I saw and opportunity on February 12th to short the AUDUSD after I saw it fall past 0.90 and so I decided to short it at 0.8966 and shortly thereafter squared at 0.8930 for a trading profit of 36bps.
After my spot trade earlier in the day, I kicked myself for not keeping the spot position and instead write a call option as AUD continued to strengthen.
I suppose I was pre-occupied by my impending lunch with my father, so decided to just square off the spot trade.
Nonetheless, I saw the opportunity again later in the day, so I decided to buy a call option for one day at the strike of 0.8842 when spot was 0.8822 with a premium of 21bps and breakeven of 0.8863. At about 2am, the AUDUSD looked alittle peakish…………so I decided to sell the option at 0.8935 for a trading profit of 72bps.
This morning I had a strong gut feeling that the RBA would begin to sound more positive and less dovish.
So prior to the RBA announcement and statement at 11:30am Singapore time, the spot was 0.8758 and I placed a spot order to stop if offered at 0.8778. The order was triggered within 1 minute of the announcement and immediately AUDUSD shot up to 0.8845. When it started coming off, I decided to sell the spot position at 0.8822 for a trading profit of 44bps.
It’s interesting how the forex markets can really give our hearts a good workout!
Gladly, I bought a call option on the GBPUSD and was prepared right at the get-go, to lose the premiums of 46bps.
As you will recall, I did the trade on January 14th; struck at 1.6390 with a breakeven of 1.6436. After I did the option the GBP started to turn down to 1.6312 on January 16th.
Like all traders, while I was happy to lose the premiums that I paid for the option, the little guy at the back of your head always wishes that the analysis on your trade is correct.
On the fateful day of January 17th, the GBPUSD miraculously moved upwards based on very strong retail sales. It moved all the way up to 1.6458 during London morning.
My option was due at 10am NY session or 10pm Singapore time. NY opened with GBPUSD still staying quite firm and my option was eventually closed at 1.6449 for a very tiny profit of 13bps. I am just happy I didn’t have to forgo my premiums.
The gold trade I did back in December 2013 and adding on a call option which I sold, received $30 in premiums and expiring January 30th, 2014.
Let’s recap some of the trade details; I bought gold at spot $1,232 on December 10th, 2013. Gold steadily moved upwards from then on and I decided to sell a call option at $1,246 expiring January 30th, 2014, hoping to give myself sufficient time to ensure that the option was exercised.
While I was busy with Christmas and the New Year’s, I stopped all trading except this outstanding gold trade. Having done the trade I was alittle nervous when gold decided to turn south towards the end of December reaching a low of $1,187 on December 20th. It meant that I was facing a mtm of about $45 loss per kg. Then, it started climbing up again, which was a welcome relief, however, I was beginning to think that I should have placed a stop loss level, as gold began dropping again, back down to $1,187 on December 30th.
However, since I had time and the fact that I know with a high level of confidence and comfort that whenever gold drops below $1,200, it will only be temporary and as long as I have time, I do not have to be unduly worried as the floor was established in June 2013 at $1,179.
Of course, I knew that gold was going to trade at a broader channel of between $1,200 and $1,300. I didn’t think that it would go higher than $1,300, given that most central banks around the world has stopped increasing liquidity and if anything at all may begin to taper following the footsteps of the U.S. So I knew the upside was somewhat capped.
Also, the fact that gold today is an asset class by itself, it would validate a fair price value of about $1,100.
From the new year onwards, gold just did a steady grinding path upwards.
On January 30th the high was during the NY session at $1,268 and the low was during the Asian session at $1,237 and since my option was expired at 10am NY time, I had the benefit of the uptick in gold prices.
The option was exercised against me, since the strike was at $1,246, so I delivered my gold at $1,246, after having bought it for $1,232 for a trading profit of $14 per kg. However, I also benefited from the $30 per kg premium for the call option that I sold, so my total profit was $46 per kg.
Pretty good trade if I may say so, of course, with some anxiety during the past month and a half.
The non farm payroll number certainly surprised the markets last Friday with a 74K print when the whole world was expecting a 196K estimate.
It gave forex traders the ammunition to beat up the USD and that they did, with all the majors gaining by one big figure.
Then articles started coming out in the press, speculating whether or not this is a simple blip or a precursor to a further weakening in the US labor market.
Personally, I believe the NFP numbers will usually experience anomalies during the winter months, when less people are working and less employers are employing…….all because of the weather. This winter is a harsh one in the U.S., and in Europe, therefore, I expect employment to be weaker in the next two months.
From Monday to Tuesday, the EUR and GBP started correcting and giving up gains from Friday, however, the AUD and JPY continued to grind higher against the USD. The AUD helped by the buoyant housing market, however, the structural economy is still weak. The JPY was alittle puzzling, but maybe, it’s a reversal from the long bull run the USD had against the JPY starting from 101.00 a month ago.
Chinese New Year is on January 31st and I will be busy with family affairs starting next week right up to the first day of Chinese New Year. Admittedly, I haven’t really jumped back on the trading chair since Christmas and I really need to in order to start the new year with a nice foundation.
I will be posting the November and December performance review shortly and an overall experiential feedback of 2013.
The GBPUSD did a wonderful see saw roller coaster ride from Friday last week with the weak NFP numbers. Initially, it strengthened about 100bps, then on Monday in the afternoon, it took a nose dive from 1.6500 to 1.6350. From this morning, the GBPUSD was making a slow comeback grind from 1.6350 to 1.6390 in Asia session.
The Ichimoku and stochastics indicated that the GBPUSD was primed for a move back up. So I decided to buy a call option struck at the money spot of 1.6390 with a premium cost of 46bps, expiring on Friday, January 17th and a breakeven of 1.6436.
Right now in the US morning session, the GBPUSD is holding steady at 1.6435. Well, let’s see whether I am right or not.
Just as I did the short trade in the GBPUSD, the AUDUSD also looked good from a charting point of view, so I also executed a short AUDUSD at 0.9112 with a stop loss at 0.9130.
Later on in the night, I squared the position at 0.9028 for a trading profit of 102bps.
My charts looked great in the evening of December 11th, with the Ichimoku and Stochastics indicating a potential short opportunity in the GBPUSD.
So I executed a Short GBPUSD at 1.6390, stop loss at 1.6410.
An hour later I took profit at 1.6363 for a trading profit of 47bps.
The Panthenon Investment Group 