dude is my new hero. His trading approach is very interesting…and it seems to be working for him. Watch, learn, and then go out have a beer with your friends.

And then get back to his blog and study his trades again. Be sure to check out the “man behind the curtain”.

I don’t usually subscribe to blogs. I subscribed to this one.

TLT

Is Woodie a fraud?

I was reading Simon’s blog tonight and came across Trader’s Paradise — a blog that has revealed another side to the Woodie’s CCI Club story.

I first came across Woodie’s material back in 2002 or 2003 or thereabouts…maybe it was a bit later. Those days are a blur. To tell you the truth, I didn’t really buy into it. CCI has never “spoken” to me. In retrospect, maybe that was a good thing.

Check out the blog. Pretty funny guy.

Hat tip to SimonSuperTrader.

Short term method a measured success…so far

I chickened out over the weekend on moving the new model to the live account. Instead, I chatted on Skype with a friend — a fellow FX trader from Australia (recent UK transplant) who is probably one of the most diligent and intelligent people I know — and posted the signals there. He was kind enough to sit through it. This was the outcome:

AUDJPY
long 98.53 psl 30 0030 (+50)
long close 99.03

AUDUSD
long 0.9349 psl 9339 0015 (+62)
long close 9411 1149

CHFJPY
long 99.70 psl 99.45 2115 (+15)
long close 99.85 at 1020

EURCHF
short  1.6291 psl 1.6330 2152 (-13)
long 1.6304 psl 26 0845 (-5)
nulled 0909

EURGBP
long 0.7843 psl 20 0815 (+10)
long close 7853 1149

EURJPY
short 162.41 psl 162.71 2245 (-29)
nulled 162.70 2319

EURUSD
long 1.5423 at 2143 PSL 5490 (+3)
short 1.5426 psl 5456 2245 (-30)
short 5467 psl 30 0700 (-22)
long 1.5489 psl 30 0830 (-21)
long close 1.5468 1048

GBPCHF
long 2.0815 psl 80 0415 (-27)
short 2.0788 psl 80 0815 (+36)
short close 2.0752 1149

GBPJPY
short 207.99 psl 80 0015 (+6)
long 207.93 psl 80 0415 (-9)
short 207.84 psl 80 0815 (+72)
short close 207.12 1149

GBPUSD
long 1.9726 psl 9690 2216 (+3)
nulled 1.9729 2245
long 1.9730 psl 9695 2319 (+20)
short 1.9750 psl 40 0815 (+68)
short close 1.9682 1149

NZDJPY
long 82.24 psl 30 0100 (+114)
close 83.38 1030

NZDUSD
Long 0.7801 psl 0.7765 2203 (+2)
nulled 0.7803 2224 (close)
long 0.7803 psl 30 0000 (+32)
long close 0.7835 1149

USDCAD
short 1.0189 psl 50 0015 (+27)
short close 1.0162 1149

USDCHF
Short 1.0555 at 2148 PSL 1.0590 (+11)
short close 1.0544 1149

USDJPY
short 105.34 psl 105.75 2115 (+0)
long 105.34 2215 (-6)
nulled 105.28 2231 (close)
short 105.35 psl 30 0015 (+12)
short 105.22 psl 30 0830 (-1)
short close 105.23 1149

Some of the times might be off by a minute or two, and some of the results off by a pip or two. That isn’t so important right now. The demo worked up to a point. I am having some issues with charts and alerts, so anyone combing through this will notice all trades were cut at 1149 GMT. I will also hold off on trading live until I can resolve these issues. They are serious enough to affect the trades adversely.

Can anyone recommend a good programmer with some time on his or her hands? (For both NeoTicker and MT4?) I would rather not go through Rent-A-Coder. This is not an automated system, but I think the devil of today’s problem is the code I’m using. I have a feeling only a very good programmer can solve my problem.

If I can resolve just this one issue, I think I’m on my way. (The sooner the better.) There isn’t much time to trade tomorrow, so I will post some thoughts about the changes I’m making in my trading plan and a little bit about the approach I’m taking.

TLT

Trades closed: Fed Funds futures sell off after NFP, TAF

Look, the market is not acting rationally, but it doesn’t matter. The -20K NFP number, although a surprise, is still negative. In fact, all of the data is negative. The Fed has announced a $25Bn expansion of both of its remaining TAF auctions, along with special swap agreements with the ECB and SNB, in what is one of the best-timed announcements I have ever seen. (Gee, do ya think there was some coordination between the Fed and the BLS on this one? I’ll bet some of the big guys in our hallowed “halls of power” made a killing on this announcement.) WTI did not penetrate $120 and looks set to correct. Fed funds futures have begun a sell-off, reflecting a slight chance (18% to 22%) of a tightening bias going into the third and fourth quarters. (We’ll have to see today’s close for a better read on this.) Had enough of the paranthetical statements? Me too.

Traders seem to really believe a reversal is in place. Anyway, my near term bias on the USD is wrong — the market is right. That perfect storm I was talking about yesterday has yielded to an even more compelling technical and fundamental alignment for the near term. And truth be told, the USD index has been basing / printing a bottom for weeks. I still think that at the end of May we will see a big revision to April’s NFP number, but that doesn’t matter today.

I closed all three of yesterday’s swing positions immediately following the NFP surprise, for a total loss of 2.4%. The near term fundamentals do not support the thinking that went into those trades. Mentally, I’ve hit the reset switch. My relatively longer term bias of a USD bottom turned out to be correct, but in retrospect I did not use that information very intelligently. Going into the weekend, my task is now simpler — start over and follow the plan. If I trade on weekly or monthly charts, I would probably still be hanging on. But I don’t. So there it is.

EURUSD closed at 1.5405 (-118)
EURJPY closed at 162.18 (-140)
USDJPY closed at 105.30 (-157)

The longer term swing positions have not been very effective — so I have to decide this weekend whether I want to continue trading the method. It’s been a little over six months and still no joy. (Who says trading off of the daily charts is easier?) The new model on the hourlies has had a fairly good track record, although the exits still need refining. I think I’ll just concentrate on my strengths until I can tweak the longer term model — perhaps I’ll change it to more of a position trading model…anyone want to help me with this?

TLT

Related post:
Swing trades galore, but not much joy

Swing trades galore, but not much joy

I remain unconvinced of a USD turnaround. A correction? Sure. But structural weaknesses in the US — economic, financial and fiscal/political — still need to unwind. The USD is due for another round of pain. Forget about all the pundits talking it up. Add to this improving odds of another Fed rate cut as more bad data pours in and crude holds onto its highs or moves higher. (The last part of that sentence is key — if.) I also expect gold to find support soon. We are in the eye of a macroeconomic storm.

So I’ve entered a few proper swing trades. (Read: These could last for several weeks — bit I’m hoping for better.) I’m currently long EURUSD and short USDJPY and EURJPY. Each pair is at or near a key level and the plan is for an expected value of more than three (scaling considered). Without going into too much detail, I have summarized my thinking below.

EURUSD long:
1.5523 x1 (taken today at 1047)
1.5365 x 1.5 (buy stop)
1.5225 x2 (buy stop)
Initial target 1.5845
PSL open

 

I’m surprised at how fast the market can change its outlook. I have been bearish on the pair for awhile, but expected the market to make one last effort at 1.6. Any such event will almost definitely be data driven, so it comes down to whether or not I think the USD is in for more pain. And I do. Not sure I have the best positioning here, but I’m patient. Eurozone and German data due in the morning could put pressure on my long, but I expect a poor reading in the US employment release. A poor number could afford me some flexibility with this trade…and some time.

USDJPY short:
103.73 x1 (taken today at 0412)
105.85 x1.5
107.45 x2
Initial target 97.85
PSL open

I’m concerned about recent gains in the US equities markets. Does the fact that the DJIA closed above 13K for the first time since January mean anything to me? Nor really. But it apparently means something to a lot of other folks out there — folks who are much more savvy and active in the markets than I am. I think it’s a dog and pony show, personally, but my opinion doesn’t mean anything. I’m not sure I want to hang on while the pair grinds up toward 108. I don’t expect the pair to extend much beyond 104.80 tonight. If it does, and if the 105 level holds convincingly into Friday’s close, I may reassess.

EURJPY short:
160.78 (avg price taken today at 1526 and 1614)
Initial target 156.25
PSL 162.68

This is my concern for the moment. The cross was no doubt supported by the gains in US equities. The overall tone for the pair is bearish, however, and I’ll be keeping an eye on the Eurozone data due tomorrow. Any change in sentiment could send this pair straight through my stop. In fact, it looks as though traders are positioning themselves to do just that. (Do they expect good news? I don’t know.) I don’t expect good news, but so many people want it that I wouldn’t be surprised if officials in the EZ spin the numbers just a bit – much like they do in the US in an election year. (Fortunately, there isn’t much US officials can do at this point, except to put lipstick on a pig.) The question is whether the market will buy it.

Does all of this seem arbitrary? (If it does, do I really want to know?) I am completely open to the fact that none of these trades will achieve their targets in the current market and I could possibly spend all of May recovering from the losses — but hey you gotta take risks, no?

Completed trades today were a bit of a mess. For some reason GBPCHF just doesn’t want to cooperate, but at least it pays out. CHFJPY won’t even give me the courtesy of a scratch. I bugged out on a GBPUSD short — why does this pair scare me so much? There were a couple of scalps on EURGBP and EURJPY that earned a few pips, but only enough to pay for the spreads of all the other trades — less their own.

GBPCHF Summary:
Short 2.07432 @ 0838 01MAY
CL 2.06636 @ 1313
TP 2.0535 -> open
PSL open
Profit 79.6bp -i

GBPUSD Summary:
Short 1.98755 @ 0739 01MAY
CL 1.98716 @ 0757
TP 1.9690
PSL open
Profit 3.9bp -i

CHFJPY Summary:
Long 99.795 @ 0807 01MAY
CL 99.359 @ 1313
TP 100.45 -> open
PSL open
Loss 43.6bp

 

 

 

 

Less than stellar results. It’s one thing to win more than I lose — it’s quite another to leave so much profit on the table. I’m still adjusting to the new model and should probably be more patient with myself. There are a few things I’m considering to make it easier which I’ll probably write about over the weekend.

TLT

New on the blogroll

FreetheMarketMan has a blog, titled Truth is Treason in the Empire of Lies. It’s new and worth a read for those of you who are permabulls, or otherwise addicted to an unhealthy idealism in your outlook for the United States economy. I’m not a permabear, but all the unqualified optimism floating around the blogosphere makes me ill when I see what is happening on the ground at home and abroad.

So check it out and send FtMM some link love if you can.

Truth is Treason in the Empire of Lies

TLT

Agricultural commodities price fluctuations worrying

Where I am currently living, there have been riots as a result of price inflation. You could say that for each uptick in the price of wheat and rice and other ags, a few million more people go hungry. (Read: A few million more among the hundreds of millions already undernourished.) You can’t know what this suffering means until you actually get out of the wealthy urban centers and live among these people. Short of doing this, I invite everyone reading this post to take an hour or two out of a busy day to learn something about what these people are going through. And if you have a free month or two during the year, why not volunteer abroad in public works, public health, technology transfer, sustainable development, or humanitarian relief projects?

I won’t go into all the factors that complicate poverty alleviation, but it isn’t as simple as smug cynics often say. I am not one to say that speculation alone is responsible for the current increase in suffering. In fact, anyone who blames speculation ignores scores of much more important factors. This is the way I justify it to myself, anyway, so that I don’t feel like such a vampire.

Okay, back to trading. Take a look at the slides at the link below. Hat tip to Eddie Tofpik at ADM Investor Services International for sending me this presentation, given by John Fenton at the CFTC. Again, these are just slides — so that means all you “I just look at the pictures” types won’t have to actually read anything.

Agricultural Markets Roundtable

FOMC statement little changed from March 18

Except this time the cut is the expected 25bp. Not 75. It looks from the price action that the market was expecting a more “hawkish” tone to the rhetoric and was caught off its guard. I dunno. I was so tired I slept through the whole thing.

Anyway, there are some noteworthy nuances. I would parse it out for you, but you can get that stuff on a thousand stock trading blogs. And you should never trust what I have to say anyway.

FOMC statement for April 30
FOMC statement for March 18

For those of you with short attention spans, like me, it shouldn’t take long. Happy reading.

TLT