French Election Thesis Part 1 - UK Flash Election?

So today my SL for my position was grazed. It was yesterday evening as well. It still hovers around this area as I write this article.

For the ease of non-followers of myself here it is:

Entry - 1.0795
Initial SL - 1.0730

I was initially trying to trade smaller positions yesterday on my private account to scalp some pips. I try not to do it because of how depleting trading this way is, and how it takes away from my ability to do objective research/evaluation of my thesis.

It has thus lead to some intense frustration.

I didn't want to write this thesis because of the other things I must do. But the recent price movements has caused me to rethink this. Articulating my words on this blog gives me a better understanding of my views and how to handle the nervous energy that surrounds being wrong.

Source: http://i2.mirror.co.uk/incoming/article8468319.ece/ALTERNATES/s615/JS95412977-1.jpg
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Market Pricing - Reflexivity vs. Efficient Markets

I have talked about this point numerous times, you can either have the opinion that 1) market pricing is correct and all information is correctly priced or 2) that the market is wrong and not all information is priced in.

Most of my copiers and readers know, i adapt the latter.

As of yesterday, I was still confident in my thesis, but as where we sit today, I am no longer so.

So, what has changed? Theresa May has called for a snap election even after saying numerous times publicly that she will not. This threatened the USD and strengthened the EUR somewhat.

But why does this make sense? What do traders see out of it? This is where one of the most intense parts of trading the way I do comes in. Fighting with my beliefs. When I make a statement of having a position I do my best to find reasons to contradict my thesis.

This keeps me honest and allows me to get out if i am wrong on my beliefs.

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Flash elections so what?

Truth be told, I don't see any catalyst that would cause such the reaction we saw yesterday. The EURUSD moved 90 over points upwards in a single day due to Theresa May's announcement of a flash election.

Does the snap election bring stability to Britain or to repeal Brexit? Slim chance of a maybe.
Does the snap election remove any uncertainty from the French Election? No.
What about the hawkish FED? Does it make the FED move dovish? No.

Last night was brutal. No answers for a market reaction with no fundamental backing.

The headline news & twitter simply did not help. Mostly technical analyst puffing up their feathers saying how they were right because of a cloud cover here, or a reverse head and shoulders or technical reaction.

I am not hating on them, but if you do not publish your trades in a public verifiable arena, i 

1) tend to believe that you are not as good as one says she/he is
2) tend not to believe in the style in the long run. Simply because there have not been constant outperformers in this space despite many (AND I MEAN MANY) adopting this style. 
3) Those who get lucky and by pure probability make money over the long run, but most do not consistently profit especially if they are managing large amounts of capital.

So yesterday was probably a market that was waiting for excuse to go higher, a self-reinforcing cycle that simply happened. But it creates a more significant mispricing.

It was not forseeable nor the reaction identifiable
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So now what?

I am tempted to add more to my position simply because my thesis continues to hold true. Even if I am wrong, i won't "lose" more than 1-2% of my account.

Although i have already lost that in terms of where i was at the peak of this trade, and now.

Right now i need to play the probabilities, the French election is still this weekend.

The only event that could cause me to "lose" is a Macron and Fillon 2nd round.

If either La Pen or Melenchon were to make it to the second round, the Frexit is still on the table.

Why am I so adamant about Frexit? Well, I guess I should post this is where part 2 comes in.


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