Posts
MCFX as a blog is over. This much may have been guessed by the lack of posts. While the experiment was not successful on returns - finishing down around the 20% mark, we are pleased with the experience. Our currency calls have largely been very good - our foolishness has been nearly entirely focussed on equities where we have lost vast sums through mis-sized, mis-timed, and mis-scaled punts. We not only lost money nearly every time we invested in equities (whether long or short) - we lost way too much each time.
Oh well, lesson learned. Our macro views on currencies that we have reiterated throughout remain the same.
However, more important than the losses, MCFX started a new job a few weeks ago and a very exciting one at that. This will unfortunately consume all his time for the foreseeable future and so blogging (that was not happening anyway) must end. Thanks for the support from those few who read and followed the blog.
Good luck and goodbye!
Sunday 10 May 2009
Friday 20 March 2009
Very Frustrating Week
MCFX has failed to blog this week. Not due to lack of time; but due to intense frustration. Mainly with his liquidity provider who used the high volatility on Wednesday evening to completely fail in their service provision and hence cost MCFX a lot of money (I won't go into details now as have spent half the week fighting with them). It's not been THE most expensive week - but it's been an expensive one and we are upset to have given back such a large percentage of last week's gains - particularly so when we feel are market calls have been largely correct.
So yet again we finish the week flat risk. Short EURGBP was clearly wrong. But we sold EURAUD at great levels only for our provider to tenuously claim that we should have been stopped out above the highs in the midst of last Wednesday's mentalness - but they only told me an hour after the event when EURAUD was much lower.
We sold EURUSD around 1.3700 which was clearly great. But don't still have the position. Annoying and poor position management.
We got stopped out of GBPCHF right at lows - before it promptly rallied.
And most frustratingly, we got stopped out of our cable long near enough to lows before it promptly went 7 big figures higher! Ouch.
Hmmm....
Obviously the market has yet to make up its mind about what the Fed's plan to buy Treasuries really means. Apart from being inflationary and USD negative. But will stocks continue to rally next week? Today's price action is not very supportive of that idea. We dipped our baby toe into stocks over last 48 hours but are not convinced and so have taken the position off. We'll try to reassess over weekend.
Underlying all our thinking though is that we remain GBP bulls at these levels. And longer-term EUR bears. How best to trade this view is not always clear as EURGBP, while obvious, does not move in an easily trending / tradeable fashion. And overall we like trading from a risk-recovery point of view. Only ever long equities, short CHF, short JPY, long AUD, long CAD.
Good luck!
So yet again we finish the week flat risk. Short EURGBP was clearly wrong. But we sold EURAUD at great levels only for our provider to tenuously claim that we should have been stopped out above the highs in the midst of last Wednesday's mentalness - but they only told me an hour after the event when EURAUD was much lower.
We sold EURUSD around 1.3700 which was clearly great. But don't still have the position. Annoying and poor position management.
We got stopped out of GBPCHF right at lows - before it promptly rallied.
And most frustratingly, we got stopped out of our cable long near enough to lows before it promptly went 7 big figures higher! Ouch.
Hmmm....
Obviously the market has yet to make up its mind about what the Fed's plan to buy Treasuries really means. Apart from being inflationary and USD negative. But will stocks continue to rally next week? Today's price action is not very supportive of that idea. We dipped our baby toe into stocks over last 48 hours but are not convinced and so have taken the position off. We'll try to reassess over weekend.
Underlying all our thinking though is that we remain GBP bulls at these levels. And longer-term EUR bears. How best to trade this view is not always clear as EURGBP, while obvious, does not move in an easily trending / tradeable fashion. And overall we like trading from a risk-recovery point of view. Only ever long equities, short CHF, short JPY, long AUD, long CAD.
Good luck!
Tuesday 17 March 2009
Sell EURGBP
This is just a quick post to tell you to sell EURGBP while it's still above 0.9265 (it's bouncing around 0.9270 as I write) - these are the highs. We've repeatedly tried dipping our toes into shorting this pair over the last week - not to too much success but overall not too much lost either. But now is the time. We've upped our size and are piling in. Cable won't go much below 1.39 on this run down whereas EURUSD has the guts of 2% to do.
Get involved and good luck!
Get involved and good luck!
Monday 16 March 2009
It's all about timing
Well we returned with a bang. We said buy GBP and GBP promptly roared. We made 5 big figures on GBPCHF and 3 on GBPJPY within 48 hours. We were tightening our stops aggressively and so were out of everything by Friday afternoon including EURAUD which we made nearly 2 big figs on as well. Cable is obviously 4 big figs higher than where we bought it but we must admit we stopped out at flat Thursday afternoon. And EURGBP was also a flat exercise.
However it was a great 48 hours and we went in to the weekend out of all positions looking for any retracement to get back in. This was not so good timing. GBP has continued to roar today and we've missed out on several big figs more across the board.
Still it was a very hefty profit which went some way towards repairing MCFX's decimated balance sheet. About 10% of profit. Yep. Much needed.
Ideally now we should wait til the next obvious opportunity. But bear in mind that MCFX is now unemployed and so trading (when in London) is practically his full-time occupation. And while patience is a virtue, we feel we should be trying to maximise the time we have while we have it.
So we will continue to push. But today it did not work. We dipped our toe in to short EURGBP and promptly got stopped out near the highs so we stand aside til tomorrow. It was a loss of less than 1% but it hurts.
Good luck!
However it was a great 48 hours and we went in to the weekend out of all positions looking for any retracement to get back in. This was not so good timing. GBP has continued to roar today and we've missed out on several big figs more across the board.
Still it was a very hefty profit which went some way towards repairing MCFX's decimated balance sheet. About 10% of profit. Yep. Much needed.
Ideally now we should wait til the next obvious opportunity. But bear in mind that MCFX is now unemployed and so trading (when in London) is practically his full-time occupation. And while patience is a virtue, we feel we should be trying to maximise the time we have while we have it.
So we will continue to push. But today it did not work. We dipped our toe in to short EURGBP and promptly got stopped out near the highs so we stand aside til tomorrow. It was a loss of less than 1% but it hurts.
Good luck!
Thursday 12 March 2009
We return
MCFX is back. Back in London and back in business. It's time to start repairing our horrendous balance sheet. And we're starting the recovery by buying GBP. Over the last 24 hours, we've bought a lot of GBP against CHF, JPY, USD and EUR. We actually think that GBP could become a safe-haven currency farther down the line. I know. Bizarre. But GBP is way ahead of the game in taking the pain and definitely in pricing in the pain. It's had an awful smack again this week amidst the backdrop the details of the Lloyds deal and the distressing terrorist killings in Northern Ireland. The latter has depressed us as we see the situation escalating again as recession dampens the economic incentives for peace.
However, in currency terms, GBP has had a healthy cleanout. It cleaned us out of our last remaining chunky position in GBPCHF - we stopped out of the June IMM date at 1.6480 but have recently bought back at a 1.6050 average and are happy that we'll fill that gap soon enough.
We've also sold EURAUD. The world is too bearish EUR and it's probably set for a very decent rally at some point - sure it's already had one over last few days. But that will probably continue. We are part of that bearish EUR brigade but stand aside as positioning dominates. That said, we've dipped our toes into short EURGBP but that's mainly a GBP view. And we've sold EURAUD - this is partly to ensure that we have some short EUR on just in case but also because we believe that the EURUSD bounce will coincide with an equity and risk bounce and so AUD might well outperform. Longer-term we love short EURAUD.
Our mention of equities brings us back to something we mentioned in our last post. We said we think the cult of equities is dead. That may be true. But we went too far - we said we don't believe equities will necessarily be higher in 5 years time in real terms. That was probably a bit crazy. Equities are now looking cheap. We may go a lot lower but over longer-term, there are buying opportunities at these levels.
Something else we mentioned in our last post was an imminent collapse in gold (as prompted by MCFX's brother), which duly happened. It's down a tasty 7% or so since our last post. And may have more to run. But we have not played it due to lack of faith in the timing.
But basically, load up on GBP - we'll probably manage it reasonably actively. As said above, we've bought a lot. 1.3760 (spot) just seemed too tempting a level to buy cable - especially with the expected EURUSD rally. EURGBP we've dipped our toes in a few times over last couple of weeks but most recently around 0.9265 for the June IMM date. GBPJPY after missing buying way lower due to some charting idiocy (was very very very frustrating), we've bought at around 133.50ish levels for the June IMM - that was probably a bit hasty considering how much lower it subsequently went. But we'll hopefully be above 140.00 within a few trading days. And the EURAUD we sold at 1.9920 also for June IMM date. The cable position is the main one we'll be jobbing as we hold that spot.
Good luck!
However, in currency terms, GBP has had a healthy cleanout. It cleaned us out of our last remaining chunky position in GBPCHF - we stopped out of the June IMM date at 1.6480 but have recently bought back at a 1.6050 average and are happy that we'll fill that gap soon enough.
We've also sold EURAUD. The world is too bearish EUR and it's probably set for a very decent rally at some point - sure it's already had one over last few days. But that will probably continue. We are part of that bearish EUR brigade but stand aside as positioning dominates. That said, we've dipped our toes into short EURGBP but that's mainly a GBP view. And we've sold EURAUD - this is partly to ensure that we have some short EUR on just in case but also because we believe that the EURUSD bounce will coincide with an equity and risk bounce and so AUD might well outperform. Longer-term we love short EURAUD.
Our mention of equities brings us back to something we mentioned in our last post. We said we think the cult of equities is dead. That may be true. But we went too far - we said we don't believe equities will necessarily be higher in 5 years time in real terms. That was probably a bit crazy. Equities are now looking cheap. We may go a lot lower but over longer-term, there are buying opportunities at these levels.
Something else we mentioned in our last post was an imminent collapse in gold (as prompted by MCFX's brother), which duly happened. It's down a tasty 7% or so since our last post. And may have more to run. But we have not played it due to lack of faith in the timing.
But basically, load up on GBP - we'll probably manage it reasonably actively. As said above, we've bought a lot. 1.3760 (spot) just seemed too tempting a level to buy cable - especially with the expected EURUSD rally. EURGBP we've dipped our toes in a few times over last couple of weeks but most recently around 0.9265 for the June IMM date. GBPJPY after missing buying way lower due to some charting idiocy (was very very very frustrating), we've bought at around 133.50ish levels for the June IMM - that was probably a bit hasty considering how much lower it subsequently went. But we'll hopefully be above 140.00 within a few trading days. And the EURAUD we sold at 1.9920 also for June IMM date. The cable position is the main one we'll be jobbing as we hold that spot.
Good luck!
Friday 27 February 2009
Self-imposed exile
Apologies for the long delay from MCFX. We passed our own 20% down take-a-break marker. The catalyst being obvious from the first line of our last post. Long equities. Okay, so the bear-market rally we were harping on about. Yep. That one that didn't happen. Well exactly. Pretty harsh.
We disappeared to France to take some time abroad to ponder things. We came back more bearish EUR longer-term though wary that Ireland may be bailed out by Europe at any moment which may cause some painful volatility.
We've been jobbing bits and pieces in smalls - none of it successfully. Only trade we still believe in is long GBPCHF which we've jobbed quite successfully and still hold.
Other macro thoughts include that we are giving up on equities. We still believe at some point they could have a massive rally but longer-term we are coming around to the theory that the cult of equity is over. I think the pain this time will be too long. There will remain tradeable opportunities over the coming years but I'm no longer convinced that equities will necessarily be higher in 5 years time than they are now. At least not in real terms. In nominal terms they probably will but surely there is a better way of playing that reflationary trade?
However, relative value we can't help but feel that long German equities against short Spanish equities will be a great trade (thank you MPPI for this idea). Amazingly, they've performed roughly similiarly over the last few years. We can't help but feel that Spanish equities are horribly screwed to put it nicely. They are stuck in a deflationary environment with increasing unemployment. I don't like having outright equity exposure so hedging with German equities makes sense. They are quite highly correlated being in the same investment bracket for most funds but the divergence should grow.
Another idea which MCFX's brother has been talking about is long oil vs short gold. I like long oil over a longer-term period. It will rocket again at some point: the thing about oil is the supply side is much stickier than the demand side. Falling demand has been the story of this collapse in oil prices but supply is also falling, albeit slowly, but eventually just as viciously, and when demand starts picking up that supply won't be able to come online again so quickly. It's also a way of playing the reflation trade. So longer-term we really like long oil.
Gold we also think will do well in the impending world inflationary environment. The problem is that anecdotally every Tom, Dick, Harry and Mary are in this trade. There is not enough gold around to make the gold ingots demanded by the private sector. This worries me. I think gold can take a horrendous whack short-term.
So in conclusion, while we like the thinking behind this trade as a relative way to play the commodity reflation story, we just think that the timing of both parts of the trade is very very difficult.
That's all for now. MCFX is returning to France next week - this time to formally improve his French. I may update from abroad but only if I'm inspired - and these markets are seldomly inspiring me nowadays!
Good luck!
We disappeared to France to take some time abroad to ponder things. We came back more bearish EUR longer-term though wary that Ireland may be bailed out by Europe at any moment which may cause some painful volatility.
We've been jobbing bits and pieces in smalls - none of it successfully. Only trade we still believe in is long GBPCHF which we've jobbed quite successfully and still hold.
Other macro thoughts include that we are giving up on equities. We still believe at some point they could have a massive rally but longer-term we are coming around to the theory that the cult of equity is over. I think the pain this time will be too long. There will remain tradeable opportunities over the coming years but I'm no longer convinced that equities will necessarily be higher in 5 years time than they are now. At least not in real terms. In nominal terms they probably will but surely there is a better way of playing that reflationary trade?
However, relative value we can't help but feel that long German equities against short Spanish equities will be a great trade (thank you MPPI for this idea). Amazingly, they've performed roughly similiarly over the last few years. We can't help but feel that Spanish equities are horribly screwed to put it nicely. They are stuck in a deflationary environment with increasing unemployment. I don't like having outright equity exposure so hedging with German equities makes sense. They are quite highly correlated being in the same investment bracket for most funds but the divergence should grow.
Another idea which MCFX's brother has been talking about is long oil vs short gold. I like long oil over a longer-term period. It will rocket again at some point: the thing about oil is the supply side is much stickier than the demand side. Falling demand has been the story of this collapse in oil prices but supply is also falling, albeit slowly, but eventually just as viciously, and when demand starts picking up that supply won't be able to come online again so quickly. It's also a way of playing the reflation trade. So longer-term we really like long oil.
Gold we also think will do well in the impending world inflationary environment. The problem is that anecdotally every Tom, Dick, Harry and Mary are in this trade. There is not enough gold around to make the gold ingots demanded by the private sector. This worries me. I think gold can take a horrendous whack short-term.
So in conclusion, while we like the thinking behind this trade as a relative way to play the commodity reflation story, we just think that the timing of both parts of the trade is very very difficult.
That's all for now. MCFX is returning to France next week - this time to formally improve his French. I may update from abroad but only if I'm inspired - and these markets are seldomly inspiring me nowadays!
Good luck!
Wednesday 11 February 2009
Equity madness
Ok MCFX is getting carried away again. I am buying equities like there is no tomorrow. SPX March future to be precise. Since last night, I've been adding little chips to the core position mentioned yesterday. We are very leveraged... but stops are staggered and some very close. A 1% move in stocks causes a move in excess of 4% in our fund. Madness.
But we plan to keep on adding if it rallies from here. Against that, we'll keep on tightening up our stops. Between all our current positions, including our initial entry at 843.5, we've entered at an average of around 832 in the March future. And we're risking a total of about 7% of our fund at the moment.
We also now have short EURAUD again having sold at 1.9838 for the March IMM date. We picked our entry level nicely on this one with the rally overnight not going much higher.
And finally we have long GBPCHF on again entering at 1.6658 for the June IMM date.
MCFX is using some of his spare time to research more and more the press around previous bubbles / crashes. It's easiest to find articles on the Asia crisis, Russian crisis, LTCM, and the Internet boom so this is where I am focussing. I'm hoping it will give me a greater insight to market psychology around bear-markets - but bizarrely all this doom-and-gloom reading is only making me more bullish. I have become entrenched in my view that a decent rally is on the horizon; whether bear-market rally or genuine start to the new bull-market I am less convinced, though still definitely err towards the former option. Having already expended so much capital on all the previous false dawns, I'm keen to catch it when it happens. This kind of attitude is what kills traders / funds. Being too aggressive too early. Though I do the current market sentiment is ripe for the move. And I will tighten up my stops aggressively as, and if, the market runs.
The fund is currently down 13.7508% ytd. Upsetting. Though given current position size in equities, this will probably change significantly in one direction very soon. We must remember that this fund is targetting 100% returns on the year. Which means that we are looking to make nearly 9% average per month. Average. Including down months. So -13.7508% is in no way denting our plans - only our ego.
Good luck!
But we plan to keep on adding if it rallies from here. Against that, we'll keep on tightening up our stops. Between all our current positions, including our initial entry at 843.5, we've entered at an average of around 832 in the March future. And we're risking a total of about 7% of our fund at the moment.
We also now have short EURAUD again having sold at 1.9838 for the March IMM date. We picked our entry level nicely on this one with the rally overnight not going much higher.
And finally we have long GBPCHF on again entering at 1.6658 for the June IMM date.
MCFX is using some of his spare time to research more and more the press around previous bubbles / crashes. It's easiest to find articles on the Asia crisis, Russian crisis, LTCM, and the Internet boom so this is where I am focussing. I'm hoping it will give me a greater insight to market psychology around bear-markets - but bizarrely all this doom-and-gloom reading is only making me more bullish. I have become entrenched in my view that a decent rally is on the horizon; whether bear-market rally or genuine start to the new bull-market I am less convinced, though still definitely err towards the former option. Having already expended so much capital on all the previous false dawns, I'm keen to catch it when it happens. This kind of attitude is what kills traders / funds. Being too aggressive too early. Though I do the current market sentiment is ripe for the move. And I will tighten up my stops aggressively as, and if, the market runs.
The fund is currently down 13.7508% ytd. Upsetting. Though given current position size in equities, this will probably change significantly in one direction very soon. We must remember that this fund is targetting 100% returns on the year. Which means that we are looking to make nearly 9% average per month. Average. Including down months. So -13.7508% is in no way denting our plans - only our ego.
Good luck!
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