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!

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!

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!

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!