FX Trading June 4 - June 8

[JillyB]

Morning all. Another winner for Jilly last night. I'm short now at 45 looking for a return below 9900, stops above yesterday's highs

Morning all - yes it would have been a nice 20 pips this morning - except that I didn't trade last night. I wrote my entry and exit down for the system results but didn't actual put money on it. It was the retracement of the price from the high that made me hesitate but then again I shouldn't start 'thinking', I should just trust the system.

I rechecked some of my backtesting last night and decided that - if the trade isn't in profit between 7.40am and 8.00am, then I should just exit at break-even and not try to take a profit. This is where I've had a couple of losing trades recently that would have been break-even trades if this had been done. With this in mind the last 18 weeks (90 trades) would have been as follows (for the sake of testing an entry at 22.30 and an exit at 7.45am have been taken - so in actual trading it is likely that slightly better results would have achieved.)

90 trades
5 losing trades (5 x 48 pips = 240 pips)
23 break-even trades
62 profitable (1537pips total - nett of 3 pip spread per trade)

Nett profit = 1297 pips
divide this by 90 trades = av. 14.4 pips per trade.

 

[zuke]

Morning all - yes it would have been a nice 20 pips this morning - except that I didn't trade last night. I wrote my entry and exit down for the system results but didn't actual put money on it. It was the retracement of the price from the high that made me hesitate but then again I shouldn't start 'thinking', I should just trust the system.

I rechecked some of my backtesting last night and decided that - if the trade isn't in profit between 7.40am and 8.00am, then I should just exit at break-even and not try to take a profit. This is where I've had a couple of losing trades recently that would have been break-even trades if this had been done. With this in mind the last 18 weeks (90 trades) would have been as follows (for the sake of testing an entry at 22.30 and an exit at 7.45am have been taken - so in actual trading it is likely that slightly better results would have achieved.)

90 trades
5 losing trades (5 x 48 pips = 240 pips)
23 break-even trades
62 profitable (1537pips total - nett of 3 pip spread per trade)

Nett profit = 1297 pips
divide this by 90 trades = av. 14.4 pips per trade.

Jilly,

Ive been monitoring your trades and system and personally, I think you've got something pretty good (with all the usual caveats about MM etc). However, I think you need to trust your system more..it's seems more robust than you give it credit for.

Just my 2 pips...

 

[jacinto]

IMHO, seems like we will get a yen driven move today, although ECB should be the focus.

Edit: Just got this on my news provider. rather interesting.

06 Jun 2007 08:14 GMT


BULLET: FX: One trader notes that Morgan Stanley and Citi....
FX: One trader notes that Morgan Stanley and Citi have put out
recommendations to exit carry trades. We haven't seen these reports
first hand and are just reporting market talk.

Provided by: Market News International

 

[zuke]

IMHO, seems like we will get a yen driven move today, although ECB should be the focus.

Edit: Just got this on my news provider. rather interesting.

06 Jun 2007 08:14 GMT


BULLET: FX: One trader notes that Morgan Stanley and Citi....
FX: One trader notes that Morgan Stanley and Citi have put out
recommendations to exit carry trades. We haven't seen these reports
first hand and are just reporting market talk.

Provided by: Market News International

Had to take a phone call and hence missed a glorious entry on GBP/JPY..hate when that happens

I have a short setup on Cable now..just looking for a good entry

 

[JillyB]

Jilly,

Ive been monitoring your trades and system and personally, I think you've got something pretty good (with all the usual caveats about MM etc). However, I think you need to trust your system more..it's seems more robust than you give it credit for.

Just my 2 pips...

You are soooo right.... I do need to trust it more!

I need to accept that it's a mechanical system and just trade it without analysising it too much.

 

[jacinto]

Had to take a phone call and hence missed a glorious entry on GBP/JPY..hate when that happens

I have a short setup on Cable now..just looking for a good entry

sorry to hear that zuke, same here but with euryen, missed it. now awaiting price to dictate the best enry for shorts on cable. I will most likely give euryen a miss

j

edit: I just hope cable decides to move too and not just monkey around for 2 days before it tanks.

 

[Atilla]

Had to take a phone call and hence missed a glorious entry on GBP/JPY..hate when that happens

I have a short setup on Cable now..just looking for a good entry

Zuke if Jacintos FX news / rumour is true then shouldn't you be looking to go long.

I thought cable might test 1.9875 but it's not shifting below 1.9920 and may well bounce off this level.

Also, DOW looks like falling -> $ likely to continue fall.

I'm in two minds at the mo but if I had to jump in - I'd be long.

 

[jacinto]

hi atilla,

unless i completely dont understand the relation between cable and carry trades, i thought that unwinding carry trades meant cable shorts, not longs.

j

 

[zuke]

Zuke if Jacintos FX news / rumour is true then shouldn't you be looking to go long.

I thought cable might test 1.9875 but it's not shifting below 1.9920 and may well bounce off this level.

Also, DOW looks like falling -> $ likely to continue fall.

I'm in two minds at the mo but if I had to jump in - I'd be long.

I should have clarified, I missed a glorious SHORT entry on GBP/JPY (at 241.88) I am biased short today, but still looking for a good entry on Cable. OT's 9945 is looking even more fantastic.

 

[djl]

I'm pretty sure carry trades refer to pairs where there is an interest incentive i.e. yen carry trades not cable

 

[Atilla]

hi atilla,

unless i completely dont understand the relation between cable and carry trades, i thought that unwinding carry trades meant cable shorts, not longs.

j

My understanding is that they are due to rate differentials between US and Japan.

The Japaneese convert Yens into Dollars and invest for higher interest rates in the US.

If they exit these positions it implys they will close their dollar based assets and take back their Yens and so dollar will fall.

Dollar falling against Yen is likely to have ripple effects wrt other currencies coupled with the DOW going pants (assuming it does).

 

[brutusdog]

placed a oco order on cable.

long 1.9930
short 1.9910

either way target 20-30 pips...

 

[jacinto]

My understanding is that they are due to rate differentials between US and Japan.

The Japaneese convert Yens into Dollars and invest for higher interest rates in the US.

If they exit these positions it implys they will close their dollar based assets and take back their Yens and so dollar will fall.

Dollar falling against Yen is likely to have ripple effects wrt other currencies coupled with the DOW going pants (assuming it does).

agree with USDJPY part, relating to cable, GBPJPY also falls, question is GBPUSD falls or not. Remember February 27 and subsequent carry trade scares? that is what I mean.

 

[JER08]

longed cable 9800,It's got to move,one way or another.

Covered long 19926, looking to long again.

 

[smbtnt]

Morning all,

Nice trading on the Dow Zuke, personally missed the short on the breakout/pullback at 13630, I did get filled on the long though at 13575 triggered on the 4 hour off trendline support and ma bounce. The indices do look overbought now and I wouldnt be surprised if do get stopped out of my position as the downtrend kicks in.

Regarding Cable; since yesterdays sharp reaction off 9965 major Fib resistance on the dailies my bias has switched, currently holding half stake short off the round number rejection at 9950, my targets are tighter as medium trend is bullish for £ and no major support zones have been busted.
Also, bargain hunters might flock into buy value pullbacks between 9900-9950 for a sharp stint to 2.000 causing whipsaws in the next day or so.
Good luck all.

 

[Atilla]

agree with USDJPY part, relating to cable, GBPJPY also falls, question is GBPUSD falls or not. Remember February 27 and subsequent carry trade scares? that is what I mean.

-------

In Supply and Demand terms I would think

GBPJPY will fall as Japaneese buy back Yens.

GBPUSD will rise as USD will fall and traders will take fright from US dollar based assets.

-------

However, I've been looking at the charts for Feb - Apr on the daily and you are right in that

USDYEN - Fell and then Rose
GBPYEN - Fell and then Rose
GBPUSD - Fell and then Rose

I can only think there is a close economic relationship between between US - Japan & UK markets that exceed currency supply and demand fluctuations.

Best if I still hang on to my IT job for a little while longer...

 

[JillyB]

hi atilla,

unless i completely dont understand the relation between cable and carry trades, i thought that unwinding carry trades meant cable shorts, not longs.

j

As far as I understand it you would want to be long on the Cable to pick up interest on the carry trade side.

This might be of interest regarding carry trades

http://www.dailyfx.com/story/tradin...ynamic_Carry_Trade_Basket__1180453052057.html

 

[jacinto]

As far as I understand it you would want to be long on the Cable to pick up interest on the carry trade side.

This might be of interest regarding carry trades

http://www.dailyfx.com/story/tradin...ynamic_Carry_Trade_Basket__1180453052057.html

agree on that. the issue is when you close it, the opposite works, and if that rumor is true about the banks recommending to close carry trades, then it would be time for the following shorts:

AUD vs JPY and vs CHF
NZD vs JPY and vs CHF
EUR vs JPY and vs CHF
GBP vs JPY and vs CHF

and GBPUSD would in theory be a subsequent victim of all that portfolio recomposition.

anyway, not important, the only important part is what the chart says.

thanks for the link Jilly

j

 

[JillyB]

agree on that. the issue is when you close it, the opposite works, and if that rumor is true about the banks recommending to close carry trades, then it would be time for the following shorts:

AUD vs JPY and vs CHF
NZD vs JPY and vs CHF
EUR vs JPY and vs CHF
GBP vs JPY and vs CHF

and GBPUSD would in theory be a subsequent victim of all that portfolio recomposition.

anyway, not important, the only important part is what the chart says.

thanks for the link Jilly

j

So are you saying that shorting something like the Eur/Usd would be both good on interest for the trade when you close it and good for carry trade interest as well. Even better if you catch a good fall or pullback

 

[jacinto]

So are you saying that shorting something like the Eur/Usd would be both good on interest for the trade when you close it and good for carry trade interest as well. Even better if you catch a good fall or pullback

well, what i would say is to avoid eurusd alltogether :cheesy: . trade shor euryen if carry trades are unwinding. scalpers paradise on the 1 minute when that happens. when cable stops monkeying around, then short it too:cheesy:


fresh from the press

06 Jun 2007 10:40 GMT


BULLET: EURO-YEN: Slipping to fresh lows as carry trade on...
EURO-YEN: Slipping to fresh lows as carry trade jitters weigh on the
cross, MNI Techs highlighting the next level of support at Y163.40, the
21 day moving average and Ichimoku support both coming in there. Bids
then noted into Y163.00 with stops under Y162.90.

Provided by: Market News International