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Tag Archives: foreign exchange

Well, 2017 has proven to be both a tough and opportunisitc year.

It was not easy to spot the trends and certainly event driven trading also proved to be challenging, however, we managed to close our trading books with an absolute performance of 147.49%

Now, I am going to focus on Christmas.

Here’s wishing one and all a very Merry Christmas and good trading in 2018.

I wasn’t sure whether the FOMC will turn out like the BOE last month, but there was sufficient buzz in the market to suggest that it could be a volatile event.

I decided not to stay up for the action but instead place some one day vanilla options with the following details:-

EURUSD Call Option; Spot 1.1762, Premium; 40bps, Breakeven; 1.1802

USDJPY Put Option; Spot 113.05, Premium; 38bps, Breakeven; 112.67

AUDUSD Call Option; Spot 0.7610, Premium; 21bps, Breakeven; 0.7631

Decided to square all the three options as follows: –

EURUSD at 1.1830 for a trading profit of 28bps

USDJPY at 112.61 for a trading profit of 0.6 yen

AUDUSD at 0.7634 for a trading profit of 3bps

This whole exercise turned a small profit of 36bps……………aarrgghh…………the whole event turned out to be a lacklustre event.

Ok, I am closing my books for 2017.

Will put up the final performance figures for 2017 shortly.

 

Another sought after UK economic data.

I decided to place my straddle with the following details: –

GBPUSD; Stop if Offered at 1.3323, Spot at 1.3344, Stop if Bid at 1.3365

Claimant count came out worse at negative 5.9K versus forecast of 3.3K, and previous month was revised upwards to negative 6.5K from 1.1K. Bad situation in the employment scene in the UK.

Unfortunately, the GBPUSD spiked upwards and triggered my stop if bid and before I could do anything, it fell and hit my stoploss at 1.3344, so I ended up with a small loss of 21bps……………such is life!

Nowadays inflation data of all first world countries is an important economic data to watch out for. Today, is UK CPI.

I decided to place my straddle trade with the following details: –

GBPUSD; Stop if Offered at 1.3335, Spot att 1.3341, Stop if Bid at 1.3365

As it turned out CPI came slightly higher at 3.1% against forecast of 3.0%. Core CPI was the same at 2.7%.

The GBPUSD moved up and triggered by stop if bid, however, after less than 10 minutes it simply had no legs.

I squared the trade at 1.3375 for a small trading profit of 10bps.

As it happened last month with the BOE, market decided to sell off the GBP when BOE announced the rate hike………….the classic rally on rumours and sell on fact.

Of course, in the GBP’s case, the GBP rallied aggressively prior to the rate decision by BOE.

In the case of the US Dollar, it has lost ground to the EUR.  GBP’s weakness is because of the failure of the recent round of Brexit talks between the EU and Theresa May.

The JPY is the reverse with US gaining ground coming up to the FOMC decision. AUD has weakened recently because of the fear of a softening economy.

So how will the US Dollar react on FOMC rate decision day?

Right now, it appears that it can go either way, so it looks like I will be putting on a straddle to capture either direction if and when it happens.

Are we expecting volatility? Yes!

It looks like the two AUDUSD call options that I bought; one expiring tomorrow and the other one on December 14th will both expire WORTHLESS.

And I am going to be hit with a loss of 142 bps being the premiums paid upfront. Actually, at the start, I have already decided to risk the 142bps, so it’s okay but still sucks! Hahahahahahahahaha……………ok people………..alittle humour?!

This year end is proving to be really difficult to trade, maybe, should just close my trading books and call it a day for 2017?!

Then again, we have major potential events happening this month, will it bring with it high volatility given the lower trading volumes?

Let’s see.

Today was UK Services PMI, and typically a hot data.

I decided to put on my straddle just before the announcement of the data with the following details: –

Stop if Offered at 1.3370, Spot at 1.3388, Stop if Bid at 1.3410

As it turned out the data came in weaker at 53.8 versus forecast of 55.2.  Instead the GBP strengthened and triggered by Stop if Bid.

As I needed to leave the office to have dinner with my wife, I decied to square the spot trade at 1.3430 for a small trading profit of 20bps.

As it turned out, the USDJPY never did have any legs, so the option expired with a loss of 0.30yen.

I am deciding to take a small punt and buy a one day call option on the USDJPY with the following details: –

Strike: 113.20

Premium: .030

Breakeven: 113.50

Let’s see.

4H chart shows that the USDJPY is about touching the 200DMA.

At this point, the USDJPY can rebound back to 114 or meltdown to 111.70, how will it move.

Is this a buying or selling opportunity?!

Let’s see whether it can defend the support level of 113.20?!